COURT FILE NO.: CV-23-90
DATE: 2024-02-08
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF SYDNEY GARFIELD MONTEITH, deceased
BETWEEN:
DAVID MONTEITH, as Trustee of the Estate of Sydney Garfield Monteith
Applicant
– and –
TIMOTHY MONTEITH, AMY SZASZ, JULIE SZASZ-CROCKER and SANDRA BLAIR
Respondents
Amy Dale and Helen Button, for the Applicant
Lou-Anne Farrell, for the Respondent Timothy Monteith
William Sasso, for the Respondent Sandra Blair
HEARD: December 4, 2023 by videoconference, virtually at St. Thomas; decision released December 27, 2023; submissions on costs completed January 23, 2024
HEENEY J.:
[1] I have now reviewed the submissions of counsel as to costs.
OVERVIEW:
[2] The facts of the case are fully reviewed in my Reasons for Judgment, cited as Estate of Sydney Monteith v. Monteith et al, 2023 ONSC 7246, and need not be repeated here. Suffice it to say that this case was one of statutory interpretation, on the issue as to whether the respondent Sandra Blair (“Sandra”) was entitled to share in the estate of Sydney Monteith (“Sydney”), who died intestate.
[3] I determined that she was not, because she was a foster child of George and Doris Monteith, and was never adopted by them. Sydney, however, had been legally adopted by them, as was the respondent Timothy Monteith (“Timothy”) and Ena Szasz, who predeceased Sydney, leaving two children, the respondents Julie Szasz-Crocker and Amy Szasz (“Julie” and “Amy”). The fact that George treated Sandra as his own daughter was legally irrelevant to an application under Part II of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the “SLRA”). Because Sandra had never been adopted, she was not, in law, a “child” of George and Doris, nor a “sister” to Sydney, and therefore had no right to share in his estate after he died without a will.
[4] The applicant Estate Trustee claims costs on a full indemnity basis in the amount of $11,460.62, payable out of the estate.
[5] Timothy seeks his costs on a substantial indemnity basis, in the amount of $11,230.07, payable by Sandra. In the alternative, he asks the court to make a “blended” costs order, such that Sandra pay his partial indemnity costs, and that the balance of his costs be paid by the estate.
[6] Notwithstanding the position taken by the applicant that the applicant’s costs should be paid from the estate, Timothy further argues that Sandra should pay those costs on a substantial indemnity basis or, alternatively, that a blended costs order be made, such that Sandra would pay the applicant’s partial indemnity costs, and the estate would pay the balance.
[7] Sandra agrees with the applicant’s position regarding his costs. As to the position taken by Timothy, she argues that this litigation was required for the proper administration of the estate, such that the traditional approach in estate litigation is warranted, whereby the costs of the applicant and Timothy should be paid by the estate. Sandra advances no claim for costs herself.
THE LAW:
[8] The law with respect to costs in contested estate litigation has undergone significant changes from the historical practice of ordering that the costs of all parties be paid from the estate. In Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, at paras. 82-86, Gillese J.A., speaking for the court, outlined the current state of the law:
In Goodman Estate v. Geffen, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353 (S.C.C.), at pp. 390-391, Wilson J., writing for the court on this issue, reiterated the long-standing principle that estate trustees are entitled to be indemnified for all reasonably incurred costs, including legal costs. She quoted with approval the following statement from Dallaway, Re (1981), [1982] 3 All E.R. 118 (Eng. Ch. Div.), at p. 122:
In so far as [an estate trustee] does not recover his costs from any other person, he is entitled to take his costs out of the fund held by him unless the court otherwise orders; and the court can otherwise order only on the ground that he has acted unreasonably, or in substance for his own benefit, rather than for the benefit of the fund.
However, the practice of ordering costs from the estate did not extend solely to estate trustees. Historically in estate litigation, the courts would order the estate to bear the costs of all parties.
The historical approach to costs in estate litigation created the danger that estates would be unreasonably depleted because of unwarranted or needlessly protracted litigation. Consequently, it has been displaced by the modern approach set out by this court in McDougald Estate v. Gooderham (2005), 2005 CanLII 21091 (ON CA), 255 D.L.R. (4th) 435 (Ont. C.A.), at paras. 78-80: the court is to carefully scrutinize the litigation and, unless it finds that one or more of the relevant public policy considerations apply, it shall follow the costs rules that apply in civil litigation. That is, the starting point is that estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, except in those limited circumstances where public policy considerations apply.
The public policy considerations at play in estate litigation are primarily of two sorts: (1) the need to give effect to valid wills that reflect the intention of competent testators; and (2) the need to ensure that estates are properly administered. In terms of the latter consideration, because the testator is no longer alive to rectify any difficulties or ambiguities created by his or her actions, it is desirable that the matter be resolved by the courts. Indeed, resort to the courts may be the only method to ensure that the estate is properly administered.
In any event, where the problems giving rise to the litigation were caused by the testator, it is appropriate that the testator, through his or her estate, bear the cost of their resolution. In such situations, it ought not to fall to the Estate Trustee to pay the costs associated with having the court resolve the problems. As Kruzick J. observed in Penney Estate v. Resetar, 2011 ONSC 575, 64 E.T.R. (3d) 316 (Ont. S.C.J.), at para. 19, if estate trustees were required to bear their legal costs in such situations, they might decline to accept appointments or be reluctant to bring the necessary legal proceedings to ensure the due administration of the estate.
[9] Thus, the starting point is the general civil litigation costs regime. Even in estate matters, that generally means that the “loser pays”, as described by Brown J. (as he then was), in Fiacco v Lombardi, 2009 CarswellOnt 5188, [2009] O.J. No. 3670 (S.C.J), at paras. 31-36. The general principles outlined in r. 57.01 must be taken into account by the court in exercising its discretion to award costs.
[10] In determining whether public policy considerations apply so as to displace the default regime, it is, in my view, necessary to consider the costs of the applicant and the costs claimed by Timothy separately.
[11] I will begin with the applicant. The Notice of Application shows that the applicant Estate Trustee commenced this Application for Directions to the court, “with respect to the distribution of the intestate estate” of the deceased, and “specifically an Order that the Respondent Sandra Blair is not entitled to a share in the residue of the Estate”.
[12] The order sought by the applicant was set out in Schedule B to the Notice of Application, and sought an order that the residue be divided among the respondents other than Sandra Blair, as follows: Timothy, 50%; Julie and Amy, 25% each. Significantly, the draft order sought costs of the application on a full indemnity basis payable out of Sydney’s estate. No claim for costs was asserted against the respondent Sandra. This position was reiterated in the Factum filed by the applicant, and in oral argument before the court.
[13] In the applicant’s submissions as to costs, he stated that “[i]t was necessary to obtain the Court’s direction before proceeding with the distribution of the residue of the Estate to the legal beneficiaries”.
[14] As to whether public policy considerations are engaged, the first one described by Gillese J.A. does not apply, because there was no valid will to give effect to. As to the second, the deceased Sydney did not create any “difficulties or ambiguities” by his actions, other than the fact that he did not have a will at all, which necessitated that his estate be distributed pursuant to the provisions of the provisions of Part II of the SLRA. However, the applicant felt the need to commence this application in order to obtain the directions of the court before distributing the residue. Even though the applicant took the position that Sandra had no entitlement, it appears that the law was not sufficiently clear that the applicant could proceed with distribution without the directions of the court.
[15] This supports a conclusion that the applicant’s costs arose out of “the need to ensure that estates are properly administered”. This, in turn, supports a conclusion that public policy considerations apply, such that the costs of the applicant should be borne by the estate.
[16] Quite apart from that, considerations of fairness to Sandra point to the same conclusion. As already noted, the applicant did not seek costs against Sandra in his Notice of Application, even though he was well aware that she intended to make a claim against the estate, and was only bringing the application in order to proactively deal with that claim. After all responding materials were delivered, and Sandra’s position was formally on record, the applicant still maintained, in his Factum, that the estate should pay the applicant’s full indemnity costs.
[17] Thus, Sandra presumably participated in this litigation in the expectation that she was not in jeopardy of a costs award in favour of the applicant if she was unsuccessful. The applicant continues to take the position that the estate, and not Sandra, should pay his costs. It seems to me to be fundamentally unfair to override the consistent position of the applicant, and to ignore the reasonable expectations of Sandra, and make an order that she pay the applicant’s costs as Timothy requests.
[18] I am satisfied that the costs claimed by the applicant are reasonable, and no party has submitted otherwise. Accordingly, an order will go that the estate shall pay the applicant’s costs, on a full indemnity basis, in the amount of $11,460.62.
[19] With respect to the costs claimed by Timothy, the situation is entirely different. Since Timothy was not the estate trustee, his participation in this litigation was not necessary for the proper administration of the estate. Instead, his involvement was to protect his own entitlement to 50% of the residue, which he would have had to share with Sandra had her claim been successful. He was strongly of the view that a simple reading of the applicable legislation demonstrated that there was no merit to Sandra’s position. He submitted, in para. 19 of his Factum, that if the court rejected Sandra’s claim, he was seeking costs against Sandra on a substantial indemnity basis. Thus, Sandra and Timothy were clearly opponents in this litigation. Sandra was on notice that he would be seeking costs against her if she lost, and she did, indeed, lose.
[20] There are no public policy considerations that are engaged in the litigation as between Timothy and Sandra. They are two parties opposite in interest, fighting over the same pot of money. In that, they are little different than anyone else engaged in civil litigation. Thus, there is no reason why the normal rules governing costs in civil litigation should not apply.
[21] The first rule, of course, is that costs normally follow the event. In that regard, Timothy’s position was clearly articulated in his Factum, and was skillfully presented during argument by his counsel. The court accepted his arguments completely. He was, therefore, totally successful, and is presumptively entitled to his costs.
[22] Sandra does not suggest that Timothy has done anything that would disentitle him to an award of costs as the successful litigant. Aside from arguing that the traditional approach to costs in estate litigation should be followed, which I have rejected insofar as Timothy’s costs are concerned, the only other argument she raises is that she is of advanced years and limited funds. While impecuniosity may be considered by the court in exercising its discretion as to costs, Sandra provides no evidence to support it. Evidence that the party does not currently possess the financial means to pay an award of costs, and is unlikely to ever acquire that ability, is generally required where such a claim is made: Nassab v. ErinoakKids, 2017 ONSC 2740 at para. 35 (Div. Ct.). I therefore give this submission no weight.
[23] In my view, the real issue is not entitlement, but rather whether Timothy should be awarded costs as against Sandra on a substantial indemnity basis, as primarily claimed, or on a partial indemnity basis, as claimed in the alternative.
[24] As to the considerations articulated in r. 57.01, the time spent by his counsel and support staff totalled 25.9 hours, and is entirely reasonable. The hourly rate of Ms. Farrell is somewhat high for this jurisdiction, at $500 per hour, but she has 35 years of experience, and I consider her to be one of the leading estate litigators in this part of Ontario, such that such a rate is justifiable.
[25] As to the amount in dispute in this litigation, the inventory of the estate shows it to have an approximate value of $542,256. Since Sandra was, in effect, claiming 1/3 of that amount, the amount in dispute was $180,752. The costs claimed by Timothy are not disproportionate to the amount in dispute.
[26] The proceeding was not particularly complex. I found it to be a relatively straightforward exercise in applying a series of statutes that together determined whether Sandra could claim the status of “sister” to Sydney.
[27] The issues were obviously important, since administration of the estate could not be completed, and Timothy could not receive his share, until Sandra’s entitlement, or lack thereof, was determined.
[28] Timothy argues that Sandra’s position was “improper, vexatious or unnecessary” and that she denied, or refused to admit, something that should have been admitted. Both of these are grounded in the position she took in this litigation, i.e., that she was a sister to Sydney because George always treated her as one of his children.
[29] I do not agree that Sandra’s behaviour falls within either r. 57.01(1) (f) or (g). She did not refuse to admit any relevant facts. Indeed, there was no real dispute on the facts. She did disagree with Timothy on the law, and I ruled against her. I cannot conclude, though, that the entire proceeding, brought about by the claim she made, was “improper, vexatious or unnecessary”. Litigants find themselves on the losing side of questions of law all the time. That does not mean that posing the question itself was vexatious.
[30] In that regard, it is noteworthy that counsel were unable to find a single case on point. That may well be because the statutory provisions are so clear that no one has ever bothered to litigate the claim that Sandra has raised. However, the lack of any binding precedent does militate against a conclusion that her case was entirely frivolous.
[31] Substantial indemnity costs are normally only resorted to where the court wishes to express its disapproval of the “especially egregious” conduct of a party to the litigation: see Net Connect Installation Inc. v. Mobile Zone Inc. (2017), 140 O.R. (3d) 77, 2017 ONCA 766 (C.A.). This is not such a case.
[32] I am satisfied that Timothy is entitled to an award of costs, payable by Sandra, on the usual partial indemnity basis.
[33] Timothy’s substantial indemnity costs total $11,230.07, inclusive of disbursements and HST. He did not provide a partial indemnity calculation in his Bill of Costs. In my view, partial indemnity costs of $7,300 all inclusive, representing approximately 65% of his full indemnity costs, is a fair and reasonable amount for the unsuccessful party to pay. This is particularly so given the amount in dispute. Sandra could not reasonably expect to litigate a claim for over $180,000 and not be saddled with an award of costs against her of at least $7,300 after losing the case. Indeed, such an award could be considered modest.
[34] As to the balance of Timothy’s costs, in the amount of $3,930.07, an order will go that these will be paid by the estate. I arrive at that conclusion because Timothy’s defence of Sandra’s claim enured not only to his own benefit, but to the benefit of Julie and Amy as well, since they would have been splitting one-third of the residue between themselves instead of one-half had she been successful. They did not retain counsel and participate in this litigation, but essentially left it to Timothy to defend against Sandra’s claim.
[35] An order that the estate pay the balance of Timothy’s costs will reduce the amount available for distribution by that identical amount, and thus will essentially share those costs among Timothy, Julie and Amy proportionate to their interest in the residue.
[36] To summarize, an order will go as follows:
The estate shall pay the applicant’s costs, on a full indemnity basis, in the amount of $11,460.62;
Sandra shall pay to Timothy his partial indemnity costs in the amount of $7,300, all inclusive;
The estate shall pay the balance of Timothy’s full indemnity costs, in the amount of $3,930.07.
T. A. Heeney, J.
Released: February 8, 2024
COURT FILE NO.: CV-23-90
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF THE ESTATE OF SYDNEY GARFIELD MONTEITH, deceased
BETWEEN:
DAVID MONTEITH, as Trustee of the Estate of Sydney Garfield Monteith
Applicant
– and –
TIMOTHY MONTEITH, AMY SZASZ, JULIE SZASZ-CROCKER and SANDRA BLAIR
Respondents
REASONS FOR JUDGMENT ON COSTS
T. A. Heeney J.
Released: February 8, 2024