ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
THE ESTATE OF WILLIAM ROBERT WATERS BY HIS ESTATE TRUSTEES LINDSAY HISTROP AND AGNES KUSSINGER
Plaintiff
– and –
GILLIAN HENRY, NOELLE HENRY, MATTHEW ALEXZANDER HENRY, CEDRIC NOEL BUTTERS, JEAN ELAINE BUTTERS, DONNA MCGRATH, MICHELLE AMANDA LLOYD, SHAMILE LLOYD, RICHARD ANTHONY LLOYD, 2325587 ONTARIO LIMITED, 2329223 ONTARIO LIMITED, 7222874 CANADA INC., JOHN DOE #1, JANE DOE #1, JANE DOE #2, JOHN DOE CORP., KING OF HEARTS STABLES LTD., GMNT LIMITED, GMT LENDING CORPORATION
Defendants
Lorne Silver, Robert Cohen, Jonathan Shepherd, and Sarah Kemp, for the Plaintiff/Defendants to the Counterclaim
Arie Gaertner, Allan Sternberg and Karen Sanchez, for the Defendants/Plaintiffs by Counterclaim
AND BETWEEN:
GILLIAN HENRY
Plaintiff by Counterclaim
– and –
THE ESTATE OF WILLIAM ROBERT
WATERS, by his Estate Trustees LINDSAY HISTROP and AGNES KUSSINGER
Defendants to the Counterclaim
HEARD: March 7, 2025
CALLAGHAN J.
COSTS ENDORSEMENT
1This is the cost endorsement in furtherance of the decisions in this case. The decisions may be found at The Estate of William Robert Waters v. Gillian Henry et al., 2024 ONSC 4190 (“Decision”) and the The Estate of William Robert Waters v. Gillian Henry et al., 2024 ONSC 6201 (“Comeback Decision”).
2This action by the Estate of William Waters (the “Estate”) sought the return of monies and properties purchased with monies given to Gillian Henry (“Gillian”) by William Waters (“William”). Gillian counterclaimed alleging she was sexually abused by William.
3Each side claims that costs should be awarded in their favour. The Estate seeks a blended partial and substantial indemnity cost award in the amount of $1,764,519.26, of which fees are $1,492,322.98. Gillian seeks a cost award on a full indemnity basis in the amount of $3,026,035.63, of which fees are $2,516,099.60.
4There are three issues to be addressed: i) which party is entitled to costs ii) do the unproven allegations of fraud and sexual abuse , either increase the scale of costs or alter the entitlement to costs and iii) what is the appropriate quantum of costs.
Which Party is Entitled to Costs
5In the main action, the Estate sought the return of over $30 million. The money was given by William to Gillian over 10 years. The money generally fell into three buckets: money for property, money for King of Hearts, and money for other items, including VISA purchases. There was a fourth bucket related to money of William’s wife, Phyliss, which was found to be improperly gifted to Gillian by William.
6In the result, Gillian was ordered to turn over 80% of King of Hearts to the Estate, to repay the Estate monies owed as result of loans by William to her, and to remove William as a guarantor on a mortgage of property owned by Gillian. She was also required to repay the Estate the monies received from William that belonged to Phyliss which William had no right to gift to Gillian. Due to the sale of certain property and payments made by Gillian in the interlocutory process, the Estate was required to reimburse $450,000 and $617,500. Because monies belonging to Phyliss were used to improve King of Hearts, William having acquired 80% of King of Hearts was responsible to retain a portion for Phyliss. In the end, the Estate was successful in recovering its interest in King of Hearts, a discharge of a mortgage in excess of $1 million and $2,675,385, with adjustments set out in the Comeback Decision.
7The counterclaim was dismissed.
8The Court has discretion in the determination of costs: Section 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.4. As to which side is entitled to costs, absent special circumstances, “costs follow the event”: Bell Canada v. Olympia & York Developments Ltd. (1994), 1994 239 (ON CA), 111 D.L.R. (4th) 589 (Ont. C.A.); Yelda v. Vu, 2013 ONSC 5903, [2013] O.J. No. 4246, at para. 11, leave to appeal refused, 2014 ONCA 353; St. Jean v. Cheung, 2009 ONCA 9, [2009] O.J. No. 27, at para. 4.
9Where there is success by both parties in respect of the issues in dispute, the court does not make distributive cost awards. Distributive cost awards apportion costs based on the perceived success of the individual issues raised in the litigation. Rather, the court assesses which party is the more successful party and adjusts the cost award based on the principles set out in Rule 57.01 of the Rules of Civil Procedure, RRO 1990, Reg 194, (the “Rules”). This is because cost awards in our civil justice system are strongly linked to the offer to the settle regime in Rule 49. Settlement is a policy objective at the heart of our civil justice system: Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37, [2013] 2 SCR 623, at para. 11. Distributive cost awards undermine this objective. Justice Carthy discussed this in Oakville Storage and Forwarders Ltd. v. C.N.R. (1991), 1991 7060 (ON CA), 5 O.R. (3d) 1 (Ont. C.A.).
10Since Oakville Storage, the general rule is that “costs are not to be determined by considering success on an issue-by-issue basis”: Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2021 ONCA 381, at para. 10. Rather, costs are to be awarded based on the overall success achieved by a party: Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33, at para. 21; Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2021 ONCA 381 (), at para 10. Accordingly, the fact that a party was not successful on all elements of its claim does not disentitle it to costs. The court looks to what “drove” the litigation: Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 218 at para 8. In Ontario Realty Corporation v. P. Gabriele & Sons Limited, 2009 68828 (ON SC), Justice Newbould explained this approach as follows:
35I take from all these cases the proposition that generally if the plaintiff has succeeded on some but not all issues, the plaintiff, not the defendant, is entitled to costs but the trial judge is entitled to take into consideration the time and expense involved in those issues that were not successful. Only rarely, perhaps, may a distributive cost order be made.
11In this case, there is both the claim and counterclaim to consider. The Estate was wholly successful in defending the counterclaim. In some circumstances, a counterclaim may be considered a separate proceeding for the purpose of assessing costs. In this case, the underlying facts giving rise to the counterclaim, being the sexual relationship between Gillian and William, were also central to both the main action and the counterclaim. As such, there was a significant overlap of evidence between the main action and counterclaim. It is not possible, as a practical matter, to separate the costs of the trial between the claim and the counterclaim. For this reason, there should be only one assessment of costs. Therefore, the Estate’s success on the counterclaim weighs in favour of the Estate receiving a cost award.
12In considering the main action, Gillian points to the fact that the Estate was unsuccessful in recovering its full monetary claim. She points to the fact that the entire claim was for $30 million, including the return of 20 properties. Yet only 80% of King of Hearts was returned, and the only money to change hands were loans that were to be repaid and money that Gillian was given by William that is to be returned to Phyliss.
13The nub of this litigation was whether Gillian was entitled to retain the funds given to her by William. In the end, she retained a good deal of what she was given. Nonetheless, a significant amount was returned to the Estate, including 80% of King of Hearts. The evidence was that $7 million of the $30 million went into King of Hearts. While King of Hearts only sold after trial for $5 million, each side had real estate experts who valued the property at $10 million. Gillian had an offer for $18 million prior to trial which fell through. While King of Hearts alone was a sizable recovery, at the time of the trial, its perceived value during the trial was even greater. With the interest in King of Hearts, repayment of the loans and the discharge of the mortgage, the Estate achieved success in the main action, albeit not on all issues.
14Had offers been exchanged, a successful offer would involve either funds, assets or both flowing from Gillian to the Estate. In my view, but for this litigation, the Estate would not have recovered its interest in King of Hearts. While Gillian admitted that she owed the Estate money because of loans made by William, there was no formal offers to repay those funds. Similarly, there was no formal offer that Gillian would discharge the mortgage. I accept that the Estate was required to litigate to achieve this success, albeit as noted it with less success than the Estate sought when it started the action.
15Gillian argues that the money to be returned to Phyliss ought not to be factored toward the success of the Estate. She points out that the Estate does not benefit from the money but rather the Estate must hold the funds for the benefit of Phyliss. In my view, this misses the point. The Estate is indebted to Phyliss. In returning the money to Phyliss, the Estate gets the benefit of extinguishing a portion of its debt to Phyliss. Moreover, but for the lawsuit, Gillian would still have Phyliss’ money. To that extent, the lawsuit was necessary and there was success in favour of the Estate.
16I am satisfied that the Estate is entitled to an award of cost as against Gillian.
17In respect of the family members who were defendants, they were successful in having all actions dismissed against them. It is submitted by defence counsel that the successful family members ought to be awarded costs. I disagree. The family member defendants were not separately represented. The litigation against the family member defendants involved claims for the return of property provided to Gillian by William, which, in turn, Gillian gave to her family members, being her children, siblings and parents. It was reasonable for the Estate to sue the family members to trace the assets in question. Given the purpose of suing the family members was to recover the assets that were allegedly misappropriated by Gillian, the evidence called in respect of the family members’ claims was evidence that would have been called in addressing the claims against Gillian.
18In Stevens v. The Globe and Mail, 1993 CarswellOnt 928, [1993]O.J. No. 185 Justice Gibson dealt with a similar situation where both the successful and unsuccessful defendant was represented by the same counsel. He declined to award costs in favour of the successful defendant as the claim against a successful defendant in that case did not “materially extend or prolong matters”. That rationale applies here. As noted, the claims against the family members did not appreciably prolong or extend this action as the evidence would have been called if the action proceeded against Gillian alone. For theses reasons, I decline to award costs in favour of the family members.
Do the allegations change the entitlement to or scale of costs?
19Both parties cite the nature of the allegations as a reason for awarding them costs or an enhanced scale of costs. In the case of the Estate, it requests substantial indemnity costs because Gillian alleged but did not prove she was sexually abused by William. In the case of Gillian, she requests substantial indemnity costs as the allegations in the statement of claim included allegations that she defrauded William which were also not proven. The family members also claim the allegation against them involve the taint of fraud.
20Conduct that is reprehensible, scandalous, or outrageous may give rise to an award of costs, including the higher scale of substantial indemnity costs. Justice Arbour in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, stated the following at para. 26:
In Young v. Young, 1993 34 (SCC), [1993] 4 S.C.R. 3, at p. 134, McLachlin J. (as she then was) for a majority of this Court held that solicitor-and-client costs "are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties". An unsuccessful attempt to prove fraud or dishonesty on a balance of probabilities does not lead inexorably to the conclusion that the unsuccessful party should be held liable for solicitor-and-client costs, since not all such attempts will be correctly considered to amount to "reprehensible, scandalous or outrageous conduct". However, allegations of fraud and dishonesty are serious and potentially very damaging to those accused of deception.
21This principle was articulated by Abella J.A. in McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 2002 41899 (ON CA), 59 O.R. (3d) 97, [2002] O.J. No. 1536 (C.A.) where, at para. 39, she said:
Apart from the operation of rule 49.10 (introduced to promote settlement offers), only conduct of a reprehensible nature has been held to give rise to an award of solicitor and client costs. In the cases in which they were awarded there were specific acts or a series of acts that clearly indicated an abuse of process, thus warranting costs as a form of chastisement.
22The underlying philosophy was described by Robins, J.A in Mortimer v. Cameron (1994), 1994 10998 (ON CA), 17 O.R. (3d) 1, [1994] O.J. No. 277 (C.A.), at p. 23 O.R., as being appropriate “in rare and exceptional cases to mark the court's disapproval of the conduct of a party in the litigation”: citing Orkin, The Law of Costs, 2nd ed. (1993), pp. 2-91 to 2-92.
23In this case, neither the allegation of sexual abuse on the one hand nor fraud on the other was successful. This does not mean that the court should sanction either party with either an award of costs or an enhanced award of costs. It is still rare and exceptional to make such an award.
24In the case of the fraud allegations against Gillian, they were made in circumstances where a significant amount of money changed hands. The allegations were not made dishonestly. They were reasonable allegations in the circumstances. The same applies to the allegations against the family members who were the recipients of William’s gifting to Gillian. It was reasonable in the circumstances to seek to trace the funds to the family members who obtained the benefit. While the allegations were unsuccessful, in my view, they do not warrant chastisement.
25In the case of Gillian’s allegations against William, while I found against Gillian, an enhanced cost award against her would prove chilling to others who might come forward in other sexual abuse cases for fear of being disbelieved. The Estate says that the allegations tarnished the reputation of Waters. In my view, the reputation of Waters is a matter of some debate, as he was not all that he appeared to others, although I accept unproven allegations of sexual abuse can deleteriously impact a person’s reputation. However, to award substantial indemnity costs because of a tarnished reputation of a deceased person would appear inconsistent with the principle that an estate may not maintain an action for the libel or slander of a deceased: Trustee Act, RSO 1990, c T.23, s 38. Rather, the common law maxim actio personalis moritur, cum person ("a personal right of action dies with the person") applies as it relates to an action involving the libel or slander of a deceased person. It may be for this reason that I was directed to no cases where the reputation of a deceased led to an enhanced cost award. In my view, an award of enhanced costs is not warranted.
What is the appropriate quantum?
26This then brings me to the quantum of the costs to be paid to the Estate . As there are no Rule 49.10 offers and no basis for chastisement, the Estate is entitled to an award of partial indemnity costs. As mentioned above, given the interrelationship of the allegations between the claim and the counterclaim, I am of the view that there should be only one assessment of costs: Shelanu Inc. v. Print Three Franchising Corp., 2000 22683 (ON SC), at para. 5.
27The exercise now is “to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case”: Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, [2022] O.J. No. 3632, at para. 61, citing Boucher v. Public Accountants Council (Ontario) (2004), 2004 14579, 71 O.R. (3d) 291 (C.A.). This is not a mechanical exercise but rather involves the considerations of the criteria set out in rule 57.01 and an exercise in judgment.
28In my view, in considering the criteria in 57.01, there are three factors that weigh heavily on this assessment of costs: i) the reasonable expectation of the unsuccessful party; ii) the amount claimed, and the amount recovered and iii) conduct that shortened or lengthened the proceeding: Eastern Power Limited v. Ontario Electricity Financial Corporation, 2012 ONCA 366, at para. 20.
29Where a plaintiff was successful on some but not all issues, the unsuccessful party ought not to be expected to pay for that part of the litigation that did not result in any success for the plaintiff. Similarly, costs should be proportionate to the success achieved. Where, as here, the plaintiff sought to recover $30 million but achieved significantly less financial success, the costs must be assessed having regard not to the claimed amount, but the actual success achieved. Similarly , where litigation involves many issues, but the plaintiff achieved success on just a few issues, the time spent on the unsuccessful issues undoubtedly lengthened the proceeding resulting in increased costs which the unsuccessful party ought not to pay. These factors apply here.
30In this case, the Estate sued in respect of 393 different financial transactions, 20 properties and over $3 million of VISA bills. At the start of the trial, the Estate submitted that all 393 transactions and VISA bills were in issue. The VISA bills were eventually conceded. Of the 393 transactions, totalling some $30 million, only those relative to the $2.85 million of Phyliss’ money and the purchase/renovation of King of Hearts were established to be subject to a resulting trust and/or unjust enrichment. Similarly, the Estate established a resulting trust over only one property, King of Hearts. The remaining properties were not subject to a resulting trust. In addition, all the VISA payments, almost all the direct deposits and a good number of the properties were beyond the limitation period. Most of these were not close calls. The family members who were sued were all vindicated. There were no findings against them, and all actions were dismissed.
31In assessing the appropriate cost award, I recognize that the costs must reflect a reasonable fee having regard to the entirety of the claim and counterclaim. In doing so, I am cognizant of not only the success of the plaintiff but also the success of the defendants. In my view, this requires me to be alive as to what evidence and issues supported the plaintiff’s successful arguments, as opposed to the unsuccessful arguments. For example, the Estate assets that 40% of the trial was spent addressing the counterclaim. I disagree. The defence of the main action by Gillian involved calling evidence that there was an intimate relationship between her and William which was denied by the Estate. In this, she was successful, and it supported her defence that William willingly gifted her the funds. This evidence of the relationship was also part of the counterclaim. This is an example of the evidence straddling both the claim and counterclaim. Similarly , much of the evidence and many of the witnesses called about William’s dealing with his money, including with advisors, supported Gillian’s position that not only was William of sound mind, but he freely gifted much of what was given to her. Similarly, other evidence of the advisors was relied upon to establish the Estate’s resulting trust claim in respect of King of Hearts. All of which is to say, the assessment of what evidence was required to be called for which issues is more art than science.
32Turning to the request of the Estate, the partial indemnity award being sought is $1.576 million inclusive of fees, disbursements and taxes. The fee portion is $1,326,297. This compares to fees claimed by Gillian in her bill of costs of the partial indemnity equivalent of approximately $1.5 million.
33I have no issue with either the hourly fees charged, or the time spent by counsel. This was a 19 day trial with a considerable number of difficult issues. Indeed, the requested amount by the Estate is less than that being requested by Gillian. In saying so, both sides exceeded the budgets set by Justice Koehnen for this action but neither side has taken issue with that fact.
34In regards to the other factors in rule 57.01, there is no doubt that this case was complex: Rule 57.01(c). It was also of great importance to both sides: Rule 57.01(d). Gillian sought to retain the gifts of William and the Estate trustees sought to recover what it believed to be amounts that should go to William’s beneficiaries. Both importance and complexity reflect the time and effort put into both the successful and unsuccessful issues in this case.
35In respect of the conduct of this litigation, I reject any suggestion that counsel for either side unnecessarily lengthened or increased the costs by their actions in this proceeding. This was hard fought litigation. The tactical choices on both sides undoubtedly imposed burdens and costs that, in hindsight, could have been avoided but none have been identified to me that would impact the costs award as contemplated in Rule 57.01(f).
36Having regard to my comments above, a costs award of $800,000 is appropriate in all the circumstances. Such an award reflects the success achieved, is proportionate to the amount recovered and discounts the time and cost spent addressing the Estate’s unsuccessful allegations. As the fees incurred on both sides were similar, I am also of the view that this is an amount that Gillian should expect to pay in the circumstances of this case: Rule 57.01(O.b).
37Finally, it is necessary to “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable”: Apotex Inc., at para. 60, applying Restoule v. Canada (Attorney General), 2021 ONCA 779, 466 D.L.R. (4th) 2, at para. 356. Having considered the factors above and having regard to the nature of this litigation, I am of the view that the all-inclusive amount of $800,000 is a fair and reasonable cost award. I order that Gillian pay to the Estate $800,000 in costs to the Estate. This costs award shall incur post-judgement interest in accordance with the Courts of Justice Act.
38There was a final issue relating to the expense of the capacity assessment of Phyliss performed just prior to trial. Gillian was responsible for paying that account. If that account has not been paid, I order that it be paid by Gillian.
Callaghan J.
Released:May 22, 2025