Court File and Parties

Court File No.: CV-24-00005081-0000
Date: July 18, 2025
Ontario Superior Court of Justice

Between:
CIBC Trust Corporation, as Trustee of the John Szewczyk Testamentary Trust
Applicant

• and -
  John Szewczyk, personally and Edward Szewczyk, as Trustee of the Szewczyk Grandchildren’s Trust
  Respondents

Appearances:

• Daniel J. Dochylo, for the Applicant, CIBC Trust Corporation, as Trustee of the John Szewczyk Testamentary Trust
• Martin Zatovkanuk, for the Respondent, John Szewczyk
• Natalia R. Angelini, for the Respondent, Edward Szewczyk, trustee of the Szewczyk Grandchildren’s Trust

Heard: In Writing

Reasons for Judgment
Sean F. LeMay

Background

[1] Jennie Szewczyk had three sons, Edward, John and Robert Szewczyk. Given that all of the parties share a last name, I will refer to them all by their first names. No disrespect is intended by this.

[2] Jennie passed away on October 6, 2018. Her will established a trust for John (“the John Trust”) and a trust for her grandchildren (“the Grandchildren’s Trust”). There has been some litigation between the parties, particularly over the funding and management of the John Trust.

[3] John receives an annual income from the John Trust. The John Trust also pays the expenses associated with the home where John lives. There was an issue between the parties as to how the indexing for John’s income from the trust should be calculated. That dispute was resolved by way of written submissions, and my reasons are reported at 2025 ONSC 3382.

[4] In essence, the dispute was whether there was both an annual indexing and an upward adjustment of the income that John is paid from the trust every five years. CIBC, who had been appointed as the Trustee for John’s Trust, originally administered John’s Trust in accordance with the view that there should be indexing both annually and a lump sum increase every five years. I will refer to this as “double indexing”.

[5] The Grandchildren’s Trust is the beneficiary of the residue of John’s Trust when John dies. As a result, the Grandchildren’s Trust challenged the original interpretation that there should be double indexing. There were some other issues involving the funding of John’s Trust that were also addressed in litigation, but those matters were resolved.

[6] Ultimately, CIBC brought an Application to have this question determined. I addressed that application in writing. I am now required to fix the costs for the proceedings before me. There are complexities associated with this question because it involves the administration of a Trust under a Will. With that in mind, I now turn to the positions of the parties.

The Positions of the Parties

[7] John takes the position that his costs, in the sum of $15,112.17 inclusive of HST and disbursements, should be payable out of the trust because he was partially successful. He also takes the position that the other parties should not be able to recover costs from him personally. Finally, he takes the position that the costs charged by CIBC’s counsel are unreasonable and excessive and that, if I am going to award costs to CIBC out of John’s Trust, I should substantially reduce the amount that I award.

[8] The Grandchildren’s Trust takes the position that it was caught in the middle of an application between John’s Trust and John. As a result, it takes the position that it should be entitled to its costs, in the sum of $57,464.50. It also takes the position that this litigation was only caused by CIBC’s error and that, as a professional Trustee, CIBC should be liable for the costs associated with the error and should pay the costs personally. Finally, the Grandchildren’s Trust asserts that John unreasonably sought to take advantage of CIBC’s error for personal gain, insisted on the annual indexing, was largely unsuccessful on the application and drove the costs up. As a result, the Grandchildren’s Trust argues that costs should be payable by John personally.

[9] CIBC takes the position that, as the Trustee, it should be entitled to full indemnity costs in the sum of $60,006.32 inclusive of HST and disbursements. This position is advanced on the basis that the costs were incurred in the administration of the John Trust, and that a trustee is entitled to be fully indemnified for all costs and expenses properly incurred in the administration of a trust.

[10] Each party also provided reply submissions, which I have also reviewed. Those reply submissions addressed the issues raised by the other parties and I will address them as necessary below.

Legal Principles

[11] The practice in English cases was to have the costs of every party paid out of the Estate. However, Canadian courts have taken that practice and it has evolved. The evolution is described in McDougald Estate v. Gooderham, 2005 21091 (ON CA), paras 78-80:

[78] The practice of the English courts, in estate litigation, is to order the costs of all parties to be paid out of the estate where the litigation arose as a result of the actions of the testator, or those with an interest in the residue of the estate, or where the litigation was reasonably necessary to ensure the proper administration of the estate. See Mitchell v. Gard (1863), 3 Sw. & Tr. 275, 164 E.R. 1280 and Spiers v. English, [1907] P. 122. Public policy considerations underlie this approach: it is important that courts give effect to valid wills that reflect the intention of competent testators. Where the difficulties or ambiguities that give rise to the litigation are caused, in whole or in part, by the testator, it seems appropriate that the testator, through his or her estate, bear the costs of their resolution. If there are reasonable grounds upon which to question the execution of the will or the testator’s capacity in making the will, it is again in the public interest that such questions be resolved without cost to those questioning the will’s validity.

[79] Traditionally, Canadian courts of first instance have followed the approach of the English courts. While the principle was that costs of all parties were ordered payable out of the estate if the dispute arose from an ambiguity or omission in the testator’s will or other conduct of the testator, or there were reasonable grounds upon which to question the will’s validity, such cost awards became virtually automatic.

[80] However, the traditional approach has been – in my view, correctly – displaced. The modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the court finds that one or more of the public policy considerations set out above applies, to follow the costs rules that apply in civil litigation. Four cases usefully illustrate this modern approach.

[12] The Court goes on to describe four cases where costs were ordered payable personally and not out of the Estate. Most of the cases involved conduct that was “ill advised”: Re Lotzkar (1895) 19 E.T.R. 135 (B.C.S.C.) or unreasonable: Re Marshall Estate, (1998) 50 O.T.C. 357 (Gen. Div.), Gamble v. McCormick, (2002) 4 E.T.R. (3d) 209 (S.C.J.).

[13] In Sawdon v. Sawdon Estate, 2014 ONCA 101, para 85, the Court of Appeal has expanded on the public policy considerations that will give rise to an order of costs from the Estate. The Court stated:

[85] 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.

[14] However, the case law references the fact that the costs must be reasonably incurred: Brown v. Rigsby, 2016 ONSC 521, para 11; Estate of Francoise Poitras v. Canadian Cancer Society, 2021 ONSC 406, paras 28 and following. I view the requirement that the costs be “reasonably incurred” as providing the Court with jurisdiction to review a claim for costs, even a claim between a solicitor and his own client.

Application to the Case

a) Do Public Policy Considerations Apply?

[15] The first question that I have to determine is whether the public policy considerations apply in this case. I start with the observation that the Grandchildren’s Trust is correct that this litigation might not have been necessary if CIBC had not made an error in the interpretation of the terms of Jennie’s Will. As set out in my decision, I am of the view that the appropriate interpretation of the will was clearly that advanced by the Grandchildren’s Trust.

[16] However, that is not the end of the matter. The Agreed Statement of Fact makes it clear that CIBC made its original decision to index John’s payments annually as well as providing a lump sum increase every five years after consultation with Christine Perry, the counsel who had prepared the will, in 2019. Ms. Perry originally confirmed that the intention was to have the payments indexed annually as well as providing a lump sum increase. However, when Ms. Perry was consulted in 2024, she took the opposite view.

[17] Although incorrect, it was not unreasonable for CIBC to have approached indexing in the way it did in 2019. Once it adopted that approach, however, this application became inevitable. Having obtained this benefit, John would not be interested in surrendering it. The Grandchildren’s Trust would want to challenge the interpretation that CIBC had adopted.

[18] Ultimately, in the litigation over the funding of the John Trust, the issue of double indexing came to the forefront and it was clear that there was a dispute between the beneficiaries of the John Trust. John argued that the interpretation that CIBC had originally adopted was correct, while the Grandchildren’s Trust argued that it was incorrect. A decision had to be made on the issue of double indexing in order for the John Trust to be properly administered.

[19] Finally, I acknowledge that the original interpretation was a mistake on the part of CIBC. However, as I detailed at paragraph 16, it was a mistake that was made in good faith, and on the basis of a reasonable consideration of the facts. The fact that a Trustee made a good faith mistake in administering a trust is not a basis to deny them their costs from the Trust or to require them to pay costs personally. I would also note that, even if the Trustee did not make a mistake in the interpretation of the provision, there may still have been litigation over the interpretation of the indexing provisions as John might have sought to have the Court order the higher level of indexing.

[20] For the foregoing reasons, public policy considerations apply in this case, and I should consider whether there is any reason to depart from the principle that the costs should be payable from the John Trust to the participants in the litigation.

b) Are There Any Reasons to Deviate from Paying Costs from the Trust?

[21] Both John and CIBC argue that the costs should be recoverable from the trust. John has issues with the quantum of the costs claimed by both CIBC and the Grandchildren’s Trust, and I will return to that issue below.

[22] The Grandchildren’s Trust, on the other hand, argues that neither John nor CIBC should be entitled to recover any costs from the Trust. Instead, the Grandchildren’s Trust argues that CIBC’s conduct caused this litigation through its error and should be required to bear its costs personally. The Grandchildren’s Trust also argues that John was, for the most part, unsuccessful and should bear his own costs and the costs of the other parties that CIBC is not ordered to pay personally.

[23] I reject the Grandchildren’s Trust’s arguments. For the reasons that I have set out above, I am of the view that, once the mistake was made in good faith, it was not unreasonable for the parties to have to litigate the application before me. The fact that John was mostly unsuccessful on this Application does not change this analysis. The interpretation was still necessary as a result of the decisions that were originally made. As a result, I see no reason to deny any of the parties their reasonable costs out of the John Trust.

c) The Quantum of Costs

[24] I start with John’s claim for costs. He is seeking a total of $15,112.17 from the John Trust on account of his costs. That amount is entirely reasonable, and John is to be compensated in that amount from the Trust funds.

[25] This brings me to the bills of CIBC and the Grandchildren’s Trust. I have significant concerns with those bills. In that respect, I am mindful of the factors that are listed under Rule 57.01 in assessing reasonable costs:

• The amount claimed and recovered in the proceeding;
• The complexity of the proceeding; and
• The importance of the issues.

[26] I hasten to add that my reference to Rule 57.01 is not a determination that either the Grandchildren’s Trust or CIBC should only be entitled to partial indemnity costs. Both are entitled to be indemnified for their reasonable costs, and this is especially true in the case of CIBC as the Trustee. Indeed, the provisions contained in Jennie’s will make it clear that CIBC is entitled to be reimbursed for all of its reasonable expenses.

[27] However, there is an issue as to what the reasonable costs are. The principles set out in Rule 57.01 provide me with a framework to assess reasonability. I am of the view that the costs claimed by both CIBC and the Grandchildren’s Trust are excessive and disproportionate. In that respect, I note the following:

• There were two short case conferences in this matter, and they were both held virtually.
• The submissions were done in writing and the parties proceeded by way of an Agreed Statement of Facts.
• The issue was a relatively straightforward interpretation of two provisions of Jennie’s will. It was, at most, of moderate complexity.
• The legal principles I had to apply were relatively straightforward and have been accepted for a considerable period of time.

[28] I note that there were concerns that the Agreed Statement of Facts took some time to write. However, it was still an Agreed Statement of Facts on a file where, given the previous litigation, the lawyers should have been quite familiar with it. As a result, there should have been some efficiencies available to counsel in preparing it.

[29] I also had some concerns with the accounts of both counsel for CIBC and counsel for the Grandchildren’s Trust. An example from each account will suffice to demonstrate my concerns.

[30] Counsel for CIBC has an hourly rate of $900.00. I acknowledge that CIBC, as the Trustee, had the unfettered discretion to choose counsel. However, in my view, that rate is not sustainable for the nature of the work that was being done in this case. As a result, there needs to be a reduction in the amount of costs to take these concerns into account.

[31] Counsel for the Grandchildren’s Trust has a couple of claims for time that seem quite high. For example, there is 20 hours of time (between a junior and a senior lawyer) for drafting a Rule 49 offer to settle and communicating with opposing counsel and the client about it. Assuming an eight-hour billable day, this is two and a half days work. Similarly, the factum took 69 hours of time to write. Assuming an eight-hour billable day, this is eight and a half days of work on the Factum. For the nature of the issues in this case, the time spent is disproportionate.

[32] My concerns should be taken as an expression of concern over proportionality only. I have no reason to doubt that the time was spent by counsel. However, the amounts in dispute in this case are not significant. Part of the reason that this was done in writing was to keep the costs down. A total costs bill of more than $120,000 between the three counsel for a dispute that is probably only worth about that amount is disproportionate. Part of the reason that the modern costs awards in estates proceedings permit costs to be awarded against parties (including the Trustee) personally is to ensure that discipline is brought to bear on legal costs: Bilek v. Salter Estate, 2009 28403 (ON SC), para 6.

[33] In this case, the Court has a responsibility to review the costs claimed by the Trustee and by the Grandchildren’s Trust to ensure that they are reasonable. In my view, they are not and must, even on a full indemnity basis, be reduced. This brings me to what would be reasonable in each case.

[34] In the case of the Grandchildren’s Trust, I accept that there would have been more work involved in this matter, as counsel would have been less familiar with the file than the other two counsel. Similarly, for CIBC’s counsel, I accept that there would have been some additional work involved in preparing the Agreed Statement of Fact.

[35] I would also note that the fact that John’s counsel’s account was less than $16,000 is informative but not determinative. I am not assessing partial indemnity costs in this case. I am determining what should reasonably be charged as full indemnity costs against the John Trust. CIBC and the Grandchildren’s Trust are entitled to retain their own counsel at a different rate.

[36] In the end, therefore, I am of the view that each of the Grandchildren’s Trust and CIBC should be entitled to costs in the sum of $30,000 inclusive of HST and disbursements for this application, with those costs being payable from the John Trust. There is no recovery against John personally.

Conclusion

[37] For the foregoing reasons, I am ordering as follows:

a) The Applicant, CIBC, is entitled to costs in the sum of $30,000.00 inclusive of HST and disbursements from the John Trust for this application. To the extent that CIBC has been reimbursed more than that on account of this Application, the monies are to be returned without interest.

b) The Respondent, the Grandchildren’s Trust is entitled to costs in the sum of $30,000.00 inclusive of HST and disbursements from the John Trust for this application.

c) The Respondent, John Szewczyk, is entitled to costs in the sum of $15,112.17, again paid from the John Trust for this application.

Released: July 18, 2025

Sean F. LeMay