Court File and Parties

Court File No.: CV-20-00652038-00ES

Date: July 31, 2025

Ontario Superior Court of Justice

In the Matter of the Estate of Cyril Hirsh Rosenthal, deceased

Re: Jonathan Rosenthal and Benjamin Barrett

Applicants

And:

David Rosenthal, in his capacity as Estate Trustee for the Estate of Joseph Rosenthal Samuel Rosenthal, in his capacity as Estate Trustee for the Estate of Joseph Rosenthal Cheryl Rosenthal, in her capacity as Estate Trustee for the Estate of Joseph Rosenthal Syed Pervez, in his capacity as Estate Trustee of the Estate of Cyril Hirsh Rosenthal Rachel Barrett Jacob Barrett Joshua Yue Rosenthal-Wang Aviva Ming Rosenthal-Wang

Respondents

Before: Justice A.A. Sanfilippo

Counsel:

• Matthew Karabus and James Aston, for the Moving Party Applicants
• Adam Stephens, for the Respondent, Syed Pervez
• David Wagner, for the Respondents, David Rosenthal, Samuel Rosenthal and Cheryl Rosenthal, in their capacities as Estate Trustees of the Estate of Joseph Rosenthal

Heard: In Writing

Costs Endorsement

Background

[1] In Reasons for Judgment released April 3, 2025, I determined the Motion brought by the Applicants, Jonathan Rosenthal and Benjamin Barrett, as Succeeding Estate Trustees (the "Applicants" or the "Succeeding Estate Trustees") of the estate of Cyril Hirsh Rosenthal (the "Estate") for a declaration that the former estate trustees, Syed Pervez and the late Joseph Rosenthal (collectively, the "Respondents" or the "Former Estate Trustees"), are in contempt of the Judgment granted, on consent, by Justice Cavanagh on December 17, 2020 (the "Judgment"). In particular, the Applicants pleaded that the Former Estate Trustees breached paragraph 5 of the Judgment which ordered that the Former Estate Trustees deliver to the Succeeding Estate Trustees, all documents and other information in their "possession, power and control relating to the Estate and the administration of the assets and liabilities thereof" (the "Document Production Order"). The Applicants also sought an order that the Former Estate Trustees comply with paragraph 5 of the Judgment (the "Contempt Motion").

[2] By the time of the hearing of this Contempt Motion, Joseph had died, giving rise to a Consent Order for the continuation of this Application against David Rosenthal, Samuel Rosenthal and Cheryl Rosenthal, in their capacity as co-estate trustees of the estate of Joseph Rosenthal (the "Joseph Rosenthal Trustees") only to compel compliance with the Document Production Order and costs, and that the Applicants' motion for a declaration of contempt shall not proceed as it relates to Joseph or to the Joseph Rosenthal Estate.

[3] For the reasons set out in the Reasons for Judgment, I dismissed this Contempt Motion. In paragraph 93 of the Reasons for Judgment, I directed a process for the parties to deliver written submissions on the issue of costs of this Contempt Motion, if the parties could not agree on this issue. The parties delivered their written cost submissions in accordance with the timetable.

[4] For clarity, and considering that several parties share a surname, I will respectfully refer to the parties by their first names, in the same manner as was done by their lawyers in their written and oral submissions.

A. Syed's Position on Costs

[5] Syed seeks costs of the Contempt Motion on the basis that he was successful. Syed submitted that as a former estate trustee, he is presumptively entitled to full indemnity for costs reasonably incurred in the discharge of his duties as a trustee.

[6] Syed delivered a Bill of Costs by which he quantified his costs on a full indemnity basis in the amount of $191,708.37, comprised of fees incurred in connection with the Contempt Motion in the amount of $155,131.49, inclusive of HST, and disbursements in the amount of $36,576.88. Syed claimed that his costs on a substantial indemnity scale are $176,195.21, comprised of fees in the amount of $139,618.33, inclusive of HST, and disbursements of $36,576.88, and that his costs on a partial indemnity scale quantify at $129,655.77, comprised of fees in the amount of $93,078.89, inclusive of HST, and disbursements of $36,576.88. Syed showed that his disbursements were incurred to conduct the e-discovery needed to comply with the Applicants' claim for documentary disclosure.

B. The Joseph Rosenthal Trustees' Position on Costs

[7] The Joseph Rosenthal Trustees echo Syed's position that their success in defending the Contempt Motion provides them with a presumptive entitlement to an award of costs. These Trustees submitted that they were required to defend the Contempt Motion once continued after the death of Joseph Rosenthal and, as Trustees for the Joseph Rosenthal Estate, ought to be fully indemnified for the costs incurred reasonably in the defence of the Contempt Motion.

[8] The Joseph Rosenthal Trustees claim costs on a full indemnity basis and submit that the costs should be paid personally by the Applicants on the basis that the Contempt Motion yielded no benefit to the Estate. These Trustees delivered a Bill of Costs in support of a claim for full indemnity costs in the amount of $62,999.01, all inclusive of fees, disbursements, and applicable taxes. Alternatively, these Trustees quantify their substantial indemnity costs in the amount of $56,816.32, all inclusive, and quantify their costs on a partial indemnity basis in the amount of $38,268.24, all inclusive.

C. The Moving Party Applicants' Position on Costs

[9] The Applicants submitted that success on the Contempt Motion was divided. The Applicants maintained that their motion sought two distinct categories of relief: (a) a finding that the Former Estate Trustees were in contempt of the Judgment; and (b) an order that the Former Estate Trustees deliver the documents required by the Document Production Order. The Applicants acknowledge that they failed to establish the requirements of civil contempt but submit that they succeeded in securing production of thousands of documents from the Former Estate Trustees. The Applicants therefore contend that Syed should receive costs on a partial indemnity basis for his defence of the contempt order sought by the Applicants, and that the Estate should be awarded costs on a partial indemnity basis payable by the Former Estate Trustees by reason of the Estate's success in obtaining documentary production.

[10] The Applicants delivered a Costs Outline in support of their claim that they incurred $201,210.69 in actual costs, consisting of fees of $172,026.00, disbursements of $6,036.56, and applicable taxes of $23,148.13. The Applicants submitted that these costs quantify on a substantial indemnity basis in the all-inclusive amount of $188,158.51, and on a partial indemnity basis in the all-inclusive amount of $127,712.78. The Applicants submitted that 25% of their costs should be allocated to the order sought in contempt, and that 75% of their costs should be allocated to their objective of obtaining documentary production.

[11] In their Responding Costs Submissions, the Former Estate Trustees submitted that success was not divided in the Contempt Motion but rather the motion was dismissed in its entirety. They submitted that the Moving Party Applicants have not shown any basis for an award of costs, or even a partial award of costs, or any basis on which the Former Estate Trustees ought to be denied the recovery of their costs.

D. Analysis

Outcome of the Contempt Motion

[12] I begin by addressing the parties' competing submissions on the outcome of the Contempt Motion.

[13] I do not accept the Applicants' submission that success in the Contempt Motion was divided. The motion was dismissed. Nor do I accept the Applicants' submission that the Contempt Motion consisted of two distinct areas of relief: a declaration of contempt, and a motion for production. The Applicants' Notice of Motion was based in contempt, specifically, Rules 60, 60.05 and 60.11, and this was the sole issue raised by the Motion.

[14] As set out in para. 81 of the Reasons for Judgment, the Supreme Court instructed in Carey v. Laiken that "contempt of court cannot be reduced to a mere means of enforcing judgments", and that the contempt power must be used "cautiously and with great restraint", as "an enforcement power of last rather than first resort" and not as a "routine tool". The Applicants' claim for an award of costs for the use of a contempt motion as a tool of first resort for document production is inconsistent with these principles and cannot be accepted.

[15] The Respondents were successful in their defence of the Contempt Motion. Their success gives rise to a presumptive entitlement to costs.

Principles Governing Costs in Estate Litigation

[16] The historical approach in estate litigation that all costs be paid out of the estate has long been displaced by an approach that is intended to ensure that estates are not unnecessarily depleted by unwarranted litigation. The issue of costs in estates litigation is like any form of civil litigation in that it is governed by s. 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43 and r. 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, unless public policy considerations require that the costs be paid out of the estate. The two predominant public policy considerations are: (a) the need to give effect to valid wills that reflect the intentions of a competent testator; and (b) the need to ensure that estates are properly administered. These principles were recently set out succinctly by the Court of Appeal in Westover Estate v. Jolicouer, as follows:

It is now well-established that estate litigation, like all civil litigation, is subject to the general civil litigation costs regime. The historical approach in estate proceedings that all parties' costs are paid out of the estate has been displaced by the modern approach to fixing costs in estate litigation that seeks to ensure estates are not depleted through the costs of unnecessary litigation and the assets of an estate are not treated "as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation. The same rules that govern costs in civil litigation at the appeal level apply in estate litigation.

Exceptions to the general approach may arise in limited cases where public policy considerations apply and mandate a different result. Public policy considerations include the need to give effect to valid wills that reflect the intention of competent testators as well as the proper administration of estates.

Application to This Case

[17] This Contempt Motion was brought by the Applicants as Succeeding Estate Trustees against the Respondents as Former Estate Trustees. The Applicants brought the Contempt Motion to seek compliance with the Judgment. In my view, this step was taken by the Applicants in furtherance of the administration of the Estate on their allegation that the Respondents' failure to comply with the Judgment deprived the Applicants with the evidence that they considered necessary to pursue a claim against Paragon Protection Ltd. and others (collectively, the "Paragon Parties") by the Deceased's holding company, Tamstu-Harjon Holdings of Canada Limited ("Tamstu"), shown to be the principal asset of the Estate (the "Paragon Action").

[18] I determined that the requirements necessary to bring the Contempt Motion were not established, including because of reasonable doubt that the Document Production Order was clear in specifying the scope of documentary production that the Former Estate Trustees were required to provide, considering Syed's role as both estate trustee and as external accountant for Paragon. There were other reasons to exercise my discretion to dismiss the Contempt Motion, including because the Contempt Motion was improperly brought as a remedy of first resort and thereafter advanced in furtherance of the parties' ongoing debate regarding the adequacy of compliance with the documentary production ordered by the Judgment. However, this does not derogate from my finding that the Applicants brought the Contempt Motion in their capacity as Succeeding Estate Trustees on their intention to advance the proper administration of the Estate.

[19] I do not accept the submission by the Joseph Rosenthal Trustees that the Succeeding Estate Trustees brought the Contempt Motion "as a tactical tool to gain an unfair strategic advantage in the commercial action, rather than pursuing it in good faith as a genuine enforcement mechanism." The Contempt Motion was brought over a year before the Paragon Action. In Muscat v. Muscat Estate, the Court of Appeal held that "[a]n estate trustee may be ordered to pay costs personally where they have acted unreasonably or in substance for their own benefit, rather than for the benefit of the estate." This is not such a case.

[20] On these findings, the cost awards that I grant to the Respondents shall be payable by the Applicants from the assets of the Estate.

Indemnification of Estate Trustees

[21] In the event that I have erred in this finding, there is another reason why the cost awards arising from the Contempt Motion shall be payable from the assets of the Estate. It is well-established that estate trustees are generally entitled to be indemnified for all reasonably incurred costs in the administration of an estate. This principle was stated by the Supreme Court of Canada in Geffen v. Goodman, and has been consistently applied by the Ontario Court of Appeal. The basis for this principle is that "saddling estate trustees personally with legal costs" that arise from their conduct as trustees might discourage them from advancing or defending reasonably necessary legal proceedings to ensure the due administration of the estate.

[22] There are limitations on the right of an estate trustee to be indemnified for costs incurred as an estate trustee. To be capable of indemnification, the costs must be reasonably incurred in the administration of the estate. Considering that all parties to the Contempt Motion are or were estate trustees, this principle has two applications: first, did the Succeeding Estate Trustees act reasonably in bringing the Contempt Motion and are they thereby entitled to an order that the costs be paid from the assets of the Estate and not personally; and second, were the costs incurred by the Respondent Former Estate Trustees reasonable?

[23] Regarding the Succeeding Estate Trustees, while they failed in the Contempt Motion, I have found that it was reasonably brought by them in their capacity as estate trustees. The Current Succeeding Estate Trustees ought not to be personally liable for a step taken reasonably in furtherance of an interest of the Estate. This further supports my finding that any cost awards granted to the Respondents shall be payable from the assets of the Estate.

Quantum of Costs

[24] I turn to the analysis of the monetary claims by the Respondents. As the Contempt Motion arose from their conduct as Former Estate Trustees and because the defence costs were incurred in their successful defence of the Contempt Motion, the Respondent Former Estate Trustees have established a presumptive entitlement to be indemnified for legal costs reasonably incurred in responding to the Contempt Motion.

[25] The Joseph Rosenthal Trustees claim to have incurred full indemnity costs of $62,999.01, all inclusive of fees, disbursements, and applicable taxes. Having reviewed the supporting Bill of Costs, I find that these costs are reasonable, fair, and proportionate, considering the scope of the Contempt Motion, its duration and procedural complexity, and were reasonably incurred in the defence of the Contempt Motion. On my finding that the Contempt Motion was reasonably brought by the Succeeding Estate Trustees, I reject the submission by the Joseph Rosenthal Trustees that these costs should be paid by the Applicants personally. On the same finding, I do not consider that this is an appropriate case for a blended cost award, wherein a portion of the costs are payable by the losing party, here the Applicants, and the balance is payable by the Estate. I reach the same conclusion regarding the costs claimed by Syed.

[26] Syed claims to have incurred full indemnity costs of $191,708.37, comprised of fees in the amount of $155,131.49, inclusive of HST, and disbursements in the amount of $36,576.88. The disbursements shall be awarded because they were incurred by Syed in attending to an extensive e-discovery process that was demanded by the Succeeding Estate Trustees, including through the multi-page/multi-category list provided by the Succeeding Estate Trustees on September 19, 2022, and referred to as the "September 2022 List". Since Syed undertook e-discovery to satisfy this broad production demand, the costs shall be paid from the assets of the Estate.

[27] This leaves for consideration the claim by Syed for fees in the amount of $155,131.49, which consists of $137,284.50 in fees and HST of $17,846.99. A claim in civil contempt is quasi-criminal in nature and can have serious consequences. Syed, as a professional accountant acting in a fiduciary capacity as a trustee, cannot be faulted for directing a fulsome legal response. However, this does not provide a licence to obtain recovery of all fees incurred, but rather only those that were reasonably incurred.

[28] Syed's Bill of Costs shows that Syed incurred $55,199.37 in legal fees, inclusive of HST, in replying to the production requests made by the Succeeding Estate Trustees within the Contempt Motion. Considering that Syed will be granted $36,576.88 in disbursements for e-discovery, I find the legal fees in the amount of $55,199.37 for assisting Syed with documentary production to be unreasonably incurred and shall be fixed in a reduced amount.

[29] Syed claims $99,932.12 in legal fees, inclusive of HST, for fees in the defence of the Contempt Motion apart from production requests. By comparison, the Joseph Rosenthal Trustees claimed costs of $62,999.01, all inclusive, in responding to the same motion and were awarded this amount on my finding that these costs were reasonable, fair, and proportionate. Had I been required to do so, I would not have made the same finding regarding the legal fees claimed by the Succeeding Estate Trustees in the amount of $194,389.38, inclusive of HST. Although, I acknowledge that Syed took a broader role than Joseph in responding to the Contempt Motion, and although I accept that Syed was required to respond to the steps taken by the Succeeding Estate Trustees, I do not accept that legal fees totaling $99,932.12, inclusive of HST, in responding to the Contempt Motion apart from production requests were reasonably incurred. These fees shall be fixed in a reduced amount.

[30] Having considered all factors, I fix the legal fees reasonably incurred by Syed in this Contempt Motion as $125,000.00, inclusive of HST. When combined with the disbursements of $36,576.88, Syed is awarded costs of $161,576.88, all inclusive, to be paid from the assets of the Estate. I find that these costs are reasonable, fair and proportionate considering the scope of the Contempt Motion.

E. Disposition

[31] On the basis of these reasons, I order:

(a) David Rosenthal, Samuel Rosenthal and Cheryl Rosenthal, in their capacity as co-estate trustees of the estate of Joseph Rosenthal, are awarded costs of this Contempt Motion, fixed in the amount of $62,999.01, all inclusive of fees, disbursements, and applicable taxes, payable by the Applicants, Jonathan Rosenthal and Benjamin Barrett from the assets of the Estate of Cyril Hirsh Rosenthal.

(b) Syed Pervez is awarded costs of this Contempt Motion fixed in the amount of $161,576.88, all inclusive of fees, disbursements, and applicable taxes, payable by the Applicants, Jonathan Rosenthal and Benjamin Barrett from the assets of the Estate of Cyril Hirsh Rosenthal.

Justice A.A. Sanfilippo

Date: July 31, 2025

Footnotes

[1] Rosenthal v. Rosenthal, 2025 ONSC 2096 (the "Reasons for Judgment").

[2] Costs Submissions of Syed Pervez dated April 25, 2025, with Statement of Fees and Statement of Disbursements, Case Center bundle 009, Doc. B-1:67; Costs submissions of the Estate Trustees of the Joseph Rosenthal Estate dated April 25, 2025, with Bill of Costs, Case Center bundle 009, Doc. B-2:164; Costs Submissions of the Moving Party Applicants dated April 25, 2025, with Cost Outline, Case Center bundle 009, Doc. A:362; Responding Costs Submission of Syed Pervez dated May 16, 2025, Case Center bundle 009, Doc. B-1:68; Responding Costs Submission of the Estate Trustees of the Joseph Rosenthal Estate dated May 16, 2025, Case Center bundle 009, Doc. B-2:165.

[3] Carey v. Laiken, 2015 SCC 17, [2015] S.C.R. 79, at para. 36, quoting Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., [1992] 2 S.C.R. 1065, at p. 1078 and TG Industries Ltd. v. Williams, 2001 NSCA 105, 196 N.S.R. (2d) 35, at para. 32. Also, see Moncur v. Plante, 2021 ONCA 462, at para. 10; Sutherland Estate v. Murphy, 2025 ONCA 227, at paras. 46 and 47; Hefkey v. Hefkey, 2013 ONCA 44, at para. 3.

[4] Bell Canada v. Olympia & York Developments Ltd., 111 D.L.R. (4th) 589, at para. 21; Yelda v. Vu, 2013 ONSC 5903, at para. 11, leave to appeal refused, 2014 ONCA 353; St. Jean v. Cheung, 2009 ONCA 9, at para. 4; 1318706 Ontario Ltd. v. Niagara (Municipality), 75 O.R. (3d) 405, at paras. 48-52.

[5] McDougald Estate v. Gooderham, 255 D.L.R. (4th) 435, at para. 85.

[6] White v. Gicas, 2014 ONCA 490, 98 E.T.R. (3d) 197, at para. 71. Also, Di Nunzio v. Di Nunzio, 2022 ONCA 889, 164 O.R. (3d) 796, at para. 9; Johnson v. Johnson, 2022 ONCA 682, 81 E.T.R. (4th) 7, at para. 21; Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, 119 O.R. (3d) 81, at para. 84; McDougald Estate, at paras. 78-80; Neuberger v. York, 2016 ONCA 303, 131 O.R. (3d) 143, at para. 24.

[7] Westover Estate v. Jolicouer, 2024 ONCA 81, at paras. 12-13 (citations omitted).

[8] Muscat v. Muscat Estate, 2025 ONCA 518, at para. 19, relying on Westover, at para. 14.

[9] Geffen v. Goodman, [1991] 2 S.C.R. 353, at p. 391: "The courts have long held that trustees are entitled to be indemnified for all costs, including legal costs, which they have reasonably incurred."

[10] Westover, at para. 14; Brown v. Rigsby, 2016 ONCA 521, 20 E.T.R. (4th) 171, at paras. 11-12; Muscat, at para. 19.

[11] Westover, at para. 14, citing Sawdon, at para. 86, and Gicas, at para. 72.

[12] Neuberger, at para. 25, relying on Sawdon, at paras. 93-100 and 107.