Court File and Parties

Court File No.: CV-23-00704920-00ES Date: 2025-09-29 Ontario Superior Court of Justice (Estates List)

In the Matter of the Estate of Robert Cudden, deceased

Between: Anne Marie McQueen, in her capacity as Estate Trustee of the Estate of Robert Cudden

Applicant

And: Robert Peter Cudden, in his capacity as Estate Trustee of the Estate of Robert Cudden

Respondent

Before: Justice A.A. Sanfilippo

Counsel: Brian D. Belmont, for the Applicant Robert McGlashan, for the Respondent

Heard: August 7, 2025

Endorsement on Costs

Overview

[1] The Applicant, Anne Marie McQueen, and the Respondent, Robert Peter Cudden, have, since September 25, 2019, been the co-Estate Trustees of the estate of Robert Cudden (the "Estate"). On August 15, 2023, Ms. McQueen brought this Application against Mr. Cudden. On November 21, 2023, Gilmore J. granted an Order, on the consent of the parties, that determined all the relief sought in this Application except a claim by Ms. McQueen that Mr. Cudden be removed as co-Estate Trustee and the issue of costs.

[2] Ms. McQueen abandoned her claim that Mr. Cudden be removed as co-Estate Trustee. This left for determination only the issue of costs.

[3] Ms. McQueen sought costs of this Application in the amount of $125,933.32, all inclusive, on a substantial indemnity basis, or $87,728.02 on a partial indemnity basis, payable from Mr. Cudden personally. Mr. Cudden submitted that the Applicant's claim for costs was excessive, unreasonable, unexpected and disproportionate to the value of the Estate. Mr. Cudden delivered a Bill of Costs setting out his costs of the Application in the amount of $14,793.36, all inclusive, but submitted that all parties should bear their own costs.

[4] For the reasons that follow, I find that the Respondent, Mr. Cudden, shall pay costs of this Application to the Applicant, Ms. McQueen, fixed in the amount of $16,000.00, all inclusive. The parties shall otherwise bear their own costs of this Application.

I. THIS APPLICATION

[5] Robert Cudden died on June 24, 2018 (the "Deceased"). The Applicant, Anne Marie McQueen, was the Deceased's surviving spouse, and the Respondent, Robert Peter Cudden is the Deceased's son from a previous marriage. The Deceased left a last will and testament dated July 14, 2003 (the "Will"). The Will named Ms. McQueen and Mr. Cudden as the Estate Trustees. A Certificate of Appointment of Estate Trustee with a Will was issued to them on September 25, 2019.

[6] The parties submitted that the Will provides that Ms. McQueen is a beneficiary under the Will of a life interest in a house known municipally as 43 Tremont Crescent, Toronto (the "Property") and that she is the recipient of a one-half interest in the Property, while Mr. Cudden and his three siblings from the Deceased's previous marriage, Ann Margaret Cudden, Philip John Cudden and Aileen Rose Vanderbeken (collectively, the "Cudden Children"), are the beneficiaries of the other one-half interest in the Property. Ms. McQueen and the Cudden Children are equal beneficiaries of shares held by the Deceased in three companies, 674662 Ontario Limited ("674662 Ltd."), Cudden Consulting Inc. and Trail Blazers Cycles Ltd. (collectively, the "Cudden Companies") while Ms. McQueen is the sole beneficiary of the residue of the Estate.

[7] Ms. McQueen brought this Application on August 15, 2023, almost four years after the appointment of the parties as co-Estate Trustees. The relief sought by the Applicant may be summarized as follows (collectively, the "Applicant's Claimed Relief"):

(a) An Order directing Mr. Cudden to sign the documents needed to complete the filing with the Canada Revenue Agency (the "CRA") of all tax returns for the Estate.

(b) An Order directing Mr. Cudden to sign the documents needed to complete the corporate tax returns for 674662 Ltd.

(c) An Order directing Mr. Cudden to sign the documents needed for the Estate to pay the invoices rendered by the accountant, V.B. Sharma Professional Corporation ("Sharma Corporation") regarding the filing of any tax returns for the Estate and/or 674662 Ltd.

(d) An Order directing Mr. Cudden to sign the documents needed to enable the appointment of a lawyer to act for the parties in their capacity as co-Estate Trustees.

(e) An Order directing Mr. Cudden to produce any financial records of the Estate within his possession, control or knowledge.

(f) An Order directing Mr. Cudden to sign the documents necessary to cause the Estate to reimburse Ms. McQueen for all expenses that she has paid on behalf of the Estate.

(g) An Order directing that, failing compliance by Mr. Cudden with the Order sought, Mr. Cudden be removed as Estate Trustee.

(h) Costs.

[8] Mr. Cudden delivered a Responding Application Record on November 17, 2023. In his affidavit sworn November 16, 2023, Mr. Cudden deposed that he and Ms. McQueen had been jointly represented by Mr. Duncan Miller, who had acted as the lawyer for the Estate Trustees, until about December 2022. Mr. Cudden swore that he had been advised that "it clearly makes no sense to litigate an Estate of this value (under $60,000.00 in BMO Estate Bank Accounts)" because "[a]ll Estate funds will be depleted by litigation." A trust accounting prepared on December 9, 2022 by Mr. Miller, and exhibited to Mr. Cudden's affidavit, showed an Estate trust balance of $38,905.75.

[9] Mr. Cudden exhibited to his affidavit an email dated November 7, 2023, to Ms. McQueen's counsel, wherein he consented to four of the orders sought by Ms. McQueen (#1, 3, 4 and 6 of the "Applicant's Claimed Relief"), but disputed the filing of a tax return on behalf of 674662 Ltd., his removal as co-Estate Trustee, and the issue of costs.

[10] By the hearing of the Application on November 21, 2023, Mr. Cudden consented to all the Applicant's Claimed Relief except for his removal as Estate Trustee and the issue of costs. On November 21, 2023, Gilmore J. ordered, on the consent of the parties, all of the Applicant's Claimed Relief except for the removal of Mr. Cudden as Estate Trustee and the issue of costs (the "November 2023 Order"). Gilmore J. directed that the parties retain a lawyer to act as counsel to the Estate Trustees, in the manner done previously by Mr. Miller, and ordered that "the balance of the relief sought in the Notice of Application herein, including costs thereof against the Respondent personally, be adjourned to the hearing of this application, to be scheduled" at a Case Conference arranged for February 8, 2024. Gilmore J. directed that the parties engage in settlement discussions, as follows: "Once the terms of the Order have been carried out, I have directed [the lawyer for Ms. McQueen] to contact the Respondent to have further settlement discussions in order to avoid costly litigation."

II. HEARINGS CONDUCTED AFTER THE NOVEMBER 2023 ORDER

[11] At the Case Conference on February 8, 2024, the parties reported that Laura Cardiff had been retained to act as counsel for the co-Estate Trustees. At the parties' request, the time for the parties to conduct cross-examination and the mandatory mediation was extended, and the parties were directed to notify Ms. Cardiff of future Case Conferences so that she might participate. A further Case Conference was arranged for May 13, 2024, which was adjourned to July 10, 2024, and then to October 15, 2024, on the parties' submission that the only outstanding issue in the administration of the Estate was the preparation of the Estate's tax returns, which was delayed by the accountant's work schedule, and that only about $20,000.00 remained in the Estate.

[12] On October 15, 2024, the parties requested a further adjournment as they continued to await the accountant's preparation of the Estate tax returns which, by then, had been in progress for some six months. The Case Conference was adjourned to November 27, 2024, on the expectation that the tax returns would by then be completed.

[13] At the Case Conference of November 27, 2024, conducted before Dietrich J., Mr. Cudden initially refused to sign the authorization to file the now-prepared T2 tax return for 674662 Ltd. and the T3 information return for the Estate, and declined to sign the cheque to pay the outstanding income tax, on the basis that Ms. McQueen had not provided evidence regarding the shareholders' equity in 674662 Ltd. Justice Dietrich ordered that the former accountant of the Deceased, Sharma Corporation, deliver to Mr. Cudden all records in their possession relating to 674662 Ltd. Mr. Cudden agreed to sign the authorizations required for the tax filings and the payment of the tax obligation, without prejudice to his position that the tax returns may need to be refiled if there was shareholder equity in 674662 Ltd. at the time of the Deceased's death.

[14] The Applicant abandoned the claim for removal of Mr. Cudden as a co-Estate Trustee. The only issue remaining for determination is the issue of costs.

III. THE POSITION OF THE PARTIES

A. The Applicant's Position

[15] The Applicant submitted that her claim in costs in the amount of $125,933.32, all inclusive, on a substantial indemnity basis, or $87,728.02 on a partial indemnity basis, is reasonable, fair and proportionate. The Applicant claimed that she has been successful in the Application in obtaining all the Applicant's Claimed Relief and submitted that the claim for removal of Mr. Cudden as estate trustee was no longer required.

[16] The Applicant submitted that the Application was necessary because Mr. Cudden refused to sign documents necessary for the administration of the Estate, as was found by Gilmore J. and by Dietrich J. in hearings conducted on November 21, 2023 and November 27, 2024, respectively. The Applicant maintained that Mr. Cudden cannot avoid liability for the costs incurred by the Applicant to secure Mr. Cudden's execution of required documents by agreeing to do so on the eve of, or during the hearing, because the Application was necessary to secure Mr. Cudden's agreement. The Applicant claimed that Mr. Cudden was uncooperative and unresponsive as a co-Estate Trustee and responded only to this Application.

[17] The Applicant requested that the award of costs be paid by Mr. Cudden personally on three grounds. First, because costs in estate litigation generally follows the civil costs regime, and there is no public policy justification for payment of the costs by the Estate. Second, because Ms. McQueen is the sole beneficiary in the residue of the Estate, meaning that any costs payable by the Estate would serve to reduce the amount that would otherwise be distributed to her in the residue of the Estate. Third, because the Estate does not have available funds to satisfy a cost award. The parties did not tender admissible evidence of the current value of the Estate, but I saw no dispute that the current value of the Estate is modest.

B. The Respondent's Position

[18] The Respondent submitted that this Application was unnecessary, and that the stalled administration of the Estate is attributable to Ms. McQueen not satisfying Mr. Cudden and the other beneficiaries of the equity in the Cudden Companies, particularly 674662 Ltd., and to Ms. McQueen not updating the beneficiaries, including in regard to the maintenance and carrying costs of the Property. Mr. Cudden emphasized that the reason for his delay in executing tax documents was to be satisfied that they were accurate. The Respondent submitted that Ms. McQueen failed to carry out the Order of Gilmore J. to retain a lawyer to act for the co-Estate Trustees by impeding Ms. Cardiff's retainer and by failing to use funds available to the Estate to pay Ms. Cardiff's continued representation of the co-Estate Trustees.

[19] Mr. Cudden submitted that Ms. McQueen made a deliberate choice to pursue litigation over collaboration, caused legal expense to be incurred that is disproportionate to the value of the Estate, and that all parties ought to bear their own costs of this Application.

IV. ANALYSIS

[20] 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: McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.), at para. 85. 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: White v. Gicas, 2014 ONCA 490, 98 E.T.R. (3d) 197, at para. 71; Westover Estate v. Jolicouer, 2024 ONCA 81, at paras. 12-13; Di Nunzio v. Di Nunzio, 2022 ONCA 889, 164 O.R. (3d) 796, at para. 9. In my view, the current debate between the co-Estate Trustees does not fit within any public policy exception.

[21] The Applicant's submission that she ought not to be out-of-pocket for the costs that she claims to have incurred is founded on the principle that estate trustees are generally entitled to be indemnified for all reasonably incurred costs in the administration of an estate: Geffen v. Goodman, [1991] 2 S.C.R. 353, at p. 397; Westover, at para. 14. However, a trustee's claim for indemnification will fail where a determination is made that the estate trustee "acted unreasonably, or in substance for their own benefit, rather than for the benefit of the estate": Muscat v. Muscat Estate, 2025 ONCA 518, at para. 19, relying on Westover, at para. 14.

[22] In a costs analysis, "[t]he overarching objective is to fix an amount of costs that is objectively reasonable, fair and proportionate … rather than fix an amount based on the actual costs incurred" by the party entitled to costs: Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, at para. 61, as applied in 100 Bloor Street West Corporation v. Barry's Bootcamp Canada Inc., 2025 ONCA 447, at para. 71. The party seeking costs bears the burden of proving them to be reasonable: Apotex, at para. 66, as applied in 100 Bloor Street, at para. 71.

[23] I accept that Ms. McQueen acted reasonably in bringing this Application. At the time that she brought the Application, the Estate was in its fourth year of administration, the co-Estate Trustees were in conflict, and the tax liabilities of the Estate, including its ownership of the Cudden Companies, had to be addressed. Ms. McQueen was successful in obtaining the November 2023 Order which although predominantly on consent, still required argument at the hearing before agreement was reached on certain terms. In granting the November 2023 Order, Justice Gilmore found that Mr. Cudden had "failed to cooperate with requests of the Applicant to sign documents including tax returns, reimburse her for out-of-pocket expenses including funeral expenses and [Estate Administration Tax], sign cheques to pay the accountant and outstanding taxes, produce financial documents and appoint counsel."

[24] In my view, Ms. McQueen also acted reasonably in arranging the hearing before Dietrich J. on November 27, 2024, to obtain Mr. Cudden's agreement to sign the authorizations required for the tax filings and the payment of the tax obligation. Dietrich J. found that "Ms. McQueen sought the case conference because Mr. Cudden has not agreed to sign the authorizations required to file tax returns relating to the Deceased's estate (the "Estate"), and he declined to sign the cheque to pay the income taxes owing."

[25] However, since the claim for the removal of Mr. Cudden as co-Estate Trustee was not pursued, the relief sought on this Application was fully determined by the November 2023 Order, except for the issue of costs. Put differently, within three months of bringing this Application, from the inception of this Application on August 15, 2023, to the November 2023 Order, Ms. McQueen obtained a consent Order that addressed all the substantive relief in her Application. I find that the hearing conducted in November 2024 was required to obtain compliance with one of the terms of the November 2023 Order.

[26] In the exercise of my discretion, I find that Ms. McQueen has established the basis for an award of costs for bringing this Application, for the hearing conducted in November 2023, and for the hearing conducted in November 2024, payable by Mr. Cudden. However, I do not accept that Ms. McQueen acted reasonably in incurring the costs that she otherwise generated in this Application in the period from November 2023 to present apart from the hearing conducted in November 2024. I will explain why.

[27] Justice Gilmore ordered, in the November 2023 Order, that the Respondent sign documents to enable the Applicant to appoint counsel to act "for the parties in their capacity as Estate Trustees of the Estate", with such counsel being "selected by the Applicant or as may be otherwise directed" by the Court. The Applicant retained Ms. Laura Cardiff and paid, from the Estate assets, Ms. Cardiff's initial retainer of $5,000.00. The Applicant submitted that she reasonably refused to fund any further retainer of Ms. Cardiff because the further retainer of $10,000.00 represented approximately one-half of the money that remained in the Estate. I do not accept this submission. It is not reasonable for the Applicant to deny funding the lawyer for the Estate Trustees in the amount of $10,000.00 only then to incur some $80,000.00 in costs after making this decision.

[28] Further, the evidence showed that Ms. Cardiff resigned for another reason. Ms. McQueen insisted that her personal counsel instruct Ms. Cardiff on her behalf. Ms. Cardiff explained, in her email of April 3, 2024, to Ms. McQueen's personal counsel, that this was unacceptable: "I cannot have a proper lawyer/client relationship with Anne on the terms she requires. There is no ability to communicate effectively, the retainer is turning into a staging area for counsel's legal arguments that are not relevant to my retainer, and you and I both agree the cost is out of all proportion with the size of the estate."

[29] The costs that Ms. McQueen incurred in insisting that she could only communicate with her Estate lawyer through her personal lawyer were not reasonable and shall not be indemnified by the Estate and will not be ordered payable by the Respondent. The prolonged debate that Ms. McQueen conducted through her personal counsel with Mr. Cudden, at most times self-represented, was not reasonable because the issues could have been addressed by Ms. Cardiff as the Estate lawyer. Ms. McQueen's decision not to use Estate funds to pay Ms. Cardiff to act as counsel to the Estate Trustees only to then generate considerably more legal expense in the ongoing prosecution of this Application was not reasonable.

[30] A costs analysis calls for a critical examination of all relevant factors, including those set out in Rule 57.01. The court must "step back and consider the result produced and question, whether in all the circumstances, the result is fair and reasonable": Apotex, at para. 60, as applied in 100 Bloor Street at para. 71. The reasonable expectation of the parties concerning the amount of the costs award is an important factor, as is the requirement that the costs be proportionate: 100 Bloor Street at paras. 71 and 84-85.

[31] In my view, the costs claimed by the Applicant are disproportionate, cannot be said to have been reasonably anticipated by the Respondent and can have the chilling effect of discouraging litigation, as I will explain.

A. Proportionality

[32] This Application raised issues pertaining to a disagreement between estate trustees that was informed, in large part, by a disagreement over the parties' treatment of an estate asset, 674662 Ltd., in which all beneficiaries claim an interest. The issues raised by this Application were not sufficiently complex to support the costs that the Applicant has claimed, and the costs are disproportionate considering that the modest value of the Estate. Even the Applicant's written costs submissions were disproportionate, consisting of eight records comprising 117 pages, including the following: Written Costs Submissions dated May 21, 2025; Supplementary Costs Brief dated May 30, 2025; Costs Memorandum dated June 4, 2025; Supplementary Costs Memorandum dated June 17, 2025; Second Supplementary Costs Brief dated June 17, 2025; Costs Outline; Supplementary Costs Outline; and a Factum dated July 25, 2025.

[33] The Consolidated Practice Direction for Toronto Region, effective June 30, 2025, sets out, in section E, the Practice Directions for the conduct of matters on the Estates List in the Toronto Region. Section E.2(a) provides that all proceedings on the Estates List are guided by the principle that "the time and expense devoted to a proceeding should be proportionate to what is at stake in the proceeding." This was not followed here.

B. The Reasonable Expectation of the Parties

[34] A review of the Applicant's Costs Outline and Supplementary Costs Outline shows that the lawyer's time claimed by the Applicant was excessive and beyond the reasonable expectation of the Respondent, including: 31.8 hours for preparation of the Application for Directions; 24.4 hours for preparation for the one-hour hearing of November 21, 2023; 27.1 hours for preparation for the one-hour Case Conference of November 27, 2024; and over 30 hours for the preparation of written costs submissions.

[35] The Court of Appeal has instructed that the fixing of costs requires determining what is reasonable, fair and proportionate and warranted for the type of activity undertaken in the case, "rather than the amount of time that a party's lawyer is willing or permitted to expand": 100 Bloor Street, at para. 86, applying Apotex, at para. 65.

[36] The Respondent's reasonable expectation of the costs of this Application is reflected by the Respondent's Costs Outline, which is in the amount of $14,793.36, all inclusive.

C. The Effect of Discouraging Litigation

[37] The amount of costs claimed by the Applicant would have a chilling effect on litigation. Estate trustees in small or modest sized estates would be reluctant to seek orders or directions if they could be confronted with a claim in costs that is well-beyond the value of the Estate. The Court of Appeal has cautioned against fixing costs at an amount that would exceed any fair and reasonable expectation of the parties: Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.), at para. 37, applied in 100 Bloor Street, at para. 88. I find that a cost award of the amount claimed by the Applicant would have this effect.

D. Fixing the Amount of Costs

[38] In response to a question posed in oral submissions, the Respondent submitted, in the alternative, that the reasonable costs of the Applicant in bringing this Application, and appearing at the November 21, 2023 and November 27, 2024 hearings is $16,500, all inclusive, on a substantial indemnity basis, and $13,500.00, all inclusive, on a partial indemnity basis.

[39] The Applicant submitted, in response to a question posed in oral submissions that, based on her Costs Outline and Supplementary Costs Outline, her costs of bringing the Application, and appearing at the November 21, 2023 and November 27, 2024 hearings, is $47,976.00, all inclusive, on a substantial indemnity basis, and $33,280.00, all inclusive, on a partial indemnity basis.

[40] Costs on a substantial indemnity basis "are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties": T.A.W. v. J.C.L., 2021 ONCA 270, at para. 4, citing Young v. Young, [1993] 4 S.C.R. 3, at p. 134; Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 26. The Applicant did not establish that the Respondent's conduct met this threshold.

[41] In fixing the Applicant's costs on a partial indemnity basis, I find that the reasonable, fair and proportionate costs for the bringing of the Application is $12,000.00, all inclusive, and that the reasonable, fair and proportionate costs for each of the hearings of November 21, 2023, and November 27, 2024, is $2,000.00, each, for a total of $16,000.00, all inclusive.

[42] Considering all the factors set out in Rule 57.01, and applicable case law, and in the exercise of my discretion under s. 131(1) of the Courts of Justice Act, I conclude that it is fair, reasonable and proportionate to fix the Applicant's costs of this Application, on a partial indemnity basis, payable by the Respondent in the amount of $16,000.00, all inclusive of legal fees, disbursements, and applicable taxes.

V. DISPOSITION

[43] For the reasons set out herein, an Order shall issue that the Applicant, Anne Marie McQueen, is awarded costs of this Application, on a partial indemnity basis, payable by the Respondent, Robert Peter Cudden, fixed in the amount of $16,000.00, all inclusive of legal fees, disbursements and applicable taxes. The parties shall otherwise bear their own costs of this Application.

Justice A.A. Sanfilippo

Date: September 29, 2025