As many of us are aware, due to personal and/or professional experience, when families become entangled in legal battles the result is often destructive, both financially and emotionally, for those involved. A recent decision by the Ontario Court of Appeal (ONCA) sheds light on one such case, providing valuable lessons for estate representatives.
This week, the ONCA released their decision in Westover Estate v. Jolicouer, 2024 ONCA 81, upholding the trial judge’s trial and costs decisions (2022 ONSC 4550 and 2022 ONSC 6684) requiring the plaintiff estate representative to personally bear two-thirds of the costs of a civil action as a result of “acting unreasonably or in substance for their own benefit, rather than for the benefit of the estate.”
The crux of the matter revolved around allegations of fraudulent property transfers from the late Milton Westover (the Deceased) to his relatives dating back to 1997.
The Case in Brief:
In 2017, the Deceased commenced an action against two of his three daughters and his son-in-law: Joan and Allen Jolicouer, and Debra Westover-Morriseau. The Deceased primarily alleged that in 1997, Debra and the Jolicouers conspired to fraudulently transfer several parcels of his Milton farm property to the Jolicouers without his knowledge.
In 1998, the Deceased passed away; his third daughter, Betty Scheibler, acting as Litigation Administrator for his estate, advanced litigation in his place. The trial judge, Justice Fitzpatrick, dismissed the claim on the merits, citing a lack of evidence, and determined the action was statute-barred by operation of the ultimate 15-year limitation period under section 15(2) of the Limitations Act. In apportioning costs, Justice Fitzpatrick ordered one-third of the costs be paid by the estate and two-thirds by Betty personally, citing Betty’s questionable involvement in the litigation. He found Betty, who had lived with the Deceased (rent-free) in the years leading up to his death, had unduly influenced him and had moved in with him to benefit herself.
Specifically, Justice Fitzpatrick found Betty’s evidence of the Defendants’ alleged fraud was entirely self-serving and not persuasive. Moreover, he found Betty’s best evidence was simply unpersuasive: her claiming she had no knowledge about the 1997 parcel transfers until 2015, despite not being involved with the Deceased’s financial affairs until 2013.
The Appeal:
Betty appealed the trial and costs decisions, challenging the finding that the action was statute-barred, alleging bias on the part of the trial judge, and that he erred in principle by ordering her to personally pay costs.
The ONCA dismissed the trial decision appeal on all grounds citing the claims were without merit; specifically, the claim that the trial judge made any palpable or overriding errors in his assessment of the evidence. The Court additionally dismissed Betty’s allegation that Justice Fitzpatrick was biased as no such allegation was raised at trial and the trial record did not support such an allegation.
Of particular significance was the court’s affirmation of Justice Fitzpatrick’s decision to order Betty to personally pay the majority of the trial costs, confirming that public policy considerations allowed them to exceptionally sanction an estate representative with costs in appropriate circumstances. The court stated that the modern approach to costs in estate litigation seeks to ensure estates are not depleted through unnecessary litigation and that “the assets of an estate are not treated ‘as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation’” (Salter v. Salter Estate (2009), 50 E.T.R. (3d) 227 (Ont. S.C.)).
The court also acknowledged that while “[s]addling estate trustee personally with legal costs where litigation was caused by the testator might well discourage them from initiating reasonably necessary legal proceedings to ensure the due administration of an estate”, the principle of protecting estate trustees from costs is not absolute. The panel stated that this exception will arise “if an estate trustee has acted unreasonably or in substance for their own benefit, rather than for the benefit of the estate.”
Notably, the court awarded costs on appeal to the Respondents, thereby entirely payable by Betty personally, as the appeal was brought on the “same baseless allegations that were rejected at trial.” The court stated that a person cannot rely on their role as estate trustee “as license to engage unreasonably in estate-funded litigation that was of no real benefit to the estate nor to its proper administration” or litigation that “has no genuine prospect of success”. Interestingly, the panel also remarked that estate representatives who inherit litigation commenced by the testator must exercise their own judgment and “take reasonable steps to ascertain whether the litigation should be continued”. In this case, Betty’s actions were deemed unreasonable and without merit, leading the court to order costs of the appeal be entirely paid by Betty personally.
Key Takeaways:
This case underscores several important lessons for estate representatives and those involved in estate litigation:
- Duty to the Estate: Estate representatives must prioritize the interests of the estate over personal motives. Engaging in litigation solely for personal gain can result in personal liability for costs;
- Exercise of Judgment: Inherited litigation should prompt estate representatives to exercise their own judgment. They must assess the merits of continuing legal proceedings and act in the best interests of the estate; and,
- Avoiding Unnecessary Litigation: Estate representatives should refrain from pursuing baseless or meritless claims that do not serve the estate’s objectives. Frivolous litigation can deplete estate assets and hinder proper administration.
In essence, the decision in Westover Estate v. Jolicouer serves as a reminder that estate representation is a position of trust and responsibility. It highlights the importance of prudent decision-making and adherence to legal principles to ensure the proper administration of estates.
As individuals navigate the complexities of estate matters, they would do well to heed the lessons gleaned from this case and approach their duties with diligence and integrity. After all, in the realm of estate law, the guiding principle should always be the preservation and protection of the deceased’s legacy for the benefit of their heirs and beneficiaries.
Thanks for reading!