During the COVID-19 pandemic, our Courts have unfortunately, but necessarily, been impacted. As a result, the Courts have, at times, had to restrict the matters that may be heard to only those that are urgent, as defined by the Notices to the Profession that have been published by the Court. For instance, the Consolidated Notice to the Profession, Litigants, Accused Persons, Public and the Media lists a number of matters that are to be considered urgent. With respect to civil and commercial list matters, this includes “urgent and time-sensitive motions and applications in civil and commercial list matters, where immediate and significant financial repercussions may result if there is no judicial hearing.” Discretion is also granted to allow the Court to decline to hear any particular matter described in the Notice as being urgent, if appropriate, or to allow a hearing that the Court deems necessary and appropriate to be heard on an urgent basis.
Despite the Notices from the Court, there may still be confusion amongst parties as to whether their matter qualifies as “urgent” or not. As The Honourable Justice Myers stated in the recent decision of Nicholas v. Ogniewicz, 2021 ONSC 4442, “Self-induced urgency is not ‘urgent’.”
In Nicholas v Ogniewicz, the issue was that there had been an agreement of purchase and sale with respect to real property, which provided that the purchaser would submit requisitions two weeks prior to closing. Unfortunately, the requisitions submitted by the purchaser were extensive, and as noted in the decision, it was apparent that several of the requisitions could not be physically accomplished before the closing date.
A week after the requisitions were received, the vendor asked for an urgent hearing date, pursuant to the Notice to Profession – Toronto, Toronto Expansion Protocol for Court Hearings during Covid-19 Pandemic, to resolve the validity of the requisitions.
Justice Myers described the current state of the civil list in Toronto as follows:
The civil list in Toronto is building a backlog of motion and application hearings. It is currently suffering unacceptably long timeouts for civil motions and applications due to the effects of the pandemic and a lack of resources. Truly urgent matters are being heard on an urgent basis. But no judge is sitting around waiting for them to come in. They are heard at a cost to other cases waiting in the queue or to case conferences that the judge may have to defer, or to parties waiting for the release of the judge’s reserved decisions that the judge was writing in her non-sitting time.
In the court’s view, in this particular case the time-sensitivity present was self-induced by both sides. It was also noted that no one was at risk of physical injury, the property was not about to suffer irremediable waste, no confidential information was at risk of disclosure or misuse, and no business was at risk of imminent failure or irreparable harm unless misconduct is urgently prevented. Ultimately, the court determined that the matter was not urgent as set out in the Notice to the Profession, and there was no basis for it to jump the queue.
Although there may be a light at the end of the pandemic tunnel, we must all still be mindful of the long-lasting consequences, including the heavy backlog that continues to exist, and will likely continue to exist for some time, in our courts.
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Administering an estate can be problematic, regardless of the size of the estate. Even small estates can be fraught with administrative difficulties that can arise by reason of actions or inactions of the deceased, issues as to the relationship between the surviving beneficiaries, or both.
The matter of Gibbons v. Lemont is a good example of the problems that can arise, and their reasonable resolution.
There, the deceased was survived by her three children. In her will, the deceased appointed two of her children as estate trustees.
The estate was a relatively small one, consisting of a house having a value of $100,000 at the time of death. The low value was partially attributed to the fact that the deceased was a hoarder.
To complicate matters, the two estate trustees had a strained relationship with their brother. The brother took issue with the actions of the estate trustees, which lead to a trial and a decision. The decision reflects some of the difficulties in dealing with estates, small or large, and addresses ways of dealing with those issues.
- The trial proceeded by way of a summary procedure. Affidavits were relied upon in lieu of examinations in chief, and cross-examination was limited. The judge observed that “the parties were well advised not to run up the costs by days of evidence and cross-examinations.” However, in the same paragraph, the judge notes that as a result of the extremely limited cross-examination, the judge did not have any assistance in making determinations as to credibility and reliability.
- Rather than sell the home “as is”, the estate trustees spend thousands of hours cleaning and repairing the house to prepare it for sale. This resulted in a gain in the value of the house of approximately $70,000. But for this work, there would probably have been no estate to distribute after the mortgage was paid. The judge commended the estate trustees for their efforts, and observed that in hindsight, the estate trustees might have been better off in declining to act, and to let the mortgagee take enforcement proceedings and sell the property.
- With respect to the time spent to clear, clean and improve the real property, the court found that the estate trustees were entitled to compensation for their work. While the deceased’s will expressly provided that the estate trustees were not entitled to compensation for acting as estate trustees, the work done by the estate trustees went beyond the work reasonably expected of an estate trustee.
- The brother alleged that the estate trustees unfairly and unequally distributed the deceased’s personal effects. However, the estate trustees tried to contact the brother for the purpose of distributing the items, but the brother did not respond. The estate trustees then divided the personal property into lots and assigned a number to each lot. A number was drawn for each child, and the personal effects were distributed accordingly. The court held that this was a fair way of dealing with the personal effects in the circumstances.
At the end of the day, after payment for compensation and out-of-pocket expenses (but before any award of legal costs) the net estate for distribution would be about $47,000, or $15,000 to each beneficiary. Even with the summary procedure that was adopted, the trial took two days to hear. However, notwithstanding the size of the estate, it appears that the issues were important enough to the beneficiaries and estate trustees so as to warrant a judicial determination.
Unfortunately, whether a large estate or a small one, sometimes a determination by the court as to the rights of the parties or the propriety of the action of the estate trustees is necessary. Unfortunately, often the parties are not able to cooperate to ensure that the legal determination can be obtained as efficiently and cost-effectively as possible. The parties and their counsel, in this case, should be commended for their cooperation in having the diverse legal issues put before the court in an efficient manner.
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I blogged on the Ontario Public Guardian and Trustee’s Guardianship Investigations Unit, and the OPGT power to bring an application for a temporary guardianship under certain circumstances earlier this week. In The Public Guardian and Trustee v. Willis et al, 2020 ONSC 3660, the OPGT brought an application for Andrew Willis to pass his accounts with respect to his management of his mother’s Ruth Irene Willis’ property, and for an order that the OPGT be appointed as Mrs. Willis’ temporary guardian of property which would replace Andrew Willis as Mrs. Willis’ POA.
Mrs. Willis suffers from moderate to severe dementia and she lives in MacKenzie Place Nursing Home. Mrs. Willis is a widow and Andrew is her only living child. Mrs. Willis’ only asset is her home in Richmond Hill. There are four mortgages registered against the home, which total $3.35M. However, according to the last appraisal, the home was only estimated to be worth $2.8M after various renovations are complete. The extent of the mortgages and Andrew’s role in arranging them, and as a personal guarantor in the event of Mrs. Willis’ default, was the basis for the OPGT’s accounting request.
What led to the OPGT to seek to replace Andrew as Mrs. Willis’ substitute decision maker was serious enough to convince the Court:
- Andrew was found to be consumed by the home renovations when Mrs. Willis’ basic living expenses at the nursing home were left unpaid. The Court was particularly concerned that,
“Andrew does not do what he says he will do. He made many promises to MacKenzie Place to pay his mother’s arrears but did not. There are still arrears owing of $15,000. Andrew has not made his mother’s needs a priority. As a result, his mother is living in a ward with other residents in a facility which has experienced COVID-19 cases and with minimal services. Mrs. Willis’ quality of life must be improved.”
- Willis also owes unpaid taxes to the Canada Revenue Agency. Her only bank account was found to have been used for Andrew’s personal expenses, such as his Granite Club fees, groceries, gas, alcohol, hockey equipment and his child support payments before the account was frozen by RBC.
- Despite Andrew’s efforts in listing the property for sale, the only offer that Andrew had received was less than the total mortgages.
- Andrew had also failed to make an application for survivor’s pension to increase Mrs. Willis’ monthly income.
The Court ultimately gave Andrew another 1.5 months to sell the house as Mrs. Willis’ attorney for property before the OPGT takes over regardless of whether the home has sold. If you are interested in learning more about Willis, click here for Rebecca Rauws’ blog on the accounting aspects of this case.
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Britney Spears’ recent statement to the Court on the abuses of her conservatorship has stunned the world. Spears spoke of being abused and traumatized by her conservators. Spears gave examples of being forced to do a concert tour against her wishes and under threat of breach of contract; and of being prevented from marrying and having more children of her own.
Spears’ father, who is at the center of this controversy as one of Spears’ conservators for the last 13 years, has filed his own petition for the Court to investigate the allegations in Spears’ statement. Spears’ father has also expressed criticism over Spears’ conservator of person care, Jodi Montgomery, to which Ms. Montgomery has made the following statement according to Variety,
“…conservatorships in California are subject to the strictest laws in the nation to protect against any potential abuses, including a licensing requirement for all professional fiduciaries. Ms. Montgomery is a licensed private professional fiduciary who, unlike family members who serve as conservators, is required to follow a Code of Ethics…Private professional fiduciaries often serve in cases as a neutral decision-maker when there are complex family dynamics, as in this case…
Because Ms. Montgomery does not have any power or authority over the conservatorship of the estate, every expenditure made by Ms. Montgomery for Britney has had to be first approved by Jamie Spears as the conservator of the estate…Practically speaking, since everything costs money, no expenditures can happen without going through Mr. Spears and Mr. Spears approving them.”
There is similar provision in Ontario for how guardians of property are required to work with the guardians of person. Section 32(1.2) of the Ontario Substitute Decisions Act, 1992 provides that, “A guardian shall manage a person’s property in a manner consistent with decisions concerning the person’s personal care that are made by the person who has authority to make those decisions.”
The Ontario Substitute Decisions Act, 1992 also imposes a positive duty on the Public Guardian and Trustee (“OPGT“) to investigate “any allegation that a person is incapable of managing property or personal care and that serious adverse effects are occurring or may occur as a result” (see sections 27 and 62 of the Act). According to the OPGT,
“With respect to finances, “serious adverse effects” includes “loss of a significant part of one’s property or failure to provide the necessities of life for oneself or dependents”. Incapacity may, for example, lead a person to give large sums of money away to strangers or to face loss of their home for failure to pay taxes. An incapable person may face starvation or eviction if they cannot look after paying rent or buying food.
With respect to personal welfare, “serious adverse effects” includes “serious illness or injury, or deprivation of liberty and personal security”. Incapacity may, for example, result in a person being unable to remove themselves from a very dangerous situation or to take steps to stop physical or sexual abuse.
Throughout the investigation, the investigator tries to facilitate solutions that will serve to protect the person without the need for a formal court process. Respect for the dignity of the person and objectivity about the circumstances are paramount considerations in every investigation.”
If a formal court process is found to be necessary, the OPGT will make an application to the Court for a temporary guardianship, and the OPGT can also apply to make the temporary guardianship permanent. The OPGT is a branch of the Ontario Ministry of Attorney General, and they are meant to provide Ontarians with protective safeguards. While this specific investigative process is not technically meant to terminate an existing guardianship, it can temporarily or even permanently place the OPGT in charge as guardian of property and person.
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Britney Spears has been the subject of worldwide discussion for most of her life. The attention on Spears is once again at its height after Spears gave evidence in Court to contest and lay bare the abuses that she has suffered in the course of her 13-year conservatorship. You can read a slightly edited transcript of Spears’ 24-minute statement here.
Spears has been under a conservatorship ordered by the Los Angeles Superior Court since 2008. The order was made following a number of publicly scandalous events such as the time when Spears was photographed driving with her baby on her lap, and the time when she was photographed shaving her own head. Spears’ father, Jamie Spears, and a lawyer were named as her conservators which gave them the authority to make decisions about Spears’ property and health. Spears’ conservatorship was routinely back before the Court and extensions of the arrangement were granted throughout its 13-year history. A full timeline can be found here.
Recently, in 2019, Jamie Spears sought to extend the conservatorship across multiple states so that he would be similarly authorized to deal with Spears and her property in Louisiana, Hawaii, and Florida. That same year, Jamie Spears stepped down as the primary conservator after criticisms from Spears’ 14-year old son. In 2020, Spears sought to remove Jamie Spears as one of her conservators all together. Fast forward to now, Spears tells Los Angeles probate Judge Brenda Penny that she didn’t know she could petition to end the conservatorship, and that she wanted it to end without being evaluated. Days later, on June 30th, an old application to remove Jamie Spears was dismissed and a wealth management company, Bessemer Trust, was appointed to act as a co-conservator with Jamie Spears, although Spears is not precluded from bringing new applications in the future.
Here in Ontario, our version of a conservatorship is known as a guardianship under the Substitute Decisions Act, 1992. A petition to terminate a guardianship can be brought by motion under section 28 of the Act. This was done in one instance by Y. Zheng in Zheng v. Zheng. Zheng v. Zheng, 2012 ONSC 3045, is a Division Court decision by Justice Wilton-Siegel which granted Zheng leave to appeal an order that she be assessed as a part of her motion to terminate her guardianship.
In Zheng, Zheng was found to be incapable of managing property and personal care in 2007 and Zheng’s brother became appointed as her guardian. When Zheng applied to terminate the guardianship in 2012, Zheng submitted four current assessments, all of which found Zheng to be capable. The assessments were done by a qualified assessor under the Act, a staff psychiatrist at CAMH, and an in-home occupational therapist. The psychiatrist, in particular, had found that Zheng is currently capable with respect to treatment of her psychiatric condition, which was diagnosed as a psychotic disorder due to a head injury.
Zheng’s brother opposed the termination. Zheng’s brother had the assessments reviewed by the same neuro-psychologist who assessed Zheng in his 2007 guardianship application and concerns were raised about the sufficiency of these new assessments. Thereafter, Zheng retained her own neuro-psychologist to do conduct the same review, and Zheng’s neuro-psychologist came to the opposite conclusion in Zheng’s support. Given the conflicting review, Zheng’s brother brought a motion for Zheng to undergo a further assessment by an assessor of his choice. This was ordered by Justice B. O’Marra, and leave to appeal this order was granted by Justice Wilton-Siegel. Unfortunately for us, there does not appear to be any further reported decisions in this matter and I do not know if the assessment appeal or the broader motion to terminate was pursued further.
At the end of the day, I hope Spears’ conservatorship will be resolved to Spears’ satisfaction. It may very well be that an evaluation of some sort will be required on Spears’ part but, like Zheng, perhaps Spears’ evaluations can be done on her own terms.
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Can a text message be tantamount to a signed acknowledgment?
Yes, according to the recent Ontario Divisional Court decision in 1475182 Ontario Inc. o/a Edges Contracting v. Ghotbi.
There, the court considered the application of certain provisions of the Limitations Act, 2002. Essentially, under the Act, a claim must be started within two years of the act or omission giving rise to the claim. However, under s. 13 of the Act, the date for a claim for payment can be extended where the debtor acknowledges the debt to a creditor IN WRITING and SIGNED BY THE PERSON MAKING IT OR THE PERSON’S AGENT.
In Edges, a contractor sued for money owing for renovation work. The last payment under the contract was made in March 2016. The claim was not commenced until May, 2018, and the defendant argued that the claim was statute-barred. However, the defendant texted the contractor in June, 2016, saying “The balance will be paid once everything is completed as per your agreement. No payment will be made until everything is clear. I’m going to hire a third-party inspector and their fees will be deducted from your payments too.”
The contractor argued that this was an acknowledgment of the debt, and therefore extended the limitation period. The defendant countered by arguing that the text was not signed, and therefore did not have that effect. The Small Claims Court judge and the Divisional Court disagreed.
On the issue of whether the text satisfied the statutory requirement that the acknowledgement be “signed”, the Divisional Court noted that there was no issue as to whether the text was authentic, or sent by the defendant. The Divisional Court held:
- The requirement of a signature is grounded in concerns of authenticity. As there was no issue with respect to the authenticity of the text, the underlying purpose of the signature requirement was satisfied.
- In any event, the Divisional Court concluded that the text was “signed”, albeit not in the traditional sense. The text was sent from the defendant’s cell phone. The phone had a unique phone number, and “other unique identifiers associated with … [the defendant’s] phone, including, without limitation, an International Mobile Equipment Identifier (IMEI) number. These unique identifiers provide, in effect, a digital signature on every message sent by the user of that particular device.”
The Divisional Court observed that “The world is changing. Everyone knows that. We live in a digital world now, much more than was the case when the Act came into force in 2002. It is incumbent upon the court to consider not just traditional means of affixing one’s signature to a document, but other, more modern means, including digital signatures.”
The world is indeed changing. Text with caution.
Have a great weekend.
The Supreme Court of Canada recently delivered its judgment in Sherman Estate v. Donovan. In this case, a prominent couple was found dead in their home in 2017, and intense press scrutiny followed. The deaths remain unsolved and are being investigated as homicides. In these circumstances, it comes as no surprise that the estate trustees sought sealing orders in respect of the applications for probate. The relief was granted in the first instance, but on appeal by the Toronto Star, the sealing orders were lifted. The executors then unsuccessfully appealed to the Supreme Court of Canada.
The judgment of the Court was delivered by Kasirer J., who clarified the test for discretionary limits on court openness established in Sierra Club as requiring an applicant to establish that (1) court openness poses a serious risk to an important public interest, (2) the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent the risk, and (3) as a matter of proportionality, the benefits of the order outweigh its negative effects.
The Court disagreed with the estate trustees’ argument that an unbounded interest in privacy qualifies as an important public interest. Citing the principle of openness as the rule and covertness as the exception, the Court narrowed the dimension of privacy to the protection of dignity. Therefore, the information revealed by court openness must consist of intimate or personal details, which the Court describes as the “biographical core”, in order to qualify as a serious risk to an important public interest. Additionally, the Court readily recognized that a risk to physical safety is an important public interest.
Given that in the Sherman case the information sought to be protected was not highly sensitive, it was found that the risk to privacy was not serious. Though the Court appreciated that the disclosure of the probate application may be the source of discomfort, it concluded that it did not constitute an affront to dignity, and the fact that some of the beneficiaries of the estates may be minors was not sufficient to meet the seriousness threshold. Additionally, though the feared physical harm was grave, the Court agreed with the Toronto Star that the probability of harm was speculative.
Despite the Court’s pronouncement that dignity is in need of protection, as it is a fairly narrow aspect of privacy, it seems to me that the resolute observance of the open court principle came out as the clear winner in this case.
Thanks for reading and have a great day,
Natalia R. Angelini
Dependants and Their Entitlement to a Deceased’s Estate – A summary of Earl v. McAllister, 2021 ONSC 4050
In the recent decision of Earl v. McAllister, 2021 ONSC 4050, the Divisional Court ordered 100% of the net estate of the Deceased to be used for the benefit of the minor dependants, to the exclusion of the Deceased’s wife.
Leo McAllister (the “Deceased”) died on May 3, 2017. He is survived by his wife (Barbara McAllister) and his two minor sons (the “Sons”) from a previous relationship with Tammy Earl. When the Deceased learned he was dying, he started to put his affairs in order, including executing a Will and leaving his estate (the “Estate”) to his wife and signing consents required to transfer the designed beneficiaries on one of his pensions from Ms. McAllister to his Sons.
Ms. Earl brought an application on behalf of her Sons, for their support, pursuant to Part V of the Succession Law Reform Act. The Applicant argued that for the purposes of this application, the value of two pensions and a life insurance policy should be included in the value of the Estate of the Deceased, failing which, the Estate would have a shortfall of $12,926.82 due to the Estate’s liabilities. She also argued that the entirety of the Estate should be used for the benefit of her Sons, as they are both dependants of the Deceased.
The Application Judge agreed that one of the pensions and the life insurance proceeds should be included in the value of the Estate, valuing it at $167,062.52. The Application Judge ordered the net value of the Estate to be split in two halves, one to be used for the benefit of the Sons and one to be distributed to Ms. McAllister. The Application Judge also ordered $30,000 of the Sons’ half to be paid into Court, to be paid to the Sons when they turn 18.
Ms. Earl appealed this decision, arguing that both pensions should be included in the value of the Estate, the entirety of the Estate should be used for the benefit of her Sons and that the $30,000 which the Application Judge ordered to be paid into court should now be paid out to the Appellant, for the benefit of the Sons.
For the purposes of this article, we will focus on the Divisional Court’s decision in respect of the whether to include both pensions in the value of the Estate and the manner in which the Estate is to be distributed.
The Deceased had two pension plans. The first was from the Union’s Province of Ontario Pension Plan, the value of which was included in the Estate by the Application Judge. The second was the Union’s “Canada” Pension Plan (administered in the US), which provided for a pre-retirement surviving spouse benefit under which the Respondent, as a surviving spouse, was entitled to a lump sum payment of $88,117.40.
The Divisional Court found that it was not open to the Deceased to designate someone other than his spouse to receive the pre-retirement benefit under the second pension and while the Respondent could have waived her entitlement to the receipt of that benefit, she could not be deprived of that benefit without her agreement.
As a result, the second pension was not included in the value of the Estate.
Distribution of the Net Value of The Estate
The Divisional Court found that in determining the issues between the parties, the needs of the Sons in the balancing exercise should be paramount. The court weighed the financial circumstances of the Sons against the financial circumstances of the Respondent.
Particularly, the court noted that the Sons live in precarious financial circumstances and there is very little income to support them apart from public finances and loans. The Sons live in the home of their mother’s parents. The appellant’s affidavit contained information concerning monthly expenses and the loss of the Deceased’s group health benefits. The Applicant’s evidence was that her yearly expenses exceed her income. Further, the Deceased was active in his Sons’ lives and paid the Appellant $300 per week to support his Sons until his death.
In contrast, the Respondent was not financially dependant on the Deceased, had good income of approximately $100,000 annually, had no extraordinary expenses, owned a home (although with a mortgage) and had made some provisions for her own pension. The Respondent and the Deceased had been married for just over two years at the time of death. The Respondent was also to continue to receive the benefits from the second pension.
The Divisional Court cited Madore-Ogilvie v Ogilvie Estate (2008), 88 O.R. (3d) 481 (C.A.), noting the following:
“Where there are insufficient assets to adequately provide for any or all of a deceased’s dependants, the circumstances of the case may warrant the exercise of an application judge’s discretion to use the limited assets for the benefit only of the minor dependants, to the exclusion of his wife.”
The Divisional Court concluded that in the present case, the circumstances warranted the use of the limited assets for the benefit of the Sons only, to the exclusion of the Respondent.
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When a deceased’s capacity is called into question, medical and legal records are generally a key source of evidence. Having said that, courts will not allow parties to go on a “fishing expedition” with respect to production orders. This issue was recently considered in the case of Young v. Prychitko, 2021 ONSC 3150.
In this decision, the deceased executed his last Will on September 2, 2020 (the “2020 Will“), which provided for the majority of his estate, totalling approximately $500,000, to be distributed to his son, the applicant in the proceeding. The deceased’s daughter, the respondent, filed a Notice of Objection to the 2020 Will, alleging that the deceased lacked capacity and was subject to undue influence at the time of execution. Accordingly, the respondent sought an order for the production of the deceased’s testamentary documents, including his medical, financial and legal records. The applicant argued that the respondent failed to meet the evidentiary threshold to require the production of the aforementioned documents and, as a result, his position was that the order would be premature. Having said that, the applicant’s proposed timetable afforded the respondent with the opportunity to file further evidence in support of her objection at a later time.
In its decision, the court held that, prior to compelling the production of certain documents, it must be satisfied that the evidentiary threshold has been met. This minimal evidentiary threshold, as discussed in Neuberger Estate v. York, 2016 ONCA 191, protects against needless expense and litigation. This is particularly important in the case of small estates, as the costs involved in seeking productions may be disproportionate to the size of the estate. In its analysis, the court considered the following questions:
1) When can someone with an interest in an estate compel the propounder of the Will to prove it in solemn form?
2) How does someone satisfy the above test?
3) If the test is not yet met, what procedure should be followed moving forward?
The court stressed that simply alleging incapacity or undue influence is not enough. Even if there is some evidence to support this point, the court must assess whether the propounder can sufficiently answer the evidence.
In the end, the court held that the respondent’s evidentiary record was insufficient. As such, compelling the production of medical, legal, and financial records at this early stage was determined to be premature and would ultimately be “countenancing a fishing expedition.” The course proposed by the applicant was held to be the most prudent.
Thanks for reading! Have a wonderful day,
Suzana Popovic-Montag & Tori Joseph
As in other areas of civil litigation, the general costs principle of “loser pays” applies in estate litigation. The recent costs decision of Toller James Montague Cranston (Estate of), 2021 ONSC 3704, is an interesting example of just how much a loser in estate litigation could have to pay.
In Toller, the Estate Trustee of the estate of Toller Cranston was compelled to bring an application to pass her accounts by the two other beneficiaries of the estate. These beneficiaries (the “Objectors“) raised over 300 objections to various expenses paid by the Estate Trustee personally to administer the estate in Mexico. The Objectors were unsuccessful on all of their objections except for five. They also made allegations of fraud and theft by the Estate Trustee which were ultimately unproven. The Estate Trustee sought costs on a substantial indemnity scale of $390,602.98 inclusive of HST and disbursements, payable by the Objectors personally. The Objectors took the position that the requested amount was not reasonable or proportionate in the circumstances.
In his costs decision, the Honourable Justice Robert Smith relied on the factors set out in Rule 57 of the Rules of Civil Procedure to help determine the appropriate costs award to make. He also relied on the case of Estate of Francoise Poitras v. Canadian Cancer Society, 2021 ONSC 406, for a summary of the legal principles applicable to costs in estate litigation, which include:
- An estate trustee is generally entitled to be indemnified for all reasonably incurred costs in the administration of an estate, including the legal costs of an action reasonably defended, to the extent these costs are not recovered from another person.
- The winning party in estate litigation is usually entitled to reasonable costs from the losing party.
- A court may deny cost recovery by an estate trustee, in whole or in part, if the trustee acted unreasonably or in substance for his or her own benefit, rather than for the benefit of the estate.
- If the estate trustee acted reasonably, the court may require the other party or parties to pay costs or make a blended order requiring the losing party to pay some costs and the estate to pay the balance.
- In fixing costs, the court must determine the fair and reasonable amount that a party should pay in the particular circumstances of the case.
In the case at hand, the Estate Trustee won by a landslide. What is more, given the complexity of the estate and the large number of objections raised, the Estate Trustee was forced to spend a significant amount of time and legal expenses to respond to the 295 meritless objections that had been raised. Justice Smith also found that the Objectors acted unreasonably in refusing to narrow the issues to be decided before the hearing and to then abandon approximately half of their objections at the hearing, after time and expenses had already been incurred on those objections. The Objectors’ unfounded allegations of misconduct by the Estate Trustee also warranted an elevated costs award. For these reasons and more, Justice Smith concluded that the bulk of the Estate Trustee’s legal costs should be paid by the Objectors.
It was ultimately decided that the Objectors would pay costs to the Estate Trustee on a substantial indemnity basis, reduced by an amount to account for the Objectors’ partial success. This resulted in a notably high costs award of $325,000.00, inclusive of disbursements and HST, payable to the Estate Trustee by the Objectors. It was further ordered that the balance of the Estate Trustee’s legal costs be paid to her from the estate.
The Toller decision shows that the court will not shy away from holding a losing party personally liable for significant costs in estate disputes where the court deems such an award to be appropriate in its discretion. To help limit personal liability to costs in the event of a loss, parties should endeavour to act reasonably from the beginning through to the end of the litigation.
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