Tag: Blended Costs

02 Oct

Full Indemnity through Blended Costs: The Estate of Irmgard Burgstaler

Doreen So Elder Law, Guardianship, Passing of Accounts, Trustees, Uncategorized Tags: , , , , , 0 Comments

The Estate of Irmgard Burgstaler (disability), 2018 ONSC 472, was a costs decision that arose from an application to pass attorney accounts.  Erwin  was named as the attorney for property for his mother, Irmgard.  Erwin was ordered to pass his accounts and his siblings, Barbara and Peter, objected.

A four-day hearing took place.  Erwin was self-represented and his accounts were not in court format pursuant to Rule 74.17 of the Rules of Civil Procedure.  Extensive written submissions were also filed by both sides.

Erwin was found to have breached his fiduciary duty to Irmgard when $82,000.00 was taken from Irmgard and applied towards the purchase of a home in Erwin’s name.  Erwin also took approximately $44,000.00 from his mother’s accounts to pay his legal fees in the proceeding at issue and the Court found that this expense was not for Irmgard’s benefit.  Certain other expenses were ordered to be repay to Irmgard as well as the repayment of $5,000.00 from the sale of Irmgard’s trailer.

Given their success, the Objectors sought full indemnity on a blended basis from Erwin (15%) and the Estate (85%).  In reviewing the jurisprudence on costs in estate matters, Justice Shaw found that this case fell within the public policy exemption for due administration of estates and allowed the Objectors’ claim for full indemnity.

That said, Justice Shaw disagreed with the Objectors’ proposed 15/85 split on the basis of the “losers pay” principle in general civil costs.  Justice Shaw ordered Erwin to pay the Objectors’ costs on a partial indemnity scale while the Estate was ordered pay the full remaining balance.  In this case, partial indemnity appears to be close to 70% of the total claimed based on the fixed amounts that were ordered.

Thanks for reading!

Doreen So

23 Jan

Blended Costs

Hull & Hull LLP Estate & Trust, Estate Planning, Trustees Tags: , , , , 0 Comments

“Blended costs” were endorsed last year by the Court of Appeal for Ontario in Sawdon Estate v. Watch Tower Bible and Tract Society of Canada. The policy underling such costs orders is that there are situations in which a successful trustee will be entitled to costs where he or she is successful in litigation, but may still be out of pocket. In such cases, the Estate should make up the shortfall as because the money was spent on due administration of the Estate.

In the recent case of Heston-Cook v. Schneider, 2015 ONCA 10 (Ont. C.A.), two sisters were beneficiaries of their mother’s estate. The mother’s house went to one daughter (Estate Trustee, respondent on the appeal) and $100,000 out of residue went to the other sister (appellant).

After the transfer of the house and the acceptance of the specific legacy, the appellant brought claims against the estate trustee for breach of fiduciary duty – basically a POA accounting but with the nice twist that she wished disgorgement of money that should have been spent on the mother`s care while alive.

The respondent brought a Rule 21 motion to strike the Claim. The Motion Judge adjourned the Rule 21 Motion in order to allow the Appellant to apply to remove and replace the respondent as estate trustee so she could press the breach of fiduciary duty claim as she otherwise lacked standing.

Wilton-Siegel J. sat as the Motion Judge on the removal application and dismissed it. He awarded full indemnity costs of $12,000.

In the Court of Appeal, the appeal was dismissed. There was no error in principle by Motions Judge in respect of the substantive decision. The costs award, however, was varied. The Endorsement provided at para 14:

A blended award, in which costs on a partial indemnity scale are awarded against the unsuccessful party and the remainder of the costs are paid from the estate would appear to strike the appropriate balance. See e.g. Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101 (CanLII) at para. 96. In our opinion the motion judge erred in principle in ordering the appellant to fully indemnify the respondent.

This is a nice case that deals with the common occurrence of the need for proper standing to press a claim on behalf of the estate. A beneficiary ill-advisedly brought the claim in her own name. The Motions Judge on an application to remove and replace the Estate Trustee obviously thought the underlying claim was weak and sanctioned the claimant through an order for full-indemnity costs. The Court of Appeal agreed that the successful Estate Trustee should be fully indemnified, but the full indemnification was to be borne by the Estate in part ($4500) and in part by the unsuccessful applicant ($7500). In other words, the unsuccessful claimant ought not to have been punished (and hence partial indemnity costs – in effect – were ordered) but the estate trustee ought not to suffer (and hence was entitled to a full indemnity).

A nice short case that continues a principled approach to costs.

David Freedman

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