Today’s Blog was Written by Jacob Kaufman
The Divisional Court has just written another chapter in the ongoing saga of a dispute between two sisters, Erna and Hilda, who have been in litigation against each other since 2003. Erna had acted as attorney for property of her parents since 2002 and as estate trustee of her mother since 2008.
In the case of In the Estate of Stefanie Aber, deceased, 2015 ONSC 5123, the Divisional Court heard an appeal of a contested passing of accounts with respect to Erna’s role as attorney and estate trustee for her parents. After a five day trial, Justice C. Brown held that Erna was entitled to approximately $130,000 in compensation, which included a care and management fee for her service as attorney and estate trustee. Justice C. Brown ordered Hilda to pay full indemnity costs in the amount of $192,000.
Hilda appealed the order and sought leave to appeal the cost order.
The Divisional Court rejected Hilda’s argument that the estate was simple to administer. Rather than Erna failing to maintain accurate accounts, as Hilda argued, the Divisional Court praised her “meticulous records.” The Divisional Court upheld the compensation the lower court had awarded to Erna for acting as attorney, including the care and management fee.
The Divisional Court held that Erna was entitled to claim capital receipt and distribution fees based on the value of a house that she transferred to herself pursuant to her mother’s will in her capacity as estate trustee (she did not claim a capital receipt or distribution fee for the house when acting as attorney).
However, the Divisional Court did not believe that Erna was entitled to a care and management fee for acting as estate trustee. Here, the bulk of the estate was distributed within a year of the mother’s death and there was no evidence of significant time to manage the other estate assets. While the Divisional Court acknowledged that Erna had to spend significant time maintaining accounts and dealing with Hilda, this work was compensated through the generous percentages for capital and revenue.
As such, while the Divisional Court upheld the bulk of the compensation the lower court had awarded to Erna for acting as estate trustee, it eliminated the care and management fee (equal to approximately 5% of total compensation).
The Divisional Court also reduced in half a $7,000 deduction from Hilda’s share of the residue which had been ordered to compensate the estate for an unpaid cost order from litigation Hilda had commenced in 2003. The reasoning behind the reduction was that, given that all specific bequests had been paid, Hilda would ultimately be entitled to half of all debts owed to the estate, even if she was the debtor.
Finally, the Divisional Court held that Hilda should not be required to pay Erna’s full indemnity costs. While Hilda had minimal success in the litigation, her conduct was not so reprehensible, scandalous and outrageous that substantial or full indemnity costs were warranted. Instead, the Divisional Court imposed a blended cost order, making Hilda responsible for 60% of Erna’s $192,000 in legal fees with the balance payable from the estate.
This case demonstrates the risks inherent in a contested passing of account. In addition to her own legal fees, Hilda now owes a substantial sum to Erna in legal fees. Only time will tell if this is the last chapter in the legal dispute between the sisters or if there will be further appeals and further proceedings.
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