WEL Newsletter - Volume 5, Number 6 - September 2015
 

Whaley Estate Litigation provides litigation, mediation and dispute resolution to clients throughout Ontario:
 

 
* Albert Oosterhoff, Professor Emeritus Western University, Counsel to WEL consults on matters within his areas of expertise, providing opinions concerning Wills, Estates, Trusts and related Property matters. 
 
Please Enjoy,

Kimberly A. Whaley
WEL

PART I: WEL NEWS

1. LAURA CARDIFF, ASSOCIATE LAWYER, JOINS WEL  

 
WEL is pleased to welcome Laura Cardiff who has joined as an Associate Lawyer Litigator.
 
2. ARIEH A. BLOOM, ASSOCIATE LAWYER, JOINS WEL  
 
WEL is pleased to welcome Arieh A. Bloom who has joined as an Associate Lawyer Litigator.
 
3. CHRIS HRYHORUK JOINS WEL  
 
WEL is pleased to welcome Chris Hryhoruk who has joined as Litigation Assistant.
 
4. DAPHNE PEREIRA JOINS WEL  
 
WEL is pleased to welcome Daphne Pereira who has joined as Litigation Assistant.
 
5. CONGRATULATIONS TO THE HONOURABLE MADAM JENNIFER PFUETZNER  
 
Kimberly Whaley and colleague Wenda Yenson attended the Court of Appeal Swearing-In Ceremony for the Honourable Madam Jennifer A. Pfuetzner on September 8, 2015 in the law Courts Complex, Winnipeg, in the Province of Manitoba. Congratulations to our colleague and friend. We wish her every success. 
6. CHAMBERS CANADA AWARDS, 2015  
 
Kimberly Whaley was ranked in the inaugural Chambers Canada guide. She is a member of a select group at the very top of the profession. 
 
Information on Chambers and Partners website
7. 
2015 EDITION - THE BEST LAWYERS IN CANADA 

  
Kimberly Whaley was selected to be included in The Best Lawyer in Canada by her peers and was nominated in the areas of Trusts and Estates.
 
8. 
WEL SUMMER STUDENT 

  
WEL would like to thank Madeeha Hashmi who worked in a student position at our  offices for a period of 3 months during the summer of 2015.  We wish her luck in her second year of law school. Her parting blog on Bunn v. Gordon, can be accessed at:
 
Link to Madeeha's blog post: Case commentary: Bunn v Gordon
9. 
ESTATES AND TRUSTS SUMMIT, OCTOBER 2015

Kimberly Whaley will be presenting a paper on "Undue  Influence" and Professor Albert Oosterhoff will be presenting his paper on "Crowdfunding and the Law of Trusts" at the Law Society of Upper Canada 18th Annual Estates and Trusts Summit, Day 1, on October 7, 2015.
 
10. 2015 CANADIAN LEGAL LEXPERT DIRECTORY
 
 

Kimberly Whaley has been listed in the 2015 Canadian Legal Lexpert Directory in the Estate and Trust Practice area. 
11. JUST MAGAZINE EDITORIAL BOARD 
 
 

Kim was honoured to be asked and has accepted the invitation of Patrick James, Chair of OBA Editorial Board, to join the 2015-2017 JUST. Editorial Board. 
12. LSUC PRACTICE GEMS, THE ADMINISTRATION OF ESTATES, SEPTEMBER 10, 2015  
 
 

Kimberly co-chaired with Tim Grieve on September 10 and the program was well attended.
 
 
Albert Oosterhoof spoke on: "Estate Trustees/Trustees: Accounting and Compensation Tips and Traps"
 
13. 
CANADA LAW BOOK IN REVIEW

Kimberly Whaley and Heather Hogan submitted their co-authored article: "Contempt Orders in Estates Disputes" which was included in the 2014-2015 Edition of Key Developments in Estates and Trusts Law in Ontario, Chapter 9, recently released.
 
14.
CANADIAN ELDER LAW CONFERENCE, NOVEMBER 12-13, 2015

Register today and view the full agenda for this exciting conference!
 
The Canadian Centre for Elder Law is thrilled to be hosting the 2015 Canadian Elder Law Conference in collaboration with the Continuing Legal Education Society of BC on November 12 and 13, 2015, in Vancouver.
 
The Elder Law Conference is the only international conference devoted to legal and policy issues affecting older adults.  This year, the conference will examine "The Journey of Aging-the Law and Beyond" and will offer inter-jurisdictional perspectives on elder law and policy, including practice tips, case updates, exploration of policy reform and promising practices for working with older adult clients.
 
An exciting line-up of speakers and topics has been confirmed for this year's event.  Keynote speakers include: Isobel Mackenzie, BC's Senior's Advocate, Dr. Andrew Wister, Chair of the National Senior's Council and Barb MacLean, Chair of BC Council to Reduce Elder Abuse.  Conference Chair, Jan Goddard from Goddard Gamage Stephens LLP, has organized an exciting conference program featuring distinguished presenters from Ontario and across Canada:
  • Kimberly A. Whaley, Whaley Estate Litigation
  • Jane E. Meadus, Staff Lawyer, Advocacy Centre for the Elderly
  • Clare Burns, WeirFoulds LLP
  • Laura Tamblyn Watts, Seniors Fellow CCEL
  • Catherine M. Romanko, BC Public Guardian and Trustee
  • Andrew S. MacKay, Alexander, Holburn, Beaudin and Lang
  • Geoffrey W. White, Geoffrey W. White Law Corporation
  • Deidre J. Herbert, McLellan Herbert
  • Honourable Marion J. Allan, Clark Wilson LLP
  • Barbara Buchanan, Law Society of BC 
This year's conference panels include the following topics:
  • Advance health care planning-implications of the Bentley decision
  • Debate: Would a national power of attorney registry help reduce elder financial abuse?
  • Update on guardianship law in BC-reflections on changes to legislation one year in
  • Who do you call when you suspect elder abuse? Introducing the new BC decision tree
  • Physician assisted suicide after Carter - where do we go from here?
  • Late life separation and divorce-Financial consequences, pensions and benefits issues, practice tips
  • Dementia and client competency - practice tips, communication strategies and ethical issues
  • Mental capacity assessment-the when and how of getting a referral and working strategically with assessment professionals
  • Elder abuse and care issues in a long-term care setting: working strategically to advocate for older adults 

PART II: LAW REVIEW
(i) Smith v Croft [1]
 
Smith v. Croft: A Friendly Transaction between Neighbours or Elder Financial Abuse?
 
A recent Ontario Small Claims Court decision highlights a growing concern for our aging population: people who prey upon the elderly for financial gain. While we might think more typically of elder abuse involving greedy grandchildren stealing from their vulnerable grandparents, or children from their parents, this case demonstrates how strangers may not hesitate to take financial advantage of an older person if they see an opportunity to do so.
 
The Transaction in Question
 
In Smith v. Croft 2015 CanLII 3837 (ON SCSM) an older adult, Adeline Smith, suffered from dementia and Alzheimer's and was struggling with living on her own. She would have hallucinations and would sometimes wander on her own not knowing where she was. Rita was assisted by "Meals on Wheels" and the Alzheimer's Society. At one point she was admitted into the hospital by her daughter (her primary caregiver and attorney under a power of attorney). However Smith checked herself out and returned to her house despite her daughter's concerns.
 
Smith owned an antique truck. The truck had been in her family for many years and held great sentimental value for Smith and her children. One day, her neighbour Mr. Croft was over assisting her around the house and noticed the truck in the garage. He told Smith that he would buy it if she ever wanted to sell it. The next day Smith told Croft she would give it to him for his birthday. He declined but said he would buy it from her. A few days later, Smith told Croft she would sell it to him for $2000 because she needed $1700 to buy shingles for her roof.
 
On April 21, 2011 Croft and Smith signed a contract quoted exactly:
 
"I'am Adeline Smith I am selling my 1931 modle A ford to Steven Croft for som $100.00 on the date of April 21 2011."
 
Croft testified regarding the $100 figure that 'she tried to pull a fast one' so Croft would pay less taxes on transferring the vehicle in his name. The sale price was actually $2,000.00 paid in cash. Croft testified that he had no real idea of the value of the truck. The truck was assessed at $18,000.00 by an expert for the trial.[2] Croft moved the truck that day.
 
The matter was reported to the police by Smith's family but the investigation was closed with no charges laid. The police viewed it as a civil matter. Croft stated a little old lady sold him a truck and he didn't know why he was in court for that.[3] He never saw her have hallucinations. He described her as a "funny old lady with a bit of attitude". [4]
 
The Trial
 
Smith's daughter acted as her litigation guardian and argued that Croft knew or ought to have known that Smith did not have the mental capacity to sell the truck. She argued that Croft's version of events was suspect and self-serving. He had to be aware of Smith's mental issues and took advantage of them. The Plaintiff wanted the transaction set aside based on undue influence and/or unconscionability.
 
Croft argued that he was unaware of any mental health issues involving Smith. His limited contact with her precluded him from making any observations about her state of mind. He thought she simply wanted to sell him the truck to "spite some of her children". He described it as a simple transaction amongst neighbours.
 
Undue Influence / Unconscionability
 
The Court started by examining the Substitute Decisions Act 1992, S.O. 1992, c. 30 ("SDA") and s.2(1) which states that a person who is eighteen years of age or more is presumed to be capable of entering into a contract. A person is entitled to rely upon the presumption of capacity with respect to another person unless he or she has reasonable grounds to believe that the other person is incapable of entering into the contract.[5]
 
Based on the medical evidence and testimony of the caregiver daughter and other witnesses, the Court found that Smith continued to suffer from moderate dementia after her release from hospital. That she was living alone could not be equated with being of sound mind. She could no longer drive and her ability to do small things - like using a microwave - were in question.
 
With respect to the allegation of undue influence, the Court adopted the approach and words of Justice Lang (citing from John D McCamus, The Law of Contracts, 2nd ed. (Toronto: Irwin Law, 2012)) at paragraphs 9 and 10 in Juzumas v. Baron 2012 ONSC 7220 http://canlii.ca/t/fvfc2, (a predatory marriage case we have written about in the past): 

McCamus describes the equitable doctrine of undue influence as providing a "basis for setting aside a gift or a transaction where the transfer has been induced by an 'unconscientious use by one person of power possessed by him [or her] over another". 
 
He addresses the distinction between the two categories of undue influence: actual and presumptive undue influence. As an example of actual undue influence, McCamus refers to Re Craig, [1970] 2 ALL E.R. 390, in which a caregiver threatened an elderly dependent with abandonment. . .The onus is on a plaintiff to establish actual undue influence.
 
A presumption of undue influence arises from the nature of a recognized relationship (e.g. solicitor and client, doctor and patient, etc. The presumption can also arise from the particular circumstances of the case, where one party has the ability or potential to "dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power".
 
The Court went on to cite Newbould J in Buccilli v. Pilliterri 2012 ONSC 6624 on undue influence:
 
The doctrine of undue influence is well known. Where there is no special relationship such as trustee and beneficiary or solicitor and client, it is open to the weaker party to prove the stronger was able to take advantage, either by actual pressure or by a general relationship of trust between the parties of which the stronger took advantage.[6]
 
As Smith and Croft were neighbours there was no presumptive influence to consider under typical categories of lawyer/client or doctor/patient. So the Court had to look for actual influence. It concluded however that:
 
I find there was no actual influence exerted by Croft over Smith. He did not exert any domination or control over Smith. I find he was aware she needed assistance in her day to day life - visits by [the drug store employees] and Meals on Wheels for medications and meals, respectively - but his contact with her was limited. Croft did take some evening meals over to Smith but in my view this falls appreciably short of establishing the "high burden" of a finding of undue influence.[7]
 
The Court next examined whether the transaction was unconscionable. The Court cited Newbould J., in Buccilli:
 
An unconscionable transaction arises in contract law where there is an overwhelming imbalance in the power relationship between the parties.  .  . a plea that a bargain is unconscionable invokes relief against an unfair advantage gained by an unconscientious use of power by a stronger party against a weaker.  On such a claim the material ingredients are proof of inequality in the position of the parties arising out of the ignorance, need or distress of the weaker, which left him in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger. On proof of those circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable.
 
. .The circumstances of each case must be examined to determine if there is an overwhelming imbalance of power in the relationship between the parties....[emphasis added]
 
The Court in Smith v. Croft found that the basic elements for unconscionability had been met. The Deputy Judge stated:
 
Even if I were to accept that Croft knew nothing prior about Smith's mental health issues and had not seen the truck before looking for the extension cord, Smith wanting to give him the truck the next day should have alerted him to concerns about Smith's state of mind. I find that offer was an irrational act. It ought to have been so viewed by Croft, suggesting to him there was 'something wrong' with Smith. Before any suggested negotiations had been entered into, I find Croft knew or ought to have known he should have taken steps to assure Smith knew what she was doing. In not doing so, I find Croft took advantage of Smith. There was a clear inequality in the positions of the parties.[8]
 
I find the truck transaction was an improvident bargain. Leaving aside the chicanery of the original $100.00 sale document, the truck was sold for $2,000.00. Even the appraisal that Croft obtained for purposes of the transfer listed a value of $8,000.00, one quarter of the sale price: Paying $0.25 on the dollar amounts to substantial unfairness.[9]
 
The Court found that the sale price was grossly unfair and improvident and there was no indication Smith had at minimum suitable advice on the matter, yet alone legal advice. There was an overwhelming imbalance in bargaining power due to Smith's mental illness and Croft knowingly took advantage of Smith's mental illness. Croft could not prove that the transaction was fair, just and reasonable.
 
While the Court found the transaction to be unconscionable, it also allowed Croft's counter claim in unjust enrichment and quantum meruit. Croft had expended monies on the truck to the ultimate advantage of the Plaintiff by paying the $2000 purchase price. If the Plaintiff was allowed to keep the $2000 purchase price they would be unjustly enriched. The Court also found that Croft was entitled to reimbursement of some expenditure he had made to improve the truck based on quantum meruit, an equitable remedy:
 
It is ultimately a question of fairness. I have found the value of the truck had increased while in Croft's possession. Quantum meruit awards have been made where a court has otherwise found unconscionability and/or undue influence by a party.[10]
 
In the costs award, the Court further condemned Croft's actions:
 
What started the entire process in action was Croft trying to justify the unconscionable transaction involving the truck. He took advantage of an elderly lady. The equities readily compel me to find Smith is entitled to costs in advancing the Plaintiff's Claim but Croft is not entitled to costs relative the Defendant's Claim. This reflects the court's disapproval of the underlying facts. It was always open to Croft to return the vehicle and then sue for his expenses if Smith was not forthcoming in that regard. He chose to try to sustain a highly dubious transaction. Disallowance of any costs to Croft-fees and disbursements--is the court's assessment of the overall equities.[11]
 
Conclusion

This decision is yet another example in which vulnerable older adults may become victims of financial abuse. Fortunately, family members were able to intervene and assist the older adult in this situation before more damage could be done. These situations will only continue and most will go undetected which underscores the importance of planning for future disability.


1. Smith v Croft, 2015 CanLII 3837 (ON SCSM)
2. 2015 CanLII 3837 (ONSCSM) at para. 95-96 ("Smith")
3. Smith at para. 148
4. Smith at para. 132
5. SDA at s.2(1).
6. Smith at para. 203
7. Smith at para. 223
8. Smith at para. 230
9. Smith at para. 238
10. Smith at para. 264
11. 2014 CanLII 34247 (ON SCSM) at para. 32.
(ii) Aber Estate
2013 ONSC 6363 (CanLII); http://canlii.ca/t/g2g19

by Heather Hogan 

Divisional Court overturns decision on legal costs and trustee's care and management fee

We have blogged about the Aber Estate litigation before. Ostensibly an application to pass accounts, this contest between two sisters continues to branch off into surprising directions.
 
In this latest instalment, Divisional Court allowed an appeal of a trial judge's decision on trustee compensation and costs. This article reviews the Divisional Courts reasons, summarizes the principles confirmed therein, and considers the practical and intangible benefits of estate litigation.
 
Background
 
One sister, the Respondent, was appointed as attorney for property by her late mother and named as executor in the late mother's will. The Estate was worth roughly 1.5 million at the date of death. The Respondent inherited the mother's house in High Park, valued at $890,000, and personal effects and household goods valued at $4,000. The Respondent's only sibling, the Appellant, received a distribution of $100,000 pursuant to the will. The residue of the estate was to be divided between the sisters.
 
The Trial Judge's Decision
 
The Appellant objected to the Respondent's application to pass attorney and trustee accounts. The Parties attended examinations, several motions regarding undertakings, refusals and documentary productions, and a five day trial.
 
The Court awarded the Respondent her claimed attorney and trustee compensation of $129,861.05, which represented substantially all of the compensation claimed, less a reduction of $9,000 arising from the trial judge's adjustment of the value of the house. The trial judge also ordered that the Appellant's distributive share of the Estate would be reduced by $7,000 representing an outstanding cost award in favour of the Respondent which the Appellant had not paid. All of the other objections raised were dismissed.
 
The trial judge granted the Respondent her full indemnity costs of that trial, to be paid by the Appellant.
 
Issues on Appeal
 
The Appellant argued that the trial judge erred in respect of the accounting application in three ways:
  1. in finding that the Respondent was entitled to compensation based on the tariff and guidelines, including a care and management fee as an attorney for property and as estate trustee;
  2. in relying upon opinion evidence from real estate agent with respect to the valuation of the house; and
  3. in ordering that $7,000 be deducted from the Appellant's share of the residue of the estate because of the outstanding 2003 costs order of $3,500. 
The Appellant also argued that the trial judge erred in in her decision regarding costs in the following two ways:
  1. in awarding the Respondent her costs on a full indemnity basis and
  2. in making those costs payable by the Appellant, personally, rather than by the Estate.
The Decision
 
The decision of the Divisional Court can be summarized as follows:

With respect to the accounting:
  1. The trial judge's approval of the Respondent's compensation and care and management fee as an attorney for property was upheld, and the trial judge's approval of the trustee compensation was also upheld, but the approval of the Respondent's trustee care and management fee of $6,500, was overturned;
  2. The appeal in respect of the property valuation was dismissed; and
  3. The trial judge's mathematical error of $3,500 was corrected.

 With respect to the issue of costs:

  1. The Respondent's award of full indemnity costs was overturned and replaced with an award of partial indemnity costs; and
  2. The Court dismissed the appeal of the order that the Appellant must pay those costs personally.
Analysis
 
The chart below compares the Respondents objections, which were raised during trial and again on appeal, and Divisional Court's reasons for dismissing or allowing each objection, which reasons are discussed in more detail following the chart:
 
Objections (at para 21)
Divisional Court's reasons
 The estate was a simple one to administer, and therefore compensation should be reduced. The assets in the estate, at the time that the respondent began to act as Attorney for Property, were valued at $1.4 million, consisting of the house, bank accounts, savings bonds, and GICs. At the time she became Estate Trustee, the assets totaled $1.43 million in essentially the same mix.
The appellant has made great efforts to minimize the extent of the work done by the respondent in her capacity as Attorney for Property and to question the quality of the work she performed. The trial judge very reasonably rejected those arguments, given the evidence before her...The tasks that the respondent carried out were many and time consuming, including hiring and supervising the caregivers on a daily basis, paying for groceries and medications, and paying taxes and housing costs. The respondent also had ongoing responsibilities with respect to the maintenance and repair of the home that would not be compensated by a simple application of the percentages for capital and revenue.[1]
The trial judge inappropriately considered the time taken by the respondent in providing personal care to her parents (see the Reasons, para. 34). This is not relevant to the respondent's compensation as Attorney for Property.
... the trial judge did not improperly consider work done for personal care rather than care of property.[2]
 
The respondent, as Estate Trustee, is not entitled to fees for capital receipt and disbursement attributable to the distribution of the house to herself personally.
The trial judge did not err in principle in awarding compensation based on the receipt and distribution of the value of the house. The courts have held that an executor is entitled to compensation when making a distribution under a will to himself or herself, as it is an essential part of the executor's job to pay legacies and bequests, including bequests to the executor (Cohen, Re (1977), 1 E.T.R. 80 (Ont. Surr. Ct.) at para. 24; Atwell Estate, Re, 1997 CarswellOnt 3036 (Ont. Gen. Div.) at para. 7; Stanley Estate, Re, 1996 CarswellOnt 1180 (Ont. Gen. Div.) at paras. 9-10).
 
The appellant relies on Heron Estate, Re, 1996 CarswellOnt 196 (Ont. Gen. Div.), asserting that it is appropriate to reduce compensation when the Attorney managing property for an individual later becomes Estate Trustee. However, the case does not stand for the proposition that compensation should always be reduced in this situation. Rather, the court applied the five factors and reduced the compensation, in part because the information provided by the corporate trustee as to the time spent by its employees was deficient (at paras. 34-35).
 
Moreover, the trial judge correctly stated that the respondent did not receive 3% on the house as a capital receipt as Attorney and 3% on the capital disbursement as Attorney. The house was not included as a capital item in the Power of Attorney accounts, and there was no double taking of compensation.
 
With respect to the award of the tariff for the capital and revenue receipts and disbursements, I see no error in principle by the trial judge. While the amount is generous, I cannot say that it is grossly excessive. As the Divisional Court noted in Laing Estate v. Laing Estate, 1996 CarswellOnt 775 (Ont. Div. Ct.) (upheld by the Court of Appeal), the percentages usually apply to estates of average complexity (at para. 47). [3]
 
The respondent did not exercise much responsibility over the assets of the trust during her mother's lifetime. She continued to invest in GICs and bonds, as her parents had done, rather than employ a financial advisor.
The respondent carried out her responsibilities in a manner respectful of her parents' wishes to remain in their home until death. Her conservative treatment of investments was consistent with the way in which her parents had invested, and this is not a reason to reduce her compensation.[4]
The respondent failed to maintain accurate accounts.
The respondent also kept meticulous records, as the trial judge stated more than once. The respondent did so, in part, because it was apparent from the appellant's behaviour, including the unsuccessful litigation she commenced in 2003, that the respondent's actions would be closely watched and questioned by the appellant. While there were some minor errors, they were corrected and explained - for example, as errors in transcription or description that did not affect the numbers.[5]
It was inappropriate to award a care and management fee, given the nature of the estate and given the respondent's lack of skill in managing the financial assets. In particular, there were no special circumstances justifying the award of a care and management fee while she was Estate Trustee.
...It is with respect to the care and management fee that the trial judge fell into error. While she acknowledged the need for special circumstances (Reasons, para. 25), she never examined whether there were special circumstances that required a care and management fee.
 
It is true that a care and management fee may be appropriate if the administration of the estate is time consuming and carried out with diligence (see, for example, Macivor Estate, Re, 2011 ONSC 4175 (Ont. S.C.J.) at para. 33). However, in Macivor, the estate trustee continued to care for the deceased's home, arranging renovations so that the house could be sold. In other words, there was an ongoing supervision and management of the property that was compensated.
 
In the present case, the bulk of the estate was distributed by October 2008. The house was transferred in May 2008, less than two months after Mrs. Aber's death. The residue of the estate, at under $500,000, was in bank accounts and GICs, and there is no evidence of any significant time required for the ongoing management of these funds.
 
It is true that the dispute over the accounts took up a great deal of time, and the trial judge made reference to this factor (at para. 42). However, most of that dispute, it would appear, related to the period while the respondent acted as Attorney, rather than Estate Trustee. Moreover, the trial judge stated that the respondent "spent considerable amounts of time from February 2011 onward" dealing with requests for information. That is true, but not relevant to the fixing of compensation for the Estate Trustee in the period up to November 2010.
 
...In my view, the care and management fee is not justified, given the size of the estate, the disposition of the bulk of the estate in the executor's year, the lack of evidence of any supervision and management of the remaining assets, and the generous compensation provided on the percentages award for capital and revenue. Accordingly, the compensation for the Estate Trustee should be reduced by deduction of the care and management fee. [6]
 
The Court upheld the trial judge's finding that fair and reasonable attorney compensation for the 5.5 year period is $63,200.84, which includes a care and management fee of $27,000, all of which was based on the SDA tariff.[7]
 
The Court also upheld the trial judge's approval of trustee compensation of $60,160.21; although it was noted the compensation was generous, the Court did not agree with the Appellant's assertion that it was grossly excessive. The Court did, however, take issue with the trial judge's approval of the trustee care and management fee of about $6,500. 

The Court reviewed several authorities that confirm that the care and management fee ought not to be awarded routinely or automatically, and cited Justice Perrell's explanation of the care and management fee in Archibald Estate, Re, which provides that some special circumstance are necessary for awarding a care and management fee.[8]
 
The Court found that the trial judge erred when she calculated the trustee care and management fee based on special circumstances without fully articulating which special circumstances were present, or why they justified a care and management fee.[9] The Court did not accept the trial judge's reasoning that the extra work generated by the Appellant's objections qualified as special circumstances, and observed that once the Estate's only asset had been sold and the proceeds deposited, there were no extra effort required of the Respondent to manage the Estate during the course of the litigation. [10]
 
The Court dismissed the appeal regarding the property valuation.
 
With respect to the previous cost order, the court found that the trial judge made a mathematical error when she approved the deduction of $7,000.00 from the Appellant's distributive share instead of ordering the Appellant to pay the Estate $7,000; the deduction should have been only $3,500.00.
 
With respect to the issue of costs, the Appellant had been ordered to personally pay the Respondent's full indemnity costs of $192,632.53. The Court upheld the order that the Appellant must pay the Respondent's costs personally, but found that blended, rather than full indemnity costs were more appropriate, citing Sawdon Estate and Young v. Young.[11] The trial judge made no finding that the appellant's conduct was reprehensible, scandalous or outrageous, as required to justify substantial indemnity costs, or that the Appellant's conduct was designed to harass, as required for full indemnity costs. The Court ordered the Appellant to personally pay the Respondent's partial indemnity costs of $115,200.00, which costs the Court, in agreement with the trial judge, were reasonably incurred. The balance of the Respondent's legal fees will be paid by the Estate, which means each sister personally loses 50% of $77,432.53 (or $38,716.27) from their distributive share of the residue.
 
Commentary
 
The Appellant's objections in respect of her sister's accounting will be familiar to any estate litigator. The Divisional Court's reasons provide us with a useful authority for the following general principles:
 
Care and Management Fees
  • A care and management fee must is contingent on the presence of special circumstances;
  • Special circumstances in support of an attorney for property's care and management fee may include:
    • maintaining the incapable adult's health, safety and comfort while fulfilling his or her wish to age in place;
    • hiring and supervising the caregivers on a daily basis;
    • paying for groceries and medications;
    • paying taxes and housing costs; and
    • the maintenance and repair of the incapable adult's home;
  • A trustee's care and management fee is usually not appropriate until after the executor's year has passed, and even then, only if the trustee must manage an ongoing trust that is demonstrably more complicated than a bank account or a GIC;
  • A care and management fee may not be appropriate if the compensation awarded is generous (and there appears to be room to argue that the Court in Aber found that the percentages rate of trustee compensation was generous, although not excessive);
Attorney and Trustee Compensation
  • Calculations of compensation based on tariff rates will usually apply to estates of moderate complexity. The Aber Estate consisted of a house, a bank account, and some investments. Arguably, then, this is an example of a moderately complex estate;
  • Compensation may be paid on a receipt and disbursement even if the disbursement represents the distribution of a legacy to the trustee in their capacity as a beneficiary;
  • Minor errors in accounts, if corrected, will not attract a finding that the fiduciary failed to keep accurate accounts such that compensation should be reduced;
  • Conservative investing of assets may not be relied upon as a ground for reducing compensation if the incapable adult benefited from that investment strategy; 
Costs in Contested Passing of Accounts
  • A trustee is entitled to indemnity for legal costs reasonably incurred;
  • A trustee's legal costs of $192,632.53 may be reasonably incurred on a contested passing of accounts, especially if incurred as a result of the objector's conduct;
  • Determining what a reasonable costs order would be against an unsuccessful litigant is a different inquiry from whether an estate trustee has reasonably incurred legal expenses for which he or she should be indemnified by the estate; the court must always ask what is a reasonable amount that the unsuccessful party should pay;[12]
  • It is fair and reasonable for the losing party to pay partial indemnity costs of $115,200 when one takes into consideration the length of the litigation, the number of motions, the five day trial, and the need for extensive preparation in order to examine in detail some 750 pages of documents;
  • Absent a finding of conduct that is reprehensible, scandalous or outrageous, substantial indemnity costs may not be appropriate;
  • Absent a finding that the litigation was fruitless or designed to harass, full indemnity costs may not be appropriate;
  • Even if an objector succeeds in realizing modest reductions to compensation or other adjustments to the accounts, he or she may still be "the losing party" for the purpose of costs. In the Aber Estate, the Appellant had raised numerous objections that resulted in a 5-day trial. An adjustment at trial to the valuation of real property reduced trustee compensation by $9,000. In the context of the many objections raised regarding attorney and trustee compensation of roughly $100,000 which did not represent success in litigation. It may be that this 10% adjustment could have been framed as a success for costs purposes if the multitude of other meritless objections had been withdrawn at the right time;
As with any general principle, the application of these principles will depend on the facts of each case.
 
Does the Applicant care about precedents and principles? Perhaps not. Let's consider the practical consequences of this litigation. The Appellant has a 50% interest in the residue of the Estate, which means the Appellant will receive only 50% of any adjustment in compensation.
 
At trial, the Appellant gained 50% of the $90,000 reduction in compensation. On appeal, the Appellant was able to increase her distributive share by roughly $45,466.26 ($77,432.54 of the Respondent's costs are now paid from the Estate rather than by the Appellant, which in effect yields $38,716.27 for the Appellant; $3,500.00 in respect of the mathematical error; and 50% of the $6,500 care and management fee that is no longer payable to the Respondent).
 
It appears as though the Appellant increased her distributive share by about $95,000.00, but she still has to pay her sister's costs of $115,200.00, and this is only one of several different proceedings in respect of this Estate (the Appellant also sought to remove the Respondent in separate proceedings - she was not successful - the costs order from that proceeding is not published). 
 
This brings me to the real reasons why this case is so educational for estate litigators and their clients. First, it confirms that acting as an Attorney for Property or an Estate Trustee is an important but thankless job; people who accept the appointment should be prepared to work hard, to meet a standard of care that they may find burdensome, and to deal with the scrutiny that comes with the role, regardless of whether or not that scrutiny is fair or justified. This is why the principle of trustee indemnification is so very important: why would anyone ever agree to do this for free?
 
Second, it pays to keep accounts and meet the appropriate standard of care. In the Aber case, the Attorney / Estate Trustee anticipated trouble, sought good legal advice and followed it, kept meticulous records, did not intermingle funds, could explain every transaction and discretionary decision, and demonstrated that all of her decisions served the best interests of their mother or the Estate. Had the Respondent in this case failed to conduct herself as she did, the financial consequences for her could have been quite serious.
 
Finally, it's not always about the money, and it can be a strategic mistake to assume otherwise. Lawyers and their clients may focus on the financial consequences of litigation, but this case confirms that it would be a mistake for Estate Trustees to assume that financial gain is the only impetus in estate litigation. If the Appellant succeeded in holding her sister to account, if she was able to access the opinion of the Court on matters that she had previously been unable to comfortably discuss or negotiate with her sister, and if she was comforted by the Court's finding that her mother's best interests were absolutely met, then the Appellant may be very pleased with the result regardless of the financial outcome.


1. Aber Estate, para 24
2. Ibid
3. Aber Estate, paras 30 - 33
4. Aber Estate, para 25
5. Aber Estate, para 26
6. Aber Estate, paras 34 - 37, 39
7. Aber Estate, para 27
8. Archibald Estate, Re, 2007 CarswellOnt 3872 (Ont. S.C.J.), paras 23 - 24
9. Aber Estate, para 28, 34
10. Aber Estate, paras 36, 37
11. Sawdon Estate v. Watch Tower Bible and Tract Society of Canada (2014), 2014 ONCA 101, 2014 CarswellOnt 1274; Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.) at p. 134)
12. Aber Estate, para 82

PART III: UPCOMING EVENTS
OBA, YLD, Wills and Estate Planning: A Primer
September 29, 2015
The Initial Client Meeting: Practice Issues - Before the Meeting
Speakers: Kimberly Whaley and Lionel Tupman
 
LSUC 18th Annual Estates and Trusts Summit
October 7 and 8, 2015
Undue Influence
Speakers: Kimberly Whaley and John Poyser
 
STEP Passport Series: Powers of Attorney
October 14, 2015
Moderator: Corina Weigl
Speakers: Ed Esposto, Kathrine Smirle

CBA Wills, Estate and Trust Fundamentals for Estate Practitioners
October  15-18, 2015
Predatory Marriages and Trends in the Practice of Estates and Trusts: Building on Estates Practice  
Speaker, Kimberly Whaley
 
LSUC, The Intersection of Estates Law and Bankruptcy Law: Administration of the Insolvent Estate
October 30, 2015
Speaker: Kimberly Whaley, panelist
Chairs: Frank Bennett and Ben Arkin
 
Osgoode Professional Development, Key Issues - Best Practices - Practical Approaches: Advising the Elderly Client
November 4-5, 2015
Claims Arising out of Later Life Partnerships
Speaker: Kimberly Whaley
 
Osgoode Professional Development, Advising the Elderly Client
Best Practices and Pitfalls in Guardianship Proceedings
November 4, 2015
Speakers: Heather Hogan and Shelley Hobbs (OPGT)
 
Capacity and Predatory Marriages
November 12-15, 2015
Speaker: Kimberly Whaley and Heather Hogan
 
STEP Passport Series: Charities
November 18, 2015
Moderator: Elaine Blades
Speakers: Malcolm Burrows, Elena Hoffstein
 
STEP Passport Series: December Seasonal Event
December 3, 2015
 
STEP Passport Series: Probate Planning - Issues Arising from Drafting and Litigating Secondary Wills
January 20, 2016
Moderator: Danny Dochylo
Speakers: Danielle Joel, Clare A. Sullivan
 
Osgoode Professional Development, Elder Law Webinar Series
Working with Financial Institutions
January 21, 2016
Speakers: Heather Hogan and Suzanne Michaud (RBC)
 
Osgoode Professional Development, Elder Law Webinar Series
New Spouse/Old Money: Predatory Marriages
February 4, 2016
Speaker: Kimberly Whaley and Albert Oosterhoff
 
STEP Passport Series: Post Mortem Planning - Private Corporation Shares
February 17, 2016
Moderator: Joan Jung
Speakers: Michael Atlas, Brian Nichols
 
STEP Passport Series: Insurance in Estates and Trusts
April 13, 2016
Moderator: Harris Jones
Speakers: Ted Polci, Glenn Stephens

STEP Passport Series: Planning Using Trusts
May 18, 2016
Moderator: Brian Cohen
Speakers: Rachel Blumenfeld, Prof. Albert Oosterhoff

PART IV: RECENT BLOG POSTS
Slate: Late true-crime author Ann Rule a victim of elder abuse

What is "financial interest'?

England and Wales Court of Appeal Triples Support Award for Disinherited Daughter

Interpretation of minutes of settlement

Less happy when you have children? Wait till they sue you.

The SLRA: the gift that keeps on giving

"You can't make a silk purse out of a sow's ear": Kozusko v. Kozusko

Badges of fraud

Case commentary: Bunn v. Gordon

PART V: CONNECT WITH WEL
Newsletter Archive
Access past editions of the WEL Newsletter: WEL Newsletter Archive
WEL Blog

Online Connections
  Follow us on Twitter   View our profile on LinkedIn 
Sign Up for Our Mailing List
WEL Directory