Case Summary
Westover Estate v. Jolicouer, 2024 ONCA 81
The Court of Appeal for Ontario has upheld a trial decision ordering an estate representative to pay two-thirds of the costs of a civil action personally. The court's decision summarizes the case law outlining circumstances where estate trustees can be held personally liable for litigation. These include where the estate trustee “has acted unreasonably or in substance for their own benefit, rather than for the benefit of the estate.”
The Decision Under Appeal
Westover Estate v. Jolicouer, 2024 ONCA 81, concerns an appeal from a judge’s trial and costs decisions (2022 ONSC 4550 and 2022 ONSC 6684). The appellant, Betty Scheibler, was the unsuccessful plaintiff at trial. She advanced the litigation in the place of her late father, Milton Westover, who died a year after the proceeding was commenced.
The defendants were Betty’s sisters and brother-in-law, Joan and Allen Jolicouer and Debra Westover-Morriseau. The chief allegation of the plaintiff's claim, commenced in 2017, was that Debra and the Jolicouers had conspired to fraudulently transfer several parcels of farm property from Milton to the Jolicouers without his knowledge in 1997.
At trial, Fitzpatrick J. dismissed this claim on the merits. He also determined that the action was statute-barred by the operation of the ultimate, 15-year limitation period under section 15(2) of the Limitations Act. In his reasons, His Honour concluded that the plaintiff had failed to prove a single badge of fraud.
In apportioning the costs of the matter payable one-third by the estate and two-thirds by Betty personally, Fitzpatrick J. relied on his findings about Betty’s role in directing the litigation. He found that Betty, who lived with Milton in the years leading up to his death, had exercised “undue influence” on him, and had moved in with him primarily to benefit herself. She continued to live in his residence on one of the disputed parcels rent-free at the time of trial in 2022.
His Honour concluded that Betty’s evidence of the defendant’s alleged fraud “was completely self-serving and not persuasive”. He found that her “highest and best evidence” was that she claimed not to know about the 1997 transfers until 2015, despite having nothing to do with her father’s affairs until 2013. His Honour found this unpersuasive.
The Appeal
Betty appealed the trial and costs decisions. Her appeal challenged the unsuccessful allegation that her father’s properties were transferred to the Jolicouers without his authorization. Her appeal also challenged the finding that the action was statute-barred, alleged that the trial judge had pre-judged the case, and stated that the trial judge erred in principle by ordering her to pay costs personally to the respondents.
The court dismissed all grounds of appeal and awarded the costs of the appeal to the respondents, this time payable entirely by the estate trustee personally. In so doing, the panel found that the appeal was “meritless and of no benefit to the estate”, having been founded on “the same baseless allegations that were rejected at trial.”
The Merits Appeal
The Court of Appeal dismissed the appeal of the trial findings, concluding that the trial judge had not made any palpable and overriding errors in his assessment of the evidence and his findings of fact and credibility, including the inferences that he drew from the evidence, and that his conclusions were firmly rooted in the evidence and were open to him to make on the record before him.
The justices observed that the appeal was advanced on "the same baseless allegations that were rejected at trial". The panel confirmed that it could not retry plaintiff's case on appeal and would not disturb the trial judge's findings.
Notably, despite alleging bias on the part of the trial judge on appeal, no concern about bias was raised at trial, and nothing in the record from trial supported any such allegation. This ground of appeal was dismissed as well.
The Costs Appeal
Betty also appealed the trial judge’s decision to order her to personally pay two-thirds of the respondents’ costs against an estate administrator. The panel's decision confirmed that public policy considerations allow the court to exceptionally sanction an estate trustee with costs in appropriate circumstances.
The court reiterated the general principles that cost awards should only be set aside on appeal where “there is an error in principle or the costs award is plainly wrong” (Hamilton v. Open Window Bakery Ltd., 2004 SCC 9) and that costs against an estate trustee personally are rare.
However, the court determined that the trial judge made no error in ordering costs payable by Betty personally in the circumstances of this case. The court stated that the modern approach to costs in estate litigation seeks to ensure estate are not depleted through unnecessary litigation and that the “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 stated that these rules are guided by public policy considerations intended to give effect to the proper administration of estates. 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.”
In this case, the court was satisfied with the trial judge’s reasoning that the appellant unduly influenced her father to make the claims in the first place, and that her continuation of the action was primarily to benefit herself, rather than her late father. The court repeated several of the trial judge’s findings, stating that “[t]he only basis for the action impugning the property transfers were the clearly unsubstantiated allegations of fraud and conspiracy.”
The Court of Appeal was satisfied that the trial judge’s conclusion that the appellant had acted unreasonably, having “done little to administer the estate and had enjoyed living rent-free in Mr. Westover’s home for several years.” It dismissed the costs appeal.
Takeaways
The key passages of this decision relate to the award of costs to an estate trustee personally.
The decision states that estate representatives caught up in litigation need to remind themselves of the interests they must advance in the performance of their duties, lest they attract personal liability. The court suggests that the appointment as trustee must not be understood as a blank cheque for litigation crusades, nor does it confer immunity for self-dealing in litigation with estate assets.
The court stated that a person cannot rely on their role as estate trustee “as licence 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 active litigation commenced by the testator must exercise judgment and “take reasonable steps to ascertain whether the litigation should be continued”.
The successful respondents/defendants, Joan and Allen Jolicouer, were represented by Douglas W. Judson of Judson Howie LLP at trial and on the appeal.