Schwartz Estate v. Kwinter et al., (2013) 558 A.R. 236 (QB)

• Judge: Graesser, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: March 07, 2013
• Citations: (2013), 558 A.R. 236 (QB);2013 ABQB 147

Schwartz Estate v. Kwinter (2013), 558 A.R. 236 (QB)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. AP.056

Elaine Gayle Myron, Executrix of the Estate of William Schwartz (plaintiff) v. Shelley Rae Kwinter, Alyse Schwartz and Justin Kwinter (defendants)

(0501 17525)

Estate Name: William Schwartz

Shelley Rae Kwinter (applicant) v. Elaine Gayle Myron; Elaine Gayle Myron, Executrix of the Estate of William Schwartz; and Elaine Gayle Myron, Trustee of the William Schwartz Alter Ego Trust (respondent)

(ES01 097485; 2013 ABQB 147)

Indexed As: Schwartz Estate v. Kwinter et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Graesser, J.

March 7, 2013.

Summary:

This hearing related to the costs to be assessed following the discontinuance of the defendants' statement of defence and counterclaim in the plaintiff executor's action to prove William Schwartz's will. The defendants' application to withdraw had been opposed by the plaintiff. Both parties sought solicitor and client costs. The defendants (Schwartz's elder daughter, who had been disinherited, his ex-wife, and one of his grandsons) sought their solicitor and client costs of some $1.8 million from the estate. The plaintiff and main beneficiary (Schwartz's younger daughter) sought her and the estate's solicitor and client costs of some $1.4 million.

The Alberta Court of Queen's Bench held that the plaintiff and the estate were entitled to punitive costs pursuant to Surrogate Rule 90(h). However, solicitor and client costs were inappropriate. "Applying the approximation of triple Schedule C for a 'typical' solicitor and client equivalency, and then doubling that to take into account inadequacies in Schedule C in some areas as well as consideration of the penalty component under Surrogate Rule 90(h) provides an appropriate level of costs in this case." The court fixed the fee portion of the costs at $600,000 plus GST. The court also commented on several policy issues, including the court's role in family litigation, the application of the foundational principles in the new Rules of Court, and the ordering and assessment of costs.

Executors and Administrators - Topic 5541

Actions by and against representatives - Costs - General - This costs application proceeded under rule 90 of the Surrogate Rules - The Alberta Court of Queen's Bench considered the principles on costs in estate litigation - "In estate litigation, I have no doubt that the so-called 'modern rule' applies, such that costs in estate litigation are now be treated in a similar fashion to costs in other civil litigation. ... Surrogate Rule 90(h) is undoubtedly a codification of the modern rule in Alberta, lest there be any doubt whatsoever that the modern rule now prevails over the traditional 'estate pays' concept. What Surrogate Rule 90(h) does is to supplement the ordinary cost principles. There is nothing in the Surrogate Rules to shelter a losing party from ordinary Schedule C costs or ordinary principles. Instead, Surrogate Rule 90(h) makes it clear that an unsuccessful claimant may be liable for penalty costs if the conditions in the rule are found to apply." - See paragraphs 113 to 120.

Executors and Administrators - Topic 5541

Actions by and against representatives - Costs - General - The Alberta Court of Queen's Bench discussed the interplay between Surrogate Rule 90(h) and rule 10.31 of the Rules of Court - "In estate litigation, the 'modern rule' applies so litigants start with the general presumption of 'loser pays' as with other civil litigation. Surrogate Rule 90(h) then requires an assessment as to whether the position taken by the party seeking costs from the estate, or resisting payment of costs to the estate, was reasonable. The court's determination of 'reasonableness' will inform the decision as to no costs, basic costs, or punitive costs. Once that determination has been made, Rule 10.31 of the general Rules of Court applies to the quantification of those costs and the exercise of the court's discretion as to the appropriate column, whether there should be multiples of a column, or the extent to which costs may be elevated up to full solicitor and client costs or even more" - See paragraphs 261 and 262.

Practice - Topic 7326

Costs - Costs in probate proceedings - Unsuccessful opposition to proof of will - This proceeding related to the costs to be assessed following the discontinuance of the defendants' statement of defence and counterclaim in the plaintiff's action to prove the testator's will - The Alberta Court of Queen's Bench held that there was no basis for the defendants to receive any of their costs from the Estate or from the plaintiff executor - There was no reasonable basis for the defendants' position in the litigation (alleged lack of testamentary capacity, undue influence, and mistake) - The defendants began and continued the underlying proceedings on speculation, with the hope that something might come out during the discovery process to support their position - There was never a time when the defendants' position was reasonable - The litigation was caused entirely by the defendants, not the testator - The entire conduct of the litigation on behalf of the defendants could be characterized as a fishing expedition - Any unreasonableness on the part of the plaintiff and the Estate in the defence of the claims did not justify the defendants' conduct so as to enable the defendants to seek payment of their costs from the Estate - The defendants, with no justification, alleged undue influence and maintained that position until their opposition to probate was abandoned - That factor suggested that costs should be paid by the defendants - See paragraphs 163 to 191.

Practice - Topic 7455

Costs - Solicitor and client costs - Entitlement to - Estates and estate matters - This application related to the costs to be assessed following the discontinuance of the defendants' statement of defence and counterclaim in the plaintiff's action to prove the will - The principal players in the estate litigation were the plaintiff as executor and main beneficiary of the estate, and the defendants - Both parties sought solicitor and client costs - The Alberta Court of Queen's Bench stated that "[b]ecause of Surrogate Rule 90(h), it is necessary for me to consider not only the Defendants' conduct in the estate litigation, but also the objective reasonableness of the Defendants' positions in that litigation. Losing makes them potentially liable for Schedule C costs; if they are found to fall within Surrogate Rule 90(h), they are potentially liable for penalty or elevated costs. Misconduct may take those costs beyond mere elevation to indemnification in the form of solicitor and client costs." - See paragraphs 123 and 124.

Practice - Topic 7455

Costs - Solicitor and client costs - Entitlement to - Estates and estate matters - The plaintiff executor was forced to bring an unnecessary application to prove the will - The defendants, who had no case from the beginning of the matter, stretched out litigation for nearly four years - The Estate/Will action was primarily an application under Division 3 of the Surrogate Rules - The plaintiff sought costs on a solicitor and client basis - She had spent some $1.4 million defending the allegations and proving the will - The defendants spent in excess of $1.8 million - Column 5 of Schedule C would result in an award of $97,300 in fees - The plaintiff requested 14 times Column 5 - The Alberta Court of Queen's Bench stated that the first consideration was Surrogate Rule 90(h) - Requiring the plaintiff to prove the will was frivolous and vexatious - There was no reasonable basis for the defendants to require that the application be made - The plaintiff and the Estate were entitled to an award of penalty costs pursuant to Surrogate Rule 90(h) - "My determination under Surrogate Rule 90(h) and my analysis of the general principles relating to costs require a punitive award against the Defendants. I decline to award full solicitor and client costs because of my determination that [the plaintiff's] response to the challenge and her approach to proving the will was unreasonable and overkill. The level of expense incurred in defending herself and the will has not been justified." - In the end result, the Estate's lawyer's accounts were to be paid on a full indemnity basis (treated as a disbursement), and costs were awarded on Column 5 of Schedule C multiplied by six - See paragraphs 192 to 239.

Practice - Topic 7455

Costs - Solicitor and client costs - Entitlement to - Estates and estate matters - The Alberta Court of Queen's Bench was satisfied on the evidence that the plaintiff executor and the Estate were entitled to punitive costs from the defendants pursuant to Surrogate Rule 90(h), there having been no reasonable basis to require formal proof of the testator's will - The measure of those costs, applying the principles applicable to costs in civil litigation, required consideration of whether solicitor and client costs were appropriate - However, the cost of the plaintiff's approach to proving the will and defending against the allegations of lack of testamentary capacity and undue influence, was disproportionate to the objective needs of the case - In these circumstances, solicitor and own client costs were entirely inappropriate, and it was impractical and inappropriate for the court to undergo an hour by hour analysis of the time spent to determine what might be reasonably recoverable from the unsuccessful party, were some measure of solicitor and client costs to be awarded - "Applying the approximation of triple Schedule C for a 'typical' solicitor and client equivalency, and then doubling that to take into account inadequacies in Schedule C in some areas as well as consideration of the penalty component under Surrogate Rule 90(h) provides an appropriate level of costs in this case." - The plaintiffs' draft bill of costs showed fees of $97,300 - The items appeared appropriate - The court fixed the fee portion of the plaintiffs' costs at $600,000, plus GST - See paragraphs 274 to 280.

Practice - Topic 7408

Costs - Solicitor and client costs - General principles - Solicitor and client costs as damages or punishment - [See third Practice - Topic 7455 ].

Cases Noticed:

Quaintance Estate, Re (2004), 373 A.R. 8; 2004 ABQB 968, refd to. [para. 77].

Reykdal (N.V.) & Associates Ltd. v. 571582 Alberta Ltd. et al., [2000] A.R. Uned. 444; 2000 ABCA 330, refd to. [para. 109].

Foote Estate, Re (2010), 484 A.R. 188; 2010 ABQB 197, affd. (2011), 493 A.R. 354; 502 W.A.C. 354; 2011 ABCA 1, leave to appeal denied (2011), 426 N.R. 387; 524 A.R. 399; 545 W.A.C. 399; 2011 CarswellAlta 1125 (S.C.C.), refd to. [para. 114].

Petrowski v. Petrowski Estate et al. (2009), 476 A.R. 171; 2009 ABQB 753, refd to. [para. 116].

Serdahely Estate, Re (2005), 392 A.R. 220; 2005 ABQB 861, refd to. [para. 117].

Popke et al. v. Bolt et al., [2006] A.R. Uned. 537; 2006 ABCA 338, refd to. [para. 117].

Washington et al. v. Krest, [2006] A.R. Uned. 165; 2006 ABQB 292, dist. [para. 136].

Woronuk et al. v. Woronuk et al. (2003), 327 A.R. 199; 296 W.A.C. 199; 2003 ABCA 97, refd to. [para. 139].

Moon v. Sher et al. (2004), 192 O.A.C. 222 (C.A.), refd to. [para. 149].

Babchuk v. Kutz et al. (2007), 411 A.R. 181; 2007 ABQB 88, refd to. [para. 181].

College of Physicians and Surgeons (Alta.) v. J.H. et al. (2009), 468 A.R. 101; 2009 ABQB 48, refd to. [para. 208].

Paniccia Estate et al. v. Toal, [2013] A.R. Uned. 27; 2012 ABCA 397, refd to. [para. 210].

Trizec Equities Ltd. v. Ellis-Don Management Services Ltd. et al. (1999), 251 A.R. 101; 1999 ABQB 801, refd to. [para. 214].

Parkridge Homes Ltd. v. Anglin, [1996] A.J. No. 768 (Q.B.), refd to. [para. 220].

Evans v. Sports Corp. (2011), 523 A.R. 88; 2011 ABQB 616, refd to. [para. 232].

Nexxtep Resources Ltd. v. Talisman Energy Inc. et al., [2012] A.R. Uned. 786; 2012 ABQB 708, refd to. [para. 271].

Statutes Noticed:

Rules of Court (Alta.), rule 10.31 [para. 194]; rule 10.33 [para. 195].

Surrogate Rules (Alta.), Reg. 130/95, rule 90(h) [para. 196].

Counsel:

Ariel Z. Breitman and Kara L. Smyth (McCarthy Tetrault LLP), for Elaine Gayle Myron;

Steven H. Leitl and Karl Seidenz (Norton Rose LLP), for Shelley Rae Kwinter, Alyse Schwartz and Justice Kwinter.

This costs application was heard on October 17-19, 2012, at Calgary, Alberta, before Graesser, J., of the Alberta Court of Queen's Bench, who delivered the following reasons for judgment, dated, March 7, 2013.