



COURT OF APPEAL FOR ONTARIO

CITATION: Feinstein v. Freedman, 2014 ONCA 446

DATE: 20140605

DOCKET:  C56955 and C56958

Laskin, van Rensburg and Hourigan JJ.A.

BETWEEN

Abraham Feinstein

Applicant

(Respondent)

and

Jacob
    Freedman, Jonathan Freedman, Rose-Anne Freedman-

Prizant,
    Josh Freedman, Michael Freedman, Shira Leah Ben-

Choreen
    Schneck, Rachel Freedman, Joshua Freedman, Eli

Freedman,
    Tal-Or Ben-Choreen, Elishua Ben-Choreen, Joshua

Prizant,
    Sarah Idit Prizant, Samuel Prizant, Joshua Freedman,

Adam
    Freedman, Liat Ben-Choreen and Riva Freedman Rotenberg

Respondents

(Respondents)

Application under ss. 3, 5, 16 and 37 of the
Trustee Act
,
    R.S.O., 1990,

c. T-23 and Rules 10.01, 14.05(3)(a), (b), (c), (d) and (h) of the
Rules
    of Civil

Procedure, R.R.O. 1990, Reg. 194;

AND BETWEEN

The
    Childrens Lawyer, as litigation guardian for Joshua Freedman,

Adam
    Freedman, Samuel Prizant, Asher Freedman, Netta Grace Schneck,

Nili
    Sarit Schneck and Ora Tmemah Aviner

Applicant

(Appellant)

and

Jacob
    Freedman, Rose-Anne Freedman-Prizant, Josh Freedman,

Jonathan
    Freedman, Michael Freedman, Shira Leah Ben-Choreen Schneck,

Rachel
    Freedman Aviner, Joshua Freedman, Eli Freedman, Joshua Prizant, Sarah Idit
    Prizant, Liat Ben-Choreen, Tal-Or Ben-Choreen,

Elishua
    Ben-Choreen, Riva Freedman Rotenberg and Abraham Feinstein

Respondents

(Respondents)

Application under s. 5 of the
Trustee Act
, R.S.O., 1990, c. T-23
    and Rules 14.05, 16 and 17.02(c) of the
Rules of Civil Procedure, R.R.O.
    1990, Reg. 194.

Joseph Y. Obaji, for the appellants Liat Ben-Choreen,
    Tal-Or Ben-Choreen and Elishua Ben-Choreen

Claire E. Burns and Bianca V. La Neve, for the appellant
    the Office of the Childrens Lawyer as litigation guardian for Joshua Freedman,
    Adam Freedman, Samuel Prizant, Asher Freedman, Netta Grace Schneck, Nili Sarit
    Schneck and Ora Tmemah Aviner

Catherine Francis and Mark Freake, for the respondents
    Jacob Freedman, Rose-Anne Freedman-Prizant and Josh Freedman

Gregory M. Sidlofsky, for the respondents Michael
    Freedman, Shira Schneck, Rachel Freedman, Joshua Freedman, Eli Freedman, Joshua
    Prizant and Sarah Prizant

Peter G. Hagen, for the respondent Abraham Feinstein

Kenneth Radnoff, Q.C., for the respondent Riva Freedman
    Rotenberg

Jaye Hooper, for the respondent Jonathan Freedman

Heard:  January 14, 2014

Released:  March 12, 2014

On appeal from the orders of Justice Julianne A. Parfett
    of the Superior Court of Justice, dated March 18, 2013 and June 2, 2013, with
    reasons reported at 2013 ONSC 1616 and 2013 ONSC 4420, respectively.

COSTS ENDORSEMENT



A.      Introduction

[1]

This appeal arises in the context of litigation regarding the proper
    administration of the Riva Freedman Trust (RFT), an
inter vivos
spousal income trust established by Jarvis Freedman. The trustee of the RFT,
    Abraham Feinstein, brought an application for directions regarding the
    appointment of his successor upon his resignation.  The Office of the
    Childrens Lawyer (the OCL), supported by Jonathan Freedman and his adult
    children (being Tal-or Ben-Choreen, Elishua Ben-Choreen, and Liat Ben-Choreen 
    collectively, the Ben-Choreen Appellants), brought a cross-application for
    the appointment of a sole independent trustee for the RFT.

[2]

Justice Parfett dismissed the OCLs cross-application and ruled that,
    upon Mr. Feinsteins resignation, the four children of Jarvis Freedman could
    appoint replacement trustees, including themselves. With respect to costs, the
    application judge found that Mr. Feinsteins application and the cross-application
    were necessary for the proper administration of the RFT and the Jarvis Freedman
    Insurance Trust (collectively the Estate). Consequently, she ruled that the
    costs of all parties should be paid out of the Estate.

[3]

The OCL and the Ben-Choreen Appellants appealed the order of the
    application judge. The successful parties on the application and the OCL sought
    leave to appeal the costs award made by the application judge.

[4]

In reasons dated March 12, 2014, the two appeals and the motions for
    leave to appeal the costs awards were dismissed. The parties were unable to
    agree on the issue of the costs of the appeals and the motions for leave to
    appeal, and have filed extensive written submissions.

B
.
POSITIONS OF THE PARTIES

[5]

Jacob Freedman, Rose-Anne Freedman-Prizant, and Josh Freedman (the
    Three Siblings) seek costs on a full or substantial indemnity basis against
    the appellants and Jonathan Freedman. These respondents submit that costs on a
    higher scale are warranted given the serious and unfounded allegations of
    wrongdoing made against them by the appellants and Jonathan Freedman. They have
    filed a bill of costs claiming total costs of $129,813 on a full indemnity
    basis and $77,129 on a partial indemnity basis.

[6]

Michael Freedman, Shira Schneck, Rachel Freedman, Joshua Freedman, Eli
    Freedman, Joshua Prizant and Sarah Prizant (the Freedman/Prizant
    Grandchildren) seek costs on a partial indemnity basis, fixed at $25,000,
    inclusive of disbursements and HST, and payable jointly and severally by the
    appellants. The amount requested has been reduced by $4,715 to reflect the lack
    of success of these parties on their cross-appeal.

[7]

Riva Freedman Rotenberg seeks costs on a substantial indemnity basis,
    payable jointly and severally by the appellants and Jonathan Freedman. She has
    filed a bill of costs claiming total costs of $49,112 on a substantial
    indemnity basis and $34,576 on a partial indemnity basis.

[8]

Mr. Feinstein seeks costs on a substantial indemnity basis payable jointly
    and severally by the appellants. He has filed a bill of costs claiming total
    costs of $31,148 on a full indemnity basis, $28,248 on a substantial indemnity
    basis, and $19,547 on a partial indemnity basis.

[9]

Jonathan Freedman submits that the court should order that the costs of
    Mr. Feinstein be paid by the Estate on a partial indemnity basis and that all
    other parties should bear their own costs. In the alternative, he submits that
    if the court awards costs among the parties, he should be awarded his costs of
    the motions for leave to appeal on a partial indemnity basis, payable by the
    Three Siblings jointly and severally. He has filed a bill of costs claiming
    total costs of $20,522 on a full indemnity basis and $12,957 on a partial
    indemnity basis.

[10]

The
    OCL submits that there was divided success on the appeals, that it was
    reasonable for it to appeal, and that the Three Siblings and the
    Freedman/Prizant Grandchildren made unfounded allegations against the OCL and
    its counsel and, consequently, they should not be awarded any costs. The OCL
    also submits that Mr. Feinstein and Ms. Freedman Rotenberg did not need to
    retain counsel because the Three Siblings defended their interests.

[11]

The
    Ben-Choreen Appellants submit that there was divided success and that all
    parties should bear their own costs, with the exception of Mr. Feinstein, whose
    costs should be paid by the Estate.

C.      Analysis

i.

Entitlement to Costs

[12]

The
    first issue is the entitlement to costs.  The first consideration as part of
    this analysis is whether the loser-pays regime should apply or whether costs
    should be paid out of the Estate.

[13]

The
    loser-pays regime generally applies to estate litigation, such that successful
    parties are entitled to have their reasonable costs paid by the unsuccessful
    parties and that costs are usually only payable from an estate where the
    litigation arose out of the actions of the testator or was reasonably necessary
    to ensure the proper administration of the estate:
McDougald Estate v.
    Gooderham
, [2005] O.J. No. 2432 (C.A.), at paras. 78, 80, 85, 91; and
Vance
    Estate v. Vance Estate
, 2010 ONSC 4944, at para. 4. We found no error in
    the application judges finding that the litigation enured to the benefit of
    the Estate and in her consequential ruling that costs should be paid from the
    Estate.

[14]

The
    circumstances extant at the time of the application and cross-application were
    much different from the circumstances at the time of the commencement of the
    appeals. At the time of the application and cross-application, there was genuine
    uncertainty about how a new trustee(s) would be appointed. At the time of the
    appeals, the uncertainty was gone. The application judge determined the issue
    and, in so doing, made findings regarding the interpretation of the relevant
    documentation and the conduct of the parties.

[15]

The
    application judge gave clear direction as to how the appointment process should
    work. The appellants were entitled to challenge the application judges
    findings and conclusions, but they did so at their own risk. This was no longer
    an exceptional circumstance where the proceeding was reasonably necessary to
    ensure the proper administration of the estate. The normal loser-pays regime
    applies to the appeals and the motions for leave to appeal.

[16]

We
    reject the argument advanced by the OCL that the Three Siblings and the
    Freedman/Prizant Grandchildren have no entitlement to costs by reason of the
    allegations made against the OCL and its counsel. We have carefully reviewed
    the submissions of the parties on the appeal. This was high stakes litigation.
    Allegations and counter-allegations were levelled. There is obvious distrust
    among the parties. In this context, the Three Siblings and the Freedman/Prizant
    Grandchildren in their submissions used unfortunate and somewhat intemperate language.
    However, those submissions do not cross the line to the point that they
    disentitle the Three Siblings and the Freedman/Prizant Grandchildren from being
    awarded their costs as successful litigants.

[17]

We
    also reject the submission of the OCL that Mr. Feinstein and Ms. Freedman
    Rotenberg did not need to retain counsel because the Three Siblings defended
    their interests. These parties had interests that were distinct from those of
    the Three Siblings. They were entitled to have counsel. Mr. Feinstein, in particular,
    is a well-respected member of the Ottawa legal community. At the very least his
    competence as trustee was challenged in the appeals. He had a right to defend
    himself. It should come as no surprise to the OCL that all of the parties
    affected by the appeals would incur significant legal fees.

[18]

The
    next consideration is whether there was divided success such that no party
    should be entitled to its costs. While we recognize that there was some measure
    of divided success, given that both the appeals and motions for leave to appeal
    were dismissed, the vast majority of the time and effort on the hearing and the
    written submissions was dedicated to the appeals brought by the OCL and the
    Freedman/Prizant Grandchildren. Thus, while we are prepared to reduce the
    amount of costs awarded to the successful parties on the appeals, we are not
    prepared to order that the parties should bear their own costs.

[19]

Jonathan
    Freedman is in a unique position. He did not appeal the decision of the
    application judge. He was a respondent on the appeal but supported the position
    taken by the appellants. His position was akin to that of an intervener. In
    these circumstances, we find that the appropriate order is for there to be no
    costs payable by or to Jonathan Freedman.

[20]

In
    summary, we find that the normal loser-pays regime should apply and that the
    successful parties, being the Three Siblings, the Freedman/Prizant
    Grandchildren, Mr. Feinstein and Ms. Freedman Rotenberg, are entitled to their
    costs.

ii.

Scale of Costs Payable

[21]

The
    next issue is the scale of costs payable. The presumptive rule is that costs
    are payable on a partial indemnity basis. That rule is, of course, subject to
    exceptions that may result in an award of costs on a higher scale.

[22]

We
    reject the argument made by the Three Siblings that costs on a higher scale are
    warranted because of the allegations of wrongdoing made against them by the
    appellants and Jonathan Freedman. Again, we do not find that the nature of the
    allegations crosses the line such that a costs award on a higher scale is
    warranted.

[23]

There
    is no basis for an award of costs on a substantial indemnity scale to Ms.
    Freedman Rotenberg.

[24]

Mr.
    Feinstein is in a different position. His involvement in this case results from
    the execution of his duties as trustee. No doubt he will have a claim against
    the RFT for any costs not recovered as a result of this costs award. However,
    it would be inequitable for all of the beneficiaries of the RFT to be forced to
    pay for a sizable portion of his costs. We conclude, therefore, that costs on a
    full indemnity basis are warranted for Mr. Feinstein.

[25]

The final issue is the quantum of costs to be awarded.
The overriding principle in assessing costs is that
    the award must be fair and reasonable:
Boucher v. Public Accountants Council
    for the Province of Ontario
(2004), 71 O.R. (3d) 291 (C.A.), at para. 24.

[26]

In
    exercising our discretion regarding costs, the general principles enumerated in
    rule 57.01 are instructive. The most relevant factors here are that the issues
    raised on the appeal were of tremendous importance to the parties and that the
    factual and legal issues were complex. None of the parties could have
    reasonably expected that, if unsuccessful on the appeals, they would not be
    required to pay significant costs. We note that the full indemnity costs of the
    OCL were $97,581.

[27]

We
    find that a reduction of the costs awarded to the successful parties should be
    made to reflect the fact that they were not successful in obtaining leave to
    appeal the costs award made by the application judge.

[28]

The
    Three Siblings were primarily responsible for responding to the appeals. It is
    not surprising, therefore, that their costs are the highest claimed. In our
    view, the costs sought are somewhat excessive in all of the circumstances. We fix
    their costs at $70,000.

[29]

The
    costs claimed by the Freedman/Prizant Grandchildren of $25,000 are entirely
    reasonable and shall be so ordered.

[30]

We
    also find the full indemnity costs claimed by Mr. Feinstein in the amount of
    $31,148 are reasonable and an order will go for their payment.

[31]

The
    costs claimed by Ms. Freedman Rotenberg are excessive. She played a relatively
    minor role on the appeals and should not be awarded more costs than the
    Freedman/Prizant Grandchildren. We fix her costs at $20,000.

[32]

All
    amounts awarded are inclusive of fees, disbursements and HST, and shall be
    payable jointly and severally by the OCL and the Ben-Choreen Appellants.

D.      DISPOSITION

[33]

We
    award costs, inclusive of fees, disbursements and HST, payable jointly and
    severally by the OCL and the Ben-Choreen Appellants, to:

(a)

the Three Siblings - $70,000;

(b) the Freedman/Prizant Grandchildren - $25,000;

(c) Riva Freedman Rotenberg - $20,000; and

(d) Abraham Feinstein - $31,148.

John Laskin J.A.

K. van Rensburg J.A.

C.W. Hourigan J.A.


