





CITATION:
Smith Estate v. Rotstein, 2011 ONCA 833



DATE: 20111223



DOCKET: C52105



COURT OF APPEAL FOR ONTARIO



Armstrong, Epstein and Karakatsanis JJ.A.



In the Matter of
          the Estate of Ruth Dorothea Smith, deceased



BETWEEN



Lawrence
          Jerome Berk Smith,

Executor and Estate
          Trustee of the Estate of Ruth Dorothea Smith, deceased



Moving Party (Respondent)



and



Nancy-Gay Rotstein
,
          Marilyn Chapnik Smith, Cynthia Joy Smith,

Ilyse Jan
          Smith, Natalie Jill Smith, Tracey Tremayne-Lloyd Smith

and Claude R.
          Thomson, Trustee of the I. & R. Trust

settled on
          November 7, 1991



Responding Party (
Appellant
)



Earl A. Cherniak, Q.C., and Jasmine Akbarali, for the
          appellant



Richard H. Shekter, and Debra L. Stephens, for the
          respondent



Heard: January 26, 2011



On appeal from the judgment of Justice David M. Brown of the
          Superior Court of Justice, dated April 15, 2010, with reasons reported at 2010
          ONSC 2117, 56 E.T.R. (3d) 216, and the costs order dated July 30, 2010, with
          reasons reported at 2010 ONSC 4487, 59 E.T.R. (3d) 279.



COSTS ENDORSEMENT



Introduction

[1]

This appeal concerned the application of the so-called General Rule of Probate
    Law (General Rule) which is said to require that all testamentary documents
    be proven or probated at the same time.

[2]

In a motion for summary judgment, the motion judge ordered that partial
    probate be issued to the respondent, Lawrence Smith, in respect of his mothers
    will and in respect of the first and second codicils of the will, upon payment
    of the usual fees.  The motion judge also required, as a condition of ordering
    probate, that the respondent file an undertaking to hold back $250,000 from the
    distribution of the estate until such time as a certificate of appointment is
    issued in respect of the third or fourth codicils, or both.

[3]

The appellant, Nancy-Gay Rotstein, the daughter of the testatrix,
    appealed the judgment of the motion judge.  Her primary ground of appeal was a
    claim that the judgment breached the General Rule, which requires that all five
    testamentary documents should have been admitted to probate together.

[4]

The appellant also sought leave to appeal the motion judges order for
    costs in the amount of $737,580.29.

[5]

We dismissed the appeal in respect of the General Rule (the appeal on
    the merits).  However, we granted leave to appeal the motion judges order for
    costs (the costs appeal).  On the costs appeal, we set aside the costs award
    and referred the issue of the quantum of the fees claimed back to the motion
    judge for reassessment.

[6]

This endorsement deals with the costs of both the appeal on the merits
    and the costs appeal.

The Position of the Respondent

[7]

The respondent seeks his costs of the appeal on the merits on a full
    indemnity scale in the amount of $72,420 or on a substantial indemnity scale in
    the amount of $59,537.  He submits that such an award is called for because the
    appeal is a continuation of a reprehensible[,] harassing[,] and meritless
    Will challenge brought by the respondent.

[8]

In the event that the court is not prepared to order costs on a full
    indemnity or substantial indemnity scale, the respondent submits that the court
    consider his offer to settle the issues on appeal, which was outstanding until
    the commencement of argument before this court.  This submission is advanced on
    the basis that the failure of the appellant to beat the offer on the appeal
    triggers the costs consequences of Rule 49.  In the alternative, the respondent
    argues that the court should consider deferring its costs award on the appeal
    until the motion judge conducts his reassessment or that the court make
    alternative costs awards contingent on whether the respondent does better or
    worse than his offer to settle.

[9]

In respect of the costs appeal, the respondent submits that success was
    equally divided so each party should bear his or her own costs.  Specifically,
    the respondent submits that success was equally divided because the appellant
    succeeded on two of her arguments on costs and the respondent succeeded in
    upholding the motion judges decision that costs should be awarded on a full
    indemnity scale.

The Position of the Appellant

[10]

In response, the appellant argues that given the divided success in
    respect of the appeal on the merits and the costs appeal, it is appropriate
    that each party bear its own costs  especially since there was a significant
    dollar value associated with the issue on which the appellant was successful on
    the costs appeal.

[11]

The appellant also submits that the appeal should not be divided into
    two parts  the merits and the costs  as the respondent suggests.  She argues
    that there is, in fact, only one appeal before the court.

[12]

The appellant further argues that, contrary to the respondents
    allegations, her conduct in respect of the appeal cannot be characterized as improper
    in any way.

[13]

The appellant states that Rule 49 does not apply to an offer made
    pending appeal, and even if the court were to take the offer into account, it
    is impossible for the court to determine at this time whether the respondent obtained
    a better result in the appeal than contained in his offer.  The appellant also
    rejects the submission of the respondent that the court consider deferring its
    costs award until the motion judge conducts his reassessment or that the court
    make alternative costs awards contingent on whether the respondent does better
    or worse than his offer to settle.

Analysis

[14]

Whether the proceeding before us constituted one appeal or two separate
    appeals is not determinative of what we have to decide.  That said, we are of
    the opinion that the appeal on the merits and the appeal on the costs are
    separate appeals.

[15]

We reject the respondents submission that this is a case for either
    full indemnity or substantial indemnity costs.  There is no basis for it.  The
    argument advanced on appeal by the appellant was on a narrow question of law. 
    The appellant accepted the findings of fact made by the motion judge.  It
    cannot be said, with credibility, that the prosecution of the appeal on the
    merits represented a continuation of what the respondent describes as the reprehensible[,]
    harassing[,] and meritless Will challenge before the motion judge.

[16]

We do not accept the respondents submission concerning the application
    of Rule 49 or Rule 49-like consequences.  Rule 49 does not apply to appeals. 
    This court has, on an earlier occasion, said that an offer to settle an appeal
    prior to argument may be taken into account when fixing costs: see
Douglas
    Hamilton Design Inc. v. Mark
(1993), 66 O.A.C. 44.  However, this power of
    the court is exercised only on rare occasions.  It follows from the above that
    we see no merit in deferring our decision on costs until the costs below are
    reassessed.  Similarly, we do not accept the suggestion that we should approve
    two bills of costs contingent on the outcome of the reassessment.

[17]

As to the costs appeal, we do not accept that each party should be
    responsible for its own costs.  Costs of $737,580.29 for a three day summary
    judgment have been set aside.  This represents a significant victory for the
    appellant at this stage.  The fact that the motion judges order for full
    indemnity costs was upheld in favour of the respondent does not suggest that
    there was equal success.  The full indemnity issue was not a major issue in the
    costs appeal.  The issue that occupied, by far, the greater part of counsels
    and the courts time was the respondents bill of costs and the critique of the
    bill by counsel for the appellant.  The appellant succeeded on this issue.

[18]

In our view, the respondent is entitled to his costs of the appeal on
    the merits on a partial indemnity scale.  The appellant is entitled to her costs
    of the costs appeal on a partial indemnity scale.

The Respondents Costs for the
    Appeal on the Merits

[19]

The respondent has provided a bill of costs on a partial indemnity scale
    in the amount of $40,145.  In considering the appropriate quantum, we observe
    that a part of the respondents factum and much of his argument in our court
    was taken up with a review of the facts and, in particular, a review of the
    conduct of the appellant.  None of this was at issue in the appeal.  However,
    we accept that it was necessary that the factual matrix be understood in order
    to dispose of the legal issue.  Nevertheless, some discount of the respondents
    bill is necessary, which is attributable to the excessive attention to the
    facts that were not in issue.  We would therefore apply a discount of $5,000.

[20]

The respondents bill includes a claim for $2,279 for a motion to
    deliver the certificate of appointment of estate trustee with a will.  This
    item is not properly chargeable to the costs of the appeal.  It relates to the
    probate of the will and should be deducted from the respondents bill.

[21]

In the result, we would award the respondent his costs of the appeal on
    a partial indemnity scale fixed at $32,866, inclusive of disbursements and
    applicable taxes.

The Appellants Costs for the
    Costs Appeal

[22]

The appellant filed a partial indemnity bill of costs, which covered
    both the appeal on the merits and the costs appeal.  The total bill is
    $40,357.47.  There is no breakdown of the costs between the two appeals.  The
    respondent suggests an appropriate allocation to the costs appeal would be 25%
    of the docketed hours and 10% of the disbursements on the appellants bill of
    costs, which produces a figure of $9,273.30.  We accept the approach taken by
    counsel for the respondent.  We therefore fix the award of costs to the
    appellant for the costs appeal on a partial indemnity scale in the amount of
    $9,273.30, inclusive of disbursements and applicable taxes.

Disposition

[23]

In the result, the respondent is entitled to set off the $9,273.30
    against the respondents award of $32,866.  The respondent is therefore owed $23,592.70
    by the appellant for its remaining costs of the appeal on the merits.

Armstrong J.A.

G.J. Epstein
    J.A.

Karakatsanis J.A.


