Personal costs ordered for trustees who showed ‘persistent lack of self-awareness’

In a recent case before the Ontario Superior Court of Justice, a testamentary trustee and estate trustee both sought costs following their conduct during the litigation that the court described as showing a “continued and persistent lack of self-awareness.”

Cardinal v. Perreault, 2020 ONSC 4825 involved the issue of costs in two court applications in connection with the estate of Joseph Edmond Beaulieu, which had an estimated gross value of $339,000. The first is an application for directions filed by Roger Cardinal, the testamentary trustee. The second is an application for the passing of accounts filed by Ginette Perreault, the estate trustee.

Various actions undertaken by both parties caused difficulties and delays in the court proceedings. On the part of Perreault, she initially resisted Cardinal’s reasonable request for accounting. Her counsel also complained about the court proceedings being conducted in French and about the translation costs he had to spend.

Justice Ria Tzimas, writing for the Superior Court, said that Perreault’s conduct showed a lack of understanding about her obligations as estate trustee. On the other hand, Cardinal attacked Perreault’s integrity and personal dignity and made allegations of bad faith and misappropriation of funds.

Tzimas cited Rule 57.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which contains a non-exhaustive list of factors that the court will consider when exercising its discretion to award fair and reasonable costs, with the overriding principle being reasonableness.

“In the context of estates litigation, it is useful to note the Ontario Court of Appeal’s direction that the modern approach to fixing costs in such cases is to carefully scrutinize the litigation and to follow the costs rules that apply in civil litigation, unless public policy considerations dictated otherwise,” wrote Tzimas.

Tzimas tackled a few of the factors under Rule 57.01. As to the complexity and importance of the issues of the case, both sides became entrenched in their respective legal positions, which complicated the issues and the proceedings, wrote Tzimas. As to the parties’ conduct, Cardinal’s allegations against Perreault were reprehensible, while Perreault’s actions, though lacking in efficiency, were not reprehensible, Tzimas wrote.

The court, considering Rule 57.01 factors and the proportionality of costs in relation to what was in issue and to the size of the estate, awarded Cardinal costs of the application for directions at $18,000, which was 60 per cent of his full indemnity costs, and awarded Perreault costs of the application for the passing of accounts at $48,000. The net amount came to $30,000 in favour of Perreault. The court disallowed the translation costs sought by Perreault’s counsel.

All About Estates, a collaborative blog of lawyers, accountants, trust officers and social workers, noted that, in the outcome of the case, “the court declined to order costs payable from a modest estate and instead ordered the two parties (both trustees) to pay costs personally.”