Ontario judge lashes out at successful parties and counsel in estates case
Justice Arthur Gans' criticisms 'offside,' according to one targeted lawyer
An Ontario judge warned of the risks of separate representation in estate litigation as he awarded some of the winning parties in a case a fraction of their requested costs.
InKates Estate, Ontario Superior Court Justice Arthur Gans confirmed the validity of codicils to the will of Helen Kates, the owner of a resort in Algonquin Park. The dismissal of the challenge by two nieces of the deceased meant that Kates’ seven grandchildren inherited equal shares of 75 per cent of the residue of her estate, with the remainder divided among 25 charities.
But in one of his last rulings before his impending retirement at the end of June, Justice Gans took issue with the fees requested by four sets of lawyers acting for the successful parties.
“In my view, while there were ‘joined’ or ‘designated’ multiple parties and hence multiple counsel, some of the parties did not require full-time separate representation, or at least representation after the commencement of trial. As will be discussed later, several (albeit successful) parties are now seeking to feast at the estate trough, excessively and unreasonably,” he wrote in his April 9 costs endorsement.
Justice Gans absolved two firms for doing the “bulk of the heavy lifting” during the trial and in the lead up: Hull & Hull LLP, which represented the estate trustees during litigation, was awarded all of its requested costs at $264,000, while Mills & Mills LLP, acting for the charities, saw a “modest tweak” for duplication, collecting $195,000 compared to a request of $227,000.
But Whaley Estate Litigation Partners, which acted for the Kates grandchildren, bore the brunt of Justice Gans’ ruling, having requested $160,000 in costs, including $44,000 for trial time.
The judge wrote that he was “truly troubled by the claims for costs” submitted by the firm, which was recently named among the country’s top 10 estates law boutiques in Canadian Lawyer magazine.
“No less than seven lawyers docketed time to this brief at hourly rates that are staggering. The duplication at each of the benchmark events is, in my respectful opinion, manifest and accordingly unrecoverable,” Justice Gans added.
Concluding that the firm added “precious little to the prosecution of the case during trial,” the judge allowed $7,500 for its role, plus a further $40,000 for work in the lead up to trial.
“This, in my view, is more than generous. The ‘multiple lawyering’ and complexity of the issues with which this firm was charged, in addition to those matters undertaken by the lead lawyers, does not come close to warranting the amounts claimed,” Justice Gans wrote.
The judge also questioned the need for Theresa Pupulin – a former employee of the resort serving as one of the estate trustees – to have her own counsel throughout trial, suggesting her lawyer Sean Graham could have made “cameo appearances,” rather than attending every minute.
“Furthermore, he took unusual positions on some matters, including late document production, and brought a wasteful motion mid-trial that would have all but derailed the proceedings had I permitted him to continue down that track,” Justice Gans added. “In the final analysis, his fees for the trial will be markedly reduced.”
Balking at Graham’s request for substantial indemnity fees of $140,000 for trial preparation and attendance, the judge found he would be “well compensated” at $40,000. He also awarded Graham a further $40,000 for earlier work ahead of a pre-trial mediation.
In a statement, Graham said he had no comment “aside from being pleased by the trial outcome and appreciative of the Court’s work on the case.”
However, WEL founding partner Kimberly Whaley tells Court Report Canada that she was blindsided by the judgment.
“I do not want to be flippant, as litigation lawyers sometimes face these sorts of comments and I do not want to be on the receiving end of them, the judge’s criticisms of our firm, in my view were offside,” she says.
Otherwise, the costs decision was a good one that her clients were pleased with, Whaley adds.
She explains that it was necessary for her clients to get involved in the challenge once the estate trustees had decided not to propound Kates’ will, out of concern that they would be personally liable for costs if the challenge succeeded.
“I think value was added by our clients’ position at trial, and we were ultimately successful in upholding the testamentary intentions of their grandmother,” Whaley says.
While the residual beneficiaries were aligned in interest, the financial outcomes were very different, and justified separate representation, she added.
“I can only conclude that Justice Gans perhaps did not quite appreciate the circumstances our clients faced in the totality,” Whaley says.
In addition, her firm worked cooperatively with counsel for the charities and the estate trustee during litigation throughout the four-year case, says Whaley, who left her partner Matthew Rendely to handle the trial alone in order to keep costs down.
“The hours involved were reflective of the work done and the hourly rates are market rates,” she says.
Indeed, a summary of requested costs attached to Justice Gans’ ruling shows that only one of the four firms representing the successful parties sought costs at lower average hourly rates for their work on the case.
Richard Worsfold, the Mills & Mills partner who represented the charities in the case, says his clients cooperated with the Kates grandchildren to obtain an expert opinion on capacity, while all parties were involved in an offer to settle rejected by the objectors ahead of trial.
“It is important for parties who are aligned in interest to work together to promote efficiency and proportionality in litigation and the parties in the Kates matter did that,” he says. “I thought that Whaley Estate Litigation did excellent work and that they represented their clients well, as did all counsel involved.”
Paul Trudelle, the partner at Hull & Hull who acted for the estate trustees during litigation, says he was surprised by Gans’ remarks about his fellow counsel at trial.
“I thought it was very unfortunate he made those comments,” he says. “We all worked together to ensure there was no undue duplication, but it’s still very hard. It’s difficult to drop in and out of a trial when you’re not sure what you’re going to miss.”
For Trudelle, the main lesson of the endorsement is for objectors, since Justice Gans’ held Kates’ two nieces personally liable for $324,000, more than half of the $587,000 total costs award. The remainder he ordered paid out of the estate.
“If you’re going to object, you’d better be on solid ground. Otherwise, a substantial award can be made against you,” Trudelle says. “It’s important for parties to always be assessing the evidence that comes out and give serious consideration to settling throughout.”
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