SUPREME COURT OF Nova Scotia
Citation: Hopgood v. Hopgood Estate, 2020 NSSC 18
Date: 20200120
Docket: 451532
Probate: 58689
Registry: Halifax
Between:
Christopher Hopgood
Appellant
v.
Estate of Corinne Mabel Hopgood
Respondent
|
DECISION ON COSTS
|
|
Judge: |
The Honourable Justice Glen G. McDougall |
|
Heard: |
April 3, 2019, in Halifax, Nova Scotia |
|
|
|
|
Counsel: |
Diana Musgrave, for the Appellant William Mahody, for the Intervenor – Cox & Palmer Lawrence Graham, for The Salvation Army Jessica Lyle, for Proctor
|
By the Court:
Introduction
[1] The appeal by Christopher Hopgood from the decision of the Registrar of Probate after the hearing to pass accounts was, for the most part, dismissed in a decision released on April 26, 2018. The only payment made by the Estate’s personal representative for which he was not found responsible for repayment to the Estate was the $6,564.48 he made to Ken Unser by bank draft just prior to Corinne Hopgood’s death. In all, Christopher Hopgood was ordered to repay a total of $697,400 to the Estate. To his credit, he had already admitted to having improperly paid himself an extra $140,000. He paid it back to the Estate and is reflected in my decision.
[2] Counsel for Christopher Hopgood and The Salvation Army, one of the residual beneficiaries of the Estate, could not agree on the issue of costs. Counsel for the Intervenor – Cox & Palmer – and counsel for Mr. Hopgood succeeded in coming to their own agreement on costs. I thank counsel for their efforts in doing so.
[3] It is left to the Court to decide what, if any, costs should be ordered against Christopher Hopgood either to The Salvation Army or to the Estate. Ultimately, it is for the Estate to pay costs to the Salvation Army which took on the role of challenging some of the payments made by the personal representative all of which came at the expense of the five residuary beneficiaries. The Proctor for the Estate took no active role in challenging the legitimacy of these various payments either at the hearing before the Registrar or during the court appearance to decide whether Cox & Palmer should be allowed to intervene or the hearing of the appeal proper.
[4] I will deal first with counsel’s argument that The Salvation Army cannot now seek costs from Mr. Hopgood because they did not first seek to be added as a party or, alternatively, as an intervenor.
Issue #1
[5] Does The Salvation Army, as a residuary beneficiary, have standing to seek costs without having first been named as a party or, alternatively, as an intervenor prior to the hearing of the appeal?
[6] Counsel for Christopher Hopgood takes the position that the court cannot order costs against her client in favour of The Salvation Army, one of the five residuary beneficiaries under Corinne Hopgood’s Will. She argues that only Christopher Hopgood, in his personal capacity, and the estate of Corinne Hopgood are parties to his appeal of the Registrar’s decision that he must personally pay to the estate the sum of $865,115. According to Ms. Musgrave, if The Salvation Army intended to seek costs, it should have moved to be joined as an intervenor. In her brief, she states – without authority – that once a decision has been rendered, the court cannot add a party “for the sole purpose of seeking costs personally against the Appellant”.
[7] At the costs hearing, counsel for The Salvation Army, Lawrence Graham, said it never occurred to him that there might be an issue with respect to his client’s standing to participate in the appeal. He informed the court, however, that even if costs cannot be awarded directly to The Salvation Army, the residuary beneficiaries agree that if costs are awarded against Mr. Hopgood personally, payable to the estate, then The Salvation Army’s legal costs will be paid out of the estate in advance of the distribution.
[8] Neither party provided the court with any authority on the point. Unfortunately, I have not found any relevant case law, either. Accordingly, we must rely only on the statute and the regulations to determine whether The Salvation Army ought to have applied to be added as an intervenor.
The Probate Act
[9] Under s. 69(1) of the Probate Act, S.N.S. 2000, c. 31, a personal representative has a duty to give the court an accounting of the administration of an estate. An application for the passing of accounts is heard by the registrar: s. 97(3). Sections 71 to 73 set out the registrar’s powers on passing the accounts:
71 On passing the accounts of the personal representative, the court may
(a) enter into and make full inquiry and accounting of and concerning the whole property that the deceased was possessed of or entitled to, and the administration and disbursement thereof, including the calling in of creditors and adjudicating on their claims, and for that purpose take evidence and decide all disputed matters arising in the accounting; and
(b) inquire into and adjudicate on a complaint or claim by a person interested in the taking of the accounts of misconduct, neglect or default on the part of the personal representative and, on proof of the claim, make any order the court considers necessary, including an order that the personal representative pay such sum as it considers proper and just to the estate, but any order made under this subsection is subject to appeal.
72 (1) On passing of accounts the court may
(a) order that
(i) the accounts of the personal representative are passed and bills of costs are taxed pursuant to Section 91,
(ii) the personal representative is discharged,
(iii) any security be released,
(iv) the estate remaining undistributed after the passing of accounts be distributed among the persons entitled; and
(b) make any other order it thinks necessary to settle the estate.
(2) Where there is a contest as to how the remaining assets are to be distributed, the court shall hear evidence and determine who are the persons entitled to participate in the surplus of assets and the shares that they are respectively entitled to receive.
73 On passing the accounts of the personal representative and the distribution of the estate or in any matter relating thereto, a court has the same powers as the Supreme Court.
[10] Section 98 gives “any person interested in the estate” the right to appear at the hearing:
98 At the hearing of any application pursuant to this Act any person interested in the estate may appear at the hearing either personally or by counsel and may adduce evidence, cross-examine any witness called by any other party, re-examine any witness and make submissions and arguments.
[Emphasis added]
[11] The phrase “any other party” in s. 98 implies that “any person interested in the estate” who participates in the hearing is considered a party. Party status is also consistent with the procedural rights afforded to the interested person. Section 93 of the Act, which deals with appeals, also refers to “any party”:
93 (1) Any party aggrieved by an order or decision of the registrar, other than a grant, may in the prescribed manner, appeal from the order or decision of the registrar to the judge.
(2) On an appeal taken pursuant to subsection (1),
(a) the judge may hear such appeal and, where the judge thinks fit, any of the parties thereto may adduce the same evidence as that given before the registrar and, so that the judge may hear the same evidence and any further or other evidence, any further or other evidence and the judge may confirm, vary or set aside the order or decision appealed from, and may make any decree, order or decision which the registrar should have made;
(b) the judge may rescind, set aside, vary or affirm the order or decision appealed from or make any decision or order the registrar could have made;
(c) costs of the appeal are in the discretion of the court.
[12] Taken together, ss. 93 and 98 suggest that any person interested in the estate is entitled to appear, as a party, at the hearing for the passing of accounts, and, on an appeal, may adduce the same evidence as put before the registrar. Section 93 also states that any party aggrieved by the registrar’s decision may appeal, which would include The Salvation Army. It would make little sense for The Salvation Army to have party status if it filed the appeal, but to have no standing on the appeal filed by another party.
The Probate Court Practice, Procedure and Forms Regulations
[13] The Probate Court Practice, Procedure and Forms Regulations, NS Reg 119/2001, are divided into four parts – Part I – General; Part II – Non-contentious Matters; Part III – Accounting, Settlement and Distribution; and Part IV – Contentious Matters. Applications for the passing of accounts are discussed in Part III, which comprises ss. 52 to 62.
[14] Under s. 52(1)(a), a residuary beneficiary is a person interested in the estate for the purposes of an application for the passing of accounts. Section 55(3) provides that a personal representative who applies for an order for passing the accounts shall serve a copy of the application, a copy of the accounts, and a blank notice of objection on each person interested in the estate not less than 30 days before the date set to pass the accounts. Section 55(3) states that where no completed notice of objection is filed with the court, the application for the passing of accounts may proceed without further notice. Section 58 of the regulations deals with notices of objection. Section 58(3) provides that a person who has not filed and served a notice of objection is deemed to have consented to the administration of the estate as contained in the accounts and may only make representations at the hearing with the registrar’s permission.
[15] Section 59 sets out the registrar’s powers on an application for the passing of accounts which are in addition to the powers under ss. 71 and 72 of the Probate Act. Section 59(h) empowers the registrar to “adjudicate a disputed matter in accordance with Sections 66 or 71 of the Act, and set the procedure the parties shall follow and time limits, if appropriate”.
[16] There is noting in Part III in relation to appeals from a registrar’s decision on an application for the passing of accounts.
[17] Part IV of the regulations deals with “contentious matters”, including applications for revocation or a grant (s. 70) and applications for proof of a will in solemn form (s. 71). Section 63(1) provides that a person interested in an estate, for the purposes of Part IV, is a personal representative, or any of the persons referred to in subsection 52(1). Section 64 provides, in part:
64 (1) An application may be made to a court under this Part respecting any contentious matter.
(2) For the purposes of this Part, a “respondent” includes but is not limited to any person interested in an estate.
…
[Emphasis added]
[18] Section 70 deals with applications for revocation of a grant, and includes the following:
70 (2) A court may direct that any person interested in an estate be made a party to the proceeding for revocation of a grant.
[19] Similarly, s. 71 which governs applications for proof in solemn form states:
71 (3) All persons known to have an interest in upholding or disputing the validity of the will shall be served with a copy of the application referred to in subsection (1) in accordance with Section 65 and shall have the right to be joined as parties.
[20] Interestingly, the section dealing with appeals is also contained in Part IV – Contentious Matters:
75 (1) An appeal pursuant to Section 93 of the Act from a decision or order of a registrar shall be commenced by any party aggrieved by the order or decision by
(a) filing 4 copies of a notice of appeal with the registrar;
(b) serving 1 copy of the notice of appeal on the respondent, if any; and
(c) serving 1 copy of the notice of appeal on the personal representative, if the personal representative is not the appellant or the respondent,
not later than 30 days after the date of the registrar’s decision or order.
…
(5) The judge may direct what material may be filed for the hearing of an appeal and may request clarification of the case from the registrar.
[Emphasis added]
[21] It should be recalled that, s. 93 of the Probate Act, upon which Christopher Hopgood relied in filing his appeal, states that any party aggrieved by an order or decision of the registrar, other than a grant, may appeal to the court. This broad language would include a decision on a passing of accounts. It appears, however, that the drafters of the regulations did not turn their minds to the possibility of an appeal from this kind of application. While an application for the passing of accounts is not a contentious proceeding by definition, it becomes contentious where a person interested in the estate objects to the accounts and chooses to participate in the hearing.
Analysis
[22] The status of a residuary beneficiary on an appeal from a decision on a passing of accounts brought by another party is a novel issue in Nova Scotia. In my view, however, ss. 93 and 98 of the Probate Act support the conclusion that a residuary beneficiary who files a notice of objection to the application for the passing of accounts is entitled to participate in the hearing as a party, with all the attendant rights, including the right to call evidence and cross-examine witnesses called by any other party, and, on an appeal, the right to call that same evidence and cross-examine witnesses before a judge.
[23] While the Probate Court Practice, Procedure and Forms Regulations do not address appeals from an application for the passing of accounts, this appears to be an oversight. Although appeals under the Act are dealt with in Part IV of the regulations – Contentious Matters, and applications for the passing of accounts are dealt with in Part III, s. 93 of the Act permits an appeal from any decision of the registrar, including a decision on an application for the passing of accounts. Part IV of the regulations makes clear that residuary beneficiaries have the right to participate, as a party, in any contentious probate proceeding. This fact, when considered together with ss. 93 and 98 of the Act, supports a finding that a residuary beneficiary has standing on an appeal from a decision of the registrar on an application for the passing of accounts.
Resolution of the Issue
[24] I find that The Salvation Army is a party and, as such, is entitled to costs. I do so on the basis that, as a residuary beneficiary, it filed a notice of objection and fully participated in the hearing for the passing of accounts before the Registrar. It also carried the load for the four other residuary beneficiaries on the hearing of Christopher Hopgood’s appeal from that decision to this Court.
[25] Sections 93 and 98 of the Probate Act suggest that any person interested in the Estate is entitled to appear, as a party, at the hearing for the passing of accounts, and, on an appeal, may adduce the same evidence as put before the registrar. Section 93 also states that any party aggrieved by the registrar’s decision may appeal, which would include The Salvation Army. Although appeals are only dealt with in Part IV of the regulations, applicable to contentious matters, s. 93 of the Act allows an appeal from any decision of the registrar. This broad language would include an appeal from a decision on an application for the passing of accounts, which can become a contentious matter when interested persons file notices of objections and participate in the hearing. Part IV of the regulations makes clear that a residuary beneficiary has the right to participate, as a party, in any contentious probate proceeding. It is therefore possible, based on the Act and the regulations, to conclude that The Salvation Army is a party in Mr. Hopgood’s appeal.
[26] If I am wrong in reaching this conclusion and The Salvation Army had to apply to be added as a party, I exercise my discretion under Civil Procedure Rule 2.03 to forgive the irregularity and add The Salvation Army as a party now. Rule 35.08(1) provides that a judge may join a person as a party in a proceeding at any stage of the proceeding. The Salvation Army was, in effect, representing all five residuary beneficiaries at the original hearing and on the appeal. I say this because the other residuary beneficiaries initially consented to the accounts, and only revoked their consent and filed notices of objection when The Salvation Army filed its notice of objection. They also agreed that if costs were awarded to the Estate, The Salvation Army’s costs would be paid prior to any distribution to the residuary beneficiaries. Furthermore, the Estate elected not to hire its own counsel for the hearing or the appeal, preferring to let The Salvation Army take the lead and incur those costs instead. Under Rule 35.08(2), it is presumed that the effective administration of justice requires each person who has an interest in the issues to be before the court in one hearing. In this case, the Estate was unwilling to act, and The Salvation Army stepped in to protect the interests of the residuary beneficiaries. Its submissions were of assistance to the court, and it would be inequitable to deny The Salvation Army its costs in these circumstances.
Issue #2
[27] What is the appropriate award of costs in this case?
[28] The amount of costs to be awarded can, for the sake of convenience, be paid to the Estate and then flow through from the Estate to The Salvation Army once its final account as been sent to the Registrar to be taxed and approved.
The Appellant’s Position on Costs
[29] Counsel for the Appellant submits that, if costs are to be awarded, it should be under Scale 1 of Tariff A of Civil Procedure Rule 77 – Costs. In her brief, she sets the amount involved at $691,000. This falls between $500,000 and $750,000 and based on Scale 1, this would result in party and party costs of $37,313.
[30] To this she would recommend adding an additional $6,000 representing $2,000 per day for the three days I Court dealing with the appeal.
[31] In all, she asks the Court to limit costs, if awarded at all, to $43,313.
The Salvation Army’s Position on Costs
[32] Mr. Graham, on behalf of The Salvation Army, urges the Court to award costs based on Tariff A. He suggests that the amount involved is $865,115. He further urges the Court to apply Scale 2 (Basic) which would result in an award of $64,750 to which should be added $6,000 (ie. $2,000 a day for 3 days) for a grand total of $70,750.
[33] Alternatively, if the Court decides that Tariff C should apply, counsel recommends the $6,000 total per diem be multiplied by a factor of 4 and increased to $60,000 in a lump sum amount.
Court’s Ruling on Costs
[34] The authority to award costs in Estate matters is found in the Probate Act, S.N.S. 2000, c. 31 (as amended). Section 92 of the Act states:
Costs in contested matters
92 (1) In any contested matter, the court may order the costs of and incidental thereto to be paid by the party against whom the decision is given or out of the estate and if such party is a personal representative order that the costs be paid by the personal representative personally or out of the estate of the deceased.
(2) An order made pursuant to subsection (1) may be reviewed by the Nova Scotia Court of Appeal or any judge thereof in chambers, upon notice given in the prescribed manner and form by the party aggrieved to the opposite party, and such order may be made thereon as the Court or the judge considers just and proper.
(3) An order for the costs of an application may be made personally against a personal representative where the application is made as the result of the personal representative failing to carry out any duty imposed on the personal representative by this Act.
(4) An order for costs in an application may be made personally against a personal representative who has made the application where the application is frivolous or vexatious.
[35] The Probate Act also recognizes the application of the Civil Procedure Rules where the Act or the Probate Rules do not cover. At Section 102, the Probate Act states:
Application of Civil Procedure Rules
102 Where no provision is made in this Act or in the Probate Rules with respect to practice or evidence and in so far as this Act or the Probate Rules do not extend, the Civil Procedure Rules apply.
[36] In Casavechia v. Noseworthy, 2015 NSCA 56, Oland, J.A., at paragraph [71], quoted from an earlier decision of the Nova Scotia Court of Appeal in Prevost Estate v. Prevost Estate, 2013 NSCA (2), as follows:
[71] This Court’s most recent statement on costs in estates litigation is found in Prevost Estate. There, Bryson J.A. for the Court stated:
[17] It is often the case that parties in an estate dispute are awarded costs out of the estate. An adverse party may receive party-and-party costs; an executor or trustee will usually receive solicitor-client costs by way of indemnity. One cannot assume judicial generosity in all of these cases. Much will turn on whether or not the contested issue arises from conduct of the deceased. Generally, if the need for resort to the court was caused by the testator, costs will be borne by her estate, (MacDonell, Sheard and Hull Probate Practice, 4th ed. (Scarborough, Ont: Carswell, 1996) pp. 372-381). …
[37] In Wittenberg v. Wittenberg Estate, 2015 NSCA 79, Bryson, J.A., beginning at paragraph [91] et sequentes provides a clear and concise review of the evolution of costs in Estate matters.
[38] I do not think it necessary to reproduce what Justice Bryson wrote in its entirety. I do note, however, that he referred to what he had been previously stated in Prevost Estate.
[39] At paragraphs [99] and [100], Justice Bryson also said:
[99] To the extent that there was a traditional practice of paying costs of all parties out of the estate, those days are over. Provided that a personal representative is discharging her duties and is acting reasonably, she can be expected to be indemnified from the estate. Not so with an adverse party, who may obtain party-party costs if successful, but may have to bear her own costs or even have to pay them, if unsuccessful. If the court proceeding can be ascribed to conduct of the deceased or residuary beneficiaries, a losing party may still recover costs from the estate, although usually on a party-party basis (Casavechia, supra; Townsend v. Doherty, 1993 O.J. No. 713, per Borins J. as he then was; Gamble v. McCormick, 2002 O.J. No. 2694 (S.C.J.); Holzel v. Mjeda, 2000 ABQB 549; Oldfield v. Oldfield Estate, 1994 O.J. No. 2529).
[100] Awarding costs against or out of an estate means that the expense usually is borne by the residuary beneficiaries. It is appropriate to ask whether that is a proper burden for them to bear. Where the personal representative is discharging her duties and there is no other unsuccessful party to share at least some of the burden, there is nothing that can be done to mitigate this indirect charge on the generosity of the testatrix, at the expense of the residuary beneficiaries. But where, as here, there is an unsuccessful party who is the cause of the litigation, it is proper that the unsuccessful party bear much of the burden. …
[40] In the appeal of the Registrar’s decision, the appellant was acting in his personal capacity. He was found to have exceeded his authority and his duty to properly administer the Estate on behalf of the beneficiaries specifically the residuary beneficiaries who have agreed that The Salvation Army should be paid its reasonable legal fees and disbursements from the Estate prior to final distribution. That amount will be left to the Registrar of Probate to determine.
[41] No one has suggested that the appellant should cover the costs that the Estate will incur on a solicitor/client basis. Although the appellant’s conduct, in paying himself and other members of the testatrix’s family considerable sums of money that were not provided for in the Last Will and Testament of the deceased, was a serious abuse of his authority. I do not think it rises to the level of egregious conduct that would warrant an award of costs on a solicitor/client basis. It does, however, warrant an award of costs that represents a significant contribution to the actual amount that will have to be paid. I believe this can be done by resort to Tariff A, Scale 2 (Basic).
[42] I set the amount involved at $671,059.52. I arrive at this figure based on the amount the Registrar ordered the appellant to repay to the Estate which was $851,655. From this I deduct the amounts the appellant acknowledged he should not have paid which includes:
1. $140,000 “pre-death financial obligation” he paid to himself;
2. $20,841he paid to his daughter;
3. $10,000 he paid himself for acting as his aunt’s attorney;
4. $1,500 cheques he wrote to himself and to Nancy Unser for acting as attorney for the deceased testatrix prior to her death which cheques had not cleared the bank before she died ($3,000 in total);
5. $190 he reimbursed himself for expenses related to a relative’s funeral in 1981.
[43] The sub-total amounts to $677,624. From this I deduct a further sum of $6,564.48 paid to Ken Unser which was beyond the Registrar’s jurisdiction to order repaid.
[44] Using Tariff A, Scale 2 (Basic) this results in a costs award of $49,750 to which should be added an additional $6,000 (ie. $2,000 per day x 3 days) for a total of $55,750.
[45] Once the Registrar of Probate has taxed the account of counsel for The Salvation Army, any additional amount approved will be paid by the Estate, along with other legitimate Estate expenses, prior to distribution to the five residuary beneficiaries in accordance with the terms of the Will.
[46] I ask counsel for The Salvation Army to prepare and present the order reflecting this decision.
Glen G. McDougall, J.