Gray Estate v Gray

Gray Estate v Gray Court Supreme Court Date 2020-09-02 Citation 2020 NSSC 235 Docket Hfx No. 447609 Judge/Registrar/Adjudicator Warner, Gregory M. (Honourable Justice) Document Type Decision Decision Content SUPREME COURT OF NOVA SCOTIA Citation: Gray Estate v Gray, 2020 NSSC 235 Date: 2020-09-02 Docket: Hfx No. 447609 Registry: Halifax Between: Douglas Garrison, as Executor of the Estate of Lila Gray Plaintiff v. Aerial Scott Gray and Meghan Sampson Defendants Judge: The Honourable Justice Gregory M. Warner Last Submission: August 10, 2020 Counsel: Judith Schoen, counsel for the Plaintiff Wayne A Bacchus and Igor Yushchenko, counsel for the Defendants By the Court: [1] This costs decision relates to this Court’s decision issued as 2020 NSSC 155. [2] Lila Gray (“Lila”) commenced, and her Estate pursued, an action against her son Scott Gray (“Scott”) and, in respect of the real property claims, her granddaughter (to whom Scott had conveyed a joint interest). [3] The Court found that Scott Gray breached his fiduciary duties as attorney for his mother and took her investments and much of her money for his own benefit without her knowledge or consent. He failed at any time to keep, and after a request to provide, an accounting of the monies he took from his mother’s accounts and investments. [4] Judgment was granted against Scott in an amount of $101,683.11. [5] The Court dismissed Scott Gray’s counterclaim (and set off claim) against Lila Gray for expenses incurred and services rendered to her. [6] In addition, in July 2014, Scott caused his mother (then age 89) to sign deeds in his favour for her home at Sambro and his home at Birchwood Road (which property he had conveyed to his father, Lila Gray’s late husband, Aerial Gray (“Aerial”), when Scott’s wife was ill). [7] The Court found the two conveyances to be void/voidable on the basis of undue influence and non est factum. The Court declared the Estate to be the sole owner of the Sambro property. However, because the late Aerial Gray effectively held the Birchwood Road property for the benefit of Scott and his late wife, declined to order the Plaintiff’s request for reconveyance of the Birchwood Road property to Lila Gray’s Estate. PLAINTIFF’S SUBMISSIONS [8] When Lila Gray learned that her monies were gone and she no longer owned her home in October 2015, she retained counsel. [9] On March 16, 2016, she offered to settle her claim for the following: 1. a Quit Claim Deed for the Sambro property, 2. the return of $36,000.00 Scott took from her TFSAs, 3. the life insurance proceeds paid on Aerial’s death ($50,000.00) less some expenditures on her property (estimated at trial at about $7,000.00), 4. legal costs of $2,000.00. [10] The offer was refused. (A counteroffer was made later in March.) [11] The Court’s decision was more favourable to the Estate than this offer to settle. [12] The Estate enumerated many events after March 16, 2016, that it claims should impact a costs award, including: 1. the Defendant’s contest of the Plaintiff’s application to preserve the two properties pending trial, which preservation order (injunction) was granted (and unsuccessfully appealed by the Defendants), 2. failure of the Defendants to provide discovery undertakings, 3. Scott Gray’s failure to provide at any time an accounting of his actions pursuant to the Power of Attorney for Lila, 4. the late demand for Lila Gray’s medical files, late adjournment requests and wasting Court time at the beginning of the trial, and, 5. failure to turn over to the Estate the $36,000.00 that Scott paid into his lawyer’s trust account, despite apparently admitting that it came from Lila’s TFSA accounts. [13] The Plaintiff submits that costs should be awarded to it on the basis of Tariff A, Scale 3, based on an “amount involved” of $300,000.00 or, alternatively, using the “substantial contribution-lump sum” approach. Invoices for the Plaintiff’s accounts were provided to the Defendant but not the Court. To her March 16, 2016, settlement offer, the Plaintiff’s costs totalled $2,644.94 (fees, disbursements and HST). After March 16, 2016, they totalled $58.439.39. [14] The Plaintiff cites several provisions of Civil Procedure Rule 77 (“Rule”) relating to costs. [15] The Plaintiff lists six “facts” that leave “no doubt” that Tariff A, Scale 3 applies. [16] Some of the facts are not relevant to costs: the fact that Lila was greatly distressed when she learned that Scott owned her home; similarly, the fact that Scott improperly refused to return to Lila the $36,000.00 that he transferred from her TFSA to his own. [17] The fact that Scott failed, contrary to his fiduciary duty, to provide any reasonable accounting at any time (and only produced some documents before and during trial) is a relevant consideration. It added to the Plaintiff’s costs, and the complexity and length of the trial. [18] The fact that he was providing some disclosure during the trial and failed to fulfill discovery undertakings in a timely manner, added complexity to the proceeding. [19] The fact that Scott acknowledged at trial that he “lied” on discovery, and that he took no steps to correct the lies before trial, was bad conduct. [20] The Plaintiff submits that the “amount involved” was over $300,000.00. Tariff A, Scale 3 for an “amount involved” of $300,000.00 to $500,000.00 is $43,438.00.00. Adding six trial days at $2,000.00 per day, makes a total of $55,438.00, plus disbursements. [21] Counsel repeats that the complexity of trial and the need for the Defendants to provide the Defendants’ finances increased the Plaintiff’s costs. Counsel refers the Court to Weilgart v. Whitehead, 2019 NSSC 221 (“Weilgart”), at paragraph 21, and Godin v. Godin, 2014 NSSC 46 (“Godin”). [22] Alternatively, the Plaintiff submits that the “substantial contribution” approach, as described in Armoyan v. Armoyan, 2013 NSCA 136 (“Armoyan”), at paragraphs 23, 27 and 37, applies. This approach would result in costs to the Plaintiff of 66% of her pre-settlement offer costs and 80% of her post-offer costs, or $48,497.17. [23] The Plaintiff notes that, despite not seriously contesting that the Defendant took $36,000.00 from Lila’s TFSAs, he refused to pay it until ordered to do so by this Court. [24] The Plaintiff submits that the Defendants should be jointly liable for costs. DEFENDANTS’ SUBMISSIONS [25] The Defendants say that there were three issues decided at trial: the ownership of the Sambro home, the ownership of the Birchwood Road home, and whether Scott Gray accounted for Lila’s money, which he handled via the Power of Attorney. [26] Success was divided. The Plaintiffs won on issues one and three, and the Defendant was ordered to pay $106,020.00 less $36,000.00 or $70,020.00. The Defendants won issue two. Therefore, the “amount involved” for issues one and three was $155,200.00 (assessment of the Sambro property) and $70,020.00; for issue two, the “amount involved” was $162,500.00 (assessment for Birchwood Road property). The Defendants submit that the net success in favour of the Plaintiff was $62,620.00. [27] The Defendant does not dispute the law cited by the Plaintiff but, citing paragraphs 17 to 22 in Armoyan, argues that the Armoyan approach does not apply because of the split success of the parties in this proceeding. [28] The Defendant submits that Tariff A is the appropriate approach. He submits that the Plaintiff’s conduct “was not beyond reproach”. She “lied” when she pleaded that she jointly owned the Birchwood Road property, when in fact the property became hers via the will of Aerial Gray. She also filed for default judgment the day after the time to file a defence passed. (The Court notes in the Plaintiff’s reply, she writes that she had given notice that no time extension to file would be given.) [29] Based on this conduct, Scott Gray says costs should be assessed against him on Scale 1, and in favour of Ms. Sampson on Scale 3. [30] In reply to the Plaintiff’s brief, the Defendants submit that: 1. The Plaintiff gives no particulars of Scott’s alleged lies at discovery. 2. It was not apparent that no accounting would be forthcoming from Scott, and “it was clear that the defendant [Scott] Gray provided an accounting to the best of his knowledge and ability”; he blamed his inability on the fact that Lila used cash to pay her bills. 3. In reply to Lila’s March 16, 2016 settlement offer, Scott made this “very reasonable counteroffer” on March 29, 2016: i. He would transfer the Sambro property to Lila, ii. He would return $36,000.00, iii. He would have unrestricted and exclusive access to the garage at Sambro to recover his tools and materials. 4. The costs of the Defendant’s appeal of the injunction (that prevented sale of the two properties pending the litigation) were already paid. 5. The Defendant’s late request for Lila’s medical file was because its relevance only became apparent when the Plaintiff produced, on December 5, 2017, the metadata of Lila’s unsworn affidavit, that was requested at her discovery on April 26, 2017. It was only in January 2018 that the Defendant agreed to obtain the medical file. Moreover, that medical file was relevant to Lila’s pleading of non est factum. The majority of the wasted time on day one of the trial could have been avoided if the metadata and medical files had been provided earlier. 6. The Plaintiff’s submission that the Defendants had not spoken to the LRO employee causing her to be subpoenaed was not true; that submission was malicious and defamatory. 7. The transfer by Scott of the two properties to himself and Ms. Sampson was joint tenants, one month before the Action was filed, was not bad conduct. 8. The $36,000.00 taken from Lila’s TFSA was not returned because counsel agreed in May 2017 that the funds would be kept in Defence counsel’s trust fund. (The Court read the attached May 5 and 7, 2017 correspondence attached to the brief. Counsel’s May 5th letter proposed to put the money into his trust account “as there is the will contestation action” until settlement or a Court directs release. It does not acknowledge that it was money belonging to Lila Gray or that would be paid to her. The Defendant’s counterclaimed and sought a set off for any monies found by the Court to be owed by Scott to Lila.) [31] Scott Gray submits that the “amount involved” is $62,020.00, and that he alone is liable for costs, which should be calculated on Tariff A, Scale 1 at $5,138.00 plus five days at $2,000.00, for a total of $15,138.00. [32] From that Scott seeks to offset expenses he incurred “because of the injunction” – in particular, interest of $16,408.97, and $708.47 in expenses regarding the Sambro property. [33] He claims that the Plaintiff owes him the difference of $2,022.54. [34] Scott Gray’s claim for interest because of the injunction is supported by his Affidavit filed with the submission. In it he states that he was enjoined from selling his house to pay his lawyer and, in the meantime, interest on his legal fees as of May 20, 2020 was $16,408.97. No information as to how the interest was calculated was included in the affidavit or brief. About proof of the particulars and an analysis of how interest owed to his lawyer because of a lawful injunction, the Court disregards this submission. [35] In their costs brief, the Defendants ask that the injunction be “clearly removed from” the Birchwood Road property. No Notice of Motion was filed. [36] The Defendants further submits that Ms. Sampson was successful “in the of $7,400.00 (the difference between assessment in the two properties) and should get costs based on Tariff A, Scale 3, plus six days of trial, for a total of $17,000.00. PLAINTIFF’S REPLY [37] Counsel says the Defendant’s brief and affidavit to end the injunction needs to be made on motion and is not properly before the Court. The Court noted that there was no evidence at trial about the injunction. Nevertheless, the Plaintiff is eager to end the litigation, and writes that the Plaintiff would consent to vacating the injunction if provided with an Order drafted by the Defendant. [38] The Plaintiff argues that the Defendants’ settlement offer was not reasonable and less than one-quarter the Court’s judgment. Counsel notes that the Plaintiff did not seek return of the Birchwood Road property in her settlement offer. [39] Finally, the Plaintiff submits that Ms. Sampson is not entitled to costs. [40] The Plaintiff says that the Defendant’s March 27, 2016 counteroffer was not reasonable and only one-quarter ($36,000.00) of the Court’s ultimate judgment ($101,683.12). [41] Finally, the Plaintiffs submit that Ms. Sampson is not entitled to any costs. analysis [42] Costs awards are governed by Rule 77. [43] Rule 77.02 gives the Court discretion to make any order of costs that will do justice between the parties. The discretion is not to be exercised arbitrarily, nor is it unlimited. It gives some flexibility in the application of the principles set out in the Rules and the case law. [44] It starts with the general proposition that costs of a proceeding follow the result. The Rules provides for different awards based on the type of proceeding through six tariffs. Case law in Nova Scotia overlays the application of the formulae contained in the respective tariffs, with the overriding principle that a successful party should recover a substantial proportion but not all of its reasonable litigation costs. [45] Tariff A is applicable the circumstances of this case, subject to the exercise of judicial discretion. [46] Application of Tariff A involves two steps. First is the determination of the “amount involved”, and second is the determination of the appropriate scale to the “amount involved”. The rule reads: a) Where the main issue in a proceeding is a monetary claim, which is allowed in whole or in part, the “amount involved” is determined having regard to: i. the amount allowed, ii. the complexity of the proceeding, and iii. the importance of the issues; b) where the main issue is a monetary claim which is dismissed, an amount determined having regard to i. the amount of damages provisionally assessed by the court, if any, ii. the amount claimed, if any, iii. the complexity of the proceeding, and iv. the importance of the issues; [47] Section (b) is relevant to the Defendant’s counterclaim. [48] Tariff A provides for three scales. Scale 2 is the Basic Scale; Scale 1 reduces party-and-party costs by 25% and Scale 3 increases costs by 25%. [49] CPR 77.07 provides that a judge who fixes costs may add or subtract an amount from the Tariff costs. It sets out a non-exhaustive list of eight relevant factors. The eight factors include: (b) a written offer of settlement, whether made formally under Rule 10 - Settlement or otherwise, that is not accepted; (e) conduct of a party affecting the speed or expense of the proceeding; (f) a step in the proceeding that is taken improperly, abusively, through excessive caution, by neglect or mistake, or unnecessarily; [50] As noted, the Tariff A approach is the appropriate starting point. Rule 77.07 allows for tariff costs to be added to or subtracted from. [51] Adjusting tariff costs to “do justice between the parties” (Rule 77.02) permits the court to consider a partial but substantial indemnity of a successful party’s reasonable costs. [52] Reliance on the lump sum approach (Rule 77.08) to achieve a partial but substantial contribution to the successful party’s actual costs is not the normal approach and should be reserved for litigation that does not fit easily in the Tariff approach. (See, for example: Geophysical Services Inc. v. Sable Mary Services Inc., 2010 NSSC 357, Wadden v. BMO Nesbitt Burns, 2014 NSSC 11, and NBFL v. Potter, 2014 NSSC 264) [53] The settlement offers in March 2016, just before the action was filed, can be considered under Rule 77.07(1)(b). [54] In this case, the Plaintiff was successful at trial. The Defendant Scott Gray’s counterclaim was dismissed. The conveyances were found to have been wrongly obtained, but a remedy was denied respecting one of the two properties in the names of the two Defendants. [55] The Defendant Meghan Sampson was only added as a Defendant by reason of Scott Gray’s transfer of the Sambro and Birchwood Road properties to himself and her as joint tenants. Ms. Sampson did not participate in the trial. She was represented by the same counsel as Scott Gray. No time nor costs of trial was incurred as a result of her being a party. She was joined only to enforce any remedy that may have resulted from a finding of wrongdoing by Scott. [56] Defence counsel seeks costs in favor of Ms. Sampson. This is a non-starter for several reasons: 1. She did not participate, and her status added nothing to the trial’s length or costs. 2. The Court determined that Scott Gray obtained the Deeds for two properties by wrongdoing, and then conveyed a joint interest to Ms. Sampson for no consideration. Her interest in the Sambro property was voided by the Court’s decision, and her retention of the joint interest in the Birchwood Road property was in spite of Scott Gray’s wrongdoing. 3. As will be dealt with further respecting costs between the Estate and Scott Gray, before she commenced her action, Lila offered to settle for return of the Sambro property, her TFSAs and the insurance proceeds and Aerial Gray’s life insurance proceeds. She did not seek return of the Birchwood Road property. 4. If this offer had been accepted (it was less favourable to the Estate than the Court’s eventual determination), Ms. Sampson would not have been a defendant. 5. Ms. Sampson was not entirely successful since she lost her joint interest in the Sambro property. [57] As between Lila Gray’s Estate and Scott Gray, the Plaintiff was substantially successful and is entitled to costs. The issue is the amount. [58] I conclude that the proper approach – the starting point – is the Tariff A approach. [59] The first issue is to determine the appropriate “amount involved”. [60] The issues were all monetary. The tax assessment on Sambro Wharf Road was $155,200.00 and on Birchwood Road was $162,000.00. The damages awarded for Scott’s breach of his fiduciary duty to his mother was $101,682.11. (The Court’s written decision stated $106,020.00 but, post-decision, counsel agreed to a lesser amount.) [61] Scott Gray advanced a substantial counterclaim, in part as a set off for monies he took from Lila’s accounts, and, in part, on the unjust enrichment principle with resect to alleged services. [62] I conclude that the proper “amount involved” for determination of the Estate’s costs claim is $256,000.00, being the Sambro property tax assessment (not the subsequent sale price) and the monetary damages awarded. [63] I do not include the value of Birchwood Road, despite finding the transfer was unlawful, nor do I deduct (as asked by Scott) the assessed value of the Birchwood Road property. I exercise my discretion to not include the amount of Scott Gray’s inflated and artificial counterclaim for services (unjust enrichment). [64] The second step of the analysis relates to the complexity of the proceeding. [65] It is relevant that Scott, when Lila asked formally for an accounting of where all her money went, had a fiduciary duty to account and never provided anything that would approximate an accounting. He provided some documents before and during the trial, but they were meaningless in the context of an accounting. [66] Many of the transfers out of Lila’s accounts were made to Scott’s bank accounts. He never provided his own bank account records. [67] Mr. Garrison was left to reconstruct a semblance of an accounting. He struggled. The trial was adjourned twice (during the trial) to allow for something better than what Mr. Garrison had reconstructed. This added to the complexity of the trial. I lay blame entirely at Scott’s feet. [68] Both parties allege bad conduct by the other during this litigation. While the Court was unimpressed with Scott’s evidence, and my conclusion that his wrongdoings were serious, it was not the kind of “bad conduct” that affected the complexity, speed or expense of the proceeding, except in failing to provide an accounting. [69] As in every proceeding, “the importance of the issues” is significant to the litigants. [70] Independent of their importance to the litigants, I am not certain whether Scott’s actions towards his mother amounted to “elder abuse”, an important societal concern, or an assumption by Scott that as Lila’s only child he had a right to her money, and greed. [71] This proceeding was neither simple nor unusually complex Application of a Scale 2 is the appropriate Scale. Scale 2 provides for costs of $17,063.00, plus $2,000.00 per day for six trial days, or $12,000.00, for a total of $29,063.00. [72] The Defendants says that the wasted first day was not his fault. In my view, the Defendants’ late disclosure and failure to provide an accounting was the cause of all the delay. [73] I may increase or decrease the Tariff costs based on factors, such as those in Rule 77.07. [74] I have already noted that Scott’s failure to provide an accounting affected the speed and expense of the trial. [75] Also relevant are the offers to settle exchanged in March 2016. [76] Lila offered to settle for the return of her home, the $36,000.00 that Scott acknowledged taking from her TFSAs, and the proceeds on Aerial’s life insurance policy less some expenses (with receipts) Scott claimed to have incurred. [77] In contrast, Scott’s counteroffer was far less favorable to him than the Court’s judgment against him. [78] These two factors merit an increase in the Tariff costs. [79] The Defendant argues that Scott put in trust the $36,000.00 he took from Lila’s account, and counsel argues that the parties agreed that he would hold it. I note that the exchanges between counsel did not contain an agreement that $36,000.00 was to be paid to Lila. The Defendants claimed a setoff and counterclaimed. There was no promise or understanding that the $36,000.00 would be paid to the Plaintiff, otherwise than as a result of the court’s decision. The money was not paid before an Order was issued. [80] I conclude the entire amount of the Judgment was in issue and give no “credit” in determining the “amount involved” for the fact that $36,000.00 was held in Defence counsel’s trust account. [81] I increase the Tariff A costs of $29,063.00 to $40,000.00 pursuant to Rule 77.07(1)(b) and (e), together with reasonable disbursements, proof of which may be made by affidavit. [82] In his brief, the Defendant asks that some kind of injunction (or possibly a preservation order) issued early in the proceeding be vacated. The Plaintiff objected to the absence of a separate motion but agreed to sign an appropriate order vacating the injunction. [83] If the Defendants file a Motion by correspondence to judge - Rule 27, with a letter to my attention that “the party moves for a consent order” (Rule 27.01(e)), I would ask that the Prothonotary at the Halifax Law Courts provide me the communication, the Consent Order and the file without the requirement of a Notice of Motion (Rule 27.01(2)). Warner, J.