Anderson Estate, 2011 ABQB 806

Court of Queen ’ s Bench of Alberta Citation: Anderson Estate, 2011 ABQB 806 Date: 20111219 Docket: ES01 098508 Registry: Calgary Court File Number ES01 098508 Court Court of Queen’s Bench of Alberta (Surrogate Matter) Judicial District Calgary Estate Name Harold Jackson Anderson Applicants (Executors) Sally Chabros, John Chabros and Valerie Wilson Respondent (Residuary Beneficiary) Norman Anderson Respondent (Residuary Beneficiary) Robert Van Haaren _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice P.M.

Clark _______________________________________________________ I. Introduction [ 1 ] This matter concerns the estate of the late Harold Jackson Anderson, who died on December 15, 2004, leaving two sons, the Respondents, Mr. Norman Anderson and Mr. Robert Van Haaren. I will refer to Mr. Harold Anderson herein as “the Deceased” to distinguish him from Mr. Norman Anderson. [ 2 ] In September 2004, the Deceased received a diagnosis of terminal cancer. On September 24, 2004, the Deceased executed his will (the “Will”). The Will appoints as executors the three Applicants, Mr. John Chabros, Mrs. Sally Chabros and Mrs.

Valerie Wilson, all of whom were friends of the Deceased. On the same date, the Deceased also executed an Enduring Power of Attorney, naming the three Applicants as attorneys thereunder.

[ 3 ] On October 20, 2004, the Deceased opened a bank account at the Calgary North Hill branch of ATB Financial (the “ATB Account”). The ATB Account listed five owners: the Deceased, Mr. Chabros, Mrs. Chabros, Mrs. Wilson and the Deceased’s wife, Marie Perle Anderson. At trial, the bank manager, Mr. William Greschuk, testified that the normal procedure any time a joint account is opened is to review the nature of a joint account, including the right of survivorship, with the account holders. Mr.

Greschuk testified that, at the time the ATB Account was opened, no-one indicated that there was a problem with it being a joint account. [ 4 ] On November 6, 2004, Mrs. Anderson died unexpectedly. Shortly thereafter, the Deceased attended at the Calgary North Hill ATB branch with Mrs. Chabros to remove Mrs.

Anderson’s name from the ATB Account. [ 5 ] Apart from the ATB Account, the Deceased’s main assets were farmland near Spruce Meadows (the “Farm”) and the shares of a U.S. corporation, Mar Jack Inc. (“Mar Jack”), which owned a residential property in Arizona (the “Arizona Property”). [ 6 ] As noted above, the Deceased died on December 15, 2004. The administration of the Deceased’s estate (the “Estate”) now is largely complete.

Two issues are before me: the ownership of the ATB Account and the proper compensation to be paid to the Applicants for acting as executors of the Estate. [ 7 ] With respect to the latter, the Applicants claimed that the administration of the Estate was “complex, time consuming and difficult”. They seek compensation in the amount of $2,900,000.00. II. The ATB Account [ 8 ] I will deal first with the question of the ATB Account. The ATB Account is a joint account and carries with it a right of survivorship.

The Applicants took the position that the Deceased intended to make a gift of the funds in the ATB Account to them. Mr. Anderson’s position was that the ATB Account is an Estate asset. [ 9 ] The Supreme Court of Canada considered and altered the law applicable to joint accounts in the companion cases of Pecore v. Pecore , 2007 SCC 17 , 1 SCR 795 and Madsen Estate v. Saylor , 2007 SCC 18 , 1 SCR 838. In those cases, the Supreme Court held that, unless the joint account holder is a spouse or a minor child, the presumption of resulting trust applies to joint accounts.

Thus, the onus is on the party claiming a gratuitous transfer to rebut the presumption of resulting trust by showing on a balance of probabilities that a transfer was intended. [ 10 ] The Applicants relied on the fact that the ATB Account was a joint account and that Mr. Greschuk, the ATB manager, explained the right of survivorship at the time it was opened. This alone is not sufficient to rebut the presumption of resulting trust.

If it were, it would apply to any joint account, rendering the presumption effectively meaningless. [ 11 ] The Applicants also pointed out that they were named as attorneys under a Power of Attorney executed by the Deceased. They asserted that, since this would have allowed them to manage the Deceased’s financial affairs without the ATB Account, the ATB Account must have been intended as a gift to them. However, I note that the claimant in Madsen Estate was also the attorney for the deceased and the executor of the deceased’s will.

Nevertheless, the Supreme Court of Canada found that the presumption of resulting trust had not been rebutted. The Court at para. 68 cautioned against putting too much weight on the power of attorney: Again however, this evidence will not be determinative and courts should use caution in relying upon it, because it is entirely plausible that the transferor granted power of attorney and placed his or her assets in a joint account but nevertheless intended that the balance of the account be distributed according to his or her will.

For example, the transferor may have granted power of attorney in order to have assistance with other affairs beyond the account and may have made the transferee a joint account holder solely for added convenience. [ 12 ] In this case, I am of the view that there is not sufficient evidence before me to rebut the presumption of resulting trust. I am not satisfied that the Deceased intended to make a gift to the Applicants of the balance remaining in the ATB Account upon his death.

[ 13 ] Therefore, I conclude that the ATB Account is an Estate asset. The Applicants must put back into the Estate the amount that was in the ATB Account as of the date of the Deceased’s death, being $162,407.74. III. Executors ’ Compensation A. The Law [ 14 ] It is well-known that the starting point for determining appropriate compensation for an executor is s. 44 of the Trustee Act , RSA 2000, c.

T-8: 44(1) A trustee under trust, however created, is entitled to any fair and reasonable allowance for the trustee’s care, pains and trouble and the trustee’s time expended in and about the trust estate that may be allowed by the Court of Queen’s Bench or by any clerk of those courts to whom the matter is referred.

(2) A judge of the Court of Queen’s Bench may on application to the judge for the purpose settle the amount of the compensation although the trust estate is not before the court in any action.

(3) Compensation may be allowed in the case of any trust created before as well as after the commencement of this Act.

(4) Nothing in this

section applies to any case in which the allowance is fixed by the instrument creating the trust. [ 15 ] Clearly, then, the determination of appropriate compensation is in the discretion of the Court, absent some specific direction in the will. [ 16 ]

Part I of

Schedule 1 to the Surrogate Rules also provides some guidance.

Section 2 of that Part sets out the following factors that are relevant to the determination: (

a) the gross value of the estate; (

b) the amount of revenue receipts and disbursements; (

c) the complexity of the work involved and whether any difficult or unusual questions were raised; (

d) the amount of skill, labour, responsibility, technological support and specialized knowledge required; (

e) the time expended; (

f) the number and complexity of tasks delegated to others; and (

g) the number of personal representatives in the will, if any. [ 17 ] In addition, s. 3 provides as follows: 3. Additional compensation may be allowed when the personal representatives (

a) are called upon to perform additional roles in order to administer the estate, such as exercising the powers of a manager or director of a company or business,

(

b) encounter unusual difficulties or situations, or (

c) must instruct on litigation. [ 18 ] Several years ago, the Legal Education Society published a set of Suggested Fee Guidelines, setting out ranges of percentages for determining compensation: Capital On the first $250,000.00 of capital 3% - 5% On the next $250,000.00 of capital 2% - 4% On the balance 0.5% - 3% Revenue On revenue receipts 4% - 6% Care and management On the first $250,000.00 of capital 0.3% - 0.6% On the next $250,000.00 of capital 0.2% - 0.5% On the balance 0.1% - 0.4% [ 19 ] The parties acknowledged that the Suggested Fee Guidelines have no force of law and that compensation remains within the discretion of the Court, taking into account the factors enumerated in the Surrogate Rules. [ 20 ] That said, there has been some suggestion in the case law that a proper approach to determining executors’ compensation is to test the Guideline amounts against the factors in the Surrogate Rules: see, for example, Gladue Estate v.

Lameman , 2004 ABQB 130 at para. 9 and Re Sklar Estate , 2010 ABQB 544 , 60 ETR (3d) 157 at para. 32 . [ 21 ] Consequently, I will review this case in the context of the various factors. I will say at the outset I am concerned that the $2,900,000.00 compensation requested by the Applicants seems disproportionately high. However, I must undertake a review of the factors to assess whether that amount is justified. I will consider the factors in the order in which they are set forth in the Surrogate Rules. B. The Factors

(1) Gross Value of the Estate

[ 22 ] It was common ground that most of the value of the Estate derives from the Farm. The Applicants appeared to take the position that the value of the Farm is due, in large part, to their efforts.

At para. 132 of their brief, they said: The [Applicants] submit that on December 15, 2004, the market value of the Farm was $1,600,000.00 and on July 16, 2007 the market value was $23,000,00.00; thus, the value of the Farm increased by $21,400,000.00 during their management of the Estate and the Farm was indeed sold for fair market value. [ 23 ] I find this proposition difficult to accept as it ignores the intervening fact that the Farm was annexed into the City of Calgary on January 15, 2005 as well as the state of the real estate market in Calgary at the relevant time.

While, as discussed below, the Applicants made various efforts in relation to that annexation, it is not reasonable to attribute the substantial increase in the value of the Farm entirely to them. [ 24 ] I recognize that there were conflicting appraisals of the Farm as of the date of the Deceased’s death, all of which were substantially less than the amount for which the Farm ultimately was sold. I am also cognizant that the Canada Revenue Agency accepted a date of death value of $1,600,000.00 for income tax purposes.

Nevertheless, the annexation of the Farm into the City of Calgary subsequent to the Deceased’s death cannot be ignored as a factor in the Farm’s increase in value. [ 25 ] The Applicants pointed out that in Fraser v. Menard , 2010 ABQB 208 , Mahoney J. of this Court held that it was not appropriate to use the value of land reported for probate purposes in determining proper compensation for the executrix. It is important to remember, however, that in that case, the executrix retained the land in the estate for some thirty-five years.

It was her foresight in retaining the land that resulted in the substantial sale value. Therefore, while I take the point that executors’ compensation should be determined using a realistic value of the estate assets, Menard is not on all fours with the present situation. [ 26 ] Nevertheless, Mr. Anderson, in arriving at his suggested compensation for the Applicants, used the sale value of the Farm, being $23,000,000.00. Thus, it appears to be common ground that this is the appropriate value to use.

In the circumstances, I consider this a sensible approach and I will have reference to this value in making my decision.

(2) Revenue Receipts and Disbursements [ 27 ] Neither side’s brief was particularly precise on this issue. The Applicants, in making calculations using the LESA Guidelines, used a figure of $1,766,990.00 for receipts and disbursements. Mr. Anderson, by contrast, argued that there were no revenue receipts from any ongoing business other than a yearly grazing lease payment of approximately $3,800.00.

He further submitted that the sale proceeds from the Farm were put into investment certificates or T-bills and required little management by the Applicants. [ 28 ] Receipts and disbursements are a relatively minor component of the compensation claimed. Using the Applicants’ figure and the LESA Guidelines gives rise to an additional $70,679.60 - $106,019.40 in compensation while Mr.

Anderson’s estimate would lead to only a nominal increase in compensation. [ 29 ] It is clear from the evidence before me that much of the revenue generated by the Estate arose from interest payments, particularly on the proceeds of sale of the Farm. It is clear that the Applicants simply deposited various funds with their solicitor, Mr. Salmon, whose account then generated the interest. Therefore, there was little effort required of the Applicants in this respect and I do not think that substantial compensation is justified under this factor.

(3) Complexity and Difficulty of Estate Administration [ 30 ] The Applicants submitted that the administration of the Estate was complicated by “unusual and difficult challenges” pertaining to a number of issues, including: tax issues, both Canadian and U.S.; the payment of bequests to minors;

interpretation issues

in respect of the timing of payments to the residuary beneficiaries; planning issues in respect of the Farm; the sale of the Farm; the U.S. Assets; and Mr. Anderson’s conduct. (

a) Tax Issues [ 31 ] The Applicants enumerated this issue under their list of unusual and difficult challenges, but then devoted little or no argument to it. I have no doubt, given the U.S. Assets and the need to obtain appraisals of the Farm for capital gains purposes, that there were tax issues that required attention. Equally, however, I have no doubt that the Applicants engaged the necessary professionals to address those issues. The evidence before me does not indicate that significant personal attention was required of the Applicants to address these questions. (

b) Payment of Bequests [ 32 ] The Applicants made passing references in their briefs to the need to pay bequests to twelve beneficiaries. However, there is nothing in the evidence to indicate that there was anything particularly onerous about this task. Further, the payment of bequests is commonly part of the duties of an executor. There is nothing unusual, complex or difficult about it. I see no justification for substantial compensation to the Applicants in this regard. (

c) Timing of Payments [ 33 ] The Applicants asserted that there were complex issues in respect of the timing of payments to Mr. Anderson and Mr. Van Haaren from the sale proceeds of the Farm. Their position was that it was unclear from the Will when the payments were to be made. This resulted in a series of applications to this Court, as detailed below. (

d) Planning Issues re: the Farm [ 34 ] As noted above, the Farm was located just south of Spruce Meadows. At the time of the Deceased’s death, the Farm was outside the boundaries of the City of Calgary (the “City”). However, on January 15, 2005, the Farm was annexed into the City. [ 35 ] The Applicants submitted that they were required to deal with planning issues pertaining to the Farm. Some months after the Deceased’s death, the Applicants reviewed a preliminary draft regional policy plan map and learned that the City was contemplating both a major roadway and an environmental reserve area on the Farm.

Later proposals included designating the majority of the Farm as a conservation study area. The Applicants were concerned that this would have a negative impact on the development potential and, therefore, the sale value of the Farm. [ 36 ] Mrs. Chabros testified that she, either alone or with either or both of the other Applicants, took various steps to address the planning issues.

These included: attending City planning meetings; obtaining and reviewing the City’s bylaws and policies with respect to the development of farm land; writing to City land use planners and other City officials; meeting with neighbouring landowners; and hiring an appraiser and a negotiator, both of whom had prior experience with the City. [ 37 ] Ultimately, the conservation area was reduced to approximately 16% of the Farm, with the possibility of further reductions later. [ 38 ] I reject Mr. Anderson’s position and the conclusion of his expert, Mr.

Shum, that the reduced size of the conservation area had no effect on the market value of the Farm. As the Applicants pointed out, Mr. Shum provided no evidence in support of this opinion.

I prefer the evidence of the Applicants that potential purchasers of the Farm took the City’s plans for the land into account in making their offers. [ 39 ] I have no doubt that the City’s plans for the Farm were of significant concern and that the Applicants, primarily Mrs. Chabros, devoted time and effort to achieving a favourable result. Nevertheless, while the Applicants’ efforts should be recognized in their compensation, I do not see that these efforts, in and of themselves, are so extraordinary as to merit the compensation claimed. (

e) The Sale of the Farm [ 40 ] In their brief and in Mrs. Chabros’ affidavit, the Applicants described their efforts to sell the Farm. They attended at the Farm some months after the Deceased’s death, taking pictures and carrying out an inspection. In some cases, they took prospective purchasers out to the Farm to view the property. [ 41 ] Between the spring of 2005 and the spring of 2007, various offers were received and considered. Those offers ranged from a low of $8,000,000.00 to a high of $28,000,000.00.

Some of the offers required the Estate to finance the purchase, something the Applicants were not prepared to agree to. Some offers were refused by the Applicants, others were withdrawn by the offerors. [ 42 ] In the spring of 2007, the Applicants accepted an offer of $25,000,000.00 from Citiland. After doing its due diligence, Citiland reduced its offer to $22,000,000.00. In subsequent negotiations, Citiland increased its offer to $23,000,000.00 and the sale was completed at that price. [ 43 ] The Applicants contended that the sale of the Farm was complicated by the conduct of Mr. Anderson.

They asserted that Mr. Anderson pressured them in 2006 to sell the Farm for $15,000,000.00. That is neither here nor there. As executors, their obligation was to make all reasonable efforts to achieve the best value for the Estate assets notwithstanding the demands, pleas or blandishments of a beneficiary. [ 44 ] The Applicants further stated that they learned in March 2006 that a certain realtor was representing that he had a listing to sell the Farm for $15,000,000.00. They complained to the Estate’s solicitor, Mr. David Salmon, and the matter was resolved.

However, the Applicants argued that a potential purchaser was lost as a result. [ 45 ] The Applicants also claimed that they saved the Estate $805,000. At one point, the Farm was listed with ReMax Realty. Had the Farm been sold while under that listing, ReMax would have been entitled to a commission of 5%; on a sale price of $23,000,000.00, this would have amounted to $1,150,000.00. Instead, the listing expired without a completed sale. The Applicants subsequently agreed to pay a finder’s fee of 1.5% to Mr. Jacobs and Mr.

Durant, the appraiser and the negotiator they had worked with in respect of the planning issues. Mr. Jacobs and Mr. Durant brought in Citiland as a potential purchaser and, when that sale proceeded, became entitled to a finder’s fee of $345,000.00. [ 46 ] Mr. Anderson took issue with the payment to Mr. Jacobs on the basis that it was later discovered that Mr. Jacobs had also received a payment of $100,000.00 from Citiland. He seemed to argue that Mr.

Jacobs had facilitated the sale of the Farm at less than fair market value to a party from whom he was taking a “secret commission”. [ 47 ] I find both sides of this argument unconvincing. While it appears that Mr. Jacobs may have been less than forthcoming with respect to his connection to Citiland, I am satisfied that the Farm was sold at a reasonable value. On the other hand, while the finder’s fee paid to Mr. Jacobs and Mr.

Durant was less than an ordinary real estate commission might have been, it does not appear to me that this arrangement was the product of any extraordinary skill on the part of the Applicants. They simply were able to make an advantageous deal with persons with whom they already had been dealing in respect of the Farm. That is commendable, but does not justify greatly increased executors’ compensation. [ 48 ] As with the planning issues, I am satisfied that the Applicants made good faith efforts to sell the Farm and to obtain maximum value for the Estate.

This, as I have already stated, was their obligation as executors. Again, however, while the value of the Farm was considerable, the evidence before me does not satisfy me that the efforts necessary to sell it were extraordinary.

(

f) The U.S. Assets [ 49 ] The Applicants asserted that complexities and difficulties arose in their dealings with the U.S. Assets as well. They stated that they were required to do the following: - prepare the Arizona Property, which was in a state of disrepair, for sale; - consult with professionals regarding the winding up of Mar Jack and the transfer of assets from the U.S. to Canada; - deal with Mr.

Anderson’s threats to harm the purchaser of the Arizona Property and the Applicants themselves; and - deal with litigation regarding the sale of the Arizona Property. [ 50 ] The litigation arose because, pursuant to advice, the Applicants wanted to sell the shares of Mar Jack, the sole asset of which was the Arizona Property, rather than selling the Arizona Property itself. In November 2004, while in Arizona, Mr. and Mrs. Chabros met with Ms. Johanna Christine Lippert, who expressed an interest in buying the Arizona Property. They advised Ms. Lippert that the sale would be for the shares of Mar Jack. Ms.

Lippert, however, forwarded directly to the Deceased an offer to purchase the Arizona Property. The Deceased accepted this offer on or about December 2, 2004 without the Applicants’ knowledge. [ 51 ] The Applicants attempted to negotiate a variation of the agreement with Ms. Lippert, but she refused and filed a lawsuit in Arizona seeking to have the contract enforced. The Applicants engaged counsel in Arizona, who indicated that it might be possible to defend the lawsuit on the basis that the Deceased lacked the capacity to agree to the contract.

Part way through the litigation, however, the Applicants were advised by counsel that there was insufficient evidence to rely upon that defence. Therefore, the Applicants settled the litigation with Ms. Lippert. [ 52 ] Certainly, litigation is always a factor to be considered in assessing the complexity of an estate for purposes of executor’s compensation. However, it is also important to note that the Applicants engaged counsel to deal with the lawsuit. This, of course, was the proper thing to do.

Nevertheless, as will be discussed below, reliance on and delegation to professionals is another factor to consider in determining executors’ compensation. (

g) Mr. Anderson ’s Conduct [ 53 ] The Applicants stated in their brief that Mr. Anderson attempted on numerous occasions to interfere with and undermine their efforts to administer the Estate. They asserted that in doing so, Mr. Anderson “unduly increased the time, energy, stress and cost of administering the Estate”. They contrasted Mr. Anderson’s behaviour with that of Mr. Van Haaren, whom they described as “supportive and helpful”. [ 54 ] The Applicants made several specific accusations about Mr. Anderson’s conduct in respect of the Estate. They alleged that Mr.

Anderson: - questioned the decisions made by the Applicants and continually sought immediate payment of funds and control of the Estate; - caused problems with respect to the sale of the Farm, including moving onto the property after it was sold to Citiland; - threatening to move into the Arizona Property and to have someone break Ms. Lippert’s legs; and - demanding information to which Justice Eisvik of this Court, in an interlocutory application, found he was not entitled and/or had already received.

[55] The Applicants also asserted that Mr. Anderson frequently attempted to intimidate them and made threats against thempersonally. They claimed that he threatened to “shoot somebody”, to “fix them good” and to burn down their houses. [56] The Applicants pointed to Re Assaf Estate (2009) (ON SC), 94 OR (3d) 561 (Ont. S.C.J.) in support of theproposition that an executor may be entitled to additional compensation when a beneficiary is particularly difficult to deal with. Theyasserted that not awarding additional compensation would be tantamount to condoning Mr.

Anderson’s behaviour and would encouragefuture beneficiaries to engage in similar behaviour. [57] There is sufficient evidence before me to establish that Mr. Anderson was difficult to deal with and I am prepared to factorthat into my determination of the appropriate compensation for the Applicants to some extent. But I do not wish to be taken to agreeentirely with the Applicants’ position in this regard. While the Applicants no doubt would have preferred to deal with two beneficiariesas “supportive and helpful” as Mr.

Van Haaren, I do not consider it necessary to award additional compensation to the Applicants for thepurpose of deterring future beneficiaries from inappropriate conduct. The Trustee Act and the Surrogate Rules provide that trustees areentitled to fair and reasonable compensation for their efforts in administering estates; deterrence forms no part of the analysis. [58] Further, Mrs. Chabros admitted that the Applicants deliberately withheld information from Mr. Anderson, even after he wasrepresented by counsel and his counsel had agreed to receive all information through his office. While Mr.

Anderson may have taken anexpansive view of his entitlement to information and consultation, it was not reasonable to simply leave him in the dark. If I am toconsider Mr. Anderson’s conduct in assessing compensation, I must weigh this in the balance also.

(4) Skill, Labour and Responsibility [59] The Applicants submitted that they were required to assume significant responsibility and to use a great deal of skill inadministering the Estate. They asserted that this was particularly so in respect of the planning issues surrounding the Farm. Theirposition was that they did not retain Mr. Jacobs and Mr.

Durant until well into the process of dealing with the City and that, even afterthose gentlemen were retained, the Applicants “continued to actively participate in the process”. [60] The Applicants also made reference under this category to other responsibilities, including: managing and overseeingbequests, managing and selling the Arizona Property and dealing with the associated litigation, instructing and assisting professionals,managing the Farm, selling the Farm and contending with Mr. Anderson. [61] I have addressed these responsibilities earlier in these reasons.

As I have already indicated, some of these matters, such as theplanning issues in respect of the Farm, may be said to have added something unusual to the Applicants’ responsibilities. Others, such asthe payment of bequests, do not seem to me to be out of the ordinary.

(5) Time Expended [62] The Applicants estimated that each of them spent approximately 1250 hours administering the Estate, based upon Mrs.Chabros’ diary entries. [63] The Applicants point to Re Flaska Estate, [1998] O.J. No. 4171, in which the Ontario Court of Appeal expressly rejected anhourly rate approach to the determination of executors’ compensation.

The Court in that case held that such an approach was inconsistentwith the provisions of Ontario’s equivalent to the Trustee Act. [64] Be that as it may, I cannot ignore the fact that the compensation sought by the Applicants divided by 3750 hours for the threeof them would result in payment at approximately $733.33 per hour of time spent. While I accept that there is case law indicating thatcalculation of executors’ compensation using an hourly rate is not appropriate, neither do I think it appropriate to ignore this result altogether.

I note that Justice Yamauchi of this Court held in Re Sklar Estate, 2010 ABQB 544, 33 Alta. L.R. (5th) 376 that it was notreasonable for the executor to pay a solicitor $250 per hour for such tasks as paying bills and boosting a motor home’s battery. Surely itis no more reasonable to expect this Estate to bear the cost of administration at such an exorbitant rate.

[ 65 ] The Applicants also pointed to Re Gladue Estate , 2004 ABQB 130 , in which Justice Moen rejected the argument that an executor should not be paid more per hour for administering an estate than he would have been paid for his work as an accountant. At para. 40, she stated that the test is that the compensation must be “fair and reasonable having due regard for the care, pains, and trouble and time expended in the affairs of the estate”. I agree that this is a correct statement of the test.

But I note that Justice Moen also expressed concern about an inordinate notional hourly rate, saying this at para. 38: If I were to accept the proposed remuneration of $100,000.00 for the personal representative, this would amount to $207.00 per hour for the 482 hours spent by Mr. Budd as personal representative. Although I suspect that Mr.

Budd did not count all his time, this amount per hour may be excessive. [ 66 ] Therefore, I conclude that I may consider the notional hourly rate when determining whether the compensation claimed is fair and reasonable in the circumstances. [ 67 ] In addition, I have some difficulty with the number of hours the Applicants claim to have spent administering the Estate. As noted above, Mrs. Chabros estimated 1250 hours of her time based on her diary entries. The Applicants then took the position that they could simply triple that number to arrive at the total number of hours spent by the three of them.

There is no evidence before me as to the actual number of hours spent by Mr. Chabros or Mrs. Wilson and I find it difficult to accept that each of the three Applicants spent the same number of hours and that all of that time was necessary to Estate business. Neither do I consider it reasonable to assume that all three Applicants had to be involved in every aspect of the Estate administration. [ 68 ] In short, I am not satisfied that the evidence in respect of this factor justifies the $2.9 million compensation claimed by the Applicants.

(6) Tasks Delegated to Others [ 69 ] Interestingly, neither of the briefs filed by the Applicants addressed this issue. There is no dispute that the Applicants engaged a number of professionals to deal with various issues in the Estate. This was entirely proper. However, I am concerned that the Applicants have, in effect, glossed over this professional involvement and overstated their personal efforts.

In several instances, their arguments in favour of their proposed compensation relied on the Applicants having been “actively involved with” or “actively engaged with” tax advisors, accountants, bankers, lawyers and the like. I am of the view that some of the efforts described by the Applicants are overstated or exaggerated. [ 70 ] Retaining and instructing professional advisors as needed is a proper task for an executor, but one must be cautious about adopting the efforts of such professionals as one’s own and expecting to be remunerated for tasks the executor has already paid another to do.

This factor is listed in the Surrogate Rules in recognition of the fact that personal representatives should not be permitted to “double dip” by hiring and paying professionals and then seeking compensation themselves for what amounts to the same work. See, for example, Re Sklar Estate at para. 87 .

(7) Number of Personal Representatives [ 71 ] To some extent, I have already canvassed this factor in my comments on the time spent. In my view, where more than one personal representative is appointed under a will, it should not be assumed that the testator intends each one to be involved in each and every task.

To the contrary, a testator may well appoint more than one personal representative out of a desire for the burden of administration to be shared among them. [ 72 ] Equally, it does not make sense to determine what would be fair and reasonable compensation for one executor and then multiply that figure by the actual number of executors. The determination of what is fair and reasonable compensation must be made on the basis of the actual number of executors and the amount of work done by all of them.

Once the overall compensation has been determined, it is up to the executors themselves to decide how it will be divided among them.

(8) Additional Roles [ 73 ] The Applicants made two arguments in respect of this factor. First, they pointed out that the Surrogate Rules specifically reference an executor acting as a director of a company. Mr. and Mrs. Chabros were the directors of Mar Jack and oversaw the winding up of that corporation, which they asserted required them to “actively engage with tax advisors, banking professionals and lawyers”.

They argued that additional compensation was appropriate for this reason. [ 74 ] Second, the Applicants estimated that they spent approximately 500 hours assisting the Deceased with arranging his affairs prior to his death. (It was not clear from the materials whether the Applicants claimed to have spent 500 hours each or 500 hours in total.) They pointed to Re Gevaert Estate (1998), 22 ETR (2d) 288 (Ont. Gen.

Div.) in support of the proposition that an executor may claim additional compensation for work performed prior to the deceased’s death where such work benefited the estate and the beneficiaries. [ 75 ] I have no quarrel with either of these propositions in general. In appropriate cases, it may be reasonable to award additional compensation to an executor who has acted as the director of a corporation. In this case, however, I do not see that such additional compensation is warranted. It is common ground that the Arizona Property was the sole asset of Mar Jack.

There were no other assets to be dealt with and no ongoing business to be carried on or wound up. Further, as previously discussed, much of the work involved in winding up Mar Jack was done by the various professional advisors. This was properly so, but I do not see that acting as directors of a corporation in these circumstances would have added significantly to Mr. and Mrs. Chabros’ responsibilities. Further, there is no indication that Mrs. Wilson was involved in this part of the Estate administration, though it is not entirely clear to me why not.

I am not satisfied that increased compensation should be awarded on this basis. [ 76 ] With respect to the Applicants’ second argument, it is not entirely clear from the evidence before me what work was done prior to the Deceased’s death and what afterward. Nevertheless, I am prepared to allow that some work was done before his death that ultimately was of benefit to the Estate and I will bear that in mind in determining the Applicants’ compensation.

(9) Unusual Difficulties or Situations [ 77 ] The Applicants set out several items under this factor. Most of these, however, are a reiteration of matters already discussed, including the claimed savings to the Estate with respect to the sale of the Farm, Mr. Anderson’s conduct, Mr. Anderson’s demand that the Farm be sold for $15,000,000.00 and the increase in the value of the Farm. I have canvassed all of these items earlier in these reasons. As previously noted, I find that there were some unusual features to this Estate, particularly the planning issues in respect of the Farm.

However, I am inclined to the view that the Applicants have overstated the extent to which this Estate presented unusual difficulties.

(10) Litigation [ 78 ] The Applicants quite correctly pointed out that the Surrogate Rules refer to the need to instruct on litigation as a factor to be considered in determining executors’ compensation. In this case, there were two aspects to such instruction. The first, being the litigation in respect of the Arizona Property, has been discussed above. [ 79 ] The second aspect pertains to several motions brought by Mr. Anderson. The Applicants contended that they were required to instruct counsel on these motions to ensure that Mr. Anderson did not “seize undue control of the administration of the Estate”.

The Applicants referred specifically to three such motions. [ 80 ] The first motion was heard on March 31, 2008. Mr. Anderson sought disclosure of certain information and an order preventing the Applicants from making any payments out of the Estate without Mr. Anderson’s consent or further Court order. Justice Eidsvik refused the restriction on payments but ordered the disclosure of some of the information sought. The Applicants pointed out, however, that Justice Eidsvik questioned whether Mr. Anderson was entitled to “every single little detail about the administration of this estate”.

[ 81 ] On December 12, 2008, Justice Sullivan of this Court heard and allowed Mr. Anderson’s application for payment of part of the proceeds of the sale of the Farm. The Applicants submitted that they had acted prudently in requiring a Court order prior to making payment as there was some uncertainty as to the meaning of the distribution provisions of the Deceased’s Will. [ 82 ] The third motion was brought before Justice Ross on March 4, 2010. Again, the issue was the timing of the payments from the sale of the Farm.

The Applicants took the position that it was appropriate to require a Court order for this payment too as Justice Sullivan, in ordering the first payment, had not made any specific ruling on the

interpretation of the Will. [ 83 ] Certainly, the need to instruct on litigation is a factor to be taken into account in determining an executor’s compensation. But I am concerned that in this case, the Applicants were, to some extent, the authors of their own difficulty. In particular, I am troubled by the application before Justice Ross. While Justice Sullivan may not have made an express finding on the

interpretation of the Will, I would have thought that his ruling gave the Applicants the necessary guidance. I am concerned that their animosity toward Mr. Anderson led them to require a further Court application that was not strictly necessary. C. Determination [ 84 ] It is by no means unknown for the estates of persons who lived in and around Calgary to consist primarily of land which has dramatically increased in value and I am hesitant, absent additional considerations such as those in Menard , to award substantial executors’ compensation solely on the basis of the gross value of the estate.

An estate’s value is, after all, only one of several factors enumerated in the Surrogate Rules. [ 85 ] To be sure, this Estate had some unusual features. I accept that the planning issues in respect of the Farm were significant and required the Applicants to devote additional time and attention. The litigation surrounding the Arizona Property was out of the ordinary, though it was dealt with in large part by professional advisors. And I recognize that Mr.

Anderson was not an easy person to deal with. [ 86 ] Nevertheless, as I said at the outset, I am of the view that the amount of compensation the Applicants claim is disproportionately high. Many of the arguments made in favour of the amount claimed were circular, repetitious and self-referencing. In addition, the Applicants themselves seemed to have no clear idea of the basis for the amount claimed. When questioned at trial about how the figure of $2.9 million was arrived at, Mrs.

Chabros testified simply that it was what the Applicants’ lawyers had suggested. [ 87 ] In addition, I am guided by the list of Personal Representatives’ Duties enumerated in

Schedule 1 - Legal and Personal Representative Compensation to the Surrogate Rules. As I think consideration of this list is useful to the proper determination of this matter, I will reproduce it in toto : Personal Representatives ’ Duties 1. Making arrangements for the disposition of the body and for funeral, memorial or other similar service. 2. Determining the names and addresses of those beneficially entitled to the estate property and notifying them of their interests. 3. Arranging with a bank, trust company or other financial institution for a list of the contents of a safety deposit box. 4.

Determining the full nature and value of property and debts of the deceased as at the date of death and compiling a list, including the value of all land and other buildings and a

summary of outstanding mortgages, leases and other encumbrances.

5. Examining existing insurance policies, advising insurance companies of the death and placing additional insurance, if necessary. 6. Protecting or securing the safety of any estate property. 7. Providing for the protection and supervision of vacant land and buildings. 8. Arranging for the proper management of the estate property, including continuing business operations, taking control of property and selling property. 9. Retaining a lawyer to advise on the administration of the estate, to apply for a grant from the court or to bring any matter before the court. 10.

Applying for any pensions, annuities, death benefits, life insurance or other benefits payable to the estate. 11. Advising any joint tenancy beneficiaries of the death of the deceased. 12. Advising any designated beneficiaries of their interests under life insurance or other property passing outside the will. 13. Arranging for the payment of debts and expenses owed by the deceased and the estate. 14. Determining whether to advertise for claimants, checking all claims and making payments as funds become available. 15.

Taking the steps necessary to finalize the amount payable if the legitimacy or amount of a debt is in issue. 16. Determining the income tax or other tax liability of the deceased and of the estate, filing the necessary returns, paying any tax owing and obtaining income tax or other tax clearance certificates before distributing the estate property. 17. Instructing a lawyer in any litigation. 18. Complying with the requirement for filing an acknowledgment of trustee(

s) before distributing any property to a trustee. 19. Preparing the personal representative’s financial statements, a proposed compensation

schedule and a proposed final distribution schedule. 20. Distributing the estate property in accordance with the will or intestate succession provisions. [ 88 ] Some of the items relied upon by the Applicants for their assertion that this Estate was complex and difficult are contemplated by this list. Selling estate property, distributing property, instructing lawyers and determining income tax liabilities are all contemplated. This strengthens my view that the Applicants’ descriptions of the difficulties associated with this Estate are overstated and that their claim for $2.9 million in compensation is unjustified.

[ 89 ] This, then, brings me to the question of what is appropriate compensation for the Applicants. As noted above, the case law indicates that, while the Suggested Fee Guidelines are not to be followed slavishly, a proper approach is to test those amounts against the factors discussed above. [ 90 ] To apply the Guidelines, I must begin with the capital and revenue of the Estate. The Farm was sold for $23,000,000.00. Other assets listed on the

Schedule 5 Inventory totalled $377,285.55. To this, for the reasons set out above, I add $162,407.74, being the amount in the ATB Account as of the Deceased’s death. Thus, the total amount of capital is $23,539,693.29. [ 91 ] As previously discussed, the Applicants argued that revenue and disbursements amounted to $1,766,990.00 while the Respondent asserted that these amounts were nominal.

For purposes only of my initial Guideline calculation, I am prepared to use the Applicants’ figure. [ 92 ] The Suggested Fee Guidelines, then, give rise to compensation in the following amounts: Capital On the first $250,000.00 of capital 3% - 5% $ 7,500.00 - $ 12,500.00 On the next $250,000.00 of capital 2% - 4% $ 5,000.00 - $ 10,000.00 On the balance 0.5% - 3% $115,298.47 - $691,790.80 Total $127,798.47 - $714,290.80 Revenue On revenue receipts 4% - 6% $ 70,679.60 - $106,019.40 Care and management On the first $250,000.00 of capital 0.3% - 0.6% $ 750.00 - $ 1,500.00 On the next $250,000.00 of capital 0.2% - 0.5% $ 500.00 - $ 1,250.00 On the balance 0.1% - 0.4% $ 23,039.69 - $ 92,158.77 Total $ 24,289.69 - $ 94,908.77 [ 93 ] The next step is to test these figures against my conclusions above in respect of the factors.

The Applicants asserted that the Guidelines provide inadequate compensation and note that the Court may depart from the Guidelines in “extraordinary” cases. While, as I found above, this Estate had some unusual features, I would not characterize it as extraordinary and I do not agree that the compensation contemplated by the Guidelines is inadequate. Indeed, in some respects, I consider it excessive.

[ 94 ] First, with respect to the capital item, I am satisfied that a number within the Guideline range is appropriate. The capital of the Estate arose in large part from one asset, namely the Farm. While I recognize that the Applicants were required to undertake some unusual efforts to preserve the value of the Farm, I do not think those efforts were such as to take fair and reasonable compensation even to the top of the Guideline range, let alone beyond it.

Therefore, I award compensation under the capital heading in the amount of $600,000.00. [ 95 ] I am less convinced that the Guideline range in respect of revenue and disbursements is appropriate in this case. Most of the revenue generated consisted of interest paid on the trust account of the Applicants’ solicitor. It is clear from the evidence that little effort was required of the Applicants in this regard. I conclude that $60,000.00 is reasonable compensation under this part. [ 96 ] Finally, there is the issue of care and management.

The Applicants have claimed this amount for each of the years of their administration; Mr. Anderson asserted that this amount should be claimed only once, rather than annually. The case law cited by the Applicants indicates that this amount may be claimed for each year of estate administration. To that, however, I would add the caveat that it should be claimed only for those years in which care and management is required. In this case, the Farm was sold in December 2007 and the sale proceeds were deposited with the Applicants’ solicitor.

Therefore, I do not see that a care and management fee is warranted for the years after the Farm was sold. For the years prior to the sale of the Farm, I consider $50,000.00 to be fair and reasonable. Therefore, I award $50,000.00 for each of 2005, 2006 and 2007. [ 97 ] In total, then, reasonable compensation to the Applicants amounts to $600,000.00 + $60,000.00 + $150,000.00 = $810,000.00. As I have already stated, this compensation is the total amount for all three Applicants. They may divide it among themselves however they see fit. IV.

Costs [ 98 ] The question of costs in this matter presents some very interesting issues for the Court. However, the Applicants specifically requested that they be allowed to speak to costs after the issues of compensation and the ATB Account had been dealt with. Therefore, I am prepared to hear submissions on costs in due course. Heard on the 6 th day of December, 2010 to the 8 th day of December, 2010 and the 11 th day of August, 2011. Dated at the City of Calgary, Alberta this 19 th day of December, 2011. P.M. Clark J.C.Q.B.A. Appearances: A. Webster Macdonald Jr., Q.C. and Carla A.

Hunt Blake, Cassels & Graydon LLP for the Applicant Executors, Sally Chabros, John Chabros and Valerie Wilson

Brian E. Devlin, Q.C. O’Brien Devlin MacLeod for the Respondent Residuary Beneficiary, Norman Anderson No-one appearing for the Respondent Residuary Beneficiary, Robert Van Haaren