Yaworski Estate (Re), 2016 ABQB 86

Court of Queen ’ s Bench of Alberta Citation: Yaworski Estate (Re), 2016 ABQB 86 Date: 20160211 Docket: ES03 126492 Registry: Edmonton In the Matter of the Estate of Helen Yaworski Between: David J. Turner, Administrator of the Estate of Helen Yaworski Applicant - and - Holly Bennett, Patricia Pariseau, Todd Yaworski, Ted Yaworski, Bonnie Yaworski, Geri Spenrath, Mark Yaworski and Hallmark Construction Group Inc. Respondents _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice B.R.

Burrows _______________________________________________________ [ 1 ] The Administrator of the Estate of Helen Yaworski applies for the passing of his accounts, an order directing that the funds he holds for the Estate be paid into court, and to be discharged.

[ 2 ] The main issue to be addressed is whether or not the administration costs which amount to about 1/3 of the value of the Estate should be approved. As well, directions as to how to deal with remaining personal property owned by the Estate are required. The implications of the proposed discharge for litigation in which the Estate is a defendant must also be considered. [ 3 ] Helen Yaworski died on September 4, 2005.

Probate of her Will dated April 21, 2004 was granted on January 8, 2008 to the personal representatives named in the Will: Todd Yaworski, Ted Yaworski and Sonya Demers. [ 4 ] The administration of Ms. Yaworski’s estate has proved to be very difficult. Features that have complicated it include that: - Ms. Yaworski left the residue of her estate to seven of her eleven children and appointed three of the seven beneficiaries as personal representatives; - The three personal representatives were unable to agree or to cooperate on many matters.

The application for probate was not filed for more than two years following Ms. Yaworski’s death. After the grant of probate, the administration of the Estate was marked by continuous disputes among the personal representatives; - There were significant disputes among some of the beneficiaries relating to items of personal property owned by Ms.

Yaworski and what should become of them; - One of the disinherited children who worked all his adult life for his father’s construction business and operated it for more than 20 years after his father’s death has sued the Estate seeking compensation relating to entitlements that he alleges flow from his work for the firm.

The action remains unresolved; - The value of the assets in the Estate is, and always was, modest and clearly insufficient to accommodate the cost of coping with, let alone resolving, the various disputes which arose among the three personal representatives, the seven beneficiaries and the eleven children of the deceased. [ 5 ] In the application for probate, the net value of the Estate was stated to be $271,498.59. The Estate assets consisted of a house in the town of Redwater, two bank accounts, two GIC’s, a RIF, household goods and personal effects, and all the shares in P.

Yaworski Holdings Ltd., the construction firm previously mentioned. [ 6 ] In 2009, when it became obvious that the disputes among the three personal representatives would render it impossible for them to complete the administration of the Estate, the Court discharged them and appointed David J. Turner, C.M.A. and Trustee in Bankruptcy, Administrator of the Estate. This development was in the nature of a compromise worked out by counsel representing five of the beneficiaries (including the personal representatives). The Order appointing David J.

Turner was not a consent order, but it was presented jointly by counsel for the five beneficiaries. [ 7 ] The Order appointing the Administrator listed the matters required to complete the administration of the Estate as: - Take control of the bank deposits which amounted to about $116,500 at the time of the Order; - Take possession of a gold ring and the key to a storage locker; - Have the Redwater house appraised, listed, and sold; - Have the personal property in the house appraised and disposed of; - Have heavy equipment, construction materials, and personal effects stored in a trailer, appraised and disposed of; - Inventory any other personal property owned by the Estate. [ 8 ] The Order further directed that personal property, other than the contents of a storage locker, was to be disposed of by auction among the beneficiaries, or, if not sold to a beneficiary, by public auction.

The contents of the excepted storage locker were to be listed and the list provided to the beneficiaries. If one and only one beneficiary advised the Administrator he or she wanted an item on the list, it was to be given to that beneficiary. If more than one beneficiary wanted an item on the list, the Administrator was to decide, with no input from the beneficiaries, which beneficiary should have the item. [ 9 ] The Order required the Administrator to: . . . pay his costs, fees and expenses including GST as they occur from time to time from the Estate trust account, according to the fee

schedule attached to this Order, subject to review and approval by the Court upon the conversion of the remaining assets to cash and providing an accounting to the Court. No fee

schedule was attached to the Order. [ 10 ] The Order also required the Administrator to provide an accounting of his administration to the Court.

[ 11 ] The Administrator, as authorized by the Order, made at least one contested application for directions during the course of his administration. This resulted in a Memorandum of Decision dated June 14, 2012 ( 2012 ABQB 392 ). [ 12 ] The Administrator has filed his accounting of his administration. It shows total receipts of $316,562.37 and total expenses of $161,514.58, including the Administrator’s fees and GST of $61,893.30, and legal fees for Counsel for the Administrator, including disbursements and GST of $45,572.98.

Materials filed on this application indicate that the Administrator has been charged further legal fees totalling $2,571.64 for services after the preparation of the accounts. Total professional fees, disbursements and GST claimed are $110,038.22 or 35% of the value of the Estate assets. The net estate at the time of the accounting was $161,514.58. [ 13 ] At the hearing of this application, two of the beneficiaries Ted and Todd Yaworski took the position that the administration costs should not be approved by the Court. They each identified several specific points of objection.

They had advised the Administrator of the particulars of their objections only a few days before the application though the Administrator had given them his accounting and invited response more than a year earlier. The Administrator responded to their objections. I directed Ted and Todd Yaworski to file affidavits setting out their objections by July 15, 2015. I set deadlines for the filing of responding materials. [ 14 ] On the day of the deadline I set, July 15, 2015, Ted and Todd Yaworski each attempted to file materials.

The Clerk of the Court would not accept the documents they submitted because they were not in the proper format. Both filed affidavits in the proper format (or at least in a format the Clerk accepted) after the deadline, on July 21, 2015. [ 15 ] The Administrator filed a responding affidavit and written submissions on August 7, 2015. Patricia Pariseau filed written submissions on August 27, 2015. Sonya Demers and Holly Bennett each filed written submissions on August 28, 2015.

Mark Yaworski and Hallmark Construction Group (who the Administrator included as Respondents though they are not beneficiaries because they are the Plaintiffs in the action against the Estate mentioned earlier) filed written submissions on August 31, 2015. Todd and Ted Yaworski jointly filed submissions on August 31, 2015. Late filing of Affidavits [ 16 ] The Administrator submits that I should reject the affidavits of Ted and Todd Yaworski since they were filed after the deadline.

He observes that Ted and Todd Yaworski did not respond for over a year to his request that they advise as to objections to his accounts and that they particularised their objections at the last minute before the application. He submits that a party filing on the last day of a filing period takes the risk that their materials will be rejected, as these materials were. They should not be relieved of that risk. [ 17 ] Although I see some merit in that submission, I decline to accept it.

If Ted and Todd Yaworski had been represented by counsel and materials in an unacceptable format had been offered for filing on the deadline, counsel would have known to immediately seek a fiat from a judge permitting the materials to be filed despite the deficiencies in format and almost certainly would have been be granted the fiat. Ted and Todd Yaworski’s default of the deadline is technical and results from them being unrepresented by counsel. Acting on it by rejecting the late filed materials would not serve justice.

Quantum of Administrator’s Fees and Administrator’s Counsel Fees [ 18 ] By far the most significant objection raised against the accounts which the Administrator has offered is that the administration costs for which approval is sought are very high. The Administrator does not dispute that observation. He responds that the time required to administer this estate and the time required for the Administrator’s legal counsel to deal with the matters for which the Administrator required the assistance of legal counsel, as itemized in detail in the accounts, were necessary in the unique circumstances of this estate.

The administration costs, he submits, are justified despite the fact that they amount to 35% of the value of the Estate. [ 19 ] The Administrator’s claimed compensation and expenses are subject to the Court’s assessment and approval. In making that assessment, I am to consider all relevant factors including the care, pain, trouble and time required of the Administrator. [ 20 ] I have reviewed the Administrator’s fee accounts and those of his legal counsel carefully.

With one exception, I am satisfied that all of the actions identified in those accounts as having been carried out were reasonably required to be carried out by the Administrator and his staff in order to administer this estate.

I am satisfied that the amount of time both the Administrator and his legal counsel record as having been spent in carrying out their duties were actually spent and were reasonably required to be spent. [ 21 ] In reaching that conclusion, I note that one objection raised is that the time recorded for an action sometimes seems excessive – greater than one would expect it would take to perform the action. The Administrator has responded that the necessarily brief description of the action in such cases would omit reference to steps actually taken.

I notice as well that frequently the amount of time recorded for an action seems significantly less than what one would expect to have been required. I reject the objection. [ 22 ] The Administrator and his legal counsel have both determined the amount of their fees by applying hourly rates to recorded hours.

The materials indicate that the Administrator seeks compensation for actions taken up to the end of February 2013 on the basis of detailed time records, and for five further hours after February 2013 for “final time for closing file including attendance at court for taxing of fees and accounting of estate funds”. The materials indicate that the Administrator spent considerably more than five hours on this estate after February 2013.

Legal counsel stopped charging for his time after January 2015 – before preparing the materials for, appearing at, and preparing responding materials after this application. [ 23 ] Hours recorded multiplied by a professional’s hourly rate is a relevant consideration in determining administrator’s compensation but is generally not determinative. In my view, however, in this case, it is appropriate to give that product very much greater weight than would generally be the case.

Indeed, it is appropriate, in this case, to approve the fees calculated and claimed on that basis. [ 24 ] Here, the Administrator was appointed because the circumstances required the intervention of an independent and impartial outsider – a professional – who would be above the fray. The nature of the disputes and the conduct of some of the beneficiaries in the context of those disputes as described in affidavits filed on the application which resulted in the Administrator’s appointment, made it

clear that at least some of the beneficiaries were incapable of cooperating to avoid wasteful dissipation of the Estate. It must have been obvious to all that hourly rates would be charged by the professionals called in to complete the administration.

It must also have been recognized that the cost of the administration would be completely out of reasonable proportion to the size of the Estate. [ 25 ] In circumstances such as these, where it is correctly anticipated that professional efficiency and effectiveness may be compromised by the interference of disputing beneficiaries, no professional would undertake the work for lesser compensation than he could earn from alternative work. [ 26 ] It is significant as well that the Administrator and his legal counsel stopped charging for their services well before the completion of their respective retainers. [ 27 ] The professional fees charged are clearly an unusually great portion of the value of the Estate.

In ordinary circumstances, it would cost far less than it did to administer an estate of this size. The circumstances were not ordinary.

In the unique circumstances of this case, the amount of the professional fees claimed is reasonable. [ 28 ] Ted Yaworski has observed in his materials objecting to the fees claimed that the appointing order required that beneficiaries: Not to interfere with the Administrator in the exercise of his rights and duties under this Order, which specifically includes a prohibition on e-mailing, telephoning or otherwise corresponding or communicating with him except upon his prior request. Mr.

Yaworski suggests that, given this term of the Order, it was within the Administrator’s power to prevent the interference of the beneficiaries, including Mr. Yaworski, which contributed to the proportionally high cost of the administration. [ 29 ] The Administrator correctly observes that this suggestion is ironic coming, as it does, from one of the parties who interfered. It is also misconceived. The quoted term of the Order imposed an obligation on the beneficiaries. It did not give the Administrator any authority to himself enforce the obligation.

Enforcement would have required an application to the Court to have the offending beneficiary held in contempt. The cost to the Estate of taking that step would have been greater than patiently tolerating the interference. [ 30 ] I stated above, that with one exception, the fees claimed by the Administrator are reasonable. The one exception is that the Administrator has claimed fees for actions taken prior to his appointment as Administrator. It appears from the description of these actions in the fee account that they related to discussions with the lawyer who recruited the Administrator for the appointment.

In my view, the Administrator’s charges for time spent prior to his appointment by the Court are not recoverable from the Estate. I would reduce the Administrators fees by $2,901.00, the amount charged for hours recorded before the order appointing the Administrator was in place. Ted Yaworski’s Objections [ 31 ] Ted Yaworski’s affidavit raises a multitude of objections to the Administrator’s accounting and to specific features of the Administrator’s administration. The Administrator has provided responses to many of these objections.

I have reviewed each of the objections and the Administrators responses. [ 32 ] Most of the objections are, in my view, entirely without merit. After reviewing them, it is my view that their lack of merit is obvious. Many of them involve complaints about specific actions taken by the Administrator. I have already concluded that the Administrator’s fees are reasonable. This constitutes an approval of those actions. Individual discussion and dismissal of most of Ted Yaworski’s specific objections is not appropriate or required. [ 33 ] However, two of Ted Yaworski’s objections, in my view, require discussion.

In one case, I have found the objection has merit. In the other I have found it does not. Penalties for Late Estate Trust Tax Returns [ 34 ] The Administrator retained a chartered accountant to prepare trust tax returns for the Estate for the tax years ending September 4, 2009 and September 4, 2010. Both returns were prepared and filed in March 2011. They were both late. The filing date for the first return was December 3, 2009. The filing date for the second return was December 3, 2010. The CRA charged the Estate late filing penalties and interest totalling $2,382.74.

Ted Yaworski submits that the Administrator should not have missed the filing deadline and that the interest and penalties resulting from the late filing should not therefore be charged to the Estate. [ 35 ] When Ted Yaworski first raised this objection on June 12, 2015 he said only, “. . . the estate has been charged over $2400.00 in penalties and arrears interest to CRA for late filing of taxes by the Administrator.” [ 36 ] The Administrator responded on June 15, 2015 as follows: “The Administrator was appointed three and a half years after the death of Helen Yaworski.

Tax returns were delinquent when the Administrator was appointed. The interest and penalties are for late filing of tax returns.” [ 37 ] Ted Yaworski raised the matter again in his late-filed affidavit of July 21, 2015. The detail of his concern provided in that affidavit was greater though not entirely accurate. The Administrator has provided no further response. [ 38 ] I agree with Ted Yaworski’s observation. On the materials filed, it appears that the Administrator missed the filing deadlines for these returns, the earliest of which was several months after his appointment.

The second return apparently reported taxable income of $53,091.00 earned in the year ending September 4, 2010. The materials do not include an explanation as to why the CRA filing deadline with respect to this income was not met. I must assume that the Administrator simply missed it. He ought not to have. The Estate should not be charged the resulting CRA penalties and interest. [ 39 ] I disallow the payment of $2,382.74 made by the Administrator in respect of penalties for the late filing of tax returns and

arrears interest. Unnecessary Corporate Tax Returns [ 40 ] Ted Yaworski questions the payment by the Administrator of the $729.75 bill of an accountant who prepared corporate financial statements and tax returns for P. Yaworski Holdings, the shares of which were owned by the Estate. Ted Yaworski submits that the work was unnecessary as the company had been dissolved about 19 months before the Administrator was appointed. He submits that the Estate should not be required to pay for this unnecessary work. [ 41 ] Ted Yaworski did not raise this concern in his June 12, 2015 list of objections.

He raised it for the first time in his late-filed July 21, 2015 affidavit. The Administrator has not responded to the concern specifically. [ 42 ] Prior the appointment of the Administrator, it appears that Ted Yaworski administered the affairs of P. Yaworski Holdings.

The Administrator’s account indicates that sometime after his appointment, Ted Yaworski turned the $10,826.80 remaining in the company over to the Administrator who received it as an Estate asset. [ 43 ] The corporate tax returns in question, which are included in the materials filed on this application, reported the company as inactive. [ 44 ] The affidavit of Ted Yaworski exhibits a letter from the CRA dated December 3, 2010. The letter is addressed to him, even though it was the Administrator who filed the returns in question.

The letter says, “Please be advised the T2 return for the above noted tax year ends have been considered as “No Returns” as our records indicate that this corporation was dissolved on September 2, 2007.” [ 45 ] The fee accounts filed by the Administrator indicate that on September 4, 2009 the Administrator reviewed a corporate search on P. Yaworski Holdings Ltd. and noted “company struck”.

The tax returns in question were for the year ended September 23, 2009 and the year ended December 31, 2008. [ 46 ] The materials before me do not indicate how it came about that the company was dissolved, whether Ted Yaworski was aware of the dissolution when it occurred (which might depend on how the dissolution came about) or whether he informed the Administrator of that fact, if he knew it. [ 47 ] The information in the materials does not permit me to conclude that the Administrator ought to have known before he filed them that tax returns were not required for the years for which they were filed.

Indeed, it is not clear that the CRA communication to Mr. Yaworski means that the returns were not required to be filed. [ 48 ] I decline to disallow this expense. Todd Yaworski’s Objections [ 49 ] The objections raised by Todd Yaworski in his affidavit repeat those raised by Ted Yaworski. My dispositions in respect of Ted Yaworski’s objections apply to those raised by Todd Yaworski as well. Approval of Accounts [ 50 ] I approve the Administrator’s accounts as submitted with the adjustments noted.

I expect that there may have been further charges incurred for the continuing storage of the remaining personal property and that there will be further expense incurred for the disposition of the remaining personal property. I authorise the Administrator to charge such costs to the Estate. Remaining Personal Property [ 51 ] Several items of personal property remain in the Administrator’s control. These are boxes of mainly old business records relating to the construction company which the Administrator has in storage.

The contents of the boxes have been inventoried and the inventory has been provided to the beneficiaries. It is doubtful that any beneficiary has a genuine interest in these materials. It is necessary, however, to relieve the Administrator of continuing responsibility for them. [ 52 ] I therefore direct, subject to the directions set out in the next paragraph, that the Administrator seal the boxes and deliver them to Ted Yaworski.

I direct Ted Yaworski to keep the boxes secure in his possession, and to not break the seal of any box, without first obtaining permission to do so from the Court or from each of the beneficiaries of the Estate in writing. [ 53 ] If Ted Yaworski is unwilling to take possession of the boxes on the terms stated in the preceding paragraph, I direct that he so advise the Administrator in writing within 10 days of the day upon which the Administrator sends him a copy of the formal order resulting from this decision. [ 54 ] If the Administrator receives written refusal to accept the boxes from Ted Yaworski within the time stated in the preceding paragraph, I direct the Administrator to advise the other beneficiaries that Ted Yaworski has refused to accept the boxes on the terms stated and to invite any of the other beneficiaries to advise him in writing within 10 days of the date of the invitation that he or she is willing to accept the boxes on the terms previously stated.

The Administrator will determine to which beneficiary to deliver the boxes if more than one is willing to accept them on the terms stated, without seeking any input from any source whatsoever before making that determination, and shall deliver the boxes to that beneficiary. [ 55 ] If Ted Yaworski has refused to accept the boxes and no other beneficiary advises that he or she is willing to accept them before the deadline, then the Administrator shall have the boxes and their contents destroyed. [ 56 ] The Administrator shall charge the cost of preparing the boxes for disposition as ordered and the cost of the delivery of the boxes, to the Estate.

[ 57 ] Within 10 days of his disposition of the boxes, the Administrator shall file a Statement in these proceedings setting out how the boxes were disposed of. The Administrator shall mail a copy of that Statement to each beneficiary. [ 58 ] After the Administrator has filed the said Statement, any beneficiary may at any time on notice to each of the other beneficiaries apply, in these proceedings, for an order permitting access to the boxes or providing for some alternative arrangement for the maintenance, distribution or destruction of the boxes and their contents.

Payment into Court of the Net Proceeds of Estate [ 59 ] There remains in the region of $160,000 in the possession of the Administrator. There is also outstanding litigation against the Estate by Mark Yaworski and his company.

The Administrator proposes that he be directed to pay the remaining funds into Court pending an order directing that they be paid out. [ 60 ] In my view, it is reasonable that the funds be held in Court pending an order for their payment out of Court whether on termination of the litigation or in some other circumstance, for example, if on application, the Court determines that distribution of the funds should not be delayed until termination of the litigation. [ 61 ] I direct the Administrator to pay the remaining proceeds of the Estate into Court on those terms.

Mark Yaworski Action [ 62 ] Some of the materials filed on this application included submissions relating to the merits of the Mark Yaworski litigation and how it should be dealt with. Such matters and issues are not before the Court in this application. Discharge of Administrator [ 63 ] Upon the Administrator filing the Statement concerning the disposition of the boxes, and paying the net proceeds of the Estate into Court, he shall stand discharged. [ 64 ] I recognize that thereafter the Estate will have no authorized representative.

This may be of concern to Mark Yaworski and his company as plaintiffs in the outstanding litigation. However, in my view, it would be wrong to keep the Administrator involved simply for the purpose of the litigation. Indeed, it never was part of the Administrator’s responsibility under the Order appointing him to defend the Estate in the litigation. [ 65 ] Whatever difficulties the lack of a person legally responsible for the Estate creates for the plaintiffs in the litigation are for the plaintiffs to overcome.

Whatever difficulties the lack of a person legally responsible for the Estate creates for the beneficiaries in the context of the litigation is for the beneficiaries to overcome. [ 66 ] I am satisfied that all interested parties are aware that the process of overcoming those difficulties and of processing the litigation through a trial is certain to cost more than the net proceeds of the Estate.

I am also satisfied they are aware that an agreement between the seven beneficiaries and Mark Yaworski which would see each of them receive some portion of the net proceeds of the Estate would be preferable to continuing the litigation until the remaining net proceeds are entirely spent on the process.

I am also satisfied that they are fully aware that any one of them has the ability to prevent that preferable result and to cause the Estate to be entirely dissipated without there being a distribution to any of them. [ 67 ] All participants in this application shall bear their own costs. [ 68 ] I direct the Administrator to prepare the formal order resulting from this decision. I direct that approval of the form of the formal order by the Respondents to this application is not required. Heard on the 15 th day of June, 2015.

Further materials filed by September 30, 2015 Dated at the City of Edmonton, Alberta this 11 th day of February, 2016. B.R. Burrows J.C.Q.B.A. Appearances:

Brian W. Summers for the Applicant Theresa L. Wilson for Mark Yaworski and Hallmark Construction Group Inc. Danial Peskett for Sonya Demers as a Defendant in a related proceeding Sonya Demers, Bonnie Yaworski, Holly Bennett, Todd Yaworski and Ted Yaworski appeared without counsel Andrea Pariseau, the daughter of Patricia Pariseau attended for her mother Geri Spenrath did not appear in person or by counsel