McAndrew Estate (Re), 2021 ABQB 56

Court of Queen’s Bench of Alberta Citation: McAndrew Estate (Re), 2021 ABQB 56 Date: 20210121 Docket: ES01 128539 Registry: Calgary Court File Number ES01 128539 Court Court of Queen’s Bench of Alberta (Surrogate Matter) Judicial Centre Calgary Estate Name Patricia Doreen McAndrew Applicant (Plaintiff) Orin Buchanan Respondent (Defendant) Diane Shultz _______________________________________________________ Decision on Costs of the Honourable Mr. Justice N.E.

Devlin _______________________________________________________ Overview [ 1 ] This case required the Court to choose between three wills left by the late Patricia McAndrew (the “Deceased”). In reasons reported at 2020 ABQB 614 , I determined that a 2012 holograph will, her final testamentary document, was valid and should be admitted to probate. The application for advice and directions underlying this decision was brought by the Deceased’s brother, Orin Buchanan (“Orin”), acting in his capacity the estate administrator. The matter was made contentious by the Deceased’s daughter, Diane Schultz (“Diane”).

She opposed Orin’s attempt to validate the Deceased’s latter two wills, arguing, inter alia , that the Deceased lacked capacity to make them and/or was unduly influenced in doing so. [ 2 ] The background to this dispute is that the Deceased had, in 2011 and 2012, altered her will to diminish Diane’s share of the estate, reducing it to one more proportional with that left to her other heirs.

These changes occurred contemporaneously with Diane taking money from the Deceased’s bank account to fund gambling debts. [ 3 ] My decision that the Deceased had testamentary capacity to make the 2012 holograph will, and that it reflected her true wishes, effectively meant that Diane was the losing party. However, no agreement has been reached on costs. Therefore, the Court must determine: (

i) whether Diane’s costs should be paid from the estate, notwithstanding her lack of success; and (ii) whether Diane or the estate should bear the costs incurred by Orin. The governing principles [ 4 ] The parties are substantially in agreement with respect to the law on costs in estate litigation. In her submission, Diane summarized that law as follows:

Justice Moen in Babchuk v Kutz [2007 ABQB 88 at paras 5-8, aff’d 2009 ABCA 144] notes: The Court has authority to award costs in its own discretion, but that discretion must be exercised judicially: Dansereau Estate v. Vallee,2000 ABQB 288 (Alta. Q.B.) at para 16; Popke v Bolt, 2005 ABQB 861 (Alta. Q.B.) at para 19; Seward v. Seward Estate, (1997) (AB KB), 201 A.R. 77 (Alta. Q.B.) at para 9. The usual rule is that the unsuccessful party bears the costs. However, in anestate mater the unsuccessful party sometimes has its costs paid by the estate.

The policy reason why the unsuccessful party bears the burden of the costs is to encourage litigants to settle their disputes, that is, todiscourage litigation. Litigation is very expensive and often depletes assets. The competing policy reason why the estate sometimes paysthe costs of both litigants is that society has an interest in ensuring only valid wills are probated. Sometimes litigation is necessary toensure that the court supervises the probity of a particular will: Popke v. Bolt, at para 22 and 23. ... It is not automatic in probate litigation that the estate must pay costs: McCullough Estate v.

McCullough, 1998 ABCA 38 ,[1998] A.J. No. 111 (Alta. C.A.). Rather, the modern approach to fixing costs in estate litigation is to scrutinize the litigation carefully torestrict unwarranted litigation and protect estates from being depleted by such litigation: McDougald Estate v. Gooderham (2005), (ON CA), 255 D.L.R. (4th) 435 (Ont. C.A.). There are a number of factors that must be considered when determining whether the court should award costs to an unsuccessful partyin estate litigation: a. Did the testator cause the litigation? b. Was the challenge reasonable? c. Was the conduct of the parties reasonable? d.

Was there an allegation of undue influence? e. Were there different issues or periods of time in which costs should differ? f. Were there offers to settle?

Justice Graesser, in Foote Estate, Re, summarized the general principles set out by the caselaw with respect to awarding costs in estatematters, including the principles set out by Justice Moen in Babchuk and Petrowski v Petrowski Estate, adding: Costs will normally follow the event in estate litigation, unless the challenge to the estate was reasonable (Petrowski at para. 78), or onthe basis of a public policy exception recognizing society’s interest in only probating valid wills (Petrowski at para. 79).

The recognized exceptions (to the costs follow the event rule in modern litigation), as summarized in Foote, are: a. Cases involving the validity of a will; b. Cases involving the

interpretation of a will or trust; c. Cases involving dependant or family relief claims (wills variation cases); d. Cases where the cause of the litigation takes its origin in the fault of the testator or those interested in the residue; and e. Cases where there are sufficient and reasonable grounds concerning the testator’s testamentary capacity or whether there was undueor [sic] influence on the testator. The parties’ positions [5] Diane takes the position that only the final enumerated factor in Foote is relevant.

She asserts that, on the facts of this case, itwas reasonable for her to have had concerns about the Deceased’s testamentary capacity when she executed wills in 2011 and 2012, andabout Orin’s role in their creation. Therefore, she takes the position that her costs should be borne by the estate. [6] In April 2011, Diane caused the Deceased to execute an enduring power of attorney naming her to act with immediate effect.Shortly thereafter, she arranged for the Deceased to be assessed at the Seniors Health Clinic, where she was diagnosed with MixedAlzheimer’s and Vascular Dementia.

A doctor then signed a “Declaration of Incapacity to Make Decisions about a Personal Matter”.This Declaration asked the physician completing it to opine whether the maker of a personal directive “lacks the capacity to makedecisions about the following personal matter(

s) of a non-financial nature” (emphasis added). The 2011 and 2012 wills were both madeafter these events, which Diane submits warranted her opposition to their recognition. [7] Diane also places considerable reliance on the fact that the records of the Deceased’s family physician for the relevant timescould not be obtained.

She submits that she “...ought not to be penalized with bearing the burden of her legal costs for a reasonableconcern for testamentary capacity in the absence of medical records that would have shone better light on the issue.” [8] Diane further argues that she “...ought not to be penalized with bearing the burden of her legal costs simply because, as anon-medical and non-legal lay person, she could not tease apart the close relationship between capacity for medical purposes andtestamentary capacity.” [9] Orin responds that the litigation was necessary exclusively due to Diane’s refusal to accept the validity of the Deceased’s

2011 and 2012 wills, which position was driven purely by financial interest and was inconsistent with Diane’s own behaviour. Consequently, Orin argues that Diane should not only bear her own costs but also pay those he incurred on behalf of the estate. Analysis [ 10 ] Diane’s position is in tension with certain basic facts in this case. First, the litigation (and its costs) arose not from Diane’s concerns about the Deceased’s condition in 2011, but from the litigation that followed the Deceased’s death in November 2018.

Significantly, Diane arranged to have the Deceased sign a mortgage on her home in 2018 – the principal asset of the estate – approximately six weeks before her death. That Mortgage, as discussed in the Decision, was used to provide funds for Diane to make Court-ordered restitution for fraud. There was nothing before me to suggest that the Deceased’s condition had improved by that point.

Diane’s actions were thus inconsistent with her assertion that she had a reasonable concern about the Deceased’s capacity some seven years earlier. [ 11 ] Second, both the 2011 will and the 2012 power of attorney were prepared by very senior estates counsel, Grant Watson. Diane’s evidence was that, when she learned of the 2011 will, she showed Mr. Watson the Declaration of Incapacity and he told her that the Deceased could invalidate the 2011 will by writing “Void/Cancel” on each page and signing it. Crucially, Diane had no concern respecting the Deceased’s capacity to supposedly revoke her will by doing so.

If she had had genuine doubts about the Deceased’s capacity to execute the 2011 will, it is unclear how she would have concluded that the Deceased nevertheless had the capacity to “cancel” it. [ 12 ] Unsurprisingly, Mr. Watson, had no recollection of giving this curious advice, in this case or ever. I found Diane’s account difficult to accept and concluded that she had concocted this story in an attempt to maintain her entitlement to the lion’s share of the estate under the Deceased’s 2005 will.

Her actions in this respect are, again, not indicative of a genuine concern over the Deceased’s testamentary capacity. [ 13 ] Third, Mr. Watson also prepared a 2012 power of attorney, very close in time to the 2012 holograph will. This instrument named Orin as attorney and was accompanied by the standard Certificate of Legal Advice indicating that Mr. Watson explained the nature and effect of the power of attorney and that the Deceased appeared to understand it. Again, there was no evidence before me that Diane discussed with Mr.

Watson her concerns about the Deceased’s capacity when she learned of this development. Diane did not challenge the 2012 power of attorney, but did challenge the 2012 holograph will executed by the Deceased a week earlier. [ 14 ] Each of these factors leads me to conclude that this litigation was necessary only because Diane chose to pursue it to protect her financial position. I find that her actions were animated not by concern about the Deceased’s capacity, but rather a wish to maximize her own inheritance.

She seems to have been prepared to put aside concerns over her mother’s capacity when she stood to benefit. In my view, neither the interests of justice nor the proper administration of the estate required this litigation. [ 15 ] Diane notes that in Babchuk , Justice Moen held that the challenge to a will was reasonable at first, but became unreasonable upon receipt of further documentation. Diane states that “In this matter, no such additional information came to light so as to make the challenge unreasonable.” [ 16 ] I disagree.

This matter came before me more than a year after the Deceased’s death, during which time the parties filed substantial evidence and undertook Questioning. Accordingly, even if Diane did not discuss the Deceased’s capacity with Mr. Watson in 2011 or 2012, his evidence was available to her once this litigation began. As noted in the Decision, Mr. Watson satisfied himself that the Deceased was competent to make the 2011 Will, Mr.

Watson was also satisfied of her capacity to execute the 2012 power of attorney a week after the 2012 holograph will. [ 17 ] Moreover, Diane was also not required to “tease apart” the meaning of testamentary capacity on her own, as she submits. Rather, she paid $5000 out of the Deceased’s funds to Vogel LLP in January 2019. It is clear, therefore, that Diane had counsel at a very early stage in this matter and therefore had ready access to legal advice. [ 18 ] Finally, I must consider the allegation of undue influence Diane made against Orin.

I agree with Justice Moen’s conclusion in Babchuk that this is a relevant factor to consider when awarding costs in estate litigation. Where undue influence is proven, the party who improperly influenced the testator is more likely to be liable for the costs of the litigation. Conversely, this allegation is akin to a fraud claim and carries considerable moral opprobrium. Therefore, such claims complicate cases and motivate opposing parties to call additional evidence to clear their names.

When made and not proven, an allegation of this nature often will influence the costs outcome. [ 19 ] Diane asserted that Orin exercised “control and influence” over the execution of the 2012 holograph will. I found that she had fallen far short of proving the coercion necessary for a finding of undue influence. That contention did not materially increase the scope of litigation.

It does, however, mean that Diane’s case consumed resources in what was effectively an attempt to obstruct the Deceased’s true wishes. [ 20 ] Taking all of the foregoing into account, I conclude that this is not an appropriate case to exercise my discretion in favour of awarding costs to Diane as the unsuccessful estate litigant. It is fair and just that she bear her own legal expenses. [ 21 ] I have also given serious consideration to requiring Diane to pay Orin’s costs.

Ultimately however, I decline to do so for pragmatic reasons. [ 22 ] Orin states in his written submission that Diane remains an undischarged bankrupt and has no assets. Further, she is already indebted to the estate for approximately $55,000, including the amount previously paid to her counsel from the Deceased’s funds. Given the modest size of the estate and the number of other beneficiaries, it is likely that setting off this existing indebtedness will consume the entirety of Diane’s share of the estate.

I am satisfied that ordering Diane to pay Orin’s costs will only put the estate to further expense in a fruitless effort to collect.

[ 23 ] In the result, Orin’s costs are to be paid out of the estate and Diane shall bear her own costs. Dated at the City of Calgary, Alberta this 21 st day of January, 2021. N.E. Devlin J.C.Q.B.A. Appearances: Judd M. Blitt Scott Venturo Rudakoff LLP as agent for Meyers Davis LLP. for the Applicants Victor H. Vogel, QC Vogel LLP for the Respondents