IRIS KOWALINSKI APPLICANT (RESPONDENT) - v. –, 2023 SKKB 131

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 131 Date: 2023 06 19 Docket: QBG-SA-00409-2017 Judicial Centre: Saskatoon BETWEEN: IRIS KOWALINSKI APPLICANT (RESPONDENT) - and – ESTATE OF MARIA KOWALINSKI, TERRY KOWALINSKI AS PERSONAL REPRESENTATIVE OF THE ESTATE OF MARIA KOWALINSKI and BETH ANN KOWALINSKI AS PERSONAL REPRESENTATIVE OF THE ESTATE OF MARIA KOWALINSKI RESPONDENTS (APPLICANTS) Counsel: Terry J. Zakreski, K.C. for the applicant (respondent) Raymond Wiebe, K.C. and Arran J.

Ferguson for the respondents (applicants) ___________________________________________________________________________ JUDGMENT R.S. SMITH J. June 19, 2023 ___________________________________________________________________________ Introduction [ 1 ] The applicant estate [Estate] seeks an order pursuant to s. 46.4(1) of The Administration of Estates Act , SS 1998, c A-4.1 , approving a proposed distribution of the Estate of Maria Kowalinski [Maria]. For ease of reading, I will refer to the personal representatives of the Estate, being her children, by their first names, Terry and Beth.

Their sibling is Iris, and Beth’s son is Delaney. There are four beneficiaries of the Estate, being Terry, Beth, Iris and Delaney. [ 2 ] Maria passed away on February 3, 2016. Since that time her children have conducted themselves in such a manner that a reasonable observer could conclude they wished to ensure that very few of Maria’s assets were frittered away on her chosen beneficiaries.

[ 3 ] There was a Notice of Objection to the affidavit of Iris brought by Terry and Beth. It was withdrawn at the beginning of the application. Background [ 4 ] Marie executed her Will on April 23, 2013. She appointed her three children, Terry, Beth and Iris as executors. It is clear that there had been a pattern of Maria loaning money to her children, particularly Terry and Iris. That protocol no doubt led to much of the suspicion between the siblings. [ 5 ] I expect there was, in place, a level of antipathy between the siblings prior to 2015.

However, in October 2015, events happened which caused the existing animus to bubble up and arguably overflow. [ 6 ] Terry was meeting with Maria and for some reason discovered that there was a collateral mortgage registered against Maria’s home on Shea Crescent in Saskatoon in the amount of $60,000. Maria confirmed that mortgage was granted in order to secure a $60,000 loan to Iris. [ 7 ] I infer that Terry was concerned that Iris might try to maneuver things to increase her share in the Estate by not paying off the $60,000 loan. [ 8 ] He contacted Maria’s lawyers and made arrangements to meet.

Terry took Iris to her lawyer’s office from the hospital as she was then being treated for complications related to cancer and was in a weakened state. [ 9 ] The lawyers recommended that Maria prepare a holographic codicil removing Iris as an executor. This was done and the codicil, written October 7, 2015, reads: This is a codicil to my will dated April 23, 2013. I remove Iris Theresa Kowalinski as an executor of my Esetate ( sic ). Iris Theresa Kowalinski owes me $86,600.00 for amounts I have lent loand ( sic ) to her which remain unpaid.

Therefor ( sic ) her chare ( sic ) shall be reduced by $86.600.00$ ( sic ) plus any adittional ( sic ) debt and interest ( sic ) which may apear ( sic ).

Any costs of colleting ( sic ) from Iris shall be charged to her share. [ 10 ] Unfortunately, even a cursory inquiry by Terry or Maria’s lawyers would have confirmed that the PowerLine loan had been paid off and Maria was in a position to insist that the mortgage be discharged. [ 11 ] Terry thereafter began to take steps to place the Estate in a position where probate will not be necessary or, alternatively, as Iris views it, to place himself in a position of power vis-à-vis his siblings and the assets. [ 12 ] He arranged for Maria’s tax-free savings account (TFSA) to be placed in his sole name.

He also had title to Maria’s home registered in his and Maria’s names, as joint tenants. He also then confronted Iris about the line of credit and the mortgage on Maria’s home. Iris took that opportunity to explain to him that the line of credit had been paid in full. In due course, that mortgage was discharged. [ 13 ] Notwithstanding Maria’s precarious state, Iris importunes her on January 30, 2016 for an additional $15,000 loan. The loan is recorded in a purple notebook, which was the manner in which Maria kept track of what her children owed her.

Maria passed away on February 3, 2016. [ 14 ] As everyone distrusted everyone else, it was agreed there would be a reading of the Will on February 9, 2016. This is how Iris remembers it (taken from page 6, clause 9 of Iris’s brief of law): (

y) February 9, 2016 – There [was] a reading of the Will and Codicil with all beneficiaries present. Terry K. reads the Codicil this way: “This is a codicil to my will dated April 23, 2013. I remove Iris Theresa Kowalinski as an executor of my Estate as she is dishonest and untrustworthy.” Terry K. further says to Iris K., “If you didn’t like that, then you are definitely not going to like this,” and throws down a copy of the cheque Maria K. had written on January 30, 2016 and in respect of which Terry K. had initiated a fraud investigation.

It was otherwise agreed that nothing was to be removed from the house unless Terry K., Beth K., Delaney K. and Iris K. were all present. [ 15 ] It does not serve any larger good to detail the litany of petty and moderate miseries the beneficiaries visited on each other following Maria’s death. Suffice it to say, there was squabbling, accusations and conduct inconsistent with loving siblings. [ 16 ] I should note Delaney’s conduct was, for the most part, above board.

There were multiple court applications wherein Iris sought a trial to bring into question Maria’s mental capacity at the time of the codicil and also sought that the Will be proved in solemn form. Neither of those applications were successful. [ 17 ] There were also a number of applications engaging Terry and Beth and requiring them to disclose personal property at Maria’s residence on Shea Crescent. Suffice it to say, compliance fell something short of perfect. [ 18 ] There was an application brought by Iris to permit cross-examination of Terry, Beth and Delany on their affidavits.

This churned up significant lawyer’s time and fees but generated only moderate probative value. [ 19 ] The Court is now met with the task of ordering distribution of the Estate, which totals approximately $500,000. There are a number of issues which must be addressed going beyond the simple division between the four beneficiaries. They are:

(1) Should Terry and Beth receive executors’ fees and, if so, how much?

(2) Each of the four beneficiaries is indebted to the Estate and those amounts must be established.

(3) Terry, Beth and Delaney all assert they are out expenses which should be reimbursed by the Estate; if so, what arethose amounts?

(4) Should Terry’s and Beth’s legal fees be paid for from the Estate?

(5) Should Iris’s legal fees be paid for from the Estate?

(6) There are a number of chattels which have generated contests primarily between Terry and Iris. How should thosechattels be divided? The other night I ate at a genuine family restaurant. Every table had an argument going. George Carlin Executor Compensation [20] The brief filed on behalf of Terry and Beth addressed this debate, starting at para. 72: 72. Regarding executor compensation,

Section 52 of The Trustee Act [The Trustee Act, 2009, SS 2009, c T-23.01] alsodirects that executors are entitled to a fair and reasonable allowance for the administration of an Estate, including legal fees. The aboveprovides the Court the ability to order the requested compensation sought by Terry and Beth in their capacities as executors of the Estate.The Applicants are seeking executor compensation of 5% of the value of the Estate, payable out of the final distribution of the Estatewith: 3.5% being payable to Beth and 1.5% being payable to Terry. … 74.

The principles to be applied by the Court in exercising its discretion to fix remuneration under that section, and whichnow apply on an application pursuant to s. 52, were summarized by Justice Cameron in Safian Estate v Safian (1995), (SK CA), 134 Sask R 229 (Sask CA) [Safian Estate], as follows:

Section 80 of The Trustee Act, R.S.S. 1978, c. T-23, provides for payment to an executor of "such fair and reasonable allowance forhis care, pains and trouble and his time expended in and about the trust estate as may be allowed by the Court of Queen's bench of ajudge thereof...". It hardly need be said that this reposes in the judges of the Court of Queen's Bench a broadly-bounded discretionarypower, requiring them in the exercise of that power to have regard, among other things, to the time spent in administering the trust. 8. Over time, the application of the

section has given rise to a set of judicially determined criteria to which judges are to have regard inthe exercise of their discretion. They are to have regard for: 1. The magnitude of the trust; 2. The responsibility springing from the trust; 3. The time expended in performing the duties of the trustee; 4. The skill and ability displayed by the trustee in doing so; and 5. The success attending the administration of the trust. … [21] Then at para. 78: 78. Justice McLellan cited Verbonac [(1984), (SK SU), 31 Sask R 161] with approval in Re PreboyEstate (1989), (SK SU), 72 Sask.

R. 33, affirmed (1989) (SK CA), 74 Sask. R. 223 [PreboyEstate] and noted that, while courts have often resorted to the use of percentage figures on the value of the asset involved in each specificphase of the administration, such a method is only a guide that the court may consider along with the Five Principles in determiningappropriate executor compensation. The question is always what is fair and reasonable on the particular facts of the case.

The Courtpermitted executor compensation percentages of between 1% and 3% on capital and revenue account fees and disbursements, including1% on the value of the land transfer to the beneficiaries. The Estate was worth approximately $808,000.00 and was completed inapproximately six years. The court did not allow an additional management fee for leasing the estate lands, noting that a percentage feewas allowed on revenue from those leases. [22] What makes this situation somewhat singular is that the Estate never went to probate.

As noted, steps weretaken to ensure that probate was not necessary even though Iris argued vociferously for it. In my mind, this does affect the level ofcompensation for the executors. [23] Not surprisingly, Iris takes the position that nothing is too much for Terry and Beth. At para. 20 of her brief shenotes:

20. These same factors [the five factors] were recently applied by Justice Robertson in Meadowcroft v Baker Estate,2021 SKQB 317 [Meadowcroft]. There the court noted: “In addition to the five factors, the court should consider evidence ofthe testator’s intention or any agreement for payment.” (at para. 25) 21. The court further noted: [28] The absence of any direction in the Will for payment or any agreement amongst the beneficiaries is a significantfactor in deciding both whether to allow payment and, if so, in what amount.

If an executor takes on the role with the clear expectation,based on written instructions or agreement, that they will be compensated, then they may be entitled to the specified compensation orrate of compensation. Here that does not exist. […] [32] In Saskatchewan, many executors are family members. The local child is often best placed to serve. Most workwithout compensation. They see it as a service to family, not a job for hire. [33] The materials do not reveal any agreement nor intention to pay executor fees nor payment for services providedby family members.

Patsy, at para. 52 of her affidavit, points to the lack of any prior agreement as a reason for denying payment ofCheryl’s claim for executor fees. [34] The idea of paying executor fees seems to have arisen late in the administration of the estate and appears relatedto the difficulty and conflict between the co-Executors. While this may be understandable, it brings into question the authority to orderpayment after the fact. The court considered the five factors and these additional factors and declined to order executor fees. 22.

Terry K.’s and Beth K.’s claim for executor fees is compounded by the fact that neither applied to probate the Willnotwithstanding that Maria K. had significant assets valued at over $500,000. Iris K. applied under section 14(1) of The Administration ofEstates Act, to require Terry K. and Beth K. to probate the Will and they never have. While small estates usually do not require probate,this is not such an estate. As noted by Justice Laing in Hagel v Lacoursiere, 2005 SKQB 410 : [10] The reality is that many estates, not all of which are small are administered by executors without formallyapplying for probate.

In an

article by the Law Reform Commission of Nova Scotia, entitled “Probate Reform in Nova Scotia” whichappears in (1999) 18 Estates, Trusts & Pensions Journal 53, the Commission points out that in the past two years approximately 70percent of Nova Scotia estates have been dealt with informally. There are no similar statistics available in Saskatchewan, but there is noreason to believe that the percentage would be much different here. The

article goes on to point out there are good reasons why anexecutor would wish to take out formal probate. … [24] There is no question that Terry and Beth put in a significant amount of time dealing with matters arising fromthe Estate. However, much of it has nothing to do with “administering the Estate” but engaging in battle with Iris. [25] The sibling well was poisoned, even before Maria’s death. That sad fact was manifested in how the eventsunfolded.

I conclude that Terry, Beth and Iris are in pari delicto for the sad state of the sibling relationship. [26] I conclude that some level of compensation is appropriate, but it is to be at the low end. An examination of thefile shows that Beth did heavier lifting than Terry and, therefore, I order Beth to receive one percent of the value of the Estate payableout of the final distribution as an executor fee and that Terry is to receive 0.5 percent. Debts Owed by the Estate [27] The Estate has been embroiled in interlocutory warfare since 2017. Lots of waves, very little motion.

The courtfile reflects a tsunami of numbers coming from everyone. [28] In the end, I prefer Iris’s numbers with respect to her debt and Terry’s debt. I particularly found that Exhibit GGto Iris’s affidavit, sworn on May 18, 2021, to be helpful and probative respecting Terry’s debt. [29] I am more comfortable with the Estate’s view as to the indebtedness of Beth and Delaney. Accordingly, thosedebts are: (

a) Iris owes the Estate $30,000; (

b) Terry owes the Estate $51,800; (

c) Beth owes the Estate $1,000; and (

d) Delaney owes the Estate $2,750. [30] I should point out that Iris had a caveat attached to her $30,000 debt, namely, that she feels Delaney owes her$5,000 and that should be deducted from the $30,000. I will not do that. If she has a claim against Delaney, that is why the law createdSmall Claims Court. Debts Owed by the Estate [31] On this topic, I, again, benefit from a smorgasbord of numbers in the court file. I am comfortable with thefigures advanced by Beth and Terry with some adjustments. I determine that the following out-of-pocket expenses are payable by the

Estate: (

a) to Beth the sum of $2,529.91 less the mileage she charged from her house to the Shea Crescent property; (

b) to Terry the sum of $3,471.78 less one return flight from Panama (I understand there were two charged); and (

c) to Delaney the sum of $2,733.90. [32] The Estate (Terry and Beth) were also taking the position that Delaney was entitled to $3,880 as a fee for thework he more or less supervised to finalize the Estate towards distribution. This is generous. It must be remembered that Delaney, for alengthy period of time, lived and was supported by Maria. Delaney’s compensation for the work he did shall be limited to $1,000. [33] I will remain seized with any debate over the adjustments called for above. If there is such a debate, then theparties are to contact the Local Registrar who shall arrange for a conference call.

Who Pays the Legal Costs? [34] Terry and Beth take the position that Iris is the causa causans of the entire litigation mess and that she shouldpay the costs of same. [35] Terry and Beth refer the Court to Justice Matheson’s observation that the “general rule” of costs in estatelitigation should be paid out of the estate (Landsall v Lysyshyn (1998), (SK KB), 170 Sask R 273). That approachwas grounded in the thought that the Will should be interpreted in a manner that reflects the intention of the testator. Starting at para. 100of their brief, Terry and Beth note: 100.

The above noted “general rule” is also referenced in Ellingson v Ellingson Estate, 2017 SKQB 14 at para 119[Ellingson]. The Court in Ellingson reiterates that costs nonetheless must be determined on a case by case basis. 101. Similar to the matter currently before this Honourable Court, many applications were filed by the parties inEllingson before the matter came to Trial. The history of litigation is a relevant consideration in a costs award. In the present matter, thehistory of litigation commenced by Iris is extensive. 102.

The first question to consider is whether the parties were forced into litigation by the fault of the testator. Thesecond question is whether the proceedings had merit. 103. In the present matter, Maria had a valid Will and Codicil in place at the time of her death. Indeed, the onlylegitimate point of contention was with respect to the debt Iris actually owed the Estate, which the Applicants recognized throughcounsel was not accurate as early as May of 2016.

At that point, the dispute should have ended and Iris should have cooperated with theadministration of the Estate, including providing information regarding her actual debt (which she has still been dishonest about). Instead,Iris went down a path of contested litigation, filing lengthy, frivolous, and scandalous Affidavits, and making unsubstantiated allegationsof both Maria, and the other three beneficiaries. 104. It is respectfully submitted that the legal fees of the Applicants for the litigation should be borne by Iris. [36] Respectfully, I do not view the matter as being that straightforward.

It was clear the appetite for quarrelling,feuding and general legal battle was present on both sides. [37] Iris notes in her brief, starting at para. 72: 72. In this case the Will was not probated on the basis that no assets passed through the Estate as they were all paiddirectly to Terry K. or Beth K. in trust for the beneficiaries of the Will. In this sense, there would be no entitlement to the ordinarycompensation that would apply for solicitors for performing “core services”.

The remainder of the “non-core service” consistedprimarily of contesting every application brought by Iris K. to compel the executors to perform their basic duties. Moreover, andsignificant to Iris K.’s argument that she should be compensated for her legal fees from the Estate, Iris K. has been largely successful inevery one of her court applications. 73. Iris K. brought an Originating Application dated July 12, 2016, seeking to compel Terry K. and Beth K. to provideMaria K.’s estate files from Kloppenburg & Kloppenburg.

That application was unsuccessful as determined by Justice Currie onNovember 22, 2016, on the basis that the application was premature. 74. Terry K.’s and Beth K.’s legal victory was short-lived. Iris K. brought another Originating Application in thismatter. Justice Dovell, by order dated December 7, 2017, struck down the provision of the Codicil where Iris K.’s share of the Estatewould be reduced by $86,600 and ordered that, regarding all four beneficiaries, their actual debt will be deducted from their quartershare. Terry K. and Beth K. were ordered to provide a full accounting of the Estate.

There was to be an interim preservation order andIris K. was entitled to an authorization to access the Kloppenburg law firm to obtain a list of all documents on their file regarding estateplanning. 75. The deadline for providing the accounting was missed and, furthermore, the accounting that was ultimatelyprovided was inadequate, leading to Iris K.’s application to the court having to spell out by order on February 6, 2018, what the fullaccounting of the Estate was to include and to remind Terry K. and Beth K. about the court’s full and complete interim preservationorder of assets.

It was noted that “[b]ase utilities do not include television, cable or Internet services.” Notwithstanding this, Internet andcable continued to be paid regularly out of the Estate account. 76. On April 6, 2018, on Iris K.’s application, the court ordered that a December 19, 2017 cheque written for payment

of legal fees was in breach of the preservation order and it was ordered that the money be paid back into the Estate account. Further, given that the accounting still was not being provided in a satisfactory manner, Terry K. and Beth K. were ordered to provide Iris K. an authorization to allow her to access all banking information regarding the Estate. [ 38 ] Respectfully, from an above-the-forest vantage point, there is plenty of blame/fault to be spread around all three siblings.

Accordingly, I order that each shall bear their own costs. [ 39 ] I do, however, further order that any legal fees incurred after the date on which the order from this judgment is issued by McDougall Gauley shall be borne by the Estate, subject to being taxed by me. [ 40 ] If there is a dispute in that context, the complaining parties should contact the Local Registrar who shall convene a conference call for the purposes of addressing the debate. Chattels to be Divided [ 41 ] Not surprisingly, the siblings are also at odds over how to divide certain chattels.

These range from wood carvings, a nutcracker bowl to a black diamond pendent necklace. Unfortunately, in their respective briefs, each side creates a slightly different list of chattels in debate. Obviously, there is no correct way to divide the chattels, it is merely a task that must be accomplished in order to bring the estate bickering to an end. [ 42 ] I briefly posited to counsel that perhaps an efficient way of resolving the chattel distribution dispute was to have counsel engage in a rock, paper and scissors contest on the Court House steps .

I gleaned from the glowering look on their faces that they did not regard that as sufficiently juridical. [ 43 ] Each of the parties offer their own solution as to how to divide the chattels but just picking one suggestion over the other seems somewhat arbitrary. [ 44 ] I conclude that “luck” is the best arbiter. I direct counsel to prepare a list of chattels that are in debate. Perhaps the siblings can agree on some so that we do not have a raft of items to deal with.

However, I leave that to them. [ 45 ] In any event, when the list is prepared, it is to be forwarded to me through the Local Registrar and I will then set a date to draw names from a hat to determine ownership of the chattels in issue. The draw will take place in a courtroom and on the record. [ 46 ] If there is a dispute as to the actual number of chattels in debate, then each counsel should write to the Court outlining the nature of the disagreement and I will convene a conference call with a view to arguing it and deciding the issue. Family quarrels are bitter things. They don’t go according to any rules.

They’re not like aches or wounds, they’re more like splits in the skin that won’t heal because there’s not enough material. F. Scott Fitzgerald Directions for the Go-Forward [ 47 ] Beth and Terry are to arrange for the filing of the final income tax return of Maria’s Estate. That cost shall be borne by the Estate. [ 48 ] Terry and Beth shall prepare a final reconciliation based on the above findings herein and indicate what the equal distribution shall be between the four beneficiaries.

That document should be prepared and sent to the four beneficiaries and no action to distribute the funds should be taken until 10 days thereafter. [ 49 ] I will remain seized with any disputes arising from the mechanics of distributing the Estate. In the event that counsel cannot resolve the dispute, they are to contact the Local Registrar identifying the particulars of the dispute and arrangements will be made to convene a telephone conference call for the purposes of finalizing the Estate. ______________________________J. R.S. SMITH