Interim Payment from the Estate to cover Plaintiffs' Legal Costs of Litigation
In Zhao v. Ismail Estate [2006], O.J. No. 5221, the Court considered a motion before it brought by the plaintiffs in the action seeking, amongst other things, (i) certain directions and disclosure of information prior to a scheduled mediation, (ii) an Order for interim support under s.64 of the Succession Law Reform Act (“SLRA”), (iii) the removal of the defendant as Estate Trustee of the subject Estate, and (iv) an Order granting the interim payment of legal costs from the Estate to the plaintiffs.
Pursuant to an Order of the Court dated December 15, 2005, the proceeding had been converted from an Application to an ordinary action in light of the contested issues of fact and credibility involved. The plaintiffs are the mother (91 years old) and brother (55 years old) of the testator, both of whom reside in China. The testator died on June 4, 2004 and left her entire Estate valued in the range of $1.7 million to her solicitor and friend, the defendant, who at the time of the motion was the Estate Trustee of the testator’s Estate.
The Statement of Claim in this proceeding, dated February 6, 2006, claims, inter alia, that the testator’s Will dated January 28, 1992 and Codicils dated April 30, 2004 and May 14, 2004 are invalid as the testator lacked testamentary capacity and/or was subject to undue influence or that she lacked knowledge and approval of the contents. In addition, amongst other relief, the plaintiffs claim, in the alternative, that the testator failed to make adequate financial provision for them, as dependants, under Part V of the SLRA.
The Court disagreed with the defendant’s submission that the Court was not authorized to appoint an Estate Trustee in place of the Estate Trustee already appointed. The Court held that the defendant, as sole beneficiary under the Will, was in a clear conflict of interest in carrying on as Estate Trustee and that pursuant to Rule 75.04 of the Rules of Civil Procedure and s.5 of the Trustee Act, the Court had such power.
The Court further ordered (i) the production of transcripts of any examinations held in the Application, (ii) an accounting from the Respondent as attorney under a Power of Attorney for Property from December 1978 of all transactions conducted by the defendant, pursuant to the Rule 74.17 and pursuant to s.42 of the Substitute Decisions Act, (iii) copies of all bank, investment and other financial statements in respect of the deceased’s investments for 5 years prior to the testator’s death, (iv) an inventory of all household items owned by the deceased, (v) copies of all files from the law firm in question from 1978 to present pertaining to the testator’s affairs, and (vi) copies of all medical records of the testator dating back to January 1, 1982.
With respect to the plaintiffs’ request for an interim Order for support, the Court noted that such an Order is contemplated by s.64 of the SLRA and held, on the facts and circumstances of the case and for the limited purpose of the motion for interim support, that the testator was supporting her mother in the amount of approximately $2,500.00 per month. The Judge ordered that an interim lump sum payment equivalent to 24 months support ($60,000.00) be paid to this plaintiff (the mother). Similarly for this same purpose, the testator’s brother, who was/is disabled and received support of approximately $500.00 a month from the testator, was entitled to a lump sum payment equivalent to 24 months ($12,000.00).
Plaintiffs’ counsel also sought an order for an interim payment from the Estate, pursuant to s.131 of the Courts of Justice Act, to cover disbursements he had incurred in the sum of $50,000.00 to a Chinese law firm for their work in preparing the affidavit material for the plaintiffs.
The Judge noted that the plaintiffs were of very modest means, resided in China and that there was no realistic possibility that the plaintiffs would be able to put forward their claims in this matter in the absence of financial assistance from the testator’s Estate. The rather extraordinary circumstances which resulted in the testator’s family being excluded from any interest in her Estate, in favour of her solicitor as the sole beneficiary, required the scrutiny afforded by this proceeding. The Judge held that it was appropriate that the Estate bear the costs of this necessary inquiry, at least on an interim basis. As such, the Court ordered that the sum of $50,000.00 be paid from the Estate to the plaintiffs’ solicitors, such funds to be used to pay off existing indebtedness to the Chinese law firms who they engaged in this matter and the balance, if any, to be used to fund their continuing representation of the plaintiffs. The funds were to be accounted for.
The plaintiffs were also awarded costs of the motion in the sum of $10,500.00, inclusive of disbursements and GST, payable from the Estate within 30 days of the date of the Order.
The order for an interim payment from the Estate in respect of the plaintiffs’ legal costs is particularly interesting given the amount awarded and that if the plaintiffs’ are unsuccessful with their action, there appears to be no real expectation that they would be able to pay any costs; they, in that case, would not be beneficiaries of the Estate, they live in a foreign jurisdiction, have no Canadian assets other than perhaps monies arising from a dependant support claim, and have modest assets at best outside the jurisdiction.
Thanks for reading,
Craig.
