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Above and Beyond: When is an Attorney Entitled to Claim a ‘Special Fee’?

When an attorney is called upon to act as a substitute decision maker for another, the decisions and tasks they will have to address will likely be as varied and unique as the grantor(s) themselves. At the outset, the management of a person’s property or personal care may be quite straightforward. However, given the vagaries of life, complications often arise necessitating the making of unforeseen and often difficult decisions, which are necessary in the grantor’s best interests. Where such complications and/or unforeseen decision making requirements arise, an attorney may find themselves devoting additional time and energy, well in excess of that which is within the normal exercise of the attorney’s function.

The courts have awarded attorneys a “special fee”, in addition to any compensation permitted under the power of attorney document or in the tariff, where extra or specialized work by the attorney was necessary in the administration of the grantor’s property or their personal care.

The reader will note that many of the cases relied upon deal with special fees to executors.  The reason being that the courts have held that the principles which apply to the calculation of estate trustees’ compensation also apply to attorneys and guardians.1

This blog will discuss what a special fee is, the basis of an attorney’s entitlement to claim a special fee and how a special fee is quantified. Finally, some select cases are reviewed where a special fee has been awarded.

What is a special fee?

In Bluestein Estate v. Bluestein2, the Ontario Superior Court explained the nature of a special fee as follows:

[20] Claims for special fees are justified where extra or specialized work by the estate trustee is necessary as a result, for example, of the complexities in the administration arising from the nature of the assets, taxation problems, numerous categories of beneficiaries or litigation by or against the estate. The estate trustee must establish that the special work performed was outside the “average” estate such that the estate trustee would not be compensated adequately for all the work required to be done.

The court in O’Brien Estate v. O’Brien stated that the setting of special fees is an art and not a science. It is extraordinary compensation awarded in special circumstances, the amount of which is in the discretion of the Judge3.

In Frye Estate, Re., in referring to the trustee’s special fee in the context of a committeeship (now known as “guardianship”), the court had regard to the functions performed which may fall outside the scope of the usual trusteeship, to the time spent and the results achieved4.

A claimant must demonstrate that without an award for special fees, he or she would be under-compensated for the work properly performed while administering the estate5.

The basis of an attorney’s entitlement to claim a special fee

There is no specific statutory provision which provides for a special fee.

Subject to provisions contained in the power of attorney document, an attorney for property is entitled to compensation. The right of an attorney to compensation is set out in section 40(1) of the Substitute Decisions Act (“SDA”). O. Reg. 26/95 under the SDA contains the prescribed amounts for attorney compensation. Compensation greater than the prescribed scale is permitted under section 40(3) of the SDA upon the written consent of the Public Guardian and Trustee and the incapable person’s guardian or attorney for personal care (if applicable).

The Trustee Act contains provisions which give a judge of the Superior Court of Justice discretion as to the amount of compensation to be awarded:

23 (2) Where the compensation payable to a trustee has not been fixed by the instrument creating the trust or otherwise, the judge upon the passing of the accounts of the trustee has power to fix the amount of compensation payable to the trustee and the trustee is thereupon entitled to retain out of any money held the amount so determined.

61 (1) A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.

Under the common law, attorneys for property and attorneys for personal care may be entitled to claim a special fee in certain circumstances.

In H. (L), Re.6 the court awarded a special fee to two attorneys for property and personal care; one being a lawyer and one an accountant. The beneficiaries objected to the amount of compensation claimed by the lawyer, who charged her hourly rate in the performance of her duties as attorney. While the court reduced the lawyer’s compensation, Greer J. did award a special fee:

I award the attorneys a special fee of $8,000 inclusive of GST, for the extra work they went through in clearing H.’s apartment and arranging the sale of her household goods and jewellery and arranging for her care in a proper setting to meet her needs. I am satisfied that there was extra work done, but far too much time was spent at lawyers’ hourly rates which could not be justified under the circumstances, given the very small value of this estate.

It is notable that the special fee was awarded to the attorneys in respect of work performed in their capacities as attorney for property and personal care. In discussing attorney’s compensation, the court stated that the principles were the same as those governing executor’s compensation

The cases to which counsel referred me, were mainly all cases relating to work done by executors and trustees, as opposed to attorneys. The principles are, however, the same7.

The court in Frye Estate Re8. heard a passing of accounts for a committee of an incapable person. The court gave the following comments:

In referring to the trustee’s special fee, within the scheme of management, there is provision that the Court consider separate and additional compensation to (C.T.), having regard to the functions performed which may fall outside the scope of the usual estate Committeeship, to the time spent and the results achieved

Quantification of special fee

a. Within discretion of judge

There are no tariff guidelines for special fees. Amounts are decided on a case-by-case basis within the discretion of the judge9.  To varying degrees, inherent within each judgment to either grant or refuse a special fee, has been judicial consideration of:

  1. whether the work performed was necessary in the best interests of the grantor(s);
  2. whether the compensation awarded to the trustee under the tariff or by way of a care and management fee has adequately compensated the trustee for the work done, and
  3. whether the trustee’s own conduct contributed to any difficulties in the administration of the estate or the quantification of the fee.

b. Work done must be properly documented

It is trite law that a trustee must keep a complete record of its activities and be able to explain and prove it. This statement is particularly applicable where a special fee is claimed10. Where a trustee is found to have failed to keep proper accounts and to have been grossly indifferent to his/her fiduciary obligations, he/she may be disentitled to compensation11.

Nevertheless, courts have granted a special fee to trustees in the absence of proper records where it is satisfied that a ‘good amount of work’ has been undertaken12.

The court in Frye Estate Re. dealt with the passing of accounts of the Committee of George Henry Frye II, a mental incompetent (to use the language of the day). The special fee was claimed for “propounding the scheme of management” including controlling a board of directors and travelling time. The court found that proper records as to the time spent and the work performed for such time were not kept13. The court commented that it was impossible to say whether the special fee was already accounted for within the compensation calculated under the tariff. The court went to great lengths to emphasize the duty of the trustee to keep good records. Nevertheless, the court ultimately did award a special fee:

[55]    In my examination of the information filed, I accept that a good amount of work has been undertaken as to this estate, particularly in their investigation of allegations. Nonetheless, the trustee has not satisfied this Court of the time spent. It requires proper specifics for entitlement to the special fee on the efforts expended for which the trustee was engaged which is outside of the compensation paid within the tariff.

[56]   For the allocation of such time, I find myself in the position where the trustee has placed me, that is to attempt an estimate of remuneration for the special fee. In this regard, subject to my comments hereafter concerning deductions, I fix the sum of $25,000.00, slightly more than one half of the special fee claimed as my best estimate of an appropriate fee under the circumstances14.

The court in Stanley Estate, Re. had to decide whether to grant a special fee in the amount of $3,500 for defending a lawsuit. The court found that additional compensation was merited but reduced the amount of the special fee in light of the executors’ poor record keeping:

I find that defending a lawsuit is not one of the matters that an executor may be expected to undertake and additional compensation is, therefore, warranted. However, as to the quantum, I am of the view that the amount claimed is excessive. There is no evidence of the specific time spent on the case by the executrices and a review, for example, of the docketed account of Mr. Lewis delivered at the request of Mr. Murphy shows very few attendances on the executrices themselves to discuss the lawsuit15.

c. Core duties of a trustee

The Alberta courts have decided an estate trustee’s entitlement to a special fee by referring to whether the trustee engaged in estate-related tasks not contemplated by the headings of core compensation16. The Alberta Courts are aided by Schedule 1 of the Alberta Surrogate Rules which contains a list of 20 core duties of a personal representative17. Work performed outside of these core duties is more likely to attract a special fee.

In the Alberta case of Boje Estate, Re., the trustees sought a special fee for accounting, administration of farming assets, bookkeeping and several other miscellaneous activities in the amount of $370,100. The court compared the ‘additional’ work against the core duties of an estate trustee contained in the Alberta Surrogate Rules. The court found that the majority of the activities for which the respondents claimed additional compensation were already taken into account by the award for core compensation.18 The trustees were awarded a reduced special fee of $44,748.

In A.T.A. v. Calgary Board of Education the court held that for the joint trustee to show entitlement to additional fees, it must establish that it engaged in trust-related tasks not contemplated by the headings in the original budget>19.

Ontario does not have a comparable Schedule 1 containing core duties of a trustee or an attorney. However the list can serve as a useful guide where an estate trustee wishes to catalogue the work done in an estate.

d. Special fees awarded

The discretion to award a special fee lies solely with the judge and is decided on a case-by-case basis. There is no tariff and case-law is of limited relevance. The amounts awarded vary greatly, and the size of the estate is an important factor. The following chart shows the work performed and the special fee awarded in select cases:

CaseWork PerformedAmount
Bluestein
  • Litigation
  • Difficult beneficiary
  • Resolve the issue of an oil spill, pursue the insurance claim, advance the sale of the house, income tax advice and planning
Estate = unknown (of “average size” - contained property sold for $440,000, cash in the bank, shares in two private companies with an unknown value, jewellery and other personalty”

Fee = $4,195
Bellomo Estate20
  • Management of a company incl. sale of the residential property and the rent review application
Estate = $1.5 - 2MM

Fee = $20,000
Boje Estate, Re
  • Accounting,
  • Administration of farming assets,
  • Bookkeeping and
  • Several other miscellaneous activities
Estate = $3.1MM

Fee = $44,748
Re Bedonte Estate
  • Constant challenges undertaken by a residuary beneficiary
Estate = $188,503.16

Fee = $ 4,873
Frye Estate
  • Investigations into unlisted shares
  • Travel
Estate = $ 1,835,571

Fee = $25,000
O’Brien Estate v O’Brien
  • Value and liquidate art collection;
  • liaising with government and Blood Agency with respect to a claim which flowed to estate
Estate = unknown (>$750,000)

Fee = $7,000
Stanley Estate. Re.
  • Defence of a lawsuit
Estate = unknown (contained a “large number and variety of mutual funds”)

Fee = $2,000

Select cases where a special fee has been awarded

In Bluestein v. Bluestein, the court allowed a portion of the special fee claimed given that, what began as a relatively simple estate became a somewhat complex estate as a result of the animosity between the beneficiaries and the estate trustee21. Issues addressed by the estate trustee included resolving an oil spill, pursuing an insurance claim and processing the sale of the house belonging to the estate.

In Bellomo Estate Re., the executors sought a special fee in respect of the management of a construction company. The court reviewed the services involved in obtaining appraisals, considering and advising of offers to purchase, arranging for a listing of the property for sale and in conducting a successful rent review application and awarded a fee of $20,000. The court commented on the “considerable time and effort” expended by the trustees which resulted in a 10 per cent increase in rents being allowed by the Rent Review Board.

The Court in Krentz Estate v. Krentz22 refused to allow a special fee of $14,387.82 for the trustees’ administration of the estate. In a detailed consideration of the application of the percentages award and a care and management fee to the facts, the court held that the trustees were properly compensated without an additional special fee. However, the court did award a special fee of $18,000 for work done to prepare for and attend at the passing of accounts.

In O’Brien Estate v. O’Brien23, a special fee was allowed for the executors’ efforts in valuing and liquidating and art collection as well as liaising with the government and Blood Agency with respect to a claim which flowed to the estate.

In Philp Estate, Re., the executors claimed a special fee on the basis of the residuary beneficiary unnecessarily complicating matters resulting in delays. The court disallowed the requested special fee of $2,000 as

communication between the executors and the beneficiary appears to have broken down resulting in his seeking the advice of legal counsel and obtaining a citation order to pass the accounts plus an order to comply with the citation. Under these circumstances I do not think the special fee should be allowed24.

Practical Tips Regarding Special Fees

A court has the discretion to award a special fee to an attorney in the face of opposition from those who are otherwise beneficially entitled to share in the grantor’s estate. However those other interested parties must be given the opportunity to respond to the attorney’s request for increased fees, which must be documented in an affidavit and filed in accordance with the Rules of Civil Procedure.

Rule 74.18(11) of the Rules states that a request for increased costs on a passing of accounts must be served on those who have filed either a notice of objection or a request for further notice at least 15 days before the hearing date for the passing of accounts. Specifically, the applicant must serve (a) a request for increased costs (Form 74.49.2 or 74.49.3) specifying the amount of the costs being sought, and (b) a costs outline (Form 57B).

Subrule 74.18(11.2) of the Rules provides that “Any objection or consent to a request for increased costs shall be made by returning the completed Form 74.49.2 or 74.49.3, as the case may be, to the person making the request so that he or she receives it at least 10 days before the hearing date of the application.

Pursuant to subrule 74.18(11.3), the applicant for a special fee shall then, at least five days before the hearing date of the application, file with the court a supplementary record containing (a) the documents served under Rule 78.18(11) mentioned above, together with an affidavit of service of those documents; and (b) an affidavit containing (i) a summary of the responses to the request for increased costs received under subrule (11.2), and a list of the persons who failed to respond, and (ii) the factors that contributed to the increased costs.

The purpose and tenor of Rule 74.18(11) is to ensure that an attorney’s request for a special fee is properly set out, properly served on those with an interest in the grantor’s property who can then respond to the request. Where an attorney does not serve or file their materials in accordance with the Rules, this may jeopardize their request for increased compensation. An attorney may argue that Rules 1.04 and 2.01 state that the Rules shall be liberally construed to secure the just, most expeditious and least expensive determination of every civil proceeding on its merits and that a failure to comply with these rules is an irregularity and does not render a proceeding or a step, document or order in a proceeding a nullity, and the court may grant all necessary amendments or other relief, on such terms as are just, to secure the just determination of the real matters in dispute.

The bottom line for counsel is that it saves time and costs to serve your materials on the interested parties well in advance of the hearing and to file the required materials in a timely fashion as per the Rules.

Conclusion

Above all else, to qualify for a special fee, it is imperative that the attorney demonstrate that a good deal of valuable work was done and that the work performed went over and above the normal exercise of the trustee’s function. A detailed affidavit should be prepared setting out the extra or specialized tasks which the attorney dealt with and the results which were achieved.  While smaller estates will impact the quantum of any special fee awarded, where meaningful and properly documented extra work was performed by an attorney, a court will seriously consider a request for a special fee, no matter the size of the estate.

Footnotes
  1.  H. (L.), Re  2000 CarswellOnt 3672 (Ont. S.C.J.) at para 13. As Justice Greer said, ”The cases to which counsel referred me, were mainly all cases relating to work done by executors and trustees, as opposed to attorneys. The principles are, however, the same.”

    Also see Schnurr, Brian A. Estate Litigation, 2nd Edition at 9.2(f)(i)
     

  2.   Bluestein Estate v. Bluestein 2000 CarswellOnt 1054 Ontario Superior Court of Justice at para 20
     
  3.   O’Brien Estate v. O’Brien 1996 CarswellOnt 4885 Ontario Court of Justice, General Division at para 27
     
  4.   Frye Estate, Re 1992 CarswellOnt 1888 Ontario Court of Justice (General Division) at para. 18
     
  5.   Boje Estate, Re 2006 ABQB 599, 2006 CarswellAlta 1032 Alberta Court of Queen’s Bench at para 74
     
  6.   H. (L.), Re  2000 CarswellOnt 3672 (Ont. S.C.J.) at para 14
     
  7.   H. (L.), re., supra at para 13
     
  8.   Frye Estate, Re 1992 CarswellOnt 1888 Ontario Court of Justice (General Division)
     
  9.   O’Brien Estate v. O’Brien 1996 CarswellOnt 4885Ontario Court of Justice, General Division at para 27
     
  10.   Frye Estate, Re 1992 CarswellOnt 1888Ontario Court of Justice (General Division) at para 24
     
  11.   Zimmerman v. McMichael Estate 2010 ONSC 2947, 2010 CarswellOnt 3481 (Ont. S.C.J.) at para 34. See also Fareed v. Wood2005 CarswellOnt 2572 (Ont. S.C.J.)
     
  12.   Frye Estate, Re 1992 CarswellOnt 1888 Ontario Court of Justice (General Division) at para 55
     
  13.   Frye Estate, Re 1992 CarswellOnt 1888 Ontario Court of Justice (General Division) at para 25
     
  14.   Frye Estate, Re 1992 CarswellOnt 1888 Ontario Court of Justice (General Division) at paras 55 and 56
     
  15.   Stanley Estate, Re 1996 CarswellOnt 1180 Ontario Court of Justice (General Division) at para 7
     
  16.   Boje Estate, Re 2006 ABQB 599, 2006 CarswellAlta 1032Alberta Court of Queen’s Bench at para 74
     
  17.   Surrogate Rules, Alberta Regulation 130/1995 https://www.qp.alberta.ca/documents/Regs/1995_130.pdf
     
  18.   Boje Estate, Re 2006 ABQB 599, 2006 CarswellAlta 1032Alberta Court of Queen’s Bench at para 76
     
  19.   A.T.A. v. Calgary Board of Education 2006 ABQB 817, 2006 CarswellAlta 1724 Alberta Court of Queen’s Bench at paras. 32 and 33
     
  20.   Bellomo Estate, Re 1989 CarswellOnt 541Ontario District Court
     
  21.   Bluestein Estate v. Bluestein 2000 CarswellOnt 1054 Ontario Superior Court of Justice at para 13
     
  22.   Krentz Estate v. Krentz 2011 ONSC 1653, 2011 CarswellOnt 1651Ontario Superior Court of Justice
     
  23.   O’Brien Estate v. O’Brien 1996 CarswellOnt 4885Ontario Court of Justice, General Division
     
  24.   Philp Estate, Re 1989 CarswellOnt 537Ontario Surrogate Court at para 17
     
James Dunphy

James Dunphy

The author of this blog is James Dunphy. James is an associate at Wagner Sidlofsky LLP.

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This blog is not intended to serve as a comprehensive treatment of the topic. It is not meant to be legal advice. Every case turns on its specific facts and it would be a mistake for the reader of this blog to conclude how it might impact on the reader’s case. Nothing replaces retaining a qualified, competent lawyer, well versed in this niche area of practice and getting some good legal advice.
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