A Toronto litigation boutique possibly will be on the hook for legal costs after its conduct sparked a harsh rebuke by a Superior Court judge in a long-running trusts-and-estates saga.
Polten & Hodder, along with lawyer Eric Polten, was the subject of strongly worded condemnation from Justice David Brown, who said the firm ran up “scandalous” legal costs and “attempted to perpetrate a naked cash grab” on two elderly clients.
Polten, whose experience includes domestic and international family and estate law matters, also misrepresented himself to the court and was in breach of his professional duties as an officer of the court, Brown said in a judgment in Miksche Estate v. Miksche released this month.
According to Sandra Schnurr, counsel for the estate trustee, the legal gossip mill is churning with news of the ruling.
“It already seems to be well known. I’ve had numerous lawyers comment to me on it,” she says.
On the ruling itself, Schnurr says the judge’s decision speaks for itself.
“I’m satisfied but I’m not jubilant. Whenever I see a colleague at the bar being harshly criticized, it makes me uncomfortable,” she says.
In representing Johanna Miksche, a Scarborough, Ont., woman who died two years ago, and her sister Ursula Lill, Polten racked up more than $1 million in legal fees that he first tried to recover from the Miksche estate and then from the older sister, who was the primary beneficiary, the ruling said.
“Having been rebuffed in his effort to have the assets of one vulnerable person satisfy the scandalous costs he ran up, Mr. Polten came before me on this application attempting to poach upon the assets of another vulnerable person.
"From such conduct, I conclude that Mr. Polten was prepared to use any means to place his financial interests in this proceeding ahead of those of his former clients,” Brown wrote. “Such conduct merits the strongest condemnation by this court.”
When reached for comment, Polten would only say that he would be appealing the decision.
“The matter will be dealt with in the notice of appeal,” he says in response to questions about specific criticisms in the ruling. “I presently have no other comment.”
Miksche was 78 when she passed away in a long-term care facility in Scarborough. Her husband had died many years prior, and her only living sibling was her sister, who was then 87 and living in Germany.
Miksche had previously granted powers of attorney to two friends who were also included as beneficiaries in her will.
Then in 2005, Miksche’s three nephews travelled from Germany to visit their aunt in the care facility, accompanied by a member of Polten & Hodder.
At that time, Miksche also granted powers of attorney to one of her nephews as well as her sister and signed a retainer for Polten & Hodder.
The two groups - Miksche’s two friends on the one hand and her relatives on the other - then filed competing applications for guardianship.
Before a decision could be rendered, Miksche died, prompting the parties to submit claims for costs.
“The Polten and Hodder firm sought the staggering amount of $1,038,297 . . . against Johanna’s estate,” Brown wrote.
Not only did the amount include a success premium but it also exceeded the value of the estate, according to the judgment.
In a separate 2007 ruling on the same matter, Superior Court Justice Nancy Spies called the arguments raised by the law firm “preposterous” and “alarming” and said the legal approach advocated by the firm exploited the elderly woman.
The firm had also alleged on behalf of the nephews that Miksche’s two friends had held her as a “prisoner” in the care facility.
“I do not understand how Mr. Polten even has the audacity to make this submission,” Spies wrote, adding that the submission demonstrated a “complete detachment from reality and lack of judgment.”
The judge awarded the nephews costs of $35,500 but ordered them to first cover $28,000 in legal fees to Miksche’s two friends.
Polten & Hodder appealed the ruling on behalf of Lill and the nephews but a few days later made an offer to settle by proposing to drop the matter in return for an agreement on how to distribute the estate to its beneficiaries.
The offer, however, “radically changed the flow of estate funds to Ursula Lill,” Brown wrote, noting that all of the residual assets of the estate would be payable to the law firm in trust under the new arrangement.
“And it was quite clear from the written and oral submissions made by Mr. Polten what would happen to those funds once in his trust account - there they would stay until he was able to extract from Lill payment of his ‘scandalous’ costs claim.”