Gone are the days of disgruntled relatives and would-be beneficiaries engaging in speculative
litigation over wills and estates on
the assumption that the estate
will pay for their legal costs. There
is a growing trend in the Ontario
courts to follow the “loser pay”
principle common in civil litigation. The emphasis on proportionality arising from the recent
changes to the province’s Rules of
Civil Procedure will only serve to
strengthen this movement.
Until about a decade ago,
people felt free to engage in estate
litigation, taking comfort in the
knowledge that even if they were
unsuccessful, all the parties’ legal
costs would be paid from the
estate. Courts regularly ordered
costs in will challenges and other
common estate proceedings to be
paid out of the estate.
Naturally, this led to frivolous
and speculative proceedings, as
well as many legitimate proceedings being unjustifiably opposed.
Parties were less inclined to
examine the strengths and weak-nesses of their case at the outset,
and less motivated to settle before
trial. Not only could a party expect
ERIC
HOFFSTEIN
to have its own legal costs paid
from the estate, but even an
unsuccessful litigant might not be
liable for the successful party’s
costs if those costs were also paid
from the estate.
More recently, however, the
courts have shifted their approach
to costs in estate litigation. The
courts now tend to apply the principles of civil litigation in determining appropriate costs awards.
Judges will often refer to the
guidelines set out in Rule 57 and
order the unsuccessful party to
pay the costs of the successful
party, including reimbursing the
estate for its costs incurred in the
course of the litigation. Judges
are cautious, however, not to let
the pendulum swing too far in the
other direction, and will still
order costs paid by the estate in
appropriate circumstances.
If the testator or the residuary
beneficiaries are the cause of the
litigation or, in the case of the
residuary beneficiaries, prolonged
or complicated the litigation
through their conduct, the court
will have no difficulty awarding
costs from the estate. The shifting
trend in costs awards is discussed
by the Ontario Court of Appeal in
McDougald Estate v. Gooderham,
[2005] O. J. No. 2432. There, the
court held that the traditional
approach had been replaced by a
tendency for costs to follow the
event, as it does in ordinary civil
litigation, except where “public
policy considerations” apply.
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“Parties cannot treat
the assets of an estate
as a kind of ATM bank
machine from which
withdrawals
automatically flow
to fund their litigation.
the administration of an estate
— which are supported by reasonable evidence — can expect to be
funded by the estate, subject to
the conduct of the parties.
In Binkley Estate v. Lang,
[2009] O.J. No. 2167 (add’l reasons at [2009] O.J. No. 2879,
leave to appeal denied at [2009]
O.J. No. 5876), the Ontario
Superior Court of Justice considered the impact of the parties’
conduct and principles of proportionality in connection with a
costs award arising from an application to rectify a mistake in a
will. In oral reasons given at the
conclusion of a motion for leave
to appeal the costs award on the
initial rectification application,
which awarded costs against the
unsuccessful beneficiaries who
opposed rectification, the court
emphasized that costs are a matter of discretion which should
only be interfered with in the
clearest of cases.
The court echoed the view of
the application judge that the
respondent beneficiaries, who
opposed the application, should
have recognized the merits of the
case during the course of the pro-
ceedings. The court determined
that after cross-examining the
three witnesses for the applicant,
and in the absence of any compel-
ling evidence to the contrary,
“there was no point in continuing
to oppose the application.” The
court upheld the application
judge’s costs award and ordered
costs against the beneficiaries for
the motion for leave to appeal.
Eric Hoffstein is a partner
with Fraser Milner Casgrain LLP
in Toronto specializing in trusts
and estates and general cor-
porate/commercial litigation.
Fraser Milner Casgrain LLP
acted as counsel for the estate
solicitor in Binkley Estate.
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