Costs Arising from Litigation in respect of a Trust – Nolan v. Kerry

October 29, 2010 Hull & Hull LLP Estate & Trust, Litigation Tags: , , , , , , , , , 0 Comments

In the last of my series this week on recent trust cases of interest, today’s blog looks at the case of Nolan v. Kerry (Canada) Inc., 2009 SCC 39, [2009] 2 S.C.R. 678. This case provides guidance as to when costs, arising from litigation regarding a pension trust fund, are payable out of the pension trust fund. Though Nolan v. Kerry (Canada) Inc. is a pension case, the analysis might apply to a context where there is a proceeding involving a legitimate uncertainty as to how to properly administer a trust, and/or where there is a trust dispute (whether or not the proceeding is brought by trustees or by beneficiaries).

The issues in Nolan v. Kerry were related to the obligations of an employer under a pension plan for its employees.   


The Supreme Court of Canada dismissed the appeal and affirmed the decision of the Ontario Court of Appeal in favour of the respondents, the employer and the Superintendent of Financial Services. The Court of Appeal had declined to award costs to the Employees Pension Committee (the “Committee”) from the trust fund as the unsuccessful party in the litigation. 

The Supreme Court of Canada held: “In the end, of course, costs awards are quintessentially discretionary.” The key question on that point was, however, whether the litigation was adversarial or whether it was aimed at the due administration of the pension trust fund. The Supreme Court of Canada found that the rules in both Buckton v. Buckton [1907] 2 Ch.406.and Sutherland v. Hudson’s Bay Co. (2006) would allow a court to award costs out of the fund where there is a legitimate uncertainty as to how to properly administer the trust and where the dispute is not adversarial. Adversarial claims in the context of the Nolan case did not qualify for a costs award from the trust fund. Here, the litigation was adversarial in nature because it was ultimately about the propriety of the employer’s actions and because the Committee sought to have funds paid into the trust fund to the benefit of its members.  

Thanks for reading and enjoy the weekend.


Craig R. Vander Zee – Click here for more information on Craig Vander Zee.

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