Divided Success or “Loser” Should Pay

April 7, 2015 Hull & Hull LLP Continuing Legal Education, Estate & Trust, General Interest, Litigation 0 Comments

An interesting costs decision was recently rendered by the Honourable Justice Leitch in Brown, Dale and Shackleton v. Rigsby and Shackleton.

This decision arose from a dispute between the children of the late Blanch Shackleton.  The Respondents held the power of attorney for their late mother and they were also appointed as the estate trustees of her Estate.  In 2008, the Applicants sought orders compelling the Respondents to pass their accounts as attorneys, and as estate trustees, in addition to their removal and replacement with an independent third-party.

The Application was converted into a trial which was scheduled to commence on September 29, 2014.  Not uncommonly, the parties settled eleven days before trial on September 18, 2014.  As a term of settlement, the parties agreed that the issue of costs shall be argued before the Court.

On motion before Justice Leitch, the parties sought a recovery of their costs on a substantial indemnity basis from one another.  Although Justice Leitch found that the Applicants were reasonable in their commencement and pursuit of the Application, the substantive resolution of all the Applicant’s claims was viewed as by the Court as “divided success” in which one could not conclude that one party was more successful than the other.  In other words, “these [were] not circumstances where a “loser” should pay” and each party was ultimately ordered to pay their own costs.

In determining this issue, Justice Leitch relied on the principles set out by the Honourable Justice Gillese in McDougald Estate v. Gooderham which provided for the modern approach to costs in estate litigation.  To quote Justice Gillese,

  1. The practice of the English courts, in estate litigation, is to order the costs of all parties to be paid out of the estate where the ligation arose a result of the actions of the testator, or those with an interest in the residue of the estate, or where the litigation was reasonably necessary to ensure the proper administration of the estate. […]
  2. Traditionally, Canadian courts of first instance have followed the approach of the English courts. While the principle was that costs of all parties were ordered payable out of the estate if the dispute arose from an ambiguity or omission in the testator’s will or other conduct of the testator, or there were reasonable grounds upon which to question the will’s validity, such cost awards became virtually automatic.
  3. However, the traditional approach has been – in my view, correctly – displaced. The modern approach to fixing costs in estate litigation is to carefully scrutinize the litigation and, unless the court finds that one or more of the public policy considerations set out above applies, to follow the costs rules that apply in civil litigation. […]

Thanks for reading,

Doreen So

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