A Reminder Regarding the Costs of Estate Litigation

December 10, 2015 Umair Estate & Trust, Executors and Trustees, Litigation, Passing of Accounts Tags: , , , , , 0 Comments

For parties who are thinking about litigating an estate-related dispute in Court, the possibility of an adverse costs award should always be top of mind. A recent costs endorsement from the Ontario Superior Court of Justice serves as a reminder that the legal fees of a successful party may be payable personally by the losing party.

In Ontario, the general rule in civil litigation is that costs – some or all of the successful party’s legal fees – are to be paid by the losing party. Such a costs award can be daunting: in addition to paying his or her own legal fees, the losing party may also be on the hook for some or all of the other party’s legal fees.

With respect to estate litigation matters, Ontario Courts have moved away from the historical rule that costs are to be paid from the assets of the estate. While costs may still be payable from the estate in certain circumstances, the Courts have held that costs are generally to be paid personally by the losing litigant. Rule 57 of the Rules of Civil Procedure sets out the factors the Court may consider in exercising its discretion in awarding costs.

In Tierney (Estate) v Brown, 2015 ONSC 4137, certain beneficiaries of the Estate brought a motion seeking the removal of the estate solicitor in the context of a contested passing of accounts. The beneficiaries alleged that the solicitor was in conflict of interest and would be a witness in the passing of accounts, whereas the responding Estate Trustees argued that the motion was premature. The Honourable Justice Hackland held that the solicitor was in a conflict, and granted the request for an order removing him as solicitor for the Estate.

In a subsequent costs endorsement, Justice Hackland considered the conduct of the parties in the proceedings and noted that there was no misconduct by any of the parties. The Court also noted that the beneficiaries had tried to resolve the issue out of Court. In the result, Justice Hackland held that the costs would be payable on a partial indemnity basis.

After setting the quantum of the costs award, the Court then considered who should pay for the beneficiaries’ costs. Justice Hackland noted that “a more difficult question is whether the costs award herein should be paid by the Estate Trustees personally, as opposed to the estate.”

Justice Hackland went on to hold that the present case did not fit the narrow circumstances in which costs are payable from the assets of the Estate, and that the Estate Trustees should have agreed to the beneficiaries’ request without resort to Court proceedings. The Estate Trustees were ordered to pay the costs of the motion personally, on a joint and several liability basis.

Courts have a broad discretion when it comes to awarding costs, and Justice Hackland’s recent endorsement in Tierney reiterates the importance for litigants to understand the risks with respect to costs if they find themselves on the losing side of a Court proceeding.

Thank you for reading,

Umair Abdul Qadir

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