The Risk of Personal Costs Awards in Estate Litigation

March 11, 2019 Rebecca Rauws Litigation Tags: , , , , , , , , , , 0 Comments

In the past, in estate litigation matters, it was often the case that some or all of the litigating parties’ costs would be paid out of estate assets. However, in more recent years, the courts have been moving away from this general practice, and increasingly making costs awards providing for the payment of costs by one of the parties, personally. In particular, if the court views a party, including an estate trustee, to have behaved improperly or unreasonably, it may decide that such a party must pay the other party’s costs, personally. We have blogged about instances of such an outcome before.

A recent decision of the Ontario Superior Court of Justice has reaffirmed this general trend. The decision in Ford v Mazman, 2019 ONSC 542, involved a motion to pass over the named estate trustee, and appoint the two sole beneficiaries of the estate in question, as estate trustees. Although the named estate trustee and the beneficiaries were initially on good terms, within several months of the testator’s passing, the relationships began to break down, with the estate trustee beginning to make accusations towards the beneficiaries, in relation to the testator. The court found that it was “not a case of mere friction—this is a case of outright hostility from [the estate trustee] to the beneficiaries”, also commenting that it was difficult to fathom why the estate trustee acted as she did, and that her accusations were unwarranted. Ultimately, the court made an order passing over the estate trustee.

After the parties were unable to reach an agreement as to costs, the court made an endorsement in this regard in Ford v Mazman, 2019 ONSC 1297. After a discussion of the costs principles applicable to estate litigation, the court stated as follows:

“I am mindful that an estate trustee should be fully compensated for any reasonable costs incurred in the administration of the estate. However, the actions of the [estate trustee] are far from reasonable. I was not provided any rationale as to why her animus became necessary in the administration of her good friend’s estate.”

Ultimately, the court made a costs award in favour of the beneficiaries, payable by the estate trustee, personally.

This costs decision serves as an important reminder that parties entering into estate litigation proceedings should not count on their costs being paid out of the estate. Additionally, even though the estate trustee’s conduct in this case appears to be extreme, litigants should still keep in mind the importance of acting reasonably.

Thanks for reading,

Rebecca Rauws

 

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