Cost consequences in estate litigation: your behaviour matters
In a recent decision out of the Ontario Superior Court of Justice, a “continued and persistent lack of self-awareness” on the part of both parties resulted in cost consequences to each, one, a testamentary trustee, and one an estate trustee.
Cardinal v Perreault, 2020 ONSC 4825, involved the issue of costs in relation to two applications regarding the Estate of Joseph Edmond Beaulieu. The first application, an application for directions, was commenced by Mr. Cardinal, the testamentary trustee. The second, an application to pass accounts, was commenced by Ms. Perreault, the Estate Trustee.
Actions of both parties caused various difficulties and delays throughout the proceedings.
In rendering its decision, the Court provided a helpful summary of costs principles in estate litigation. That summary is highlighted below:
- Rule 57.01(1) of the Rules of Civil Procedure, which sets out that the Court, in exercising its discretion to award costs, the court may consider a number of factors including, among others: the result in the proceeding; any offer to settle; the principle of indemnity; the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed; the complexity of the proceeding; and the conduct of any party to shorten or lengthen unnecessarily the duration of the proceeding;
- In Davies v Clarington (Municipality), 2009 ONCA 722 the Court of Appeal held that reasonableness in the circumstances is the overarching principle applied in awarding costs;
- In Andersen v. St. Jude Medical Inc. (2006) the court outlined the elements to consider in its assessment of the reasonableness of the circumstances as, among others: the specific facts and circumstances of each case; a consideration of the experience, rates charged and hours spent that is appropriate, balanced with the overriding principle of reasonableness; the reasonable expectation of the unsuccessful party regarding what is fair and reasonable; inconsistencies should be avoided with comparable awards in other cases; and the indemnity principle should be balanced with the objective of access to justice; and
- In McDougald Estate v Gooderham, the Ontario Court of Appeal provided direction that the approach to fixing costs in the context of estate litigation should follow the modern approach, so as to carefully scrutinize the litigation and follow the costs rules that apply in civil litigation, unless public policy considerations dictate otherwise;
After reviewing the relevant costs principles, the court considered the parties’ behaviour in their respective applications. In Mr. Cardinal’s application for directions, he sought full indemnity costs of approximately $24,000. The court set what it reasoned to be a fair costs award of $18,000 in favour of Mr. Cardinal, and payable by Ms. Perreault.
In Ms. Perreault’s application to pass accounts, the court set a costs award of $48,000 in favour of Ms. Perreault and payable by Mr. Cardinal. All in all, the set-off of costs awards resulted in a net award to Ms. Perreault in the sum of $30,000. The court further held that the costs were to be payable by Mr. Cardinal, personally, rather than as an expense to the Estate. The Court reasoned that Mr. Cardinal’s attempt to impugn Ms. Perreault’s credibility without a credible evidentiary foundation was reprehensible. The court further reasoned that the estate and the remaining beneficiaries should not be burdened by Mr. Cardinal’s decision to pursue allegations that lacked any evidentiary foundation.
Hopefully this case will stand as a reminder to those who find themselves involved in estate litigation (and litigation generally) – your conduct throughout the proceeding is an important factor that will be considered by the court when setting costs awards.
Thanks for reading!