In recent years, the Ontario Court of Appeal has issued a number of cases addressing how costs should be determined in the context of estate litigation, including McDougald Estate v Gooderham, 2005 CanLII 21091, Sawdon Estate v Sawdon, 2014 ONCA 101, and Neuberger v York, 2016 ONCA 303. The Court’s most recent addition to this body of law can be found in McGrath v Joy, 2022 ONCA 119.  

Traditionally in estate litigation, costs were payable out of the estate. In recent years, however, this approach has been supplanted by the modern approach to costs used in civil litigation, where, as a general proposition, the “loser pays.” The Ontario Court of Appeal has even confirmed that the person applying to admit a will to probate may be required to pay costs personally if that party “acted unreasonably or in substance for his or her own benefit, rather than for the benefit of the estate”: see Brown v Rigsby, 2016 ONCA 521. 

In McGrath v Joy, the Court of Appeal makes it clear that, when fixing costs for estate litigation, it is incorrect to begin from the premise that the civil litigation costs regime operates. Instead, a step-by-step sequential analysis is to be used in which:  

… the first step … is to determine whether one or more … public policy considerations apply. If so, generally the parties’ reasonable costs should be payable from the estate. A departure from this general principle requires justification on the part of the court. 

The public policy considerations that are usually of concern in estate litigation are the need to give effect to valid wills that reflect the intention of competent testators, and the need to ensure that estates are properly administered. 

The Court of Appeal also explained in McGrath v Joy that, when determining costs, it is incorrect to engage in a balancing of public policy considerations against the rationale for costs rules that ordinarily apply in civil litigation. Rather, “the court must begin by carefully scrutinizing the litigation to determine whether one or more of the public policy considerations apply.”  

Applying this approach, the Court of Appeal found that the lower court that decided McGrath v Joy, 2021 ONSC 316 (CanLII) was “plainly wrong” in awarding costs personally against the applicant. By way of context, this case dealt with an application to admit a suicide note to probate. The note satisfied the requirements for a holograph will set out in section 6 of the Succession Law Reform Act and named two beneficiaries – the applicant, who was the deceased’s stepson, and the applicant’s own son. The lower court refused to recognize the note as a valid will, finding that the deceased lacked testamentary capacity because he used drugs and alcohol the day before he took his life, and admonished the applicant for bringing the application by issuing a hefty costs award against him personally: see McGrath v Joy, 2021 ONSC 316 (CanLII).  

The Court of Appeal reversed the lower court’s decision and ordered that the litigation costs be paid from the estate due to public policy considerations, finding that the application was necessary to ensure that the estate was administered properly and that the deceased’s conduct led to the litigation.  

Contrary to the lower court’s judgment, the Court of Appeal also found that it was not unreasonable for the beneficiary to bring the application. The application was necessary to ensure that the estate was distributed in accordance with the true testamentary wishes of the deceased. The Court also noted that the application benefited both beneficiaries named in the note, and therefore was not limited to pursuing the applicant’s own self-interests. 

This case is an excellent reminder that, while costs are within the discretion of the court, parties with reasonable questions about the validity of a testamentary document should be able to raise those questions in a court of law without fear of reprisal. There should be no doubt that costs related to estate litigation ought to be paid by the estate if there are reasonable grounds to question the execution of a will or the testator’s capacity, or if any difficulties or ambiguities giving rise to litigation are caused by the testator.  

Thank you for reading, and have a great day. 

Suzana Popovic-Montag