Let’s Talk about Costs Baby! Interest on Litigation Loans

Let’s Talk about Costs Baby! Interest on Litigation Loans

In keeping with my theme from yesterday’s blog, I want to talk about Justice Myers’ recent costs decision in Drennan v. Drennan, 2024 ONSC 3905.  This is a case where interest on a litigation loan was claimed (as a disbursement in the Applicant’s bill of costs) and awarded, along with substantial indemnity costs. 

The costs award in this decision ought to be a sufficient spoiler on how this litigation unfolded.  Our firm has also previously blogged on one of the interim decisions in this matter. 

Drennan is in essence an Application for the removal of an estate trustee.  The Deceased had three children (one of whom was predeceased).  His Will left 50% of the residue to his daughter (the Applicant), 25% to his son (the Respondent estate trustee), and 25% to surviving children of the predeceased child (who were also the Respondents).  The Respondents, as a collective, were of the view that the Estate ought to have been divided 1/3, 1/3, 1/3. 

The Respondents did not retain a lawyer to respond to the Application despite being strongly urged to do so by Justice Myers.  Instead, the Respondent estate trustee chose to respond by representing himself and by seeking to rely on lengthy, unsworn material that was introduced during the hearing.  He indicated that the Respondents wanted to bring claims challenging the Will and to seek a pre-death accounting from the Applicant.  An estate trustee during litigation (“ETDL”) was appointed in the interim, and the Applicant had to return to the Court to seek the approval of the ETDL order because the Respondents ignored counsel’s requests to finalize the order.  During this delay, the mortgage on the Deceased’s house fell into arrears and the mortgagee moved to enforce its rights causing the Estate to incur further legal costs.  Thereafter, the Respondent estate trustee was removed and a succeeding estate trustee was appointed in his place.  The alleged counterclaims were never commenced. 

On the basis of the foregoing, Justice Myers found that substantial indemnity was warranted.  The scurrilous allegations of the Respondents were viewed as an abuse of process.  Moreover, the Applicant’s costs in dealing with the mortgage enforcement were ordered to be paid from the Respondent estate trustee’s share of the Estate. 

The Applicant also had evidence that the litigation loans were necessitated by the Respondent estate trustee’s failure to administer the Estate.  The loan was modest, and in conjunction with the Respondent’s abuse of process, Justice Myers found that this case warranted the recovery of the Applicant’s interest costs as a reasonable disbursement that was incurred to carry the litigation.  The total costs award was fixed at $60,000, all inclusive, to be firstly satisfied from the Respondents’ share of the Estate. 

Doreen So