In the recent decision of Forgione v. Alonzi, 2025 ONSC 4051, Justice Myers of the Ontario Superior Court of Justice considered the appropriate costs disposition and entitlement to pre-judgment interest following a contested passing of accounts proceeding involving a deceased’s granddaughter and her aunt and uncle. The ruling offers an important reminder on fiduciary obligations, outlines the treatment of litigation conduct in cost awards, and provides as overview on the principles underlying pre-judgment interest awards in estate matters.
Factual Background
The respondent, Anne-Marie, was appointed attorney for property and personal care, and later estate trustee, for her grandfather, Ciriaco. The applicants, Amato and Luisa, are her uncle and aunt, and residual beneficiaries under the deceased’s will. The litigation arose out of a passing of accounts brought by Anne-Marie, which was met with significant opposition from the applicants, including allegations of financial impropriety and mismanagement.
In the underlying decision released on June 6, 2025 (Forgione v. Alonzi, 2025 ONSC 3393), the Court awarded Anne-Marie $537,922.25 in compensation for her services as attorney and estate trustee, but applied a $100,000 reduction related to improper documentation and payment practices involving compensation to her husband for caregiving and other services.
Key Issues in the Costs Ruling
In the July 7, 2025 decision, Justice Myers addressed:
- Whether the costs of the proceeding should be borne personally by the applicants, paid from their estate shares, or paid by the estate as a whole and on what indemnity basis; and
- Whether Ms. Alonzi was entitled to pre-judgment interest on her compensation.
Costs Analysis
Justice Myers found that while the passing of accounts was necessary for proper estate administration, the applicants’ conduct throughout the litigation significantly escalated the proceeding. Their allegations included mismanagement, self-dealing, and even that Anne-Marie had improperly prolonged the deceased’s life for financial gain. All claims that were ultimately not substantiated at trial.
Despite these issues, the Court held that the costs should be paid by the estate, relying on the principle from Neuberger Estate v. York, 2016 ONCA 303, which allows for estate-funded costs where proceedings are required for proper administration or arise from the testator’s acts or omissions. Justice Myers emphasized that while the applicants’ conduct was problematic, Anne-Marie’s failure to maintain proper records contributed to the complexity and necessity of the proceeding.
The Court accepted Anne-Marie’s claim of $315,902.70 in legal costs as reasonable, noting that she was largely successful in defending her actions, and her offer to settle was very close to the final amount awarded. However, Justice Myers ordered costs payable on a substantial indemnity basis all-inclusive rather than a full indemnity basis and provided the following commentary:
This is a case in which the estate trustee and attorney is entitled to rely on her right to full indemnity from the estate for costs in the ordinary course. Neuberger supports that outcome. My finding above on the entitlement of the respondent to substantial indemnity for her costs is just to provide the alternative should I be held to be mistaken on my principal conclusion.
Pre-Judgment Interest
Anne-Marie sought pre-judgment interest on her compensation from the commencement of proceedings in 2021. However, the Court declined to award interest. While pre-judgment interest serves to compensate for the delay in receiving funds, Justice Myers found that the delay in compensation was largely attributable to Anne-Marie’s failure to maintain proper records, which necessitated the passing of accounts and extended the litigation.
Accordingly, the Court found that the economic burden of the delay should not be shifted to the estate or the other parties, and no pre-judgment interest was ordered.
Legal Takeaways
- Compensation vs. Conduct: A fiduciary’s compensation may be reduced for administrative or recordkeeping failings, but this does not necessarily preclude a finding that they acted in good faith or are entitled to costs.
- Costs in Contentious Estate Matters: Courts may still order that estate assets be used to fund costs even when there were administration errors which contributed to the need for a passing of accounts proceeding for the proper administration of the estate. However, cost awards can always be reduced from full indemnity to substantial indemnity.
- Settlement Offers: Reasonable offers to settle will impact court’s assessment of entitlement to costs.
- Recordkeeping Obligations: Attorneys and estate trustees must maintain detailed and transparent records. Failure to do so may affect compensation, increase legal costs, and eliminate the possibility of pre-judgment interest.
Final Thoughts
Forgione v. Alonzi highlights the complexities that can arise in estate litigation where fiduciaries face challenges from family members. While the respondent ultimately succeeded in defending her conduct and recovering compensation, the ruling underscores the importance of fulfilling fiduciary duties, particularly with respect to documentation and reporting.
Thanks for reading and have a great Friday!