In Bacic v. Halar et al., 2026 ONSC 4095, the Ontario Superior Court of Justice considered the consequences of an estate trustee’s failure to promptly complete the administration of an estate following settlement, including whether the resulting costs should be borne personally by the trustee rather than by the estate.
Background
The underlying estate litigation was resolved at a pre-trial in July 2024. Under the terms of settlement, most estate funds were distributed to the beneficiaries, while a $100,000 holdback remained in trust pending completion of the estate’s tax obligations. Responsibility for completing the necessary tax filings rested with the estate trustee.
In the months following settlement, repeated requests for information concerning the status of the tax filings yielded little progress. The beneficiary seeking updates was repeatedly advised that the accountant retained by the estate was working on the returns. More than a year after settlement, the returns remained outstanding, resulting in a series of case conferences before the court between July 2025 and February 2026.
During those attendances, the court issued directions aimed at completing the administration of the estate and obtaining information regarding outstanding tax and pension-related matters. The court noted that multiple appearances were required before adequate answers and supporting information were provided.
The issue before the court was whether the legal costs associated with those post-settlement proceedings should be borne by the estate or by the estate trustee personally.
The Court’s Decision
A central issue before the court was whether the delays that occurred after settlement justified a costs award against the estate trustee personally. The estate trustee argued that the delays were attributable to the accountant who had been retained to complete the estate’s tax work. The court was therefore required to determine who bore responsibility for ensuring that the outstanding administrative tasks were completed.
The court concluded that responsibility remained with the estate trustee. While professionals may be retained to assist with the administration of an estate, the court held that the trustee is ultimately responsible for providing instructions to those professionals and ensuring that necessary work is completed. The court rejected the suggestion that responsibility for the delays could be shifted to the accountant.
The court also considered whether the post-settlement proceedings had been necessary. After reviewing the history of the matter, the court found that repeated court appearances and directions were required to move the administration of the estate forward. The court concluded that the trustee had failed to complete the administrative obligations required under the settlement and that the estate would likely not have been finalized without the court’s intervention.
The court further found that the administration had been delayed for an unreasonable period of time. Despite multiple attendances before the court, adequate information concerning outstanding estate matters was not provided until after further directions were issued. The court observed that the administrative work necessary to complete the estate should have been undertaken much earlier.
Having found that the post-settlement proceedings were necessitated by the trustee’s conduct, the court then considered the appropriate costs award. Although it declined to award full indemnity costs, the court concluded that the trustee’s conduct warranted an elevated costs award. The court therefore ordered substantial indemnity costs of approximately $8,400 against the estate trustee personally.
The Law
The decision reviews several important principles governing costs in estate litigation.
The court confirmed that estate trustees are generally entitled to be indemnified from the estate for legal costs reasonably incurred in carrying out their duties. However, relying on Brown v. Rigsby and Geffen v. Goodman Estate, the court noted that indemnification may be denied where an estate trustee has acted unreasonably or has acted for personal benefit rather than for the benefit of the estate.
The court also reviewed the law governing elevated costs awards. Referring to Davies v. Clarington (Municipality), Young v. Young, Mortimer v. Cameron, and McBride Metal Fabricating Corp. v. H. & W. Sales Co., the court reaffirmed that substantial indemnity and full indemnity costs are reserved for exceptional circumstances. Full indemnity costs generally require particularly egregious conduct, while substantial indemnity costs may be awarded where a court wishes to express its disapproval of a party’s conduct.
The court further reviewed the evolution of costs principles in estate litigation. Citing McDougald Estate v. Gooderham and Sawdon v. Sawdon Estate, the court noted that costs are not automatically payable from an estate simply because litigation concerns estate administration. Costs may be paid from an estate where court involvement is necessary to ensure the proper administration of the estate or to give effect to a testator’s intentions.
In this case, the court concluded that neither circumstance applied. The post-settlement proceedings were required because the estate trustee failed to complete the administrative obligations required under the settlement and failed to comply with court directions in a timely manner. The court therefore ordered that the costs be paid from the trustee’s share of funds being held in trust rather than from the estate itself.
Takeaways
The decision illustrates that an estate trustee’s responsibilities continue after litigation has settled. Settlement does not end the obligation to complete the administration of the estate, and trustees remain responsible for ensuring that professionals retained to assist with the administration perform the work required.
The case also serves as a reminder that the right of an estate trustee to be indemnified from estate assets is not absolute. Where delays, non-compliance, or unreasonable conduct result in unnecessary court proceedings, the court may order costs personally against the trustee and deny reimbursement from the estate.
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