Tag: Blended Costs

01 Jun

Toller James Montague Cranston (Estate of): Lose Big, Pay Big

Arielle Di Iulio Estate Litigation, Litigation Tags: , , 0 Comments

As in other areas of civil litigation, the general costs principle of “loser pays” applies in estate litigation. The recent costs decision of Toller James Montague Cranston (Estate of), 2021 ONSC 3704, is an interesting example of just how much a loser in estate litigation could have to pay.

In Toller, the Estate Trustee of the estate of Toller Cranston was compelled to bring an application to pass her accounts by the two other beneficiaries of the estate. These beneficiaries (the “Objectors“) raised over 300 objections to various expenses paid by the Estate Trustee personally to administer the estate in Mexico. The Objectors were unsuccessful on all of their objections except for five. They also made allegations of fraud and theft by the Estate Trustee which were ultimately unproven. The Estate Trustee sought costs on a substantial indemnity scale of $390,602.98 inclusive of HST and disbursements, payable by the Objectors personally. The Objectors took the position that the requested amount was not reasonable or proportionate in the circumstances.

In his costs decision, the Honourable Justice Robert Smith relied on the factors set out in Rule 57 of the Rules of Civil Procedure to help determine the appropriate costs award to make. He also relied on the case of Estate of Francoise Poitras v. Canadian Cancer Society, 2021 ONSC 406, for a summary of the legal principles applicable to costs in estate litigation, which include:

  • An estate trustee is generally entitled to be indemnified for all reasonably incurred costs in the administration of an estate, including the legal costs of an action reasonably defended, to the extent these costs are not recovered from another person.
  • The winning party in estate litigation is usually entitled to reasonable costs from the losing party.
  • A court may deny cost recovery by an estate trustee, in whole or in part, if the trustee acted unreasonably or in substance for his or her own benefit, rather than for the benefit of the estate.
  • If the estate trustee acted reasonably, the court may require the other party or parties to pay costs or make a blended order requiring the losing party to pay some costs and the estate to pay the balance.
  • In fixing costs, the court must determine the fair and reasonable amount that a party should pay in the particular circumstances of the case.

In the case at hand, the Estate Trustee won by a landslide. What is more, given the complexity of the estate and the large number of objections raised, the Estate Trustee was forced to spend a significant amount of time and legal expenses to respond to the 295 meritless objections that had been raised. Justice Smith also found that the Objectors acted unreasonably in refusing to narrow the issues to be decided before the hearing and to then abandon approximately half of their objections at the hearing, after time and expenses had already been incurred on those objections. The Objectors’ unfounded allegations of misconduct by the Estate Trustee also warranted an elevated costs award.  For these reasons and more, Justice Smith concluded that the bulk of the Estate Trustee’s legal costs should be paid by the Objectors.

It was ultimately decided that the Objectors would pay costs to the Estate Trustee on a substantial indemnity basis, reduced by an amount to account for the Objectors’ partial success. This resulted in a notably high costs award of $325,000.00, inclusive of disbursements and HST, payable to the Estate Trustee by the Objectors. It was further ordered that the balance of the Estate Trustee’s legal costs be paid to her from the estate.

The Toller decision shows that the court will not shy away from holding a losing party personally liable for significant costs in estate disputes where the court deems such an award to be appropriate in its discretion. To help limit personal liability to costs in the event of a loss, parties should endeavour to act reasonably from the beginning through to the end of the litigation.

Thanks for reading!

Arielle Di Iulio

02 Oct

Full Indemnity through Blended Costs: The Estate of Irmgard Burgstaler

Doreen So Elder Law, Guardianship, Passing of Accounts, Trustees, Uncategorized Tags: , , , , , 0 Comments

The Estate of Irmgard Burgstaler (disability), 2018 ONSC 472, was a costs decision that arose from an application to pass attorney accounts.  Erwin  was named as the attorney for property for his mother, Irmgard.  Erwin was ordered to pass his accounts and his siblings, Barbara and Peter, objected.

A four-day hearing took place.  Erwin was self-represented and his accounts were not in court format pursuant to Rule 74.17 of the Rules of Civil Procedure.  Extensive written submissions were also filed by both sides.

Erwin was found to have breached his fiduciary duty to Irmgard when $82,000.00 was taken from Irmgard and applied towards the purchase of a home in Erwin’s name.  Erwin also took approximately $44,000.00 from his mother’s accounts to pay his legal fees in the proceeding at issue and the Court found that this expense was not for Irmgard’s benefit.  Certain other expenses were ordered to be repay to Irmgard as well as the repayment of $5,000.00 from the sale of Irmgard’s trailer.

Given their success, the Objectors sought full indemnity on a blended basis from Erwin (15%) and the Estate (85%).  In reviewing the jurisprudence on costs in estate matters, Justice Shaw found that this case fell within the public policy exemption for due administration of estates and allowed the Objectors’ claim for full indemnity.

That said, Justice Shaw disagreed with the Objectors’ proposed 15/85 split on the basis of the “losers pay” principle in general civil costs.  Justice Shaw ordered Erwin to pay the Objectors’ costs on a partial indemnity scale while the Estate was ordered pay the full remaining balance.  In this case, partial indemnity appears to be close to 70% of the total claimed based on the fixed amounts that were ordered.

Thanks for reading!

Doreen So

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