In contentious litigation, it is quite rare for a court to award complete indemnity costs to one of the parties. The decision to award costs, and the amount of such costs, is within the court’s discretion. There are a number of factors for the court to consider in exercising its discretion, as set out in Rule 57.01 of the Rules of Civil Procedure, including factors relating to the conduct of a party.
Where a party has made an offer to settle pursuant to Rule 49 of the Rules of Civil Procedure, there are certain costs consequences if that party is successful, including the scale of costs to which they are entitled. Rule 49 specifically sets out when a party is entitled to partial or substantial indemnity costs. But in what circumstances will the Court increase the scale of costs to complete indemnity?
The recent decision of Churchill v Churchill, 2019 ONSC 5137 considered this issue. There had been a dispute between children over their mother’s estate. The plaintiffs were virtually entirely successful at trial as against the respondent, their brother, and had made several offers to settle that were more favourable to the brother than the results at trial. The court concluded that the plaintiffs were entitled to substantial indemnity costs from the date of the offers made, but raised the additional question of whether the scale of costs should be increased to complete indemnity, in view of the brother’s conduct throughout the proceedings. Citing the Ontario Court of Appeal, the court stated that, in order to increase the scale “the conduct of the losing party would have to be based on their serious misbehaviour so, as to fall within the category of ‘reprehensible’ behaviour”.
The court considered the brother’s behaviour, including his misappropriation of estate assets, failure to comply with court orders, and perseverance with meritless claims despite a number of court hearing with rulings adverse to the brother and two adverse costs awards. Although the brother was self-represented, that did not justify his conduct.
The plaintiffs’ complete indemnity costs were approximately $77,000.00. Ultimately, the court concluded that the plaintiffs were entitled to more than substantial indemnity costs, and awarded them costs in the amount of $75,000.00.
Thanks for reading,
You may also be interested in these other blog posts:
Listen to Passing of Accounts and a Joint Retainer
This week on Hull on Estates, Craig Vander Zee and David Smith discuss conflicts of interest during Passing of Accounts trials and rules of professional conduct.
Rules of Conduct – An Estates’ Perspective: An Introduction to the ACTEC Model Rules of Conduct and the Commentaries- Part II
In addition to the basic themes of the Commentaries (see our June 9, 2006 blog), they also reflect the role that the trusts and estates lawyer has traditionally played as the lawyer for members of the family. In that role, a trusts and estates lawyer frequently represents the fiduciary of a Trust or an Estate and one or more of the beneficiaries.
In drafting the Commentaries, the authors have attempted to express views that are consistent with the spirit of the MRPC (Model Rules of Professional Conduct) as evidenced in the following passage:
"The Rules of Professional Conduct are rules of reason. They should be interpreted with reference to the purposes of legal representation and the law itself."
The editors note (at page 1 of the Commentaries) that a goal of the Commentaries is to encourage a full discussion between a lawyer and a client as to the scope and the cost of the representation. Furthermore, the duties of trusts and estates lawyers are also carefully considered and described. In the U.S. jurisdictions, many of the parameters of the duties of estates and trusts lawyers are set out by opinions rendered in malpractice cases, which provide some guidance regarding some of the ethical duties of the lawyer as well.