Estate litigation exists in a somewhat unique corner of the litigation world for as a Will can potentially have numerous beneficiaries, each of whom could receive differing amounts from the estate, the potential individuals who could be impacted by any court decision can often extend beyond the parties actively participating in the litigation. As estate litigation can be both emotionally and financially expensive, if you are a beneficiary who only was to receive a relatively modest bequest of say $5,000, you may question whether it can be financially justified for you to retain a lawyer to actively participate in the litigation or whether you should just throw your hands up and not participate. Although the final decision of whether to participate will be case specific to the beneficiary in question, there may be a third option other than actively participating or simply not responding, being that you can formally “submit” your rights to the court.
The concept of “submitting” your rights to the court is in effect a formal declaration to the court that you will not be actively participating in the litigation but that you would still like to be provided with notice of certain steps. By formally submitting your rights to the court the plaintiff is required to provide you with written notice of the time and place of the trial, as well as a copy of the eventual Judgment. You are also personally insulated from any costs award that may be made in the proceeding (other than incidentally as a beneficiary of the estate should costs be awarded out of the estate).
The potentially most attractive incentive to formally submitting your rights to the court however may be that in the event any settlement is reached amongst the other parties that no Judgment may be issued implementing the settlement unless the court is provided with your consent to the settlement or an affidavit confirming that you had been provided with a copy of settlement and had not served and filed a “Rejection of Settlement“. Such a requirement could provide you with the opportunity to object to any settlement before it is implemented, potentially sidelining any settlement that you believe unfairly impacted your interest in the estate.
The process by which an individual can “submit” their rights to the court is governed by rule 75.07.1 of the Rules of Civil Procedure, with the individual submitting their rights to the court being required to serve and file a “Statement of Submission of Rights to the Court“.
Thank you for reading and stay safe and healthy.
My last blog discussed recent steps taken by the legislature to modernize the administrative side of the practice of law in Ontario. The practical side has also seen a number of developments that have emerged as a direct result of the ongoing pandemic. Some of these efforts have been spearheaded by the courts directly, while others, such as the Estate Arbitration and Litigation Management initiative, have been developed by members of the Bar an in effort to continue moving matters towards a resolution despite limited court access.
A recent decision of the Superior Court of Justice provides some important commentary on the judiciary’s expectations of parties and counsel to adapt to the current reality using these tools and others so that files can continue to progress.
In Arconti v Smith, Justice Myers grappled with the competing views of the parties as to whether an examination for discovery ought to proceed by way of a videoconference. The defendant, who was to submit to examination, proposed that the examination proceed by way of videoconference given the social distancing guidelines in place.
The plaintiff objected on several grounds. Among other objections, the plaintiff argued that the defendant and their counsel ought to be in each other’s presence to ensure the process proceeded smoothly. Alternatively, the plaintiff argued that the fact of conducting an examination remotely would “[deprive] the occasion of solemnity” and would otherwise make it more difficult to assess the defendant’s demeanour as a witness. The plaintiff argued that the examination ought to be deferred until social distancing guidelines were lifted.
Justice Myers’ initial response to the plaintiff’s position was simple, yet persuasive: “It’s 2020.” He held that the parties have technological tools at their disposal to conduct examinations and other litigation steps remotely, and that the use of such tools was especially salient in the context of the social distancing guidelines. Although Justice Myers advised that the concerns raised by the plaintiff might be relevant in different circumstances, they were not at issue there.
Ultimately, Justice Myers held that the use of readily available technology should be part of the skillset required both of litigators and the courts, and that the need to use such tools was merely amplified, not created, by the pandemic. The plaintiff was ordered either to conduct the examination of the defendant by videoconference, or to waive their entitlement to conduct the examination altogether.
This decision provides a glimpse into the court’s expectations of litigants and counsel to move matters forward in spite of the social distancing guidelines and court closures. While the current directives and legislation cannot be used to compel a party to perform a particular litigation step by audiovisual means, one may read Arconti as suggesting that the courts will nonetheless expect the parties to consider the entirety of their skillset to move matters along so that they do not languish in litigation purgatory as a result of social distancing guidelines.
Once social distancing guidelines have been lifted, it will likely be some time before the courts have dealt with the matters that were adjourned between March and June and are in a position to hear new matters. Parties who are willing to use the tools at their disposal to move matters forward and avoid contributing to this delay may find themselves commended by the judiciary. Those who are resistant to adapt, on the other hand, may expose themselves to commentary from a judge, or possibly cost consequences for their client, depending on the circumstances.
If you are interested in learning more about litigation procedure and estate planning best practices in the time of COVID-19, please consult our information guide.
Thanks for reading.
With the loser-pays costs model firmly entrenched in civil litigation, and, for some time now, also consistently applied in most estate litigation cases, it behooves counsel to give early and ongoing consideration to putting forward an offer to settle under Rule 49 of the Rules of Civil Procedure with the objective of obtaining a more favourable costs outcome.
In order to get the benefit of the cost consequences under the Rule, such an offer (i) must be made at least seven days before the hearing, (ii) cannot be withdrawn and cannot expire before the commencement of the hearing, (iii) must not be accepted by the opposing side, and (iv) the offeror must meet or beat the offer at the hearing. However, even if this criteria is met, the court has the discretion to depart from the cost presumptions under the Rule.
Taking into account the court’s discretion, and given what feels like the release of more and more decisions where cost awards seem to bear little reflection to the costs incurred or the Rule 49 offers made, I wonder whether making a Rule 49 offer actually provides the expected benefit of a better costs outcome for the offeror.
In reading a recent article on the issue, I am reminded that there is some predictability in place. The authors review some relevant authorities, including Niagara Structural Steel (St. Catharines) Ltd. v. W.D. LaFlamme Ltd. and Barresi v. Jones Lang Lasalle Real Estate Services Inc., two Court of Appeal cases where it was held that the courts of first instance erred in resorting to the exception in Rule 49, and where the Court of Appeal reasoned as follows:
- the purpose of the Rule is to be an incentive to encourage settlement;
- a judge’s discretion to depart from the costs presumption under the Rule is not unfettered, and should not be exercised in such a widespread manner so as to render the general rule ineffectual; and
- a judge should only depart from the Rule “where the interests of justice require a departure”, after giving weight to the policy of the Rule, the importance of predictability and the even application of the Rule.
Thanks for reading and have a great day,
One way that dispositions such as a gift during one’s lifetime, or a Will, may be challenged is on the basis of undue influence. However, allegations of undue influence are often difficult to prove. Additionally, due to the nature of these types of allegations, which often call into question the character of the alleged influencer, they are taken seriously by the court. As a result, parties should be cautious in alleging undue influence, and should be virtually certain that they will be able to back up their claims.
A recent example of this was in the costs decision of Nimchick v Nimchick, 2019 ONSC 6653. A mother and daughter had claimed that their son/brother (“B”) had devised a plan to financially exploit his mother for the benefit of himself, his spouse, and his son, (“J”). The circumstances leading to this allegation involved the mother adding J’s name to a bank account belonging to the mother, for the purpose of paying for J’s student loans, with any excess going to B. The trial judge dismissed the mother and daughter’s claim, finding that the mother intended to gift the money to B and J, and that B had not exerted undue influence over his mother.
The defendants, who were wholly successful, sought their substantial indemnity costs, in the amount of approximately $147,000.00. The court noted that the defendants’ partial indemnity costs of the action were approximately $100,000.00.
In making its determination as to costs, the court considered the circumstances in which elevated costs are warranted, including where the unsuccessful party has engaged in reprehensible, scandalous, or outrageous behaviour that is worthy of sanction. The court found that the mother and daughter’s behaviour had been of this nature. This conclusion seemed to have largely been based on the court’s finding that the mother and daughter advanced baseless allegations of wrongdoing and failed to prove their claims of civil fraud and deceit. Overall, the court preferred B’s evidence to the evidence from the mother and daughter.
The court ultimately awarded costs to the defendants in the amount of $100,000.00. This amounted to the defendants’ partial indemnity costs, according to a note included in the decision. Accordingly, it does not appear that the award against the plaintiffs was necessarily on an elevated scale. The costs awarded were, however, $15,000.00 more than the amount submitted by the plaintiffs as being appropriate.
Thanks for reading,
You may also enjoy these other blog posts:
Competing applications about the ownership of a home were before the Court in Marley v. Salga, 2019 ONSC 3527. On the death, the home was jointly owned between the deceased (Salga) and his wife (Marley). Notwithstanding the registered, legal ownership of the property, Salga’s Will gave Marley a lifetime right to occupy and use Salga’s one-half interest in the property and thereafter directed that the house be sold for the benefit of the residuary beneficiaries.
This led the residuary beneficiaries to commence an Application for a declaration that the Estate is entitled to an undivided one-half interest in the home and for an order requiring the Estate Trustee (Klassen) to sell the home right away (the “Salga Application“). Thereafter, Marley commenced her own Application for a declaration that she was the sole legal and beneficial owner of the property, or, alternatively, that her interest in the property is greater than 50% (the “Marley Application“).
Ultimately, Justice Reid found that ownership of the property was severed by the deceased in the course of his dealings but denied the Salga Applicants’ request that the property be sold before the termination of Marley’s interest under the Will. The Marley Application was also denied. Our blog on this decision can be found here.
The parties were unable to agree to the issue of costs. Justice Reid, 2019 ONSC 6050, followed the traditional approach to costs in estate matters and the costs of both applications, on a partial indemnity scale, were ordered from the Estate. In reaching this conclusion, Justice Reid considered and found the following:
- The Marley Application was in essence a response to the Salga Application and the costs of both proceedings were treated as one;
- Both parties were found to be partially successful: the Salga Applicants were successful in obtaining a declaration that 50% of the home belongs to the Estate and the Marley Applicant was successful in preventing an immediate sale of the home;
- Consideration was given to the fact that an award of costs from the Estate meant that the Salga Applicants (as the residuary beneficiaries) would be effectively bearing their own costs as well as Marley’s costs. However, that was not enough to outweigh the deceased’s responsibility to act unambiguously by severing his interest on title during his lifetime.
- Costs against the Estate in this case “places the responsibility for the litigation squarely on [the deceased] where it belongs“.
This costs decision is also an informative read for the costs of an estate trustee as a respondent in both proceedings and how costs should be paid from an estate where there is no liquidity.
Thanks for reading!
The monetary jurisdiction of Ontario’s Small Claims Court is set to increase on January 1, 2020. The jurisdiction of the Court will increase from $25,000 to $35,000.
The current limit of $25,000 was in place since 2010. Prior to that, the limit was $10,000.
In a press release from the Ministry of the Attorney General, the change is said to “make it faster, easier and more affordable for people and businesses to resolve their disputes in front of a judge.”
Claims over $35,000 would need to be brought in the Superior Court of Justice. As noted by the Ministry of the Attorney General, claims in the Superior Court of Justice can take years to resolve, and can involve expensive legal representation. Claims in the Small Claims court, however, can be resolved in less than a year, and litigants are not required to hire lawyers or other legal help.
The Ministry also stated that the change should have the effect of reducing wait times in the Superior Court of Justice, as many claims that would otherwise have been brought in the Superior Court of Justice could now be brought in the Small Claims Court.
Another change is that the minimum amount of a claim that may be appealed to the Divisional Court is increased from $2,500 to $3,500.
As to transition, litigants who started a claim in the Superior Court of Justice for an amount between $25,000 and $35,000 can move to have their claim transferred to the Small Claims Court.
There are costs consequences if a proceeding is brought in the wrong court. Under Rule 57.05 of the Rules of Civil Procedure, if a plaintiff recovers an amount within the jurisdiction of the Small Claims Court, the court may order that the Plaintiff shall not recover any costs. If a Plaintiff recovers default judgment that is within the monetary jurisdiction of the Small Claims Court, costs shall be assessed in accordance with the Small Claims Court’s tariff.
Costs in the Small Claims Court are limited under its rules, and are subject to a limit under the Courts of Justice Act, s. 29, to 15% of the amount of claimed or the property sought to be recovered, subject to the court’s right to award higher costs to penalize a party or the party’s representative for unreasonable behavior.
Thanks for reading.
The issue of the payment of costs in an estate litigation matter has seen somewhat of a reshaping recently. Historically, courts generally took the position that the costs incurred by all parties in an estate litigation matter ought to be paid out of the assets of the estate at issue, regardless of the outcome. Whether or not a party was successful in the litigation, that party would not likely be responsible for its own legal costs. More recently, the courts have adopted a modified approach with a view to disincentivizing frivolous claims and to bring the costs principles in estate matters more in line with those in other civil litigation matters. In particular, the principle that the “loser pays”, as opposed to the estate, gained traction.
The recent decision of the Court of Appeal for Ontario in Birtzu v McCron, 2019 ONCA 777, reaffirmed the court’s approach to the “loser pays” principle consistent with other civil matters. The parties to this appeal had endured a 21-day trial in 2016, following which the defendant McCron was held to be entirely successful. However, contrary to the “loser pays” principle, Justice Bloom, in his decision on costs released in 2017, decided instead that the parties would each bear their own costs.
Justice Bloom’s reasons were based on two findings in particular:
- Notwithstanding that the plaintiffs were entirely unsuccessful at trial, they had “reasonable grounds” on which to commence the action; and
- That McCron had lacked credibility with respect to one issue resolved at trial.
McCron successfully appealed the decision, and the Court of Appeal for Ontario awarded her costs of the trial on a partial indemnity basis, consistent in part with the “loser pays” principle.
At the outset, the Court of Appeal noted that costs awards are discretionary. Rarely will litigants be granted leave to appeal except in cases where the lower court is found to have made a “legal error” or, more generally, where the costs award is “plainly wrong.”
The Court of Appeal acknowledged, in respect of the second criteria above, that a litigant’s conduct at trial and her credibility are relevant factors with respect to the issue of costs. However, unless that litigant’s conduct bears on the length or the substance of the trial, it is not appropriate for a court to punish that litigant by denying them their costs. The issue of McCron’s credibility was, in effect, moot given that she was successful “on all fronts” and, in any event, it did not impact the judge’s findings.
The Court held that McCron’s costs “should have followed the result”, but they did not. The costs decision of the trial judge was held to be “plainly wrong” and accordingly overturned.
Thanks for reading.
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:
I recently came across a case out of the Court of Appeals of Texas (Royce Homes, L.P. v. Neel, 2005 Tex.App.LEXIS 1514) where the Court of Appeal overturned a jury’s determination of damages that was based on weak evidence from a construction defect expert. Although apparently well qualified, the expert simply estimated the costs of repairs based on his experience: he did not take any notes or measurements.
The court rejected the evidence as “ipse dixit” (sometimes spelled “ipse dexit”). The term is latin for “he said it himself”. The fallacy of logic is that by baldly asserting a state of affairs without evidence to support it sidesteps the argument. It is an assertion without proof. The fallacy is similar to an argument from authority.
My kids used to call me out on the use of ipse dixit all the time. When I made an assertion, they would ask “Why?” My usual, lazy, response was “Because I said so.”
Ipse dixit has been recognized as a problem in litigation, particularly in the area of expert evidence. In General Electric Co. et al. v. Joiner et ux, the U.S. Supreme Court recognized the problem of “opinion evidence which is connected to existing data only by the ipse dixit of an expert.”
The term has been used in several Canadian cases. For example, in Young v. Insurance Corp. of British Columbia, 2017 BCSC 2306 (CanLII), an expert gave evidence that damages in a motor vehicle accident were not caused by a sideswipe-type collision. At trial, the plaintiff objected to the evidence, with counsel asking “where is the science”. The court agreed, and rejected the evidence. The expert did not refer to his own assessment of sideswipe-type collisions. He did not refer to any studies or tests involving sideswipe-type collisions. As stated by the trial judge, “Instead, what we are left with is an exercise in ipse dixitism: it is so because I say it is so.”
In Lord’s Day Alliance fo Canada v. Regional Municipality of Peel et al., the issue was whether an exemption from Sunday closing by-laws was “essential for the maintenance or development of a tourist industry”. Town council said the exemption was essential, without citing any evidence. The Court of Appeal disagreed, holding that something more was required beyond council merely saying so. The legislation required proof that the exemption was essential, not just council deeming it to be essential.
In Lewis v. The King, 1949 CanLII 376 (QC CA), the Quebec Court of Appeal overturned a conviction for keeping a common betting house. In a concurring judgment, the appeal judge states that “there is no evidence, except the ipse dixit of the police officer, that the accused was the keeper of the place in which the search was made”.
In Ontario, Rule 53.03 of the Rules of Civil Procedure require that an expert report shall contain, inter alia, “The expert’s reasons for his or her opinion”.
As we head into elections, both here and in the US, keep your eyes open for ipse dixit.
Further, in litigation, be wary of ipse dixit evidence. Simply saying something is so does not make it so.
Make it a great weekend ahead. No ipse dixit. Provide proof.
There was a recent decision of the Ontario Superior Court of Justice on the issue of costs in a contested guardianship proceeding. Rather unusually, the endorsement in Howard Johnson v. Howard, 2019 ONSC 4643, dealt with the issue of costs after the parties have resolved the main dispute on consent.
In this case, there were two competing guardianship applications over Elizabeth. The applicants on the one hand were Elizabeth’s daughter and son, Marjorie and Griffin, and on the other hand, Elizabeth’s other son, Jon. All three of Elizabeth’s children were of the view that their mother was in need of a substitute decision maker for both the management of her property and for personal care.
While the endorsement does not specify who the competing applicants were seeking to appoint as Elizabeth’s guardian, the parties eventually settled on the appointment of CIBC Trust Corporation as Elizabeth’s guardian of property and all three children as Elizabeth’s guardians of personal care. On the issue of costs, Marjorie and Griffin sought full indemnity costs from Jon while Jon sought substantial indemnity costs from Majorie and Griffin or, in any event, that he be indemnified by Elizabeth for any amounts not recovered from his siblings.
Pursuant to section 3 of the Substitute Decisions Act, 1992, Elizabeth was represented by counsel throughout the proceeding and on the issue of costs. Submissions were made on Elizabeth’s behalf that she should not have to pay costs of the other parties or the outstanding balance of an invoice that was purportedly incurred by Elizabeth in a joint retainer with Jon.
The Court in this instance considered the modern approach to costs in estate litigation as set out in McDougald Estate v. Gooderham, 2005 CanLII 21091 (ON CA), with respect to Jon’s claim that Elizabeth ought to be responsible, at least in part, for his costs. The court relied on D.M. Brown J.’s (as he was then) comments that the discipline imposed by the “loser-pays” approach to estate litigation applies with equal force to matters involving incapable persons citing Fiacco v. Lombardi, 2009 CanLII 46170 (ON SC). Only costs incurred for the best interests of the incapable person could be justified as costs payable from the incapable’s assets.
In this case, the competing applications of the siblings were found to contain a number of ancillary issues beyond that of the appointment of a substitute decision maker for Elizabeth. The Court was ultimately unable to see how Elizabeth would have derived any benefit from her children’s disputes. Therefore, the children were all ordered to bear their own costs. There was also no clear benefit to Elizabeth from the invoice that was issued to her prior to the appointment of section 3 counsel and Jon was ultimately left to pay that balance.
At the end of the day, the only costs borne by Elizabeth, as the incapable person subject to two competing guardianship applications, were the costs of section 3 counsel pursuant to the section 3(2) of the SDA.
Here is a Bon Appetit recipe for a frozen margarita pie that we could all benefit from.