Sydney Osmar‘s blog from yesterday covered the issue of the recent cuts to legal aid funding, which can only be expected to result in increased barriers to Ontario residents in accessing the court system.
Within the context of estates, high legal fees may contribute to the inability of (would-be) litigants to obtain able assistance in accessing the court system. Some meritorious estate and capacity-related litigation may not be commenced simply because of a lack of funds required to hire a lawyer to assist in doing so.
While successful parties may be awarded some portion of the legal fees that they have incurred, payable by the unsuccessful party to the litigation (or out of the assets of the estate), recovery of all legal fees incurred in pursuing litigation is rare. The balance of legal fees that a party can be expected to pay out of whatever benefit they may ultimately receive dependent on the outcome of the litigation may eliminate some or all of the financial benefit of the funds that they may stand to receive.
For example, a dependant’s support application brought by a surviving spouse who lacks the financial means to support him or herself may result in protracted litigation. Even if the application for dependant’s support is successful, the court may not always make an order that adequately reflects the entitlements of the dependant and the total fees that he or she has incurred to bring the application, limiting the funds available for the dependant’s expenses going forward. While interim support orders or orders directing payments toward professional fees related to bringing the application may be available during litigation in some circumstances, the related motions will serve to further increase the legal fees incurred by the applicant if such relief is not obtained on consent. In the absence of contribution from the assets of the estate to fund the litigation or an alternative arrangement for the payment of legal fees, it may not be possible for a surviving spouse in need to make a dependant’s support claim in the first place or he or she may need to do so without a lawyer’s assistance.
In 2016, it was reported that the numbers of self-represented litigants in Canada have increased over the last two decades and more significantly in recent years. The inability to afford a lawyer and ineligibility for legal aid assistance were cited as the primary reasons why a party is self-represented. Research suggests that parties who are self-represented are less likely to be successful in litigation (with success rates of only 4% in responding to motions for summary judgment, 12.5% for motions and applications, and 14% at trial) than represented parties.
While assistance with estate-related matters may be available to some from the Advocacy Centre for the Elderly, the Queen’s University Elder Law Clinic, or other clinics (which are funded by Legal Aid Ontario and will be impacted by the recent budget cuts) in some circumstances, many individuals simply do not qualify for assistance or require assistance that is not provided by these clinics.
Our colleague, The Honourable R. Roy McMurtry, is a strong advocate for access to justice and has expressed the following sentiment: “[O]ur freedoms are at best fragile…they depend on the ability of every citizen to assert in a court or tribunal their rights under law as well as receiving sound legal advice as to their obligations. Indeed, our laws and freedoms will only be as strong as the protection that they afford to the most vulnerable members of society.”
Unfortunately, greater numbers of individuals than previously may struggle to access just resolutions of estates and other matters as a result of the recent changes to legal aid funding in Ontario.
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Typically, costs awards are not made until the conclusion of litigation. However, in rare circumstances, courts may order that costs are paid to a party at an earlier point during the litigation to assist them with the funding of the litigation itself, even if it is not yet known which of the party or parties will ultimately be successful at trial.
In what circumstances will a court order the payment of legal fees on an interim basis? The Supreme Court of Canada outlined the test for granting an order for interim costs to fund litigation in British Columbia (Minister of Forests) v. Okanagan Indian Band. The Court summarized the test as follows:
- the party seeking the order must be impecunious to the extent that, without such an order, that party would be deprived of the opportunity to proceed with the case;
- the claimant must establish a prima facie case of sufficient merit to warrant pursuit; and
- there must be special circumstances sufficient to satisfy the court that the case is within the narrow class of cases where this extraordinary exercise of its powers is appropriate.
In the Okanagan Indian Band decision, the Supreme Court considered family law disputes as one of the few unique exceptions to the general rule that the costs of an action or application only be awarded at the conclusion of litigation. One factor that the Court refers to as making interim costs awards suitable in family law matters is the presumption that the property in dispute is to be shared by the parties in some way. Ontario courts have acknowledged this presumption to be the basis of allowing interim payments to fund ongoing legal costs in estate litigation, suggesting that the payment of costs to fund the litigation can be accounted for in the final decision. However, a party to family or estate proceedings still needs to satisfy the above test before an interim costs award will normally be made.
In estate litigation, it is not uncommon for the Court to direct the payment of funds for use toward one or more party’s legal fees out of the assets of the estate while litigation is ongoing. Most often, the party to whom interim costs are paid will be entitled to a share of the assets of the estate whether he or she is successful in the litigation or not. The interim costs award can be deducted from the distributions that are ultimately made to that party. While rarely made within contexts other than family and estate litigation, interim costs orders can allow a party that may otherwise be unable to fund litigation to advance or respond to legal proceedings that affect his or her entitlements as the beneficiary of an estate.
Thank you for reading.
Other posts that you might be interested in reading:
With the recent case law moving in the direction of “loser pays”, costs in estates matters are becoming more and more of a concern to litigants. If only there was insurance against such a risk, you say. Well, now there may be, in certain cases. It is called Opponent’s Costs Indemnity (OCI©) and it is offered by Lexfund Management Inc.
Lexfund is a third-party litigation funding company that offers funding for what it determines to be meritorious commercial litigation lawsuits for monetary damages of $1 Million or more. For litigation that meets Lexfund’s criteria, funding is provided on the basis that the plaintiff owes nothing if the case is lost. Lexfund’s new OCI insurance is a companion product designed to alleviate the plaintiff’s anxiety and apprehension over the possibility of having to pay the defendant’s court costs if the claim is unsuccessful.
Another service you may wish to check out is BridgePoint Financial Services. BridgePoint has a variety of plaintiff lending services. They offer flexible and affordable "bridge loans" to help plaintiffs carry on with their lives without financial stress while providing their lawyers the time needed to negotiate a reasonable settlement of their legal claims. BridgePoint will tailor a financing solution to specific needs while ensuring that every loan offered makes sense, relative to the claim.
Lexfund and BridgePoint offer a variety of options for plaintiffs with strong claims who might otherwise have to abandon their cases due to the financial pressures of litigation.
Sharon Davis – Click here for more information on Sharon Davis.