Legal Costs and Awards
- Cost Awards
- Costs - Who Pays in Estate Litigation
- Costs Payable out of the Estate
- Fixing Costs - The Conduct of a Solicitor
- Funding Anticipated Costs out of the Estate
- Security for Cost Motions
- Standing in the Shoes of an Estate Trustee and Getting Paid
Cost Awards
It is often impossible to predict how costs will be decided by the presiding judge at a motion, application, or trial. The Rules of Civil Procedure encourage a judge to fix the costs of the proceeding before him or her. A judge has wide discretion to award costs - discretion that an appeal court will be reluctant to interfere when faced with the issue. With the demise of the infamous cost grid, costs have tended to come down and the court is now largely motivated by deciding what is reasonable in the circumstances and fair to all parties with an eye to the factors listed in Rule 57.01(1).
An interesting case recently released by the Ontario Superior Court of Justice in Rand Estate v Lenton caught my attention. In a relatively rare decision, the court awarded costs against the solicitors for the respondents.
According to the court, the conduct of the solicitors for the respondents caused costs to be incurred without reasonable cause or wasted by undue delay, negligence or default. The solicitors for the respondents systematically engaged in a pattern of inappropriate conduct, including: (1) inordinate and unnecessary delays; (2) bringing numerous and unnecessary motions; (3) being inadequately prepared; (3) failing to appear; (3) disregarding the professional obligation to be civil and courteous to others; (4) presenting arguments that had no merit; (5) acting for the respondents despite having a clear conflict of interest; (6) failing to do anything to resolve the litigation; (7) disregarding court orders; and (8) continuing to produce documents in contempt of a court order. As a result, the court found it appropriate to award costs against the solicitors for the respondents on a substantial indemnity basis to address the costs thrown away by the applicants.
The case, and the laundry list of improper behaviour, is a good reminder to all counsel to think long and hard about tactics and strategy (no case is really worth sullying your own reputation and credibility). Lawyers also need to keep in mind that they are not just mouth pieces for their clients. Counsel should advise their clients of the minimum standard of behaviour, decorum and professionalism expected by the courts. A good way to control your client is to remind him/her that costs can be awarded against a party who makes frivolous claims, or engages in egregious behaviour. Of course, lawyers are clearly not immune from costs and must govern themselves accordingly. If a client refuses to listen or expects you to take a position that will be frowned upon by the court, it is time to get off the record.
Costs - Who Pays in Estate Litigation
This is a PDF document. Click here to view.Costs Payable out of the Estate
Many litigants in estate litigation are disappointed to learn that costs are no longer automatically paid out of an estate. In fact, it is now widely accepted that estate litigation can attract the usual costs consequence. As such, costs are an issue that should be considered by a party before embarking upon estate litigation. Ukrainian Catholic Episcopal Corp. of Easter Canada v. Pidwerbecki, a recent decision of the Ontario Superior Court of Justice, is instructive in this regard.
The respondents were success at trial and sought their costs. The applicant, the Ukrainian Catholic Episcopal Corp. of Easter Canada (the "Church"), argued that no costs should be awarded and that the costs requested were, in any event, excessive.
The court recognized that in estate matters, issues frequently arose upon which "reasonable persons" could "reasonably disagree". Ambiguity in a testamentary document was cited as one such example. The court held that where there were reasonable grounds for an application, costs should generally be paid by the estate.
However, in the case at hand, there was no dispute arising out of any mistake or lack of clarity or default of the testator. According to the court, the lack of evidence supporting the Church's position ought to have been apparent from the beginning and certainly at the end of discoveries (a good reminder to counsel to write to clients at the end of discoveries to address the merits of the case). Given the allegations of misconduct, coupled with the lack of evidence, the court held that costs, on a partial indemnity scale, should follow the cause (loser pays the winner).
The fact that the Church was a not-for-profit organization carried no weight with the court. Moreover, even though there was no adversity of interest between the respondents, the court was satisfied, despite the arguments of the Church, that it was reasonable for the parties to be separately represented. The respondents were awarded their separate costs.
Fixing Costs - The Conduct of a Solicitor
It is often impossible to predict how costs will be decided by the presiding judge at a motion, application, or trial. The Rules of Civil Procedure encourage a judge to fix the costs of the proceeding before him or her. A judge has wide discretion to award costs - discretion that an appeal court will be reluctant to interfere when faced with the issue. With the demise of the infamous cost grid, costs have tended to come down and the court is now largely motivated by deciding what is reasonable in the circumstances and fair to all parties with an eye to the factors listed in Rule 57.01(1).
An interesting case recently released by the Ontario Superior Court of Justice in Rand Estate v Lenton caught my attention. In a relatively rare decision, the court awarded costs against the solicitors for the respondents.
According to the court, the conduct of the solicitors for the respondents caused costs to be incurred without reasonable cause or wasted by undue delay, negligence or default. The solicitors for the respondents systematically engaged in a pattern of inappropriate conduct, including: (1) inordinate and unnecessary delays; (2) bringing numerous and unnecessary motions; (3) being inadequately prepared; (3) failing to appear; (3) disregarding the professional obligation to be civil and courteous to others; (4) presenting arguments that had no merit; (5) acting for the respondents despite having a clear conflict of interest; (6) failing to do anything to resolve the litigation; (7) disregarding court orders; and (8) continuing to produce documents in contempt of a court order. As a result, the court found it appropriate to award costs against the solicitors for the respondents on a substantial indemnity basis to address the costs thrown away by the applicants.
The case, and the laundry list of improper behaviour, is a good reminder to all counsel to think long and hard about tactics and strategy (no case is really worth sullying your own reputation and credibility). Lawyers also need to keep in mind that they are not just mouth pieces for their clients. Counsel should advise their clients of the minimum standard of behaviour, decorum and professionalism expected by the courts. A good way to control your client is to remind him/her that costs can be awarded against a party who makes frivolous claims, or engages in egregious behaviour. Of course, lawyers are clearly not immune from costs and must govern themselves accordingly. If a client refuses to listen or expects you to take a position that will be frowned upon by the court, it is time to get off the record.
Funding Anticipated Costs out of the Estate
Can the court order an estate to pay the anticipated legal costs of a party, who is challenging or propounding a will? In other words, the court is not being asked to award costs based on an application or motion that it decided in the ordinary course, but rather to determine whether a party is entitled to some payment in order to fund or defend a Will Challenge (a down payment if you like).
In a recent unreported decision of Sachs J. in the Estate of Edward Assaf ("Assaf Estate"), the court held that it did indeed have the discretion to order an estate to pay the anticipated legal costs of a party who was challenging the quantum of her entitlement under a Will. However, the court decided that it was not appropriate to grant the relief requested in the circumstances of the case.
In coming to its decision, the court found that the Assaf Estate had been the subject of constant litigation, the vast majority of which had been initiated by Vivian Assaf (the widow of the testator) or by William Assaf (the son) and almost all of which had been unsuccessful. To make matters worse, as of the date of the hearing before Sachs J., Vivian Assaf still had an unpaid costs order against her of approximately $90,000.
Secondly, the court held that it was by no means clear what the value of Vivian Assaf's remaining entitlement was under the Assaf Estate. Thirdly, the court was not persuaded that there was any real merit to the proceeding that Vivian Assaf now wished to pursue (a contested passing of accounts).
Finally, the court was not prepared to entertain a suggestion by the estate trustee during litigation that, as an alternative to one-time payment, the court should order that the funds be paid albeit with appropriate conditions attached. That is, any funds paid to Vivian Assaf would be subtracted from her ultimate entitlement under the Assaf Estate. However, the court was not persuaded that even a conditional payment would do anything other than encourage litigation.
In the end, the court declined to order the Assaf Estate to pay Vivian Assaf any funds to fuel future litigation. Moreover, the court ordered Vivian Assaf to pay the costs of the parties who opposed the relief requested as well as the costs of the estate trustee during litigation.
The lesson to be drawn from the decision of Sachs J. is that while a court may have the jurisdiction to order an estate to pay the anticipated legal costs of a party to a Will Challenge, it will only do so the appropriate circumstances. Simply put, the right conditions have to be in place before the court will be persuaded that it would be just and equitable to order such a payment.