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“Misleading Evidence” – Not Enough to Deny Costs to Successful Party in Estate Case: Birtzu v. McCron

Birtzu v. McCron, 2019 ONCA 777 (CanLII), http://canlii.ca/t/j2nkm

Introduction

Recently, the Court of Appeal for Ontario overturned the cost award[1] of a trial judge in the will challenge case of Birtzu v McCronn, finding that the trial judge was “plainly wrong” in denying the successful party her costs.[2]

Background

A father died, leaving behind three adult children: two sons and a daughter. In his will he left his entire estate to his daughter where previous wills had distributed his estate among his three children and grandchildren. The sons commenced an action seeking, among other things, an order setting aside the will, alleging their father lacked testamentary capacity.

The trial lasted for 21 days. Ultimately, the trial judge dismissed the brothers’ claim, specifically concluding that the daughter had discharged her onus to prove that her father had testamentary capacity.  Other parts of the claim were dismissed as they were statute-barred.

Despite the daughter’s success, and the fact that the “loser pays” principle generally applies to estate litigation, the trial judge concluded that both parties should bear their own costs of the proceeding.

Court of Appeal

The daughter sought, and was granted, leave to appeal the cost award. Cost awards are discretionary. The Court of Appeal seldom grants leave to appeal a cost award and will vary such an order only if the appellant demonstrates legal error or that the order is “plainly wrong.”[3]

The Court of Appeal noted that the daughter was “entirely successful at trial.”[4] In the normal course she would have received her costs. This was not a case for costs payable by the estate. The daughter was the sole beneficiary.

In his brief endorsement, the trial judge supported his decision on the costs on the basis that the daughter was successful only by virtue of the limitation period defence. However, the trial judge made detailed findings of fact in favour of the daughter. The Court of Appeal concluded that the brothers lost at trial “on all fronts.”[5] The implication in the cost endorsement that success had been somehow divided was “not borne out by an examination of the trial judge’s reasons for judgment.”[6]

The second reason the trial judge gave for denying the daughter her costs was his finding that she gave “misleading evidence” at trial. The trial judge found that the daughter had lied about her recollection of conversations she had with her father’s doctor about her father’s mental condition.

The Court of Appeal refused to reconsider the trial judge’s credibility assessment. However, the Court of Appeal noted that although a party’s conduct (including offering misleading testimony) can be relevant in assessing costs, costs “are not used to punish a litigant for giving misleading evidence.”[7]

The Court concluded that while misleading evidence can never be condoned, the evidence given by the daughter could not justify, on its own, a denial of costs in respect of a 21-day trial in which she was entirely successful in defending. The trial judge “erred in law by focusing his costs analysis almost exclusively on the misleading nature of one aspect of [the daughter’s] evidence.”[8]

The Court of Appeal also found that it was “incumbent on the trial judge in this case, to more fully explain why, despite [the daughter’s] total success, she was denied her costs.” The Court found that the trial judge’s cost order was “plainly wrong” and that the costs should have followed the result. The Court fixed the costs on a partial indemnity basis at $150,000.00.

Conclusion

Cost awards are rarely overturned, except where, like in this case, the trial judge is “plainly wrong”. While there are situations where the parties in an estate dispute should be responsible for their own costs, this case, where one party was completely successful, was not one of them. For more information on costs in estate litigation see my paper “Costs in Estate Litigation”, a version of which article was also submitted to the Advocates Quarterly, (publication pending).

[1] Birtzu v McCron, 2017 ONSC 2276.

[2] Birtzu v McCron, 2019 ONCA 777.

[3] Birtzu v McCron, 2019 ONCA 777 at para 8.

[4] Birtzu v McCron, 2019 ONCA 777 at para 9.

[5] Birtzu v McCron, 2019 ONCA 777 at para 12.

[6] Birtzu v MCCron, 2019 ONCA 777 at para 12.

[7] Birtzu v McCron, 2019 ONCA 777 at para 15.

[8] Birtzu v McCron, 2019 ONCA 777 at para 17.

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