A Postscript on Villa v. Villa: estate litigation and the “loser pays” principle
We wrote previously about the case of Villa v. Villa; it is a great example of the importance of acting honestly and transparently as a fiduciary. We now have the benefit of a costs decision to confirm the modern approach to costs in estate litigation, and the Court of Appeal has upheld the lower court’s decision.
Briefly, the Applicant Enzo was the Attorney for Property for his Deceased mother and the Trustee of her estate. He brought an application to pass his accounts and he claimed compensation. His Respondent brother opposed the claim for compensation for a number of reasons, including the fact that Enzo had mixed his mother’s funds with his own. The Court granted Enzo his compensation, citing 35 of the Trustee Act; Enzo accounted for the whereabouts of the funds and could repay them to the Estate, so he was indemnified from a good faith breach.
Here are two postscripts:
1) The court awarded Enzo his costs in the amount of $32,191.82 payable by the Respondent brother, personally.1 Justice O’Marra cited the modern approach to costs in estate litigation: costs follow the event (“loser pays”). The Respondent brother had rejected Enzo’s Offer to Settle (served after the original judgment and before the issue of costs was decided). The Court was of the view that the Respondent brother must have foreseen that if he rejected the Offer to Settle and was unsuccessful in prosecuting his Objections, he would be liable for substantial costs. The Court found that the Respondent’s conduct was unreasonable and rendered a straightforward matter unnecessarily complex.
2) The Respondent brother appealed the original judgment (not the costs decision) on the grounds of bias or procedural unfairness.2 His appeal was dismissed and he was ordered to pay Enzo’s costs in respect of the appeal.
Attorneys and Trustees should therefore seek advice about their duties and obligations and conduct themselves accordingly if they wish to rely on the statutory indemnity in the Trustee Act. Respondent/Objectors on Applications to Pass Accounts should be mindful of the costs consequences of acting unreasonable and of rejecting Offers to Settle.
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1. Villa v. Villa, 2013 ONSC 4421, 230 A.C.W.S. (3d) 67, 89 E.T.R. (3d) 61, 2013 CarswellOnt 10107.
2. Villa v. Villa, 2014 ONCA 2987, 2014 CarswellOnt 6903.
Written by: WEL Partners
Posted on: June 16, 2014
Categories: Commentary
We wrote previously about the case of Villa v. Villa; it is a great example of the importance of acting honestly and transparently as a fiduciary. We now have the benefit of a costs decision to confirm the modern approach to costs in estate litigation, and the Court of Appeal has upheld the lower court’s decision.
Briefly, the Applicant Enzo was the Attorney for Property for his Deceased mother and the Trustee of her estate. He brought an application to pass his accounts and he claimed compensation. His Respondent brother opposed the claim for compensation for a number of reasons, including the fact that Enzo had mixed his mother’s funds with his own. The Court granted Enzo his compensation, citing 35 of the Trustee Act; Enzo accounted for the whereabouts of the funds and could repay them to the Estate, so he was indemnified from a good faith breach.
Here are two postscripts:
1) The court awarded Enzo his costs in the amount of $32,191.82 payable by the Respondent brother, personally.1 Justice O’Marra cited the modern approach to costs in estate litigation: costs follow the event (“loser pays”). The Respondent brother had rejected Enzo’s Offer to Settle (served after the original judgment and before the issue of costs was decided). The Court was of the view that the Respondent brother must have foreseen that if he rejected the Offer to Settle and was unsuccessful in prosecuting his Objections, he would be liable for substantial costs. The Court found that the Respondent’s conduct was unreasonable and rendered a straightforward matter unnecessarily complex.
2) The Respondent brother appealed the original judgment (not the costs decision) on the grounds of bias or procedural unfairness.2 His appeal was dismissed and he was ordered to pay Enzo’s costs in respect of the appeal.
Attorneys and Trustees should therefore seek advice about their duties and obligations and conduct themselves accordingly if they wish to rely on the statutory indemnity in the Trustee Act. Respondent/Objectors on Applications to Pass Accounts should be mindful of the costs consequences of acting unreasonable and of rejecting Offers to Settle.
—
1. Villa v. Villa, 2013 ONSC 4421, 230 A.C.W.S. (3d) 67, 89 E.T.R. (3d) 61, 2013 CarswellOnt 10107.
2. Villa v. Villa, 2014 ONCA 2987, 2014 CarswellOnt 6903.
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