Costs in Estate Litigation on a Finding of Fraud
Earlier this year I posted a blog on Bayford v Boese.[1] The Ontario Court of Appeal has now released its decision on costs.[2] It is interesting because of a possibility of fraud on the part of the respondent who brought an action to prove a document she produced as the deceased’s will. The trial judge held that it had been properly executed and was therefore a valid will. The Court of Appeal reversed and found that the witnesses to the deceased’s alleged will had signed it after his death. Hence, it was not a valid will. The appellant in effect argued that the respondent attempted to perpetrate fraud on the court. In his application for costs of the appeal, he sought costs on a full indemnity basis of $113,500. He also sought an order that, to the extent the respondent would be unable to satisfy the order for payment of the costs of trial and appeal, he would be entitled to recover the balance of the costs from the estate.
The parties agreed that the appellant was entitled to the costs of the trial and that those costs should be referred to the trial judge for assessment.
The Court of Appeal agreed that a finding of fraud, or attempted fraud, may justify an award of costs on an elevated scale on the basis of the principle that such elevated costs may be appropriate ‘where there has been reprehensible, scandalous, or outrageous conduct on the part of one of the parties.[3] However, the court noted that there is a significant and important distinction between full indemnity costs and substantial indemnity cost. On this point, it quoted from Net Connect Installation Inc v Mobile Zone Inc:[4]
Substantial indemnity costs is the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party to the litigation. It follows that conduct worthy of sanction would have to be especially egregious to justify the highest scale of full indemnity costs.
Moreover, said the court, this principle normally applies only to trial proceedings, not to appeal proceedings, and there was no conduct by either party on the appeal that fell within the above principle. This meant that any finding about the respondent’s conduct and its effect on costs was to be determined by the trial judge when she assessed the costs of the trial.
However, the court agreed that the nature of the evidence and the findings of the trial judge had an impact on the appeal proceedings, because, since the trial judge accepted the respondent’s argument, the appellant had an onerous task on the appeal. He had to establish that the trial judge made a palpable and overriding error. That was a factor the court should consider in determining the reasonable amount of costs of the appeal. Ultimately, the court awarded the appellant $50,000 as his costs on the appeal.
The court endorsed the parties’ agreement that the appellant was entitled to his costs at trial and that those costs should be referred to the trial judge for assessment.
The court also accepted that the appellant was entitled to a ‘blended costs award’,[5] under which he was entitled to be paid his costs of the trial and the appeal from the estate to the extent the respondent was unable to satisfy them.
The case thus signals an important constraint on recovering costs on a full indemnity basis on an appeal.
—
[1] 2021 ONCA 442, 67 ETR 4th 13, reversing 2019 ONSC 5663, 50 ETR 4th 204. See ‘O What a Tangled Web We Weave: Bayford v Boese, https://welpartners.com/blog/2021/08/o-what-a-tangled-web-we-weave-bayford-v-boese/.
[2] Bayford v Boese, 2021 ONCA 533, 69 ETR 4th 216.
[3] Citing Young v Young, [1993] 4 SCR 3 at 134; and Mars Canada Inc v Bemco Cash & Carry Inc, 2018 ONCA 239 at para 43.
[4] 2017 ONCA 766, 140 OR 3d 77 at para 8.
[5] Citing Sawdon Estate v Watchtower Bible and Tract Society of Canada, 2014 ONCA 101, 119 OR 3d 81 at para 99 as authority for such an award.
—
This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Menu
Written by: Albert Oosterhoff
Posted on: December 10, 2021
Categories: Commentary
Earlier this year I posted a blog on Bayford v Boese.[1] The Ontario Court of Appeal has now released its decision on costs.[2] It is interesting because of a possibility of fraud on the part of the respondent who brought an action to prove a document she produced as the deceased’s will. The trial judge held that it had been properly executed and was therefore a valid will. The Court of Appeal reversed and found that the witnesses to the deceased’s alleged will had signed it after his death. Hence, it was not a valid will. The appellant in effect argued that the respondent attempted to perpetrate fraud on the court. In his application for costs of the appeal, he sought costs on a full indemnity basis of $113,500. He also sought an order that, to the extent the respondent would be unable to satisfy the order for payment of the costs of trial and appeal, he would be entitled to recover the balance of the costs from the estate.
The parties agreed that the appellant was entitled to the costs of the trial and that those costs should be referred to the trial judge for assessment.
The Court of Appeal agreed that a finding of fraud, or attempted fraud, may justify an award of costs on an elevated scale on the basis of the principle that such elevated costs may be appropriate ‘where there has been reprehensible, scandalous, or outrageous conduct on the part of one of the parties.[3] However, the court noted that there is a significant and important distinction between full indemnity costs and substantial indemnity cost. On this point, it quoted from Net Connect Installation Inc v Mobile Zone Inc:[4]
Substantial indemnity costs is the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party to the litigation. It follows that conduct worthy of sanction would have to be especially egregious to justify the highest scale of full indemnity costs.
Moreover, said the court, this principle normally applies only to trial proceedings, not to appeal proceedings, and there was no conduct by either party on the appeal that fell within the above principle. This meant that any finding about the respondent’s conduct and its effect on costs was to be determined by the trial judge when she assessed the costs of the trial.
However, the court agreed that the nature of the evidence and the findings of the trial judge had an impact on the appeal proceedings, because, since the trial judge accepted the respondent’s argument, the appellant had an onerous task on the appeal. He had to establish that the trial judge made a palpable and overriding error. That was a factor the court should consider in determining the reasonable amount of costs of the appeal. Ultimately, the court awarded the appellant $50,000 as his costs on the appeal.
The court endorsed the parties’ agreement that the appellant was entitled to his costs at trial and that those costs should be referred to the trial judge for assessment.
The court also accepted that the appellant was entitled to a ‘blended costs award’,[5] under which he was entitled to be paid his costs of the trial and the appeal from the estate to the extent the respondent was unable to satisfy them.
The case thus signals an important constraint on recovering costs on a full indemnity basis on an appeal.
—
[1] 2021 ONCA 442, 67 ETR 4th 13, reversing 2019 ONSC 5663, 50 ETR 4th 204. See ‘O What a Tangled Web We Weave: Bayford v Boese, https://welpartners.com/blog/2021/08/o-what-a-tangled-web-we-weave-bayford-v-boese/.
[2] Bayford v Boese, 2021 ONCA 533, 69 ETR 4th 216.
[3] Citing Young v Young, [1993] 4 SCR 3 at 134; and Mars Canada Inc v Bemco Cash & Carry Inc, 2018 ONCA 239 at para 43.
[4] 2017 ONCA 766, 140 OR 3d 77 at para 8.
[5] Citing Sawdon Estate v Watchtower Bible and Tract Society of Canada, 2014 ONCA 101, 119 OR 3d 81 at para 99 as authority for such an award.
—
This paper is intended for the purposes of providing information only and is to be used only for the purposes of guidance. This paper is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.
Author
View all posts