Cost Issues in Estate Litigation
The recent decision of Di Nunzio v. Di Nunzio[1] from Ontario’s Court of Appeal highlights the analysis the courts employ when deciding parties’ costs in estate litigation.
The appellant, Lucia Di Nunzio (the “Appellant”) appealed the dismissal of her application to set aside the Last Will and Testament of her deceased mother, Rosalba Di Nunzio (the “Deceased”). The Appellant also sought leave to appeal the partial indemnity costs order made against her in the amount of $111,395.45 and to have her costs ordered payable out of the estate.
Will challenge
The Court of Appeal found that the application judge had correctly applied the principles in Vout v. Hay[2], and thoroughly considered the available evidence put forward by the parties.
In the Court of Appeal’s view, the evidence strongly supported the Application judge’s findings that the Deceased, despite her illness and the effects of her treatment and medication, had the necessary mental capacity to execute her Last Will and Testament. The judge also determined that the Deceased was not unduly influenced by anyone but instead acted based on her own sound judgment. This was despite the fact that the Deceased’s final Will disinherited two of her children in favour of the third.[3]
Costs
The Appellant submitted that the Application judge erred in finding there were no public policy considerations that warranted payment of her costs out of the estate and that even if her appeal was dismissed, she raised reasonable grounds in questioning the will’s validity.[4]
The Court of Appeal cited McDougald Estate v. Gooderman[5], the authoritative case for how estate litigation costs are decided. In McDougald, the court highlighted that the traditional English approach to costs in estate litigation, that all parties’ costs are ordered payable out of the estate, has been displaced by the ‘modern approach’ of fixing costs in accordance with civil costs rules. This is unless the court finds there are legitimate public policy considerations.[6]
Public policy considerations include instances where:
- Disputes arise out of ambiguity, omissions in a testator’s will or other conduct from the testator; or
- There are reasonable grounds to question the will’s validity.[7]
Thus, if the court finds that there are public policy considerations, they will order a parties’ costs payable out of the estate. The ‘modern approach’, which involves a more careful scrutiny of the litigation by the court, balances the need of the court’s oversight to ensure that “only valid wills executed by competent testators are propounded with the need to restrict unwarranted litigation and protect estates from being depleted by litigation”.[8]
The Application judge gave no further elaboration than to cite McDougald Estate and state that “none apply here, in my view”[9]. As the judge gave no reasons for their conclusion on public considerations engaged, the Court of Appeal owed no deference to that conclusion. As such, the court could reconsider the question of costs anew.
On the basis of the Application judge’s findings of the Deceased’s testamentary capacity and the validity of her will, the Court of Appeal were not persuaded that public policy considerations were engaged and made no order that the Appellant’s costs be paid from the estate[10].
However, while the Appellant’s submissions were not to the level of engaging public policy considerations, the court stated they “were not frivolous and did raise triable issues warranting court scrutiny”[11]. The Application judge noted that the Deceased’s intention to leave her entire estate to one sibling, and not the other two could be considered a suspicious circumstance[12].
The Court of Appeal dismissed the Appellant’s appeal to challenge the will of the Deceased. The court also exercised its discretion and set aside the costs order against the Appellant, as such she would bear her own costs in this matter.
—
[1] 2022 ONCA 889 (CanLII).
[2] 1995 CanLII 105 (SCC), the seminal case for considering undue influence and testamentary capacity in Canada.
[3] (Supra note 1) at para 5.
[4] Ibid at para 8.
[5] 2005 CanLII 21091 (ON CA) at paras 78-80.
[6] (Supra note 1) at para 9.
[7] This includes the main grounds for a will challenge; undue influence or lack of testamentary capacity.
[8] Ibid.
[9] Ibid at para 10.
[10] Ibid at para 12.
[11] Ibid at para 13.
[12] Ibid.
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Written by: Oliver O'Brien
Posted on: May 24, 2023
Categories: Commentary, WEL Newsletter
The recent decision of Di Nunzio v. Di Nunzio[1] from Ontario’s Court of Appeal highlights the analysis the courts employ when deciding parties’ costs in estate litigation.
The appellant, Lucia Di Nunzio (the “Appellant”) appealed the dismissal of her application to set aside the Last Will and Testament of her deceased mother, Rosalba Di Nunzio (the “Deceased”). The Appellant also sought leave to appeal the partial indemnity costs order made against her in the amount of $111,395.45 and to have her costs ordered payable out of the estate.
Will challenge
The Court of Appeal found that the application judge had correctly applied the principles in Vout v. Hay[2], and thoroughly considered the available evidence put forward by the parties.
In the Court of Appeal’s view, the evidence strongly supported the Application judge’s findings that the Deceased, despite her illness and the effects of her treatment and medication, had the necessary mental capacity to execute her Last Will and Testament. The judge also determined that the Deceased was not unduly influenced by anyone but instead acted based on her own sound judgment. This was despite the fact that the Deceased’s final Will disinherited two of her children in favour of the third.[3]
Costs
The Appellant submitted that the Application judge erred in finding there were no public policy considerations that warranted payment of her costs out of the estate and that even if her appeal was dismissed, she raised reasonable grounds in questioning the will’s validity.[4]
The Court of Appeal cited McDougald Estate v. Gooderman[5], the authoritative case for how estate litigation costs are decided. In McDougald, the court highlighted that the traditional English approach to costs in estate litigation, that all parties’ costs are ordered payable out of the estate, has been displaced by the ‘modern approach’ of fixing costs in accordance with civil costs rules. This is unless the court finds there are legitimate public policy considerations.[6]
Public policy considerations include instances where:
Thus, if the court finds that there are public policy considerations, they will order a parties’ costs payable out of the estate. The ‘modern approach’, which involves a more careful scrutiny of the litigation by the court, balances the need of the court’s oversight to ensure that “only valid wills executed by competent testators are propounded with the need to restrict unwarranted litigation and protect estates from being depleted by litigation”.[8]
The Application judge gave no further elaboration than to cite McDougald Estate and state that “none apply here, in my view”[9]. As the judge gave no reasons for their conclusion on public considerations engaged, the Court of Appeal owed no deference to that conclusion. As such, the court could reconsider the question of costs anew.
On the basis of the Application judge’s findings of the Deceased’s testamentary capacity and the validity of her will, the Court of Appeal were not persuaded that public policy considerations were engaged and made no order that the Appellant’s costs be paid from the estate[10].
However, while the Appellant’s submissions were not to the level of engaging public policy considerations, the court stated they “were not frivolous and did raise triable issues warranting court scrutiny”[11]. The Application judge noted that the Deceased’s intention to leave her entire estate to one sibling, and not the other two could be considered a suspicious circumstance[12].
The Court of Appeal dismissed the Appellant’s appeal to challenge the will of the Deceased. The court also exercised its discretion and set aside the costs order against the Appellant, as such she would bear her own costs in this matter.
—
[1] 2022 ONCA 889 (CanLII).
[2] 1995 CanLII 105 (SCC), the seminal case for considering undue influence and testamentary capacity in Canada.
[3] (Supra note 1) at para 5.
[4] Ibid at para 8.
[5] 2005 CanLII 21091 (ON CA) at paras 78-80.
[6] (Supra note 1) at para 9.
[7] This includes the main grounds for a will challenge; undue influence or lack of testamentary capacity.
[8] Ibid.
[9] Ibid at para 10.
[10] Ibid at para 12.
[11] Ibid at para 13.
[12] Ibid.
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