The Costs of Success – “Winning” Isn’t Always Free
Litigation, by nature, gives rise to an adversarial arena where parties often believe that there will be a clear-cut winner and loser at the end of the day. In the spirit of this competitive approach, some parties who believe that their positions are bound for success may misjudge their financial risks by trusting they will be reimbursed and indemnified for their legal costs if they press forward and “win the day” at trial.
Unfortunately, this bullish view is often misguided when seen through the lens of estate litigation since the potential blended approach to cost awards can result in parties and potential beneficiaries having to pay for significant amounts of their own legal costs, even when their challenger’s arguments are dismissed.[1]
A recent example of the potential costs associated with successful advocacy in estate litigation can be seen in the Ontario Superior Court decision of Nanchin v. Peller, 2022 ONSC 2846, where the Honourable Justice Conlan, J. required the respondents to bear nearly $20,000 of their own legal costs despite dismissing the moving party’s motion for dependant support (Nanchin v. Peller, 2022 ONSC 1760) (“the Motion”).
By way of brief summary, the moving party, the girlfriend of the deceased at the time of his death, sought a declaration that she was a dependant who the deceased failed to make adequate provision for out of his estate, and she also sought orders for interim support and her legal fees be paid out of the Estate. Unable to adduce sufficient supporting evidence, the moving party’s motion was dismissed.
On its face, the court’s decision to dismiss the moving party’s Motion appears to clearly suggest that the Respondents were successful or “victorious” while the moving party was unsuccessful or “lost”. In fact, in determining costs, Justice Conlan, J. specifically and plainly set out that the moving party’s arguments were rejected while the respondents’ arguments were accepted, and it is simply incorrect to claim that there was equal success on the Motion.[2]
Despite the respondents’ success on the Motion, in determining costs awards Justice Conlan placed considerable weight on balancing the proportionality of the respondents’ actual costs for the Motion while satisfying the overall objective of indemnifying successful litigants, stating as follows:
Thus, the only legitimate questions are whether the quantum of costs sought by the interim Estate Trustees is fair, just, reasonable, and proportionate, and whether the award requested would meet the objectives of costs orders – to at least partially indemnify successful litigants, and to encourage settlement, and to discourage bad or inappropriate conduct.[3]
On this basis, Justice Conlan, ordered the moving party to pay for only $35,000.00 of the respondents’ $54,166.31 legal fees primarily because:
“$54,166.31 is a lot of money to pay for costs of a motion which was argued in one-half day and which could not have resulted in a final order being made.”[4]
Considering the significant costs attributable to the respondents despite their apparent success at the Motion, diligent lawyers must be careful to provide perspective and objective recommendations to their clients on costs outcomes. While the desire to “win” and to obtain a form of perceived validation from the courts may motivate some clients to relentlessly pursue adjudication, the costs of such efforts, even when successful, can result in diminishing returns and significant losses to clients who must thus be properly informed and educated by their lawyers.
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[1] Neuberger v. York, 2016 ONCA 303.
[2] Nanchin v. Peller, 2022 ONSC 2846 at para 14, 18.
[3] Ibid at para 19.
[4] Ibid at paras 21, 23.
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Written by: WEL Partners
Posted on: June 19, 2023
Categories: Commentary, WEL Newsletter
Litigation, by nature, gives rise to an adversarial arena where parties often believe that there will be a clear-cut winner and loser at the end of the day. In the spirit of this competitive approach, some parties who believe that their positions are bound for success may misjudge their financial risks by trusting they will be reimbursed and indemnified for their legal costs if they press forward and “win the day” at trial.
Unfortunately, this bullish view is often misguided when seen through the lens of estate litigation since the potential blended approach to cost awards can result in parties and potential beneficiaries having to pay for significant amounts of their own legal costs, even when their challenger’s arguments are dismissed.[1]
A recent example of the potential costs associated with successful advocacy in estate litigation can be seen in the Ontario Superior Court decision of Nanchin v. Peller, 2022 ONSC 2846, where the Honourable Justice Conlan, J. required the respondents to bear nearly $20,000 of their own legal costs despite dismissing the moving party’s motion for dependant support (Nanchin v. Peller, 2022 ONSC 1760) (“the Motion”).
By way of brief summary, the moving party, the girlfriend of the deceased at the time of his death, sought a declaration that she was a dependant who the deceased failed to make adequate provision for out of his estate, and she also sought orders for interim support and her legal fees be paid out of the Estate. Unable to adduce sufficient supporting evidence, the moving party’s motion was dismissed.
On its face, the court’s decision to dismiss the moving party’s Motion appears to clearly suggest that the Respondents were successful or “victorious” while the moving party was unsuccessful or “lost”. In fact, in determining costs, Justice Conlan, J. specifically and plainly set out that the moving party’s arguments were rejected while the respondents’ arguments were accepted, and it is simply incorrect to claim that there was equal success on the Motion.[2]
Despite the respondents’ success on the Motion, in determining costs awards Justice Conlan placed considerable weight on balancing the proportionality of the respondents’ actual costs for the Motion while satisfying the overall objective of indemnifying successful litigants, stating as follows:
Thus, the only legitimate questions are whether the quantum of costs sought by the interim Estate Trustees is fair, just, reasonable, and proportionate, and whether the award requested would meet the objectives of costs orders – to at least partially indemnify successful litigants, and to encourage settlement, and to discourage bad or inappropriate conduct.[3]
On this basis, Justice Conlan, ordered the moving party to pay for only $35,000.00 of the respondents’ $54,166.31 legal fees primarily because:
“$54,166.31 is a lot of money to pay for costs of a motion which was argued in one-half day and which could not have resulted in a final order being made.”[4]
Considering the significant costs attributable to the respondents despite their apparent success at the Motion, diligent lawyers must be careful to provide perspective and objective recommendations to their clients on costs outcomes. While the desire to “win” and to obtain a form of perceived validation from the courts may motivate some clients to relentlessly pursue adjudication, the costs of such efforts, even when successful, can result in diminishing returns and significant losses to clients who must thus be properly informed and educated by their lawyers.
—
[1] Neuberger v. York, 2016 ONCA 303.
[2] Nanchin v. Peller, 2022 ONSC 2846 at para 14, 18.
[3] Ibid at para 19.
[4] Ibid at paras 21, 23.
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