Kurt v. Kurt and Sullivan^[1], 2024 ONSC 589 (“Kurt”) is a recent decision that serves as a useful reminder of the Court’s modern approach to costs awards. Additionally, the Court described what constituted “laudable” conduct by a Plaintiff during litigation, setting out factors it considered to be behavior worth sanctioning.

Cost Principles

Traditional approach:

Traditionally, Courts took an approach to cost orders that entitled a litigant’s costs to be payable out of the Estate.^[2] After the seminal decision of Salter v Salter Estate^[3], Justice Brown reprimanded the parties for treating the assets of the Estate “as a kind of ATM bank machine for which withdrawals automatically flow to fund litigation.”^[4] This prompted the Courts to impose the “loser pays” principle to deter unreasonable behavior during litigation.^[5]

Modern approach:

By exposing litigants to the chance of being held personally responsible for cost awards, an incentive was created for litigants to act proportionately. In McDougald Estate v Gooderham^[6], the Court held that cost rules in civil litigation would follow, apart from the few exceptions posed by public policy exceptions. If such exceptional circumstances arise, the Court has a greater incentive to award costs payable by the Estate. McDougald Estate referenced “two public policy considerations for deviating from the standard civil cost rules”^[7]:

(1) where the litigation was reasonably necessary to ensure the proper administration of the estate, as in the case where there are reasonable grounds on which to question the execution of a will or the testator’s capacity to make a will; and

(2) where the litigation arose because of the actions of the testator or those with an interest in the residue of the estate.^[8]

Additionally, the Court in Kurt stated that the “modern costs rules are designed to foster three fundamental purposes”^[9]:

(1) to indemnify successful litigants for the cost of litigation;

(2) to encourage settlements; and

(3) to discourage and sanction inappropriate behavior by litigants^[10]

Facts

The daughter of the Deceased (the “Plaintiff”) attested that she was owed $800,000 by the Deceased’s Estate. This assertion by the Plaintiff derived from the “alleged legacy” that was intended for her according to the Deceased’s secondary will.^[11] The Deceased’s lawyer (the “Defendant”) who drafted the secondary will, took the position that there had been a drafting error in the will. The Defendant acknowledged to the Court that he had made a drafting error, which allowed the Court to determine the intent of the Deceased’s disposition, which was not to leave $800,000 to the Plaintiff.^[12] The Court dismissed her claim after rejecting the Plaintiff’s interpretation of the Deceased’s secondary will.

The Plaintiff sought substantial indemnity on her costs “in the amount of $96,973.90, or in the alternative, her partial indemnity costs in the amount of $65,998.80, be paid by either the estate of the Deceased” or the Defendant, and the Defendant’s law firm or a combination of the two.^[13]

The Plaintiff contended the estate should cover the Plaintiff’s costs given the drafting error triggered the public policy considerations. The Plaintiff in Kurt held, “one such consideration is that where the litigation is caused by the testator, it is appropriate for the estate to bear the costs of the dispute”.^[14]

Analysis

The Plaintiff’s public policy considerations were rejected by the Court because it was stated that it was more of a responsibility on the Defendant to identify the error in the Will, rather than the Deceased himself. The Plaintiff raised the decision of Lipson v Lipson^[15], where the Court ruled that the costs of the parties were payable out of the Estate due to the drafting error in the propounded will. However, Lipson differed from the case at hand because the testator had never read the will before signing it. The Court went on to state that regardless of whether the Deceased should have some responsibility for the litigation:

[19], I nonetheless decline to order the Plaintiff’s costs be recoverable from the Estate in light of the Plaintiff’s conduct which is not to be sanctioned with an award of costs.^[16]

The Court stated the “Plaintiff’s less than laudable conduct includes the following”^[17]:

1) The Plaintiff insisted on proceeding by way of action, rather than application, thus incurring costs with discovery that were not necessary in the litigation.

2) The Court described the Plaintiffs’ actions as “tactical” given she did not have a close relationship with her father “such as would entitle her to an extra $800,000 legacy from her father’s estate.”

3) The Plaintiff’s weak offers to settle “one on January 24, 2022, for $790,000 plus interest and costs, and a second, on August 24, 2022, for $600,000 plus interest and costs. The Court held “neither offer is reflective of an earnest attempt at compromise.”^[18]

This decision demonstrates the importance of behaving reasonably and proportionally as a litigant. In spite of the fact that the Plaintiff’s claim for the reduction of her cost award contained merit, the Court was unable to look past the Plaintiff’s reprehensible behaviour.

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[1] Kurt v. Kurt and Sullivan, 2024 ONSC 589 (“Kurt”)

[2] Kurt at para 5.

[3] Salter v. Salter Estate, 2009 CanLII 28403 (“Salter”)

[4] Salter at para 6.

[5] Salter at para 6.

[6] McDougald Estate v. Gooderham, 2005 CanLII 21091 (ON CA)

[7] Kurt at para 8.

[8] Kurt at para 8.

[9] Kurt at para 13.

[10] Kurt at para 13.

[11] Kurt at para 19.

[12] Kurt at para 3.

[13] Kurt at para 5.

[14] Kurt at para 5.

[15] Lipson v. Lipson et al., 2010 ONSC 475.

[16] Kurt at para 19.

[17] Kurt at para 19.

[18] Kurt at para 19.