The recent decision of Roe v Roe[1], 2024 ONSC 62 (“Roe’”) addressed exorbitant cost submissions by parties, and the final cost order by the court in regard to a failed Will challenge. Additionally, this decision reiterated how the court will reward a litigant who chooses a conciliary approach during litigation.
Brief Overview of Costs in Estate Matters & Rule 49
The modern approach to costs in litigation has been described as the “loser pays”, determined by the seminal case of McDougald Estate v Gooderham, 2005 ONCA 21091.[2] This approach was implemented as a way for the court to deter unnecessarily litigious claims or claims that have been brought to solely deplete an estate.
If a party has submitted reasonable offers to settle, to which the opposing side rejects, the court may be incentivized to penalize such unreasonable behavior through the liability of costs. In regard to Rule 49, the court in Roe stated[3]:
[5] A will challenger could be relieved from paying the trustee’s cost on an unsuccessful will challenge if they raise a bona fide concern with the will that warrants judicial scrutiny. On the flipside, a court may deprive an estate trustee from using estate coffers to cover the cost of litigation where they have acted unreasonably or in substance for their own benefit[4].
Facts
The cost submission of Roe, is based on the will challenge decision of Roe v. Roe, 2022 ONSC 5821[5]. Beverly (the “Deceased”) was the mother to the Applicant, Mark, and her other three sons: Rick, Randy, Chris, who formed the Responding party. After several disputes regarding the division of the Deceased’s assets, tensions grew strong enough for the Deceased to execute a Will in 2005 (the “Will”) disinheriting Mark. The Deceased’s previous Will from 2004 (the “2004 Will”) had divided her estate equally amongst all of her sons.[6]
On July 12, 2014, the Deceased passed away, disposing the assets of her estate to Rick, Randy and Chris.[7]
On January 24, 2022, Mark’s Will challenge regarding the Deceased’s lack of testamentary capacity began. After a three-week trial, the Application was converted into an action. Mark also began a cause of action against Rick and Randy personally, but abandoned it mid trial.[8]
Mark provided sufficient evidence to indicate that the Deceased’s Will had been executed under suspicious circumstances.[9] However, it was proven by Randy that the Deceased had the requisite testamentary capacity to execute a Will. On this basis, Mark’s Will challenge ultimately failed.[10]
Randy’s total costs are between “$1,005,583.01 or $1,159,029.15 in all-inclusive fees, disbursements and HST”.[11]
The court ordered as follows:
- Randy owes Mark $25,114.53for the Faieta, J. order of July 4, 2019;
- Mark shall pay Randy $330,000 in all inclusive costs;
- Mark shall bear his own costs;
- The estate shall cover $260,338.03 of Randy’s litigation costs;
- Randy cannot recover any other litigation costs from the estate and is personally responsible for the balance of the fees and disbursements; and
- Chris shall be reimbursed $170,000 from the residue of the estate.
Analysis
The court asserted that Randy was entitled to “to recover total fees of $500,000 as the propounder of the Will of which Mark shall pay $300,000 and the estate shall pay $200,000”.[12] The court’s reasoning for such decision is broken down into four sections.
Complaints to the LSO
Randy complained to the Law Society of Ontario (the “LSO”) when he was unhappy with the legal position advanced by his counsel. The court described such behavior as reprehensible, failing to permit Randy from recovering costs for such baseless complaints.[13]
The Rolls Royce of Legal Service
Randy retained 9 lawyers on his file, whom all billed at “relatively high rates”.[14] The court asserted that Randy would not be able to recover from Mark, nor, the estate for his voluntarily choice of the “Rolls Royce of legal service”, despite Randy’s entitlement to “retain whomever he wants”.[15] The court went on to say that retaining 9 lawyers likely lead to a “duplication of time” and that some of the fees charged by the lawyers did not relate to the action.[16]
Propounder of the Will challenge where there were suspicious circumstances proven
Turning to Mark’s costs, the court asserted that Mark was entitled to some “discount” in his costs because the circumstances regarding the Will were “worthy of court scrutiny”.[17] Mark cited Di Nunzio v Di Nunzio[18], 2022 ONCA 889 (“Nunzio”) to exemplify where the court “had all trustee costs paid out of the estate and relieved the unsuccessful challenger of paying any”.[19] The court denies fully relieving Mark’s costs from the deceased’s estate, given that it would unfairly impact Chris’ share of the estate. The courts stated Chris took a conciliary approach to litigation, unlike Mark and Randy, so his share of the estate should not be depleted by his brothers’ unreasonable litigation.
The Respondent Acted in His Best Interest
The court agreed with Chris’ position, who stated that Randy’s conduct was reprehensible on the basis that Randy refused to settle despite the five offers that were submitted by Chris. The court again affirmed Chris’ conciliary approach to the litigation stating that Randy should not deplete Chris’ share from the estate. The court goes on to state:
[20] I agree with Chris that Randy acted in his own best interest in the litigation, more than that of the estate, was unnecessarily adversarial, and unreasonable in refusing to properly entertain his settlement offers. This warrants a reduction in what Randy can recover from the estate in fees.[20]
Despite this, the court contended that Randy was entitled to have some of his costs covered by the estate’s funds because he propounded the Will due to the suspicious circumstances present during its execution.
Commentary
In the decision of Roe, the court made it clear that a litigant who takes a conciliary approach to litigation will be rewarded in respect of costs. Chris not only made various offers to settle but avoided a combative approach during litigation like his brothers. This decision reiterates the importance of Rule 49, and incentivizes parties to settle as well as demonstrate that the court will impose cost consequences on a litigant who displays reprehensible or unreasonable behavior during litigation.
—
[1] Roe v Roe, 2024 ONSC 62 (“Roe’”)
[2] McDougald Estate v. Gooderham, 2005 CanLII 21091 (ON CA)
[3] Roe at para 5.
[4] Roe at para 5.
[5] Roe v. Roe, 2022 ONSC 5821 (“Roe 2022”)
[6] Roe 2022 at para 28.
[7] Roe 2022 at para 1.
[8] Roe at para 5.
[9] Roe at para 20.
[10] Roe at para 3.
[11] Roe at para 7.
[12] Roe at para 16.
[13] Roe at para 17.
[14] Roe at para 18.
[15] Roe at para 18.
[16] Roe at para 18.
[17] Roe at para 19.
[18] Di Nunzio v. Di Nunzio, 2022 ONCA 889
[19] Roe at para 18.
[20] Roe at para 20.
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Written by: Gabriella Banhara
Posted on: February 2, 2024
Categories: Commentary, WEL Newsletter
The recent decision of Roe v Roe[1], 2024 ONSC 62 (“Roe’”) addressed exorbitant cost submissions by parties, and the final cost order by the court in regard to a failed Will challenge. Additionally, this decision reiterated how the court will reward a litigant who chooses a conciliary approach during litigation.
Brief Overview of Costs in Estate Matters & Rule 49
The modern approach to costs in litigation has been described as the “loser pays”, determined by the seminal case of McDougald Estate v Gooderham, 2005 ONCA 21091.[2] This approach was implemented as a way for the court to deter unnecessarily litigious claims or claims that have been brought to solely deplete an estate.
If a party has submitted reasonable offers to settle, to which the opposing side rejects, the court may be incentivized to penalize such unreasonable behavior through the liability of costs. In regard to Rule 49, the court in Roe stated[3]:
[5] A will challenger could be relieved from paying the trustee’s cost on an unsuccessful will challenge if they raise a bona fide concern with the will that warrants judicial scrutiny. On the flipside, a court may deprive an estate trustee from using estate coffers to cover the cost of litigation where they have acted unreasonably or in substance for their own benefit[4].
Facts
The cost submission of Roe, is based on the will challenge decision of Roe v. Roe, 2022 ONSC 5821[5]. Beverly (the “Deceased”) was the mother to the Applicant, Mark, and her other three sons: Rick, Randy, Chris, who formed the Responding party. After several disputes regarding the division of the Deceased’s assets, tensions grew strong enough for the Deceased to execute a Will in 2005 (the “Will”) disinheriting Mark. The Deceased’s previous Will from 2004 (the “2004 Will”) had divided her estate equally amongst all of her sons.[6]
On July 12, 2014, the Deceased passed away, disposing the assets of her estate to Rick, Randy and Chris.[7]
On January 24, 2022, Mark’s Will challenge regarding the Deceased’s lack of testamentary capacity began. After a three-week trial, the Application was converted into an action. Mark also began a cause of action against Rick and Randy personally, but abandoned it mid trial.[8]
Mark provided sufficient evidence to indicate that the Deceased’s Will had been executed under suspicious circumstances.[9] However, it was proven by Randy that the Deceased had the requisite testamentary capacity to execute a Will. On this basis, Mark’s Will challenge ultimately failed.[10]
Randy’s total costs are between “$1,005,583.01 or $1,159,029.15 in all-inclusive fees, disbursements and HST”.[11]
The court ordered as follows:
Analysis
The court asserted that Randy was entitled to “to recover total fees of $500,000 as the propounder of the Will of which Mark shall pay $300,000 and the estate shall pay $200,000”.[12] The court’s reasoning for such decision is broken down into four sections.
Complaints to the LSO
Randy complained to the Law Society of Ontario (the “LSO”) when he was unhappy with the legal position advanced by his counsel. The court described such behavior as reprehensible, failing to permit Randy from recovering costs for such baseless complaints.[13]
The Rolls Royce of Legal Service
Randy retained 9 lawyers on his file, whom all billed at “relatively high rates”.[14] The court asserted that Randy would not be able to recover from Mark, nor, the estate for his voluntarily choice of the “Rolls Royce of legal service”, despite Randy’s entitlement to “retain whomever he wants”.[15] The court went on to say that retaining 9 lawyers likely lead to a “duplication of time” and that some of the fees charged by the lawyers did not relate to the action.[16]
Propounder of the Will challenge where there were suspicious circumstances proven
Turning to Mark’s costs, the court asserted that Mark was entitled to some “discount” in his costs because the circumstances regarding the Will were “worthy of court scrutiny”.[17] Mark cited Di Nunzio v Di Nunzio[18], 2022 ONCA 889 (“Nunzio”) to exemplify where the court “had all trustee costs paid out of the estate and relieved the unsuccessful challenger of paying any”.[19] The court denies fully relieving Mark’s costs from the deceased’s estate, given that it would unfairly impact Chris’ share of the estate. The courts stated Chris took a conciliary approach to litigation, unlike Mark and Randy, so his share of the estate should not be depleted by his brothers’ unreasonable litigation.
The Respondent Acted in His Best Interest
The court agreed with Chris’ position, who stated that Randy’s conduct was reprehensible on the basis that Randy refused to settle despite the five offers that were submitted by Chris. The court again affirmed Chris’ conciliary approach to the litigation stating that Randy should not deplete Chris’ share from the estate. The court goes on to state:
[20] I agree with Chris that Randy acted in his own best interest in the litigation, more than that of the estate, was unnecessarily adversarial, and unreasonable in refusing to properly entertain his settlement offers. This warrants a reduction in what Randy can recover from the estate in fees.[20]
Despite this, the court contended that Randy was entitled to have some of his costs covered by the estate’s funds because he propounded the Will due to the suspicious circumstances present during its execution.
Commentary
In the decision of Roe, the court made it clear that a litigant who takes a conciliary approach to litigation will be rewarded in respect of costs. Chris not only made various offers to settle but avoided a combative approach during litigation like his brothers. This decision reiterates the importance of Rule 49, and incentivizes parties to settle as well as demonstrate that the court will impose cost consequences on a litigant who displays reprehensible or unreasonable behavior during litigation.
—
[1] Roe v Roe, 2024 ONSC 62 (“Roe’”)
[2] McDougald Estate v. Gooderham, 2005 CanLII 21091 (ON CA)
[3] Roe at para 5.
[4] Roe at para 5.
[5] Roe v. Roe, 2022 ONSC 5821 (“Roe 2022”)
[6] Roe 2022 at para 28.
[7] Roe 2022 at para 1.
[8] Roe at para 5.
[9] Roe at para 20.
[10] Roe at para 3.
[11] Roe at para 7.
[12] Roe at para 16.
[13] Roe at para 17.
[14] Roe at para 18.
[15] Roe at para 18.
[16] Roe at para 18.
[17] Roe at para 19.
[18] Di Nunzio v. Di Nunzio, 2022 ONCA 889
[19] Roe at para 18.
[20] Roe at para 20.
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