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Costs awards in estate litigation need scrutiny

Speaker's Corner

Estate litigation matters are becoming more and more expensive. Clients are required to foot the bill for medical expert reports and examinations of solicitors. They must pay for cross-examinations and the review of potentially thousands of pages of medical and legal records by their lawyers. 

Historically, costs in estate litigation were ordered to be paid out of the estate for all parties. This was justified, in part, on the basis that it was the deceased’s action — or failure to take appropriate action — that required the court to intervene. Clients would commence litigation with the benefit of knowing that their costs would likely be reimbursed by the estate regardless of their success or failure. 

However, in recent years, there has been a cultural shift by the courts in estate litigation matters. This change has been toward a civil litigation model where the loser pays. This presents a problem for estate litigation lawyers who are presented with a dilemma of how to properly advise their clients when it comes to resolution. 

Should lawyers recommend resolution without costs if their clients have incurred significant expense? Are the large costs associated with proceeding to trial or summary judgment worth the risk of a potential costs award? 

Ultimately, the adoption of the “loser pays” model in estate litigation may act as a barrier to the parties’ resolving an issue, once litigation has been commenced and significant costs incurred.

The discretionary uncertainty of costs awards in civil litigation is trite knowledge among civil litigation lawyers in Ontario. 

Rule 49 offers to settle and other tactics are regularly recommended by counsel with the hope that the discretion of the courts regarding any costs award or awards will sway in their clients’ favour. 

The expansion of the civil model of costs awards into estate litigation may be the result of an increase in frivolous will challenges and estate litigation proceedings or simply a change in the views of the judiciary. Yet, those who practise estate litigation know that estate and civil litigation can be very different procedurally from one another and may recognize the possibility that the shift toward the civil “loser pays” model is not always warranted and depends on the facts of each case.

For example, in many civil litigation matters, the plaintiff will have the usual benefit of accessing and possessing the majority of their evidence to prove their case. 

However, in will challenge proceedings alleging lack of testamentary capacity, undue influence and/or suspicious circumstances, where there are no lay witnesses available to give evidence, the applicant is arguably unable to know the strength of their case due to the fact that the evidence they will need to rely on at trial is hidden under the cloak of solicitor/client privilege and unattainable prior to the commencement of the litigation due also to doctor/patient confidentiality. 

As a result, applicants are required to obtain a court order to compel access to the evidence, which may very well have deterred them from commencing the application in the first place. These court orders (called orders giving direction) are often obtained on the consent of all parties at the initial return date of the application. 

Is it justifiable to hold a will challenger liable for the estate’s costs in defending an application that the estate consented to progressing? 

Were they not required to commence the litigation to obtain access to the records to satisfy themselves regarding any lack of capacity on the part of the deceased or lack of undue influence? Is a will challenger not just acting in the best interests of the deceased and the beneficiaries by ensuring that there were no suspicious circumstances surrounding the preparation of the deceased’s will? 

By shifting to the civil costs award model, the courts have attempted to instill reasonableness and deter individuals from initiating frivolous litigation of estate-related disputes, like in Bilek v. Salter Estate

However, what is the cost of this attempt? A shift to the loser pays model may have the opposite desired effect and prevent parties in the midst of litigation from resolving the dispute. 

Mediation may assist the parties to come to a resolution, but mediation may not always be an option in an emotionally charged estate litigation, especially if a party is refusing to negotiate a resolution based solely on costs. 

Consider the situation where an applicant — after obtaining all the medical and legal records of the deceased relevant to the litigation — agrees with the respondent estate that the evidence demonstrates that their application has no merit. 

Of course, they were not in the position to do so before obtaining and reviewing these records, to which the estate likely consented to the applicant obtaining. Should they be permitted by the opposing party or parties to walk away without costs or should the dispute continue to trial? 

Does your client really benefit from paying to proceed to trial or summary judgment on the basis that they may be entitled to a discretionary costs award by being victorious, the quantum of which is uncertain and unknown? 

Or should counsel refuse to negotiate a without-costs resolution because the applicant will certainly (and admittedly) be unsuccessful at trial?

These issues must be considered.

The shift toward the civil “loser pays” model in estate litigation matters may simply be a reaction by the courts to the ever-increasing costs of estate litigation. However, the effect on resolution and mediation is unavoidable. To put it simply, the costs may outweigh the benefits.

Jonathan M. Friedman is a litigation lawyer primarily practising in estate litigation with Heft Law PC.

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