Once upon a time, it was thought that costs in estate litigation could usually be expected to come from the estate. On the one hand, this gave parties with limited resources access to the machinery of the justice system, knowing that their legal fees were likely to be reimbursed at the end, win or lose. The drawback, of course, is that this could sometimes encourage parties to advance claims with little or no merit, with very little personal risk.
The “Modern Approach”
Times change, however, and the “traditional rule” that the estate bears the costs of all parties has long-since been displaced. In 2005, the Ontario Court of Appeal in McDougald Estate v. Gooderham clarified the “modern approach” to costs in estate litigation. The modern approach requires the courts to carefully scrutinize the litigation and to follow the “loser pays” costs rules that apply in general civil litigation, unless public policy considerations apply. One circumstance where those considerations apply is where the problem that underlies the litigation is caused by the testator, such as an ambiguity or omission in the will, or by the beneficiaries of the residue. Another situation is where there exist reasonable grounds to question the execution of the will or the testator’s capacity in making the will, because of the public interest in giving effect to “valid wills that reflect the intention of competent testators”, or where the litigation was necessary to ensure that the estate is properly administered.
A large number of cases have relied upon this principle since McDougald Estate, and a few have colourfully restated it. In Salter v. Salter Estate, Justice D.M. Brown, as he then was, said that parties “cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation”. He went on to state,
“Given the charged emotional dynamics of most pieces of estates litigation, an even greater need exists to impose the discipline of the general costs principle of “loser pays” in order to inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes.”
The position articulated in McDougald Estate and in Salter Estate has been consistently followed by Ontario courts for over a decade. Today, most estate litigation matters settle out of court, at mediation or otherwise. To what extent this is influenced by changing attitudes towards costs is difficult to determine.
For questions about these cases or for guidance on any other Estate Litigation matters, contact the estate litigation lawyers at Eisen Law in Toronto to find out how we can help. Call us at 416-591-9997 or contact us online.