Estate litigation is often emotionally charged, factually complex, and financially risky. While many beneficiaries assume that legal disputes over wills, codicils, and estate assets will ultimately be paid for out of the estate, Ontario courts have repeatedly emphasized that this is no longer the default rule. A recent decision of the Ontario Superior Court of Justice, Schickedanz v. Schickedanz, provides a stark reminder that unsuccessful litigants—particularly those who advance self-interested claims—may be ordered to pay millions of dollars in costs personally.

The decision arose from a multi-year family dispute involving a contested holographic codicil, alleged trust arrangements over investment accounts, and competing claims for compensation. Although the underlying litigation had already been resolved in earlier proceedings, the court was required to determine one remaining, highly consequential issue: who should bear the extraordinary legal costs incurred by the litigation.

The result was a costs award exceeding $2.2 million against one beneficiary, payable personally rather than from the estate. The reasons offer essential guidance for estate trustees, beneficiaries, and anyone considering challenging or defending a will or codicil in Ontario.

A High-Value Estate and Deeply Divided Beneficiaries

The litigation arose following the death of the testator, Elma. Her estate included exceptionally valuable assets, most notably a residential property valued at approximately $23 million and investment accounts worth roughly $4 million. The beneficiaries included her daughter and four sons.

The daughter brought an application seeking a declaration that a handwritten holograph codicil executed by her mother was valid. If upheld, the codicil would have transferred the $23 million home exclusively to the daughter. Her brothers (the testator’s sons) opposed the codicil, alleging suspicious circumstances, lack of testamentary capacity, and lack of knowledge and approval.

In parallel, the brothers brought their own application seeking a declaration that certain investment accounts held by the daughter were not hers beneficially but were instead held in trust for the estate. The daughter also commenced a further application seeking compensation for managing those accounts, although that claim was later withdrawn.

These proceedings culminated in an eleven-day trial marked by extensive documentary discovery, expert evidence, numerous examinations, and multiple pre-trial motions. Ultimately, the daughter was unsuccessful on the codicil issue, and the court ruled in favour of the brothers on the investment account dispute.

What remained was the question of costs.

The Modern Approach to Costs in Estate Litigation

Historically, Ontario courts often ordered that all parties’ legal costs in estate litigation be paid from the estate itself. This approach was rooted in the idea that estate disputes frequently arise from uncertainty created by the testator, and that beneficiaries should not be deterred from seeking judicial guidance.

However, that historical approach was again firmly displaced in Schickedanz. The court began its analysis by reaffirming that estate litigation is subject to the same costs regime as all civil litigation. The general rule is that costs follow the event, meaning the unsuccessful party pays a portion of the successful party’s legal costs. The court emphasized that estates are not to be treated as a limitless source of funding for litigation, nor as an “ATM” from which parties may automatically withdraw to finance legal battles.

Exceptions to this rule exist, but they are narrow. Public policy considerations may justify costs being paid from the estate where the testator’s actions caused litigation or where estate trustees reasonably seek the court’s guidance in administering the estate. Even then, the entitlement to estate-funded costs is not absolute.

Daughter Argued That Legal Costs Should Be Paid From the Estate

The daughter argued that her legal costs (exceeding $900,000) should be paid from the estate rather than borne personally. She advanced the following arguments in support of this position:

1. The application regarding the codicil was reasonable because the administration of the estate required a judicial determination of the document’s validity. She analogized her position to that of an estate trustee seeking court direction.
2. The litigation was caused by the testator herself. In support of this, the daughter pointed to evidence suggesting that her parents had previously indicated she should receive the property, that the testator had handwritten and signed the codicil, and that contradictory testamentary documents existed.
3. The alleged uncertainty surrounding her mother’s mental state at the time the codicil was written, arguing that it was reasonable to seek judicial resolution given those factual ambiguities.

On this basis, the daughter submitted that public policy considerations justified paying her costs out of the estate.

Court Found Daughter’s Self-Interest Defeated Public Policy Protection

The court rejected the daughter’s arguments in unequivocal terms. It emphasized that the codicil in question conferred a substantial benefit exclusively on the daughter and that she played a significant role in procuring it. The court noted several factual findings from the trial that were particularly relevant to the costs analysis, including that the daughter was instrumental in the codicil’s preparation, that it was executed in secrecy, and that there were serious concerns regarding the testator’s mental capacity at the time.

Most importantly, the court concluded that the daughter could not credibly argue that the litigation arose solely from the testator’s actions. Where a beneficiary actively participates in the creation of a testamentary document that benefits them, and then unsuccessfully seeks to uphold it, the resulting litigation cannot be characterized as neutral or trustee-like.

Estate Trustees Can Be Denied Costs Reimbursement When They Act Unreasonably

The court underscored that even estate trustees may be denied indemnification from the estate if they act unreasonably or primarily in their own self-interest. A beneficiary in the daughter’s position who stood to gain $23 million under the codicil could not invoke public policy to shield herself from the financial consequences of unsuccessful litigation.

The court warned that accepting the daughter’s position would create perverse incentives. Litigants would have nothing to lose by advancing questionable testamentary documents: if successful, they would receive the gift; if unsuccessful, the estate would pay their legal bills. Public policy does not support such an outcome.

The Brothers’ Costs Claim: Scope, Scale, and Scrutiny

The brothers (the testator’s sons) sought costs totalling more than $2.6 million, relying on a combination of partial indemnity and substantial indemnity claims. In the alternative, they advanced reduced figures, all of which still exceeded $1.9 million.

The court acknowledged that the litigation was exceptionally complex. It involved extensive discovery, multiple expert reports, over twenty examinations, and numerous motions and conferences. There was no suggestion that the proceedings were trivial or unnecessary.

Nevertheless, the court emphasized that a costs award must be objectively reasonable, fair, and proportionate. The court undertook a detailed review of the claimed amounts, scrutinizing issues such as unexplained increases in legal fees, high hourly rates, and potential over-lawyering.

The court accepted that the brothers’ costs would reasonably exceed their sister’s, given the number of witnesses and expert reports they were required to marshal. However, the court also agreed that the total amount claimed exceeded what the testator’s daughter could reasonably have anticipated and warranted careful adjustment.

Offers to Settle and Their Impact on Costs

A critical factor influencing the final costs award was the existence of multiple formal offers to settle made by the brothers under Rule 49 of the Rules of Civil Procedure. The daughter made no offers of her own.

The brothers served offers in January 2022 and January 2024 that, in various forms, proposed declaring the codicil invalid and resolving the issues with the investment account. The court conducted a detailed analysis of whether the judgment ultimately obtained was as favourable or more favourable than those offers.

The court concluded that, at least after January 2024, the brothers had achieved results that triggered presumptive entitlement to substantial indemnity costs. The absence of any settlement efforts by their sister weighed against her in the costs analysis.

Withdrawn Applications Still Carry Cost Consequences

The testator’s daughter had withdrawn her application for compensation relating to the management of the investment accounts before trial. Nevertheless, the court held that the brothers were entitled to their costs of responding to that application.

Under Rule 38 of the Rules of Civil Procedure, a respondent is presumptively entitled to costs when an application is abandoned, unless the court orders otherwise. No public policy exception applied, and the daughter did not dispute the amount claimed. As a result, she was ordered to pay those costs personally as well.

The Final Costs Order: A Multi-Million-Dollar Consequence

After balancing all relevant factors, the court ordered the testator’s daughter to pay:

• $2.2 million in costs relating to the codicil and investment account applications; and
• $17,768.69 in costs relating to the withdrawn management fee application.

These amounts were payable within 90 days. Failing payment, the court directed that the costs could be satisfied from the daughter’s share of the estate, underscoring that beneficiaries are not insulated from financial consequences simply because litigation arises in an estate context.

Eisen Law: Providing Tenacious Estate Litigation Services in Toronto

Estate disputes can carry severe financial risks, particularly where will challenges, codicils, or asset ownership are contested. If you are considering estate litigation or are defending a claim, it is critical to understand your potential exposure to costs before taking action. The estate litigation lawyers at Eisen Law advise beneficiaries, estate trustees, and interested parties on will challenges, suspicious circumstances, and cost-risk strategy. Contact us to obtain clear, practical guidance by calling 416-591-9997 or reaching out online.