FUNDING FUTURE LITIGATION FROM A DECEASED ESTATE

Posted on September 29, 2006 by Hull and Hull LLP
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For my final Blog, I want to consider the discrete but important issue as to whether the court can order an estate to pay the anticipated legal costs of a party, who is challenging or propounding a Will. In other words, the court is not being asked to award costs based on an application or motion that it decided in the ordinary course, but rather to determine whether a party is entitled to some payment in order to fund or defend a Will Challenge (a down payment if you like).

In a recent unreported decision of Sachs J. in the Estate of Edward Assaf ("Assaf Estate"), the court held that it did indeed have the discretion to order an estate to pay the anticipated legal costs of a party who was challenging the quantum of her entitlement under a Will. However, the court decided that it was not appropriate to grant the relief requested in the circumstances of the case.

In coming to its decision, the court found that the Assaf Estate had been the subject of constant litigation, the vast majority of which had been initiated by Vivian Assaf (the widow of the testator) or by William Assaf (the son) and almost all of which had been unsuccessful. To make matters worse, as of the date of the hearing before Sachs J., Vivian Assaf still had an unpaid costs order against her of approximately $90,000. Secondly, the court held that it was by no means clear what the value of Vivian Assaf's remaining entitlement was under the Assaf Estate. Thirdly, the court was not persuaded that there was any real merit to the proceeding that Vivian Assaf now wished to pursue (a contested passing of accounts).

Finally, the court was not prepared to entertain a suggestion by the estate trustee during litigation that, as an alternative to one-time payment, the court should order that the funds be paid albeit with appropriate conditions attached. That is, any funds paid to Vivian Assaf would be subtracted from her ultimate entitlement under the Assaf Estate. However, the court was not persuaded that even a conditional payment would do anything other than encourage litigation. In the end, the court declined to order the Assaf Estate to pay Vivian Assaf any funds to fuel future litigation. Moreover, the court ordered Vivian Assaf to pay the costs of the parties who opposed the relief requested as well as the costs of the estate trustee during litigation.

The lesson to be drawn from the decision of Sachs J. is that while a court may have the jurisdiction to order an estate to pay the anticipated legal costs of a party to a Will Challenge, it will only do so in the appropriate circumstances. Simply put, the right conditions have to be in place before the court will be persuaded that it would be just and equitable to order such a payment.  

Have a great day.  Justin de Vries --------

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