Cost Decisions and Estate Litigation - Hull on Estates #188
Listen to: Cost Decisions and Estate Litigation - Hull on Estates #188
This week on Hull on Estates, David Smith and Nadia Harasymowycz discuss cost decisions and estate litigation.
If you have any comments, send us an email at hull.lawyers@gmail.com or leave a comment on our blog.
David M. Smith - Click here for more information on David Smith.
Nadia M. Harasymowycz - Click here for more information on Nadia Harasymowycz.
Cost Decisions and Estate Litigation -
Nadia Harasymowycz: Hello and welcome to
Welcome to
Nadia Harasymowycz: Hi and welcome to another episode of
David Smith: Good morning, Nadia.
Nadia Harasymowycz: Good morning, David.
David Smith: I’m David Smith, a partner at
Nadia Harasymowycz: It is.
David Smith: Alright, so we’ll go slowly and hopefully everyone get’s something out of this. So there’s been a lot of talk and a lot of publication about the issue of costs in Estate litigation. And what we want to do today is just briefly give an overview of what the trends are. But before we even get into the trends, let’s just talk about the general principles. Now when I started doing Estate litigation a little over 10 years ago, the general rule was well entrenched and that rule was that if there was a Will challenge and the circumstances giving rise to the challenge were essentially the fault of the testator, then it followed that the Estate would bear the legal fees. But that’s changing, it’s it, Nadia?
Nadia Harasymowycz: It absolutely is, David. It’s changing a little bit in that removing away from the traditional approach and bringing the costs out of the Estate and forcing it into a situation much more like in regular civil litigation where costs are flowing from the losing party.
David Smith: You know…and certainly from my perspective the general rule I think…in my experience this idea that it was guaranteed that you would get your costs out of the Estate in Estate litigation was never truly the case. If there was a frivolous or vexatious Will challenge, in those circumstances it was a pretty safe bet that the challenger wouldn’t get their costs. But certainly the Estates litigation Bar was, to some extent, the envy of more traditional civil litigation lawyers because of the fact that there was occasionally, in the right case, the Estate available to fund the legal fees. What’s the typical rule in civil litigation, Nadia?
Nadia Harasymowycz: The general rule in civil litigation is that costs are paid by the losing party. So the decision is not made before you go into the Courtroom; it’s made at the end of the litigation.
David Smith: And what factors into a determination? Is it simply that if you went to trial and you lost, you don’t get your costs? Or…I understand that Offers to Settle might factor in, correct?
Nadia Harasymowycz: Absolutely. If you do place an Offer to Settle on the table and leave it open until the beginning of litigation, there is the situation where if that Offer was reasonable and you didn’t accept it, that you may bear the costs of the litigation. But that was not necessarily always followed.
David Smith: Right, and Offers to Settle always have some value, be it in civil litigation or general Estate litigation because Courts will always want to see that the parties have made a reasonable attempt to settle the matter without having to go to trial. Now some of the recent cases, and in particular in the Toronto Estates Bar, we’ve had the benefit of Justice David Brown who’s been sitting as the administrative justice and he’s rendered a great deal of jurisprudence relating to various Estates issues, and certainly relating to costs. What’s his view been from the decisions that you’ve seen, Nadia, as to whether the Estate litigation exception should continue or whether we should be subject to the normal rules?
Nadia Harasymowycz: In view of a variety of the cases that Justice Brown has come down with, I think the decisions reflect that it shouldn’t be parties coming to the table expecting to get their costs paid. He actually does state that he doesn’t think that parties should treat the Estate as an ATM. And I think that that’s going to change the situation with Estates in that parties are going to have to think about the situation before they pursue the litigation.
David Smith: Right, and it’s I think…the thrust of what he’s saying is that…in some of the decisions that…and one of the comments he made was that Estates litigation is a subset of civil litigation, in his words, which means essentially that it’s subject to the same rules as civil litigation and that will require the Court to consider all of the relevant factors under Rule 57, subject to certain limited exceptions. Now I thought we should segway briefly and talk about guardianship applications, because that’s another area of law in which we specialize and in which there have been similar developments in costs. And what are the issues, Nadia, with respect to guardianship? I mean, what’s generally going on there in terms of the issues between the parties?
Nadia Harasymowycz: In a guardianship application, generally the parties have a great interest in preserving the individual who’s potentially lost capacity or has lost capacity. And they’re looking to protect the well-being of the individual. In a situation such as that, though, the parties have conflicting perspectives on what should be done and how it should be done. And it appears that recent case law is suggesting that that fight shouldn’t be paid out of the assets of the person who is incapable.
David Smith: Right and I think you know that’s a little bit more intuitive in the sense that first of all you’re dealing with a person who potentially is under disability, if you’re alleging that he or she is not capable. The Public Guardian & Trustee is involved, representing the interests of that person. There might be Section 3 counsel involved as well, representing the interests of that person. And so you have a whole regime in place which is predicated on protecting the best interests of an incapable person. So it’s a good question. How can you ever, in those circumstances, justify costs out of that person’s assets, unless the assets are significant enough to bear litigation and the litigation can be justified? So in that sense, it’s a bit of a…it’s similar to Estate litigation but it’s different because the person obviously is still alive, is in need and the Court is going to be looking out for that person’s best interests. And that brings us to, in a sense, under all of the issues that come up in a Rule 7 approval motion where you’re dealing with a party under disability.
Now very briefly, let’s talk about the issue of proportionality because that’s been mentioned by the Honourable Justice Brown. And what do you understand that to mean, Nadia? And can we sort of tease out that concept a little bit?
Nadia Harasymowycz: I think the concept generally looks to the fact that costs on a motion or any appearance before the Court should be reasonable. And you shouldn’t simply use excess lawyer fees or excess time because you think that the money is coming directly out of the Estate. And the costs award should be proportional to the amount of work that it should have taken to get the matter done.
David Smith: Does proportionality have anything to do with how big the fees are as a proportion of the value of the Estate?
Nadia Harasymowycz: I think it’s somewhat tied in. But in general, the nature is the work that had to be done to get the issue to Court and not the value of the Estate.
David Smith: So in a sense what we’re looking at really is the same kind of analysis that the Court always bears in mind when it applies the provisions of Rule 57 in assessing costs and fixing costs. Although this is one other point we should clarify is, there is a difference, isn’t there between fixing costs and assessing costs. And I wonder if you can just spell that out for me.
Nadia Harasymowycz: Yeah there is a difference between fixing costs and assessing costs. In fixing costs, the Court doesn’t go through an analysis which is detailed line by line. They look to the factors set out in the rules and the jurisprudence and try to determine a fair and reasonable amount that reflects the principles.
David Smith: Right and I mean in a perfect world, you could argue that an assessment and the fixing of costs arrive at the same number. But clearly, that probably wouldn’t be the case. And judges will view these things differently than an assessment officer. Certainly it’s a whole lot less of a laborious process going through fixing of costs than an assessment.
Nadia Harasymowycz: Absolutely.
David Smith: I noticed that looking at the time, Nadia, we’re coming close to the end of this. So I think maybe what we should do is, just in terms of overviewing the whole thing…oh is there any other issues, sorry, we haven’t touched on that we can briefly touch on? Or do you…
Nadia Harasymowycz: I think one thing that we may want to talk about is the liability of lawyers for costs in a situation like this.
David Smith: Okay, let’s speak briefly about that. What governs that?
Nadia Harasymowycz: Under Rule 57.07 of the Rules of Civil Procedure, where a lawyer for a party has caused costs to be incurred without reasonable cause or where there has been waste by undue delay, negligence or other default, the Court can order that those costs be paid by the lawyer personally.
David Smith: Right, very draconian relief. Very rarely, in my experience, applied but certainly something to give consideration to if you’re on a file and dealing with counsel who may be taking action that seems to just be crossing the line in terms of creating expense. And usually we’re thinking about motions, certain procedural steps that add unnecessary cost to any proceeding.
So in summary then, I think the bottom line here is that we have to be responsible as counsel when we’re litigating. We have to manage our resources. And when we’re in guardianship proceedings, we’ve got to remember that the Court will not be concerned at all with the lawyers getting paid but will be concerned with ensuring the best interests of the incapable person. With respect to Estates, Nadia, what do you think the sort of sum up comment would be?
Nadia Harasymowycz: I think the sum up comment should be that you shouldn’t expect your fees out of the Estate and you have to pursue litigation where it’s reasonable, but that you should be prepared to pay your costs if you’re not successful.
David Smith: Okay, well that was a great discussion, Nadia. Thanks so much. It was great having you podcast for the first time. And we’ll look forward to podcasting again. For our listeners, if you have any comments, you can e-mail us. The information is on the website. And we will look forward to podcasting again. Take care, Nadia.
Nadia Harasymowycz: Thanks David, you too.
This has been
To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.
Our theme music is Upper Structure by DJ AKid and is courtesy of the Podsafe Music Network.
