In its recent decision in Bizon Estate, 2012 ABQB 605, the Court of Queen’s Bench of Alberta considered circumstances in which a personal conflict between two executors delayed the administration of an estate and resulted in unnecessary litigation. In the circumstances, the Court held that there was no reason that the estate should have to pay the costs incurred and ordered one of the executors to pay the other’s costs personally.
This costs decision arose in the context of an application for advice and directions and for formal passing of the estate’s accounts.
In the case, the testator had named his brother and sister as his executors. Even before probate was issued, the siblings had difficulties cooperating with one another. After probate was issued, they continued to have problems working together, as the brother unilaterally took steps to realize various estate assets and the sister raised questions and requested information respecting his decisions. The brother argued that his sister had done nothing to forward the administration of the estate, leaving him to do the necessary work, and had instead actively obstructed this process. To this end, he had previously brought court applications seeking, inter alia, to remove his sister as an estate trustee and to find her in breach of trust, which applications had been dismissed by the Court. The sister on the other hand, argued that her brother had excluded her from the estate administration, withheld information respecting the estate, and attempted, unreasonably, to remove her as an estate trustee.
The issue before the Court was whether the sister should be entitled to payment of her legal costs in defending herself in these applications and other litigation commenced by the brother and, if so, should they be paid by the estate or personally by him.
In arriving at its decision, the Court recognized that “the general rule in estate litigation is that the unsuccessful party should pay the costs of the successful party unless the testator or the residuary beneficiaries were the cause of the litigation… Estate litigation is no longer treated as an exception to the basic rule that costs follow the event.” In the circumstances of the case, the Court found that the litigation clearly did not result from any act of the testator or the beneficiaries, so the general rule applied.
The Court went on to assess the court file and the various applications and orders made, recognizing that the sister had been almost entirely successful and the brother had been almost entirely unsuccessful in these various applications. Further, the Court found that the applications made by the brother did not benefit the estate and simply delayed administration. The Court further found that the applications commenced by the brother seem to have been either an attempt to settle personal scores with his sister, or an effort to obtain the removal of his sister as co-executor so that he could administer the estate himself. Further, the Court found that the brother unnecessarily raised claims of bad faith, deviousness, and lying by the sister and, as little evidence was adduced to support these allegations, stricter costs consequences were justified. The Court found that there was no reason that the beneficiaries should have to pay the costs incurred as a result of the brother’s applications, and ordered him to be personally liable for his sister’s costs, on a solicitor-client basis.
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