While the Judgment in Webster v. Webster Estate [2006], 25 E.T.R. (3d) 141 (Ont. S.C.J.) was rendered in July 2006, Justice Robertson’s Endorsement regarding the costs award in the matter was released in February 2007 (see [2007] O.J. No. 371).
In Webster, the Applicant, Mrs. Webster, was seeking an Order extending the time in which she may file an election to make an equalization claim under s.5(2) of the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”) from the Estate of her deceased husband, Mr. Webster. The six month limitation period in s. 7(3)(c) of the FLA prevented the claim from succeeding unless an extension order was granted.
According to the Decision on the motion, Mr. and Mrs. Webster were married for 29 years; it was a second marriage for both parties. During their married life, Mr. and Mrs. Webster gave generously to the community. They lived happily ever after until the death of Mr. Webster on October 11, 2003. Mrs. Webster was a devoted wife. Mr. Webster was 87 years old when he died. Mrs. Webster was then 81 years old. Mrs. Webster developed Alzheimer’s disease, which progressed to the point where she was unable to testify as a witness in the proceeding.
Mr. Webster’s Estate was valued between $22 and $24 million. The bulk of the Estate was left to charity. The named executors of the Estate were Mrs. Webster, Mrs. Webster’s son by her first marriage, Mark Armitage (who was also her legal representative), Mr. Webster’s son by his first marriage, Norman Webster and the long-time trusted financial advisor to the testator, Mr. Ferguson. On consent, Mrs. Webster and Mr. Armitage were removed as executors of the Estate by Court Order dated January 12, 2006.
Mr. Webster’s Will provided Mrs. Webster with use of Ottawa and Florida residences (both owned by a company of which Mr. Webster was the sole shareholder), as well as $250,000.00 per year, net of tax income, for her life from a spousal trust. Subject to Mrs. Webster’s life interest, the Will required that the remainder of the Estate be paid out, within five years of the death of Mrs. Webster, to Mr. Webster’s Foundation and such other charities as the Executors might select. The designated charities were mostly schools and hospitals.
Justice Robertson dismissed the motion finding, among other things, that the case did not meet the criteria set out in s. 2(8)(b) and (c) of the FLA and that it would be unjust and contrary to the objectives of the FLA to use the extension provision in the manner pursued in this case.
The Respondents sought costs on a full recovery basis in the sum of $176,006.89 arising from the proceeding. Mrs. Webster, by her representative, was opposed to an Order granting costs to the Respondents.
Justice Robertson found that the Respondents’ legal costs and disbursements in the amount of $176,006.89 were reasonable and ordered that they be paid by the residue of the Estate of Mr. Webster. Mrs. Webster was responsible for paying her own legal costs.
In his Endorsement, the Judge noted that cost rules are designed for three fundamental purposes: (i) to indemnify successful litigations for the cost of litigation; (ii) to encourage settlements; and (iii) to discourage and sanction inappropriate behaviour by litigants. When success is divided, he noted that costs are apportioned. His Honour also noted that Rule 24 of the Family Law Rules is the primary rule dealing with costs. Although Rule 24(1) presumes that the successful party is entitled to costs, His Honour added that while the emphasis on the outcome is a significant factor, consideration of other factors must be carefully weighed.
His Honour also noted the following, among other things: (i) the nature of the relief sought could result in an Order with only two options: to extend or not to extend; (ii) the legal test was more complex and in that regard the success on individual points was more divided; (iii) the ability to pay a cost order was not an enumerated factor in determining liability or quantum pursuant to the cost rules (here, both parties had the means to satisfy any order made); (iv) the parties had acted in good faith; (v) neither party should be sanctioned for behaviour reasons; and (vi) both lawyers were well prepared and learned.
In addition, apparently, paragraph 19 of the Will specifically discouraged litigation and encouraged alternative dispute resolution. Despite this direction, there were no formal offers of settlement and the parties chose to waive a case conference. Given the experience and cooperation of the counsel, however, the Judge found that waiving the case conference in the face of a defined legal problem may have been practical and saved money.
In exercising discretion, Justice Robertson stated that after having balanced the amount claimed with the necessary considerations, including the complexity and importance of the legal issue, it was not appropriate to award costs against Mrs. Webster.
Have a great day.
Craig