Recently, I came across a case that highlights the issue. There, a wrongful dismissal matter, the court awarded the employee 2 ½ months’ notice, or $9,166. However, in the costs ruling, the judge noted that the employee’s own costs, according to the employee’s bill of costs, were $14,246. (Actual costs incurred by a client are often in excess of the costs claimed in a bill of costs.) The judge, for various reasons, did not award any costs to any party.

There are a myriad of other examples.

There is also the old joke about the man who said he only went bankrupt twice: once when he lost a lawsuit, and once when he won.

Parties often state that it is the “principle” of the matter that warrants the fight. However, “principles” come with a cost, and this reality must always be kept in mind.

Parties to a piece of litigation must be aware of these costs, and these costs should inform, to a considerable extent, the actions of the parties. Hopefully, all parties will take reasonable approaches in light of the costs of proceeding to court.

This, however, is easier said than done, particularly in the context of estate litigation. Here, emotions are usually close to the surface, and often interfere with reasonable judgment. One of the functions of the litigation lawyer is to attempt to calm these emotions, and to bring a reasoned, objective vision to the table.

Thank you for reading,

Few would dispute that litigation costs can sometimes grow rapidly, particularly where the issues are complex or a litigant acts unreasonably.  However, it seems to me that for many other legal services, there has actually been a reduction over the years.  I am often surprised to find out the legal costs for the average client to: make a Will, buy or sell a house purchase, buy or sell a small business, set up a company or other routine solicitor's work. 

I suspect many lawyers, especially sole practitioners, might agree that many of these expenses have actually been reduced for clients over the years.  They may even say that the standard of care tends to rise over time, so what was simple forty years ago is more complex today. 

I suppose at the end of the day sympathy for lawyers doesn't make for a great news story...

Have a great day.

Chris Graham

An interesting case recently released by the Ontario Superior Court of Justice in Rand Estate v Lenton caught my attention.  In a relatively rare decision, the court awarded costs against the solicitors for the respondents.

According to the court, the conduct of the solicitors for the respondents caused costs to be incurred without reasonable cause or wasted by undue delay, negligence or default. The solicitors for the respondents systematically engaged in a pattern of inappropriate conduct, including: (1) inordinate and unnecessary delays; (2) bringing numerous and unnecessary motions; (3) being inadequately prepared; (3) failing to appear; (3) disregarding the professional obligation to be civil and courteous to others; (4) presenting arguments that had no merit; (5) acting for the respondents despite having a clear conflict of interest; (6) failing to do anything to resolve the litigation; (7) disregarding court orders; and (8) continuing to produce documents in contempt of a court order.  As a result, the court found it appropriate to award costs against the solicitors for the respondents on a substantial indemnity basis to address the costs thrown away by the applicants. 

The case, and the laundry list of improper behaviour, is a good reminder to all counsel to think long and hard about tactics and strategy (no case is really worth sullying your own reputation and credibility). Lawyers also need to keep in mind that they are not just mouth pieces for their clients. Counsel should advise their clients of the minimum standard of behaviour, decorum and professionalism expected by the courts. A good way to control your client is to remind him/her that costs can be awarded against a party who makes frivolous claims, or engages in egregious behaviour. Of course, lawyers are clearly not immune from costs and must govern themselves accordingly. If a client refuses to listen or expects you to take a position that will be frowned upon by the court, it is time to get off the record. 

Justin

Your Sins Are Not Forgiven - Cost Awards and Charities - Hull on Estates Podcast #77

Posted on September 18^th, 2007 by Hull & Hull LLP

Natalia Angelini: Welcome to Hull on Estates, podcast #77 on Tuesday, September 18^th, 2007 with Justin de Vries and Natalia Angelini.

Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada.  Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.

Natalia Angelini: Hi Justin, how are you?

Justin de Vries: Good Natalia, this is our first time that we’re podcasting together. We work closely together on a number of files, so it’s nice that we can actually talk on the air, so to speak, about a case. And today, we’re going to talk about costs, which is always a favourite, I think, in the estate world because it’s a little bit less clear, for lack of a better word, than in the normal or general litigation that one comes across. Today, we’re going to talk about the Ukrainian Catholic Episcopal Corporation of Eastern Canada v. Pidwerbecki which was a recent decision of the Ontario Superior Court of Justice. And it talks about costs in the estate context. So Natalia, why don’t you tell us what was going on there.

Natalia Angelini: Sure. Essentially in this case, the church had commenced an application against estate trustees alleging misconduct, one of whom I believe was a lawyer. They were unsuccessful in the application and the respondents naturally sought their costs. And then the church took the position that no costs should be awarded and that the costs request was excessive in any event.

Justin de Vries: A couple of interesting things coming out of this case. First of all, the Court recognized the general principle that reasonable people could reasonably disagree in the estate context. And where that was the case, and perhaps the most common example of that is a Will interpretation. It’s really going to be the estate that pays the costs of the parties. The parties approach the Court and say, we’re not quite sure how to figure out this testamentary document, we need some guidance. If both parties take reasonable positions and advance reasonable arguments, the Courts are going to really blame the mess on the testator or the testatrix and therefore costs are payable out of the estate.

But, of course, that wasn’t the case here.

Natalia Angelini: Right. In this case, the Court found that there was no dispute arising out of any mistake or lack of clarity or default of the testator. Essentially, the applicant had no basis for commencing its application.

Justin de Vries: So what I found interesting about this case, and I did an earlier blog on it, was the fact that the church took the position, and said well, hold on, we are a not-for-profit organization. We clearly bring other value to the community and as such, you shouldn’t award costs against us because the church was unsuccessful in its application. And the judge simply said no, the fact that you’re not-for-profit is not persuasive to me. You should have known better. In particular, the judge said you should have known after discoveries that your case was weak. And it’s a good reminder to counsel as well that what you should do after discovery is take a good, hard look at the case. Because now you know what allegations are made against you, you now know the evidence to support it, you’ve seen your client examined as well. So you need to write that opinion letter to cover off the risks of any trial going forward.

So the judge said, church - what’s good for the goose, is good for the gander, you have to pay costs as well.

Natalia Angelini: So that’s a good point, Justin. I think that reflects the general trend that when you don’t have a good case, you’re going to be penalized most likely by way of a costs Order against you. And we’ve seen it in various estate matters. For instance, in Will challenges, when unjustified allegations are made against a defendant, the plaintiff may be ordered to pay the defendant’s costs. In dependent support claims, successful claimants may even have to bear their own costs, when the Court considers factors that weigh in favour of that result.

And even in passings of accounts, where executors neglect or refuse to furnish accounts, or fail to keep proper records, they can be ordered to pay the costs of the successful beneficiaries.

Justin de Vries: And let’s look what the Court did here. Once the judge determined that costs were to be paid by the estate, the judge approached it as a judge would in any civil litigation matter. First of all, the judge recognized that there were settlement offers made by the respondents, none made by the applicant, which I think had some bearing on the judge. But in any event, in terms of the respondent’s settlement offers, none of them qualified as a Rule 49 offer. And it’s always important if that’s the case, to follow exactly the parameters or provisions of that Rule. But the Court is nevertheless allowed to look at reasonable settlement offers, which they did here. But the Court said great that you made some settlement offers, but it doesn’t persuade me that you should be awarded higher costs on a higher scale that is. And just by way of reminder, we now have partial indemnity costs which generally are 30% to 60% of the costs of litigation. And substantial indemnity, which now is probably anywhere from about 80% to 100%. And the Rules talk about both of those scales. There’s a Notice to Profession which talks about what the maximum rates should be under partial indemnity costs, though it’s not a hard and fast rule. It’s just something that’s put forward. And then specifically for substantial indemnity costs, the Rules actually define substantial indemnity costs as one and a half times the amount that is awarded on partial indemnity. And here the judge almost did an assessment, which is unusual, because the judge looked at the amount of hours clocked by the respondent lawyers, and in certain instances, brought it down. There were two sets of lawyers for the respondents and the judge said at one point, one of the respondent’s lawyers didn’t do as much prep for the trial, didn’t carry the weight of the trial when it was ongoing, and therefore reduced the time. And also looked at the hourly rates that were put forward. As the Court pointed out, $350 is the maximum amount that can be charged for these respondent lawyers under this Notice to Profession. But brought it down to $250 an hour as the multiplying factor because the complexity of the case wasn’t there. The judge says listen, it was hard fought but there wasn’t particularly difficult issues that were brought before the Court.

So it was interesting from my point of view. Again, the judge really almost made an assessment. And often, Courts won’t do that. Judges are very quick to point out they’re not an assessment officer. They don’t get into the nitty gritty. It’s sort of a touchy feely type of process and they try to get at what they think is fair. And they very much rely on Rule 57 and the factors set out in that Rule.

Natalia Angelini: That’s a great point. When making costs submissions, I would really recommend that everyone review Rule 57 and try to address each of the sub-paragraphs and the factors that the Court will consider because that will most likely help in you getting what you’re asking for.

Justin de Vries: And finally, very difficult to appeal a costs award because it’s discretionary. The Court of Appeal or the Divisional Court would be very reluctant to look into that because discretion means just that. It’s up to the trial judge. The Court of Appeal is not going to really replace its view of what the trial judge did when it comes to costs; wide latitude is given. So bottom-line here is if you’re a charity, same rules apply. You better know what you’re doing, you better think long and hard about the costs consequences and finally, on Examinations for Discovery, make sure that a client is given some sort of opinion about the risks so that they know whether they should fold their tent and move on. And certainly what kind of settlement offer they should make and make it a Rule 49 offer. Thanks Natalia.

Natalia Angelini: Thank you Justin.

This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.

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.

The respondents were success at trial and sought their costs. The applicant, the Ukrainian Catholic Episcopal Corp. of Easter Canada (the “Church”), argued that no costs should be awarded and that the costs requested were, in any event, excessive.

The court recognized that in estate matters, issues frequently arose upon which “reasonable persons” could “reasonably disagree”. Ambiguity in a testamentary document was cited as one such example. The court held that where there were reasonable grounds for an application, costs should generally be paid by the estate.

However, in the case at hand, there was no dispute arising out of any mistake or lack of clarity or default of the testator. According to the court, the lack of evidence supporting the Church’s position ought to have been apparent from the beginning and certainly at the end of discoveries (a good reminder to counsel to write to clients at the end of discoveries to address the merits of the case). Given the allegations of misconduct, coupled with the lack of evidence, the court held that costs, on a partial indemnity scale, should follow the cause (loser pays the winner).

The fact that the Church was a not-for-profit organization carried no weight with the court. Moreover, even though there was no adversity of interest between the respondents, the court was satisfied, despite the arguments of the Church, that it was reasonable for the parties to be separately represented. The respondents were awarded their separate costs.

Thanks for reading and have a good weekend.

Justin