In a recent Ontario Court of Appeal decision, a daughter won a costs appeal after successfully defending her father’s will. Her two brothers were ordered to pay her $150,000.
The father died on April 29, 2009. He had three children: two sons and a daughter. His wife had died in 2005.
In January 2006, the father executed a will, leaving his entire estate to his daughter. Previous wills had distributed the estate among his three children and grandchildren.
In August 2011, the two sons commenced an action against the daughter and the estate. They sought:
- to set aside the 2006 will;
- a declaration that part of the daughter’s home was held in trust for the estate of the father;
- an accounting of the assets of the estate; and
- damages against the daughter for conversion of estate property and breach of fiduciary duty.
Lower Court Decision
The trial lasted for 21 days. Ultimately, the trial judge dismissed all of the claims made by the sons. He held that the claims were statute-barred by the Limitations Act, 2002. He further held that, although the sons had shown suspicious circumstances in relation to the execution of the 2006 will arising from the father’s dementia, the daughter had discharged her onus to prove testamentary capacity. The trial judge further held that the sons had failed to show undue influence.
Having determined that the claims were statute-barred and that the will was valid in any event, the trial judge did not consider the merits of the other claims advanced by the sons.
The sons commenced an appeal from the trial judge’s decision. That appeal was dismissed for delay. A motion to set aside the dismissal failed.
The daughter had sought costs in the amount of $395,898, but the judge ordered the parties to bear their own costs. The daughter sought and obtained leave to appeal the costs order.
Court of Appeal Decision
The court began by explaining that cost awards are discretionary. It stated that the Court of Appeal rarely grants leave to appeal a cost order and will vary that order only if the appellant demonstrates legal error, or that the order is “plainly wrong”.
The court then noted that the daughter was entirely successful at trial and that in the normal course of events, she would have received her costs.
In reviewing the judge’s costs endorsement, the court stated that he made reference to two features of the trial proceedings before indicating that there would be no award as to costs. First, he noted that the sons had successfully established “suspicious circumstances” surrounding the 2006 will, but had failed in their claim on account of the limitation period. Second, the judge indicated that the daughter had given “misleading evidence” about her father’s mental state. He held that the daughter’s attempt to mislead the court could not be condoned and was “relevant” to his costs decision.
However, the Court of Appeal found this mischaracterized the trial judge’s detailed factual findings in his reasons for judgment. While the trial judge had accepted that the sons had shown suspicious circumstances in respect of the 2006 will, he went on to find that the daughter had rebutted those suspicious circumstances and demonstrated her father’s testamentary capacity. The trial judge had made strong findings of fact in favour of the daughter on both the testamentary capacity and the undue influence issues.
As a result, the sons had lost at trial on all fronts. The Court of Appeal therefore found that the implication in the costs endorsement that success had been somehow divided at trial was not borne out by an examination of the trial judge’s reasons for judgment.
Additionally, at trial, the judge had found that the daughter had misled the court in recollecting a conversation with her father’s doctor. While the Court of Appeal found that it was open to the trial judge to find that the daughter misled the court during the trial, costs are not to be used to punish a litigant for giving misleading evidence. The court found that the misleading evidence given by the daughter could not justify, on its own, a denial of costs in respect of a 21-day trial in which the daughter was entirely successful in defending the will. It found that the judge erred in law by focusing his costs analysis almost exclusively on the misleading nature of one aspect of the daughter’s evidence.
Finally, the court found that the judge should have more fully explained why, despite the daughter’s total success, she was denied her costs.
For these reasons, the Court of Appeal found that the judge’s cost order was “plainly wrong” and awarded the daughter costs in the amount of $150,000 for the trial and $10,000 for the appeal. The costs were to be payable by the two sons.
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