A significant benefit of preparing a proper estate plan is often done is minimizing the risk of estate litigation among loved ones after your passing. Estate litigation, among other things, can involve extensive legal costs and other expenses which can result in the total estate value diminishing, leaving less to be distributed. However, in certain estate litigation cases, a court may order a costs award, leaving the unsuccessful party facing financial hardship.
A recent decision from the Alberta Court of King’s Bench considered a case where costs were awarded, and the court provided an analysis on when an award for solicitor-client costs may go above and beyond the normal cost amounts that would be awarded in similar instances.
Brothers face off in estate litigation
In the matter of Graham Estate (Re), the parties involved in the dispute were brothers (referred to as “TG” and “DG”) and were two of the deceased’s children. When their father died, he left his estate in equal parts to his four sons, including TG and DG. TG was also named as the Executor of his estate. Leading up to his death, the parties’ father, who had been in poor health, distributed much of his wealth. By the time he died, the estate’s only significant asset was a property located in Nova Scotia, which was valued between $60,000 to $70,000. Throughout 2019, TG managed the estate and obtained probate, liquidated the assets, and distributed the proceeds to him and his brothers in equal parts.
However, in January 2020, DG brought an application for inter alia, seeking formal proof of the will. While it was never pursued, TG replied with an application to dismiss the application. This resulted in a discharge of a Certificate of Lis Pendens, which is a notice of pending litigation against TG’s house. DG eventually instructed his lawyer to consent to the summary dismissal of his 2020 application, but said he was not agreeable to paying solicitor-client costs. TG brought this application before the court, seeking $20,041.91 in costs for legal fees he incurred in obtaining the dismissal and preparing for the application.
How are costs determined?
The Court explained that there are general rules that apply when undertaking a determination for costs. The Court listed several factors that should be taken into account before making a decision, including the following, which are prescribed by Rule 10.33(1) of the Alberta Rules of Court:
(a) the result of the action and the degree of success of each party;
(b) the amount claimed and the amount recovered;
(c) the importance of the issues;
(d) the complexity of the action;
(e) the apportionment of liability;
(f) the conduct of a party that tended to shorten the action;
(g) any other matter related to the question of reasonable and proper costs that the Court considers appropriate.”
When deciding whether to impose, vary or deny a particular amount in a costs award, the Court referenced Rule 10.33(2) which provides that a Court may consider the following factors:
(a) the conduct of a party that was unnecessary or that unnecessarily lengthened or delayed the action or any stage or step of the action;
(b) a party’s denial of or refusal to admit anything that should have been admitted;
(c) whether a party started separate actions for claims that should have been filed in one action or whether a party unnecessarily separated that party’s defence from that of another party;
(d) whether any application, proceeding or step in an action was unnecessary, improper or a mistake;
(e) an irregularity in a commencement document, pleading, affidavit, notice, prescribed form or document;
(f) a contravention of or non-compliance with these rules or an order;
(g) whether a party has engaged in misconduct;
(h) any offer of settlement made, regardless of whether or not the offer of settlement complies with Part 4, Division 5.
Court considers allegations of extraordinary circumstances
TG asked the court to order that all of his legal costs should be paid for by his brother. However, in order to support this position, he would be required to establish one or more extraordinary circumstances that would entitle him to such. TG claimed that such extraordinary circumstances did take place, so the Court conducted an analysis of each.
TG first alleged that he was under undue influence. The Court noted that the case law has established that in estate law, undue influence allegations are “akin to allegations of fraud” as they carry the risk of reputational harm, financial loss, and stress on relationships. In this case, the Court found that the distribution of assets from the estate would have been exactly the same with or without proof of the will, which indicated that the situation arose as a result of mistrust between siblings. The Court went on to note that, had the matter been resolved by consent rather than through the courts, there may not have been an impact to costs here. However, since DG only withdrew the application the day before the hearing took place, he could not be shielded from cost consequences. DG’s challenge of the deceased’s will triggered a long legal process which would have ultimately changed nothing had he been successful.
The Court moved on to consider TG’s allegation of undue delay, which involves actions that unnecessarily prolong the litigation. Here, the Court found that DG did not prosecute his challenge to the will in a timely manner, and even after it had been filed, he did little to nothing to advance his claim. The Court acknowledged DG’s pattern of failing to respond and failing to take necessary steps to conclude his claims against his brother. As such, the Court decided that this amounted to a “waste of judicial resources” and it unnecessarily increased the costs for both parties.
After careful analysis of TG’s claims, the Court noted that the Surrogate Rules allow it to “sanction parties whose proceedings have no “substantial basis for requiring the scrutiny of the court”.” The Court emphasized that “baseless litigation,” which was the case here, should be discouraged.
Accordingly, the Court held that TG was entitled to costs for his legal expenses, resulting in a costs award of $20,041.91 against DG.
Contact DBH Law in Calgary for Comprehensive Advice on Estate Planning and Resolving Estate Disputes
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