In estate litigation, especially in cases where the litigation has been prolonged for an extended period of time and the file has accumulated hours upon hours of manpower, costs can be (and often are) a contentious issue between the parties. There are a few different ways in which costs may be dealt with, such as: costs being awarded out of the estate to one or both of the parties, an order that the parties bear their own costs, or one of the party’s may be ordered to pay a fixed amount of the other party’s costs. Cost awards are highly dependent on the facts and outcome of a case.

The focus of this blog will be on situations where one party is ordered to pay a portion of the other party’s costs, and in particular, when it may or may not be appropriate for an order of elevated costs (substantial[1] or full indemnity) to be awarded. It is often the case that where party-to-party costs are awarded, they are done so on a partial indemnity basis. While partial indemnity usually ranges from approximately 55%-60% of the total costs, the percentage may vary pursuant to the Court’s discretion.[2] In rare situations, the Court may find that the circumstances warrant awarding elevated costs on a substantial or even full indemnity basis.

General Principles

An award for elevated costs is warranted only where there has been reprehensible, scandalous, or outrageous conduct on the part of one of the parties.[3] Examples of what might constitute this kind of behaviour are baseless allegations of wrongdoing or meritless claims of fraud, deceit and dishonesty based on pure speculation against the other party.[4]

In Net Connect Installation Inc. v. Mobile Zone Inc., 2017 ONCA 766 at paragraph 8, the Court made an important distinction between awarding elevated costs on a substantial compared to full indemnity basis:

“Substantial indemnity costs is the elevated scale of costs normally resorted to when the court wishes to express its disapproval of the conduct of a party to the litigation. It follows that conduct worthy of sanction would have to be especially egregious to justify the highest scale of full indemnity costs.”

The threshold for obtaining elevating costs is high: elevated costs cannot be awarded solely because an application or action has little merit.[5] That being said, lets explore some of the “exceptional” cases where the Court felt that an elevated costs award was appropriate in the circumstances.

Case Examples

In Viertelhausen v. Viertelhausen, 2020 ONSC 7890, the applicant alleged, among other things, that the respondent had committed fraud when obtaining the certificate of appointment of estate trustee. The Court found this to be false, and considered this a very serious false allegation. The Court also found that the application was largely founded upon the applicant’s wide-ranging and unmeritorious allegations against the respondent, both personally and in the respondents capacity as estate trustee. The applicants allegations were “utterly without foundation” and advancing them in the manner that the applicant did was reprehensible conduct worthy of sanction. However, Justice Bell finished the analysis by concluding that “while the applicant’s behaviour was, without doubt, egregious, I cannot say that it was so ‘especially egregious’ that full indemnity costs are warranted”, and ordered the applicant to pay the respondents costs on a substantial indemnity basis.

In Dewaele v. Roobroeck, 2021 ONSC 1604, the applicant and the respondents were co-estate trustees of their late parents’ estates. Among other things, the respondents had not fulfilled their obligations as co-estate trustees, preferred their own self-interest over that of the other beneficiaries, failed to comply with court orders (even orders made on consent), refused to take any meaningful steps to facilitate the realization of the estate, and, by their own conduct, brought the administration of the estate to a standstill. The Court found that the respondents deliberately interfered with the applicant’s ability to complete the administration of their parents estates, and but for the conduct of the respondents, the litigation would not have been necessary. The respondents conduct was found to be reprehensible, outrageous, and worthy of sanction, and as a result the Court deemed elevated costs appropriate and ordered the respondents to pay the applicant’s costs on a substantial indemnity basis.[6]

In Re Estate of Ruth Smith, 2010 ONSC 4487, the applicant sought full indemnity costs against the respondent personally, and not out of the estate. While the respondent acknowledged that the applicant was entitled to seek costs against her personally, she submitted that costs should be awarded against her only on a partial indemnity basis. Among other things, the Court took issue with the respondents conduct throughout the litigation. The respondent made very serious allegations against the applicant, such as that he exercised a “lifetime” of undue influence over their mother, that he stripped away properties from their mother or placed them under his control in order to advance his own financial interests, and that his complete physical control over their mother prevented her from maintaining a relationship with the applicant. The Court found that there was no evidence to support any of those allegations, and ultimately ordered that the respondent pay the applicant’s costs on a full indemnity basis.

Conclusion

As can be a common theme throughout legal principles, an award of elevated costs is dependant on the specific facts of the case. Without the presence of some level of the type of conduct as described above, elevated costs will rarely be awarded. As stated judiciously by Justice Brown: “engaging in hard-fought litigation does not, in and of itself, attract an award of elevated costs, although it doubtless will result in a very robust award of partial indemnity costs.”[7]

 

[1] As per the definition laid out in Rule 1.03(1) of the Rules of Civil Procedure, RRO 1990, Reg 194, “substantial indemnity costs” mean costs awarded in an amount that is 1.5 times the amount of partial indemnity.

[2] Moore v. Getahun, 2014 ONSC 3931, at para 20; Courts of Justice Act, R.S.O. 1990, c. C.43, section 131.

[3] Young v. Young, 1993 CanLII 34 (SCC), [1993] 4 S.C.R. 3, (“Young”) at page 134.

[4] Re Estate of Ruth Smith; Smith v. Rotstein, 2010 ONSC 4487, at para 45.

[5] Young, at page 134.

[6] The Court found that the applicant was entitled to their costs on a full indemnity basis, however, ordered that the applicant pay roughly 76% of the applicants costs while the balance was paid to the applicant from the estates of their parents.

[7] Re Estate of Ruth Smith; Smith v. Rotstein, 2010 ONSC 4487, at para 32.