People often believe that they can litigate a wills and estate matter in a "risk-free" manner because the estate will bear the legal costs of the disputants. That is generally not true. A litigant must be prepared to bear their own legal fees and to pay the costs of the opposing party if they are not successful.
Historically, the courts often ordered the estate to bear the legal costs of parties in an estate proceeding, regardless of whose position was successful. The rationale was that the litigation was caused by (and therefore, the fault of) the deceased. An example of this approach to costs is where an ambiguous clause in an instrument needs the court's interpretation. In such a situation, the court generally will award all parties (notwithstanding their opposing position on the interpretation outcome) their legal costs from the estate.
However, most estate disputes are now regarded as adversarial proceedings between parties who are pursuing their own personal interests in the disputed inheritance. As such, the courts now generally award costs as would be done in any other type of adversarial litigation – the successful party receives their costs from the unsuccessful party. The trend is moving away from awarding all parties' costs from the estate and to award costs in a way that requires estate litigants to assume costs risk for the positions they take in the legal proceeding.
An exception to this "winner gets costs" approach is that an executor generally receives their legal costs for the litigation from the estate, regardless of the outcome. However, where the executor is also a beneficiary and is found to be using their executor position and the estate funds to advance their own personal interests, a court may deny the executor their costs being paid by the estate: Dallas Estate (Re), 2024 BCSC 213 1.
Wills variation and dependant relief claims and disputes about which is the valid last will, based on claims related to the deceased's testamentary capacity, undue influence or otherwise, are often now characterized as adversarial, and costs are awarded to the successful party payable by the unsuccessful party: Singh Estate (Re), 2019 BCSC 1114. Some jurisdictions have legislation that expressly requires a person who fails to prove they are a dependant in a dependant's relief claim to pay costs for the unsuccessful challenge: s. 9, Adult Interdependent Relationships Act, SA 2002, c A-4.
Notably, courts are taking a more nuanced approach to awarding costs and often make "blended costs" awards. Costs may be awarded to a party up to a particular stage in a litigation but denied after a certain stage to reflect what should be reasonable conduct by parties once facts are discovered: Re McCarthy Estate, 2022 ABCA 131. Courts have looked at a variety of factors, including a party's use of social media, in assessing reasonableness of conduct in litigation: Lyons v Todd, 2019 ONSC 2269. Court orders may require the unsuccessful party to bear some share and the estate to bear some shares of the costs of the successful party: Holmes v Holmes, 2024 BCSC 510. If all parties act unreasonably, the court may opt to not make any cost awards, leaving each party responsible for their own legal costs: Medynski Estate Re, 2016 ONSC 4257.
Finally, the concept of using costs in a penal manner applies to estate litigation. If a party pursues a claim found to be entirely meritless and proceeds with reckless indifference regarding the evidence needed to establish their claim, special costs or substantial indemnity costs (being payable on a higher than usual scale) may be awarded against the unsuccessful party: Vassilaki v. Vassilakakis, 2024 BCCA 15. To be clear, special costs are awarded in circumstances of egregious conduct and not to punish for everything in an action, such as delays in advancing the claim by the unsuccessful party: Sinitsin Estate, 2024 BCSC 534.
Take heed! Before embarking on a particular litigation strategy in advancing an estate claim or defending an estate claim, one should turn their mind at the outset to: "who will pay the legal costs in this case"? All litigants should get advice from their lawyer as to how the risks of legal fees payments might fall in the circumstances of the particular estate case. 2 Throughout the litigation, the ultimate potential costs award, as to who potentially pays and how much, should be kept in consideration as parties make decisions in the legal proceedings to bring an end to the dispute.
Footnotes
1. This decision is under appeal and the ruling on costs may not be final.
2. The law concerning costs varies among Canada's provinces and territories, and the comments above do not apply in Quebec. Please contact us for specific inquiries.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.