ABCA Confirms There is No Longer a Costs Presumption in Estate Litigation
In McCarthy Estate (Re), at issue was a document labelled “Last Will and Testament” authored by the deceased that lacked any witness signatures. Witness signatures are required on such documents pursuant to s. 15 of Alberta’s Wills and Succession Act (the “Act”). Consequently, the document’s validity depended on s. 37 of the Act:
37 The Court may, on application, order that a writing is valid as a will or a revocation of a will, despite that the writing was not made in accordance with section 15, 16 or 17, if the Court is satisfied on clear and convincing evidence that the writing sets out the testamentary intentions of the testator and was intended by the testator to be his or her will or a revocation of his or her will.
At Chambers, the judge found that the document was not a valid will, and awarded the successful respondent costs under Schedule C of Alberta’s Rules of Court, which outlines the Tariff of Recoverable Fees in a proceeding.
The Court of Appeal’s Analysis
On appeal, the Alberta Court of Appeal confirmed that the document was a valid will of the deceased. The main issue before the Court of Appeal was regarding how the successful appellants sought costs payable by the respondent, and how they were to be assessed. The unsuccessful respondent asked that the costs be paid out of the deceased’s estate, on a solicitor-and-own client basis.
At the outset of their analysis, the Court of Appeal emphasized that there were two kinds of legal and estate expenses involved in this case:
- The first type is with respect to how an executor or administrator, including a de facto administrator, will generally be reimbursed from the estate for expenses legitimately incurred, including legal fees. Whether a party is entitled to reimbursement, and for what amount, must be settled by the parties, or dealt with by a trial court.
- The second type are the legal costs of the litigation itself. Those are the costs (assessable legal fees and disbursements) directly related to the various applications to the court to resolve the issue about the validity of the testamentary document, and the subsequent appeal. It was these type of costs that were the subject of the litigation before the Court of Appeal.
Regardless of the type of costs though, the Court of Appeal noted that awarding costs is an “inherently discretionary exercise”, but that discretion must be exercised in accordance with established principles and presumptions. Costs awards are designed to partly indemnify the successful party for its legal expenses. Notwithstanding, costs awards also achieve other purposes. They can be used to:
- Encourage settlement;
- Prevent frivolous, vexatious or harassing litigation; and
- Encourage economy and efficiency during litigation.
With these objectives in mind, a successful party to litigation is presumptively entitled to be paid costs by the unsuccessful party.
However, the Court of Appeal made clear that there is no longer any presumption that all the parties in estate litigation will be paid costs out of the estate funds. Moreover, there is no fixed formula for determining whether estate litigation should be paid for out of estate funds.
In determining whether the rationale behind costs awards and the underlying public policy objectives are being served, the Court of Appeal confirmed previous case law which discussed how a variety of factors must be considered. These include, but are not limited to, considering the following questions:
- Did the testator cause the litigation?
- Was the challenge reasonable?
- Was there an allegation of undue influence or lack of capacity?
- Was the conduct of the parties reasonable? and
- Were there offers to settle?
Applying these factors to this situation, the Court of Appeal found that, while some factors actually favoured the respondent, fundamentally, the respondent was unsuccessful on the issue of the validity of the testamentary document. In addition, there was no reasonable basis shown by the respondent to extend the dispute in a manner which challenged the deceased’s mental capacity.
As a result, the Court of Appeal held that the respondent had not established an entitlement to be paid solicitor-and-client costs out of the estate. Instead, the only costs to be paid of the estate were normal party-and-party costs pursuant to Schedule C of the Rules of Court.
The main takeaway from McCarthy Estate is that cost awards are discretionary.
No longer does a presumption exist that the parties to estate litigation will be paid costs out of the estate funds. Instead, courts must consider several different factors when making costs awards, beyond which party is successful.
McLennan Ross can provide legal advice to individuals as it relates to pending or ongoing estate litigation matters.
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.
 McCarthy Estate (Re), 2022 ABCA 131 [McCarthy Estate].
 Wills and Succession Act, SA 2010, c W-12.2 (the “Act”).
 Alberta Rules of Court, Alta Reg 124/2010.
 McCarthy, supra note 1 at paras 10-11.
 Ibid at para 12.
 Ibid at para 14.
 Ibid at para 15.
 Ibid at paras 16-42.
 Ibid at para 44.