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Thursday, July 19, 2018

Spending $1 to recover a nickel: are there costs consequences?

A big factor in any type of litigation is the payment of legal fees. At the end of a trial or other court proceedings, the judge will usually make an order about who among the parties is paying the legal fees for whom. Perhaps everyone will pay his or her own lawyer. Perhaps the estate may have to cover some portion of fees. Or perhaps one party will be ordered to pay not only his or her own legal fees but that of the other parties as well. When that order is made, we call that having costs ordered against the party who must pay. Our general rule of court costs is that the loser of the case ends up paying for the fees of the winning party.

If you are involved in estate litigation, you know it's expensive. Your fees could be in the tens of thousands and perhaps even more. Your lawyer may already have warned you that your costs may be more than the asset you're fighting over.

This was the topic of an article I recently read on the blog of a Toronto law firm called Wagner Sidlofsky. Click here to read the article if you'd like more detail.

The question discussed in that post is whether the courts will punish parties for carrying on battles when the legal fees exceed the value of the asset they are fighting about. When that happens, you know that people are fighting on principle and perhaps are not being reasonable. The article took a look at what judges have been doing about costs in recent estate litigation cases.

While there isn't perfect consistency between judges, there is a trend towards judges refusing to allow costs awards that are above the value of the disputed asset, or even when not in excess of the value, are disproportionate to the value. The idea is to discourage parties from battling it out in the courts when there are better, cheaper, faster methods if only people would be reasonable.

The article talks about a case where the parties spent nearly $500,000 fighting over a $30,000 painting in an estate. The judge awarded the winning party most of what it wanted (about $200,000) against the losing party personally. This means the estate wasn't paying anyone's fees. The winner still had to absorb about a $100,000 tab. The loser had to pay $200,000 of the winner's fees plus about $250,000 of his own fees. I bet that made every single person involved sorry they ever laid eyes on that painting. Imagine having to pay $450,000 just because you wouldn't settle a dispute.

I'm pleased to see this trend. I've seen a number of cases where one stubborn person will hold up an entire estate, sometimes for years, refusing all reasonable settlement offers and insisting on putting everyone through the legal wringer for no good reason. Those people often get dinged with costs. I am happy to see cases we see where the judges make decisions not to punish people who have won a case because not only were in the right legally, but they made settlement offers and did all they could to avoid going to court. The people who insist on using the courts as their personal hammer despite all logic are exactly the folks who should be paying the costs.

5 comments:

  1. Loved your blog about the case involving the "Madness of King George" in the context of estates. Are you sure the parties weren't named "Jarndyce v. Jarndyce?"

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    Replies
    1. I loved that "Bleak House" had that endless estate litigation file in it! Dickens must have had some experience with one.

      Lynne

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  2. Lynne
    The article talks about a case where the parties spent nearly $500,000 fighting over a $30,000 painting in an estate.[..]
    Now this one, does not make any sense. This case IMO is just wasting everyone's time and is making lawyers wealthy.
    As you are aware I have been involved in a lengthy Estate matter. No simple Estate involving a modest property and some GIC's should take 14 years to resolve and settle. Over 2000 to 3000 pages of docs. You can well imagine, something is VERY wrong here. I have never been accused of not fulfilling my role as Executor. I cannot be accused of not being reasonable. I have 'conducted myself accordingly' ? I have co-operated 100%.
    I hope to add more later. I could write a book.
    webeye

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    Replies
    1. In reading some more background on those costs cases, I note that the judges were careful to say that they would not punish any party who had been completely reasonable and had made every effort to settle or figure things out. I think that's an important point; there are cases in which you CAN'T end the fight because the other side simply will not allow things to end. I have one like that right now. It should have settled long ago (the clients were involved in this for 8 years before they came to me) and my clients want to settle it but there is one party who wants to fight to the bitter end. We plan to eviscerate her on costs because she is so unreasonable. People like you who genuinely try to deal with things in a reasonable way should not be punished with costs.

      Lynne

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  3. Lynne,

    A lot of Estate matters are so simple, but somehow, they end up getting complicated. IMO there is a problem with the system. My lawyer has dug himself into a hole. He will not respond to my emails nor my requests that he call me. He has lied, fabricated, withheld critical documents from me and the Court. My request for witnesses was ignored. The other side is well aware of what is going on. I still have some hands to play. Most people would have given up a long time ago. What is my recourse? Can I ask for a meeting with the Motions Judge?
    Webeye

    ReplyDelete

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