Trustees have costs awarded against them for prolonging the dispute unnecessarily

 

Any readers who have been involved in litigation or who are thinking about engaging in litigation have probably heard about costs. At the end of a lawsuit, the parties are allowed to ask for costs. In other words, they can ask that the other side be ordered to pay at least part of their legal bill. 

The judge who hears the case is the one who decides who is paying costs to whom and in what amount. A judge has quite a bit of discretion and can make an award that ranges from no costs being paid at all to full indemnity. When an estate is involved, there is an added wrinkle, because some parties to the litigation will ask that their costs come out of the estate rather than from the other litigants.

Because the court has so much discretion in the award of costs, it's worthwhile to keep up with new cases that show what the judges are doing with estate costs. Doing so gives me information that I can use to advise my clients how to behave and what to expect from the courts. An example of such a case is a new one from Ontario called Cardinal v Perrault. 

The main steps by the parties to this case were an application for advice and direction, later followed by an application to pass accounts. In other words, there were no unusual steps or strange happenings; these were applications that are common to many estates. 

At the end of the lawsuit, both sides asked for costs on a full indemnity basis, even though full indemnity is rarely given (there has to be 'reprehensible' conduct by one of the litigants before full indemnity may be granted). Both of the litigants were trustees of the estate and wanted the costs paid from the estate if not from the other party. 

In the end, the judge ordered some costs for both sides. Mr. Cardinal was awarded $18,000 against Mrs. Perrault. On the other side, Mrs, Perrault was awarded $48,000 against Mr. Cardinal. The parties had to come up with the funds themselves. The judge refused to order that the costs come out of the estate because the estate was only $339,000 and the judge thought that depleting it was unfair.

The interesting part is the reason the judge gave for awarding the costs. He specifically referred to the 'lack of self-awareness' of the parties about their own conduct. The parties fought about everything. One asked for an accounting and the other refused even though the first person had the right to an accounting. They fought over whether the proceedings should be held in French even though the party requesting it had a right for it to be held in French. One side made personal comments about the other. The judge said that both of them had been unreasonable and had missed opportunities to settle. 

In other words, if you're making things harder on everyone or prolonging a fight for no good reason, you could end up literally paying for it.