Who pays the legal costs and expenses relating to BC estate law proceedings? Are costs paid out of the estate or is the party personally liable? The answer depends on who commenced the proceedings and why. For example, the general rule is that an executor who is also a beneficiary cannot recover from the estate his or her legal costs flowing from his or her participation in a wills variation proceeding (though there are exceptions to that rule, such as where the executor-beneficiary’s participation was limited to defending the will in a “neutral” manner
Another general rule is that costs follow the event for wills variation actions (i.e. the losing party at trial is personally liable to pay the winning party’s costs and costs are not payable by the estate). In BC estate law, this is referred to as the “rule in Steernberg”, following the court’s concise statement of principles governing costs in estate actions in Steernberg v. Steernberg, 2007 BCSC 953. The court in Unger v. Unger Estate, 2017 BCSC 1746 recently affirmed the rule in Steernberg but concluded on the facts that it was appropriate to depart from the general rule. This article will examine the general rule and reasons why it may not be followed in certain BC estate law proceedings.
BC estate law: The Rule in Steernberg
In Steernberg v. Steernberg, 2007 BCSC 953 at para. 21 Martinson J. provided a helpful statement of the principles governing the issue of costs in BC estate law proceedings (emphasis added):
[21] In Vielbig v. Waterland Estate (1995), 121 D.L.R. (4th) 485, 1 B.C.L.R. (3d) 76 (C.A.), the British Columbia Court of Appeal approved the following summary of the law made by Master Horn in Lee v. Lee Estate (1993), 84 B.C.L.R. (2d) 341 (S.C.), with respect to costs in estate actions and actions under the Wills Variation Act:
An order for costs in favour of a completely unsuccessful party against a completely successful party is a most exceptional order. The general rule is that costs follow the event and, while a court may depart from this rule, any departure is usually in the way of depriving a successful party of costs and not of awarding costs to an unsuccessful party. In either case, the usual rule should not be departed from simply because an unsuccessful party did not expect to lose…
In probate or administration actions or in proceedings for the construction of wills, the rule may be more frequently departed from. In such cases where the validity of a will or the capacity of the testator to make a will or the meaning of a will is in issue, it is sometimes the case that the costs of all parties are ordered to be paid out of the estate. This is upon the principle that where such an issue must be litigated to remove all doubts, then all interested parties must be joined and are entitled to be heard and should not be out of pocket if in the result the litigation does not conclude in their favour. The estate must bear the cost of settling disputes as a cost of administration… . The question to be asked in such case [sic] is whether the parties were forced into litigation by the conduct of the testator or the conduct of the main beneficiaries.
But the case is different where the litigation does not relate to the validity of the will or the capacity of the testator or the construction of the will. Actions brought under dependants’ relief legislation presume the validity of the will and the capacity of the testator and that his intentions are clear. There are not doubts to be settled. The remedies provided by such legislation are directed to the maintenance and support of the dependants of the testator and are based on public policy. The legislation does not invalidate the will, it merely permits the court to vary the provisions made by the testator. So an unsuccessful action under such legislation cannot be said to have been caused by a testator, or to have been necessary to enable the estate to be distributed. The action does not benefit the estate.
Exceptions to the rule in Steernberg
The court in Unger v. Unger Estate, 2017 BCSC 1746 affirmed the rule in Steernberg but then articulated circumstances where it may be appropriate for the court to depart from the general rule:
[66] The rule in Steernberg – that beneficiaries acting in their personal capacity in wills variation actions will be personally liable for costs – is often applied by BC courts: see e.g., Doucette v. McInnes, 2012 BCCA 235 at para. 28. However, the court has discretion not to follow the general rule and has departed from it on several occasions, notably where beneficiaries have been drawn into the dispute because of the testator’s conduct and failure to make adequate provisions: see e.g., Todd v. MacDonald Estate, 2009 BCSC 537 at para. 6; Griese v. Syvret, 2013 BCSC 1601 at para. 80.
In Unger v. Unger a widow who was left out of her husband’s will brought a successful application to vary the will against her husband’s children from a previous marriage. https://onyxlaw.ca/wills-variation/bc-wills-variation-legal-moral-duties-second-spouse/ In Forth J.’s view, the situation warranted a departure from the general rule that the defendant children should be personally liable for costs, as the will-maker’s decision to provide nothing through the will to his spouse of 34 years made a claim for variation very likely, if not inescapable.
Take home point on costs in BC estate law
The general rule in BC estate law is that the losing party in a wills variation case will pay costs to the winning party. However, the court has discretion to depart from that rule and grant costs out of the estate – for example, where the beneficiary has been drawn into the dispute because of the will-maker’s conduct and failure to make adequate provisions in the will.
Frequently Asked Questions
Are wills variation costs paid out of the estate in BC?
Not as a default. The general rule, from Steernberg v. Steernberg, 2007 BCSC 953, is that costs follow the event: the losing party pays the winning party’s costs personally. A wills variation claim assumes the will is valid, so an unsuccessful claim is not treated as something that benefited the estate.
When might a court order costs from the estate instead?
The court has discretion to depart from the usual rule. Where the litigation was reasonably caused by the will-maker’s own conduct, or was needed to resolve genuine uncertainty about the will, costs may come from the estate. Unger v. Unger Estate, 2017 BCSC 1746, is an example of a court departing from the general rule on its facts.
Can an executor recover legal costs from the estate?
It depends on the role the executor played. An executor who is also a beneficiary generally cannot recover costs from the estate for participating in a wills variation fight in their own interest. An executor who stays neutral and simply defends the will in a proper, even-handed way is treated differently.
Why does the costs rule matter before starting a claim?
Because losing can mean paying the other side’s costs out of your own pocket, not the estate. That risk is part of deciding whether a wills variation claim is worth pursuing. A realistic view of the strength of the claim and the potential costs exposure should come before filing.