We have previously discussed the issue of who pays the costs of a BC will challenge. The general rule in estate litigation is that the unsuccessful party pays the successful party’s court costs. However, the courts may depart from the general rule and order that costs of all parties be paid out of the estate where it was the conduct of the will-maker that raised the dispute (for example, where the validity of the will, the capacity of the will-maker to make a will, or the meaning of the will are at issue). This is on the principle that where such an issue must be litigated to remove all doubt, then all interested parties must be joined and are entitled to be heard and should not be out of pocket if the litigation does not conclude in their favour. The estate must bear the cost of settling the dispute as a cost of administration.
Special costs may be ordered in some BC will challenges
While all parties may have their costs paid from the estate where the difficulties or ambiguities that gave rise to the litigation were caused, in whole or in part, by the will-maker, those costs usually do not fully cover legal expenses. It is open to the court to award “special costs” in certain BC will challenges, which will result in a costs award that is closer to fully covering actual legal expenses. In today’s post, we will examine Sato v. Sato, 2020 BCCA 62, a recent estate matter in which the court assessed special costs to be paid out of the deceased’s estate following trial and appeal of a BC will challenge.
Underlying BC will challenge in Sato v. Sato
In May 2011 Hiroyuki Sato executed a will in BC which appointed his sister Helen as the executor of his estate and left the bulk of his estate to his two sisters equally. Both sisters lived in BC. While Hiroyuki had lived in BC earlier in his life, he never returned to BC after his May 2011 visit, instead living in Luxembourg. In April 2013, Hiroyuki married Makiko. In March 2014, Hiroyuki was diagnosed with cancer. He died in March 2015 while undergoing cancer treatments in Japan. Hiroyuki did not make any subsequent will after his marriage to Makiko, so if his 2011 will was valid, Hiroyuki’s entire estate would vest with his sisters to the exclusion of his widow. There was a significant sum of money in dispute, as the value of Hiroyuki’s estate was approximately $2,000,000.
Widow brings successful BC will challenge
Makiko brought an application in BC to revoke the 2011 will. Under BC law at the time of their marriage, Hiroyuki’s 2011 will would be revoked by his subsequent marriage to Makiko in 2013, resulting in an intestacy which would have the effect of making her the sole beneficiary of his estate. (Note that BC law has since changed, such that a marriage which takes place on or after March 31, 2014 no longer revokes a prior will.) The law in Luxembourg was different, so if it was found that he was domiciled in Luxembourg, the BC will would remain valid and his entire estate would vest with his sisters. Helen took the position that the 2011 will was valid.
Appeal from trial decision in BC will challenge
The trial judge concluded that Hiroyuki’s domicile was BC, the will was revoked, and Makiko was entitled to the estate. Helen appealed, but the trial judgment was upheld. However, Helen’s appeal on costs was successful, allowing both Helen and Makiko to recover their special costs from the estate. The Court of Appeal concluded that it was appropriate to order the parties’ special costs of both the trial and appeal against the estate as it was Hiroyuki’s conduct that raised the dispute as to the validity of his will. Hiroyuki drafted his will in 2011 while living abroad, and took no action after he was married to draw up a new one by the time he died in 2015. He was also diagnosed with cancer approximately a year before he died, yet took no steps to update his will. The Court of Appeal agreed this was a “good faith dispute” that arose from Hiroyuki’s failure to draft a new will before his death in 2015 and thus his estate should bear both parties’ special costs. It is significant to note the upshot of this finding: the practical effect is that Makiko, as sole beneficiary of the estate, bore both her own and Helen’s litigation expenses.
Assessment of special costs
Helen claimed $135,237.23 in fees, disbursements and taxes. On an assessment of special costs in an estate matter differ from a case where an award of special costs is made on the basis of conduct deserving of rebuke. There are several factors for consideration, including the complexity of the proceeding and the difficulty or novelty of the issues involved and the amount involved in the proceeding. The Registrar recognized that the Sato matter was of significant importance and accepted that it was appropriate for Helen to deploy significant resources given its high-stakes nature. As is frequently the case in estate litigation when the validity of a will is at stake, only complete success or failure was possible, given that the question of domicile could only be answered in one parties’ favour. However, at its core, the case had a narrow focus on the facts and law, a modest record, and very little procedural difficulty. In the result, Helen’s costs were reduced to $89,098.11.
Take home point on special costs of a BC will challenge
Costs – and in some cases, special costs – of both parties may be awarded against the estate where the difficulties or ambiguities that gave rise to a BC will challenge are caused, in whole or in part, by the will-maker’s conduct. The estate must bear the cost of settling disputes as a cost of administration.
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