At the close of a Vancouver estate litigation matter, are costs paid out of the estate or is unsuccessful party personally liable for those costs? The answer to the question of who pays the legal costs and expenses relating to Vancouver estate litigation proceedings generally depends on who started the litigation and why.
General costs rule in Vancouver estate litigation
The general rule in Vancouver estate litigation is that costs follow the event (i.e., the unsuccessful party will be ordered to pay costs to the successful party). For example, the general rule is that the losing party in a wills variation case will pay costs to the winning party. Applications to vary a will on the basis that it has made inadequate provision for the will-maker’s spouse or children are brought under the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 [“WESA”]. The rationale for the costs rule is that actions brought under WESA for variation of a will presume the validity of the will, the capacity of the will-maker, and that the will-maker’s intentions are clear. Put another way, an unsuccessful action to vary a will under WESA cannot be said to have been caused by the will-maker, or to have been necessary to enable the estate to be distributed. The action does not benefit the estate, so the losing party is personally liable for costs.
Exceptions to the general costs rule in Vancouver estate litigation
The court has discretion to depart from the general rule and grant costs of a wills variation action to be paid out of the estate in certain circumstances – see here for our Vancouver estate litigation team’s discussion of the general rules and exceptions with respect to costs of wills variation proceedings in BC. In addition, in matters where the validity of a will or the capacity of the will-maker 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 based on 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 cases is whether the parties were forced into litigation by the conduct of the will-maker or the conduct of the main beneficiaries.
Recent costs trend in Vancouver estate litigation applications under s. 58 of WESA
Our Vancouver estate litigation lawyers have noticed trend for all of the parties in s. 58 WESA applications to have their costs paid from the estate. First, let’s discuss what a s. 58 application is. For a BC will to be valid and binding, it must meet certain formal requirements set out in s. 37(1) of WESA – it must be in writing; signed at its end by the will-maker in the presence of 2 or more witnesses present at the same time; and signed by 2 or more of the witnesses in the presence of the will-maker. A will or change to a will that does not comply those requirements is invalid unless the court orders it to be effective on an application under s. 58, which is known as a “curative provision” that allows the court to cure deficiencies in certain circumstances.
Recent s. 58 Vancouver estate litigation cases where costs paid from estate
Let’s have a look some Vancouver estate litigation decisions that demonstrate the trend.
The s. 58 application in Cook Estate (Re), 2019 BCSC 417 was brought by the executor of an estate for an order declaring that a handwritten document made by the deceased should be fully effective as though it had been made as the will or part of the will of the deceased, despite its failure to comply with the formal will requirements. The deceased in that case, Eleanor Cook, had made a will in 2005 which divided her estate equally among her three children (Jennifer, Aaron, and Laurel) and named Jennifer as the sole executor. Shortly before her death in 2017, Eleanor made a handwritten document which purported to give her estate to Jennifer and Aaron in equal shares (i.e. to the exclusion of Laurel). See here for our Vancouver estate lawyers’ detailed discussion of the facts in the Cook Estate matter. When the handwritten document was discovered, Jennifer brought the s. 58 application. The court ruled that the handwritten document was authentic but declined to decide summarily whether it should be given legal effect as representing the testamentary intentions of the deceased. The other parties to the application took the position that Jennifer was not neutral in her role as executor and thus should not receive her costs of the application from the estate since it was, in part, her alleged conflict of interest which necessitated the application. Jennifer was not just the executor; she was also a beneficiary of the estate and stood to personally gain if the position she took was accepted by the court (she would get a ½ share of her mother’s estate instead of a 1/3rd share). The court held that it was appropriate for Jennifer to bring the s. 58 application under the circumstances and ordered that all parties receive their costs on an indemnity basis to be paid out of the estate.
In Levesque Estate (Re), 2019 BCSC 927 the s. 58 application was brought by the executors appointed under a will for a determination of whether a change to a will that was not made in accordance with the statutory requirements was effective or not. In their notice of application, the executors appointed under the will sought either an order that the alteration was effective, or an order that it was not. The executors were effectively neutral on the issue; stuck in the middle of a family dispute and preferring not to take sides. The change to the will in question was made by white-out, covering the name of one of the beneficiaries (the deceased’s granddaughter). The change was not witnessed nor was it signed by the will-maker. Nevertheless, the court concluded that the marking on the will made with white-out covering the name of the beneficiary represented the deceased’s testamentary intention to revoke the bequest to her granddaughter and made an order that the alternation was fully effective as though it were made in compliance with the requirements of s. 54 of WESA. The co-executors sought an order for special costs, payable from the estate. Some of the beneficiaries of the will and the disinherited beneficiary opposed that order. The court was of the view that the parties were forced into litigation by the conduct of the deceased, as the deceased alteration of the will gave rise to a dispute among the beneficiaries of the will. It was reasonable for the executors to apply to the court to resolve the dispute. As such, the court ordered that all parties’ costs were to be paid from the estate and the executors’ costs should be assessed as special costs. See here for our discussion of the facts in the Levesque Estate matter.
In Quinn Estate v. Rydland, 2019 BCCA 91 all parties had their costs from the estate on a full indemnity basis not just for the s. 58 application, but also for the appeal from the chambers judge’s ruling on the application. The usual rule on appeal is that the unsuccessful party pays the costs. However, the Court of Appeal was of the view that the circumstances justified an exception to the usual rule. The executor of the estate sought the court’s guidance on the validity of what is known as a “pour-over clause” in a will (see here for our Vancouver estate litigation lawyers’ discussion of the case). The interests of the intended beneficiaries of the pour-over clause were clearly affected by that petition, requiring them to appear in the litigation. The pour-over clause was declared invalid by the chambers judge, but given the novelty of such clauses, it was reasonable for the disappointed beneficiary to launch the appeal. Though her appeal was unsuccessful, the Court of Appeal awarded all parties appearing on the appeal their costs on a special costs basis payable by the estate.
Bottom line on costs of Vancouver estate litigation
The recent trend for all parties in s. 58 WESA applications to have their costs paid from the estate is one that our Vancouver estate litigation lawyers will continue to monitor. The cases thus far appear to line up with the general costs principles in Vancouver estate litigation matters (i.e., based on a consideration of whether the parties were forced into litigation by the conduct of the will-maker or the conduct of the main beneficiaries).
If you would like to discuss your Vancouver estate litigation matter, we invite you to call (604) 900-2538 to schedule a free 30-minute consultation with Onyx Law Group.