Written on October 14, 2014 – 6:00 am | by Angela Casey
My colleague, Diane Vieira, recently blogged about the Divisional Court’s decision in Quinn v. Carrigan. While she highlighted what the case had to say about the proper approach to determining dependant’s support, the case is also instructive on who should bear the costs of a dependant support application.
Prior to McDougald Estate v. Gooderham and Salter v. Salter Estate (in which Justice Brown notoriously warned estate litigants that an estate is not an ATM from which they may freely draw cash to pay their legal fees), there was a prevailing assumption that costs in Ontario estate litigation would typically be paid out of the estate. However, it has been clear for a number of years now that parties in estate litigation face the same risks as any other Ontario litigant: if you end up the loser in the litigation, you risk being ordered to pay some or even all of the winner’s legal fees, depending on how unreasonable the judge determines your position to have been.
An important exception to the “loser-pay” principle was highlighted in the Gooderham decision. That is, where litigation was the “fault” of the testator, then the costs of the litigation should presumptively be paid out of the testator’s estate. In Carrigan, the Divisional Court confirmed that where a testator fails to adequately provide for one of his dependants in his will, then it will be appropriate that the reasonable costs of an ensuing dependant support application be paid out of the estate. In Carrigan, the Court wrote that “the fault for the litigation lies squarely on the shoulders of Ron Carrigan, who could have taken the steps necessary to arrange his legal affairs before his death…the failure to organize his affairs to provide adequately for Ms. Quinn was his failure alone.”
I do not think that many who practice estate litigation in Ontario would be surprised at this proposition. However, the Divisional Court in Carrigan confirmed that this may not end the analysis. If parties in dependant support litigation take unreasonable positions that tend to increase the costs of litigation, then those parties risk having their cost award reduced by the costs attributable to their “bad behavior” as litigants. Thus, the Court found in Carrigan that “although the genesis of this dispute arises from Mr. Carrigan’s failure to arrange his affairs properly, Ms. Carrigan and Ms. Quinn also bear significant responsibility for the way in which this litigation has unfolded. There has been some intransigence on both sides.”
The Divisional Court found that neither Ms. Quinn (the claimant), nor Ms. Carrigan, acting on behalf the estate, was without fault:
- Ms. Carrigan acted unreasonably by refusing to provide information about estate assets to Ms. Quinn and requiring that Ms. Quinn accept an offer to settle without full information about the estate’s assets.
- Ms. Quinn unreasonably tried to re-argue an aspect of the dispute that had already been determined by the Court of Appeal.
- Ms. Carrigan disputed factual issues which should have been conceded, arguing that Ms. Quinn was not a “real spouse” and denying that she and Mr. Carrigan had ever separated.
- Ms. Quinn spent an inordinate amount of court time trying to establish misconduct in the administration of the estate by Ms. Carrigan; the Court found that those issues “occupied an undue amount of time at trial relative to their significance.”
As a result, the Divisional Court held that each side should receive only partial indemnity costs out of the estate. To the extent that each party incurred costs in excess of the partial indemnity costs awarded, those additional costs were to be borne by each party personally.
The take away from the Divisional Court is that even if dependant support litigation begins because of the fault of the testator, parties have a responsibility to litigate proportionately, to avoid litigious behaviour which tends to exacerbate, as opposed to resolve, the issues between them, and to avoid unreasonable positions. They may face cost consequences if they fail to meet these expectations.