At long last, cottage season is upon us. As I gaze longingly out my window at the construction of what looks like an awesome rooftop patio in the making, I thought it would be fitting to write about a cottage dispute. A really, really expensive cottage dispute.
The background was as follows. The mother, Grace, made a will in 2010 leaving her condo to her daughter Barbara and her cottage to her son Peter. There was no issue that Grace was capable when she made her 2010 will.
In July 2011, Grace became worried about her ability to continue to maintain the cottage expenses on her fixed income. With assistance from Barbara, Grace sold the cottage for $310,000.00. Peter alleged that Grace was not mentally capable at the time and that it was Barbara who was really behind the sale of the cottage. Peter accused his sister of conspiracy and fraud in an attempt to deprive him of his inheritance. Barbara claimed that the decision to sell the cottage was Grace’s alone and that Grace was fully competent to enter into the sale. Barbara insisted that her assistance was limited to carrying out her mother’s instructions because Grace had been hospitalized with a serious illness and was physically unable to attend to all aspects of the sale.
Before the sale could close, Peter got Grace to sign a deed making him a joint owner of the cottage. Much litigation ensued. In 2011, Grace sued Peter to get her cottage back from him. There was also litigation involving the purchaser.
Grace was declared incapable in 2012 and the PGT was appointed as her guardian of property. Accordingly, the PGT took over Grace’s action against her son. In 2013, Peter sued Barbara alleging conspiracy and fraud. Eventually, the purchaser, Peter and Grace reached a settlement in October 2015. However, Peter’s litigation against Barbara continued until Barbara brought a motion for summary judgment to dismiss Peter’s action.
Faced with the summary judgment motion, Peter capitulated and agreed to a dismissal of his action against Barbara. As such, the sole issue to be decided was costs. Justice Hainey ordered substantial indemnity costs payable by Peter to Barbara. However, he observed that “costs of these proceedings are completely disproportionate to the modest value of the Cottage.”
The cottage was worth just over $300,000. The legal costs sought by Barbara against Peter were $403,174.85. This figure did not represent all of the legal costs for this dispute. Costs had already been ordered in respect of interim motions. Accordingly, Barbara’s actual legal fees would have been in excess of the $403,174.85 sought in her Bill of Costs. As well, this figure represented only Barbara’s costs; it did not include the legal fees incurred by Peter, Grace and the purchaser.
There are three elements of a costs award: (a) entitlement – who should pay costs (usually the loser) and who should receive costs (usually the winner); (b) scale (whether partial indemnity, substantial indemnity or full indemnity); and (c) quantum. The presiding judge will typically decide all three elements but may also refer the issue of quantum to an assessment officer. Here, because of his concerns about proportionality, the judge referred Barbara’s Bill of Costs to an assessment officer under Rule 58 of the Rules of Civil Procedure and put off fixing the amount of Barbara’s costs until he was in receipt of the assessment officer’s report.
Clients are often reluctant to settle a claim they regard as unmeritorious. I have heard more than once, “I would rather pay you than him.” But standing on principle can be costly. Even a “home run” at trial will leave the victor out of pocket for any legal fees (s)he cannot recover from the unsuccessful other side.