All About Estates

Costs in Capacity Litigation

The question of who will bear the costs of a proceeding at the end of the day is often hotly debated, but the matter may be more complex in cases where the litigation concerns the guardianship of, or issues relating to, an incapable individual.

The court in Fiacco v. Lombardi (“Fiacco”) makes clear that “The exercise of the court’s discretion in respect of cost claims in capacity litigation should reflect the basic purpose of the SDA – to protect the property of a person found to be incapable and to ensure that such property is managed wisely so that it provides a stream of income to support the needs of the incapable person: SDA, sections 32(1) and 37.” Further, “When faced with a cost claim against the estate of an incapable person, a court must examine what, if any, benefit the incapable person derived from the legal work which generated those costs.”

Many may be familiar with Justice Brown’s decision in Salter v. Salter Estate, which Justice Brown refers to in Fiacco. Justice Brown confirmed that the general costs rules for civil litigation apply equally to estates litigation – the loser pays – and that parties cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation. Justice Brown also added, “Those comments apply with equal force to capacity litigation involving incapable persons, with some modification to fit the particularities of guardianship applications.”

Gadula v. Leroux is another case where the court addresses the payment of costs in a guardianship proceeding, but here the court considers an additional issue. Namely, whether counsel appointed pursuant to section 3 of the Substitute Decisions Act (i.e. section 3 counsel) are entitled to recover his or her costs from the incapable person’s property. In this case, which was a guardianship application, section 3 counsel sought his costs on a full indemnity basis. Section 3 counsel submitted that he was appointed to conduct a capacity assessment and to provide the incapable person’s position on the issues to the court. Counsel further submitted that he had no client per se and no basis for any recovery for his efforts, other than from the parties or from the incapable person’s property.

In considering whether to award section 3 counsel his costs, the court noted that such counsel are tasked with assisting the court with guardianship applications and providing valuable information to the parties. To an extent, the court commented, section 3 counsel may help to facilitate the resolution of such cases without the necessity of a full hearing. “Most importantly, they discharge their role in assisting the court with the fundamental issue of the best interests of the incapable person.”. The court went on to state, “It seems to me that in order that lawyers willingly accept and discharge their obligations under a s. 3 appointment, it is good public policy to permit s. 3 counsel to recover their full costs, as they generally have no other recourse for such reimbursement.  Of course, it is incumbent on s. 3 counsel to convince the court that their efforts and related fees are reasonable in the circumstances.  I find that is the case here.” Section 3 counsel was accordingly awarded his full indemnity costs.

The payment of legal fees in capacity litigation may be nuanced, however it is clear that the best interests of the incapable person continues to be the overriding consideration informing the court’s cost decisions.

About Joanna Lindenberg
Joanna is an experienced estates, trusts, and capacity litigator at de VRIES LITIGATION LLP. Joanna obtained her law degree from the Shulich School of Law at Dalhousie University after completing a Bachelor of Arts degree at McGill University. Following her call to the Ontario Bar in June 2011, Joanna obtained a Masters of Law at the University of California Los Angeles (UCLA), specializing in international and comparative law. Joanna's current practice focuses on, in part, will challenges, dependant’s support, capacity, and power of attorney disputes.

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