On December 21, 2022, the Court of Appeal released its decision in Di Nunzio v Di Nunzio, 2022 ONCA 889 (CanLII) (“Di Nunzio”). The testator’s daughter appealed the lower court’s decision dismissing the challenge to her mother’s will (Di Nunzio v. Di Nunzio, 2021 ONSC 6689 (CanLII)). The daughter appealed the dismissal of her will challenge and sought leave to appeal the $111,395.45 costs award against her.
The appellate court did not agree that the application judge made any reversible error dismissing the will challenge. It found that the application judge gave “compelling reasons” for accepting the evidence of the appellant’s sister, who was named sole executor and sole beneficiary in the challenged will.
The appellate court then considered whether leave ought to be granted to appeal the costs decision. The appellant argued that, even if her appeal was unsuccessful, her costs ought to be paid from the estate because she raised reasonable grounds to challenge the will. The reasonable grounds meant that public policy considerations existed to award costs from the estate.
The relevant costs principles from McDougald Estate v. Gooderham, 2005 CanLII 21091 (ON CA) (“McDougald”) were reviewed: costs in estate litigation follow the civil costs rules (colloquially referred to as the “loser pays” principle). This is the general principle unless the court finds that there are public policy considerations that exist. Public policy considerations include where questions about the validity of the will arises from the conduct of the testator, or there are reasonable grounds upon which to challenge the validity of the will. Since the appellate court found that the application judge did not give reasons in deciding the issue of costs, the decision was not subject to deference and leave to appeal the costs award was granted.
In a bit of a twist, however, although the appellate court found that the appellant had grounds to challenge the will, it found that those grounds did not rise to the level of the public policy considerations outlined in McDougald. The appellant was therefore not entitled to costs from the estate. However, the grounds she raised in the will challenge were “not frivolous” and she raised “triable issues warranting court scrutiny.” The appellate court also noted the following comment by the application judge:
“at first glance, [Mrs. Di Nunzio’s] decision to leave all of her estate to Teresa, excluding both Lucia and Robert, could be considered as a suspicious circumstance.”
The appellate court exercised its discretion and set aside the costs order against the appellant. The appellant is responsible for her own costs of the application while her sister’s costs are paid from the estate. Since the sister is the sole beneficiary of the estate practically this means she pays her own costs. After an unsuccessful will challenge and in the absence of public policy considerations, bearing only one’s own costs is the best possible outcome.