All About Estates

Proportionality and costs awards

In Fanelli v. Fanelli-Bruno, 2023 ONSC 6501, Justice Myers provided clear direction on the principle of proportionality in litigation, and the ways in which it can influence a decision on costs.

 

The decision

The estate of Ms. Lina Fanelli, the mother of the Applicant and Respondent, was the subject of the recent Fanelli decision, which was released earlier this month. Approximately one year before her death, Ms. Fanelli drafted a new will. The original will was a simple 50/50 split between the Applicant and Respondent. The new will reduced the share of each of them to 25% and split the remaining 50% evenly between Ms. Fanelli’s two grandchildren, who are the children of the Respondent.

The Applicant commenced an application challenging the new will on grounds of incapacity and undue influence. The Court found that although Ms. Fanelli suffered health issues at the time that the will was signed, there was no evidence that her capacity was lacking or that she was not able to manage her affairs and finances. Further, Justice Myers pointed out that no evidence had been introduced by the Applicant in support of his allegations of undue influence against the  Respondent. More generally, the Applicant would not have been able to get beyond the evidentiary threshold required for a finding of suspicious circumstances.

Ultimately, the Applicant withdrew his will challenge after several years of costly litigation, leaving just the issue of costs before the Court. The Court awarded $74,000 to the Respondent, payable by the Applicant personally, and not from the estate as the Applicant had sought.

 

Proportionality

One major factor leading to the costs award was the relatively modest value of the estate, which stood in stark contrast to the litigation tactics employed by the Applicant. Early in his decision, Justice Myers noted that under the new will, the inheritance of the Applicant was reduced from about $160,000 to about $75,000. This meant that the Applicant stood to gain at most $85,000, if entirely successful in his application. Nevertheless, the Applicant engaged in litigation tactics that were described by the Court as four years of  “scorched earth” and “DEFCON 1”, racking up approximately $150,000 in legal fees between the two parties – nearly double what the Applicant stood to gain in his best-case scenario.

Justice Myers referred to a 2022 ONCA decision, Johnson v. Johnson, 2022 ONCA 682, in which  the Court of Appeal warned against improper use of applications or motions for directions in estate matters. Without a minimum evidentiary threshold, it is easy for a disgruntled relative that received less than expected (or nothing), to commence litigation, including never-ending and expensive motions or requests for documentary disclosure, in order to hunt for any piece of evidence with which to back his or her allegations.  Cases such as Johnson, Fanelli and Giann v Giannopoulos, 2023 ONSC 5412, stand in the way of such tactics, and reinforce the principle of proportionality, encouraging litigants to engage in a more measured and proportionate approach and ensuring that the minimum evidentiary threshold is met.

 

Take away

It is important to bear in mind what the best-case outcome of litigation is when developing a one’s litigation strategy. If the estate at issue is relatively modest, it is worth considering whether embarking on costly and protracted litigation will cost a disproportionate amount in legal fees, perhaps even approaching the value of the estate in question. Further, if a litigant’s case is lacking in key evidence and he or she nevertheless persists in launching litigation on the basis of allegations that turn out to be unfounded, there could be a costs award made against the litigant, even if the main issues are settled out of Court.

 

Thanks for reading.

About Jonathan Pellow

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