Estate administration issues can be emotional, and tensions can run high. During the administration of an estate, it is important to remember that allegations of breach of trust and fraud are distressing to those at whom the allegations are directed and can taint a person's reputation. In the recent related decisions of Bryant Estate v Bryant 2015 ONSC 161 and Bryant Estate v Best 2015 ONSC 1853, it is clear that the serious nature of allegations made during estate litigation can affect the costs awarded to successful parties where evidence to support the claims against executors is lacking.
When trustees and beneficiaries disagree over the administration of an estate, the accusations levelled in the estate proceedings can inherently imply dishonesty and fraud. This is due to the nature of the issues that can arise in estate proceedings. A relative who arranges for an incapable person to draft a will benefitting themselves, or a trustee who mismanages funds for their own personal benefit, are, at best, careless or wilfully blind and, at worst, intentionally breaching trust and engaging in fraud. Courts are now considering the seriousness of these accusations more than ever in awarding costs against unsuccessful parties in litigation.
The decisions in the Bryant Estate cases arose from a dispute between the deceased's son and daughter, and the estate trustee during litigation and the deceased's common law wife. The estate was under the care of the trustee as a result of a claim by the spouse against the estate. Subsequently, after resolving the issues of the division of the estate and signing minutes of settlement to that effect, the son, supported by the daughter, brought a motion against the trustee. The spouse supported the trustee.
The son and daughter demanded that the trustee be removed, among other requests, for a battery of reasons, including that the trustee was, "incompetent, dishonest and biased." The son and daughter questioned almost every aspect of the trustee's administration of the estate, as well as the trustee's motives, integrity and competence throughout the court materials. The Honourable Madam Justice Louise L Gauthier, who presided over the motion proceedings, did not accept the majority of reasons given by the son and daughter. At the outcome of the motion the son and daughter were unsuccessful in most of their claims. The reasons for costs were submitted in writing.
In her decision on costs, Justice Gauthier referenced previous case law highlighting that courts should limit costs payable by estates to scenarios in which the litigation was reasonably necessary to ensure proper administration of the estate, or in the event that the actions of the testator (the deceased) gave rise to the litigation. She also referenced the fact that "costs on the higher scale will be awarded where there are unfounded allegations of fraud and dishonesty."
In relation to the conduct of the son and daughter, Justice Gauthier stated, "the positions advanced by both Steven and Sarah were ill-considered from the outset and completely unsupported by any cogent or coherent evidence." She further stated, "... Steven did make unfounded allegations of fraud, dishonesty, incompetence and other improper conduct 'seriously prejudicial to the character of reputation' of the trustee. Sarah supported Steven's position." Justice Gauthier also found sanction of the court was required because the motion at hand had already been addressed in previous motions and in the minutes of settlement.
While the fact that the son was self-represented and drafted his own court materials may have contributed to the fact that his materials were "intemperate and disrespectful", the daughter was represented by counsel. The judge specifically mentioned that the court materials submitted by the daughter, "contained largely her opinion on matters, and few relevant facts", not enough proof of misconduct to justify removal of the trustee.
Justice Gauthier considered the above factors and awarded personal and legal costs to the trustee and spouse on a substantial indemnity basis in the amounts of $44,166 and $29,327 respectively plus HST. While a comparatively small share for costs for an adjournment was to be paid to the son and the daughter personally by the trustee and the spouse, the substantial costs awarded to the trustee and the spouse for the motion were to be paid personally by the son and the daughter out of the son and daughter's shares of the estate and not as estate expenses. In essence, Justice Gauthier allocated essentially all of the costs of the motion to the son and daughter.
What is the lesson to be taken from these decisions? As estates, along with many other areas of legal practice, become increasingly litigious, those who choose to bring lawsuits against estates should ensure they have a solid legal foundation for their arguments and sufficient evidence prior to bringing a motion before the court. Woe be it to beneficiaries or their counsel who attend court with unfounded accusations and no actual evidence of mismanagement by the estate trustee. Unfounded accusations are not tolerated by the court, especially when serious accusations of breach of trust and fraud are involved. Costs will be awarded against parties as a result. Lawyers would be well advised to ensure that their clients are informed of the risks of bringing frivolous or unsubstantiated motions in the area of estate litigation, as this case has determined that estates will not be picking up the tab for unfounded claims.
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