Estate Litigation and Solicitor-Client Costs
In the recent decision of Fech v Lewington, 2022 ABCA 154, the Alberta Court of Appeal provided a useful summary of the law on solicitor-client costs in estate litigation matters.
In Fech, the appellants sought to overturn the decision of a chambers judge dismissing their application for formal proof of will and awarding solicitor-client costs in the amount of almost $250,000.00.
The chambers judge awarded solicitor-client costs against the appellants who were seen to have made numerous allegations of misconduct against the respondent, including of undue influence, which were not supported by evidence. The chambers judge identified that allegations of undue influence are extremely serious, akin to allegations of fraud, which, if unproven, usually result in serious cost consequences.
The Alberta Court of Appeal confirmed that the Surrogate Rules, Alta Reg 130/1995 provide judges with discretion regarding costs, including solicitor-client costs, as follows:
Rule 64(1)(h) permits a judge to order costs to be paid from the estate or by any person who is a party to the application;.
Rule 90(h) allows for the payment of costs, including to penalize any person who required formal proof of will where it became clear during the proceedings that:
(i) the application was frivolous or vexatious,
(ii) the person caused undue delay, or
(iii) the person had no substantial basis for requiring the scrutiny of the court.
The Alberta Court of Appeal confirmed further that in addition to the Surrogate Rules, the modern rule is that the usual presumptions on costs found in the Alberta Rules of Court, Alta Reg 124/2010 apply to estate litigation as well.
The Alberta Court of Appeal summarized the following principles relevant to awards of solicitor-client costs in estate litigation matters:
- Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous, or outrageous conduct by one of the parties and in rare and exceptional circumstances, for example when misconduct occurs in the course of litigation.
- Solicitor-client costs are not justified merely because one party was unsuccessful in the litigation, even if the unsuccessful litigation had little merit.
- In estate litigation, solicitor-client such costs are reserved for cases of misconduct, bad faith, or unreasonable conduct on the part of the unsuccessful party.
The Alberta Court of Appeal in Fech ultimately overturned the costs award of almost $250,000.00, finding that such award was not reasonable. The respondent was described as having been resistant to a number of interlocutory applications and her change of counsel twice in the course of nine months resulted in extra costs being incurred. While the appellants were seen to have made serious allegations of misconduct against the respondent, some unsupported by any evidence and against the weight of highly credible, independent evidence, the Alberta Court of Appeal found that this conduct was offset to some degree by the respondent’s opposition to the appellants’ reasonable applications in the course of litigation.
The Alberta Court of Appeal substituted a lump sum costs award of $100,0000.00 for the award imposed by the chambers judge.