Ontario Court Of Appeal Confirms Modern Approach To Cost Awards In Estate Litigation: McGrath v. Joy

• Published date: 05 April 2022
• Subject Matter: Litigation, Mediation & Arbitration, Family and Matrimonial, Trials & Appeals & Compensation, Wills/ Intestacy/ Estate Planning
• Law Firm: Miller Thomson LLP
• Author: Alexander J. Swabuk and Arjun Gandhi

On February 10, 2022, the Ontario Court of Appeal (the "Court") released its decision in McGrath v. Joy, 2022 ONCA 119. In this case, the applicant challenged the validity of a holograph will written shortly before the testator committed suicide because there was evidence that the testator had been drinking and using drugs the day before his death. The application judge weighed the evidence and determined that the testator lacked the testamentary capacity required to make a valid will; ultimately, the Court of Appeal reversed this decision. More interesting, however, were the Court of Appeal's comments on the principles governing cost orders in estate litigation.

The traditional approach to estate litigation involves having the testator's estate pay for all of the parties' costs. The rationale for this approach was that if there were reasonable grounds on which to question the execution of a will, the interpretation of a will, or the testator's capacity to make the will, then it was in the public interest for such questions to be resolved without cost to the litigants.

However, over time, it became apparent that the courts needed to prevent their processes from being used to unnecessarily deplete a testator's estate. From this concern emerged the modern approach to estate litigation, articulated in McDougald Estate v. Gooderham (2005), 255 D.L.R. (4^th) 435 (Ont. C.A.). First, the court must carefully scrutinize the litigation to determine whether one or more public policy considerations apply. Where public policy considerations apply, then the parties' reasonable costs should be paid from the testator's estate. Where public policy considerations do not apply, the parties should expect to follow the cost rules that apply in civil litigation, most notably that the "loser pays."

With its decision in McGrath v. Joy, the Court confirmed this approach and clarified that the determination of costs for estate litigation "is not a balancing of the public policy considerations against the rationale for cost rules that ordinarily apply to civil litigation. Rather, it is a sequential analysis, the first step of which is to determine whether one or more of the public policy considerations apply. If so, generally the parties' reasonable costs should be payable from the estate. A departure from this general principle requires justification on the part of the court."

Applying these principles to the appeal at hand, the Court found that the application judge...