Rolling The Dice On Costs Of Estate Litigation

Alberta Courts have been busy on the topic of costs in estate litigation in the past few months. Four recent decisions issued out of three judicial centres in Alberta provide a good reminder of just how unpredictable litigation is and the Court's wide discretion in compensating parties for their litigation expenses.

General principles

If there was still any doubt, I think it is now clear in Alberta at least, that whether litigation concerns an estate or not, the general rule that "costs follow the event" is the starting point. To put it perhaps more harshly, the Courts for the most part continue to give effect to the "loser pays" principle in litigation. There is a narrow exception to relieve a losing party of those costs consequences in cases where the testator has caused the litigation or there were sound public policy reasons behind the dispute. However, simply dying without a will or cutting out a beneficiary who expected to inherit is not enough to find fault with the testator.

In what should be no surprise to any litigator, the multitude of factors to be considered under Rule 10.33 of the Alberta Rules of Court means that there is lots of room for the Court to craft a costs award specific to the circumstances. Anyone considering a will challenge should also be aware that unfounded requests for formal proof of a will may result in a penalty under the Surrogate Rules.

There is also a good reminder that Formal Offers to Settle must be reasonable to be enforceable. With Estate matters, where issues are not always strictly monetary, the nature of the offer should be carefully considered. The $10.00 nuisance settlement offer may therefore not be as appropriate in a will challenge as it may be in a debt claim or a personal injury matter.

The cases, briefly

Neufeld Estate (Re), 2017 ABQB 802 was a formal proof application to admit an unsigned copy of a will to probate. The decision on the merits was rendered orally, so the underlying facts are scarce. The applicant was successful in the face of opposition from a disappointed family member.The applicant sought partial indemnity costs from the respondent on Column 3 of Schedule C of the Rules of Court (claims between $150,000 and $500,000). There is no explanation for why that column was chosen, but it may have been based on the net value of the Estate. The applicant also asked for double costs pursuant to a Formal Offer for the trial and written submissions. The defendant asked for both...