In Drennan v. Drennan,[1] Justice Myers of the Ontario Superior Court made a $60,000 costs award against the respondents in an application and concluded that their conduct amounted to an abuse of process and resulted in a loss of value to the estate. This case serves as a harsh warning to parties who act in bad faith, engage in “scorched earth” litigation tactics, and abuse the litigation process.

Facts

This dispute arose over the estate of John Drennan (the “Deceased”). Under his Will, his estate was to be divided as follows: 50% to his daughter, Melissa; 25% to his son, David; and 25% to the two children of his son who predeceased him, Jessica and Nicholas. His son was named as estate trustee. His son and grandchildren, the respondents in this matter, objected to this distribution and argued that the estate should be divided amongst them equally in thirds. Melissa began this litigation to remove David as estate trustee or, alternatively, to appoint an Estate Trustee During Litigation (“ETDL”). In response, the respondents alleged that the applicant stole from the Deceased during his life and coerced him into signing a Will; however, they refused to put any of these allegations in writing.[2]

Decision

At the initial hearing, the respondents represented themselves and, despite failing to deliver their materials prior to the hearing date, were permitted to participate. Justice Myers granted the applicant’s request and ordered the appointment of an ETDL. He also advised the respondents of the procedural steps required to participate in the litigation, including delivering the necessary materials and filing notice of appearances.[3] The respondents failed to follow these steps. They did not approve the formal order appointing an ETDL, did not deliver a notice of appearance, and did not commence litigation to challenge the Deceased’s Will. Moreover, by failing to act as the named estate trustee or facilitating the appointment of an ETDL, David allowed the mortgage on the Deceased’s home to fall into arrears, resulting in costs to the estate when the mortgagee moved to enforce its rights.[4] At the next hearing, Justice Faieta appointed a new estate trustee. The only remaining issue in the application for Justice Myers to determine was costs.[5]

Costs Award

The applicant incurred nearly $65,000 in costs as a result of the application.[6] As the applicant was successful, she was entitled to reimbursement for a portion of her costs. In determining the quantum of costs to be awarded, Justice Myers noted that the following legal principles applied:
  • The fixing of costs is within the discretion of the motion judge and attracts a high degree of deference;[7]
  • Costs on a substantial indemnity basis are only available “where there has been reprehensible, scandalous or outrageous conduct on the part of one of the parties”;[8] and
  • Conduct that justifies an enhanced costs award includes conduct in the proceedings as well as the circumstances that gave rise to the litigation.[9]
Applying these principles, Justice Myers concluded that “[i]t seems that the respondents just wanted to make scurrilous allegations and then to delay so as to hurt the applicant even if it prejudiced them. This is an abuse of the litigation process and deserving of enhanced costs.”[10] Justice Myers also noted that David’s inaction in acting as estate trustee or facilitating the appointment of an ETDL resulted in financial losses to the estate. As such, he ordered that the costs of the mortgage enforcement be paid by the respondents.[11] The applicant also sought repayment of the interest on the litigation loans she incurred due to this application and David’s failure to administer the estate. Justice Myers agreed and confirmed that the applicant did not need to inform the respondents of her need to take out litigation loans, nor of her intention to hold the respondents liable for the interest on the loans.[12] Although Mr. Drennan was the principal bad actor in this litigation, Justice Myers determined that all three respondents were jointly and severally liable for the costs, given that the other two respondents stood to gain from Mr. Drennan’s actions and “stood in common cause” with him.[13] Justice Myers ordered the respondents to pay $60,000 in costs to the applicant out of their share of the estate, after the costs of the mortgage enforcement and payment of the interest on the applicant’s litigation loan were taken from their shares.[14]

Conclusions

This case highlights the cost consequences for parties who act in bad faith to delay litigation and drive up the legal costs for opposing parties. These litigants run the risk of substantial costs awards that may include additional costs, such as interest on an opposing party’s litigation loans. In this decision, Justice Myers also acknowledged the leeway given to unrepresented parties in procedural matters: “[i]n the court’s effort to assist unrepresented parties, we all too often ignore procedural niceties. Judges, including me, repeatedly let the respondents participate and make unsworn, nasty allegations while failing to take even the most basic steps required to them.”[15] However, while the courts may be more lenient with unrepresented parties, this does not give unrepresented parties a free pass to ignore court procedure. If self-represented litigants repeatedly refuse to follow the rules, they will face significant exposure in costs awards. If you have any questions about the potential costs of estate litigation, please contact experienced estate litigation lawyer, David Derfel, at 416-847-3580, ext. 220 or david.derfel@devrylaw.ca, or our other lawyers at Derfel Estate Law.

This blog was co-authored by Articling Student, Leslie Haddock.

This article is intended to inform. Its content does not constitute legal advice and should not be relied on as such. If you require legal assistance, please see a lawyer. Each case is unique, and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.

[1] 2024 ONSC 3905 [Drennan].
[2] Ibid at para 12.
[3] Ibid at para 3.
[4] Ibid at paras 4-6.
[5] Ibid at paras 7-10.
[6] Ibid at para 11.
[7] Mars Canada Inc v Bemco Cash & Carry Inc., 2018 ONCA 239 at para 43 [Mars Canada], citing Hamilton v Open Window Bakery Ltd, 2004 SCC 9 at para 27.
[8] Mars Canada, supra at para 43, citing Young v Young, 1993 CanLII 34 (SCC) at p 134.
[9] Mars Canada, supra at para 43, citing Clarington (Municipality) v Blue Circle Canada Inc, 2009 ONCA 722 at para 30.
[10] Drennan, supra at para 17.
[11] Ibid at para 18.
[12] Ibid at paras 19-20.
[13] Ibid at para 22.
[14] Ibid at para 24.
[15] Ibid at para 13.