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Considering unduly prolonging a court action and rejecting reasonable offers to settle? It could cost you. The Ontario Court of Appeal recently upheld the lower court’s decision in Villa v. Villa, 2014 ONCA 2987. The parties to the case were brothers Enzo and Renzo Villa, whose mother had recently passed away. Enzo had held a Continuing Power of Attorney for her property prior to her death and brought an application for passing of the accounts and compensation for his services. Renzo opposed his brother receiving compensation, claiming Enzo had improperly handled his mother’s property. The matter was set down to be heard by a judge.

Before the scheduled court date, Renzo appeared before a judge- failing to notify his brother or his own lawyer first- and received a court order requiring his brother to either accept or decline appointment as trustee under his mother’s will. At the hearing, Renzo also failed to inform the presiding judge that a hearing had already been set to deal with the matter of the contested compensation or that his mother had drafted a subsequent will, making the one on which the court’s order was based void.

After becoming aware that the hearing had taken place in his absence, Enzo appealed the decision and the court stayed it, noting that Renzo had failed to notify his brother of the hearing and had withheld material information from the court. The court then held that Enzo had not breached his fiduciary duty to his mother and that he was entitled to compensation from the estate. Renzo was ordered to pay his brothers’ costs of the action on a substantial indemnity basis, given that he had rejected a reasonable offer to settle the matter and that his conduct had made the matter unnecessarily lengthy and complicated. Enzo then appealed the decision to Court of Appeal. The appellate court dismissed the appeal and ordered him to pay Renzo’s costs of the appeal.

The decision in Villa v Villa reminds us that the modern approach to costs requires that estates litigants consider the impact of their conduct- including refusing settlement offers and unduly prolonging actions- on their exposure to a potentially significant costs award.

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