Given the possible high costs of litigation, it is important for litigants to always be mindful of the potential costs consequences as they move through a proceeding. When it comes to estate litigation, the payment of costs from the estate may not be guaranteed. The recent decision by the Ontario Court of Appeal in Di Nunzio v Di Nunzio, 2022 ONCA 889 confirms that the rules on costs applied in civil litigation also apply in estate litigation including that the payment of the parties’ costs out of the assets of the estate is an exception to the rules.

Di Nunzio v Di Nunzio

In Di Nunzio, the deceased left her entire estate to one daughter, the respondent, and disinherited her other daughter, the applicant. The applicant sought to set aside the will based on lack of capacity, suspicious circumstances and undue influence. The lower court dismissed the application and ordered partial indemnity costs against the applicant of over $111,000. The applicant appealed the decision. 

On appeal, the Court found no errors in the application judge’s reasons concerning the validity of the Will and agreed with the judge’s decision to dismiss the application. However, the Court of Appeal held that the costs order against the applicant should be set aside.

Decision on Costs

On the issue of costs, the appellant argued that the application judge erred in finding that there were no public policy considerations that warranted payment of her costs from the estate, and that she raised reasonable grounds relevant to the will’s validity. In its reasons, the Court relied on the seminal case of McDougald Estate v Gooderham which established that the traditional approach in estate litigation that the costs of all parties are ordered payable out of the estate has been displaced by the modern approach of fixing costs in accordance with civil costs rules, unless the court finds that there are public policy considerations that warrant costs being paid from the estate.

Public Policy Considerations

Public policy considerations include where the dispute arises from an ambiguity or omission attributable to the testator or there are reasonable grounds upon which to challenge the will’s validity. In this case, the Court found that the grounds raised by the appellant did not rise to the level of public policy considerations. However, she did raise triable issues warranting court scrutiny and on that basis, she should bear only her own costs of the application while the respondent’s costs be paid from the estate.

The case of Di Nunzio is a good reminder that payment of the parties’ costs from the estate is not guaranteed and should not be relied upon by litigants. While there is a public policy exception that can warrant costs being paid from the estate, a party may fall short of meeting that exception.

If you require assistance with an estates dispute, contact one of our lawyers at Mills & Mills LLP and we would be happy to help.

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