In a recent Ontario decision, two brothers were ordered to pay $325,000 in costs to their sister after raising 300 objections to her estate administration and making unfounded fraud claims.
Brothers Raise 300 Objections To Sister’s Estate Administration
The deceased was a Canadian Olympic skater and a painter, who passed away while living in Mexico in 2015.
The deceased died without leaving a will. His three siblings, one sister and two brothers, were declared the sole heirs of his estate by a Mexican court in August 2015.
The sister was first appointed executor to the estate by the court in Mexico and subsequently appointed estate trustee by a Canadian court in 2016.
The assets of the estate were situated both in Canada and in Mexico and included approximately 20,000 pieces of original artwork, chattels, bank accounts and properties. The original value of the estate was approximately $6,258,520.
The sister was subsequently compelled by the brothers to bring an application to pass her accounts for the period from January 23, 2015 to April 31, 2018 after the brothers raised over 300 objections to various expenses paid by the sister personally to administer the deceased’s estate in Mexico.
Ultimately, however, the brothers were unsuccessful on all of their objections except for five.
While the brothers had withdrawn over half of their objections at the hearing, they had nonetheless forced the sister’s counsel to spend a substantial amount of time preparing to address each of the over 300 objections.
Additionally, the brothers had also alleged and maintained their allegations that the sister had committed fraud and stolen several hundred thousand dollars of the estate funds, when there was no evidence to support their allegations.
As a result, the sister sought costs on a substantial indemnity scale of $390,602 inclusive of HST and disbursements, payable by the brothers personally.
In response, the brothers submitted that they expected that costs would be ordered against them based on their unproven allegations of fraud, but they argued that the costs claimed were not reasonable or proportionate in the circumstances. Instead, they suggested that an award of $100,000 would be more appropriate and that disbursements be reduced to $3,889. They also submitted that some of the costs claimed were for part of the ongoing litigation which was separate from the passing of accounts.
Court Orders Brothers to Pay Sister $325,000 in Costs
At the outset, the court set out the relevant factors to be considered when fixing costs, as set out in Rule 57 of the Rules of Civil Procedure, which include, in addition to success, the amount claimed and recovered, the complexity and importance of the matter, unreasonable conduct of any party which unduly lengthened the proceeding, scale of costs and any offer to settle, the hourly rate claimed, the time spent, and the amount that a losing party would reasonably expect to pay.
Additionally, the court noted that in this case there were the additional factors that the sister was acting in her capacity as the trustee of the estate and the brothers had failed to prove very serious allegations of fraud and theft by the sister. Specifically, the court observed:
“The unfounded allegations of substantial fraud, made by [the brothers] against [the sister], constitute reprehensible conduct. Their conduct merits an award of substantial indemnity costs to mark the court’s disapproval, and to deter others from engaging in similar reprehensible conduct.”
After reviewing all the relevant factors, the court ultimately ordered the brothers to pay costs on a substantial indemnity basis of $325,000 inclusive of disbursements and HST to the sister.
The brothers’ lawyer has indicated that the decision is being appealed.
Estate disputes are complicated: they involve high levels of emotion, usually by individuals who are grieving the loss of a family member or who are dealing with a loved one who is very ill. Such disputes can become quite lengthy and can take months or even years to resolve, prompting individuals to take sides, creating acrimonious divisions, and eating into the value of an estate.
At Campbells LLP, our team of compassionate and highly skilled Oakville estate litigation lawyers have been assisting clients with estate disputes and resulting litigation since 1999. We are proud of the strong, long-lasting relationships that we build with our clients and provide a steady sounding board and legal advice to guide them through what can be one of the most emotionally draining times in their lives. With our help, we can ensure that the legacy of our client’s loved ones is carried out exactly as they wished, that their health and well-being is taken care of, and that their estate is protected.
At Campbells LLP, our exceptional estate lawyers can represent you in all estate litigation matters. We know that many individuals work during the week and cannot meet during the day. One of our lawyers would be pleased to meet you in the evening or during the weekend, by appointment, if your schedule so requires. Contact us online or at (905) 828-2247. We look forward to speaking with you and going through this process by your side.