2007 BCSC 1549 Woodward v. Grant

Before: The Honourable Madam Justice Gray

Reasons for Judgment

Re: Costs

Counsel for the Plaintiffs:	Fiona Hunter
Counsel for the Defendants: I.C. Grant, M. Grant, and S.I. Grant	Wesley D. Mussio
No other appearances
Date and Place of Hearing:	March 1 and 2, 2007
	Vancouver, B.C.
Written submissions on costs received:	September 7, 10, and 27, 2007

INTRODUCTION

[1] This proceeding involves the estate of Joseph Roberts, which is worth about $1.25 million. Mr. Roberts executed two wills, one on October 14, 1994, and the other on October 30, 2002. The plaintiffs challenged Mr. Roberts' capacity to execute the 2002 will. The terms of the 1994 Will provided that the plaintiffs together were entitled to almost the entire estate, while the 2002 Will provided that the plaintiffs together were entitled to about half of the estate.

[2] Three of the defendants, who I refer to as the "Successful Defendants", applied to dismiss the plaintiffs' claim under Rule 18A. In reasons for judgment released August 10, 2007, the 2002 Will was found to be valid and the plaintiffs' claim was dismissed. Counsel were permitted to make written submissions regarding costs through the registry. Ms. Hunter provided written submissions on behalf of the plaintiffs and Mr. Mussio provided them on behalf of the Successful Defendants.

[3] The Successful Defendants seek costs under Rule 37 assessed to the February 22, 2007 date of their offer to settle, and double costs from that date forward. Alternatively, the Successful Defendants seek costs of the action. The unsuccessful plaintiffs seek an order that the costs of all parties to the proceedings be paid out of the estate on Scale B.

COSTS UNDER RULE 37

[4] The relief sought in the statement of claim was an order pronouncing against the validity of the 2002 Will, revocation of the grant of probate of the 2002 Will, and costs on an indemnification basis. The Successful Defendants sent an offer to settle in this form:

The defendants, Ian Cameron Grant, Monica Grant and Susan Ivy Grant offer to settle this proceeding on the following terms:

1. payment in the amount of one dollars [sic] ($1.00) in full and final satisfaction of the plaintiffs [sic] claim for general damages, special damages and court order interest;

2. plus costs and disbursements in accordance with Rule 37(22) and (37).

[5] The plaintiffs did not make a claim for general damages, special damages, or court order interest. The Successful Defendants offered to accept monetary relief in settlement of claims that the plaintiffs did not make, and when the plaintiffs' claims were non-monetary. As a result, the Successful Defendants' offer to settle is irrelevant to determining costs in this case.

[6] It is therefore unnecessary to consider whether Rule 62(13) effectively makes Rule 37 ineffective in probate actions. Rule 62(13) provides that "no probate action shall be compromised without leave of the court." It is also unnecessary to consider the argument of the parties on the timing of the offer to settle.

COSTS FROM ESTATE AND GENERALLY

[7] The plaintiffs seek an order that the costs of all parties to the proceedings be paid out of the estate on Scale B. Counsel for the plaintiffs argued that where the validity of a will is at issue, costs of all parties will normally be paid out of the estate.

[8] Counsel referred to comments by Master Horn which were cited with apparent approval by the Court of Appeal in Vielbig v. Waterland Estate (1995), 1 B.C.L.R. (3d) 76. The Court of Appeal quoted paras. 12 through 14 of Master Horn's decision in Lee v. Lee Estate (1993), 84 B.C.L.R. (2d) 341, as follows:

[12] An order for costs in favour of a completely unsuccessful party against a completely successful party is a most exceptional order. The general rule is that costs follow the event and while a court may depart from this rule, any departure is usually in the way of depriving a successful party of costs and not of awarding costs to an unsuccessful party. In either case, the usual rule should not be departed from simply because an unsuccessful party did not expect to lose. (Baart v. Kumar (1985), 21 D.L.R. (4th) 705 (B.C.C.A.) at 711; Approving Officer (Burnaby) v. Mutual Development Corp., [1971] 5 W.W.R. 97 (B.C.C.A.) at 100 and 105; Donald Campbell & Co. v. Pollak (No. 2), [1927] A.C. 732 (H.L.) at 776.)

[13] In probate or administration actions or in proceedings for the construction of wills, the rule may be more frequently departed from. In such cases where the validity of a will or the capacity of the testator to make a will or the meaning of a will is in issue, it is sometimes the case that the costs of all parties are ordered to be paid out of the estate. This is upon the principle that where such an issue must be litigated to remove all doubts, then all interested parties must be joined and are entitled to be heard and should not be out of pocket if in the result the litigation does not conclude in their favour. The estate must bear the cost of settling disputes as a cost of administration. This is the reasoning which underlies such cases as Re Dingwall (1967), 65 D.L.R. (3d) 43 (Ont. H.C.) and McNamara v. Hyde, [1943] 2 W.W.R. 344 (B.C.S.C.) and Re Lotzkar Estate (1965), 51 W.W.R. 99 (B.C.C.A.). The question to be asked in such case is whether the parties were forced into litigation by the conduct of the testator or the conduct of the main beneficiaries.

[14] But the case is different where the litigation does not relate to the validity of the will or the capacity of the testator or the construction of the will. Actions brought under dependants relief legislation presume the validity of the will and the capacity of the testator and that his intentions are clear. There are not doubts to be settled. The remedies provided by such legislation are directed to the maintenance and support of the dependants of the testator and are based on public policy. The legislation does not invalidate the will, it merely permits the court to vary the provisions made by the testator. So an unsuccessful action under such legislation cannot be said to have been caused by a testator, or to be have been necessary to enable the estate to be distributed. The action does not benefit the estate.

[9] Master Horn wrote at para. 22 of Lee that considerations which may be appropriate to awarding costs to an unsuccessful party in ordinary estate litigation are not appropriate in litigation under the Wills Variation Act. He held that the general rule must apply, which is that only in extraordinary circumstances will a successful party be made to pay the costs of an unsuccessful party. He found no such extraordinary circumstances in the facts of Lee.

[10] Similarly, in Vielbig, the Court of Appeal concluded that costs in a Wills Variation Act proceeding should follow the event. However, the court said as follows at paras. 45 through 47:

[45] Here there was no question of the validity of the will, the testamentary capacity of the Testator, or of the meaning of the will. The Testator was not at fault in some way, thereby contributing to the appellant making an unsuccessful claim against his estate. In my view the general rule must prevail; costs should follow the event. I would not disturb the order of the summary trial judge whereby he dismissed the plaintiff's claim with costs.

[46] The usual rule in this Court that costs follow the event should be followed.

[47] I would dismiss the appeal with costs against the appellant in the court below and in this Court.

[11] The effect of these decisions is that the Court of Appeal has suggested, in obiter dicta, that cases regarding the validity of a will or the testamentary capacity of the testator, are cases in which, as stated by Master Horn in para. 13 of Lee, "it is sometimes the case that the costs of all parties are ordered to be paid out of the estate", and the court may more frequently depart from the general rule that costs follow the event.

[12] This falls short of demonstrating that costs are "normally" paid out of the estate where the validity of a will is at issue. In fact, in the recent B.C. cases I have been able to find awarding costs after a challenge to a testator's testamentary capacity, the usual rule of costs following the event was applied.

[13] In Kirkham v. Fox, [1993] B.C.J. No. 2518, the court upheld a will challenged on the basis that the testator lacked capacity. Cohen J. applied the general rule that costs follow the event. There, the will in question was executed four days before the testator died. The testator was very sick, weak, frail, and terminally ill with cancer when he signed the will, and was on a low dose of morphine. However, the court held he had testamentary capacity when he gave instructions to a lawyer and executed his will. The court considered the position of the party challenging the will to be ill-founded and unreasonable, and found that the litigation was driven by mistrust and dislike of the party who benefited under the last will.

[14] In Field v. James, [1999] B.C.J. No. 1398, Bouck J. upheld the validity of a will. He held that, although the testator's mental capacity was reduced, he had the necessary testamentary capacity. Bouck J. ordered that costs would follow the event, but the reasons for judgment do not include any discussion of the question of costs.

[15] Cases more recent than those discussed by Master Horn in Lee suggest a trend towards the general rule that costs should follow the event. See, for example, Gold v. Gold (1993), 82 B.C.L.R. (2d) 18, in which McEachern C.J.B.C. wrote as follows for the five-member panel of the court regarding costs in matrimonial cases:

19. It is my further view that the rule which should govern the award of costs in matrimonial proceedings should be the same as in other civil litigation, namely, that costs should follow the event unless the Court otherwise orders as specified in Rule 57: Meneghetti v. Meneghetti (1979), 17 B.C.L.R. 200 (B.C.S.C.) at p. 201.

20. The question, then, is: when should the Court order otherwise? With respect, when the court should order otherwise is a matter of discretion, to be exercised judicially by the trial judge, as directed by the Rules of Court. To lay down any strict guidelines or even to attempt to give exhaustive examples is not, I think, helpful because the facts and issues in each family law case vary so greatly. Factors such as hardship, earning capacity, the purpose of the particular award, the conduct of the parties in the litigation, and the importance of not upsetting the balance achieved by the award itself are all matters which a trial judge, quite properly, may be asked to take into account. Assessing the importance of such factors within the context of a particular case, however, is a matter best left for determination by the trial judge.

[16] The trend towards the general rule that costs should follow the event is likely, in part, a recognition of the significant costs that can be incurred in litigation and that consideration of costs can assist in achieving settlement. Providing that an unsuccessful party can recover its costs from an estate would discourage that party from taking into account the legal costs of proceeding when considering settlement. As a result, awarding costs from the estate could encourage probate litigation and discourage settlement. It would defeat the testator's intentions to the extent that the costs reduced the size of the estate available for distribution.

[17] As a result, costs should follow the event unless the court orders otherwise, exercising its discretion judicially.

[18] I note that Rule 62(10) provides as follows:

(10) In a probate action, a statement of defence may state that the defendant merely requires that the will be proved in solemn form, and that the defendant only intends to cross-examine the witnesses produced in support of the will, and in that event the defendant is not liable for costs, unless the court determines that there was no reasonable ground for requiring proof in solemn form.

[19] Here, the proceeding was commenced by the plaintiffs who were challenging the 2002 Will and the grant of probate under it. The plaintiffs provided their own evidence regarding the validity of the 2002 Will rather than simply cross-examining the witnesses produced in support of the 2002 Will. As a result, Rule 62(10) does not apply.

[20] This is not a case requiring construing the terms of a will, where the testator used unclear language that required clarification by the court. In this case, the testator signed the 2002 Will in the presence of a lawyer, and following two prior meetings with that lawyer. The only aspect of the testator's conduct which may have encouraged litigation is that he made two telephone calls after execution of the 2002 Will, in which he suggested that he did not consider the 2002 Will to be in force. Overall, this is not a case where the parties were forced into litigation by the conduct of the testator.

[21] This proceeding was in substance an adversarial dispute between beneficiaries who would receive more under the 1994 Will and those who would receive more under the 2002 Will. There is no reason to depart from the general rule that costs follow the event. The Successful Defendants are entitled to their costs at Scale B.

"Madam Justice Gray"

Citation:	*Woodward v. Grant,*
	2007 BCSC 1549