Tuesday, February 03, 2009

Costs Award in Brydon v. Malamas

This post is a postscript to my post on Brydon v. Malamas, 2008 BCSC 749, a case in which the Supreme Court of British Columbia pronounced against a will made by Stella Sirgianidis. Mr. Justice Halfyard found that she did not have the mental capacity to make the will. The court also set aside a transfer of her land, of two bank accounts and of a beneficiary designation of her Registered Retirement Savings Plans.

After the decision, the parties were then given the opportunity to argue who should receive the court costs.

The usual rule in British Columbia is that court costs follow the event. This means that if you win a lawsuit, the losing party has to pay you some costs toward your legal expenses. Usually the costs awards do not fully indemnify the successful party, but they sure help.

Like many rules, there are exceptions. In disputes about estates, the courts sometimes allow unsuccessful parties their costs out of the estate, occasionally on a full indemnity basis. If the court determines that the lawsuit was in some sense caused by the deceased or by his or her conduct, then the court may allow all of the parties their costs. For example, if the will is poorly drafted causing ambiguities that the court must interpret, the court may exercise its discretion to award costs out of the estate even to the unsuccessful parties. The lawsuit can be said to be caused by the deceased, rather than those who end up in court.

There is a further principle that an executor or administrator is usually entitled to be reimbursed for his or her legal expenses related to the administration of the estate, including legal expenses in lawsuits.

In Brydon, one of the defendants, Jimmy Malamas, was named as an executor in the disputed will. He was also a beneficiary in the disputed will, and he would have benefited from the disputed transfers of the bank accounts and from the designation in the Registered Retirement Savings Plan if those transactions had been upheld.

Mr. Malamas, and the other defendant, Mary Malamas, argued that all parties should receive their costs on a special cost basis (which may fully indemnify the parties for their legal costs). They argued that the litigation was caused by the deceased’s conduct. She made the will and performed the transactions at a time when she was incapacitated.

Furthermore, as the named executor, Jimmy Malamas, argued that it was reasonable for him to bring the application to prove the validity of the disputed will. He argued that he should be fully indemnified as the named executor.

The plaintiff, on the other hand, sought her costs against the defendants personally, and opposed the payment of costs to the defendants out of the estate. She argued that the case did not fall into either of the exceptions cited by the defendants to the normal rule that costs follow the event.

In Brydon v. Malamas, 2009 BCSC 80, Mr. Justice Halfyard agreed with the plaintiff. He found that the defendants were acting in the lawsuit to protect their own interests as beneficiaries of the disputed will and the other disputed transactions. The lawsuit was in the nature of an adversarial contest among beneficiaries. He found that the defendants were involved in some of the suspicious circumstances concerning the making of the will and of the transactions. He also found that they were reckless as to Stella Sirgianidis’ mental capacity.

In the result, the defendants are required to pay the plaintiff’s costs, and are not entitled to any costs out of the estate.

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