Saturday, January 30, 2010

Costs Award in Mazur v. Berg

In Mazur v. Berg, the plaintiff successfully applied to vary the will of her late common-law spouse, Victor Fennell. Mr. Fennell’s will left his estate to his son, Jesse Berg, whom he had also appointed as his executor. Madam Justice Adair varied the will to provide the plaintiff 55 percent of the estate. I wrote about the case here.

In reasons released last Thursday, January 28, 2010, Madam Justice Adair awarded costs out of the estate to both parties. She cited Erlichman v. Erlichman Estate, 2002 BCCA 160 and Wilcox v. Wilcox Estate, 2000 BCCA 491, as authority for the costs of the parties coming out of the estate.

Trial judges have discretion on the issue of court costs. The usual rule in litigation in British Columbia, including I suggest Wills Variation Act cases, is that the unsuccessful parties pay the successful parties their costs. The court costs generally do not fully indemnify the successful parties, but are based on tariffs set out in the Supreme Court Rules.

Most of the Wills Variation Act cases follow the leading authority of Vielberg v. Waterland Estate (1996), 6 E.T.R. (2d) 1 where Mr. Justice Hinds cited Master Horn in Lee v. Lee Estate (1993), 50 E.T.R 297:

[41] In Lee v. Lee Estate (1993), 50 E.T.R. 297, Master Horn extensively reviewed the law with respect to costs in actions brought under the Wills Variation Act or its predecessor, the Testator's Family Maintenance Act. At pp. 301-302 he stated:
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 p. 711;Burnaby (District) Approving Officer v. Mutual Development Corp., [1971] 5 W.W.R. 97 (B.C.C.A.), at pp. 100 and 105;Donald Campbell & Co. v. Pollak, [1927] A.C. 732 (H.L.), at p. 776.)

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. (2d) 43 (Ont.H.C.); and McNamara v. Hyde, [1943] 2 W.W.R. 344 (B.C.C.A.); 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.

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 have been necessary to enable the estate to be distributed. The action does not benefit the estate.

[42] Master Horn then went on and referred to Lukie v. Helgason (1976), 1 B.C.L.R. 1 (B.C.C.A.), where, at p. 15, Robertson J.A. said:
I look without favour on any idea that persons without meritorious claims under the Act to share in the estate of a testator may have a try at getting part of his estate without risk to themselves and at the expense of the persons whom the testator wished to benefit.

[43] And where, at p. 35, Carrothers J.A. stated:
Costs should follow the event and the respondents should pay the costs of the appellants throughout on a party-and-party basis.

[44] Master Horn referred at p. 303 to the decision of Wilson C.J.S.C. in Re Bow Estate, [1971] 4 W.W.R. 234 (B.C.S.C.) where, at pp. 239-240 the learned former Chief Justice said this:
Under The Testator's Family Maintenance Act there is no question of ambiguity or of the creation of a difficulty by the testator or of the petitioner being "led into the contest by the state in which the deceased left his papers". There is a simple assertion and denial of a claim under a statute. If the unsuccessful petitioner recovers costs from the estate it is frequently the effect that the successful litigants pay them through the diminution of the estate caused by the payment of the petitioner's costs.
Therefore good cause must be shown for departing from O. 65 which says that costs will follow the event. This means not just that an unsuccessful petition [sic] will not ordinarily recover costs, it means that he will ordinarily pay costs.

[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.

The court, in Mazur v. Berg, 2010 BCSC 109, does not cite Vielberg or the other cases that have followed Vielberg.

In deciding that the unsuccessful defendant should get costs out of the estate, Madam Justice Adair wrote:

Here Mr. Berg, as his father’s executor, was obliged to defend Mr. Fennell’s will, and the issues arose from provisions in the will. In my view, the appropriate order in this case is that the costs of all parties in the proceeding be paid by the estate, to fall rateably on the whole of the estate, as was ordered in Erlichman, with the proviso that there be a single set of costs for both defendants.

This stands in contrast to other authority, including Wilcox v. Wilcox, 2002 BCCA 574, where the court has said that the executor is supposed to remain neutral in a Wills Variation Act claim. In Wilcox, the court said:

[25] Under Rule 8(14) of the Rules of Court, the executors of the estate were required to be made a party to the Wills Variation Act proceeding. Generally speaking, an executor is required to play a neutral role in the litigation. As a result of having to play a neutral role, an executor generally receives special costs from the estate. However, when the executor is also a beneficiary, the costs must be separated.

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