Emotion is a powerful driver of lawsuits. Estate litigation is especially prone to devolve into a forum for family infighting, with devastating consequences. In Holowaychuk v Lopushinsky, 2016 ABCA 102, the Alberta Court of Appeal upheld an important decision regarding costs in such emotion-driven cases, allowing full indemnity costs against the unsuccessful litigant. The trial judgment, Lopushinsky Estate (Re), 2015 ABQB 63, is particularly interesting for its extension of the principal of proportionality articulated in Hryniak v Mauldin, 2014 SCC 7, to support elevated costs.
Lopushinsky Estate (Re) was a dispute between family members over the estate of their deceased father, a successful farmer. The applicant, Barbara, was the testator’s daughter and the executor. She applied to pass accounts and wind up the estate. The respondent was her brother, Julian, who opposed the application, alleging (among other things) that Barbara had misappropriated $40,000 worth of canola and misspent estate funds.
After a three and a half day hearing, the trial judge concluded Julian had failed to prove his allegations and acted unreasonably throughout the litigation. Misconduct included:
- His principal allegation, that Barbara misappropriated the canola, was resolved in Barbara’s favour on the basis of documents Julian did not produce prior to the hearing. Had he disclosed, or even carefully reviewed, the crucial documents previously, much of the hearing time could have been avoided.
- After abandoning the misappropriation issue, his key focus was alleged unequal treatment of siblings by Barbara, as executor. The Court was unimpressed with that as a justification for costly proceedings.
- Though the Court accepted Barbara did make some improper uses of estate money, the amounts at issue were minor and not expended in bad faith. Barbara offered to repay one such expense, a satellite TV subscription she maintained at the deceased’s home. But instead of accepting that resolution, Julian preferred “to bring the expenditure forward to the court as an example of Barbara’s misuse of estate assets” (para 130).
- Julian threw up numerous obstacles to the administration of the estate and made demands that caused significant expense and delay. “Like a dog with a bone, unfortunately he never let [an issue] go” (para 149).
The Court allowed the application for passing of accounts and excused Barbara’s minor breaches of trust (pursuant to s. 41 of the Trustee Act). The improper expenditures were deducted from her executor’s compensation.
In contrast, the Court found Julian’s conduct in the litigation justified solicitor and own client costs (i.e. full indemnity), the most punishing cost award available. Appealing to the culture shift marked by Hryniak v Mauldin (dealing with summary judgment) the Court concluded the lack of proportionality between Julian’s complaints and the expensive litigation he maintained justified elevated costs against him (see paras 225 and 227).
Moreover, the Court found Julian had used the legal system as a means to punish his sister for perceived wrongs, and perhaps as an outlet for anger against his father, the testator.
… this application has become a vehicle in which Julian has chosen his “weapon”… But, he has been using a club to hit a fly and the court system is not the appropriate place for such revenge. The Court must take this into consideration … on the matter of costs. [para 227]
Finding that such conduct should be discouraged, Julian was ordered to pay full indemnity costs to the estate and all beneficiaries who participated in the hearing.
Lopushinsky Estate (Re) serves as an important reminder of the dangers inherent in emotion-driven litigation. It may also signal that the principle of proportionality in the administration of justice is an emerging ground for elevated costs.
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Matthew Tomm Law provides legal services in Calgary, Alberta, focusing on employment law and civil litigation.