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Wills, Estates Trusts Law - Proceedings - Practice and procedure - Costs

Thursday, August 25, 2016 @ 8:00 PM  


Appeal by the estate trustees, Rigsby and Shackleton, from an order requiring the parties to bear their own costs. The appellants and the three respondents were siblings. Along with a sixth child, the parties were the residual beneficiaries under their mother’s will. The appellants were the estate trustees and appointed under a power of attorney. In 2008, the respondents commenced an application seeking the appellants’ removal as trustees, a passing of accounts, and repayment of amounts taken from the estate. The action settled in 2014. The parties were unable to agree on disposition of the costs of the action and agreed to refer the matter to the court. The motion judge found that the terms of the settlement reflected divided success, justifying an order that each party bear their own costs. The appellants obtained leave to appeal to the Court of Appeal. They submitted that they were duty bound to defend the action and the estate, and that in the absence of serious or unreasonable misconduct, their costs were payable out of the estate.

HELD: Appeal dismissed. The motion judge conflated the issues of trustee indemnification and civil litigation costs principles and did not analyze whether the appellants’ conduct met the thresholds of unreasonableness or self-interest justifying denial of indemnification for the costs associated with defending the action. However, nobody had advanced the issue of trustee indemnification before the motion judge. Scrutinizing the appellants’ conduct justified denial of indemnification from the estate on the grounds of both unreasonableness and self-interest, as much of the dispute arose from the appellant’s failure to make required disclosure and their aggrandizement of personal holdings at the expense of the estate and other beneficiaries. The appellants were not entitled to recovery of their costs from the estate.