Guardianship applications are often commenced out of necessity. Some examples of when and why a guardianship application occurs include when someone is incapable and has no power of attorney and requires a financial or medical decision maker, there are concerns that someone is being abused or taken advantage of by their current power of attorney or guardian and when someone suffers an accident and having no power of attorney requires decisions to be made on their behalf while they undergo treatment or recover.
The costs of a contested, or even un-contested, guardianship application can be extremely high. A party commencing a guardianship application must seriously consider the costs and also the fact that, if contested, and should they be unsuccessful, it is possible that they may be required to compensate the successful party for a portion of their costs.
The SDA does not deal specifically with the costs of guardianship applications or subsequent motions for directions.
Section 131 of the Courts of Justice Act and Rule 57 of the Rules of Civil Procedure therefore govern the costs associated with a guardianship application.
In Salter v. Salter Estate, 2009 CanLII 28403 (ON S.C.), the Honourable Justice D. M. Brown held the following with respect to costs claim in litigation involving the estates of deceased persons;
“…As the Court of Appeal made clear in McDougald Estate…estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by section 131 of the Courts of Justice Act and Rule 57 of the Rules of Civil Procedure, except in a limited number of circumstances where public policy considerations permit the costs of all parties to be ordered paid out of the estate. Those limited circumstances exist where the litigation arose as a result of the actions of the testator or those with an interest in the residue of the estate, or where the litigation was reasonably necessary to ensure the proper administration of the estate: McDougald Estate…
estates litigation is a sub-set of civil litigation. Consequently, the general costs rules for civil litigation apply equally to estates litigation – the loser pays, subject to a court’s consideration of all relevant factors under Rule 57, and subject to the limited exceptions described in McDougald Estate. Parties cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation…
Given the charged emotional dynamics of most pieces of estates litigation, an even greater need exists to impose the discipline of the general costs principle of “loser pays” in order toinject some modicum of reasonableness into decisions about whether to litigate estate related disputes.
The above was adopted by the Ontario Superior Court in Fiacco v. Lombardi in 2009 and applied to capacity litigation involving incapable persons, with some modification to fit the particularities of guardianship applications.
Justice D.M. Brown in Fiacco found at para 33 that the exercise of the court’s discretion in respect of cost claims in capacity litigation should reflect the basic purpose of the SDA – to protect the property of a person found to be incapable and to ensure that such property is managed wisely so that it provides a stream of income to support the needs of the incapable person: SDA, sections 32(1) and 37. To that end, when faced with a cost claim against the estate of an incapable person, a court must examine what, if any, benefit the incapable person derived from the legal work which generated those costs.
At para 35 of Fiacco Justice D.M. Brown further found inter alia that “if a Court appoints a guardian of property, then the incapable person has received a benefit because her property will now be managed for her benefit. In such cases it will be up to the Court to consider the reasonableness of the costs claimed against the estate of the incapable person.
Justice D.M. Brown at paragraph 36 goes on to find that while bona fide disputes may exist amongst those interested in the well-being of the incapable person as to who should be appointed her guardian, a significant risk exists that a contested guardianship application may lose sight of its purpose – to benefit the incapable person – and degenerate into a battle amongst siblings or other family members, some of whom may have only their own interests at heart. In such circumstances courts must scrutinize rigorously claims of costs made against the estate of the incapable person to ensure that they are justified by reference to the best interests of the incapable person.
To summarize, prior to commencing a guardianship application and/or prior to contesting a guardianship application counsel must advise their clients of the likelihood that their costs will be scrutinized rigorously by the application judge and of the risk that costs may not be fully reimbursed from the alleged incapable persons property. To quote Justice D.M. Brown at para 37 in Fiacco, “it would be a serious mistake for members of the Bar to presume that all parties to contested capacity litigation will have their costs paid by the estate of the incapable person. Such an attitude would misapprehend the principles which must guide the court’s exercise of its discretion on costs.”
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