A Lesson for Executors Regarding Costs

In an earlier post, we looked that a situation where a dependant sought severance of a joint tenancy in connection with a claim for dependant’s relief under Ontario’s Succession Law Reform Act.  The dependant was unsuccessful in a claim under s. 72 of the Act (which allows for a form of statutory severance of a joint tenancy for the narrow purpose of making assets available for dependant’s relief claims) because his application was brought outside of the six-month limitation period under the Act.

The issue of costs of the dependant’s relief application and other litigation involving the estate was the matter of reasons of the Court released earlier this month and include a lesson for all executors and their legal counsel.

The successful executor claimed costs in the total amount of $127,872 on a partial indemnity basis.  However, one of the dependant’s objections to the claim for costs was disclosure by the executor at a very late date that the estate did not have sufficient assets to satisfy a dependant’s relief claim, if successful.  The Court found that the executor had previously advised the dependant that the estate did have sufficient funds to satisfy his claim.  However, shortly prior to the hearing, the executor raised as a defence a paucity of assets.  The Court did find that there were insufficient assets to satisfy a claim, but found that had proper disclosure of the assets of the estate be made earlier, the dependant may have chosen not to pursue his claim.  As a result, while it appears the Court may have been willing to grant the costs sought by the executor, it reduced the fees claimed by 50% as a result of the late disclosure.

While it goes without saying that it is expected and imperative that an executor maintain proper accounts and records of assets, the failure to do so can result in significant and personal consequences.  It is not clear in this case whether there were assets in the estate to pay the legal fees of the executor as incurred.  If there were not, the executor may bear those costs personally.

One Comment to “A Lesson for Executors Regarding Costs”

  1. excellent memo. Just another example of the executor’s need to be open with potential claimants and to be diligent with regard to limitation periods.

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