Special costs in BC estate litigation: Kolic v. Kolic, 2022 BCSC 1448

Pursuant to the Supreme Court Civil Rules, B.C. Reg. 168/2009, costs during litigation in British Columbia are typically awarded to the successful party at trial. Costs are intended to be at least a partial indemnity for legal fees plus reimbursement for proper out-of-pocket expenses that the successful party incurred as a result of starting (or defending) an action. However, in some instances, if there has been reprehensible conduct during the course of litigation, the court may order that “special costs” be paid to the successful party. Special costs are typically higher than ordinary costs, and are meant to approximate actual legal fees.

In the recent case of Kolic v. Kolic, 2022 BCSC 1448, the British Columbia Supreme Court evaluated the conduct of the executor throughout the course of the litigation and ultimately determined that special costs were warranted.

After the death of their mother, Violet Kolic (the “Deceased”), the four Kolic children (Charles, Mary, Joseph and Angela) were at odds over the Deceased’s estate (the “Estate”). Mary was appointed executor of the Estate, while Charles applied to the court for the Last Will and Testament of the Deceased to be varied but he died during an adjournment of that proceeding. The primary issue in this case in relation to special costs, was the counterclaim filed by Joseph and Angela, who sought judgment against Mary, as executor, for misappropriating funds from the Estate. Ultimately, the counterclaim was successful, and judgment was granted against Mary. Following the judgment, Joseph and Angela subsequently applied for special costs against Mary, as executor, based on her conduct during trial, which included:

• failure to produce relevant documents;
• misleading the court;
• seeking an adjournment on the morning of the trial because she did not have legal counsel, despite previously advising the Master that she would represent herself; and
• feigning illness in an attempt to prevent the trial from proceeding.

In response, Mary asserted that her conduct at trial was in part due to her lack of familiarity with the law and procedure. Nevertheless, the court ultimately held that special costs in this situation were warranted and that they were subsequently to be paid to Joseph and Angela out of Mary’s share of the Estate. In reaching this conclusion, the British Columbia Supreme Court highlighted the purpose behind an award for specials costs and the rationale for when they would be appropriate. Citing the earlier case of Mayer v. Osborne Contract Ltd., 2011 BCSC 914, the court held that special costs may be ordered in the following circumstances:

1. where a party pursues a meritless claim and is reckless with regard to the truth;
2. where a party makes improper allegations of fraud, conspiracy, fraudulent misrepresentation, or breach of fiduciary duty;
3. where a party has displayed « reckless indifference » by not recognizing early on that its claim was manifestly deficient;
4. where a party made the resolution of an issue far more difficult than it should have been;
5. where a party who is in a financially superior position to the other brings proceedings, not with the reasonable expectation of a favourable outcome, but in the absence of merit in order to impose a financial burden on the opposing party;
6. where a party presents a case so weak that it is bound to fail, and continues to pursue its meritless claim after it is drawn to its attention that the claim is without merit;
7. where a party brings a proceeding for an improper motive;
8. where a party maintains unfounded allegations of fraud or dishonesty; and
9. where a party pursues claims frivolously or without foundation.

By rebuking reprehensible conduct, the court punishes bad behaviour and deters it in the future, while also allowing the court to distance themselves from the conduct at issue. The key takeaway from this recent decision is that the British Columbia Supreme Court has demonstrated yet again that it will not shy away from special cost awards in estate litigation when they are deemed necessary. Accordingly, parties to estate litigation should be aware that their actions/inactions in an emotionally charged arena may result in financial consequences.

If you have any questions, need advice or assistance with the administration of a contentious estate, please contact Miller Thomson’s Estate Litigation team.