How To Simultaneously Win And Lose In Litigation

A very recent Ontario Superior Court decision on costs demonstrates how someone can simultaneously win and lose the litigation battle. If you picked up on the word "costs" in the opening sentence, it becomes clear that the war cost more than the prize for winning.

The prize at stake was a $310,000.00 cottage owned by the elderly mother of a son and daughter. In 2010, the fully-competent mother executed a will leaving the cottage to the son and leaving her condo to the daughter. The rest of her modest estate was to be split equally between the two siblings.

Approximately a year later, the mother entered into an agreement to sell the cottage to a third party. Before the sale could close, the mother executed a deed transferring ownership of the cottage to the son as her joint tenant. Not surprisingly, this action derailed the sale and the lawyers suited up. Among the various ensuing lawsuits were actions involving the son, the daughter, the mother and the third-party purchaser. The son's claims against the mother and his sister were that his mother lacked the competency to transfer the cottage and that his sister had fraudulently arranged a clandestine sale to deprive him of the cottage.

Within a few months, the mother was declared incompetent and the Public Guardian and Trust was appointed to manage the mother's affairs.

Eventually, the son settled with the Public Guardian and Trust with respect to the action against his mother. His sister brought a motion for summary judgment which resulted with his claim against her being dismissed on consent.

The only remaining issue left for the judge to decide was that of costs. The daughter requested costs of $403, 174.00. Yes, you read that correctly. The bill of costs was almost $100,000 more than the cottage that the siblings were fighting over.

The judge ruled that, since in the normal course, a successful party is entitled to costs, the daughter should receive costs and that those costs should be on a substantial indemnity basis due to allegations of civil fraud and an existing settlement offer. He declined to fix costs though, sending the matter to an assessment officer for line by line assessment. He did opine however, that the costs involved were completely disproportionate to the modest value of the cottage.

The bill of costs did not include all the legal costs of the litigation. Several motions had already been carved out as costs for those proceedings had been previously fixed. Additionally, the $403,174 would exclude the mother's legal costs as well as the son's and the third-party purchasers. Even assuming more reasonable amounts, puts the costs of this was at several multiples of the cottage's value.

The Lesson: Keep costs in mind when planning and implementing your legal strategy and continue to assess the costs involved throughout the litigation process. Winning the war becomes a hollow victory if you bankrupt yourself to do so.

Lacey v Lacey, 2016 ONSC 1716 https://www.canlii.org/en/on/onsc/doc/2016/2016onsc1716/2016onsc1716.pdf

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