How To Simultaneously Win And Lose Litigation - A Reminder

A recent Ontario Superior Court decision illustrates how it is possible to simultaneously win and lose in litigation. Moreover, this case illustrates that it is possible for both sides to simultaneously win and lose.

The dispute involved the estate of Rosa Galvano, which was left to her daughter Nellie and two granddaughters Rosa Pignatelli and Tecla Tarantino. Nellie was to inherit half the estate, Rosa and Tecla were to receive a quarter of the estate each.

The estate's main asset was 80.38% of a house valued at $680,000, or approximately $546,000. Nellie owed the remaining 19.62% of the house and had a right of first refusal over the house. For years prior to the decease, Nellie had lived with the deceased and provided caregiving services. Approximately five years before the elder Rosa's death, Nellie under a valid power of attorney for property caused the house to be transferred to herself signing the transfer documents on behalf of the deceased. Nellie claimed this was the Rosa's valid wish and that Rosa wished to compensate her for the caregiving services.

Following the decease, the two granddaughters sued to put aside the transfer on the basis that Nellie was in a conflict of interest when she signed the document transferring the property. They also sought an accounting of the money Nellie had administered on behalf of the deceased. Finally, they sought to have Nellie removed as administrator of the Estate.

Not surprisingly, Nellie opposed this claim. She countersued and added that if unsuccessful, she should be reimbursed for a number of expenses; that she should received quantum meruit payment for caregiving services and that she should remain executor.

Both sides were substantially successful. The granddaughters succeeded in setting aside the transfer of the property to Nellie and at obtaining an accounting, although for a substantially shorter time period than requested. Nellie succeeded in obtaining reimbursement for expenses, and obtaining quantum meruit payment for caregiving services. Nellie also was allowed to remain executor.

However, the issue of costs illustrates how both sides lost even while succeeding. Nellie sought costs of $172,762.41 and the granddaughters sought costs of $292,066.23 both numbers being on a partial indemnity scale. Collectively the costs were $621,660.00 well in excess of the estate assets.

In ordering a cost award to the granddaughters sufficient only to cover one expert report, the judge stated:

The only beneficiaries of the Estate are the three participants in this lawsuit. They collectively decided, by the way they chose to advance this litigation, to incur fees that deplete the Estate. This cannot be proportionate to the amounts and issues raised in the proceeding.

The mixed success, the lack of proportionality, the fact that the three Estate Trustees are the sole beneficiaries, unreasonableness, and self-interest are important elements of my decision.

Sadly, this case illustrates that even though both sides were substantially successful, they spent more than they eventually gained. Being reasonable and willing to compromise might have allowed them to win without losing.

The Lesson: Proportionality must always be kept in mind in litigation. At the end of the day, winning is of little value if the costs of doing so exceed the prize.

Tarantino v Galvano, 2017 ONSC 6635 (ONSC) https://www.canlii.org/en/on/onsc/doc/2017/2017onsc6635/2017onsc6635.pdf

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