Self-reps in estate dispute ordered to pay interest on opponent's litigation financing

In a recent Superior Court decision in an estate matter, one party used a litigation funder, and the judge ordered the unsuccessful parties to cover, as a disbursement, the interest on the loans.  

The case arose from a dispute between siblings over their father’s estate. The applicant’s father divided his estate in the will, with 50 percent going to the applicant, 25 percent to the respondent sibling, and 25 percent to the other two respondents, children of the third sibling who predeceased his father. The respondents were self-represented.

The respondents argued the estate should be divided equally between the three parties.

While litigation financing is common in personal injury law, says Dorothy Hagel, who acted for the applicant, historically, estate litigants have not used it to the same extent. Without financing, she says, in estate litigation, for lawyers to even take the case, there must be assets to fight for. “If there are no assets to fight for, there’s no case.” Her firm approached Bridgepoint Financial to work with their clients, some of whom have been using litigation financing for approximately the last three years.

In Drennan v. Drennan, 2024 ONSC 3905, Superior Court Justice Frederick Myers said there was evidence that the sibling respondent’s actions made the litigation loans necessary. While the applicant did not notify the respondents that she needed to borrow the funds and that she would hold them liable for her costs, the judge said litigants do not inform the other side before they retain experts or accumulate other disbursements. He told the sibling respondent, who would not allow the applicant to pay a lawyer with funds from the estate that he should not be surprised that she had to borrow money.

While the sibling respondent was “the principal bad actor,” the other respondents “stood in common cause,” said the judge, who ordered they share the cost burden jointly and severally.

Hagel says the decision recognizes that litigation financing allows for access to justice.

“As far as I'm concerned, access to justice is not about government paying for people's legal fees, it is the ability of people to access all the other resources, and then the court recognizing that.”

Marie Haywood, a legal risk analyst at BridgePoint Financial Group, says that the sibling respondent was executor of the estate, and the applicant was unsuccessful in encouraging him to move the probate process forward and sell the property so she could access her inheritance. She says the applicant had no money to fund the litigation without it, which makes the case an example of how litigation financing can aid access to justice.

In a motion in November of last year, the applicant sought an order to remove the respondent sibling as the estate trustee. The judge granted the applicant’s alternative relief of appointing an estate trustee during litigation (ETDL). The sibling respondent advised that he prepared a “lengthy narrative document” to answer the applicant’s claims and that he and the other respondents may seek to challenge the will with one or more other claims arising from the applicant’s actions while she was attorney for property under the deceased’s power of attorney.

Myers “strongly urged” the respondents to seek legal advice and required them to deliver notices of appearance and their sworn evidence before the end of the year. If they did not, Myers said the applicant could bring an early case conference to schedule the return of the application. He also laid out a schedule for cross-examination to deal with any responding evidence from the respondents. Myers also told the respondents to bring the claims within the regular limitations periods to combine any new claims with the existing litigation, otherwise the application may be heard before they were ready to go with their new claims. Myers also directed that, if the respondents brought new claims, the parties would be required to combine procedural steps on all claims to “minimize delay and expense.”

Myers made a cost order against the sibling respondent for failing to disclose important facts and abide by the timeline, which meant that an “otherwise unnecessary motion” was brought.

The applicant asked the court in January to approve the formal order appointing the ETDL. Myers “gave the respondents something of a primer on signing orders” and implored them not to ignore the order, that it needed to be finalized, and that a costs order could follow if it was not.

Despite the judge’s warning, the respondents were silent for months after. They did not approve the order, nor did they deliver a notice of appearance to participate in the litigation, and they have not commenced litigation to challenge the will. “Worse still,” said Myers, the sibling respondent’s inaction caused the mortgage on the deceased’s house to fall into arrears. The mortgagee’s enforcement orders burdened the estate with a financial penalty that harmed both the applicant, as well as the respondents.

In July, another judge appointed an estate trustee to replace the sibling respondent. Though they had not filed notices of appearance, the respondents attended the hearing.

Later, in a case conference the Myers signed the order appointing the ETDL in the form Hagel proposed.

The judge said that the sibling respondent’s failure to act on the appointment of the ETDL meant that the applicant racked up $65,000 in costs, with Hagel being required to attend court six times. His inaction “put the estate at risk and then impeded the appointed of an ETDL.”

While the respondents accused the applicant of stealing jewellery and money and pressing the deceased to sign a will that did not reflect his own views, Myers said they were never willing to put their allegations in writing under oath, only to delay.

“In the court’s effort to assist unrepresented parties, we all too often ignore procedural niceties,” he said. “Judges, including me, repeatedly let the respondents participate and make unsworn, nasty allegations while failing to take even the most basic steps required of them.”

Hagel says that the legal system has to ensure that unrepresented litigants’ rights are properly heard by the system.

“But the twist in the story is that quite often, the unrepresented litigant is given so much leeway that people who hire the lawyers and go against those unrepresented litigants – their costs are increased.”

Myers’ decision shows that unrepresented litigants cannot run up the costs borne by the other with unwise claims unsupported by any evidence, she says.

The way the system too often operates, says Hagel, is that litigants are deliberately going unrepresented because it gives them certain advantages over parties with lawyers.

“This is not how our system is supposed to be working.”

Myers made a costs award on a substantial indemnity basis. With the respondents causing the applicant to incur significant costs, failing to properly participate or justify their allegations, and allowing the house to fall into arears, to their own detriment, “[i]t seems to be a case of scorched earth,” he said. The respondents’ “scurrilous allegations” and mutually destructive delay is an abuse of the litigation process, he added.