Estate Planning

To Whom is an Award of Costs Payable?

By Hull & Hull LLP

This question is considered in the recent decision of Re Balanyk Estate, 2008 CanLII 63161 (Ont. S.C.).

There, the Applicant was successful in resisting a motion to dismiss her claim for dependant support. Costs were awarded to the Applicant, payable out of the estate.

After the motion, the Applicant and her lawyer had a falling out, and an issue arose as to who the costs award was payable to: the Applicant or her lawyer.

Henderson J. found that as a general principal, the costs of a proceeding are payable to the litigant, not the lawyer. Entitlement to costs is based on the principle of indemnity, and costs are awarded to a litigant to indemnify the litigant for monies that she may owe to her lawyer or a third party (although the law of costs has been expanded to allow for costs to unrepresented litigants).

Henderson J. held that any dispute between a litigant and her lawyer should not be dealt with in the main proceeding, but should be dealt with in another manner, such as an assessment.

Having said that the costs belong, prima facie, to the litigant, Henderson J. went on to consider whether the Applicant had contracted out of the general principle. The Applicant had signed an irrevocable direction in favour of the lawyer. However, Henderson J. reviewed the direction and found that it was not sufficiently broad to as to apply to the fact situation. Henderson J. held that if the parties wished to contract out of the general principle that the costs of a proceeding belong to the litigant, they must do so by way of a clear, precise written agreement.

Thank you for reading.

Paul Trudelle

Full post as published by Toronto Estate Law Blog on March 26, 2009 (boomark / email).