The Applicants were successful on an Application to declare the residue of Colin Constant’s Will intestate, to be distributed to them under s. 34 of the Wills and Succession Act, SA 2010, c W-12.2. The Will listed the Respondent as the named Personal Representative, but did not name a residual beneficiary. The Respondent was unsuccessful in a Cross-Application to be declared the residual beneficiary of the Will.

At issue in this Application was the allocation of Costs. The Applicants sought recovery of 70% of solicitor-client costs, contending they were entitled to Costs for two Applications, their own and the Cross-Application, double-costs due to the rejection of their Calderbank Offer, and further costs as the Respondent engaged in litigation misconduct. The Respondent argued that each party should have their own Costs paid from the Estate, rather than from the unsuccessful party.

Justice Hollins rejected the argument that the Application and Cross-Application should be considered separately for the purpose of calculating Costs, noting that no additional briefs of affidavits were required and that both the Application’s were argued together as a single issue, resulting in one decision. Hollins J. also dismissed the Applicants’ claim of litigation misconduct by the Respondent, emphasizing that the Respondent had an arguable position and that losing a case does not amount to misconduct. Additionally, the Court noted that the Applicants’ Calderbank Offer was an effective settlement, open for a reasonable period, and included extra payment for the Respondent’s legal fees, which the Applicants were not obliged to provide.

Justice Hollins confirmed that, under Rule 10.33(1)(a), the unsuccessful party will generally bear the costs of the successful party. However, citing Re McCarthy Estate, 2022 ABCA 131, Hollins J. noted that in rare circumstances, Costs may be paid by the Estate. Factors to consider include whether the Testator caused the litigation, whether the challenge was reasonable, any allegations of undue influence or lack of capacity, the parties’ conduct, and any settlement offers.

Hollins J. observed that while the testator may have contributed to the litigation, courts recognize that it is ultimately the litigants who cause disputes. Justice Hollins found the Respondent’s challenge was reasonable, but an effective settlement offer would have covered most fees. Considering these factors together, Justice Hollins concluded that the case did not meet the rare circumstances to justify costs being imposed on both parties, to be paid by the Estate.

The Court explained that, under Rule 10.33, the calculation of Costs requires consideration of the importance of the issues, the conduct of the parties, the complexity of the Action, and what the unsuccessful party can reasonably be expected to pay. Hollins J. stated that Costs are intended to partially, but not fully, indemnify the successful party, typically reflecting 40-50% of reasonable solicitor-client costs, guided by Schedule C and case law. Justice Hollins further noted that, since the hearing resolved all issues and the Respondent had no share of the Estate, a lower partial indemnity percentage was appropriate. Accordingly, Hollins J. awarded the Applicants $25,000, approximately 34% of their Costs, payable by the Respondent.