Litigation is expensive. The question of who pays for it, when and how, is often top of mind for most litigants. Following an 11-day trial, the Ontario Superior Court in Schickedanz v. Schickedanz, 2026 ONSC 297 recently ordered the Applicant Charlotte Schickedanz to pay her four brothers $2,217,768.69 in costs for three interrelated applications concerning their late mother’s holograph codicil, her investment accounts, and Charlotte’s alleged fees for the management of her mother’s investment accounts.
This decision in Schickedanz includes many hallmarks of estate litigation: siblings in conflict, the validity of key documents in question, allegations of incapacity concerning a family elder, whether certain assets are held personally or held in trust for the estate, and valuable real estate. As such, the decision offers a useful summary of the factors the Court will consider in making an award of costs and underscores the cost risks associated with protracted, complex estate litigation.
In brief, the Applicant Charlotte sought a declaration that her late mother’s purported codicil, which would amend her mother’s will to leave her a $23 Million home, was in fact a valid testamentary document. Charlotte’s four brothers disagreed. They challenged the validity of the codicil arguing that it was made under suspicious circumstances, and that their mother lacked testamentary capacity. The brothers also asked the Court to declare that their mother’s investment accounts worth approximately $4 Million, which were being managed by their sister Charlotte, were properly assets of the estate held in trust by their sister.
The Court found that the codicil was invalid and that Charlotte assisted her mother in making the codicil with terms solely to her own benefit, while being aware of her mother’s mental decline. These actions, which were considered purely self-interested and unreasonable, did not permit Charlotte to have her legal costs paid from her mother’s estate. Likewise, Charlotte was unsuccessful with respect to the brother’s investment account application as the accounts were found to be held in trust for the estate. Charlotte was not entitled to have her costs of the investment account application paid from the estate, or to receive costs for her abandoned application for management fees.
How costs are awarded in estate litigation:
• “Loser-pays framework”: The old practice of routinely paying all parties’ costs from the estate has been displaced and Courts now adopt a standard “loser pays” model to prevent estates from being drained by unnecessary litigation. For further reading, the Ontario Court of Appeal recently reaffirmed this approach in Westover Estate v. Jolicouer, 2024 ONCA 81.
• Limited public policy exceptions: Estate trustees are generally indemnified for the reasonable administration costs they incur in the course of their duties. This does not apply where actions are purely self-interested and do not serve the Estate. Courts may exercise discretion to depart from the “loser pays” approach in rare situations where litigation was necessary to ensure proper estate administration or where exceptional facts justify a more tailored cost award.
• Fixing the amount: The successful party is not necessarily entitled to recoup every dollar spent in litigation. Costs must still be fair, reasonable, and proportionate for the losing party to pay, assessed against factors in Rule 57.01 (which include the result, the amounts at stake, the complexity of the proceeding, the reasonableness of the parties’ conduct and the importance of the issues.) Importantly, Courts will critically review dockets, staffing, rates, duplication, and whether time claimed was warranted. For further reading, this framework was recently outlined by the Ontario Court of Appeal in Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587.
• Scale of costs and offers to settle: Larger cost awards are justified where the Court seeks to reprimand unreasonable conduct. Costs can be awarded on a partial indemnity, substantial indemnity or full indemnity scale, with partial indemnity being the smaller (ex: 60%) and more common scale, and full indemnity being the largest (ex: 100%) and most exceptional scale. As an example, substantial indemnity costs may be awarded in situations where the Court’s decision is ultimately worse for the unsuccessful litigant compared with previously made offers to settle. This approach encourages reasonable efforts to settle disputes early, and discourages unnecessary, lengthy, and expensive trials where the parties could otherwise settle.
Here in the case of Schickedanz, the Court made an especially large cost award based on several factors:
• “Loser-pays framework” and public policy considerations: The judge rejected Charlotte’s request to have her costs paid from the estate. The Court emphasized public policy by explaining that rewarding a party who procured a codicil benefiting herself, amid suspicious circumstances and capacity concerns, would encourage litigants to embark on more risky will challenges with the expectation that there is “nothing to lose.” Similarly, there was no public policy justification for Charlotte to have the $17,768.69 in costs that she incurred on her abandoned management fee application to be paid out by the estate.
• Complexity and reasonableness: The Court considered the proceeding to be “complex”, and indeed it was complex since both sides left “no stone unturned” through extensive discovery with more than 20 examinations, expert reports, numerous motions, conferences, and ultimately an 11 day trial. This complexity justified a large award, but time entries nonetheless faced scrutiny as the Court found some items excessive (ex: 97.5 hours on two affidavits). Taking these critiques into consideration, the Court fixed a reduced lump sum of $2.2 million.
• Results vs. attempts to settle: The brothers were ultimately successful on the core applications in dispute. Their offers to settle made respectively in January 2022 and January 2024 positioned them for enhanced costs. The Court determined that the brothers were presumptively entitled to partial indemnity costs up to January 24, 2024, and substantial indemnity costs thereafter, because the final decisions on the applications were as favourable or more favourable than their previous offers to settle.
In conclusion, although some mistakenly believe that costs are always paid by the estate, parties can expect standard “loser pays” outcomes in estate litigation where costs are paid by the litigants themselves. These costs can be significant and should always be considered before embarking on potentially complex estate litigation.