In estate litigation costs awards follow the “loser pays” principle. This means that generally the party who is unsuccessful in court will be ordered to pay a portion of the successful party’s costs. (There are factors that the court will consider that could deviate from the “loser pays” principle, such as where the litigation is “caused” by the actions of the testator). There are also factors that the court will consider in assessing the amount of costs to be paid by the unsuccessful party. One such factor is whether any offers to settle were made. If the successful party made an offer to settle and after the hearing/trial does as well as or better than the offer, the court can award substantial indemnity costs from the date of the offer. (Litigants may be surprised to learn that “substantial indemnity” costs is less than the full actual costs incurred.) One of the elements of this powerful type of offer to settle is that it must not be revoked or expire until after the hearing/trial has commenced. This type of offer to settle is called a “Rule 49 Offer” as it must meet the requirements of rule 49 of the Rules of Civil Procedure in order to attract the costs consequences available under that rule.
In the recent costs decision of Schickedanz v. Schickedanz, 2026 ONSC 297 (CanLII) (“Schickedanz”) the court considered offers to settle made by the winning parties. There were three applications in which four brothers contested the actions of their sister. The brothers argued that a codicil allegedly made by their mother was invalid and that investments in the name of their sister were held in trust for their mother’s estate. The brothers were successful in both applications. The third application was commenced by the sister for management fees and abandoned by her early in the proceedings.
After the brothers were successful in the two main applications, they submitted the quantum of costs being sought from their sister personally. They were significant: roughly $2.65 million. The court reviewed the offers to settle by the brothers to assess whether substantial indemnity costs were warranted. (The sister made no offers to settle). In the application challenging the validity of the codicil, the first offer to settle by the brothers included a term that their sister could purchase a piece of real property from the estate for a fixed sum of $20 million. The court found that it was unclear whether the brothers obtained a judgment that was more favourable than the first offer. This was because the judgment did not include an option to purchase by the sister and the court could not assess whether the $20 million “price tag” would have been favourable to the sister since the property was estimated at $23 million in value. With respect to the second offer to settle, the court was able to conclude that the judgment for the brothers was as favourable or more favourable than the offer. Therefore, the brothers were awarded their partial indemnity costs to the date of the second offer to settle and substantial indemnity costs thereafter.
Similarly, the brothers made two offers to settle in the second application. In assessing the terms of the offers against the judgment awarded, the court concluded that the brothers did not do as well as or better than their first offer to settle. However, the brothers did obtain a judgment as favourable or more favourable than the terms of their second offer. Again, the brothers received their partial indemnity costs to the date of the second offer to settle and substantial indemnity costs thereafter. Schickedanz is a helpful review of the costs principles applicable in estate litigation and analysis of the costs consequences of offers to settle.
