Estate Disputes: The Financial Risk of Being the “Loser” Who Pays Costs

When I was a young lawyer many years ago, I heard a senior lawyer jokingly pronounce with respect to an estate that was in litigation: “Let not the assets of the estate be wasted on the beneficiaries”.

Many a truth is said in jest. It was well-recognized that the cost of litigation would invariably diminish to a significant extent the amount the beneficiaries would eventually receive – particularly since in most cases the court ordered that each party’s legal costs were to be paid out of the estate.1

The law was changed to prevent estates from being unduly depleted, and beneficiaries unduly deprived, by litigation brought or prolonged by litigants who counted on their legal costs being paid by the estate.2 Justice D.M. Brown cautioned in the Ontario Court of Appeal’s 2009 ruling in Salter v. Salter Estate that:

Parties cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation. The ‘loser pays’ principle brings needed discipline to civil litigation by requiring parties to assess their personal exposure to costs before launching down the road of a lawsuit or a motion… given the charged emotional dynamics of most pieces of estate litigation, an even greater need exists to impose the discipline of the general costs principle of ‘loser pays’ in order to inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes.

Therefore, the “modern approach to costs in estate litigation seeks to ensure that estates are not depleted through the costs of unnecessary litigation.”3 Under the so-called “modern approach”, the court may consider a number of factors, including which party or parties the court considers to have lost the lawsuit.

An emphasis on winning or losing is a characteristic of litigation that can be counter-productive in estate litigation. Such emphasis rarely addresses the often valid “emotional dynamics” preventing the litigation from being resolved. Indeed, focusing on “winning” will probably damage beyond repair family relationships that continue after the court has adjudicated. In the end, the monetary value of the estate will be reduced and one or more “losing” litigants will have to find a way to pay costs. Or the costs owed by a beneficiary may be subject to a court-ordered charge against that beneficiary’s share of the estate. For example, in McGrath v. Joy, 4 the Applicant sought unsuccessfully to have a suicide note admitted into probate as a holograph will. In his costs ruling released on January 13, 2021, Justice Gregory Mulligan ordered the Applicant to pay approximately $60,000 in costs within 30 days, failing which the $150,000 specific bequest to the Applicant in the testator’s valid will would form a fund to pay the costs against him.

Mediation will often be a better alternative. Mediation reduces the chances of there being costs-paying litigation “losers”. Mediation can ensure that the estate’s value is significantly preserved. Elizabeth Quinlan, a retired Superior Court Justice and an Ex Juris roster member, advises that estate disputes are ideally suited to mediation. Elizabeth notes that early intervention significantly helps resolve estate disputes and that mediation, particularly if promptly arranged, helps to preserve family and other relationships. Family members or other interested parties can express emotions in a less formal setting than a courtroom and before positions become entrenched and relationships become irreparably damaged.

“Loser pays” is not simply a principle of law. It is a warning to those who might think that litigation is the best way to deal with concerns arising in an estates context.

It is better to mediate. Let not the assets of the estate be wasted on litigation.


  1. McDougald Estate v. Gooderham 2005 CanLII 21091 (ON CA) at para. 78.
  2. (2009) CanLII 28403, 50 E.T.R. (3d) 227 at para. 6.
  3. Sawdon Estate v. Sawdon, 2014 ONCA 101 (CanLII) at para. 96.
  4. McGrath v. Joy 2021 ONSC 316, 2021 CarswellOnt 413 at para. 30.