A common misconception among parties involved in estate litigation in Alberta is that the estate is or will be required to pay their legal fees.

The Old Rule (the “Old Rule”):

Part of the misunderstanding likely stems from the fact that, in Alberta, up until somewhat recently, parties could reasonably expect that all (or at least some) of their estate litigation costs would be paid from the estate.

“Historically, it was common practice in estate matters for courts to award costs of all parties out of the estate. This approach, however, has been out of favour for several years.”¹ 

In 2022 the Alberta Court of Appeal made clear that the Old Rule could no longer be presumed or relied on: 

“There is no longer any presumption that all the parties in estate litigation will be paid costs out of the estate funds [emphasis added].”¹

The New Rule (the “New Rule”)

The current judicial view as to when the litigation costs of a party involved in estate litigation are payable by the estate appears to be as follows:

1. The Court has discretion with respect to costs, but that discretion must be exercised judicially.² 
    
2. The “modern” approach to costs in estate litigation generally requires unsuccessful parties, rather than the estate, to pay the legal costs of successful parties in order to restrict unwarranted litigation and protect estates from being depleted by such litigation.³ 
    
3. Payment of an unsuccessful party’s estate litigation costs out of the estate requires analysis of a number of factors:⁴  
   • Did the testator cause the litigation?
   • Was the challenge reasonable?
   • Was the conduct of the parties reasonable?
   • Was there an allegation of undue influence?
   • Were there different issues or periods of time in which costs should differ?
   • Were there offers to settle?
4. There is residual discretion where factors such as who initiated the proceedings and the size of the estate may be relevant.⁵ 
    
5. Costs for a successful claimant bringing a family maintenance and support claim are generally awarded on a solicitor and client basis.⁶ 
    
6. As a general rule costs are only paid to the successful or, more recently, “substantially successful” party.⁷
    
7. Whether a litigating party, viewed objectively, “had quantitatively and qualitatively greater success than the other party” and was, in fact “substantially successful” is another consideration and issue altogether.⁸
    
8. Costs will normally never be paid by the estate to a completely unsuccessful party in estate litigation unless an unsuccessful challenge was, for some reason, warranted, reasonable and necessary or there is an appropriate public policy exception that applies.⁹ 

Accordingly, the relationship status between: (a) estate litigants; and (b) automatic entitlement to payment from the estate of one’s legal costs has deteriorated from a “committed relationship” to “it’s complicated”.

Depending on the situation, even estate executors and their lawyers are no longer safe to assume their “administrative” costs, legal fees, and allegedly much deserved executor compensation will be paid, in full, from the estate even when they are acting in non-litigation roles or capacities.

As noted by the Alberta Court of Queen’s Bench (as it then was) in one particularly oft-cited decision:

“I am concerned that a large estate file is perceived by both executors and estate lawyers as a ‘dripping roast’. To be sure, in any estate, there is work that must be done. But a large estate value does not justify abandoning all restraint. Both executors and estate lawyers must be judicious with respect to costs they purport to incur against an estate [emphasis added].”¹⁰  

The Exceptions

Of course, no rule, simple or complicated as it may be, would be complete without exceptions (the “Exceptions”). Costs may be paid out of the estate, even to substantially unsuccessful parties, in cases where the cause of the litigation takes its origin in the fault of the testator.

Cases frequently argued to fall under “the fault of the testator” include disputes that involve:

1. the formal validity of a will;
2. the interpretation of a will or trust; and
3. family maintenance and support claims for allegedly under-supported family members¹¹

These Exceptions come with a significant caveat.  The mere fact that a party is challenging the validity of a will, the interpretation of a will or trust, or the level of support left for a qualified family member and appears to fall within one of the Exceptions, does not guarantee that party’s legal fees will be paid out of the estate.  See, for example, “(3)” of the New Rule (above) which requires any challenge to have been “reasonable”.

The Conclusion

1. the Old Rule has been replaced by the New Rule.

2. there are Exceptions to the New Rule.

3. it appears that there may be room for further exceptions to the New Rule and, depending on the circumstances, exceptions to the Exceptions.

4. when in doubt, see “(1)” of the New Rule (above).  Ultimately, and even when there is enduring agreement by all of the parties, it is up to the Court to decide what costs will be paid out of an estate (if any) and the Court’s current preference is for unsuccessful parties to pay substantially successful parties.  (For further reading, see also Rules 1.3, 10.29, 10.31 and 10.33 of the Alberta Rules of Court, AR 124/2010 and rules 2, 62, 64, 69, 74, 89, 90, 105, 113, and 115 of the Surrogate Rules, AR 130/1995.)

5. NEVER assume that your legal fees will be paid by the estate.  Better yet, ask your lawyer.

If you have questions or would like further information regarding expert evidence at trial, please contact Layne Thiessen or any of our Estate Litigation lawyers.

¹  Chabros v Anderson, 2012 ABQB 517, at para 7 [“Chabros”]
²  Ibid. at para 7; Babchuk v. Kutz, 2007 ABQB 88, at para 5 [“Babchuk”]; Foote Estate, Re, 2010 ABQB 197, at para 16 [“Foote”].
³  Chabros, supra, at para 7; Babchuk, supra, at para 6; Foote, supra, at para 16.
⁴  McCarthy Estate (Re), 2022 ABCA 131, at para 15; Foote, supra, at para 16; Babchuk, supra, at para 8.
⁵  Foote, supra, at para 16; Babchuk, supra, at paras 70, 72.
⁶  Foote, supra, at para 16; Petrowski v. Petrowski Estate, 2009 ABQB 753, at para 62 [“Petrowski”].
⁷  Foote, supra, at para 16; Petrowski, supra, at paras 68, 74.
⁸   Garbera Estate, 2024 ABKB 641, at paras 49-54.
⁹   Foote, supra, at para 16; Petrowski, supra, at paras 76-78.
¹⁰  Foote, supra, at para 16; Petrowski, supra, at paras 78-79.
¹¹  Chabros, supra, at para 50.
¹²  Mitchell v Gard (1863), 164 ER 1280 [“Mitchell”]; Foote, supra, at para 22; St. Onge Estate, supra.
¹³  Anderson Estate, Re, 2009 ABQB, at para 10 [“Anderson Estate”]; Foote, supra, at para 22; St. Onge Estate.
¹⁴  Foote, supra, at paras 21-24; Riva v Robinson (2000), 263 AR 389.
¹⁵  Anderson Estate, supra, at paras 13-14.