IN THE SUPREME COURT OF BRITISH COLUMBIA
| Citation: | Singh Estate (Re), |
|
| 2019 BCSC 1114 |
Date: 20190709
Docket: S168198
Registry: Vancouver
In the Matter of the Estate of Shiv Kumari Singh, deceased
Between:
Uma Kant Singh and Sharda Singh
as Executors of the Estate of Shiv Kumari Singh
Petitioners
And
Sneh Kant Singh, Pushp Lata Arora, Ramesh Arora, Manjula Devi Kalra, Sunil Kant Singh, Kushwaha Kant Singh, Sneh Lata Joon, Dalip Singh Joon, Pushp Kant Singh, Ravi Kalra, Ashika Singh, and Savitri Singh
Respondents
Before: The Honourable Madam Justice D. MacDonald
Reasons for Judgment on Costs
| Counsel for the Petitioners: | D. Taylor |
| Counsel for the Respondents: | D. Hunter S. Denholm |
| Place and Dates of Hearing: | Vancouver, B.C. October 30, 31 and November 1, 2018 |
| Written Submissions of the Petitioners: | April 29, 2019 |
| Written Submissions of the Respondents: | May 6, 2019 |
| Place and Date of Judgment: | Vancouver, B.C. July 9, 2019 |
[1] This decision addresses costs arising out of my Reasons for Judgment indexed at 2019 BCSC 272. The underlying proceeding was an estate dispute involving all eight children of Shiv Kumari Singh (the “Deceased”) and many of their spouses. I briefly outline the facts in this decision but the majority of facts are contained in my Reasons for Judgment. For the sake of clarity and intending no disrespect, I refer to the parties by their given name or names.
[2] The Deceased executed a will on February 14, 2013 (“2013 Will”) which named the petitioners, Uma Kant Singh (“Uma Kant”) and Sharda Singh, as the executors of her estate. When probate proceedings were initiated by the petitioners, the respondent Kushwaha Kant Singh (“Kushwaha”) filed a Notice of Dispute, providing a copy of a different will executed by the Deceased on February 22, 2016 (“2016 Will”) which named Kushwaha as the executor of her estate.
[3] The terms of the 2016 Will disinherited Uma Kant and Sneh Kant Singh (“Sneh Kant”), both sons of the Deceased, on the basis that they had received “their share” of assets from the estate of their late father, Raghu Singh.
[4] The primary issue before this Court was whether the 2016 Will was a valid will. The petitioners alleged that there were suspicious circumstances with respect to the execution and validity of the 2016 Will, that the Deceased’s testamentary capacity was at issue, and that the Deceased did not possess knowledge and approval of the 2016 Will.
[5] I found that the 2016 Will was executed under suspicious circumstances. Consequently, the burden shifted to the respondents to prove the validity of the 2016 Will. I found that the respondents failed to prove, on a balance of probabilities, that the Deceased had the requisite testamentary capacity when she executed the 2016 Will. If I was wrong regarding testamentary capacity, I found that the respondents had not persuaded me that the Deceased possessed knowledge and approval of the 2016 Will.
[6] I ruled that the 2016 Will was of no force and effect. As there was no dispute regarding the validity of the 2013 Will, I concluded that it is a valid and subsisting will, proven in solemn form.
[7] The parties are now before me on the issue of costs.
[8] The petitioners claim that they are entitled to the costs of these proceedings, payable by the respondents, and that no costs should be ordered from the estate of the Deceased. They rely on the following arguments, which I have summarized, to support their position to award costs in their favour.
i. There was evidence before this Court which ought to have put the respondents on reasonable notice that there was likely a significant issue with respect to the testamentary capacity of the Deceased due to her medical condition leading up to February 22, 2016, when the 2016 Will was executed.
ii. Before encouraging the Deceased to speak with a lawyer and draft a new will, the respondents ought to have made appropriate inquiries of the hospitals, nurses, physicians, social workers or other caregivers that they knew were treating the Deceased, to inquire if the Deceased had sufficient capacity to make a new will.
iii. If the respondents had taken this step, the question of “suspicious circumstances” would not have arisen and would not have required litigation before this Court.
iv. In these circumstances, taking the Deceased to see a lawyer with the intention of preparing a new will, without any consideration of her testamentary capacity, was blameworthy conduct which materially contributed to the litigation that had to be brought before the court.
v. The Petition cannot be fairly characterized as litigation that was necessary because of the conduct of the Deceased.
vi. The modern approach to estate litigation is that the normal cost rules generally apply: Hollander v. Mooney, 2017 BCCA 238 at paras. 39‑40, cited with approval in Sato v. Sato, 2018 BCCA 287 at para. 56.
vii. If costs do not follow the event, there will be unfairness and injustice in that the petitioners succeeded in court but may need to liquidate the family home, the primary asset in the 2013 Will, in order to generate cash to satisfy the cost award.
[9] The respondents request that the costs for the validity of the will proceeding be paid out of the estate of the Deceased as special costs. They also seek that costs for the unfounded allegations of undue influence and duress, from the examination of discovery of Kushwaha to the date of the hearing, be payable by the petitioners on a full-indemnity basis.
[10] The respondents made the following arguments, which I have summarized, in support of their position on costs.
i. As executor of the 2016 Will, Kushwaha had a positive duty to seek its proof in solemn form. The 2016 Will satisfied the formal requirements of s. 37 of Wills, Estates and Succession Act, S.B.C. 2009, c. 13 [WESA]. It cannot be said that the 2016 Will was so deficient that it did not warrant examination by the court and persons should not be reluctant to bring their legitimate claims to court.
ii. Costs are borne by the estate where it was the deceased’s actions that necessitated consideration of the validity of a will by the court: Mitchell v. Gard (1863), 164 E.R. 1280 (Eng. Prob. Ct.) [Gard], at p. 1281.
iii. The respondents were required to collect, lead evidence, and prepare a defence to serious allegations of undue influence and duress, both of which are tantamount to fraud. The petitioners have no justification for failing to withdraw those allegations prior to the first day of hearing: Morton v. Morton Estate, [1993] B.C.J. No. 1523 (S.C.) [Morton] at paras. 39-41; and Vielbig v. Waterland Estate (1995), 121 D.L.R. (4th) 485 (B.C.C.A.) [Vielbig].
iv. The Rules of Court governing estate proceedings anticipate that a petition to prove a will in solemn form, so long as the requirement for proof before the court is brought in good faith, on reasonable grounds, and is not made unduly complicated by unnecessary proceedings, should not attract personal costs for the respondent: R. 25-15(4).
v. Regarding the petitioners’ argument that “any costs award in favor of the respondents would engage issues with respect to liquidation of the one‑third interest of the Deceased in the family home of Uma Kant Singh in order to fund any costs award,” there is no evidentiary basis to suggest that liquidation of the family home would be required.
vi. In any event, Uma Kant “wears two hats” in this litigation, as co-executor of the Deceased’s estate and as a beneficiary of the estate. Uma Kant as an individual in his personal capacity is not a party to the litigation. If costs are awarded in the petitioners’ favour they will go to the estate which brought the petition for proof in solemn form. The estate must satisfy the debts of the Deceased: ss. 50, 162, and 163 of WESA.
[11] Traditionally, costs of all parties involved in an estate dispute were ordered to be paid out of the estate. The estate would bear the costs of settling disputes in estate proceedings unless the losing party’s position was obviously unwarranted. The public policy behind the traditional approach is that where a will is ambiguous, and subsequent litigation ensues which is partially or largely cause by the testator, his or her estate ought to bear the costs of the litigation: Gard; and British Columbia (Public Guardian and Trustee) v. Sheaffer, 2015 BCSC 1306. Gard was cited with approval by Justice N. Smith in Moore v. Drummond, 2012 BCSC 1702.
[12] In Steernberg v. Steernberg, 2007 BCSC 953, Justice Martinson, citing the Court of Appeal in Vielbig, explained the traditional approach as follows:
[21] …. In [estate] cases where the validity of a will or the capacity of the testator to make a will or the meaning of a will is in issue, it is sometimes the case that the costs of all parties are ordered to be paid out of the estate. This is upon the principle that where such an issue must be litigated to remove all doubts, then all interested parties must be joined and are entitled to be heard and should not be out of pocket if in the result the litigation does not conclude in their favour. The estate must bear the cost of settling disputes as a cost of administration.... The question to be asked in such cases is whether the parties were forced into litigation by the conduct of the testator or the conduct of the main beneficiaries.
[13] The traditional approach has been gradually displaced by the modern approach to cost awards where costs follow the event in estate matters. Courts retain discretion and have deviated from this trend and followed the traditional approach where justified. This often occurs where the deceased is wholly or partially the cause of the need for an inquiry.
[14] Justice Silverman helpfully explained the current approach in Jung v. HSBC Trust Company (Canada), 2007 BCSC 1740 at para. 106:
….
1. The costs of and incidental to a proceeding will follow the event unless the court otherwise orders.
2. If the cause of the litigation originated from the conduct or errors of the testator (i.e., unclear wording or validity of the will), then the costs of all parties will generally be paid from the estate on a full indemnity basis.
3. If there were circumstances which provided reasonable and sufficient grounds to have brought the action relating to questions of capacity or allege undue influence or fraud, the court will not normally make an order for costs against the unsuccessful party.
4. In an action under dependent relief legislation (i.e., where the proceedings are adversarial in nature and are not brought about by the actions of the testator), costs follow the event.
5. All costs awards are subject to the court's discretion and an overriding test of reasonableness.
[15] Where the validity of a will has been called into question, it is the duty of the executor(s) to prove the will in solemn form of law: Trites v. Johnson (1945), 61 B.C.R. 397 (B.C.S.C) [Trites] at 399, cited with approval in Hetherington v. McLeod, 1991 BCSC 1; Morton at para. 36; and Fuller (Estate) v. Fuller, 2004 BCCA 218 [Fuller] at para. 43.
[16] Part 25 of the Supreme Court Civil Rules, B.C. Reg. 168/2009, governs estate proceedings. Rule 25-15(4) provides that a petition to prove a will in solemn form should not attract personal costs consequences for the respondent if “the respondent merely requires that the will be proved in solemn form” and “the respondent only intends to cross-examine the witnesses produced in support of the will,” unless the judge finds that “there was no reasonable ground for requiring proof in solemn form.”
[17] It is an executor’s duty to administer the deceased’s estate and to pay the debts out of the estate assets, including costs, before distributing any bequests to the beneficiaries. Real estate and other property are to be reduced together to satisfy just debts and expenses of the estate. Land is “administered in the same manner as personal property”: s. 162 of WESA.
[18] Where a party advances but fails to prove a claim of undue influence or fraud, that party is responsible for the costs of the whole action: Morton at paras. 40-41; Bates v. Finley Estate, 2002 BCSC 159 at paras. 119-129; and Kouwenhoven Estate v. Kouwenhoven, 2001 BCSC 1402.
[19] While traditionally all parties’ costs were payable out of the estate in estate litigation, this is no longer the default. In any event, costs are discretionary. Here I exercise my discretion to depart from the current approach in light of the arguments of the parties, the legal principles, and the evidence at the original hearing. Considering all of the above, three key factors inform my decision.
[20] First, the executors of the 2016 Will, the respondents, had an obligation to seek proof of the will in solemn form upon the death of the Deceased: Trites and Fuller. This should not attract a personal costs award unless the respondents unduly complicated the proceedings: R. 25-15(4). Here the respondents took no issue with the validity of the 2013 Will except to argue that it was replaced by the 2016 Will. The respondents did not prolong or complicate the litigation.
[21] Second, the petitioners made allegations of undue influence and duress against the respondents. The petitioners withdrew their claim of undue influence and duress on the first day of the hearing. By this point, the respondents had been put to the trouble and expense of preparing a defence on these issues. They had engaged in documentary discovery and examinations for discovery on this issue. All of this unnecessarily prolonged the litigation.
[22] Third, the litigation was necessary, in part, due to the uncertainty raised by the Deceased leaving two wills upon her death.
[23] I am not persuaded that the respondents’ involvement in assisting the Deceased make the 2016 Will should impact the costs award. I made no finding that the respondents acted improperly or unduly influenced the Deceased to execute the Will.
[24] With respect to the argument that the petitioners may need to liquidate the family home to satisfy the cost award, I agree with the respondents that until the Deceased’s debts are satisfied, Uma Kant holds the real estate interest only as executor, not as its owner. Wearing his hat as co-executor, he must first be granted probate and administer the estate in that capacity before he receives the land as a beneficiary: WESA s. 163.
[25] I exercise my discretion to award both parties their costs out of the estate based on the following:
i. The petitioners were successful, but materially contributed to the litigation by making allegations of undue influence and duress.
ii. The respondents were unsuccessful, but were obligated to prove the 2016 Will in solemn form.
iii. By drafting two wills, the Deceased’s actions contributed to the need for litigation.
[26] In conclusion, both the petitioners and the respondents are entitled to full indemnity costs from the estate of the Deceased. Costs may be subject to an assessment if the parties cannot agree.
“MacDonald J.”
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