Failure to Engage and a “Scorched Earth” Approach Leads to Near-Full Indemnity Costs

Drennan v. Drennan, 2024 ONSC 3905, is an instance of a rare and significant costs award that almost entirely compensated a litigant for the actual costs she incurred. It should serve as a stark reminder to litigants who sit on their rights and refuse to participate meaningfully in a Court-ordered process, despite having notice of procedural matters and, importantly, warnings from the Court of the risks of a costs order that could follow their non-engagement and non-compliance. Here, the Respondents’ failure to act and “scorched earth” approach to the opposing litigant resulted in a significant amount in costs being made payable from their inheritance.

The Applicant in this case was Melissa Drennan, the daughter of the deceased, John Drennan. The Respondents were Melissa’s brother David, and the children of Melissa’s and David’s pre-deceased brother, Jessica and Nicholas (the “Grandchildren”). Under John Drennan’s will, Melissa was granted 50% of the Estate residue; David was to receive 25% and the Grandchildren would divide the remaining 25%. David was named as the Estate Trustee in the Will. The Respondents stated, without formalizing their position, that the Estate should instead be divided 1/3 to each of David and Melissa and 1/3 to the Grandchildren.

In November 2023, Melissa sought to have David removed as Estate Trustee, or in the alternative, to have an Estate Trustee During Litigation (ETDL) appointed. The ETDL is a neutral person who is Court-appointed to manage Estate assets when litigation is ongoing, typically by preserving them and acting within a limited set of powers established by Court order. The request for an ETDL was granted by Justice Myers: 2024 ONSC 141. Notably, David had refused to advance the administration of the Estate on the grounds that he and the Grandchildren intended to challenge the Will and make claims against Melissa, who acted as the deceased’s power of attorney before he died.

The Court went to significant lengths to assist the self-represented Respondents: they were urged to get legal advice, given deadlines to deliver notices of appearance and affidavits of evidence, and advised of their limitation periods for bringing their claims in a way that would “minimize delay and expense.” The Respondents were also warned that failure to participate and meet deadlines exposed them to a risk of a costs order against them.

In this case, the Respondents’ refusal to cooperate to finalize the interim orders made by Justice Myers, including the order to have an ETDL appointed, led to regrettable consequences for the Estate. As a note, approving an order as to form and content is not meant to be adversarial; as Justice Myers noted, “the process is just to ensure that the party who drafted the order correctly set out the terms ordered by the judge. Everyone is bound to cooperate to try to ensure that the formal order says what it is supposed to say in accordance with the judge’s endorsement or reasons.”

Counsel for Melissa sent a draft Order to the Respondents for their input. They failed to respond to her drafting: “They asked no questions. They made no comments. They gave no approval. They just ignored the draft and the time by which a response was requested”. Counsel then submitted her draft order to the Court in January 2024, seeking the Court’s approval of the draft. The Court directed counsel to make amendments to the draft and to contact the Respondents for their input.

The Respondents continued to remain silent. They did not meet any of the filing requirements or take any actions in the litigation, despite the Court’s comments and stipulations made on November 2023, and they did not approve the order as drafted. Nor did they make suggestions for changes to the draft. The Estate continued to languish, as the appointment of the ETDL, while ordered, could not be acted upon because the wording of the order was not finalized. This had serious consequences: a mortgage fell into arrears and the mortgage company sought enforcement for payment.

On a motion on July 2, 2024, the Court removed David as Estate Trustee. A few days later, Justice Myers made a ruling on the cost consequences of the Respondents’ inaction (2024 ONSC 3905). Justice Myers also approved the draft order from November 2023.

By this time, the Applicant’s lawyer had attended Court six times and incurred almost $65,000 in fees, which was financed at least in part by the Applicant’s litigation loans. By contrast, the Respondents failed “to take even the most basic steps required of them” to put any allegations in writing and did not meet deadlines. They took a “scorched earth” approach. Justice Myers states:  “It seems that the respondents just wanted to make scurrilous allegations and then to delay so as to hurt the applicant even if it prejudiced them. This is an abuse of the litigation process and deserving of enhanced costs”.

The Court ordered costs against the Respondents on a substantial indemnity basis. The costs payable by the Respondents included a significant portion of the Applicant’s legal fees, the fees/expenses that became due because of the mortgage that fell into arrears, and the interest payable on the Applicant’s litigation loans. While the Court identified David as the “principal bad actor,” the niece and nephew “stood in common cause” with him and were ordered to share the costs burden with him jointly and severally.

Of the almost $65,000 in costs the Applicant spent to deal with these Respondents, the Court ordered the Respondents to pay the Applicant $60,000 all-inclusive, payable out of the Respondents’ share of the Estate, after payment of the mortgage, mortgagee’s costs, and litigation loan interest.