Litigants who pursue frivolous and vexatious lawsuits should beware

Litigants who pursue frivolous and vexatious lawsuits should beware: the Court has indicated that it can and will, in appropriate circumstances, order them to pay the other party’s full indemnity (100%) costs. This was the case in Marcy v. Marcy a dispute between two brothers, Gordon and Brian Marcy, who are the residuary beneficiaries of their late mother’s Estate.

Brian was originally appointed as Estate Trustee of his mother’s will, he was judicially removed from the role years later and replaced by an independent third party to administer his mother’s Estate.

In the course of administering her Estate, the replacement Estate Trustee, sold the mother’s home and a closing date was set. Brian registered a caution on title to prevent the closing. Cautions registered on title allow potential purchasers to be aware of an ongoing dispute related to the property in question. He later removed the caution after the Estate Trustee and Gordon objected.

The Estate Trustee sought an order vacating the caution to ensure that the “no dealings indicator” was removed from title. He also sought an order preventing Brian from interfering with the upcoming closing and sought costs on a full indemnity basis. The Estate Trustees and Gordon’s goals were to sell the home and ultimately wind down the Estate.

Brian argued that title to the property vested in him and Gordon, three years after their mother died in accordance with s. 9 of the Estate Administration Act – before the replacement Estate Trustee was appointed. He claimed that as a consequence of s. 9, the Estate Trustee had no right to sell his interest in the home or to close the sale. Registering the caution, he claimed was reasonable.

The Court prohibited Brian from taking any further action that would disrupt the sale of his mother’s property as initiated by the Estate Trustee. In arriving at its decision, the Court noted the following:

• The will empowered the Estate Trustee with the “power to sell property at such times and in such manner as the estate trustee sees fit”.
• The Estate Administration Act does not limit the scope of a trustee’s power by requiring a property to vest after a specific period of time. Rather, it was intended to give estate trustees additional powers so long as those powers do not conflict with the provisions of the will.
• The August 11, 2022 Order of the Honourable Justice Dietrich declared that the property of the Estate was vested in the replacement Estate Trustee.
• The May 24, 2023 Order of the Honourable Justice Gilmore ordered Brian to provide vacant possession of the property to the replacement Estate Trustee in order to facilitate its sale.
• The replacement Estate Trustee’s title was not contested before the Court.
• Brian removed the caution he placed on the property before the hearing in order to avoid the hearing and to avoid costs from accruing.

The Court further stated that the Estate Trustee’s Affidavit made it abundantly clear that “extraordinary efforts” were undertaken by the Estate Trustee to accommodate Brian. He was provided ample opportunity to advance his interest in the home but it was clear he simply wanted to prevent the sale from closing. The Court notes that the excess cost of administration may be claimed to have been caused by Brian’s behaviour – which is substantial and material in the context of the Estate.

Ultimately, the Court prohibited Brian from registering any document or interest on title to the property except with leave of the court obtained on notice to Gordon and the replacement Estate Trustee. The Court also used its discretion to award costs under s. 131 of the Courts of Justice Act and ordered Brian to pay the Estate Trustee’s costs personally on a full indemnity basis for taking “frivolous and vexatious steps to stop a transaction without lawful excuse”.

This case leaves readers with two key takeaways:

1. It is of utmost importance to have clearly worded wills and in particular that the scope of an estate trustees powers are set out and,
2. Beneficiaries who fail to cooperate in the administration of an estate can face serious cost consequences.

Want to learn more?  Call us at 416 927 0891 or email us at:  hello@dicksonappell.com