Beneficiary digging in his heels results in losing nearly his entire entitlement to estate
Litigants who seek to bring unnecessary and vexatious lawsuits, and who fail to concede obvious points, should be cautious – the Court, in appropriate circumstances will not shy away from ordering the payment of substantial indemnity costs for beneficiaries who pursue what they call “scorched earth litigation”.
Fanelli v. Fanelli-Bruno is a case that demonstrates the lengths a son would go to in court because he was so unsatisfied by the division of assets provided in their late mother’s will.
The deceased mother, Lisa Fanelli had an estate worth $320,000.00. A year before she passed, she changed her will. Her old will provided that her estate be divided equally amongst her two adult children, her son Damiano Fanelli and her daughter, Sonia Fanelli-Bruno.
In her new will, she left 25% of her estate to each of her son, her daughter and her daughter’s two minor children. She named her daughter as her estate trustee. By changing her will, she effectively decreased her son’s share of her estate from $160,000.00 to about $75,000.00.
Her son, Damiano, brought an application on the basis that his mother lacked capacity and his sister unduly influenced their mother with respect to changing her will. Through the course of the litigation, Damiano was able to obtain some 9,000 pages of medical records and an affidavit with back-up notes and correspondences from the mother’s lawyer that provided evidence as to the mother’s testamentary capacity. He eventually accepted the terms of the new will.
All that was left for the court to decide was the issue of costs.
Damiano incurred legal fees to the tune of $60,000.00 to chase a maximum of $85,000.00 and put his sister in the position of having to spend $90,000.00 to protect the gifts provided by her mother to her children.
The Honourable Justice Myers indicated that this case was a prime example of scorched earth litigation. The estate was tied up in litigation for about four years unable to make distributions. The entire situation was lose-lose considering the modest size of the estate unless Damiano paid his sister her legal fees.
The Court asserted that this was a case where substantial indemnity costs were justified and necessary. Justice Myers noted the lack of proof regarding the mother’s incapacity and a weak argument made for undue influence. Making allegations of undue influence with no relevant evidence of either incapacity or undue influence and forcing a massive expense on the estate in an effort to scorch the earth so that no one would have anything at the end of the litigation was in the Court’s view, reprehensible behaviour.
Ultimately Damiano was to pay $74,000.00 in costs to his sister, leaving him with only $1,000.00 from his mother’s Estate.
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