Executive Summary: Key Legal and Evidentiary Issues

• Personal liability of estate trustees for costs incurred in continuing litigation after the testator’s death

• Application of the doctrines of functus officio, res judicata, and cause of action estoppel to post-trial costs applications

• Differentiation between defending a claim and continuing a counterclaim or third-party claim in estate proceedings

• Discretionary authority of the court to apportion costs among distinct legal issues in complex litigation

• Procedural fairness in raising personal liability after a final costs order has been entered

• Epic and Travelers won at trial; Fuller secured procedural success by obtaining leave to appeal the costs order

Facts and outcome of the case

The case originated from a 2017 property insurance dispute. Desmond Fuller’s home sustained water damage, and Epic Restoration Services Inc. was contracted to conduct repairs. Epic invoiced Travelers Canada, the insurer, which in turn issued a joint cheque to Epic and Mr. Fuller. However, the cheque was deposited solely by Mr. Fuller’s father, who then refused to pay Epic. In response, Epic filed a claim in 2018 for breach of contract, unjust enrichment, and breach of fiduciary duty. Mr. Fuller’s father counterclaimed, asserting an equitable setoff based on poor workmanship, and brought a third-party claim against Travelers Canada, alleging breach of the insurer’s duty to defend and seeking damages for lost rental income.

Desmond Fuller passed away in January 2019. His son, Rudyard Kippling Fuller, took over the litigation in his capacity as executor and continued the counterclaim and third-party proceedings on behalf of the estate. During the course of litigation, Mr. Fuller also transferred the title of the affected property to himself, which he disclosed to the opposing parties. The trial was held in late 2022, and the Supreme Court of British Columbia found in favor of Epic and Travelers Canada. Costs were awarded against the estate, not Mr. Fuller personally.

By the time the costs hearing occurred, the estate had been fully administered and held no assets. Epic and Travelers Canada brought new applications to hold Mr. Fuller personally liable for the outstanding costs. Their applications were initially rejected by Justice Shergill, who ruled that such relief required either adding Mr. Fuller as a party in his personal capacity or launching a separate proceeding. However, she left open the possibility of applying to the original trial judge for personal costs liability. The parties did so, and the trial judge ruled that Mr. Fuller was personally liable for the costs of the counterclaim and third-party claim, relying on the common law principle that trustees are liable for costs of claims they advance unsuccessfully. He was not held personally liable for costs related to defending the original claim.

Mr. Fuller applied to the Court of Appeal for leave to appeal the order holding him personally liable. He argued that the doctrines of cause of action estoppel and functus officio barred the respondents from seeking new relief after the initial costs order was entered, and that there was no principled legal basis to equate continuing a pre-existing claim with initiating one for purposes of imposing personal liability. The Court of Appeal agreed that the issues raised were significant questions of principle with broader relevance to civil practice and estate litigation. The court granted leave to appeal the December 11, 2024 costs order, allowing Mr. Fuller to challenge the ruling. However, it declined to grant leave in respect of the February 13, 2025 order apportioning the costs, citing its discretionary nature and lack of independent merit.

To stay execution of the appealed costs order, Mr. Fuller was required to post security in the amount of $90,000—$50,000 to Epic and $40,000 to Travelers Canada. The funds were already held in his lawyer’s trust account, and a formal stay was granted on that basis.

Epic and Travelers Canada were the prevailing parties at the trial level, winning on the merits and securing a costs order. However, Mr. Fuller achieved a procedural victory at the appellate level by obtaining leave to appeal the ruling that made him personally liable, keeping his legal challenge alive pending full appellate review.