So i recently made a crusader for my game, i was especially excited since my GM likes to use fear as a way to mess with our group and dealing extra damage to the scary thing seemed like a good plan. however my GM thinks that you need to spend a fate point to activate that ability, along with ignoring fear, dealing x more damage and pen to a creature with fear x. is he right or is it a static ability?

It seema to me that the second part of the ability is static

The fate point is for the fear test that is one statement ending.

In addition whenever you inflict a hit with a melee attack you will always do X more damage.

Crusader role ability very good combined for "Bulwark of Faith" talent. You fail fear test vs demon, spend you faith point and you take success and enemy take not reduced damage (equal you will power bonus), and maybe possible need to make the test warp instability, and despite the fact that battle hasn't even started... In addition if you have "untouchable" elite advance and "bane of the daemon" talent, and poor demon in radius you ability... unhappy day for demon.