We act in different capacities: sometimes in a personal capacity, and sometimes in a representative capacity, such as in the capacity as Estate Trustee. What capacity we are acting in can sometimes have a significant impact on our legal rights.

Take, for example, the Court of Appeal decision in Bennett v. Bennett Estate, 2018 ONCA 45 (CanLII). There, four brothers, Dennis, George, Donald and John, owned several parcels of land. They entered into an agreement that provided a right of first refusal in the event that any of them sought to sell any of the lands to a third party. Donald died, and was survived by his wife, Darlene. John died, and his property was transferred to his wife Joyce and two sons.

In 2012, Joyce and her sons proposed to sell their property to a third party. The agreement of purchase and sale acknowledged the right of first refusal, and the sale was conditional upon George, Dennis and the estate of Donald not exercising their right of first refusal. Darlene purported to exercise her purported right to purchase the property.

The third party purchaser took the position that Darlene could not exercise the right of first refusal because she was not a party to the first right agreement. It was acknowledged that Donald’s estate was entitled to exercise the right of first refusal. However, Darlene claimed to exercise the right of first refusal not as estate trustee of Donald’s estate, but as a family member. The motions judge rejected this submission based on the judge’s review of the first right agreement, and the Court of Appeal upheld the motions judge’s ruling.

On appeal, Darlene submitted that she in fact exercised the right of first refusal on behalf of Donald’s estate. However, there was no evidence of any right of Darlene to act on behalf of the estate. In fact, the third party specifically asked Darlene to produce proof of her authority to act on behalf of Donald’s estate, but Darlene refused to produce such evidence. “The appellant [Darlene] had many opportunities to establish the facts upon which she seeks to rely but chose not to do so. As a result, there was no evidence before the motions judge – and no evidence before this court on appeal – concerning the appellant’s ability to exercise the right of first refusal on behalf of the [Donald’s] estate.”

In assessing legal rights and positions, it is important to not only assess what those legal rights are, but to consider in what capacity we hold them.

Thank you for reading. Have a great weekend.
Paul Trudelle