Claiming Portions of a Settlement on Behalf of an Estate
In the past, we have written about whether an Estate must first obtain a Certificate of Appointment before issuing a statement of claim.
But what about an Estate that may be entitled to claim a portion of a court-approved settlement?
Over the past year, a number of court-approved class action settlement agreements involving deceased class members appear to have taken into account the cost and complexity of appointing an Estate Trustee.
The settlement agreement approved by the Federal Court in McLean v. Canada is the culmination of litigation concerning tragic, historic events in the lives of those who attended Indian Day Schools. These events include allegations of systemic abuse and mistreatment of children. The “class period” runs from January 1, 1920 until the date of closure or relinquishment of control by Canada of any particular day school or, that date on which the written offer of transfer by Canada was not accepted by the respective First Nation or Indigenous government.
The settlement approval noted that if a class member dies on or after July 31, 2007, their “Estate Executor” is still eligible to be paid the compensation to which the class member would have been entitled.
Similarly, the more recent settlement agreement approved by the Federal Court in Toth v. Canada addresses the claims of veterans who were in receipt of various benefits, including disability pension benefits, and had the disability pension amounts deducted from the other benefits which they received or were entitled to receive. The decision reads:
“Under the proposed settlement, which totals $100 million, every Class Member and the estates of Class Members who have passed away since the Certification Notice was published will receive a payment. Payments will be calculated and made promptly as the majority of Class Members are known and every effort will be made to ensure that all Class Members, or their estates, receive their payment, which will not be subject to income tax.”
If a proceeding has been commenced by an estate before probate has been issued, Rule 9.03 of the Ontario Rules of Civil Procedure offers some relief in stating that the proceeding shall be deemed to have been properly constituted from its commencement.
It is not always necessary for an estate trustee to obtain a Certificate of Appointment in order to administer an estate; however, in certain matters, an estate trustee may be required to obtain probate before being able to represent the estate, whether or not there is a valid Will. The Ontario Superior Court in Carmichael et al. v. Sharpley et al. has set out three circumstances in which probate is required:
- Third parties dealing with the executor may refuse to accept the authority of the Will and demand production of letters probate as authentication of that power…
- Proceedings involving the executor representing the estate as plaintiff or as defendant. It would seem that in such circumstances the court requires probate as an evidentiary matter…
- Where a foreign executor wishes to establish title to estate assets in Ontario he must have his letters probate resealed in Ontario or obtain ancillary grant letters probate. This requires that he first obtain probate in the primary jurisdiction.
Moreover, the Estates Act ensures that estate trustees named in a Certificate of Appointment of Estate Trustee have sole authority in respect of the estate:
“30. After a grant of administration, no person, other than the administrator or executor, has power to sue or prosecute any action or otherwise act as executor of the deceased as to the property comprised in or affected by such grant of administration until such administration has been recalled or revoked”
It will be interesting to see if the Courts will continue to take into consideration the necessity and of appointing an Estate Trustee in light of historic claims, and how third parties making efforts to award a portion of the settlement to the Estate will deal with the requirement for probate.
Thanks for reading!