Author: David M Smith

29 Nov

Resealing of Foreign Orders Appointing Guardians

David M Smith Estate & Trust, Estate Planning, Trustees, Uncategorized, Wills Tags: , , , , 0 Comments

This blog was written in collaboration with, and with thanks to Yasmin Vinograd of Merovitz Potechin LLP .

In some cases, an incapable person residing outside of Canada has assets in Canada. Can a guardian appointed outside of Canada have access to the incapable’s Canadian assets? By extension, would a Guardianship Order made outside of Canada be recognized in Ontario?

In Ontario, this scenario is dealt with in the Substitute Decisions Act, 1992 (“SDA”). Section 86 of the SDA provides a mechanism by which orders made by a court outside of Ontario to appoint a guardian of property or of the person may be recognized or “resealed” in Ontario. Subsections of s. 86 specify that:

s.86(1): a foreign order is “an order made by a court outside Ontario that appoints, for a person who is sixteen years of age or older, a person having duties comparable to those of a guardian of property or guardian of the person.”

s.86(2): “Any person may apply to the court for an order resealing a foreign order that was made in a province or territory of Canada or in a prescribed jurisdiction.”

s.86(3): an applicant seeking to have the court reseal the foreign order is required to file a copy of the foreign order, along with a certificate signed by registrar, clerk or other officer of the foreign court stating that the order is unrevoked and is of full effect.

The effect of these provisions is that a guardianship order made by a foreign court will be recognized and enforceable in Ontario.

Sounds easy enough, doesn’t it? Unfortunately, it is not.

I had previously blogged about the possibility of resealing guardianship orders made in other provinces and territories. The issue arises when trying to reseal a guardianship order made outside of Canada. The problem is that Ontario has yet to prescribe any other country as a “prescribed jurisdiction” for the purpose of section 86(2). This begs the question: can the court reseal a foreign guardianship in the absence of the list of prescribed jurisdictions?

When faced with this exact issue in Cariello v Perrella, 2013 ONSC 7605, the court refused to apply section 86 to reseal a guardianship order made in Italy. Justice Mesbur stated:

It seems to me that unless and until Ontario creates a list of “prescribed jurisdictions” there is simply no legislative basis on which I can apply s. 86. This is not a case where the statute inadvertently fails to deal with an issue. Here, the province has simply failed to take the regulatory steps necessary to create a list of prescribed jurisdictions to which s.86 would apply. I have no idea of the province’s intentions in that regard. I fail to see how I can simply assume Ontario would designate Italy as a prescribed jurisdiction when it finally creates a list of prescribed jurisdictions under the SDA. I have no basis to conclude that Ontario has any intention of having s.86 apply to any jurisdiction other than another Canadian province or territory. Section 86 cannot apply.

In light of the Cariello decision, it appears that section 86 and the mechanism it provides cannot be used to reseal an order made by a jurisdiction outside of Canada. What, then, is a guardian to do if the incapable has assets in Canada that need to be accessed?

There are two ways in which this could be addressed.

The first is to bring an application to have the guardianship order recognized as a non-monetary order, pursuant to the Supreme Court of Canada’s decisions of Morguard Investments v De Savoye, [1990] 3 SCR 1077 (SCC), Beals v Saldanha, 2003 SCC 72, and Pro Swing Inc v ELTA Golf Inc, 2006 SCC 52. As of now, there is no decision that applied the SCC’s test of real and substantial connection in the context of a guardianship order. It remains to be seen whether an Ontario court would be open to recognizing a guardianship order on that basis and what the Public Guardian and Trustee’s position will be on such an application.

The second option is to commence a new guardianship application in Ontario. The evidence of incapacity in the foreign jurisdiction may be useful in such an application, but it would probably need to be updated to reflect the current status of the incapable and to demonstrate his or her incapacity. The “new” guardianship application will need to conform to Ontario’s requirements under the SDA, including the filing of a Management and/or Guardianship Plan(s), service on required persons, and naming of specific respondents in the notice of application.

Thanks for reading!
David M. Smith & Yasmin M. Vinograd

05 Dec

Fraudulent Conveyance and The Estate Planning Defence

David M Smith Estate & Trust, Estate Planning, Executors and Trustees, General Interest, In the News, Litigation, Public Policy Tags: , , , , 0 Comments

We have previously blogged on Fraudulent Conveyance.  This cause of action can, on occasion, be met with a defence that the conveyance of property was in furtherance of an estate plan and, therefore, without fraudulent intent.  As with most cases, the specific facts of the case will determine whether the defence can succeed.

In Bank of Montreal v. Real Marleau, the Saskatchewan Court of Queen’s Bench was prepared to entertain the notion that the defendant’s assertion might actually be true, but nonetheless, determined that the conveyance ought to be aside.

The estate planning defence was considered and again rejected in Re Whetstone, 1984 CarswellOnt 157.  In this case, the estate planning defence relied on evidence from the family’s solicitor.  The court noted, at paragraph 28,

“In the circumstances, it is not material that the family’s solicitor recommended the conveyance based on general principles and not on actual knowledge of the company’s financial position; the intent we are concerned with is not that of the family’s solicitor, but of [the defendant].”

Lastly, in an unreported decision of the Ontario Superior Court of Justice, RBC v. Nicolau, the defence was considered but not accepted:

“In this case, Mr. Nicolau testified that the transfer was for estate planning purposes.  He submits that there was therefore no fraudulent intent.

RBC referred the Court to jurisprudence in which the estate planning defence was raised.  I agree with the submissions of RBC that this defence must fail.  While the transfer may have also satisfied Mr. Nicolau’s estate planning goals, this explanation is not, in my view, sufficient to displace the inference of fraudulent intent given the timing of this estate planning and the presence of the badges of fraud.  Accordingly, I find that the April 16, 2012 conveyance of 1 Lister Drive to Gabriel Nicolau was fraudulent, and the provisions of the Act are therefore applicable.”

Thanks for reading,

David Morgan Smith

28 Nov

Supreme Court Advocacy

David M Smith Continuing Legal Education, Estate & Trust, Estate Planning, General Interest, Litigation, Wills Tags: , , , , , 0 Comments

I was able to attend a recent CPD program by the Advocate’s Society titled “Supreme Court of Canada Advocacy.”

A powerful keynote address was presented by the Honourable Madam Justice Suzanne Côté of the Supreme Court of Canada. Justice Côté’s remarks included an inside look at what lies behind the Supreme Court of Canada’s “big mahogany doors,” as she so eloquently phrased it. The Honourable Marshall Rothstein, Q.C., then spoke about the unwritten rules to getting leave to appeal.

Debate was had over the need for a script. Most panelists supported coming prepared with a script but cautioned against being married to it. When it comes to answering questions, advocates should see this as an opportunity to get off their script and engage in a dialogue with the bench. As Justice Côté points out, an oral argument is not supposed to be a monolog.

After discussion on the power of oral advocacy, the discussion shifted to the importance of the written argument. Although the factum is a critical component of any appeal, parties are under no obligation to reach the maximum page length. It was suggested that some of the most successful arguments can be made in 25 pages or less.

In addition to the factum, the Condensed Book can be a vital tool for advocates appearing before the Supreme Court. Under the Supreme Court rules, the Condensed Book may contain a two page outline of the oral argument. Preparing the this two page outlines forces advocates to truly narrow down their key points.

The panelists also spoke about the important role interveners can have in a case. Within the confines of a 10 page factum, and 5 minutes of oral argument, an intervenor can illustrate why a matter is of public interest, and provide supplemental answers to questions posed to the parties by the Justices. Interveners can play a critical role, and should not be overlooked.

Finally, the panel highlighted the power of a moot. Practice moots are one of the most valuable tools an advocate can use to prepare their case. The Supreme Court Advocacy Institute offers moot sessions where participants have the opportunity to moot their case before a panel of experienced litigators and retired justices.

Thanks for reading,

David Morgan Smith

24 Oct

Why Influence is not always Undue

David M Smith Uncategorized Tags: 0 Comments

In the world of estate litigation, there is a tendency to view influence askance:  to see all influence as being motivated by self-interest and as inevitably carrying the seeds of coercion or “undue influence.”

Of course, this can’t be the case.  A society that cares for the vulnerable and the elderly will require that strangers or distant relatives step in on occasion to help someone in need, particularly where there is no immediate family member to assist.  A balance must be struck in the law as it relates to undue influence between protecting the elderly and vulnerable while, at the same time, respecting the dignity of an individual to exercise his or her own decision-making even in the face of influence or persuasion.

The law of undue influence has evolved differently as it relates to inter vivos gifts, on the one hand, and Wills, on the other.  A full discussion of the reasons for this goes way beyond the scope of a blog but one observation that can be made is the acceptance that the law has shown for an individual to assert testamentary freedom, even if that means benefitting someone who exercises power over them.

Commentators such as John Poyser have observed the various rationales behind the fact that the presumption of undue influence is inapplicable in the case of Wills.  While the law in this area has evolved, one of the policies underlying the law recognizes what we observed above:  society requires the young to help the old.  While there must be boundaries put on any conduct that would amount to an abuse of this social reality, there must at the same time be a recognition that well-meaning people should not be dissuaded from providing assistance if to do so would automatically trigger a legal presumption that their actions amounted to coercion.

Thanks for reading,

David Morgan Smith

 

 

 

 

 

 

17 Oct

Holding the House in Trust

David M Smith Hull on Estates, Trustees Tags: 0 Comments

As a follow up to my last blog which considered Andrade v. Andrade, 2016 ONCA 368, today we further consider the specific issues that can arise in the litigation of competing interests in real estate and the importance of a declaration of trust.

The scenario is common: one party holds legal title to real estate and another asserts that he or she is beneficially entitled to the property having provided the funds to purchase the property or pay down the mortgage.

While evidence may be led to establish the existence of a resulting or constructive trust in favour of the applicant or plaintiff, it is tempting to simply argue that an express trust existed:  the legal owner held the property from inception in trust for the person who alleges that he or she is the beneficial owner.  Successfully advancing such an argument relieves the disappointed party from having to tender vast amounts of bank records and cancelled cheques to establish, say, a purchase money resulting trust.

The simplicity of the argument, however, requires clear evidence that satisfies the basic requirements of an express trust, and meets the requirements of the Statute of Frauds.  The successful applicant or plaintiff will have to establish that the legal owner assumed the obligations of trustee by:

  • certainty of intention to create the trust;
  • certainty of the identification of the subject property of the trust; and
  • certainty as to the persons intended to be beneficiaries of the trust

Proving the three certainties requires documentation evidencing a property interest in trust.  The gold standard would be a trust declaration attached to a reporting letter from the purchaser’s solicitor.  In the absence of such evidence, the three certainties cannot be proved and the provisions of the Statute of Frauds are violated.  Recent cases considering this issue include Sundarampillai v. Ponnambalam, 2015 ONSC 5466, and Roberts v. Hyland, 2017 ONSC 2164.

In the absence of an express trust, equitable remedies may still be available but, as noted, the case becomes more complex from an evidentiary point of view.

Thanks for reading,

David Morgan Smith

Find this blog interesting? Please consider these other related posts:

Resulting Trusts and What it Means to Pay for the House

 

03 Oct

Resulting Trusts and What It Means to Pay for the House

David M Smith Uncategorized Tags: 0 Comments

There are many cases that consider whether a resulting trust is created in respect of real estate. The question that arises is whether the person with legal title to real estate is in fact the true owner or whether, because of contributions made by another, the property should “result” or be returned to the person who actually contributed the proceeds required to purchase the property.

In Andrade vs. Andrade, the Ontario Court of Appeal considered a lower court decision in which the Trial Judge had found that a woman named Luisa who lived in a house had not paid for the house and could therefore not establish an entitlement based on resulting trust.

What is most interesting about the decision of the Court of Appeal is that, in reversing the lower court decision, it peeled the onion on what actually constitutes a financial contribution by someone who purports to be beneficially entitled to real estate:

  •  Luisa paid down the mortgage with money given to her by her children who resided with her.  But it was her money: “once the working children gave their paycheques to Luisa…[it] was no longer their money because they made a gift of it to their mother, knowing she would use it to support the family.”
  • Likewise, the rental income was Luisa’s money: “Luisa was the only person…who advertised for and negotiated with prospective tenants and collected their rent.”
  • And, lastly, Luisa had other sources of money: “Luis received old age security benefits commencing in 1990… and in 2003 she received a settlement of $21,000.”

The takeaway from the case would appear to be that the determination of whether someone paid for a house requires a thorough analysis of the source of the moneys rather than simply looking for cancelled cheques directly written by the purported beneficiary.

Thanks for reading,

David Morgan Smith

Find this blog interesting? Please consider these other related posts:

Resulting Trusts – Protect Yourself

The Purchase Money Resulting Trust

Resulting Trust Reverberations

 

28 Sep

The Equitable Doctrine of Tracing

David M Smith Estate & Trust Tags: 0 Comments

Where an estate trustee acts in breach of trust, the first concern of the beneficiary is to recover the estate assets.  But what if the trust property has left the hands of the trustee?  In such a situation the beneficiary is left to trace the trust property and seek to recover it from the person or entity then in possession.

The equitable doctrine of tracing operates on the occurrence of two events:

  • the acquisition of legal title “in breach of some trust, express or constructive, or of some other fiduciary obligation”  and
  • the assumption of possession by a volunteer “provided that as a result of what has gone before some equitable proprietary interest has been created and attaches to the property in the hands of the volunteer”

These principles were considered and applied in Re Diplock, [1948] Ch.465 (C.A.), the leading modern authority on the doctrine.

In this case, an executor distributed an estate to charitable residuary beneficiaries pursuant to a Will (presumably not probated) which was subsequently challenged and found to be invalid.  The next of kin sought to recover from the executors and the charitable beneficiaries.  Applying the doctrine of equitable tracing, the executors were found to have distributed in breach of a fiduciary duty to the next of kin.  The charitable beneficiaries, although innocent volunteers, could not take good equitable title to the estate property.

The next of kin were thus entitled to recover, first from the estate trustee and then from the charitable beneficiaries.

Thanks for reading,

David M. Smith

 

19 Sep

A Collaborative Motion for Summary Judgment

David M Smith Litigation, Uncategorized, Wills Tags: , , 0 Comments

In yesterday’s blog, my colleague Umair observed that moving for summary judgment may carry significant risks.  This is particularly so where only the moving party seeks to use the process and, where credibility is in dispute, the Court will often be compelled to find that a genuine issue for trial exists.

The situation is quite different, however, when the parties agree to use the summary judgment process to adjudicate a dispute.  Where the parties have agreed to have all or part of a claim determined by summary judgment and the Court is satisfied that it is appropriate to grant same, judgment will issue one way or the other.

A collaborative approach to summary judgment may be an advisable manner of adjudication, particularly having regard to the principles of proportionality with regard to the assets in dispute.  As a general rule, if counsel agree that the matter can be adjudicated based on an agreed Statement of Fact and transcripts of examinations for discovery, Judgment may be made.  The key determination is whether the viva voce evidence of witnesses and the “machinery” of cross-examination before the trier of fact is required for the fair and just adjudication of the case.  Note that the Judge may direct the matter to trial even if counsel submit the case on consent for summary judgment (this would be a rare occurence indeed).

An example of a collaborative motion for summary judgment is the decision in Rammage v. Estate of Roussel (2016 ONSC 1857).  In this case,   Alfred Roussel (“Alfred”) and Ruth Roussel (“Ruth”) were married in 1997. Each had two children from previous relationships.  In 1998, Alfred and Ruth executed wills by which they gave their respective estates to each other and provided for an equal division amongst their four children on the death of the surviving spouse (the “1998 Wills”). Alfred died 2009 leaving his estate to Ruth. Ruth decided to prepare a new will in 2010 leaving the entirety of her estate to her two children. Ruth later died in 2013.

Alfred’s children took issue with the fact that Ruth’s estate passed entirely to her beneficiaries and not them and litigation ensued.

As there was no direct written or oral confirmation that the 1998 Wills were mutual, Alfred’s children had to rely on extrinsic evidence to support the existence of a binding legal contract. Justice Reid considered the context and the agreed evidence.  In finding that the deceased made a mutual will, the Court considered: (i) the 1998 Wills were made in context of 13 years of cohabitation including a commitment of marriage, (ii) Alfred had been the breadwinner for many years, (iii) Alfred and Ruth had acted throughout their marriage as if they had a family consisting of four children, (iv) the obituary was indicative of a unified family and (v) Alfred and Ruth had told the four children they would be left everything once both had passed.

Thanks for reading,

David Morgan Smith

Find this blog interesting? Please consider these other related posts:

Summary Judgment Granted

Summary Judgment in Estates Litigation

Late-Stage Summary Judgment Motions Questioned

12 Sep

Knowing Assistance vs. Knowing Receipt

David M Smith Trustees, Uncategorized Tags: 0 Comments

When does a holder of funds (to which another is entitled but who suffers a loss) become liable for knowing assistance?  And what is the difference between knowing assistance and knowing receipt?

In Abou-Rahmah v. Abacha [2006] EWCA Civ 1492 as reported in 9 ITELR,  a client unwittingly made payment into a Nigerian bank account through an English branch which funds were promptly removed from the bank by fraudsters who disappeared. The victim sought damages against the Nigerian bank by way of a proceeding commenced in England.

Having lost at trial, the Plaintiff appealed, arguing that the bank had “knowingly assisted” in the fraudster’s breach of trust. The Court of Appeal (Civil Division) dismissed the appeal and, in so doing, comprehensively reviewed the authorities.

In short, a finding that the bank had knowingly assisted in the breach of trust would require a dishonest state of mind such that the bank had knowledge that rendered its participation “contrary to normally acceptable standards of honest conduct.”

In contrast to knowing assistance, the elements of knowing receipt are as follows:

(a)               The defendant received property subject to a trust in favour of the plaintiff

(b)               The property was taken from the plaintiff in simple breach of trust;

(c)               The defendant had knowledge of facts sufficient to put a reasonable person on notice or inquiry of the breach of trust; and

(d)               The defendant applied the property for its own use and benefit.

In summary, there are three differences between knowing assistance and knowing receipt:

  1. knowing receipt requires only a simple breach of trust by the trustee, while knowing assistance requires a dishonest and fraudulent breach of trust.
  2. In the case of knowing receipt, the defendant’s constructive knowledge of breach of trust will suffice, while a form of actual knowledge is required for knowing assistance; and
  3. knowing receipt involves a defendant applying the property for its own use and benefit.

Thanks for reading,
David Smith

29 Aug

Can a Fiduciary Overcome Poor Record-Keeping?

David M Smith Estate & Trust, General Interest, Guardianship, Passing of Accounts, Uncategorized Tags: , 0 Comments

The duties of a fiduciary must be performed diligently, with honesty and integrity and in good faith, for the benefit of the recipient.  Whether a fiduciary can prove that he or she has complied with these duties will depend to a great extent on the ability of the fiduciary to account.  While the duty to account is not debatable, the Court may consider the specific circumstances of the fiduciary when evaluating whether their actions are appropriate.

In Christmas Estate v Tuck [1995] OJ No 3836, the executor disputed numerous cheques for the benefit of the attorney for property and other cash gifts that she was unable to substantiate with receipts or vouchers. The Court held that it would be inappropriate to impose strict accounting requirements where the parties had a “close family relationship”, in this case, mother and daughter.

The Court further declined to draw a negative inference when the attorney was unable to produce records to account for all transactions: the grantee had helped the grantor “in a multitude of ways” and, accordingly, the burden of strict accounting practices was inappropriate.

In Laird v Mulholland [1998] OJ No 855, the Court noted that the overall credibility of an attorney for property is an important factor in determining whether that attorney’s informal accounts are satisfactory. The Court was unable to conclude that the attorney had acted dishonestly with a view to misappropriating the grantor’s assets, notwithstanding that his “record-keeping practices [left] much to be desired.

The Court pointed to the “abundant evidence” that the Attorney had performed “a multitude of services” which were entirely for the benefit of the grantor. The Court held that the fiduciary had acted “honestly and reasonably in all the circumstances” and should therefore be “relieved from personal liability.”

Thanks for reading,

David Morgan Smith

 

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