Author: Fred Tonelli
Another recent decision out of Alberta, Thompson v AltaLink Management Ltd, sheds further light on the thinking of Canadian courts and tribunals regarding virtual litigation, going forward.
In this dispute, one party argued that proceedings should occur in-person, rather than virtually. Making an appeal to “common sense,” he noted that (as of August 2021) there were no Covid-related restrictions in Alberta and that one couldn’t predict whether renewed restrictions would be imposed in the future. He also noted the advantages of observing witnesses and decision-makers and their natural reactions first hand.
The other party did not challenge this position, per se, but noted that the participants in the proceeding (including administrative staff) might not yet be comfortable “returning to normal,” risking exposure to infection during the ongoing pandemic.
It was ultimately decided that one party and his counsel would participate from a hotel close to his location in rural Alberta, while all other participants and staff would participate virtually. The degree to which in-person participation was allowed in this case was mainly a technological consideration, however, the overall reasoning in this decision involved a balancing of considerations of fairness of proceedings (favouring in-person) and safety of participants (favouring virtual). The latter consideration was deemed to be of greater significance, in light of Covid.
It remains to be seen when exactly the courts will go back to full in-person litigation, or whether elements of virtual or hybrid proceedings are here to stay. The pertinent question right now is under what circumstances would a party be compelled to attend in person, if they would prefer to remain virtual. Until the pandemic is over, this will likely remain an open question.
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A rare but important rule of the common law which sometimes arises in the context of estate litigation is the so-called “slayer rule,” on which we have previously written.
The slayer rule follows from the principle of ex turpi causa – that one cannot profit from their own crime – in that a beneficiary who is found guilty to have murdered the giftor/testator of their particular benefit consequently loses their benefit.
For example, if a daughter was found to have murdered her mother, rather than accelerating her inheritance, she would lose whatever benefit she was entitled to receive under her mother’s will.
The most recent appearance of the slayer rule in Ontario estates law occurred in a March 2021 decision, The Bank of Nova Scotia Trust Company v Rogers, in which a son was convicted of murdering his parents and was subsequently sentenced to two life sentences without the possibility of parole for 20 years.
The parents had mirror wills providing first for each other, and then for their son, as an alternative beneficiary. If their son were to predecease them (or otherwise lose his entitlement – as was the case), then the next alternative beneficiary was to be the son’s “issue then living in equal shares per stirpes.”
As the son did not yet have any issue, the judge’s dilemma was whether to wait for further distribution until he died, or to skip forward to the next named beneficiaries in the will. For a multitude of reasons, including public policy and the implied intention of the testators, the judge decided upon the latter option, which would result in an equal division of the residue of the estate among the deceased mother’s three brothers.
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I previously wrote about the upcoming changes to the Succession Law Reform Act, introducing a substantial compliance regime to the law of will drafting in Ontario. As of January 1, 2022, the new Section 21.1 of the SLRA will allow for a broader interpretation of the validity of wills drafted by a testator, if they are otherwise improperly executed, but sufficiently demonstrate the “testamentary intentions of a deceased.”
The result of this change in legislation could be the admission of diary entries or even loose-leaf documents as valid testamentary documents. I could even imagine a future where a Word document saved on a testator’s laptop or cloud server could qualify as a valid will, if no better document could be found.
The February 2020 Dalla Lana decision in Alberta is illustrative. Alberta already has a substantial compliance regime – as do many other provinces – and cases such as this could be relevant to resolving disputes in Ontario, after January 1, 2022.
In Dalla Lana, the deceased wrote changes to his previous will on two sticky notes, only four days before he died. He had previously executed a formal will in 1997, but his sticky notes of March 2018 were deemed to be not only valid changes to his will, but a complete and valid rewriting of his will.
The factors considered by the Judge in his decision included:
1) The testator was old enough (over 17) to make a will;
2) The testator had testamentary capacity;
3) The holograph will was “in writing”;
4) The holograph will featured his signature;
5) His signature indicated his “intention to give effect to the writing in the document as the testator’s will.”
It will be interesting to see if similar cases soon appear in Ontario, as substantial compliance takes effect in the New Year.
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I recently attended a replay of a Continuing Professional Development webinar, hosted by Ms. Lisa Toner and our own Mr. Ian Hull, in which a number of estates lawyers had the opportunity to give six-minute presentations on select, relevant subjects in estates law in 2021.
A presentation on holograph wills by Ms. Clare Burns particularly caught my attention.
Normally, when drafting a will, strict formalities are required, including the signatures of two or more witnesses. The one major exception in Ontario is the “holograph” will – a will written and signed entirely in the testator’s own handwriting.
However, as of January 1, 2022, a new section added to the Succession Law Reform Act, namely Section 21.1, will allow courts to order validation of an improperly executed document if it “sets out the testamentary intentions of a deceased.” The previous passing of similar “substantial compliance” legislation in other provinces has resulted in attempts to probate documents such as diary entries (B.C.), memoranda of an accountant (Manitoba), and sticky notes (Alberta) as testamentary documents, to varying degrees of success.
Ms. Burns suggests that Ontario will likely follow the lead of the British Columbia Court of Appeal in applying this new legislation. In the landmark decision of Re: Hadley Estate, the B.C. Court of Appeal applied the following two-part test: 1) is the document authentic?; and 2) if it is authentic, but not compliant with the formalities for holograph wills, does it represent the deceased’s intentions at the time that document was created? The Court also added that any valid document should have been drafted with the knowledge and consent of the deceased, if it was not in their own handwriting.
Furthermore, certain factors will support the finding of testamentary intention, including: if it was signed by the deceased, if there are witness signatures, if there are references to the revocation of previous wills, if executors are named, and if there are specific bequests. Conversely, there are facts that will weigh against a finding of testamentary intention, including: if written in pencil, if a document is incomplete, if using a pre-printed will form, and if a person has a previous formal will.
Nonetheless, it remains to be seen how this legislation will play out in litigation with the courts in Ontario.
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In January 2021, a decision was made by the Ontario Superior Court regarding a motion in the ongoing Cohen v. Cohen Estate matter. This case involves a widow making a claim against the estate of her late husband on several grounds, including a decades-old marriage contract, an application for equalization of net family property, and a claim for dependent support.
As this matter demonstrates, a surviving spouse who believes themselves to have been unfairly left out of the will of their late spouse has several options in terms of litigation against the deceased’s estate. If a marriage contract existed between the spouses previously, providing for one spouse in the event of the death of the other, then the surviving spouse could move to enforce the marriage contract and make an appropriate claim upon the estate.
In the alternative, the surviving spouse can bring an application under the Family Law Act (“FLA”) to effect an equalization of net family property. This would be functionally similar to the process of asset equalization after a divorce or separation, only that the claim would be against the estate of the deceased spouse, rather than against their living person.
Also in the alternative, the surviving spouse can also bring an application under the Succession Law Reform Act (“SLRA”) for dependent support. Essentially, if the surviving spouse were to sufficiently prove to the Court that he or she was financially dependent upon the deceased while they were still living, then the surviving spouse could be entitled to an appropriate amount of cash to support their former lifestyle with their late spouse.
Finally, a surviving spouse can also make equitable claims of unjust enrichment, promissory estoppel, or proprietary estoppel. The essence of all three of these claims is that the deceased benefitted disproportionately from work that their spouse contributed to their relationship, and that the surviving spouse is therefore entitled to financial compensation, as a result.
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One pertinent issue briefly discussed in the recent webinar I attended was that of the effect of the March 2020 Calmusky decision upon estate planning.
In Calmusky v. Calmusky, the Court decided that assets held in a Registered Income Fund (RIF) were presumed to constitute a resulting trust, instead of a direct transfer to the named beneficiary of the RIF. The anticipated impact of this decision on estate planning and administration – and, by proxy, litigation – has caused quite a stir in the legal community.
In the “Wills and Estates Refresher” webinar, the presenters expressed frustration with Calmusky and the complications of its application to their own estate planning practices. After all, designating a beneficiary of a RIF or similar investment account is an excellent tool an estate planner can use to transfer assets outside of a testator’s estate, thus reducing estate administration tax for a given estate. Imposing a resulting trust upon the assets in these accounts to the benefit of the estate quite explicitly defeats the purpose of using such an estate planning mechanism.
The presenters suggested that the estate planning bar was not overly enthusiastic about following Calmusky, for the reasons stated above. In the very recent 2021 decisions of Munro v. Thomas (May) and Mak (Estate) v. Mak (June), the Court was confronted with beneficiary designation fact scenarios quite similar to Calmusky, and decided quite differently. Mak Estate, in particular, directly addressed the legal reasoning in Calmusky and came to the opposite conclusion regarding the question of whether the assets ostensibly transferred to a designated beneficiary ought to be presumed to be held in resulting trust for the benefit of a deceased’s estate. This should be promising to estate planners nervous about the implications of Calmusky over the past year.
However, as Calmusky, Munro, and Mak Estate were all determined at the level of the Ontario Superior Court, until we hear otherwise from the Court of Appeal or Ontario Legislature, the practical impact of Calmusky is in a state of legal limbo.
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I recently had the pleasure of attending a Continuing Professional Development webinar offered by the Law Society of Ontario, namely the July 14, 2021 Wills and Estates Refresher.
The main topics discussed in this webinar related to both general issues in the process of estate planning, and particular issues related to the rise of virtual legal practice during the Covid-19 pandemic.
For example, the speakers discussed how many potential clients would approach an estate planning lawyer under the assumption that drafting their will and other testamentary documents would be a simple, uncomplicated process, until their lawyer soon discovered several issues with their assets and life situation that would actually significantly complicate their estate planning.
Six such factors outlined by the speakers were: 1) bequeathing a family cottage, 2) bequeathing a family business, 3) bequeathing to family members living in the United States or another foreign jurisdiction, 4) bequeathing real estate located in the US or another foreign jurisdiction, 5) bequeathing complex financial assets, and 6) bequeathing to children or spouses from a former marriage.
Imagine a situation in which a husband and wife are both married to each other for the second time, both have children from their previous marriages, with a daughter living in England, and a son living in Ireland, while owning a vacation property in Florida. One could understand why, in such a circumstance, drafting a will for the husband or wife would not be so “simple.”
Another cogent issue discussed was the rise of virtual client meetings and execution of wills over the course of the pandemic. Although this was a necessity during Covid, many virtual legal practices will likely continue into the future, as a convenience and cost-saving measure for both lawyers and clients. However, the speakers did note that a lawyer meeting virtually with a client should always be cautious, making sure that there are not other parties in the room with the client potentially unduly influencing their estate planning intentions. One speaker suggested that in the future, she would perform initial client meetings virtually, but would only commission the execution of wills in person. This seems like a reasonable compromise.
It remains to be seen how the profession will move forward in this regard, as many personal and professional restrictions related to the pandemic are gradually lifted.
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In our recent eState Academy webinar, the topic of mirror wills and mutual wills arose. The definitive case on this issue was the 2016 Ontario Superior Court decision of Rammage v Estate of Roussel, which we have touched upon previously.
Mirror wills, or reciprocal wills, are a pair of wills drafted with similar provisions between two spouses, usually for the benefit of their children. Mutual wills are significantly different, however, in that they also have a contractual component. As outlined in Rammage:
“Mutual wills are reciprocal wills that the makers have agreed cannot be changed, at least as to their effect, without the consent of the other. Once one of the testators has died, it is not possible for the surviving testator to receive such consent, and therefore the terms cannot be altered.”
For example, in a situation where one spouse dies, leaving a surviving spouse and two children, if the surviving spouse were to make significant gifts to one of their children from the assets inherited from their late spouse, the other child may have a claim to equalize these gifts.
This is because, according to the contractual terms of a mutual will, the surviving spouse cannot have a sudden change of heart after their late spouse’s passing and frustrate the testamentary intentions they previously shared in the context of their marriage. In a sense, their capacity to dispose of their formerly joint assets is frozen with their spouse’s death.
Of course, not all mirror wills are also mutual wills, so a couple must be careful in their estate planning to be clear about what their intentions are regarding what a surviving spouse is allowed to do with inherited assets after the death of their spouse.
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Cherry v Boultbee is an 1839 English case whose decision affects the law of wills and estates in common law jurisdictions to this day.
The rule, as outlined by the Honourable Mr. Justice Clark in the 2011 Alberta decision, Re Moody Estate, can be succinctly described as follows:
“Where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed to participate unless he has fulfilled his duty to contribute.”
Justice Clark then described this rule’s application to estates law, quoting the 1891 decision of Re Akerman, Akerman v Akerman, which outlined that “the circumstance that a debt owing to a testator was statute barred at the date of death of the testator did not prevent the application of the rule in Cherry v Boultbee from being applied.”
In other words, if a beneficiary of an estate personally owed a debt to the deceased, prior to his or her death, then said beneficiary’s share in the estate could be deducted to satisfy this debt, even if this debt was barred by statute.
However, Justice Clark ultimately decided that the rule in Cherry and Boultbee did not apply in this case, throwing doubt as to its future application in Canada.
Following Moody, this rule was once more proposed in the 2017 British Columbia case of Re Johnston Estate. In this decision, Justice Church disagreed with Justice Clark and re-affirmed the application of the rule in Cherry v Boultbee:
“The rule in Cherry v Boultbee does not confer on the estate any right to recoup the amount owing but rather operates to ensure fairness in the distribution of an estate, recognizing that the relationship between a testator and his or her beneficiaries is typically not at arm’s length. The fundamental purpose of the rule is to ensure that beneficiaries are treated fairly and it embodies the principal that he who seeks equity must do equity.”
It remains to be seen what the fate of the rule in Cherry v Boultbee will be in future Canadian case law.
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