Author: Garrett Horrocks

21 Feb

Policy and Estate Planning in Film

Garrett Horrocks Disappointed Beneficiaries, Estate & Trust, Estate Planning, General Interest, Hull on Estate and Succession Planning, In the News, Public Policy 0 Comments

This blog is the second and final blog in my series discussing estates-related topics in the film The Grand Budapest Hotel.  While the first part focused on the application of forfeiture rules in the context of a testator’s murder, this blog specifically discusses the policy considerations that arise as a result of the further Last Will and Testament executed by one of the film’s characters, Madame D.

As a brief refresher, late in the film, a further Last Will and Testament executed by Madame D is discovered, the operation of which is only to be given effect in the event of Madame D’s death by murder.  While the concept makes for an interesting twist in the film, in reality the purported condition precedent that the Will takes effect only upon death by murder likely means nothing in the context of Madame D’s estate planning.

Part I of Ontario’s Succession Law Reform Act specifically contemplates that a Will is revoked by, among other actions, the execution of a subsequent Will made in accordance with the provisions of that section.  It is not made clear in the film which of Madame D’s two Wills were executed last.  If the further Will was executed most recently and complied with all of the requirements of due execution, the prior Will would have been revoked and the second Will would likely prevail irrespective of the condition precedent.

Alternatively, a Will may also be revoked by a written direction of the testator to do so.  Failure to expressly revoke a prior Will can potentially create problematic administration scenarios in which a testator may have believed, albeit mistakenly, that a prior Will had been revoked when in fact it had not.

While executing a Will in accordance with the provisions at Part I of the Succession Law Reform Act is sufficient in and of itself to revoke prior Wills, it is nonetheless prudent from an estate planning perspective to include a written intention to revoke prior Wills (provided, of course, the testator intends to do so).

Separately, even if we were to disregard the provisions of the Succession Law Reform Act, there would be a number of practical policy concerns if a Will whose effects were subject to a condition precedent. Notably, a reasonable debate could arise between beneficiaries in scenarios in which the cause of death is ultimately unclear.

The film suggests Madame D’s reason for executing a further Will to take effect on her murder is to ensure her nephew could not benefit from her demise at his hand.  However, as discussed in Tuesday’s blog, that goal is accomplished by the operation of the slayer rule.  Alternatively, Madame D could have relied on a common estate planning technique by making her nephew’s interest in her estate, rather than the Will in its entirety, subject to a condition precedent.

While Ontario prohibits conditions precedent that are deemed to be contrary to public policy, such as restraining marriage or promoting discriminatory behaviour, other conditions precedent are recognized at law.  For example, Madame D could have simply made Dmitri’s interest contingent on his reaching a certain age, or reaching a certain milestone in his life, such as graduating from university.  Instead, the purported condition precedent that the further Will was to take effect on her murder likely has no effect at all, provided the evidence shows it was executed after the initial Will and in compliance with the provisions of Part I of the Succession Law Reform Act.

Thanks for reading.

Garrett Horrocks

18 Feb

Forfeiture in Film: The Slayer Rule in The Grand Budapest Hotel

Garrett Horrocks Estate & Trust, Estate Planning, General Interest, In the News, New Media Observations, Public Policy Tags: 0 Comments

Recently, I experienced a series of coincidences involving American filmmaker Wes Anderson.  In the span of a handful of days, I came across the newly-released trailer of his upcoming film, The French Dispatch, and had the opportunity to revisit his 2014 hit, The Grand Budapest Hotel.

Not having seen the latter in several years, I had entirely forgotten a key plot point involving a handful of curious estate planning decisions.  Although the film was released six years ago, I nonetheless attach a mild spoiler warning.

The plot of the film revolves around a specific bequest of a work of art made by one of the characters in the film, Madame D.  The painting, Boy with Apple, is left to Ralph Fiennes’ character, Gustave H, the proprietor of the film’s namesake hotel, per Madame D’s (purported) Last Will and Testament.

Her decision to leave the painting to Gustave, rather than her nephew, Dmitri, creates a firestorm of controversy, not least of all because Dmitri accuses Gustave of murdering his aunt in order to secure

his entitlement to Boy with Apple.  In reality, it is strongly hinted in the film that Dmitri is responsible for her murder.  As an additional twist, a further Last Will and Testament executed by Madame D is discovered later, which appears to leave the entire residue of her estate, rather than just Boy with Apple, to Gustave.  However, it is stated in the film that this further Last Will is only to be given effect in the event that Madame D is murdered.

This single plot point raises a number of points of discussion and policy concerns as to what would transpire if the film were set in Ontario.  This blog will explore the nature of Dmitri’s and Gustave’s potential entitlements in the Estate.

Prior blogs have explored the concept of common law forfeiture rules in Canada, which preclude an individual from deriving a benefit from their own morally culpable conduct.  Colloquially known as the “slayer rule” in the context of a testator-beneficiary relationship, a beneficiary who is found to have caused the unlawful death of a testator will be deemed at common law to have predeceased the testator, thereby extinguishing any interest in the testator’s estate.

In the film, Dmitri accuses Gustave of the murder of Madame D.  In the ordinary course, a conviction proper is not a necessary precondition to the applicability of the slayer rule.  Rather, common law suggests that the rule applies strictly in the event that the beneficiary’s deliberate act caused the death of the testator.  In theory, Gustave’s interest in the estate of Madame D could be in jeopardy despite the lack of culpability.  In practice, despite his efforts to frame Gustave, the evidence would likely show that Dmitri was the culprit, thereby extinguishing any interest in Madame D’s estate.

Of course, the further Last Will purportedly being given effect only in the event a murder adds a further layer of discussion, and will be explored in greater detail in part 2 of this blog.

Thanks for reading.

Garrett Horrocks

17 Oct

A Rose between Thorns: The Interpleader Motion

Garrett Horrocks Estate & Trust, Estate Litigation, General Interest, Litigation, RRSPs/Insurance Policies Tags: , , , , 0 Comments

Occasionally in litigation, an innocent party will get caught in the crossfire between two litigants that have made competing claims to property held by the innocent party.  The classic case is that of an insurance company in possession of the proceeds of an insurance policy, the benefit of which is claimed by two parties.

The insurer may not necessarily be a party to the litigation between the two claimants, but they are nonetheless implicated given that they hold the coveted payout.  What is the insurer to do?  Enter the interpleader motion.

The interpleader motion is a powerful yet rarely utilized tool that can be used by an innocent party to essentially extricate itself from a proceeding in which competing claims have been made against property held by that party.  Rule 43.02 of the Rules of Civil Procedure provide that a party may seek an interpleader order in respect of personal property if,

(a) two or more other persons have made adverse claims in respect of the property; and

(b) the first-named person (being the “innocent” party),

(i) claims no beneficial interest in the property, other than a lien for costs, fees, or expenses; and

(ii) is willing to deposit the property with the court or dispose of it as the court directs.

In other words, the interpleader motion permits a party to seek an order from the court allowing that party to deposit, with the Accountant of the Superior Court of Justice, the property against which the adverse claims are being made.  However, that party must not have any beneficial interest in the property being deposited, although they are entitled to have any legal fees in bringing the motion, and other reasonable expenses, paid out of that property.

Some cases have opined on whether the court hearing the interpleader motion has an obligation to assess the likelihood of success of one or  both of the claims to the property at issue.  In Porter v Scotia Life Insurance Co, for example, the court considered whether, notwithstanding that one of the competing claims was “without strong foundation and built upon hearsay and suspicion”, it nonetheless held that the claim was “not frivolous” and granted the interpleader order.

Thanks for reading.

Garrett Horrocks

15 Oct

“Costs Follow the Result”: The “Loser Pays” Principle

Garrett Horrocks Estate Litigation Tags: , , 0 Comments

The issue of the payment of costs in an estate litigation matter has seen somewhat of a reshaping recently.  Historically, courts generally took the position that the costs incurred by all parties in an estate litigation matter ought to be paid out of the assets of the estate at issue, regardless of the outcome.  Whether or not a party was successful in the litigation, that party would not likely be responsible for its own legal costs. More recently, the courts have adopted a modified approach with a view to disincentivizing frivolous claims and to bring the costs principles in estate matters more in line with those in other civil litigation matters.  In particular, the principle that the “loser pays”, as opposed to the estate, gained traction.

The recent decision of the Court of Appeal for Ontario in Birtzu v McCron, 2019 ONCA 777, reaffirmed the court’s approach to the “loser pays” principle consistent with other civil matters.  The parties to this appeal had endured a 21-day trial in 2016, following which the defendant McCron was held to be entirely successful. However, contrary to the “loser pays” principle, Justice Bloom, in his decision on costs released in 2017, decided instead that the parties would each bear their own costs.

Justice Bloom’s reasons were based on two findings in particular:

  1. Notwithstanding that the plaintiffs were entirely unsuccessful at trial, they had “reasonable grounds” on which to commence the action; and
  2. That McCron had lacked credibility with respect to one issue resolved at trial.

McCron successfully appealed the decision, and the Court of Appeal for Ontario awarded her costs of the trial on a partial indemnity basis, consistent in part with the “loser pays” principle.

At the outset, the Court of Appeal noted that costs awards are discretionary.  Rarely will litigants be granted leave to appeal except in cases where the lower court is found to have made a “legal error” or, more generally, where the costs award is “plainly wrong.”

The Court of Appeal acknowledged, in respect of the second criteria above, that a litigant’s conduct at trial and her credibility are relevant factors with respect to the issue of costs.  However, unless that litigant’s conduct bears on the length or the substance of the trial, it is not appropriate for a court to punish that litigant by denying them their costs.  The issue of McCron’s credibility was, in effect, moot given that she was successful “on all fronts” and, in any event, it did not impact the judge’s findings.

The Court held that McCron’s costs “should have followed the result”, but they did not.  The costs decision of the trial judge was held to be “plainly wrong” and accordingly overturned.

Thanks for reading.

Garrett Horrocks

25 Jul

Testamentary Freedom versus a Moral Obligation to Provide: Striking a Balance

Garrett Horrocks Elder Law, Estate & Trust, Estate Planning, Hull on Estates, Wills Tags: , , , 0 Comments

A recent decision of the Supreme Court of British Columbia examined the tension between a testator’s moral obligation, if any, to provide for a child under a will, and that testator’s freedom to dispose of his or her estate as that testator sees fit.

The facts in Grewal v Litt are relatively simple and were generally not in dispute between the parties.  The applicants were the four daughters of the two testators whose wills were under scrutiny.  The respondents were the testators’ two sons.  The testators had died leaving mirror wills, each benefitting one another.  Upon the death of the survivor, the wills left modest bequests of cash to each of the daughters, while the two brothers shared the residue.

The combined values of the estates exceeded $9 million.  Pursuant to the terms of the wills, each daughter was to receive a bequest of $150,000, or about 1.5% of the total value of the two estates.  The two brothers were the sole residuary beneficiaries and stood to split the remaining 94%.

The daughters brought an application to vary the wills under section 60 of British Columbia’s Wills, Estates and Succession Act (the “WESA”) to provide an equal distribution of the residue between all six children.  The application was brought on the basis that the testators had purportedly discriminated against the applicant daughters based on their adherence to traditional cultural values.  The respondent brothers agreed that the terms of the wills did not fulfill the testators’ moral obligations to the daughters, but did not agree that the solution was an equal distribution of the residue.

The court grappled with the tension between the need to make proper provision for the daughters versus recognizing the testators’ broad testamentary freedom to dispose of their estate as they see fit.  Ultimately, the court found substantially in favour of the daughters and held that each daughter would be entitled to a 15% share in the residue, with the respondent brothers each receiving a 20% share.

In reaching that decision, the court first looked at section 60 of the WESA and noted that the value of the estates was large enough that the court could both consider the parents’ testamentary autonomy in favouring the respondent brothers while nonetheless making adequate provision for the applicant daughters.

The application judge then referred to numerous prior decisions in which the court had ordered variations of wills when unequal testamentary distributions were made by testators who believed themselves to be bound by cultural norms.  Finally, the judge noted that the significant contributions by the daughters to the testators during the last few years of their lives, which were not replicated by the brothers, enhanced the testators’ moral obligation to provide for the daughters.

This case’s potential impact in Ontario remains to be seen, although it is important to the note that Ontario lacks a statute with as broad a mandate for varying testamentary documents as the WESA.  Part V Ontario’s Succession Law Reform Act is a comparable parallel that allows a court to make adequate provision for a testator’s dependants, but that language is less broad than the language of the WESA.  In any event, the Court of Appeal for Ontario held in Spence v BMO Trust Company that absent any requirement by a testator to adequately provide for a dependant, the testator has broad testamentary freedom.

Thanks for reading.

Garrett Horrocks

23 Jul

Putting Your Best Foot Forward: Evidence on Summary Judgment Motions

Garrett Horrocks Estate & Trust, Estate Litigation, Litigation, Public Policy Tags: , , 0 Comments

In Drummond v Cadillac Fairview, the Court of Appeal for Ontario considered the issue of the admissibility of hearsay evidence on a motion for summary judgment.  The facts in Drummond are quite simple.  The plaintiff tripped on a skateboard while shopping at the Fairview Mall in Toronto, owned by the defendant.  The plaintiff brought an action for occupier’s liability, supported by an affidavit sworn by him.  The defendant, Cadillac Fairview, responded by bringing a motion for summary judgment.

At the hearing of the motion, not only did the judge dismiss Cadillac Fairview’s motion for summary judgment, but it granted summary judgment in favour of the plaintiff (a remedy that the plaintiff was not seeking).  Cadillac Fairview appealed and was successful at the Court of Appeal.

In granting the appeal, the Court identified serious concerns regarding the hearsay evidence relied on by the plaintiff in responding to Cadillac Fairview’s summary judgment motion.  The plaintiff’s responding affidavit relied heavily on statements purportedly made by his fiancée and his daughter, and two unidentified staff members working at the mall.  The trial judge agreed that these statements were hearsay but admitted them nonetheless under the business records exception to the hearsay rule and under Rule 20.02 of the Rules of Civil Procedure.

The Court of Appeal rejected the admission of the hearsay statements.  While the Court agreed that Rule 20.02 permitted the admission of affidavit evidence “made on information and belief”, the Court also noted that the Rule permits a trier of fact to draw an adverse inference if a party with personal knowledge of contested facts does not give evidence.

The Court of Appeal found that the information relayed by the plaintiff from his fiancée and his daughter “went to the heart” of his claim.  The plaintiff’s failure to have his fiancée or daughter swear their own affidavits with respect to the key facts at issue caused the Court to have considerable reservations about admitting their evidence.  The Court of Appeal ultimately held that the finding of liability against Cadillac Fairview was based on an “erroneous admission of hearsay evidence on key, contested issues” and reversed the decision.

On motions for summary judgment, courts will expect the parties to put their best foot forward, including the nature and source of relevant evidence.  As can be seen in this case, a party’s failure to do so can have serious consequences.

Thanks for reading.

Garrett Horrocks

18 Jul

Peering behind the Curtain: Costs against Non-Parties

Garrett Horrocks Uncategorized Tags: , , 0 Comments

In March of last year, I blogged on the decision in Hunt v Worrod which dealt with predatory marriages and an individual’s capacity to marry.  There have been several developments in that case since then, most recently in a Court of Appeal decision released in June, concerning the issue of costs.

The facts of the case are set out in greater detail in my earlier blog, but a quick refresher may nonetheless be helpful.  The application was commenced by the applicant, by his two litigation guardians, largely for the purposes of challenging the validity of his marriage to the respondent and its effect on her property rights as a spouse of the applicant.  The respondent had been granted a legal aid certificate by Legal Aid Ontario (“LAO”), which funded her legal fees through trial.  Importantly, LAO was not retained as counsel by the respondent.  Rather, the respondent retained private counsel whose fees were funded by LAO.

The applicant was ultimately successful at trial and sought an order for costs against the respondent personally, the respondent’s counsel personally, and LAO.  In his decision on costs, Justice Koke ordered the respondent was to pay the applicant’s costs on a full indemnity basis.  However, he equally noted that, as a result of her limited means and tenuous financial position, it was unlikely that the respondent would be able to pay any amount of that costs award.

The trial judge then turned his mind to the request for costs payable by LAO.  In reviewing the circumstances of LAO’s involvement in the case, the trial judge held that it had failed to carry out its mandate by continuing to fund the respondent’s fees notwithstanding the lack of merit.  The trial judge ordered LAO to pay one-half of the amount of the costs award made against the respondent.

LAO appealed the costs award and was successful.  In its reasons, the Court of Appeal plainly stated that the decision to award costs against LAO could not stand, as it had been made on a misapprehension of LAO’s role in the matter.  While the trial judge had held that LAO purportedly failed to monitor the litigation that it had continued to fund, resulting in an abuse of process, the Court of Appeal took a markedly different view.

Notably, the Court of Appeal identified that LAO’s role was strictly limited to providing funding for the respondent to retain separate counsel in accordance with its statutory mandate.  LAO itself did not act for the respondent, nor was it a party to the initial application.

Had LAO been a party to the litigation, the Court of Appeal held that they would properly have been exposed to a potential costs award, subject to the discretion of the trial judge.  However, in the absence of  evidence of any bad faith on the part of LAO in continuing to fund the litigation, the Court of Appeal held that a costs award against LAO was not appropriate in the circumstances.

Thanks for reading.

Garrett Horrocks

02 May

Practical Tips from the Bench

Garrett Horrocks Estate & Trust, Estate Litigation, General Interest, Litigation 0 Comments

I recently had the good fortune of attending a dinner hosted by the Ontario Bar Association along with several members of the Toronto estates list Bench.  The judges were kind enough to share a few pearls of wisdom with respect to practice tips and elicit some of the dos and don’ts of appearing before them. A few of the most salient points are highlighted in this blog.

Confirmation Forms

The Rules of Civil Procedure provide that parties to a proceeding are to file a confirmation form with the court no later than 2:00pm three days prior to the hearing in order to ensure that a particular matter is properly scheduled.  The form allows sets out several options to be selected by counsel regarding the purpose or anticipated outcome of the attendance.

However, in order to improve judicial efficiency, the Bench has asked that if counsel will be seeking the court’s assistance in resolving certain minor contested issues, a short description of these issues should be attached with the confirmation form.  Particularly in the case of short scheduling appointments, which only typically last ten minutes, advising the court of relevant issues ahead of time will ensure a productive use of the attendance.

Case Conferences

The Bench has also professed the benefits of scheduling case conferences before a judge with a view to resolving or otherwise narrowing the issues to be tried in a given matter.  Case conferences typically follow the format of short scheduling appointments, though with significantly more time allotted to these attendances on the understanding that they are to be used to resolve substantive rather than procedural issues.

Ideally, the bench would like to see counsel attend such conferences prior to scheduling motions or hearings that would be dispositive of a proceeding or of certain issues, such as motions for summary judgment.  In most cases, the opportunity for counsel to obtain the advice and direction of a judge while avoiding the significant costs of preparing for a motion can be a helpful step towards resolution.

Probate Issues

On the administrative side, the Bench was kind enough to release a list of the most common errors in applications for certificates of appointment as raised by court staff.  In no particular order, the court strongly encourages the following practical tips:

  1. Ensure parties are correctly and consistently identified throughout the application, especially if a party identifies under a different name or a pseudonym.
  2. Ensure the names of parties and entities are spelled correctly.
  3. If a particular section of the application does not apply on the facts, do not leave that section blank.  Instead, expressly indicate that the section is not applicable.
  4. Ensure all exhibits included as part of the application, especially the Last Will and Testament that is the subject of the application, are stamped with an exhibit stamp and commissioned.
  5. Ensure the commissioner includes their full name below their signature.

These are only a few of the many tips shared by the judiciary, but they are as much to the benefit of the court as they are to counsel.  Great advocacy is equal parts assisting your client and assisting the court.

Thanks for reading.

Garrett Horrocks

25 Apr

An Ounce of Prevention…

Garrett Horrocks Capacity, Elder Law, General Interest, Health / Medical, In the News 0 Comments

My colleague, Sayuri Kagami, blogged Tuesday on efforts to use artificial intelligence in scanning for risk factors that have historically contributed to premature death.  Such efforts constitute a significant development in policy pertaining to preventive models of health care.

Broadly speaking, delivery of health care services can generally be categorized into one of two models.  The reactive model of health care is one based on acute care, and focuses on the treatment of illness as it arises and on an ongoing basis.  Your typical visit to the emergency room would generally fall within the scope of reactive health care.

The preventive model of health care, in contrast, is a proactive treatment model emphasizing, as one might expect, the prevention of illness and the mitigation of key risk factors contributing to chronic disease.  This model emerged largely as a result of the significant financial strain placed on public health care models in Ontario and abroad by the reactive model.

Treatment of acute and chronic illness on an ongoing and extended basis is, by most accounts, exceedingly expensive and inefficient.  In the context of estate planning, we are frequently exposed to the considerable financial and emotional tolls of treating Alzheimer’s disease and other illnesses impacting cognition.

Since the 1970s, policy makers have made significant strides in advocating for a treatment model that sets out the benefits of preventive health care in an attempt to reduce the burden of reactive treatment models.  In particular, this model focuses on steps that may be taken by individuals to reduce the risk of chronic illness in order to alleviate the strain placed on the public health care system.

A recent study performed by Cancer Care Ontario identified four main risk factors common to more than 90% of instances of chronic disease:

  1. Tobacco consumption;
  2. Alcohol consumption;
  3. Lack of physical activity; and
  4. Unhealthy eating habits.

Proponents of the preventive have therefore advocated for increased funding devoted to mitigating each of these factors in order to reduce reactive spending down the road.

If you didn’t pay attention to your grandmother while growing up, take it from the experts: an ounce of prevention is worth a pound of cure.

Thanks for reading.

Garrett Horrocks

18 Apr

A Question of Fact: Will Challenges and Mistaken Belief

Garrett Horrocks Capacity, Estate & Trust, Estate Litigation, General Interest, Litigation Tags: , 0 Comments

A recent decision of the Ontario Superior Court of Justice considered an interesting question of fact and law.  Will challenges in Ontario are ordinarily grounded on the basis that a testator lacked testamentary capacity, did not know and approve of the contents, or that the Will was procured by undue influence.  In Cavanagh et al v Sutherland et al, however, the applicant sought to challenge the validity of her mother’s will on novel grounds; namely, that it was procured as a result of a mistake of fact.

The testator died in July 2016, leaving a Will benefiting 5 of her 6 daughters.  The Will expressly excluded her sixth daughter, Carolynn, from sharing in the Estate.  Carolynn objected to the issuance of a certificate of appointment on the basis that her mother lacked capacity or that the Will was procured by undue influence.

The estate trustees brought a motion for summary judgment seeking an order dismissing Carolynn’s objection and a declaration that the Will was their mother’s valid Last Will and Testament.  At the hearing of the motion, Carolynn changed her position and chose instead to focus primarily on her belief that her mother had been operating on a set of mistaken facts.

Carolynn referred to a payment of $65,000 made to her by her parents in or about 2011, prior to the execution of an earlier will that also excluded Carolynn.  She took the position that this payment was made in satisfaction of a loan to her father years earlier that her mother knew nothing about.  Carolynn argued that her mother likely believed this payment was a gift to Carolynn in lieu of her inheritance and, accordingly, left her no benefit under the Will.

The court found that the evidence held otherwise.  Notably, the evidence showed that the payment was not made in satisfaction of a loan, but rather as a result of a demand by Carolynn.  In 1996, her parents had agreed to place her on title to a property to assist them in obtaining a mortgage.  The mortgage was subsequently paid off in 2011, at which point Carolynn’s parents asked that she transfer her interest in the property back to them.

The evidence showed that Carolynn refused, instead asserting that there was always an intention that she remain on title to the property as legal owner.  Carolynn’s parents ultimately offered to buy out her interest in the property in exchange for a payment of $65,000.  Her mother later advised the lawyer who prepared the Will that this was to constitute Carolynn’s inheritance.  It was clear to the court that the testator had considered this payment when the Will was drafted.

In the end, the evidence was such the court did not have to consider the effect of a true mistake of fact on the validity of a Will.  However, the question of a mistake of fact would ordinarily tie into knowledge and approval and, specifically, whether the mistake was sufficient to negate the validity of the Will.  In this case, it was apparent that the testator had turned her mind to the payment to Carolynn, and there was no question of a lack of knowledge and approval.

Thanks for reading.

Garrett Horrocks

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