Author: Hull & Hull LLP
According to recent news reports, Prince Andrew has allegedly been “actively evading” service of legal documents in relation to a proceeding commenced against him in the United States. Specifically, he has allegedly stopped spending time in public areas, has moved from place to place in order to make it difficult to determine where he is currently staying, and has instructed guards at his places of residence to refuse to accept service or to allow process servers to meet with the Prince personally. As a result, a hearing has been scheduled to address the issue of whether service upon Andrew by other means is effective in light of his apparent evasion of personal service.
In estates matters, we sometimes see disgruntled beneficiaries or estranged family members attempting to evade service. In Ontario, our Rules of Civil Procedure offer several tools for addressing situations in which respondents take active steps to evade service. Rule 16.04 permits a party to request an order for substituted service where “it is impractical for any reason to effect prompt service of an originating process or any other document required to be served personally or by an alternative to personal service under these rules”, and, “where necessary in the interest of justice, [the court] may dispense with service” altogether. Alternatively, where unsuccessful steps have already been taken to effect service, Rule 16.08 permits a court to make an order validating service if “the document came to the notice of the person to be served; or the document was served in such a manner that it would have come to the notice of the person to be served, except for the person’s own attempts to evade service.” In either scenario, the materials filed with the court should outline the steps taken to attempt and/or evade service and explain why proper service is impractical (such as a detailed affidavit from the process server).
While the Rules of Civil Procedure still require personal service with notice of some originating processes and other documents, we have seen some relaxation of this standard during the COVID-19 pandemic, when personal service has been unsafe and/or impractical.
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Sometimes, the court will say that enough is enough. It will put the brakes on frivolous estate litigation.
One such case is the Court of Queens’ Bench of Alberta decision of Re Klein. There, the deceased died in 2012. She was survived by her three children, who were the beneficiaries of her estate. The estate appears to have consisted of a real property, and some bank accounts. Notwithstanding the apparent straightforwardness of the estate, it appears that multiple proceedings were commenced as between the beneficiaries and the estate trustee in relation to the estate.
On August 27, 2021, after various earlier court attendances, Justice Graesser put a stop to the litigation. The matter was before the court as two of the beneficiaries sought further disclosure of banking activity in relation to a $99.25 deposit into the estate account.
In the decision, Justice Graesser reviewed the history of the estate administration and the evidence of the parties. He concluded that there was no merit in requiring the estate trustee to make any further disclosure. He noted the “proportionality” provisions of the Rules of Court. While the estate trustee may not have accounted perfectly, “Any further work, by [the estate trustee] or by the Courts in receiving or reviewing any further information or submissions, would be completely disproportionate to the magnitude of any possible failings.”
Justice Graesser also noted the court’s readiness to dismiss frivolous claims as an abuse of process. “I subscribe to [ACJ Rooke’s] comments about the need for a cultural shift in civil litigation and to save the Courts and the litigants themselves from frivolous litigation.”
Justice Graesser pointed out that the estate trustee had previously passed her accounts, rendering may of the current complaints by the beneficiaries as res judicata. Further, the passage of time had rendered many of the claims by the estate trustee against the beneficiaries as statute-barred.
While the judge determined that he could not strike claims without hearing from the parties, he was able to continue a stay of proceedings, and not allow any of the parties to take any further steps without leave of the Chief Justice. The parties were, however, permitted to move to dismiss any existing claims.
Justice Graesser concluded by advising: “I do not encourage the parties to continue their disputes in Court. From my extensive review of the Court filing from its beginning, I am satisfied that the parties have nothing to gain by continuing their fight.”
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Join us on Monday, June 21st for the Ontario Bar Association’s Elder Law Day: A Conference for Lawyers and Other Professionals Assisting Seniors, sponsored by Hull and Hull LLP. The OBA Elder Law Program will be discussing the most pressing issues impacting our aging population. The expert faculty will get you up to speed on the latest developments and share need-to-know insights to take your expertise to the next level.
Hull and Hull LLP is proud to sponsor the Elder Law Day program. Our very own Natalia Angelini and Sydney Osmar are on the OBA’s Elder Law Executive, as Past Chair and Member-At-Large respectively.
We hope that the Eldar Law Day conference will bring to light some of the issues we have seen in this area of case law.
Here is the schedule for the day:
|10:00 am – 12:00 pm||Part 1: Critical Issues in Elder Law|
|12:15 pm – 12:45 pm||Keynote Address|
|1:00 pm – 2:30 pm||Part 2: What’s Really Going on Inside Long-Term Care and Retirement Homes|
|2:45 pm – 4:00 pm||Part 3: Lightning Round: Quick Tips and Tidbits for Your Elder Law Practice|
|4:00 pm – 5:00 pm||Virtual Networking|
You can register for the full-day program or exclusively for Part 1, Part 2, or Part 3, via the OBA website here. *All registrations will include the Keynote Address and virtual networking session.
We look forward to participating in and learning from our colleagues during the conference.
Over the past two decades, and especially in recent years, filmmakers have used their medium of choice to produce compelling and exceptionally realistic depictions of the effects of dementia on an individual and their loved ones. From Dame Judi Dench in Iris to Julianne Moore in Still Alice, depictions of the struggle, exhaustion, and emotional toll incurred in the months and years following diagnosis have been lauded, if not for the performances, then for the devastating impact they elicit.
Often, however, these struggles are viewed as a conflict to be managed as part of the broader film, with the focus typically being on the most prominent symptom of dementia, memory loss. The latest entry in the list of films depicting dementia, 2020’s The Father, differs in that it portrays the condition not only in the context of the significant emotional responses that it elicits, inclusive of memory loss, but also as a shared experience across all members of the individual’s inner social circle, including the individual themselves.
A recent op-ed in the Toronto Star by author and gerontologist Dan Levitt posits that the film offers a distinctly more personal narrative, and one that is perhaps uncomfortably relatable to those who have experienced it firsthand. Levitt contends that the film does not shy away from depictions of raw emotion that span the spectrum, from denial to anger, distress to depression.
To those who have experienced that range of emotions firsthand, or have been called on to counsel or advise those who have, those experiences are often held out as the most challenging and difficult experiences to manage. The film confronts these experiences and, as Levitt notes, does so with a view to bringing broader attention and compassion to the shared experiences between patient, loved ones, and caregivers, and to create a more positive public discourse.
Thanks for reading, and congratulations Sir Anthony Hopkins on a well-deserved award.
In yesterday’s blog, I considered how to define the “closing of pleadings” in the context of applications. As an aside, I noted that the Rules of Civil Procedure allow a party to amend a pleading without leave of the Court until such time as pleadings have closed. The corollary that flows from yesterday’s blog is, of course, the question of what steps are to be taken by the parties and the Court when pleadings have closed and a party nonetheless moves to amend a pleading.
Rule 26.01 would seem to be the appropriate place to start, as it provides that the Court “shall grant leave to amend a pleading on such terms as are just”, unless such an amendment would result in prejudice that cannot be compensated by an award of costs or an adjournment. Although this Rule employs mandatory language suggesting that leave is to be granted except in discrete circumstances, the case law suggests the analysis is slightly more nuanced.
In Marks v Ottawa (City), the Court of Appeal considered an appeal of a lower court decision to deny the plaintiffs leave to effect certain amendments to a statement of claim while allowing others. The plaintiffs had brought a motion to amend a statement of claim with a view to amending existing claims and also introducing four new claims. The lower court granted only partial relief.
On appeal, the Court of Appeal noted that although Rule 26.01 provides that amendments are “presumptively approved” given the mandatory language of the Rule, the Court nonetheless retains a “residual right to deny amendments where appropriate.” The Court provided a list of factors that are to be considered on a motion for leave to amend.
Notably, and consistent with the language of Rule 26.01, the Court should allow pleadings to be amended unless such amendments “would cause an injustice not compensable in costs.” Moreover, the proposed amendment must be shown to be “an issue worth of trial and prima facie meritorious.” Conversely, an amendment should not be allowed if it would have been struck had it been included in the initial form of the pleading. Finally, the proposed amendment must contain “sufficient particulars.”
Although the first factor is intended to be broad in scope, the remaining three are interrelated and compel the Court to consider the merits and the particulars of additional claims being sought in deciding whether leave should be granted. Although the Court would effectively be performing a gatekeeping function in doing so, the Court is already empowered to perform a similar function with respect to claims raised in an original pleading. , for example, specifically empowers the Court to determine a discrete issue or question of law prior to a trial, or to strike a pleading entirely on the basis that it discloses no reasonable cause of action. Granting the Court the ability to perform a similar function with respect to claims to be raised in an amended pleading is merely an extension of its existing authority.
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Litigation is a fluid exercise. Often, proceedings are commenced by a party with only limited or rudimentary knowledge of the facts giving rise to a particular cause of action. As additional information is discovered, parties may wish to particularize the details of certain claims, or introduce new claims altogether.
The Rules of Civil Procedure permit a claimant to do so without leave of the Court, but only so long as “pleadings are not closed.” The close of pleadings is a term of art that, in the context of actions, is clearly defined by a plain reading of the Rules. However, in the context of applications, the Rules are not so clear, and guidance from the Court is required. The recent decision in Angeloni v Estate of Francesco Angeloni summarized the relevant authorities on this issue.
This case consisted of an application initially commenced by the alternate attorneys for property (eventually litigation guardians and, ultimately, estate trustees) for Concetta Angeloni, concerning the use of the proceeds of sale of a property by her deceased husband and prior attorney for property, Francesco. At a time when Concetta was incapable of managing her property, Francesco, as her prior attorney for property, severed the joint tenancy in a property previously owned by them, sold the property and, it was later discovered, retained all of the net proceeds of sale personally. In reviewing Concetta’s affairs following Francesco’s death, Concetta’s alternate attorneys for property soon realized that she did not appear to have received any share of the proceeds of sale, nor had Francesco made any provision for her in his Will.
Concetta’s attorneys for property commenced an application for dependant’s support against the Estate. However, only after this application was commenced did they confirm that Francesco had retained the sale proceeds entirely. The litigation guardians quickly amended the application seeking additional relief including an accounting as well as a declaration that Francesco had breached his fiduciary duty to Concetta.
The estate asserted that the relief sought in the amended application was not properly before the Court on the basis that the Notice of Application had not been “properly amended.” The Court disagreed. At the outset, the Court found that although a Notice of Application is not a pleading for the purposes of the Rules in the same vein as a Statement of Claim, the same rules with respect to the amendment of pleadings apply nonetheless.
The Court also noted that although Rule 25.05 defines the “close of pleadings” as being when the last Reply to a defence is served or the time to do so has expired, no equivalent definition in the context of applications is provided – a Reply is a pleading that may only be delivered in an action.
The Court considered the decision of the Court of Appeal in 1100997 Ontario Limited v North Elgin Centre Inc. In that case, the Court held that the affidavit materials filed by the parties, and not the Notice of Application, are to be considered the “pleadings” for the purposes of Rule 25.05, as it is the affidavits that contain the relevant facts in support of the relief sought in the Notice of Application. As such, a supporting affidavit would be considered part of an applicant’s pleadings, while a responding affidavit would be considered part of the respondent’s.
Accordingly, the Court found that at the time the Notice of Application was amended, pleadings had not yet closed as the Estate had not delivered a responding affidavit. In any event, the Court noted that the responding affidavit eventually filed ultimately responded to the claims raised in the amended application and, as such, the Estate could not now take the position that those claims were not properly before the Court.
The Court concluded that the applicants did not require leave of the Court to amend the Notice of Application, that the Notice of Application had been properly amended, and that the additional claims could be (and were) determined by the Court.
Thanks for reading.
In July 2020, the provincial government announced a Commission into COVID-19 and long-term care. The Commission was mandated to investigate how the pandemic spread within the homes, how residents, staff and families were impacted, and the adequacy of measures taken by the province and other parties. With the expected release of the Commission’s final report on April 30, 2021, the province will now review the report and begin to consider changes.
Come join Hull & Hull LLP’s Natalia Angelini and Wahl Elder Law’s Judith Wahl as they co-chair the upcoming OBA program: Long-Term Care COVID-19 Commission Report, on Tuesday, May 11th from 12:00 pm to 1:30 pm.
The Chair of the Long-Term Care COVID-19 Commission, The Hon. Associate Chief Justice Frank N. Marrocco, will be sharing his insights. This will be followed by a panel discussion on the key legal issues that arose and are continuing to arise in Long-Term Care settings across the province.
This program is eligible for up to 1 hour and 30 minutes of substantive CPD hours.
Registration via the Ontario Bar Association can be found here.
Mentoring plays a vital role in the development of competent practitioners. The need for mentorship has never been greater, especially now, as the practice of law evolves with the pandemic.
Come join Hull & Hull LLP’s Suzana Popovic-Montag, who will be presenting at the upcoming ADR Mentorship Circle program on April 22nd at 5:30 PM. As one of the country’s premier estate litigators with almost 25 years of litigation experience, she has successfully represented clients at every level of court, including the Supreme Court of Canada. Suzana will bring her extensive experience in Estate Law to students and members of the OBA.
Registration via the Ontario Bar Association can be found here.
Registrants are invited to select their top two practice areas of interest. Please email Janet Green at email@example.com to indicate your top two practice areas of interest.
Best efforts will be made to accommodate each registrant’s first choice.
In Tuesday’s blog, I scratched the surface of the recent battle between titans of Wall Street and a social media community over shares of GameStop, a brick-and-mortar video game retailer. The enormous volatility seen in GameStop’s share price, fluctuating between $20 and $350 in a matter of only a few weeks, led to some investors profiting handsomely, leaving others, including certain institutional investors, to foot the bill so to speak. Today’s blog discusses the obligations of a trustee to prudently invest trust capital and to generally avoid high-risk, high-reward strategies unless specifically instructed.
Section 27(1) of Ontario’s Trustee Act provides that a trustee investing trust assets “must exercise the care, skill, diligence and judgment that a prudent investor would in making investments” – colloquially known as the Prudent Investor rule. A further subsection of the Trustee Act, section 27(5), sets out a non-exhaustive list of criteria that a trustee is to consider when making investment decisions which include, among others, the expected total return on investment.
A savvy but risk-prone hypothetical trustee might have viewed the GameStop saga as an opportunity to earn significant returns for the benefit of the trust. Of course, had such a trustee “gotten in early” when the share price was still low and also correctly predicted the meteoric rise, the trust in question might well have enjoyed a capital return many times the size of their initial investment. Great!
However, the opposite consideration is relevant to any discussion of a trustee’s obligation as a prudent investor. What if the trustee took steps to invest in GameStop or any other volatile security, without reasonable justification for doing so, and suffers substantial losses? What recourse, if any, is available to the beneficiaries of a trust that suffers such losses?
In the ordinary course, a trustee may be personally liable for any investment losses as a result of imprudent investment decisions. Whether the trustee committed a breach of his fiduciary duty by choosing to invest in high-risk, high-reward securities is a nuanced question. In carrying out their obligation as a prudent investor, a trustee must consider several factors, including:
- The terms of the trust instrument or Will including any investment guidelines contemplated by the grantor or testator;
- The guidelines of any investment plan or strategy relied on by the trustee in making investment decisions, including any such plan prepared by a professional advisor; and
- The nature and extent of the investment made and the loss suffered.
A consideration of the factors above will determine whether a trustee’s actions constitute a breach of fiduciary duty. Hypothetically, a trustee may be directed by the terms of the governing instrument to invest a certain portion of the capital into specific types of assets, which could include volatile securities, with asset diversification as a main goal.
Although such investments might not ordinarily be viewed as “prudent”, section 27(9) of the Trustee Act provides that a trustee is not authorized to act in a manner that is inconsistent with the terms of the governing instrument. Although the trustee has some discretion in terms of the choice of investment, they may nonetheless be directed by the instrument to engage in risky transactions.
As such, the risk of personal liability to a trustee who was directed to invest a small share of the total capital of a trust into high-risk securities, as compared to a trustee who unilaterally decides to invest half of the trust capital into similar assets, will be considerably different. Provided the conduct of the trustee is in accordance with the directions and reasonable professional guidance offered to them, it is unlikely that a trustee will be personally liable for investment losses.
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Late last month, I and many of my colleagues of the Millennial age were treated to a flurry of headlines that many of us in that age bracket were able to piece together, but which might have left those of a more senior generation scratching their collective heads. The battle between Wall Street and an army of social media users over stock trading perhaps led to some new terminology entering the lexicon of those beyond the Millennial age group. No doubt the words ‘Reddit’, ‘subreddit’, and ‘GameStop’ caused a few crossed eyes. Allow me to explain.
GameStop Corporation is a publicly traded company that, for much of the 1990s and early 2000s, operated a slew of brick-and-mortar retail stores selling video games, consoles, and other associated merchandise worldwide. As a bright-eyed middle-schooler during the height of GameStop’s market control, many a Friday night was spent wandering the aisles with friends eagerly looking to spend my allowance on the next craze.
As a result of a shift in the direction of the video game industry towards digital and online fare, as well decreased engagement as a result of the pandemic, GameStop’s brick-and-mortar sales model, and retail models more generally, saw a historic decline in sales and revenue. As the demand for GameStop’s business model declined, so did its share price.
This decline did not go unnoticed by certain savvy Wall Street hedge funds and other institutional investors. Shares in GameStop were a popular purchase among “short sellers” looking to turn a profit as a result of the company’s misfortunes. Briefly summarized, short-selling occurs when an investor borrows a particular stock from a stockholder, then sells that stock to a third-party investor willing to pay current market price for the security, on the short-seller’s expectation that the share price will have decreased by the time the loan from the original stockholder is called. The short-seller would then repurchase the borrowed stock from the third-party investor at the now-lower share price before returning ownership to the original stockholder and earning a profit on the difference.
In the case of the GameStop saga, the short-selling attempts by some large hedge funds and institutional investors did not proceed as planned. Members of a specific community under the Reddit platform – individually, a ‘subreddit’ – discovered in late 2020 that GameStop stock had been ‘shorted’ to an unprecedented degree. In essence, hedge funds and investors had bet significant sums on the continued decline of GameStop, intending to turn a profit as the share price was expected to continue dropping.
Members of the ‘WallStreetBets’ subreddit saw an opportunity to ‘squeeze’ the investors by collectively purchasing a significant portion of the available stock in GameStop, driving up the price-per-share to historic highs and decimating the intended ‘short’. The price-per-share ballooned from around $20 in early 2021 to a staggering $350 per share by the end of January. Many of the investors and hedge funds who had bet on the price decreasing from $20 were now compelled by their loan obligations to repurchase shares at a price many times higher than their initial capital investment, incurring significant losses in the process.
Although the frenzy around GameStop and other publicly-traded companies such as AMC has died down in recent weeks, as of today’s date GameStop is still trading at around $51 per share, more than double the share price at the beginning of the year. The incident has also drawn the ire of securities regulators as well as the US Congress. Game over?
The next blog in this series will tie in the concepts of short-selling and the fundamentals at play in the GameStop incident to the obligations of fiduciaries to act as prudent investors.
Thanks for reading.