18 Oct

The Right of an Estate Trustee to Waive Privilege: Not Absolute

Hull & Hull LLP Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills 0 Comments

Communications between a client and their lawyer are protected by solicitor-client privilege. Except in limited circumstances, only the client can waive the privilege.

Upon death, the right to waive privilege passes to the estate trustee named in the will, or appointed by the court if there is no will.

Is the right to waive privilege absolute, applying to all solicitor-client communications? According to a decision of the Supreme Court of Nova Scotia, the answer is No.

In Dumke v. Conrad, 2019 NSSC 310 (CanLII), the deceased died without a will. Her son applied for and was appointed as administrator of the deceased’s estate. He was the sole beneficiary.

Prior to the deceased’s death, the son was attorney for property for the deceased. The deceased regained capacity and brought a proceeding to declare the power of attorney in favour of the son invalid, and to compel the son to pass his accounts. That litigation was resolved.

Following the death of his mother, the son sought to obtain the lawyer’s file relating to the power of attorney litigation. The lawyer then brought an application for directions, with the question being whether the son was entitled to the litigation file.

The court held that the right to waive privilege is not absolute. The files sought must be relevant to an issue being decided or to the ability of the personal representative to administer the estate. Confidentiality “should not be interfered with except to the extent necessary and the right of the respondent to waive privilege must be interpreted restrictively.”

A deceased person could have criminal files, child protection files, divorce files, etc. If a person seeking advice from a lawyer knew that, after their death, their children would have access to those files, the free, confident, candid communication necessary between a lawyer and client would not occur. The basis of solicitor/client privilege would be eroded. As stated above in Descôteaux, the right to counsel would be imperfect if the privilege is eroded or frittered away.

The court could not find any reason why the files being sought would be relevant to the administration of the estate. Rather, it found that the files being sought were for “personal reasons not relevant to the administration of the estate”.

The court ordered that the file in relation to the power of attorney litigation not be disclosed.

Thank you for reading.

Paul Trudelle

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

16 Oct

Rubner v Bistricer: When a Gift is Bare-ly a Trust

Ian Hull Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: , , 0 Comments

Recently, the Ontario Court of Appeal ruled that even where a gift is not validly executed, the intention of the parties can still be fulfilled through a bare trust.

Facts

A father made a profitable investment that was held by his wife in trust for their three children in equal shares. One brother sold his share of the investment, so that the remaining portion of the investment was to be divided 50/50 between his brother and sister. The sister subsequently disclaimed her share of the investment for tax reasons, with the result that her share reverted back to the mother. It was understood and orally communicated that the mother would hold the investment and gift the income from the investment to the sister, with the principal coming back to the sister as part of the mother’s inheritance. When the mother was eventually declared incapable and the brothers became their mother’s Attorneys for Property, they were suspicious of this arrangement between their mother and their sister, and brought an action against the sister and her husband.

Issues

The main issue was whether the past and future proceeds of the investment had been validly gifted by the mother to the sister, and whether the sister’s husband, who had assumed responsibility for using the proceeds, was liable as trustee de son tort.

Ruling

In the initial ruling, the application judge rejected the sister’s claim to the funds and held that the gift from the mother was invalid. Funds had been transferred by the mother to the sister through signed blank cheques. A valid gift requires delivery from the donor to the recipient (Bruce Ziff, Principles of Property Law, 6th ed. (Toronto: Carswell, 2014); Teixeira v. Markgraf Estate, 2017 ONCA 819, 137 O.R. (3d) 641, at paras. 38, 40-44), and the gift was not considered delivered until the cheque had been cashed. In this case, by the time the cheques were cashed by the sister, the mother had been declared incapable and lacked the capacity to gift. The judge ruled that the money belonged to the mother, and that the sister and her husband had to account for it, and the husband was liable as trustee de son tort.

This result was overturned recently in the Court of Appeal. The court found that the applicable legal mechanism here was not a gift, which was invalid, but instead was a valid bare trust. A bare trust is where the trustee has no obligations other than to convey the trust property to the beneficiaries on their demand (Donovan W. M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Carswell, 2012) at pp. 33-34).

The decision turned on whether there had been sufficient certainty of intention from the mother to create a bare trust, and the court found that there had been. The trust did not have to be formally evidenced in writing because the trust property was funds in a bank account and not land or an interest in land (Statute of Frauds, R. S. O. 1990, c. S.19, ss. 4, 9-11; see also In the Estate of Jean Elliott (2008), 4 E. T. R. (3d) 84 (Ont. S. C.) at para. 42.). There was sufficient evidence in the conduct of the parties to show an intention for the funds to be held for the sister as well as one of her brothers in equal shares, and the certainty of intention for the mother to hold the money as bare trustee was satisfied. As there was a valid trust, the husband was not liable as trustee de son tort because he had not acted inconsistently with the terms of the trust. While the proceeds that had already come from the investment were held on bare trust by the mother, the future distributions from the investment were not, as future property cannot be the subject matter of a trust (para. 58 and 84 of the judgment).

Moral of the story

This is a great indicator of how, when a gift is invalid, the court will use the legal mechanism of a bare trust to give effect to the intention of the parties, so long as their intention is sufficiently certain.

Thanks for reading,
Ian M. Hull and Sean Hess

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

11 Oct

Cold Turkey

Paul Emile Trudelle Estate & Trust, Estate Litigation, Estate Planning, Uncategorized Tags: , , , 0 Comments

A few Thanksgiving-related items:

  • To go “cold turkey”: to stop an addictive habit suddenly and completely. To be contrasted with a gradual cessation or weaning.

There are differing opinions on the origin of the term. One theory is that the term derives from the cold, clammy feel of the skin during withdrawal, like a turkey that has been refrigerated. Along the same lines, the term may refer to the goosebumps and cold sweats that abstaining addicts may suffer from.

Another theory is that the term derives from a combination of “cold”: in the sense of “straightforward” or “matter-of-fact”, as in “the cold, hard truth”, and “talking turkey”, meaning to speak plainly. Proponents of this theory refer to the fact that the term was used before it was applied to withdrawals from drug addiction.

  • John Lennon wrote a song called “Cold Turkey”, which was performed by the Plastic Ono Band. The song was first performed on September 13, 1969 in Toronto, and appeared on an album called “Live Peace in Toronto 1969”. The song’s lyrics are definitely not about a Thanksgiving dinner leftover.
  • When cooking turkey, it shouldn’t be cold. Butterball has a “Turkey Calculator” that will tell you how big a turkey to buy, how long to thaw it, and how long to cook it, based on the number of guests.
  • “Did you know that Canadians celebrate Thanksgiving at the beginning of October and yet Americans celebrate their Thanksgiving at the end of November? That means we must have invented it, because we celebrate it first. Did you? It’s a fact.” – “It’s a Canadian Fact”, SCTV.

Cold turkey or hot, enjoy your Thanksgiving.

Thanks.

Paul Trudelle

10 Oct

Procedural differences between Applications and Actions

Stuart Clark Estate Litigation Tags: , , , , , , , , , 0 Comments

Consider yourself warned. Notwithstanding the relatively mundane title referenced above, the within blog contains a (somewhat mild all things considered) rant about something that troubles me to my very core (more of a mild annoyance really). Individuals who confuse and conflate the procedural steps and processes of Applications and Actions. Turn back now ye of mild stomachs.

There are two basic ways that civil matters proceed before the court in Ontario, either by Application or by Action. The Action is the more common of the two, and is the stereotypical image that most people probably have when thinking of something being heard before the court. Evidence is put before the court in an Action by witnesses sitting in the witness box, with the lawyers cross-examining and putting questions to the witnesses much like they do in your favourite legal television show. Applications, on the other hand, proceed only on a written record, with any evidence that is put before the court being contained in affidavits that were sworn by the various parties before the hearing date. To the extent that there are any cross-examinations on these affidavits they will generally have taken place before the hearing, with the Judge only being provided with copies of the transcripts and not witnessing the cross-examinations first hand as they would with an Action.

The estates litigation world exists in this somewhat unique corner of the civil litigation world, as many of the statutes under which our claims are advanced provide that the claims are to be commenced by way of Application and not Action. Although this in theory should result in these proceedings advancing on affidavit evidence alone, as parties often believe that there may be a strategic advantage to having the matter heard by way of Action (i.e. a sympathetic witness appearing in person before a Judge rather than simply in writing) parties will often seek to convert their proceedings from an Application to an Action at an early stage. I imagine that this is probably where most of the confusion stems from when individuals conflate the procedural steps of Applications and Actions, with the Order Giving Directions often being issued at a time the matter is still an Application yet providing directions for how an Action is to proceed.

The procedural process and obligations imposed upon parties participating in an Application are very different than those participating in an Action. There are no “Affidavit of Documents” or “Discoveries” in an Application, with the only evidence and documentation that is generally produced being that contained in the affidavits (subject to any undertakings or further directions from the court). Conversely, once a matter has been converted into an Action from an Application the affidavits that may have historically been filed are in a way irrelevant, as the Judge should in theory no longer have them available at the ultimate hearing of the matter with any evidence now being produced “viva voce” (i.e. in person). Once a matter has been converted into an Action from an Application the process that is to be followed is that of an Action, with the parties no longer being expected to serve and file any responding affidavits, but rather the more typical pleadings and documentation required for an Action such as a Statement of Defence or an Affidavit of Documents.

So please. I beg of you. Do not ask me when my client will be producing their Affidavit of Documents in an Application to Pass Accounts or when my client will be producing their responding affidavit after a matter has been converted into an Action.

Thank you for reading.

Stuart Clark

09 Oct

Avoiding Common Errors in an Application for a Certificate of Appointment of Estate Trustee With a Will

Suzana Popovic-Montag Estate & Trust, Estate Litigation, Estate Planning, Trustees, Uncategorized, Wills Tags: 0 Comments

Commencing an Application for a Certificate of Appointment of Estate Trustee With a Will is the first step in having a court formally declare a will as valid. This process was formerly known in Ontario as “probate”.

While these Certificates are not mandatory, some banks and financial institutions may require an Estate Trustee to obtain a Certificate in order to deal with estate assets. Aside from this, a Certificate is usually required in instances where:

  • the estate is large;
  • the assets cannot be easily transferred; and
  • real property forms part of the estate.

Avoiding Common Errors

Although the Application for a Certificate of Appointment of Estate Trustee With a Will is fairly short in length and seems straightforward, it is rare for these Applications to be approved upon their first submission. In the majority of cases, they are returned for corrections.

In order to assist applicants in completing their forms, the Ministry of the Attorney General released the following guidelines that highlight some common errors in these Applications:

  1. An Affidavit of Execution of Will or Codicil (Formed 74.8) signed by one of the witnesses to the will must be filed together with the original will, which will be marked as “Exhibit A” to the affidavit.
  • If there is no affidavit of execution and both witnesses cannot be found or have died, an affidavit attesting to the signature of the testator  must be filed. Ideally, the affidavit should be made by someone who is familiar with the testator’s signature.

 

  1. On Form 74.4 “Application for a Certificate of Appointment of Estate Trustee With a Will (Individual Applicant)”, the question under section 5 regarding an election of the Family Law Act should only be answered if the applicant is the spouse of the deceased.

 

  1. If the will states that someone other than the applicant has the right to apply for the Certificate of Appointment of Estate Trustee (or succeeding estate trustee), that person must give up their right by completing Form 74.11 “Renunciation of Right to a Certificate of Appointment of Estate Trustee (or Succeeding Estate Trustee) With a Will.”
  • This must be indicated on the Application (Form 74.4) and on Form 74.13 “Certificate of Appointment of Estate Trustee With a Will.”

 

4. If the applicant is not named as Estate Trustee in the will, they must obtain consent to their appointment from the beneficiaries who make up a majority share of the assets of the estate.

 

5. If an Estate Trustee who is named in the will or codicil is not the applicant due to death or renunciation, this should be indicated on the Application (Form 74.4) and on Form 74.13.

 

  1. If a will and/or codicil refers to a memorandum, the memorandum must be filed with the court.
  • If the memorandum cannot be found, an affidavit indicating this must be filed, along with the efforts made to locate it.

 

  1. All beneficiaries named in the will must be served with Form 74.7 “Notice of an Application for a Certificate of Appointment of Estate Trustee With a Will.”
  • If a beneficiary has not been served, an explanation must be given in Form 74.6 “Affidavit of Service of Notice” as to why.
  • Form 74.7 must be marked as “Exhibit A” to Form 74.6 “Affidavit of Service of Notice.”

 

  1. The original will should be marked as “Exhibit A” to the affidavit in the Application (Form 74.4).

 

  1. If Form 74.8 “Affidavit of Execution of Will or Codicil” is not submitted, an affidavit must be filed with the Application that explains this and sets out the efforts made to find the people who witnessed the testator sign their will.

 

  1. On Form 74.13 “Certificate of Appointment of Estate Trustee With a Will”, the address of the court should be typed under the Registrar’s signature line.
  • The date should not be filled in on this Form;
  • A plain, unmarked copy of the will should be filed; and
  • The court will impress a seal upon the Certificate of Appointment and the copy of the will attached.

To read the full article from the Ministry of the Attorney General about how to avoid common errors in applying for a Certificate of Appointment of Estate Trustee, visit this link.

 

Thanks for reading!

Suzana Popovic-Montag and Celine Dookie

 

08 Oct

Hull on Estates #581 – Minimal Evidentiary Threshold in Will Challenges

76admin Estate & Trust, Estate Planning, Hull on Estate and Succession Planning, Hull on Estate and Succession Planning, Hull on Estates, Hull on Estates, Podcasts, Wills Tags: , , , , 0 Comments

On today’s podcast, Paul Trudelle and Rebecca Rauws discuss the recent decision of Naismith v Clarke, 2019 ONSC 5280, and the minimal evidentiary threshold test for will challenges.

Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.

Click here for more information on Paul Trudelle.

Click here for more information on Rebecca Rauws.

08 Oct

Notice of Contestation of Claim – Can you use it for all potential claims?

Stuart Clark Executors and Trustees Tags: , , , , , , , , , , , , 0 Comments

Yesterday I blogged about the Notice of Contestation of Claim, which is a process that in essence provides the Estate Trustee with the ability to require individuals with a potential claim against the estate to commence such a claim within 30 days of being served with the Notice of Contestation of Claim failing which they are deemed to have abandoned the claim such that they can no longer pursue it before the court.

The power given to an Estate Trustee by the Notice of Contestation of Claim coupled with the relatively short timeframe by which the claimant must respond could appear attractive to an Estate Trustee, potentially enticing the Estate Trustee to use such a process to flush out all potential claims at the early stages of the administration of the estate. This is turn raises questions about the kinds of claims that the Notice of Contestation of Claim can be used for, and whether it can be used for all potential claims against an estate or whether the claims against which it can be used are more limited. Could you, for example, serve a possible dependant with a Notice of Contestation of Claim, and in doing so require the alleged dependant to bring their claim for support forward within 30 days failing which they are deemed to have abandoned their claim?

The issue of whether a Notice of Contestation of Claim can be used against a potential dependant of the estate was dealt with by the Ontario Court of Appeal in Omiciuolo v. Pasco, 2008 ONCA 241, wherein the court confirmed that the Notice of Contestation of Claim could not be used in relation to a potential claim for support by a dependant under Part V of the Succession Law Reform Act. In coming to such a decision the Court of Appeal notes that historically the “claim or demand” referenced in sections 44 and 45 of the Estates Act had been interpreted to mean a “claim or demand against the estate by a ‘creditor’ for payment of money on demand“, and that it could not be used for claims such as declaratory relief or a claim for judicial sale or foreclosure.

From the Court of Appeal’s rationale in Omiciuolo v. Pasco it would appear that the “claims” against which a Notice of Contestation of Claim can be used are likely limited to claims of potential creditors of the estate (i.e. claims that the deceased owed an individual money), and that it cannot be used against other more nuanced or equitable claims such as a potential claim from a dependant for support or declaratory relief.

Thank you for reading.

Stuart Clark

07 Oct

Just sue me already – Notice of Contestation of Claim

Stuart Clark Executors and Trustees Tags: , , , , , , , , , , , , , , 0 Comments

What’s an Estate Trustee to do when faced with a situation in which an individual has threatened to bring a claim against the estate but has not yet actually taken any formal steps to advance the claim. As Estate Trustee you have certain obligations to the beneficiaries of the estate, including seeing to the administration in a timely manner. An Estate Trustee also has obligations to the creditors of the estate however, and needs to ensure to that all debts of the estate are paid prior to distributing the estate to the beneficiaries. If they fail to do so, the Estate Trustee could face potential personal liability to the creditors of the estate.

An active claim being commenced against the estate can significantly delay the amount of time it takes for an estate to be administered, as the Estate Trustee cannot see to the final administration of the estate while the claim remains active as they must ensure that there are requisite funds in the estate to satisfy any damages award should the estate ultimately not be successful in the claim. The same is also true for a claim that has been threatened against the estate, as the Estate Trustee may be apprehensive to distribute the estate in the face of a claim possibly being commenced for the same reason. When faced with a such a threatened claim the Estate Trustee could be put in a difficult dilemma, for on the one hand they wish to administer the estate in a timely fashion to the beneficiaries and there is no active claim that has been commenced that would otherwise stop them from doing so, yet because of the threatened claim they may be reluctant to do so for fear of their own potential liability should the claim later be commenced after the funds have been distributed. When faced with such a situation the “Notice of Contestation of Claim” could become the Estate Trustee’s new best friend.

At its most basic the Notice of Contestation of Claim provides a mechanism by which a Estate Trustee can require the potential claimant to formally advance their claim against the estate failing which they are deemed to have abandoned the claim. The “Notice of Contestation of Claim” process is governed by sections 44 and 45 of the Estates Act. If a potential claimant is served with a Notice of Contestation of Claim they are provided with 30 days to issue a “claim” pursuant to the Notice of Contestation of Claim, failing which they are deemed to have abandoned the claim. The 30 day deadline may be extended up to a maximum of three months by the court if the claimant should seek such an extension.

The process by which a Notice of Contestation of Claim is issued is governed by rule 75.08 of the Rules of Civil Procedure, providing the form (Form 75.13) that the Notice of Contestation of Claim must be in, as well as the steps that the claimant must follow to bring their claim before the court upon being served with the Notice of Contestation of Claim should they intend to pursue the matter.

Through the Notice of Contestation of Claim an Estate Trustee can force a potential claimant to make a decision regarding whether they intend to bring a claim against the estate. If the potential claimant does not take the appropriate steps following being served with the Notice of Contestation of Claim their potential claim is deemed to be abandoned and can no longer be pursued before the court, with the Estate Trustee being theoretically free to proceed with the administration of the estate.

Thank you for reading.

Stuart Clark

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