The Application to Pass Accounts serves an important function in the administration of estates and trusts, providing the beneficiaries with the ability to audit the administration of the estate or trust and raise any concerns through their Notice of Objection.
The procedure that is followed for the Application to Pass Accounts is somewhat distinct from any other court process, with the process being governed by rule 74.18 of the Rules of Civil Procedure. These procedural steps include the filing of the “Notice of Objection” and the “Reply” to the Notice of Objection, processes and documents which are distinct to the Application to Pass Accounts. Although the Application to Pass Accounts process differs in certain ways from a more traditional Application, at its core the Application to Pass Accounts is still an “Application” and not an “Action”, with the process designed to be more summary in process as compared to the typical Action.
I have previously blogged about the procedural differences between an “Application” and an “Action”, and how things like Discovery and Affidavits of Documents, as well as calling witnesses to give oral evidence, are generally not available in an Application. The same generally holds true for an Application to Pass Accounts, with there generally being no Discovery process or witnesses called at the eventual hearing for the passing of accounts, with the summary process designed to be adjudicated on the paper record of the documents contemplated under rule 74.18.
Although the simplified and summary process intended for the Application to Pass Accounts may present many benefits to the parties, including allowing the beneficiaries to pose questions and objections to the trustee without having to resort to potentially prolonged and expensive litigation as provided in a typical Action, it could present some challenges if the claims that are being advanced are complex or seek significant damages as the process may not allow for the full record to be adequately explored.
If the claims or issues which are being advanced in an Application to Pass Accounts are complex, such as for example claims that the trustee was negligent or committed a breach of trust, the summary process designed for the typical Application to Pass Accounts may not provide the depth of procedural process that the claims may deserve. Under such circumstances the parties may seek to direct and/or convert the complex objections into a separate triable issue, thereby potentially opening up the procedural processes more typically reserved for an “Action” such as Discovery or the calling of witnesses to the issue.
The process by which certain objections are directed and/or converted into a separate “triable issue” is governed by section 48(4) of the Estates Act, which provides:
“The judge may order the trial of an issue of any complaint or claim under subsection (3), and in such case the judge shall make all necessary directions as to pleadings, production of documents, discovery and otherwise in connection with the issue.”
Under section 48(4) of the Estates Act the court may direct any objection which fits under section 48(3) of the Estates Act, which includes allegations of breach of trust, to be separately tried before the court, with section 48(4) noting that the judge shall make necessary directions regarding pleadings, Discovery, and the production of documents for the objection.
If an individual wishes to direct an objection to be tried under section 48(4) of the Estates Act such an intention should be raised at the early stages of the Application to Pass Accounts, with an Order being sought which would specifically direct the objection(s) in question to be tried by way of Action. To the extent that such an Order cannot be obtained on consent a Motion may be brought regarding the issue, with the court also being asked to provide direction regarding the procedures to be followed for the triable issue.
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September has brought some news out of the world of James Bond.
Labour Day saw the release of the new trailer for No Time To Die, the 25th installment of the blockbuster spy franchise, and fifth (and final) for current 007 Daniel Craig. While Craig is exiting, and there is no word yet as to who will don the most famous code name of all time, the newest trailer sees the return of familiar characters, friend and foe alike: Ernst Blofeld, head of the notorious terrorist organization, SPECTRE, CIA Agent Felix Leiter and of course, Ms. Moneypenny.
As for those looking for a cottage or a second home, September also brought the news that Sean Connery, the most famous 007 of them all, has placed his house in Cote d’Azur, France on the market for a cool €30 Million.
Truly a house built for a super spy on the banks of the Mediterranean in Cap de Nice, Connery’s 1.24 acre Belle Epoch-inspired abode boasts a saltwater pool, indoor gym and pool, and two guest houses. While Sir Sean may be leaving town, Elton John and Tina Turner have also owned homes nearby, and Monaco is just a 30 minute drive away.
One is encouraged to be mindful of the tax liabilities in France, however, as the Taxe Foncière is based on the cadastral income of a property, while the Taxe d’Habitation is traditionally only paid by residents. While the TH has been the subject of much political attention for primary residences, if the house is a second home, authorities can levy a surcharge of as much as 60% if a furnished home is left vacant for more than 120 days per year. Finally, France has a wealth tax that applies to residents and non-residents alike if they have real property assets of €1.3 million or greater. A significant tax risk for cottaging Canadians to be sure.
If a Canadian is considering a property purchase on the Riveria, it’s worth investigating the consequences for an estate plan. While Canada has no tax on testamentary gifts, one would be wise to check with the jurisdiction in which a prospective beneficiary lives. In the United States, for example, citizens are taxed on their worldwide income, so a gift of this size to an American relative may yield a tax burden. Finally, while personal property is governed by the jurisdiction in which the testator lives, real property is governed by the jurisdiction in which it’s located. So France will decide what taxes will apply to the property itself.
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Ian Hull and Daniel Enright
A recent decision of the Federal Court provides detailed instructions for proceeding with a virtual trial.
- the technology to be used;
- document management;
- counsel preparation to ensure they have the required hardware and software;
- witness preparation with respect to hardware, software;
- testimony protocols, including camera positioning, access to documents, and who can be present;
- how documents are to be put to a witness;
- what is to happen if there is a loss of internet connection;
- how objections are to be raised and dealt with;
- how the principle of “open courts” is to be addressed;
- testing of the systems before trial;
- access to Zoom “chat” functions.
The Direction also includes a schedule entitled “Information for Witnesses” which summarizes part of the Direction, and is to be provided to witnesses in advance of their testimony.
The decision is not a “Practice Direction” applicable to all virtual trials. However, it is comprehensive and should be considered by the parties and the trial judge in a case conference prior to the commencement of any other trial.
Justice Lafreniere begins the Direction by setting out the balancing act that the courts must engage in when dealing with trials during these COVID times. “The Court recognizes the importance of reducing the spread of COVID-19 and prioritizes the health and safety of all court participants, including members of the Court, registry staff, counsel, witnesses, stenographers and interpreters. At the same time, the Court must balance the need to maintain judicial operations. Bearing in mind these important factors, it has been ordered that the hearing of this trial continue remotely via videoconference.”
The show must go on. Albeit with a very different script.
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The looming threat of COVID-19 has caused some people to see their own mortality in a new and clearer light. In addition to the existential and/or religious contemplation that may arise from this reality, individuals are also turning their minds to more practical end of life planning.
An end of life plan, also referred to as an advance care plan (“ACP”), sets out how an individual would like to be cared for in the final months of their life. In Ontario, an ACP will usually include a Power of Attorney for Personal Care designating a trusted person(s) to make healthcare decisions on behalf of an individual in the event of their incapacity.
An ACP may also include an advance directive, or “living will”, which is a written statement of wishes about future care. Unlike a Power of Attorney, advance directives are not referenced in Ontario’s health care legislation and are not a legal document. However, Ontario law does recognize that wishes and preferences regarding future care choices that are expressed when mentally capable ought to be respected and followed, if possible. Thus, a Power of Attorney or other substitute decision maker is expected to abide by an advance directive to the extent possible. This makes advance directives a useful tool for anyone seeking greater control over the medical treatment they receive while incapable.
Interestingly, a COVID-19-specific advance directive has emerged in the United States. Dr. Andrea Kittrell, a head and neck surgeon practicing in Virginia, established an organization called Save Other Souls (“SOS”) whose objective is to assist individuals with their advance care planning as it pertains to COVID-19-related medical treatment. Specifically, SOS provides guidance on preparing a document that has been coined the “COVID-19 SOS Directive”. This document is a type of altruistic advance directive wherein a person expresses their wish to defer lifesaving critical care hospital placement, medication, and/or equipment to another patient in need during a declared emergency and where there are insufficient health care resources to go around.
Since the COVID-19 SOS Directive was developed for use in jurisdictions outside of Ontario, I will not opine on the effectiveness of this particular document. However, the document is a reminder of the importance of considering one’s own ACP in light of the global pandemic. For information on COVID-19-related advance care planning for Canadians, you can check out Dying With Dignity Canada’s COVID-19 ACP Toolkit. Another helpful resource is the Plan Well Guide which is discussed in Nick Esterbauer’s blog here.
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The presence of COVID-19 in Canada has been felt through all communities, but those living in long-term care facilities have been most significantly affected. The virus’s exponential infection rate, coupled with the pre-existing medical conditions of many of those who reside in these care facilities, has resulted in high death rates and little insight on how best to protect the elderly community going forward.
On May 19, 2020, Premier Doug Ford announced the Ontario Long-Term Care COVID-19 Commission (the “Commission”) in response to the devastating impact COVID-19 has had on residents and staff of long-term care homes.
The Commission has a mandate to investigate the spread of COVID-19 in long-term care facilities, the adequacy of efforts taken by the facilities to prevent transmission during the first wave of the pandemic, and how various elements of the existing system may impact the spread of COVID-19 within long-term care homes. The commission aims to provide recommendations to the government regarding the health and safety of residents and staff of these facilities and how to better protect them from potential outbreaks in the coming months.
The establishment of the Commission emphasizes the need for quick and decisive action in response to the virus’s overwhelming effect on Ontario’s elderly population. Though the virus’s impact remains prominent at this time, a second wave of COVID-19 is anticipated in the coming months. Consequently, the Commission will work diligently to provide the government with a final report by April 30, 2021.
Three commissioners will lead the investigation. The Honourable Justice Frank N. Marrocco was appointed as Chair of the Commission. Associate Chief Justice Marrocco has been involved in high-profile matters in the past, including as the lead counsel for the Province of Ontario in the Walkerton inquiry. Justice Marrocco was appointed to the Superior Court of Justice in 2005. Angela Coke and Dr. Jack Kitts will accompany Associate Chief Justice Marrocco on the Commission.
Angela Coke is a former senior executive of the Ontario Public Service (OPS), where she spent 27 years committed to the transformation of government operations. Ms. Coke retired in 2017, having previously served as the Deputy Minister, Ministry of Government and Consumer Services, where she played a leadership role on a range of government and public service priorities.
Dr. Jack Kitts completed a three-year tour of duty as a medical officer in the Canadian Armed Forces. He later returned to school for specialty training in anesthesia. In 1995, he was appointed Chief of Anesthesia and Associate Professor at the University of Ottawa. Within three years, he was appointed Vice-president of Medical Affairs and led the medical staff through a large restructuring, in which three hospitals and five large programs merged into the Ottawa Hospital.
Given the qualifications of the members of the Commission and the importance of taking any possible steps to protect the lives of residents of Ontario’s long-term care facilities, the creation of the Commission appears to be a promising first step in implementing necessary measures to enhance the ability of long-term care facilities to adequately respond to the pandemic and to protect their residents and staff once the current health care crisis has passed.
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This week on Hull on Estates, Jonathon Kappy and Stuart Clark discuss Quinn Estate v. Rydland, 2019 BCCA 91, and the concept of “pour over clauses” more generally and whether you can leave a bequest in a Will to an already existing inter vivos trust.
Should you have any questions, please email us at firstname.lastname@example.org or leave a comment on our blog.
In response to the COVID-19 pandemic, the Ontario government enacted O. Reg. 129/20 (the “Regulation”), which allows for the remote execution of wills and powers of attorney using video conferencing and counterpart. The Regulation was effective as of April 22, 2020 and was recently extended until September 22, 2020.
In light of the above, we can presume that many of the wills executed over the past five months were done using video conferencing. According to the Reopening Ontario (A Flexible Response to COVID-19) Act, 2020, the Regulation may be extended by further orders up to July 24, 2021. Thus, it is possible that the remote execution of wills may continue in the weeks to come.
As with all client meetings, the execution of a will using video conferencing should be well-documented. In most cases, the attendees of a video conference have the option to record both the audio and visual of the meeting. Thus, those who seek a more comprehensive account of the virtual meeting might consider recording the video conference. For information on the benefits and risks of recording client meetings using virtual communication technologies, such as a will signing by video conference, you can visit the Law Society’s COVID-19 Practice Management FAQs.
In the event of a challenge to the will, any video recording of the will signing that may exist will likely be producible documentation. This recording has the potential to be a crucial piece of evidence in the dispute. First, the recording can be used to show that the requirements for due execution of the will have been complied with. To the extent that the testator commented on the dispositions made in their will during the will signing meeting, the video recording may also assist in confirming the testator’s wishes and providing a rationale for their testamentary choices. A video recording could also help demonstrate that the testator was of sound mind at the time they signed their will.
However, it is also important to note that any video recording of the will signing will probably be heavily scrutinized by the person challenging the will. Any behaviour displayed by the testator that could be perceived as hesitation, uncertainty, forgetfulness, or misunderstanding could potentially be used to undermine the validity of the will. As such, depending on the idiosyncrasies of the testator, and how they react to being on camera, retaining a video record of the execution of the will might not be especially helpful in warding off challenges to the will.
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While remote communication has become the norm for many, there continues to be resistance to using technology in the legal sphere. A recent decision by Justice Myers of the Ontario Superior Court of Justice suggests that, in 2020, the court will not easily acquiesce to such resistance.
In Arconti v. Smith, the plaintiffs sued their former lawyer and his partner for negligence, breaches of duty, and other causes of action in connection with the lawyer’s representation of the plaintiffs in a securities fraud case. In January 2020, Justice Myers ruled that a focused mini-trial was required to determine if summary judgment ought to be granted with respect to one of the issues. In a later case conference, he agreed with the plaintiffs that they should be entitled to further examination for discovery of the defendants prior to the mini-trial. An examination of one of the defendants was then scheduled for May 6, 2020.
However, at a case conference held on May 1, 2020, counsel for the plaintiffs advised that his clients did not want the examination of the defendant to proceed by video conference. He argued that because in-person examination is not possible due to the implementation of social distancing in response to the pandemic, the proceedings should be delayed until the requirement for social distancing is ended. The plaintiffs objected to a videoconference examination on the bases that:
- they need to be with their counsel to assist with documents and facts during the examination;
- it is more difficult to assess a witness’s demeanour remotely;
- the lack of physical presence in a neutral setting deprives the occasion of solemnity and a morally persuasive environment; and
- the plaintiffs do not trust the defendants not to engage in sleight of hand to abuse the process.
In his case conference endorsement, 2020 ONSC 2782 (the “Decision”), Justice Myers dealt with the issue of whether the plaintiffs ought to be required to conduct an examination out-of-court by video conference rather than in person. He ultimately held that if the plaintiffs wish to take advantage of the opportunity to examine the defendant out-of-court, before the upcoming mini-trial, they must do so remotely by video conference. The general sentiment of Justice Myer’s reasons is captured in paragraph 19 of the Decision:
“In my view, the simplest answer to this issue is, “It’s 2020”. We no longer record evidence using quill and ink. In fact, we apparently do not even teach children to use cursive writing in all schools anymore. We now have the technological ability to communicate remotely effectively. Using it is more efficient and far less costly than personal attendance. We should not be going back.”
Justice Myers further explained that the use of readily available technology is a necessary component of a civil litigator’s basic skillset. Like other tools at a lawyer’s disposal, technology does not produce perfection and parties ought to remain vigilant to the risks and shortcomings associated with remote processes. However, one’s own unfamiliarity with the technology is not a good basis to decline to use available technology, particularly where remote processes can help move a proceeding forward more efficiently and affordably.
As the Decision suggests, justice will not be served by sitting and waiting for the pandemic to pass. We must learn to accept our circumstances and adapt to the new normal. As Max McKeown wrote, “adaptability is about the powerful difference between adapting to cope and adapting to win.” It is becoming increasingly evident that in today’s legal system, adopting technological processes is adapting to win.
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A recent decision of the Court of Appeal illustrates the importance of documenting intentions with respect to inter-familial loans. It also addresses the importance of solicitors’ evidence in establishing the wishes and intentions of a testator.
The case, ), involves a promissory note given by the deceased’s daughter to the deceased. The daughter was borrowing $142,000 to buy an interest in a cottage. A promissory note was signed by the daughter on July 16, 2014. Prior to signing, the note was reviewed by the deceased’s lawyer. The daughter discussed the note with the deceased and added a clause stating that the loan was to be forgiven upon the deceased’s death. The deceased’s lawyer reviewed this revision and advised against it. The deceased took the forgiveness term out of the promissory note, and the daughter signed it.
Following the deceased’s death, the daughter produced a second promissory note dated July 22, 2014. This promissory note provided that the loan was to be forgiven upon the deceased’s death. The daughter gave evidence that she discussed the loan with the deceased and the deceased had originally wanted to put a forgiveness clause in her will, but after having second thoughts, decided to have the forgiveness clause put into the second promissory note.
In rejecting the validity of the second promissory note, the lower court found that the deceased relied on the first promissory note only when advancing the funds. The second note was never discussed with her lawyer after the first note was signed. The deceased then went to another lawyer to discuss her estate plan. This second lawyer was given a copy of the first promissory note by the deceased, and there was no mention of the second promissory note.
Thus, while the second promissory note was signed by the daughter, there was insufficient evidence to convince the court that the deceased had accepted those terms.
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I have previously blogged about Vanier v Vanier, a decision of the Ontario Court of Appeal relating to a dispute amongst attorneys, in which the Court of Appeal agreed with a statement by the motion judge that the attorneys had “lost sight of the fact that it is [the incapable’s] best interests that must be served here, not their own pride, suspicions, authority or desires”. Unfortunately, it is often the case that in disputes amongst family members over the management of an incapable family member’s care or property, the incapable’s interests may be overshadowed by the fight amongst the other members of the family.
The recent Ontario Superior Court of Justice decision in Lockhart v Lockhart, 2020 ONSC 4667, appears to be another similar situation.
The applicant, Barbara, and the respondent, Robert, are children of Mrs. Lockhart. Mrs. Lockhart was 89 years old at the time of the decision. A number of years before, she had contracted bacterial meningitis and had suffered some long-lasting effects that impacted her cognition. Mrs. Lockhart’s husband predeceased her on October 2, 2018. Prior to his death, he had made personal care and treatment decisions for Mrs. Lockhart when she was not able to do so herself. After Mrs. Lockhart’s husband’s death, Barbara was unable to locate a power of attorney for personal care for Mrs. Lockhart; accordingly, Barbara and Robert proceeded to make personal care decisions on Mrs. Lockhart’s behalf, jointly.
However, in December 2018, Robert arranged to have Mrs. Lockhart sign a power of attorney for personal care and a power of attorney for property naming him as her sole attorney (the “2018 POAs”). Barbara was not aware of the 2018 POAs, and was not involved in their preparation or execution. Barbara did not even become aware of the 2018 POAs until April 2020 when Robert revealed them to her in the midst of a dispute between Barbara and Robert relating to Mrs. Lockhart’s care. Barbara subsequently challenged the validity of the 2018 POAs on the basis that, among other things, Mrs. Lockhart was not capable of granting them.
The court found that the 2018 POAs were of no force and effect, and were void ab initio. The court was also asked to determine which of Barbara and Robert would be authorized to make decisions on Mrs. Lockhart’s behalf under the Health Care Consent Act, 1996 (the “HCCA”). Each of Barbara and Robert took the position that they should have sole decision-making authority.
Notably, the court stated specifically that “[t]his dispute has less to do with Mrs. Lockhart’s interests and more to do with a power struggle between two siblings.” Given this outcome, and the facts leading to the litigation, I found the solution arrived at by the court interesting. The court determined that both Barbara and Robert are authorized to make personal care, health care, and treatment decisions under the HCCA, on behalf of Mrs. Lockhart, jointly. It appears that the court was satisfied that both of Barbara and Robert would exercise that authority in Mrs. Lockhart’s best interests, notwithstanding the dispute between them that lead to litigation. Other than the major disagreement between Barbara and Robert that lead to the litigation, the court found that “it appears that they have, in the main, come to decisions that have been in Mrs. Lockhart’s best interest and have kept her safe.” This historic ability to make joint decisions seems to have been sufficient for the court to decide that Barbara and Robert should continue doing so going forward.
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