Category: Continuing Legal Education
Competing applications about the ownership of a home were before the Court in Marley v. Salga, 2019 ONSC 3527. On the death, the home was jointly owned between the deceased (Salga) and his wife (Marley). Notwithstanding the registered, legal ownership of the property, Salga’s Will gave Marley a lifetime right to occupy and use Salga’s one-half interest in the property and thereafter directed that the house be sold for the benefit of the residuary beneficiaries.
This led the residuary beneficiaries to commence an Application for a declaration that the Estate is entitled to an undivided one-half interest in the home and for an order requiring the Estate Trustee (Klassen) to sell the home right away (the “Salga Application“). Thereafter, Marley commenced her own Application for a declaration that she was the sole legal and beneficial owner of the property, or, alternatively, that her interest in the property is greater than 50% (the “Marley Application“).
Ultimately, Justice Reid found that ownership of the property was severed by the deceased in the course of his dealings but denied the Salga Applicants’ request that the property be sold before the termination of Marley’s interest under the Will. The Marley Application was also denied. Our blog on this decision can be found here.
The parties were unable to agree to the issue of costs. Justice Reid, 2019 ONSC 6050, followed the traditional approach to costs in estate matters and the costs of both applications, on a partial indemnity scale, were ordered from the Estate. In reaching this conclusion, Justice Reid considered and found the following:
- The Marley Application was in essence a response to the Salga Application and the costs of both proceedings were treated as one;
- Both parties were found to be partially successful: the Salga Applicants were successful in obtaining a declaration that 50% of the home belongs to the Estate and the Marley Applicant was successful in preventing an immediate sale of the home;
- Consideration was given to the fact that an award of costs from the Estate meant that the Salga Applicants (as the residuary beneficiaries) would be effectively bearing their own costs as well as Marley’s costs. However, that was not enough to outweigh the deceased’s responsibility to act unambiguously by severing his interest on title during his lifetime.
- Costs against the Estate in this case “places the responsibility for the litigation squarely on [the deceased] where it belongs“.
This costs decision is also an informative read for the costs of an estate trustee as a respondent in both proceedings and how costs should be paid from an estate where there is no liquidity.
Thanks for reading!
A recent master motions in the Estate of Robert William Drury Sr., 2019 ONSC 6071, considered the issue of an extension of time to serve a statement of claim.
Robert Sr. owned a property where the defendant Shirley lived with her spouse Hugh Drury. When Hugh Drury died, Robert Sr. sought vacant possession of his home. Robert Sr. died on September 8, 2016. Days later there was a fire on the property on September 24th and Shirley was criminally charged with arson.
Almost two years later, the estate trustee for Robert Sr.’s Estate issued a statement of claim for malicious and intentional arson damage, or gross negligence causing loss of enjoyment of life, or damages for loss of property. That claim was issued on September 19, 2018 while Shirley’s criminal proceedings were underway. Pursuant to Rule 14.08(1), Robert Jr. had 6 months to serve the civil claim on Shirley which expired on March 19, 2019. Shirley was not served until June 14, 2019 when Robert Jr. brought a motion for an extension of time.
In applying the test that was set out by the Court of Appeal in Chiarelli v Wiens, 2000 CanLii 3904, the extension of time was ultimately allowed by Master Sugunasiri.
The delay was only three months and the prejudice to Shirley was minor. Robert Jr. explained that he acted on the advice of counsel when the decision was made to serve Shirley after the conclusion of the criminal proceeding. This decision was not personal or contemptuous. As for Shirley, while memories fade over time, the criminal proceeding was found to be an ameliorating factor that preserved her evidence for the civil proceeding.
In reaching this decision, Master Sugunasiri also considered an instance where an extension of time was denied because the delay was caused by the Plaintiff’s decision not to serve the claim until he had enough money to fund the proceeding. In that case, the Court found that the Plaintiff ought to bear the consequences of the risk that he took under the Rules.
Thanks for reading!
Most professions require their members to complete a certain amount of continuing education. For example, lawyers in Ontario are required to complete 12 hours of Continuing Professional Development, with a minimum of 3 hours of Continuing Professional Development having certain “professionalism” content.
Failure to complete the required continuing education can lead to suspension. Often, professionals scramble at the last minute to complete their continuing education requirements.
In recent disciplinary proceedings, insurance agents had their insurance agent licences revoked where they did not complete the required continuing education, and submitted fraudulent continuing education certificates
In both D’Mello v. Ontario (CEO of FSRA), 2019 ONFST 20 and Sohi and Sandhu v. Ontario (Superintendant Financial Services), 2019 ONFST 9, insurance agents purchased continuing education certificates from a Mr. Rutledge, a continuing education teacher. The certificates confirmed that the agents received 30 hours of continuing education. However, the teacher did not provide the agents with any training or educational materials. The agents paid the teacher $100 for the certificates.
In the Sohi and Sandhu proceeding, the Financial Services Tribunal refers to the evidence of Mr. Rutledge. It is said that while he was at one point a continuing education teacher, he stopped teaching long before the incidents in question. When contacted by a former student or person referred by a former student, he would “help” them with their licence renewals by selling them the false continuing education certificates for courses they did not actually study for or take.
The Tribunal held that the agents knowingly submitted false continuing education certificates and intentionally misled the Financial Services Commission of Ontario. Their licences as insurance agents (all three had been agents for 20 years or more) were revoked.
The moral of the story is obvious: complete your continuing education. Actually complete it!
Also, complete it early. As stated in the D’Mello decision, while failing to complete your continuing education does not automatically constitute incompetence, leaving it to the last minute constitutes “brinksmanship”: in the case of the insurance agents, “leaving 30 hours of CE compliance to late in the two year cycle would seem to demonstrate a lack of good planning”.
For our blog from 2010 on the introduction of Continuing Legal Education requirements, see here.
Thank you for reading.
There was a recent decision of the Ontario Superior Court of Justice on the issue of costs in a contested guardianship proceeding. Rather unusually, the endorsement in Howard Johnson v. Howard, 2019 ONSC 4643, dealt with the issue of costs after the parties have resolved the main dispute on consent.
In this case, there were two competing guardianship applications over Elizabeth. The applicants on the one hand were Elizabeth’s daughter and son, Marjorie and Griffin, and on the other hand, Elizabeth’s other son, Jon. All three of Elizabeth’s children were of the view that their mother was in need of a substitute decision maker for both the management of her property and for personal care.
While the endorsement does not specify who the competing applicants were seeking to appoint as Elizabeth’s guardian, the parties eventually settled on the appointment of CIBC Trust Corporation as Elizabeth’s guardian of property and all three children as Elizabeth’s guardians of personal care. On the issue of costs, Marjorie and Griffin sought full indemnity costs from Jon while Jon sought substantial indemnity costs from Majorie and Griffin or, in any event, that he be indemnified by Elizabeth for any amounts not recovered from his siblings.
Pursuant to section 3 of the Substitute Decisions Act, 1992, Elizabeth was represented by counsel throughout the proceeding and on the issue of costs. Submissions were made on Elizabeth’s behalf that she should not have to pay costs of the other parties or the outstanding balance of an invoice that was purportedly incurred by Elizabeth in a joint retainer with Jon.
The Court in this instance considered the modern approach to costs in estate litigation as set out in McDougald Estate v. Gooderham, 2005 CanLII 21091 (ON CA), with respect to Jon’s claim that Elizabeth ought to be responsible, at least in part, for his costs. The court relied on D.M. Brown J.’s (as he was then) comments that the discipline imposed by the “loser-pays” approach to estate litigation applies with equal force to matters involving incapable persons citing Fiacco v. Lombardi, 2009 CanLII 46170 (ON SC). Only costs incurred for the best interests of the incapable person could be justified as costs payable from the incapable’s assets.
In this case, the competing applications of the siblings were found to contain a number of ancillary issues beyond that of the appointment of a substitute decision maker for Elizabeth. The Court was ultimately unable to see how Elizabeth would have derived any benefit from her children’s disputes. Therefore, the children were all ordered to bear their own costs. There was also no clear benefit to Elizabeth from the invoice that was issued to her prior to the appointment of section 3 counsel and Jon was ultimately left to pay that balance.
At the end of the day, the only costs borne by Elizabeth, as the incapable person subject to two competing guardianship applications, were the costs of section 3 counsel pursuant to the section 3(2) of the SDA.
Here is a Bon Appetit recipe for a frozen margarita pie that we could all benefit from.
Earlier this year, the Ontario Court of Appeal considered the issue of an estate’s entitlement to the residual assets of a partnership upon the death of its sole limited partner.
Canadian Home Publishers Inc. v. Parker, 2019 ONCA 314, is a lawsuit between the general partner and the Estate Trustees of the deceased limited partner, David. Canadian Home Publishers Inc. was incorporated when Lynda and David decided to purchase Canadian House and Home magazine in 1985. Lynda and David were married at the time. The corporation was owned by Lynda as the sole general partner and by David as the sole limited partner. It was their intention that Lynda would run the company as her own business and David would make use of its tax losses.
The couple later divorced in 1991. Litigation ensued and there was a previous decision about the nature of the parties’ oral partnership agreement in the ’90s. David dies in 2012. By the time of his death, David had received over $26 million from his interest as the limited partner. The magazine itself was valued at over $50 million. Lynda, as the general partner, sought a declaration that 1) the limited partnership was dissolved upon David’s death, and 2) that David’s Estate was only entitled to a share of the profits to the date of his death and a repayment of his remaining capital contribution (i.e. that the Estate was not entitled to share in the residual value of Canadian Home Publishers).
The lower court found that 1) the limited partnership was indeed dissolved upon David’s death and 2) that David’s Estate was entitled to an equal share of the residual value of Canadian Home Publishers with Lynda. While the Court of Appeal upheld the finding that the limited partnership was dissolved on death, the second finding was overturned and the Estate was limited from any additional benefit over above its share in profits as of the date of death and a return of capital.
The Court’s analysis provides a helpful description of the differences between limited partnerships and ordinary partnerships. A limited partner is meant to be a passive investor whose exposure to liability is limited to the extent of his or her capital contribution unless otherwise provided in the Limited Partnerships Act (see paras. 20-21). A limited partner has no broader right to participate in the upside of the limited partnership, just as the limited partner has no broader obligation to suffer or contribute in the downside (para. 25).
Since we are talking about House & Home, here is a recipe from their website for pineapple honey ribs 🙂
Thanks for reading and until next time!
Written reasons from a mid-trial motion was recently released in Barker v. Barker, 2019 ONSC 2906. The only issue in this motion was whether a particular video of a deceased plaintiff was admissible at trial. The larger claim at issue surrounds the Oak Ridge division of the Penetanguishene mental health centre and its treatment of maximum security mental health patients between the 60’s and the 80’s. One of the plaintiffs, James Motherall, died after the action was brought and his claims were continued by the estate trustees of Mr. Motherall’s estate under Rule 9 of the Rules of Civil Procedure.
Prior to Mr. Motherall’s death, Mr. Motherall was examined for discovery in the ordinary course but he was not examined under Rule 36 for the purpose of having his video testimony tendered as evidence at trial. Since a de bene esse examination did not occur, the trial judge was literally unable to assess Mr. Motherall’s credibility with his own eyes. In an effort to address this issue, counsel for the plaintiffs sought to introduce video footage of Mr. Motherall from a CBC documentary that featured Mr. Motherall and his experiences at Oak Ridge. The footage was taken a month before Mr. Motherall’s death and counsel for the Plaintiffs proposed to call the filmmaker as a witness to introduce the unedited footage of the filmmaker’s interview with Mr. Motherall.
Without criticizing the filmmaker’s work, the trial judge found that the video interview was not conducted under reliable circumstances for the purposes of a trial because Mr. Motherall was not sworn, he was not cross-examined, and he was simply asked to tell his story without more. The video was presumptively hearsay and it was up to the plaintiffs to meet, on a balance of probabilities, the criteria of necessity and reliability under the principled approach for the admissibility of hearsay evidence (R v. Khelawon, 2006 SCC 57, R. v. Chretien, 2014 ONCA 403).
In addition to the issues of reliability, the trial judge also found that the video was not necessary since there was a transcript of evidence from Mr. Motherall’s examination for discovery and an affidavit from Mr. Motherall in the course of a prior summary judgment motion.
Both the filmmaker’s proposed testimony and the video footage of Mr. Motherall was found to be inadmissible.
Even though Barker v. Barker is at its core a civil matter, the reasoning from this motion is instructive for estate litigators who are also bound by the additional hurdle for material corroboration pursuant to section 13 of the Evidence Act.
Thanks for reading!
The Ontario Court of Appeal recently considered the issue of whether the litigation files of the Office of the Children’s Lawyer are subject to a freedom of information access request in Ontario (Children’s Lawyer) v. Ontario (Information and Privacy Commissioner), 2018 ONCA 599. This appeal arose from a father’s request for the production of the Children’s Lawyers’ records. The Children’s Lawyer acted for the father’s children in the course of a custody and access dispute. Accordingly, a portion of the Children’s Lawyer’s records were privileged.
Justice Bennotto, in writing for a unanimous panel, found that the issue turned on whether the records are “in the custody or under the control” of the Ministry of the Attorney General for Ontario (“MAG“) for the purposes of the Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c. F. 31.
The answer was no.
The Children’s Lawyer’s records are not in the custody or under the control of MAG because she operates separately and distinctly from MAG and,
“ [she] is an independent statutory office holder appointed by Cabinet through the Lieutenant Governor. She derives her independent powers, duties and responsibilities through statute, common law and orders of the court.
 To allow a disgruntled parent to obtain confidential records belonging to the child would undermine the Children’s Lawyer’s promise of confidentiality, inhibit the information she could obtain and sabotage her in the exercise of her duties. This would, in turn, impact proceedings before the court by depriving it of the child’s voice and cause damage to the child who would no longer be meaningfully represented. Finally, disclosure to a parent could cause further trauma and stress to the child, who may have divided loyalties, exposing the child to retribution and making the child the problem in the litigation.”
For those practising in the estates and trusts context, it is important to note that the role of the Children’s Lawyer is different in family law.
In civil matters that implicate a minor’s financial interest in property, the Children’s Lawyer acts as the minor’s litigation guardian and she is represented by the lawyers of her choice. In custody and access disputes, the Children’s Lawyer acts, at the request of the court, as the minor’s lawyer.
Bonus answer: the current Children’s Lawyer is Marian Jacko.
Thanks for reading this week!
In Michael v. Thomas, 2018 ONSC 3125, Justice Ramsay awarded a dependant support claimant the entirety of the Estate net of all debts and liabilities. The dependant support claimant in this case was a common law spouse of approximately 20 years. Ms. Michael was in her late-fifties/early sixties when Mr. Chambers died suddenly from cancer without a will.
Mr. Chambers and Ms. Michael were not married at the time of Mr. Chambers’ death. Accordingly, Ms. Michael was not a beneficiary of Mr. Chambers’ Estate pursuant to the rules of intestacy. Mr. Chambers did not have any children either so the beneficiaries of his Estate were his surviving siblings and two nephews who were the sons of his predeceased sister.
Justice Ramsay found that Mr. Chambers and Ms. Michael lived modestly during Mr. Chambers’ life. They were joint owners of their home, which Ms. Michael received by right of survivorship. The home was subject to a mortgage of about half its market value in the amount of $150,000.00. Ms. Michael was also the beneficiary of a modest $80,000.00 life insurance policy and her income became supplemented by an additional $3,325 per month through the deceased’s CPP and pension benefits. Ms. Michael worked part-time and has two adult children of her own. Interestingly, Justice Ramsay commented that Ms. Michael should not have to seek support from her adult children under the Family Law Act (even though she could, theoretically) before seeking support from Mr. Chambers’ Estate.
In considering the Respondent’s case, Justice Ramsay found that Mr. Chambers did not have any other dependants and that he was estranged from the only party who responded to Ms. Michael’s claims in Court. Mr. Chambers’ sister argued that Ms. Michael already received $203,965 out of the assets of the Estate, which, including section 72 assets, were worth a total $285,000. She further argued that Ms. Michael would be able to maintain the same standard of living that she used to enjoy if Ms. Michael supplements the pension income by working full-time at minimum wage. In his analysis, Justice Ramsay squarely stated as follows:
 I do not agree. It is not reasonable to expect the Applicant to take an entry level job at the age of 62 when she is already past the point of being able to sustain full time physical labour, even light physical labour. Even if it were possible, it would only raise her earnings to the low $40,000 range, which would still not be enough to continue the modest standard to which she was accustomed. I do not think that the intestate made adequate provision for the proper support of the Applicant.
 The estate is not big enough to make periodic payments. In fact it is not big enough to provide the proper support the Applicant needs. I think that a judicious spouse would have left her the entire estate, such as it is. The Applicant is the only dependant and the only person with any moral claim on the estate. Accordingly I order the trustee to convey to the Applicant the entire residue of the estate after payment of taxes, debts of the estate and his own fees and I declare that the amounts already received or already in the Applicant’s possession are hers to keep.
Ms. Michael was also awarded partial indemnity costs from Mr. Chambers’ sister. Mr. Chambers’ sister was found to have no need for “more found money” from Mr. Chambers’ Estate because of the inheritance that she received from their mother, and that costs from the Estate would have the same effect as awarding costs against Ms. Michael.
Thanks for reading!
It is not uncommon for Canadian estate trustees to make distributions to beneficiaries living in the U.S. In doing so, the U.S. Customs and Border Patrol (the “US CBP“) could be involved in a myriad of ways.
A recent story from CBC News is an example of what can go wrong if estate trustees are not aware of their US reporting obligations. An estate trustee in Ottawa mailed a bank draft worth $500,000.00 to a beneficiary in the U.S. U.S. border officials seized the bank draft because it was mailed without filing the appropriate customs declaration form. Almost a year later, the bank draft is still held at the border while the unfortunate beneficiary is sick and in need of money for his medical bills.
According to the U.S. Customs and Border Protection website, any time money exceeding $10,000.00 is sent to the U.S. from a foreign country, the sender is required to file a “Report of International Transportation of Currency or Monetary Instructions” (FinCEN Form 105) with the CBP before the money is sent. This applies regardless of whether the sender is acting personally or on behalf of another legal entity. This applies to money in the form of coins, currency notes, travellers checks, money orders, etc. This also applies to money sent by mail, courier, personal delivery, etc.
However, this particular US reporting requirement does not apply where the method of transfer does not involve physically transporting money over the border, such as wire transfers through banking institutions. If a wire transfer is used, the bank is responsible for satisfying the necessary reporting requirements.
In course of sending money worth $10,000.00 or more from Canada, there are corresponding Canadian customs requirements as well. If money is sent by mail, be sure to visit a Canada Post location and inquire about the necessary requirements. The applicable reporting form must be filled out and enclosed within the envelope or package and a copy of the same form must be submitted to the Canada Border Services Agency. If money is sent by courier, the courier is responsible for filing another reporting form while the individual sender is still responsible for providing the courier with the general reporting form.
Like the US CBP, Canada Border Services Agency has the authority to seize the funds and charge penalties if the Canadian reporting obligations are not satisfied.
Thanks for reading!
Previously on our blog and podcast, we discussed Tarantino v. Galvano, 2017 ONSC 3535 (S.C.J.) in the context of the counterclaim for quantum meruit and the costs decision of the Hon. Justice Kristjanson.
Tarantino v. Galvano arose from a lawsuit that was commenced by two out of three Estate Trustees against the third Estate Trustee, Nellie, with respect to her actions as attorney for property for the Deceased, Rosa (i.e. Nellie’s actions while the Deceased was still alive but incapable of managing her own property).
Rosa had two daughters, Nellie and Giuseppina. Giuseppina died before Rosa. Guiseppina’s daughters were the other two Estate Trustees and they are beneficiaries of the Rosa’s Estate along with Nellie. For the better part of her life, Nellie lived with Rosa. She took care of her mother after her father’s death. Nellie and her son were also Rosa’s caregivers as Rosa’s health declined until Rosa’s death in 2012.
Rosa and Nellie owned the home that they lived in together. Rosa held an 80.3% interest and Nellie held an 19.62% interest. Pursuant to Rosa’s 2005 Will, Nellie had a right of first refusal to purchase the home from Rosa’s Estate. In 2008, on the advice of counsel while Rosa was incapable, Nellie entered into an agreement between herself and Rosa. The agreement provided for a transfer of Rosa’s interest in the home and 75% of Rosa’s pension income to Nellie in exchange for Nellie’s caregiving services. The agreement was in writing and it was signed by Nellie. Nellie signed for herself and for Rosa, in her capacity as Rosa’s attorney for property.
Even though the Court found that Nellie was a good daughter who held up her end of the bargain by caring for Rosa, the agreement was set aside because it was a self-dealing transaction that did not meet the requirements of the Substitute Decisions Act, 1992:
“ Under the Substitute Decisions Act, Nellie could only enter into the agreement to transfer the house and pension income if it was “reasonably necessary” to provide for Rosa’s care, which I find it was not. As a fiduciary, an attorney for property is “obliged to act only for the benefit of [the donor], putting her own interests aside”: Richardson Estate v. Mew, 2009 ONCA 403 (CanLII), 96 O.R. (3d) 65, at para. 49. An attorney is prohibited from using the power for their own benefit unless “it is done with the full knowledge and consent of the donor”: Richardson Estate, at paras. 49-50. Rosa lacked capacity at the time of the Agreement, and the transfer of the house and pension income therefore were not done with Rosa’s full knowledge and consent.”
The “reasonably necessary” test was assessed, as of the time of the transfer, rather than from hindsight and it was determined that the decision to transfer 80.3% of a home and 80% of Rosa’s pension income at the outset of care was “an imprudent agreement which benefitted Nellie beyond that ‘reasonably necessary’ to provide adequately for Rosa’s care” (see paragraphs 34-49 for the Court’s analysis of this issue).
As a set off, Nellie’s quantum meruit claim was successful and you can click here for Ian Hull and Noah Weisberg’s podcast on this particular issue. While there was blended success to all parties involved, none of the three Estate Trustees were entitled to indemnification. Our discussion of the denial of costs can be found here and the Endorsement can be found here.
Thanks for reading!