Category: Estate Litigation
The COVID-19 pandemic has resulted in temporary changes to the way that lawyers are able to practice law. For the time being, many of us and our staff are working remotely, avoiding in-person meetings whenever possible, and access to assistance through the courts is limited.
Processes such as examinations for discovery and mediations may not necessarily be postponed with the availability of online platforms through which they can be hosted, such as Zoom. However, an issue remains in how best to address procedural issues for which we would normally seek directions from the court.
For the time being, court dates are available only to provide assistance in respect of truly urgent matters. While some clients may consider the appointment of an estate trustee during litigation or timetabling issues to be urgent, it is unlikely that a judge will share this viewpoint absent compelling circumstances. While the scope of matters that can be heard by teleconference may expand after April 6, 2020, the ability of the courts to keep up with demand can be expected to be limited. Furthermore, once the courts resume operations, one can only expect schedules to fill up quickly as lawyers and clients try to make up for lost time.
Lawyers and our clients have a common interest in moving matters forward during this period of instability. To assist in this regard, I am spearheading an initiative that I have called Estates Arbitration Litigation Management (“EALM“).
What I see as being the key features of EALM can be summarized as follows:
- parties will enter into an EALM agreement that sets out the matters to be arbitrated, primarily being procedural and interim relief;
- senior members of the Bar will assist the parties as arbitrators in determining those issues agreed upon at a reduced hourly rate;
- if the decision of the arbitrator requires a court order to be effective (for example, the appointment of an estate trustee during litigation), the parties agree to file a consent motion in writing to obtain the necessary order; and
- the parties may return to court to address substantive issues once normal operations are restored or may elect to proceed to arbitration or mediation.
These measures have already been successfully employed by the Family Law Bar and we are grateful to Aaron Franks, Judith Nicoll, Martha McCarthy, and Gary Joseph for sharing their experiences in that regard. A link to a precedent draft agreement specific to EALM, as well as an information sheet that lawyers will be able to share with clients, will be added to the resources section of our website within the next couple of days, which will be the result of continued consultations with senior members of the Estates Bar.
Despite the unique challenges posed by COVID-19, it is important that we employ new measures to continue to move matters forward for the benefit of our clients and colleagues throughout the Estates Bar, and I am hopeful that EALM will become a timely and cost-effective tool in limiting the disruption to our practices in the coming weeks. If you have any comments regarding EALM, or are interested in introducing this into your own practice, please contact me at email@example.com.
Thank you for reading and be safe.
Many of us are familiar with the expression: “Time waits for no one.” We also previously blogged about the impact time has on all parties in litigation: “No one likes to see a limitation period applied to dismiss a claim.” (So says Justice Nakatsuru in the opening line of his decision in Sinclair v. Harris.)
In general, claims must be commenced in a timely fashion. If too much time passes–depending on the circumstances and nature of the claim–parties may be prohibited from commencing a lawsuit, or have their lawsuit dismissed, by what is known as a ‘limitation period’.
With the recent developments of COVID-19, however, the Lieutenant Governor in Council made an Order under s. 7.1 of Ontario’s Emergency Management and Civil Protection Act suspending limitation periods in Ontario. This suspension is retroactive to March 16, 2020. A copy of the Order can be found here.
What happens when the suspension is lifted? It will be interesting to see if limitation periods go back to existing the day this suspension is lifted, or if further legislation may be needed to deal with this issue. For now, it appears that “time” is waiting for everyone.
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An important and useful tool in any estate planning toolkit is the ability to transfer title to real property between spouses, which typically occurs for nominal consideration and/or natural love and affection. These types of transfers are recognized at law. In certain circumstances, transfers of this nature may be used by spouses seeking to defeat, hinder, delay, or defraud creditors. The Fraudulent Conveyances Act (“FCA”) provides the legislative authority to set aside transfers of property that are entered into with the intent to defeat the claims of a creditor.
Such was the case in Anisman v Drabinsky, 2020 ONSC 1197. On September 11, 2015, Mr. Drabinsky and his wife, Ms. Winford-Drabinsky, transferred their joint ownership of their home to Ms. Winford-Drabinsky alone (the “Drabinsky Property”). At the time of said transfer, Mr. Drabinsky had several unpaid judgments against him as well as ongoing monthly debt payments that were nearly double his monthly income. One such judgment, dated November 2018, was in favour of the Plaintiff for monies owed by Mr. Drabinsky.
In an effort to recover monies owed to him, the Plaintiff obtained a Certificate of Pending Litigation against the Drabinsky Property. It was not until April 2019 that the Plaintiff testified that he learned of the transfer through a title search conducted on Mr. Drabinsky in preparation for his examination in aid of execution respecting the unpaid judgment. On June 18, 2019, some three years and nine months after the impugned transfer of title, the Plaintiff commenced an action seeking to reverse the transfer of title in the Drabinsky Property.
In his defence, Mr. Drabinsky argued that the transfer itself was not fraudulent, but that in any event, the Plaintiff’s claim was statute barred given that the 2-year limitation period provided for in the Limitations Act, 2002, SO 2002, c. 24 (“Limitations Act”) had expired.
In considering the validity of Mr. Drabinsky’s limitation defence, the court considered two key principles regarding limitation periods: discoverability of claims and the applicable statutory authority. With respect to the latter, the court considered whether it was the 2-year limitation period pursuant to the Limitations Act, or the 10-year limitation period in the Real Property Limitations Act (“RPLA”), that applied. The RPLA applies to actions to “recover” land. The question then became, does an action to set aside a conveyance of real property fall within the category of claims to “recover land”?
The court ultimately found that it was the 10-year limitation period in the RPLA that applied to the present action. In reaching its decision, the court relied on the case of Conde v Ripley, 2015 ONSC 3342, which found that claims made to set aside a conveyance of real property under the FCA are on their face, a claim to recover land. The court went further to say, “the Legislature has seen fit to… differentiate between actions involving recovery of land and other types of actions” given that the Limitations Act addresses claims in contract or tort, while the FCA addresses the recovery of real property.
However, as identified in this article, this line of reasoning contradicts earlier decisions that differentiated between the recovery of land itself and the recovery of debts connected to that land (see Wilfert v McCallum, 2017 ONSC 3853 and the Ontario Court of Appeal case of Zabanah v Capital Direct Lending Corp, 2014 ONCA 872), leaving the law in a state of uncertainty.
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In its recent decision, Baran v Cranston, the Divisional Court provides a helpful summary of the principles applied by the court when determining if the appointment of an Estate Trustee During Litigation (“ETDL”) is appropriate.
As a starting point, the court outlines the Superior Court of Justice’s statutory authority to appoint an ETDL. Section 28 of the Estates Act provides that an ETDL may be appointed “pending an action touching the validity of the will of a deceased person, or for obtaining, recalling or revoking any probate or grant of administration…” Additionally, Rule 75.06(3)(f) of the Rules of Civil Procedure expressly authorizes the court to appoint an ETDL on an application or motion for directions.
The court then looked to the jurisprudence for further support that an ETDL may be appointed even where the validity of a will is not in issue. In McColl v McColl, an ETDL was appointed, notwithstanding the fact that the validity of the will was not in issue. In McColl, the court ultimately appointed an ETDL “based on the conflict and the trustee’s lack of experience in managing a business.”
In Mayer v Rubin, the court set out that the appointment of an ETDL may be required (even where the validity of the will is not in issue) where the parties’ duties as fiduciaries are inconsistent with their ongoing litigation interests. The appointment of an ETDL will also be necessary where there is a trustee who is in an adversarial position towards a co-trustee or beneficiary, and who therefore, should not be left in charge of trust property.
After having reviewed the relevant statutory provisions and jurisprudence, the Divisional Court went on to note some of the factors that will be considered by the court in determining whether or not it should exercise its discretion to appoint an ETDL:
- whether a trustee may be a witness in the litigation;
- potential for conflict of interest;
- conflict between the interests of the trustees and/or beneficiaries;
- hostility between the trustees and/or beneficiaries;
- lack of communication between the parties; and
- evidence of settlement discussions that exclude some of the parties.
The Divisional Court also approved the lower court’s summary of the legal principles factored into its decision to appoint an ETDL, which included, among others:
- the court has broad and inherent powers to supervise the management of estates, and can draw upon its inherent jurisdiction (where appropriate) to protect parties so that justice can be done in the proceeding;
- the court must ensure that there is a level playing field between the parties, and the assets of the estate must be immunized from the tactics employed by litigating parties; and
- the appointment of an ETDL is not an extraordinary measure and the court should refuse the appointment only in the clearest of cases. The appointment of an ETDL will be “favoured by the court in the majority of cases of conflict between the trustee and beneficiaries unless the administration of the estate is particularly simple or straightforward.”
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In a recent Ontario Superior Court of Justice decision, the Court considered certain extrinsic circumstances surrounding the making of the Will, as well as the reading of the Will as a whole, in reaching a decision regarding its interpretation.
In Love v Wheeler 2019 ONSC 4427, a spouse of a deceased beneficiary sought a declaration that a beneficiary’s estate was entitled under a testator’s Will to an undivided half-interest in property and that the other beneficiary wrongfully appropriated it.
Frances Irene Wheeler died in 2012. She bequeathed a parcel of land to her two sons, Harold William Wheeler and Martin Douglas Wheeler. Her Will stated that this property was to go to Harold and Martin “jointly or the survivor of them”.
The Court grappled with the question of whether Frances meant to leave the property to Harold and Martin as joint tenants or as tenants in common. Certainly, in a joint tenancy, there would be a significant benefit to the survivor of the two brothers, as the other half interest would pass on a right of survivorship, rather than form a part of the deceased brother’s estate.
This is exactly what happened in this case. Martin died in 2015 and in April, 2017, Harold had the title to the property transferred into his own name, on the argument that it was owned by him and Martin, as joint tenants.
Deborah Love, Martin’s common-law spouse of 16 years, commenced an application before the Court, as against Harold. One of the grounds for Deborah’s position was that the extrinsic evidence surrounding the making of the Will, including a prior Will of February, 2009, supports a finding that Frances intended her sons to inherit the property as tenants in common.
The Court’s Decision
In reaching its decision, the Court emphasized its role in giving effect to the testamentary intention of the testator, as expressed in a Will. Justice Chozik gave consideration to the “armchair” rule, which requires a judge to place him or herself in the position of the testator at the time when the last Will was made, and to consider and weigh the circumstances which then existed and which might reasonably be expected to influence the testator in the disposition of her property.
Justice Chozik found that Frances intended to leave the property in question to her sons, as tenants in common. This intention was held to be clear from the Will when it is read as a whole, taking into account some of the extrinsic circumstances surrounding the making of the Will.
This decision certainly emphasizes how important it is that the Will clearly stipulates the terms of each bequest, particularly when it comes to large assets, such as real property.
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In preparing my other blogs this week, I spent some time considering the issue of how we might see the increased access to medical assistance in dying (MAID) impact our practice area. As such, I thought that I would finish off this series of blogs focusing on MAID with a hypothetical question I have not yet encountered in practice, but which is inevitably going to be raised: what impact, if any, does MAID have on a will challenge?
Our regular readers will already be well aware that capacity is task, time, and situation specific.
Presumably, the standard of capacity applying to the decision to access MAID is that required to make other personal care decisions, such as receiving or refusing medical treatment. Section 45 of the Substitute Decisions Act, 1992, defines incapacity for personal care as follows:
A person is incapable of personal care if the person is not able to understand information that is relevant to making a decision concerning his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is not able to appreciate the reasonably foreseeable consequences of a decision or lack of decision.
I have been unable to find any literature suggesting whether the standard may be somewhat heightened as a result of the significant impact of the decision to actually receive MAID.
The standard for testamentary capacity typically applied remains that set out in the old English authority of Banks v Goodfellow. While some have suggested that the standard of testamentary capacity be updated, we are generally concerned with the same, well-established criteria:
It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties—that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.
While, historically, standards of mental capacity were viewed as hierarchical, recent case law and commentary have strayed from this understanding, instead viewing the different standards of mental capacity as just that: different. Courts will consider whether an individual understood the nature of the decision being made and appreciated the reasonably foreseeable consequences of their decision.
Consent to MAID must be confirmed very shortly before it is administered, which restriction has been of considerable controversy. While possessing the capacity to confirm consent to obtain MAID may not correspond to testamentary capacity, it may nevertheless become evidence suggestive of a degree of mental capacity that is valuable (in conjunction with other evidence) in establishing that a last will and testament executed shortly before death is valid.
Whether the fact that MAID has been achieved will be important evidence on a will challenge in support of testamentary capacity or not remains to be seen, but it will be interesting to see how the laws relating to MAID evolve and how incidents of MAID may impact estate law over time.
Thank you for reading,
The testators died in 2008. The family realized there was a disagreement about the validity of their parents’ codicils that year but everything seemed to be on hold until Helen brought an application in 2015 to determine the validity of the codicil. In response, Krystyna brought a motion for summary judgment to dismiss Helen’s application on the basis it is statute barred pursuant to the Limitations Act, 2002. This motion was brought by Krystyna because she was interested in maintaining the force and effect of the codicils that gave her certain properties. Thereafter, Helen cross-motioned for summary judgment on her application.
Rule 20.04 of the Rules of Civil Procedure sets out the basis for summary judgment. Summary judgment shall be granted if: (a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or (b) if the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment. The Supreme Court of Canada in Hryniak v. Maudlin, 2014 SCC 7, determined that “a trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.”
With that in mind, Justice Dietrich found that Krystyna’s motion for summary judgment was appropriate for the following reasons (see para. 35):
- There were no material facts in dispute;
- No additional facts would emerge at trial;
- The application of an absolute limitation period was generally a fairly straightforward factual analysis;
- That based on the evidence before her, this matter can be resolved without a trial and that a trial of this narrow issue would be a more expensive and lengthy means of achieving a just result.
The Ontario Court of Appeal agreed with Justice Dietrich’s finding on this point. The panel emphasized how both parties brought summary judgment motions and filed affidavits with exhibits of their own.
In contrast, a similar summary judgment motion was unsuccessful in Birtzu v. McCron, 2017 ONSC 1420, 2019 ONCA 777 (on the issue of costs, only). The Court in Birtzu found that summary judgment was not appropriate and ordered costs against the defendant in any event of the cause (with reasons that were unreported). That said, the defendant was ultimately successful in proving that the plaintiffs were statute barred after a full trial on all issues.
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Doreen So and Celine Dookie
Today’s blog is a continuation of yesterday’s discussion regarding the limitations analysis in Piekiut v. Romoli, 2019 ONSC 1190, 2020 ONCA 26. No limitation period was found to apply where an estate trustee was simply seeking a determination and declaration as to whether certain codicils were valid or not valid.
The testators in this case died in 2008. They had 3 children, Helen, Victor, and Krystyna. A meeting took place in 2008 between all 3 children and a lawyer to discuss the administration of the Estate. During this meeting, Krystyna revealed, for the first time, the existence of codicils and declarations of gift that provide her with an interest in certain properties. Helen refused to acknowledge the validity of these new documents.
In 2015, Helen brings a court application. Her application was later amended, on the consent of parties, in 2018 to reflect that Helen was only seeking a declaration in respect of the validity of the codicils. Thus in 2019, Justice Dietrich’s decision was made in the context of Krystyna’s motion for summary judgment to dismiss Helen’s application on the basis that it was statute barred and Helen’s cross-motion for summary judgment on her application. Justice Dietrich found that, since Helen did not ask the court to determine the ultimate beneficiaries of the properties that were subject to the Codicil or to vest such properties in any particular beneficiary or beneficiaries, her application was not barred by the Limitations Act, 2002.
The Court of Appeal agreed with Justice Dietrich. The panel was also of the view that this case is distinguishable from Leibel v. Leibel, 2014 ONSC 4516 and Birtzu v. McCron, 2017 ONSC 1420 because of the consequential relief that was pleaded in those cases. Since the Court of Appeal decision did not go into the details of the relief sought in Birtzu (unlike its description of Leibel), it is helpful to understand the breadth of the Statement of Claim in Birtzu, which sought the following:
- an Order setting aside the Will;
- an Order setting aside the Deceased’s Powers of Attorney;
- an accounting of the entire Estate, as well as all financial transactions undertaken by the Deceased, or on his behalf, or on behalf of his Estate, from the date that the Deceased’s matrimonial home was sold in 2003 to the date of trial;
- Orders for the production and release of financial and medical information;
- an Order reversing all transactions undertaken by the Defendant, either directly or indirectly, without authority or in breach of her authority, or in breach of her fiduciary duties to the Deceased and to his beneficiaries, including the Plaintiffs;
- an Order tracing the property of the Deceased into the property owned by the Defendant, including her home;
- Orders for injunctive relief, including the issuance of a certificate of pending litigation;
- a Declaration that all property held in the name of the Defendant, or part thereof, is held by her for the benefit of the Plaintiffs;
- damages against the Defendant in the amount of at least $400,000.00, for conversion of property, breach of statutory duty, and/or breach of fiduciary duty;
- pre- and post- judgment interest; and
- costs fixed on a substantial indemnity basis, plus H.S.T.
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The main issue on appeal was whether Justice Dietrich was right in finding that the applicant could still ask the court to determine whether certain codicils were valid (or invalid) seven years after death. Justice Dietrich based her limitations analysis on whether this proceeding would fall under section 16(1)(a) of the Limitations Act, 2002 where there is no limitation period in respect of “a proceeding for a declaration if no consequential relief is sought”.
In her reasons, Justice Dietrich distinguished the case before her from the other limitations cases that have applied the two-year, basic limitation period to will challenges: Leibel v. Leibel, 2014 ONSC 4516, Birtzu v. McCron, 2017 ONSC 1420, and Shannon v. Hrabovsky, 2018 ONSC 6593. The case before her was different from Liebel, Birtzu, and Shannon because nothing had been done by the respondent beneficiary to propound the codicils that she had an interest in. If the proceeding was started differently in 2015, by the very beneficiary who has an interest in the codicils, then the estate trustee would have a limitations defence against the beneficiary. Since the beneficiary had done nothing, it remained opened to the estate trustee to commence an application for declaratory relief. Such declaratory relief is “a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs.’ It is restricted to a pronunciation on the parties’ rights” (see para. 46, 2019 ONSC 1190).
The Court of Appeal agreed that there was no limitation period in this case because the applicant did not seek consequential relief in addition to a determination of the validity or invalidity of the codicils. The Will had not been probated and nothing had been done for seven years to resolve the issue.
“In these circumstances, Helen was entitled to seek declaratory relief, simply to establish the validity, or lack of validity, of the codicils – to define the rights of the parties in order to avoid future disputes.”, Strathy C.J.O., MacPherson J.A., and Jamal J.A.
Thanks for reading and more on these limitation cases to follow later this week!
In our estate litigation practice, we commonly seek orders permitting registration of a Certificate of Pending Litigation (CPL) against title to property that is, for instance, an estate asset that a client is seeking to preserve until the litigation is concluded.
In order to obtain a CPL, one needs to demonstrate that an interest in land is in question, and in determining whether to order the issuance of a CPL, the following legal principles ought to be considered, as highlighted in Perruzza v Spatone:
- the threshold in respect of the “interest in land” is “whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed”;
- the onus is on the party opposing the order for a CPL to demonstrate that there is no triable issue with respect to whether the party seeking the CPL has “a reasonable claim to the interest in the land claimed”; and
- the governing test is that the Court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL ought to be granted.
We can see from the above that the threshold to obtain a CPL is not high; presumably the rationale being that it is more favourable to have a property in dispute secured during litigation than risk it being dissipated to the prejudice of a litigant.
Once a CPL is obtained it is prudent to assess the circumstances throughout the life of the litigation so that it is discharged at the appropriate time. As noted in Perruzza, factors the court can consider to discharge a CPL include whether the land is unique, whether there is an alternative claim for damages, whether there is or is not a willing purchaser and the harm if the CPL is or is not removed.
If the litigation stagnates, without reminders in place it is possible for the registered CPL to be left unaddressed. These were the circumstances in Novia v. Saccoia Estate (Trustee of). The CPL had remained on title for more than 20 years and even after the defendant’s death, ultimately forcing the defendant’s executor to obtain an order dismissing the action and discharging the CPL.
Thanks for reading and have a great day,