Category: Estate Litigation

14 Sep

The “Appropriate Means” factor under section 5 of the Limitations Act, 2002

Doreen So Continuing Legal Education, Estate Litigation, Litigation, Uncategorized Tags: , , 0 Comments

The Court of Appeal in Dass v. Kay, 2021 ONCA 565, was recently asked to reconsider the dismissal of a claim that was found to be statute barred pursuant to the Limitations Act, 2002.  The appellant in this case is the principal of two corporations, and the respondent was the principal of a mortgage brokerage.

In 2015, the mortgage brokerage was asked by the appellant’s brother to secure financing to purchase a commercial property on Drew Road in Toronto.  The Drew Road mortgage application listed the appellant as a guarantor and provided that one of his companies would be the tenant.  The Drew Road mortgage application ultimately was denied by Roynat, an affiliate of Scotiabank, although the real issue was that the appellant was never advised of the Drew Road mortgage application, and that the appellant had never agreed to be a guarantor or tenant.  The appellant only discovered the Drew Road mortgage application when he was trying to secure financing from Roynat for his own purposes.  The Drew Road mortgage application was brought to the applicant’s attention by Roynat on July 24, 2015, and he denied any knowledge or involvement with the application to Roynat then.  The appellant’s mortgage application was also ultimately denied by Roynat and he was advised by Roynat that the denial had nothing to do with the appellant’s association with the Drew Road mortgage.  On August 21, 2015, the appellant sought advice from his lawyer on the basis that he believed that his mortgage application was rejected because of the improper Drew Road mortgage application, and that the mortgage broker and his brother have harmed his reputation with Roynat.  His lawyer’s advice in 2015 was that the appellant had no evidence to prove that the mortgage broker’s actions resulted in the denial of the appellant’s mortgage, and it was the lawyer’s view that an action against the mortgage broker was inadvisable because it was unlikely to succeed.  Meanwhile, the appellant was also attempting to borrow from Scotiabank, and he was denied by Scotiabank as well.  The appellant was eventually able to secure financing but at much higher interest rates than those offered by Roynat and Scotiabank.

In 2018, when the appellant’s financing was due for renewal, the appellant approached Roynat and Scotiabank again.  This time, the appellant was told that he had been “blacklisted” due to Drew Road mortgage application.  Thereafter, the appellant issued a statement of claim on April 27, 2018 which sought damages for the reputational and commercial harm suffered by the appellant as a result of the mortgage broker’s submission of the Drew Road mortgage application.

The motions judge found that the appellant knew on July 24, 2015 of the unauthorized application, that he knew on July 27, 2015 of the mortgage broker’s involvement, and that he knew by August 21, 2015 that he suffered financial loss as a result of the unauthorized application because of the appellant’s email to his lawyer.  Of note, the Court of Appeal’s analysis of section 5(1)(a)(iv) of the Limitation Act, 2002 is found at paras. 22-28 of the decision.

First, the determination of whether a proceeding is an appropriate means to remedy an injury, loss, or damage depends on the factual and statutory context.

Second, the Court has recognized two non-exclusive factors that can operate to delay matters: (i) when the plaintiff relied on the defendant’s superior knowledge and expertise, particularly where the defendant has taken steps to ameliorate the plaintiff’s loss, and (ii) where there is an alternative dispute resolution process for an adequate remedy that has not yet been completed.

Third, the “appropriate means” factor has nothing to do with the viability of a claim, or any other practical and tactical reasons for waiting.

While the appellant contented that he was not advised of being “blacklisted” until 2018, this does not fall under the two non-exclusive factors set out above.  The limitation period does not commence only when one is able to assess whether litigation would be an attractive option (para. 46).  Moreover, the appellant’s reliance on the legal advice that he received in 2015 is irrelevant to the limitations analysis (para. 54).

Thanks for reading.

Doreen So

31 Aug

Can you commence a claim against an estate that doesn’t have an Estate Trustee?

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

Generally speaking an Estate Trustee has the ability to “step into the shoes” of the deceased individual as if they were the deceased individual. I have previously blogged, for example, about the Estate Trustee’s general ability to waive any duty of confidentiality owed to the deceased individual after death. This ability to represent the deceased individual generally extends to any legal proceedings commenced against the deceased individual’s estate, with it typically falling to the Estate Trustee to represent the deceased individual or their estate in the claim. But what happens when there is no Estate Trustee? Can a legal proceeding be commenced against a deceased individual when there is no Estate Trustee, and, if so, who represents the estate in such a claim?

Rule 9.02 of the Rules of Civil Procedure provides the general framework by which a claim can be commenced against the estate a deceased individual where there is no Estate Trustee, providing for the appointment of a “litigation administrator”. Specifically, rule 9.02(1) provides:

“Where it is sought to commence or continue a proceeding against the estate of a deceased person who has no executor or administrator, the court on motion may appoint a litigation administrator to represent the estate for the purposes of the proceeding”

The “litigation administrator” is typically a neutral third party whose sole role is to represent the estate in the proceeding. The authority of the litigation administrator does not extend beyond the representation of the estate in the legal proceeding, with the litigation administrator, for example, not having the authority to make distributions to the beneficiaries or otherwise administer the estate (i.e. pay debts or liabilities). To the extent it is desired to complete such tasks someone will need to be appointed as Estate Trustee or otherwise be provided with the authority by way of court order through something like a limited grant under section 29(3) of the Estates Act.

Thank you for reading.

Stuart Clark

26 Aug

Can an Estate be Sued 30 Years Later?

Juanita Valencia Estate Litigation, General Interest, In the News, News & Events Tags: , , , , , 0 Comments

A baby in a swimming pool reaching for a $1 bill. Music lovers would instantly recognize this description as the album cover of Nirvana’s 1991 album “Nevermind.”

Until recently, Spencer Elden – the baby in question – embraced the fame that came with being on the cover of one of the most recognizable albums of all time. Elden even recreated the notorious photo several times over the last 30 years to mark the album’s 10th, 20th, and 25th anniversaries. In those photos, Elden is wearing swimming trunks.

Earlier this week, Elden made headlines when the media learned that he was suing the parties involved for sexual exploitation. Elden argues that his parents never authorized the use of his photograph for the Nirvana album, and that the band used the image to promote their music at his expense. Elden is seeking $150,000.00 USD in damages from each of the 15 defendants, which include the photographer Kirk Weddle, the surviving band members, and Kurt Cobain’s Estate.

Elden’s lawsuit has many people wondering: can an Estate be sued 30 years after an incident took place?

In California, where Elden began his lawsuit, victims of sexual abuse crimes who were children at the time of the alleged incident have until their 40th birthday or 5 years from the date that they discovered their abuse to file a civil action.

What if this claim had been commenced in Ontario? On March 9, 2016, the Limitations Act, 2002, S.O. 2002, c. 24 Sched. B was amended to remove all limitation periods for civil claims based on sexual assault. Therefore, assuming that a judge would find that Elden’s lawsuit can be properly classified as sexual abuse, Elden would be well-within his rights in bringing this claim.

However, if a judge ultimately found that Elden’s claim is not a civil claim based on sexual assault, different limitation periods would apply. Generally, the Limitations Act, 2002, provides an individual with two years from the date on which a claim is “discovered” to commence a claim before it is statute barred. However, individuals intending to commence a claim against someone who has died, such as Kurt Cobain, must also consider the much stricter limitation period imposed by section 38 of the Trustee Act, R.S.O. 1990, c. T.23.

Section 38 of the Trustee Act imposes a strict two year limitation period from the date of death for any individual to commence a claim against a deceased individual in tort. This limitation period is much more strict, as it is not subject to the same “discoverability” principle as the limitation period imposed by the Limitations Act. We have previously blogged about the limitation period imposed by section 38 of the Trustee Act here.

It remains to be seen whether Elden will be successful in his claim. However, this case should serve as a reminder to Estate Trustees and solicitors that Estates may be held accountable for events that took place well before the Deceased’s death, depending on the nature of the claim.

Thank you for reading,

Juanita Valencia

19 Aug

Unexecuted Will Found to be Fully Effective in British Columbia

Sanaya Mistry Charities, Estate & Trust, Estate Litigation, Estate Planning, Wills Tags: , , 0 Comments

In the recent decision of Bishop Estate v. Sheardown, 2021 BCSC 1571, pursuant to the court’s curative powers under section 58 of the Wills, Estates and Succession Act, SBC 2009, c 13, (the “WESA”) the court found an unexecuted Will to be fully effective.

In this case, Marilyn Bishop (the “Deceased” or “Ms. Bishop“) had given instructions, reviewed the draft and made a few minor clarifications in respect of her new will (the “2020 Will”). The Deceased had scheduled an appointment with her lawyer to sign the Will in March 2020 but subsequently cancelled the appointment. The Deceased died four months later, at the age of 76.

James Thrower was the executor of the Deceased’s previous will (the “2014 Will”), which named her husband (now deceased) as the sole beneficiary and the respondent Kelowna General Hospital Foundation (the “Foundation”) as the beneficiary in the event that her husband predeceased her. The respondents Robert Sheardown and Deborah Sheardown (the “Sheardowns”) are Ms. Bishop’s nephew and niece-in-law, who she named as executors and beneficiaries of her unexecuted 2020 Will. It should be noted that the Deceased and her husband had prepared mirror wills in 2014.

Mr. Thrower was seeking clarification from the court as to “whether Ms. Bishop’s unexecuted 2020 Will represents her testamentary intention and should be ordered to be effective under s. 58 of the Wills, Estates and Succession Act.”

The Foundation submitted that section 58 of the WESA ““cannot be used to validate a will that is substantially invalid” [emphasis added], citing Hadley Estate(Re), 2017 BCCA 311”. The court noted that in fact, Hadley Estate states that “[a]lthough s. 58 cannot be used to uphold a will that is substantively invalid, it permits the court to cure issues of formal invalidity…” [emphasis added].” Moreover, the court clarified that section 58 of the WESA “does not specify a minimal level of execution or other formal requirement for a testamentary document to be found fully effective” and therefore, ““substantial invalidity” is not a bar to an order under s. 58.”

In order to determine if the unexecuted 2020 Will is valid, the court considered whether (i) the 2020 Will was authentic, and (ii) it represented the Deceased’s fixed and final intentions testamentary intentions.

Authenticity

The authenticity of the 2020 Will was not in question. The Deceased made an appointment with her lawyer (“Mr. Livingston“) and specifically instructed him to prepare a new will naming the new executor and alternate executor, removing the gift to the Foundation, including a possibility of a gift to local charities and to the Sheardowns’ daughter, and giving the remainder of the residue of her estate to the Sheardowns equally with a gift over to their children.

Mr. Livingston prepared a draft pursuant to these instructions. The draft was reviewed by Ms. Bishop and she provided clarifications via a note. Mr. Livingston prepared the final draft on the basis of these instructions and the appointment to sign the 2020 Will was scheduled for March 20, 2020.

Fixed and Final Testamentary Intention

The court inferred “that Ms. Bishop could not attend the appointment because she was not able to leave the care home” as there was evidence to prove that at that time in March 2020 (during the COVID-19 pandemic), “Ms. Bishop’s care home prohibited residents to leave other than for medical appointments”.

In order to determine whether the unexecuted 2020 Will represents the Deceased’s “fixed and final intention”, the court analyzed “whether its departure from the formal testamentary requirements considering the context and contents of the alleged substantial invalidity make it impossible to establish testamentary intention” and also “whether the failure to execute the unexecuted 2020 will from when it was ready for execution until Ms. Bishop’s death nullifies any intention Ms. Bishop may have had when she made her appointment to execute it in March 2020.”

Among other things, the court considered the following:

  1. The 2020 Will departs from testamentary requirements in that it is not signed by the will-maker and that the will-maker’s signature was not witnessed.
  2. After the death of the Deceased’s husband, the Sheardowns moved to Kamloops, BC and became a regular part of her life.
  3. The Deceased’s health had declined and so she had sold her home and mobile home and recently moved into a care home.
  4. The Deceased went to the same law firm that prepared her 2014 Will and met with Mr. Livingston to specifically discuss her plans for her estate.
  5. Mr. Livingston’s evidence was that the Deceased gave him specific instructions regarding the 2020 Will, including the fact that she did not want to include the Foundation as a beneficiary because she did not have a connection to the Foundation and that it was her husband’s idea to include them in their previous wills because he was either from Kelowna or spent a considerable amount of time there.
  6. Mr. Livingston was satisfied that the Deceased had the capacity to make a new will and was not under any undue influence.
  7. After reviewing the draft, the Deceased did not suggest any new changes but rather answered the questions of Mr. Livingston in her note to him.
  8. Although the Foundation argued the Deceased’s note to Mr. Livingston which stated “No charities at this time” [emphasis added] indicated that the Deceased’s “intentions lacked finality”, the court referenced Estate of Young, 2015 BCSC 182 noting that “a fixed and final intention cannot mean that the intention is irrevocable, since wills are, by their nature, revocable until the testator’s death” and “the intention need only “be fixed and final at the material time”.”

The court concluded that the Deceased’s fixed and final intention as of March 17, 2020 was to execute the 2020 Will. The court then considered “whether the failure to execute the unexecuted 2020 will over the following four months indicates a change in Ms. Bishop’s intentions.”

The Foundation noted that the Deceased did not execute the 2020 Will despite the remote execution procedures coming into effect on May 19, 2020. However, the court found that there was no evidence that the Deceased was aware of this option and as a result, “her failure to execute the will either remotely pursuant to the May 19, 2020 order or on her own [did] not undermine her testamentary intentions.”

The Foundation further noted that the Deceased did not order the destruction of her 2014 Will. The court was not persuaded that the Deceased’s lack of instruction to destroy her 2014 Will was evidence that she intended for it to be valid “in the absence of any evidence that she was advised to destroy her 2014 will and informed of the consequences of not doing so”.

The court was “satisfied that the unexecuted 2020 will represents Ms. Bishop’s fixed and final intentions for the disposal of her assets” and concluded as follows:

“Ms. Bishop provided simple, clear instructions as to what she wanted in her will and then responded with minor clarifications after reviewing the draft. It was clear that Ms. Bishop wanted to remove Kelowna General Hospital Foundation as a beneficiary of her will. The four-month period between her appointment to execute the unexecuted 2020 will and her death does not undermine her fixed and final intention to distribute her assets according to the unexecuted 2020 will.”

Accordingly, the court ordered the unexecuted 2020 Will to be fully effective, pursuant to the court’s curative power under s 58 of the WESA.

Thank you for reading.

Sanaya Mistry

17 Aug

Considerations for Determining the Validity of Powers of Attorney and Appointing Guardians for Property and Personal Care

Sanaya Mistry Capacity, Estate & Trust, Estate Litigation, Guardianship, Litigation, Power of Attorney Tags: , , , , , 0 Comments

In yesterday’s blog, I discussed the recent decision in Rudin-Brown et al v. Brown, 2021 ONSC 3366, focusing on the court’s decision in respect of the admissibility and weight given to the audio recordings of Carolyn Brown’s telephone conversations.

In today’s blog, I discuss the factors considered by the court in (i) determining that the 2016 powers of attorney were invalid, and (ii) declaring Carolyn’s 2009 power of attorney for property to be operative, and (iii) appointing Jeanne and Missy as Carolyn’s co-guardians of the person.

The court applied the factors outlined in  Royal Trust Corporation of Canada v. Saunders,  [2006] OJ No 2291, to determine whether or not Carolyn’s 2016 powers of attorney were executed under suspicious circumstances. Particularly, the court considered the following:

  1. The extent of physical and mental impairment of the grantor around the time the powers of attorney were signed;
  2. Whether the powers of attorney in question constitutes a significant change from the former powers of attorney;
  3. The factual circumstances surrounding the execution of the powers of attorney; and
  4. Whether any grantee was instrumental in the preparation of the powers of attorney.

Note, the consideration of “whether the will in question generally seems to make testamentary sense” does not apply to powers of attorney.

The court noted that, among other things, (i) there was evidence that Carolyn was having memory issues at the time the powers of attorney were signed, (ii) after visiting two law firms without success, Gordon downloaded forms for powers of attorney and some will templates from the internet, and (iii) one of the witnesses to the powers of attorney testified that Carolyn seemed “vaguely puzzled” the day she witnessed Carolyn’s signature and also stated that Carolyn said that Gordon had told her to sign the powers of attorney.

The court concluded that the powers of attorney were executed under suspicious circumstances in respect of capacity and undue influence. The court also concluded that Gordon failed to prove that Carolyn had capacity to execute the powers of attorney and declared the powers of attorney to be invalid. In addition, the court found that Gordon “failed to show that Carolyn signed the powers of attorney as a result of her own “full, free and informed thought” and has failed to rebut the presumption of undue influence arising from his and Carolyn’s relationship” and therefore concluded that “even if Carolyn had the capacity to sign one or both powers of attorney, they are not valid due to undue influence.”

In respect of appointing guardians of property and personal care for Carolyn, the court did not solely rely on Carolyn’s 2009 powers of attorney, but rather entered into a detailed analysis to determine who would be appointed as Carolyn’s guardians. As noted by Justice H. J. Williams,

“In appointing a guardian for property, the court shall consider whether the proposed guardian is the attorney under a continuing power of attorney, the incapable person’s current wishes and the closeness of the applicant’s relationship to the incapable person. Where there is an ongoing valid power of attorney, cases in Ontario and elsewhere have held that the court must first determine whether there is strong evidence of misconduct or neglect on the part of the attorney before the court should ignore the wishes of the donor.”

The court did “not hesitate to find that, in accordance with Carolyn’s 2009 power of attorney for property, Jeanne should be Carolyn’s guardian for property and that Carter should be the alternative attorney.” The court noted that in Carolyn’s 2009 power of attorney for personal care, Carolyn had named Gordon and Missy as her attorneys for personal care. While the court was satisfied that Missy would be able to fulfill the duties of guardian of the person, the court was not satisfied that Gordon would be able to do so for several reasons, some of which are outlined below:

  1. “A guardian must make decisions that are in the incapable person’s best interests”, which Gordon had failed to do consistently for Carolyn.
  2. “A guardian must seek to foster regular personal contact between the incapable person and supportive family members and friends” and Gordon failed to foster Carolyn’s relationships with Missy or Jeanne.
  3. “Gordon did not consult anyone other than Carolyn in preparing his guardianship plan.”
  4. Gordon intended to “discontinue a companion service for Carolyn that had been recommended for her and that she had been receiving and apparently enjoying.” Although Gordon said that “Carolyn does not remember the visits and is unhappy with how much they cost”, the court found that “it is more likely that Gordon was unhappy about the cost.”
  5. The court was also concerned by the fact that Gordon had failed to follow court orders. He failed to comply with Justice Kershman’s “order to stop recording Carolyn’s conversations.” It is important to note that the court found that “it was evident from Gordon’s evidence that he felt justified in ignoring a court order if he did not agree with it.”

In summary, the court concluded that “it is in Carolyn’s best interests for Missy and Jeanne to be jointly appointed as Carolyn’s full guardians of the person.”

Thank you for reading.

Sanaya Mistry

 

28 Jun

Electronic Signatures Still not an Option for Wills in Ontario

Nick Esterbauer Estate Litigation, Estate Planning, Wills Tags: , , , , , , 0 Comments

Our readers will already know about the recent approval of legislation providing for will validation in Ontario under Bill 245, the Accelerating Access to Justice Act, 2021.  The act received Royal Assent in April 2021.  The changes under Schedule 9, which addresses amendments of the Succession Law Reform Act, RSO 1990, c S.26 (the “SLRA”), come into effect on January 1, 2022 (other than the update to virtual will witnessing in counterpart, which has already been made permanent under the revised Section 4 of the SLRA).

As of January 1, 2022, a new Section 21.1 of the SLRA will read as follows:

Court-ordered validity

(1) If the Superior Court of Justice is satisfied that a document or writing that was not properly executed or made under this Act sets out the testamentary intentions of a deceased or an intention of a deceased to revoke, alter or revive a will of the deceased, the Court may, on application, order that the document or writing is as valid and fully effective as the will of the deceased, or as the revocation, alteration or revival of the will of the deceased, as if it had been properly executed or made.

No electronic wills

(2) Subsection (1) is subject to section 31 of the Electronic Commerce Act, 2000.

Transition

(3)Subsection (1) applies if the deceased died on or after the day section 5 of Schedule 9 to the Accelerating Access to Justice Act, 2021 came into force.

We have seen Section 21.1 referred to as both a will-validation provision and as a “substantial compliance” provision.  In fact, Section 21.1 does not specify that substantial compliance with the formal requirements for a valid will under the SLRA is required and it may, accordingly be more accurately referred to as a will-validation provision.  Either way, this is a significant change to the law of validity of wills in Ontario and our province, as of January 1, 2022, will no longer be a strict compliance jurisdiction where some documents clearly intended to function as a valid will are rejected and deemed ineffective for technical reasons.

Notably, the legislation carves out the use of electronic signatures.  Some estate practitioners had been hopeful that electronic signatures would be accepted under the proposed estate legislative reform, given the recent increased acceptance of electronic signatures in the swearing/commissioning of affidavits and other legal documents and options available to verify their authenticity.  Section 31 of the Electronic Commerce Act, 2000, SO 2000, c 17, excludes the application of that act to wills, codicils, testamentary trusts, and powers of attorney.

Accordingly, it appears that a will signed by the testator or witnesses using electronic means cannot be validated by the Court, even after the new Section 21.1 is introduced to the SLRA.  For now (including after January 1 of next year), all wills still require actual, “wet” signatures in order to be valid.  Furthermore, even if a will may be validated by the Court under Section 21.1, the uncertainty, delay, and expense relating to applying for court-ordered validation of a will may still be best avoided by seeking an experienced estate planning lawyer’s assistance in the preparation of a Last Will and Testament.

Thank you for reading.

Nick Esterbauer

22 Jun

How Can We Combat Ageism in Law?

Natalia R. Angelini Elder Law, Estate Litigation, General Interest, Uncategorized Tags: , 0 Comments

The pandemic spotlighted our treatment of older Ontarians, including from the vantage point of discrimination based on age in health care. The problem showed itself in various ways, including through crowded hospitals discharging elderly patients who still needed care and through seniors in long-term care homes with COVID-19 having struggled to get hospital treatment. Reportedly, only 20% of those in long-term care in Ontario who died from COVID-19 were transferred to hospitals, the tragic result being thousands of critically ill residents left to die in facilities not armed to manage the virus.

Ageism transcends the health care system, occurring consciously or unconsciously in other areas, including in our law practices. In Alex Procope’s article How to Combat Ageism in the Practice of Law, he speaks to the World Health Organization’s (WHO) recently published Global Report on Ageism, and its reinforcement of the need for us to recognize and resist ageism in our practice.

To recognize it, Mr. Procope looks at the definition, which the WHO Report describes as stereotypes (how we think), prejudice (how we feel) and discrimination (how we act) directed towards people on the basis of their age. He also provides examples of ageism in play in estate litigation, including through (i) a testator whose will is subject to challenge being depicted as susceptible to undue influence due to their age, (ii) the rights to privacy and due process being downplayed in guardianship disputes, and (iii) through requiring a potential client to submit to a capacity assessment before proceeding with the drafting of a will.

To combat ageism, Mr. Procope considers strategies that he employs, including by approaching cases with the rights and autonomies of the older client as paramount. By seeking to understand the culture, race, interests etc. of older persons, their individuality can be the focus. Additionally, import is given to using non-discriminatory narrative. For instance, he does not cite a person’s age as evidence of incapacity, and he links a person’s frailties to specific evidence of the various factors at play in the case, rather than to age.

These materials serve as a reminder to me that ageism can present itself in both obvious and subtle ways, and that we all have opportunities to address it in our practices.

Thanks for reading and have a great day,

Natalia Angelini

10 Jun

Dependants and Their Entitlement to a Deceased’s Estate – A summary of Earl v. McAllister, 2021 ONSC 4050

Sanaya Mistry Estate & Trust, Estate Litigation, Litigation, Pension Benefits, Support After Death Tags: , , , 0 Comments

In the recent decision of Earl v. McAllister, 2021 ONSC 4050, the Divisional Court ordered 100% of the net estate of the Deceased to be used for the benefit of the minor dependants, to the exclusion of the Deceased’s wife.

Leo McAllister (the “Deceased”) died on May 3, 2017. He is survived by his wife (Barbara McAllister) and his two minor sons (the “Sons”) from a previous relationship with Tammy Earl. When the Deceased learned he was dying, he started to put his affairs in order, including executing a Will and leaving his estate (the “Estate”) to his wife and signing consents required to transfer the designed beneficiaries on one of his pensions from Ms. McAllister to his Sons.

Ms. Earl brought an application on behalf of her Sons, for their support, pursuant to Part V of the Succession Law Reform Act. The Applicant argued that for the purposes of this application, the value of two pensions and a life insurance policy should be included in the value of the Estate of the Deceased, failing which, the Estate would have a shortfall of $12,926.82 due to the Estate’s liabilities. She also argued that the entirety of the Estate should be used for the benefit of her Sons, as they are both dependants of the Deceased.

The Application Judge agreed that one of the pensions and the life insurance proceeds should be included in the value of the Estate, valuing it at $167,062.52. The Application Judge ordered the net value of the Estate to be split in two halves, one to be used for the benefit of the Sons and one to be distributed to Ms. McAllister. The Application Judge also ordered $30,000 of the Sons’ half to be paid into Court, to be paid to the Sons when they turn 18.

Ms. Earl appealed this decision, arguing that both pensions should be included in the value of the Estate, the entirety of the Estate should be used for the benefit of her Sons and that the $30,000 which the Application Judge ordered to be paid into court should now be paid out to the Appellant, for the benefit of the Sons.

For the purposes of this article, we will focus on the Divisional Court’s decision in respect of the whether to include both pensions in the value of the Estate and the manner in which the Estate is to be distributed.

Pensions

The Deceased had  two pension plans. The first was from the Union’s Province of Ontario Pension Plan, the value of which was included in the Estate by the Application Judge. The second was the Union’s “Canada” Pension Plan (administered in the US), which provided for a pre-retirement surviving spouse benefit under which the Respondent, as a surviving spouse, was entitled to a lump sum payment of $88,117.40.

The Divisional Court found that it was not open to the Deceased to designate someone other than his spouse to receive the pre-retirement benefit under the second pension and while the Respondent could have waived her entitlement to the receipt of that benefit, she could not be deprived of that benefit without her agreement.

As a result, the second pension was not included in the value of the Estate.

 

Distribution of the Net Value of The Estate

The Divisional Court found that in determining the issues between the parties, the needs of the Sons in the balancing exercise should be paramount. The court weighed the financial circumstances of the Sons against the financial circumstances of the Respondent.

Particularly, the court noted that the Sons live in precarious financial circumstances and there is very little income to support them apart from public finances and loans. The Sons live in the home of their mother’s parents. The appellant’s affidavit contained information concerning monthly expenses and the loss of the Deceased’s group health benefits. The Applicant’s evidence was that her yearly expenses exceed her income. Further, the Deceased was active in his Sons’ lives and paid the Appellant $300 per week to support his Sons until his death.

In contrast, the Respondent was not financially dependant on the Deceased, had good income of approximately $100,000 annually, had no extraordinary expenses, owned a home (although with a mortgage) and had made some provisions for her own pension. The Respondent and the Deceased had been married for just over two years at the time of death. The Respondent was also to continue to receive the benefits from the second pension.

The Divisional Court cited  Madore-Ogilvie v Ogilvie Estate (2008), 88 O.R. (3d) 481 (C.A.), noting the following:

“Where there are insufficient assets to adequately provide for any or all of a deceased’s dependants, the circumstances of the case may warrant the exercise of an application judge’s discretion to use the limited assets for the benefit only of the minor dependants, to the exclusion of his wife.”

The Divisional Court concluded that in the present case, the circumstances warranted the use of the limited assets for the benefit of the Sons only, to the exclusion of the Respondent.

Thank you for reading.

Sanaya Mistry

04 Jun

Dickens’ Provisions: Reversion of Literary Rights to an Author’s Estate

Paul Emile Trudelle Estate Litigation Tags: , , , , , , , 2 Comments

Estates of artists pose problems. Issues arise with respect to the ownership, use and disposal of the artist’s works.

An important consideration relating to copyright and estate assets is the concept of “Dickens provision” under Canada’s copyright laws.

Briefly put and simplified, the Copyright Act creates reversionary rights with respect to the heirs of an author. Notwithstanding any assignment agreement made during the lifetime of the author, the author’s copyright reverts to the author’s estate 25 years after the death of the author.

The provisions are technical, and there are important notice provisions that apply and must be followed before the reversion can occur. This was the issue in the 2002 decision of Anne of Green Gables Licensing Authority Inc. v. Avonlea Traditions Inc.

In Anne of Green Gables Licensing Authority Inc. v. Avonlea Traditions Inc., the court sets out the reasoning behind the provisions: “This complex statutory framework of reversionary copyright was originally created in England to relieve against the hardship suffered by the impoverished families of deceased authors”. The court goes on to note that the reversionary rights have been repealed in England, but remain in force in Canada.

The Dickens provisions were applied in the matter of Winkler v. Roy. There, Thomas Kelley, who authored several books on the Black Donnellys[1], died. The court determined that under the Dickens provisions of the Copyright Act, his estate was the owner of the copyright, notwithstanding the fact that Kelley assigned the rights during his lifetime. The assignee would own the copyright until a date 25 years from Kelley’s death, and thereafter, the copyright would belong to his estate.

Subsequently, the Kelley estate sued another author, Nate Hendley for copyright violations, alleging that Hendley copied Kelley’s story of the events relating to the Donnellys. The action was dismissed. The court held that Kelley presented his version of the story as being true historical facts. The rule that “there is no copyright in facts” applied, even if some of the facts as presented by Kelley were subsequently shown to be untrue and thus literary creations.

One takeaway from all of this is that estates of artists require special care and consideration. Expert advice is essential to their proper administration. A second takeaway is to avoid feuding with your neighbours.

Have a great weekend.

Paul Trudelle

 

[1] On February 4, 1890, after years of feuding, a mob of townsfolk attacked the Donnelly homestead, leaving five members of the Donnelly family dead and their farm burned to the ground. Despite two trials, no one was ever convicted of the murders.

A podcast on the event, written by Nate Hendley, can be found here.

01 Jun

Toller James Montague Cranston (Estate of): Lose Big, Pay Big

Arielle Di Iulio Estate Litigation, Litigation Tags: , , 0 Comments

As in other areas of civil litigation, the general costs principle of “loser pays” applies in estate litigation. The recent costs decision of Toller James Montague Cranston (Estate of), 2021 ONSC 3704, is an interesting example of just how much a loser in estate litigation could have to pay.

In Toller, the Estate Trustee of the estate of Toller Cranston was compelled to bring an application to pass her accounts by the two other beneficiaries of the estate. These beneficiaries (the “Objectors“) raised over 300 objections to various expenses paid by the Estate Trustee personally to administer the estate in Mexico. The Objectors were unsuccessful on all of their objections except for five. They also made allegations of fraud and theft by the Estate Trustee which were ultimately unproven. The Estate Trustee sought costs on a substantial indemnity scale of $390,602.98 inclusive of HST and disbursements, payable by the Objectors personally. The Objectors took the position that the requested amount was not reasonable or proportionate in the circumstances.

In his costs decision, the Honourable Justice Robert Smith relied on the factors set out in Rule 57 of the Rules of Civil Procedure to help determine the appropriate costs award to make. He also relied on the case of Estate of Francoise Poitras v. Canadian Cancer Society, 2021 ONSC 406, for a summary of the legal principles applicable to costs in estate litigation, which include:

  • An estate trustee is generally entitled to be indemnified for all reasonably incurred costs in the administration of an estate, including the legal costs of an action reasonably defended, to the extent these costs are not recovered from another person.
  • The winning party in estate litigation is usually entitled to reasonable costs from the losing party.
  • A court may deny cost recovery by an estate trustee, in whole or in part, if the trustee acted unreasonably or in substance for his or her own benefit, rather than for the benefit of the estate.
  • If the estate trustee acted reasonably, the court may require the other party or parties to pay costs or make a blended order requiring the losing party to pay some costs and the estate to pay the balance.
  • In fixing costs, the court must determine the fair and reasonable amount that a party should pay in the particular circumstances of the case.

In the case at hand, the Estate Trustee won by a landslide. What is more, given the complexity of the estate and the large number of objections raised, the Estate Trustee was forced to spend a significant amount of time and legal expenses to respond to the 295 meritless objections that had been raised. Justice Smith also found that the Objectors acted unreasonably in refusing to narrow the issues to be decided before the hearing and to then abandon approximately half of their objections at the hearing, after time and expenses had already been incurred on those objections. The Objectors’ unfounded allegations of misconduct by the Estate Trustee also warranted an elevated costs award.  For these reasons and more, Justice Smith concluded that the bulk of the Estate Trustee’s legal costs should be paid by the Objectors.

It was ultimately decided that the Objectors would pay costs to the Estate Trustee on a substantial indemnity basis, reduced by an amount to account for the Objectors’ partial success. This resulted in a notably high costs award of $325,000.00, inclusive of disbursements and HST, payable to the Estate Trustee by the Objectors. It was further ordered that the balance of the Estate Trustee’s legal costs be paid to her from the estate.

The Toller decision shows that the court will not shy away from holding a losing party personally liable for significant costs in estate disputes where the court deems such an award to be appropriate in its discretion. To help limit personal liability to costs in the event of a loss, parties should endeavour to act reasonably from the beginning through to the end of the litigation.

Thanks for reading!

Arielle Di Iulio

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