Category: Estate & Trust

08 Apr

Incapacity to Sue under section 7 of the Limitations Act, 2002

Doreen So Capacity, Continuing Legal Education, Estate & Trust, Estate Litigation, Ethical Issues, Uncategorized Tags: , , , , 0 Comments

The basic limitation period under section 4 of the Limitations Act, 2002 provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.  However, pursuant to section 7(1) of the Act,  the “clock” does not run when the person with the claim,

(a)  is incapable of commencing a proceeding in respect of the claim because of his or her physical, mental or psychological condition; and

(b)  is not represented by a litigation guardian in relation to the claim.

A person is also presumed to be capable of commencing a proceeding in respect of a claim at all time unless the contrary is proved (section 7(2)), although minors are dealt with separately under section 6 of the Act.

The issue of the plaintiff’s capacity to commence a proceeding in respect of his claim was considered at length by the Court of Appeal in Carmichael v. GlaxoSmithKline Inc., 2020 ONCA 447Carmichael is a tragic case involving the murder of the plaintiff’s 11 year old son.  The plaintiff strangled his son to death in 2004 when he was suffering from mental illness and psychotic delusions.  During this time, the plaintiff was also taking an anti-depressant that was manufactured by the defendant drug company.  The plaintiff was charged with murder and he was found to be not criminally responsible as a result of his mental disorder.  He later received an absolute discharge from the Ontario Review Board on December 2, 2009.  Nearly two years after that, the plaintiff commenced his claims against the drug company on October 5, 2011.

The defendant drug company brought a motion for summary judgment to dismiss the plaintiff’s claim as statute barred.  The motions judge dismissed the motion because he found that the plaintiff was incapable of commencing a proceeding because of his psychological condition until the day of his absolute discharge from the Ontario Review Board.  The Court of Appeal disagreed.

The Court of Appeal affirmed the use of the Huang/Hengeveld indicators as a list of non-exhaustive, objectively verifiable indicators of incapacity under section 7(1)(a) of the Act (see paras. 94-96):

  • a person’s ability to know or understand the minimum choices or decisions required to make them;
  • an appreciation of the consequences and effects of his or her choices or decisions;
  • an appreciation of the nature of the proceedings;
  • a person’s ability to choose and keep counsel;
  • a person’s ability to represent him or herself;
  • a person’s ability to distinguish between the relevant and irrelevant issues; and,
  • a person’s mistaken beliefs regarding the law or court procedures.

Moreover, the plaintiff’s physical, mental, or psychological condition must be the cause for the incapacity in order to meet section 7(1)(a).  The incapacity cannot arise from other sources, such as lack of sophistication, education, or cultural differences (para. 101).

The Court of Appeal ultimately found that the plaintiff had the capacity to sue the defendant drug company prior to his absolute discharge from the Ontario Review Board.  The Court disagreed with the motions judge’s view of the plaintiff’s expert evidence.  The plaintiff’s expert witness was criticized for never having prepared a capacity assessment before and for making conclusions that were unsupported by the evidence.  Rather,

“The evidence shows that Mr. Carmichael had several reasons for not suing GSK before December 2, 2009: he did not believe he had the necessary expert evidence until he received the genetic test from Dr. Lucire in October 2009; he was worried about repercussions if the Hospital decided that he was not taking responsibility for his actions; and he was concerned for his own and his family’s well-being. These are understandable reasons for not commencing a lawsuit. But in my view, none of these reasons, alone or together, prove that Mr. Carmichael was incapable of suing GSK until December 2, 2009 because of his psychological condition.” (para. 163)

Leave to appeal to the Supreme Court of Canada was denied last week.

Thanks for reading!

Doreen So

06 Apr

Hull on Estates #610 – Inherent Jurisdiction and Standing in Trust Litigation

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

 This week on Hull on Estates, Natalia Angelini and Garrett Horrocks discuss the recent Ontario Court of Appeal decision in Carroll v Toronto Dominion Bank, 2021 ONCA 38, pertaining to the issue of standing in trust litigation.

 

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

Click here for more information on Natalia Angelini

Click here for more information on Garrett Horrocks

05 Apr

A Tale of Substantial Indemnity: Zachariadis Estate v. Giannopoulos

Doreen So Continuing Legal Education, Estate & Trust, Estate Litigation, Executors and Trustees, Litigation, Uncategorized Tags: , , 0 Comments

Dr. Zachariadis was divorced and estranged from his two daughters.  After his divorce, he began a romantic relationship with Ms. Giannopoulos.  They were together for almost twenty years as common law spouses until Dr. Zachariadis’ passing.  A year before his death, Dr. Zachariadis moved in with Ms. Giannopoulos and they had plans to marry.  Dr. Zachariadis transferred his medical practice to Ms. Giannopoulos’ son Aris, and he gave Ms. Giannopoulos a bank draft for $700,000.00 which she deposited into her own bank account.  He died within six months of that bank draft.

Dr. Zachariadis did not have a relationship with his daughters from his first marriage.  He was not invited to their weddings and he has never met his grandchildren.  Dr. Zachariadis died without a Will and his daughters became the estate trustees and beneficiaries of this Estate.  More than two years after Dr. Zachariadis’ passing, the daughters commenced an action against Ms. Giannopoulos to recover the payment of $700,000.00 to her on the basis of breach of trust, fraud at equity, conversion and unjust enrichment.  The action was dismissed on a motion of summary judgment by Justice Koehnen.  The appeal of Justice Koehnen’s decision, 2019 ONSC 6505, and his Honour’s costs order, 2020 ONSC 588, were also dismissed by the Court of Appeal, 2021 ONCA 158.

 

On the motion for summary judgment, Justice Koehnen found that the daughters were statute barred by section 38(3) of the Trustee Act in failing to commence their claims within two years of Dr. Zachariadis’ death.  The daughters failed to make out any fraudulent concealment on Ms. Giannopoulos’ part that would toll the operation of section 38(3).  Rather, Justice Koehnen found that there was no positive obligation on Ms. Giannopoulos’ part to tell the daughters about the payment, and he found that the payment was a gift in any event.  All of which were upheld by the Court of Appeal.

The Court of Appeal also found that there was no basis to interfere with Justice Koehnen’s costs order.  The Estate and the daughters, in their personal capacities, were ordered to pay Giannopoulos costs of $199,602.46 on a substantial indemnity scale.   The allegations of fraud in the underlying claim were unsupported and pursued to the end.  Justice Koehnen noted that the daughters could have pursued their claims on the basis of constructive trust and resulting trust without going so far as alleging fraud.  The daughters were also found to have taken unnecessarily aggressive steps and to have lengthened the proceeding due to their lack of cooperation with Ms. Giannopoulos’ counsel while Ms. Giannopoulos’ offers to settle were weighed against them.  Issue was also taken with the length of the daughters’ materials which were noted to be in violation of the page limits and other formatting requirements for facta.    Lastly, Justice Koehnen rejected the daughters’ argument that they were only pursuing the claim to ensure the due administration of the Estate and out of their concern that the Estate would have sufficient funds to pay its CRA liability. Interestingly enough, Justice Koehnen commented that, if that were the case, the daughters could have simply turned over the claim for CRA to pursue.

Thanks for reading!

Doreen So 

18 Mar

Standing and the Inherent Jurisdiction of Courts in Trust Matters

Sanaya Mistry Estate & Trust, Executors and Trustees, Trustees Tags: , , , 0 Comments

In the recent decision of Carroll v Toronto-Dominion Bank, 2021 ONCA 38, the Ontario Court of Appeal dismissed the appeal of an applicant for lack of standing to bring the application, notwithstanding that the application related to an alleged breach of trust. Standing is required to sue for breaches of trust.

In this matter, the applicant, Marion Carroll, was formerly employed by Toronto-Dominion Bank (“TD Bank”), as a manager who was responsible for the compliance of a group of TD Bank’s subsidiaries relating to the management of mutual funds. Among other things, Ms. Carroll claimed to have exposed regulatory non-compliance and breaches of mutual funds trusts by TD Bank’s subsidiaries. In 2019, Ms. Carroll issued an application against TD Bank with respect to its role as Trustee of designated mutual funds.

The motion’s judge dismissed the application pursuant to Rule 21.01 of the Rules of Civil Procedure, finding that Ms. Carroll lacked standing to bring the application. Ms. Carroll appealed that ruling to the Ontario Court of Appeal.

While the Ontario Court of Appeal addressed other issues within this appeal, the focus of this article will be to highlight the Court’s finding that standing is required to sue for breaches of trust.

Ms. Carroll’s position was that once a court is informed of allegations of a potential breach of trust, the inherent jurisdiction of courts to administer trusts makes standing “subordinate, and largely irrelevant, where allegations of fraudulent or improper misconduct are made against a trustee,” thereby obliging the courts to resolve the litigation. Ms. Carroll also furthered the position that the courts of equity have removed the requirement of standing to protect the interests of incapacitated beneficiaries who cannot effectively sue to enforce trust obligations.

The Court rejected Ms. Carroll’s position stating that the claim that standing is subordinate or irrelevant “misconceives the true nature of the inherent jurisdiction of courts to supervise or administer trusts and is contrary to basic trust principles.” Although, the courts have previously extended access to the court’s inherent jurisdiction to creditors or contingent beneficiaries, the Court noted that the implications of Ms. Carroll’s position would result in strangers being able to enforce trust benefits that beneficiaries are entitled to, even if the beneficiaries choose not to enforce them, and that this would be contrary to the essential character of a trust.

The Courts are able to assist those with an interest in trusts by enforcing and compelling the performance of those trusts. Specifically, the Court noted that:

“the inherent jurisdiction to supervise and administer trusts exists to assist the parties to the trust relationship or those who are interested in the trusts. As such, the inherent jurisdiction of courts to supervise and administer trusts is not inconsistent with the imposition of standing requirements. To the contrary, it is entirely in keeping with the role inherent jurisdiction performs to ensure that those who seek to invoke the inherent jurisdiction to supervise or administer trusts have an interest in the trusts they seek to enforce.”

The Court of Appeal also discussed the following issues within this decision:

  1. Did the motion judge err by applying the wrong standing test?
  2. Did the motion judge err by finding that Ms. Carroll had not pleaded facts establishing a prima facie case of standing?
  3. Did the motion judge err by failing to consider all aspects of the relief sought when determining Ms. Carroll’s standing?

The Court concluded that the motion judge made none of the above-noted errors and dismissed the appeal.

 

Thank you for reading.

Sanaya Mistry

15 Mar

Model Orders for the Estates List in the Toronto Region!  

Sanaya Mistry Capacity, Estate & Trust, Estate Litigation, Guardianship, Litigation, Passing of Accounts, Power of Attorney, Support After Death, Trustees, Wills Tags: , , , , , , , , 0 Comments

The Consolidated Practice Direction Concerning the Estates List in the Toronto Region was established for the hearing of certain proceedings involving estate, trust and capacity law, applying to matters on the Estates List in the Toronto Region.

As of March 9, 2021, Part VII (Contested Matters – Estates) of this practice direction was amended to make reference to model orders prepared by the Estate List Users’ Committee.

Generally, parties are expected to take the time and care to prepare proposed orders giving directions for consideration by the court. If the parties are unable to agree upon an order giving directions and a contested motion for directions is required, each party must file a copy of the draft order giving directions it is seeking with its motion materials.

 

In addition to providing requirements for what orders giving directions should address, where applicable, this practice direction now includes the following model orders:

  1. Order Giving Directions – Appointment of Section 3 Counsel
  2. Order Giving Directions – Power of Attorney/Guardianship Disputes
  3. Order Giving Directions – Will Challenge
  4. Order Giving Directions – Dependant’s Support
  5. Order Giving Directions – Passing of Accounts

 

As noted in the practice direction, the preparation of draft orders for consideration by the court will greatly expedite the issuance of orders.  Where the relevant model orders have been approved by the Estate List Users’ Committee, a copy of the draft order showing all variations sought from the model order must be filed.

The addition of model orders can greatly benefit the Estates List in the Toronto Region. Among other things, these model orders provide a baseline for all parties, such that it can significantly reduce drafting time and potential disagreements on wording among parties, which in turn can increase efficiency and reduce costs.

Many thanks to the Estate List Users’ Committee for their time and efforts in preparing these model orders!

Thank you for reading.

 

Sanaya Mistry

04 Mar

When does the authority of an Estate Trustee During Litigation (ETDL) end?

Sydney Osmar Estate & Trust, Litigation Tags: 0 Comments

Pursuant to section 28 of the Estates Act, the court may appoint an ETDL, “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.” Rule 75.06(3)(f) of the Rules of Civil Procedure also expressly provides the court with the authority to appoint an ETDL on an application or motion for directions.

However, once appointed, how long does an ETDL’s authority last?

While given that “during litigation” is in the very name of the role, one might think the answer is self-explanatory, however, the Ontario Divisional Court recently had to render a decision on this very question.

In Gefen v Gefen, 2021 ONSC 1464, the Ontario Superior Court of Justice had appointed an ETDL pending the “final disposition of the counterclaim,” (involving an alleged mutual will agreement), and that the ETDL be appointed with respect to all of the property of the Estate “pending the final disposition of the Will Challenge Claim” (a claim commenced in Gefen v Gaertner).

Over the course of November 2018 to March 2019, the trial of issues, including the Will Challenge Claim, proceeded before The Honourable Justice Kimmel. On October 17, 2019 Justice Kimmel’s decision was released, which in part dismissed the Will Challenge Claim.

This decision was appealed, and question was raised regarding the ETDL’s authority – had it ceased, or did the authority continue? The ETDL, by way of his counsel, wrote to the parties confirming his understanding that his role was to continue as ETDL until the litigation was finally completed. Notwithstanding this, one of the parties attempted to list three commercial properties (that comprised a substantial part of the Estate) for sale, without notifying the ETDL.

The parties attended at a case conference on September 3, 2020, where the case management judge ordered, among other things, that the authority and jurisdiction of the ETDL be heard by a judge of the Estates List.

That motion was heard, and it was determined that the jurisprudence provided clear authority for the ETDL to continue until the litigation had finally completed. This decision was appealed to the Divisional Court.

In rendering its decision, the Divisional Court looked to the ordinary meaning of “pending”, meaning “while waiting” or “continuing” concluding that the parties were waiting for the final disposition of the Will Challenge Claim, currently under appeal. The Divisional Court agreed with the motions judge, observing that the principle that, “the duties of an Estate Trustee During Litigation continue until the litigation is finally completed, including during any appeal,” has long been established by the jurisprudence.

The Court also cited Brian A. Schnurr, Estate Litigation 2nd ed, noting that “it is clear that the duties of an administrator pendent lite continue until the litigation in respect of which he is appointed is finally disposed of. Even, as in this case where judgment is appealed his duties continue until the final appeal or disposition of the litigation.”

The Court also unequivocally held that “litigation” on a common sense application of the meaning of the term, includes an appeal to an appellate court, with litigation only ending once all appeals have exhausted.

To learn more about ETDLs, please see the below:

Who controls the assets of an estate during litigation?

Appointing an Estate Trustee During Litigation

The Court Appoints an Estate Trustee During Litigation (ETDL)

Thanks for reading!

Sydney Osmar

02 Mar

Silent Acquiescence and Secret Trusts

Sydney Osmar Estate & Trust Tags: 0 Comments

A recent decision out of the British Columbia Court of Appeal had the opportunity to consider Secret Trusts, which the Court proffered are “rarely encountered today, but have a long history.”

Secret Trusts are trust arrangements made between a testator and a trustee, without disclosure of the terms of the arrangement, but where an understanding exists between the parties. Secret Trusts are not mentioned in a testator’s Will. In addition to the usual trust requirements of certainty of intention, objects and subject matter, to make out a Secret Trust, the following factors must be shown:

  • An intent by the testator to subject the trustee to an obligation in favour of a beneficiary,
  • Communication of that intent to the trustee,
  • Acceptance of the obligation by the trustee, either expressly or implicitly, and
  • The conditions are satisfied before or after execution of the will, but before the testator dies.

Of course, Secret Trusts can be found to exist in both testate and intestate estates.

In Bergler v Odenthal, 2020 BCCA 175, the Deceased, on her deathbed, informed her common-law spouse that, should he become involved in a new relationship, her wish was for her Estate to pass to her niece, who had no career or significant savings. The Deceased wanted her Estate assets to be used to assist her niece in returning to school, should her common-law spouse enter into a new relationship.

The Deceased’s nieces and family members testified to having had similar conversations with the Deceased, or, to having overheard such conversations. While much of the nieces’ evidence was hearsay, the trial judge found that necessity and reliability had been established and that it was therefore admissible to prove the Deceased’s wishes.

Shortly after the Deceased’s death, the common-law spouse transferred himself the Estate assets, depleted them, and, entered into a new relationship.  Upon entering into the new-relationship, he refused to transfer any assets to the niece.

In rendering its decision, the Court looked to Waters’ Law of Trusts in Canada (4th ed, 2012), explaining that the two essential features of a secret trust are a “communication” by the deceased person, to his or her devisee, legatee, or intestate heir, and an acceptance by that person. In expanding on this definition, the Court quoted Professor Waters,

 “The communication is the most essential factor. Once it is established, acceptance, though vital, can be spelled out of the silence of the devisee, legatee, or heir. The court takes the view that any person having received a request of this nature would be bound to say something if he rejected the idea that he himself should not enjoy the property beneficially.”

The silent acceptance of the obligations imposed under a Secret Trust has also been commented on in Oosterhoff on Trusts (9th ed, 2019), where it is observed that “positive acceptance will suffice, but so too will silent acquiescence,” as well as by the editors of Underhill and Hayton: Law Relating to Trusts and Trustees (18th ed., 2010), who state “Acceptance by the recipient [of the communication of the deceased] is readily inferred once communication occurs unless he protests.”

Though the Court provided a  thorough review of silent acquiescence, in Bergler, it was found that the common-law spouse had positively accepted the obligation to hold the Deceased’s assets in trust, for her niece, such that silent acquiescence did not need to be relied upon, in any event. The Court found that the trial judge did not err in making this finding.

The Court also determined that, in finding that a Secret Trust had been settled, upon the acceptance by the common-law spouse, jointly held property between him and the Deceased was severed, such that the common-law spouse was holding the Deceased’s interest in the real-property in Trust, for the niece, in accordance with the obligations imposed upon him pursuant to the terms of the Secret Trust.

To learn more about Secret Trusts, please see the below:

Secret and Half-Secret Trusts

Secret Trusts – How to prove one and what if it fails?

Hull on Estates #601 – Proving Secret Trusts

Thanks for reading!

Sydney Osmar

25 Feb

Handwritten Wills/Codicils – Yay or Nay – Larry King’s Estate, as the Latest Example

Kira Domratchev Estate & Trust, Estate Litigation, In the News, Litigation, Wills Tags: , , , , , , , 0 Comments

Handwritten Wills/Codicils are certainly quite rare, particularly for people with means. In certain circumstances, and particularly where the testator had made a pre-existing Will, the presence of a subsequent handwritten Will or Codicil can suggest the presence of suspicious circumstances.

As Paul Trudelle blogged last week, Larry King apparently executed a secret handwritten codicil in 2019 that divided his roughly $2 million estate amongst his five children, to the exclusion of his wife, Shawn King. Mrs. King apparently intends to challenge the validity of the 2019 codicil.

In Ontario, an amendment to a Will is referred to as a “codicil” and it is considered to be a Will, for the purposes of the Succession Law Reform Act. A handwritten Will, in Ontario, is referred to as a “Holograph Will” and the only requirement is that it be made wholly by the testator’s own handwriting and signature, without formality, and without the presence, attestation or signature of a witness. The fact that a Holograph Will is usually made without witnesses will often cause litigation, particularly if there are suspicious circumstances surrounding its execution and/or discord in the family of the deceased.

If Mr. and Mrs. King resided in Ontario, Mrs. King could pursue various claims in challenging the validity of the 2019 codicil (subject to the available evidence), including:

  • Lack of requisite testamentary capacity on Mr. King’s part;
  • Mr. King being subject to undue influence from any or all of his children (or other third parties);
  • Presence of suspicious circumstances in the execution of the codicil; and
  • Presence of fraud in the execution of the document (which is pleaded quite rarely, as there are serious costs consequences for those that make such an allegation but are unable to prove it).

It will certainly be interesting to see how this matter unfolds, particularly taking into account that $2 million is not a significant amount when the costs of litigation are taken into account.

Interestingly, some sources suggest that his Estate is actually worth $50 million, which sounds a lot more accurate!

Thanks for reading!

Kira Domratchev

Find this blog interesting? Please consider these other related posts:

When to Make a Codicil

Alterations to a Will – When are they valid?

Back to Basics: Is This Testamentary?

23 Feb

Ontario Raises Small Estate Limit to $150,000.00 – Now What?

Kira Domratchev Estate & Trust, Executors and Trustees, News & Events Tags: , , , , , 0 Comments

As Ian Hull and Daniel Enright of our office blogged last week, as of April 1, 2021, small estates in Ontario will be defined as those worth $150,000.00, instead of the $50,000.00 figure we are all used to.

The Ontario Attorney General, Doug Downey, advised that the process of applying to manage an estate in Ontario was the same, whether it is worth $10,000.00 or $10 million, which often deters people from claiming smaller estates.

As a result of this change, more estates will be able to access a simplified probate process, though the amount of probate fees payable will not change.

Although these changes are welcome, some consider that there are still a number of other issues outstanding, such as:

  • Due to real estate values, estates in Toronto could be considered small, whereas that would not be the case in other parts of the province (e.g. a $500,000.00 estate in Toronto could be considered small); and
  • The probate process itself could be simplified, as many financial institutions take the position that assets cannot be managed until such time as probate is obtained (which in turn can often cost an estate, as asset values fluctuate).

A recent article discussing the above-noted points can be found here.

It will certainly be interesting to see if the new changes will make a difference, and whether more changes are coming, in light of the concerns expressed by various members of the legal profession.

Thanks for reading!

Kira Domratchev

Find this blog interesting? Please consider these other related posts:

Simplified Procedures for Small Estates Project

A Simplified Procedure on the way for Modest Estates?

Fare Thee Well, Fax Machine! An Overview of Changes to the Rules of Civil Procedure

09 Feb

Hull on Estates #606 – The Unorthodox Expansion of Pecore

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

This week on Hull on Estates, Stuart Clark and Jennifer Philpott discuss the unorthodox use of Pecore v. Pecore, 2007 SCC 17, in the recent decisions PGT v. Cherneyko, 2021 ONSC 107, and Calmusky v. Calmusky, 2020 ONSC 1506.

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

Click here for more information on Stuart Clark

Click here for more information on Jennifer Philpott

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