Category: Estate & Trust
What is a solicitor’s duty when preparing a Will?
Those seeking to answer this question should start their journey with the BC Court of Appeal decision of Chalmers v Uzelac. Here, Madam Justice Southin noted that, “every solicitor who, as part of his or her practice, draws wills should read, mark and inwardly digest at least once each year the judgment of Sir John Alexander Boyd, C. in Murphy v. Lamphier (1914), 31 O.L.R. 287, the Canadian locus classicus on a solicitor’s duty in taking instructions”.
Murphy is a seminal case. The Court found that it was wrong to assume that because a person can understand a question put to them, and give a rational answer, that they are of sound mind and capable of making a Will. Instead, the Court emphasized that capacity must be judged in light of the nature of the act and all of the circumstances:
“A solicitor is usually called in to prepare a will because he is a skilled professional man. He has duties to perform which vary with the situation and condition of the testator. In the case of a person greatly enfeebled by old age or with faculties impaired by disease, and particularly in the case of one labouring under both disabilities, the solicitor does not discharge his duty by simply taking down and giving legal expression to the words of the client, without being satisfied by all available means that testable capacity exists and is being freely and intelligently exercised in the disposition of the property. The solicitor is brought in for the very purpose of ascertaining the mind and will of the testator touching his worldly substance and his comprehension of its extent and character and of those who may be considered proper and natural objects of his bounty. The Court reprobates the conduct of a solicitor who needlessly draws a will without getting personal instructions from the testator, and, for one reason, that the business of the solicitor is to see that the will represents the intelligent act of a free and competent person.”
Expanding on this, the Ontario Court of Appeal in Hall v Bennett Estate references an article by M.M. Litman & G.B. Robertson which identifies common errors that have been either the subject of criticism by the courts or the basis of liability for professional negligence in the preparation of a Will, including failing to: obtain a mental status examination; interview the testator in sufficient depth; properly record/maintain notes; test for capacity; and, provide proper interview conditions.
Read, mark, and inwardly digest this blog at least once a year accordingly.
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In Banks v Goodfellow, the English High Court laid out the benchmark test for assessing testamentary capacity. To this day, it has stood the test of time. Subsequent cases have served to focus and clarify aspects of it. The recent decision of the Ontario Superior Court of Justice in Kay v Kay Sr. is such a case. In Kay v Kay Sr., the court provides a helpful review of the law regarding testamentary capacity, specifically the weight that is to be given to the drafting lawyer’s assessment and a posthumous testamentary capacity assessment.
The deceased, Annie Wotton, died on August 26, 2019, at the age of 95. Mrs. Wotton created a will in 1992 which essentially left everything to her son, John. It also provided that John, along with her husband, Jack, were to be appointed as joint executors.
Medical assessments conducted in November 2009, September 2010 and October 2010 noted that Mrs. Wotton had a mild to moderate form of dementia. The assessments stated that Mrs. Wotton’s memory was moderately impaired and that her cognitive abilities were progressively declining.
In November 2010, another will was prepared by Mrs. Wotton. The drafting lawyer, Mark Ouimet-McPherson, met with Mrs. Wotton and assessed her capacity. Mr. Ouimet-McPherson believed that Mrs. Wotton had testamentary capacity so he took her instructions and prepared and executed the documents. The new will stipulated that the residue of the estate was to be divided equally amongst John and two of Mrs. Wotton’s three grandchildren: Cindy and John Jr. It also named John as estate trustee, with Cindy as the alternate.
At the time of Mrs. Wotton’s death, John had advanced dementia and was incapable of acting as estate trustee. John’s wife, Rosemary, acted as his litigation guardian and filed a Notice of Objection to Cindy’s application for a Certificate of Appointment of Estate Trustee. Rosemary’s objection was based on the fact that the November 2010 will should be declared invalid as Mrs. Wotton lacked testamentary capacity at that time.
In 2019, a posthumous testamentary capacity assessment was conducted by Dr. Francine Sarazin. Dr. Sarazin found that “there [was] reasonable evidence in support of a determination of incapacity when Mrs. Wotton gave instructions to draw up a last will and testament.”
The court relied on O’Neil v. Royal Trust Co. and Vout v. Hay to summarize the legal principle regarding the onus of testamentary capacity: A presumption of capacity exists until it is shown that suspicious circumstances existed regarding the preparation of the will. If suspicious circumstances exist, that presumption is no longer in effect and the onus then shifts to the party propounding the will to prove that the testator had testamentary capacity.
Since medical evidence found that Mrs. Wotton suffered with a form of mild to moderate Alzheimer dementia at the time of signing the 2010 will, and due to Mrs. Wotton’s age and the changes between the two wills, the court determined that the onus should shift to the propounder of the November 2010 will to show capacity.
The court accepted the posthumous assessment of Dr. Sarazin, but the assessment was only afforded a modest degree of weight for the following reasons:
- Since it was a retrospective capacity assessment which went back nine years, the court thought that it was not very reliable;
- The assessment was not an exhaustive review of Mrs. Wotton’s life in and around the time she signed the will; and
- Cindy’s material was not provided to or reviewed by the assessor.
The court then turned to Mr. Ouimet-McPherson’s evidence. In his meeting with Mrs. Wotton, Mr. Ouimet-McPherson filled out a checklist for her. Based upon Mrs. Wotton’s answers to Mr. Ouimet–McPherson’s questions, her knowledge of her family and her assets, he was satisfied that Mrs. Wotton had testamentary capacity.
The court also took other evidence into consideration, such as the medical assessments conducted in November 2009, September 2010 and October 2010. While the assessments provisionally diagnosed Mrs. Wotton with a mild to moderate form of dementia, they noted that she was able to manage daily living on her own as well as her finances.
The court took this evidence and applied it the Banks v Goodfellow test:
- Understanding the nature of the act of making a will and its consequences: At the meeting with Mr. Ouimet-McPherson, Mrs. Wotton commented that she wanted to be fair and avoid disputes. This demonstrated that she likely understood the consequences of what she was doing.
- Understanding the extent of one’s assets: In general terms, Mrs. Wotton knew the assets she owned. Although she could not recall specific details such as knowing whether her life insurance lapsed or the last statement of her bank account, Mr. Ouimet-McPherson felt that Mrs. Wotton responded appropriately for someone her age.
- Understanding the claims of those who might expect to benefit from the will, both of those to be included and excluded: From Mrs. Wotton’s instructions, it seems as if she knew she was changing her 1992 will to divide her assets three ways as opposed to leaving everything to John.
- Any disorder of the mind or delusions: Mr. Ouimet-McPherson’s evidence seems to suggest that Mrs. Wotton knew what she was doing at the time the will was executed and was not suffering from any delusions or disorders of the mind that impacted her intentions.
After considering all of the above, the court ultimately concluded that, at the time the November 2010 will was executed, it was more likely than not that Mrs. Wotton had testamentary capacity. As such, Cindy was named as the Estate Trustee.
Kay v Kay Sr. provides a helpful review of the test for testamentary capacity as set out in Banks v Goodfellow. It emphasizes that testamentary capacity is to be determined based on the facts and circumstances of each case. The drafting lawyer’s assessment plays a major role in assessing capacity. A posthumous testamentary capacity assessment may also be given considerable weight if it is conducted around the time the deceased’s capacity was in question and if the assessor’s review of the deceased’s life around the time they signed the will is fairly extensive.
Thanks for reading – Have a great day!
Ian Hull and Celine Dookie
I am not sure why, but whenever I talk to my friends about the benefits of having a Will, they seem to dismiss the advice, thinking that Wills are only meant for old people. I was thus delighted to come across this article which highlights millennial-centric reasons for having a Will, some of which are as follows:
Digital Assets – while many millennials attest to not being flush with cash, many are flush with digital assets. I have previously written about my digital presence, admitting that I have two personal e-mail addresses, four social media accounts, and so many points through reward programs such as Aeroplan, Indigo, Greenhouse Juice – the list goes on and on. These assets carry both a financial and personal value. Millennials preparing a Will should think about how they wish to transfer these assets.
Young Children – if a child is a minor, under the Children’s Law Reform Act, it is possible for a testator to appoint one or more persons to have custody of that child in a Will. It is also possible to set up a trust in the Will to ensure that the child’s inheritance is spent responsibly. I often tell people that in making a Will, do not think of it as being done to benefit oneself (i.e. the testator), but to benefit and help your loved ones. Being able to take care of minor children is a great example of this.
Pets Pets Pets – without engaging in the dog vs cat debate, it is suffice to say that many millennials have pets. In fact, millennials these days are opting for pets over parenthood – just walk through Trinity Belwoods Park on a Saturday afternoon. In Ontario, pets are considered property, and thus require specific estate planning. Some options include leaving a cash legacy to a pet guardian or setting up a trust for a pet guardian, both of which can be accomplished in a Will.
Hoping that my millennial friends now agree that Wills aren’t just for old people!
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Fall arrived this year on Monday September 23. On that date, the plane of the earth’s equator passed through the centre of the sun. The Earth’s axis is not tilted towards or away from the sun: equinox. Simply put, colder days and longer nights ahead.
“Equinox” comes from the Latin word “aequinoctium, or “equal nights”. On equinox, we have darkness and light for approximately 12 hours each. (There are some variations, depending on geography and physics.)
The onset of fall signals the onset of pumpkin spice time. Although I am not a fan of the mixture of cinnamon, nutmeg, ginger, cloves and allspice in anything other than a pumpkin pie, it appears that the spice mix has found its way into just about everything. Lattes are an obvious example. However, it is now found in Spam. At the liquor store, you can find pumpkin spice beer, whisky (“Nose: Perfect subtle sweet pumpkin pie combined with a barrel oak scent to create a very pleasing aroma. Taste: Pumpkin and whisky at the forefront with the spice becoming more predominant later in the taste sequence. A nice whisky/pumpkin finish.”), and Baileys (“aromas and flavours of nutmeg, pumpkin, vanilla pie crust and coffee”).
In Canadian courts, pumpkin spice has made a few recent appearances. In R. v. King, 2019 ONCJ 366, the accused was charged with communicating with a person under 16 for the purposes of committing an unlawful sexual act. The admitted facts were that the accused, aged 52, chatted online with a police detective posing as a 14 year old girl. The accused arranged to meet with the “girl”, and arrived in his vehicle with “a flannelette blanket, a purple vibrator, some baby wipes and the pumpkin spice latte” that the “girl” requested. As summarized by the court, “”the defendant drove over 200 kilometres with tools of seduction at hand and pumpkin spice latte at the ready.”
Pumpkin spice latte also figured in a very different type of case. In Bernstein v. Peoples Trust Company, 2019 ONSC 2867, the issue was the certification of a class action involving a claim of improperly charged fees on “payment cards”. The Defendant argued that the payment card was not a gift card because it did not create an entitlement to purchase any specific item, and was merely a cash replacement. In the Applicant’s Factum, which the judge agreed with, the Applicant argued that the card entitled the holder to make purchases. It was akin to a gift card. “… the holder of a Starbucks card does not have a specific entitlement to be sold a pumpkin-spice latte in July, only a general entitlement to the products that the coffee chain offers at a particular time.”
Enjoy the season/seasoning.
One steady source of estate litigation is the uncertainty around estate trustee compensation. There is no statutory formula for determining the appropriate quantum. Instead, estate trustees come up with a percentage that is supposed to reflect their contributions, and the beneficiaries are left with the options of accepting, objecting, and everything in between. If matters proceed to court, judges apply an age-old customary analysis in order to find a number that suits the unique circumstances of the estate administration. One of the five factors the courts look at is the size of the estate. Whereas traditionally bigger estates have led to bigger compensation, we have seen a potential turning point out in New Brunswick in the case of Atlantic Jewish Foundation v. Leventhal Estate,  N.S.S.C. 297.
Section 61 of the Trustee Act directs that estate trustees be paid “fair and reasonable allowance[s]” for their “care, pains and trouble”. Over time, courts have set the “tariff guideline” or customary rate at “2.5% of each of the capital receipts, capital disbursements, revenue receipts, and revenue disbursements” (Freeman Estate, Re,  O.J. 3402 at para. 30). This rate must be cross-checked, however, against the five factors, which look at the actual work done, before a final quantum is reached.
Size and Complexity
Historically, estate trustees have earned more in administering bountiful estates, and vice versa. The administration of a small yet convoluted estate has typically been far less lucrative than the administration of a large estate comprised of a handful of simple assets. Courts have, however, been ready to reduce compensation when an estate, despite its net value, involves little complexity – for instance, when the assets are easy to liquefy and distribute (see Forrest Estate v. O’Donohue,  O.J. 1898 (Gen. Div.) at para. 14).
A Deviation in New Brunswick
What is unique with the compensation reduction in Atlantic Jewish Foundation is that the estate trustee’s duties were not particularly simple. He managed the deceased’s hotel, sold it at a good price, oversaw numerous agents, and generally displayed skill and sophistication. Yet the court slashed his proposed compensation in half – a pronounced reduction – and did so not on the basis that the estate was simple, but that he should not receive remuneration that was tantamount to a “windfall or a bequest”. Certainly his case was not helped by the fact that the objector, and residuary beneficiary, was a charity, and that he was seeking $900,000 for 77 hours of work …
In the wake of this case, it will be interesting to see if other courts lessen compensation because the figure is merely too high, rather than applying percentages that coincide with the work done.
Thanks for reading,
Suzana Popovic-Montag and Devin McMurtry
The Ontario Court of Appeal recently set aside an order committing an estate trustee to 15 days in jail, to be served on weekends, for contempt of an order requiring the estate trustee to pass his accounts.
In Ross v. Ross, 2019 ONCA 724 (CanLII), the estate trustee was a lawyer, 73 years of age, with no prior convictions or findings of contempt. At the time of the appeal, the estate trustee had purged his contempt.
At the hearing below, the judge found that the contempt arose from “a failure to understand and appreciate or to ignore the need for, and importance of, complying with the order within the specified time or within a reasonable time.” The Court of Appeal held that this finding meant that the estate trustee’s actions did not amount to a callous disregard for the court’s authority. Accordingly, a jail sentence was not appropriate.
For other cases on contempt and sentencing, see our blog, here and here. In the first blog, reference is made to a case where an 88 year old litigant with health issues was sentenced to 30 days in jail for contempt. In the second blog, we discuss a case where an attorney for property failed to pass accounts as required by court order. He was fined $7,000.
Finally, consider the case of Canavan v. Feldman, 2004 CanLII 4787 (ON SC). This was a claim by an estate trustee against his former lawyer. There, the estate trustee, 67 years old, spent 35 days in jail for contempt of court orders relating to a passing of accounts, and was only released when new counsel put further evidence before the court. The estate trustee’s prior lawyer had consented to an order of contempt without the estate trustee’s knowledge. The lawyer told the estate trustee that he had “nothing to worry about”. At a sentencing hearing, the lawyer did not attend. The estate trustee was sentenced to 6 months in jail. The estate trustee was awarded general damages of $200,000 and punitive damages of $100,000 against his prior lawyer.
Thanks for reading.
No, we are not referring to the 1979 film featuring Dustin Hoffman and Meryl Streep, but a far more recent (but nonetheless interesting) legal dispute involving an application to pass accounts, suspicious activity on behalf of an Attorney for Property, and the resurgence of the equitable defences of laches and acquiescence.
A complex series of facts is present in the Estate of Ronald Alfred Craymer v. Hayward et al, 2019 ONSC 4600: two Attorneys for Property, six marriages, seven children, thirty years of estrangement between Ronald and his four children, and virtually no financial records for the period during which the first Attorney for Property oversaw the affairs of her incapable husband’s estate.
The cruxes of the dispute are that the first Attorney for Property (Joan, Ronald’s wife) transferred the title of the matrimonial home to herself, she kept scanty financial records, and the value of her assets (over $1 million) dwarfed that of her late husband’s (around $35,000). When Joan died suddenly, John Craymer (Ronald’s son, the plaintiff) applied for a passing of accounts and the second Attorney for Property (Linda, Joan’s daughter) was left in the unenviable position of potentially having to answer for the conduct of her late mother in relation to accounts of which she, Linda, had no knowledge.
Under section 42 of the Substitute Decisions Act, 1992, S.O. 1992, c. 30, the Court may order a passing of accounts. In considering whether to do so, it should examine “the extent of the attorney’s involvement in the grantor’s financial affairs and second whether the applicant has raised a significant concern in respect of the management of the grantor’s affairs” (McAllister Estate v. Hudgin, 42 E.T.R. (3d) 313 (ONSC), at para 13). Since section 42 carries a high threshold, and Linda was not responsible for her mother’s conduct, the Court did not grant the application. In its reasons, moreover, the Court found fault with the transfer of the home, but given the marital relationship between grantor and attorney, it did not attach much weight to the scantiness of detailed accounts.
Noteworthy in this case is the Court’s consideration of the equitable doctrines of laches and acquiescence in the context of a motion for a passing of accounts (in which, in Ontario, there is no limitation period). In determining whether these defences apply, the Court looks at the length of the delay and the resulting prejudice. Neither of these components were applicable here, for when John learned of the value of his father’s estate as well as the transfer of the home into Joan’s name, he acted promptly. Instead, his application was dismissed on the Court’s discretion.
Thank you for reading.
Ian Hull & Devin McMurtry
Previously, Hull and Hull LLP blogged on the decision of Tarantino v. Galvano, 2017 ONSC 3535 (CanLII). After a ten day trial, the court set aside a transaction whereby the deceased’s daughter, acting as attorney under a Power of Attorney, transferred the deceased’s interest in her home to the daughter. The court also allowed a claim by the daughter for services provided to the deceased. The court disallowed a claim for occupation rent against the daughter.
We also blogged on the costs decision, reported at Tarantino v. Galvano, 2017 ONSC 6635 (CanLII). The collective legal fees of the parties on a substantial indemnity basis (ie., the actual legal fees were higher) were $621,660. The main asset of the estate was 80% of a house valued at $680,000 in 2012. Neither party was awarded costs, other than a reimbursement for the cost of an expert report.
The matter was before the courts once again. On September 6, 2019, the Ontario Court of Appeal dismissed the appeal brought by the grandchildren of the deceased (the daughter’s nieces): Tarantino v. Galvano, 2019 ONCA 699 (CanLII).
The Court of Appeal held that with respect to the dismissal of the claim for occupation rent, the trial judge did not err. The daughter remained in the house (of which she owned 20%) after death. However, the granddaughters had sought and obtained an undertaking from the daughter not to sell the house while the litigation was pending. Of note is the fact that the daughter, under the deceased’s will, had a first option to purchase the house. As the daughter was prevented from selling the house by reason of the undertaking sought by the granddaughters, it would be “unfair” to charge the daughter rent when she was unable to deal with the house.
With respect to a second ground of appeal, the Court agreed with the trial judge that the costs of maintaining the home during the deceased’s lifetime, and while she was in poor health, should fall on the deceased. As the trial judge concluded, “Having accepted that [the deceased’s] wish was to be looked after at home, and having accepted that in her capacity as attorney for personal care it was appropriate for [the daughter] to make arrangements for [the deceased] to be looked after in the home, those expenses are properly attributable to the care of [the deceased].”
The appeal was dismissed, with costs of $15,000 payable by the granddaughters to the daughter.
I expect that this is the last chapter in this unfortunate, expensive saga.
Thank you for reading.
The Substitute Decisions Act (the “SDA”) was passed in 1992. It governs what happens when a person becomes incapable of managing their own property or personal care. Under section 3 of the SDA, if the capacity of a person in a legal proceeding is in issue, the Public Guardian and Trustee (the “PGT”) may arrange for the legal representation of that person. Section 3 also provides that the person shall be deemed to have the capacity to retain and instruct counsel.
Although section 3 seems to be fairly straightforward, the details surrounding the appointment and position of section 3 counsel are somewhat obscure. Cases such as Sylvester v Britton and Banton v Banton have added some clarity to the role of section 3 counsel. The recent case of Kwok v Kwok provides a further illustration as to when section 3 counsel is to be appointed.
In Kwok v Kwok, Jiefu Kwok was involved in two motor vehicle accidents in 2011. He suffered a traumatic brain injury as a result and commenced two legal actions in relation to the accidents. A capacity assessment was conducted in 2014, which revealed that Jiefu was incapable of taking care of himself and managing his own property. In 2015, Jiefu’s son, Derek, was appointed as his guardian for property and personal care. Derek later filed an application to be released from these roles as he stated that it was putting a strain on his relationship with his father. Derek’s mother, Ellie, brought an application to take Derek’s place and be appointed as Jiefu’s guardian of property and personal care.
The PGT took the position that section 3 counsel should be appointed to represent Jiefu and obtain his wishes before Ellie was appointed as Jiefu’s guardian of property and personal care. The PGT was of the view that Jiefu’s capacity assessment conducted in 2014 was outdated and that a more limited guardianship might be appropriate for him.
Counsel for Derek and Ellie (the “Applicants”) argued that section 3 counsel is to be used in cases where a capacity assessment has not already been conducted. They added that, since a capacity assessment was already conducted in this case, the appointment of section 3 counsel was inappropriate. Moreover, a primary concern for the Applicants was the high costs associated with the appointment of section 3 counsel.
The Court considered the arguments of the PGT and the Applicants and noted the following about the role of section 3 counsel:
- The appointment of section 3 counsel is a safeguard that protects the dignity, privacy and legal rights of a person who is alleged to be incapable
- Section 3 of the SDA does not make the appointment of legal representation mandatory
- In deciding whether to appoint section 3 counsel, the Court must consider the specific facts and issues in each case
- The Court can appoint section 3 counsel even in cases where a capacity assessment has already been conducted or where there is an existing Court order declaring that a person is incapable
The Court concluded that the appointment of section 3 counsel would not be in Jiefu’s best interests and would be a waste of resources. The Court made this finding based on the following reasons:
- There were no completing claims amongst Jiefu’s closest relatives as to who should be his legal representative. Both Derek and Ellie supported the appointment of Ellie as Jiefu’s guardian of property and personal care
- There was no evidentiary basis to question the validity of the 2014 capacity assessment
- A letter from Jiefu’s primary care physician regarding his current condition did not suggest that Jiefu’s condition had improved
- Jiefu attended Court and expressed that he supported the appointment of Ellie as his guardian of property and personal care
As a result, Derek was released from his role as Jiefu’s guardian for property and of the person and Ellie was appointed in his place.
Kwok v Kwok adds to a growing body of cases examining the role of section 3 counsel. It provides that the Court can appoint section 3 counsel even in cases where a capacity assessment has already been conducted or where there is an existing Court order declaring that a person is incapable. Furthermore, it indicates that the wishes of the incapable person are to be given a considerable amount of weight in assessing whether section 3 counsel is appropriate.
For further reading on section 3 counsel, check out these other blogs:
Thanks for reading – have a great day!
Suzana Popovic-Montag and Celine Dookie
“There is no love lost between sisters [K] and [A].” So starts the endorsement in Nutzenberger v. Pryde, 2019 ONSC 5030 (CanLII).
There, the parents made a loan to A of $75,000. In their wills, the residue of the estate is to pass to the surviving parent. Both wills contained a clause that provided that if the other spouse was not living on the 30th day following the first spouse’s death, the $75,000 was to be forgiven.
Mother died on September 25, 2015. Father died on May 30, 2016.
K, as estate trustee of mother’s estate, brought a claim against A for the repayment of the loan. A moved for summary judgment on the claim.
Justice Harris agreed that summary judgment was appropriate. There were no primary facts in dispute, and no credibility issues. He dismissed the claim on two basis: first, mother’s estate had no standing to bring the claim, and second, the loan had been forgiven according to the terms of the wills.
On the first point, the loan came from father’s assets. Any interest that mother had in the loan passed to father under the terms of her will. Only father, or father’s estate had standing to pursue the loan.
Secondly, although the terms of the wills forgiving the loans were not “a model of drafting dexterity, to put it mildly”, the court interpreted the wills to mean that the intention of the parents was that either one could call in the loan while alive, but upon the death of the survivor, if no action was taken, the loan would be forgiven.
In determining the intention of the parties, the court looked at other terms of the wills. One term in both wills gave the estate trustee the discretion to pursue a loan. Another term acknowledged that a certain advance was in fact a gift. The term in question was “an awkward hybrid”. However, the court was able to conclude that the intention was that the loan would be forgiven if the surviving parent did not take any steps to collect on it.
As usual, more careful drafting may have avoided the litigation.
Thank you for reading.