Category: Ethical Issues
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
Building on this idea of judicial discretion is the recent case of Dobis v Dobis recently heard and decided by the Ontario Superior Court of Justice, whereby the court ordered a passing of accounts by a party who was deemed to have misappropriated funds from an estate asset.
Elizabeth commenced an application in her role as the estate trustee of her late husband’s estate. She sought, among other things, certain orders that would allow her to gain and maintain possession and control over one of the estate assets, a four unit rental property. She also sought an order requiring her son, Mark, to pass his accounts in respect of funds she alleged were misappropriated from the rental property.
Mark resided in one of the units of the rental property with his spouse, and alleged that it was his father’s intention that he maintain a life interest in the property. During the lifetime of the deceased, Mark acted as a manager/superintendent of the rental property in exchange for reduced rent. He also collected rent from one of the tenants and deposited the funds into a bank account owned jointly by his parents. Following his father’s death, Mark began diverting rent from the rental property to himself rather than depositing it in the joint account.
Despite requests from Elizabeth, Mark failed to properly account for the rental income. The accounting that was provided to Elizabeth was not supported by vouchers, and contained no detail of the expenses incurred. Elizabeth submitted that Mark had no legal or beneficial interest in the property, that he was holding the property hostage while unlawfully benefiting personally from the funds generated by the property, and that he failed to account for those funds.
In arriving at its decision, the court relied on the 2016 Ontario Superior Court decision in Net Connect Installations Inc. v. Mobile Zone Inc., which held that a court has jurisdiction to order an accounting where a party is deemed to have misappropriated funds.
Ultimately, Mark was compelled to pass his accounts for all monies received by him in connection with his management of the property. All this to say, watch what you do, because you may be held accountable.
Thank you for reading!
In overturning a lower court decision, on May 31, 2019, the Ontario Court of Appeal held that neither contract law nor property law principles govern how to dispose of embryos, where neither party has a biological connection to the genetic material.
Instead, in S.H. v D.H, 2019 ONCA 454 the Court held that the governing legislation and regulations prevail: The Assisted Human Reproduction Act (“AHRA”) and the Assisted Human Reproductions (Section 8 Consent) Regulations (“Consent Regulations”).
In 2011, D.H. and S.H. purchased four embryos (created from anonymous donors) from a lab in the US. Two of the four embryos were viable, one of which resulted in the birth of the couple’s son. The second embryo is stored in an Ontario lab. The couple divorced shortly after the birth of their son, and a dispute arose around the fate of the second embryo.
At the time of purchasing the embryos, the couple entered into two contracts, one with the US based lab, and one with the Ontario based lab. The first contract set out that the frozen embryos would be donated, in the event that the parties are unable to make a decision as to their disposition in the future. The couple also acknowledged that in the event of a divorce, the legal ownership of any remaining stored embryos would be determined in a property settlement.
The Ontario based contract identified D.H. as the “patient” and the S.H. as the “partner”. It set out that in the event of divorce or legal separation, the lab would “respect the patient’s wishes”. When D.H. attempted to proceed with implanting the second embryo, S.H. withdrew his consent.
In the lower court decision, the court looked to the persuasive authority, M. (J.C.) v A. (A.N), 2012 BCSC 584, concluding that the embryos were to be treated as property, governed by the contracts, such that the “patients’ wishes” should be respected.
The Ontario Court of Appeal however, has concluded that Parliament has imposed a consent-based, rather than a contracts-based model through AHRA and the Consent Regulations. Under this legislative format, “donor” is defined to include a couple who are spouses at the time the in vitro embryo is created, even where neither person contributes reproductive material to the embryo. The Court also determined that separation or divorce does not change the donor status of the couple in instances where either both individuals are genetically connected to the embryo, or neither individual is genetically connected to it. Pursuant to s. 10(3) of the Consent Regulations, the donor status is only changed if there is only one genetically contributing former spouse – and it is that individual who will be deemed the sole donor.
The Court went on to consider that the principle of free and informed consent was a fundamental condition to the use of human reproductive technologies. The Consent Regulations reflects that consent is ongoing and is not frozen in time by specifically legislating that the consent of the donor may be withdrawn by either spouse. The Consent Regulations and AHRA criminalizes the use of genetic material without the written consent of the embryo’s donors.
In coming to its conclusion, the Court held that a consent-based model to reproductive technology is “fundamentally at odds with contract law”, and that an individual cannot simply contract out of criminal law, nor the protections that may be afforded to them under that law. Therefore, it was within S.H.’s right to withdraw his consent to the use of the embryo.
In the estate planning context, assisted human reproduction brings with it many considerations which should be taken by the drafting solicitor, such as whether or not the client, or their partner has any stored sperm or ova, whether there is consent to the use of the genetic material post-mortem, if there are any time limitations on its use, and whether or not there is an intention that children conceived with donated sperm/ova posthumously are to be included in the Will, among many others.
To learn more about the impact of assisted human reproduction within the estate planning context, and some practical tips for solicitors, see “Fertility Law Considerations for Estate Lawyers” by Suzana Popovic-Montag.
Thanks for reading!
The use of artificial intelligence (“AI”) is saturating all facets of life and death. While we might often think of AI as some future product of a technologically advanced society, it is already in common use. Think of Apple’s Siri and Google Translate; both require AI in order to function.
Earlier this year, my colleague, Garrett Horrocks, blogged on a study showing the promising use of AI in detecting Alzheimer’s. This month, a recent study out from the University of Nottingham explores the use of AI in predicting premature death of middle-aged persons. The study shows promising results.
AI and Bias
While many reports are optimistic in how such predictive models can improve preventative health care, others are more cautious. A recent article from Wired raises the issue of potential bias in such AI models. The article delves into the concerns of scholars that AI might adopt and even promote bias as a result of implicit biases that already exist. Take, for example, the Amazon AI recruitment tool which was designed to review resumes of job applicants and pick the top candidates. Amazon abandoned the project after experiencing several issues, including the program explicitly discriminating against women. The program did so by penalizing candidates who graduated from women’s colleges or had the word “women’s” in their resume (e.g. “women’s chess club”).
The Wired article also raises concerns about existing biases in health care services, such as how patients of different ethnics groups are treated differently for pain with studies in the US finding that racial and ethnic minorities tend to be undertreated for pain, compared to non-Hispanic white persons. While the Wired article raises concerns about the potential biases that can be adopted and/or promoted by AI, the article also notes the potential for AI to reduce bias by focusing on objective factors affecting a person’s health.
AI and the Law
Many say that the law and lawyers are resistant to change (who still relies on faxes?). Despite any such resistance, the legal system, like everyone else, is being dragged into the world of AI, whether ready or not. Just as AI is revolutionizing health care, legal products implementing AI are being developed, with some estimating that over 100,000 jobs in the legal sector will be automated by 2036.
More importantly, however, is the ongoing need for the law to adapt to the changing world of AI. The implementation of AI in our everyday life has significant ramifications from the products recommended to us while online shopping to whether or not we might receive proper preventative health care. With the potential for ethical abuses and unintended consequences (such as discrimination), it will be interesting to see how (or if) laws and regulations develop to address these new advances in AI.
Thanks for reading!
It’s taken decades, but we’re slowly coming to terms with a few of the “isms” in our culture – racism and sexism being two obvious ones. We can add discrimination based on disability and sexual preference as two others.
My question, thought, is does “ageism” belong in the same category? Ashton Applewhite, the author of This Chair Rocks: A Manifesto Against Ageism, believes it does. This website sets out her thesis – and the Globe and Mail provided an excerpt recently.
Applewhite is thorough – and has certainly done her research. She is also getting a lot of positive press. But not everyone is entirely convinced of everything she says.
How bad is it?
Applewhite defines ageism as follows:
Discrimination and stereotyping on the basis of a person’s age. We’re ageist when we feel or behave differently toward a person or a group on the basis of how old we think they are.
So, ageism affects both the young and the old. One interesting idea is her move to change words like “adolescents” and “seniors” to “youngers” and “olders.” I like the way this subtle shift in language (to my ear anyways) eliminates a lot of the baggage associated with either end of the age spectrum.
Age discrimination certainly exists – we can all get impatient by slow walkers or dismiss the ideas of olders too readily. And this is an area we should definitely continue to work on, to ensure that youngers and olders are respected as individuals at every stage. But much of Applewhite’s focus is on how we shouldn’t stereotype ourselves as we get older – the negative talk that we tell ourselves (like being too old to dance, too old to ski, and too old to attend a political rally). And that’s where some aren’t sure her arguments have merit.
Do we limit ourselves based on our own notion of age? Or do our individual conditions and state of mind do that for us?
Applewhite brings out the stats on how able and happy those over age 65 are, and encourages us to google the U-curve of happiness as evidence. Here it is, courtesy of the Washington Post:
As multiple studies have shown, we are happiest at the beginning and end stages of life. So this begs the question: if the curve clearly shows greater happiness as we move through our 60s, 70s, and 80s, how much of a negative impact is ageism really having? And how much self-ageist thinking is actually taking place?
We seem to be doing a pretty good job of aging happily. Personally, I’ve been relying on my own mind and body, not my age, when I make decisions to add or subtract things from my life. I think most people are doing the same.
Thanks for reading … Have a great day!
This week on our podcast Stuart Clark and I discussed the statutory Residents’ Bill of Rights that is within the Long-Term Care Homes Act, 2007.
The importance of this Act should not be overlooked by anyone who is has a loved one in a long-term care home. Section 3 of the Act gives rise to enforceable rights as between the resident and the care home as if they have entered into a contract where the home has agreed to fully respect and promote 27 enumerated residents’ rights.
As an example, the first 4 rights are:
- the right to be treated with courtesy and respect and in a way that fully recognizes the resident’s individuality and respects the resident’s dignity;
- the right to be protected from abuse;
- the right not to be neglected; and
- the right to be properly sheltered, fed, clothed, groomed and cared for in a manner consistent with his or her needs.
While it may be difficult to determine what the Residents’ Bill of Rights means in day-to-day reality, it is a meaningful starting point for any advocate.
An important resource is the government of Ontario’s Guide to the Long-Term Care Homes Act, 2007 and Regulation 79/10, which is available for download here.
Thanks for reading and listening!
As lawyers, we always have to consider whether we can act for someone before we are retained. Often, the question of whether we are in a conflict is a simple one; however, occasionally, it is more difficult to assess whether we can or more importantly, should, act for someone.
In a recent case, a Plaintiff moved to remove counsel for the Defendant due to a perceived conflict of interest (Gloger v Evans 2018 ONSC 4919).
Otillie and Jochen Gloger, whose children are the parties in this action retained a law firm, to prepare their Wills. Otillie died first and Jochen retained the law firm to prepare a survivorship application with respect to their joint property.
Jochen’s Will named both the Plaintiff and the Defendant in this matter as the Estate Trustees of his Estate and the Estate was divided equally between the Plaintiff and the Defendant.
In this action, following Jochen’s death, the Plaintiff sought to have the Defendant removed as Estate Trustee based on various allegations such as misappropriation of assets and breach of fiduciary duty.
The Defendant retained the law firm to represent her in this action. In turn, the Plaintiff alleged that the firm could not represent the Defendant because there were several conflicts of interest and more importantly, such representation would undermine public confidence in the administration of justice.
The Court considered the test set out in MacDonald Estate v Martin (1990) 3 SCR 1235, which requires that two questions be answered:
- Did the lawyer receive confidential information attributable to a solicitor client relationship relevant to the matter at hand?
- Is there a risk that it will be used to the prejudice of the client?
Because prejudice is difficult to prove, the “test must be such that the public, represented by the reasonably informed person, would be satisfied that no use of confidential information would occur…”.
Analysis and Decision
The Court held that, at its best, the Plaintiff’s evidence was that he and the Defendant initially retained the law firm but that, three days later, he retained his own lawyer. The Plaintiff never met with a lawyer at the law firm but he apparently had a telephone call with someone at the law firm while the Defendant listened in. However, he could not advise whom he spoke with, nor what that person’s occupation was. Furthermore, the Plaintiff did not sign a retainer agreement nor did he provide a retainer.
Given this evidence, the Court held that the Plaintiff did not retain the law firm and was therefore not a former client. Even if he was a former client, however, the Plaintiff stated at his cross-examination that he did not provide any confidential information to the law firm.
The Court did not believe that any confidential information provided by the Deceased, with respect to the Will which named both the Plaintiff and the Defendant as the beneficiaries and Estate Trustees of the Estate, was relevant to this action regarding trustee misconduct, given that the Will was not ambiguous, nor was there a challenge to the Will.
In making this decision, the Court also commented on the importance of the right of the client to be represented by counsel of their choice and that a flexible approach must be taken.
In light of the foregoing, the Court did not consider the second step of the test and dismissed the Plaintiff’s motion for the removal of the law firm, as the Defendant’s counsel.
This case reminds us that it is important to consider whether you should act for someone in the circumstances of each individual case. The above-noted test helps one determine whether a potential conflict of interest may arise.
Thanks for reading!
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One of the major facets underpinning the principles of fundamental justice in Canada is ensuring all parties to a litigation have a voice. The ability of the judicial system to satisfy this burden is often rendered more challenging when the capacity of one of the parties is a central issue in a given proceeding. The recent decision of the Ontario Superior Court of Justice in Sylvester v Britton, 2018 ONSC 6620, provides clarity in respect of the duties and obligations of counsel who are appointed to navigate these issues.
In Sylvester, the Applicant brought an application seeking to be appointed as guardian of property and personal care for her mother, Marjorie. Marjorie had previously appointed two of her sons as her attorneys for property and personal care pursuant to validly-executed powers of attorney.
On consent of all parties, the Public Guardian and Trustee arranged to have a lawyer, Clarke Melville, act for Marjorie on the application in accordance with section 3 of Ontario’s Substitute Decisions Act. Section 3 of the SDA provides that, where the capacity of a person is at issue in a proceeding, that person will be deemed to have the capacity to instruct counsel for the purposes of that proceeding. Accordingly, the Court deemed Marjorie to have the capacity to give instructions to Mr. Melville on the application.
The Applicant disputed this presumption of capacity. She brought a motion seeking, amongst other relief, Mr. Melville’s removal as Marjorie’s section 3 counsel and a declaration that Marjorie was not capable of instructing counsel.
The Applicant’s position on the motion was largely premised on earlier findings of Marjorie’s incapacity. Capacity assessments performed several years earlier had revealed that Marjorie was not capable of managing her property or her personal care. At common law, the test for capacity to manage property and personal care is generally more onerous than the test for capacity to instruct counsel. The Applicant took the position that a finding of incapacity to manage property and personal care was sufficient to establish a lack of capacity to instruct counsel.
The Court disagreed and, in its reasons, highlighted several key points that clarify the role of section 3 counsel in the court process. The purpose of the SDA and of section 3 in particular is to protect vulnerable individuals and to allow them to provide input, to the extent possible, on matters that impact their interests.
However, the Court also stressed that the Rules of Professional Conduct govern all solicitor-client relationships, including relations arising under section 3. Section 3 counsel must carry out all of the duties and obligations to the Court and to the client that other counsel must observe, regardless of the particular vulnerabilities of their client. All counsel have an obligation to canvas the wishes or instructions of their client and to advance the client’s interests. The role of section 3 counsel differs only insofar as it is potentially more likely that he or she will be required to advise the Court if, at any point, counsel no longer believes the client has the capacity to give instructions.
This final point is the salient point that governed the Court’s decision to deny the Applicant’s motion. The Court ultimately held that significant deference ought to be granted to section 3 counsel in assessing a client’s capacity to give instructions. The Rules of Professional Conduct properly govern a lawyer’s duty to all clients and to the Court. As such, no individual will be better positioned to judge an incapable person’s capacity to give instructions than the person to whom the instructions would ordinarily be given.
Accordingly, the Court will only interfere if it is apparent that the client is not able to give instructions and where it is clear that counsel has “strayed from his or her obligations to the client and to the Court.” In all other circumstances, the Court will presume that counsel is acting with the integrity of the court process in mind.
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Does an attorney, or guardian, have the power to change a grantor’s estate plan?
According to section 31(1) of the Substitute Decisions Act, a guardian of property (or attorney for property) has the power to do on the incapable person’s behalf anything in respect of property that the person could do if capable, except make a will.
The statute, however, is deceptively simple. Can a guardian transfer property into joint tenancy? Can a guardian sever a joint tenancy? Can a guardian change a beneficiary designation on a RRSP, RRIF or insurance policy? Can an inter vivos trust be established or an estate freeze undertaken to save taxes? There are numerous cases which have tested these issues.
For instance, in Banton v Banton, Justice Cullity found that although the grantor’s attorneys had the authority to create an irrevocable inter vivos trust, they nonetheless breached their fiduciary obligations owing to the grantor, in creating the trust.
The irrevocable trust provided for income and capital at the trustee’s discretion for the grantor’s benefit during his lifetime and a gift over of capital to the grantor’s children, who were also the attorneys. The scheme of distribution of the irrevocable trust was the same as provided for in the grantor’s will. However, the court found that the fact that the remainder interest passed automatically to the grantor’s issue defeated the grantor’s power to revoke his will by marriage and would deprive his common law spouse of potential rights under Parts II and V of the Succession Law Reform Act and Part I of the Family Law Act. The court found that the gift of the remainder of the interest went beyond what was required to protect the grantor’s assets.
Justice Cullity stated:
“I do not share the view that there is an inviolable rule that it is improper for attorneys under a continuing power of attorney to take title to the donor‘s assets either by themselves or jointly with the donor . This must depend upon whether it is reasonable in the circumstances to do so to protect or advance the interest, or otherwise benefit, the donor.”
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On December 15, 2017, I blogged on judicial references to Santa Claus.
Well, the jolly man in red suit has made another (figurative) courtroom appearance: this time in the Ontario Superior Court of Justice.
Santa Claus figures prominently in the decision in Baars v. Children’s Aid Society of Hamilton.
There, the applicants, who were foster parents, refused to utter or affirm the existence or role of Santa Claus (and the Easter Bunny) in relation to foster children under their care. As a result, Children’s Aid removed the 3 and 4 year old sisters that were in their home, and closed the applicants’ foster home.
The Applicants applied to the court for a declaration that the Children’s Aid Society violated their freedom of conscience and religion, their freedom of expression, and their right to be free from discrimination., and a declaration that the closure of their foster home was unreasonable, discriminatory and contrary to their fundamental rights and freedoms.
The Applicants advised Children’s Aid that they do not endorse Santa Claus or the Easter Bunny because they did not want to lie to children. Children’s Aid took the position that the foster parents should honour their foster children’s cultural practices. Children’s Aid then arranged for the removal of the children from the home, and closed their foster home.
In deciding the case, the court was careful to note that the ruling did not purport to address certain questions:
This ruling is not about whether parents or guardians ought to promote or discourage the practice of advising young children about Santa Claus or the Easter bunny. It is not about the existence or utility of proclaiming Santa Claus or the Easter Bunny as a part of the secular celebratory rituals that arise at Christmas or Easter respectively. It is neither about offering commentary over the veracity or validity of one’s belief nor offering any commentary on general parenting or guardianship skills. This decision does not purport to advance any criticism or endorsement in relation to Christian or other religious beliefs or values.
The court concluded that the children were removed from the home in direct response to the applicants’ refusal to lie to the children about the Easter Bunny. This was an infringement on the applicants’ freedom of religion, and their freedom of expression.
As a remedy, the court ordered that Children’s Aid note in the applicants’ file that the decision to close the foster home violated the applicants’ Charter rights. If the applicants sought to be adoptive or foster parents in the future, there should be an inquiry into the applicants’ suitability with the court’s ruling in mind.