As it relates to the administration of an estate:
- the Estate’s T3 tax return is now due on June 1, 2020 instead of April 14, 2020. Tax payments owed by a trust remain deferred until September 1, 2020
- the filing of an individual’s tax return remains uncertain as mentioned in Paul’s blog
Information is changing daily. If the above applies to you, or an estate that you are responsible for, you should contact a professional accountant and/or monitor the CRA website.
Stay safe and wash your hands,
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In today’s podcast, Stuart Clark and Doreen So discuss the Ontario Court of Appeal’s decision in Donaldson v. Braybrook, 2020 ONCA 66, and what to consider when the ownership of a family cottage was changed to include the children.
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In today’s podcast, Natalia Angelini and Sydney Osmar discuss the OBA’s Institute Elder Law program recently chaired by Natalia and Kimberly Whaley. Natalia and Sydney delve into the debated issue of whether or not beneficiary designations are testamentary. Tune in to learn how the crowd voted.
Please note that, as a result of technical difficulties, the introduction of this podcast has been cut off. Sorry for the inconvenience.
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The testators died in 2008. The family realized there was a disagreement about the validity of their parents’ codicils that year but everything seemed to be on hold until Helen brought an application in 2015 to determine the validity of the codicil. In response, Krystyna brought a motion for summary judgment to dismiss Helen’s application on the basis it is statute barred pursuant to the Limitations Act, 2002. This motion was brought by Krystyna because she was interested in maintaining the force and effect of the codicils that gave her certain properties. Thereafter, Helen cross-motioned for summary judgment on her application.
Rule 20.04 of the Rules of Civil Procedure sets out the basis for summary judgment. Summary judgment shall be granted if: (a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or (b) if the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment. The Supreme Court of Canada in Hryniak v. Maudlin, 2014 SCC 7, determined that “a trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.”
With that in mind, Justice Dietrich found that Krystyna’s motion for summary judgment was appropriate for the following reasons (see para. 35):
- There were no material facts in dispute;
- No additional facts would emerge at trial;
- The application of an absolute limitation period was generally a fairly straightforward factual analysis;
- That based on the evidence before her, this matter can be resolved without a trial and that a trial of this narrow issue would be a more expensive and lengthy means of achieving a just result.
The Ontario Court of Appeal agreed with Justice Dietrich’s finding on this point. The panel emphasized how both parties brought summary judgment motions and filed affidavits with exhibits of their own.
In contrast, a similar summary judgment motion was unsuccessful in Birtzu v. McCron, 2017 ONSC 1420, 2019 ONCA 777 (on the issue of costs, only). The Court in Birtzu found that summary judgment was not appropriate and ordered costs against the defendant in any event of the cause (with reasons that were unreported). That said, the defendant was ultimately successful in proving that the plaintiffs were statute barred after a full trial on all issues.
Thanks for reading!
Doreen So and Celine Dookie
Today’s blog is a continuation of yesterday’s discussion regarding the limitations analysis in Piekiut v. Romoli, 2019 ONSC 1190, 2020 ONCA 26. No limitation period was found to apply where an estate trustee was simply seeking a determination and declaration as to whether certain codicils were valid or not valid.
The testators in this case died in 2008. They had 3 children, Helen, Victor, and Krystyna. A meeting took place in 2008 between all 3 children and a lawyer to discuss the administration of the Estate. During this meeting, Krystyna revealed, for the first time, the existence of codicils and declarations of gift that provide her with an interest in certain properties. Helen refused to acknowledge the validity of these new documents.
In 2015, Helen brings a court application. Her application was later amended, on the consent of parties, in 2018 to reflect that Helen was only seeking a declaration in respect of the validity of the codicils. Thus in 2019, Justice Dietrich’s decision was made in the context of Krystyna’s motion for summary judgment to dismiss Helen’s application on the basis that it was statute barred and Helen’s cross-motion for summary judgment on her application. Justice Dietrich found that, since Helen did not ask the court to determine the ultimate beneficiaries of the properties that were subject to the Codicil or to vest such properties in any particular beneficiary or beneficiaries, her application was not barred by the Limitations Act, 2002.
The Court of Appeal agreed with Justice Dietrich. The panel was also of the view that this case is distinguishable from Leibel v. Leibel, 2014 ONSC 4516 and Birtzu v. McCron, 2017 ONSC 1420 because of the consequential relief that was pleaded in those cases. Since the Court of Appeal decision did not go into the details of the relief sought in Birtzu (unlike its description of Leibel), it is helpful to understand the breadth of the Statement of Claim in Birtzu, which sought the following:
- an Order setting aside the Will;
- an Order setting aside the Deceased’s Powers of Attorney;
- an accounting of the entire Estate, as well as all financial transactions undertaken by the Deceased, or on his behalf, or on behalf of his Estate, from the date that the Deceased’s matrimonial home was sold in 2003 to the date of trial;
- Orders for the production and release of financial and medical information;
- an Order reversing all transactions undertaken by the Defendant, either directly or indirectly, without authority or in breach of her authority, or in breach of her fiduciary duties to the Deceased and to his beneficiaries, including the Plaintiffs;
- an Order tracing the property of the Deceased into the property owned by the Defendant, including her home;
- Orders for injunctive relief, including the issuance of a certificate of pending litigation;
- a Declaration that all property held in the name of the Defendant, or part thereof, is held by her for the benefit of the Plaintiffs;
- damages against the Defendant in the amount of at least $400,000.00, for conversion of property, breach of statutory duty, and/or breach of fiduciary duty;
- pre- and post- judgment interest; and
- costs fixed on a substantial indemnity basis, plus H.S.T.
Thanks for reading!
The main issue on appeal was whether Justice Dietrich was right in finding that the applicant could still ask the court to determine whether certain codicils were valid (or invalid) seven years after death. Justice Dietrich based her limitations analysis on whether this proceeding would fall under section 16(1)(a) of the Limitations Act, 2002 where there is no limitation period in respect of “a proceeding for a declaration if no consequential relief is sought”.
In her reasons, Justice Dietrich distinguished the case before her from the other limitations cases that have applied the two-year, basic limitation period to will challenges: Leibel v. Leibel, 2014 ONSC 4516, Birtzu v. McCron, 2017 ONSC 1420, and Shannon v. Hrabovsky, 2018 ONSC 6593. The case before her was different from Liebel, Birtzu, and Shannon because nothing had been done by the respondent beneficiary to propound the codicils that she had an interest in. If the proceeding was started differently in 2015, by the very beneficiary who has an interest in the codicils, then the estate trustee would have a limitations defence against the beneficiary. Since the beneficiary had done nothing, it remained opened to the estate trustee to commence an application for declaratory relief. Such declaratory relief is “a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs.’ It is restricted to a pronunciation on the parties’ rights” (see para. 46, 2019 ONSC 1190).
The Court of Appeal agreed that there was no limitation period in this case because the applicant did not seek consequential relief in addition to a determination of the validity or invalidity of the codicils. The Will had not been probated and nothing had been done for seven years to resolve the issue.
“In these circumstances, Helen was entitled to seek declaratory relief, simply to establish the validity, or lack of validity, of the codicils – to define the rights of the parties in order to avoid future disputes.”, Strathy C.J.O., MacPherson J.A., and Jamal J.A.
Thanks for reading and more on these limitation cases to follow later this week!
With the loser-pays costs model firmly entrenched in civil litigation, and, for some time now, also consistently applied in most estate litigation cases, it behooves counsel to give early and ongoing consideration to putting forward an offer to settle under Rule 49 of the Rules of Civil Procedure with the objective of obtaining a more favourable costs outcome.
In order to get the benefit of the cost consequences under the Rule, such an offer (i) must be made at least seven days before the hearing, (ii) cannot be withdrawn and cannot expire before the commencement of the hearing, (iii) must not be accepted by the opposing side, and (iv) the offeror must meet or beat the offer at the hearing. However, even if this criteria is met, the court has the discretion to depart from the cost presumptions under the Rule.
Taking into account the court’s discretion, and given what feels like the release of more and more decisions where cost awards seem to bear little reflection to the costs incurred or the Rule 49 offers made, I wonder whether making a Rule 49 offer actually provides the expected benefit of a better costs outcome for the offeror.
In reading a recent article on the issue, I am reminded that there is some predictability in place. The authors review some relevant authorities, including Niagara Structural Steel (St. Catharines) Ltd. v. W.D. LaFlamme Ltd. and Barresi v. Jones Lang Lasalle Real Estate Services Inc., two Court of Appeal cases where it was held that the courts of first instance erred in resorting to the exception in Rule 49, and where the Court of Appeal reasoned as follows:
- the purpose of the Rule is to be an incentive to encourage settlement;
- a judge’s discretion to depart from the costs presumption under the Rule is not unfettered, and should not be exercised in such a widespread manner so as to render the general rule ineffectual; and
- a judge should only depart from the Rule “where the interests of justice require a departure”, after giving weight to the policy of the Rule, the importance of predictability and the even application of the Rule.
Thanks for reading and have a great day,
Five seemingly simple yet essential litigation lessons are so cleverly set out in a recent Advocates Journal article by Gord McGuire that I reproduce them below, with some accompanying insights:
- The law is the cart. The facts are the horse.
The take-away: It is suggested that it is better to apply case law after you have persuaded a judge to lean in your client’s favour, as judges are often moved more by their sense of achieving an outcome that is fair and just than by application of the law.
- A picture is worth a thousand authorities.
The take-away: I can’t count the number of times I’ve heard a lawyer complain about losing a winning case or beam about winning a losing one. The author reminds us that having a convincing legal argument or supportive case-law on your side may not carry the day if the opposing side creates an image that registers with the judge. To avoid getting bested by your opponent, use physical photos if you can, and, if you can’t, create mental ones.
- Thinking on your feet is good. Having already done the thinking in advance is better.
The take-away: Better preparedness equals less chance of being caught off-guard by a judge’s questions. This lesson resonates with me as a great practice tip as well as a great mental health tip, since I gather from this article that I’m not alone in having tortured myself post-hearing by repeatedly running the court scene through my head with the perfectly crafted answer that I had meant to give to the judge.
- You and your case are in love. For the judge, it is a first date.
The take-away: Conviction in your case can be persuasive, and it may lead you to expect that a judge will take a similar view. Don’t forget that your perspective is uniquely formed by the level of intimacy you have with the case, and that a judge will give equal consideration to the opposing-side’s position. To temper your expectations, the author suggests that you can try testing the waters by dispassionately discussing your case with colleagues to gauge their reaction, without giving away which side you are on.
- Advocacy matters only so much, and that’s a good thing.
The take-away: Take comfort in knowing that even with the most superb lawyering, there is only so much you can do to secure victory for your client. The facts, the law and the judge’s reaction and perspective are what they are. So when a mediocre advocate defeats a superior one, take it as a mark of a justice system that is functioning as it should.
Thanks for reading and have a great day,
It is the start of a new year and a new decade. Many of us recently enjoyed some holidays and had much to eat and drink. Many of us are also feeling the lingering effects of this merriment. I figured that an uplifting, feel good read would be a nice way to start 2020. I was thus delighted to learn about Eva Gordon, and her estate.
Ms. Gordon passed away at the age of 105. She grew up on an orchard in Oregon, never graduated from college, and worked as a trading assistant at an investment firm in Seattle. In 1964, she married her husband, who was a stockbroker. They did not have any children together. Neither Ms. Gordon or her husband came from money, and they lived a modest life. Ms. Gordon’s godson, who was the Estate Trustee, joked that if Ms. Gordon and her husband went out for lunch or dinner, then they would make sure to bring their Applebee’s coupon.
From the salary that Ms. Gordon received from her employer, she purchased partial shares in numerous stocks, including oil and utility companies, and was an early investor in Nordstrom, Microsoft, and Starbucks. Unlike many at that time, Ms. Gordon held onto these valuable stocks. As a result of this shrewd investing, Ms. Gordon’s wealth increased considerably over the latter years of her life.
Instead of wasting away her money, in her Will, Ms. Gordon decided to bequeath $10 million to various community colleges, with about 17 colleges each receiving cheques for $550,000. Interestingly, no stipulations were put into place as to how the money was to be spent by the colleges. The colleges could do with the money as they wished. For many of them, it was one of the largest donations they had ever received.
For an interesting perspective on the impact of donations to modest, as opposed to elite, institutions, you should listen to Malcolm Gladwell’s Revisionist History podcast (episode 6).
If you find this blog interesting, please consider these other related blogs:
The recent decision of Muth Estate, 2019 ABQB 922, a decision of the Court of Queen’s Bench of Alberta, is a cautionary tale (and a scary one, at that) for estate trustees when distributing an estate.
There, the estate trustee distributed the estate to herself and other beneficiaries of an estate, subject to a holdback. The holdback was insufficient to satisfy amounts owing to CRA. The estate trustee then brought an application for an order requiring that the beneficiaries indemnify her for the amounts owing to CRA.
The estate trustee moved for summary judgment. Summary judgment was denied. The court found that the respondent beneficiaries had no obligation to indemnify the estate trustee.
As background, the estate trustee retained an accountant to prepare estate tax returns. The accountant advised that a holdback of $25,000 was sufficient. The estate trustee therefore held back $25,000, and distributed the balance of the estate. Unfortunately, that accountant did not file the required returns. A second accountant then completed the returns. The tax owing and the second accountant’s invoice totalled $60,772.19. The estate trustee paid this amount, and sought indemnification from the beneficiaries for their share of this amount.
(Query: Whether the estate trustee would have a claim against the first accountant?)
Of note, when making the distributions, the estate trustee could have but did not ask the beneficiaries to provide an indemnity.
The court held that the Income Tax Act imposed personal liability on the estate trustee for unpaid taxes where a clearance certificate is not obtained.
The court went on to find that one of the duties of an estate trustee is to file tax returns and pay taxes owing. As the estate trustee breached her duties, she was not entitled to an indemnity. Relief may have been available if it was the beneficiaries who instigated or requested the breach. However, this was not the case.
The natural corollary of that principle [breach of trust at instigation of beneficiaries] is that if the beneficiaries did not instigate or request the breach, they cannot be obligated to indemnify the trustee. In a fiduciary relationship such as that between a trustee and a beneficiary, the logic of that corollary is that as between the two parties, one who had the obligation to perform the duty and failed and one who had neither the obligation nor the means to satisfy it, it is the former who should bear the consequences of the action or inaction.
Interestingly, the judge dismissed the estate trustee’s motion for summary judgment, but, notwithstanding the finding that the beneficiaries were under no obligation to indemnify the estate trustee, did not dismiss the proceeding. The beneficiaries did not ask for this relief. The matter was therefore allowed to proceed. However, the estate trustee was warned that “if she continues with the lawsuit, she may face a significant costs award if another judge comes to the same conclusion at the end of the suit.”
Thank you for reading.