Tag: accounting

04 Aug

When does an Attorney Accounting Period Start?

Rebecca Rauws Passing of Accounts Tags: , , , , , , , , , , , , 0 Comments

Sometimes there is a grey area when it comes to a person’s loss of capacity, and the time when his or her attorney for property first began to act on an incapable’s behalf. In such a situation, it can be difficult to determine the starting date for an attorney’s fiduciary accounting period.

The recent decision of The Public Guardian and Trustee v Willis at al, 2020 ONSC 3660, dealt with this kind of situation. One of the issues was whether the respondent should be required to pass his accounts for the period before he became the attorney for property for his mother, Mrs. Willis.

The respondent was his mother’s only living child, and was acting as her attorney pursuant to a power of attorney for property dated May 2, 2018. Mrs. Willis was assessed as incapable of managing her property in September 2018, but the decision notes that she had been “clearly suffering from some cognitive deficits prior to June 2018”.

The Public Guardian and Trustee (the “PGT”) sought to have the respondent provide an accounting back to January 1, 2015, because the respondent had arranged several mortgages on his mother’s behalf in that period. The respondent, however, only agreed to pass his accounts starting from May 2, 2018 when he became his mother’s attorney for property. One of the main reasons that the respondent did not want to pass his accounts prior to that period was due to the expense, because it was clear that Mrs. Willis was insolvent, and the respondent would likely have to personally bear the costs of passing his accounts. The PGT clarified during the hearing that it was not seeking court format accounts for the period from 2015-2018, but only “justifiable explanations of money coming in and out of his mother’s RBC account and how mortgage advances were spent plus all relevant disclosure.”

The court found that the respondent had assisted his mother with paying bills and arranging mortgages prior to the time that she was assessed as incapable. It was also noted in the decision that there was “no doubt” that even while Mrs. Willis was capable, she was unsophisticated, vulnerable, and relied on the respondent. The respondent also had access to his mother’s bank account before January 1, 2015.

The court held that, even if an individual is not specifically appointed in a fiduciary role (such as an attorney) one must look at the types of duties that the individual was carrying out to determine if they were acting in a fiduciary capacity. On this basis, the court found that the respondent had been acting as a fiduciary for Mrs. Willis for some time, and determined that he should provide detailed explanations of financial transactions upon the PGT’s request from January 1, 2015 to May 1, 2018 (in addition to the passing of accounts to which the respondent had consented starting from May 2, 2018).

Thanks for reading,

Rebecca Rauws

 

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26 Aug

Judicial discretion to order passings of accounts

Nick Esterbauer Capacity, Estate & Trust, Passing of Accounts Tags: , , , , , , , , , , , , , 0 Comments

We often encounter situations where the administration of an estate is complicated by the fact that the deceased was married multiple times, and there is a clash between children from a prior relationship and a subsequent spouse (and/or his or her children).  Sometimes, a couple will be closer with one set of children, which may lead to disputes following both of their deaths.  Estate of Ronald Alfred Craymer v Hayward et al, 2019 ONSC 4600, was one such case, in which Joan and Ronald had been closer for much of their 32-year marriage with Joan’s children from a prior marriage.  After Joan and Ronald died in 2016 and 2017, respectively, a dispute arose between their adult children.

While Ronald’s will named his own children as beneficiaries of his estate, his Continuing Power of Attorney or Property (like Joan’s), named Joan’s daughter as alternate attorney for property, should his spouse be unable to act.   Joan had acted as Ronald’s attorney for property from 2006, during which he had suffered a stroke, until her death.  In 2011, Joan had transferred the couple’s matrimonial home, previously held jointly, to herself alone.  During this period, however, there had been no request by Ronald’s children for an accounting.  Joan’s daughter had subsequently acted as Ronald’s attorney for property and as estate trustee for Joan’s estate over the period of approximately eight months between the deaths of Joan and Ronald.

Ronald’s children sought a passing of accounts with respect to the management of their father’s property by Jane and her daughter and, specifically, challenged the change in title to the matrimonial home.  The Court referred to Wall v Shaw, 2018 ONCA 929, in stating that there is no limitation period to compel an accounting.  Accordingly, it considered the only bar to this relief to be laches and acquiescence.  Justice C.F. de Sa commented that the there was nothing improper in the manner in which the plaintiff had sought the accounting and, furthermore, that the delay was not unreasonable in the circumstances.  The Court permitted the claim regarding the matrimonial home to continue, but nevertheless declined to order a passing of  accounts:

…[O]rdering the passing of accounts is discretionary. And in my view, to require an accounting at this point would result in a clear injustice as between the parties.

[Joan’s daughter,] Linda, as Estate Trustee, is hardly in a position to account for Joan’s spending while she was alive. Yet, to require a passing of accounts at this point would subject every line of Joan’s spending (as Attorney for Property) to the court’s scrutiny.  Moreover, as the Estate Trustee, the Defendant would be liable to account for any unexplained expenditures.

Indeed, it is unclear that the spending was spurious given the nature of the relationship between Joan and Ronald. Joan would have been spending the money as his wife as much as his Attorney for Property.  The failure to keep detailed accounts is hardly suspicious given the circumstances here.

…In the circumstances, I will not order a passing of accounts.

This decision is interesting in that it clearly considers the practicality of a passing of accounts and the inability of the deceased attorney’s estate trustee to properly account in the absence of relevant records in determining that it would be unjust to order a passing of accounts, despite there being no other apparent legal reason not to do so.

Thank you for reading.

Nick Esterbauer

 

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04 Jul

Watch what you do, you may be held accountable

Christina Canestraro Estate Litigation, Ethical Issues, Litigation, Passing of Accounts Tags: , , , , , 0 Comments

Noah Weisberg’s recent blog on the Court of Appeal decision in Dzelme v Dzelme, serves as a great reminder that ordering a passing of accounts remains in the discretion of the court.

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!

Christina Canestraro

30 Oct

Hull on Estates #558 – Fica v Dmytryshyn: Costs Consequences of Failing to Comply with Rules of Civil Procedure

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

On today’s podcast, Jonathon Kappy and Rebecca Rauws discuss the Ontario Superior Court decision in Fica v Dmytryshyn, 2018 ONSC 2034, which addresses a fiduciary’s duty to comply with the Rules of Civil Procedure in accounting matters.

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 Jonathon Kappy.

Click here for more information on Rebecca Rauws.

31 May

Estate Trustee Duties 101

Hull & Hull LLP Executors and Trustees, In the News, Litigation, Passing of Accounts Tags: , , , , , 0 Comments

The duties owing by an Estate Trustee are plentiful and onerous.  It is important for an Estate Trustee, as soon as stepping into office, to understand their obligations and prioritize the steps to be completed.

There have been concerns rising out of Australia where firms have been billing clients, now deceased, for services that they are no longer providing.  The Australian Broadcasting Corporation, as well as Bloomberg, have reported that many financial institutions have been billing clients notwithstanding their own internal documents confirm that services are not being provided and that their client is dead.  In some instances, clients who had passed away ten years prior, were still being charged.

This serves as a helpful reminder that Estate Trustees should immediately take steps to cancel the deceased’s numerous accounts/subscriptions that are no longer needed and that may automatically renew.  These include, telephone, internet, magazine/newspaper, and the gym.  And of course, the bank!  An estate account should also be opened in order to deposit income and to pay any necessary expenses that may arise.

An Estate Trustee does not want to deliver an accounting, replete with payments for services that are no longer necessary.  This would certainly impact a claim for compensation.

Solicitors assisting an Estate Trustee with the administration of an estate often provide checklists to ensure such obligations are met.

Noah Weisberg

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29 Aug

Can a Fiduciary Overcome Poor Record-Keeping?

David M Smith Estate & Trust, General Interest, Guardianship, Passing of Accounts, Uncategorized Tags: , 0 Comments

The duties of a fiduciary must be performed diligently, with honesty and integrity and in good faith, for the benefit of the recipient.  Whether a fiduciary can prove that he or she has complied with these duties will depend to a great extent on the ability of the fiduciary to account.  While the duty to account is not debatable, the Court may consider the specific circumstances of the fiduciary when evaluating whether their actions are appropriate.

In Christmas Estate v Tuck [1995] OJ No 3836, the executor disputed numerous cheques for the benefit of the attorney for property and other cash gifts that she was unable to substantiate with receipts or vouchers. The Court held that it would be inappropriate to impose strict accounting requirements where the parties had a “close family relationship”, in this case, mother and daughter.

The Court further declined to draw a negative inference when the attorney was unable to produce records to account for all transactions: the grantee had helped the grantor “in a multitude of ways” and, accordingly, the burden of strict accounting practices was inappropriate.

In Laird v Mulholland [1998] OJ No 855, the Court noted that the overall credibility of an attorney for property is an important factor in determining whether that attorney’s informal accounts are satisfactory. The Court was unable to conclude that the attorney had acted dishonestly with a view to misappropriating the grantor’s assets, notwithstanding that his “record-keeping practices [left] much to be desired.

The Court pointed to the “abundant evidence” that the Attorney had performed “a multitude of services” which were entirely for the benefit of the grantor. The Court held that the fiduciary had acted “honestly and reasonably in all the circumstances” and should therefore be “relieved from personal liability.”

Thanks for reading,

David Morgan Smith

 

11 Jul

Hull on Estates #524 – Considerations for granting leave for an attorneyship accounting

76admin Hull on Estate and Succession Planning, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, Show Notes Tags: , , , , , , , , 0 Comments

Today on Hull on Estates, Jonathon Kappy and Noah Weisberg discuss the decision on Ghor and Steele and specifically when an attorney can be compelled to account.

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

Hull on Estates #415 – Accounting obligations with digital assets and accounts

Hull & Hull LLP Hull on Estates, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED, Show Notes Tags: , , , , , , 0 Comments

Listen to Hull on Estates #415 – Accounting obligations with digital assets and accounts

Today on Hull on Estates, Jonathon Kappy and Noah Weisberg discuss administration and accounting obligations with respect to digital assets and digital accounts.  Although much attention of late has been targeted towards the gathering of these assets, and the determination of the rightful owner, attention must also turn to the inclusion of these assets in administration and accounting.

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 Jonathon Kappy.

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27 Apr

Rule Amendments Alter Timing in Passing of Accounts Proceedings

Hull & Hull LLP Litigation, Passing of Accounts Tags: , , , , , , , 0 Comments

The time line in passing of accounts proceedings is being changed. Recent amendments to the Ontario Rules of Civil Procedure extend the time period for service of the Notice of Application to pass accounts, and move up the time within which to deliver a Notice of Objection. 

The amendments also increase the costs allowable upon an unopposed passing of accounts.

The amendments, found in Ontario Regulation 55/12, come into effect on July 1, 2012.

With respect to timing, the amendments make the following changes:

  • Notice of Application: Ontario respondent: 60 days notice (up from 45)
  • Notice of Application: Outside Ontario respondent: 75 days notice (up from 60)
  • Notice of Objection: 30 days before hearing (up from 20 days)
  • Response from Children’s Lawyer or Public Guardian: 30 days before hearing (up from 20 days)

The amendments also codify what is required where a request for increased costs is being made, and the time frame for making and opposing such a request.

The tariff for costs allowable on an uncontested passing allows for greater costs. The costs range from $2,500 for an estate having a value of less than $300,000, to $7,500 for an estate having a value of $3,000,000 or more (up from a range of $800 to $5,000).

Have a great weekend.

Paul Trudelle – Click here for more information on Paul Trudelle

25 May

Passing Over an Executor

Hull & Hull LLP Estate & Trust Tags: , , , , , , , , , , , , , 0 Comments

In a recent decision out of the Supreme Court of B.C., Re Thomasson Estate, the Honourable Justice Gerow considered the circumstances where the court may pass over an executor, on an application by a co-executor/beneficiary.

The two Deceased (collectively referred to as the “Deceased”) had been married and had four children together, all of whom survived the Deceased. In their Wills, they named two of their children, as their executors, and directed the executors to distribute the estate to three of their four children. 

 

One son commenced this application to obtain an order that would pass over the other son as his co-executor for the Estates. The Applicant argued that it is necessary for the Estates to make a proper enquiry into the nature of inter-vivos transactions between the co-executor Respondent and the Deceased and such an inquiry must be made independent of the co-executor Respondent as he would be in a conflict of interest.

 

The co-executor Respondent opposed the Applicant’s application, and argued, amongst other things, that the court should not interfere with the testator’s right to nominate his or her executor and removing him would be prejudging the case.

In her decision Justice Gerow states:

In the circumstances of this case, it is my opinion that there is a perceived conflict of interest between the co-executor Respondent in his role as an executor and his interest in his personal capacity. If an action is instituted by the executors as a result of the transfer of the Property, it would be against the co-executor Respondent. In my opinion, the co-executor Respondent, in his capacity as executor, cannot attack the transfer of the Property to himself while at the same time maintaining, in his personal capacity, that the transfer of the Property was proper. By making such a finding I am not prejudging the case. I am simply of the view that, in the circumstances of this case, if an action is commenced as a result of the enquiries into the transfer, the co-executor Respondent cannot conscientiously act as a plaintiff in his capacity as an executor in a case where he will be the defendant.

B.C. legislation is unique compared to the legislation that governs estate trustees in Ontario; however, if a similar situation arose, an application seeking similar relief could be brought under Rule 14.05(3) of the Rules of Civil Procedure.

 

 

Rick Bickhram – Click here for more information on Rick Bickhram. 

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