Tag: Court of Appeal
Recently, the Ontario Court of Appeal had the opportunity to consider the correct use of the “armchair rule” in will interpretations.
In Ross v Canada Trust Company, 2021 ONCA 161, the Court of Appeal was tasked with determining whether the motion judge’s use of the armchair rule to interpret provisions in a Will regarding the disposition of a cottage property was correct.
The motion judge interpreted the Will as directing the proceeds to be equally distributed amongst the Deceased’s four grandchildren. However, one grandchild disagreed with the interpretation, and argued that the proper interpretation would require the sale proceeds to be divided into five equal shares, with distribution of two shares to him, such that he would ultimately receive 40% of the sale proceeds, rather than the 25% that would result from the motion judge’s decision.
The respondents on the appeal cross-appealed. While they agreed with the judgment, they disagreed with the manner in which the decision was arrived at. In short, both parties submitted that the motion judged erred by resorting to the “armchair rule”.
In explaining the armchair rule, the Court of Appeal cites Ian Hull and Suzana Popovic-Montag’s description of the armchair rule in Feeney’s Canadian Law of Wills, 4th ed. (Toronto: LexisNexis, 2020) at 10.45 and 10.46:
“In the first instance, the court may be convinced that the testator’s intention can be discerned from the will itself. In such a situation, since the testator must be taken to have used the language of the will in view of the surrounding circumstances known to him or her when he or she made his or her will, evidence of such circumstances is necessarily admissible, at least insofar as it corresponds to the facts and circumstances referred to in the will. It seems obvious that a court might conclude that admissible evidence of surrounding circumstances is not helpful in determining meaning…The court puts itself in the position of the testator at the point when he or she made his or her will, and, from that vantage point, reads the will, and construes it, in the light of the surrounding facts and circumstances. This approach is commonly referred to as the “armchair rule”. [emphasis added].
The Court of Appeal rejected the arguments raised by the parties, and concluded that the interpretative methodology applied by the motion judge was sound. The Court found that where the motions judge could not discern the plain meaning of the Will’s language, the motions judge correctly took a step back to “consider the bigger picture” of the surrounding circumstances and applied the armchair rule. The court furthered that given the inconsistency that results from the two Will provisions in question, it was necessary to resort to the armchair rule.
The Court of Appeal ultimately held that the motion judge did not err in applying the armchair rule, the conclusion did not reveal any palpable or overriding error, and, the decision was well supported by the evidence.
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In the recent decision of Carroll v Toronto-Dominion Bank, 2021 ONCA 38, the Ontario Court of Appeal dismissed the appeal of an applicant for lack of standing to bring the application, notwithstanding that the application related to an alleged breach of trust. Standing is required to sue for breaches of trust.
In this matter, the applicant, Marion Carroll, was formerly employed by Toronto-Dominion Bank (“TD Bank”), as a manager who was responsible for the compliance of a group of TD Bank’s subsidiaries relating to the management of mutual funds. Among other things, Ms. Carroll claimed to have exposed regulatory non-compliance and breaches of mutual funds trusts by TD Bank’s subsidiaries. In 2019, Ms. Carroll issued an application against TD Bank with respect to its role as Trustee of designated mutual funds.
The motion’s judge dismissed the application pursuant to Rule 21.01 of the Rules of Civil Procedure, finding that Ms. Carroll lacked standing to bring the application. Ms. Carroll appealed that ruling to the Ontario Court of Appeal.
While the Ontario Court of Appeal addressed other issues within this appeal, the focus of this article will be to highlight the Court’s finding that standing is required to sue for breaches of trust.
Ms. Carroll’s position was that once a court is informed of allegations of a potential breach of trust, the inherent jurisdiction of courts to administer trusts makes standing “subordinate, and largely irrelevant, where allegations of fraudulent or improper misconduct are made against a trustee,” thereby obliging the courts to resolve the litigation. Ms. Carroll also furthered the position that the courts of equity have removed the requirement of standing to protect the interests of incapacitated beneficiaries who cannot effectively sue to enforce trust obligations.
The Court rejected Ms. Carroll’s position stating that the claim that standing is subordinate or irrelevant “misconceives the true nature of the inherent jurisdiction of courts to supervise or administer trusts and is contrary to basic trust principles.” Although, the courts have previously extended access to the court’s inherent jurisdiction to creditors or contingent beneficiaries, the Court noted that the implications of Ms. Carroll’s position would result in strangers being able to enforce trust benefits that beneficiaries are entitled to, even if the beneficiaries choose not to enforce them, and that this would be contrary to the essential character of a trust.
The Courts are able to assist those with an interest in trusts by enforcing and compelling the performance of those trusts. Specifically, the Court noted that:
“the inherent jurisdiction to supervise and administer trusts exists to assist the parties to the trust relationship or those who are interested in the trusts. As such, the inherent jurisdiction of courts to supervise and administer trusts is not inconsistent with the imposition of standing requirements. To the contrary, it is entirely in keeping with the role inherent jurisdiction performs to ensure that those who seek to invoke the inherent jurisdiction to supervise or administer trusts have an interest in the trusts they seek to enforce.”
The Court of Appeal also discussed the following issues within this decision:
- Did the motion judge err by applying the wrong standing test?
- Did the motion judge err by finding that Ms. Carroll had not pleaded facts establishing a prima facie case of standing?
- Did the motion judge err by failing to consider all aspects of the relief sought when determining Ms. Carroll’s standing?
The Court concluded that the motion judge made none of the above-noted errors and dismissed the appeal.
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In a recent decision from the British Columbia Court of Appeal, Mayer v Mayer Estate, 2020 BCCA 282, the court considered an application to reopen a trial to admit new evidence or to have a mistrial declared (the “post-trial application”). The post-trial application arose as a result of an email between the respondent’s daughter-in-law (who had been assisting the respondent with the litigation) and the respondent’s counsel. The appellant had obtained the email from the deceased’s computer. The deceased and the respondent had shared an email address, and when the appellant connected the computer to the internet some emails were downloaded from the shared account, including the email in question. The appellant took the position that the email that she had obtained impugned the respondent’s credibility by contradicting evidence she had given in the previous proceedings. The post-trial application was dismissed, and the appellant appealed the decision.
The Court of Appeal dealt with the question of the email fairly briefly. The post-trial application judge had concluded that the email was a communication that was subject to solicitor-client privilege. The Court of Appeal appears to have accepted that finding.
The content of the email is not specifically set out in the decision, but appears to have related to the purpose for which the respondent had made certain transfers to the deceased. It appears that, notwithstanding the finding that the email was privileged, the court still considered whether the contents of the email did impact the respondent’s credibility.
The respondent swore affidavit evidence in the original proceedings that she had made two transfers to the deceased to assist him in paying some tax debts. The email apparently indicated that at the time the respondent swore her affidavit, she knew that the deceased did not, in fact, have any tax debt. The post-trial application judge’s analysis stated that it appeared the deceased may have been untruthful with the respondent at the time the transfers were made, and probably used the funds for something other than tax debts, which he did not have. However, the respondent’s evidence in this regard was not a lie, because at the time of the transfer, all she knew was what the deceased had told her, namely that he intended to use the funds to pay his tax debts.
Additionally, the post-trial application judge had already addressed minor inconsistencies of this nature in the respondent’s evidence in his reasons from the original proceeding, noting that they were not consequential and fully explained by the respondent.
The Court of Appeal dismissed the appeal. In making this decision, the Court of Appeal notes that “it is apparent that the appellant is seeking largely to re-argue the case as originally tried before Justice Crossin, particularly as to credibility, which is not open to her.”
The Court of Appeal also awarded the respondent special costs (on a higher scale), based on its conclusion that the very serious allegations made and maintained by the appellant against the respondent constituted “sufficiently reprehensible conduct to merit rebuke in the form of an award of special costs”.
Although scenarios may exist where new evidence could have such an impact on credibility that it would warrant reopening a trial, one should be careful to fully assess the nature and strength of such evidence. The award of special costs also serves as further caution that serious allegations such as fraud and perjury should be made very selectively, when they are appropriate and fully supported by the evidence.
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How many pages are too many pages? In what circumstances will the Court of Appeal grant leave to a party to file a factum exceeding 30 pages in length? A recent decision of the Court of Appeal addresses these questions within the context of a request for leave to file a 500 page factum (300 of which comprised of appendices).
In OZ Merchandising Inc. v Canadian Professional Soccer League Inc. et. al., the proceedings had been ongoing for many years, the trial was lengthy, and there were numerous grounds of appeal (60 or so), however, the Court failed to see the justification for a factum outside the prescribed 30 page limit. In coming to its decision, the Court highlighted the well-established principles and relevant considerations, when determining whether or not an extension of the facta page limit should be granted. These points are summarized below:
- The maximum length of appellate facta is 30 pages. This is not a suggestion or a starting point;
- The maximum page length has been set with a view to reasonably complex cases, such that simpler matters can and should be dealt with in much shorter factums;
- The purpose of the 30 page limit is to “focus counsel on the issues and not have a factum that goes on, and in fact, wanders”;
- Leave of the court is required to file a factum beyond the 30 page limit;
- Leave is exceptional, granted sparingly and only in special circumstances;
- While a party must be permitted to present its whole case effectively, this does not detract from the need for conciseness and the duty of efficiency to the court;
- The overarching question, is “whether the extension is required in the interests of procedural fairness and justice to advise the other side of the issues in dispute so it can prepare properly for the appeal and to assist the division of the Court that hears the appeal to deal effectively with the issues”; and
- The fact that an appeal raises important and complicated questions of facts or law, that there are numerous grounds for appeal, or that the proceedings have been ongoing for many years, do not automatically justify an extension of the page limit.
In concluding, the Court cited Chartier J.A (as he then was) in R v Henderson (W.E.), 2012 MBCA 93, stating that “Courts expect counsel to be of assistance to the appellate process…Counsel are expected to have sufficient confidence to prioritize their arguments, to separate wheat from the chaff and to provide fully developed arguments on what should be the real points for appellate review. Not only is this in the best interests of their clients; it is in the best interests of the administration of justice.”
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The Ontario Court of Appeal recently addressed an appeal that was scheduled to be heard on April 16, 2020 which had to be adjourned sine die due to COVID-19. The full decision of 4352238 Canada Inc v SNC-Lavalin Group Inc, 2020 ONCA 303 can be found here.
During a case management conference before Justice L.B. Roberts, which was scheduled to determine how this matter was to proceed, the Appellant objected to the appeal proceeding in writing, as suggested by the Respondents. The argument that the Appellant relied on was that the Court would not have jurisdiction to hear an appeal in writing over a party’s objection. The Court disagreed.
In making such a decision, the Court confirmed as follows:
- The Court Has Jurisdiction to Order a Civil Appeal Heard in Writing
- The Appellant’s argument that the Court has limited supervisory jurisdiction over its own process, restricted to governing administrative details was rejected. The Court held that it is well settled that its implicit or ancillary jurisdiction to manage its own process is broad. Case law was cited to support the Court’s position that it has “the jurisdiction to make any procedural order to prevent an abuse of process or to ensure the just and efficient administration of justice”.
- The Court’s implicit powers include those that are “reasonably necessary” to accomplish the Court’s mandate and perform its intended function which arise by necessary implication even where there is no express statutory or common law authority to that effect.
- The Courts of Justice Act and the Rules of Civil Procedure do not mandate the absolute right to an oral hearing of an appeal.
- COVID-19 has created extraordinary circumstances to which all must adapt as best as possible.
- This Appeal Should Proceed in Writing
- This matter arises as a result of the dismissal of an application for narrow declaratory relief which proceeded on a paper record. It concerns the interpretation of a clause in a contract within the context of relatively straightforward facts.
- Further submissions are not foreclosed in that, if necessary, the panel has the option to seek further oral and written submissions.
- There is no prejudice or unfairness to the Appellant by proceeding in writing but the potential prejudice to the Respondents by any further delay and the unnecessary strain on the Court system is evident.
It has been some time now that the judicial system highlighted the importance of written advocacy. Certainly, advocates today are aware of how important it is to their client’s case, regardless of whether an oral hearing takes place, at the end of the day.
What this recent decision suggests now is that the importance of written advocacy is further elevated because during these difficult times and given the limitations imposed by COVID-19, your client’s written position may very well be their “day in Court”.
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Are you an estate trustee? Is the estate being sued? Are there no, or insufficient, assets left in the estate to satisfy any judgment that may be obtained? Then plene administravit (or plene administravit praeter) is the doctrine for you!
Plene administravit is Latin for “fully administered”. It is pleaded where there are no assets remaining in the estate to satisfy any judgment and costs award that may be obtained. Plene administravit praetor means “fully administered except”, and is pleaded when there are some but insufficient assets in the estate to satisfy any judgment and costs.
Failure to plead plene administravit could lead to personal liability on the part of the estate trustee for the claim. As stated in Commander Leasing Corp. Ltd. v. Aiyede (1983) CanLII 1649 (ON CA):
It has long been established that if an executor or administrator has no assets to satisfy the debt upon which an action is brought, in the absence of a plea of no assets or plene administravit, he will be taken to have conclusively admitted that he has assets to satisfy the judgment and will be personally liable for the debt and costs if they cannot be levied on the assets of the deceased. If the executor has some, but insufficient, assets to satisfy the judgment and costs, a plea of plene administravit praetor will render him liable only to the amount of assets proved to be in his hands as executor”.
Where the doctrine is pleaded, the burden of proof falls on the plaintiff to show that assets existed or ought to have existed in the hands of the estate trustee at the time the action was commenced.
In Commander Leasing, the estate trustee distributed the proceeds of the estate to the beneficiary (herself), with knowledge of the claim. The Court had no difficulty in finding that as the doctrine was not pleaded, the estate trustee was personally liable for the judgment.
In Commander Leasing, the Court of Appeal also discussed the companion doctrine of devistavit. Devistavit, or a wasting of assets, is defined to be “mismanagement of the estate and effects of the deceased, in squandering or misapplying the assets contrary to the duty imposed on them, for which the executors or administrators must answer out of their own pockets, as far as they had, or might have had, assets of the deceased.” In Commander Leasing, the court found that in distributing the estate the estate trustee breached her duty as estate trustee, rendering her personally liable.
However, all is not lost if the estate trustee fails to plead plene administravit. In Brummund v. Baumeister Estate, 2000 CanLii 16988 (ON CA), the Court of Appeal upheld a trial judge’s decision to allow the defendant to amend the defence at trial to plead the doctrine. The Court of Appeal held that the plaintiff was not prejudiced by the amendment, as the facts underlying the application of the doctrine were fully canvassed at trial.
Have a great, plenus weekend.
The recent Ontario Court of Appeal decision in Dzelme v Dzelme acts as a helpful reminder that even if an attorney has standing to seek a passing of accounts, the Court may still refuse to grant the passing.
John was named as the attorney for personal care for his father, Ritvers, and sought an accounting of Ritver’s financial affairs from his brother Arnis (Ritvers’ other son) who was the attorney for property. Both John and Arnis agreed that John, given that he was an attorney for personal care, could apply under section 42(4)(1) of the Substitute Decisions Act for a passing of accounts without leave. Nonetheless, the Court of Appeal identified that even if a person has standing to apply for an accounting, it remains the discretion of the Court to order a passing of accounts.
In deciding whether to order the passing, the superior court judge made the following findings of fact: (i) both the father and mother were capable when they executed written instructions to Arnis not to produce any financial information about his affairs to John; (ii) the mother maintained this position in response to John’s motion; (iii) a capacity assessment found that the mother was capable of making her own decisions; (iv) a third brother corroborated Arnis’ evidence that he was abiding by his parent’s wishes; (v) the application judge did not doubt that Arnis was following his mother’s wishes; and, (vi) there was no reason to suspect that Arnis was acting improperly with respect to certain transactions.
On this basis, the Court of Appeal upheld the application judge’s dismissal of John’s request for an order that Arnis pass his accounts of Ritver’s property.
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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.
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Another will challenge was before the Court of Appeal this month on February 5, 2019. Reasons for the panel, comprised of Pepall, Trotter, and Harvison Young JJ.A., were released in writing on February 13th. Quaggiotto v. Quaggiotto, 2019 ONCA 107, can be found here.
The issue of validity was solely focused on a codicil that was executed by Maria Quaggiotto when she was 87 years old. The codicil left the residue of her estate to one son, Livio, while her will had previously left an equal division of the residue to both of her sons, Livio and Franco.
After a 10 day trial, Justice Rogin found that the codicil was valid.
On appeal, the challenger Franco sought to overturn various findings of fact and findings of mixed fact and law.
Ultimately, the panel upheld the decision of Justice Rogin.
The panel reaffirmed the Court of Appeal’s decision in the Orfus Estate with respect to the notion that testators are not required to have “an encyclopedic knowledge” of their assets in order to satisfy the test for testamentary capacity.
Interestingly enough, the Court of Appeal found that the trial judge was sufficiently alive to corroboration requirements of section 13 of the Ontario Evidence Act even though Justice Rogin’s decision would appear to have erroneously cited section 13 of the Ontario Estates Act for this important statutory requirement. The adage “form over substance” did not hold water in this appeal given that the actual legal requirement was adequately considered by Justice Rogin.
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In today’s podcast, Jonathon Kappy and Sayuri Kagami discuss the recent Court of Appeal decision in Styres v Martin, 2018 ONCA 956, where the Court ordered a new trial of the issues. The Appellant had suffered catastrophic brain injuries after a motorcycle accident and subsequently entered into a long-term relationship with the Respondent to whom he eventually transferred his home. On Appeal, the Court of Appeal examined some of the important issues that need to be examined in such a matter.
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