The monetary jurisdiction of Ontario’s Small Claims Court is set to increase on January 1, 2020. The jurisdiction of the Court will increase from $25,000 to $35,000.
The current limit of $25,000 was in place since 2010. Prior to that, the limit was $10,000.
In a press release from the Ministry of the Attorney General, the change is said to “make it faster, easier and more affordable for people and businesses to resolve their disputes in front of a judge.”
Claims over $35,000 would need to be brought in the Superior Court of Justice. As noted by the Ministry of the Attorney General, claims in the Superior Court of Justice can take years to resolve, and can involve expensive legal representation. Claims in the Small Claims court, however, can be resolved in less than a year, and litigants are not required to hire lawyers or other legal help.
The Ministry also stated that the change should have the effect of reducing wait times in the Superior Court of Justice, as many claims that would otherwise have been brought in the Superior Court of Justice could now be brought in the Small Claims Court.
Another change is that the minimum amount of a claim that may be appealed to the Divisional Court is increased from $2,500 to $3,500.
As to transition, litigants who started a claim in the Superior Court of Justice for an amount between $25,000 and $35,000 can move to have their claim transferred to the Small Claims Court.
There are costs consequences if a proceeding is brought in the wrong court. Under Rule 57.05 of the Rules of Civil Procedure, if a plaintiff recovers an amount within the jurisdiction of the Small Claims Court, the court may order that the Plaintiff shall not recover any costs. If a Plaintiff recovers default judgment that is within the monetary jurisdiction of the Small Claims Court, costs shall be assessed in accordance with the Small Claims Court’s tariff.
Costs in the Small Claims Court are limited under its rules, and are subject to a limit under the Courts of Justice Act, s. 29, to 15% of the amount of claimed or the property sought to be recovered, subject to the court’s right to award higher costs to penalize a party or the party’s representative for unreasonable behavior.
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The Ontario Court of Appeal recently set aside an order committing an estate trustee to 15 days in jail, to be served on weekends, for contempt of an order requiring the estate trustee to pass his accounts.
In Ross v. Ross, 2019 ONCA 724 (CanLII), the estate trustee was a lawyer, 73 years of age, with no prior convictions or findings of contempt. At the time of the appeal, the estate trustee had purged his contempt.
At the hearing below, the judge found that the contempt arose from “a failure to understand and appreciate or to ignore the need for, and importance of, complying with the order within the specified time or within a reasonable time.” The Court of Appeal held that this finding meant that the estate trustee’s actions did not amount to a callous disregard for the court’s authority. Accordingly, a jail sentence was not appropriate.
For other cases on contempt and sentencing, see our blog, here and here. In the first blog, reference is made to a case where an 88 year old litigant with health issues was sentenced to 30 days in jail for contempt. In the second blog, we discuss a case where an attorney for property failed to pass accounts as required by court order. He was fined $7,000.
Finally, consider the case of Canavan v. Feldman, 2004 CanLII 4787 (ON SC). This was a claim by an estate trustee against his former lawyer. There, the estate trustee, 67 years old, spent 35 days in jail for contempt of court orders relating to a passing of accounts, and was only released when new counsel put further evidence before the court. The estate trustee’s prior lawyer had consented to an order of contempt without the estate trustee’s knowledge. The lawyer told the estate trustee that he had “nothing to worry about”. At a sentencing hearing, the lawyer did not attend. The estate trustee was sentenced to 6 months in jail. The estate trustee was awarded general damages of $200,000 and punitive damages of $100,000 against his prior lawyer.
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The Substitute Decisions Act (the “SDA”) was passed in 1992. It governs what happens when a person becomes incapable of managing their own property or personal care. Under section 3 of the SDA, if the capacity of a person in a legal proceeding is in issue, the Public Guardian and Trustee (the “PGT”) may arrange for the legal representation of that person. Section 3 also provides that the person shall be deemed to have the capacity to retain and instruct counsel.
Although section 3 seems to be fairly straightforward, the details surrounding the appointment and position of section 3 counsel are somewhat obscure. Cases such as Sylvester v Britton and Banton v Banton have added some clarity to the role of section 3 counsel. The recent case of Kwok v Kwok provides a further illustration as to when section 3 counsel is to be appointed.
In Kwok v Kwok, Jiefu Kwok was involved in two motor vehicle accidents in 2011. He suffered a traumatic brain injury as a result and commenced two legal actions in relation to the accidents. A capacity assessment was conducted in 2014, which revealed that Jiefu was incapable of taking care of himself and managing his own property. In 2015, Jiefu’s son, Derek, was appointed as his guardian for property and personal care. Derek later filed an application to be released from these roles as he stated that it was putting a strain on his relationship with his father. Derek’s mother, Ellie, brought an application to take Derek’s place and be appointed as Jiefu’s guardian of property and personal care.
The PGT took the position that section 3 counsel should be appointed to represent Jiefu and obtain his wishes before Ellie was appointed as Jiefu’s guardian of property and personal care. The PGT was of the view that Jiefu’s capacity assessment conducted in 2014 was outdated and that a more limited guardianship might be appropriate for him.
Counsel for Derek and Ellie (the “Applicants”) argued that section 3 counsel is to be used in cases where a capacity assessment has not already been conducted. They added that, since a capacity assessment was already conducted in this case, the appointment of section 3 counsel was inappropriate. Moreover, a primary concern for the Applicants was the high costs associated with the appointment of section 3 counsel.
The Court considered the arguments of the PGT and the Applicants and noted the following about the role of section 3 counsel:
- The appointment of section 3 counsel is a safeguard that protects the dignity, privacy and legal rights of a person who is alleged to be incapable
- Section 3 of the SDA does not make the appointment of legal representation mandatory
- In deciding whether to appoint section 3 counsel, the Court must consider the specific facts and issues in each case
- The Court can appoint section 3 counsel even in cases where a capacity assessment has already been conducted or where there is an existing Court order declaring that a person is incapable
The Court concluded that the appointment of section 3 counsel would not be in Jiefu’s best interests and would be a waste of resources. The Court made this finding based on the following reasons:
- There were no completing claims amongst Jiefu’s closest relatives as to who should be his legal representative. Both Derek and Ellie supported the appointment of Ellie as Jiefu’s guardian of property and personal care
- There was no evidentiary basis to question the validity of the 2014 capacity assessment
- A letter from Jiefu’s primary care physician regarding his current condition did not suggest that Jiefu’s condition had improved
- Jiefu attended Court and expressed that he supported the appointment of Ellie as his guardian of property and personal care
As a result, Derek was released from his role as Jiefu’s guardian for property and of the person and Ellie was appointed in his place.
Kwok v Kwok adds to a growing body of cases examining the role of section 3 counsel. It provides that the Court can appoint section 3 counsel even in cases where a capacity assessment has already been conducted or where there is an existing Court order declaring that a person is incapable. Furthermore, it indicates that the wishes of the incapable person are to be given a considerable amount of weight in assessing whether section 3 counsel is appropriate.
For further reading on section 3 counsel, check out these other blogs:
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Suzana Popovic-Montag and Celine Dookie
In Baca v. Tiberi, the court awarded substantial costs as against an attorney for property/estate trustee for maladministration of her mother’s property while she was alive, and of her estate following her death.
The litigation was settled prior to a court determination. However, under the settlement, the parties submitted the question of costs to the court.
In Baca, the court found that there was serious misappropriation by the attorney and estate trustee. The attorney added her name to her mother’s bank accounts and took out money for her own expenses. She caused her mother to incur tens of thousands of dollars of debt for the benefit of the attorney, her husband and sister. She moved into her mother’s home with her family and did not pay rent. She transferred title to the home to herself and her mother jointly. After the mother’s death, she transferred the home to herself and her husband. She mortgaged the home to pay her own debts.
At the costs hearing, the court asked the parties whether the attorney’s lawyer might have personal liability for costs. The attorney waived solicitor-client privilege and the lawyer was subjected to examination and made submissions.
The court awarded costs against the attorney and the lawyer on a “full indemnity” basis, after a reduction of $50,000 for excessive time spent, in the amount of $301,941.41, plus HST and disbursements. (The estate had a total value of approximately $1m.) The attorney and the lawyer were jointly and severally liable for costs. As between themselves, the attorney was to be liable for 75% of the costs, and the lawyer was liable for 25%.
In its ruling, the court was critical of the lawyer’s conduct. The court found that the lawyer pursued a goal that was unattainable. Further, the lawyer misrepresented facts to the court. In pleadings, the lawyer (not the client, per the court) denied assertions that were, to her knowledge, true. Further, the pleadings contained assertions that were known to be false. The lawyer allowed a misleading affidavit to be sworn by her client. The lawyer also failed to ensure that certain funds were held in trust in accordance with a court order. At a later hearing, the lawyer advised the court that the funds were held in trust when they were not.
The court found the lawyer liable, partially, on the basis that she knew of her client’s misconduct yet advised or acted on instructions to take untenable legal positions. She also took legal steps that costed her client and the other side hundreds of thousands of dollars, yet the steps did nothing to avoid “the only inevitable conclusion possible”: that her client would have to make the estate whole. There was no evidence that the client was ever advised of the situation.
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Sometimes, you are added as a party to a proceeding when you don’t really want to be. In other cases, a proceeding is started, and you are not a party, but want to be. What can be done about this? Intervention.
Under Rule 13.01(1) of the Rules of Civil Procedure, a person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims:
- an interest in the subject matter of the proceeding;
- that the person may be adversely affected by a judgment in the proceeding, or
- that there exists between the proposed intervenor and one or more of the parties a question of law or fact in common with one or more of the questions in issue in the proceeding.
Rule 13.01(2) adds another consideration. The court shall consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding.
Intervention was considered in the decision of Arnold v. Arnold, 2019 ONSC 3679. There, the proceeding involved a Power of Attorney dispute between 3 of the incapable person’s children. The issue was whether a 2011 Power of Attorney, which appointed children 1, 2 and 3 as attorneys, governed or whether a 2019 Power of Attorney, which only appointed children 2 and 3 as attorneys governed.
The proposed intervenor was child 4. He was not named as attorney in any of the Powers of Attorney, and was not a party to the proceeding. Child 4 was diagnosed with schizophrenia and lived in his mother’s, the incapable person’s, house. He was receiving support from her. He sought to intervene to ensure that his needs were protected.
The court considered the criteria for intervening, and refused to allow child 4 to intervene.
As to the first criteria, the court found that essence of the application was who was to be responsible for the management of mother’s property, not how it was to be managed. While child 4 may have an interest in how the property was being managed, he had not genuine interest in who.
Regarding the second criteria, child 4 acknowledged that he was not adversely affected by the management of mother’s property, as long as the responsible person fulfills that role properly. The court added that child 4 would benefit from the determination of the question raised in the proceeding, as he would then know with whom he is dealing.
With respect to the third criteria, child 4 argued that he had potential claims as against his father’s estate and his mother for child support. The court found that the questions raised in those potential proceedings were not the same as the questions raised in the existing proceeding regarding who was to care for mother. Further, child 4’s lack of intervenor status would not prejudice his claims.
The court also found that allowing child 4 to intervene would result in undue delay and prejudice. The proceeding was already being expedited, and was scheduled to be heard two weeks after child 4’s motion to intervene. Allowing child 4 to intervene would likely delay the proceeding. Had child 4 moved to intervene sooner, this might not have been the case.
Costs were awarded against child 4. However, due to his being on ODSP, costs were awarded against child 4 in the amount of $4,000 to each of the other groups of litigants. Payment was deferred until child 4 received his share, if any, of his mother’s estate.
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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.
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If you are anything like me you have previously struggled with how you are to refer to Masters in court. Referring to them as “Master” always felt a little bit awkward, while at the same time you were always not sure if the more formal “Your Honour” was reserved solely for Judges.
If you have ever experienced similar uncertainty wonder no more, as the Consolidated Practice Direction for the Ontario Superior Court of Justice was recently amended to clarify how you are to refer to Masters in court. In accordance with the revised item 114 of the Practice Direction, it is confirmed that you are to refer to Masters as “Your Honour” in English and “Votre Honneur” in French.
Now that the potential embarrassment of using the incorrect honorific in referring to Masters has been resolved, now may also be an opportune time to provide a reminder that in accordance with item 58 of the same Consolidated Practice Direction lawyers are not required to gown when appearing before a Master.
So in summary, in accordance with the updated Consolidated Practice Direction you are to refer to Masters as “Your Honour” when appearing before them, while at the same time you are not required to gown. Consider yourself properly prepared for you next appearance before a Master.
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On March 27, 2014, I blogged on the issue of settling litigation, but leaving the issue of costs to the court. I noted the decision of Dhillon v. Dhillon Estate, 2009 CanLII 58607 (ON SC), where the matter was settled on the eve of trial, but the parties left the issue of costs to the court. The court declined to make any award of costs, as the factors to be considered in awarding costs had not been determined by the court.
In the decision of Koster v. Koster, 2018 ONSC 6896 (CanLII) released November 19, 2018, the issue arose again. A motion was brought for summary judgment, but as the court determined that it could not decide the question without a trial, the motion was dismissed. The parties then went to mediation, where the matter was settled, except for the issue of costs. Pursuant to the settlement, the entitlement and quantum of costs was to be determined by the court.
There, the court declined to make any costs award. The court referred to the Dhillon decision.
In refusing to award costs, the court stated:
By definition, a settlement is a compromise between the litigants’ positions. Also by definition, it is agreeable to all the parties. It is impossible to say with accuracy why any particular settlement was acceptable to one or other of the parties. Put another way, an award of costs is typically grounded in findings by the court as to the parties’ respective success and the impact of their actions during litigation, which are findings not made in the event of a settlement.
The court also cited from the decision in Waterloo North Condominium Corporation No. 161 v. Redmond, 2017 ONSC 1304 (CanLII). There too, the court declined to determine liability for costs following a settlement. There, the court stated:
Moreover to embark upon a full examination and adjudication of the merits of the parties’ respective substantive claims and defences for the sole purpose of determining the question of costs, when those substantive issues have been settled by the parties, would run counter to the principle in McLellan that costs are incident to a determination of the rights of the parties and are not to be made themselves the subject matter of the litigation.
As I concluded in my March 2014 blog, settling but leaving the issue of costs to the court should be avoided. Courts will be reluctant to relitigate the entire matter in order to make a determination as to who was right and who was wrong and therefore entitled to or liable for costs.
Have a great weekend.
Multiple wills are an extensively used estate planning tool designed to reduce the amount of Estate Administration Tax payable. Essentially, the grant of a Certificate of Appointment is limited to the assets referred to in the will that is being probated, and Estate Administration Tax is only paid on the assets falling under the will that is being probated.
This estate planning strategy was tested and approved by the courts in Granovsky Estate v. Ontario.
Where there is only one will, can similar probate fee/administration tax savings be accomplished by applying for a limited grant? According to the Manitoba Court of Appeal decision of Pollock v. Manitoba, the answer is NO.
In Pollock, the deceased died leaving personal property, mainly shares in privately held corporations, having a value of about $12.5m, and real property having a value of $1m. Probate was required to deal with the real property, but not required to deal with the shares. If probate could be obtained in relation to just the real property and not the value of the shares, the estate would save $75,000 in probate fees. (Using current Estate Administration Tax rates in Ontario, the saving under such a scheme would be $187,500!)
The Manitoba legislation allowed the administration of an estate of a deceased person to be limited to certain assets “as the court thinks fit”. The Manitoba Court of Appeal considered a long line of cases dealing with the issue and concluded that the court must have a “strong reason” for making a limited grant, and stated “I do not regard the saving of probate fees as a sound reason for making a limited grant of probate. An applicant for a limited grant is, of course, entitled to take the least expensive way of administering an estate, but the chosen way must be one permitted by the legislation. The saving of probate fees is not, as I see it, a sufficiently strong reason to justify a limited grant. Nor is a limited grant a money-saving device contemplated by the legislation.”
In Ontario, the Rules of Civil Procedure specifically allow for limited grants. However, the grant is “limited to the assets referred to in the will”: Rule 74.04(1). Thus, in Ontario, if there is only one will, the result would be as in Pollock: even if probate of the will was needed in order to deal with only one asset, Estate Administration Tax would need to be paid on all assets of the estate.
Have a great weekend.
Last night, I attended an advance screening of RBG, a documentary focusing on the career of Justice Ruth Bader Ginsburg, a current Associate Justice of the Supreme Court of the United States. Justice Ginsburg is a long-time social rights activist and advocate well known for her work in promoting gender equality on both sides of the bench.
More recently, Justice Ginsburg has gained notoriety for frequent dissenting opinions within the context of a primarily conservative judiciary. While a dissent is, by definition, “a disagreement with [the] majority decision” (Black’s Law Dictionary) that becomes law, one should not underestimate the value of a strong dissent over time.
At provincial appellate courts in Canada, a strong dissent may be of great assistance in preparing an application seeking leave to appeal to the Supreme Court, as well as at the appeal stage if leave is granted. Dissenting opinions of the Supreme Court of Canada have been referred to as the voice of the future, with prophetic potential.
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