A recent blog by Hull & Hull LLP, found here, highlights the methods that Estate Trustees may use in advertising for creditors. Such options included advertising in local newspapers, the Ontario Gazette, and online services. A recent Judgment by the Ontario Superior Court of Justice considers the appropriateness of advertising for creditors through the online service of NoticeConnect.
The unreported decision by the Honourable Madam Justice Conway dated July 7, 2017 (Court File No.: 05-118/17), declared that the Notice to Creditors published by the Estate Trustee on NoticeConnect, “was an appropriate notice to creditors and the [Estate Trustee] is therefore entitled to the liability protection provided by s. 53(1) of the Trustee Act“.
Therefore, Estate Trustees who properly advertise through NoticeConnect may proceed to distribute assets of an estate with the peace of mind that they will not be held personally liable should a claim against an estate later arise.
Hull & Hull LLP has closely followed the development of NoticeConnect having written numerous blogs about it. It will be interesting to continue to follow NoticeConnect and other technological advances in the estates and trust community, such as Hull e-state Planner, which will certainly assist lawyers in providing quality and efficient service to their clients.
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One of an estate trustee’s duties in administering an estate is to satisfy any outstanding debts owed by the deceased person upon his or her death. An executor who is aware of an outstanding claim by a creditor, but nevertheless distributes the estate, may be personally liable to the creditor. Although there is no requirement in Ontario to advertise for creditors, it is generally advisable to do so in order to enjoy the protection afforded to estate trustees by s. 53 of the Trustee Act, R.S.O. 1990, c. T.23.
Section 53 provides that upon the expiration of due notice to creditors, the estate trustee may proceed to distribute the estate assets, and will not be held personally liable should there be later notice of a claim following such distribution. The notice does not extinguish the debt, but removes the personal liability of the estate trustee.
The Trustee Act does not specify the manner in which notice should be made, nor the length of time that should pass before the notice expires. One commonly accepted method is to advertise in the local newspaper in the location where the deceased lived, usually for 3 consecutive weeks, after which the estate trustee will generally wait at least 30 days before taking steps to distribute the estate. Another option has been to advertise in the Ontario Gazette, which publishes, among other things, legislative decisions and public notices.
However, the Ontario Gazette recently advised that as of January 1, 2017, it will no longer be accepting requests to publish private notices where there is not a statutory requirement to publish in the Ontario Gazette.
According to Widdifield on Executors and Trustees, the practice of advertising for creditors in the Ontario Gazette may, in any event, not have been the most effective manner of publishing a notice, as many people do not read it. On the other hand, Widdifield notes that if the creditors of a deceased person are located throughout Ontario, and are therefore unlikely to see a local advertisement, it may be prudent to advertise in the Gazette as well as the local newspaper. Accordingly, although the Ontario Gazette may not have been the most commonly used method of advertising for creditors, it did provide an option for publishing notices in a more far-reaching manner than the local newspaper, in situations where a more widespread notice is advisable.
We have previously blogged about an online service for publishing notices to creditors (here and here). The company notes that their website is search-engine optimized so that a Google search by a creditor will locate a notice posted with their service. This may provide an alternate option for an estate trustee who feels it is necessary to reach a broader geographical range than is generally reached by a local newspaper.
It has also been noted in Widdifield that, in Ontario, the cost of advertising is a relevant factor. Whether through the company mentioned above (which notes a cost of around $150.00 for a notice and a notarized affidavit of publication), or some other online service, it seems likely that an online advertisement may be more cost-efficient than a print publication.
Based on the convenience and cost-efficiency of online advertising, we may be able to avoid a significant disturbance in the process of administering estates due to the fact that the Ontario Gazette will no longer publish private notices. Change can be a good thing and if we can adapt accordingly, we may be able to establish a new and more efficient customary way of advertising for creditors.
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The first instance decision in Roulston v McKenny was recently upheld on appeal. In this case, the deceased, Mr. Penner, and his ex-wife, Ms. McKenny, entered into a separation agreement requiring Mr. Penner to maintain $150,000.00 in life insurance, with Ms. McKenny as the designated beneficiary. Mr. Penner failed to pay the premiums on the life insurance policy, which lapsed prior to his death.
Mr. Penner died in March 2013. Shortly thereafter, the estate trustee (the deceased’s sister, also a beneficiary of the estate) discovered that Mr. Penner’s life insurance policy had lapsed. However, her lawyer did not advise Ms. McKenny’s lawyer until September 2013.
Ms. McKenny commenced her claim against the estate in September 2015, before the two-year expiration after learning of the lapse, but after the expiration of the two-year limitation period from the date of death. The estate trustee sought the court’s directions as to whether the claim was statute-barred.
The application judge held that Ms. McKenny’s claim was not statute-barred, applying the doctrine of fraudulent concealment to toll the limitation period. On appeal, the appellant submitted that the judge made the following errors:
- In finding that a special relationship existed between the estate trustee and Ms. McKenny.
- In finding that the conduct of the estate trustee was unconscionable, such as to attract the operation of the doctrine of fraudulent concealment.
The Court of Appeal for Ontario denied the appeal, reasoning that:
- The special relationship between the estate trustee and Ms. McKenny did exist, arising from a combination of: (i) duties owed at law by an estate trustee to creditors; and (ii) the estate trustee’s exclusive control over information – the insurer would only release information to her.
- By withholding material facts, the estate trustee concealed from Ms. McKenny that she was a legitimate creditor of the estate. It was unconscionable for the estate trustee to initially suggest that insurance was in place, then delay matters and then later take the position (that would benefit the estate trustee as a beneficiary) that the limitation period had expired.
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