A recent class action proceeding against the estate of a deceased illustrates an estate’s limited liability. That is, an estate can’t be liable for more than what is left in the estate.
The case, Davidson v. Solomon (Estate), 2020 ONSC 2898, involved a class action against the estate of a deceased orthodontist. The orthodontist was alleged to have, for years prior to his retirement in 2015, “inappropriately” video recorded patients while he was providing them with dental services. 295 patients, many of whom were minors, were identified as victims.
Dr. Solomon was charged in 2017 with various offences, including voyeurism, making child pornography and possessing child pornography. He died on October 5, 2017 at the age of 69, before the criminal charges were tried. Accordingly, the criminal charges were withdrawn.
The incidents were discovered in 2017 when the Royal College of Dentists began investigating after receiving a complaint about Dr. Solomon’s services. In the course of the investigation, camcorder tapes were discovered, and Children’s Aid and the police were notified. The tapes dated from 1994 to 2014.
A class action was brought against Dr. Solomon on September 29, 2017. According to a news report, the claim sought damages of $1m, Family Law Act damages of $50,000 for each family law claimant, and $500,000 in punitive and exemplary damages. The claim was continued against Dr. Solomon’s estate after his death.
The estate denied the allegations. The allegations were never proven in court.
However, after extensive investigation, including dialogue with the estate’s lawyers, the representative plaintiff’s lawyer determined that the value of the estate was likely limited to $500,000. In light of the criminal nature of the allegations, it was determined that professional liability insurance was not likely to respond to the claim. Thus, it was concluded by the representative plaintiff that any judgment for damages would be limited to $500,000.
In light of this, a settlement was reached which saw to the estate paying a total of $425,000 for damages, administration fees, and legal costs. The court approved this settlement, noting, amongst other factors, that the estate had limited assets to satisfy any judgment. In approving the settlement, the judge hearing the approval motion stated, “Furthermore, there is a significant risk that but for this settlement, the Class Members would recover nothing, given the limited assets available to satisfy any judgment.”
Presumably, the estate plead plene administravit praetor: that the estate had limited assets. Read about this doctrine here.
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People can become upset when they find out that they have been written out of a Will. This frustration can often become multiplied when the individual in question received a significant bequest under a prior Will, believing the that the prior Will in which they received a more significant interest should govern the administration of the estate. In looking for recourse or answers, the “disappointed beneficiary” can often lash out against the drafting lawyer who was retained to prepare the new Will, believing that it was somehow improper or negligent for them to have prepared the Will, and that they have suffered damages in the form of the lost bequest. Some “disappointed beneficiaries” will even go as far as to commence a claim against the drafting lawyer for having seen to drafting the new Will. But can such claims be successful?
In order for the “disappointed beneficiary” to successfully have a claim against the drafting lawyer, the court must find that the drafting lawyer owed a “duty of care” to the beneficiaries under the prior Will. Generally speaking, the only individual to whom a drafting lawyer owes a duty of care when seeing to the preparation of a Will is the testator (and the beneficiaries listed in the new Will by extension). Although the court will sometimes in limited circumstances extend a duty of care to “disappointed beneficiaries”, such circumstances typically exist when the testator advised the drafting lawyer of an intention to benefit a certain individual, however as a result of the actions of the drafting lawyer such an individual did not end up receiving the intended bequest (see White v. Jones and Hall v. Bennett Estate). Such circumstances appear notably distinct from bequests to beneficiaries under a prior Will, for by creating a new Will the testator is in effect communicating to the drafting lawyer an intention to no longer benefit the individuals under the prior Will.
The Alberta Court of Appeal in Graham v. Bonnycastle succinctly summarizes why the court is typically not willing to extend a duty of care from the drafting lawyer to the beneficiaries listed in a prior Will, stating:
“There are strong public policy reasons why the solicitors’ duty should not be extended. The imposition of a duty to beneficiaries under a previous will would create inevitable conflicts of interest. A solicitor cannot have a duty to follow the instructions of his client to prepare a new will and, at the same time, have a duty to beneficiaries under previous wills whose interests are likely to be affected by the new will. The interests of a beneficiary under a previous will are inevitably in conflict with the interests of the testator who wishes to change the will by revoking or reducing a bequest to that beneficiary…” [emphasis added]
In noting that there are other avenues available to such “disappointed beneficiaries”, including challenging the validity of the new Will, the court in Graham v. Bonnycastle goes on to state:
“As noted above, several decisions have recognized the untenable situation that would be created by extending solicitors’ duty of care to include beneficiaries under a former will. Beneficiaries under a former will have other remedies available to them, and may block probate of the will where testamentary capacity is not established. The estate also has a remedy available where it suffers a loss as a result of solicitor negligence. There is no justification for imposing a duty on solicitors taking instruction from a testator for a new will to protect the interests of beneficiaries under a former will. There is not a sufficient relationship of proximity and there are strong policy reasons for refusing to recognize the existence of a duty. It is not fair, just and reasonable to impose a duty.” [emphasis added]
As cases such as Graham v. Bonnycastle suggest, the court appears unwilling to extend a duty of care from the drafting lawyer to a beneficiary listed under a prior Will. If no duty of care exists, no claim may now be advanced by the disappointed beneficiary against the drafting lawyer for any perceived “damages” they may have suffered on account of the new Will having been drafted. This appears true even if it is ultimately found that the testator lacked testamentary capacity at the time the new Will was signed.
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In today’s podcast, Stuart Clark and Sayuri Kagami discuss the issue of whether damages can be claimed on a passing of an attorney for property’s accounts in light of the fact that section 49(3) of the Estates Act, RSO 1990, c E21 only refers to the ability of a Judge to award damages against an executor, administrator, or trustee, not an attorney for property, in such proceedings. To read about this issue, see Stuart Clark’s recent blog on this topic.
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When concerns are raised about the conduct of an Attorney for Property, those raising the concerns often seek an Order compelling the Attorney for Property to commence an Application to Pass Accounts pursuant to section 42 of the Substitute Decisions Act. Should such an Application to Pass Accounts be commenced, the objecting party will often make allegations against the Attorney for Property that the incapable person and/or estate has suffered damages as a result of the Attorney for Property’s conduct, often seeking monetary damages against the Attorney for Property in relation to such objections.
An interesting question was recently posed to me in the context of such an Application to Pass Accounts for an Attorney for Property. Can the objecting party pursue damages against the Attorney for Property within the actual Application to Pass Accounts itself, or do they need to commence a separate claim against the Attorney for Property for the recovery of such damages?
The ability to pursue damages against an Estate Trustee within the Application to Pass Accounts process is well established by statute, with section 49(3) of the Estates Act providing:
“The judge, on passing any accounts under this section, has power to inquire into any complaint or claim by any person interested in the taking of the accounts of misconduct, neglect, or default on the part of the executor, administrator or trustee occasioning financial loss to the estate or trust fund, and the judge, on proof of such claim, may order the executor, administrator or trustee, to pay such sum by way of damages or otherwise as the judge considers proper and just to the estate or trust fund, but any order made under this subsection is subject to appeal.” [emphasis added]
Section 49(3) of the Estates Act makes it clear that a separate claim against an Estate Trustee is not necessary to pursue damages for breach of trust when an Application to Pass Accounts has been commenced, and that the Judge may order damages against the Estate Trustee within the actual Application to Pass Accounts itself. Perhaps importantly however, the Estates Act appears to suggest that section 49 only applies to a passing of accounts for an “executor, administrator or trustee under a will“, making no reference to an Attorney for Property. Sections 42(7) and 42(8) of the Substitute Decisions Act also set out the “powers of the court” in an Application to Pass Accounts for an Attorney for Property, with such provisions notably containing no reference to the ability to order damages against the Attorney for Property for any wrongdoing.
As there appears to be no statutory equivalent to section 49(3) of the Estates Act which specifically contemplates that it applies to Attorneys for Property, and the ability to pursue damages within the Application to Pass Accounts itself in other circumstances appears to be derived from statute, the question of whether there is a “legislative gap” as it relates to the ability to pursue damages against an Attorney for Property within an Application to Pass Accounts can at least appear to be raised. If such a “legislative gap” does exist, would this mean that a separate claim would have to be commenced by the objector to pursue such damages even when an Application to Pass Accounts was currently before the court?
When I have raised the question to other estate practitioners, some have suggested that while there may be no statutory authority to order such damages against the Attorney for Property within the Application to Pass Accounts, the court may have inherent jurisdiction to order such damages by way of a “surcharge order” in the Application to Pass Accounts. Some have also suggested that as section 42(6) of the Substitute Decisions Act contemplates that the procedure to be utilized on passing an Attorney’s accounts is to be the same as that as an executor’s accounts, that this should be read as evidence to show that section 49(3) of the Estates Act would apply to the passing of an Attorney for Property’s accounts. In response to this, I would suggest that it is at least questionable if section 49(3) of the Estates Act is “procedural” in nature, and, even if it is found to be procedural, whether the “powers of the court” provisions of sections 42(7) and 42(8) of the Substitute Decisions Act, which notably does not include the power to award damages against the Attorney for Property for wrongdoing, would trump section 49(3) of the Estates Act in any event.
I am aware of no decision which specifically addresses the issue of whether there is a “legislative gap” when it comes to whether damages can be sought against an Attorney for Property within the Application to Pass Accounts itself. While the issue may simply be academic at this time, it is not unforeseeable that someone could attempt to argue that an objector cannot seek damages against the Attorney for Property within the Application to Pass Accounts itself, and that a separate claim is required. If such an argument is successfully raised, and the length of time between the alleged wrong and the separate claim being commenced was such that the limitation period may have expired, it is not unforeseeable that the Attorney for Property may attempt to argue that the separate claim must now be dismissed as a result of the expiry of the limitation period.
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