Cherry v Boultbee is an 1839 English case whose decision affects the law of wills and estates in common law jurisdictions to this day.
The rule, as outlined by the Honourable Mr. Justice Clark in the 2011 Alberta decision, Re Moody Estate, can be succinctly described as follows:
“Where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed to participate unless he has fulfilled his duty to contribute.”
Justice Clark then described this rule’s application to estates law, quoting the 1891 decision of Re Akerman, Akerman v Akerman, which outlined that “the circumstance that a debt owing to a testator was statute barred at the date of death of the testator did not prevent the application of the rule in Cherry v Boultbee from being applied.”
In other words, if a beneficiary of an estate personally owed a debt to the deceased, prior to his or her death, then said beneficiary’s share in the estate could be deducted to satisfy this debt, even if this debt was barred by statute.
However, Justice Clark ultimately decided that the rule in Cherry and Boultbee did not apply in this case, throwing doubt as to its future application in Canada.
Following Moody, this rule was once more proposed in the 2017 British Columbia case of Re Johnston Estate. In this decision, Justice Church disagreed with Justice Clark and re-affirmed the application of the rule in Cherry v Boultbee:
“The rule in Cherry v Boultbee does not confer on the estate any right to recoup the amount owing but rather operates to ensure fairness in the distribution of an estate, recognizing that the relationship between a testator and his or her beneficiaries is typically not at arm’s length. The fundamental purpose of the rule is to ensure that beneficiaries are treated fairly and it embodies the principal that he who seeks equity must do equity.”
It remains to be seen what the fate of the rule in Cherry v Boultbee will be in future Canadian case law.
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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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