Tag: Dispute

26 Aug

Judicial discretion to order passings of accounts

Nick Esterbauer Capacity, Estate & Trust, Passing of Accounts Tags: , , , , , , , , , , , , , 0 Comments

We often encounter situations where the administration of an estate is complicated by the fact that the deceased was married multiple times, and there is a clash between children from a prior relationship and a subsequent spouse (and/or his or her children).  Sometimes, a couple will be closer with one set of children, which may lead to disputes following both of their deaths.  Estate of Ronald Alfred Craymer v Hayward et al, 2019 ONSC 4600, was one such case, in which Joan and Ronald had been closer for much of their 32-year marriage with Joan’s children from a prior marriage.  After Joan and Ronald died in 2016 and 2017, respectively, a dispute arose between their adult children.

While Ronald’s will named his own children as beneficiaries of his estate, his Continuing Power of Attorney or Property (like Joan’s), named Joan’s daughter as alternate attorney for property, should his spouse be unable to act.   Joan had acted as Ronald’s attorney for property from 2006, during which he had suffered a stroke, until her death.  In 2011, Joan had transferred the couple’s matrimonial home, previously held jointly, to herself alone.  During this period, however, there had been no request by Ronald’s children for an accounting.  Joan’s daughter had subsequently acted as Ronald’s attorney for property and as estate trustee for Joan’s estate over the period of approximately eight months between the deaths of Joan and Ronald.

Ronald’s children sought a passing of accounts with respect to the management of their father’s property by Jane and her daughter and, specifically, challenged the change in title to the matrimonial home.  The Court referred to Wall v Shaw, 2018 ONCA 929, in stating that there is no limitation period to compel an accounting.  Accordingly, it considered the only bar to this relief to be laches and acquiescence.  Justice C.F. de Sa commented that the there was nothing improper in the manner in which the plaintiff had sought the accounting and, furthermore, that the delay was not unreasonable in the circumstances.  The Court permitted the claim regarding the matrimonial home to continue, but nevertheless declined to order a passing of  accounts:

…[O]rdering the passing of accounts is discretionary. And in my view, to require an accounting at this point would result in a clear injustice as between the parties.

[Joan’s daughter,] Linda, as Estate Trustee, is hardly in a position to account for Joan’s spending while she was alive. Yet, to require a passing of accounts at this point would subject every line of Joan’s spending (as Attorney for Property) to the court’s scrutiny.  Moreover, as the Estate Trustee, the Defendant would be liable to account for any unexplained expenditures.

Indeed, it is unclear that the spending was spurious given the nature of the relationship between Joan and Ronald. Joan would have been spending the money as his wife as much as his Attorney for Property.  The failure to keep detailed accounts is hardly suspicious given the circumstances here.

…In the circumstances, I will not order a passing of accounts.

This decision is interesting in that it clearly considers the practicality of a passing of accounts and the inability of the deceased attorney’s estate trustee to properly account in the absence of relevant records in determining that it would be unjust to order a passing of accounts, despite there being no other apparent legal reason not to do so.

Thank you for reading.

Nick Esterbauer

 

Other blog entries that may be of interest:

20 Aug

Parties to Bear Their Own Costs of a Contested Guardianship

Doreen So Capacity, Continuing Legal Education, Elder Law, General Interest, Guardianship, In the News Tags: , , , , 0 Comments

There was a recent decision of the Ontario Superior Court of Justice on the issue of costs in a contested guardianship proceeding.  Rather unusually, the endorsement in Howard Johnson v. Howard, 2019 ONSC 4643, dealt with the issue of costs after the parties have resolved the main dispute on consent.

In this case, there were two competing guardianship applications over Elizabeth.  The applicants on the one hand were Elizabeth’s daughter and son, Marjorie and Griffin, and on the other hand, Elizabeth’s other son, Jon.  All three of Elizabeth’s children were of the view that their mother was in need of a substitute decision maker for both the management of her property and for personal care.

While the endorsement does not specify who the competing applicants were seeking to appoint as Elizabeth’s guardian, the parties eventually settled on the appointment of CIBC Trust Corporation as Elizabeth’s guardian of property and all three children as Elizabeth’s guardians of personal care.  On the issue of costs, Marjorie and Griffin sought full indemnity costs from Jon while Jon sought substantial indemnity costs from Majorie and Griffin or, in any event, that he be indemnified by Elizabeth for any amounts not recovered from his siblings.

Pursuant to section 3 of the Substitute Decisions Act, 1992, Elizabeth was represented by counsel throughout the proceeding and on the issue of costs.  Submissions were made on Elizabeth’s behalf that she should not have to pay costs of the other parties or the outstanding balance of an invoice that was purportedly incurred by Elizabeth in a joint retainer with Jon.

The Court in this instance considered the modern approach to costs in estate litigation as set out in McDougald Estate v. Gooderham,  2005 CanLII 21091 (ON CA), with respect to Jon’s claim that Elizabeth ought to be responsible, at least in part, for his costs.  The court relied on D.M. Brown J.’s (as he was then) comments that the discipline imposed by the “loser-pays” approach to estate litigation applies with equal force to matters involving incapable persons citing Fiacco v. Lombardi, 2009 CanLII 46170 (ON SC).  Only costs incurred for the best interests of the incapable person could be justified as costs payable from the incapable’s assets.

In this case, the competing applications of the siblings were found to contain a number of ancillary issues beyond that of the appointment of a substitute decision maker for Elizabeth.  The Court was ultimately unable to see how Elizabeth would have derived any benefit from her children’s disputes.  Therefore, the children were all ordered to bear their own costs.  There was also no clear benefit to Elizabeth from the invoice that was issued to her prior to the appointment of section 3 counsel and Jon was ultimately left to pay that balance.

At the end of the day, the only costs borne by Elizabeth, as the incapable person subject to two competing guardianship applications, were the costs of section 3 counsel pursuant to the section 3(2) of the SDA.

Here is a Bon Appetit recipe for a frozen margarita pie that we could all benefit from.

Doreen So

20 Apr

Disputes Regarding Personal Property

Hull & Hull LLP Estate & Trust, Estate Planning, Wills Tags: , , , , , , 0 Comments

The division of one’s personal property, which may include, jewellery, art, books, furniture, tools and clothing, can often become a significant source of tension and conflict amongst those who collectively stand to inherit such items from the estate.

The sentimental value that is often attached to such items, coupled with the loss of a loved one, can result in emotions running high at the time when important allocation decisions must be made. As such, it is almost inevitable that disagreements will arise.

When such disagreements arise it is important to consult the deceased’s Will. Through the estate planning process individuals often consider and make provision for specific items of personal property within the terms of their Will. A Will may, for example, make a specific bequest of a disputed item. In some instances, the deceased may have gone one step further and referenced an attached memorandum within his or her will. Such a memorandum may contain an itemized list of various items of the deceased’s personal property and outline precisely whom the deceased has directed to receive each item.

It is extremely rare, however, for all items of personal property to be included within the Will or an attached memorandum. Any items not expressly listed will generally fall to the residue of the estate, and as such, must ultimately be divided amongst the beneficiaries of the estate. It is quite common in this regard for the deceased, through the terms of his or her Will, to direct the beneficiaries to “divide any remaining items of personal property equally amongst themselves, as they agree”. Disagreements often arise as a result of the ambiguity created by such wording and where the beneficiaries cannot agree amongst themselves as to the best way to allocate the items.

While there are many options open to executors and beneficiaries, including drawing straws, picking numbers out of a hat or tossing a coin, these options can result in individuals missing out on specific items that they valued above all others purely due to chance. A fair alternative, that allows beneficiaries to walk away with the majority of the items they want and seems to have good results, is to hold an “auction”.

In order to conduct such an action, all items must first be appraised. The total of the appraised value should then be divided by the number of beneficiaries. Each beneficiary can then be provided with a sum equivalent to their share of the appraised value, which he or she will then use to bid on the items. For example, if the appraised value of all items was $10,000.00 and there were two beneficiaries, each beneficiary would receive $5,000.00 to bid on items. A list of all items and their appraised value should be presented to each beneficiary in advance of the auction. On the auction day, each item should be presented one by one before all the beneficiaries. Each beneficiary is given equal opportunity to bid on the items, and the highest bidder will go home with the item. Therefore, if a beneficiary values one item over others, he or she can choose to spend the majority of his or her auction dollars on that item. Any unused auction dollars are returned to the estate. Any remaining items that are not sold at auction can then be divided amongst the parties as they agree, and if they cannot agree they may be listed for sale and the profits split between the beneficiaries. Finally, the value of the items successfully obtained at the auction should be deducted from each beneficiary’s share of the overall estate prior to the final distribution in order to ensure a fair distribution.

For example, lets say there are two beneficiaries to an estate, Jack and Jill. Jack and Jill stand to inherit from the estate equally (50/50) and the Will directs them to divide all items of personal property as they agree. A dispute subsequently arises with respect to specific items of the deceased’s personal property. The total value appraised value of the deceased’s personal property is $10,000.00. Both Jack and Jill would be provided with $5,000.00 to bid with at the auction. Jill bids on items totaling $2,000.00, Jack bids on items totaling $3,000.00. If the total estate value was worth $100,000.00, Jack’s share of the estate would be $50,000.00, and Jill’s share would be $50,000.00. After deducting the value of the items they received at the auction Jack would receive $47,000.00 ($50,000 – $3,000) and Jill would receive $48,000.00 ($50,000 – $2,000).

By using this method each beneficiary has a certain amount of control over the items he or she receives and has the opportunity to actively select the items he or she values most.

Thank you for reading,

Ian Hull

 

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