Tag: Estate Liabilities

29 May

Limits of Estate Liability: You Can’t Get What Isn’t There

Paul Emile Trudelle Estate & Trust, Litigation Tags: , , , , 0 Comments

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 Accordingly, the criminal charges were withdrawn.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.

Thanks for reading.

Paul Trudelle

11 Feb

Exercising the Discretion to Make Interim Distributions

James Jacuta Estate & Trust Tags: , , , , 0 Comments

What do you do as a lawyer when you represent someone who is waiting to receive money from an estate, but the Estate Trustee will not pay? An interim distribution can commonly be made. The Estate Trustee can hold back some of the funds for potential liabilities and distribute some of the money immediately.  Potential liabilities can involve delayed tax filings related to Canada Revenue Agency (CRA) procedures being slow, or other estate liabilities. Final distribution can be delayed for a matter of 2-3 years, or even longer. As an example, on a $1,000,000 estate, the hold back might be $200,000 on $50,000 of estate liabilities that are known or can be knowledgeably estimated. This safely leaves $800,000 for immediate interim distribution, without waiting years until concluding administration of the estate. However, the practice of the Office of Public Guardian and Trustee  (OPGT) in Ontario is not to do interim distributions. They take the position that even if there is the remotest potential for liability they will not take the risk. As a government entity there is certainly no incentive to take any risk. The following rhetorical question illustrates the problem –  What civil servant in a bureaucratic government agency is going to move quickly to take on liability and risk?

A recent decision clearly directs the Office of Public Guardian and Trustee  (OPGT) of Ontario to make an immediate interim distribution as Estate Trustee.

It is unfortunate, in my view, that anyone would have to take steps to seek an Order in these circumstances. This is what happened in  Foundation for Human Development and Jack Benson v The Estate of Keith Irwin-Reekie, 2020 ONSC 299, with the decision released on January 15, 2020. The court directed an interim distribution by the OPGT, to distribute the inheritance to which the moving parties were entitled. The court found that it was appropriate to exercise discretion under rule 74.15 (1) (i)  “Orders for Assistance” of the Rules of Civil Procedure, Courts of Justice Act. The reasoning was that it was usual practice for estate trustees to make interim distributions out of estates,  “once the Estate Trustee has a good understanding of the taxes and other liabilities of the estate, holding back sufficient funds  in the estate to satisfy those expenses / liabilities”.

Thanks for reading!

James Jacuta

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