Tag: Estate Litigation
As most of our readers know, when a person dies without leaving adequate support for their dependants, the courts may intervene to ensure that such dependants receive a fair share of the estate. Furthermore, pursuant to subsections 63(2) and 68(2) of the Succession Law Reform Act (SLRA), the Court has flexibility in the form of support ordered and against what portion of the Estate such support will be charged against.
Although the SLRA provides the Court with flexibility in the types of orders it can make, case law in Ontario also provides some guidance as to the priority of assets to be used in making support orders.
Priority of Support from “Traditional Estate Assets”
In Matthews v Matthews Estate, the Superior Court considered the issue of which assets should be used in making an order for dependant’s support. The assets available were both assets falling inside the estate (being mainly a ½ interest in a matrimonial home) and assets falling outside the estate, but subject to the clawback provision of section 72 of the SLRA (being a $1,000,000.00 life insurance policy). In that case, the Court made it clear that:
“where property not normally part of the Estate is brought into the Estate by virtue of the provisions of the Succession Law Reform Act to the detriment of those designated beneficiaries, care must be taken to insure that the burden of any support order in favour of the Applicant be borne by the traditional assets of the Respondent’s estate before any encroachment is made on the life insurance policy proceeds.”
No Priority Among Section 72 Assets
While the Court has set out that traditional estate assets should be used to satisfy dependant support claims before section 72 assets, there is no priority among section 72 assets, or even any requirement that an applicant seek to obtain support from all section 72 assets.
In Stevens v Fisher Estate, the estate itself was insolvent due to the debts of the Deceased. The Deceased, however, had three life insurance policies: a $84,000.00 group life insurance policy naming a lifelong friend/former common law spouse as beneficiary, a $50,000.00 insurance policy naming his 32 year old daughter as beneficiary, and a $250,000.00 life insurance policy to be held in trust for his two younger (but still adult) children. The common-law spouse of the Deceased commenced a claim but sought support only from the $84,000.00 group life insurance policy. While the beneficiary of the $84,000.00 group life insurance policy argued that the Applicant should look to the other life insurance policies before resorting to the group life insurance policy, the Court found that there was no priority of estate assets for the Applicant to look to before turning to the $84,000.00 policy.
While Stevens v Fisher Estate indicates that there is no requirement that an applicant for support look to all section 72 assets, it’s important to consider the implications of seeking support from only some, as opposed to all, section 72 assets.
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I recently came across several articles (one of which can be found here) regarding the elder financial abuse of a senior gentleman in Moncton, New Brunswick. Around 2013, Mr. Goguen had been living in the home that he owned, with tenants residing in part of the property. Upon deciding to sell his home, Mr. Goguen was referred to Ms. Hannah and Mr. Poirier, licensed real estate agents in New Brunswick. After the home had been listed for sale for some time, without success, Ms. Hannah apparently told Mr. Goguen that his home was in such deplorable condition that it would be impossible to sell without making certain repairs (which Ms. Hannah says Mr. Goguen could not afford) and removing the tenants (whom Ms. Hannah has claimed were using drugs and not paying rent).
As a result of the alleged difficulty in selling Mr. Goguen’s house, he, Ms. Hannah, and Mr. Poirier entered into an agreement whereby Ms. Hannah and Mr. Poirier purchased Mr. Goguen’s home. The terms of the arrangement were not favourable to Mr. Goguen, and it appears that Ms. Hannah and Mr. Poirier did not follow through on certain aspects of the agreement.
The Financial and Consumer Services Commission, which regulates real estate agents in New Brunswick, has revoked Ms. Hannah and Mr. Poirier’s real estate licenses. The Commission stated that Ms. Hannah and Mr. Poirier committed financial abuse of a senior and took “outrageous and egregious advantage” of Mr. Goguen. The Public Trustee of New Brunswick has now become involved on Mr. Goguen’s behalf, and has filed a statement of claim against Ms. Hannah and Mr. Poirier, seeking $83,320.00, characterized as the amount owing to Mr. Goguen.
We’ve blogged about elder abuse a number of times. Unfortunately, due to factors such as isolation, physical difficulties, and cognitive impairments, elderly people are often vulnerable to abuse. Given this vulnerability, and the circumstances in which abuse occurs, it can go undetected for a significant amount of time. In such situations, it may be too late to make the elderly person “whole” if the abuse is not discovered until it is too late.
Fortunately in Mr. Goguen’s case, despite the fact that it took a number of years, the Public Trustee discovered the abuse and is now taking steps to protect Mr. Goguen and recoup funds owed to him by his abusers. However, the Public Trustee is seeking the amount of approximately $83,000.00, which may not fully reimburse Mr. Goguen for the value of the house had it been sold to a normal third-party purchaser. Additionally, one of the articles also notes that Mr. Goguen had named Ms. Hannah and Mr. Poirier as his attorneys, and also executed a will naming them as executors and beneficiaries of his estate. It is unclear whether the Public Trustee has sought any relief in this regard. As such, even though the Public Trustee may be pursuing relief on Mr. Goguen’s behalf, it is an unfortunate possibility that he may continue to feel the effects of the abuse.
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In today’s podcast, Ian Hull and Rebecca Rauws discuss the availability of summary judgments, and their use in estate litigation, in the context of the recent Ontario Court of Appeal decision in Aird & Berlis LLP v Oravital Inc., 2018 ONCA 164.
Should you have any questions, please email us at email@example.com or leave a comment on our blog.
The recent decision of Fletcher’s Fields Limited v Estate of Samuel Harrison Ball, 2018 ONSC 2433 considered whether an appointment of trust funds for a particular purpose created an interest in land.
Fletcher’s Fields is a not-for-profit Ontario corporation which owns land that is predominantly used as a sports facility for rugby football union (the “Land”). Mr. Jenkins was the trustee of the estate of Samuel Harrison Ball. He was also a lawyer, and over the years had been actively involved with Fletcher’s Fields, as General Counsel, and as a member of the board of directors. In Jenkins’ role as trustee of Mr. Ball’s estate, he had the power to appoint money forming part of the estate as he saw fit.
In 1994, Jenkins exercised his power to provide Fletcher’s Fields with $100,000.00 pursuant to a “Deed of Appointment”. The Deed of Appointment provided that (a) the money must be used solely for the purpose of improving the sports facility on the Land; (b) the trustee had the right to revoke any or all of the money if the Land was not kept in good condition suitable for playing the sport; and (c) if revoked, Fletcher’s Fields was required to transfer the fund to the trustee, with interest.
In 2015, a new board of directors for Fletcher’s Fields was elected, which did not include Jenkins. It seems that Jenkins may not have been pleased with this development. The following year, Fletcher’s Fields discovered that a notice had been registered on title to the Land by Jenkins, under s. 71 of the Land Titles Act, R.S.O. 1990, c. L.5. It appears that the notice had been registered after Jenkins had ceased to be a member of the board.
Fletcher’s Fields took the position that the funds provided pursuant to the Deed of Appointment were a gift or, alternatively, trust funds. Jenkins took the position that the Deed of Appointment was not a trust, but rather that it was a loan that was to be repaid if certain conditions crystallized. He characterized it as an equitable mortgage.
The Court noted that the terms of the Deed of Appointment were key to determining whether or not an interest in land had been created. There was no indication of an express intent to create an interest in the Land, or provide that failure to repay the funds would result in a charge over the Land. Without such an express intent, the notice should not remain on title to the land. The Court also held that the parties’ conduct supported the position that there was never any intention to create an interest in the Land.
The Court ordered that the notice that had been registered by Jenkins on title to the Land be removed. The result of this case seems correct, as one would expect that an interest in land should not be created unilaterally and without notice. There are significant differences between types of financial arrangements such as loans, mortgages, gifts, and appointments of trust funds. It is reassuring that the Court in this situation upheld the integrity of the parties’ intentions in crafting their financial arrangement and did not impose a charge-type interest in the Land where none existed.
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The Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA”), governs, among other things, the appointment of guardians for incapable persons. There are two types of guardians: a guardian for property and a guardian for personal care.
Sections 22(1) and 55(1) of the SDA provide that the Court may, on any person’s application, appoint a guardian of property or of the person, for a person who is incapable of managing property or personal care if, as a result of the said incapacity, it is necessary for decisions to be made on his or her behalf.
In order to appoint a guardian for someone, the Court will need to make a finding of incapacity for that person. This is an important hurdle, and the Court will generally need to see evidence that the person in question has been assessed as incapable of managing property and/or personal care prior to making a finding that he or she is incapable.
Depending on the circumstances, a person may submit to a capacity assessment voluntarily. However, according to section 78(1) of the SDA, if a person refuses to be assessed, an assessor shall not perform the assessment. Section 79 of the SDA allows the Court to order that a person be assessed, provided that the Court is satisfied that there are reasonable grounds to believe the person is incapable. Additionally, to obtain a Court Order for an assessment, there must be a proceeding under the SDA, in which the person’s capacity is in issue. The Ontario Court of Appeal in Neill v Pellolio, 2001 ONCA 6452 held that there is no stand-alone relief available for an Order for a capacity assessment in the absence of an application brought under the SDA. Accordingly, obtaining a finding of incapacity from the Court may not be a simple endeavour.
The SDA also has in place measures to protect an individual’s decision-making rights from undue restriction. Sections 22(3) and 55(2) state that the Court shall not appoint a guardian if it is satisfied that the need for decisions to be made will be met by an alternative course of action that does not require the Court to find the person incapable, and is less restrictive of the person’s decision-making rights than the appointment of a guardian.
Accordingly, for example, if a person has already granted a power of attorney, allowing the named attorney to act would constitute a less restrictive course of action which also does not require the Court to make a finding of incapacity in order for decisions to be made for an incapable person. Furthermore, if a person is incapable of managing their property or personal care, but remains capable of granting a power of attorney, that would likely also constitute a less restrictive course of action, and would allow that person to exercise their decision-making rights.
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In November 2017, my colleague, Sayuri Kagami, blogged about the Ontario Court of Appeal’s decision in Teixeira v Markgraf Estate, which considered the validity of a gift in the form of a cheque cashed after the death of the payor. Today’s blog discusses similar facts in the court’s decision in Rubner v Bistricer. That is, whether pre-signed blank cheques cashed after the payor is declared incapable of managing property constitute either an enforceable promise to gift or, in the alternative, a valid inter vivos gift.
In the late 1960s, the patriarch of the Rubner family, Karl, purchased a 10% stake in a real estate development in Oakville known as the Lower Fourth Joint Venture. Karl kept legal title to this interest in the name of his wife, Eda, with the intention that their three children, Marvin, Joseph, and Brenda, each receive beneficial ownership of a one-third share in the Lower Fourth interest.
Brenda subsequently renounced her share in the Lower Fourth interest to avoid triggering certain tax consequences. Accordingly, her share reverted back to Eda, who then set up an account into which the income generated by Brenda’s former share would be deposited. Notwithstanding that she had disclaimed her share, however, Brenda nonetheless wanted to retain the income that her share generated. In 2014, Eda agreed to sign several blank cheques for the benefit of Brenda and her husband, allowing them to collect the income from Brenda’s former share without incurring the tax liability.
In November 2016, Eda was assessed as being incapable of managing property. Shortly thereafter, Brenda’s husband filled in and deposited two of the blank cheques previously signed by Eda in order to prevent Brenda’s brothers from using those funds to pay for Eda’s expenses.
Brenda’s brothers subsequently commenced an application seeking, amongst other relief, a declaration that the funds withdrawn by Brenda after Eda became incapable were held on a resulting or constructive trust for Eda’s benefit. Brenda took the position that Eda had intended that these funds be considered gifts for Brenda’s benefit. She claimed that at a family meeting in 2012 or 2013, Eda had specifically agreed to gift to Brenda all future income generated by Brenda’s former share in Lower Fourth.
The court was tasked with considering whether a purported promise of future gifts could constitute valid inter vivos gifts. In order to establish a valid inter vivos gift, the recipient must show:
- An intention to make a gift on the part of the donor, without consideration or expectation of remuneration;
- An acceptance of the gift by the donee, and
- A sufficient act of delivery or transfer of the property to complete the transaction.
The court held that the first step and third steps in this analysis could not be satisfied once Eda had been declared incapable of managing her property. Eda was deemed to have been unable to formulate the necessary intention to make a gift with respect to the blank cheques. Moreover, the court held that the delivery of “signed, blank cheques cannot amount to a complete gift”, as the drawer retains an interest in the amount of the cheque until it is cashed. Once Eda became incapable of managing her property, the gift could no longer be perfected. The blank cheques that were cashed after Eda was assessed as incapable of managing her property were held to be invalid, and Brenda was ordered to repay the amounts withdrawn.
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I recently read this article from the New York Times, which discusses the Will of Harper Lee, author of “To Kill a Mockingbird”, as well as some of the events that occurred several years prior to Harper Lee’s death. Harper Lee died in 2016, at the age of 89. In the years leading up to her death, there was some question as to her capacity, and possible vulnerability to coercion or undue influence.
The New York Times article states that Ms. Lee had had a stroke in 2007 and also had severe vision and hearing problems. Ms. Lee resided in an assisted living facility before her death. The article also describes the position taken by counsel for Ms. Lee as part of a copyright dispute in 2013, where counsel stated that Ms. Lee had been taken advantage of and coerced into signing away her copyright because she was “an elderly woman with physical infirmities that made it difficult for her to read and see.”
A couple of years ago, in 2015, Ms. Lee published her second novel, “Go Set a Watchman”. It turned out that this novel had been an earlier draft of her extremely popular book, “To Kill a Mockingbird”, which is purported to have been discovered by Ms. Lee’s lawyer, Tonja Carter, in 2014. There was some controversy surrounding the publication of “Go Set a Watchman” on the basis that Ms. Lee had not actually consented to the manuscript being published, and may have been manipulated into doing so. The publication of a new book was particularly remarkable given that Ms. Lee had only ever published one book prior to “Go Set a Watchman”—namely, “To Kill a Mockingbird”, which was published in 1960. However, an investigation was performed, and a determination made that there had been no elder abuse of Ms. Lee.
After Ms. Lee’s death, her Will had not been made a matter of public record, as a result of the successful efforts by Ms. Carter (named in the Will as executor) to have the Will sealed on the basis that Ms. Lee, who was a very private person, would have wanted her Will to remain private. It was only unsealed recently after litigation by the New York Times, and after Ms. Lee’s estate withdrew its opposition to the Will being unsealed.
The Will was signed only 8 days before Ms. Lee’s death, and apparently directs that the bulk of her assets be transferred into a trust formed by Ms. Lee in 2011. Ms. Carter is one of the trustees of this trust. Further documents relating to the trust are not public, and accordingly, very few details are known about it.
Given the questions surrounding Ms. Lee’s potential vulnerability in the years leading up to her death, it will be interesting to see whether anything further develops in relation to her estate, or the trust which apparently will hold most of the assets of Ms. Lee’s estate.
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In Ontario, if there is a claim to be made or continued by a deceased person or their estate, any such claim must be brought by the executor or administrator of his or her estate. If there is no executor or administrator, under Rule 9.02 of the Rules of Civil Procedure, RRO 1990, Reg 194, the court may appoint a litigation administrator, who will represent the estate for the purpose of the proceeding. A beneficiary or other person may also represent the interests of an estate, under Rule 10.02, where it appears that an estate has an interest in a matter in question in a proceeding.
In British Columbia, section 151 of the Wills, Estates and Succession Act, SBC 2009, c. 13 (“WESA”) provides an alternative way of pursuing a claim by an estate. Section 151 states that a beneficiary of an estate may, with leave of the court, commence proceedings in the name and on behalf of the personal representative of a deceased person, either to recover property or enforce a right, duty or obligation owed to the deceased person that could be recovered or enforced by the personal representative, or to obtain damages for breach of a right, duty or obligation owed to the deceased person. Section 151(3) outlines the circumstances in which the court may grant leave in this regard:
(3) The court may grant leave under this section if
(a) the court determines the beneficiary or intestate successor seeking leave
(i) has made reasonable efforts to cause the personal representative to commence or defend the proceeding,
(ii) has given notice of the application for leave to
(A) the personal representative,
(B) any other beneficiaries or intestate successors, and
(C) any additional person the court directs that notice is to be given, and
(iii) is acting in good faith, and
(b) it appears to the court that it is necessary or expedient for the protection of the estate or the interests of a beneficiary or an intestate successor for the proceeding to be brought or defended
In a document produced by the Government of British Columbia entitled “The Wills, Estates and Succession Act Explained” (“WESA Explained”), section 151 is described as overcoming a gap in the law. Previously, if a beneficiary wished for an action to be brought on behalf of an estate, and the personal representative refused to do so, the beneficiary’s sole recourse would be to apply for removal of the personal representative.
However, removal may not always be necessary or convenient. As described in WESA Explained, such a situation could arise in the event that the personal representative’s main concern (as is often the case with executors, generally) is to preserve and distribute the estate. The personal representative is therefore likely more risk adverse and conservative in assessing the potential success of pursuing an action. The beneficiary may have differing views on the merits of the claim, and in his or her assessment of the risk and return.
Section 151 of WESA differs from the process for litigation administrators and representation orders in Ontario in that s. 151 allows the executor and beneficiary appointed to bring a claim on behalf of the estate to co-exist simultaneously.
The concept of s. 151 is similar to a derivative action, in which a shareholder or other person is permitted to bring an action on behalf of a corporation, where the corporation refuses to do so.
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When someone composes an obituary for a loved one who has passed away, carefully selecting the photograph to go along with it, one would suppose that the last thing on their mind is the copyright they may hold in that obituary and photograph. Of course, few people expect that an obituary could be the subject of republication or possible copyright infringement.
However, one website has been reproducing obituaries in their “database of deceased people”, leading to questions about ownership of the obituaries themselves, as well as the photographs accompanying them. The website reproduces obituaries and photographs, apparently without permission from the individuals who originally created and posted the obituaries. As reported in this Global News article, one family even states that an obituary for their loved one, which had not been written by their family and contained a number of errors, was posted on the website less than a day after their loved one passed away. The family did not know who wrote the obituary, although the website released a statement that all of the obituaries they re-post are already on the internet.
A recent article in The Lawyer’s Daily discusses an application for certification of a class action copyright claim against this obituary database website. The application claims that the website is infringing copyright and moral rights in respect of the obituaries and photographs. The moral rights claim relates to the website’s monetization of the obituaries by offering options to purchase flowers, gifts, or virtual candles, through affiliate retailers. Some funeral homes offer a similar service, but the article notes that the unsavoury nature of the website’s business model, which consists of “scraping” obituaries from elsewhere on the internet, without permission or notice, and making money by doing so through advertisements or the selling of flowers or virtual candles, could provide some support for the moral rights claim.
In relation to the copyright infringement claims, there may be some obstacles to overcome, particularly in relation to ownership of the copyright. According to The Lawyer’s Daily article, under the Copyright Act, R.S.C., 1985, c. C-42, the person claiming a copyright infringement must be the owner, assignee or exclusive licensee of the work in question. An assignment of copyright must be in writing. As mentioned in the article, this could create an issue if the photograph used in the obituary was taken, for instance, by a stranger.
Damages in the event of liability are also uncertain. In a recent case with similar facts, where the defendants were found to have infringed on the plaintiff’s copyright, the court awarded statutory damages of only $2.00 per image because the cost of capturing the images in that case was low. However, given the emotional aspect of obituaries, it is possible that the facts in this case could lead to a larger damages award.
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As the holiday season comes to a close, many of us will take stock of the time enjoyed with friends, family, and loved ones, and look forward to the prospect of a new year. Unfortunately, as members of the estates bar, we are occasionally called on to review circumstances in which no family members or loved ones are around for the purposes of a deceased individual’s estate planning decisions. More specifically, we are often asked to consider the proper legal procedures when an individual passes away having named an estate trustee who is incapable of acting, and where the individual died leaving no spouse, children, or next-of-kin in Ontario.
In the foregoing circumstances, Ontario’s Crown Administration of Estates Act gives the Office of the Public Guardian and Trustee (the “PGT”) the appropriate authority to step in to the shoes of an estate trustee and administer the estate, if necessary and subject to certain statutory guidelines. Section 1 of the Act allows the Superior Court of Justice to issue to the PGT “letters of administration or letters probate”, thereby giving it the authority to administer an estate, provided the following conditions are satisfied:
- The deceased person died in Ontario, or was a resident of Ontario but died elsewhere;
- The person died intestate (that is, without a validly executed will), or died leaving a will that does not name an executor or estate trustee who is willing and able to administer the estate; and
- The Deceased had no known next-of-kin of the age of majority residing in Ontario who are willing to administer the estate.
Certain additional policy considerations not listed in the Act have also been adopted to govern whether the PGT will agree to administer an estate. Notably, the PGT will generally only act as an estate trustee of last resort. Before agreeing to act, the PGT will typically take steps to locate another interested party who may wish to be appointed, for example, any of the deceased person’s next-of-kin from out of province. Moreover, the PGT will only step in to administer estates that will hold a value of at least $10,000 after all debts of the estate have been paid. By its own estimates, at any given time the PGT is actively administering more than 1,400 estates. Accordingly, these additional policy considerations ensure that the appropriate resources can be directed to the estates that the office has agreed to administer.
Thanks for reading. Happy New Year!