When a parent transfers assets to an adult child, the rebuttable presumption of resulting trust will apply to that transfer. Unless the child can rebut the presumption, it will be presumed that the child was holding the transferred assets in trust for the parent.
But what kind of evidence will be needed to rebut the presumption? Ideally there would be some kind of documentation made contemporaneously with the transfer to support the parent’s intention. If the documentation is lacking, there may be evidentiary issues where the parent has passed away or is incapable, and is not able to give evidence as to his or her intention at the time of the transfer.
In the recent decision of Pandke Estate v Lauzon, 2021 ONSC 123, the court considered two cheques paid by a mother, Carol, to her adult son and daughter-in-law, Steven and Marnee, in the amounts of $35,000.00 and $90,000.00, respectively, shortly before her death. The court reviewed the evidence in determining whether the presumption of resulting trust was rebutted, or whether Carol had intended the cheques to be gifts.
Carol was diagnosed with terminal pancreatic cancer in 2017, and died about a month following her diagnosis. At the time that she was diagnosed, she lived with her husband, William, to whom she had been married since 1992. Following her diagnosis, it was decided that Carol would move in with Steven and Marnee, as William was not physically capable of providing her the care that she would require. Shortly after moving in with Steven and Marnee, Carol provided a cheque in the amount of $35,000.00, payable to Marnee, with a note on the cheque stating that it was “For Rent”. Four days later Carol provided another cheque payable to Steven, in the amount of $90,000.00, with the note on the cheque stating “Medical Expenses”. The total value of the two cheques constituted the majority of Carol’s liquid assets. William, who was the sole beneficiary of Carol’s estate, challenged these payments following Carol’s death.
The court found that the $35,000.00 payment was intended to be a gift by Carol to Steven and Marnee. Part of the evidence on which the court’s conclusion in this regard was based was Marnee’s hearsay evidence of what Carol had told her about why she was making the payment, being that Steven had left his job to care for Carol and she did not want him to suffer financially as a result. The court found that Marnee’s hearsay evidence could be admitted, notwithstanding that it was hearsay, on the basis that it fell within a traditional exception to the hearsay rule (that the statement is adduced to demonstrate the intentions or state of mind of the declarant at the time the statement was made) and under the principled approach to hearsay evidence as it met the necessity and reliability requirements. The court also found that Marnee’s evidence was corroborated by independent evidence.
However, with respect to the $90,000.00 payment, the court found that there was insufficient evidence to rebut the presumption of resulting trust. Although the court admitted Steven’s evidence of statements made by Carol to him as to her state of mind at the time the cheque was signed, the court also raised other concerns with Steven’s evidence. For instance, the reference to “Medical Expenses” noted on the cheque was concerning, as there were no medical expenses, and the court wondered why Carol would not have simply indicated that it was a gift if that is what she intended it to be. The court was also not convinced by a statement that Steven said was made by Carol that she was making the payment because she did not want Steven to suffer financially because he had left work to care for her, given that only a few days before Carol had made the $35,000.00 payment, which paid off Steven’s truck loan, line of credit, and left around $15,000.00 cash to spare. There was also no corroborating evidence of Carol’s intention to gift the $90,000.00 amount to Steven. As a result, Steven held the $90,000.00 in trust for Carol’s estate.
Unfortunately, it is often the case that payments to adult children are challenged after the parent has died. Unless the parent has taken special care to document his or her intention in making the payment, the intention can be difficult to determine with any degree of certainty. Accordingly, a parent making a gift to an adult child should consider seeking legal advice as to the best way to document such a transfer in order to ensure that their intentions will be upheld. From the opposite perspective, if a parent wants to make a transfer on the basis that their adult child will hold the asset in trust for him or her, or his or her estate, the parent should also consider seeking legal advice to ensure that this is properly documented in order to reduce the chance of issues arising in this regard after his or her death.
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A party has a prima facie right to test the evidence given by a witness through cross-examination. This is a critical means to building a body of evidence to support one’s case. However, if a party does not make adequate efforts to avail themselves of the opportunity to cross-examine, they may lose this benefit. The Honourable Madam Justice Sylvia Corthorn of the Ontario Superior Court of Justice addresses this issue in her recent decision in Clayton v. Clayton et al., 2020 ONSC 7592.
Clayton involves an application to remove the trustees of two trusts that form part of an estate. The applicant in this case brought a motion for an order striking the affidavit sworn by one of the respondents and trustees, Shirley. Pursuant to a notice of cross-examination, Shirley was to be cross-examined on her affidavit on November 22, 2019. However, prior to the commencement of cross-examinations, Shirley’s counsel advised that she would not be produced for cross-examination due to concerns about her mental capacity. Counsel agreed that an assessment of Shirley’s capacity to be cross-examined was necessary and consequently, she was not cross-examined. The applicant did not obtain a certificate of non-attendance with respect to Shirley’s cross-examination and no notice to cross-examine Shirley on a subsequent date was served.
The geriatric assessment of Shirley was scheduled for May 2020 and then postponed to the fall of 2020 due to COVID-19. There was no evidence before the court as to whether this assessment was ever done. The hearing of the application was likewise delayed as a result of the pandemic. The application is currently scheduled to be heard in January 2021.
At no point after November 2019 did the applicant pursue cross-examination of Shirley. When the application returned to court in September 2020, the applicant took the position that Shirley’s affidavit cannot be used on the application in light of her supposed incapacity and the respondents’ alleged refusal to permit cross-examination. The applicant then brought a motion requesting that the affidavit be struck in its entirety on the grounds that the admission of this evidence would be prejudicial to the fairness of the hearing and constitute an abuse of process.
Justice Corthorn dismissed the applicant’s motion. She found that he did not take any steps, prior to bringing this motion, to seek the assistance of the court in determining the steps required to address concerns with respect to Shirley’s affidavit and whether she could be cross-examined. She also considered that the application had already been adjourned three times and that the applicant had not requested a further adjournment to permit cross-examination of Shirley. Justice Corthorn affirmed that the court has discretion to prevent or limit cross-examination where it is in the interests of justice to do so. She decided that in this case, it is fair to both the process and the parties to admit Shirley’s affidavit and leave the issue of the weight to be given to her evidence to be determined with the benefit of the complete record. The parties would also have the opportunity to make submissions with respect to the weight to be given to Shirley’s evidence, and this will permit the court to control the process and avoid an abuse of it.
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In many estates disputes, litigants find themselves in the position of not having as much evidence as they would like, and regretting that they had not gathered more. This occurs because litigation is typically unplanned, with many disagreements suddenly fanning from small flames to infernos. Parties, as well, tend not to prepare for the worst at the outset of their dispute; they hope for reconciliation and do not immediately heed their gloomy forebodings. And, as estates conflicts mostly arise from family quarrels, it is commonplace for parties not to collect receipts, locate witness, assemble affidavits, and secure other evidence until it is too late – when the key witness has died, the receipts are gone, and other useful evidence is buried in the past.
In such cases of scant evidence, parties’ credibility looms large. It is necessary, then, for counsel to skillfully establish their own parties’ credibility while undermining that of their opposing witnesses. In so doing, before counsel contradicts an opposing witness’ testimony, counsel must put the impugning evidence to the witness while the witness is still on the stand. This is known as the rule in Browne v. Dunn, in which case Lord Herschell explained the rule’s purpose:
“My Lords, I have always understood that if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practices in the conduct of a case but is essential to fair play and fair dealing with witnesses.”
The rule is by no means absolute, for its application depends on the judge’s discretion. With this in view, some counsel deliberately ignore it, concluding that the strategic advantages of evidentiary ambushes outmatch the drawbacks. Consider the damage caused if, at the end of a proceeding, counsel prompts the final witness to let slip several calumnies about another witness who has already been cross-examined; while this would be a breach of the rule in Browne v. Dunn, it might prove worthwhile insofar as it could taint the witness’ credibility.
The consequences of breaching Browne v. Dunn can be impactful. In one Alberta estates decision, the Court of Queen’s Bench found that counsel’s violation of the rule “diminishe[d] the weight of their evidence”. If it is found that counsel has deliberately breached the rule to cause prejudice, the court may prohibit counsel “from the presentation of its case”. Another remedy is for the judge to allow counsel to recall his or her witness to confront the subject matter of the Browne v. Dunn breaches. Recalling a witness and having the final say can provide a strong tactical advantage – “he laughs best who laughs last”, as the idiom goes.
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Ian Hull & Devin McMurtry
I recently read an interesting article by Helene Love titled “Seniors on the Stand: Accommodating Older Witnesses in Adversarial Trials”, that explored the intersection of age and its effects on witness testimony in trials. Helene’s article considers whether the legal and procedural rules that have been developed to ensure that only the most reliable evidence is used in a trial may disproportionately be excluding evidence from seniors. The paper assessed the risks associated with aging, as well as the practical and legal issues related to aging witnesses, and offered suggestions to accommodate senior witnesses within our current legal framework. I will summarize some of the key considerations below.
The objective of a trial is to discover the truth. Examinations of witnesses under oath allow the trier of fact to test the reliability of witnesses, making examinations during trial a fundamental aspect of the modern day trial. Interestingly, the basis for requiring live testimony of witnesses dates back to the 16th and 17th century trials by jury, whereby jurors were not prevented from relying on untrustworthy sources of information, and abuses of power were common. In order to enhance the reliability of trials and control the quality of evidence, judges created the requirement for witnesses to provide evidence in person. The reliability of a witness is typically assessed by a judge based on a witness’s ability to observe, recall, and then recount and event in the courtroom.
Reports indicate that within the next 20 years, the number of Canadians aged 65 years or older will double, meaning that there will be more senior citizens involved in the justice system. Given the significant increase in older persons acting as witnesses, there are a number of ways that aging can impact a witness’s ability to provide evidence during a trial.
Some of the risks associated with aging include:
- Attrition – depending on the complexity of a case, it can take months or even years to finally reach a trial date, meaning that there are increased chances that an older witness, particularly those over 80 years old, have an increased chance of dying before having a chance to take the witness stand.
- Changes to the Sensory Organs and the Brain with Age – biological changes to sensory organs and the brain can result in a decrease in perceptual acuity and gaps in memory.
- Mobility Issues – Health Canada reports that by age 75, 29% of men and 38% of women report at least one physical limitation, making it more difficult to attend court in person, particularly if that appearance is extended over a period of time.
- Strokes and Dementia – Individuals aged over 65 are ten times more likely to have a stroke, and individuals who have had a stroke are more than twice as likely to develop dementia. Dementia can involve a range of symptoms, including physical limitations such as limb stiffness to the most commonly known type of dementia, Alzheimer’s Disease. Individuals with cognitive impairments would not be competent to testify in a trial.
This begs the question, how can the legal system accommodate senior witnesses while maintaining accuracy and reliability as top priorities in the pursuit of the truth? I will address some of the main solutions proposed in the civil context (although there were a number of great alternatives proposed in the criminal context that I encourage you to read).
- Expedited trial scheduling or proceeding by way of summary trial. Although not discussed in this article, another possibility in Ontario may be to request a case management judge who can determine whether the case should be heard in an expedited manner.
- Obtain witness evidence at an earlier point in time through discoveries, pre-trial examinations, or affidavit evidence to be relied on at a later date.
- Use the principled approach to hearsay. The rule against hearsay states that earlier statements made by others outside of court are presumptively inadmissible because they were not made under oath, in the presence of the trier of fact and/or tested by cross examination. However, hearsay statements can be admitted for their truth if they are sufficiently necessary and reliable, as outlined in the leading Supreme Court of Canada case of R v Khelawon, 2006 SCC 57
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 In the 1692 Salem Witch Trials, 14 women and 6 men were executed on charges of witchcraft based entirely on supernatural visions that indicated the presence of witchcraft, the reliability of which went untested during the trial.
A recent news article refers to the struggle of father of accused killer Bryer Schmegelsky to obtain video footage from the Royal Canadian Mounted Police.
The father’s lawyer has referred to the video as the accused’s “last will and testament.” It was apparently recorded very shortly before death and expresses funeral and burial preferences.
Oral wills (also known as nuncupative wills) are recognized in select jurisdictions, including some American states:
- New York law provides that an oral will, heard by at least two witnesses and made by a member of the active military or a mariner while at sea can be valid and will expire one year after discharge from the armed forces or three years after a sailor, if the testator survives the situation of peril;
- In North Carolina, an oral will made while the testator’s death is imminent and in circumstances where the testator does not survive in the presence of two or more witnesses may be valid;
- In Texas, oral wills made in the presence of three or more witnesses on the testator’s deathbed before September 2007 are valid in respect of personal property of limited value.
As most state legislation is silent on the issue of videotaped wills, if the testator’s oral wishes are videotaped, they must generally meet the criteria for a valid oral will to be effective.
However, in Canada, a will must be in writing, signed by the testator, and witnessed by two people. Alternatively, a will that is entirely in the testator’s handwriting and unwitnessed may be valid. Because Ontario is a strict compliance jurisdiction, any inconsistency with the formal requirements, as set out in the Succession Law Reform Act, renders a will invalid.
While a videotaped statement intended to be viewed posthumously may not be a valid will in Ontario and other Canadian provinces, it can nevertheless be used to express the deceased’s final wishes, for example with respect to the disposition of his or her remains (which are typically precatory rather than enforceable, even if appearing within a written document), and may assist a family in finding closure following an unexpected loss.
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A recent decision dealing with the estate of a French rock star highlights the potential relevance of social media evidence in estates matters.
Johnny Halliday, known as the “French Elvis”, died in 2017, leaving a Last Will and Testament that left his entire estate to his fourth wife, disinheriting his adult children from a previous marriage. The New York Times reports that French law does not permit a testator to disinherit his or her children in such a manner, and the adult children made a claim against the estate on that basis. The issue became whether the deceased singer had lived primarily in the United States or in France.
Halliday was active on Instagram, using the service to promote his albums and tours, as well as to share details of his personal life with fans. The adult children were, accordingly, able to track where their father had been located in the years leading up to his death, establishing that he had lived in France for 151 days in 2015 and 168 in 2016, before spending 7 months immediately preceding his death in France. Their position based on the social media evidence was preferred over that of Halliday’s widow and their claims against the estate were permitted.
Decisions like this raise the issue of whether parties to estate litigation can be required to produce the contents of their social media profiles as relevant evidence to the issues in dispute. Arguably, within the context of estates, social media evidence may be particularly relevant to dependant’s support applications, where the nature of an alleged dependant’s relationship with the deceased, along with the lifestyle enjoyed prior to death, may be well-documented.
The law regarding the discoverability of social media posts in estate and family law in Canada is still developing. While the prevalence of social media like Instagram, Twitter, and Facebook is undeniable, services like these have not become popular only in the last fifteen years or so and it seems that users continue to share increasingly intimate parts of their lives online.
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Written reasons from a mid-trial motion was recently released in Barker v. Barker, 2019 ONSC 2906. The only issue in this motion was whether a particular video of a deceased plaintiff was admissible at trial. The larger claim at issue surrounds the Oak Ridge division of the Penetanguishene mental health centre and its treatment of maximum security mental health patients between the 60’s and the 80’s. One of the plaintiffs, James Motherall, died after the action was brought and his claims were continued by the estate trustees of Mr. Motherall’s estate under Rule 9 of the Rules of Civil Procedure.
Prior to Mr. Motherall’s death, Mr. Motherall was examined for discovery in the ordinary course but he was not examined under Rule 36 for the purpose of having his video testimony tendered as evidence at trial. Since a de bene esse examination did not occur, the trial judge was literally unable to assess Mr. Motherall’s credibility with his own eyes. In an effort to address this issue, counsel for the plaintiffs sought to introduce video footage of Mr. Motherall from a CBC documentary that featured Mr. Motherall and his experiences at Oak Ridge. The footage was taken a month before Mr. Motherall’s death and counsel for the Plaintiffs proposed to call the filmmaker as a witness to introduce the unedited footage of the filmmaker’s interview with Mr. Motherall.
Without criticizing the filmmaker’s work, the trial judge found that the video interview was not conducted under reliable circumstances for the purposes of a trial because Mr. Motherall was not sworn, he was not cross-examined, and he was simply asked to tell his story without more. The video was presumptively hearsay and it was up to the plaintiffs to meet, on a balance of probabilities, the criteria of necessity and reliability under the principled approach for the admissibility of hearsay evidence (R v. Khelawon, 2006 SCC 57, R. v. Chretien, 2014 ONCA 403).
In addition to the issues of reliability, the trial judge also found that the video was not necessary since there was a transcript of evidence from Mr. Motherall’s examination for discovery and an affidavit from Mr. Motherall in the course of a prior summary judgment motion.
Both the filmmaker’s proposed testimony and the video footage of Mr. Motherall was found to be inadmissible.
Even though Barker v. Barker is at its core a civil matter, the reasoning from this motion is instructive for estate litigators who are also bound by the additional hurdle for material corroboration pursuant to section 13 of the Evidence Act.
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Medical records are frequently key evidence in estate disputes. Often, a testamentary document or inter vivos transaction is challenged on the basis that the deceased lacked testamentary capacity or the mental capacity to make a valid gift.
The British Columbia Supreme Court recently reviewed the issue of admissibility of medical records within the context of a will challenge. The parties propounding the last will asserted that the deceased’s medical records were inadmissible on the basis that (1) the parties challenging the will were attempting to admit the records for the truth of their contents, (2) the records included third party statements from family members, which was suggested to constitute double hearsay evidence, and (3) the records were entirely inadmissible because they were not relevant, none of them being within weeks of the date of execution of the challenged will.
In Re Singh Estate, 2019 BCSC 272, the estate trustees named in the deceased’s will executed in 2013 only learned of the existence of a subsequent will executed in 2016 after they provided notice to the beneficiaries of the estate that they intended to apply for probate in respect of the 2013 will. The 2016 will disinherited two of the deceased’s eight children (including one of the two adult children named as estate trustee in the 2013 will) on the basis that they had received “their share” in their mother’s estate from the predeceasing husband’s estate. Between the dates of execution of the 2013 and 2016 wills, the deceased had suffered a bad fall and allegedly experienced delusions and had otherwise become forgetful and confused.
At trial, medical records are typically admitted under the business records exemption of the Evidence Act (in Ontario, section 35). Justice MacDonald acknowledged this general treatment of medical evidence, citing the Supreme Court of Canada (at para 48):
While clinical records are hearsay, they are admissible under the business records exception both at common law and under s. 42 of the Evidence Act. The requirements for the admission of medical records as business records are set out in Ares[ v Venner,  SCR 608]. The Supreme Court of Canada held at 626:
Hospital records, including nurses’ notes, made contemporaneously by someone having a personal knowledge of the matters then being recorded and under a duty to make the entry or record should be received in evidence as prima facie proof of the facts stated therein.
Subsequent case law cited by the Court addressed the second objection of the parties propounding the will, which provided that the observations that a medical practitioner has a duty to record in the ordinary course of business (including those involving third parties) are generally admissible (Cambie Surgeries Corporation v British Columbia (Attorney General), 2016 BCSC 1896). Lastly, the Court considered the issue of relevance of the medical records and found that evidence relating to the mental health before and after the making of a will can be relevant in supporting an inference of capacity at the actual time of execution of the will (Laszlo v Lawton, 2013 BCSC 305).
After finding the medical records to be admissible as evidence of the deceased’s mental capacity (and in consideration of all of the available evidence), the Court declared the 2016 will to be invalid on the basis of lack of testamentary capacity.
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A recent decision of the Ontario Superior Court of Justice highlights the importance of preserving a surviving married spouse’s ability to elect for an equalization of net family properties within the six-month limitation period.
Upon death, a surviving married spouse in Ontario can elect for an equalization of net family properties under Sections 5 and 6 of the Family Law Act instead of taking under the predeceasing spouse’s will or, if the spouse has not left a will, on intestacy. Subsections 6(10), 6(11), and 7(3)(c) of the Family Law Act provide that the surviving spouse must ordinarily make an election within six months of date of death and not after that date. The Court may, however, extend the election deadline in the event that: (a) there are apparent grounds for relief; (b) relief is unavailable because of delay that has been incurred in good faith; and, (c) no person will suffer substantial prejudice by reason of the delay (subsection 2(8) of the Family Law Act).
Courts have reviewed the circumstances in which an extension is typically ordered. The requirement that the delay be incurred in good faith has been interpreted as meaning that the party has acted honestly and with no ulterior motive (see, for example, Busch v Amos, 1994 CanLII 7454 (ONSC)).
In Mihalcin v Templeman, 2018 ONSC 5385, a surviving spouse had commenced two claims with respect to the estate of her late husband and an inter vivos gift made to a live-in caregiver. However, neither of the proceedings had sought any relief relating to an equalization of net family properties, nor did the wife take any steps to make an election or to extend the time within which she was permitted to do so. The Court reviewed whether the delay in making the election was in good faith. The evidence regarding the reasons for the delay in electing for equalization were considered to be vague and insufficient to satisfy the evidentiary burden that the delay was incurred in good faith. Accordingly, the applicant was not permitted to amend her pleadings to incorporate this relief.
Justice Bruce Fitzpatrick commented as follows with respect to the importance of limitation periods, generally (at para 48):
I am mindful of the general importance of limitation periods for the conduct of litigation. There is an obligation on parties to put forward all known legitimate claims within certain time limits. In this case, the time limit was relatively short. I think it cannot be readily ignored. The evidentiary record is not sufficient for me to say that justice requires me to exercise my discretion in favour of allowing [the applicant] to amend her claim so as to include a claim for equalization in all of the circumstances.
Where an equalization of net family properties may be sought at a later time (for example, pending the outcome of a will challenge or dependant’s support application), it is prudent to seek an extension well before the expiry of the six-month limitation period as courts may or may not assist a surviving spouse in seeking this relief down the road, if and when it may become advisable.
Thank you for reading,
Other blog entries/podcasts that may be of interest:
- When is it Appropriate to Extend the Time Granted in Favour of Equalization Under the Family Law Act?
- Equalization Claims and Unequal Division of the Net Family Property
- Family Law Equalization Claims and Bankruptcy
- Consolidation of Family Law Act and Dependant Support Claims
A decision released earlier this week highlights the importance of a complete Management Plan supported by evidence when seeking one’s appointment as guardian of property.
Sometimes, the necessity of filing a Management Plan is viewed as a formality without proper attention to the details of the plan. However, the failure to file an appropriate Management Plan may prevent the appointment of a guardian of property, putting the administration of the incapable’s property in limbo.
In Connolly v Connolly and PGT, 2018 ONSC 5880 (CanLII), Justice Corthorn declined to approve of a Management Plan filed by the applicant and, accordingly, refused to appoint her as guardian of property. The Management Plan was rejected for the following reasons (among others):
- it did not address an anticipated increase in expenses over time (including when the applicant was no longer available to serve as the incapable’s caregiver and he may incur alternate housing costs);
- there was no first-hand evidence from BMO Nesbitt Burns or Henderson Structured Settlement with respect to the net settlement funds in excess of $1.4M and their payout and investment in a portfolio on the incapable’s behalf;
- the Court was concerned that stock market volatility could threaten to deplete the invested assets;
- the Public Guardian and Trustee had strongly recommended that the applicant post security, the expense of which was reflected as a deduction from the incapable’s assets (while not suggested that this was unreasonable, Justice Corthorn took issue with the absence of any case law or statutory provision cited by the applicant in support of the payment of the expense by the incapable rather than the applicant herself); and
- while the applicant had agreed to act as guardian without compensation, the plan did not contemplate how compensation would be funded if claimed by a potential successor guardian.
Notwithstanding that neither the incapable nor the Public Guardian and Trustee had opposed the Management Plan or the appointment of the applicant as guardian of property, Justice Corthorn found that the appointment of a guardian to manage over one million dollars in settlement funds was “contentious” and, accordingly, under Rule 39.01(5) of the Rules of Civil Procedure, direct evidence from a representative of the financial institution was required. In short, although the applicant was accepted as being a suitable candidate for appointment as guardian of property (and it was anticipated by the Court that she would ultimately be appointed), the Court was not satisfied on the evidence available that the management of the incapable’s property in accordance with the contents of the Management Plan was consistent with the man’s best interests.
While Justice Corthorn declared the individual respondent incapable and in need of assistance by a guardian of property, Her Honour adjourned the balance of the matter, suggesting that the applicant’s appointment as guardian of property could be revisited once additional evidence was filed in support of the contents of the Management Plan and/or the plan was further revised.
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