Today’s blog is a continuation of yesterday’s discussion regarding the limitations analysis in Piekiut v. Romoli, 2019 ONSC 1190, 2020 ONCA 26. No limitation period was found to apply where an estate trustee was simply seeking a determination and declaration as to whether certain codicils were valid or not valid.
The testators in this case died in 2008. They had 3 children, Helen, Victor, and Krystyna. A meeting took place in 2008 between all 3 children and a lawyer to discuss the administration of the Estate. During this meeting, Krystyna revealed, for the first time, the existence of codicils and declarations of gift that provide her with an interest in certain properties. Helen refused to acknowledge the validity of these new documents.
In 2015, Helen brings a court application. Her application was later amended, on the consent of parties, in 2018 to reflect that Helen was only seeking a declaration in respect of the validity of the codicils. Thus in 2019, Justice Dietrich’s decision was made in the context of Krystyna’s motion for summary judgment to dismiss Helen’s application on the basis that it was statute barred and Helen’s cross-motion for summary judgment on her application. Justice Dietrich found that, since Helen did not ask the court to determine the ultimate beneficiaries of the properties that were subject to the Codicil or to vest such properties in any particular beneficiary or beneficiaries, her application was not barred by the Limitations Act, 2002.
The Court of Appeal agreed with Justice Dietrich. The panel was also of the view that this case is distinguishable from Leibel v. Leibel, 2014 ONSC 4516 and Birtzu v. McCron, 2017 ONSC 1420 because of the consequential relief that was pleaded in those cases. Since the Court of Appeal decision did not go into the details of the relief sought in Birtzu (unlike its description of Leibel), it is helpful to understand the breadth of the Statement of Claim in Birtzu, which sought the following:
- an Order setting aside the Will;
- an Order setting aside the Deceased’s Powers of Attorney;
- an accounting of the entire Estate, as well as all financial transactions undertaken by the Deceased, or on his behalf, or on behalf of his Estate, from the date that the Deceased’s matrimonial home was sold in 2003 to the date of trial;
- Orders for the production and release of financial and medical information;
- an Order reversing all transactions undertaken by the Defendant, either directly or indirectly, without authority or in breach of her authority, or in breach of her fiduciary duties to the Deceased and to his beneficiaries, including the Plaintiffs;
- an Order tracing the property of the Deceased into the property owned by the Defendant, including her home;
- Orders for injunctive relief, including the issuance of a certificate of pending litigation;
- a Declaration that all property held in the name of the Defendant, or part thereof, is held by her for the benefit of the Plaintiffs;
- damages against the Defendant in the amount of at least $400,000.00, for conversion of property, breach of statutory duty, and/or breach of fiduciary duty;
- pre- and post- judgment interest; and
- costs fixed on a substantial indemnity basis, plus H.S.T.
Thanks for reading!
Billionaire and recently deceased American shopping mall developer Melvin Simon’s heirs are fighting over his last will. Mr. Simon’s children from his first marriage are challenging a will that changed the distribution of his estate in favour of his second wife. Aside from the glamour factor, the case is interesting in that an allegation of fraud was recently dismissed on the grounds that "[t]he complaints fail to allege affirmative misrepresentations that can support a claim of actual fraud".
This illustrates an important point in estate and trust litigation. Ontario’s Rules of Civil Procedure similarly requires pleadings that contain allegations of fraud or breach of trust to contain full particulars:
"Rule 25.06(8) Where fraud, misrepresentation, breach of trust, malice or intent is alleged, the pleading shall contain full particulars, but knowledge may be alleged as a fact without pleading the circumstances from which it is to be inferred."
This could theoretically present beneficiaries challenging the actions of a trustee, since the trustee frequently has the particulars and the beneficiaries do not. In practice, this problem rarely arises because most litigation occurs in the context of a passing of accounts, where it is unnecessary to make allegations against the estate trustee. Instead, under the procedure in Rule 74, the beneficiaries can simply file and serve a Notice of Objection to Accounts challenging transactions or omissions in the trustee’s accounts.
After filing their Notice of Objection to Accounts, the beneficiaries can then bring a motion for an order giving directions (or an order for assistance) that will provide for the disclosure of the particulars they think exist. After receiving full disclosure, the beneficiaries should in a position to make a better-informed decision on whether to add such allegations to their pleadings.
Where this process is anticipated, the order should specifically authorize the parties to return to court for further directions. Of course, it would rarely even be necessary to allege fraud at all, since the facts that support the allegation of fraud can form the basis of an objection to the accounts without using the words "fraud" or "breach of trust", and this can achieve the same practical result without the risks associated with alleging fraud. Beneficiaries can also avoid the risk of having their pleadings struck at an early stage.
Have a great day,
Christopher M.B. Graham – Click here to learn more about Chris Graham.
Rule 45 of Ontario’s Rules of Civil Procedure contains mechanisms by which a party can freeze assets that are in issue or relevant to the proceeding. However, this should be done prior to the close of pleadings because once the matter is set down for trial, Rule 48.04(1) applies. Rule 48.04(1) requires that any motion brought after the close of pleadings have leave of the court. Leave will only be available where there has been a substantial or unexpected change in circumstances.
A recent example of Rule 48.04(1) barring a motion for interim preservation occured in Trapukowitcz Estate v. Royal Bank of Canada. In this case, an estate trustee was seeking an order that the proceeds of a GIC and a bank account be paid into court pending determination of ownership. Justice Harris refused to grant leave to bring the motion because, on the basis of the admissible evidence, the estate trustee had not shown a substantial or unexpected change in circumstances.
Justice Harris followed Machado v. Pratt & Whitney Canada Inc. (1993), 16 O.R. (3d) 250, which requires strong affidavit evidence to demonstrate a "substantial and unexpected change in circumstances to the extent that to refuse the order would be manifestly unjust". The grounds in the moving estate trustee’s affidavit were unconvincing.
As importantly, viva voce evidence given in submissions was not considered. To do so would be unfair to the respondent, particularly since the evidence had been available since June 4, 2009 and the hearing took place in August 6, 2009. Therefore, Justice Harris cited Rule 37.06(b), which stipulates that every notice of motion must state the grounds to be argued, and refused to consider the viva voce evidence.
There is no requirement under Rule 45 to prove the assets are actually at risk, so a R. 45 freezing order is easier to get before the close of pleadings.
Enjoy your day,
Christopher M.B. Graham – Click here for more information on Chris Graham.