Tag: property

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:

16 Aug

One Expensive Tree!

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

“What could be more Canadian than Toronto neighbours arguing about building an addition on a house? Home owners arguing about a maple tree, of course.”

And so begins the saga of Allen v. MacDougall, 2019 ONSC 1939, a decision of Justice Morgan.

There, the Allens wanted to build an extension to their Moore Park home. To do so, they wanted to remove a tree that was on the property line between their property and their neighbours, the MacDougalls.

The Allens had obtained municipal permits to cut down the tree. However, as the court noted, the permits were necessary as a matter of regulatory compliance: they did not reflect any adjudication of property rights.

The MacDougalls argued that as the tree was on the boundary line between the properties, it was the common property of both adjoining owners. This was confirmed by The Forestry Act.

The Allens countered with an assertion that the tree constituted a “nuisance”, and therefore should be removed. “The law of nuisance seeks to balance the competing rights of owners – one neighbour to do what he wants and the right of the other neighbour not to be interfered with”.

The court held that although the tree was interfering with the proposed addition, it was not interfering with the Allens’ current use and enjoyment of the property. Further, the court found that no reasonable alternative to destroying the tree was explored. The application for an order authorizing the destruction of the tree was dismissed.

On the issue of costs, reported here, the Allens were ordered to pay the MacDougalls $77,000 in costs. This was based on partial indemnity costs up to the time of an offer to settle by the MacDougalls, and substantial indemnity costs from the time of the offer.

So, it appears, the tree still stands. However, I expect that the neighbourly relations between the parties have been clear-cut.

To read about one expensive dock, see my blog, here.

Have a great weekend.
Paul Trudelle

12 Apr

Fun Fact Friday: The Masters Edition

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

This weekend sees The Masters Tournament being hosted once again at the Augusta National Golf Club in Augusta, Georgia. The Masters was established in 1934, making this its 85th year.

Elizabeth and Herman Thacker have seen many of those tournaments. They have lived in their home next to Augusta since 1959.

Over the years, the Augusta national Golf Club has spent a reported $40 million (US), according to Business Insider, buying up homes next to the course, to accommodate parking. However, to date, the Thackers have resisted Augusta’s offers.

A 2019 article in Bisnow reported that Augusta National has spent $200 million over the past 20 years to purchase land surrounding the famed course. Purchases include two strip malls, and a church.

The spending spree does not seem to have had an impact on food prices at the tournament. A pimento cheese sandwich is still only $1.50, and a beer is $4.00. Take that, Rogers Centre!

On to the green jacket: all members of the Augusta National Golf Club (there are about 300 of them) get a green jacket. This was to identify them as members. In 1949, the club began awarding a jacket to tournament winners (although they don’t get  a membership). The winner is allowed to take the jacket off of the club grounds, but only for one year. The green in the jacket is “Pantone 342”.

Caddies at The Masters are not so sartorially lucky. They are required to wear white coveralls and a green baseball hat. Until 1983, golfers couldn’t bring their own caddies, but had to use caddies supplied by Augusta National. The coveralls each have a number on the front. The defending champion gets #1; other numbers are based on the order that the caddies check in to the tournament.

Have a great weekend.

Paul Trudelle

13 Dec

Testing the waters of Section 72(1)(d) of the Succession Law Reform Act

Hull & Hull LLP Joint Accounts, Support After Death Tags: , , , , 0 Comments

Many of our readers will be aware that on an application for dependant’s support under Part V of Ontario’s Succession Law Reform Act, certain property that may not be considered an asset of the deceased’s estate can be “clawed back” into the estate for the purposes of considering and funding an award of dependant’s support.  Subsection 72(1)(d) provides that “a disposition of property made by a deceased whereby property is held at the date of his or her death by the deceased and another as joint tenants” shall be deemed to be part of the estate.

Whether jointly-held property is caught by s.72(1)(d) depends on whether there was a “disposition” into that joint tenancy.  When a property is initially purchased by a deceased person and another in joint tenancy and remains as such at the time of death, it can not be said that there was a disposition into joint tenancy: s. 72(1)(d) would not appear to apply.

However, when the ownership arrangement of a property is more intricate, whether or not jointly-held property will be deemed to be an asset of the estate within the context of a dependant’s support application becomes less clear.

Consider the following scenario:

  • At first instance, title to a property is taken as follows:
    • 50% held solely by A; and
    • 50% held jointly by A and B, who are common law spouses.
  • Years later, A conveys the 50% held by her alone to herself and her common law spouse jointly.
  • Therefore, immediately preceding A’s death, 100% of the property is held in joint tenancy by A and B.

Now, after A’s death, A’s minor children assert a dependant’s support claim. Does section 72(1)(d) apply, such that the property can be made available to fund a payment of dependant’s support?

The decision in Modopoulos v Breen Estate, [1996] O.J. No. 2738 interpreted section 72(1)(d) of the Succession Law Reform Act to mean that, only if the property was owned solely by the deceased and later transferred into joint tenancy prior to death, would there be a “disposition” into joint tenancy.

In the unique set of circumstances described above, it could be argued that A never solely owned the property and, therefore, the later disposition is not captured by section 72(1)(d).  However, another perspective is that the 50% interest held initially by A as a tenant in common (with A and B jointly as to the other 50%) would have formed part of her estate if the subsequent disposition to B as a joint tenant did not take place. This interpretation strongly supports that section 72(1)(d) of the Succession Law Reform Act would in fact apply to make the 50% interest in the property available in satisfaction of a dependant’s support claim.  Certainly such an argument is consistent with the remedial intent of the legislation.

To our knowledge, there has yet to be a decision in Ontario that addresses whether section 72 would apply to a disposition out of a tenancy in common and into a joint tenancy, such as that featured in our hypothetical example.  It will be interesting to see how a court would interpret similar transactions if encountered in the future.

Thank you for reading.

David Morgan Smith and Nick Esterbauer

 

Other blog entries that you may enjoy reading:

 

11 Oct

The Importance of Filing Comprehensive Management Plans

Nick Esterbauer Guardianship Tags: , , , , , , , 0 Comments

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.

Thank you for reading.

Nick Esterbauer

 

Other blog entries and podcasts that may be of interest:

10 Jul

Hull on Estates #550 – Damages in Passing of Accounts of Attorneys for Property

76admin Hull on Estate and Succession Planning, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED, Show Notes Tags: , , , , , , , 0 Comments

In today’s podcast, Stuart Clark and Sayuri Kagami discuss the issue of whether damages can be claimed on a passing of an attorney for property’s accounts in light of the fact that section 49(3) of the Estates Act, RSO 1990, c E21 only refers to the ability of a Judge to award damages against an executor, administrator, or trustee, not an attorney for property, in such proceedings. To read about this issue, see Stuart Clark’s recent blog on this topic.

Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.

Click here for more information on Stuart Clark.

Click here for more information on Sayuri Kagami.

08 Jun

A Gift With A Catch: Bequests of Real Property and Mortgages

Paul Emile Trudelle Beneficiary Designations, Estate & Trust, Estate Planning, Trustees, Wills Tags: , , , 0 Comments

Assume that you are given real property in someone’s will, but the property is subject to a mortgage. Do you get the real property free and clear, or do you take it subject to the mortgage? Is the estate liable for paying off the mortgage?

The answer lies in s. 32 of the Succession Law Reform Act, and the terms of the will.

Pursuant to s. 32, the real property is primarily liable for satisfying the mortgage, unless there is a contrary or other intention in the will.

Section 32(1) provides:

Where a person dies possessed of, or entitled to, or under a general power of appointment by his or her will deposes of, an interest in freehold or leasehold property which, at the time of his or her death, is subject to a mortgage, and the deceased has not, by will, deed or other document, signified a contrary or other intention,

(a) the interest is, as between the different persons claiming through the deceased, primarily liable for the payment or satisfaction of the mortgage debt; and

(b) every part of the interest, according to its value, bears a proportionate part of the mortgage debt on the whole interest.

Thus, you take the property subject to the mortgage.

But, you may ask, what about the general direction to pay debts that is found in many wills? Isn’t that a “contrary intention”?

Section 32(2) states that a testator does NOT signify a contrary intention by a general direction for the payment of debts. Something more is needed.

While the property is subject to the mortgage, the mortgagee does not have to take action against the real property. Section 32(3) provides that nothing in s. 32 affects the right of a person entitled to the mortgage debt to obtain payment or satisfaction either out of the other assets of the deceased or otherwise.

When taking instructions for a will for a testator who owns property subject to a mortgage, the drafting lawyer should discuss the effect of s. 32 of the Succession Law Reform Act, and confirm whether this outcome is in keeping with the testator’s intentions. If it is not, and the testator wants the beneficiary to receive the property free of the mortgage, wording should be put into the will to set out this intention.

Have a great weekend.

Paul Trudelle

19 Sep

Hull on Estates #529 – Real Property and Vacant Possession

76admin Archived BLOG POSTS - Hull on Estates, Hull on Estate and Succession Planning, Hull on Estates, Podcasts, PODCASTS / TRANSCRIBED, Show Notes, Show Notes Tags: , , , , , , , , 0 Comments

Today on Hull on Estates, Jonathon Kappy and Umair Abdul Qadir discuss vacant possession of real property belonging to an estate and the recent decision in Filippelli Estate v Filippelli, 2017 ONSC 4923.

You can read more about this decision on our blog here.

Should you have any questions, please email us at webmaster@hullandhull.com or leave a comment on our blog.

Click here for more information on Jonathon Kappy.

10 Jul

Changes to Ontario’s Escheats Legislation

Ian Hull Estate & Trust, Hull on Estates, Trustees, Uncategorized, Wills Tags: , , , , 0 Comments

In December 2016, Ontario repealed the old Escheats Act, replacing it with two separate pieces of legislation, the Escheats Act, 2015 (the “EA”), which pertains to property of individuals who die without heirs, and the Forfeited Corporate Property Act, 2015 (the “FCPA”), which deals with the undisposed-of property of dissolved corporations. In so doing, the legislators appear to have increased the record-keeping burden on Ontario corporations and further expanded the Crown’s power to seize forfeited property via escheat.

Several related amendments to separate acts were introduced along with the FCPA. Specifically, a new section (140(1)(e)) incorporated into the Ontario Business Corporations Act (the “OCBA”) requires corporations to maintain a current register of their interests in land, as well as copies of deeds, transfers and other related documents. In his paper, “Ontario Corporations Beware: Changes to the Law Regarding Record Keeping and Forfeiture of Corporate Property,” Jeffrey Alpert points out that corporations with extensive real estate holdings stand to absorb a substantial administrative burden. As this section stipulates that the register of ownership interests in land must be located at the corporation’s registered office, it would also inconveniently obligate any corporations who outsource their “registered office” to their lawyer or accountant to constantly communicate the relevant, up-to-date information to those individuals.

The legislative changes further boost the Crown’s right to control escheated property. Firstly, upon seizing such property, the Crown can unilaterally terminate any encumbrances. The Crown is required to notify the sheriff and execution creditors of its intention to cancel. Whether such notice will serve as a practical deterrent, however, is unclear. Furthermore, the Crown now boasts near absolute power to seize and put to use forfeited corporate property. While not explicitly stated as such, the legislation essentially allows the Crown, post dissolution, to negate the claims of relief seeking parties and any secured creditors with interests in the forfeited corporate property. If the Crown gives notice for such action as required, those with interests in the pertinent property would have to act immediately to maintain those interests. Lawyers with clients in this position should therefore be clear and prompt in communicating the consequences of the Crown’s actions.

Although we don’t often come across these kinds of situations in our practice, when we do, it’s important to be aware of these recent changes. For an excellent article summarizing the changes, I refer you to this blogpost: Ontario dusts off the escheats rulebook – time to dust off your advice?

Thank you for reading.
Ian Hull

05 Jun

Trusts and family property – when can you trust a trust?

Ian Hull Estate & Trust, Estate Planning, Hull on Estate and Succession Planning, Hull on Estates, Joint Accounts, Trustees, Uncategorized Tags: , , , , , 0 Comments

The laws relating to trusts are complex enough, before issues relating to family law are introduced. Even at the best of times, individuals establishing trusts need the advice and services of professionals to ensure that trust structures are sound and their trust goals are met.

But toss in marital discord or separation, and the picture can get murky.

Equalization issues

 In Ontario, and some other provinces, family law requires an equalization of net family property when a marriage ends. What would happen then if a spouse, perhaps knowing the marriage is on rocky ground, transfers some assets to an alter ego trust, with a child as beneficiary. The transfer to a trust has the effect of reducing the individual’s net family property.

The issue? If the exclusion of a trust asset is challenged, a court could examine the timing and intention in establishing the trust and include it in net family property because the establishment of the trust was a fraudulent conveyance, or intended to avoid an individual’s family law obligations.

Another complication relating to trusts and the calculation of net family property is valuing a spouse’s contingent or vested interest in a discretionary trust. Unless the interest is excluded (gifts or inheritances received during the marriage are excluded for example), interest in a trust forms part of net family property. How then do you value an interest when distributions from the trust are at the discretion of the trustee? Courts have taken different positions – a good overview of different valuation methods is provided here: http://cswan.com/valuing-interests-in-a-discretionary-family-trust/.

Estate freeze considerations

 Other forms of estate planning that don’t necessarily involve a trust – such as an estate freeze – can also be impacted by family law. Because the law in many provinces excludes gifts from family property definitions, courts have ruled that shares received gratuitously as a gift through an estate freeze can be excluded from net family property. What’s not clear is whether shares purchased for a nominal amount would still be considered a gift (and excluded for family law purposes) or considered a purchase (which is not excluded).

Thanks for reading.
Ian Hull

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