The time line in passing of accounts proceedings is being changed. Recent amendments to the Ontario Rules of Civil Procedure extend the time period for service of the Notice of Application to pass accounts, and move up the time within which to deliver a Notice of Objection.
The amendments also increase the costs allowable upon an unopposed passing of accounts.
The amendments, found in Ontario Regulation 55/12, come into effect on July 1, 2012.
With respect to timing, the amendments make the following changes:
- Notice of Application: Ontario respondent: 60 days notice (up from 45)
- Notice of Application: Outside Ontario respondent: 75 days notice (up from 60)
- Notice of Objection: 30 days before hearing (up from 20 days)
- Response from Children’s Lawyer or Public Guardian: 30 days before hearing (up from 20 days)
The amendments also codify what is required where a request for increased costs is being made, and the time frame for making and opposing such a request.
The tariff for costs allowable on an uncontested passing allows for greater costs. The costs range from $2,500 for an estate having a value of less than $300,000, to $7,500 for an estate having a value of $3,000,000 or more (up from a range of $800 to $5,000).
Have a great weekend.
Paul Trudelle – Click here for more information on Paul Trudelle.
I saw “The Descendants” on the weekend. It is a great movie in its own right, but also a great movie from the perspective of an estates and trusts lawyer. The movie raises a number of estates and trusts issues: trusteeship, powers of attorney, living wills, and the threat of estate litigation.
Without wanting to give away the plot, one of the issues referred to in the movie is the “rule against perpetuities”. I don’t expect that “rule against perpetuities” movies will be a new film genre. However, it is an interesting concept and significantly moves the story in “The Descendants” forward.
Simply put, and as well explained in the movie, the rule provides that no interest in a trust will be valid if the trust vests more than twenty-one years after the termination of some life in being at the time of the creation of the trust. The effect of the rule is that a trust cannot continue on indefinitely, and must vest at some point: that is, the trust must vest twenty-one years after the death of a prescribed person.
Much case law, legislation and commentary has evolved in relation to the rule against perpetuities. However, the general application of the rule in most cases remains, and property in a trust cannot be held in the trust indefinitely. We cannot freeze the past forever, and must move on.
Thank you for reading.
Paul E. Trudelle – Click here for more information on Paul Trudelle
Occasionally, an estate of a deceased person may be unadministered yet it is nonetheless in the interest of justice that such estate have representation in proceedings before the Court. For example, one estate may claim an entitlement in another estate. However, if the estate claiming such an entitlement is otherwise insolvent, it may be that no one is prepared to administer the estate and, as executor, actually advance the claim. It may then be left to a beneficiary to seek a Representation Order from the Court (under Rule 10.02 of the Rules of Civil Procedure) authorizing him or her to either: (i) represent the interests of the estate under which he or she takes or (ii) allow his or her application to proceed in the absence of an appointed executor.
Such was the fact situation in the decision of Justice Hoy of the Ontario Superior Court of Justice in Sloan v. Witkin released June 15, 2011. In finding that the application advanced by Ms. Sloan should be allowed to proceed, Her Honour stated, in part, as follows:
" I accept…that the court should be cautious in granting authority to carry out litigation without the burden of administering the entire estate. On the very particular facts of this case, however, I am persuaded that an order should issue pursuant to Rule 10.02 permitting Ms. Sloan to do so in the absence of a person representing the Moldaver Estate. In addition to being a beneficiary of the Moldaver Estate, Ms. Sloan is, allegedly, a creditor. If her application prevailed, she would not be an appropriate executor. Additional steps would be required at that time to name a different executor. This is an unnecessary expense. The Moldaver Estate is – absent entitlement from the Fox Estate ‑ insolvent; not surprisingly, no one has volunteered for this task….Moreover…the proceeding at issue is an application for the determination of rights depending on the interpretation of a will, not an action where facts are in dispute.
David M. Smith – Click here for more information on David Smith.
In yesterday’s blog I touched upon the rule in Re Hallett’s Estate. In today’s blog I will touch upon the rule in Clayton’s Case (1816), 1 Mer. 529, 35 ER 767 (Ch.). Again, the rules stem from situations where a trustee mixes trust funds with their own funds or with a different trust’s funds.
The rule in Clayton’s Case is generally described as the "first in, first out" rule. It holds that where a trustee mixes money from two or more trusts in one account and then removes money from it, the trustee is deemed to have taken out the money that was first deposited in the account. The reason for the creation of the rule in Clayton’s Case appears to be to facilitate the tracing of funds in situations where the equities were equal and there may be difficulty in ascertaining the proportionate share to be awarded to each of the trusts in question. At its lowest common denominator, the rule in Clayton’s Case appears to be a rule of convenience and administrative expediency.*
For example, assume that a trustee deposits $20,000 belonging to trust A in a bank account. One week later, the trustee deposits $10,000 belonging to trust B into the same account. Two months later, a deposit of $5,000 belonging to trust C is made to the same account. The following week, the trustee withdraws $25,000 from the account.
At the conclusion of these transactions, $10,000 remains in the account. In this scenario, the rule would not permit trust A to recover anything from the account, trust B would recover $5,000 and trust C would recover $5,000. Trust A and trust B would have claims against the trustee personally for amounts not recovered from the account.
There are, however, exceptions to the rule in Clayton’s Case. These include the rule in Re Hallett’s Estate (trustee having and then removing his or her own funds from the subject account). The rule does also not apply when a withdrawal is designated to a specific trust, when transactions are entered in a bank account on the same day, where all claims can be satisfied and where a trustee properly withdraws money from a mixed account for the purposes of a particular trust beneficiary but then misappropriates it. In this case, the beneficiary may not plead the rule in Clayton’s Case as a method of allocating the loss to another beneficiary.
Thanks for reading and enjoy the long weekend.
Craig R. Vander Zee – Click here for more information on Craig Vander Zee.
* See: The Law of Trusts, A Contextual Approach (Second Edition) at page 681
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.
Estates litigation is full of wonderful little procedural differences from general civil litigation. The most basic differences are found in Rules 74 and 75 of the Rules of Civil Procedure. Take for example motions. One would think a motion is fairly straightforward, but…
The general provision governing motions is Rule 37, of course, which requires motions made on notice to be served at least 4 days before the hearing (R. 37.07(6)). But in estates litigation, often a mere 4 days is not sufficient. The handy all-purpose Rule 74.15 Order for Assistance requires service at least 10 days before the hearing, even though a mere motion. So does a motion (or an application) for Directions under Rule 75.06.
Not only that, "any person who appears to have a financial interest in the estate may move" under R. 74.15 for Assistance or under R. 75.06 for Directions, so the usual standing arguments may not apply. In estates litigation (depending on the jurisdiction), even the family dog has standing (sometimes). I’ll leave the rest for another blog, but as a reminder, R. 75.06(2) requires service on "all persons appearing to have a financial interest in the estate." But that’s a topic for another blog.
Enjoy your day.
Listen to The Question of Compensation and Complaints.
This week on Hull on Estates and Succession Planning, Ian and Suzana discuss the question of compensation and complaints regarding compensation.
My last blog this week examines the application of our favourite Rule 57.07 – Liability of Solicitor for Costs – in the context of affidavits. We (and our clients) have all suffered through The Angry Affidavit. In Manitoba, which has comparable legislative provisions authorizing and governing cost awards, drafting such an affidavit can be expensive for the drafting lawyer.
In Eblie v. Yankowski,  M.J. No. 145, the court awarded costs against the solicitor personally where an affidavit contained irrelevant, scandalous, vexatious and frivolous. It was not enough to simply type what the client wanted to say. The solicitor was responsible for drafting and presenting the affidavit material, and had caused costs to be incurred without reasonable cause. In this case, the costs incurred included a motion to expunge the impugned material.
Further, the court made the interesting comment: "It is difficult to accept that these materials were not prepared and filed for an improper purpose, namely to prejudice the mind of the court against the opposite party. If their inclusion in the affidavit filed by the Petitioner was intended to gain undue advantage and to defeat the course of justice costs against counsel personally are clearly warranted."
For those interested, section 96 of Manitoba’s Court of Queen’s Bench Act is nearly identical to section 131 of Ontario’s Courts of Justice Act in creating jurisdiction to make discretionary cost awards. Manitoba’s Rule 57.01(1) is similar in all relevant ways to Ontario’s Rule 57.01(1), and Manitoba’s Rule 57.07 similarly imposes potential personal liabilty on solicitors.
Enjoy your weekend,
There seems to be a rule for every situation in estates litigation. Consider the oft-ignored Rule 74.14(2), the short-cut to probate rule.
Probate applications are refused where the application material raises legal issues. Normally, the next step is to bring a motion for directions to have a judge rule on the legal issues raised by the application. There is arguably no such thing as a "simple will"; even a modest estate can give rise to issues of the highest level of complexity. Preparing motion materials for interpretation of a "simple will" can therefore be disproportionately expensive.
Can Rule 74.14(2) can apply to avoid the need for drafting motion materials? Rule 74.14(2) states:
"Where, in the opinion of the registrar, the application and accompanying material are not complete or contain information on which the registrar has a doubt, the application shall be referred to a judge for determination."
The qualifying conditions for referral to a judge can be interpreted quite broadly. The key to this provision is the absence of any requirement to bring a motion. It would seem that a letter to the registrar is sufficient, citing this rule and requesting the matter be referred to a judge. Of course, unanimity among the parties to the probate application is probably required, though not explicitly stated in the rule. It probably also helps to be polite, since the language of Rule 74.14(2) is discretionary.
This useful rule is unlikely to be the subject of substantial litigation, since where an estate can bear litigation expenses, the usual course of a Rule 74.15 motion for an Order for assistance, or a motion or application for directions under Rule 75.06 will be preferred.
Have a great day,
Listen to Delegation in Investment Accounts
This week on Hull on Estate and Succession Planning, Ian and Suzana discuss delegation issues that arise when dealing with Investment Accounts and address a listeners question about the family cottage.