Tag: supreme court of canada
Last week, the Supreme Court of Canada released two decisions concerning the equitable doctrine of rectification: Canada (Attorney General) v. Fairmont Hotels Inc. and Jean Coutu Group (PJC) Inc. v. Canada (Attorney General). Fairmont deals with the equitable doctrine while Jean Coutu deals with rectification under Quebec civil law. Together, these decisions materially change the law of rectification by narrowing its scope. Both cases concern rectification for the purpose of tax planning. It remains to be seen what effect, if any, these decisions will have in the estates context.
In Fairmont, Fairmont Hotels and Legacy Hotels entered into a financing agreement that was intended to operate on a tax-neutral basis. When the financing agreement was terminated to allow Legacy Hotels to sell two hotels, there was an unanticipated tax liability for Fairmont. Fairmont applied to the court to rectify their directors’ resolutions to avoid the tax liability. Likewise, in Jean Coutu, a Quebec corporation, the Jean Coutu Group (PJC) made a series of transactions designed to be tax neutral, but were unsuccessful in avoiding tax consequences. After the audit, PJC sought to rectify the documents, arguing the intention of the parties to the transactions was to be tax neutral.
The Doctrine of Rectification Reviewed
In both cases, the court held that a general intention of tax neutrality is insufficient as a basis for rectifying the written documents of an agreement. Instead of looking at the motivation for entering into the agreement, a court must consider what the parties actually agreed to do. In Fairmont, the court stated: “It bears reiterating that rectification is limited solely to cases where a written agreement has incorrectly recorded the parties’ antecedent agreement. […] In short, rectification is unavailable where the basis for seeking it is that one or both of the parties wish to amend not the instrument recording their agreement, but the agreement itself.” In the case of Fairmont, the court held that Fairmont only had a wish to protect its subsidiaries from tax liability, not a plan to do so in concrete and ascertainable terms. Rectification was therefore not available.
The court will grant rectification for two types of error:
(1) where both parties subscribe to a written agreement on the mistaken common understanding that it accurately reflects the terms of their antecedent agreement; and
(2) where there is a unilateral mistake, either in a unilateral act such as the creation of a trust, or where an instrument was created to record an agreement made between parties and one party argues it does not accurately do so.
In the first case, a mutual mistake, the court must be satisfied: “that there was a prior agreement whose terms are definite and ascertainable; that the agreement was still in effect at the time the instrument was executed; that the instrument fails to accurately record the agreement; and that the instrument, if rectified, would carry out the parties’ prior agreement.” In the latter situation, the preconditions to rectify a unilateral mistake are: “the party resisting rectification knew or ought to have known about the mistake” and “permitting that party to take advantage of the mistake would amount to ‘fraud or the equivalent of fraud.’”
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Many people are aware of the presumption which was confirmed by the Supreme Court of Canada in Pecore v. Pecore that assets which are held jointly between the deceased and certain individuals (including their adult children) are presumed to be held by the surviving joint owner on a resulting trust for the deceased owner’s estate unless they can rebut the presumption and show evidence that the deceased intended them to receive the property by right of survivorship. While the application of such a presumption is clear when the property is owned jointly between a parent and an adult child, what about when the property is owned jointly between two married spouses? Does a similar presumption to that in Pecore apply, such that the surviving spouse is forced to show that the deceased spouse intended them to receive the asset upon their death, failing which it is presumed to form part of the deceased spouse’s estate?
The common law presumption that joint assets are held on a resulting trust for the benefit of the deceased owner’s estate has been altered in Ontario as it relates to married spouses by the Family Law Act. Section 14 of the Family Law Act provides:
“The rule of law applying a presumption of a resulting trust shall be applied in questions of the ownership of property between spouses, as if they were not marries, except that,
(a) the fact that property is held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants; and
(b) money on deposit in the name of both spouses shall be deemed to be in the name of the spouses as joint tenants for the purposes of clause (a).”
As a result of section 14 of the Family Law Act, property which is held jointly between two married spouses is presumed to pass to the surviving spouse by right of survivorship. That being said, it is a rebuttable presumption, such that if there is evidence that the deceased spouse did not intend the property to pass to the surviving spouse upon death, the deceased spouse’s estate could seek a declaration that the asset in question is held on a resulting trust for the benefit of the deceased spouse’s estate. Section 14 of the Family Law Act effectively reverses the presumption as described in Pecore in the case of married spouses, whereby property held jointly between two married spouses is presumed to pass to the surviving spouse by right of survivorship unless there is evidence to the contrary such that the presumption can be rebutted.
Notably, section 14 of the Family Law Act only reverses the presumption as it relates to married spouses. As a result, an argument could be raised that in circumstances where common law spouses own property jointly, that the standard presumption as confirmed by Pecore would apply, such that the surviving common law spouse is presumed to hold the asset on a resulting trust for the benefit of the deceased spouse’s estate unless they can show evidence to rebut the presumption.
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Bill C-14, An Act to amend the Criminal Code and to make related amendments to other Acts (medical assistance in dying), continues to wind its way through the legislative process. The Bill is the federal government’s proposed new law regarding physician-assisted death, in response to the Supreme Court of Canada’s decision in Carter v Canada. The Bill was passed by the Senate on June 15, 2016 with several amendments. Yesterday, Members of Parliament in the House of Commons voted 190 to 108 in favour of the Bill, and sent it back to the Senate.
As we have previously blogged, the Supreme Court of Canada’s landmark decision in Carter v Canada declared that the prohibition against physician-assisted death in the Criminal Code violated the Charter of Rights and Freedoms.
However, in order to provide the government with sufficient time to enact a law that would pass constitutional muster, the Court suspended its declaration that the relevant sections of the Criminal Code were of no force and effect for a period of 12 months. The deadline was set to expire on February 6, 2016.
The Supreme Court subsequently granted a further four-month extension, which was set to expire on June 6, 2016. However, the Court granted an exemption for individuals who wished to exercise the right to physician-assisted death during this interim four-month period, holding that “they may apply to the superior court of their jurisdiction for relief in accordance with the criteria set out in para. 127 of our reasons in Carter.”
In response, the Ontario Superior Court of Justice published a practice advisory that provided guidance on the procedural steps for such an interim application. However, upon the expiry of the Supreme Court’s suspension of its declaration on June 6, 2016, and in the absence of enacted federal legislation, it was unclear if individuals seeking access to a physician-assisted death still had to bring an application before the Ontario Superior Court of Justice for such relief.
As of June 6, 2016, the Ontario government’s website stated that assisted death was legal in Canada, “as long as the criteria set out in the Supreme Court of Canada’s decision are met.”
The government’s website also stated that, while it was not required by the Supreme Court of Canada, patients and healthcare professionals were encouraged “to seek further clarity and certainty about how the Supreme Court’s decision applies to their particular circumstances by bringing an application to the Ontario Superior Court of Justice.”
However, in a decision rendered on June 15, 2016, the Ontario Superior Court of Justice held that judicial authorization is still required in the absence of a federal law.
The Honourable Justice Paul Perell, who had previously rendered the first decision regarding physician-assisted death in Ontario pursuant to the Superior Court of Justice’s interim practice advisory, has held that those seeking a physician-assisted death must still bring an application until the federal legislation is passed.
Given Justice Perell’s recent decision, although physician-assisted death is technically legal in Canada, individuals and healthcare providers in Ontario would be well-advised to consult with a lawyer and bring an application for judicial authorization before making end-of-life decisions.
Thank you for reading,
Umair Abdul Qadir
On June 9, 2016, the Supreme Court of Canada rendered its decisions in applications for leave to appeal two recent cases that have been closely watched by the estates bar.
The Supreme Court has dismissed both applications for leave to appeal the recent appellate decisions, which considered a court’s ability to intervene and set aside a Will or a bequest under a Will for violating public policy.
In Spence v BMO Trust Company, 2016 ONCA 196, the Deceased made a Will that disinherited one of his daughters, Verolin. Although the Will was not discriminatory on its face, Verolin sought a declaration from the lower court that the Will was void and relied on extrinsic affidavit evidence to argue that the Deceased had disinherited Verolin for racist reasons.
The lower court accepted the extrinsic evidence and held that the Will was invalid on the basis of public policy. However, the Ontario Court of Appeal allowed the appeal of the BMO Trust Company, holding that the Will was clear on its face and did not offend public policy. You can read and hear more about the Court of Appeal’s decision, which now stands as the final judgment in this case, on our blog and podcast.
The Supreme Court has also denied leave to appeal the New Brunswick Court of Appeal’s decision in Canadian Association for Free Expression v Streed et al, 2015 NBCA 50 (more commonly referred to as the McCorkill decision).
In McCorkill, the testator left the residue of his Estate to the National Alliance, a white supremacist organization based out of the United States. Much like Spence, there was no discriminatory language on the face of the Will. However, the lower court set aside the bequest to the National Alliance because the purposes and activities of the beneficiary organization were contrary to public policy. The lower court’s decision was upheld on appeal to the New Brunswick Court of Appeal. We have previously written about the McCorkill decision here, here and here.
Spence and the McCorkill are not the only two recent cases where a Will has been challenged for being discriminatory. My colleague Noah Weisberg has reported on a claim in British Columbia where a testator is alleged to have disinherited his daughter on the basis of her sexual orientation.
Thank you for reading,
Umair Abdul Qadir
On March 17, 2016, the Honourable Justice Perell of the Ontario Superior Court of Justice rendered his decision in A.B. v Canada (Attorney General), 2016 ONSC 1912, the first Application in Ontario for a declaration with respect to the constitutional exemption for a physician-assisted death.
As we had previously blogged, the Supreme Court of Canada released a landmark decision on February 6, 2015, declaring that the prohibitions against physician-assisted death in the Criminal Code violated the Charter of Rights and Freedoms. The Court suspended its declaration that sections 241(b) and 14 of the Criminal Code were of no force and effect for a period of 12 months, and the deadline was set to expire on February 6, 2016.
The Attorney General of Canada subsequently sought an extension of the suspension. In its January 2016 decision in Carter v Canada, 2016 SCC 4, the Supreme Court granted a four-month extension. However, a majority of the Court also granted a constitutional exemption for individuals who met the legal criteria set out in Carter v Canada and who wished to exercise the right to physician-assisted death during this interim period. The Alberta Court of Queen’s Bench rendered the first decision with respect to such an Application for a personal exemption on February 29, 2016 in Re H.S., 2016 ABQB 121, which was discussed here.
In response to the Supreme Court’s decision, the Ontario Superior Court of Justice published Practice Advisory – Application for Judicial Authorization of Physician Assisted Suicide. The practice advisory provides guidance on the procedural steps for such an interim Application.
In A.B. v Canada, the Applicant was an 81-year-old man who was diagnosed with advanced-stage aggressive lymphoma in 2012. After treatment failed to cure the cancer, A.B. decided to begin palliative oral chemotherapy in 2013.
The palliative care helped manage A.B.’s symptoms and pain until the end of 2015, when A.B.’s pain began to worsen. A radiation oncologist prescribed radiation, and A.B. came under the care of a palliative care physician. A.B.’s hematologist, who had been his treating physician since 2012, provided a worsening prognosis and a life expectancy of less than three months.
A.B.’s Application was supported by affidavit evidence from A.B. himself, his wife, his daughter, his hematologist, his palliative care physician and a geriatric psychiatrist. The geriatric psychiatrist performed a capacity assessment and insight, judgment and cognition assessments on A.B., and provided an opinion that A.B. had the capacity to make a decision regarding physician-assisted death. The Attorney General of Canada and Attorney General of Ontario took no position on the Application.
The Court also reviewed an exchange of correspondence with the Chief Coroner of Ontario, with respect to an ancillary request for a declaration that the physicians providing physician-assisted death not be required to notify the coroner of the circumstances of the death pursuant to the Coroners Act. On this issue, Justice Perell granted a declaration that the coroner did not need to be notified of A.B.’s death.
After reviewing the evidence, Justice Perell concluded that A.B. had satisfied the criteria set out at paragraph 127 of the Supreme Court’s 2015 decision in Carter. Justice Perell held that A.B. was a competent adult person who had a grievous and irremediable medical condition. Justice Perell also held that A.B.’s condition was causing him to suffer enduring intolerable suffering which could not be alleviated by any treatment available to him that he found acceptable, and that A.B. clearly consented to the termination of his life.
Accordingly, the Court granted a declaration that A.B. had satisfied the criteria for the constitutional exemption that was granted in the Supreme Court’s recent decision.
Thank you for reading,
Umair Abdul Qadir
As lawmakers continue to formulate a legislative response on the issue of physician-assisted death, the Ontario Superior Court of Justice has released a practice advisory for interim applications seeking judicial authorization.
As my colleague Lisa Haseley recently noted on this blog, the Supreme Court of Canada suspended the declaration that sections 241 and 14 of the Criminal Code were of no force and effect for a period of 12 months, and the one-year deadline was set to end on February 6, 2016. The Attorney General of Canada subsequently sought a six-month extension of the suspension. In its decision in Carter v Canada, 2016 SCC 4, released on January 15, 2016, the Court granted a four-month extension in light of the recent federal election.
However, a majority of the Court also granted an exemption for individuals who wish to exercise the right to physician-assisted death during this interim four-month period, holding that “they may apply to the superior court of their jurisdiction for relief in accordance with the criteria set out in para. 127 of our reasons in Carter.”
On January 29, 2016, in response to the Supreme Court’s decision, the Ontario Superior Court of Justice published Practice Advisory – Application for Judicial Authorization of Physician Assisted Suicide. The practice advisory provides guidance on the procedural steps for such an interim application for judicial authorization.
The practice advisory states that the application must be commenced by Notice of Application, pursuant to Rule 14 of the Rules of Civil Procedure. The applications would be heard no earlier than fifteen days and no later than thirty days after the application is commenced, but certain applications can be heard on an emergency basis.
The Notice of Application must be served on the Attorney General of Canada and the Attorney General of Ontario, and may need to be served on the applicant’s family members and “any other person who will be affected by the order sought” depending upon the individual circumstances of the applicant. The applicant must serve and file an application record and factum at least seven days before the hearing, and the respondents shall serve and file a factum and respondent’s application record at least four days before the hearing.
In addition to highlighting the evidence that should be included in the applicant’s affidavit, the practice advisory provides guidance on the affidavit evidence required from the applicant’s attending physician, consulting psychiatrist and the physician proposed to assist death (who may also be the attending physician).
Any Ontario parties or counsel seeking an exemption should carefully review both the practice advisory and the Supreme Court’s 2015 decision in Carter. The practice advisory notes that while it includes references to the types of evidence discussed in the decision, “the onus rests with the applicant to confirm and meet the evidentiary requirements set out in Carter (2015).”
Thank you for reading.
Umair Abdul Qadir
This week on Hull on Estates, Paul Trudelle and Doreen So discuss purchase money resulting trusts and the Supreme Court of Canada Rascal decision.
Should you have any questions, please email us at firstname.lastname@example.org or leave a comment on our blog below.
Reeves v. Dean, a recent decision of the Supreme Court of British Columbia (BCSC), acts as a helpful reminder that a fiduciary relationship may arise between a caregiver and their client.
The plaintiff was 50 years old and suffered from developmental delays making her unable to independently manage her finances. The defendant was the plaintiff’s caregiver pursuant to a contract of services between the defendant and the Provincial Government. The plaintiff sought damages based on, amongst other things, breach of fiduciary duty arising from the misappropriation of monies arising from a joint account between the plaintiff and defendant.
The decision of Ben-Israel v. Vitacare Medical Products Inc. (ON SC) provides a helpful summary of the traditional categories of relationship in which a fiduciary duty exists: agent to principal; lawyer to client; trustee to beneficiary; business partner to partner; and, director to corporation. In addition, as set out in the Supreme Court of Canada decision in Lac Minerals v. International Resources, relationships in which a fiduciary obligation have been imposed appear to possess three general characteristics:
- The fiduciary has scope for the exercise of some discretion or power;
- The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests; and
- The beneficiary is peculiarly vulnerable to, or at the mercy of, the fiduciary holding the discretion or power.
Of the three characteristics, the BCSC found that it was the vulnerability of the client that was essential to a finding of a fiduciary relationship. As such, since the plaintiff was in a position of disadvantage regarding the administration of the joint account monies, and consequently placed her trust in the defendant, a fiduciary relationship was found to exist between the plaintiff and defendant.
Therefore, the plaintiff was entitled to rely on the remedies available for breach of fiduciary duty including constructive trust, accounting for profits, and equitable compensation to restore to the plaintiff what was lost.
Last week, the Supreme Court of Canada restored a $3.2 million award to the Ediger family of Chilliwack, B.C. In the ruling, the court concluded that William G. Johnston, an obstetrician, is liable for the birth injuries caused to Cassidy Alexis Ediger. The 7-0 court ruling restored a liability finding against Johnston that had been overturned by the B.C. Court of Appeal in 2011.
On January 23, 1998, Carolyn Ediger was induced in labour by her obstetrician and gynecologist William G. Johnston, after he determined that her pregnancy was high risk. Complications were encountered during the delivery, and Johnston attempted a "mid-level rotation forceps delivery" without adequately informing or warning Carolyn about the potential risks of the procedure. Cassidy’s heart rate slowed (a condition called ‘bradycardia’) and her brain was deprived of oxygen for a full 18 minutes before an anesthetist was able to attend and an emergency c-section was carried out. At trial, Johnston was found to have breached the standard of care expected of him in the circumstances (i.e. was negligent) on two counts: i) by failing to have surgical backup available prior to attempting the forceps procedure; and ii) by failing to obtain consent from Cassidy’s mother before commencing the forceps procedure. The finding on lack of informed consent was eerily similar to a tragic case decided in 2009 (upheld on appeal earlier this year) involving catastrophic injury to an infant sustained at birth (also as a result of an unsuccessful attempt at a forceps-assisted delivery).
Johnston successfully appealed to the B.C. Court of Appeal on the basis that it was not possible to prove causation (i.e. that the forceps attempt caused the obstruction of Cassidy’s umbilical cord which caused the slowed heart rate which led to her injuries and/or that his failure to arrange for "immediately available" surgical back-up caused Cassidy’s injuries). The legal test for causation requires the plaintiff to show on a balance of probabilities that "but for" the defendant’s negligent act, the injury would not have occurred.
The Supreme Court of Canada restored the trial judge’s finding that Johnston’s attempt to deliver by forceps was in such "close proximity" to the onset of Cassidy’s bradycardia as to support a finding of causation. Further, the Supreme Court found that Johnston erred by failing to ensure a backup surgical team was readily available to assist with a caesarean section delivery when it was clear that the forceps procedure failed. Had Johnston taken such a reasonable precaution (given the recognized risk of bradycardia with a forceps attempt), a faster delivery would have ensued and injury from bradycardia would likely have been prevented.
Cassidy is now 15 years old, suffers from permanent spastic quadriplegia and cerebral palsy, is non-verbal, tube-fed, confined to a wheelchair, and is fully dependent on her parents for every aspect of her daily care. Her life expectancy is 38 years.
Jennifer Hartman, guest blogger
As has been my mantra all week, Justice Cromwell, who delivered the reasons for the Court in Kerr v. Baranow & Vanasse v. Seguin, commented that for unmarried persons in domestic relationships in most common law provinces, judge made law is the only option for addressing the property consequences of the breakdown of those relationships.
A property interest by resulting trust arises where 1) there is a gratuitous transfer of property from one partner to the other, or 2) there is joint contribution by two partners to the acquisition of property, title to which is in the name of only one of them.
Added to this has been the “purely Canadian invention” of the “common intention” resulting trust, whereby a resulting trust could arise based solely on both partners having a common intention that one holds property for the beneficial interest of both. However, the Court declared that this concept was doctrinally unsound and should have no continuing role in the resolution of domestic property disputes.
A far better approach was to apply the law of unjust enrichment and the remedial constructive trust, which provide a much less artificial, more comprehensive and more principled basis to address property claims on the breakdown of domestic relationships. To be successful, a plaintiff had to establish 1) an enrichment of the defendant by the plaintiff 2) a corresponding deprivation of the plaintiff, and 3) the absence of a juristic reason for the enrichment.
The appropriate remedy for unjust enrichment will most often be monetary though there may be some circumstances in which a monetary remedy will be inadequate and a proprietary remedy is required.
When quantifying a monetary remedy, a quantum meruit approach should be applied and value assessed on a “value survived” basis, which is preferable to imposing a remedial constructive trust. To be entitled to a monetary remedy on a value survived basis, the claimant must show both that there was a joint family venture and that there was a link between his or her contributions and the accumulation of wealth.
This decision provides much guidance to courts in determining the property rights of unmarried partners and will no doubt prove instructive in cases where individuals die without having provided properly with respect to the property accumulated during their lifetime with a common law spouse.
Sharon Davis – Click here for more information on Sharon Davis.