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Hot-Tubbing Experts

Posted in General Interest, Litigation

‘Hot tubbing’– or ‘concurrent evidence’ as it is more formally known, is a means of eliciting expert evidence at trial, whereby the expert witnesses give their evidence in chief together and by engaging in discussion directly with the trial judge and each other. This approach is significantly different from the traditional model of cross-examination, in which each expert is individually examined and then cross-examined by opposing counsel.

Australia was the first to introduce the practice into civil trials, however, hot-tubbing has since been successfully adopted in the UK and has become widely used in International Arbitration.

While there are no hard and fast rules for hot-tubbing, the general procedure is somewhat consistent across jurisdictions:

Prior to trial, the experts are required to prepare and exchange written reports. They will then meet, usually in the absence of counsel, to discuss their reports and prepare a joint statement. The purpose of the joint statement is to identify the specific points upon which the experts agree and disagree. The identified areas of disagreement are then used as the basis of an agenda for the ‘hot-tub’, which is prepared and agreed by the parties. This agenda is provided to the judge in advance of the trial. At trial the experts are sworn in together. The judge initiates and directs the discussion based on the agenda. Through their oral testimony, the experts will try to reconcile the areas of disagreement. Each of the experts is provided the opportunity to present their views and answer any questions posed by the other expert. If necessary, counsel is then permitted to ask questions of each of the experts. At the end, the judge will summarize the different positions put forth by each of the experts on the issues and get them to confirm or correct if the judge’s interpretation is incorrect.

By focusing only on areas of contention, particularly during cross-examination, there seems to be a significant reduction in the amount of time required to examine each expert. Overall, this can lead to time and cost savings and increase the overall efficiency of eliciting expert evidence at trial.

In Canada, the Federal Court Rules (the “FCR”) governing expert evidence were updated in 2010 to incorporate hot-tubbing. Paragraph 282.1 of the FCR now reads:

“The Court may require that some or all of the expert witnesses testify as a panel after the completion of the testimony of the non-expert witnesses of each party or at any other time that the Court may determine…

Expert witnesses shall give their views and may be directed to comment on the views of other panel members and to make concluding statements. With leave of the Court, they may pose questions to other panel members.”

In addition, a pretrial version of hot-tubbing was added to the Ontario Rules of Civil Procedure (the “Rules”) in 2010, and appears to be gaining traction.  Pursuant to Rule 20.05(2)(k) of the Rules, the court may give direction or stipulate that experts meet on a without-prejudice basis before trial where:

“(i) there is a reasonable prospect for agreement on some or all of the issues, or

 (ii) the rationale for opposing expert opinions is unknown and clarification on areas of disagreement would assist the parties or the court.”

This practice of hot-tubbing, both before trial and at trial, is becoming more widely used in an effort to reduce areas of disagreement between experts and to increase efficiency of facilitating settlements and assisting the court at trial.

Thank you for reading,

Ian Hull

Hull on Estates #396 – Appropriate communications between counsel and experts

Posted in Hull on Estates, Hull on Estates, PODCASTS / AUDIO, PODCASTS / TRANSCRIBED, Show Notes

Listen to Hull on Estates #396 – Appropriate communications between counsel and experts

Today on Hull on Estates, Jonathon Kappy and Doreen So discuss the Position Paper of the Advocates Society as interveners to the appeal of Moore v. Getahun, in relation to what is appropriate communications between counsel and experts.

If you have any questions, please email us at hull.lawyers@gmail.com or leave a comment on our blog page.

Click here for more information on Jonathon Kappy.

Click here for more information on Doreen So.

Trial Strategies

Posted in Litigation

I attended a very helpful CLE yesterday on trial strategies.  While a large amount of material was covered addressing preparation for trial, I particularly identified with the following points made by various speakers about events during trial: 

  • Ensure the tone and style of your presentation suits the case;
  • A great advocate is a master story-teller – this doesn’t mean distorting the truth but drawing together a clear, coherent and complete picture that persuades the judge;
  • To tell a good story you need to know and keep in mind the theory of your case – this is adapting your story to the legal issues of the case; this appeals to the judge’s logic;
  • To tell a good story you need to know and keep in mind the theme of your case – appeal to shared values or common motivations; this appeals to the judge’s heart;
  • Consider not doing an agreed statement of fact in certain cases, in order to have persuasive human faces tell your story;
  • Examinations in chief are difficult – put your strongest witnesses up first and last;
  • Don’t get deflated by judge’s questions that appear to forecast a leaning against your case, the judge usually just needs more information;
  • Choose closing arguments made orally, this is more powerful than written submissions;
  • In closing argument highlight how the opposing counsel oversold their case in their opening statement;
  • In closing argument don’t oversell the evidence – cite it accurately and fairly; and
  • Be prepared to constantly re-evaluate your client’s case -don’t get discouraged by the unexpected, remember the big picture.

Have a great weekend!

Natalia Angelini

Is the Date to Determine Adequate Provision for a Claimant a Moving Target?

Posted in Common Law Spouses, Litigation, Support After Death

In wills variation proceedings in British Columbia, the date for determining whether a testator made adequate provision for a claimant is the date of death. However, in Eckford v. Vanderwood the British Columbia Court of Appeal considered the situation where the claimant’s circumstances changed after death, and whether that should impact upon the date to determine sufficiency of support.

In this case, the testator (age 57) and claimant (age 56) were common law spouses.  They had a home owned as joint tenants, and on its sale after the testator’s death the claimant received almost $310,000.00.  The deceased had other assets with a gross value of about $400,000.00.  However, the claimant was not a beneficiary in the testator’s Will (made prior to he and the claimant moving in together).

After the testator’s death, the claimant left her secretarial job due to a lung infection.  Various subsequent ailments left her disabled and it seemed unlikely that she would be able to return to work.  The claimant pursued a claim under the former Will Variation Act (in Ontario such a claim would be brought under part V of the Succession Law Reform Act (SLRA)). 

The judge found that adequate provision was made for the claimant, and the medical problems developed post-death were not reasonably foreseeable to the testator.  The judge also concluded that he could not take into account the claimant’s current medical situation.  The claimant appealed.

The appellate court agreed with the trial judge.  It cited the two-stage process of first determining whether adequate provision was made, and, if adequate provision was not made, then at stage two the court would look at what provision would be just and equitable in the circumstances – the claimant’s current circumstances could be reviewed as part of that process ( the SLRA is similar in effect ).

It was concluded that for stage one the date for determining adequate provision is the date of death, as that is the last opportunity one has to make a will. The circumstances existing at that date are relevant.  Also relevant are circumstances that are reasonably foreseeable to the testator at that time, which is a question of fact to be determined in each case.  In this case, such a rapid decline in health shortly after the testator’s death was not reasonably foreseeable.  Accordingly, the claimant did not pass the first stage of the test. 

Thanks for reading and have a good day,

Natalia Angelini

 

Mirror v. Mutual Wills

Posted in Estate Planning, Wills

Mirror wills are made by two people to benefit one another. If one should predecease, an alternate beneficiary, agreed upon by both testators is to benefit. Mirror wills are often made by spouses and designate their children as the alternate beneficiaries.

Mutual wills are a similar, yet clearly distinguishable, estate planning vehicle. The doctrine, described in detail here, involves two people making a binding agreement as to the disposal of their property and executing wills accordingly.

Mutual wills are most commonly used by spouses who enter into marriages with children from previous relationships. While they wish to benefit each other upon death, they also want their respective children to have benefits upon the death of the surviving spouse.

There are requirements, therefore, needed to elevate a mirror will to mutual will status. A mutual will needs to involve an agreement not to revoke or vary a certain testamentary plan of distribution. It must involve a sound contract without ambiguity, which upholds all of the technical necessities of a contract.

The fundamental difference between mirror and mutual wills, thus, lies in the irrevocability of the latter. When spouses make mirror wills, they have not necessarily made a contract with one another and therefore can revoke the mirror will at a later time. Mutual wills remove this aspect of testamentary freedom through use of an overriding contract.

The doctrine of mutual wills may, in some instances, require the opinion, advice and direction of the Court and the Court may need to look to evidence of the surrounding circumstances in order to determine whether there is a contractual agreement that prevents parties from revoking the wills without the other person’s consent. This could include independent notes taken by lawyers and/or accountants, as well as other witnesses that were privy to any such agreement.

Thank you for reading,

Suzana Popovic-Montag

Narcissistic Personality Disorder

Posted in Capacity, Litigation

At the recent Estates and Trust Summit, Ian M. Hull spoke about the difficult legal consideration of testamentary capacity, and the impact of Narcissistic Personality Disorder (NDP) on one’s soundness of mind. 

In Mr. Hull’s paper, the medical information cited refers to persons with NPD as viewing themselves in grandiose terms, believing themselves to be superior to others and viewing others with disdain.  They have unrealistic confidence in their ability to realize their grandiose fantasies, denying their weaknesses and displaying anger when their expectations are not met.   They have significant impairment in personality functioning (often setting goals based on gaining approval from others) and interpersonal functioning (they are excessively self-attuned), and struggle with intimacy (relationships are largely superficial and exist to serve self-esteem regulation).

There are a few instances in which NPD has come before the courts:

In Verma v. Verma (Guardian ad litem of), a British Columbia Court decision, a person with NPD was found to be incapable of managing their affairs.

In Brammall v. Brammall Estate, another British Columbia Court decision, a person was diagnosed with NPD prior to preparation of a Will.  While the testator’s NPD may have contributed to a misinterpretation of his relationship with family members, the court found that it did not amount to a deprivation of testamentary capacity.  Nevertheless, the Court intervened on the grounds of a moral duty not to unfairly disinherit his children without good cause.

Aging is problematic for persons with NDP, as they are threatened by the decline in physical attractiveness, intellectual abilities and health.  They may also be susceptible to undue influence and manipulation by others given, among other things, their quest for praise and admiration.

This issue will surely arise again in time, and courts will need to carefully examine the evidence to determine whether a Will merely reflects an eccentric, capricious, unfair mind or a mind rendered unsound by the NPD, likely aggravated by old age.

Thanks for reading,

Natalia Angelini

The Role of Insurance in Estate Planning

Posted in Estate Planning

The value of insurance should not be overlooked in estate planning. Here are just a few reasons why having insurance can be an important part of your overall estate plan:

(1) Insurance can preserve your existing estate

Pursuant to the deemed disposition rules contained within the Income Tax Act (Canada), all capital property owned at death is treated (for income tax purposes) as having been sold by the deceased immediately prior to his/her death.  These provisions will apply to, among other assets, the deceased’s business, investments, vacation/holiday home, as well as the deceased’s art and other collectables. As such, it is not uncommon for significant capital gains tax to be due and payable upon the filing of a deceased’s terminal tax return. If not properly planned for, these taxes can significantly reduce the funds that would otherwise be available for the intended beneficiaries.

Insurance can be used to offset these taxes and any other costs that are incurred by the estate in relation to the individual’s passing (i.e. funeral costs and probate fees). If you name your estate as the beneficiary of your insurance policy, your estate trustee can use the proceeds to cover these expenses, which would otherwise have to be paid out of the estate assets. This will make it less likely that non-liquid assets, such as a cottage or business, will have to be sold to cover a tax bill. However, provision should be made for an insurance trust within the Will to ensure the policy proceeds do not attract probate tax.

(2) Insurance can create an estate for your beneficiaries

Insurance can also be used to create an asset or establish a fund to provide income for an individual you wish to support. While other investments like fixed income securities, GICs and bonds are considered a safe means of accomplishing the same goal, the income earned on those investments during the testator’s life is highly taxed.  Since the proceeds of a life insurance policy are paid tax-free to the beneficiary or beneficiaries, life insurance can be an efficient way to create an estate and to transfer wealth to heirs.

In addition, if your beneficiary uses the death benefit to buy an annuity for monthly income, he/she may not have to pay tax on that monthly income.

(3) Insurance can provide a confidential benefit to anyone

If the Will of the deceased requires probate, it becomes a public document. This can make dispositions more susceptible to challenge. Using a life insurance policy, it is possible to make a private and confidential gift, and this privacy may make the gift less susceptible to challenge.

There are, however, a few caveats to using insurance in an estate plan:

(1) The insured must be able to bear the cost of the policy and afford to do so without financial compromise. The earlier one starts investing in a policy the more affordable this option becomes.

(2) In order to secure an affordable policy one must be in good heath.

(3) If the policy proceeds are intended to benefit a minor beneficiary, the insurance company will likely seek to pay the proceeds into court in order to secure a discharge. An insurance trust should be set up to anticipate and avoid the likelihood of a payment into court.

Thank you for reading,

Ian Hull

Amendments to the Estate Administration Tax Act

Posted in Uncategorized

Ordinarily we at Hull & Hull LLP tend to blog about something a little more fun and upbeat on a Friday. Well, that’s certainly true today because the draft amendments to the Estate Administration Tax Act have finally been released and it’s all anyone’s thinking about!

Seriously though, it turns out that the changes are less frightening than many estate lawyers had anticipated.

The proposed regulation requires estate trustees to submit an estate information return to the Minister of Finance for probate applications made on or after January 1, 2015. The information return is due within 30 days of obtaining your certificate of appointment (or probate). The amendments will require a more specific breakdown of the assets of the estate and their total value. Up until now you were only required to provide two figures: the total value of any real estate, and the total value of any other assets.

The following information will now have to be submitted:

• Name, address, date of birth, date of death, marital status at the time of death and date of will (if there is a will) for the deceased;
• Detailed list of assets of the deceased and a description and the value of each asset;
• The amount of Estate Administration Tax, or deposit, paid by the estate;
• Information about the certificate of appointment of estate trustee, including the name of the estate representative, location and date on which application for certificate of appointment of estate trustee was made, and the date the certificate was issued;
• The date on which the estate representative gave an undertaking required under subsection 3 (4) of the Estate Administration Tax Act and a copy of the undertaking, if the tax or deposit was calculated based on the estimated value of the estate; and
• Certain details of the court order, if the Superior Court of Justice issued the estate certificate under subrule 74.13 (3) of the Rules of Civil Procedure, without payment of a deposit required under section 3 of the Act.

An amended information return will be required within 30 days of any of the following events:

• The estate representative becomes aware that certain information given to the Minister of Finance is incorrect or incomplete.
• A full or partial refund of a deposit or tax imposed under the Act is received by the estate representative after giving the return to the Minister of Finance.
• Additional tax imposed under the Act is paid or an additional amount is deposited by the estate representative after giving the return to the Minister of Finance.
• After fulfilling the undertaking described in subsection 4 (3) of the Act.
• A statement disclosing subsequently discovered property of the estate is delivered under subsection 32 (2) of the Estates Act.

You can view the draft changes here.

Thanks for Reading!

Moira Visoiu

 

Joint Tenancy Trap

Posted in Estate Planning

My mother recently told me that she wanted to transfer her home into joint tenancy with me and my brother to avoid taxes upon her death. Someone at her work had told her that if she didn’t do this, we would have to pay significant tax on the value of the house if we received the property through her Will.

Transferring a home into joint tenancy is a common strategy, often done to avoid probate fees. If you own property with another person as tenants in common, on your death your interest in the property becomes part of your estate to be passed on according to your will. If you own property with another person as joint tenants, on your death your interest in the property passes to remaining joint tenant(s) by right of survivorship. It does not form part of your estate and therefore you do not have to pay probate fees on the value of this property.

Couples often hold property in joint tenancy, however parents are increasingly using this option to pass the asset to their children upon their death.  However, this can result in some unintended consequences, some of which are set out below.

  1. The parent cannot later cancel the transfer if she changes her mind. A child can later attempt to force a sale of the property through the Partition Act, to receive their share of the house prior to the parent’s death.
  2. The parent will not be able to sell or mortgage the land unless the child also signs.
  3. The transfer is considered a disposition for income tax purposes. The 50% interest in the property transferred to the child is deemed to have been sold at its fair market value and, unless the asset is the parent’s principal residence, a portion of any capital gains will be added to the parent’s income.
  4. One-half of any future capital gains will accrue to the child. If the property is the parent’s principal residence and the child lives elsewhere, the principal residence exemption will be lost for the child’s share of any future increase in value of the home.
  5. Property transfer tax will be payable at the time of transfer, although there may be an exemption available if the property is the principal residence.
  6. The child’s interest in the property will be subject to claims by the child’s creditors.
  7. If the child is married and the property is used for a family purpose, it could be subject to claims by the child’s spouse if there is a breakdown of the child’s marriage.
  8. If the parent transfers the property only to one child, but there are other siblings, this could result in a dispute over the asset if the parent’s intention was not made clear. The other siblings would argue that the child holds the property in trust for the estate, and that it was not intended that they should receive the property by right of survivorship.

If you are still considering putting your home into joint tenancy with one or more of your children, you should be very clear about your wishes. If you intend that child to take the property absolutely upon your death, you should execute a deed of gift. Conversely, if you want that child to hold the property in trust for the estate and to share its value with their other siblings, this should be clearly documented in a trust declaration.

Finally, it should be noted that the Canada Customs and Revenue Agency has said that the existence of a declaration of trust will not, in and by itself, be conclusive evidence that beneficial ownership of the property has not changed. It depends on all of the circumstances. If legal title to an asset is transferred from a parent to the parent and a child, but beneficial ownership remains with the parent, a disposition for income tax purposes has not actually occurred. As a result, the CRA takes the position that where no transfer of beneficial ownership as occurred, the value of the property should be included in the probate application and probate fees should be payable. In other words, if the child is holding the home in trust for the estate, and it will be distributed in accordance with the will, then the full value should be included in the application for probate. This fact likely negates the point of placing the asset into joint tenancy to avoid tax, unless there are other reasons for the parent to want to do so.

As always, if you should speak to a lawyer who can provide you with specific estate planning advice before taking any steps.

Thanks for Reading!

Moira Visoiu

What Trust is Right for You?

Posted in Estate & Trust, Estate Planning

Trusts can be useful tools for investors and have many benefits now and into the future. As recently outlined in a Wall Street Journal article, however, it can be tricky to decide what kind of trust to set up.

How much discretion do you want your trustees to have? Will you require the trust’s beneficiaries to fulfill any conditions in order to receive their share of the trust? Will there be any alternate trustees or beneficiaries in the case that conditions are not fulfilled? These are important questions to consider when setting up a trust, especially one you wish to continue on after your passing.

Estate planning professionals generally look at the tax and legal benefits of trusts when advising clients on how to set up trusts. The taxation of trusts depends upon what kind of trust is set up. A glimpse into different taxation of trusts can be found here, here and here. Often, it is in the client’s best interest to reduce taxes on their wealth upon death.

That being said, the Purposeful Planning Institute (“PPI”) attempts to direct the focus away from maximizing tax free transfers of  wealth to heirs and puts it on the transfer of value, along with money. According to the New York Times, PPI therefore suggests providing a better service to your clients by helping them to create more personalized, descriptive trusts. For example, some of PPI’s tips include writing a trust out in the first person and giving the trust a name that captures what it was designed for.

Providing that a trust could only be used in specified manners (i.e. a HEMS trust which allows distributions for health, education, maintenance and support) may accomplish  more of the trustee’s wishes than one that is purely discretionary.

There has been some criticism of this approach, however. One criticism is that some of these documents may not be iron-clad in the event of any legal issues that arise.

However, there is some merit to the notion of looking beyond the tax consequences of a trust, and approaching the creation of a trust in a personalized manner. Some considerations that can be useful at the time of trust creation include when (whether it be a specified date or the attainment of a specific age) the income and/or capital is to be distributed and whether one or more of your beneficiaries has needs requiring either more aid from the trust or aid from the trust for a longer period of time.

Working with estate planning professionals, including lawyers, accountants and financial advisors, can help individuals create a trust that best suits their needs.

Thank you for reading,

Suzana Popovic-Montag

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