The Lesser Rules of Estate Litigation - Hull on Estates #87
Listen to The Lesser Rules of Estate Litigation
This week on Hull on Estates, David Smith and Justin de Vries discuss the less-known rules (Rules 8-11) of estate litigation.
The Lesser Rules of Estate Litigation - Hull on Estates Podcast #87
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David Smith: Hi. My name is David Smith and I’m here with Justin de Vries and we’re here today to talk about certain Rules of Civil Procedure. Hi Justin.
Justin de Vries: Hi David. Today we’re going to talk about what David and I call the lesser rules of estate litigation, not to downgrade their importance, but they’re rules that often don’t come to mind as quickly. Of course, Rule 74 and 75 are the rules that people automatically think of. But in the Rules of Civil Procedure, Rules 8 to 11 also come into play. And that’s what we’re going to talk about today. I’m going to first start off and talk about Rule 8 which is generally dealing with partnerships and sole proprietorships.
The main thing to keep in mind there is that when you start a proceeding against a partnership, you can name the partnership. You don’t have to individually name partners, each and every partner that is, in that partnership. In the old days, you had to do that. Now this would come up in the estate context where, for example, you’re suing a partnership because of negligence or a disappointed beneficiary claim, something along those lines. Or, for example, where you’re looking for costs to be paid by a solicitor because of a Will interpretation and it was the solicitor’s mistakes or lack of attention to detail that caused the interpretation application to be brought. The main thing to keep in mind there as well, however, is that if you wish to try to enforce any Order that you receive against a partnership, particularly money, you have to give notice specifically to each and every partner. That’s the only way it’s enforceable. That’s 8.03 and there’s a specific form and a specific procedure. But again, bottom line is you have to put those partners on notice. And the other thing is if you’re concerned about well, I don’t know all the names of the partners even though I want to ultimately enforce this Order against them, is what you can do is require the partnership to disclose the name of partners. And that allows you to get at that information and ultimately enforce any agreement against a partnership and its partners.
The one thing, if an Order is in the name of a partnership, you first start off by going after the assets of the partnership and then ultimately you can again look to the partners to enforce a monetary judgment.
David Smith: And Justin, what about sole proprietorships?
Justin de Vries: The same thing applies to sole proprietorships. Rule 8.07 says “where a party carries on business in a business name other than his or her own name, a proceeding may be commenced by or against the person using the business name”. And then the earlier rules dealing with enforcement, etc. apply
David Smith: So obviously, you can run into some interesting technicalities there. Switching over now into estates and trusts, which are dealt with exclusively under Rule 9, other than Rule 74 and 75. Rule 9, estates and trusts, deals with three general sections. The first is the scope of the rule, that is, what kinds of proceedings that the rule applies to. The second is the appointment of a litigation administrator. And the third has to do with clearing up deficiencies in proceedings where the estate was not known or where the estate trustee was not properly identified in the originating process.
Rule 9 basically says that the executor is the person who represents the estate and so if you’re starting a legal proceeding against an estate, you don’t have to name the beneficiaries. That’s really the overriding concern of the rule. However, there are exceptions to that. And some of those exceptions are pretty significant. For instance, if you’re challenging a Will, looking to interpret a Will, removing or replacing an executor, or looking to deal with any issue relating to misconduct by a trustee. In all of those instances, you do have to name the beneficiaries as parties.
Another situation, which is somewhat similar, but at the same time different, is a claim for support under Part V of the Succession Law Reform Act. Even though Rule 9 doesn’t say you have to serve the beneficiaries, you have to be careful because Part V of the Succession Law Reform Act says that you can’t make a claim against the estate if it’s contrary to the interests of the beneficiary. So, good practice is to serve those persons as well.
Quite often there might be a claim against an estate where there’s no estate trustee appointed. And that’s when the Court will appoint what’s called a litigation administrator. And the litigation administrator will be appointed by the Court to bring in the assets of the estate, to represent the estate for the purposes of the litigation. Somewhat of an unusual situation, usually you’re going to know who the executor is and there’s little reason to have a litigation administrator appointed. But it’s good to be aware of this provision in the Rules.
One thing we run into often is the remedial provisions under Rule 9, Justin. And that’s where we might name the estate of a deceased person without knowing the identity of the estate trustee. And so the rule is pretty clear. If I’ve got a claim against John Doe’s estate, I can simply say “Estate of John Doe” as a defendant. And then later on what I can do is amend the pleading to identify the estate trustee. It’s not as if the proceeding’s a nullity and has to be recommenced because I didn’t know that person’s identity at the outset.
Justin de Vries: Big thing with Rule 9.03 is, of course, the Courts don’t want to end a claim or deal with a claim simply because a mistake was made. And so its common sense that the Court will say alright, you know, you have some time to get it in place and properly constituted and we’re not going to end it simply because of that.
David Smith: And that’s…and correct me if I’m wrong, Justin…but that’s really an overriding principle of the rules, isn’t it? That the Courts want to see that the process is used in a just and efficient manner and that there’s no abuse of process or unnecessary delay or things of that nature.
Justin de Vries: No, that’s right. Procedure shouldn’t trump substance, in most instances. It has to be a glaring…a glaring mistake or a glaring delay in terms of procedure really to have a profound impact on a claim, even in the estate litigation context.
The other rule we’re going to deal with as well is Rule 10, which is a representation Order. And that’s simply where a Court can in a proceeding, and it often shows up in estate context, appoint a person or persons where there are unascertained or an unborn group of people or where the Court or an estate trustee can’t readily find someone or they can’t ascertain where someone may be, and that person has a present, future or contingent or unascertained interest in the estate. And the idea is, the Court says, well listen, this group of beneficiaries has a similar interest to this group or person. Therefore, we’re going to appoint this group to look after and represent the interests of the people that we can’t find or we can’t ascertain because they’re not born, for example. Hence the name representation Order. And it’s fairly common in a Will to see groups of beneficiaries that are very similar in interest, not quite exact, but very close, which is why the Court will often appoint a representative.
One thing to keep in mind, though, when you’re bringing that kind of motion, you have to show the Court that you made some efforts to find the people, if there’s a lost heir, for example. And one thing that you can do is do an heir search to try to find someone. But you have to show at least you looked, and the reasons you can’t find someone.
David Smith: Justin, what’s…I’m sorry to interrupt on that, Justin…but I’m just curious, does…what’s the role of the Public Guardian and Trustee, because I know on occasion, when I’m dealing with unborn or unascertained persons, I’ll serve the Public Guardian and Trustee. And sometimes they’ll say to me, well why are you serving us? Is that good practice to serve them, do you think, or is that something you do?
Justin de Vries: I think…I think it probably is good practice. I mean, often the PGT’s office is seen as the office of last resort. Sometimes they may want to represent a certain group. The same with the Children’s Lawyer is more readily involved it seems to me that’s my experience, than the PGT. But certainly, I think in those situations, you go a long way by putting the PGT or the Children’s Lawyer on notice. And the judge would, I think, look to that as well. In fact, the PGT could say, as could the Children’s Lawyer, that they have some interest in having the right person appointed at the representation Order. So that…
David Smith: …yeah, I think…I think on reflection there’s the situation I’ve seen the PGT served is when there might be an unascertained or unidentified charitable interest, in which case I know in that situation, I’ve served the Public Guardian and Trustee as well. So…that…I see in reviewing the rule, it doesn’t sort of expressly refer to that situation. I mean apart from those two offices, who will the Court typically appoint as a representative?
Justin de Vries: I think they’ll look to the beneficiaries. They’ll look at the class of beneficiaries that are there and as I said, where the interests are somewhat similar, they’ll say, you know what, because it’s so close, you represent that group that we can’t find or that is unborn. And I think in general, like most things, going back to the service requirement, when in doubt, serve more people. I mean, it often becomes a little bit of a hassle to have the Public Guardian and Trustee or the Children’s Lawyer involved, but you can certainly then stand up in front of a judge and say hey, listen, I’ve done the best I can, I’ve put everybody on notice that I should, and I think that will ultimately go a lot further. And often the reality is both the PGT and the Children’s Lawyer can be helpful and provide you with further information or provide you with some support to bring the motion to a conclusion or the application to a conclusion.
David Smith: Well sure, and I mean if you’re not sure if they should be appointed, what I’ve typically done is I don’t name them as a party. I serve them but don’t refer to them in the style…
Justin de Vries: …right.
David Smith: …of cause, then they won’t later say well, get us out of the proceeding. Now, I guess the last thing we’ve got to touch on briefly, Justin, is transfers or transmission of interest under Rule 11. And certainly I’m familiar with Orders to continue, but I wonder if you can just explain it in a little more detail.
Justin de Vries: Well, all it’s…this is one of these rules that’s fairly straightforward for a change. Where someone dies, for example, obviously their interest is transferred to the estate, and that’s the general idea. There’s a transmission of interest. The same with a bankrupt, their interest is transferred to a trustee in bankruptcy. So all that the rule says is you need an Order to continue. You need to file, for example, an Affidavit verifying that the transfer or transmission of interest or liability has taken place. And where it’s with an estate, it’s quite straightforward. And once you have an Affidavit that sets out the circumstances, it probably would have the death certificate, enough information for the Registrar to understand what’s going on and that there has been that transmission of interest, that you will get an Order to continue. Now, what’s interesting is the action is stopped, it’s dead in its tracks until such time as an Order to continue is granted. Now the Order to continue is one of those retroactive Orders that apply back to the date of death, for example, where that’s the situation you’re faced with. An estate is the one where the interest is transferred. If there’s a gross delay, if I can put it that way, in getting the proper Order in place, that is, the Order to continue, then you can always bring a motion to dismiss. But again, like with most of the rules, its common sense. You only do it when you can really say to the Court, come on, it’s been a long time, nothing’s happened, clearly there’s no interest in continuing this, it should be dismissed. So that’s really the thing to keep in mind is, get that Order to continue. And it’s only after, you know, a reasonable amount of time has past, that a judge would think, you know what, it’s time to act, that you could then move to have the action dismissed, if that Order wasn’t gone.
David Smith: I guess from a practical point of view, too, if you have someone who dies and their assets pass to the estate trustee, this is probably one of those situations where quite often there’ll be new counsel involved, if the estate trustee chooses to retain new counsel. Although I suppose in a lot of these cases, it doesn’t really make sense to change counsel midstream either.
Justin de Vries: Yeah, I think probably what an estate trustee might do is have someone who will help them with probate, or what we used to call probate, now a Certificate of Appointment, but continue on with litigation counsel who was defending or prosecuting the suit while the deceased was alive because of, you know, it makes a lot more sense.
David Smith: Yeah, well that was a really interesting discussion, Justin. Thanks very much for suggesting this topic and we’ll look forward to podcasting again.
Justin de Vries: Thanks David.
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