Discussion of the case of Warren and Gilbert from Ontario Reports Dec 26th issue - Episode #144
Listen to Discussion of the case of Warren and Gilbert from Ontario Reports Dec 26th issue
This week on Hull and Estates, David Smith and Rick Bickhram, discuss the case of Warren and Gilbert from the Dec 26th issue of Ontario Reports. This case is interesting because it touches on procedural substantive issue relevant to both estates practitioners and family law practitioners.
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Discussion of the case of Warren and Gilbert from Ontario Reports Dec 26th issue - Episode #144
Posted on January 7th, 2009 by Hull & Hull LLP
Rick Bickhram: Hello and welcome to Hull on Estates. You’re listening to Episode 144 on Tuesday, January 6th, 2009.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.
David Smith: Hi and welcome to another episode of Hull on Estates. I’m David Smith.
Rick Bickhram: And I’m Rick Bickhram.
David Smith: If you want to be heard on Hull on Estates, you can participate by leaving us a comment. E-mail us at hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com.
Rick Bickhram: Well I guess we could first start off by wishing everyone in our audience a Happy New Year.
David Smith: Yeah, Happy New Year Rick. It’s great to be entering a new year with the opportunity to do the first podcast of 2009. And you and I have stumbled on what looks to be a really interesting case.
Rick Bickhram: That’s correct Dave. And I believe that this case was last published in the last issue of the Ontario Reports which is dated December 26, 2008.
David Smith: Right, and the citation for that is Ontario Reports, Third Series, 92 OR (3d), Part 4, page 241. And it was the Ontario Reports issued on December 26 when all of us were on vacation for the most part.
So Rick, this case is Warren and Gilbert. And let me just briefly set out the facts. You and I were discussing this a few minutes ago and a really interesting case because it touches on procedural and substantive issues relevant to both estates practitioners and family law practitioners.
In this case, there was a husband and wife in a matrimonial dispute relating to various issues arising out of their separation. And one of the main issues was the entitlement to a property that was asserted by the wife to be a matrimonial home. The property was jointly held between the husband and his aunt and there was evidence submitted by the aunt that she had contributed towards the purchase price and that she was a beneficial owner of half of the property, was not a bare trustee and had contributed to the upkeep of the property. And she disputed that the wife was entitled to any interest in the property. Shortly before the trial, the evidence appears to be that the aunt had passed away. It appears that the trial judge found the house to have been a matrimonial home and that decision was subsequently appealed. What’s interesting about this case is that it’s the estate trustees of the aunt, that is the estate trustees of the aunt of the husband who bring a motion asserting an interest in the property for the first time after the Court of Appeal had dismissed the original application dealing with the disposition of the property. And what the aunt’s estate trustees said was that they did not have an opportunity to participate in the proceeding after the aunt had died.
So Rick, tell me a little bit about what the Court sees to be the issues in this proceeding.
Rick Bickhram: Well, thanks Dave, that’s a very good recollection of the facts here. My understanding of the way this was interpreted is that the wife received a half interest in the property. The husband here appealed that decision and during the appeal, I would say about four months prior to the actual decision of the Ontario Court of Appeal, an estate trustee was appointed for the aunt’s estate. So after the estate trustees are appointed they have about four months between being appointed and when the decision was rendered and the decision was rendered that the Court of Appeal upheld the trial Court’s decision.
Now the estate trustees have applied to challenge that decision. And one of the issues that the Court of Appeal had looked at, and this is with respect to the estate trustees’ action, was whether or not the estate trustees acted promptly in intervening in this matter.
David Smith: Right and the finding of the Court of Appeal was supportive of the Motion’s Court judge and determined that no, the estate trustees did not move in a timely fashion. And I found this particularly interesting, Rick, because it touched on an issue which we all think about when we’re advising estate trustees, which is, when you take on your responsibilities as an estate trustee, one of your first duties is to secure the assets of the estate. And of course, a legal proceeding would be a shows in action, that would be an asset of the estate, that the estate trustees would need to secure and act upon. The Court of Appeal said they just didn’t act quickly enough in this case to secure and advance an interest that the estate of the aunt had in the property in dispute.
Rick Bickhram: Good point, Dave. And I’m just referring over to the dissenting opinion of Justice Roleau because he does point out a very interesting or important fact here. And this touches on a fact you just mentioned. When advising estate trustees, it’s important to advise them about the protection, securing and preserving of the estate assets. But one of the points that the dissenting judge touched on was the executors’ year. Normally, in the course of administering an estate, an executor has one year to gather, preserve and protect the assets. Now in this fact scenario, the estate trustees had approximately four months. Dave, what are your thoughts about that? Do you think that was considered reasonable in terms of the decision here that the estate trustees acted in a way where they could have acted quicker in intervening in the action, especially in light of that concept of the one year the executors have to secure, preserve and protect the assets?
David Smith: Rick, certainly the executor’s year is an important consideration, although I think there’s obviously some difference of opinion as to what the executor’s year really means. You know, certainly the general sense is that an executor is expected to administer and distribute the estate within a year of the date of death. I think that securing the estate assets and taking steps to act on the assets of the estate is more generally expected to take place earlier on in the administration of the estate. In fact, there’s a lot of authority, and I note that the majority decision quoted from Lewin on Trusts and said that a new trustee should forthwith acquaint himself with the nature and particular circumstances of the trust property and take such steps as may be necessary for its due protection. And I know there’s other authority that says you’ve got to do that quickly. So whether it would be appropriate to wait for a full year is an open question. Clearly there’s reason to question which is the right approach. And the dissenting opinion of a learned judge reflects that. But my sense would be that here the Court made the right decision, in part, because they point out that the aunt passed away even before the trial and so these guys, to some extent, sat on their hands and didn’t move as quickly as they could have. You know, had they known that there was a potential claim even, one would have thought that they could have even sought to make representations at the trial to have standing as estate trustees at the trial. Instead, it was the counsel for the wife who apparently advised the Court that the aunt had passed away. So that’s my thinking on that.
Rick Bickhram: And I think you hit the nail right on the head there, Dave, because in the majority decision there, which was by Justice Feldman, he pretty much states that one of the estate trustees were aware of the action going on throughout the process of the litigation. And in addition to that, he was also, before being appointed an estate trustee, administering the estate by paying bills, for instance, the mortgage on the subject property, from what I understand to be out of his pocket.
David Smith: Yeah, it’s absolutely an interesting point there to be considered.
So, you know, that was one of the facts that the Court has to consider, for sure. And the Court also talks about how a trustee has to not only act honestly but reasonably. And the Court talks about the fact that since the property was still the subject of litigation when the trustees were appointed, they needed to obtain timely advance to determine whether and how they could assert any interest in the estate in the property.
Rick Bickhram: A very good point. And I think the second substantive issue that the Court looked at in this matter was whether or not, presuming that the estate’s claim, there was no delay and we were going to listen to the estate’s claim, did the estate have any merit behind its claim? And the answer to this question was no, it didn’t have any merit to its claim.
David Smith: That’s right, Rick. And as I understand the finding there, it all deals with the issue of whether the joint tenancy had been severed during the life of Elizabeth Gilbert. And the Court points out that had the estate appeared at the trial, it would have had to take a position contrary to the one taken by Elizabeth while she was alive and contrary to David’s position, which was that the joint tenancy was not severed and it was her intention that the property pass to David by right of survivorship.
Rick Bickhram: Well I’m presuming that what had happened here was, if the property was held jointly which it was, and it passed to David as was being asserted by the aunt while she was alive, the property would then pass to David and the wife would be entitled to her interest in that half. Now that’s going to be a greater half as opposed to the property being severed, divided in three ways and the wife being only entitled to take out of David’s share.
David Smith: That’s right. And you know, I think what sort of underlies this whole decision and maybe I’m being a bit cynical here, but what seems to underlie this whole decision to me is the general sense that the Courts will preserve the status of the matrimonial home and that the status of the house as a matrimonial home is to my mind, on a reading of this decision, the really underlying factor. Because once the Court determines that this is a matrimonial home, and certainly that appears to be the thrust of the decision, then the Court would be loathe to see the wife lose any entitlement to her share in the matrimonial home unless there was a very sound basis upon which the aunt could assert an interest in the home that would undermine the wife’s entitlement. And I think here, you just have to look at this as a case where the estate trustees were trying to push a bolder up the hill. I mean, they really were in a position where they probably had a tough case to begin with and bringing that case late in the day, after the trial was heard, after the appeal was heard, after they had every opportunity or could have had every opportunity to put forward the aunt’s claim, I think it was perceived by the Court and the Court of Appeal at some level as being an attempt to re-try the case by someone who clearly favoured the husband’s position in the litigation and was adverse to the wife. Don’t you think that sort of was an underlying issue here?
Rick Bickhram: I completely agree with you on that point, Dave. And I think this case, again its Warren v. Gilbert, makes an interesting read for any estate, family law practitioner or an estate trustee.
David Smith: I think that brings us then, Rick, to the end of this week’s discussion. I really enjoyed it. Thanks everybody for listening and thanks for joining us today.
Rick Bickhram: It was a pleasure, Dave. I look forward to podcasting with you again soon.
David Smith: And again we look forward to hearing from our listeners. You can send us an e-mail at hull.lawyers@gmail.com and be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law.
We do hope that you enjoyed the show. Once again, I’m Dave Smith.
Rick Bickhram: And I’m Rick Bickhram. Until next week, so long.
David Smith: Take care.
This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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