Toronto Estate Law Blog : Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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In a recent blog, Suzana Popovic-Montag discussed the Court process to be followed when proving a lost or destroyed will in Ontario - both in situations where all those with a financial interest in the estate consent to the will being proven and in situations where those with a financial interest do not unanimously agree to the will being proven.

Where all persons with a financial interest in the estate consent to the will being proven, Rule 75.02 of the Rules of Civil Procedure sets out the process.  In these circumstances, affidavit(s) are filed along with the consents and other application materials, and generally no court appearance is necessary.  The Honourable Mr. Justice D. M. Brown’s brief decision in Re O’Reilly provides useful and specific direction regarding the form and content of an order that should be included with such a consent application.  Mr. Justice Brown’s decision provides, as follows:

[2] My only purpose in writing this brief endorsement is to deal with the form of the order.  Since the Rules of Civil Procedure do not prescribe the form for an order made under Rule 75.02, judges see a wide range of language submitted for proposed orders proving lost wills.  In order to bring some uniformity to this type of application, I would ask applicants to submit draft orders using the language recommended several years ago by (now retired) Justice Haley.  The draft order should read:

I declare that the Will of [insert name of deceased] dated [insert date of will] has been proved and that the copy of the Will adduced in evidence shall be admitted to probate as the last Will of  [insert name of deceased] deceased, until such time as the original may be found.

I direct that, subject to the filing of the appropriate documents with the Court, a Certificate of Appointment of Estate Trustee with a Will for the Will of [insert name of deceased] dated  [insert date of will] be issued to the applicant(s).

To this language should be added any other orders sought by the applicant, such as dispensing with service of the application, etc.

[3] Judges considering these applications are provided with a template endorsement using this language.  Therefore, in order for an applicant to avoid the delays associated with submitting a draft with different language and then having to submit a revised order that tracks the language of the endorsement signed by the judge, the language I have set out above should be used in the draft order submitted with the application record.

The direction provided by Mr. Justice Brown in Re O’Reilly continues to govern practice in this area.  Lawyers acting in applications to prove a lost will under Rule 75.02 are well advised to use the wording prescribed by Mr. Justice Brown in their draft orders, or face delays that may result from submitting a draft order with different language.  

Thanks for reading,
Saman Jaffery

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In Stevens v. Fisher, 2013 ONSC 2282 (CanLII), the Ontario Superior Court of Justice recently considered the expanded definition of “estate” against which a dependant can make a claim in a dependent’s relief application, by virtue of section 72 of the Succession Law Reform Act R.S.O. 1990, c.S.26 (“SLRA”).

Section 72 of the SLRA allows a claim for support to be satisfied by certain assets which would otherwise not form part of the estate.  Section 72(1) of the SLRA allows a Court to consider and utilize the value of the following “non-estate” assets, among others, in deciding adequacy of support: amounts payable under a beneficiary designation under an insurance policy, a RRSP/RRIF, investment fund or benefit plan; gifts made by the deceased in contemplation of death; accounts held in trust by the deceased for another; accounts of the deceased held jointly with another or property held jointly with another prior to death; and trust dispositions if the deceased had a right to revoke the disposition.  Section 72 has the effect of “clawing back” these assets, such that they are deemed to be part of the estate for the purpose of considering the application for support.

In Stevens v. Fisher, the Applicant was the common-law spouse of the Deceased. The Deceased left a Will, which did not provide for the Applicant. In any event, the value of the Deceased’s estate assets was nominal, and the debts of the estate exceeded the value of the assets.  The only significant assets left by the Deceased were three life insurance policies, which did not form part of his estate, as follows:

1. a Sun Life Assurance Company of Canada Group Life Insurance of approximately $84,000, where the Respondent, the former common-law spouse, was named as the beneficiary (the “Group Life Insurance Policy”);
2. a Manulife Policy with a benefit of $50,000, where the Deceased’s adult daughter was  the named beneficiary; and
3. a Transamerica Life Policy in the amount of $250,000, where another former spouse of the Deceased was named as beneficiary in trust for the Deceased’s other two adult children.

On the basis that adequate provision for her support had not been made been made, the Applicant commenced an application for dependant’s support.  As part of her application, she sought a declaration pursuant to s.72(1)(f.1) of the SLRA  that the Group Life Insurance Policy was an asset of the estate, available to satisfy her dependant’s relief claim.  She sought an order for support from the estate in an amount equal to the proceeds of the Group Life Insurance Policy by way of lump sum and accrued interest.  The Applicant did not seek to “claw-back” the other two policies payable upon the Deceased’s death to his children, and only sought to “claw-back” the Group Life Insurance Policy.

The Respondent argued the Group Life Insurance Policy should not be deemed part of the “estate” available to satisfy the Applicant’s dependant’s relief claim.  This argument was quickly rejected by the Court, which held that the Group Life Insurance Policy was part of the clearly identified category of property which can be included and deemed to form part of the Estate pursuant to s. 72 of the SLRA.

The Respondent further argued that the Applicant should look to the other two policies to satisfy her claim, before looking to the Group Life Insurance Policy.  This argument was also rejected by the Court, which held that there was no provision in the SLRA  that required the Applicant to look at other assets to satisfy her dependant’s relief claim in priority to the Group Life Insurance Policy.

This case provides a useful reminder of the expanded definition of an “estate” that a dependant may claim against in a dependant’s relief application. Virtually any asset over which the deceased could exercise control prior to death may be vulnerable to attack in a dependant’s support application. Further, an argument that a particular asset should rank in priority to another to satisfy an order made for dependant’s support may be unsuccessful.  

Stevens v. Fisher also sends “a good, solid message” to estate planners to consider legal or moral obligations owing to dependants in all aspects of estate planning, including in the preparation of testamentary documents and in making appropriate beneficiary designations. 

Thanks for reading, 
Saman Jaffery

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A decision reported this past week in the Ontario Reports delves into the often murky waters of limitation periods.  McConnell v. Huxtable, a decision of the Ontario Superior Court of Justice (and apparently under appeal), considers whether a limitation period applies in respect of constructive trust claims to real property in a family law proceeding. 

Like many reported cases on limitation periods, this decision was made in the context of a motion by the Respondent for summary judgment dismissing the Applicant's proceeding on the basis that the claim was brought more than two years after the cause of action ought to have been reasonably discovered.

The Court, dismissing the motion, found that the constructive trust claim constituted an "action to recover land" within the meaning of the Real Property Limitations Act and therefore was subject, instead, to a ten-year limitation period under the terms of that Act. 

More interesting, however, was the extensive consideration of the Applicant's alternative submission: if the Judge was incorrect that the ten-year limitation period applied, then there is a "statutory gap"  and no limitation period applies.  The Judge agreed:"I have come to this decision reluctantly and only after much deliberation.  The legislature would not have deliberately left a hole in its purportedly comprehensive limitations scheme....[yet]....I find there is no coherent, sensible or reasonable way to apply ss.4 and 5 of the Limitations Act, 2002 to such claims." 

The Judge then pointed to what is often a problem when a motion for summary judgment is made over the issue of a limitation period: without a complete evidentiary record, the court cannot consider whether to exercise its equitable jurisdiction to find laches applies.

David M. Smith

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A year ago, I wrote about a class-action lawsuit filed by former Redskins quarterback Mark Rypien and 125 other former professional football players. That lawsuit alleged that the NFL “deliberately ignored and actively concealed the dangers and risks of repetitive brain injuries and concussions for decades”. Fast forward to last week when the NFL attempted to have 222 consolidated lawsuits (involving one-third of the league's 12,000 retired players) dismissed. On Tuesday, Judge Anita Brody of Federal District Court heard arguments on whether lawsuits accusing the NFL of glorifying violence should be governed by the legal system or by the collective bargaining agreement (CBA). The NFL argued that the teams bear primary responsibility for health and safety, along with the players’ union and the players themselves. Simply put, the NFL believes these cases amount to a labour dispute and therefore should be subject to grievance procedures and arbitration.  The lead attorney for the players argued that the NFL glorified and monetized violence through NFL Films, and in doing so, breached its duty of due care. Further, he argued that the league “deliberately and fraudulently” concealed the dangers of head trauma. It will be months before Judge Brody makes a ruling and writes an opinion, and appeals will likely follow. “I will rule when I sort this out for myself” she said after hearing 50 minutes of arguments. And indeed, much sorting lies ahead.  Issues of assumption of risk, contributory negligence and causation are all on the table.

At the end of the day, one of three outcomes will materialize: i) Judge Brody sides with the players, ii) Judge Brody sides with the league or iii) She takes a divide and conquer approach and divvies up which claims move forward in court, and which are dealt with in arbitration. Such a division would separate those who played under a CBA from those who did not (NFL.com reminds us that there was no CBA prior to 1968, and again from 1987-1993).  Regardless of how Judge Brody rules, the NFL is likely going to pay in spades; monetary damages (whether incurred as a result of a settlement offer or as a result of a liability finding) will exceed a billion dollars and the damage to the institution from a public relations perspective cannot be overstated.  The players are also seeking the establishment of an NFL-funded medical monitoring system for former players who may be suffering long-term effects from concussions.

In a strange twist of timing, on Sunday, a jury in Colorado found Riddell Helmets liable for failure to adequately warn players wearing their football helmets about the dangers of potential concussions.  In 2008, while participating in a "machine gun drill", high school football player Rhett Ridolfi sustained a concussion.  Ridolfi's coaches ignored his complaints about headaches and allowed him to return to practice later that afternoon.  He subsequently collapsed, required emergency brain surgery, and was left paralyzed on one side of his body.  The verdict found the helmet manufacturer responsible for $3.1 million in damages.  Riddell has already expressed their intent to appeal.

Jennifer Hartman, guest blogger

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When a lawyer sees a client to prepare a will, there are a number of ways in which things can go awry, leading to liability for the lawyer.  A simple mistake in drafting, if not caught in time, can lead to problems for the drafting lawyer down the road.  The Law Society’s Rules of Professional Conduct provide for a number of other scenarios in which trouble can arise.  A simple read-through of the Rules of Professional Conduct and some careful reflection on best practices can protect lawyers from liability when wills go wrong.

Consider the scenario where a newlywed couple retains a lawyer to draft their wills.  Each agrees to leave everything to the other.  After one client leaves the lawyer’s office, the other client tells the lawyer that she plans to change her will, and asks the lawyer not to tell her spouse.  Must you tell the spouse?  May you tell the spouse?

The Rules of Professional Conduct and accompanying commentary provide that this should be treated by the lawyer as a joint retainer.  Under Rule 2.04(6), a lawyer must tell clients under a joint retainer at the outset that the lawyer cannot keep information confidential as between the joint clients.  As well, if any conflict comes up, the lawyer must withdraw from representing either, and the clients must be told this up front.  

The Rules of Professional Conduct also provide wise guidance to lawyers drafting wills with respect to delegation of tasks to staff.  Most good lawyers owe some of their success to the capable clerks and assistants that operate behind the scenes.  Often, staff will take instructions, prepare drafts, or act as witnesses.  Very often, staff can perform these tasks as ably, if not more ably, than the lawyer that they support.  

The Rules provide limits on what legal staff should and should not do.  In particular, the commentary to Rule 5.01(2) provides specific guidance with respect to wills, trusts and estates practitioners:  

“A lawyer may permit a non-lawyer to attend to all matters of routine administration, to assist in more complex matters, to collect information, draft routine documents and correspondence, to prepare income tax returns, to calculate such taxes, to draft executors’ accounts and statements of account, and to attend to filings.”

A lawyer must directly supervise and is professionally responsible for the conduct of his or her staff.  A lawyer should check in and review the work of his staff.  A lawyer should avoid assigning to a non-lawyer tasks which will require the lawyer’s professional skill and judgment.

There are a myriad of ways in which familiarity with the Rules of Professional Conduct can help to avoid liability in wills and estates practices beyond the few discussed here.  All lawyers should be familiar with the Rules, and should review them from time-to-time.  It may prevent a lot of heartache for both lawyer and client.

Thank you for reading!

Suzana Popovic-Montag

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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

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While browsing the web for news, I encountered a story that caught my eye.  Stuart Clark and I recently co-authored a paper for a UK journal on the subject of an Alberta case called Re Foote Estate that dealt with the issue of domicile in the context of an international estate.  At the heart of the litigation was Foot Nort, a residence on a remote location in the Pacific called Norfolk Island, part of the territory of Australia.  For the low price of only $3,000,000, the late Mr. Foote's home can be yours. 

A major issue in Re Foote Estate was the question of which jurisdiction's law applies.  Was the estate to be governed by the law of Alberta, where Mr. Foote was born and lived for the first half of his life?  Was the law of British Columbia to apply, where Mr. Foote had purchased a second home late in his life?  Or should the laws of Norfolk Island, where he built and lived in Foot Nort, govern Mr. Foote's estate?  The answer would ultimately depend on his domicile.

In deciding, the Court put the concept of domicile under the microscope.  A person may have more than one place of residence, but may only have one domicile at a time.  A person's domicile of origin, generally his or her birthplace, will continue to be his or her domicile unless he or she embraces a new domicile by choice. 

In order to change one's domicile, a person must acquire residence in a new place with the intention of settling there permanently and indefinitely.  In Re Foote Estate, the Court held that Mr. Foote had become domiciled on Norfolk Island when he built and moved to Foot Nort, as he had done so with the intention of making it his permanent home. 

Late in life, Mr. Foote had purchased a condominium in Victoria, BC.  Also, he fell ill and had returned to Canada for medical treatment.  It was during one such visit that he passed away in his native Alberta.  This raised the question of whether or not he had again changed his domicile.  The test applied by the Court for abandonment of his domicile was, essentially, the mirror image of the test for acquiring a domicile.  Both residence in a place, and the intention to settle there permanently must be given up.  

Ultimately, the Alberta Court of Appeal agreed with the trial judge in concluding that Mr. Foote was domiciled in Norfolk at the time of his death.  Although it was found that Mr. Foote was likely to return to Canada at some point, and although he had taken some preliminary steps towards preparing to leave Norfolk, this was insufficient to establish that he had abandoned his domicile there. 

For further reading on the topic of domicile and international estates, take a look at Moira Visoiu's series of blogs on the subject, here, here, here, and here.   

If you are looking for a remote island getaway, Foot Nort is for sale.  But think carefully before forming the intention to live out your days there.

Thanks for reading!

Suzana Popovic-Montag

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Last week, Finance Minister Jim Flaherty unveiled the Harper Government’s 2013 federal budget in a speech to the House of Commons. The budget touches on a wide array of economic issues facing Canadians, from job growth to the cost of sporting equipment and baby clothes. Particularly interesting for estates and trusts lawyers, however, is the announcement that the Government intends to consult on the issue of graduated tax rates associated with trusts and estates.

Currently, testamentary trusts and inter vivos trusts created before June 18, 1971 (“Grandfathered Inter Vivos Trusts”) are taxed federally using the graduated tax rates that are applied to individuals. Inter vivos trusts created after June 18, 1971 (“Ordinary Inter Vivos Trusts”) are taxed at a flat rate of 29 per cent, being the highest federal tax rate for individuals.

The Government appears to be concerned about the differential tax treatment between Grandfathered and testamentary trusts and Ordinary Inter Vivos Trusts; specifically, the ability of beneficiaries of testamentary and Grandfathered Inter Vivos Trusts to access multiple sets of tax rates. The Government states that this discrepancy “raises questions of both tax fairness and neutrality[…]”.

The 2013 budget also speaks to the Government’s concern over an increase in tax-motivated estate planning and administration, including the “use of multiple testamentary trusts, tax-motivated delays in completing the administration of estates, and avoidance of the OAS [Old Age Security] Recovery Tax.”

The budget promises to release a consultation paper that will consider possible ways to eliminate the tax benefits associated with the graduated rates applied to Grandfathered Inter Vivos Trusts, testamentary trusts, and estates that have passed the threshold of a reasonable period of estate administration.

Imposing a high flat tax rate to trusts currently taxed at graduated rates would undoubtedly change current estate planning and administration strategies. Estates and trusts practitioners would be well advised to study the Government’s consultation paper upon its release and consider how the proposed legislative changes contained therein will affect their practices moving forward. The paper will also provide a valuable opportunity for stakeholders to provide their comments on these possible changes.

Thanks for reading!

Suzana Popovic-Montag

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As an action movie junky, I tend to be drawn towards movies that excite my senses but not my brain. However, when recently watching the movie Gladiator, starring Russell Crowe, I realized that the legal issues driving the plot of this movie are issues that I confront quite frequently in my practice. 

The movie opens with the fictional Emperor of Rome, Marcus Aurelius, dying. Notwithstanding that this political office traditionally passes from father to son, shortly before his death and in a very private and touching cinematic moment, the Emperor advises Crowe’s character, Maximus, of his choice that Maximus be appointed the Emperor of Rome until such time that Maximus determines that the representative of the people, the Senate, is ready to rule Rome. Unfortunately, the Emperor is killed before he can make his testamentary intentions public. Without a witness to this succession plan, the Emperor’s immoral son, Commodus (played by Joaquin Phoenix), is able to rule Rome and drive the plot of the movie.

In my practise, I find that discrete gifts given by a deceased shortly before death can be the catalyst for animosity, anger and distrust between beneficiaries, rightly or wrongly. The recipient of that gift sees nothing wrong with the gift if the deceased had capacity and there was nothing sinister about the circumstances. In contrast, the other beneficiaries view the recipient’s conduct as secretive, underhanded and manipulative. 

Unfortunately for the recipient of that gift, proving that the gift was made voluntarily can be harder to survive than the Coliseum itself. Section 13 of Ontario’s Evidence Act contradicts the general rule of evidence that one person’s evidence, if determined to be reliable by the court, is sufficient to form the basis for any judgment granted. Section 13 specifically provides that in an action against the heirs, next of kin, executors, administrators and assigns of a deceased person, a party cannot obtain judgment on his own evidence in respect of a matter occurring before the death of the deceased person unless the evidence is corroborated by some other material evidence.

While the court has justified this unusual rule of evidence by explaining that it addresses the “obvious disadvantage faced by the dead” who cannot tell their side of the story [Burns Estate v. Mellon (2000) 48 O.R. (3d) 641], this rule of evidence can just as easily perpetuate an injustice as it can avoid one. Most rules of evidence are not absolute, and leave some residual discretion in the court to determine what is in the interest of justice. While section 13 precludes Maximus from proving the Emperor’s dying wish, perhaps it is time to consider importing some flexibility in the rule.

Unfortunately for Maximus, it doesn’t make for good theatre.

Jonathon Kappy

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As a recent article in The Lawyers Weekly (March 15, 2013 issue) reminds us, the 21-year rule operates by deeming a trust to have sold its property on the day that is 21 years after the trust’s creation, and every 21 years thereafter, at a price equal to fair market value. The trust is then deemed to have acquired that property at the price equal to the deemed selling price, which then becomes the cost of that property for subsequent deemed or actual dispositions.

There are certain exceptions to the 21-year rule. Planning techniques have also developed to offset the potentially significant tax burden resulting from application of the rule. 

However, the article addresses the difficulty when certain terms governing a trust, as set out in the trust document itself, create obstacles in the way of such planning techniques. In that regard, the Kanji v. Canada (Attorney General) decision is cited, where the settlor of the trust was also a co-trustee and beneficiary, thereby giving rise to an “attribution rule”. The application of this rule resulted in the inability of the trust to distribute its property to certain of the beneficiaries on a tax-deferred basis. 

Unpleasant 21^st anniversary tax surprises may be deferred or avoided if dealt with in a timely manner, and a tickler system to remind ourselves of pending deadlines a couple of years in advance may be useful.

Thanks for reading and have a good day,

Natalia Angelini

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Where a person wishes to make a gift by will but keep the recipient and the nature of the gift away from public scrutiny, the testator could leave such a gift to a third party to hold on a secret trust for a beneficiary.  

The essentials of a secret trust created by equitable principles are:

·  the intention of a testator to benefit secret beneficiaries;

·  communication of the trust to the beneficiaries/trustee; and

·  express or tacit acceptance of the trust by the beneficiaries/trustee.

Whether or not a trust exists depends on the three certainties, being:

·  the words must be so used that on the whole they ought to be construed as imperative;

·  the subject matter of the trust must be certain; and

·  the objects or intended beneficiaries must be certain.

A trust of this nature, not reduced to writing to constitute a Will, brings with it many difficulties. Some of these are:

·  proving that a trust exists, the onus of which is on the person alleging the existence of a secret trust;

·  determining whether the trust forms part of the testator’s will; and

·  the danger of a named trustee using the trust property for him/herself.

Secret trusts are rare, and not an instrument I would recommend clients contemplate unless properly papered.

Thanks for reading and have a good day,

Natalia Angelini

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 According to a recent Statistics Canada report, 7.4% of adults 20 years old or older are in a relationship without sharing the same dwelling.  The report refers to these people as “living apart together” or LAT couples.  The report defines a LAT as being someone “in an intimate relationship with someone living in another dwelling”.

The number is down slightly from the 2001 statistic. In 2001, 8.4% of people 20 or over reported themselves as being part of a LAT couple.

Most of these couples were not married.  In 2011, only 0.9% of people 20 or over reported being married but living apart.

Most LATs were younger.  More than half were under the age of 30.

What is the effect of living apart together on succession rights?  Clearly, LATs can provide for each other by making a Will.  On an intestacy, if the LATs were married, the surviving spouse would have inheritance rights on an intestacy.

Where things get questionable is where the LATs are not married.  The surviving LAT partner may have a claim for dependant support under the Succession Law Reform Act.  Under the Act, the court may make an order for support of a dependant where the deceased did not make adequate provision for the proper support of his or her dependants.  A “dependant” includes a spouse to whom the deceased was providing support, or was under a legal obligation to provide support.  “Spouse” is defined as including either of two persons who are not married to each other, and have “cohabited”, either continuously for a period of not less than three years, or in a relationship of some permanence, if they are the parents of a child.

Courts have held in various decisions that the determination of whether parties are “spouses” is highly fact reliant.  However, there is clear jurisprudence that LATs can, in certain circumstances, be considered spouses for purposes of dependant support.  In Stephen v. Stawecki, 2006 CarswellOnt 3653, the Court of Appeal stated that “We agree with the respondent that the jurisprudence interprets “live together in a conjugal relationship” as a unitary concept, and that the specific arrangements made for shelter are properly treated as only one of several factors in assessing whether or not the parties are cohabitating.  The fact that one party continues to maintain a separate residence does not preclude a finding that the parties are living together in a conjugal relationship.”  The Court of Appeal cites the decision of Molodowich v. Penttinen, an oft-cited decision which sets out various factors to be considered by the court in determining whether there is cohabitation. Cohabitation is only one of many factors to be considered.  More to the point, in Campbell v. Szoke, [2003] O.J. 3471, Karakatsanis J. stated: “The fact that the parties maintain separate residences does not prevent the finding of cohabitation.” 

Have a great weekend.

Paul Trudelle

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As I write this, the cardinals are gathering in the Sistine Chapel to select a new Pope.

According to news reports, there is a buzz in the air in St. Peter’s Square. There is excitement over the selection of a new Pope: an excitement that is not overlain with the mourning for a recently deceased Pope that normally accompanies the selection process.

This led me to think about the wills of Popes. I was able to come across the Last Will and Testament of Pope Paul VI on the Papal Encyclicals Online. (With respect to communication, the Papacy appears to have one foot in the past (for example, news of the selection of a new Pope is transmitted by coloured smoke), and one foot in the future (for example, their divine website).

Pope Paul VI was born on September 26, 1897 and died on August 6, 1978.  He became Pope on June 21, 1963, and reigned as Pope until his death. He was succeeded by Pope John Paul I, who only reigned for 33 days.

In Pope Paul VI’s Will, according to the posted excerpt, Pope Paul VI thanks and blesses his collaborators, counsellors and friends generally, and specifically mentions his brothers Ludovico and Francesco. 

As to the operational part of the Will, Pope Paul VI names his private secretary as his executor, and names the Holy See as his universal heir, subject to specific bequests.

With respect to specific bequests, Pope Paul VI states that “Concerning things of this world: I have decided to die poor and thus simplify any question in this regard”.  Possessions and properties that he still has from family are to be disposed of by his brothers freely.  They are to keep, or give to those who merit it, some memento from among his possessions.  Other things that are considered to belong to Pope Paul VI are to be disposed of by his executor, who may keep them if he chooses.  Manuscripts and notes are to be destroyed, along with spiritual and confidential correspondence.

Pope Paul VI also left precatory directions with respect to his funeral.  He directed that it be pious and simple, and that he be buried, with no monument other than a humble marker indicating the place, and asking for Christian mercy.

Long live the Pope.

Paul Trudelle

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Sometimes, timing is everything.

In Re Barbeau, the deceased died on September 17, 2011 at 5:40 am. He died leaving a Will that left the residue of his estate to his spouse if she survived him for a period of thirty days. If she did not survive him for thirty days, his estate would pass to one of his spouse’s daughters. Under the spouse’s Will, her estate passed to her five children.

As fate would have it, the deceased’s spouse died on October 17, 2011 at 4:45 pm.

The question the court had to grapple with was whether the deceased’s estate passed to his spouse, and therefore her five children under her Will, or to the one daugther, under his Will.

In the decision, the court set out the two possible interpretations: either the thirty days are calculated as thirty 24-hour periods commencing on September 17, 2011 at 5:40 am, or applying the analogy of the Rules of Civil Procedure, the thirty day period commenced on the day after the date of death. If the second interpretation prevailed, what was the effect of the spouse not being alive for the entire thirtieth day?

The court noted the purpose of such survivorship clauses: to prevent the application of s. 55 of the Succession Law Reform Act (survivorship), and to avoid the imposition of two sets of administration taxes and costs in the event that both spouses died at the same time or within a short period of one another.

The court also noted that the selection of a thirty day period was likely arbitrary. Further, the court noted that interpreting the Will, the court was to strive to determine the intention of the testator.

The court found that there was an inconsistency in the Will, in that it provided different outcomes if the first interpretation was applied. That is, the spouse would have survived for thirty days, but also have died within the thirtieth day. This, the court found, was not intended.

Thus, the court concluded that if the first day was excluded, applying the Rules of Civil Procedure, then the inconsistency was avoided. The spouse would have to survive for thiry full days: that is, survive until some time on the thirty-first day. As the spouse did not survive for thirty full days, and died within the thirty day period, the residue of the estate passed to the one daughter.

Until tomorrow,

Paul Trudelle

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A certificate of appointment of estate trustee with a will (formerly known as “probate”)  is most often obtained in “common form.” This means that it is done through the filing of documents, including but not limited to a copy of the will, affidavit(s) of execution and supporting affidavit(s). Court attendance is not required.

In certain circumstances, however, testamentary instruments are required to be proven in open court, with notice to all interested parties. This procedure is sometimes referred to as “proof in solemn form.” Rule 75.01 of the Rules of Civil Procedure (the “Rules”), states that a judge may require this procedure on an application for directions respecting proof of the will brought by the “estate trustee or by any person appearing to have a financial interest in an estate”.

Even though the standard probate application is done for the majority of wills, the circumstances bringing about the requirement for a will to be formally proved are not all that uncommon. For example, formal proof may be required where the witnesses to a will cannot be located, the witnesses to a will have since died, or when the will being claimed to be the last will and testament of the deceased is not an original copy.

When a will is being contested for any reason, formal proof is also required. Generally, formal proof forms part of a hearing with respect to the challenging of a will. In order to formally prove a will, its due execution and the testator’s testamentary capacity must be established through the examination of one or more witnesses to the will and any others who have knowledge of the facts and circumstances relating to these issues. As they would be in the usual manner of a trial, these witnesses are subject to examination, cross-examination and re-examination.

In the circumstance where a last will cannot be located or has been destroyed, r. 75.02 of the Rules provides that the will may be proved on an application supported by affidavit evidence where all persons with a financial interest in the estate have provided consent. No court appearance is necessary in this situation.

If full consent is not provided, however, it becomes necessary to make an application for directions to the court respecting the procedure for proving the lost or destroyed will. As noted above, all parties appearing to have a financial interest must be served with notice of the application. This needs to be done at least ten days prior to the hearing, as prescribed by r. 75.06 of the Rules.

Thanks for reading.

Ian M. Hull

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In Ontario, we largely rely on the Succession Law Reform Act to determine the disposition of assets after death. The statute has language that is consistent throughout the five sections, for example: Part I, Section 2 speaks of “disposing property…at the time of his or her DEATH…”; Part II, Section 44 says “where a person DIES intestate…”; Part III, Section 50 “a person entitled to designate…on participants DEATH…”; Part IV, section 55 “ When two or more persons DIE…”; and Part V, Section 58 “where a DECEASED…” (Emphasis added). I don’t emphasize the various references to death out of morbidity. I place emphasis to draw your attention to the likelihood that without certain death this statute may not be applicable. 

Estate administration in theory seems relatively straight forward. Someone dies. Their assets are distributed in accordance with the legislation in place. No worries. But what if that person isn’t really dead. Though I have written about zombies before, that’s not where I am going with this blog. I’m not talking about vampires either. I’m not talking about the undead. I am talking about people who are literally brought back to life. What do you do then?

A recent book was brought to my attention. Dr. Sam Parnia has written a book titled “Erasing Death; the science that is rewriting the boundaries between life and death”. A link to Dr. Parnia’s blog about his book and studies can be found here.  He has studied the ability to bring a person back from the dead. His purpose seems to be to study what happens when someone dies. 

Certainly this is fascinating from a medical perspective, and far too detailed for me to delve into here. The philosophical discussions on this topic could go on and likely will go on for generations. For the purpose of this blog, I’m not interested in either of those two fascinating fields of discovery and discussion. I do care about the legislation and how I advise my clients. I’m also projecting, as after initial review, I don’t think there is much risk that an estate will be administered in the 1-2 days that a person can be dead before returning to life…but…what if?

As a lawyer, part of my job is to calculate and advise on risk. What Dr. Parnia alludes to, is that there may be a time in the future that death is not certain. That even those who have medically and objectively died can be returned to life in a controlled environment after a longer period of time. If we know that the ‘deceased’ could be brought to life, or wants to be brought back to life, are you dead? Can you in good consciousness call it an estate? Certainly, the SLRA does not yet deal with this issue,  but perhaps, 10 years or 100 years from now we may be having an entirely different conversation about what it means to be dead and administer someone’s estate. 

I’ve barely scratched the surface on this topic. I’ve had to restrain myself from a litany of ‘what if’s’ I want to write and talk about. For those close to me, I apologize; you may be enticed into a philosophical discussion about the virtues and vices of this medical possibility. For everyone else, I hope I’ve given you something to think about.

Thanks for reading,

Nadia M. Harasymowycz

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All good things must come to an end.  So too, says a recent Superior Court of Ontario decision, does the window to commence a constructive trust claim. 

In the case of McConnell v. Huxtable, the Court dealt with a motion for summary judgment in the context of a family law constructive trust claim.  The issue at the heart of the motion was what, if any, statutory limitation period was applicable. 

The Court characterized the questions before it as follows:

1.  Is a claim in a family law case in which the claimant pleads facts to establish a constructive trust and asks the court to award an ownership interest in land, with an alternative claim for monetary compensation, governed by the ten year limitation period set out in section 4 of the Real Property Limitations Act or by the two year limitation period set out in section 4 of the Limitations Act, 2002?

2.  Is there a gap in the limitations legislation such that there is no applicable statutory limitation period for a constructive trust claim in a family law case, leaving scope for the court to devise a time limit using its equitable jurisdiction?

To the first question, the Court held that in a family law case where the claimant pleads a constructive trust and is seeking a declaration of an ownership interest in land, then the claim is an "action to recover land" within the meaning of the Real Property Limitations Act.  A 10 year limitation period, therefore, applies.  The Court further held that this applies to claims for monetary compensation in lieu of an ownership interest as well.

To the second question, the Court held that in family law constructive trust claims, neither the Real Property Limitations Act nor the Limitations Act, 2002 apply.  The Court is free to devise its own limitation period based on its equitable jurisdiction in order to fill this gap in Ontario's legislative scheme for limitation periods.

Based on the foregoing, the motion for summary judgment was dismissed.

A recent article in Law Times highlights the difficulties in applying the Limitations Act, 2002 to family law situations.  The Limitations Act, 2002, at section 5, sets out that the clock on the two year statutory limitation period for most claims begins to tick when the claim becomes discoverable – the day on which the person with the claim first knew or ought to have known about the injury, loss, or damage.  When ought a party to a common law spousal relationship know that the relationship is doomed?  If the relationship persists for another two years, a claimant could be put in the absurd position of having to commence a constructive trust claim before the relationship actually ends, or lose the right to pursue that claim.

Trust lawyers representing common law spouses can take comfort in the fact that, unless this decision is varied by an appeal court, the window to commence a constructive trust claim in a common law spousal relationship context appears to be a full decade.

Thanks for reading!

 

Suzana Popovic-Montag

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Ontario’s Variation of Trusts Act (the “Act”) allows the Superior Court of Justice to approve an arrangement varying or revoking a testamentary or inter vivos trust on behalf of beneficiaries who cannot legally give consent. These beneficiaries are:

• persons who are incapable of assenting by reason of infancy or other incapacity;
• persons who, whether ascertained or not (including unborn contingent beneficiaries), may become entitled to an interest under the trust at a future date or on the occurrence of a future event; or
• persons who may have an interest that may arise by reason of any discretionary power given to anyone on the failure or determination of any existing interest that has not failed or determined.

The purpose of the legislation is to ensure that no variations are made that would be detrimental to those who are unable to consent due to legal incapacity. Court approval to vary or revoke a trust will only be granted if it can be shown that doing so would benefit the classes of beneficiaries enumerated above.

Generally, the court will approve the variation of a trust where it is to the advantage of both the sui juris beneficiaries (who must consent to the variation) and the beneficiaries under a disability.

The Act applies only where property is held in a trust arising from a will, settlement or other disposition. Therefore, it can only apply to trusts already in existence. The court may not settle a trust where none existed before. The Act only allows for variation or revocation and therefore if the court perceives the proposed arrangement constitutes the re-settling of the trust, it will not grant approval.

In approving an arrangement, the court interprets the word “benefit” broadly so as not to confine its interpretation to financial benefit. Furthermore, the courts have generally held that the proposed benefit need not be certain, as there is a degree of risk that the benefit arising out of a proposed variation will not come to fruition. In determining whether or not a proposed arrangement should be approved, the court will consider the following questions:

• Does the arrangement keep alive the settlor’s intentions?
• Is it beneficial to the class of beneficiaries on whose behalf consent is sought?
• Is the benefit such that a reasonably prudent adult would accept the risk of it not materializing?

Thanks for reading.

Ian M. Hull

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In Zahn v. Taubner (80 E.T.R. (3d) 53), released in August 2012, the Alberta Court of Queen's Bench considered  a will challenge.  Kay Ford ("the Deceased") died in 2000.  She never had any children, biological or adopted. She was survived by three brothers.  The Deceased was married to a gentleman named Henry Ford who died in 1972.  He had three children from a prior marriage.  After his death, the Deceased entered into a common-law relationship with Otto Zahn in the mid 1970s.  Mr. Zahn, like Mr. Ford, had three children from a prior marriage. The Deceased separated from Otto Zahn in 1997. 

The Deceased, prior to Zahn's death, had relocated to the basement of her parents home.  A year after Zahn's death, the Deceased was diagnosed with terminal lung cancer.  She was cared for by a woman named Nadia, one of two part time caregivers who had been helping look after the Deceased's parents.   The Deceased's condition deteriorated such that in March, 2000 she was admitted to hospital where she died on May 25, 2000.

The Deceased executed three wills on the following dates: September 27, 1985 ("the 1985 Will"), April 4, 2000 ("the April 2000 Will") and May 5, 2000 ("the May 2000 Will").  The 1985 Will named the Zahn children as the Deceased's residuary beneficiaries.  The Wills made in 2000 both named one of the Deceased's brothers as executor and named the Deceased's three brothers as residuary beneficiaries.

The Zahn children challenged the validity of the 2000 Wills on the usual grounds of lack of testamentary capacity, lack of knowledge and approval and procurement by undue influence.  The Court found that there existed suspicious circumstances: 

• The lawyer who met with the deceased and attended on the execution of the 2000 Wills was a lifelong friend of at least one of her brothers;
• The lawyer was contacted by the brothers on repeated occasions throughout the will drafting process;
• The brothers, in a dramatic reversal of the Deceased's long-time testamentary intentions, became her residuary beneficiaries under the 2000 Wills;
• The Deceased was referred to by multiple witnesses as an alcoholic and was observed by the witnesses as being intoxicated while in palliative care; 
• When the Deceased was initially admitted to palliative care in hospital, never to return home, she was suffering from severe delirium and pshycological distress suspected to have been "related to opioid toxicity and liberal use of the drug Ativan, possibly aggravated by alcohol withdrawal"; 
• On March 21 and 28, 2000, a mere week before the April 2000 Will was executed, the Deceased scored 8/30 on a Mini- Mental Status Exam (MMSE).  On April 10, 2000, some six days after the execution of the April 2000 Will, her score was 25/30, greatly improved to be sure yet still illustrative of some degree of impairment.

The Court considered the foregoing evidence in concluding that there existed suspicious circumstances.  However, the Court concluded that the Wills made in 2000 were valid: testamentary capacity and knowledge and approval were proved by the Deceased's brothers.  The Court further concluded that the Zahn children failed to prove undue influence.  In the Court's eyes, the Deceased's caregiver Nadia, who had become her close confidant, was the star witness:

"…in my view, it is significant that at no time did Ford ever specifically indicate to Nadia, who had become her confidant, that she had or was being unduly influenced or pressured by [any of the Deceased's brothers] with respect to how they were to be treated in a new Will.  While one can never predict with certainty how an individual will behave in certain circumstances, it is my view that this likely would have occurred if there was undue pressure, given the nature of the relationship between [the Deceased] and Nadia."

David M. Smith

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As part of Canada Revenue Agency’s increased focus on tax compliance for trusts and estates, in the last couple of years it has made the following additions to its compliance program:

·                     Ontario Region Trust and Estates Coordinator – the person in this position is tasked with, among other things, coordinating and prioritizing the estates and trusts related tax issues that concern the province;

·                     Regional Trust Team – this team is engaging in substantial audit activity in the Golden Horseshoe region, concentrating on Mississauga, Hamilton, Kitchener, London and Windsor; and

·                     Related Party Initiative – this initiative focuses on high net-worth persons with net assets of $50 million or more, and who have 30 or more related economic entities (including trusts, corporations, partnerships, joint ventures and private foundations).

We can expect an increased number of CRA trust audits. It would seem given the decision in Antle v. Canada (where a trust was deemed invalid) that auditors will be concerned with the particulars of how a trust was set up. They will also look to whether it is being properly maintained (e.g. that tax filings are being done in compliance with the legislation). 

This is something to keep in mind for estates and trusts lawyers, especially since CRA may perform reassessments that could result in additional tax, interest and penalties.

Thanks for reading and have a good day,

Natalia Angelini