Listen to Parties Under Disability
This week on Hull on Estate and Succession Planning Natalia Angelini and Bianca La Neve discuss parties under disability. They look into how they are represented in proceedings and who has the authority to do so.
If you have any comments, send us an email at hullandhull@gmail.com or leave a comment on our blog.
Listen to Taking Evidence Before Trial
This week on Hull on Estates Bianca La Neve and Natalia Angelini discuss taking evidence before trial. They talk about the procedure for witnesses who may not be available at trial, which involves preserving their evidence beforehand so it is available prior to the trial.
If you have any comments, send us an email at hull.lawyers@gmail.com or leave a comment on our blog.
Listen to Court Proceedings Involving the Substitute Decisions Act and the Health Care Consent Act
This week on Hull on Estates Diane Vieira and Bianca La Neve discuss some issues they've been encountering concerning court proceeding involving the Substitute Decisions Act and the Health Care Consent Act.
They talk about the need for a capacity assessment and who you go to for a capacity assessment, the issue of notice periods and the right of an incapable person in proceedings under the Substitute Decisions Act.
Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.
Diane Vieira: Hello and welcome to
Welcome to
Diane Vieira: Hi and welcome to another episode of
Bianca La Neve: I’m Bianca La Neve.
Diane Vieira: If you want to be heard on
Bianca La Neve: Hey Diane.
I thought today…it seems that lately you and I have been dealing a lot with Court proceedings and matters involving the Substitute Decisions Act and the Health Care Consent Act and so I thought we’ve been spending a lot of time talking to each other on various files about these matters. I thought maybe we’d review today some of the issues we’ve been encountering such as the issue of the need for a capacity assessment and who you go to for a capacity assessment and the issue of notice periods and the right of an incapable person in proceedings under the Substitute Decisions Act.
Diane Vieira: Yeah, I think that would be something that’s important to discuss. A few weeks ago Natalia and I discussed a bit of the issue of capacity when it came to attorneys of property for personal care but I think today we’ll probably speak more broadly than on that specific subject.
Bianca La Neve: Good idea. So capacity really is the focal point of the Substitute Decisions Act. The idea is, I guess, that a capable person makes decisions for themselves and so if you’re incapable, you’re either going to need a Power of Attorney or an attorney for property or personal care, like you stated, or you’re going to need a guardian of property. So in the Substitute Decisions Act in terms of getting capacity assessments, there are actually guidelines in place for retaining somebody to do a capacity assessment. They’re called capacity assessors in the Substitute Decisions Act.
Diane Vieira: Yes and they can be health care providers, physicians, psychologists, social workers, occupational therapists and nurses who have specific training. They’ve undergone specific training by the Ministry of the Attorney General and they’ve maintained their qualifications through continuing education. And the reason you want to ideally get a capacity assessor is because they’re familiar with the process.
Bianca La Neve: So like you said Diane, a capacity assessor has specific training to conduct an assessment under the Substitute Decisions Act so remember that’s where their training and their guidelines come from. Now as the Substitute Decisions Act we know contains certain legal definitions of incapacity to manage property and incapacity respecting personal care. And a capacity assessor will be trained to refer to the SDA and to use the forms that are actually prescribed under the SDA for the reporting of capacity assessments.
Now just as a point before we go into a bit more of capacity assessments, the alternative to using a capacity assessor is to seek the opinion of a family physician.
Diane Vieira: Yes, if a capacity assessor is not available or you just have access to an opinion of a physician, such as the family physician, that’s another opportunity to get an assessment. Then again, they may not be familiar with the process and as a lawyer, you have to familiarize them and guide them in accordance to the Substitute Decisions Act itself and the legal tests.
Bianca La Neve: So what we do is we usually, when we ask a family doctor or even a psychiatrist or other specialist to conduct a capacity assessment, we usually give them a letter where we set out what we think the guidelines are. We ask them a specific question such as does this person in your opinion have capacity to give a Power of Attorney? Or does this person have capacity to make a Will etc.? And then in our letter we also outline what the legal test is and what should be included in the written opinion. Almost like setting out the parameters for them to look for in their assessment.
Diane Vieira: And just another note. If you would like to look at the guidelines for assessing capacity they are available on the web, the Attorney General’s website under the PGT website as well. And you can get a lot of information there.
Bianca La Neve: Now the guidelines, like Diane mentioned, are useful. But remember they only address assessments that are conducted under the Substitute Decisions Act and these are again assessments relating to capacity to manage your property or capacity to make personal care decisions. And we both encountered other situations where capacity assessments are called for, such as when we’re looking at giving or revoking Powers of Attorney for property and personal care, or making Wills, instructing counsel; even the capacity to marry and to divorce. So remember those are other situations. These situations are not covered by the Substitute Decisions Act and you’ll need to determine whether a capacity assessor is the appropriate person to conduct the assessment in these types of situation.
Diane Vieira: There’s a provision under the SDA to compel an assessment and the Court may, on a motion or on its own initiative, compel an assessment. But to do so, you need to meet two conditions and I’ll refer to the Ontario Court of Appeal decision Neil v. Pilialo which is a 2001 decision. In order to compel an assessment, an SDA proceeding where capacity is at issue and there has to be reasonable grounds to believe that the person is incapable.
Bianca La Neve: Now just because you meet these two conditions, so basically you have to have a guardianship or other SDA-related proceeding underway, and you have to show reasonable belief that the person is incapable. Just because you meet those two conditions, doesn’t mean the judge will automatically order a capacity assessment. So in a case of Flynn v. Flynn, it’s an unreported
Diane Vieira: And I think that’s an important point. Getting an assessment, especially when you’re compelling one, can be very hard for everyone involved: the capable person, other family members. So if you do bring a guardianship application, I think you would have to reach the conclusion that this is a necessity.
Bianca La Neve: Yes and make sure that you can meet your case in front of a judge. Now when you’re applying for guardianship in the SDA, it’s sometimes forgotten that when you’re serving your application record, that you have to serve the actual person whose capacity is at issue. So let’s say you’re seeking guardianship of Mom, you might remember to serve all your brothers and sisters and perhaps even your Dad, but you forget to serve Mom herself. And so an incapable person under the Substitute Decisions Act has the right to receive notice of any application that affects their capacity.
Diane Vieira: Yes, often we serve an incapable person and it might go to an old age home, etc. You have to make sure the person gets a copy of that application. What usually will happen is someone from the care facility may call your office and say I received this, what do I do with this? And you would say, leave a copy with the incapable person.
Bianca La Neve: And we’ve also had situations where, let’s say its sort of a friendly proceeding where perhaps some family members want to stop being guardians of property or personal care for whatever reasons and other family members what to be appointed and its all done on friendly terms, that you can have one of the family members actually deliver the application record to the incapable person themselves and then they can swear the necessary Affidavit showing that the incapable person actually received notice of the application. And the incapable person has to be told of their right to seek legal representation and also their right to seek to object to the guardianship application.
Diane Vieira: If you look at Section 3 of the SDA Act it deems the incapable person has the capacity to retain and instruct counsel. So this in the Act shows how important it is for that person to have legal representation.
Bianca La Neve: Now the role of Section 3 counsel isn’t to substitute their own ideas or judgment for that of the incapable person, regardless of whether their client who is the alleged incapable person lacks judgment or capacity or seems to be lacking the ability to provide even simple instructions. The role of a Section 3 counsel is to explain the proceeding to the alleged incapable person to the best of that person’s ability to understand it and to attempt to get at that person’s wishes and advise the Court of those wishes. And that way you can ensure that the alleged incapable person, no matter how incapable they may be and lacking in the ability to provide clear instructions, at least you’ve ensured that they’ve had some procedural fairness and also you’ve ensured a Section 3 counsel that the Court has before it a full evidentiary record which includes the wishes of this incapable person.
So those are just a couple of issues that Diane and I have been experiencing recently in our practice and we thought it would be a good idea to review them in this podcast. Again, as Diane mentioned at the beginning of our podcast, if you have any comments, questions or concerns, please e-mail us at hull.lawyers@gmail.com or visit our blog at estatelaw.hullandhull.com. Thanks again Diane.
Diane Vieira: Thank you.
This has been
To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.
Our theme music is Upper Structure by DJ AKid and is courtesy of the Podsafe Music Network.
Listen to Protection For a Trustee Against Personal Liability.
This week on Hull on Estates, Craig Vander Zee and Bianca La Neve discuss protection for a trustee against personal liability. There are a variety of ways that protection is afforded to a trustee against liability, such as exculpatory clauses in trust documents, various provisions of the Trustee Act, passing of accounts, and releases by beneficiaries and/or third parties.
Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.
Protection for a Trustee Against Personal Liability - Episode #151
Posted on February 24th, 2009 by Hull & Hull LLP
Bianca La Neve: Hello and welcome to Hull on Estates. You are listening to Episode #151 on Tuesday, February 24th, 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.
Bianca La Neve: Hi and welcome to another episode of Hull on Estates. I’m Bianca La Neve.
Craig Vander Zee: And I’m Craig Vander Zee.
Bianca La Neve: 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 always visit our blog at estatelaw.hullandhull.com.
Craig Vander Zee: How are you today, Bianca?
Bianca La Neve: I’m great, how are you?
Craig Vander Zee: Good, how are the little ones?
Bianca La Neve: My little one is awesome. You have the two kids - I have the one.
Craig Vander Zee: Yes, yes.
Bianca La Neve: Sometimes you forget there are two, right?
So today, Craig, I thought we’d talk about your paper that you recently presented at one of the annual institutes and you spoke about protection for a trustee against liability.
Craig Vander Zee: That’s right, Bianca. That was the annual institute for the OBA which was held on February 4th, earlier this month. And I thought it might be worthwhile to again discuss the protections for a trustee against potential liability.
Bianca La Neve: Now a trustee, whether incoming or outgoing, always needs to be aware and consider his or her potential liability as a trustee and over the administration of the trust. And this is because trustees are principals and not agents of beneficiaries and so prima facie they’re personally liable on obligations owed to any third parties and they can incur personal liability in tort or under statutes.
Craig Vander Zee: That’s right. I mean, trustees are potentially personally liable when they undertake what I’ll call the office of trusteeship and that potential risk or liability can be to a beneficiary, depending on what the allegation is. Or it might be to, as you have indicated, a third party whether by way of a contract or perhaps in the law of tort or by way of a statute such as the Environmental Protection Act. And so once a trustee or an individual or a company is considering becoming a trustee - perhaps they haven’t even agreed to the appointment yet - one of the things that they would be concerned with is the potential risk that might arise from the trust that they are being asked to administer. It might also be that they’re into the actual trusteeship and issues arise and they want to consider what their potential liability might be. And so that was really one of the focuses to my paper and what I thought we would touch upon today.
Bianca La Neve: Great. Now I guess the first step when you’re looking at what kind of protection there is for a trustee in undertaking his or her duties is you look to the trust document.
Craig Vander Zee: Well that’s right. The trust document itself, whether it’s an incoming or an outgoing trustee, may provide terms of protection to the trustee. Sometimes these provisions are called exculpatory clauses and may appear to absolve the trustee, perhaps even entirely, from consequences of a breach of trust by the trustee. What one has to be careful about is that exculpatory clauses, even if they’re expressly contained in the trust document, may not be enforceable and may not be valid in law. A number of papers have been written on this very subject and it seems that when it comes to exculpatory clauses, although there’s not a great deal of case law in Canada, that it appears that certain principles will be held to be enforced by Canadian Courts. And those are that an exculpatory clause cannot excuse liability for acts of gross negligence. They can’t excuse liability for wilful defaults or intentional wrongdoing. That they can’t excuse liability for acts of fraud or dishonesty. On the other hand, an appropriately drafted exculpatory clause will and can be effective to relieve a trustee from liability for breaches of trust of what one might consider lesser culpability than acts of gross negligence, intentional wrongdoing or bad faith. And again, those aren’t principles that I would say are set out in certain Canadian cases per se all in the same place, but ones that come really more from a collection of cases on how the Canadian Courts might apply that.
Bianca La Neve: And it seemed all those sort of limits that you just talked about are really self-explanatory. I mean, you would think that no matter how broad an exculpatory clause can be, you shouldn’t be able to protect against or to protect yourself from something when you did engage in fraud or dishonesty as the trustee.
Craig Vander Zee: Well that’s certainly one side of the argument. And, you know…
Bianca La Neve: And here as lawyers we argue both sides.
Craig Vander Zee: Now when talking about exculpatory clauses, though, Bianca and I were really mentioning those that remove all liability, in any circumstance. But you could have provisions in a trust document which may raise the level of culpability before one is to be held accountable or liable. Or on the other hand, it could limit the extent to which a trustee might be liable in terms of the assets of the trust itself, regardless of the conduct. So there could be different provisions within the trust document that may be of assistance to the trustee. I think what we’re talking about here is really that when looking to protect a trustee, really the first step, I would think, is going to the trust document itself and carefully reading it to see what it says or doesn’t say.
Bianca La Neve: For sure. And so after we’ve looked at that, you can also consider protection found in various statutes.
Craig Vander Zee: Well that’s right. And one such statute, you know, is the Trustee Act itself and certainly I don’t intend to get into all the sections in the Trustee Act that would provide protection or other Acts that would provide protection, but two sections in the Trustee Act I think are certainly noteworthy. And one would be Section 28 of the Trustee Act which provides that a trustee won’t be liable for a loss in a trust arising from the investment of trust property, if the conduct of the trustee that led to the loss conformed with a plan or strategy for investment amongst other things, and that such a plan would be adopted by a prudent investor under comparable circumstances. And that’s not a word-for-word reading but, you know, certainly Section 28 deals with that. And then Section 28 deals with really the damage side of things. Section 28 is relieving a trustee of liability in a circumstance where there’s been investment losses. And 29 then goes on to damages and says that where a Court is assessing damages, it can look to the overall performance of the portfolio and taking that into consideration. And so I think those two are worth mentioning as well.
Bianca La Neve: And I thought, you should also touch on Section 35 of the Act because this is a sort of a really good provision that you can look to when you’re considering whether the conduct of a trustee met the standard of care.
Craig Vander Zee: Right, in Section 35 of the Trustee Act really goes to what I would call the power to excuse the trustee because and without reading it, it deals with the ability in a situation where a trustee has acted honestly and reasonably and ought fairly to be excused from a breach, can be, if in the discretion of the Court, its appropriate in the circumstances. The caveat to this is that subsection 35(2) of it indicates that this doesn’t apply to liability for a loss of a trust arising from the investment of the property.
Bianca La Neve: 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 visit our blog at estatelaw.hullandhull.com. Thanks for listening.
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.
To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.
Our theme music is Upper Structure by DJ AKid and is courtesy of the Podsafe Music Network.
Listen to The formal requirements to make a valid Will in Ontario
This week on Hull and Estates, Christopher Graham and Bianca La Neve review the formal requirements to make a valid Will in Ontario and the consequences of failing to adhere to the formal requirement. The relatively recent English decision of Esterhuizen v. Allied Dubar Plc [1998] 2 FLR 668 is discussed.
Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.
Listen to Offers to Settle in the Context of a Will Challenge
This week on Hull on Estates, Craig Vander Zee and Bianca La Neve talk about offers to settle in the context of a will challenge. They explain the difference between a will challenge and civil litigation and discuss several examples of will challenge cases.
Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.
Offers to Settle in the Context of a Will Challenge – Hull on Estates Podcast #137
Posted on November 18th, 2008 by Hull & Hull LLP
Bianca La Neve: Hello and welcome to Hull on Estates. You’re listening to episode number 137 on Tuesday, November 18, 2008.
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.
Bianca La Neve: Hi and welcome to another episode of Hull on Estates. I’m Bianca La Neve.
Craig Vander Zee: And I’m Craig Vander Zee. And today I think, Bianca, we were going to talk about Offers to Settle in the context of a Will challenge. But first of all, how are you?
Bianca La Neve: I’m great, how are you?
Craig Vander Zee: Not too bad, did you have a nice weekend?
Bianca La Neve: I did, we celebrated our 5 year anniversary this past weekend.
Craig Vander Zee: Congratulations, but there’s many more to go.
Bianca La Neve: Yes, that’s what everyone keeps telling me.
Craig Vander Zee: What is the fifth anniversary? Is that a paper…?
Bianca La Neve: I don’t know and I know I didn’t get any jewellery so…
Craig Vander Zee: Well I guess that’s the tenth year anniversary, isn’t it?
But back to the Offers to Settle. The starting point for all of this is to recognize that Will challenges, by their nature and the function of the Court with a Will challenge, is different than in civil litigation. In civil litigation, it’s maybe A Co. against, A company that is against B company, there’s a winner, there’s a loser, the Court determines and then you have cost consequences that follow. And in the context of having made Offers to Settle, those cost consequences that may follow an award usually may be affected by the Offers, depending on if the Offers are more favourable than what the result was achieved at trial.
In the Will context, of course, it is the Court that is granting the validity of the Will. And in that case, as the Will, you know, is applicable to the world at large, or in rem as it is, the Court does have a function here. Having said all of that, there is a case in Ulinick that is very often quoted that considered this very issue.
Bianca La Neve: For background purposes, the facts of the case are as follows: the deceased had executed a Will in approximately 1979 and at the time, the deceased had been in and out of hospital and had actually undergone major surgery. One of the deceased’s children ultimately challenged the Will, asserting lack of capacity and undue influence by his sibling, who was the sole beneficiary of the deceased’s estate. There were two competing opinions from medical experts as to the testator’s capacity during the time of the Will, but ultimately Justice Sheard dismissed the Will challenge.
Craig Vander Zee: And in that regard, or perhaps more specifically, Justice Sheard found that with respect to the lack of testamentary capacity, that that allegation had been justified, that is, that it was reasonable to make in the circumstances because there was actually two expert neurologists who gave competing evidence at the trial. And as such, he found on that issue while ultimately he dismissed that issue, he found that it was justifiable to bring it up. And on that issue, he then found with respect to costs that the unsuccessful party shouldn’t have to pay the costs of the successful party. It’s interesting to note, though, that with respect to the assertion of undue influence, that there wasn’t any justification according to Justice Sheard for bringing that allegation. So with respect to that allegation, Justice Sheard found that whatever the cost of the proceedings were that could be reasonably demonstrated to have resulted from that allegation, were going to be on the shoulders of the unsuccessful litigant here. And that is interesting because it wasn’t a case where Justice Sheard found that costs are payable out of the estate regardless of success, and considered even the separate allegations in terms of warding off the requirement to pay costs was going to be dealt with. On the issue of Offers to Settle, though, Justice Sheard found that the offer made on the eve of trial didn’t factor into his consideration on costs. And so in that respect, actually, His Honour found that the Offer to Settle didn’t have effect.
Bianca La Neve: But Craig, other cases in Will Challenges have considered Offers to Settle.
Craig Vander Zee: And that’s right. And perhaps before touching on some of those cases, and we’ll probably just mention them by name given the time today, but I think it is helpful to consider the traditional approach to costs and the modern approach to costs when it comes to awards in Will challenges because it does seem to signify a change in the way at least the Court intends to look at how costs are going to be applied.
Bianca La Neve: For many, many years, in most Will challenge cases, the Courts would order all or most of the costs of the parties to be paid out of the estate. Not only was the Court disinclined to require the unsuccessful party to pay the costs of the successful party, it would also direct that the unsuccessful party be partially or even wholly indemnified by the estate.
Craig Vander Zee: Well, and that meant that the traditional approach to the award of costs in a Will challenge really was a departure from the usual rule in civil litigation, which is to award costs following the event. But while I completely agree with your comment, Bianca, that in many, many cases, for many, many years, it seemed that there was almost an impunity with respect to cost consequences in dealing with Will challenges for the unsuccessful litigant, that that’s not really what the traditional approach stood for. And the traditional approach derived from a case called Mitchell and Garde which is a case from 1863. And not really wanting to go through it, it really boiled down to two principles or policy reasons for an order for costs that would guide how the Courts should look at it. And it was basically this: that the usual rule that costs follow the event will not apply where firstly, the testator or those interested in the estate have been the cause of the litigation; and secondly, where the circumstances reasonably lead to an investigation of the Will itself.
So in the first scenario, it’s where the testator has drafted a Will which would lead one, or has done it in circumstances which would lead one, to challenge it, so where the cause of the litigation is the testator or, again, those interested in the estate. And then the second one is where there is a reasonable basis to have an investigation in respect of the document being propounded. In those scenarios, costs will not follow the event. But that became, over the years, interpreted by at least many judges to mean that there was impunity in bringing Will challenges. In the modern approach, that was more spelled out in a very directed way by the Court of Appeal in its 2005 decision of McDougall Estate and Gooderham.
Bianca La Neve: So in that case, the Court of Appeal found that the traditional approach had been displaced. The modern approach to fixing costs is to carefully scrutinize the litigation, so the Will challenge, and unless the Court finds that one or more of the public policy considerations set out by Craig applies, then a Court should follow the cost rules that apply in regular civil litigation.
Craig Vander Zee: And the Court went on to say, the modern approach to awarding costs at first instance, and again this is in a Will challenge, recognizes the importance of the Courts and the role that they play in ensuring that only valid Wills are executed by competent testators. It also recognizes, though, and this is where it is set out I think expressly now, and clarified, that the need to restrict unwarranted litigation and protect estates from being depleted by litigation, is going to be front and centre. And indeed, the Court of Appeal went on to say gone are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation. So from that perspective, the Court hasn’t said that in the appropriate circumstances, at least in my view, that an unsuccessful litigant in a Will challenge won’t get their costs or there won’t be the cost consequences that follow the event. But if they find that the public policy reasons that I mentioned before or the basis I mentioned before are not fittingly applied to the situation, then civil litigation rules are going to apply. And what that really is instructive as well is in respect of Offers to Settle because that would also mean that in the case where the public policy reasons are not affecting cost consequences and civil litigation rules apply with respect to costs consequences, that Offers should have that effect. Offers to Settle have been, in a number of cases, considered by Courts in Will challenges. But here it opens the door for a Rule 49 Offer to be more consistently applied because the Courts in the past have differed in their approach to Rule 49 Offers.
Bianca La Neve: So Craig, you mentioned earlier we would go through some of the cases. And in Barone Estate, without going into the facts, in the end the judge found that there was no incompatibility in applying Rule 49 and traditional non-estate cost principles to Will challenge proceedings.
Craig Vander Zee: Well, that’s right and that was a 1997 case. But then in a case the next year, the following year, Justice Haley found in Schwitzer and Pezecki that Rule 49 didn’t apply to estate proceedings. But with respect to the applicability of 49, it really doesn’t end there. And again, Rule 49 is the rule that specifically sets out, Rule 49.10, specifically sets out cost consequences when an Offer is made and is more favourable than the judgment that’s obtained, vis-à-vis the opposing party. In a case called Kerner and Fiorelli which was a case back in 1990, so 8 years before Justice Haley’s decision, the Court found that Rule 49 could not be ignored. So the case law regarding the applicability of Rule 49.10 seemed to have been unsettled. But it seems to me that the decision in Gooderham opens the door for that applicability of Rule 49 in the appropriate circumstances.
Bianca La Neve: So I think that’s a good place to wrap up today, Craig. If any of our listeners want to leave a comment, they may e-mail us at hull.lawyers@gmail.com or you can visit our blog at www.estatelaw.hullandhull.com. Thanks.
Craig Vander Zee: Thanks very much, Bianca, it’s always a pleasure.
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.
To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.
Our theme music is Upper Structure by DJ AKid and is courtesy of the Podsafe Music Network.
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Listen to Variation of Trusts
Craig Vander Zee and Bianca La Neve discuss variation of trusts, with an emphasis on the Variation of Trusts Act and approval of variations of trusts on behalf of minor, unascertained, unborn or contingent beneficiaries. The well-known case of R. v. Irving (1975), 11. O.R. (2d) 42 (H.C.) is discussed.
Comments? Send us an email at hull.lawyers@gmail.com, call us on the comment line at 206-350-6636, or leave us a comment on the Hull on Estates blog.
Variation of Trusts - Hull on Estates Podcast #127
Posted on September 9th, 2008 by Hull & Hull LLP
Bianca La Neve: Hello and welcome to Hull on Estates. You’re listening to Episode #127 on Tuesday, September 9th, 2008.
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.
Craig Vander Zee: Good morning, Bianca, how are you?
Bianca La Neve: Good, how are you, Craig?
Craig Vander Zee: Very well, thank you. It’s nice to have you back here full-time back in the office after being away with your little guy.
Bianca La Neve: Thank you.
Craig Vander Zee: And it’s a pleasure to be podcasting with you today.
Bianca La Neve: It is, it is a pleasure. How was your long weekend?
Craig Vander Zee: Pretty much filled with championship baseball and soccer. The baseball was Saturday, so six hours on the diamond on Saturday for my little guy, and my little girl played in the rain for three separate games on the Sunday. But they had a blast and it was a good weekend.
Bianca La Neve: Great. So, today Craig, I thought we’d talk about variation of trusts. So in starting our discussion of variation of trusts, I think, Craig, the first step is always to look at your trust document. It’s really important to go back to basics, take a look at what the trust document says, its wording, and from there decide on what your next steps are. And those can be?
Craig Vander Zee: Well, I mean, first of all just piggybacking on that, you need to look at, it could be a testamentary trust arising out of a Will, it could be by way of settlement, it could be by other disposition. So you need to understand the trust document and the exact wording of the document. It may be that what you really need is an interpretation of a section in the trust, or opinion, advice and direction of the court. But if those have been considered and it’s truly a variation of the trust, then when you’re considering how you want to go about it, you look towards the Variation of Trusts Act. And when I say how you’re going to go about it, it could be that the variation arises just due to a single issue in the trust; it could be tax reasons or the trust doesn’t provide in a manner that it should, it doesn’t allow for an encroachment and everyone believes in the situation that an encroachment is absolutely appropriate and proper and consented by everyone. But it could also arise from Minutes of Settlement dealing from another procedure, such as a passing of accounts which was contested and as a result, that involves a trust, and as a result the settlement may contemplate a variation of the trust. Obviously, that would have to be done pursuant to the Act and in consideration of the case law criteria.
Bianca La Neve: So it’s important to know that a variation of trust can be a stand-alone procedure, or proceeding, or it can be ancillary to some broader relief sought, like you had, your passing of accounts or approval of a settlement.
Craig Vander Zee: And that’s right, and even if it is piggybacking if you will, on another settlement or another proceeding, you still would bring the application itself. You still do need to bring the application under the Variation of Trusts Act. And the size of the Act or the length of the Act is quite surprising, it’s only one section in length and we shouldn’t let the length of it fool you, because we simply can’t ignore it.
Bianca La Neve: So essentially the Act permits the Court to approve a variation of a trust, whether it be under a Will, a settlement or other disposition, and allows the Court to approve it on behalf of minor, unascertained, unborn or contingent beneficiaries if the variation in the words of the Act appears to be for the benefit of those persons.
Craig Vander Zee: Well in relying on the Act for the jurisdiction to go ahead with it, there are many things to consider in pursuing the variation such as the procedure to follow and the criteria to be met for the variation to be allowed by the Court.
Bianca La Neve: Now, Craig, there is that well-known case, R. v. Irving which sets out essentially the three criteria that a Court considers in determining whether to approve the variation.
Craig Vander Zee: Yeah, and those are in summary, does the variation keep alive the basic intention of the testator or the settler? Does the variation benefit those for whom the Court is asked to consent? And then whether, and this is sort of the legal jargon, but whether a prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and risks of the variation, would likely accept it. So you first consider, who does the variation need to be done on the behalf of and then you look to those criteria. And for the purposes of today, Bianca, we won’t be getting into the case law that have considered those criteria, because there’s certainly debate as to the importance of each of those specific criteria and how they would apply to different situations, that is, different factual situations. So we’ll leave that for a different day. But what I thought we could focus on today, for the remainder of our session is, looking at the representation of the incapacitated beneficiaries and then touching upon briefly, the procedure.
So essentially then, with minors, the Children’s Lawyer in a trust scenario where the minor as a respondent is going to be the representative and we’ll act as the litigation guardian for the purposes of the variation of the trust. And then we can also look at unborn and unascertained beneficiaries as well.
Bianca La Neve: And Rule 10.01(1) authorizes the Court to appoint a person to represent these interests. This is also known as a representation order. Now although Rule 10 doesn’t specifically refer to the Children’s Lawyer, Courts have traditionally appointed the Children’s Lawyer to represent this class of beneficiaries.
Craig Vander Zee: And again, when dealing with the Notice of Application that’s necessary for a variation, the Notice of Application should specifically request such a representation order in this particular circumstance. And it may very well be that the order is sought for the Children’s Lawyer to represent all minor, unborn and unascertained beneficiaries to cover the global category of those beneficiaries.
And then I guess lastly, Bianca, we should touch upon those beneficiaries that are mentally incapable persons or absentees.
Bianca La Neve: In the case of a mentally incapable person or absentee, where there is already a person that has the authority to act as their litigation guardian, attorney or committee, such person usually acts as their litigation guardian in these variation of trust applications, unless the Court orders otherwise. If there is no person that has the legal authority to protect the interests of the mentally incapable person or the absentee, and there is no suitable person willing to act, then the order that should be sought is appointing the Public Guardian and Trustee.
Craig Vander Zee: Well and that’s right. And I think, given the amount of time, if we’ve dealt with the representation aspect, obviously those who don’t fall into those categories, beneficiaries who are adults and who are capable, certainly ought to seek independent legal advice as well. But they are capable of obtaining that representation and what we were really touching upon were those who the Court and in law don’t see as being capable and as such, need these types of representation orders or types of representation. And so I think given the balance of the time, we’ll just touch upon the documents that would be required for a variation.
Bianca La Neve: So the first document you need is the Notice of Application. The Application is brought in the Ontario Court General Division so in your Notice of Application the relief you are seeking is approval of the variation on behalf of the incapacitated beneficiaries.
Craig Vander Zee: And when you’re dealing with the beneficiaries, that’s whether they’re vested or contingent beneficiaries. And while the Notice of Application is certainly the first document in the Application record, perhaps the most important document in the Application record is the deed of arrangement itself. And the deed of arrangement will set out what the terms of the variation are intended to be. And that is well, that is being requested to be approved by the Court and is to be executed by all of those beneficiaries that have capacity. So it may also be the case that the trustees sign the deed of arrangement as well. And aside from the deed of arrangement, there would be an Affidavit that will set out what is often in the recitals of the deed of arrangement in terms of the facts in putting that before the Court so the Court can understand the situation of how it arises, and that it is in the best interests of those who the Court is asking to approve it on behalf of. And then there’s a Factum and it may very well be that a Factum isn’t necessary, that leave can be sought, that the Factum not be necessary. And that is typical in situations where there is Minutes of Settlement arising from a proceeding and the variation is part of that proceeding, albeit an application unto itself, but that it’s clear to the Court how this variation arises.
And then obviously there’s a draft judgment that would be circulated amongst the parties so that everybody is on notice as to what the terms of the judgment are going to be. And I think that does it for us today, Bianca.
Bianca La Neve: So thank you for listening to our discussion on variation of trusts. As always, we look forward to hearing from our listeners. You may send us an e-mail at hull.lawyers@gmail.com or leave us a message on our comment line, area code 206-350-6636 and be sure to visit our blog post daily at estatelaw.hullandhull.com.
Craig Vander Zee: Thanks very much, Bianca and I look forward to the next opportunity to podcast with you.
Bianca La Neve: Thanks, Craig.
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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