Pirates of the Plains

Posted on November 7, 2008 by Hull & Hull LLP

George Webster appealed to the Ontario Court of Appeal from a summary judgment partially dismissing his claim for damages against the estate of Ken Thomson.  Webster v. Thomson, 2008 ONCA 730.

At issue was a painting by the American artist, Charles Russell, "Pirates of the Plains", which had been in the Webster family since 1931. Mr. Russell, who died in 1926, is apparently well known for his paintings of the "Old American West". The painting was very special to Mr. Webster who saw it as a link to his father who had originally acquired the painting. 

On September 29, 1982, Mr. Webster's mother sold the painting to Mr. Thomson, without Mr. Webster's knowledge, for $150,000. Mr. Webster asked Mr. Thomson if he could re-acquire the painting. Mr. Thomson proposed that if Mr. Webster sold him a painting he owned by Cornelius Krieghoff, Mr. Thomson would give Mr. Webster the opportunity to purchase the Russell painting after he died at the painting’s appraised market value. This proposal was contained in a letter that Mr. Thomson wrote to Mr. Webster. Mr. Webster accepted.

On August 25, 2003, Mr. Thomson sold the Russell painting for U.S. $5,600,000 without apparent regard to his agreement with Mr. Webster. In 2004, Mr. Webster commenced a legal proceeding against Mr. Thomson. Mr. Webster's claimed damages for breach of contract in the amount of $4,000,000 and punitive damages in the amount of $10,000,000. After Mr. Thomson died in June 2006, the action was continued against his estate.

In January of 2008, the estate brought a motion for summary judgment to dismiss Mr. Webster's action. The estate claimed that Mr. Webster's did not have the means to acquire the painting at the appraised market value upon the death of Mr. Thomson. The estate therefore argued that Mr. Webster suffered no loss even if the sale of the Russell painting prior to Mr. Thomson's death was a breach of Mr. Webster’s contractual rights. 

The motions judge granted the summary judgment motion on the grounds that Mr. Webster had not proved his damages because he had provided no evidence that he could raise the many millions necessary to purchase the Russell painting. 

However, the Court of Appeal held that the amount of damages was not a proper consideration on a Rule 20 motion. There was no need, as the motion judge thought, for Mr. Webster to prove his damages at this stage of the proceeding. In the court’s view, the motion judge assumed the role of a trial judge which was not proper. 

The court further held that it was a fundamental principle that a person could not benefit from his/her breach of contract. In this case, Mr. Thomson breached an enforceable contract. He could not perform the contract as a result of its breach. As such, Mr. Thomson could not benefit from his breach, which he apparently did based on the motion judge's findings. This was still another reason why summary judgment was set aside. Everyone is indeed equal before the law. 

Thanks for reading and enjoy the weekend.

Justin

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Common Causes of Estate Litigation - Part II

Posted on January 5, 2007 by Hull & Hull LLP

In considering causes of estate litigation sometimes you need not look further than to your extended family if the relationships within the extended family are acrimonious. 

An extended family can include a spouse, former spouse whether legal or common-law, children and their respective spouses (and former spouses), grandchildren and their spouses (and former spouses), siblings, nieces and nephews, extra-marital partners and other dependents, whether related to you or not. It is possible that any one of the above-noted people might bring a claim against the estate, or raise a dispute. Jealousy amongst family members and/or the anticipation or expectation that they are to or will receive all or a portion of the estate, however unwarranted, may lead to family members taking unreasonable positions with respect to claims they feel they have against the estate.

In making an estate plan then, it is critical to have any and all agreements that may affect your estate plan prepared before you die. These agreements could include separation, marriage, co-habitation, partnership, employment and shareholders agreements depending on the nature and make up of your estate.

While the secrets one has from a family may be extremely touchy, emotional or just difficult to disclose or deal with, their disclosure following death may lead to demands against the estate. An extra-marital relationship, an illness of whatever kind not known to the family, a relationship with a caregiver or promises made to caregivers regarding their compensation can be examples of such secrets. For instance, a friend or family member may be assisting with one’s errands or day to day care. If promises are made to the family friend or relative that they will be “looked after” upon one’s death, then they may make a claim against your estate following your death if their relationship with you and/or compensation is not clearly known.

The nature of your assets and the manner in which you deal with them while you are alive can lead to problems following your death. For instance, you may have an asset that can be designated to a certain beneficiary such as an RSP, insurance proceeds or a pension. If the intended beneficiary has passed away or alternatively, your family circumstances have changed such that you no longer intend for that beneficiary to be the designated beneficiary, upon your death a dispute may arise.

Another example might be where the major assets in the estate are real estate. The beneficiaries of those assets might well get into an unnecessary argument over the handling of such assets if there is not enough cash to pay for the liabilities (i.e. taxes, expenses) that might arise upon death. This circumstance could be avoided with the purchase of sufficient life insurance to cover these liabilities upon death.

Your choice of a personal representative for your estate should also be given serious consideration. The beneficiaries of your estate will no doubt be critical of the executor and trustee appointed under your Will if the executor and trustee are perceived to be biased to certain family members.

The causes of estate litigation discussed in yesterday’s and today’s blogs are not an exhaustive list. The causes discussed are not in and of themselves a legal basis to make a claim against the estate. Having said that, if one does not have a well planned estate plan, the causes discussed can often lead to family members or others who believe that they deserve or are entitled to a portion of the estate to look for a basis upon which to challenge your Will or bring a claim against the estate for dependent’s relief under the Family Law Act, breach of contract or perhaps constructive trust.

Have a great day.

Craig.

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Hull on Estate and Succession Planning Podcast #20 - Claims against the Estate

Posted on August 8, 2006 by Suzana Popovic-Montag

LISTEN HERE

READ THE THE TRANSCRIBED PODCAST HERE

During Hull on Estate and Succession Planning Podcast #20, we wrapped up our analysis of the 10 causes of Estate Litigation and discussed Breach of Contract and Constructive Trust Claims.

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