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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The expanded powers given to the Court on a motion for summary judgment challenge the Motions Judge to balance procedural expediency against the right to a trial.  In Cranston v. Cranston, the Ontario Superior Court of Justice (Divisional Court) granted an appeal of summary judgment which found an advance of funds from a mother to her son to have been a gift rather than a loan.

The case highlights the difficulty in avoiding a trial where "the central issue is whether an oral, undocumented transaction constituted a gift or a loan."  Although reported in the Estates and Trusts Reports, both the donor and the recipient of the funds were living and able to give viva voce evidence at trial.  While the Motions Judge exercised her power under the new Rule 20.04(2.1) to weigh evidence and draw inferences, the Divisional Court concluded that the absence of viva voce evidence was fatal:

"In Healey v Lakeridge at paragraphs 28 to 32, Perell J. addressed the importance of considering whether the powers under r. 20.04(2.1) should, in the interests of justice, only be exercised at a trial.  He suggested that this question is important to address directly because some issues “cannot be truthfully, fairly, and justly resolved without the forensic machinery of a trial.” An action that turns on credibility as much as this case does falls, in our view, into that category."  

David Morgan Smith - Click here for more information on David Smith. 

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 This question surfaces quite regularly in the context of estate administration. Did the deceased advance funds to an individual with the intention that they be repaid, or was the advance a gift?

This very question is the subject of the recent, instructive ruling of Justice Brown in Colangelo v. Amore, 2010 ONSC 5657 (CanLII).  In this action, Justice Brown was not dealing with an estate matter, but a series of transactions whereby the Plaintiff provided cheques and bank transfers totalling $16,000 to the Defendant, his erstwhile girlfriend. When they later broke up, the Plaintiff claimed repayment. 

In determining whether the advances were gifts or loans, Brown J. considered the evidence before him, and the law relating to inter vivos gifts. Brown J. noted that where there is no element of indebtedness, and no presumption of advancement arises, once the transfer is proved, the burden falls on the recipient to show that the money is not repayable. The standard of proof is the general balance of probabilities applicable to all civil cases.

To show a gift, the recipient must establish:

i.                     an intention to donate;

ii.                   a sufficient act of delivery, and

iii.                  acceptance of the gift. 

In the case before him, there was clear delivery and acceptance, and the issue became, as usual, whether there was sufficient evidence to prove intention to donate.

As to donative intent, the recipient must show that the donor intended to part with the property and did not intend to reserve the ultimate right of disposal. The evidence should be inconsistent with any other intention or purpose other than to divest himself of the property.

Intention may be inferred from the donor’s acts, and various extrinsic factors, such as the nature of the relationship, the size of the “gift”, and the importance of the “gift” in relation to the donor’s overall property.

In finding that the advances were loans and not gifts, Brown J. reviewed a number of relevant factors. He concluded by citing the words of Ritchie D.C.J. in Simmins v. Clarke (1983), 40 Nfld. & P.E.I.R. 446 (Nfld. Dist. Ct.): “Persons who obtain substantial sums of money from friends should be careful to ensure that if there is no intention to repay the money that this is evidenced satisfactorily so that there can be no doubt.  Public policy demands that such casual passing of monies should be repayable unless there is satisfactory evidence to show that it was not intended by both parties to be repaid.”

Thank you for reading,

Paul E. Trudelle - Click here for more information on Paul Trudelle.

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Normally, it is the estate trustee who has the authority to deal with the disposition of the deceased’s remains. A deceased’s stated wishes with respect to disposition, including donation, are seen as merely precatory.

However, Ontario’s Trillium Gift of Life Network Actvaries this usual authority, in a number of respects.

Firstly, a deceased’s consent to organ donation is “binding and is full authority for the use of the body…”.

Secondly, where the deceased has not specifically consented to a donation, the Act allows specified persons to consent to the donation of the person’s own body or body parts upon death. A spouse or other family members, in a specific order, are authorized to consent to such a donation if the deceased has not consented during his or her lifetime. One of the persons authorized to consent to the donation is “the person lawfully in possession of the body”. This appears to be a reference to the estate trustee.  However, the estate trustee’s authority to consent is low on the list, after the spouse, children, parents, siblings and other next of kin.

The consent of a spouse or other person listed in the legislation is “binding and full authority” for the use of the body. The legislation therefore appears to make a limited exception to the common law authority of the estate trustee.

Consent is not to be given if it is believed that the deceased would have objected during his or her lifetime, or if the deceased did not consent, if someone higher on the hierarchical list would object.

Have a great weekend.

Paul Trudelle

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The business pages, especially in this uncertain economy, can be interesting.  Recently I gravitate toward Paul Waldie's column in the Globe & Mail.  Frequently, he identifies the gifts, causes and reasons provided by individuals whose donations range from under $100,000 to a million dollars or more. It's a spot of good news in this economic downturn.

We have covered legacies from several angles at Hull & Hull; there are 25 hits when "legacy" is searched on the Blogs and Podcasts section of our website.  The law dictionary defines legacy as "A gift by will, esp. of personal property and often of money;  a bequest."

Individuals can leave a legacy in their respective Wills, but as the Globe & Mail column highlights, people who have the means enjoy the satisfaction of leaving a legacy during their lifetime. Stories abound, as www.leavealegacy.ca illustrates.  There are as many reasons to leave a legacy as there are donors.

The principle of leaving a successful legacy applies to many realms, including the family business.  In some instances, it is advisable to not leave the kids the family business.  Rick Spence, of Moneysense, suggests passing on values, rather than gifting the family business.  Certainly we are not all in the position of "firing the kids", but there may be many good reasons to do now what you would otherwise do in your Will. 

Jonathan

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There is the view by some that issues surrounding the interpretations of Wills can be mind-numbing.  From time to time I tend to enjoy dusting off my book of consolidated estate statutes and reviewing some of the basic tenets of estate law, which makes our area of practice so dynamic.

The issue of a failed gift is a common subject in the context of will interpretations. The Ontario Legislature has considered failed gifts in sections 23 and 31 of the Succession Law Reform Act.

In essence, Section 23 states that unless a contrary intention appears in the subject-will, when a devisee or legatee predeceases the testator, the failed gift falls into the residue of the testator’s estate. 

Section 31 is commonly referred to as the "anti-lapse provision."  Section 31 prevents devises or bequests from failing by virtue of the devisee or legatee predeceasing the testator. In such a scenario, a gift is saved if the devise or bequest was left for a child, grand-child, brother or sister of the testator and the pre-deceased devisee or legatee died leaving a spouse or issue who survived the testator. If these conditions have been met, the devise or bequest will not fall into the residue, however it will take effect as if it had been made directly to the spouse or issue of predeceased devisee or legatee. 

Thank you for reading,

Rick Bickhram

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Listen to Developments in Will Changes.

This week on Hull on Estates, Ian and Suzana discuss developments in will changes. They reference cases from Key Developments in Estates and Trusts Law in Ontario ed. 2008.

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.

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A person with more than one set of distinct interests or roles in the same estate may have a conflict of interest.  This can create all sorts of problems and issues in an estate administration and is a driving concept in much estate litigation.

Say Joe Smith is the executor of an estate but also received gifts from his mother the testator during her lifetime.  One of these gifts, say, came in the form of a transfer of a bank account into joint ownership between the two of them. 

Wearing his executor's hat (to use some traditional vernacular), Joe may have a duty to determine whether the bank account transfer was not a gift at all and actually subject to a resulting trust in which case the estate might have a claim to the asset.  Joe may need to do so because, as executor, his duty is to identify estate assets and bring them into the estate. 

However, wearing his hat as a recipient of the bank account, Joe is unlikely to want to give the bank account back to the estate. 

In short, Joe may have a conflict of interest.

In such circumstances, Joe may need two lawyers, one to advise him as estate trustee, the other to protect him personally.  Sometimes an executor’s conflict is such that he cannot continue to act as estate trustee. 

While this example may be simple enough, there is a tremendous range of conflicts that can creep into estate matters.

Thanks for reading.

Sean Graham

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"To visit Machupijchu, you must prepare the soul, sharpen the sense.  Forget for some minutes, the small and transcendental problems of our lives, of modern man..."   Napoleon Polo, Cuzco Peru.

 In 1911, Yale history professor Hiram Bingham III stumbled upon Machu Picchu, 'the lost city of the Incas' (click here for an incredible virtual tour).  For centuries, the treasure trove of ancient Incan art and artifacts had been lost to the Peruvian people.  Backed by Yale and the National Geographic Society, Bingham excavated nearly 5,000 objects over the course of several trips to the sacred site, including statues, jewellery, instruments and human remains.  He then sent the relics to Yale's Peabody Museum in New Haven, Connecticut.

Was their transfer a loan or a gift?

In 2003, when Yale launched a major touring exhibition featuring the artifacts, the Peruvian government commenced negotiations to get them back.  Their argument rested on the existence of a letter discovered in the National Geographic Society archives by Terry Garcia, executive VP of the Society.  The letter, written by Bingham to Yale University, revealed that the artifacts "do not belong to us, but to the Peruvian government, who allowed us to take them out of the country on the condition that they be returned in eighteen months."  The National Geographic Society concluded that the artifacts that had been removed from Machu Picchu were indeed a loan from the Peruvian government, and not a gift.

Artifact ownership is a sticky issue.  Thomas Kline, of George Washington University explained to the National Geographic Channel that if a museum returns ancient artifacts too quickly, they may not be honouring their duty to "preserve and protect objects in the collection".

Yale and the Peruvian government ultimately worked out a compromise of sorts.  Yale agreed to return most of the objects following the completion of the travelling exhibition co-sponsored by the two parties, and has since acknowledged Peru's title to all of the excavated objects.

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Mom dies, leaving a will that divides her estate among her three sons. The only trouble is that before she died, Mom gave the farm to one of her sons. Accordingly, the other two sons receive nothing upon Mom’s death. 

This fact situation was recently considered by Jenkins J. in Bale v. Bale.

The two disappointed sons were not actively involved in Mom's care. The other son lived with Mom, and helped her extensively. The court found that Mom relied on the one son for her care and well being.

The lawyer on the transfer said that Mom, who was 93, understood the transaction and what she was signing. A doctor confirmed her capacity.

Notwithstanding this capacity, the judge concluded that the relationship between Mom and son was one of dependency. The presumption of undue influence was triggered. Although the court found that Mom had great affection for her one son, this was not sufficient to validate the transfer of the property to him. The court concluded that the transfer of the farm was influenced by Mom’s dependence on the one son. The transfer was set aside.

When considering the value of an estate, one should consider any transfers by the deceased prior to his or her death; particularly where any such transfer might have resulted from undue influence due to a dependency.

Thank you for reading

Paul Trudelle