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

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As I am sipping on my coffee this morning, I am thinking to myself, who can commence a will challenge? 

A will challenge can be commenced pursuant to 75.06(1) of the Rules of Civil Procedure. Rule 75.06(1) is a procedural remedy that permits any person who appears to have a financial interest in an estate to apply for directions or move for directions in another proceeding.   This begs the question, who is considered to have a financial interest in an estate? This issue was addressed in the Ontario Superior Court (Divisional Court) decision of Smith v. Vance.

In Smith, the Deceased died on October 27, 1995, leaving a will dated January 5, 1994 which named the applicants as the estate trustees.   A notice of objection was filed by three individuals who were cousins of the deceased through marriage. The objection was subsequently struck by the Honourable Justice Perras during the motion for directions on the grounds that the objectors did not have a financial interest in the subject-Estate. In this hearing, the objectors appealed this decision.

The objectors asserted their financial interest in the Estate based on their close relationship with and their physical and financial assistance for the deceased. There was also an earlier destroyed will in which the objectors were named beneficiaries. Finally a letter was allegedly written by the deceased wherein she acknowledged that the objector will have an interest in her estate.

The court acknowledged that a financial interest is not defined in the Rules of Civil Procedure. In such cases, words should be taken by its natural meaning. Black's legal dictionary defines financial interest as an interest equated with money or its equivalent. The court held that claimants must do more than simply assert an interest. They must present sufficient evidence of a genuine interest and meet a threshold test to justify inclusion as a party. The interest need not be conclusive evidence at that stage but must be evidence capable of supporting an inference that the claim is one that should be heard. 

If the evidence offered by an objector is capable of supporting an inference that the claim raises a genuine issue, and thus is one that should be heard, the objector is entitled to standing and should be granted permission to be added as a party. The appeal was allowed and the order by the Honourable Justice Perras was set aside.

I hope you had fun reading today's blog. Until tomorrow,

Rick Bickhram

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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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Looking out of our office window on such a beautiful summer day, my mind drifted from blogging to golfing. I then struggled to make a connection between the world of trusts and estates, and thoughts of golfing.

The one thing that immediately came to mind was the comment of Rodney Dangerfield’s character Al Czervic from the movie “Caddyshack” that “Golf courses and cemeteries are the biggest waste of prime real estate in America.”

Looking a little deeper on the internet, I found a wealth of golf-related murder mysteries!  Yahoo hosts a group for golf mystery collectors. The Waterboro Public Library has compiled a list of well over 100 golf murder mysteries (I stopped counting at 100). 

Titles include “Death is a Two-Stroke Penalty”, “Deadly Divots”, “Death Under Par”, “Rotten Lies”, “Fairway to Heaven”, “Putt to Death”, “Par for the Corpse” and “Six Strokes Under”. There appears to be no limit to the punning.

Whether you’re reading, or golfing, or both, have a great summer!

Thank you for reading.

Paul Trudelle

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Recently, the Ontario Superior Court of Justice struck down an arbitration clause in a retainer agreement.

In Jean Estate v. Wires Jolley LLP 2008 CanLII 14538, an estate trustee and sole beneficiary of an estate entered into a retainer agreement with counsel that provided for a “success fee” of 10% of the value of the estate. The retainer agreement also provided that any dispute relating to the success fee was to be determined by an arbitrator. 

A dispute arose, and the solicitors sought to have the dispute resolved through arbitration. The client applied to the court to have the notice of arbitration struck out, and to have the dispute resolved by the court.

Madam Justice Low granted the application. She held that the provisions of the Solicitors Act applied prima facie. She went on to conclude that even though the parties had previously agreed to an arbitration provision, and could agree to keep private commercial disputes private, the relationship between lawyers and clients is “one which transcends a mere commercial transaction. The profession has a monopoly over the provision of legal services and the occasions upon which lawyers interact with members of the public occur often when the latter are in the most vulnerable of circumstances. There is therefore an overarching public interest to be served in the court’s supervision of the profession’s monopoly.”

As the arbitration provision was a derogation of the client’s statutory right to have the court scrutinize the propriety of the fees, it was not upheld.

Thank you for reading.

Paul Trudelle

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A few of our past blogs discussed eco-friendly or other alternatives to a natural burial. (See Eco-Funerals - Green to the Grave and Natural Burial.) In researching an issue regarding cremation and the scattering of ashes, I came across yet another alternative: resomation.

“Resomation” is described as “an environmentally responsible, flameless, water based ‘biocremation™’ which sympathetically returns the body to its constituent elements.” In the process, which involves alkaline hydrolysis, the body is placed into a special vessel containing a pool of water and potassium hydroxide, which is heated to a high temperature under pressure. This dissolves the body into its chemical components, leaving only calcium phosphate bone ash. In addition, any mercury fillings and prosthetics remain intact, and can be safely removed.

The web site “Ecogeek” described the process as “The Greenest Way to Die”, and notes that the process does not release harmful mercury vapours, and only uses 90 kWh of energy, compared to 250 kWh for a normal cremation.

The company behind resomation describes the process as “accelerating natural decomposition”. 

It does not appear that the process is available in Canada yet. 

Thank you for reading.

Paul Trudelle

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The common law in Ontario now appears to clearly provide for claims by “disappointed beneficiaries” against drafting solicitors where a bequest to a beneficiary fails as a result of the negligence of the solicitor. (See Harrison v. Fallis, 2006 CanLII 19457 (ON S.C.))

A decision out of the Saskatchewan Court of Queens Bench appears to open the window to this type of claim even wider. Disappointed beneficiaries may also have a cause of action as against financial institutions and others that provide estate planning advice.

In Mayer v. Nordstrom, 2003 SKQB 397 (CanLII), the deceased consulted with a financial adviser with respect to his estate plan. The deceased owned a mutual fund plan, and designated his son as the beneficiary. However, the plan was not registered, and the designation was therefore void.  The fund fell into the deceased’s estate, and the son received only half of the value of the fund as a beneficiary of the estate. The disappointed son sued the financial planner for negligence. 

The financial planner resisted the claim, taking the position that he did not owe a duty of care to the son.

The Court disagreed. The Court held that the “disappointed beneficiary” principles articulated in solicitors’ negligence cases such as Earl v. Wilhelm (2000), 183 D.L.R. (4^th) 45 (Sask. C.A.) and White v. Jones, [1995] 1 All E.R. 691 (H.L.) applied equally to other professions. The “disappointed beneficiary” principle “is not a function merely of the defendant’s occupation”. The planner was a professional who held himself out as possessing special skill, judgment and knowledge in financial planning, which included estate planning tools. The planner ought to have known that carelessness on his part would cause harm to a third party.

The duty of care to potential beneficiaries, opened in the White v. Jones decision, continues to expand.

Thank you for reading.

Paul Trudelle

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In order to attempt to combat what is felt to be a growing problem of real estate fraud, the Ontario government has put new registration requirements in place when a real estate document is being registered.

The requirements call for the making of certain “law statements” by an individual registering a real estate document (transfer or mortgage) under the authority of a power of attorney. The individual must make a statement that they are acting within the scope of the power of attorney. Further, the solicitor must discuss the power of attorney with the client and make a “law statement”. For most purposes, the solicitor must complete the following statement:

I, name of solicitor, confirm that I have reviewed the power of attorney with the attorney, and the attorney has confirmed that:

1. The attorney is the lawful party named in the power of attorney,

2. The attorney is acting within the scope of the authority granted under the power of attorney,

3. To the best of the attorney’s knowledge, information and belief, the power of attorney was lawfully given, and

4. The power of attorney has not been revoked.

In addition, the original signed and witnessed power of attorney must be scanned and registered. 

Lawyer and bencher Robert Aaron discussed the new requirements in a recent article in the Law Times, p. 12. Mr. Aaron stated that while the new requirements will allow the party on the other side of the transaction (and their solicitor) to review the power of attorney document, and provides an opportunity for defective powers of attorney to be caught, “I’m not sure that it will frankly do much to stop fraudulent powers of attorney.”

Thank you for reading.

Paul Trudelle

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Following up on Allan Socken’s blog of March 31, 2008 entitled “What is Legacy Coaching”, I came across an article in the American College of Trust and Estate Counsel Journal entitled “Is Your (Ethical) Will in Order?” (2008) 33 ACTEC Journal 154 by Zoe Hicks. In her article, the author reviews what an Ethical Will is, what types of topics are normally covered, the format of the Ethical Will, and how estate planning practitioners have embraced the concept of advising clients with respect to leaving an Ethical Will.

Essentially, an Ethical Will is a testament of what you want your survivors to know, rather than what material assets you want them to have. Ethical Wills can include expressions of wisdom, values and beliefs of the “testator”, reminders of heritage, apologies, explanations of actions taken or not taken, regrets, expressions of love and gratitude, and words of encouragement.

Ms. Hicks sets out numerous extracts from Ethical Wills so that the reader can get a flavour of the types of matters that an Ethical Will can to address. She concludes by observing that an Ethical Will can be a valuable exercise for both the writer and the recipient.

For more information, read her article, or visit www.ethicalwill.com. This site explains the concept, and provides several examples of Ethical Wills in different forms. 

Have a great weekend.

Paul Trudelle

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On April 23, 2008, I attended at the Ontario Bar Association’s Dinner with the Estates Lists Justices.

The evening began with a review of the Case of the Month by Barry Corbin. Barry discussed the Court of Appeal decision of Madore-Ogilvie v. Ogilvie Estate (This case was also discussed by Sean Graham and Rick Bickhram in Hull on Estates, Episode #103.) This case dealt with the inclusion of jointly owned insurance polices as “section 72” assets under the Succession Law Reform Act.

Following Barry’s excellent presentation, Madam Justice Allen, Madam Justice Conway and Mr. Justice Brown took to the dais. They discussed various ways that the bar can work with the bench in order to facilitate the decision-making process, while advocating the client’s position.

Practical tips include organizing the court file, filing meaningful confirmation forms, attending with a working draft of the Order Giving Directions, and filing chronologies and lists of beneficiaries were appropriate.

The importance of filing a Factum was emphasized. These are said to be extremely helpful, and not filing a Factum should be an exception rather than the norm. 

More tomorrow.

Paul Trudelle

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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

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In determining whether to litigate, or how far to go with a claim, a paramount consideration must be the costs involved, and the prospect of their recovery or payment.

Recently, I came across a case that highlights the issue. There, a wrongful dismissal matter, the court awarded the employee 2 ½ months’ notice, or $9,166. However, in the costs ruling, the judge noted that the employee’s own costs, according to the employee’s bill of costs, were $14,246. (Actual costs incurred by a client are often in excess of the costs claimed in a bill of costs.) The judge, for various reasons, did not award any costs to any party.

There are a myriad of other examples.

There is also the old joke about the man who said he only went bankrupt twice: once when he lost a lawsuit, and once when he won.

Parties often state that it is the “principle” of the matter that warrants the fight. However, “principles” come with a cost, and this reality must always be kept in mind.

Parties to a piece of litigation must be aware of these costs, and these costs should inform, to a considerable extent, the actions of the parties. Hopefully, all parties will take reasonable approaches in light of the costs of proceeding to court.

This, however, is easier said than done, particularly in the context of estate litigation. Here, emotions are usually close to the surface, and often interfere with reasonable judgment. One of the functions of the litigation lawyer is to attempt to calm these emotions, and to bring a reasoned, objective vision to the table.

Thank you for reading,

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It’s just about tax time, so I thought I would briefly discuss the taxation of executor compensation.

The basic premise is that executor compensation is taxable in the hands of the recipient. It is either income from an office or employment (if the executor is not in the business of being an executor) or income from a business (if the executor is in the business of being an executor, or if such a function is in the executor’s usual course of business). Various consequences flow from the distinction, such as allowable deductions, and withholding requirements for EI and CPP.

CRA takes this obligation to report executor compensation quite seriously. An example of the lengths to which CRA will go is found in the decision of Oolup v. The Queen. There, Ms. Oolup, the executor held a joint account with her grandmother, the deceased. She was advised by her lawyer that upon the death of the deceased, the joint account became hers, by right of survivorship. However, for “reasons of family harmony”, she decided to keep only $10,000 from the joint account, and divided the rest with the deceased’s next of kin.

CRA took the position that the $10,000 was executor compensation, and was therefore taxable, and they assessed Ms. Oolup accordingly. To get to this point, they argued that the joint account was held on a resulting trust for the estate. The CRA argued that the presumption of resulting trust applied, and was not rebutted. Accordingly, they asserted that Ms. Oolup received the $10,000 from the estate, as executor compensation.

Luckily for Ms. Oolup, she was able to rebut the presumption, and the court found that the joint account funds became her property upon the death of the deceased. She received the money by right of survivorship. Therefore, her keeping $10,000 was not receipt of compensation by her, and was not to be included in her income.

Thank you for reading,

Paul Trudelle

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Environmental consciousness is spreading, and is making its way into the realm of estates.

There is a growing movement towards “natural burial” or “eco-cemeteries”, and away from more traditional practices such as a conventional burial or cremation. Both of these traditional practices are said to have adverse environmental effects that can be avoided through natural burial. 

Conventional burial normally involves the use of formaldehyde, a potential carcinogen. Vast amounts of steel, wood and cement are involved in the burial process. Cemeteries are often simply fields of grass, with grave markers, that require watering, mowing, pesticides and herbicides.

As for cremation, the process requires huge amounts of natural gas. Emissions from crematories contain hazardous materials.

In natural burial, the body is prepared without use of chemical preservatives such as embalming fluids, and the body is buried in a biodegradable casket or shroud. The physical layout of the cemetery is distinct in that traditional grave markers are avoided, and the grave markers are designed to blend in with the landscape. Pesticides and herbicides are avoided. 

For more information, visit the Natural Burial Co-operative website at http://www.naturalburial.coop/

According to their website, the Natural Burial Co-operative is currently working to establish Canada’s first natural burial preserve.

The movement still appears to be in its infancy; however, interest in the concept of natural burial is growing.

Have a great weekend.

Paul Trudelle

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One final note of caution arises from the Rooney (2007), CarswellOnt 6560 decision – a decision of the Ontario Superior Court of Justice that I have referred to in my blogs earlier this week. This caution refers to the release that the Estate Trustee seeks from the beneficiaries.

In Rooney, the beneficiary was provided with a form of accounts, and was told that if she signed a release, she could receive a distribution from the estate. (The court was critical of this practice.) The beneficiary did so.

Later, the beneficiary sought to compel a passing of accounts. The court allowed the Application.

The trustee had asserted that because of the release, the beneficiary could not compel a passing. The court stated “It is not an answer to say that the beneficiary approved of the accounts and gave a release. One of the obligations of the solicitor acting for the trustee is to ensure that all beneficiaries have competent, independent advice in reviewing the accounts. There is no suggestion by the solicitor that he advised the [beneficiary] to obtain independent legal advice when reviewing the trustee's accounts which he had prepared.”

Additionally, the court noted that the account rendered by the solicitor to the estate was a blended account, and included both solicitor’s work and trustee work. “The solicitor was in the best position to know what charges related to which services. He was also in the best position to know what portions of his fee account should be paid by the trustee out of her compensation or by the estate. There is no evidence that he gave any advice about these distinctions to the beneficiary so that she could consider them.”

The court concluded by stating that “There is no evidence that the beneficiary executed the release knowing that double charges for the trustee's work had been made against the estate. There is no evidence that the beneficiary knew the solicitor charged the estate more for legal and trustee's services than would arguably be allowed on quantum meruit basis. In these circumstances, the release was not a fully informed one; it cannot be enforced against the beneficiary.”

What is an Estate Trustee to do to protect himself or herself? The Estate Trustee might send out accounts that are as complete and informative as possible, so that the release can truly said to be an informed one.   Solicitor’s accounts might be included, and these accounts could specify the nature of the services provided. Beneficiaries should be advised to obtain independent legal advice. 

In many cases, an Estate Trustee may wish to obtain a court passing in any event.

Thanks for reading.

Paul Trudelle

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 Yesterday, I referred to the Ontario Superior Court decision of Rooney Estate v. Stewart Estate (2007), CarswellOnt 6560, which addressed the distinction between the role of the Estate Trustee and the role of the estate solicitor.

One of the responsibilities of the Estate Trustee is to prepare a set of accounts for the approval of the beneficiaries or the court, as may be required.

The decision expands on this requirement. Citing an article prepared by Rodney Hull, Q.C. (“Fundamental Principles and Concepts Relating to Executors and Trustees’ Accounts” (1983), Estates and Trusts Quarterly 146), the duty of an Estate Trustee in keeping accounts is said to include the duty:

1.                  To keep clear and accurate accounts of the estate, rendered at appropriate intervals to the beneficiaries;

2.                  To keep the accounts distinct from other accounts;

3.                  To retain supporting documents for all accounts;

4.                  To produce to any beneficiary the accounts when requested. Income or revenue beneficiaries are entitled to have accounts at reasonable intervals; accounts must be presented to residuary beneficiaries when entitled to possession;

5.                  To make all beneficiaries fully aware of their rights;

6.                  To disclose any and all breaches of trust;

7.                  To allow all beneficiaries adequate time to investigate the accounts;

8.                  To ensure that all beneficiaries have competent, independent advice in reviewing the accounts; and

9.                  To notify all interested beneficiaries of any court audit.

In Rooney, the court held that a release signed by a beneficiary was not a bar to compelling a passing of accounts. The beneficiary was not advised to obtain independent legal advice when reviewing the trustee’s accounts, and the accounts did not disclose that there were double charges for the trustee’s work made against the estate, or that the solicitor charged more for legal and trustee’s services than would arguably be allowed on a quantum meruit basis. As such, there was a breach of one of the obligations associated with keeping accounts. Furthermore, the release was not a fully informed one. Accordingly, it was not enforceable as against the beneficiary.

Thank you for reading.

Paul Trudelle

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The recent case of Rooney Estate v. Stewart Estate (2007), CarswellOnt 6560 serves to highlight the “distinct but complimentary” roles of the Estate Trustee and the estate solicitor. There, the court noted the responsibilities of each.

The court held that the Estate Trustee is responsible for:

1.         arranging for the funeral and disposition of remains;

2.         locating the will and instructing the solicitor to apply for the appropriate grant of appointment;

3.         locating all the assets of the estate, including making arrangements to secure, preserve, and dispose of such assets in accordance with the terms of the will;

4.         advertising for creditors and paying all debts of the estate including the filing of appropriate tax returns;

5.         preparing a set of accounts for the approval of the beneficiaries or the court, as is required; and

6.         distributing the estate.

The court noted that, generally, the role of the solicitor is to apply for a certificate of appointment for the trustee and to attend upon a passing of accounts. The Estate Trustee is entitled to pay these legal expenses out of the Estate.

The Estate Trustee can claim compensation for carrying out his or her duties. That compensation may also include reimbursement for professional help. However, the Estate Trustee cannot claim compensation for services provided by others whose services are charged to the estate.

Problems can arise where the solicitor performs work that falls within the Estate Trustee’s responsibilities. While this is permissible, the court will ensure that the estate is not being doubly charged. Further, the court will not normally allow a solicitor to charge solicitor’s rates for trustee work.

In the decision, the court cautions that the “solicitor should not perform trustee’s work unless instructed to do so by the trustee. If such a request is made, the solicitor should advise the trustee that he will render an account to the trustee personally for doing her work. Generally, the estate is not liable to pay this account; rather, it falls to the trustee to pay out of her compensation.”

Thanks for reading.

Paul Trudelle

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Does the Court have jurisdiction to set aside a Family Law Act election, or is such an election irrevocable?

This question was recently considered in the Ontario Superior Court of Justice decision of Iasenza v. Iasenza Estate 2007 CanLII 23351.

As background, Ontario’s Family Law Act (“FLA”) allows a surviving spouse to elect to either receive benefit under the deceased’s will (or on an intestacy if there is no will), or receive an equalization of net family property under the FLA. Normally, the surviving spouse seeks information regarding each of the options, and then elects for the greater benefit.

However, information regarding the values of each option is not always forthcoming in a timely fashion. The election must be filed within 6 months of the date of death, or the surviving spouse is deemed to elect to take under the will or on an intestacy.

The Court held that it did have discretion to set aside an election made in favour of an equalization. However, the Court noted that the discretion will be exercised sparingly and only in “restrictive circumstances where the interests of justice require it and where the balance of the interests of effected parties clearly warrants it.”

In considering whether to exercise its discretion, the Court will consider:

a.                  Was the election filed as a result of a material mistake of fact or law made in good faith?

b.                  Was there any responsibility or culpability on the part of the effected parties in relation to the election?

c.                  Was the notice of intent to seek revocation of the election given in a timely way, and in particular, how long after the 6 month filing period was notice given?

d.                  Has the estate been distributed or would interested parties otherwise be adversely effected?

e.                  Does the election result in an injustice to the surviving spouse in all of the circumstances?

On the particular facts of Iasenza, the Court decided to exercise its discretion and set aside the election filed by the surviving spouse. As a result, the spouse was entitled to receive 1/3 of the estate under the will, whereas she would have received nothing under the election.

Thanks for reading.

Paul Trudelle

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Not all Wills provide for an outright distribution to the beneficiaries. In some cases, the assets of an estate are held in trust over a period of time for the benefit of one or more beneficiaries, sometimes in succession.  When a trustee administers a trust, he or she is entrusted to act for the benefit of others. As such, our common law and statutes impose standards that trustees must comply with when dealing with trust property.

With the recent plummet in the stock market, I believe many trustees are considering how the stock market losses have affected the trust investments and what action they should take in the circumstances. 

Section 27 of the Trustee Act addresses the standard of care for trustees when investing assets held in a trust. Section 27(1) states, “in investing trust property, a trustee must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments”. Section 27(2) states that “a trustee may invest trust property in any form of property in which a prudent investor might invest”.

Section 27(1) and (2) outlines the prudent investor rule. When investing trust assets, a trustee must comply with the prudent investor rule to protect himself or herself from liability.   Section 28 of the Trustee Act, emphasizes this point as it states that a Trustee will not be liable for losses arising from investments if the standard of the prudent investor is met. Nevertheless, the issue remains how does a trustee meet the “prudent investor” standard? In keeping with this theme, tomorrow I will address how a trustee’s investment performance may be assessed.

Thanks for reading, and have a great day!

Rick

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Interest is normally paid on the proceeds of a policy of life insurance thirty days after the insurer receives sufficient evidence of the claim. The requirements are mandated by statute. What happens, however, where the insured “disappears”, and the beneficiary brings an application for a declaration of death? Is interest payable from the date of death (as declared by the court), or from the date of the declaration itself?

This issue was considered by the Court of Appeal of Manitoba in Antonation v. Sylvester, 2007 MBCA 110 (CanLII). There, the “deceased” disappeared on May 29, 1998. In May 2005, the beneficiary under a policy of insurance on the deceased’s life brought an application for a declaration that the deceased was presumed dead because of the passage of seven years from his disappearance. The court granted an Order on July 4, 2005 declaring that the deceased “shall be presumed to have died on May 29, 1998.”

The proceeds of the insurance policy were paid to the beneficiary within 30 days of the date that the court made the declaration: July 4, 2005. However, the beneficiary claimed interest from the date of disappearance (ie. the date of death as declared by the court: May 29, 1998).

The Court below and the Court of Appeal both held that no interest was payable until 30 days after the date upon which the declaration of death was made. This declaration was part of the “sufficient evidence” that the insurer required in order to trigger the obligation to pay under the applicable legislation. Until this declaration was made by the court, there was no obligation on the part of the insurer to make the payment.

The legislation in Ontario is essentially similar to the applicable Manitoba legislation considered by the court. In fact, the Court of Appeal of Manitoba relied on an Ontario Divisional Court case directly on point.

Thank you for reading.

Paul Trudelle

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Yesterday, I set out a fact situation giving rise to a certain interpretation issue.

The fact situation is based on the decision of Moore J. in Rudling Estate v. Rudling, 2007 CanLII 51794 (Ont. S.C.).

There, the court held that the word "debt" in relation to Property B could not include within its meaning all of the taxes, expenses and other charges that the estate trustee is directed by the will to satisfy in addition to "debts" of the estate. The court found that all reasonable charges against the estate arising from the death of the deceased were, by the terms of the will, intended to be paid from the estate before the specific bequests of the two properties are made. That is, both A and B are to share the burden of the testamentary expenses.

The court found that the will could be fairly construed upon the language contained within its four corners, and without the need to resort to extrinsic evidence in order to interpret the meaning.

However, in light of the Orders Giving Directions made in the case, and the issues is raised in the pleadings, and “because I am aware of the recent tendency of Canadian courts to apply the ‘armchair rule’”, the court also addressed the interpretation of the will in light of the surrounding circumstances. The court examined the surrounding circumstances, hearing from ten witnesses over the course of seven days. After considering this evidence, the court concluded that the evidence did not support a conclusion that the testamentary expenses be borne by A alone.

Did you make the right call?

Paul Trudelle

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Consider the following interpretation issue, which was recently considered by the Ontario Superior Court of Justice:

The deceased left a will kit-type will directing that all “just debts, funeral and testamentary expenses, all succession duties, inheritance and death taxes, and all expenses necessarily incidental thereto, to be paid and satisfied by” my executor as soon as convenient after her death. 

The will went on to provide that the following distributions were to be made:

To son A, Property A "with all loans, leins [sic], mortgages attached”.

To son B, Property B, “free and clear of all debt". 

The residue was to be divided between A and B. For the purposes of the trial, the only assets of significance were the real estate: Properties A and B.

At the time of her death, the deceased had no debt other than certain mortgages registered on title against Property A.

The issue in dispute was what assets were to be chargeable for paying the deceased's taxes, including estate administration tax and income taxes, and funeral and testamentary expenses.

A took the position that these expenses were paid out of the residue, and in the absence of any residue, were to be chargeable equally as against Property A and B. (Properties A and B were of equal value.)

B took the position that Property B was conveyed to him "free and clear of all debt", and thus, those expenses were payable out of Property A only.

What did the court do? Tune in tomorrow.

Until then, thank you for reading.

Paul Trudelle