However, even the mildly famous or sainted can have their moment in the estate spotlight.  Recently, Luciano Pavarotti's family was in the news when a dispute arose among his offspring in respect of his considerable fortune.  They have apparently reached a settlement.

I also read with interest a recent US newspaper article indicating that two of Martin Luther King's children had filed a lawsuit against a third regarding a dispute over the civil rights leader's estate (J. Edger Hoover would have loved it).  Bernice King and Martin Luther King III filed a lawsuit in Atlanta in order to force their brother, Dexter King, to open the books of their famous father's estate.

From what I understand, the lawsuit claims that Dexter King, who is the executor of his father's estate, has refused to provide his brother and sister with documents concerning the estate's administration.  The lawsuit claims that Dexter King and the estate "converted substantial funds from the estate's financial accounts…for their own use".  The siblings were never told beforehand and are now seeking financial records and other documents in order to investigate the administration of the estate. 

Martin Luther King's "dream" seems to have stalled when it comes to sibling rivalry and the fortunes of his estate.  However, on a more serious note, the dispute once again reminds us of the importance of transparency in the administration of an estate and open communication between executor and beneficiary.

Thanks for reading.  Auf Wiedersehen

An issue that can crop up in estate litigation is whether a party is entitled to interim payment of costs payable out of the estate.  The reason for such an order is to fund litigation, such as a will challenge, out of the largesse of the estate.

The court has the discretion to order the interim payment of costs pursuant to Section 131 of the Courts of Justice Act.  A number of cases have addressed the interim payment of costs, including Waese v. Bojman as well as Zhao v. Ismail Estate (Trustee of) (link not available).  Both decisions recognize the court’s inherent jurisdiction to award interim costs in a proceeding, including estate actions.

As with any exercise of judicial discretion, the facts are crucial and how those facts are marshalled and presented to the court may carry the day.  Proper evidence and complete and financial disclosure is required.  However, even where an interim payment of costs is allowed, the court is likely to impose terms and require costs to be paid out in stages based on the progress of the litigation.

Thanks for reading.  A demain.

Justin

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

In Cummings v. Cummings, [2003] 5 E.T.R (3d) 81 (Ont. S.C.J.); affirmed [2004] 69 O.R. (3d) 398 (Ont. C.A.), Ontario’s Court of Appeal held that when examining all of the circumstances of an Application for Dependant’s Relief under the SLRA, the Court is entitled to take into account not only the needs of the dependants but the moral obligation of the deceased to those dependants.

Today’s blog, as well as my blogs for the balance of this week, will look at several dependant support cases in the post Cummings era. 

In Broderick v. Papathanasiou, [2006] O.J. No. 4707 (Ont. S.C.J.), Ms. Broderick contended that she lived with Mr. Papathanasiou (the “deceased”) in a common law relationship for 8 years prior to his death.

The deceased did not provide for Ms. Broderick in his Will or during his lifetime.  Ms. Broderick earned more money than the deceased during some of the years they lived together.  They lived in residences owned by the deceased.

Ms. Broderick claimed she was a dependent spouse and asked that the Court make an order for her support under the SLRA.

The Court found that Ms. Broderick’s contributions to the deceased’s personal and financial well-being, to the detriment of her own finances, should be recognized by an award from the estate.

The Court held that the requirement for “adequate provision” to a dependant under the SLRA had been expansively interpreted by the courts; it was no longer a strictly needs based analysis; the deceased’s moral duty towards his dependents was now also a relevant decision, citing Cummings.

As the estate was not large enough to make provision for Ms. Broderick’s support indefinitely, the Court found that a lump sum would support her in transition and provide for her relocation and that it was also equitable that the deceased’s daughters should enjoy the benefit of their father’s estate as he intended under the will.

In the end, the Court ordered that the deceased’s condominium be sold and Ms. Broderick receive one half of the net proceeds in recognition of her contributions to the deceased’s well-being.

Thanks for reading.

Craig

It was great to see a full house of estate, trust, accounting and tax practitioners decked out in their finest to enjoy an evening with their peers, and honouring the lifetime achievements of Professor Emeritus Donovan Waters.  Prof. Waters, a pioneer of trust law and author of the leading text of trust law in Canada, was introduced by four esteemed speakers. True to his reputation, Prof. Waters delivered a thoughtful and engaging acceptance speech.  It was a lovely evening.

The conference will wrap up after another full day of talks today. See you there!

Have a great weekend,

Natalia

David Smith started off the seminar with a talk on the challenge of exercising an estate’s controlling interest in private corporations.  His discussion included the following observations:

-                   the obligation of an estate trustee to exercise his or her controlling interest is that of a “reasonably prudent businessman”

-                   the trustee must determine the value of the company in as timely a manner as possible

-                   depending on the wording of the Will, the trustee must provide for the company’s continuation, sale or liquidation

-                   in order for the trustee to make such a decision he/she should review the Will, financial statements and corporate records, and should inquire with individuals who have knowledge of the company’s affairs including beneficiaries, family, directors, shareholders, employees, solicitors, accountants and bankers

-                   it is advisable for a trustee to have an active role in management by, among other things, sitting on the board of directors (despite there being no legal obligation to do so)

Sean Graham followed with a discussion on evidence in estate litigation, and Ian Hull spoke about interesting case law developments.  You can find a more thorough consideration of these topics in their presented papers.

Until tomorrow,

Natalia

The father died in 2003.  A dispute arose about the purported understanding between the parents in making these Wills leading Elaine to commence an action seeking, among other things, that her mother disclose the testamentary instructions given to her solicitor for the purposes of drafting her Wills, which the mother opposed on the ground that such instructions were privileged. 

The Court held that although a Will is privileged until the testator dies, and although instructions to a testator's solicitor and the related work product are also privileged, that the mother voluntarily waived privilege by producing her Wills and by swearing affidavits relying on their content.

Another approach one could perhaps take in such circumstances is to refuse to produce a Will at the outset and claim that it is a privileged document, which may then likely lead to a court determining the issue.  If one is ultimately compelled to produce their Will by court order it would likely be viewed as involuntary disclosure, and therefore any claim for further disclosure (i.e. solicitor's instructions and file documents) could again be met with a fresh assertion of privilege. 

Have a nice day,

Natalia

While counsel may often overlook the option of summary trial (in Rule 76 of the Rules of Civil Procedure), there is no reason that it shouldn't be invoked in certain estate disputes.  At a minimum, some thought should be given to it before the pre-trial stage, since the pre-trial judge or master can decide what mode of trial is appropriate if no agreement has been reached between the parties before that time.

Some of the cost-saving measures of a summary trial include the following:

1. Evidence in chief is to be adduced by affidavit.

2. A party wishing to cross-examine the deponent on an affidavit, which can be done orally, can take no more than 50 minutes.

3. Closing arguments can take no more than 45 minutes for each party.

Proceeding by way of summary trial may also lead to a comparatively quick result and correspondingly lower cost awards.  Something worth considering…

Thanks for reading,

Natalia

The couple had been married for 20 years, and after the breakdown of their marriage the ex-husband was ordered to make periodic payments to the ex-wife.  The couple remained on friendly terms.  The ex-husband later suggested that rather than continue to pay periodic support that he should leave £100,000 to the ex-wife in his Will.  The ex-wife agreed to this proposal and they put their agreement into effect.

The ex-husband subsequently fell ill and died, marrying another woman on the morning of his death, which revoked his Will.  After his widow refused to pay the legacy from the estate, the ex-wife brought a claim for payment.

The trial judge found in favour of the ex-wife, holding that a binding agreement had been entered into between the couple.  The widow unsuccessfully appealed.  In response to her arguments to the contrary, the appellate Court held that (i) by entering into the agreement the ex-wife had not bartered away her right to future maintenance or ousted the jurisdiction of the matrimonial court; and (ii) the agreement between the couple was governed by ordinary contract principles (not principles relating to an agreement for the compromise of ancillary relief) and therefore the principal that such an agreement does not give rise to a contract enforceable at law did not apply. 

This serves as a good reminder that when contemplating rearranging one’s support arrangements, in even the most amicable of scenarios, a contingency plan should be in place to deal with the event that either of the parties may enter into a subsequent marriage.

Have a good day,

Natalia

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

Prior to July 1999, trustees were required to make investments pursuant to the “statutory legal list” provided for in the Trustee Act. This had the effect of holding trustees accountable for each particular investment, rather then the investment portfolio as a whole. The principle was further illuminated by the anti-netting rule, which stated that a trustee, who committed a breach of trust, was not entitled to set off a gain in one transaction against a loss in another. However, through recent amendments to the Trustee Act, the statutory legal list was repealed and replaced with the Prudent Investor Rule.

The Prudent Investor Rule reflects the modern portfolio approach to investments, the emphasis being on the prudence of the portfolio as a whole as opposed to each particular component. This theory is captured in Section 27(5) of the Trustee Act. Section 27(5) requires “a trustee to consider … the role that each investment plays within the overall trust portfolio”. Furthermore, under section 27(6) “a trustee is required to diversify the investments of the trust property. It appears that under the modern portfolio approach, a trustee would not be breaching the standard of care, should he or she invest a substantial amount of trust assets into a single security. As described above, section 27(6) requires that the trustee consider diversifying the portfolio, which is necessary if the Prudent Investor Rule is to be followed. To conclude my topic, tomorrow I will consider the liability of a trustee with respect to the investment of trust assets.

Thanks for reading,

Rick

Before July 2005, the Rules of Civil Procedure provided some sense of certainty to the Court’s broad discretion in awarding costs as the Rules provided a costs grid. The costs grid suggested that costs were to be determined by an hourly rate multiplied by the time spent. In 2004, the Court of Appeal in Boucher v. Public Accountants Council set forth the general principle as to the fixing of costs pursuant to Rule 57.01 and the costs grid. With respect to costs, the Court stated that the overall “objective is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”. Subsequently, in July 2005, the Rules were amended. 

The amendment to the Rules abolished the costs grid and expanded on the list of factors, set out in Rule 57.01, which the Court may consider before making a cost award. Rule 57.01 was now expanded to include the principle of full indemnity and the reasonable expectations of an unsuccessful party to pay a cost award.

The principle of the reasonable expectations of an unsuccessful party to pay a cost award appears to provide the parties with some flexibility in obtaining the maximum cost award by permitting the successful party to establish the reasonable expectations of the unsuccessful party.  

Thanks for reading, and have a great day!

Rick

Rule 14.05(3)(a) states that "a proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is, the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust".  In contrast, Rule 75.06(1) states that "any person who appears to have a financial interest in an estate may apply for directions … as to the procedure for bringing any matter before the court".

It is clear from the language of these rules that an Applicant may use either rule to apply for directions from the court.  The difference between the two rules lies in the relief that the Applicant seeks. 

Rule 14.05(3)(a) is a substantive remedy that addresses the rights of a person with respect to the administration of an estate or the execution of a trust.  Therefore an Applicant who relies on Rule 14.05(3)(a), is asking the court to make a determination of his or her rights in the context of an estate.  For example, whether or not an Applicant has an interest under the deceased's Last  Will and Testament.

Rule 75.06(1) is a procedural remedy.  In essence, Rule 75.06(1) provides the road-map for "any matter before the court".  Therefore an Applicant who utilizes Rule 75.06(1) may seek a court order that permits the disclosure of relevant documents to their matter and establish time-lines for the completion of a specific phase in their court proceeding.  For example, the court may decide that mediation should be completed within 90 days and as such, include a mediation clause in a court order.

In summary, both rules can may be used to apply to the court for direction, however with Rule 14.05 (3)(a), the Applicant is asking the court for a specific answer to a question affecting his or her rights, whereas with Rule 75.06(1), the Applicant is requesting that the court provide them with a guideline to their court proceeding.

Have a Great Day!

Rick Bickhram

Suzana Popovic-Montag started off the seminar with an instructive talk on trust issues in an estates context.  Her discussion of leading and recent case-law examining a trustee's discretion to encroach on capital, including Gisborne v. Gisborne (1877), 2 A.C. 300 (H.L.) and Fox v. Fox Estate, included the following observations:

• the Court will not interfere with the exercise of a trustee's discretion to encroach on capital in the absence of mala fides
• the term mala fides should be interpreted with some flexibility
• mala fides is more than just a category of fraud; it includes any act by an executor which is based on matters/considerations "extraneous" to the purposes of the testator
• the question as to the extent of a beneficiary's personal resources should, at first instance, be irrelevant

Suzana gleaned from her review of the authorities that the Court's overwhelming view seems to allow for the broad exercise of discretion on an unfettered basis (presuming the Will provides for it) and the Court will only reluctantly limit that discretion.

Craig Vander Zee followed with an interesting discussion on the removal and/or replacement of a trustee, and Ian Hull spoke about various estate law remedies applicable to estate administrations.  Their papers contain a thorough consideration of these topics that I unfortunately do not have sufficient space in this blog to touch upon.

Have a great weekend!

Natalia

The lawyer representing the "vendor" sent a copy of the power of attorney to the lawyer acting for the buyer and the bank.  The power of attorney was dated just one month before the sale closed, the donor was over 88 years old and it was only witnessed by one person.  Both lawyers were unaware the document was forged. 

The solicitor for the buyer and the bank did not take any steps to learn about the form, content or validity of the forged power of attorney.   It was held that because the solicitor took no steps to scrutinize the document the bank’s mortgage was void.

It will be interesting to see how this case is applied.  I wonder if it will impact on a solicitor’s duties to “go behind” a power of attorney i.e. where a power of attorney has been signed recently and/or the donor is elderly, must a solicitor ask about the donor’s whereabouts, mental capacity at the time of signing, mental capacity at the time the power of attorney is being acted on etc.?

Thanks for reading,

Natalia