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.
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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.
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Listen to Terminating or Varying a Trust
This week on Hull on Estates, Jonathan Morse and Natalia Angelini discuss trusts; specifically they discuss terminating or varying a trust.
They look at an article by Debra Stevens and give their thoughts.
If you have any comments, send us an email at hull.lawyers@gmail.com or leave a comment on our blog.
Natalia Angelini: Hello and welcome to
Welcome to
Jonathan Morse: Hi and welcome to another episode on
Natalia Angelini: And I’m Natalia Angelini.
Jonathan Morse: If you want to be heard on
Natalia Angelini: So hi, Jonathan, it’s good to be podcasting with you today.
Jonathan Morse: It’s great to be podcasting with you.
Natalia Angelini: It’s our first time, so let’s hope it’s not going to be too painful.
Jonathan Morse: It will be fine, I’m sure.
Natalia Angelini: Okay, so today we’re going to talk about trusts and specifically terminating or varying a trust. And we’re really taking…we’re going to be looking at an article that Debra Stephens authored and it’s called “Trusts - When is a Termination a Variation?”. And she presented her paper at the most recent 09 Six Minute Estates Lawyer and it was really interesting for us. And so we thought we would touch upon it and give you some of our thoughts.
Jonathan Morse: To begin, I think it’s important to point to the central issue in the paper and really I’ll briefly point out that in Ontario, a trust can be terminated generally two ways: under the rule of Saunders and Voce; and under the statutory powers of the Court to vary or revoke trusts.
Natalia Angelini: Right Jonathan, and with respect to Saunders and Voce, that rule is in essence, as I understand it, when there’s a trust provision in a Will but there’s no gift over provision in place upon death of the beneficiary of that gift, then the trust could essentially be collapsed when they reach the age of 18 and that’s essentially the effect of that case. So for those people that are really supposed to have a trust held on their behalf until they’re 25 or 30, they can get their entitlement much sooner and so that’s one effective way of terminating a trust.
Jonathan Morse: That’s right. Thank you for pointing that out. Often in Wills and when a trust is set up under a Will or otherwise, the trustees are given certain powers, one of which is absolute discretion. And in that instance, the issue that Debra Stephens points to in her paper is to what extent can trustees exercise that absolute discretion, and particularly can they exercise it to the extent that they simply choose to collapse the trust.
Natalia Angelini: Right, because that’s where now we’re talking about potentially the third way to do it, and that is through exercising a trustee’s discretion. And I guess that sort of begs the question, is their discretion truly absolute?
Jonathan Morse: I think at this point, certainly the paper refers to a lot of cases and some of the principles that come out of the cases. And of course they are old cases because we’re talking trust law. In, for example, Tempest and Lord Camoys stems from an 1882 decision, or it is an 1882 decision. And it basically stands for the idea that trustees can exercise absolute discretion but they can’t do it improperly. Which leads us then to the question, of course, what is an improper exercise of discretion?
Natalia Angelini: Right and there are several circumstances that I suppose can be considered, or that may be considered when determining whether a trustee has acted reasonably. And some of these that are noted in Wittifield, so I can direct you there. But they’re also highlighted in Ms. Stephens’ paper. And some of them include the circumstances surrounding the exercise of power; the motive of the trustee in exercising the power or not exercising the power; if there’s any conflicting interest that the trustee has with that of the beneficiaries, and a couple more that I don’t think I’ll touch upon.
Jonathan Morse: So just to continue with the case law, another case Re Blow which is a little more contemporary, it’s a 1977 case in the Ontario High Court, really looked at examining further what is improper
Natalia Angelini: That’s right because a trustee has to exercise his or her discretion judiciously. And so to not do so at all…and I suppose that depends on the actual extent of discretion given to the trustee and how particularized that was in the trust document or Will.
Jonathan Morse: Just to continue, let’s look at one particular example. And it comes from a case Hedley Estate and Grant and that’s a 1998 case, Ontario General Division. And this is interesting because it gets down to whether discretion was being exercised properly. And in this case, the testator divided the residue into equal shares, 5 beneficiaries, with direction that if a beneficiary was not then living and left issue, it would be divided amongst his or her issue to be held in trust. So 2 of the 5 beneficiaries predeceased and children, grandchildren remained. And the trustee at that point wanted to basically place the shares that were due to the 11 grandchildren into the hands of the parents so that they could, in effect, manage the money for their own children.
Natalia Angelini: Right, rather than the trustee holding the property in trust.
Jonathan Morse: That’s correct. So effectively in this case, the trustee was looking to effectively delegate her duties to the parents of those younger children. And Justice Hoylett held that the trustee was hoping to relieve herself of the obligation imposed by her under the Will. The Court went on to say the relief requested was not merely an incident of the exercise of powers, it was the very purpose of her intended exercise of the power.
Natalia Angelini: So I think these facts are, you know, this type of situation can happen more often than one would expect, and it probably leads to various questions that the Court would pose or have to think about in order to render its decision. And some of those could be, you know, what if the parents die or become incapable? Who would be the new trustee? You know, what if these children…I mean in this case the children were supposed to get the money at the age of 18 years of age. And I think one of the questions is, what if the issue don’t live that long?
Jonathan Morse: Absolutely. And so if the issue doesn’t live that long, to the age that they’re supposed to get the proceeds of the trust under the original trust when the monies then pass to the parents, do those same rules apply? The answer to that would be uncertain and the uncertainty to that answer would be what would cause a judge to, you know, put the brakes on this variation.
Natalia Angelini: Yeah, and another point is if the original trust had a discretionary power to encroach on capital rather, would that power pass to the parents?
Jonathan Morse: Right, yeah. Another issue, and again we’re sort of looking at what might be going through a judge’s mind…often trustees have to be bonded, and that is, they need to put up security to the Court to basically ensure that they’re going to abide by…
Natalia Angelini: Right, to show that they’re going to manage and administer the estate properly and if they don’t…
Jonathan Morse: Then the bond would be forfeited. And in this case, again the trustee delegated to the next level, to the parents and the grandchildren, would those parents themselves have to be bonded?
Natalia Angelini: Right and then I think another question, and just for our listener’s benefit, this case and several other cases can be found in Ms. Stephens’ paper. And we’re not going to go through all of them for the sake of time but I do recommend you read it if this topic interests you. But one last sort of question that this type of scenario raises is, how do you deal with an accounting? Do the parents account to the original trustee? You know, to the Children’s Lawyer? You know, how is that going to work? And I suppose if you’re bringing this type of matter before the Court, that it would be a good idea to think of all the various questions that they could raise and make sure your Affidavit addresses them.
So, you know, when reviewing all of these cases, the principal that really comes through is really, you know, something that is not too surprising, but it’s that each case is going to be determinative upon its own set of specific facts. Although certain factors that I think you can be sure will be relevant to a Court will definitely be as I’ve said earlier, you know, the value of the trust property, the number of the beneficiaries, the circumstances of the beneficiaries, of each individual one, and on the wording of the trust or Will document. I think those are surely going to be relevant in most cases.
Jonathan Morse: That’s right. And it seems that in
Natalia Angelini: It is interesting because it seems that the trustee, even if he or she has absolute discretion, that it’s going to be overseen by a Court at some point if this type of step is what a trustee intends on taking. So I guess in that sense, the discretion really may not be absolute.
Jonathan Morse: That’s right. Just to follow-up with Natalia’s last point. Because discretion of the trustee may not be absolute, it is certainly advisable that consents of all the beneficiaries be obtained and whenever there is any question, Court approval is likely the safer way to go for protection of the trustees and also protection of the beneficiaries.
Natalia Angelini: That’s right. It’s the best way to avoid exposure to future litigation. And it is noteworthy that when you’re dealing with minors, the Children’s Lawyer’s position is that they should be put on notice and Court approval should be obtained.
So I think that’s sort of our last little point on the topic. So before we wrap up, why don’t we give you our co-ordinates.
Jonathan Morse: We look forward to hearing from our listeners. You can certainly send us an e-mail at hull.lawyers@gmail.com. Be sure to visit our blog at estatelaw.hullandhull.com (and that’s hullandhull, not an “&”; it’s “and” - hullandhull.com) where you’ll find even more information and discussion on today’s practice of estate law.
We hope that you enjoyed the show. I’m Jonathan Morse.
Natalia Angelini: And I’m Natalia Angelini. Until next time, take care.
This has been
To listen to other podcasts, or to leave a question or comment, please visit our website at www.hullandhull.com.
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Listen to Short-circuiting the frivolous will challenge
This week on Hull on Estates Natalia Angelini and Craig Vander Zee discuss the frivoulous will challenge from the perspective of how you might short-circuit it.
Feel free to send us an email at hull.lawyers@gmail.com or leave us a comment on the Hull on Estates blog.
Short-circuiting the frivolous will challenge - Episode #146
Posted on January 20th, 2009 by Hull & Hull LLP
Natalia Angelini: Hello and welcome to Hull on Estates. You’re listening to episode number 146 on Tuesday, January 20, 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.
Craig Vander Zee: Hello Natalia, how are you today?
Natalia Angelini: I’m good Craig, how are you?
Craig Vander Zee: Excellent. Happy New Year, by the way.
Natalia Angelini: And to you.
Craig Vander Zee: Welcome to another episode on Hull on Estates. I guess this is the first one for you and I in the 2009 year so it’s a pleasure being able to do this again with you to start the year.
Natalia Angelini: For me as well.
Craig Vander Zee: If you want to be heard on Hull on Estates, you can participate by leaving us a comment and e-mail us at hull.lawyers@gmail.com or you can visit our blog at estatelaw.hullandhull.com.
Natalia Angelini: So Craig, today we’re going to talk about the frivolous Will challenge.
Craig Vander Zee: Well, and I think more specifically, from the perspective as to how you might deal with a frivolous Will challenge to short-circuit it, if you will, or to try and deal with it, terminate the challenge as soon as possible. And I think what’s important to keep in mind is that in a typical Will challenge, the process can involve an Application or a Motion for directions, documentary discovery from parties and non-parties, examinations of parties and non-parties, perhaps even interlocutory Motions. You know, those Motions in a proceeding before a trial is actually heard. Mediation, whether formal or informal, expert reports, a pre-trial conference and a trial. So as we know, it’s a very extended process unfortunately, if the Will challenge goes from its commencement right through to and including a trial.
Natalia Angelini: Yeah, and that’s why I think that one of the best tools to manage the process of a Will challenge is an Order for Directions.
Craig Vander Zee: Well, that’s right, Natalia. An Order for Directions is often the best tool a party has at first instance to manage the Will challenge. Its through the Order for Directions that you will lay out the parties, what the issues are. Is there any interim relief you need? Are you going to have Orders with respect to documentation production, examinations, etc.? So that is the time when you can best, in a typical Will challenge, craft how you want to manage the Will challenge going forward with a mind to the kind of evidence that you will need to marshal for the Will challenge itself as well as the prospects of settlement. And that is certainly what one would want to take advantage of in a typical Will challenge.
Where it’s a frivolous Will challenge and its certainly identified as that, there are other alternatives or proceedings in addition to an Order for Directions that can be utilized. One being a Motion for summary judgment. Another being a Motion for security for costs.
Natalia Angelini: Right. And if you intend to bring those Motions, its I think important to have that as one or both of the provisions in your Order for Directions.
Craig Vander Zee: Well that’s right. At least if they’re not expressly in your Order for Directions, then its something that you give thought to so that (1) if you’re going to need certain evidence for a Motion for summary judgment per se, that you consider how that’s going to be marshalled, even at the time you’re doing your Order for Directions; and also how the provisions in the Order for Directions are going to deal with how the proceeding will be heard. It may very well be, given the case law, that you don’t want to expressly state in an Order for Directions that the matter will only be heard by way of trial, as you want to leave it open for a Motion for summary judgment. And while it appears that even if that form of provision were in the Order for Directions you could still proceed with a summary judgment Motion, why complicate the matter if you don’t need to, and pave the route for that kind of Motion if that’s what you think you’re going to pursue?
Natalia Angelini: Right, good point.
Craig Vander Zee: So, as we know, Rule 20 of the Rules of Civil Procedure, governs Motions for summary judgment in the civil context, both in terms of commercial litigation and in the sense of estate litigation as well. Certainly in the civil litigation context, Motions for summary judgment are by no means unusual and have found their way as a common place mode of dealing with a particular matter. There are a number of Ontario Court of Appeal cases and even Supreme Court of Canada cases that deal with Rule 20 and summary judgment Motions.
Natalia Angelini: Right, and the test which the Supreme Court of Canada set down in the case of Guarantee of North America and Gordon Capital Corp. is that the applicant has to show that there is no genuine issue of material fact requiring trial and therefore that summary judgment is a proper question for consideration by the Court. And once the moving party has shown that, then the responding party has to establish that his or her claim is really one that has a real chance of success.
Craig Vander Zee: And perhaps another way of putting it, the burden to prove that summary judgment is appropriate in the circumstances is on the moving party, that the moving party must show that there’s no genuine issue for trial, that issues of credibility aren’t existent such as to be fatal to the Motion for summary judgment. And then once that’s established, then the responding party has to step up to the plate and prove that there is a genuine issue for trial. It is possible that a responding party may not file materials on the belief that the issue of there being credibility or a genuine issue for trial is so clear cut; however the cases have indicated that…and its possible if there’s holes in the moving party’s case, that that can well indeed be fatal to the Motion for summary judgment. However the cases have indicated, though, that if it is established that there’s no genuine issue for trial, the respondent needs to put its best foot forward with respect to its evidence, play trump if you will, in order to establish that there is a genuine issue for trial.
Natalia Angelini: So why don’t we turn to summary judgment Motions in the estate context. There’s a case by the name of Straus and Bainbridge which was affirmed in 1999 by the Court of Appeal where the Court granted summary judgment in the estates context. And maybe I’ll just go through the facts briefly.
Craig Vander Zee: Sure.
Natalia Angelini: It was a Will challenge and the basic issues were not in dispute. Ms. Straus was the executrix and sole beneficiary under Mr. Bainbridge’s last Will. She was a long-time neighbour and close friend of him and his wife. His wife had predeceased him. And Ms. Straus had assisted Mr. Bainbridge in the care of his wife. It appeared that the Bainbridges had no children. However it was later revealed that Mr. Bainbridge had fathered two children as a result of a prior union. So that prior union ended when the eldest of the two children was 2 years old and the younger child was still in gestation. The facts are that there was no further contact between the two children and Mr. Bainbridge and that both children were later adopted by the mother’s second husband.
Craig Vander Zee: That’s right Natalia. And the Motion for summary judgment was brought by Ms. Straus to dismiss the challenge by one of the estranged sons, if you will, to Mr. Bainbridge’s last Will. The challenge alleged that Mr. Bainbridge lacked testamentary capacity at the time he made his Will and that the Will was procured by way of undue influence. There were some interlocutory issues dealt with by Justice Sheard and then the ultimate Motion for summary judgment was heard by Justice Hoylett who had little trouble, it appears, in granting the Motion for summary judgment and dismissing the Will challenge. On appeal, the Ontario Court of Appeal affirmed, albeit with rather short reasons, but nevertheless affirmed Justice Hoylett’s decision that Motion for summary judgment be granted in the circumstances. And what’s particularly interesting about this decision or the comments by Justice Hoylett are that he found that the responding Affidavit to the Motion for summary judgment was really a punitive Affidavit put in and was replete with speculation, innuendo, hearsay, gossip and rumour. And it went on to say that property characterized, not only has the responding party failed to play trump, but at the risk of over-extending the metaphor, His Honour said that he was afraid the responding party had played a joker. So clearly, in that particular case, the facts were such that it was clear that it was a frivolous Will challenge and the Court granted summary judgment.
Natalia Angelini: Right, and the Court didn’t expressly address the applicability of Motions for summary judgment to Will challenges. That was considered somewhat later in a couple of other decisions.
Craig Vander Zee: Well that’s right, but just on that point, in Justice Hoylett’s decision and that of the Court of Appeal as I recollect, the specific question as to Rule 20 of the Rules of Civil Procedure being the Rule governing Motions for summary judgment and its applicability to Will challenges, wasn’t considered as expressly as it was by the Court in later years. Having said that, both Justice Hoylett and the Court of Appeal did not express any difficulties in granting the Motion for summary judgment.
Natalia Angelini: Right. And after that decision, a few…about two or three years later in Knox and Trudeau and Ostrich and Brunhuber (if I’m pronouncing that correctly) the Court denied summary judgment and in the case of Knox did so on the ground that such Motions were not available in contested estate proceedings?
Craig Vander Zee: And again, what is interesting about those two decisions is that it appears anyways that they were released in 2001, days apart from each other.
Natalia Angelini: Right.
Craig Vander Zee: Unbeknownst, if you will, to the other in that neither case considered the Straus case. So it appears that Motions for summary judgment were ‘walking through the wilderness’, to use that metaphor, for several years. And it wasn’t really until Justice Cullity in his Atori decision where the applicability to Will challenges, that is summary judgment Motions in the case of Will challenges, was again expressly considered.
Natalia Angelini: Right. And there have been several cases since then that have considered summary judgment and have granted it.
Craig Vander Zee: Well, and just before we follow-up on that, in Atori, Justice Cullity did find that summary judgment Motions, despite the comments of the judges in Knox and Trudeau and Ostrich and Brunhuber was available in estate matters in a Will challenge. And as you mentioned, there were a number of cases following those ones we’ve mentioned, that have gone on to consider Will challenges and other estate matters, if you will, in the context of a Motion for summary judgment. Sometimes its granted; sometimes it’s not. But it appears that the ability to bring a Motion for summary judgment is available.
Natalia Angelini: Right, it’s no longer in question. And with that in mind, since its clear that summary judgment is available in contested estate proceedings and more specifically, in a Will challenge, its also important to note that, you know, summary judgment Motions are risky. The moving party has to first meet its onus of proving that there’s no genuine issue for trial. The evidence must be clear and concise and the credibility of witnesses cannot be in doubt, as Craig stated earlier.
Craig Vander Zee: That’s right. Competing evidence as to testamentary capacity, undue influence or the due execution, you know, can very well be fatal to the Motion and will lead to a finding that there is a genuine issue for trial. And the overlay to a Motion for summary judgment is that there are cost sanctions for both winning and losing the Motion. And Rule 20.06, I believe, deals with that. But they can be very substantial. And if you lose your Motion, even if the Will challenge itself is a weak one but the Court finds that there’s a genuine issue for trial, or competing evidence or issues of credibility, then your client could find, or a client could find themselves paying costs in respect of losing the Motion but maybe winning the Will challenge at the end of the day. And since those costs can be substantial, its always a factor, at least I would think, taken into consideration when bringing such a Motion.
Natalia Angelini: Yeah, so that said, risk also lies on the shoulders of the responding party as well. Unsupported allegations of capacity or undue influence will not likely win the day if the moving party proves there’s no genuine issue. And an Affidavit that’s replete with speculation, innuendo, hearsay, gossip and rumour, like in the Straus case, would also not win the day. You know, as is commonly said, you have to lead trump or risk losing.
Craig Vander Zee: Well and again, just before we close out Natalia, on the issue of costs. Again, the issue of costs is in the discretion of the judge. But again, it is a factor that can certainly sway one from either bringing a Motion for summary judgment if its not clear on the face of it that there’s no genuine issue for trial. So again, they’re available, they’re risky, the Court may proceed hesitantly, but there is certainly case law where summary judgment has been granted. And especially in the case of a frivolous Will challenge. But again, the burdens must be met. And with that in mind, if a summary judgment Motion is going to be brought, going back to our initial comments about Orders for Directions, it may very well be that the Order for Directions contemplates a summary judgment being brought, not necessarily expressly but leaving it open for the opportunity to do so, if it is an appropriate, reasonable and right circumstance to bring the Motion. And I think that’s where we’ll end off today.
Natalia Angelini: Great, thanks Craig. And thanks for listening. And it was a pleasure podcasting with you, Craig. I look forward to podcasting with you again soon.
Craig Vander Zee: Thanks Natalia. And again, we look forward to hearing from our listeners. You can send us an e-mail again at hull.lawyers@gmail.com. Again, be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law. We hope that you enjoyed the podcast again today and it was a pleasure, Natalia.
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 Testamentary Capacity Issues
This week on Hull on Estates, Paul Trudelle and Natalia Angelini discuss testamentary capacity issues as they arise in estate matters. Wills require the highest level of capacity and testators need to demonstrate that they are of a sound and disposing mind.
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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