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

• Print
• Comments
• Trackbacks

On a contested passing of accounts, counsel may be requested to represent two or more clients, such as multiple beneficiaries of an estate or co-estate trustees. In such cases, it is critical to ensure that a conflict of interest does not exist. When counsel first meets with potential multiple clients their respective interests may well be perfectly aligned and identical and it may not appear that there is a potential conflict of interest. Further, all consent to the representation of multiple parties. 

In the case of multiple executors, in order to avoid a conflict of interest the controversial issues need to be addressed and discussed in detail. For instance, how will executor’s compensation be apportioned as between them? Is there a different relationship between each executor and the beneficiaries? Does one executor disagree with any actions taken by any of the other executors? Will their evidence be the same? Do the executors share the identical expectations of how the litigation should proceed as well as in respect of potential settlement? The potential disagreements can be discovered by exploring the issues up front.
 

If a conflict arises and the clients are not able to resolve a conflict, counsel may not be able to continue to act for any of them. Pursuant to the Rules of Professional Conduct, if a conflict exists or is likely to exist, clients need to be advised of the consequences of sharing counsel and consent after being informed of those consequences. In certain circumstances where clients wish and consent to having one lawyer represent them despite a conflict of interest, independent legal advice may be needed.

Joint retainer agreements or letters explaining the joint retainer relationship can set out the above issues so that clients and their lawyer are clear on their relationship and the passing of accounts.

Canadian Olympic medal count: 13. Keep watching.

Craig
 

• Print
• Comments
• Trackbacks

When an irresistable force meets an immovable object, we appeal to the Supreme Court of Canada. 

In Canada (Privacy Commissioner) v. Blood Tribe Department of Health, 2008 SCC 44, the force is the Personal Information Protection of Electronic Documents Act ("PIPEDA") and the object is solicitor-client privilege.  Section 12 of PIPEDA grants the Privacy Commissioner express statutory power to compel a person to produce any records that the Privacy Commissioner considers necessary to investigate a complaint “in the same manner and to the same extent as a superior court of record”.  The issue in Blood Tribe was whether this conferred a right of access to documents protected by solicitor-client privilege.  The Court held unanimously that the broad grant did not contain the requisite specific express authority to override privilege.

The Court stated the rule that "general words of a statutory grant of authority to an office holder such as an ombudsperson or a regulator do not confer a right to access solicitor-client documents, even for the limited purpose of determining whether the privilege is properly claimed.  That role is reserved to the courts.  Express words are necessary to permit a regulator or other statutory official to “pierce” the privilege." 

The Court also noted that "while the solicitor-client privilege may have started life as a rule of evidence, it is now unquestionably a rule of substance applicable to all interactions between a client and his or her lawyer when the lawyer is engaged in providing legal advice or otherwise acting as a lawyer rather than as a business counsellor or in some other non-legal capacity."

Speaking of the Supreme Court of Canada, the law you're looking for just might be in the "unreported judgments" section of the Supreme Court's user-friendly website.  How does a Supreme Court decision go unreported?

Have a great day,

Chris Graham

• Print
• Comments
• Trackbacks

The issue of when a missing person will be deemed to be deceased was most recently (and prominently) in the news during the search for Steve Fossett.  Notwithstanding the relatively short duration of time since his disappearance on September 3, 2007, circumstantial evidence suggested that, on a balance of probabilities, his death was a safe assumption and Fossett was declared legally dead on February 15 , 2008.

In Ontario, the Absentee Act deals with the situation in which a person is missing but about whom there is "no knowledge as to whether he or she is alive or dead."  In such a situation, the Court has the power to appoint a trust company or others to deal with that person's affairs in the interim.  Interestingly, the term "Committee" (which also used to be the title given to the person now appointed as a "Guardian" under the provisions of the Substitute Decisions Act) still is used for this purpose.

The Act provides that certain persons including the Absentee's spouse or (adult) child can make application to the court for a declaration of Absentee and the appointment of a Committee to manage such person's property. 

The question that inevitably arises in any such situation is:  what if the Absentee in fact shows up one day, alive and well, and wanting to know what has happened to his or her property?  Of course, such situations are rare but not unheard of.  In such a case, the Committee will have the obligations of a fiduciary to account for the Absentee's property.  The Committee will likely make a compelling argument that the Absentee's assets ought to be available to fund the costs of making the application and compensating the Committee for safeguarding the Absentee's assets.

David M. Smith

  

 

 

 

 

 

 

 

 

• Print
• Comments
• Trackbacks

Section 131 of the Courts of Justice Act establishes the authority for the Court to award costs. Section 131 states that the Court has absolute discretion in awarding costs, subject to the provisions of an Act or the rules of court. 

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

• Print
• Comments
• Trackbacks

Today’s blog is the last in my series addressing preparation for trial in a contested passing. The items discussed this week were certainly not meant to be, nor were they, exhaustive. Preparation necessary for a trial with narrow issues, few documents, few evidentiary concerns and an uncomplicated Estate will obviously be different than a case with numerous issues, voluminous documents, evidentiary issues and a complicated administration. The critical aspect of trial preparation is that it begins at the beginning of a case; not literally, but certainly in the sense of being mindful at pre-trial stages of the evidentiary considerations and how the evidence is to be marshalled and presented.

Aside from ensuring that you have appropriate resource materials at the trial (such as texts dealing with the rules of evidence, the Rules of Civil Procedure, Probate Practice etc.), it is important to have prepared your opening and closing statements (to the extent possible), have prepared the necessary law regarding the substantive issues in dispute (casebook, factum), have addressed costs submissions (organizing offers to settle, preparing a Bill of Costs etc.), and have a trial binder with you at trial for your own use.

A trial binder usually contains the pertinent materials that you would like to have at your fingertips during the trial (ie. pleadings, orders, witness lists, witness summaries, answers to undertakings, listing of the types of evidence objections, offers to settle etc.). The trial binder will allow you to have quick access to information that you might only have a few minutes or less to locate and quickly review.

While most contested passings settle at a pre-trial stage, if a trial is necessary, it might well be won because one party was more prepared than the other.

Thanks for reading this week. Have a great weekend.

Craig

• Print
• Comments
• Trackbacks

Today’s blog, which is part of my series this week addressing preparation for trial in a contested passing, deals with several issues regarding evidence at trial.

Rule 52.04 of the Rules of Civil Procedure deals with the marking and numbering of exhibits at trial. Where appropriate and practical, a joint book of documents simplifies the use of documents and the marking of exhibits during the trial. With a joint book of documents, the Judge, the Registrar, each counsel and the witnesses only need to refer to one set of documents, rather than to multiple sets of documents. Depending on issues of admissibility, exhibits can be dealt with by marking each volume as an exhibit or each specific document, within a volume, as it is dealt with.

With respect to witnesses, amongst other things, the following may be done:
(i) make a witness list of anticipated witnesses for each of the parties;
(ii) prepare a chart of the issues/documents to be proved by each witness;
(iii) identify and consider the concerns, evidentiary or not, with the evidence and documents to be dealt with by each witness (some concerns might include whether the Rule in Browne v. Dunn is an issue, are there hearsay evidence concerns, do originals of the documents need to be proved, is a document admissible, what Notices are required under the Ontario Evidence Act, is a witness a hostile witness, and s.13 of the Evidence Act);
(iv) ensure summaries of the evidence of witnesses are obtained and provided if the provision of summaries has been agreed to, or ordered at the pre-trial conference;
(v) prepare all witnesses you are calling and provide the witnesses with copies of the documents applicable to them, where practical;
(vi) prepare for the examinations in-chief and cross-examinations and the documents to be referred to prior to preparing your witnesses;
(vii) if the witnesses are experts, ensure Rule 53 of the Rules of Civil Procedure is complied and be mindful of Rule 31.06 regarding the scope of examination on discovery of the findings, opinions and conclusions of one’s experts;
(viii) prepare and serve Summons to Witness (Rule 53.04); and
(ix) consider whether an Order excluding witnesses is necessary (Rule 52.06).

Consider anticipated objections to evidence to be adduced by opposing parties and prepare submissions and applicable law, as necessary, prior to the trial.

In addition, while demonstrative evidence is a common feature of jury trials, thought should be given as to whether there are tools such as a family tree diagram and/or a chronology of events that can be prepared to assist the Judge at trial.

Thanks for reading.

Craig

• Print
• Comments
• Trackbacks

Today’s blog is a continuation of my blogs this week addressing preparation for trial in a contested passing.

It is important in preparing for trial to prepare summaries of the transcripts of the examinations conducted to assist counsel with locating evidence in the transcripts during trial, including admissions and/or inconsistent statements made by a witness at trial. Having said that counsel should personally review the transcripts as part of trial preparation. By reviewing the transcripts, counsel can address issues involving: (i) the completeness and answers to undertakings/refusals, (ii) admissions made by the respective parties, (iii) incomplete answers provided by the respective parties to questions on the examinations, and (iv) whether additional discovery is needed before trial.

Ensure all of your client’s undertakings have been answered. Opposing counsel may not be pressing for the answers to your client’s undertakings, but the answers should be obtained so that (i) you are not surprised by the answer of your client to an unanswered undertaking at trial, (ii) delay cannot be alleged as against your client at a pre-trial stage should the issue arise, (iii) no adverse inferences can be drawn at trial as to why your client has not provided an answer, and (iv) a request for further discovery on the answers will not be entertained just prior to trial, or perhaps even as an issue during the trial. Ensure all of the opposing party’s undertakings have been answered and any follow up discovery has been conducted. If a damages brief is to be provided by the opposing party as a result of an undertaking at examinations or otherwise, ensure that it has been provided.

A party may also, further to Rule 51.02 of the Rules of Civil Procedure, at any time, by serving a Request to Admit, request any other party to admit, for the purposes of the proceeding only, the truth of a fact or the authenticity of a document. A copy of any document mentioned in the Request to Admit shall, where practicable be served with the request (unless a copy is already in the possession of the other party).

The opposing party must respond to the Request to Admit within 20 days, failing which the opposing party will be deemed to admit the truth of the facts asserted in the Request to Admit or the authenticity of the documents referred to in the Request to Admit. As such, the Request to Admit should be served at least 20 days before the commencement of the trial, and quite some time before that, if possible, so that counsel will know what facts need not be proved or the authenticity of documents that will not need to be proved.

There may be cost consequences if a party refuses to admit the truth of a fact or authenticate documents which are proven or authenticated during the trial.

Requests to Admit may be effective to: (i) reduce the facts in dispute, (ii) reduce the number of witnesses to be called and/or the examination of a witness, (iii) minimize the costs and length of the trial, and (iv) avoid having to authenticate documents.

Thanks for reading.

Craig

• Print
• Comments
• Trackbacks

While contentious passings of accounts are regularly resolved at a pre-trial stage such as mediation, and without the necessity for a hearing, in certain circumstances a contested passing of accounts may only be resolved by way of a trial. In many cases, a successful result at trial is the direct result of the trial preparation.

It is perhaps trite to say, but trial preparation does not begin between the pre-trial conference and the commencement of trial; rather, it begins with the formulation of a strategy for the case, the identification of the issues in dispute, the determination of the evidence required to prove the case and the marshalling of that evidence. As such, while the ultimate strategy for a trial cannot be finalized until the pre-trial stages of the passing have been completed, and counsel have the benefit of a thorough review of the case (before the pre-trial conference), parties ought to be mindful of the matters to be dealt with at trial throughout the litigation and how such matters can be dealt with or addressed during the pre-trial stages, including through documentary disclosure, examinations and by way of orders of the Court (such as an Order Giving Directions or otherwise).

Having said that, my blogs this week will include a series that considers preparation for a trial of a contested passing.

Have a great day.

Craig

• Print
• Comments
• Trackbacks

You know a trust has the potential to run off the rails when the beneficiary refers to the trustees as "The Three Musketeers".

After his untimely death in 2003, Dr. Robert Atkins' widow sold his business netting proceeds of some $420 million. In his will, the famous diet guru set up two trusts: (i) a spousal trust that would benefit his wife, holding 90% of his assets, and (ii) a research foundation which would get the remaining 10%.   

Cue the sword clanging of the three musketeers:  a self-described entrepreneur, an accountant, and a lawyer, who befriended Ms. Atkins and became the widow's closest advisors as well as trustees for the spousal trust (replacing the two trustees who had been appointed by Dr. Atkins). It is reported that Ms. Atkins subsequently agreed to pay each of them $1.2 million per year (excluding bonuses), signed them to 10-yr contracts, and allowed each of them to take out a $5 million life insurance policy on her life, naming themselves as beneficiaries.  

Fast forward to a Wall Street Journal online report  that a lawsuit had been filed by the Musketeers accusing Ms. Atkins of improperly firing them.  Ms. Atkins and her new spouse asked for the trio to be removed as her trustees and further sought reimbursement of some of their fees.  The relationship between the Musketeers and Ms. Atkins began to disintegrate in 2006 when Ms. Atkins met her new spouse to be, who himself then became increasingly involved in her finances. When the Musketeers balked at her new spouse's demands to encroach for an additional $100 million for Ms. Atkins (above and beyond her $15 million annual income), he started making noise about having them removed as trustees.  

$420 million.    

That's a lot of bread.

Have a great weekend,

David

 

 

 

• Print
• Comments
• Trackbacks

It is widely assumed, and accepted for that matter, that a formal passing of accounts affords full protection to an estate trustee. The familiar mantra is that those with a financial interest in an estate are not only required to object to the accounts proffered, but must concurrently raise any other issue regarding the overall competency of the estate trustee (succinctly summed by the phrase “you snooze you lose”). However, I recently came across an Ontario Court of Appeal (“C.A.”) case that challenges that proposition.

By way of background, section 49(2) of the Estates Act states: “The judge, on passing the accounts of an executor… has jurisdiction to enter into and make full inquiry and accounting of … the whole property that the deceased was possessed of… [including] its administration and disbursement”. Section 49(3) authorizes a judge to order the estate trustee to pay damages if the estate trustee occasioned financial loss to the estate through misconduct, neglect, or default. It is worth noting that the language is permissive, not mandatory, seemingly providing a beneficiary with the opportunity to make a later complaint.

In Simone Estate v. Cheifetz, www.canlii.org/en/on/onca/doc/2005/2005canlii36155/2005canlii36155.html,Stephen Cheifetz was a Windsor lawyer who was named as one of three executors of the respective estates of a husband and wife (his clients) who died tragically in a plane crash. Mr. Cheifetz eventually resigned as estate trustee and was ordered to pass his accounts. His compensation was challenged and Mr. Cheifetz was ultimately ordered to repay monies taken as compensation. The successor estate trustee then brought an action against Mr. Cheifetz for damages for breach of fiduciary duty/breach of trust.

Somewhat complicating the matter was the fact that the decision arose out of a rule 20 and rule 21 motion. However, to cut to the chase, the C.A. held that on the earlier passing of accounts the court was concerned with the proper compensation to be paid to Mr. Cheifetz as estate trustee. Conversely, in the action for damages for breach of trust, the court would be concerned with issues of a very different nature. While aspects of Mr. Cheifetz’s conduct considered on the passing of accounts might be considered in the action for damages, it would be for a different purpose and different legal considerations would apply. 

The C.A. went on to point out the undesirability of litigating the issue of breach of fiduciary duty/breach of trust on a passing of accounts (apparently disregarding the fact that a section 49 claim could be carved out as a trial of an issue). In the end, the action for damages stood and Mr. Cheifetz was permitted to litigate issues pertaining to his alleged breach even if such issues had been raised on the passing of accounts.

For a more fulsome discussion of this case, please see this week’s Podcast. Enjoy and keep reading.

Justin