According to the October 8, 2008 endorsement of Mr. Justice Brown (court file no. 01-2725-08, no link available yet), where a testator makes 2 wills, each covering different assets, and each naming different executors, a local estates registrar can issue separate Certificates of Appointment of Estate Trustees to different executors limited to the assets referred to in each Will.

The endorsement closes with 2 "reminders" to applicants in multiple wills situations (I won't paraphrase):...

First "reminder":

 "If multiple wills exist and the executors plan to obtain probate for each, in addition to including an affidavit attesting to non-revocation as I described above, the applicants should ensure that the draft limited assets certificates of appointment which they submit each clearly identify the will for which probate is sought - e.g. the General Will dated X, or the Secondary Will dated Y, or the "will dated Z styled as the Limited Assets Will".  With each will clearly identified on the face of each certificate, the risk of any confusion arising from the issuance of separate certificates for each will should be kept to a minimum."

Second "reminder":

"If the application for a certificate involves a Granovsky-type situation where probate is sought only for one of the wills, it is important that the application materials contain a brief affidavit attesting that the non-probated will does not contain any provision revoking the will for which probate is being sought.  Such evidence will permit the Estates Office to be satisfied that the will for which probate is sought remains in force and governs the disposition of the assets enumerated in it: Re Kerzner Estate, 2008 CanLII 42020 (ON S.C.)."

I hope this helps.

Chris Graham

In preparing for the winter, protecting real property -- often a significant asset -- may be top of mind.

My colleague, Paul Trudelle, wrote about "Real Estate Transactions Involving Powers of Attorney" in July 2008.  While travelling south for the winter does not require a sale, steps can be taken to minimize risks to real property.  The Government of Ontario suggests that to avoid real estate fraud one should protect his or her identity and be alert to identity theft.

Regarding a Power of Attorney, the government also suggests caution:  "Whenever you give another person a power of attorney that permits them to deal with your personal assets, you should consult with your lawyers or advisers regarding appropriate limitations."

In a 2004 Canadian Bar Association paper -- Cross-Border Issues for Snowbirds and Roaming Retirees - Marilyn Piccini Roy wrote: "If the Snowbird owns real estate elsewhere, this power of attorney may not be recognized there if the law of the situs applies its own law to the formal or substantive validity of the power of attorney or to its effectiveness vis-à-vis third parties."   If a Power of Attorney deals with assets in different jurisdictions, one should seek legal advice in the jurisdiction of the asset(s).

Recent Ontario case law highlights issues that can arise regarding real estate when a fraudulent Power of Attorney is used.  Reviczky v. Meleknia; Caplan (Intervenor) 2007 Canlii 56494 (On. S.C.) raises quesitons about a solicitor's duty to"go behind" a Power of Attorney by enquiring about the donor's mental capacity at the time of signing and later, as well as evidentiary requirements.  The recent case law reminds all of us, including snowbirds, of the risks that exist with a Power of Attorney.  

Jonathan Morse 

The approach to, and content of, the Deed of Arrangement will most certainly depend on the circumstances involved. The approach to the Deed of Arrangement may be quite different if the variation arises as a result of an ongoing proceeding (and has been negotiated as part of that proceeding conditional on Court approval) than if it does not.
 

A Deed of Arrangement may (depending on the provision and as necessary) also contain (the following are not meant to be exhaustive) (i) recitals which provide background on the trust, the parties, trustee, potential beneficiaries and provisions of the trust including, as necessary, the term in the trust that is being varied, (ii) a paragraph that the Deed of Arrangement is subject to Court approval on behalf of the incapacitated beneficiary(ies), (iii) paragraphs setting out the variation, with the paragraph number of where the paragraph fits into the trust and indicating how the paragraph fits into the trust, (iv) paragraphs addressing, if applicable, any action that is required as part of the variation, (v) a paragraph allowing for the Deed of Arrangement to be signed in counterpart if there are numerous parties, (vi) a paragraph addressing the payment of the costs of the preparation of the Deed of Arrangement and the Application, and (vii) a paragraph addressing the legal advice obtained.

Thanks for reading, Craig
 

Rule 7 of the Rules of Civil Procedure regulates the bringing of proceedings by or against parties under disability.  As set out in the commentary to the Rule, “its central requirement is that persons under disability must be represented by a litigation guardian…Rule 7.02 creates a presumptive right for a mentally incapable person’s guardian or attorney under power of attorney to act as litigation guardian, so long as the guardian or attorney has the authority to act by the terms of his or her appointment as guardian or attorney.”  

Rule 7.03(2), specifically requires, however, that where a proceeding (ie. a variation of trust) is against a minor in respect of the minor’s interest in an estate or trust, the Children’s Lawyer shall act as the litigation guardian of the minor respondent, unless the Court orders otherwise.

It may also be that a representation order, pursuant to Rule 10 of the Rules of Civil Procedure, is required to have a person appointed to represent persons who are unborn or unascertained and have an interest in the trust.

Although Rule 10 does not refer specifically to the Children’s Lawyer, the Courts have traditionally appointed the Children’s Lawyer to represent this class of beneficiaries.

If there is more than one group of incapacitated beneficiaries requiring representation by the Children’s Lawyer, the Public Guardian and Trustee will often represent one group if there is a conflict of interest.

Thanks for reading.  Craig

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.
 

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
 

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

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

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

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

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.

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