Happy May, Happy Mother's Day, Happy Victoria Day Weekend!
May is jammed with happiness: May flowers abundant, celebrating our Moms,' and our coveted May 2-4 weekend when we pay tribute to Queen Victoria on her Birthday.
This May, it is perhaps too natural to get lost in feelings of confinement, of a loss of purpose, impatience abounds, yet, with a little focus we can turn it around, and, instead get lost in our future plans when we are finally through this challenge. This can be a time of reflection and reassessment. We can take stock of where we have been and where we want to be.
Though we can work in a more technological way, and we know now that it can be done successfully, I for one, cannot wait to return to meetings with clients, and colleagues and attend court. I never thought I would miss people so much, but I really do. I miss the little things like walking to work and saying hello to all the people I see every day on the street, those shop-keepers in store fronts, at Starbucks, local restaurants, and businesses, the office, the office building, even, the street corner!
Stay positive and plan for your return to more fulfilling days, surrounded by all the people you know and love and plan to do the things you didn't do, or haven't done....life can be really short. Live it!
In the words of Michelle Obama, "
You may not always have a comfortable life and you will not always be able to solve all of the world's problems at once but don't ever underestimate the importance you can have because history has shown us that courage can be contagious and hope can take on a life of its own."
Enjoy the read,
Congratulations to our own Albert Oosterhoff who correctly matched the most home office set-ups with the WEL Partners staff in our "April Work From Home Office Match Up Contest"!
This month we are again offering up a challenge, this time it's a "Spot the Difference Challenge". There are 10 noticeable ones and 12 in total! Have a gander and s
end your answers to Shannon Hill,
and we'll publish a list of 'winners' in our June Newsletter! Have fun and stay safe.
1. OSGOODE PROFESSIONAL DEVELOPMENT: THE OSGOODE INTENSIVE PROGRAM IN WILLS AND ESTATES, APRIL 28, 2020
Kimberly Whaley presented on the topic, 'Contentious Guardianship Applications and Removals of Attorneys and Guardians.'
2. LAW SOCIETY OF ONTARIO, THE SIX-MINUTE ESTATES LAWYER 2020, MAY 12, 2020
Kimberly Whaley presented at the Law Society of Ontario's Six-Minute Estates Lawyer on May 12, 2020. She spoke on the topic, 'Raiders of the Lost Will, Proving Due Execution.' Acknowledgement and thanks to Bryan Gilmartin for writing the paper, and for the assistance from Henry Howe.
3. ELDER ABUSE PREVENTION ONTARIO, WEBINAR SERIES: BALANCING SENIORS' RIGHTS: IDENTIFYING & PREVENTING ABUSE BY AN ATTORNEY ACTING UNDER A POWER OF ATTORNEY DOCUMENT, MAY 13, 2020
Kimberly Whaley and Daniel Paperny presented at Elder Abuse Prevention Ontario (EAPO) on the topic, 'Identifying & Balancing Seniors' Rights: Preventing Abuse by an Attorney Acting Under a Power of Attorney Document.'
4. CONCENTRA TRUST, MAY 14, 2020
WEL Partners, Kimberly Whaley and Lua Ebrahimi presented to the Concentra Trust team at a lunch & learn virtual meeting on the topic, 'Do's & Don'ts of Powers of Attorney'.
5. COWLING LEGAL FREELANCE
Kimberly Whaley was interviewed by Erin Cowling on Women Leading in Law, May 1, 2020
6. ISSUU, ALUMNI INTERVIEWS: SPOTLIGHT 2019-2020, APRIL 26, 2020
Kim Whaley was interviewed by Erin Anderson for ISSUU Alumni, Spotlight Publication as a Western alumnae.
7. THE ADVOCATES QUARTERLY, APRIL 2020
Kimberly Whaley`s article, 'Capacity to Instruct Counsel' was published in the Advocates Quarterly, Vol. 50, April 2020
8. LEXPERT RANKED LAWYER - ESTATE & PERSONAL TAX PLANNING, ESTATE LITIGATION, MAY 2020
Kimberly Whaley and Albert Oosterhoff were named as one of this year's LEXPERT Ranked Lawyers in Estate & Personal Tax Planning and Litigation in Ontario. Congratulations to all of our colleagues who were also named.
9. CANAGE 2020
CanAge is an independent Canadian Not-For-Profit advocacy organization which educates, empowers and mobilizes people on the issues that matter most to older Canadians. They work collaboratively with corporate, not-for-profit organizations, and governments, to amplify seniors' issues, influence policy and effect change. Laura Tamblyn-Watts, President and CEO and her team created a "Tools and Resources' page to help with understanding Long-Term Care health information.
To access Covid19/Long-Term Care Facility tools please click or download the PDF's on the following topics:
COVID-19 Seniors' Frauds and Scams (3-page, easy-to-read)
Please click here for more information: https://www.canage.ca/tools
10. WEL PARTNERS ON ELDER LAW
You can download the pdf of this book:
WEL Congratulates Law Society Award Recipients 2020
Law Society Medal
Professor Jeff Berryman
Dr. Ron Ellis (PhD Law)
Colonel (Ret'd) Vihar Joshi, OMM, MSM, CD, QC
Heather Joy Ross, LLB
Dr. Dianne Saxe (PhD Law)
Donald V. Thomson
Lincoln Alexander Award
John E. Valeriote
Laura Legge Award
J. Shirley Denison Award
William J. Simpson Distinguished Paralegal Award
Michelle L. Haigh
STRUDEL - NOT Apple Strudel - The Word Game Strudel!
By Kimberly Whaley
I would wager that you have some extra family time right now to play a few games, so, grab your timer and let's go.....
A strudel card has 1 word
Other cards have between 1-6 words
The "other" cards have different words composed of the same letters (sounds confusing-it is not!)
Some cards have words composed of 5 letters, others, 7 letters
I like to be the 'Strudeler' because I like to choose the deck for the Dealer...someone needs to be the Dealer!
To play a card, start the timer and start guessing the hidden words by essentially making up words of the existing letters of the word you have chosen to play (again, sounds confusing-it is not!)
If you identify correct words, you move forward on your scorecard (simple-right?)
One problem with this game for me anyways, is that there is no purple scorecard :(
That said, I am keen on the green
If you think the letters are not capable of spelling another word-you got a STRUDEL-YELL.... 'STRUDEL'...but be careful, you better be right!!!
Big Problem (help!) - who knew there were so many words I did not know....where is Professor Oosterhoff when you need him?!
Objective: see if you can get to the end of your scorecard before your opponents, or before their timers run out......
This is a challenging, fun game and for a Scrabble lover (that would be me!), definitely stepping it up a notch!
A lawyer must have made this game.... Barry Corbin - Smart Lawyer, Clever Wordsmith, Fun Loving (who knew ;)
), Visionary Game Creator. This is a must have for home, the cottage, the office, wherever, whenever, just get it!
If you would like to order the game please click here:
GIFTS OVER ON DEATH BEFORE RECEIPT
By Albert Oosterhoff
Testators sometimes include strange provisions in their wills. One is a provision that gives a gift in the following terms: "To Mary, but if she dies before receiving the gift, then to John". Judging by the reported cases, such "before receipt" provisions are remarkably common. In some cases it is clear that the testator actually intended it, but I wonder if in most it is perhaps something that the drafter inserts because it is in his wills precedents. It is not unlike a gift "To my wife if she survives me for 30 days and if she does not, to my sister". Such provisions are used to avoid having the property pass through two estates and attracting two sets of administration costs (and also, in former times, attracting succession duty twice). So the "survives me by 30 days" provisions are defensible and useful. I find the "before receipt" provisions less defensible, if only because they are productive of unnecessary litigation.
The validity of a "before receipt" provision arose in the recent Saskatchewan case, Leason v. Malcom. In my opinion this case runs counter to established principle. Consequently, I shall first explore the history of "before receipt" provisions and the principles the courts have developed to deal with them. That will make it easier to understand why the Leason decision is incorrect.
In an earlier time the law regarded "before receipt" provisions as void for uncertainty. However, in Gaskell v. Harman Lord Eldon held that they are valid if clearly expressed. But he added that the court does not go out of its way to find such an intention. In Johnson v. Crook Jessel M.R. held that the law continued to take the view that such provisions are valid and in Re Mitchell Middleton J. agreed with that view. However, the cases also show that the law places limits on the length of time during which the provision will be allowed to operate.
The cases begin with applying the presumption that a gift that is not subject to a condition precedent (such as a gift "to John when he attains age 21") vests on the death of the testator (or a morte testoris) as the older cases refer to it). Browne v. Moody, a case often cited in "before receipt" cases did not involve a "before receipt" provision. Rather, it concerned a gift to a son for life with remainder to others, but if any of the remainderers predeceased the son leaving issue, the child or children of the predeceased remainderer would take her share. The Board noted that the interests of the remainderers were not contingent and that the only reason for the postponement of the division was to permit the son to enjoy the income during his life. In those circumstances the gift over vests on the death of the testator. The gift over to the issue of a remainderer who predeceases the son means simply that the gift to the remainderers, while vested, is subject to divestment.
Browne v. Moody
did not specifically refer to the presumption of early vesting, but many of the cases that deal with a "before receipt" provision do.
In passing, I note that although the default rule is that gifts are vested at the death of the testator, in fact we probably need to regard all testamentary gifts as defeasible. This is because the whole estate is vested for the time being in the executor, who will need to use some or all of the property in the estate to pay debts and administration expenses. I have written elsewhere about this principle and stated there that the executor's title supersedes the rights of all beneficiaries, including all non-residuary ones, until the executor issues an assent. In other words, even if we regard the interests of non-residuary beneficiaries as vested from the testator's death, they ought to be described as vested subject to divestment. This is evident in any event from s. 2(1) of the Estates Administration Act, which says that when a person dies all her property (other than jointly held property) devolves to and vests in her personal representative, who must first pay the person's debts and then distribute the net remainder to the persons entitled to it. In the same article I pointed out that the statutory trust imposed by that section is not a true trust. In other words, it does not give the beneficiaries an equitable interest in the property. Of course, calling non-residuary gifts vested does have certain implications. Among others, it means that they are, absent a contrary intention, entitled to receive interest from the date of the testator's death.
Clearly, if the gift over is subject to a condition precedent that is personal to the beneficiaries or if the will contains a contrary intention, it is impossible to refer to the interest of the beneficiaries under the gift over as being vested.
A gift over "before receipt" presents a practical difficulty in that delay in obtaining probate and in administration could mean a postponement of payment for a significant period of time. The courts have recognized this problem and have resolved it, absent a contrary intention, by interpreting the "before receipt" provision as meaning "before the end of the executor's year". That was the decision in the early case, Re Arrowsmith's Trust. Vice Chancellor Kindersley held in that case that the words "dying before receiving their respective shares" should be interpreted as meaning dying before the end of the executor's year, which is the period the law normally requires executors to pay legacies. Early cases state that a beneficiary has a right de jure to receive his gift by the end of that year. In other words, he is entitled to receive his gift at law by that time. Consequently, if the beneficiary survives for one year after the testator's death, she is entitled to the property that is the subject matter of the gift, even though actual receipt may happen later. Many other cases have followed this principle
and the courts have in some instances stated that beneficiaries should not be held subject to the whims or tardiness of the executor,
or even to his flagitious behaviour if he should delay distribution to prevent certain beneficiaries from taking. Of course, if the beneficiary dies during the executor's year, the gift over will take effect. Re Hill falls into the latter category. The testator directed that the net residue should be distributed in equal shares among four named niblings, but that if any of them predeceased the testator or died before receiving his or her share, it would go over to the deceased nibling's children, and failing children to the surviving niblings. The court applied the executor's year rule and since one nephew died without issue during that year without receiving his share, his share went to the surviving niblings.
Another important case is Royal Trust Co. v. East. The testator left his estate in trust to pay all just and reasonable payments from the estate to his wife for life. After his wife's death, he directed the trustee to divide the remaining residue among seven named individuals, a charity, and two fraternal organizations. However, he provided further that if any of the named individual beneficiaries should have died before the time of distribution, that share should revert to the estate and be divided in equal amounts among five other named persons. The testator's wife died in June 1976 and, Freda, one of the named remainderers died three months later. At that time the executor had not yet completed the administration of the estate The court followed the above-mentioned "before receipt" cases and held that Freda's interest vested at the testator's death, that it was subject to being divested, and that such a divesting clause is valid if expressed with sufficient certainty. The court also followed the above cases in holding that the expression, "before receipt", must be interpreted as "before becoming entitled to receiving the gift", that is, by the end of the executor's year. Since Freda died before the end of that year, the gift to her was divested, the property reverted to the estate, and went out under the gift over to the other named persons.
Prevost Estate v. Prevost Estate
, is a case in which the court of first instance came to a different conclusion because of the way it interpreted the will. The testator left his estate to his surviving siblings, except one, to be divided equally amongst those who were alive "at the time of division". The executors failed to apply for probate for 10 years. One brother died during the executor's year and another died several years later before probate. The will directed that if a sibling died before the testator, the executor was to set aside that sibling's equal share and divide it among the sibling's issue. Because of that, the court held that the testator wanted to benefit all siblings (except one) and therefore it did not apply the executor's year principle. The Court of Appeal affirmed.
Re Campbell Estate
involved a different fact situation and that led the court to come to a different conclusion. The testator left the residue in two equal shares to pay the income to his son and his daughter for life, with a gift over on their respective deaths to their issue or failing issue to the other child. Then he went on to provide that if those trusts should fail, the executor was to divide the trust fund into four equal shares and pay one share to each of four niblings, with a gift over to issue if any should die "before his or her portion vests". The testator's son died first without issue, so his share went to his sister, the testator's daughter. Three of the four niblings died over a period of time without issue. The other nibling also died but was survived by one son. The last to die was the testator's daughter, the surviving life tenant. The court held, correctly I believe, that the gift to the niblings was contingent, because it would take effect only if the trusts to the two children failed, which was not a certainty. It followed that the presumption of early vesting did not apply. Moreover, the niblings could take only when their interests vested, which would have been on the death of the surviving life tenant. Since they did not survive her, the gifts to them failed. The one surviving grandnephew could take under the gift over to issue, but he could only take his parent's one quarter share. The other three quarters went out on intestacy to the estates of the testator's son and daughter.
Clearly therefore the accepted rule in "before receipt" cases can be ousted by a contrary intention in the will.
That brings me finally to the case mentioned above, Leason v. Malcom. The testator left his estate in equal shares to his surviving siblings and named those living at the date of the will. Then he went on to provide that if any of them "predecease me or die before having benefited in whole or in part from this my estate" that share should not be redirected to any spouse of child of the deceased sibling but should be redistributed among the surviving siblings. One of the named siblings, Jennie Leason, died 15 weeks after the testator, survived by two sons. The sons claimed her share. The executor applied for probate while Jennie was still living. The executor took the position that in light of the language of the will Jennie was no longer a beneficiary and that her estate was not entitled to her share.
Despite the great cloud of witnesses that surrounded him in the form of the foregoing "before receipt" cases, Justice Currie came to the conclusion that a bequest once vested cannot be divested. Therefore, Jennie's estate was entitled to her share. Justice Currie reached this astonishing conclusion by purporting to rely on a quotation from Justice Stirling in In re Sampson; Sampson v. Sampson, which he took in part from Re Freeth. In the quotation from Sampson Justice Stirling stated that a divesting provision will be valid if it is certain, but that it cannot be allowed to have effect for an indefinite period of time. That is, it cannot have effect beyond the time the gift is receivable at law, namely, the executor's year. That is also what McRuer decided in Freeth and this principle is in total agreement with all of the above cases. However, Justice Currie stated:
26 Justice Stirling set out the principle that a bequest, once vested cannot be divested. He said that once a gift becomes de jure receivable - once it vests according to law - it is not subject to divesting.
After referring, inter alia, to the presumption of early vesting, he went on to conclude:
30 I conclude, then, that in law a testamentary direction that purports to reverse a gift that earlier had become effective is not enforceable. Put another way, a bequest once vested may not be divested.
Justice Currie then went on in para. 31 to find that the gift to Jennie Leason "was effective at the moment of the testator's death. The gift vested - was de jure receivable - on his death" and could not be divested by her death before she received her share.
With great respect, this conclusion is incorrect. Justice Currie seems to have misunderstood the "de jure receivable" principle. The above cases make it clear that a beneficiary is not entitled to receive her gift on the testator's death, even though her interest is vested at that point. They hold rather that the beneficiary must be regarded as being at law entitled to receive her gift by the end of the executor's year, even though she hasn't actually received the property yet. Thus, the Leason decision is contrary to established principle upheld in the many cases discussed above. Those cases all hold that a gift is receivable in law at the end of the executor's year. They also hold in consequence that if the beneficiary dies during the executor's year her gift is divested, but if she survives the executor's year it is not and can no longer be divested.
Since Jennie died during the executor's year, the court should have held that the gift to her was divested.
(1805), 77 Ves. 489 at 497, 32 E.T. 117.
(1979), 12 Ch. D. 639.
(1918), 42 O.L.R. 340.
For a summary of the history, see, e.g., Re Graham,  D.L.R. 357 at 361-63, quoted in Re Ramsden; Borrie v. Beck, 1974 CarswellBC 173, 46 D.L.R. (3d) 758, at para. 7.
(1936 CarswellOnt 92,  4 D.L.R. 1 (P.C. Ont.).
The term is convenient shorthand to replace a repetition of the names or descriptions of the people who take after the life interest. I use this gender-neutral term in preference to remainderman. Some time ago in another context I wrote: "Remainderman is clearly no longer appropriate [today]; the circumlocution, 'the persons entitled to the remainder' is awkward; and one certainly doesn't want to employ the silly remainder person, although I have seen it used. Moreover, the suffix -er (or -yer in some cases) is a very convenient one, with strong Anglo-Saxon antecedents, to convert inanimate objects into animate ones involving human actors, e.g., park/parker, hunt/hunter, law/lawyer, farm/farmer, etc. And we already have a well-known cousin of remainderer that employs that suffix, namely, reversioner. Quod erat demonstrandum."
Browne v. Moody, footnote
, supra, paras. 11-12. To the same effect see Vea Estate v. Clemson Estate, 2014 BCSC 1970, in which the testator left his house to his wife for life with remainder to his daughter. The daughter died before the wife. The court held that her remainder interest vested at the testator's death and was not divested by her death before the wife. Thus, the daughter's estate was entitled to the proceeds of the house, which had been sold in the meantime.
Browne v. Moody, ibid. para. 19.
See, e.g., Re Sampson: Sampson v. Sampson,  1 Ch. 630; Re Freeth, 1946 CarswellOnt 151,  2 D.L.R. 414
See Albert H. Oosterhoff, "Locus of Title in an Unadministered Estate and the Law of Assent" (2018), 48 Adv. Q. 41.
R.S.O. 1990, c. E.22 and comparable legislation in other Canadian common law jurisdictions.
, supra, §2.7 and Excursus.
See Rivard v. Morris, 2018 ONCA 181, leave to appeal to S.C.C. refused 2019 CarswellOnt 1210 (S.C.C.)
(1860), 29 L.J. 774, affirmed 30 L.J. Ch. 148, 45 E.R. 705.
See, e.g., Re Collison; Collison v. Barber (1879) 12 Ch. D. 834; Re Chaston; Chaston v. Seago (1881), 18 Ch. D. 218, pp. 224-26 Re Petrie; Lloyd's Bank Ltd. v. Royal Nat. Institute for the Blind,  Ch. 355; Re Mitchell, 1918, 42 O.L.R. 340, per Middleton J.; Hamilton v. Hart, 1919 CarswellBC 43, 47 D.L.R. 231; Re Perrin (1925), 28 O.W.N. 173, affirmed 28 O.W.N. 289 (C.A.); Re Wass (1926), 31 O.W.N. 291; Re Freeth, 1946 CarswellOnt 151,  2 D.L.R. 414; Re Paterson Estates, 1957 CarswellMan 28; Re Ramsden; Borrie v. Beck, footnote
, supra; Re Allen, 1980 CarswellPEI 104
See, e.g., Re Williams; Spencer v. Duckworth (1881), 18 Ch. D. 634 at 637; Sampson v. Sampson, footnote
Re Graham Estate, footnote
1977 CarswellOnt 389, 1 E.T.R. 38 (H.C.).
This is a convenient word to replace the cumbersome "nephews and nieces". It is gender-neutral word that seems to have been coined in the 1950s and although not yet included in dictionaries, it makes such perfect sense (like sibling), that it ought to be.
1978 CarswellBC 468, 3 E.T.R. 55 (S.C.).
2012 CarswellNS 362, affirmed 2013 NSCCA 20.
2005 BCSC 1561, 20 E.T.R. (3d) 134.
(ii) IT'S ALL IN THE MINUTES
By Bryan Gilmartin
This case involved a dispute between two brothers, the applicant, Sanjiv, and the respondent Rajiv about their mother's property. Their mother, Asha was 81 years old at the time, a widow, and incapable of managing her property and personal care.
Asha executed powers of attorney for property and personal care on November 23, 2006, appointing Sanjiv and Rajiv jointly. She subsequently executed a series of powers of attorney, appointing one or both of Sanjiv and Rajiv.
In October 2016, Sanjiv brought this application seeking, among other things, an order terminating all of Asha's powers of attorney and a declaration that Asha was incapable of managing her property and personal care. Accordingly, Sanjiv also sought an order appointing The Bank of Nova Scotia Trust Company ("Scotiatrust") as guardian of Asha's property and the registration of certificates of pending litigation in favour of Asha on title to two properties that Asha allegedly transferred to Rajiv's spouse, Rashmi, for less than fair market value (the "Transfers").
On May 28, 2018, Sanjiv and Rajiv entered into Minutes of Settlement (the "Minutes") to resolve the dispute between them relating to the guardianship Asha's property and the Transfers. The terms of the Minutes contemplated the appointment of Scotiatrust as Asha's guardian for property and permitted Scotiatrust to commence claims against Sanjiv, Rajiv, and others in respect of property belonging to her. This provision limited such claims as of the date of the Judgment and/or within the year before the Judgment.
On September 11, 2018, the Honourable Madam Justice Chiappetta issued a judgment appointing Scotiatrust as the guardian of Asha's property, approving Scotiatrust's management plan, and ordering Sanjiv and Rajiv to abide by the terms of the Minutes (the "Judgment").
The issue, in this case, was whether the Minutes were binding on Scotiatrust, and specifically, whether Scotiatrust could commence litigation against Sanjiv, Rajiv, and others with respect to the Transfers, which took place outside of the one year prior to the Judgment.
Positions of the Parties
Sanjiv asserted that the Minutes did not bind Scotiatrust and further asserted that even if Scotiatrust was bound by the Minutes, it could not be constrained from commencing claims on behalf of Asha on the basis that her rights, as an incapable person, could not be bargained away by her sons.
On the other hand, Rajiv asserted that the Minutes did bind Scotiatrust on the basis that the Minutes were incorporated into the Judgment.
Scotiatrust brought a motion for directions seeking the advice and direction of the court. The issues before the court were as follows:
- Was it proper for Scotiatrust to bring the motion?
- Was Scotiatrust bound by the Minutes?
- If Scotiatrust was bound by the Minutes, was it precluded from pursuing a claim respecting the Transfers?
Was it Proper for Scotiatrust to Bring its Motion?
The court determined that Scotiatrust was entitled to bring its motion pursuant to section 39(1) of the Substitute Decisions Act. This was reinforced by the fact that Sanjiv and Rajiv agreed that any dispute relating to the Minutes was to be determined on a motion or application to a judge on the Estates List of the Superior Court of Justice in Toronto as set out in paragraph 35 of the Minutes.
Was Scotiatrust Bound by the Minutes?
The court determined that Scotiatrust was not bound by the Minutes. This decision was reached based upon several findings, an important one being that Sanjiv and Rajiv were the only parties to the Minutes. The court found that Scotiatrust was not a party to the minutes and furthermore, that no one from Scotiatrust attended the mediation.
Asha's section 3 counsel attended the mediation, bud did not act as Asha's litigation guardian, or as her substitute decision maker. She also confirmed that she did not sign the Minutes on behalf of Asha. On this basis, the court determined that Asha had no representation at the mediation for the purposes of contributing to, or agreeing to, any terms of the Minutes. Furthermore, if the Minutes were intended to be binding on Asha, court approval would have been required pursuant to rule 7.08 of the Rules of Civil Procedure due to the fact she was a person under disability.
The court noted the significance of the fact that the Judgment did not Order Scotiatrust to abide by the terms of the Minutes. Rather, according to the Judgment, Scotiatrust as Asha's guardian was ordered to act in accordance with the management plan and was duty-bound to act accordingly for Asha's benefit:
Scotiatrust, as guardian, must carry out its duties as prescribed by the SDA. Subsection 32(1) of that Act provides that "A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person's benefit."
Given that the court determined that Scotiatrust was not bound by the Minutes, there was no need to determine whether it could pursue claims with respect to the Transfers. As such, it was left to Scotiatrust to determine whether it would be in Asha's best interests to pursue those claims on her behalf.
Minutes of settlement are often crafted from compromise. An important takeaway from this case is that parties engaging in settlement negotiations are not free to compromise or otherwise limit the rights of those who are not parties. Some comfort may be taken from this decision as it demonstrates the court's unwillingness to adhere to terms that frustrate the rights of people who are not parties to minutes of settlement.
(iii) WHEN TRUSTEES WEAR OTHER HATS: REMOVAL IN A CONFLICT OF INTEREST
By Henry Howe
In Ontario, s. 37 of the Trustee Act allows a court to remove an estate trustee "upon any ground upon which the court may remove any other trustee," and to replace them with another person. A court may exercise this power if it finds that the removal is "clearly necessary to ensure the proper management of the trust," which can mean, among other things, that the trustee is endangering the assets of the trust, is dishonest, or is incapable of acting.
S. 9 of Manitoba's Trustee Act also contains a provision for the removal and replacement of a trustee. The Manitoba statute, more explicitly lists the situations in which this provision can be applied, some of which include:
- the case of a personal representative desiring to be relieved from the duties of his office, or guilty of any misconduct in his office, or who refuses, or is unfit to act therein, or incapable of acting therein, or who remains out of the province for more than 12 months.
Durand v Durand et al,
is a recent Manitoba decision in which a co-estate trustee was removed and replaced due to a conflict of interest.
The trustee in question ("Romeo") was one of six children of Maurice Durand (the "Deceased"). His sister ("Leona") was his co-trustee, and one of his brothers ("Bertrand") was an alternate. Romeo was also the sole director and officer of a business that had belonged to the Deceased, ("Durand Farms"), and was its only shareholder apart from the estate.
While the precise meaning of certain provisions in the Deceased's will is still being litigated, it is clear that Durand Farms is "the major asset of the estate," and that the Deceased's widow ("Suzanne") is intended to be the beneficiary of a trust that involves the Deceased's corporate assets. At the time of the hearing in this application, Durand Farms owed a debt of approximately $460,000 to the estate.
Under Romeo's management, Durand Farms made minimal effort to pay its debt to the estate. Suzanne argued that Romeo's duty as an estate trustee to maximize the value of the estate conflicted with his obligations to Durand Farms, and that he was favoring the interests of Durand Farms in choosing to avoid paying the debt.
The Court's Analysis
McCawley J., gave no weight to Romeo's argument that the estate had never demanded repayment, noting that the estate trustees would have needed to make this demand jointly, and that Romeo did not communicate with Leona. It was further noted that Romeo had never applied for advice and directions, and while it was true that Leona had not done so either, "one can easily infer from the evidence before the court, that Romeo is a controlling force in the family, not just the business."
McCawley J., also rejected Romeo's argument that he was protecting Suzanne from her inability to "manage her affairs responsibly," finding that repayment of the debt would not prevent such protection. It was also found that Romeo's various settlement offers throughout the proceedings "raise[d] the question of whether he really was trying to protect his mother against herself or whether he wished to rewrite his father's will as he thought it should have been."
On Romeo's argument that Suzanne could not explain how she was adversely affected by the non-payment, McCawley J., simply noted that a trustee's lack of knowledge or sophistication does not diminish a trustee's fiduciary duties.
McCawley J., acknowledged that a court might choose not to remove an estate trustee if a testator "contemplated or appreciated" that the trustee would be placed in a situation that could be considered a conflict of interest. Romeo tried to argue that the Deceased had contemplated Romeo's full control of Durand Farms, but McCawley J., found no evidence to support this claim. Other family members had been involved in the business at times.
After finding that Romeo was in a conflict of interest and should be removed, McCawley J., turned her attention to the question of his replacement. Suzanne and the other beneficiaries of the estate agreed that Bertrand should become a co-trustee, but Romeo argued for a corporate trustee instead. McCawley J., appointed Bertrand, briefly explaining he was capable of acting, he had been named in the will as an alternate trustee, a corporate trustee would be costly, and that a family member would be the better actor to make decisions on Suzanne's care.
It is clear that a trustee must always be mindful of their fiduciary duty to act in the best interests of the beneficiaries, and not to allow this duty to conflict with other obligations. Estate trustees in particular, must be aware of such hazards, since it is common for an estate trustee to also be a beneficiary of an estate, or for the administration of an estate to be complicated by a family business. An estate trustee should be alert to any possible conflict of interest, and be prepared to step aside if one emerges. To not do so could invite unnecessary litigation, and while a court might be reluctant to remove a testator's chosen trustee, it will exercise this power if the trust cannot be properly administered otherwise.
Di Michele v Di Michele, 2014 ONCA 261 (CanLII)
2020 MBQB 70 (CanLII)
Note: Due to the Covid-19 Pandemic many upcoming events are being cancelled, rescheduled or moved on-line. Please check the event info links for the latest information from the event organizers.
Ontario Bar Association Elder Law Passport Series Program
Capacity for Lawyers: Elder and Corporate Client Matters
June 17, 2020
Speaker: Kimberly Whaley
Law Society of Ontario, Practice Gems: Administration of Estates 2020
September 21, 2020
Chairs: Kimberly Whaley and Timothy Grieves
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
October 9, 2020
Speakers: Mike Marra and Matthew Rendely
GTAAN/FTAFN Accountants Network
Trusts & Estates For Financial Professionals
October 20, 2020
Speakers: WEL firm members
LESA 53rd Annual Refresher: Managing Wills & Estates Matters
October 23-26, 2020
Decisional Capacity: A Wills & Estates Context
Speaker: Kimberly Whaley
Estate Planning and Litigation Forum
November 11-13, 2020
Hotel William Gray in Montreal
STEP Global Special Interest Group (SIG) Annual Conference
December 4, 2020
Speaker: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
December 11, 2020
Speakers: Daniel Paperny and Bryan Gilmartin
Toronto Lawyers Association
Serious Illness Decision Making
January 28, 2021
Speaker: Kimberly Whaley
International Federation of Ageing-15th Global Conference on Ageing
Niagara Falls, March 3-5, 2021
Ontario Bar Association, Elder Law Section Program
Your Comprehensive Guide to Section 3 Counsel Under the Substitute Decisions Act
NEW DATE TO BE CONFIRMED
Chairs: Kimberly Whaley and Alex Procope
VI. IN CASE YOU MISSED IT - RECENT BLOG POSTS
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