HAPPY VALENTINE'S DAY!
WEL Partners helping clients navigate dispute resolution throughout Ontario:
* Albert Oosterhoff, Professor Emeritus Western University, Counsel to WEL consults on matters within his areas of expertise, providing opinions concerning Wills, Estates, Trusts and related Property matters.
1. BEST WISHES TO ANDREA (BUNCIC) HARPER
WEL PARTNERS sends best wishes to their colleague Andrea (Buncic) Harper on her recently joining The Ministry of Research, Innovation and Science, Communications and Marketing Branch as a Senior Policy Advisor. Andrea will be missed at the office for her competence, professionalism and contribution to the firm and the law
2. INTERVIEW WITH SEAN MALLEN, JANUARY 23, 2018
On January 23, 2018, Kimberly was interviewed by Sean Mallen respecting an article in the Women's Brain Health Initiative, Mind Over Matter magazine, on the subject of financial, legal and medical issues surrounding dementia and incapacity.
3. INTERVIEW WITH ALL BUSINESS MEDIA FM RADIO, NEW YORK, JANUARY 25, 2018
On January 25, 2018, Kimberly was interviewed by Rob Whetham, of All Business Media FM Radio, New York, Professionals Roundtable on Elder Law issues.
4. INTERVIEW WITH MICHAEL MCKIERNAN, LAW TIMES NEWSPAPER, JANUARY 25, 2018
On January 25, 2018, Kimberly was interviewed by Michael McKiernan from the Law Times Newspaper on the FAIR Canada, CCEL and The Law Foundation of Ontario joint report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence and Diminished Mental Capacity.
5. LAW COMMISSION OF ONTARIO (LCO) LAST STAGES OF LIFE CONSULTATION - FEBRUARY 1, 2018
Kimberly Whaley and Alexander Swabuk attended the second LCO Last Stages of Life consultation with other OBA members on February 1, 2018. The LCO's Last Stages of Life project considers how the law shapes the rights, choices, and quality of life for persons who are dying and those who support them. The Last Stages of Life project also seeks to address the experiences of everyone involved in the dying process, including: individuals, caregivers and other family and friends, health care institutions and professionals, government, other professionals, and community organizations. Topics discussed at the second Last Stages of Life consult included recommendations for reform in relation to the implementation of Medical Assistance in Dying (MAID) in Ontario, transitions between care (eligibility, care / planned deaths at home, acute care, etc.), as well as the legal regulation of palliative sedation. The ongoing role of legal professionals in clarifying HCCA standards related to advance care planning and capacity assessment, as well as opportunities for rights information to patients determined to be incapable was also discusse
6. INTERVIEW WITH JOAN WEBBER, CBC RADIO, FEBRUARY 2, 2018
On February 2, 2018, Kimberly was interviewed by Joan Webber, of CBC Radio, regarding a documentary on the issue of predatory marriage.
7. INTERVIEW WITH OMOLAYO IDOWU, TORONTO PUBLIC HEALTH, HEALTH PROMOTION SPECIALIST, VULNERABLE ADULTS AND SENIORS TEAM, FEBRUARY 6, 2018
On February 6th, Kimberly was interviewed by Omolayo Idowu, of the Toronto Public Health, Vulnerable Adults and Seniors Team, on Implementing best practice guidelines on elder abuse prevention and the role of the public health organization in preventing the issue.
8. OSGOODE PASSING OF ACCOUNTS AND FIDUCIARY ACCOUNTS, FEBRUARY 13, 2018
Albert and Lionel presented at the Osgoode Passing of Accounts Program on February 13, 2018, on "Compensation and Passing of Accounts" and "Passing of Accounts/Fiduciary Accounts".
9. STEP TORONTO CONNECTION, FEBRUARY 2018
Kimberly's article: "Can an Obligation to Pay Spousal Support Survive the Death of the Recipient Spouse?" on Marasse Estate (Re), 2017 ABQB 706 (CanLII), http://canlii.ca/t/hnvf6 was published in the STEP Toronto Connection, February 2018, Vol. 5, No. 5.
10. STEP 20TH NATIONAL CONFERENCE, MAY 28-29, 2018
Albert will be a member of a panel with Nancy Goldberg, John Poyser, and Charles Wagner, speaking on "Powers of Attorney for Property and Personal Care: The Good, the Bad, and the Ugly" at the STEP 20TH National Conference, on May 28 and 29 in Toronto.
Kimberly will be speaking on a panel with Dr. Adrian Owen, Dr. Kenneth Shulman, and Ed Esposto on "Medical-legal Issues Involving Capacity, Estate and Trust Planning and Litigation".
THE EXPANSION OF PROPRIETARY ESTOPPEL: COWPER-SMITH V. MORGAN
by Andrea McEwan
In a recent case, Cowper-Smith v. Morgan, 2017 SCC 61, the Supreme Court of Canada had occasion to reconsider the equitable doctrine of proprietary estoppel. The Supreme Court's ruling clarifies the test for proprietary estoppel and arguably expands its scope. It is an important decision for all practice areas, and particularly for those who practice in wills and estates.
The Court was unanimous in allowing the appeal and finding that the elements of proprietary estoppel were made out. Justice Côté and Justice Brown differed from the majority opinion, written by Chief Justice McLachlin, as to the appropriate remedy.
Elizabeth Cowper-Smith (the "Deceased") died in 2010. She was survived by her three children: Gloria, Max and Nathan.
The Deceased's husband, Arthur, died in 1992. Prior to their deaths, the Deceased and Arthur made it clear to their children that their property, including the family home (the "Home"), would be shared equally among them.
Gloria and Nathan, two of the children, fell out when Nathan moved back home in 2000 after his long-term relationship ended and he quit his job in Edmonton. He did work around the house which satisfied the Deceased. After visits with Gloria however, Nathan noticed that the Deceased would become agitated and concerned that Nathan intended to take her house, among other things. In February and April of 2001, Nathan received two letters in Gloria's handwriting, indicating that he was no longer welcome to live with his mother and should move out. When he returned from an overseas trip in 2001, he found the locks changed, with his belongings still inside. He broke in and Gloria had the police escort him out. He eventually moved back to Edmonton.
In 2005, the Deceased could no longer live on her own and Max moved back to Victoria from England to care for her. In so doing he gave up his job, cottage lease, contact with his children and his social life. Max did this after Gloria agreed that he would be reimbursed for various expenses, have the use of the Deceased's car, be able to live in the family home permanently, and would eventually acquire Gloria's one-third interest in the Home. This arrangement worked until 2009 when Gloria began to back away from her promises. The relationship amongst the siblings deteriorated.
In 2001, the Deceased's estate planning changed dramatically and she transferred title to the Home and all of her investments into joint ownership with Gloria, indicating in a trust declaration that Gloria would be entitled to those assets on her death. If the trust declaration and joint ownership were valid, the Deceased's estate (the "Estate") would not have any significant assets.
In 2005, Nathan discovered Gloria's joint ownership of the Home and she assured him at the time that the arrangement was to simplify the administration of the Estate and that he and Max would still each receive a one-third share. She gave Max the same assurance four years later when he learned that Gloria's name was on title.
After the Deceased's death, the trust declaration was revealed and in 2011 Gloria announced her plans to sell the home, in which Max was still living.
Max and Nathan sought an order setting aside the trust declaration as the product of Gloria's undue influence on the Deceased and declaring that Gloria held the property and assets in trust for the Estate to be divided equally amongst the three children. They also claimed on the basis of proprietary estoppel that Max was entitled to purchase Gloria's one-third interest in the Home.
The Courts Below
Max and Nathan were successful at trial. The trial judge found in their favour on all grounds.
The Court of Appeal unanimously upheld the trial judge's findings with respect to undue influence and resulting trust, but were split on the issue of proprietary estoppel. The majority found that because Gloria held no interest in the property at the time she made assurances to Max, proprietary estoppel could not arise. Max appealed on this issue.
The only issue before the Supreme Court was whether the trial judge erred in concluding that proprietary estoppel operates to enforce Gloria's promise. Specifically, the Supreme Court was asked to decide whether Gloria's lack of ownership in the Home defeats Max's claims and if it did not, the appropriate remedy.
The Supreme Court was unanimous in finding that the trial judge did not err in concluding that proprietary estoppel operates to enforce Gloria's promise. Chief Justice McLachlin, writing for the majority, held that: "Equity enforces promises that the law does not". She explained that an equity arises where:
- A representation or assurance is made to the claimant, on the basis of which the claimant expects that he will enjoy some right or benefit over the property;
- The claimant relies on that expectation by doing or refraining from doing something, and his reliance is reasonable in all the circumstances; and
- The claimant suffers detriment as a result of his reasonable reliance, such that it would be unfair or unjust for the party responsible for the representation or assurance to go back on her word.
When the party responsible for the representation or assurance possesses an interest in the property sufficient to fulfill the claimants' expectation, the Court found that proprietary estoppel may give effect to the equity by making the representation or assurance binding. Proprietary estoppel avoids the unfairness or injustice that would result to one party if the other were permitted to break her word and insist on her strict legal rights. Moreover, proprietary estoppel can do what other estoppels cannot - it can found a cause of action, meaning it can be used as a sword and not just a shield.
The Supreme Court did not decide whether proprietary estoppel may attach to an interest in property other than land - although by leaving the question open the suggestion is that it may - nor whether equity more broadly enforces non-contractual promises on which claimants have detrimentally relied. Importantly, however, the Court held that proprietary estoppel may prevent an inequity where a claimant has reasonably relied on an expectation that he or she will enjoy a right or benefit over property, even in circumstances where the party responsible for that expectation did not own an interest in the property at the time of the claimant's reliance.
In so doing the Supreme Court reversed the British Columbia Court of Appeal's proposition of a bright line rule: that reliance on a promise by a party with not present interest in property can never be reasonable. The Supreme Court found that the bright line rule is out of step with equity's purpose, which is to lessen the harsh effect of strict legal rules. In the circumstances of this case, it was sufficiently certain that Gloria would eventually obtain a one-third interest in the Home that her assurances would be taken seriously by Max.
With respect to the appropriate remedy, the majority of the Supreme Court found that as executor of the Estate, Gloria was bound to transfer a one-third interest in the Home to each of the three beneficiaries so that her promise to Max could be fulfilled. In short, despite the fact that the siblings only held an interest in the residue of the Estate and not a specific interest in the Home, the Court found that an in specie distribution of shares in the Home was not contrary to the Deceased's intent as the outcome was contemplated by the Deceased. As a result, the Court ordered an in specie distribution and required Gloria to sell her interest in the property to Max at the fair market value of the property as of early 2011, which was the approximate date on which Gloria could reasonably have expected to be able to transfer her interest in the first place. The majority held that this was the proper remedy as it was the "minimum necessary to satisfy the equity."
Justice Brown and Justice Côté agreed that the Max's proprietary estoppel claim should be allowed but disagreed with the majority as to the appropriate remedy. Justice Brown would have allowed the appeal and varied the trial judge's order as proposed by the majority but permitted Max to purchase Gloria's one-third interest in the Home at its fair market value as of the date of the Supreme Court's order.
Justice Côté was of the opinion that the Court had no power to order Gloria to exercise her executorial discretion in a particular manner and that therefore an in specie distribution could not be ordered. Instead, she suggested that the correct solution was to replace Gloria as executor with an unbiased, neutral executor. However, if Gloria was ordered to distribute the property in specie and compelled to sell her share to Max, she concurred with Justice Brown that the sale price should be determined by the value of the property as of the date of the Supreme Court's order.
The Supreme Court's guidance in this case with respect to proprietary estoppel has significant implications. First, the decision arguably expands the scope of proprietary estoppel by holding that the fact the promisor does not have an interest in a property at the time a claimant relies on her promise is not fatal to the claim. Here, the equity arose not at the time Gloria received her one-third entitlement to the property but at the time the assurances were made to Max.
Second, the Supreme Court is clear that once the elements of proprietary estoppel are established, the Court has wide discretion to effect an appropriate remedy in the circumstances of the particular case. Here the majority directed Gloria, in her capacity as estate trustee of the Estate, to transfer her one-third interest in the property directly to Max in circumstances where the siblings only held an interest in the residue of the estate, and not a specific interest in the property. This has potential reach with respect to the Court's role in the exercise of a trustee's discretion.
AN IRREVOCABLE RIGHT OF SURVIVORSHIP?
By Albert H. Oosterhoff
The joint tenancy is a very convenient device to transfer property and is therefore useful in estate planning. Its most important incident, the right of survivorship (the ius accrescendi) allows you to have property pass automatically to another joint tenant, such as your spouse, or one or more of your children, when you die. You can do it by transfer in the case of real property, or by signing the appropriate bank forms in the case of a bank account. And you can do all that without making a will. And so it will not form part of your probate estate. That makes it attractive to many people, because it allows you to avoid having to pay the dreaded estate administration tax. So what's not to love?
In fact, use of the joint tenancy device often causes problems and can be productive of litigation down the road if it is not done with care. One of the main problems is whether the transferor, who placed the title to the property into joint tenancy, actually intended to make a gift to the transferee, or merely transferred the property into joint tenancy as a matter of convenience, so that, perhaps the transferee can manage the property, or the bank account, for the benefit of the transferor. Pecore confirmed that when you transfer your property into the joint names of yourself and another person, or create a joint account with your money in the names of yourself and another person, the transaction takes effect immediately and gives the transferee legal title to the property. But whether the transferee becomes entitled beneficially to the property immediately or only on the death of the transferor, or not at all, depends entirely on the presumption of resulting trust (if the transferee is an adult child of or is otherwise unrelated to the transferor) and on the transferor's intention. If the transferor intended a gift to the transferee and that can be proved, that will rebut the presumption of resulting trust. In that case, as Pecore and other cases hold, the beneficial interest vests immediately and is not testamentary in nature.
There have been many cases after Pecore in which disappointed heirs argue that the transferee took the title in trust for all the heirs. Such actions can easily be avoided if the transferor keeps a written record of her intention and lawyers should advise transferors to do so. I suspect that the tax savings gained from using a joint tenancy are often swallowed up by the legal costs of such litigation - not at all what the transferor had in mind.
But there are also other issues with the device. In particular, it is uncertain whether the transferee will ever receive the property or the money. He won't if the property is dissipated or the transferor withdraws all the money from the account. But also, the transferee may not survive the transferor. If he doesn't, his interest is extinguished on his death. Professor Ziff rightly describes joint tenants as "being engaged in a tontine pact". As each joint tenant dies, her interest ends and the interests of the other joint tenants are augmented. Only the last survivor will take all.
And then there is the problem of severance of a joint tenancy. A joint tenant is entitled unilaterally to terminate a joint tenancy and turn it into a tenancy in common. Doing so will destroy the right of survivorship, since tenancies in common do not carry that right. Thus the right of a tenant in common can be left to others by will or pass on an intestacy. A joint tenant can destroy the right of survivorship by destroying one of the four unities that are an integral part of joint tenancies: the unities of interest, title, time, and possession. Thus, if a joint tenant transfers his interest to a third party, the unities of title and time are gone and the remaining tenant now owns the property as tenant in common with the third party. Not only that, but a joint tenant can transfer her interest to herself, at least if a statute permits such a transfer.
A number of these issues were raised in Pohl v. Midtal, with surprising results. I shall use the parties' first names, as the court did, to describe what took place. The defendant, Vivian, had five children by her first marriage. When her husband died, she married the defendant, Gordon. Gordon was a farmer and he transferred title to his six quarter sections of land to himself and Vivian as joint tenants. The plaintiff, Melva, was Vivian's eldest child. She and her husband were close to Vivian and Gordon and farmed a short distance away. Vivian and Gordon sold three quarter sections to Melva and her husband and their son and his wife. In 2004 they added Melva as joint tenant on the title to the home quarter. Gordon became Vivian's attorney when her mental faculties deteriorated in 2007. Vivian and Gordon's wills left their estates to Vivian's children other than Melva and a son who had received another quarter section from them. The parties had intended that Melva and her husband would move into the house on the home quarter once Vivian and Gordon vacated it. In 2010 Vivian moved into long-term care and the relationship between Gordon and Melva and her husband began to deteriorate.
In 2012 Gordon, acting for himself and as Vivian's attorney, sued Melva, claiming that she held her interest as joint tenant of the home quarter under a resulting trust. In 2014 Moreau J, as he then was, dismissed the action, holding that Melva had proved that the transfer to her was an irrevocable inter vivos gift and the right of survivorship vested when the gift was made, thereby rebutting the presumption of resulting trust.
But Gordon was not satisfied. In 2015, acting on his own behalf and as Vivian's attorney, he registered a transfer to sever the joint tenancy. The title then showed Gordon and Vivian as the owners of an undivided two-thirds interest in the land as joint tenants and Melva as the owner of an undivided one-third interest in the land as tenant in common with Gordon and Melva. Meanwhile, Melva had registered a caveat on title and brought this action. Vivian died in 2016 and Gordon in 2017.
Melva argued that the gift to her of a joint interest included an irrevocable right of survivorship. In other words, she maintained that Vivian and Gordon gave up their right to sever the joint tenancy. Khullar J. agreed, stating:
Joint tenants can agree by contract that they will not sever the joint tenancy: see Bruce Ziff, Principles of Property Law; and Haan v. Haan.Therefore, one should be able to relinquish his or her right to sever a joint tenancy by irrevocably gifting the right of survivorship to another. I think this conclusion is the logical implication that flows from Pecore. Whether such a gift was made will depend on the transferor's intention at the time the gift was made.
The court then discussed other cases that have considered the issue. In Simcoff v. Simcoff the Manitoba Court of Appeal made the following obiter comments about the making of an irrevocable right of survivorship.
Certainly, where an individual, such as this mother, is found to have made a gift of a one-half joint interest in property to her son, she cannot retract that gift at a later point in time. However, the right of survivorship is an incident of joint tenancy that takes effect only if the joint tenancy continues to exist as of the death of one of the joint tenants. The gift of one-half of the property cannot be rescinded, but the joint tenancy can be converted into a tenancy in common, which does not carry with it the right of survivorship.
In Bergen v. Bergen and McKendry v. McKendry the British Columbia Court of Appeal followed this reasoning, holding that when a parent gives an adult child a joint interest in property she does not thereby give up her right to sever the joint tenancy.
However, the Saskatchewan Court of Appeal disagreed in Thorsteinson Estate v. Olson, in which the court said, relying on Pecore, that when a person has made a valid gift of [an interest in joint tenancy and] the right of survivorship, she cannot take it back by severing the joint tenancy.
Having considered the various cases, Khullar J. stated:
I decline to follow the analysis in
Simcoff. First, as noted in
 it was clearly obiter and, therefore, less weighty. Second, while not articulated this way in
Thorsteinson, based on the reasoning in
Pecore, it seems logical to conclude that, by gifting a joint interest in property to his or her adult child, a parent can give up his or her right to sever the joint tenancy. If the facts of
Pecore are used, the finding is that the father intended the daughter to be the beneficial owner of the joint accounts when he died, but he would be the beneficial owner while he was alive. In order to give effect to that intention, the implication is that the father will not or cannot exercise the right of severance while he is alive, though he can use all of the assets in the accounts to his own benefit. By analogy, in the case at bar, Gordon and Vivian could use the Home Quarter in any way to their own benefit while joint tenants with Melva. But, in order to give effect to their gift of survivorship to Melva, when they created the joint tenancy, they gave up their right to severance. To find otherwise would defeat the point of a gift of property that will only take effect upon the death of the transferor. To the extent this is seen as a stretch of the law of joint tenancy, the first step of that stretch was taken in
Khullar J. also referred to Wong v. Chong Estate
noting that the court in that case recognized that a joint tenant "did not have the ability to sever the joint tenancy based on the intention of the transferor when the joint tenancy was created". The plaintiff argued that the parties had entered into an oral agreement that the transferee could not sever the joint tenancy and the court opined that such an agreement, which is otherwise required to be in writing under the Law and Equity Act, might be valid in the circumstances of that case. However, it went on to hold that the plaintiff failed to prove the existence of such an agreement. But it also held that the evidence established that the transferee held her interest in trust for the plaintiff. Consequently, the case was not helpful to the decision in Pohl.
Khullar J. concluded as follows:
Gordon and Vivian clearly intended that Melva would get the Home Quarter on their deaths. To give effect to their intention, an inference can and should be drawn that they gave up their right of severance in 2004, when they made Melva a joint tenant.
With the greatest respect, this conclusion conflicts with the established law of joint tenancy, which has never held that it is an incidence of the title that the parties can prevent a severance. Rather, the right to sever a joint tenancy is an inherent right of the tenancy. Moreover, in my opinion, the conclusion of Khullar J. does not flow by implication from Pecore. That leading case did not change the law of joint tenancy, but only declared that a transferee may acquire certain beneficial rights when added as a joint tenant to property and that those rights depend on whether the transferor intended the transferee to have the beneficial interest while both parties are living, only when the transferor dies, or not at all. The transferor's intention can be proved by the evidence or determined by the application of the presumption of resulting trust. The case did not address the question whether a transferor can make the right of survivorship absolute by renouncing his right of severance.
In my opinion, Khullar J. failed to give sufficient weight to the comments of the Manitoba Court of Appeal in Simcoff, dismissing them as dicta. Further, Khullar J. also dismissed Bergen and McKendry in a couple of lines. In fact, in Bergen the BC Court of Appeal rejected the argument that Pecore stands for the proposition that the complete and perfect inter vivos gift to the transferee means that the transferee owns the interest transferred to him (a one-third interest in Bergen) and that it cannot be taken away from him.
This does not mean that the result in Pohl is wrong, but it can only be justified on other grounds.
One of those grounds is an agreement between the parties that the transferee cannot sever the joint tenancy. The parties can certainly enter into such an agreement and it will be enforced if proved, provided that, in the case of land, the agreement is evidenced by writing, or if there are statutory or equitable exceptions to that requirement, such as part performance. Alternatively, an oral agreement with respect to land will be enforced in equity if the defendant fraudulently denies its existence. Equity then allows the plaintiff to adduce evidence proving the fraud and when it is proved Equity enforces the agreement by raising a constructive trust that requires the defendant to hold the property for the benefit of the plaintiff
The matter can also be analyzed under the rubric of the law of mutual wills.
The doctrine of mutual wills does not apply only to wills, but to any agreement in which parties agree to dispose of property in a particular way. Thus, it also applies to a joint tenancy that the parties have agreed not to sever. The mutual wills doctrine operates to enforce the agreement by a constructive trust.
Regardless, the agreement, if proved, is not an incident of the law of joint tenancy. Rather, it is external to the particular joint tenancy in respect of which it was made and modifies only that joint tenancy.
Had Khullar J. analyzed the case along these lines, in my opinion the result would have been defensible. As it stands, with respect, it has muddied the waters of the law of joint tenancy.
The issue was not raised in the case, but quaere whether Gordon breached his fiduciary duty to Vivian when he severed the joint tenancy.
Pecore v. Pecore
, 2007 SCC 17.
Bruce Ziff, Principles of Property Law, 6th ed. (Toronto: Thomson Reuters/Carswell, 2014), pp. 338-39.
However, consent by all the joint tenants, or a court order is required to perfect the severance in Saskatchewan: Land Titles Act, S.S. 2000, c. L-5.1, s. 156.
A joint tenancy can also be destroyed in part. This will happen if there are more than two joint tenants, e.g., A, B, and C. If A transfers his interest to D. B and C will continue to hold their interests as joint tenants, but they will hold their two-thirds interest as tenants in common with D.
See, e.g., Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, s. 41, which permits such a transfer.
Midtdal v. Pohl, 2014 ABQB 646, para. 118. The difference in spelling in the name of the parents is not explained in the two cases.
For this purpose he followed the provisions of the Law of Property Act, R.S.A. 2000, c. L-7, s. 12 and the Land Titles Act, R.S.A. 2000, c. L-4, s. 65.
, para. 42.
, pp. 350-51.
2009 MBCA 80, para. 63
2016 SKCA 134, para. 67.
, para. 50.
, para. 66.
R.S.B.C. 1996, c. 253, s. 59
Statute of Frauds, 29 Car. II, c. 3, ss. 4 and 7, and comparable provincial legislation, such as the Statute of Frauds, R.S.O. 1990, c. S.19, ss. 4 and 9; and the Law and Equity Act, s. 59, supra, footnote XX.
Wong v. Chong Estate, supra, footnote
; Haan v. Haan, supra, footnote
The fraud is not common law fraud, but equitable fraud.
See Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed. by A.H. Oosterhoff, Robert Chambers, and Mitchell McInnes (Toronto: Thomson Reuters/Carswell, 2014), §12.3.2. Exceptionally, the court can also raise a resulting trust if the plaintiff is both settlor and beneficiary of an unenforceable express trust, since the resulting trust will then cause the property to result to settlor. A constructive trust is necessary if the intention is that the property go forward to another person.
See Albert H. Oosterhoff, "Mutual Wills" (2008), 27 E.T.P.J. 135 at 138. And see McGeachy v. Russ,  3 D.L.R. 349, 15 W.W.R. 178 (B.C.S.C.), where the agreement also obliged the survivor to transfer the property later to a third party, either inter vivos, or by will.
ABEL V. ABEL: TRIAL REQUIRED FOR POWER OF ATTORNEY DISPUTE
A motion was brought to address a power of attorney dispute between two brothers. The applicant sought to have his brother removed as the attorney under power of attorney documents for both personal care and property granted by their mother. He also sought an order requiring his brother to pay back over $400,000.00 that was purportedly transferred to the attorney brother by their parents. The Court found that there was insufficient evidence on the record to decide these issues on a motion but enough questions were raised to justify a trial of the issues.
The respondent brother was appointed as an attorney by both of his parents in January of 2015. The father died in March of 2016. Four days prior to his death, the father executed a new Will in which he appointed the respondent brother his executor and the beneficiary of the remainder interest in his estate.
The father's new Will contained a provision which said that the parents had, during their lifetime, made certain gifts to the respondent brother and such "funds belong absolutely and beneficially" to him.
During cross-examinations on the affidavits, it came to light that at various times throughout 2015, the parents had transferred $435,236.83 to the respondent. There was also a suggestion that the respondent had used monies from his mother's assets for personal expenditures.
A number of undertakings regarding financial disclosure were given by the respondent brother during his cross-examination. Those undertakings remained unanswered and became the subject of two court orders. The applicant brother argued that the respondent's failure to provide the requested documents was further proof of his inability to comply with his obligations under the power of attorney and to serve their mother's best interests.
The respondent argued that the delay in producing the documents was attributable to his counsel (there was an Affidavit filed by his counsel on this issue) and that he had made the required best efforts to comply with his undertakings. He admitted that he had made some questionable expenditures, from his mother's assets, but nothing of significant value.
Power of Attorney:
The applicant brother sought to remove the respondent brother as attorney under the power of attorney for property and personal care for failing to comply with undertakings and Court orders, using funds from their mother's assets towards personal expenses and neglecting their mother's personal care and hygiene.
The respondent's counsel proposed that there should be a full hearing in relation to these issues. He questioned whether there was adequate information before the Court to make a decision with respect to the issues raised.
Justice Leitch noted that while powers of attorney can be terminated, and guardians appointed to replace an attorney under the Substitute Decisions Act, the law is clear that the courts should be wary of terminating a power of attorney that was granted by a donor when having had capacity to grant it.
Referencing Justice Fargomeni's words in
Teffer v. Schaefers,
Justice Leitch noted that the test for removal of a power of attorney is as follows:
There must be strong and compelling evidence of misconduct or neglect on the part of the attorney before a court should ignore the clear wishes of the donor; and
The court must be of the opinion that the best interests of an incapable person are not being served by the attorney.
Examples of attorney misconduct under the first step of the testinclude failure to provide a monthly accounting; failure to voluntarily pass accounts; failure to provide missing information or documentation with respect to missing funds; and an inability to follow court orders.
Justice Leitch was satisfied that the first part of the test was met.
The second part of the test, however, required the Court to determine whether the respondent was serving his mother's best interests. The answer to this question required further evidence which was not available to the Court on this motion. There was insufficient evidence regarding the respondent's behaviour to justify a trial on the issue, though.
Repayment of funds:
Justice Leitch noted that since the respondent was an adult when he received the money transfers, the presumption of resulting trust would be applicable as per Pecore and he faced the onus of rebutting that presumption. To do so, he had to produce corroborating evidence, beyond his own affidavit, either direct or circumstantial, to show on a balance of probabilities that the transfer was a gift. The respondent was not barred from relying on the statement added to his father's Will subsequent to the transfers, however, the reliability of the provision and the weight that it should be given would need to be assessed.
The respondent also faced the onus of proving lack of undue influence, given the nature of his relationship with the donors. There may also be an issue of undue influence with respect to the new Will and the provision pertaining to the inter vivos transfers.
Justice Leitch found that the record before her was not sufficient to assist in determining these issues and concluded that no order could be made in relation to the relief sought. However, a trial was required in relation to the other issues identified, i.e. removal of power to act as attorney, reimbursement of funds spent on personal expenditures and the funds transferred to the respondent by his parents.
Removal of an attorney under a power of attorney document requires strong and compelling evidence of misconduct. A court must be convinced prima facie that the incapable person's interests are not being met before interfering with the wishes of the grantor. Before seeking such relief on a motion, it is important for counsel to consider whether relevant and sufficient evidence is before the Court or whether a trial of an issue will be required.
Substitute Decisions Act, 1992, S.O. 1992, c. 30, s.12(1)(c) and s.22(1).
Teffer v. Schaefers (2008), 93 OR (3d) 447
PREDATORY MARRIAGE: HUNT V. WORROD
by Andrea McEwan and Amanda Bettencourt
In Hunt v. Worrod, the Ontario Superior Court of Justice considered whether a man incapable of managing his property and personal care had the capacity to marry. The marriage in question took place between Mr. Hunt and his estranged ex-girlfriend, Ms. Worrod (the "Respondent"), just months after Mr. Hunt suffered a catastrophic brain injury rendering him incapable of managing his property and personal care.
The Application was brought on behalf of Mr. Hunt by his two sons, Brad and Justin (the "Applicants"), who are also his guardians of property and of the person. The following issues were put before the Court:
- Whether Mr. Hunt had the capacity to marry Ms. Worrod on October 24, 2011;
- Whether Ms. Worrod had any entitlement to the home by Mr. Hunt; and,
- Whether the Court should make an order permanently prohibiting any contact and communication between Ms. Worrod and Mr. Hunt.
This case comment focuses on the factual circumstances and law as they relate to the issue of whether Mr. Hunt possessed the requisite decisional capacity to marry Ms. Worrod on the date of marriage as well as the factors Justice Koke considered in determining whether a permanent non-contact order was necessary.
On June 19, 2011, at the age of 50, Mr. Hunt sustained a catastrophic brain injury following an ATV accident. He was transported to the hospital, where he remained in a coma for 18 days. Eventually, after five months in the hospital and undergoing extensive occupational and physiotherapy, Mr. Hunt was released to his home into the care of two of his sons, Brad and Justin (the Applicants).
Prior to his accident, Mr. Hunt and Ms. Worrod were involved in an on-and-off again relationship. At the time of the accident, Ms. Worrod was subject to a recognizance in relation to impaired driving and breach of recognizance charges. One of the conditions of her bail was to live with her sureties, who were her two daughters.
In the early morning of October 24, 2011, three days after Mr. Hunt was released from the hospital, he was secretly picked up from his home by Ms. Worrod's uncle-without the knowledge of his sons-and was brought to Blue Mountain to be married to Ms. Worrod. The Applicants were deeply concerned when they found their father missing, especially since they had received extensive training in caring for him and he did not appear to be in the company of anyone trained to look after his medical needs.
Later that day, the Applicants were able to track down their father's whereabouts using his credit card history. The police were notified and they located Mr. Hunt at the hotel. Upon attending at the hotel, Justin discovered that his father had been brought to the hotel to marry Ms. Worrod and the wedding had already taken place. Only members of Ms. Worrod's family were present at the wedding. None of Mr. Hunt's family or friends, including his sons or his best friend, had been notified about the wedding. Mr. Hunt was brought home by Justin.
Evidence of Mr. Hunt's Incapacity to Marry
Justice Koke thoroughly examined the significant amount of evidence dealing with the issue of capacity presented at trial. This evidence came both in the form of expert medical testimony and medical reports as well as the oral testimony of lay witnesses.
A number of medical professionals had found that prior to the marriage and shortly after, Mr. Hunt demonstrated the following severe cognitive and physical impairments, including:
- Significant impairments to his executive functioning, such as his ability to make decisions, organize and execute tasks;
- A neurologically based lack of awareness of his deficits and impairments, making it difficult for him to experience fully what is happening around him as well as to infer consequences of events which might jeopardize his personal safety;
- He demonstrated little emotional reactivity as well as apathy, demonstrated by a lack of initiation and motivation;
- He should not be left alone and continued to need supervision for safety reasons as well as to remind him to take his medications;
- His driver's license was revoked;
- He had difficulty initiating conversation and needed cuing to provide additional information; and,
- He had limited range of motion in his left shoulder, difficulties with balance, some residual left neglect, and his ability to walk was impaired when he performed more than one task at a time.
Justice Koke found that evidence of the lay witnesses called by the Applicants supported the opinion of the medical experts as to Mr. Hunt's cognitive and physical impairments.
Before his release, Mr. Hunt was assessed by Bill Sanowar, a capacity assessor on two separate occasions. On August 5 2011, Mr. Sanowar found Mr. Hunt to be incapable of managing his property. On October 19, 2011, five days before the marriage, Mr. Sanowar found Mr. Hunt to be incapable of making personal care decisions with respect to the areas of health care, nutrition, shelter, and safety.
Evidence of the Respondent
All of the witnesses Ms. Worrod called to testify were members of her family with the exception of Mr. Hunt and the reverend who performed the marriage ceremony. The Respondent did not call any medical experts.
Justice Koke found that the "picture of Mr. Hunt's behavior painted by Ms. Worrod and the relatives she called to testify on her behalf was one of almost complete normalcy." Ms. Worrod and her daughter testified that on the date of marriage, they had not noticed any changes to Mr. Hunt's personality or any physical limitations. They both stated that he was in good spirits, was joking around with everyone at the wedding, and have a speech thanking people for coming.
Mr. Hunt testified that he was confused as to whether he was still married to Ms. Worrod and thought his sons considered his marriage invalid because they were married at a ski hill and not at a church. He did not remember the names of Ms. Worrod's two daughters. He said he did not tell any of his family about the wedding, he was not involved in the planning, and he did not remember how he proposed.
At the heart of the application was the question of whether Mr. Hunt possessed the requisite decisional capacity to enter into the marriage as at the date of the marriage. At the same time, the Court was asked to consider Ms. Worrod's conduct prior to and following the accident in order to determine whether Mr. Hunt would be safe in the care of Ms. Worrod.
Justice Koke thoroughly analyzed the evidence before him and ultimately concluded that Mr. Hunt did not have the requisite decisional capacity to marry as at the date of marriage. As such, his marriage to Ms. Worrod was set aside and declared void ab initio. His Honour also found that, based on the evidence, a permanent order prohibiting all contact and communication between Ms. Worrod and Mr. Hunt was necessary in the circumstances.
Legal Capacity to Marry
Justice Koke began his analysis by noting that section 7 of the Marriage Act, RSO 1990, c. M. 3, in Ontario restricts persons from issuing a license or solemnizing a marriage of any person who, based on what he or she knows or has reasonable grounds to believe, lacks mental capacity.
His Honour relied on Ross-Scott v. Potvin, 2014 BCSC 435 ("Ross-Scott"), para. 177:
A person is capable of entering into a marriage contract only if he or she has the capacity to understand the nature of the contract and the duties and responsibilities it creates. The assessment of a person's capacity to understand the nature of the marriage commitment is informed, in part, by an ability to manage themselves and their affairs. Delusional thinking or reduced cognitive abilities alone may not destroy an individual's capacity to form an intention to marry as long as the person is capable of managing their own affairs.
In applying the law to the specific facts of the case, Justice Koke observed that "the tension in the analysis is between preserving Mr. Hunt's personal autonomy and the right to choose how to spend the balance of his life against the possibility that he did not fully appreciate how marriage affected his legal status and contractual obligations."
Justice Koke noted that the Applicants bore a heavy burden to ensure that their father's autonomy was respected. Specifically, His Honour relied on Ross-Scott in outlining that "a court can only annul a marriage due to absence of consent if an individual does not understand the nature of the marriage contract and the duties flowing from it."
Justice Koke noted that capacity is decision, time and situation specific and one is presumed capable unless and until the presumption is legally rebutted.
His Honour reiterated the necessary distinction between the consent to marry versus capacity to marry, as outlined in Banton v. Banton, 1998 CarswellOnt 3423, 164 D.L.R. (4th) 176 (Ont Gen Div) and reaffirmed in Sung Estate: "a person may consent to marry, but if he or she lacks the capacity to enter into the contract of marriage, the marriage is void ab initio."
The onus of establishing that Mr. Hunt did not possess the requisite capacity to marry rested with the Applicants, who challenged the marriage.
With respect to the credibility of Ms. Worrod and the evidence she put forward, Justice Koke concluded: "I reject in its entirety this evidence of Ms. Worrod and her relatives with respect to Mr. Hunt's actions and behaviours on his wedding day. It is inconsistent with all of the medical evidence and the observations of the disinterested witnesses..."
Relying on the evidence presented at trial, Justice Koke found:
 In my view, the evidence overwhelmingly supports a finding that Mr. Hunt had not only made up his mind not to marry Ms. Worrod prior to the accident but also that he did not have the requisite mental capacity to marry Ms. Worrod following his accident.
 The consensus of opinion from the medical experts and witnesses, evidence which I note was uncontradicted by other medical experts, is that Mr. Hunt lacked the ability to understand the responsibilities or consequences arising from a marriage, and that he lacked the ability to manage his own property and personal affairs as a result of the injuries he sustained on June 18, 2011.
 For the above reasons, I find that Mr. Hunt did not have the requisite capacity to marry Ms. Worrod on October 24, 2011. He did not meet the test set out in Ross-Scott v. Potvin, namely that he understood the nature of the contract he was entering into and the responsibilities the contract created. At the time, and up to the present, he remains incapable of managing his own affairs. In the circumstances, I am declaring that the marriage is void ab initio.
With respect to the issue as to whether the Court should make a permanent Order prohibiting any and all contact and communication between Mr. Hunt and Ms. Worrod, Justice Koke concluded that the Applicants' devotion to the care of their father was in sharp contrast with the actions and behaviours of Ms. Worrod.
His Honour concluded that "any communication, direct or indirect, would be detrimental to Mr. Hunt's health and recovery for a number of reasons" and made an Order permanently prohibiting all contact between Mr. Hunt and Ms. Worrod, both direct and indirect, and including but not limited to telephone conversations, social media communications and communications through third parties."
Unlike the majority of predatory marriage cases which make it to trial, this case is markedly different since Mr. Hunt is not an older person and he is still living. This meant that, while clearly vulnerable, a consideration of his personal autonomy and his safety and wellbeing moving forward was necessary.
Due to the nature and extent of Mr. Hunt's injuries from his accident, extensive medical evidence for the period surrounding the marriage was available to the Court. Of particular importance were the contemporaneous capacity assessments with respect to property and personal care which had been conducted and were available to the Court. This is unusual, as predatory marriage cases often involve an older adult who may not require regular medical attention. As a result, there is often limited medical evidence from the period surrounding the marriage available.
Alienation is another common element of predatory marriages, where the unscrupulous opportunist chooses to wedge him or herself in between the older adult and their friends and family. While Ms. Worrod did attempt to alienate Mr. Hunt from his sons and influence his actions, since Justin and Brad are his guardians, they were able to do what they could to protect him and continue to make decisions in his best interest.
Hunt v. Worrod
, 2017 ONSC 7397 ("Hunt")
, paras. 147-148.
PART III: UPCOMING EVENTS
Osgoode Intensive Program in Wills & Estate
Passing of Accounts and Fiduciary Accounts, Compensation and Passing of Accounts
February 13, 2018
Speakers: Kimberly Whaley, Lionel Tupman, and Professor Albert Oosterhoff
Osgoode Certificate in Elder Law
Marriage Contracts; Conflicts in Blended Families; Sibling Struggles; intergenerational Transfer of a Family Business; and Family Meetings
March 6, 2018
Speaker: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
March 9, 2018
Speakers: Lionel Tupman, Arieh Bloom and Kate Stephens
Iranian Canadian Legal Professionals
March 9, 2018
Speaker: Kimberly Whaley
CBA, Will, Estate and Trust (WET)Fundamentals Course
Passing of Accounts
April 18, 2018
Speakers: Kimberly Whaley and Lionel Tupman
Six Minute Estate Lawyer
May 3, 2018
Speaker: Kimberly Whaley
STEP Canada 20th National Conference
May 28-29, 2018
Speakers: Kimberly Whaley and Albert Oosterhoff
B'Nai Brith Trusts and Estate Seminar
Estate Planning Gone Awry
Domestic Contracts in SLRA Applications
May 30, 2018
Chair and Speaker: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
September 28, 2018
Speakers: Andrea McEwan and Amanda Bettencourt
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
November 2, 2018
Speakers: Kimberly Whaley and Alex Swabuk
PART IV: RECENT BLOG POSTS
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