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Happy New Year from WHALEY ESTATE LITIGATION PARTNERS. We would like to wish you all the best for 2019.
Do you follow us on social media? Do you subscribe to our blog?
We invite our subscribers to read our blog on-line or via a feed reader using our blog's RSS feed and to follow us on social media.
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| 1. WELCOME MARIAN PASSMORE
It is with great pleasure that we introduce and welcome Marian Passmore who joined WEL PARTNERS as an associate lawyer on January 21, 2019.
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2. WEL ON DEPENDANTS' SUPPORT, 2019
Hot off the press, our newest publication, this time on Dependants' Support under the Succession Law Reform Act.
If you would like to receive a hard copy of our book, we invite you to contact Blossom Pangowish, Office Coordinator at blossom@welpartners.com.
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3. CANADIAN LAWYER MAGAZINE TOP TEN WILLS, TRUSTS & ESTATES BOUTIQUES, JANUARY 2019
Whaley Estate Litigation Partners is honoured to be recognized this year as a 2019-20 Top 10 Wills, Trusts and Estates Boutique by Canadian Lawyer Magazine.
Warmest congratulations to our colleagues Bales Beale LLP, de Vries Litigation LLP Toronto, Goddard Gamage LLP, Hull & Hull LLP, Legacy Tax and Trust Lawyers, O'Sullivan Estate Lawyers, Schnurr Kirsh Oelbaum Tator LLP, The Estate House, and Underwood Gilholme Estate Lawyers on their recognition.
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| 4. BEST LAWYERS RECOGNITION, JANUARY 2019
Kimberly Whaley, John Poyser and Debra Stephens were recognized by Best Lawyers, 2019 Canadian edition in the practice area of Trusts and Estates.
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5. BECHTEL v JACKSON, 2018 CARSWELLONT 17372
Matthew Rendely successfully argued that communications protected by settlement privilege be struck from the Applicants' Application Record. In this decision, the Honourable Justice Barnes confirmed the test for settlement privilege and the exceptions for when such privilege can be waived as set out by the Divisional Court in Inter-Leasing Inv. v. Ontario (Minister of Finance), 2009 CanLII 63595 (ON SCDC).
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6. WHALEY/HULL ARCHIVED WEBINAR SERIES, CLIENT CAPACITY
You still have time to access the Whaley/Hull Webinar fall webinar series on Client Capacity and the Lawyer's Retainer. Learn from Kimberly Whaley and Ian Hull as they present on capacity considerations as a critically important aspect of a lawyer's practice.
- Client Capacity: A Lawyer's Retainer
- Client Capacity and the Real Estate Lawyer's Retainer
- Client Capacity and the Family Law Lawyer's Retainer
- Client Capacity and the Corporate Lawyer's Retainer
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| 7. ONTARIO BAR ASSOCIATION INSTITUTE, FEBRUARY 6, 2019
Kimberly Whaley will be co-chairing the OBA Institute Elder Law, Personal Injury and Elder Law: Practice, Policy and Procedure with Maia Bent of Lerners LLP. She will be joined by
Dr. Dirk Huyer, Chief Coroner of Ontario; Jane Meadus, Advocacy Centre for the Elderly; Amani Oakley, Oakley & Oakley and Mike Smitiuch, Smitiuch Injury Law.
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8. MICHAEL MARRA PUBLISHED IN MONEY & FAMILY LAW
Michael Marra's article, "Life Insurance as Security for Support Obligations" will be published in the upcoming Money & Family Law, newsletter, a publication for professionals in family law, trusts and estates law and estate planning. Michael's article appeared in the WEL Partners December Newsletter).
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(i)
CHARLES v. JUNIOR AND ESTATE: INTERIM SUPPORT AND THE IMPORTANCE OF FINANCIAL DISCLOSURE
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By Alexander Swabuk
As a result of an increase in blended families, remarriages, and other types of spousal relationships, it goes without saying that estate practitioners are seeing an increase in the number of dependent support claims being brought against estates. These claims are not being commenced just by spouses of a deceased person, but by their combined children, extended family and other dependants as well. Where a deceased person fails to adhere to their statutory obligations, surviving spouses and/or dependants may seek to enforce on their legal rights as against their deceased spouse's estate pursuant to the Family Law Act and the
the
Succession Law Reform Act[1] ("SLRA"), or, if access to the provincial legislation is denied or provides an inadequate remedy, a variety of equitable claims can be made pursuant to the common law.
Due to the often contentious and emotionally charged parties involved in a dependant support claim a final determination of an opposed Application for dependant support can take months (or even years) before being resolved. This in turn may leave the leave the Applicant struggling financially in the interim.[2] Fortunately,
w
here an Application is made under Part V of the SLRA, and the Applicant is in need of (and entitled to) support but any or all of the matters referred to in section 62 or 63 have not been ascertained by the court, the court may grant an interim support order. On a motion for interim dependant support, the onus lies on the Applicant to establish some degree of entitlement to, and the need for, interim support. Accordingly, the Applicant must: make a prima facie case that they are entitled to support; demonstrate that they were a dependant of the deceased; and demonstrate the deceased was either supporting them or had a legal obligation to support them immediately before their death. Once these factors are established, the Applicant must also then demonstrate that the Deceased did not make adequate provision for their support and show that they are in need.
Experienced estate practitioners are cognizant that the provision of interim dependant support by the court is an extraordinary remedy which is not granted blithely. Often members of the bench will be left considering the opposing party's rebutting evidence in determining the overall strength of the applicant's claim and where the opposing party directly disputes the Applicant's entitlement, they may decline to award interim support.[3] In that vein, courts in Ontario have also long held that it is not enough to simply establish impecuniosity and as such Applicants would be wise to put forth as strong an evidentiary record as possible at a motion for interim support in order to advance their claim for dependant's support. This notion was echoed in a recent case before the Ontario Superior Court of Justice in Brampton, where the Honourable Justice Emery was tasked with determining a motion for interim relief that was brought forth by the widow of the deceased due to certain property transactions made by the deceased shortly before his death which substantially reduced the value of the assets in the estate.
Facts
In Charles v. Junior and Estate, Mr. Lennard Charles ("Mr. Charles" or the "Deceased") was diagnosed with stage 4 pancreatic cancer and died five weeks later, on October 8, 2017. At time of his death, Mr. Charles was married to his second wife of 22 years, Mrs. Charlene Charles ("Charlene") and was survived by his two adult children from a first marriage, namely his son Lennard Charles Junior ("Lennard" or the "Estate Trustee"), and his daughter Ruth-Ann Charles ("Ruth"). In the fifteen days leading up to his death, Mr. Charles executed a new will (the "September Will"). In the September Will, Mr. Charles changed the bequests that Charlene would have received under a previous will. Mr. Charles also severed a joint tenancy with Charlene on one or more properties, liquidated certain RRSP's worth $500,000 and drew down $130,000 on a line of credit secured against the matrimonial home. Mr. Charles then proceeded to deposit those funds into an account in his name alone. Additionally, Mr. Charles made certain transfers of title to properties having an estimated value of $2.5 million to his son, Lennard. These transactions had the net effect of reducing a possible value of the assets in the Estate from approximately $3.3 million to $460,000. Pursuant to the September Will, Charlene would receive one half of the one half interest Mr. Charles held in the matrimonial home, for a value of approximately $87,500, and the residue of the estate would then go to his two children, Lennard and Ruth, in equal shares. As a result, Charlene commenced an Application for, inter alia, support as a dependant under the SLRA and to set aside the transfer of certain properties made prior to her husband's death. Within that Application, Charlene brought forth a motion seeking an order for interim support in the amount of $1,225 per month from the Estate as a dependant. The Estate Trustee took the position that Charlene had no need for interim support from the Estate and that the Deceased and Charlene were separated prior to Mr. Charles' death.
On the motion before the Honourable Justice Emery, the Estate Trustee conceded that Charlene was a dependant as she was the spouse of Mr. Charles immediately preceding his death. Charlene therefore qualified as a dependant as that term is defined under s. 57(1) of the SLRA. Nevertheless, the motion for interim support was opposed by the Estate Trustee on two primary grounds. First, the Estate Trustee argued that Charlene consistently earned approximately $70,000 a year from her own employment prior to the death of Mr. Charles, and continued to do so. In contrast, the Deceased earned a lesser income since his retirement in 2014. Second, the Estate Trustee submitted that the transfer of the two properties from Mr. Charles to Lennard were actually transfers from Mr. Charles as a bare trustee to his son as the beneficial owner. The Estate Trustee also asserted that the transfer of those properties, the severance of Mr. Charles' interest in the matrimonial home from Carlene as joint tenants, and the execution of the September Will were all acts taken by Mr. Charles to organize his personal affairs in view of his separation from Carlene.
Finding and Key Takeaways
In his Judgment, the Honourable Justice Emery determined that Charlene's perception of entitlement to interim dependant support had been conflated with her property based claims, and that there was an insufficient basis to award interim dependant support on the grounds she was attempting to advance. The Honourable Justice Emery was satisfied that the evidence put forth before the court at the motion by the Estate Trustee had established that Charlene earned a greater income than her husband for the last three years of his life. Charlene also failed to provide any evidence that her economic circumstances worsened to any significant extent since Mr. Charles' death with respect to income and expenses. On cross-examination, Charlene admitted that she purchased the groceries and household items for herself and Mr. Charles before his death. As such, the Honourable Justice Emery found that Charlene was the primary provider for the household, dismissed the motion and determined that an assessment of proper allocation of responsibilities to pay household expenses was better left for trial.
With adequate financial disclosure, the Court may order interim costs for impecunious applicants under the SLRA, however, experienced estate practitioners should be cognizant of the important role financial disclosure and a fulsome evidentiary record plays in meeting this threshold. As demonstrated in Charles v. Junior and Estate, although the onus is on the moving party to provide the necessary information upon which the Court can decide to exercise their discretion to award interim dependant support, the court will assess both parties' evidence in determining the overall strength of the claim put forth. The type of information a court expects to see from an Applicant in order to make a prima facie case for interim dependant support, includes statements of income and expenses for the years before and after the passing of the deceased, verified and supported by relevant documents, including income tax returns and pay stubs to demonstrate employment income, as well as net worth statements for that period of time.[4] The financial statements published under Rule 13 of the Family Law Rules provide useful guides for organizing and presenting this type of evidence.
[5]
[1]
Succession Law Reform Act
, R.S.O. 1990, c. S.26.
[4]
Romero v. Naglic Estate
, 2009 CarswellOnt 3193, (Ont. S.C.J.).
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(ii)
SECTION 3 COUNSEL AND THE REBUTTABLE PRESUMPTION OF CAPACITY TO INSTRUCT
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by Daniel Paperny
Section 3 of the
Substitute Decisions Act
[1]
provides invaluable legislative protection for vulnerable individuals whose capacity has been called into question during the course of legal proceedings. The provision, which gives courts the discretion to order that legal counsel be appointed for such vulnerable individuals, is intended to give these parties an autonomous voice in litigation that may affect their interests and reads as follows:
Counsel for person whose capacity is in issue:
3. (1) If the capacity of a person who does not have legal representation is in issue in a proceeding under this Act:
(a) the court may direct that the Public Guardian and Trustee arrange for legal representation to be provided for the person; and
(b) the person shall be deemed to have capacity to retain and instruct counsel.
The role of section 3 counsel is, in part, to provide legal advice and advance the interests of allegedly incapable individuals, and to convey the wishes and interests of those persons to the court. This is a crucial function, as it provides legal rights and autonomy to individuals in proceedings who might otherwise be unable to secure same or unaware of the need for same.
However the concept and role of section 3 counsel is inherently tricky, because counsel is, on one hand, tasked to represent individuals whose capacity is in issue, yet the lawyer is still bound by the Rules of Professional Conduct and Rules of Civil Procedure and duty-bound not to take or act on instruction if the client is found to lack the capacity to instruct[2].
You will note that, pursuant to s. 3(1)(b) excerpted above, the allegedly incapable client is 'deemed' to have capacity to instruct counsel upon section 3 counsel being appointed. However, that presumption of capacity can be rebutted where there is convincing evidence that the person, in fact, lacks capacity. If there are reasonable grounds to believe that the person is incapable of instructing counsel or incapable of entering into a solicitor-client relationship, then section 3 counsel must not act.
In such circumstances, where the individual is found to lack capacity to instruct, that person's capacity is not truly "in issue" as contemplated by s. 3(1), and section 3 counsel may not be appointed by a court in the first instance[3]. This was the case in the Miziolek case discussed here.
In its 2018 Miziolek decision, the Ontario Superior Court of Justice was tasked with determining whether it was appropriate in the circumstances to order that counsel be appointed for a vulnerable adult, pursuant to s. 3 of the SDA.
In Miziolek, two daughters were fighting over the Powers of Attorney for property and personal care that had been granted to one daughter (the respondent in these proceedings) by their mother. The applicant challenged the validity of the Power of Attorney documents and challenged the actions that the respondent had taken as the mother's attorney.
The applicant asked the court to order that section 3 counsel be appointed for the mother so that her rights and interests could be protected in the litigation. The respondent took the position that it was not appropriate or necessary for section 3 counsel to be appointed. The respondent argued that it was clear, in the circumstances, that the mother lacked capacity entirely, that capacity was therefore not in issue in the proceedings, and that section 3 counsel should not be appointed because the mother was incapable of providing instructions to counsel.
In reviewing the law on section 3 counsel, the Honourable Justice Goodman cited Kim Whaley's text on this subject[4] as a guiding authority in the area:
[17] ... the literature and cases relating to Section 3 Counsel has been summarized in Kim Whaley's paper, "Between a Rock and a Hard Place: The Complex Role and Duties of Counsel Appointed Under Section 3 of the Substitute Decisions Act, 1992." Perhaps quite aptly, the introduction contains the following:
Persons involved in proceedings where capacity is at issue, whether represented by counsel or lay persons, often do not understand the need for an appointment of counsel for the allegedly incapable person and do not appreciate the particular role and responsibilities of Section 3 Counsel.
[18] I find that Ms. Whaley provides instructive advice in this area of the law. She notes that the SDA seeks to protect the interests of vulnerable persons, while at the same time providing those means to assert their autonomy by ensuring that they are part of the legal process that affects their interests ...
In its analysis, the court in Miziolek noted the important role of section 3 counsel and the presumption of the allegedly incapable client's capacity to instruct. Yet the court also observed that counsel must not and cannot act if the person lacks capacity to provide instructions.
The respondent in Miziolek provided a medical assessment report from a Dr. Sadavoy which concluded with the doctor's opinion that the mother was "incapable of providing counsel with realistic insight into her wishes and instructing counsel in any meaningful manner". The report was not rebutted or challenged by the applicant.
In rendering the court's decision in Miziolek, Justice Goodman noted the potential contradiction section 3 counsel might encounter: tasked with acting for an allegedly incapable client who is "deemed" to have capacity, yet they must not act if the person's capacity to give instructions is lacking.
In resolving this apparent contradiction, and arriving at its decision that section 3 counsel not be appointed in this case, the court in Miziolek again referred to the Whaley text:
[22] In her research, Ms. Whaley ... addresses ... the argument ... that, without instructions,
Section 3 Counsel cannot act ... proposition 1 from the Banton case. There is, however, a proposition 2 in the Banton case, namely that counsel must take instructions from the client and must not act if satisfied that capacity to give instructions is lacking.
[23] Ms. Whaley observes that these two propositions appear to be inconsistent and contradictory to Section 3 of the SDA, which deems capacity to give instructions:
A possible resolution involves interpreting section 3 as a statutory right of the person whose capacity is at issue, to be represented by counsel, without allowing for objection that the person lacks capacity to retain and instruct counsel. In essence the deeming provision of section 3 acts as a shield to any attack on the person's capacity to instruct counsel, thus ensuring the right to counsel.
The court in Miziolek concluded that while s. 3 of the SDA provided a statutory safeguard to vulnerable individuals by deeming them capable of providing instruction to counsel, such a presumption could be rebutted if there was sufficient evidence showing that the person was lacking capacity. This was the case in Miziolek.
Upon review and consideration of Dr. Sadavoy's conclusive report, Justice Goodman concluded that there were "more than reasonable grounds to believe that [the mother was] incapable of entering into a solicitor-client relationship" and incapable of providing instructions on the matters at issue in these proceedings. The court ruled that the mother's capacity was not truly 'in issue', and that the appointment of section 3 counsel would be ineffective and wasteful in the circumstances.
Conclusion
The Miziolek decision provides some useful insight into how the apparent contradiction of section 3 counsel might be resolved. Section 3 counsel serve a worthy function by advancing the interests of allegedly incapable persons, and communicating the wishes and feelings of their vulnerable clients. In the absence of conclusive evidence to the contrary, the vulnerable party shall be presumed to have the requisite capacity to provide instructions to section 3 counsel and counsel should act on those instructions. However, where there are reasonable grounds to find that the person is not able to instruct or enter into a solicitor-client relationship, section 3 counsel must not act and may not be appointed in the first place. There is a statutory presumption of capacity, which is intended to protect the rights of vulnerable individuals, yet that presumption is rebuttable and it was rebutted in Miziolek.
Whether a vulnerable individual has the capacity to instruct section 3 counsel will of course be determined by that person's own mental state, but also depends on the specific matters at issue in the subject litigation (a person may have capacity to instruct on some matters, yet not on others). Further, while this was not the case in Miziolek, there may be circumstances where the person is found to lack capacity to instruct counsel on the matters at issue in the litigation, but where section 3 counsel could still serve a valuable role in receiving and conveying the interests and wishes of the individual if they are able to communicate same to counsel.
---
For further reading on this complex subject, a pdf copy of Ms. Whaley's paper Between a Rock and a Hard Place: The Complex Role and Duties of Counsel Appointed Under Section 3 of the Substitute Decisions Act, 1992 is available on our website:
[1]
S.O. 1992, c. 30 (the "
SDA
")
[2]
See: Banton v Banton, 1998 CarsWellOnt 4688 (Ont. Gen. Div.) ("Banton")
[3]
Miziolek v. Miziolek 2018 ONSC 2841 ("Miziolek")
[4]
Whaley, Kimberly A. and Ameena Sultan, Between a Rock and a Hard Place: The Complex Role and Duties of Counsel Appointed Under Section 3 of the Substitute Decisions Act, 1992
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(iii)
COURT DISMISSES MATRIMONIAL CLAIM DISGUISED AS AN ESTATE CLAIM
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The Estate of Lois Jean Davey v. Craig 2018 ONSC 7367 (CanLII)
by Kimberly Whaley
While there may be some overlap between family law and estate law, an estate claim should not be brought as an attempt to gain certain relief that was denied in a family law claim. This is what occurred in Davey v Craig 2018 ONSC 7367 where Justice Pedlar dismissed "a matrimonial claim brought under the guise of an estate claim", under section 2.1.01(1) of the Rules of Civil Procedure. This provision allows a Court to dismiss or stay a claim if it appears on its face to be frivolous or vexatious or otherwise an abuse of the process of the court.
Background
An Estate Trustee was in the process of both divorcing his wife and administering his mother's estate. He commenced an application on behalf of his mother's estate against both himself and his wife seeking an order declaring that his mother's estate had a beneficial interest in a property legal owned by himself and his wife. This beneficial interest, he claimed, was as a result of the doctrine of constructive trust and he sought an order for partition and sale and payment. The particular property in question was an in-law suite the mother had constructed at the husband and wife's matrimonial home.
Parallel family law proceedings were also dealing with issues of the matrimonial home and the wife's counsel advised that the husband had already raised the issue that his mother constructed an in-law suite in the family law proceedings and sought an order for the sale of the property. That motion was dismissed with costs in January 2018.
In support of his estate claim, the Estate Trustee provided an affidavit and attached his mother's Will. The Will provided a term directly related to the addition of the in-law suite: "The addition built on my [son's] house where I reside shall become the sole property of said son and the estate shall have no claim on said addition." [emphasis added]
[1]
Decision
The Court held that "the express words" of the mother in her Will:
plainly evidence an
inter vivos gift. The estate is the applicant in this matter. The testatrix expressly declared that the estate shall have no claim against the property. The application by the estate does not seek to set aside the will. The executor . . .does not attempt to assert any other estate claim against the co-respondent. . .Clearly, this is a matrimonial claim brought under the guise of an estate claim. . .An estate trustee cannot pursue a claim expressly forbidden by the terms of the will without successfully setting aside the terms of the will. Accordingly,
no reasonable person could expect to distort logic and reason to succeed on this application.
[2] [emphasis added]
The Court went on to conclude that "the claim has no basis in fact or law. One cannot give the gift, make clear evidence of the gift, and then recover the property using the law of unjust enrichment."
The application was found to be an "exercise of futility and frivolous and vexatious on its face" and was dismissed under Rule 2.1.01(1) of the Rules of Civil Procedure. Costs were ordered against the Estate Trustee.
[1]
Davey v Craig 2018 ONSC 7367 at para 8.
[2]
Davey v Craig 2018 ONSC 7367 at paras 9-10.
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(iv)
WILL CHALLENGES AND RELATED CLAIMS PAPER
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Kimberly Whaley has updated her
Will Challenges and Related Claims
paper.
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PART III: UPCOMING EVENTS
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| Whaley/Hull Archived Webinar Series
Ontario Bar Association Institute Elder Law Program
Personal Injury and Elder Law: Practice, Policy and Procedure
February 6, 2019
Chair: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
February 15, 2019
Speaker: Michael Marra and Daniel Paperny
Osgoode Professional Development
2019 Elder Law - Marriage Contracts; conflicts in Blended Families: Sibling Struggles, Predatory Marriages and Family Meetings
February 26, 2019
Speaker: Kimberly Whaley
Moderator: Professor Albert Oosterhoff
Osgoode Professional Development
Powers of Attorney and Guardianship: Non-contentious and Contentious Matters
April 9, 2019
Speaker: Kimberly Whaley
Cambridge Forum, Estate Planning and Litigation Forum
Elder Abuse - Civil and Criminal Remedies
Speaker: Kimberly Whaley
April 14-16, 2019
Osgoode Professional Development
Passing of Fiduciary Accounts
April 30, 2019
Chair: Kimberly Whaley
Speakers: Ian Hull, Professor Albert Oosterhoff and Tracey Phinnemore, Heather Hogan and Katherine Antonacopoulos
STEP Premier Sponsorship Education Session
Short Case Study Presentation
May 22, 2019
Presenter: Bryan Gilmartin
B'NAI BRITH CANADA
June 4, 2019
Moderator: Kimberly Whaley
GTA Accountants and GTA Finance Network
Elder Abuse
October 1, 2019
Speaker: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
November 1, 2019
Speaker: Matthew Rendely
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
December 6, 2019
Speaker: Alex Swabuk
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PART IV: RECENT BLOG POSTS
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