WEL Newsletter, Vol.9 No.1, April 2019


 
HAPPY EASTER & PASSOVER FROM WEL PARTNERS

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SPECIAL RECOGNITION
CONGRATULATIONS TO ALBERT OOSTERHOFF, PROFESSOR
EMERITUS WESTERN UNIVERSITY, FIRM COUNSEL WEL PARTNERS

I t is with great pleasure that all of us at WEL congratulate Professor Albert Oosterhoff, our firm counsel, colleague and friend on the honours of being bestowed upon him.

Albert  is being recognized this spring for a lifetime of achievements with: 

The  OBA Distinguished Service Award

The OBA Award for Excellence in Trusts and Estates

Lifetime Honorary Membership, STEP Canada

Congratulations Albert, well deserved!

 

I. WEL NEWS
1. 
CONGRATULATIONS TO ALBERT OOSTERHOFF, PROFESSOR EMERITUS, LIFETIME HONORARY MEMBER, STEP CANDA


It is with pleasure that we congratulate Professor Albert Oosterhoff on his honorary membership to STEP Canada. The selection committee unanimously agreed that Albert has made unique and exceptional contributions to 'scholarships in the law of trusts and estates'.
 
Albert, Congratulations on receiving this prestigious accomplishment and honour. We have learned that you are in esteemed company, in that Emeritus Professor Donovan Waters, Q.C., F.R.S.C., an international expert in trust law is the only other Canadian to receive such an honour.
2. 
INVESTOR PROTECTION CLINIC OPENS NEO EXCHANGE
 
Marian Passmore, co-founder of the Investor Protection Clinic (IPC) attended the opening of the NEO Exchange on March 29, 2019 with the IPC.
 
NEO, in recognition of the importance of investors to our capital markets, invited the Investor Protection Clinic to open the market, to help raise awareness of the important work that the IPC does for investors. The IPC is often a last resort for investors who have been harmed but have not been able to obtain assistance to deal with their issue anywhere else.


3. DISPUTES OVER HUMAN REMAINS, THE ADVOCATES QUARTERLY, VOL. 49, NO. 4 APRIL 2019


Kimberly Whaley's article "Disputes over Human Remains" was published in (2019), 49 Adv. Q. 429 of The Advocates Quarterly.

4. STEP JOURNAL, APRIL 2019, VOLUME 27, ISSUE 3

 
Kimberly Whaley's article "Not a Perfect Science" was published in Volume 27, Issue 3, in the STEP Journal, April 2019.

5. ELDER ABUSE ONTARIO, PETERBOROUGH POLICE SEMINAR, APRIL 10, 2019

 
On April 10, 2019 Michael J. Marra and Alexander Swabuk co-presented on Financial Elder Abuse and the Civil/Criminal Remedies Available to Peterborough residents. Laura Tamblyn-Watts was the keynote speaker and Anthony Evelyn also presented on the topic of "Estates Planning what you need to know".


6. 

CAMBRIDGE, ESTATE PLANNING AND LITIGATION FORUM, APRIL 14-16, 2019

 
Kimberly Whaley attended the Estate Planning and Litigation Forum and presented on Elder Abuse - Civil and Criminal Remedies at the Cambridge Forum on April 15, 2019, together on a discussion panel with Peter Glowacki, Borden Ladner Gervais LLP, Vancouver, BC and Jessica Lyle, Sealy Comish Coulthard, Dartmouth, NS.
 
  http://www.eplforum.ca/
7. WEL ON DEPENDANTS' SUPPORT, 2019
 
Our newest publication, 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

A PDF of our book can be accessed on our website: 
http://welpartners.com/resources/WEL-on-dependants-support.pdf


II. SHOUT OUTS
Congratulations to our colleagues on receiving deserved honours and recognitions:

LSO AWARDS:

LAW SOCIETY MEDAL
Aldo Braida
Tom Curry
Professor Jeffery Hewitt
Cheryl Milne
Guy Pratte
Professor Carol Rogerson
Susan Ursel
Frank Walwyn

LINCOLN ALEXANDER AWARD
Yasir Naqvi

LAURA LEGGE AWARD
Pamela Cross

J. SHIRLEY DENISON AWARD
Amanda Ross, recognized for her commitment to Toronto's most vulnerable through her volunteer efforts with the Toronto Lawyers Feed the Hungry Program.

WILLIAM J. SIMPSON DISTINGUISHED PARALEGAL AWARD
Jennifer Gravel Vanasse

OBA AWARDS:

OBA PRESIDENT'S AWARD
James Douglas, Borden Ladner Gervais LLP
The Honourable Patricia C. Hennessy, Superior Court of Justice

AWARD FOR DISTINGUISHED SERVICE
Eva E. Marszewski, Peacebuilders International (Canada)
Albert H. Oosterhoff, WEL Partners Professional Corporation
Martin M. Sclisizzi, Bay Street Chambers

HEATHER MCARTHUR MEMORIAL YOUNG LAWYERS AWARD
H. Michael Rosenberg, McCarthy T├ętrault LLP

JOEL KUCHAR AWARD FOR PROFESSIONALISM AND CIVILITY
John R. Cockburn, Q.C., Barriston Law LLP
B. Robin Moodie, Moodie Mair Walker LLP

DAVID SCOTT, Q.C., AWARD FOR PRO BONO LAW
Erin H. Durant, Borden Ladner Gervais LLP

LINDA ADLAM MANNING AWARD FOR VOLUNTEERISM
Robert M.G. Shawyer, Shawyer Family Law

OBA FOUNDATION AWARD
Luke's Place

MUNDELL MEDAL FOR LEGAL WRITING
Professor Martha Jackman, University of Ottawa

III. LAW REVIEW
(i)  POTENTIAL CONFLICT OF INTEREST NOT ENOUGH TO REMOVE EXECUTOR  ANOTHER CAUTIONARY WARNING ON REMOVAL OF FIDUCIARY APPLICATIONS
Burke v Burke 2019 BCSC 383, (CanLII), http://canlii.ca/t/hz7qg
 
By Kimberly Whaley
 
In a recent case from the British Columbia Supreme Court, Burke v Burke, a beneficiary failed in her attempt to have her sister removed as executor[1] of their grandmother's estate, based on allegations of conflict of interest.
 
Background
 
The grandmother died in 2018 at the age of 95. She had only one child, the mother of the sisters. There was a history of family estrangements, with the mother being estranged from the grandmother for 13 years and the older sister (executor) living away from her mother and sister from the age of 13.
 
In 2003 the grandmother executed a land transfer form, transferring a half interest in one of her properties to the older sister as a joint tenant with a right of survivorship.
 
A month prior to her death, the grandmother held a "family meeting" confirming that she wanted the older sister to be her executor because she "had always been there for her". When the mother asked if each daughter would be inheriting one of the three properties owned by the grandmother, the grandmother responded that it was "none of your business".
 
After the grandmother died, the younger sister brought a petition to have the executor removed, relying on the Wills Estates and Succession Act ("WESA") RSBC 1996, c 464 and the inherent jurisdiction of the Court. The younger sister argued that the executor was in an "untenable conflict of interest" as she was named as a defendant in a separate WESA action brought by their mother. The WESA action alleges that the grandmother made inadequate provision for the mother and that the inter vivos transfer of property was subject to a resulting trust and that the executor was holding the property in trust for the benefit of the estate.
 
The executor defended the WESA action, arguing that the grandmother's bequests were fair to all beneficiaries and that the grandmother made a valid inter vivos gift to her of the property. She produced a handwritten note from the grandmother explaining her rationale for the gift: she had already given the younger sister large cash deposits for her to purchase real estate.
 
The executor argued there was no conflict of interest as she could continue to serve as executor while the action was litigated independently among herself, in her personal capacity, her sister and her mother. Replacing her with a trust company (as the sister and mother suggested) would add an unnecessary financial burden on the estate and its administration.
 
Should the Executor be Removed?
 
Quoting from the Ontario cases of Haines v Haines 2012 ONSC 1816 and Johnson v Lanka 2010 ONSC 4124, Justice Milman summarized the test for the removal of an executor (or, as referred to in Ontario, an estate trustee) as being:
 
1) The court will not lightly interfere with the testator's choice of estate trustee;
2) Clear evidence of necessity is required;
3) The court's main consideration is the welfare of the beneficiaries; and
4) The estate trustee's acts or omissions must be of such a nature as to endanger the administration of the trust. [2]
 
Justice Milman agreed that the executor in this case presented a strong prima facie case that the testator intended for her to be the executor and commented that the "Court ought not to interfere with that preference lightly, and then only if there is no other reasonable alternative available."
 
However, Justice Milman went on to observe that he also agreed with the sister and mother that the executor faces at "least a potential conflict of interest, insofar as the executor has a duty to maximise the assets available in the estate for distribution to the beneficiaries. In her personal capacity, [the executor's] interest lies in resisting any attempt to bring the [property] into the estate." [3]
 
In considering whether the "potential for conflict of interest" is sufficient in itself to justify the removal of the executor, it is important to keep in mind that "not every actual or perceived conflict of interest should lead to disqualification".[4] Each case turns on its own facts:
 
In this case, [the executor] was named as a defendant both in her personal capacity and in her capacity as executor. There was no need for [the mother] to name [the executor] in that latter capacity, . . . there is no allegation advanced against [the executor] in that capacity. There is no relief sought against the estate or its executor per se. [The mother] seeks only a variation of the will and a declaration of resulting trust in relation to the Alberni Street Property. In that dispute, the estate itself can and must remain neutral.

. . . [The executor] is not seeking to challenge the will, so as to put her in a conflict of interest with the estate, but rather to uphold it. It is, rather, [the sister and mother] who seek to challenge the will. [5]
 
Justice Milman went on to discuss the "perception of disabling conflict" which arises when an executor could be called upon to sue herself in her personal capacity on behalf of the estate. This was not the situation here. Ultimately Justice Milman concluded:
 
I am satisfied that as long as [the executor] makes it clear that she is defending the WESA Action solely in her personal capacity and that she is taking no position in it in her capacity as executor (as her counsel stated her position to be) then the inchoate potential for a conflict of interest on her part should not disqualify her from continuing to act as executor. [6]
 
The petition was dismissed, with costs to the executor.
 
Takeaway

As discussed in this case, there are situations where a conflict of interest will be significant enough to warrant a removal of an executor/estate trustee. However, not all situations of potential or actual conflict of interest will justify such a removal. Courts will not lightly interfere with a testator's choice of executor/estate trustee.


[1] "Executor" is the term used in British Columbia and in this case. In Ontario the term "Estate Trustee" is used.
[2] 2019 BCSC 383 at para 29.
[3] 2019 BCSC 383 at para 41.
[4] 2019 BCSC 383 at para 43.
[5] 2019 BCSC 383 at paras 47 & 49.
[6] 2019 BCSC 383 at para 57.
(ii)  MARRIAGE CONTRACTS ON DEATH 
By Michael Marra
 
What is the effect of a marriage contract on death?
 
Marriage contracts are domestic agreements authorized by Part IV of the Family Law Act ("FLA"). Beginning in 1986 with the inception of the equalization of net family property ("NFP") regime for division of property on separation and death, the FLA permitted parties in defined relationships to contract out of the statutory scheme by way of a marriage contract or cohabitation agreement:

Marriage contracts

52  (1) Two persons who are married to each other or intend to marry may enter into an agreement in which they agree on their respective rights and obligations under the marriage or on separation, on the annulment or dissolution of the marriage or on death, including,

(a) ownership in or division of property;
(b) support obligations;
(c) the right to direct the education and moral training of their children, but not the right to custody of or access to their children; and
(d) any other matter in the settlement of their affairs.  R.S.O. 1990, c. F.3, s. 52 (1); 2005, c. 5, s. 27 (25).

Rights re matrimonial home excepted

(2) A provision in a marriage contract purporting to limit a spouse's rights under Part II (Matrimonial Home) is unenforceable.  R.S.O. 1990, c. F.3, s. 52 (2).

Cohabitation agreements

53  (1) Two persons who are cohabiting or intend to cohabit and who are not married to each other may enter into an agreement in which they agree on their respective rights and obligations during cohabitation, or on ceasing to cohabit or on death, including,

(a) ownership in or division of property;
(b) support obligations;
(c) the right to direct the education and moral training of their children, but not the right to custody of or access to their children; and
(d) any other matter in the settlement of their affairs.  R.S.O. 1990, c. F.3, s. 53 (1); 1999, c. 6, s. 25 (23); 2005, c. 5, s. 27 (26).

Effect of marriage on agreement

(2) If the parties to a cohabitation agreement marry each other, the agreement shall be deemed to be a marriage contract.  R.S.O. 1990, c. F.3, s. 53 (2).

To be enforceable the domestic contract must be made in writing, signed by the parties and witnessed [section 55(1)]
 
By statute, the scope of the issues that may be covered under the contract is broad. The use of "any other matter in the settlement of their affairs" in section 52(1) (d) is particularly far ranging. It is not unusual to see the same types of final releases that we see in separation agreements in marriage contracts. The release of all future rights to property and estate claims is common. As such, the parties may be releasing claims under Part V of the Succession Law Reform Act ("SLRA") for dependents support and the right to elect to take by way of equalization under Part I of the FLA.
 
A surviving spouse could be excluded under the deceased's will and have no access to statutory remedies due to the provisions of the marriage contract.
The question then becomes whether the marriage contract can be set aside under section 56(4) of the Family Law Act:

Setting aside domestic contract

56 (4) A court may, on application, set aside a domestic contract or a provision in it,

(a) if a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
(b) if a party did not understand the nature or consequences of the domestic contract; or
(c) otherwise in accordance with the law of contract.  R.S.O. 1990, c. F.3, s. 56 (4).
 
Extensive case law has been developed over the years interpreting section 56 (4). Undue influence, duress, unequal bargaining positions, unconscionability, the lack of independent legal advice ("ILA"), insufficient ILA and the inadequacy of the financial disclosure are the primary grounds for an application to set aside a marriage contract.
 
The release or limitation of future spousal support rights is problematic as between married spouses. Such releases are specifically governed by the test of the Supreme Court of Canada in Miglin v. Miglin [2003] 1 SCR 303. Given the authority of the court in original support applications under the Divorce Act as set out in Miglin, spousal support releases in marriage contracts will be closely scrutinized and are of doubtful validity unless impeccably negotiated, factually supported and in short term marriage scenarios. The longer the marriage the less likely the spousal support release will stand.
 
The inclusion of a final spousal support release in a marriage contract may cast doubt on the validity of the balance of the provisions in the agreement.
 
By analogy contracts which purport to release a spouse's future dependents support rights should attract the same high level of scrutiny.  
 
A surviving spouse faces significant statutory time restrictions when considering whether to take under the will or elect to equalize the NFP. The election must be made in the prescribed manner within six months from the date of death [section 6(10) FLA] and the FLA court application for equalization must be commenced within that same time frame [section 7(3)(c) FLA].
 
In the event that the surviving spouse elects to proceed with equalization the marriage contract will be put forward as a defense by the Estate Trustee or opposing parties.
 
Weighing whether the marriage contract will stand or fall as against the entitlements under the will is an impossible task within the six month statutory election period. Just as in a Will Challenge proceeding, the file of the lawyer who acted for the surviving spouse when the marriage contract was executed is required. Law Pro may become involved and it is likely that a court order directing the release of the file will be necessary.
 
On motion under section 2(8) of the FLA, the Court has authority to extend the six month limitation period for making the election and commencing the proceeding if it is satisfied that:

(a) there are apparent grounds for relief;
(b) relief is unavailable because of delay that has been incurred in good faith; and
(c) no person will suffer substantial prejudice by reason of the delay.

The recently reported decision of A
quilina v. Aquilina, 2018 ONSC 3607 (CanLII) provides an excellent review of the considerations on a motion to extend the time for making an election.
 
Within the FLA proceeding the question of splitting the case or "bi-furcation" to determine whether or not the marriage contract should be set aside is a consideration.   The request to split is based on the argument that the litigation will be simplified if the Court first determines whether or not the marriage contract is valid and if so the extent of its application on death.

The 2009 decision of Justice Michael G. Quigley in Simioni v. Simioni, 2009 CanLII 934 (ON SC) is often cited for the statement of principles and considerations that the court must weigh on a bi-furcation motion:
 
[ 15 ] First, it should be accepted as non-controversial that both the  Family Law Rules  and the inherent jurisdiction of the Court provide ample authority and power to permit cases such as this to be split:  Family Law Act section 2(10) Rule 12(5) .  The jurisprudence confirms that this is an authority and power that ought to be exercised if convenient, and if the exercise of the power would be in the interests of justice.  The interests of justice will be served if there are clear time and expense benefits to be gained from the bifurcation and determination of the threshold issue, provided no real or meaningful prejudice is caused to either party: Elcano Acceptance Ltd. et al v. Richmond, Richmond, Stambler & Mills 1986 CanLII 2591 (ON CA) , [1986] O.J. No. 578 (O.C.A.); General Refractory Companies of Canada v. Venturedyne Ltd., [2001] O.J. No. 746 (S.C.J.O.); Royal Bank of Canada v. Kilmer van Nostrand Co., [1994] O.J. No. 1476 (Ont. Ct. Jus.(Gen. Div.)).

[ 16 ] Nevertheless, it is equally important to remember that the splitting of a trial effectively denies the fundamental principle that as far as possible, multiplicities of proceedings are to be avoided, and thus the power to split a case should be regarded as one that is narrowly circumscribed and to be exercised in only the clearest of cases - in cases that exhibit the exceptional merit that calls upon the Court to exercise its inherent power:  Courts of Justice Act section 138 Elcano, above; Carriero (Litigation Guardian of ) v. Flynn, [2004] O.J. No. 3117 (S.C.J.O.).  In light of this caution, the onus necessarily lies upon the party seeking to bifurcate to satisfy the Court on a balance of probabilities that if granted, severance will result in the "just, expeditious and least expensive determination of the proceeding on its merits".: Merck & Co. v. Brantford Chemicals Inc.,  2004 FC 1400 (CanLII) , [2004] F.C.J. No. 1704 (F.C.C.) at para 4.

[ 17 ] There are a number of questions the Court should consider in deciding whether the severance of the trial in this instance is just and expeditious. These include whether the issues for the first trial are relatively straightforward and the extent to which the issues proposed for the first trial are interwoven with those that will arise in the second. They include whether a decision from the first trial will likely put an end to the action, significantly narrow remaining issues, or significantly increase the likelihood of settlement. They include the extent to which resources have already been devoted to all issues, the possibility of delay, the advantages or prejudice the parties are likely to experience and whether the severance is sought on consent or over the objections of one or more parties: see General Refractories Co. of Canada, above at para. 16.  However, as Himel J. noted there, emphasizing the observations of Wilkins J. in Royal Bank v. Kilmer, above, the focus of these questions on expediency does not displace fairness and justice as the dominant considerations.     

The decisions of Justice Gordon in Dillon v. Dillon 2013 ONSC 7679 and Justice Penny in Grossman v. Grossman 2014 ONSC 2090 are helpful marriage contract bi-furcation cases which follow Simioni.

There is no doubt that the existence of a marriage contract in an estate administration adds to the complexity of the situation. Counsel with significant family law experience should be independently consulted by counsel for all parties involved.

IV. UPCOMING EVENTS
Law Society of Ontario CPD - Six Minute Estate Lawyer
Tips and Tools to Enhance an Estate Mediation
April 29, 2019
Speaker: Kimberly Whaley

Osgoode Professional Development
Passing of Fiduciary Accounts
April 30, 2019
Chair: Albert Oosterhoff
Speakers: Ian Hull, Professor Albert Oosterhoff and Tracey Phinnemore, Heather Hogan and Katherine Antonacopoulos

International Academy of Estate and Trust Law, IAETL Tokyo
Resolution of Trust and Estate Disputes
May 19-23, 2019
Panellist: Kimberly Whaley

STEP Premier Sponsorship Education Session
Short Case Study Presentation
May 22, 2019
Presenter: Bryan Gilmartin
 
Office of the Public Guardian and Trustee
Predatory Marriage and Financial Abuse of Elders
May 27, 2019
Speakers: Kimberly Whaley, Albert Oosterhoff and Sareh Ebrahimi

Osgoode: Professional Development - Estate Litigation: The Practical Guide for Legal Professionals

May 28, 2019
Speaker: Kimberly Whaley

B'NAI BRITH CANADA
Trust Troubles - Litigation, Tax and Ethical Issues
June 4, 2019
Moderator: Kimberly Whaley
 
Osgoode Professional Development - The Essential Guide to Estate Dispute Mediations: Unique Challenges Creative Solutions
Best Practices at the Mediation and Documenting the Settlement Properly
June 5, 2019
Speaker: Kimberly Whaley

OBA and Toronto Public Library Law in the Library
June 6, 2019
Speaker: Matthew Rendely

Toronto Police Seminar
Elder Abuse
June, 7, 2019
Speakers: Kimberly Whaley and Sareh Ebrahimi

OBA and Toronto Public Library Law in the Library
June 27, 2019
Speaker: Marian Passmore

LSO
Administration of Estates
September 10, 2019
Chair: Kimberly Whaley and Tim Grieve

STEP Toronto
Case Law and Legal Update
September 11, 2019
Speaker: 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 and Marian Passmore
 
CCEL BC
Access to Justice, Bridging the Gap, Elder Law for Everyone
November 14-15, 2019
Speaker: Kimberly Whaley

Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
December 6, 2019
Speaker: Alex Swabuk and Michael Marra

V. IN CASE YOU MISSED IT - RECENT BLOG POSTS
Elder Abuse Initiatives South of the Border: Michigan Launches the Elder Abuse Task Force

Remember, it is a Rebuttable Presumption of Resulting Trust - Cvetkovic v. Perrier AND Perrier v. Cvetkovic

Inheritance, the "Slayer Rule" and Reaping the Proceeds of Death (Updated)

Conflicts of Interest in Matrimonial Property Claim Brought by Administrator Against an Estate

#bustedlitigation: When your case goes down... in the dm's

Motion to Amend Judgment on Passing of Account Statute Barred

Advances in Fertility and its Environmental Impact

Fraud Prevention and Identity Theft

VI. CONNECT WITH WEL
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