A few months ago, the Queen's Bench Division of the Court in the United Kingdom released the decision in Thorpe v Fellowes Solicitors LLP. This decision did not to my knowledge extend the duty of care imposed on a solicitor. The court opined, there is "plainly no duty upon solicitors in general to obtain medical evidence on every occasion upon which they are instructed by an elderly client just in case they lack capacity. Such a requirement would be insulting and unnecessary." <1>

 

Facts:

1. Ms. Alexander contacted Fellowes Solicitors on behalf of her 77 year old mother, Mrs. Hill;
2. Mrs. Hill gave instructions for the sale of her property;
3. Ms. Alexander, Mrs. Hill's daughter lived with Mrs. Hill in the property which was to be sold;
4. The sale price was negotiated with instructions to Fellowes Solicitors that the balance received on closing after repaying the mortgage, would be made available to Mrs. Hill's daughter, Ms. Alexander, such that she could purchase a property in her own name with the assistance of her own solicitors;
5. After the sale had been completed, Mrs. Hill moved to full-time residential care;
6. The action was commenced by Mrs. Hill's son in his capacity as her Litigation Friend, seeking damages for professional negligence.

The Claim:

1. That Fellowes Solicitors LLP failed to appreciate that Mrs. Hill was a vulnerable person and to make enquiries as to her capacity to understand the sale transaction which represented the disposal of her only asset;
2. That Fellowes Solicitors LLP failed to appreciate that Ms. Alexander, her daughter, had considerable influence over Mrs. Hill, and only met with Mrs. Hill briefly in Ms. Alexander's presence;
3. That Fellowes Solicitors LLP did not properly investigate the sale of the property, its market value, the implications of selling her property;
4. That Fellowes Solicitors LLP failed to respond to the allegedly "highly suspicious" nature of the remission of the sale proceeds to Ms. Alexander as opposed to Ms. Hill; and
5. That Fellowes Solicitors LLP did not appreciate that the remission of the sale proceeds to Ms. Alexander was peculiar.

On Capacity:

1. It is unclear from the judgment whether and what capacity was assessed;
2. The judgment refers to unequivocal instructions to the solicitor without detail;
3. It is known from the judgment, that at the relevant time of the transaction, Mrs. Hill was suffering from senile dementia;
4. The Expert Evidence seems to suggest that Mrs. Hill did have capacity and did have ability to make a perfectly valued opinion, and that dementia is not an all or nothing condition when it comes to capacity.

The court in reaching its conclusion that there was no negligence, restricted its analysis to the conveyancing transaction alone. It does not appear that the nature of the transaction was investigated in full or established, nor had it been pleaded in negligence. In other words, it is not clear whether or not the proceeds which were ultimately remitted to Ms. Alexander, constituted a gift, or whether it was understood that the proceeds advanced were to be held by way of resulting trust to Mrs. Hill's Estate.

 

The judgment speaks to the fact that in Mrs. Hill's Estate, the gift, if a gift, would constitute a significant portion of her Estate. The judgment speaks to the solicitor's attendance, no records, and there is some indication that the property to be purchased by Ms. Alexander would be the property in which Mrs. Hill would also reside. This did not turn out to be the case in the end.

 

The judgment therefore seems unclear in many respects, but too, the claim pleaded, also unclear.

 

This judgment does not seem to be of much value to solicitors in determining any further duty of care owed by a solicitor in circumstances where an elderly client provides instructions, and certainly does not place any further obligation on a solicitor with respect to the assessment of capacity, in circumstances of alleged or potential undue influence.

 

Solicitors are entitled to rely on the presumption of capacity.

 

That said, in a decision analysed in a paper done by me some time ago now, that of Re Beaney [1998] 4 ALL E.R. 705, the court opined: "the degree or extent of understanding required in respect of any instrument is relative to the particular transaction which is to effect. In the case of a Will, the degree required is always high. In the case of a contract, a deed made for consideration or a gift inter vivos, whether by deed or otherwise, the degree required varies with the circumstances of the transaction. Thus, at one extreme, if the subject matter and value of a gift are trivial in relation to the donor's other assets, a low degree of understanding will suffice. But, at the other extreme, if its effect is to dispose of the donor's only asset of value, and thus, for practical purposes, to pre-empt the devolution of his estate under his Will or on his intestacy, then the degree of understanding required is as high as that required for a Will, and the donor understands the claims of all potential donees and the extent of the property to be disposed of."  <2>

 

For a summary of considerations on assessing capacity in particular circumstances, please access our firm's capacity checklists on our website by clicking here, and view our paper entitled: "Comparing the Various Tests of Capacity" by clicking here.

Case files can be found by clicking the following links:

 

Hall v. Watson, 2009 CanLII 64807 (ON SC)

Hall v. Watson, 2010 ONSC 635 (CanLII)

 

Court of Appeal: 

 

Hall v. Watson, 2010 ONCA 839 (CanLII)

 

The decision of the Honourable Justice Crane at first instance was appealed to the Ontario Court of Appeal. The trial decision dismissed Verna Hall's claim against her former solicitor, Norman Watson, for breach of his duty to her and for refusing to order that the transfer of Verna Hall's house to the Respondent, St. Joseph's Villa Foundation, be set aside.

 

The case at first instance involved a transaction whereby Ms. Hall transferred her home to the St. Joseph's Villa Foundation, retaining a life estate in the home.

 

According to the trial judgment, Verna Hall testified that the deed transferring title of her house to St. Joseph's Villa Foundation, was drawn up by Mr. Watson, executed in his presence, and was not correctly explained to her, and that he did not advise her of the nature and extent of the transfer and therefore that she did not understand she was transferring title.

 

The Honourable Justice Crane however found that Ms. Hall fully understood the nature of her gift to the St. Joseph's Villa Foundation and its legal consequences and rejected the claim against Mr. Watson and her plea of non est factum.

 

An additional allegation was raised peripherally that Mr. Watson was negligent in carrying out his duties to Ms. Hall in relation to the transaction by not ensuring that it dealt with issues such as who would be responsible for municipal taxes and maintenance during the currency of the life interest. Ms. Hall advised she had no intention of assuming such associated costs with a house she no longer owned.

 

The Court of Appeal would not give effect to the appeal in relation to the issue raised at trial regarding damages for legal fees, alleged conflict of interest, and responsibility for expenses. In rejecting Ms. Hall's claim of non est factum, the trial judge made findings of fact supported by evidence and applied them correctly. The court found that maintenance costs were not properly before the court as it was not pleaded. Ms. Hall finally challenged the costs awarded to Mr. Watson at trial and the Court of Appeal found that there was no reason to interfere with the cost award, which costs were awarded on a substantial indemnity scale. The appeal was dismissed and the costs of the appeal fixed at $19,000.00 payable by Ms. Hall to each of Mr. Watson and the St. Joseph's Villa Foundation. 

 

Link to case file: 

Barbulov v. Huston, 2010 ONSC 3088 (CanLII) 

 

This is a decision of the Honourable Mr. Justice Newbould from a summary judgment motion brought, which resulted in the summary dismissal of the plaintiff's action against the solicitor, Wilfred Paul Huston ("Huston"), in respect of a negligence claim.

 

The solicitor, Huston, requested a dismissal of the action where two issues were raised:

1. Whether the defendant owed a duty of care to the plaintiff, who was named as Attorney (the grantee) in his father's Power of Attorney and who later incurred legal fees in appealing a decision of the Consent and Capacity Board ("CCB") regarding the care to be given to his father in his dying days; and
2. Based on the assumption that there was a duty of care owed to the plaintiff, whether the defendant was negligent.

Justice Newbould concluded that no duty of care was owed to the plaintiff, and, in any event, that the plaintiff had not established that the solicitor was negligent. Justice Newbould held that a solicitor advising a grantor of a Power of Attorney owes no duty of care to the attorney. Justice Newbould went further to suggest that such a duty of care could conflict with a solicitor's ultimate duty, which is to the grantor of the Power of Attorney.

 

Facts:

1. The defendant solicitor acted for the plaintiff's father who died in April 2009.
2. The plaintiff's father emigrated from Serbia in 1970 and allegedly could neither read nor write English.
3. The plaintiff's father and mother retained the defendant solicitor to draft a Will for each of them and attended at their home to take instructions.
4. The evidence of the plaintiff according to the judgment of Justice Newbould, is that he and his sister also attended this meeting.
5. The judgment speaks to the evidence suggesting it was contested whether or not, a Power of Attorney was discussed at the initial meeting.
6. On February 28, 1995, the mother and father attended the defendant solicitor's office to execute the Wills. The plaintiff went with his parents.
7. The father executed a Power of Attorney for Personal Care and for Property on the same date.
8. The Judgment speaks to the plaintiff's evidence that it was only at the second meeting that the powers of attorney were discussed. What was discussed at the second meeting is also contested.
9. The ultimate issue however turned on the grantor's wishes concerning life support.
10. In August 2008, the father was admitted to St. Joseph's Health Centre suffering from brain damage due to a lack of oxygen. At this time, the plaintiff having reviewed the Power of Attorney and purportedly realising that it did not reflect his understanding of his father's wishes, became concerned as to the use of the Power of Attorney for personal care and he in turn, told the physicians that his father did not have one.
11. In the absence of a Power of Attorney setting out the father's wishes, the physicians commenced a Form G application to the CCB to determine the father's 'bests interests", and a plan of treatment was proposed in the application.
12. At the CCB hearing, the plaintiff produced the Power of Attorney. Based on the terms of the Power of Attorney, the doctor who participated at the hearing, proposed a revised plan of treatment which reduced medical intervention from that which was originally prescribed in the Form G application, to conform to the wishes expressed in the Power of Attorney.
13. The CCB ordered the revised plan be implemented.
14. The plaintiff retained counsel to appeal the decision of the CCB to the Ontario Superior Court of Justice.
15. The basis upon which the appeal was brought was that the Power of Attorney did not reflect the grantor's wishes.
16. In April 9, 2009, Justice Brown held that the CCB erred in concluding that the Power of Attorney expressed the grantor's prior capable wishes on the basis that there was no evidence in the record to support the CCB's conclusion that the plaintiff explained the Power of Attorney to his father.
17. At paragraph 8 of Justice Newbould's decision it is stated as follows: "In light of the decision that there was no power of attorney expressing the father's prior capable wishes, Brown J. was required to determine under Section 21(2) of the Health Care Consent Act, 1996, what was in the best interests of the father. He concluded that the decision of the Board on this issue was reasonably supportable and that the Board's conclusion that the family members were misguided by their hope of recovery for the father was reasonable on the evidence before the Board. He held that the Board's conclusion that the plaintiff had failed to act in accordance with the best interests of his father in giving or refusing consent to treatment was a reasonable one and he directed the plaintiff to give or refuse consent to treatment for his father in accordance with the treatment plan which was contained in the clinical summary attached to the Form G Application to the Board. Brown J. did not make any costs award of the appeal."
18. The plaintiff sued for legal expenses incurred by him in prosecuting the appeal.

 

Duty of Care:

 

In Justice Newbould's analysis he concedes no known case in Canada or indeed, the U.K. dealing with the issue of a solicitor's duty of care owed to an attorney named in the Power of Attorney of the solicitor's client.

 

Justice Newbould reviewed the test of whether there was a duty of care owed by the defendant solicitor to the plaintiff as set out by Lord Wilberforce in Anns v Merton London Borough Council (1977), [1978] A.C. 728 (U.K. H.L.); and which was adopted in Nielson v Kamloops (City), [1984] 2 S.C.R. 2 (S.C.C.) as follows:

           

"(i) is there a sufficiently close relationship between the parties so that, in the reasonable contemplation of the authority, carelessness on its part might cause damage to that person? If so,

(ii) Are there any considerations which ought to negative or limit (a) the scope of the duty and (b) the class of persons to whom it is owed or (c) the damages to which a breach of it may give rise?"

 

Moreover, Justice Newbould referenced Cooper v Hobart, [2001] 3 S.C.R. 537 (S.C.C.), a Supreme Court of Canada case which succinctly describes their review of the Anns v Merton test and provides:

 

"In assessing whether a duty of care should be imposed, the approach set out in Anns is still appropriate in the Canadian context. Different types of policy considerations are involved at each stage of Anns. At the first stage, the question is whether the circumstances disclose reasonably foreseeable harm and proximity sufficient to establish a prima facie duty of care. The proximity analysis focuses on factors arising from the relationship between the plaintiff and the defendant, including broad considerations of policy. The starting point for the proximity analysis is to determine whether there are analogous categories of cases in which proximity has previously been identified. If no such cases exist, the question then becomes whether a new duty of care should be recognized in the circumstances. In order to recognize a new duty of care, mere foreseeability is not enough. The plaintiff must show proximity -- that the defendant was in a close and direct relationship to him or her such that it is just to impose a duty of care in the circumstances. The factors which may satisfy the requirement of proximity are diverse and depend on the circumstances of the case. They must be grounded in the governing statute when there is one."

 

"If the plaintiff is successful in establishing a prima facie duty of care, the question at the second stage is whether there exist residual policy considerations which justify denying liability. These are not concerned with the relationship between the parties, but with the effect of recognizing a duty of care on other legal obligations, the legal system and society more generally. The second stage of Anns will seldom arise, as questions of liability will be determined primarily by reference to established and analogous categories of recovery. Where a duty of care in a novel situation is alleged, it is necessary to consider the second stage of the Anns test."

 

Justice Newbould also analyzed cases in which proximity had been identified in determining whether or not the circumstances of this case, disclosed reasonably foreseeable harm to the plaintiff if the defendant was negligent, and, whether or not there was sufficient proximity for a duty of care to be established.

 

Justice Newbould also analyzed whether liability should be extended to a new situation having regard to factors of proximity of relationship between the parties, and concluded there is not sufficient proximity to impose a duty of care on Huston in favour of the plaintiff.

 

Huston did not according to Justice Newbould, undertake to look after the plaintiff's interests.

 

Huston was concerned solely with the interests of his client, the plaintiff's father.

 

At paragraph 21 of the Judgment Justice Newbould states:

 

"In many instances, there could be a conflict between the wishes of a grantor of a power of attorney and the wishes of the named attorney at the time the power is granted or to be exercised, and the expression of the grantor's wishes in the power of attorney can protect the grantor. For the solicitor to owe a duty to the named attorney could be in conflict with the solicitor's duty to the grantor. It could not be expected that a solicitor advising a grantor of a power of attorney would owe a duty of care to the named attorney."

 

"As well, a causal connection reasonably foreseeable at the time of the execution of the power of attorney between the solicitor not following the wishes of the father and resulting legal expenses incurred as here in appealing a decision of the Consent and Capacity Board would appear to be remote. If the power of attorney did not express the father's wishes, as the plaintiff contended, an appeal from the Board's decision on the basis that the plaintiff alone could decide what was in the best interests of his father was doomed to fail. There was no power of attorney giving the plaintiff that authority. Once the matter became a decision for the Board, the plaintiff had no over-riding decision making authority. See M. (A.) v. Benes 1999 CanLII 3807 (ON C.A.), (1999), 46 OR. (3d) 271 at para. 46 (C.A.)."

 

Justice Newbould noted that neither side resisted the Summary Judgment Motion and took a position that the matter should proceed to trial. Rather, both contended that the contested evidence should be decided in their favour.

 

The action was ultimately dismissed and the defendant entitled to his costs which were not fixed at the time the judgment was concluded on May 28, 2010.   Justice Newbould in the course of his judgment concluded that there is no need to create a separate duty of care owed by the grantor solicitor to the attorney. An attorney is entitled to reimbursement from the grantor, its reasonable expenses incurred as an attorney, and if in reimbursing the attorney, negligence is found to account for the incurrence of the expenses, the grantor is free to sue his solicitor to recover them.

 

The court however was ultimately not satisfied that the power of attorney did not reflect the grantor's wishes.

 

Concluding remarks on practising defensively as a Solicitor: 

 

Tips & Traps 

1. Document everything;
2. Obtain written instructions;
3. Obtain written acknowledgments and directions;
4. Be aware of missed time limits, or inordinate delay in carrying out client instructions;
5. Manage client expectations;
6. Avoid miscommunication with clients, solicitor, third party beneficiaries;
7. Do not improperly delegate;
8. Be aware of improper supervision, poor organization, or self-management;
9. Prevent poorly defined retainer;
10. Be competent: know your client issues;
11. Avoid mistakes, omissions, drafting errors;
12. Avoid dabbling; lack of knowledge of the particular practice area and applicable legal principles;
13. Understand who your client is, and your clients' needs;
14. Understanding that a conflict of interest might arise or be present;
15. Assess urgency from a client who might be severely ill - i.e. time is of the essence, the exercise of common sense, perception and judgment; lack of agreement/advice/information re a time frame for completing the Will at the outset with the client;
16. Avoid the failure to ascertain testamentary capacity where appropriate - dementia, Alzheimer's, cognitive dysfunction, delusions, mental illness, drug addiction, alcoholism;
17. Avoid the pitfalls of varying one Will where mutual Wills are involved;
18. When preparing a new Will or Codicil, examine the terms of the previous Will and Codicil;
19. Keep written notes of instructions taken and given, and dockets recorded;
20. In executing the Will, make a checklist of all necessary items attendant on validity -signatures, dates, witnesses and their contact info, initialled

• Negligence in failing to protect the testator/client is to an ever increasing degree the foundation of complaints against drafting solicitors, after death. In an ever contentious practice area, it is important that solicitors protect their clients and themselves.

• If you are a solicitor retained to advise, or give an opinion on a solicitors' negligence claim, or you are being sued, be aware of possible limitation period issues.

• In addition to knowledge of the standard or duty of care, other tools solicitors should make use of are:

1. checklists for taking instructions;
2. checklists for ascertaining assets;
3. checklists for ascertaining capacity;
4. checklists for meeting legislative requirements for formalities;
5. client information intake forms;
6. keeping careful notes and records
   of the client's instructions;
7. reporting letters to clients;
8. developing a routine practice; and
9. retainer agreements with clients.

• On retainers, the case of Desc�teaux v. Mierzwinski<1> is a case confirming that there is no requirement for an actual executed retainer agreement to exist, in order for a solicitor-client relationship to be in existence. The question as to when a solicitor-client relationship arises, and consequently the right to confidentiality was addressed by the Supreme Court of Canada in Desc�teaux.<2>  and that of Hoque v. Montreal Trust Co. of Canada.<3>

• In an era where increasingly solicitors must be careful of not holding themselves out to be giving legal advice in casual circumstances for example, and exercise caution in that regard, suggesting that a retainer need not be formally constituted to exist, illustrates the importance of defining when a retainer agreement beings and ends. This should be at the forefront of a solicitor's risk management practice tools.

• Retainer agreements with clients apart from setting out the expectations of the solicitor, and the duties to the client, are a primary tool for setting out the subject matter of the engagement, and the fee arrangement between the solicitor and client. Notwithstanding, the retainer agreement and the terms set out therein, the court has the inherent jurisdiction to set aside the terms of the retainer agreement if they are not fair and reasonable. If the terms of the retainer agreement are considered by the Court to be unfair and unreasonable, the Court would have power under the Solicitors Act, to declare the agreement void. The Solicitors Act, is available to clients to have their legal bills of their solicitors assessed. <4>

• You may have issues of conflict and privilege which are particular to the circumstances of your retainer; I would suggest including reference to these circumstances in your retainer agreement with your client and deal with them appropriately to protect yourself, your past, present and future clients.

• On reporting letters, there is no better risk management tool available to you than the Reporting Letter. As solicitors we must report to our client on a consistent and ongoing basis. We should report in writing on any issues concerning instructions, advices, conflict, waiver, consent, privilege and issues concerning confidentiality.

• Good practice would be to confirm ongoing instructions in writing, particularly where there has been some ambiguity, or material change either on the part of advices given, or instructions given by our client. Report on new facts, or evidence, and how it impacts your client. Be careful to particularly report when advices have been given, yet your client chooses not to follow such advices. Always think proactively to protect yourselves in your practice, and to protect your client and those who you owe a duty of care.

• Solicitors must ensure that their file is well documented with detailed notes and memorandums - our file is our protection. Solicitors must keep copies of all e-mails in our files. Solicitors must stay current in our practice area.

• Risk management issues and establishing good practices are best approached by making them routine. Often there are complications within the solicitor-client relationship, or retainer, which warrants the exercise of caution.

• Certainly the case law concerning Solicitor's negligence is vast, and expanding, and consequently illustrative of a need for heightened awareness and diligence.

• There is a clearly defined duty of care owed by the Estate Planning solicitor. Liability in negligence will be sustained by the solicitor in relationships which are proximate and reasonably foreseeable.

• The tort of negligence has been defined with more clarity in the context of Will drafting over the last three decades. The state of the law in Canada on the duty of care owed has expanded, yet it is predictable as defined by the parameters of the case law to date.

 

"I'm sorry," the intensive care physician says, "There's nothing else we can do for your dad. As a result of the stroke and the time his brain went without oxygen, all of his upper brain functions have been destroyed. He's in a vegetative state from which he will never recover. It's time to let him go..."

 

"No, you can't let him die, his religious beliefs require that he hold on to life for as long as possible, no matter what!"

 

No one knows how frequently families have to make decisions similar to this, whatever the cause: it might not have been a stroke, it could have been a young person in very similar condition after a motorcycle accident, an elderly person in the late stages of dementia, or, as with Mr. Hassan Rasouli, a person in mid-life left in a vegetative (or minimally conscious or comatose) state after complications from surgery.

 

Mr. Rasouli was a patient at Sunnybrook Health Sciences last fall, admitted for removal of a benign brain tumour. Sadly, he contracted meningitis after surgery, leaving him in a persistent vegetative state-but the subject of a lawsuit over his future that made it to Ontario's Court of Appeal.

 

Mr. Rasouli's treatment team took the position that, since continued life support offered no benefit to him, it was no longer a treatment, meaning they did not require consent to discontinue it. They told his family that, unless a Court ordered otherwise, they would withdraw Mr. Rasouli's life support in a week.

 

It is worth noting that in many Ontario hospitals, when this type of "end of life" dispute arises, the doctors make application to The Consent and Capacity Board pursuant to s. 37 of The Health Care Consent Act, authorizing health practitioners to determine whether or not the substitute decision-maker has complied with the principles for giving or refusing consent to the treatment of a person incapable of making his or her own treatment decisions. There have been about 20 such cases before the Board over the past decade.

 

But the Sunnybrook treatment team said they didn't have to go to the Consent and Capacity Board because this was no longer a treatment issue. Mr. Rasouli's wife commenced a Superior Court application for injunctive relief, either to compel the doctors to continue his life support or to take the matter to The Consent and Capacity Board.

 

In a sweeping judgment<1> Madam Justice Himel held that the doctors were wrong: on the unique wording of our legislation, which specifies that withholding or withdrawing a treatment is included in the definition of "plan of treatment," which is included in the definition of "treatment," the physicians required consent to discontinue Mr. Rasouli's life support and if it was not forthcoming, their options were to continue treatment or make the Consent and Capacity Board application.

 

The doctors appealed. They lost in the Court of Appeal<2> but on much narrower grounds than per Madam Justice Himel's ruling.

 

The essence of the Court of Appeal ruling is that the doctors proposed replacing active care with palliative care. The doctors had proposed removing Mr. Rasouli from the ventilator with the expectation that he would shortly die. But they also proposed palliative care measures pending his death, particularly pain medications and other comfort measures. The Court held this was a "treatment package," requiring consent. (This fits the legislative definition of a "plan of treatment.")

 

As a result of the Court of Appeal judgment, Mr. Rasouli's treatment team has two options: either continue him on life support or make an application to The Consent and Capacity Board. At this writing, they have neither appealed to The Supreme Court or applied to the Board.

 

The Court of Appeal distinguished between discontinuing chemotherapy for an outpatient and discontinuing Mr. Rasouli's life support. In the former situation, the physician determines that further chemotherapy will not help the patient, as the cancer is not responding. The doctor tells the patient this and, effectively, sends him or her home to deal with the news. In that case, discontinuing one treatment does not require commencing another, as with discontinuing ventilator support.

 

The Court also recognized that the issue is more complex than this, even without considering the scarce resources expended to keep one patient alive-in most hospitals, being on a ventilator requires that the patient be in an intensive care unit, at a cost exceeding $1 million per year. Intensive care beds are a scarce resource. Ontario has about 1100 in total and their occupancy is close to 100%, meaning that surgeries for patients are sometimes delayed because there would be no bed for that patient after the operation.

 

The complexities include balancing a patient's values and beliefs as well as previously expressed capable wishes against his or her medical best interests, without forgetting that many health care professionals view continuing life support in some circumstances (such as Mr. Rasouli's situation) to be unethical. The Court also suggested, not entirely obliquely, that the Legislature will have to address the complexities left unanswered by The Health Care Consent Act.

 

It is of course, correct for a Court to decide an individual case on the narrowest possible grounds, leaving future cases to flesh out the principles applicable to similar cases. The Court of Appeal replaced Justice Himel's sweeping judgment with a narrow focus on the specific question of whether or not Mr. Rasouli's treatment team required consent for the specific plan of treatment they proposed and held the treatment team did need consent.

 

The problem in this area of law, however, is that few "end of life" patients live long enough for their cases to get into the courts. While applications to The Consent and Capacity Board are heard very quickly-the legislation requires that the Hearing convene within 7 days of the initial application-appeals (or injunction applications at first instance) through the courts can take months. The Rasouli application was commenced in November 2010, heard in March 2011 and heard by the Court of Appeal in May, the judgment being released the end of June 2011. Consequently, case law in this field will develop even slower than in other fields.

 

Being faced with an end of life decision for a loved one incapable of making his or her own decision is difficult at the best of times and conflict with the treatment team does not make it easier, even when the treatment team is at its best in explaining their rationale and is sensitive to the emotional distress the situation exacerbates. Hospital social workers, chaplains, risk managers and ethicists are frequently involved to assist everyone involved in attempting to find common ground.

 

But, the law remains uncertain if only because the advances of medical science proceed at a pace with which the law cannot keep up. However, there are legal principles and processes involved and the involvement of lawyers for both sides can help to clarify the issues and options-and sometimes even result in compromise where none seemed possible.

 

By Brian Wilson and Jag Gandhi. Brian Wilson is a tax lawyer, and our mediation partner at estatemediators.ca.

As many of us already know, in May of 2011, Bill 173, Better Tomorrow for Ontario Act (Budget Measures), 2011, received royal assent. Schedule 14 to the Bill amends the Estate Administration Tax Act, 1998, S.O. 1998, C.34 ("EATA") which places a duty on estate trustees to provide prescribed information to the Minister of Revenue about the deceased, gives power to the Minister of Revenue to conduct assessments and reassessments of the taxes paid by the deceased's estate and applies penalties for the failure to provide the prescribed information within the prescribed time period and manner.

These new obligations being placed on estate trustees will impact applications for estate certificates that are made on or after January 1, 2013.

 

So what does this mean for individuals who will be making applications for estate certificates? Additional scrutiny on their actions for an already thankless job. The Minister of Revenue will now have the right to assess an estate in respect of its estate administration tax liability. The assessment and reassessment period, of an estate for its taxes payable under the EATA, is a four years window from the date of filing the initial application. In addition, an assessment may be made at any time that the Minister of Revenue considers reasonable upon establishing: (a) that the estate trustees have not filed the prescribed information required; or (b) that the estate trustees made a "misrepresentation that is attributable to neglect, carelessness or wilful default, or has committed any fraud in supplying any information regarding an estate or in omitting to disclose any information regarding the estate."

 

In order to encourage compliance, like with other taxing statutes, penalties have been added to the EATA. Offences are punishable by fine, by imprisonment or by both, with a minimum fine of $1,000 and a maximum fine of twice the estate administration tax payable.

 

There is no mechanism for comfort to estate trustees that they have met their tax obligations under the EATA. Unlike a clearance certificate that the estate trustees can obtain for income tax purposes, there is no similar mechanism for the tax payable under the EATA. Does this expose the estate trustees to personal liability if the estate is distributed before the Minister of Revenue issues a notice of assessment or reassessment for additional estate administration tax? Section 2(8) of the EATA states that "tax is payable by the estate representative in his, her or its representative capacity only". So, if additional estate administration tax is payable after the estate has been distributed, who will be responsible to pay it? Who will the Minister of Revenue collect from? And how about any fines which may be payable as a result of non-compliance, whom will they collect that amount from?

 

All of this uncertainty leads us to advise estate trustees to be extremely careful during their duties of collecting information about the deceased's assets and liabilities and valuing the estate. In complex estates, to act defensively, the estate trustees should get chartered accountants, valuators and lawyers involved early in the process. Finally, estate trustees will have to keep their fingers crossed for at least four years from the date of the initial application that they are not assessed by the Minister of Revenue, however, if there is a misrepresentation attributable to neglect, carelessness, wilful default or fraud then keeping their fingers crossed won't even work. 

We continually add articles and posts to our blog and will post update notices via Twitter and on LinkedIn.  If you would like to follow blog via our RSS feeds here is the link: 

http://whaleyestatelitigation.com/blog/feed/rss/ 

 

LSUC: The Administration of Estates

September 14, 2011

Chair, Kimberly A. Whaley

 

OBA Section Executive Program on Elder Abuse and the Estate Lawyer

October 26, 2011

Ameena Sultan to moderate  

 

LSUC: The Administration of Estates

October 31, 2011

Chair, Kimberly A. Whaley

 

LSUC Summit

November 9 & 10, 2011

Kimberly A. Whaley to speak

 

LSUC, Six-Minute Lawyer

April 24, 2012

Kimberly A. Whaley to speak

 

NAELA and the CBA Elder Law Executive in partnership, Seattle Elder Law Conference

April 26-28, 2012

 

CLC CBA Vancouver, Blended Family Presentation 

August 12-14, 2012

Kimberly A. Whaley to speak

 

The Administration of Estates 2012

September 13, 2012

Chair, Kimberly A. Whaley