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Whaley Estate Litigation Partners helps clients navigate dispute resolution throughout Ontario. We hope you enjoy our newsletter.
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1. WEL WELCOMES MICHAEL MARRA
WEL welcomes back Michael to his return to the firm. Michael rejoined our firm on September 4, 2018. Michael's contact details can be accessed on our website at: http://welpartners.com/people/marra
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 2. WEL WELCOMES DANIEL PAPERNY
WEL would like to welcome Daniel Paperny. Daniel joined our firm on September 10, 2018. Daniel's contact details can be accessed on our website at: http://welpartners.com/people/paperny
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| 3. APPOINTMENT TO ONTARIO SECURITIES COMMISSION'S (OSC) SENIORS EXPERT ADVISORY COMMITTEE (SEAC)
On September 12th Kimberly Whaley was appointed to the Ontario Securities Commission's (OSC) Seniors Expert Advisory Committee (SEAC). The SEAC will advise OSC staff on securities-related policy, operational, education and outreach activities of the OSC designed for older investors.
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| 4. MONEY AND FAMILY LAW, JULY 2018 Kimberly's article "Money and Family Law: Can an Obligation to pay Spousal Support Survive the Death of the Recipient Spouse" was published in the July 2018, Issue 33-7 of Money and Family Law. |
| 5. THE ADVOCATES QUARTERLY, AUGUST 2018
Kimberly Whaley and Kate Stephens article "A Lawyer's Duties and Obligations Where Capacity, Undue Influence, And Vulnerability Are At Issues In A Retainer" was published in Volume 48, Issue 4, August 2018 of The Advocates Quarterly.
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| 6. CHAMBERS HNW 2018 LEGAL RANKINGS
Kimberly Whaley was pleased to have been ranked by her peers in Chambers HNW 2018, Private Wealth Disputes and was described as:
Kimberly Whaley of Whaley Estate Litigation is known for her "very broad knowledge in the area, really able to cover just about any type of estates case. She is an assertive litigator who is well-prepared and gets things done." She is described by one peer as "brilliant, an excellent litigator. I wouldn't hesitate to refer people to her."
Another appreciates that "she is a tireless worker, she knows this area very well and she's got a great presence in court and with clients. She is wonderful to work with, she is sensible and cuts to the chase."
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| 7. 2019 EDITION OF BEST LAWYER
Kimberly Whaley was selected by her peers for inclusion in the 13th Edition of The Best Lawyers in Canada 2019 for her work in Trusts and Estates. She has been recognized since 2009.
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| 8. ESTATE PLANNING AND LITIGATION FORUM, 2019
Kimberly is pleased to have been asked by the Estate Planning and Litigation Forum to be a member of the steering committee for the 2019 Estate Planning and Litigation Forum through Cambridge Forums. Marylin Piccini Roy is the Chair of the Forum this year.
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| 9. TORONTO PUBLIC HEALTH'S UPCOMING ELDER ABUSE PREVENTION FORUM, SEPTEMBER 28, 2018
Kimberly Whaley will be a panelist on the Toronto Public Health forum on September 28, 2018. For further information, please see link below:
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10. SEPTEMBER 26, 2018 - WEBINAR:
NAVIGATING YOUR RETAINER WHERE CLIENT CAPACITY IS AT ISSUE
Kimberly A. Whaley & Ian M. Hull jointly present a LIVE WEBINAR SERIES this fall. REGISTRATION IS NOW OPEN.
Capacity considerations are a critically important aspect of a lawyer's practice, given our emerging social and demographic populations. This valuable live webcast will help you understand a lawyer's obligation, the rules upon which a lawyer's conduct will be examined, how to reconcile legislative and common law precedent, the legal abilities of attorneys and guardians, limitations on their powers, and the role of assessors and assessments. Join Ian Hull and Kimberly Whaley as they address the importance of capacity considerations in a lawyer's retainer.
Client Capacity in a Legal Retainer - SEPTEMBER 26
Client Capacity: A Corporate Lawyer's Retainer - OCTOBER 24
Client Capacity: A Real Estate Lawyer's Retainer -
NOVEMBER 28
Client Capacity: A Family Lawyer's Retainer - DECEMBER 5
4:45 - 6:00 pm Live Webcast
$75 + HST per session
This program qualifies for 0.5 Professionalism Hours and up to 0.75 Substantive Hours of CPD.
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(i) COSTS OF ESTATE LITIGATION: WHO PAYS THE BILL?
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by Matthew Rendely
A common misconception about estate litigation is that the assets of an estate are used to fund the costs of litigation to all parties involved. This leads many to believe that if an estate holds valuable assets then those persons whom either have a financial interest in the estate or administer it do not need to worry about assessing the potential losses of commencing litigation, as the assets of the estate will cover their legal tab. This misconception is held by estate trustees and disgruntled beneficiaries alike. Although misguided now, this was in fact the historical practice of English courts in estate litigation which was adopted in Canada. Only up until nearly the turn of this century did the courts in Ontario stop automatically looking to the assets of an estate to satisfy the costs of litigation for all parties.
The tides first began to change with respect to costs awards in estate litigation with the decision of the Ontario Court of Appeal in McDougald Estate v. Gooderham.[1] In that decision, Gillese J.A. clarified on behalf of the Ontario Court of Appeal that the "historical approach" to costs awards in estate litigation has been displaced by the "modern approach."
[2]
Her Honour explained that the historical approach developed due to the public policy consideration for English courts to give effect to valid wills that reflect the intention of a competent testator. To do so, the English courts awarded the costs of all parties to be paid out of the estate where the litigation arose from either: (1) an ambiguity or omission in the testator's will or other conduct of the testator; or (2) there were reasonable grounds upon which to question the will's validity.[3] Her Honour also noted that it had become "virtually automatic" for Canadian courts of first instance to apply this historical approach in estate litigation.
Gillese J.A. went on to explain that the modern approach correctly allows for courts at first instance to carefully scrutinize the litigation and, unless the court finds that one or more of the public policy considerations applies, to follow the costs rules that apply in civil litigation.[4] Her Honour noted that the modern approach allows the courts to ensure that only valid wills executed by competent testators are propounded and to protect estates from being depleted by unwarranted litigation. Lastly, her Honour affirmed that "[g]one are the days when the costs of all parties are so routinely ordered payable out of the estate that people perceive there is nothing to be lost in pursuing estate litigation [emphasis added]."
[5]
Another turning point was Justice Brown's decision in Salter v Salter Estate.[6] In his decision, Justice Brown scolded parties for treating the assets of an estate "as a kind of ATM bank machine for which withdrawals automatically flow to fund litigation [emphasis added]".[7] Justice Brown went on to comment that the historical "loser pays" principle of civil litigation brings needed discipline to the parties and that "given the charged emotional dynamics of most pieces of estates litigation, an even greater need exists to impose the discipline of the general costs principle of 'loser pays' in order to inject some modicum of reasonableness into decisions about whether to litigate estate-related disputes."
[8]
Shortly thereafter, Strathy J., as he was then, held in Zimmerman v McMichael Estate[9] that the following principles were appropriate in determining the issue of costs sought by the objectors to the conduct of the estate trustee's administration of the estate:
(a)
Pursuant to s. 131 of the Courts of Justice Act, the costs of a proceeding are in the discretion of the court and the court may determine by whom and to what extent costs should be paid;
(b)
estate litigation, like any form of civil litigation, operates subject to the general civil litigation costs regime;
(c)
as a general proposition, the principle that the "loser pays" applies to estate litigation;
(d)
in the determination of costs, the court must have regard to the factors set out in Rule 57 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, but, at the end of the day, the court's responsibility is to make an award that is fair and reasonable, having regard to all the circumstances, including the reasonable expectations of the parties;
(e)
the court's discretion to award costs on a full indemnity basis is preserved by Rule 57.01(4)(d);
(f)
full indemnity costs are reserved for those exceptional circumstances where justice can only be done by complete indemnity.
In Sawdon Estate v Watch Tower Bible and Tract Society of Canada
[
10
]
, Gillese J.A., with Strathy J.A. concurring, plainly combined hers and Strathy J.'s, as he then was, decisions in McDougald Estate and McMichael Estate, respectively, to further clarify the modern approach to costs in estates litigation. The following was stated by the Court of Appeal in Sawdon Estate:
The court is to carefully scrutinize the litigation and, unless it finds that the one or more of the relevant public policy considerations apply, it shall follow the costs rules that apply in civil litigation. That is, the starting point is that estate litigation, like any other form of civil litigation, operates subject to the general civil litigation costs regime established by section 131 of the Courts of Justice Act, R.S.O. 1990, c. C.43, and Rule 57 of the Rules of Civil Procedure, R.S.O. 1990, Reg. 194, except in those limited circumstances where public policy considerations apply.
The public policy considerations at play in estate litigation are primarily of two sorts: (1) the need to give effect to valid wills that reflect the intention of competent testators; and (2) the need to ensure that estates are properly administered.
[11
]
Gillese J.A. also noted in the decision of Sawdon Estate that there was nothing in the jurisprudence that would prevent a court from making a "blended costs" order from both the unsuccessful party and the estate. Her Honour noted that the availability of a blended costs order gives the court the ability to respect the public policy considerations that may be involved and to maintain the discipline of which Just Brown clarified in Salter Estate.
[12]
In Sawdon, the Ontario Court of Appeal ordered that a beneficiary, who unsuccessfully objected to the estate trustee's passing of accounts, was liable to pay the estate trustee partial indemnity costs and that the estate was liable to indemnify the estate trustee for his costs not recovered from the unsuccessful beneficiary.
Most recently, a blended costs award was made in The Estate of Imgard Burgstaler (disability).[13] This decision was on the costs of a passing of accounts by an attorney for property. In his decision, Shaw J. applied Sawdon Estate by balancing those factors in Rule 57.01 of the Rules of Civil Procedure with the public policy consideration for ensuring that the estate is properly administered. This led Shaw J. to award full indemnity costs to the objectors but by use of a blended payment structure. The attorney for property was to pay partial indemnity costs to the objectors and the difference was to be paid out of the assets of the estate. His Honour acknowledged that this structure is "fair and reasonable" and gave sufficient recognition to the general costs principle of "loser pays" and the "discipline" that the principle is intended to encourage.
[14]
To conclude, it is clear that the courts in Ontario have moved away from the historical approach to costs in estate litigation, as previously adopted by the English courts. As stated best by Gillese J.A., ."[15] That said, the public policy consideration of giving effect to valid wills that reflect the intention of a competent testator is still good law in Ontario. As evidenced in The Estate of Imgard Burgstaler (disability), however, courts of first instance in Ontario will attempt to make a cost award that is fair and reasonable in the circumstances while also giving effect to the discipline that underlies the "loser pays" principle of civil litigation. This has moved the courts away from ordering that all costs of an estate litigation are to be paid from the assets of an estate to either a complete loser pays or blended structure. We continue to watch the difference approaches and to see how the modern approaches and results to the treatment of costs in estate and related litigation throughout Canada.
[1]
McDougald Estate v. Gooderham (2005), 255 DLR (4th) 435, (Ont CA) ("McDougald Estate")
[6]
Salter v Salter Estate (2009), 50 ETR (3d) 227 (Ont SC) ("Salter Estate")
[9]
Zimmerman v McMichael Estate, 2010 ONSC 3855 ("McMichael Estate")
[10]
Sawdon Estate v Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101 ("Sawdon Estate")
[13]
The Estate of Imgard Burgstaler (disability), 2018 ONSC 4725
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(ii) BORGES V BORGES: DESPITE PRIVACY CONCERNS, RELEVANT MEDICAL RECORDS SHOULD BE DISCLOSED WHERE CAPACITY IS AT ISSUE
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by Kimberly Whaley
The application in Borges v Borges, 2018 ONSC 3451 involved a dispute between siblings over the control of their older adult mother's substantial property.
Background
A mother of three adult sons was diagnosed with progressive dementia in 2011. In July of 2013, she signed a power of attorney in favour of two of her sons ("the respondents"). She also added one of their names to one of her bank accounts.
The mother's third son ("the applicant") was allegedly unaware of the existence of the power of attorney until December 8, 2017. In November of 2017, he brought an application seeking a declaration that Maria lacked the capacity to manage her property, an order appointing him as guardian of her property, as well as costs on a substantial indemnity basis and all associated expenses payable from the estate.
The applicant also sought the following relief:
- arrangement of independent representation for the mother;
- invalidating the power of attorney for lack of capacity;
- compelling the respondents to pass their accounts; and
- production of the notes and records of the lawyer who prepared the power of attorney as well as the mother's medical files dating back to 2011.
Analysis
Independent Representation:
Given that the mother's capacity was at issue and there was a dispute over the control of her property, the Public Guardian and Trustee (PGT) agreed that she would need independent representation. The Court ordered the PGT to arrange for counsel with fees payable from the mother's property if Legal Aid did not provide a Certificate.
Power of Attorney:
The respondents produced various medical reports all of which post-dated the signing of the power of attorney. These reports chronicled the mother's cognitive decline. One of the reports referenced a further report dated March 2013 which the respondents had chosen not to disclose.
The Court concluded that the reports produced did not support the applicant's contention that the mother lacked capacity at the time that she executed the power of attorney. However, since the mother was diagnosed in 2011, her condition may have deteriorated by 2013. Therefore, the undisclosed March 2013 report would thus be relevant to the issue of capacity. Despite the importance of privacy when it comes to medical records, there was no reason not to produce the report given the release of other medical records. The Court stated:
I am mindful of the Court's admonition in Seepa, at para. 28, that "no information is more personal and is accorded a higher standing in discussion of privacy law than a person's medical files." However, the respondents have disclosed [the mother's] medical files from 2013 to 2017. There is no reason why they should not disclose any medical record that may be relevant to the issue of [the mother's] capacity.
[1]
The applicant relied on Bishop et al. v. Bishop, arguing that even in a case involving a mild case of dementia, courts have not hesitated to set aside a power of attorney.[2] However, in Bishop there was an independent medical report, concluding that Mrs. Bishop did not have the capacity to grant power of attorney. There was no such report in this case.
As a result, the Court declined to set aside the power of attorney on the reports filed. The applicant was free to bring a further motion after reviewing the March 2013 report.
Solicitor's Records:
Citing the importance of solicitor/client confidentiality as referenced in Seepa v. Seepa[3], the Court declined to make an order for the lawyer's file.
Passing Accounts:
The applicant sought to compel the respondents to pass their accounts, on the basis that one of them was in a fiduciary relationship with the mother given that he had been made signatory to her account and had withdrawn sums of money from that account. The applicant also argued that the son had been paying his wife $1,400 a month from the mother's account. This monthly payment was reportedly for the care provided to the mother while she still lived at home.
The Court declined to compel the respondents to pass their account because there was insufficient evidence of any financial transgression. The monthly amount paid for the mother's care was not unreasonable.
Preservation & non-dissipation Order:
There was no evidence of dissipation on the part of the respondents. On the contrary, there was evidence indicating that the applicant had been less than forthright in his financial dealings with his mother.
Citing the tripartite test set out in
RJR MacDonald Inc. v. Canada (Attorney General)
[4]
, the Court found that the applicant has no existing right to any specific fund concerning his mother's property. Although, he may have such a right in the future. As such, the Court declined to make an order for preservation of the property.
Costs:
Since the success on the application was divided, no order was made with respect to costs.
Takeaways
A concern over a living person's capacity does not trump that person's right to privacy, however, documents that are clearly relevant to the central issue of capacity, are likely to be ordered produced (especially where other medical records have been provided). There are provisions for this disclosure in the Rules of Civil Procedure and the Courts of Justice Act[5], under the SDA and at common law. The decision is noteworthy and a warning given the Court refusal to order the attorneys to pass their accounts where there on its face exists insufficient evidence of financial transgression or misappropriation.
[2]
Bishop et al. v. Bishop, (2006) O.J. no. 3540 (S.C.)
[3]
Seepa v. Seepa, 2017 ONSC 5368, at para. 28
[4]
RJR MacDonald Inc. v. Canada (Attorney General
), [1994] 1 S.C.R. 311, at pages 347-349
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PART III: UPCOMING EVENTS
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Law Society of Ontario
Administration of Estates and Probate Essentials
September 21, 2018
Chairs: Kimberly Whaley and Tim Grieve
Whaley/Hull Webinar Series
Client Capacity: A Lawyer's Retainer
September 26, 2018
Client Capacity and the Real Estate Lawyer's Retainer
October 24, 2018
Client Capacity and the Family Law Lawyer's Retainer
November 28, 2018
Client Capacity and the Corporate Lawyer's Retainer
December 5, 2018
Live Webcast presented by Ian Hull and Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
September 28, 2018
Speakers: Amanda Bettencourt and Matthew Rendely
Toronto Public Health Vulnerable Adults & Seniors Forum
September 28, 2018
Panel Speaker: Kimberly Whaley
Oshawa Community Credit Union
Elder Abuse and Power of Attorney Seminar
October 2, 2018
Speakers: Kimberly Whaley and Andrea McEwan
Law Society of Ontario Estates and Trusts Summit
Undue Influence in Inter Vivos Transactions
October, 10, 2018
Speaker: Kimberly Whaley
Toronto Police Seminar
Civil and Criminal Remedies, Elder Abuse
November 2, 2018
Speakers: Kimberly Whaley and Alex Swabuk
Estate Planning Council of Toronto
Elder Abuse
November 6, 2018
Speaker: Kimberly Whaley
Baycrest
Professional Advisors Breakfast Seminar
November 7, 2018
Speaker: Kimberly Whaley
STEP - Mental Capacity Special Interest Group, London, UK
Putting the Lawyer at the Heart of Capacity Assessments: Examining the Role of the Lawyer in Determining Capacity
December 7, 2018
Speaker: Kimberly Whaley
Osgoode Professional Development
2019 Elder Law - Marriage Contracts; conflicts in Blended Families: Sibling Struggles, Predatory Marriages and Family Meetings
February 26, 2019
Speakers: Kimberly Whaley and Professor Albert Oosterhoof
Osgoode Professional Development
Powers of Attorney and Guardianship: Non-contentious and Contentious Matters
April 9, 2019
Speaker: Kimberly Whaley
Cambridge Forum
Steering Committee Member: Kimberly Whaley
April 14-16, 2019
Osgoode Professional Development
Passing of Fiduciary Accounts
April 30, 2019
Chair: Kimberly Whaley Speakers: Professor Albert Oosterhoof, Nancy Patrick, Birute Lyons and Ian Hull
STEP Premier Sponsorship Education Session
Short Case Study Presentation
May 22, 2019
Presenter: Kimberly Whaley
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PART IV: RECENT BLOG POSTS
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