Whaley Estate Litigation Newsletter, Vol.5 No. 7, October 2015

Whaley Estate Litigation provides litigation, mediation and dispute resolution to clients throughout Ontario:

* Albert Oosterhoff, Professor Emeritus Western University, Counsel to WEL consults on matters within his areas of expertise, providing opinions concerning Wills, Estates, Trusts and related Property matters.

Please Enjoy,

Kimberly A. Whaley

WEL

CLICK HERE TO VIEW WEL FIRM DIRECTORY

PART I: WEL NEWS

1.
STEP SEMINAR, SEPTEMBER 16, 2015

On September 16, 2015, Kim Whaley, Benjamin Arkin, Heather Hogan, and Birute Lyons, along with Craig Vander Zee, of Torkin Manes LLP, discussed the duty of estate trustees, attorneys for property, guardians of property and trustees to keep accounts. We examined some of the issues surrounding the passing of accounts including some of the new rules that will take effect on January 1, 2016 and also identified some tips and traps in preparing and reviewing accounts. The session ended with an interesting review of Aber Estate, 2013 ONSC 6363, a recent case in this area, which can be listened to in the archived webcast link below:

VIDEO LINK: http://toronto.stepwebcasts.com/?page_id=1416

2.
ESTATES AND TRUSTS SUMMIT, OCTOBER 2015

Lionel Tupman presented Kim Whaley's article on "Undue Influence" with John Poyser from Tradition Law, Winnipeg. Professor Albert Oosterhoff presented his paper on "Crowdfunding and the Law of Trusts" at the Law Society of Upper Canada 18th Annual Estates and Trusts Summit, Day 1, on October 7, 2015. Link to Program Info on LSUC site

1. Undue Influence

Link to Kim's paper

2. Undue Influence - Testamentary and Inter Vivos - Litigation and Planning

Link to John Poyser's checklist

3. Crowdfunding and the Law of Trusts

Link to Professor Oosterhoff's paper

3.
CBA NATIONAL ELDER LAW SECTION, OCTOBER 2015

On October 6, 2015, Heather Hogan was the guest speaker at the Alberta Branch meeting of the CBA National Elder Law Section. She spoke on the subject of capacity to marry, separate, divorce and co-habit.

Link to Heather's paper

4.
BAYCREST PROFESSIONAL ADVISORY BOARD, OCTOBER 2015

Whaley Estate Litigation participated in a breakfast seminar on October 22, 2015, sponsored by Crow Soberman. Two senior members of the Estates Bar, Howard Carr and Martin Rochwerg, spoke on tax changes effecting trusts and estates in 2016, and familial demands on seniors' assets.

Link to program info

5.
LAW COMMISSION OF ONTARIO

Mark Handelman has agreed to sit in as a member of the Advisory Group for the project on "Improving the Last Stages of Life" ("Project") with the Law Commission of Ontario (LCO).

6. CANADIAN ELDER LAW CONFERENCE, NOVEMBER 12-13, 2015

The Canadian Centre for Elder Law is thrilled to be hosting the 2015 Canadian Elder Law Conference in collaboration with the Continuing Legal Education Society of BC on November 12 and 13, 2015, in Vancouver.

The Elder Law Conference is the only international conference devoted to legal and policy issues affecting older adults. This year, the conference will examine "The Journey of Aging-the Law and Beyond" and will offer inter-jurisdictional perspectives on elder law and policy, including practice tips, case updates, exploration of policy reform and promising practices for working with older adult clients.

An exciting line-up of speakers and topics has been confirmed for this year's event. Keynote speakers include: Isobel Mackenzie, BC's Senior's Advocate, Dr. Andrew Wister, Chair of the National Senior's Council and Barb MacLean, Chair of BC Council to Reduce Elder Abuse. Conference Chair, Jan Goddard from Goddard Gamage Stephens LLP, has organized an exciting conference program featuring distinguished presenters from Ontario and across Canada:

Kimberly A. Whaley and Heather Hogan, Whaley Estate Litigation
Jane E. Meadus, Staff Lawyer, Advocacy Centre for the Elderly
Clare Burns, WeirFoulds LLP
Laura Tamblyn Watts, Seniors Fellow CCEL
Catherine M. Romanko, BC Public Guardian and Trustee
Andrew S. MacKay, Alexander, Holburn, Beaudin and Lang
Geoffrey W. White, Geoffrey W. White Law Corporation
Deidre J. Herbert, McLellan Herbert
Honourable Marion J. Allan, Clark Wilson LLP
Barbara Buchanan, Law Society of BC

This year's conference panels include the following topics:

Advance health care planning-implications of the Bentley decision
Debate: Would a national power of attorney registry help reduce elder financial abuse?
Update on guardianship law in BC-reflections on changes to legislation one year in
Who do you call when you suspect elder abuse? Introducing the new BC decision tree
Physician assisted suicide after Carter-where do we go from here?
Late life separation and divorce-Financial consequences, pensions and benefits issues, practice tips
Dementia and client competency - practice tips, communication strategies and ethical issues
Mental capacity assessment-the when and how of getting a referral and working strategically with assessment professionals
Elder abuse and care issues in a long-term care setting: working strategically to advocate for older adults

7.
ARIEH BLOOM IS PUBLISHED IN CARSWELL'S ESTATES TRUSTS & PENSIONS JOURNAL

Arieh's article is titled "Fish in a Barrel: Protecting Beneficiaries' Interests in Real Property". The article parses the various difficulties beneficiaries face in trying to protect their beneficial interest in real property. The complexity is augmented by Ontario's Land Titles Act not recognizing beneficial interests on title for real property. The article looks at various solutions for this possible quandary.

PART II: LAW REVIEW

(i) Sinott v. Sinott Estate, 2015 NLCA 41

http://canlii.ca/t/gl56d

Sinott v. Sinott Estate: A Tale of Two Houses, Ambiguity, and the "Armchair Rule"

The Newfoundland and Labrador Court of Appeal decision of Sinott v. Sinnott Estate[1] involved a dispute over the interpretation of a devise of a "dwelling house and land" where the deceased owned two houses on the same piece of property. The case examines the correct approach to will interpretation and if and when the "armchair rule" should be applied.

Facts

A father executed a Will which devised portions of his property to each of his five children: a designated parcel for each of his four daughters and the father's "dwelling house and land" and the residue of the property for his son. In 1998, when the Will was executed, the father lived in the only house on the property which was situated on the residue portion of the land. However, in 1999, the father moved into a new house built on the parcel of land designated for one of his daughters, Judy. He lived there until he passed away in 2012. His original house was still in existence when he died, but was subject to a demolition order.

An interpretation dispute arose: Did the clause that gave the son the father's "dwelling house and land" mean the new house built on the property devised to Judy, thereby precluding Judy from receiving her parcel of land? Or did the "dwelling house and land" refer to the old house that was subject to demolition? Should Judy be given her portion of land even though it also included the new house? The estate trustee sought the Court's opinion, advice and direction.

Application

The application judge concluded that "dwelling house" referred to the older house and that such a finding was harmonious with the rest of the Will. To propose that "dwelling house" referred to the newer house was not available on the wording of the Will itself as such an interpretation would result in the son receiving both residences and would preclude any devise to his daughter Judy.[2] This would contradict the father's intentions, which on the construction of the Will as a whole, was to include his daughter Judy. There was no basis to conclude otherwise. [3]

The Appeal

The son appealed, arguing that there was only one dwelling house, the newer house on his sister's devised land and where his father was living at the time of his death. The son argued that as the old house was subject to a demolition order it could not be considered to be a "dwelling house". [4]

The Court of Appeal reviewed the current law on Will interpretation and concluded that the "general rule that a court must rely exclusively on the four corners of a will to determine a testator's intention is the law in Newfoundland and Labrador".[5] Citing from another Newfoundland and Labrador Court of Appeal case, Jayaraman v. DeHart 2007 NLCA 32, the Court also noted that:

where there is an ambiguity as to whether a testator has disposed of assets, it is an error in law to engage in the armchair rule without first considering whether language of the will can be construed so as to result in a complete disposition of all of the property . . .The armchair rule will be engaged only if the testator's intention cannot be discerned from the language of the will .[6] [emphasis in original]

The armchair rule is where the court will sit in the "armchair" of the testator and look at the surrounding circumstances (or factual matrix) that existed when the Will was executed to determine the testator's intention.

Here, the application judge concluded that the testator's intention could be determined within the four corners of the Will, therefore the armchair rule was not engaged. The Court of Appeal held that the application judge was correct in not considering the factual matrix surrounding the creation of the father's Will.

The application judge concluded that on the plain language of the Will, "dwelling house" referred to the older house that was set for demolition. The Court of Appeal agreed that this was consistent with the father's intention to devise pieces of his property to each of his children and gave effect to the devise to both his son and Judy. This was a "harmonious" reading of the Will and was supported by the presumption against disinheritance. [7]

Conclusion

While the result was likely disappointing for the son, such a finding was expected when, on the words of the Will itself, the father wished to devise portions of his land to all of his children and had no desire to disinherit his daughter. The Court ordered costs of the appeal for all parties to be paid by the estate as this was a situation where the court appearance was necessary for the proper administration of the estate.

Had this case occurred in Ontario the outcome would have likely been the same. The Ontario Court of Appeal recently reviewed the "armchair rule" and its application in this province in Dice v. Dice Estate 2012 ONCA 468:

First, and foremost, the court must determine the intention of the testator when he made his will. The golden rule in interpreting wills is to give effect to the testator's intention as ascertained from the language that was used. . .Underlying this approach is an attempt to ascertain the testator's intention, having regard to the will as a whole. Where the testator's intention cannot be ascertained from the plain meaning of the language used, the court may consider the surrounding circumstances known to the testator when he made his will - the so called 'armchair rule'" [8] [emphasis added].

Therefore, like in Newfoundland, had the Ontario court found that the plain language of the Will disposed of all of the assets and given effect to the testator's intention then the armchair rule would not have been invoked. However, it should also be noted that earlier this year the Ontario Superior Court of Justice decision of Spence v. BMO Trust Company 2015 ONSC 615 parted with previous case law and the Court looked beyond what was apparent on the face and plain language of the Will and examined the intention of the testator through extrinsic evidence. Spence is being appealed, and hopefully some clarity will be provided in the appeal decision.

[1] Sinnott v. Sinnott Estate, 2015 NLCA 41

[2] 2015 NLCA 41 at para. 5

[3] 2015 NLCA 41 at para. 5

[4] 2015 NLCA 41 at para.9-10

[5] 2015 NLCA 41 at para.17.

[6] 2015 NLCA 41 at para. 17.

[7] 2015 NLCA 41 at para. 27.

[8] 2012 ONCA 468 at para. 37.

(ii) Nunc Pro Tunc: The Court's Power to Bend Time

by Laura Cardiff

The law is full of Latin expressions, relics which have survived to the present day with varying degrees of clarity and usefulness. One very important and rarely-used Latin term that arises occasionally in the estates context is nunc pro tunc, which means "now, for then."

This phrase has been used to refer to the power of court, at common law, to decree that its order will have retroactive effect. This is an unusual power. Generally, a court order takes effect on the date of its pronouncement, whether it is pronounced orally to the parties in court, or by written decision. However, nunc pro tunc allows the court to reach back in time and, in a sense, alter history.

The most common use of nunc pro tunc is to overcome some administrative failure or cure a procedural defect, for example back-dating the date a statement of claim was issued, when court error was the reason for its failure to issue earlier.

However, courts have held that the highly discretionary and unusual step of a nunc pro tunc order can be taken where a deceased's (and by extension his or her estate's) legal rights depend on the date of formal judgment. When untimely death interrupts litigation, nunc pro tunc orders can be used to back-date the decision and thereby avoid unjust loss to the estate which would otherwise result. Such a remedy may be necessary because an estate is not identical in rights and interests to the deceased individual, and so cannot pursue all claims the deceased would have. In fact, an estate, as the Supreme Court aptly described it in Canada (Attorney General) v Hislop, is merely "a collection of assets and liabilities of a person who has died."[1] An estate has the right to enforce or defend a judgment obtained before a plaintiff or defendant's death, but cannot bring certain personal actions on the deceased's behalf.

The Supreme Court in Crown Zellerbach Ltd v Canada cautioned that the nunc pro tunc rule should be applied only in exceptional circumstances, and even then, applied with caution.

The court does have discretion to permit a judgment to be entered nunc pro tunc when the signing of the judgment has been delayed by the act of a court.[2] Court have interpreted this idea of "delay by an act of the court" to include the process of reserving its decision, as opposing to pronouncing judgment at the conclusion of a trial or hearing.

Here are a few examples of situations in which courts have turned to nunc pro tunc to preserve a deceased's rights, where an estate would otherwise be unable to proceed.

In the recent case of Scalia v Scalia, the Ontario Court of Appeal made its order for partition and sale of the deceased's home (owned as joint tenants with the wife) nunc pro tunc as of the date that argument concluded.[3] The deceased's attorney under a power of attorney for property had commenced an application for partition and sale while the deceased was still alive. The deceased passed away before the court gave its decision, an event that would otherwise have caused title to the home to pass entirely to the joint-tenant, the deceased's spouse, by right of survivorship. The nunc pro tunc order allowed the estate to retain ownership of one half of the home.

In Jurevicius v Jurevicius, a divorce action, Justice Kruzick granted a divorce nunc pro tunc, effective as of the last day of trial, when the husband died between the end of trial and the release of His Honour's decision.[4] This prevented the surviving former spouse from being able to claim against the estate as a spouse.

In Canada (Attorney General) v Hislop, the Supreme Court of Canada found that estates do not have standing to commence s. 15(1) Charter claims on behalf of a deceased (because an estate, as a collection of assets, has no dignity to be infringed) but when a party died pending appeal of a s. 15 class action, the appeal survived death even if the original cause of action would not have. The Supreme Court held that the estate of any class member who was alive on the date that argument concluded in the Ontario Superior Court, and who otherwise met the requirements under the Class Proceedings Act, was entitled to the benefit of the Supreme Court's judgment.[5] The Supreme Court's judgment therefor was entered, nunc pro tunc, to the date of the conclusion of arguments in the trial court. This is possible because, the court explained, the issue on an appeal is "not the original cause of action but rather the legality and validity of the judgment."

Court have turned to nunc pro tunc in personal injury actions in order to preserve the deceased's claim and entitlement to non-pecuniary damages in jurisdictions where legislation prohibits estates from claiming such damages on a deceased's behalf. Legislation such as Alberta's Survival of Actions Act, RSA 2000, c S-27, like British Columbia's former Estate Administration Act RSBC 1996, c 122, limit an estate's recovery of damages to actual financial loss to the deceased or his/her estate. In Monahan v Nelson[6] and Vollrath v Bruce,[7] the courts issued judgments nunc pro tunc when the deceased died in between conclusion of trial and judgment, thus allowing recovering of damages that would otherwise be denied the estate.

How far back?

An interesting question with these nunc pro tunc orders is, when does the order take effect, and why? There has been some debate in the case law.

In Volrath v Bruce, the court held that the date immediately before the plaintiff's death was the "appropriate and correct date" to which to back-dated the judgment, and indicated it did not see the rationale behind the practice of back-dating to the last date of trial.[8] The court speculated that the reason was one could argue that that was the last opportunity the trial judge had to give oral judgment, but then found that this rationale made no sense, as theoretically the court could call the parties back to court to give oral judgment at any time.

The practice of back-dating to the day before the date of death has been followed by other courts since Volrath.[9] Selecting the date before the date of death poses an amusing evidentiary issue, in that the court is required to either have the parties prove date of death, or "take judicial notice" of the date of death - the approach taken in Petrowski v Petrowski Estate. [10]

Whether the judgment takes effect on the day before the deceased's death or the day the trial concludes, the result is the same for the estate. But in my opinion, only the date the trial or hearing concludes makes sense, given the rationale behind the nunc pro tunc order. The Supreme Court in Crown Zellerbach, supra, stated that the rationale for back-dating judgments was to avoid injustice caused "when the signing of the judgment has been delayed by an act of the court." While it may be somewhat artificial to say that reserving its decision is a delay (in the sense that is somehow avoidable, and that the court should render judgment orally at the conclusion of trial in every case), this at least provides a logical basis both for resort to nunc pro tunc and for selecting the date of conclusion of the matter as the effective date of the order.

In contrast, back-dating the order to the date immediately before death suggests that the court's only act of delay was in not anticipating the deceased's moment of death and releasing judgment accordingly: that the court waited just a moment too long and accidentally missed the window of time in which the deceased was alive to benefit from the decision. A court's ability to issue its decision effective as of the last date of trial also signals that there was nothing between the close of the trial and the date of judgment that could change how the court decided: while it may take the court some time to arrive at the decision, that decision was in effect already there. To pick some date in between, while no doubt also permissible as an exercise of the court's discretion, causes one to wonder why the deceased's rights would crystallize on that day.

Either way, a nunc pro tunc order is an extraordinary power for the judiciary, and a useful tool for a lawyer to know about if the client she was had so zealously represented in court suddenly passes away, before having the benefit of the court's decision.

[1] [2007] 1 SCR 429, 2007 SCC 10 at para. 73.

[2] Crown Zellerbach Ltd v Canada, 1979 CarswellBC 194, 13 BCLR. 276 (CA) at paras 21-23.

[3] Scalia v Scalia , 2015 ONCA 492, at para 51.

[4] 2011 ONSC 3662 at para 7.

[5] Canada (Attorney General) v Hislop, [2007] 1 SCR 429, 2007 SCC 10 at para 77.

[6] (2000), 76 BCLR (3d) 109, 186 DLR (4th) 193 (CA).

[7] 2000 ABQB 972.

[8] Vollrath v Bruce, supra, at para 70.

[9] See, for example, Petrowski v Petrowski Estate, 2009 ABQB 196.

[10] Ibid.

PART III: UPCOMING EVENTS

LSUC, The Intersection of Estates Law and Bankruptcy Law: Administration of the Insolvent Estate