Hello,
Happy May Long Weekend! I hope that you have a safe and enjoyable long weekend. Since it seems we skipped spring and went from winter to summer in a day-well, at least from a weather perspective - I hope that this weekend weather cooperates as well.
We Canadians celebrate Victoria Day every year around this time, in honour of what was the birthday of Queen Victoria who was Queen of the British Empire and the sovereign of Canada at the time of Confederation. Queen Victoria died in 1901. In addition to our history, we consider this a holiday to celebrate the start of summer……which will be a few more weeks away….
On another celebratory note, it is nice to see that award season is upon us and some of our award ceremonies are now back in person and gradually we are catching up with our colleagues in person.
Congratulations to all those who have received awards and accolades of their peers and colleagues. Enjoy this recognition and celebrate your achievements.
As ever, enjoy the read,
Kim
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1. THE OSGOODE POWERS OF ATTORNEY & GUARDIANSHIP: NON-CONTENTIOUS & CONTENTIOUS MATTERS, APRIL 19, 2022
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Kimberly Whaley presented her article, Contentious Guardianship Applications and Removals of Attorneys/ Guardians, at the Osgoode Powers of Attorney and Guardianship program on April 19, 2022.
On April 19, 2022, Bryan Gilmartin also presented on Incapacity Planning and Powers of Attorney at the Osgoode Powers of Attorney and Guardianship program.
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2. CANADIAN CENTRE FOR ELDER LAW (CCEL) ELDER LAW COURSE, APRIL 21, 2022
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Kimberly Whaley co-chaired the CCEL Elder Law update program with Geoff White, Krista James, and Hugh McLellan.
Kimberly Whaley also presented with Laura Johnston on: “Representing Clients Impacted by Abuse, Neglect, and Abuse/Neglect Responses".
View Kimberly’s materials:
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3. OSGOODE PROFESSIONAL DEVELOPMENT, PASSING OF ACCOUNTS AND FIDUCIARY ACCOUNTING, APRIL 26, 2022
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Kimberly Whaley chaired the Osgoode Passing of Accounts and Fiduciary Accounting program on April 26, 2022.
Professor Albert Oosterhoff presented his article Overview of Compensation, at the Osgoode Passing of Accounts and Fiduciary Accounting.
Tracey Phinnemore also presented her article, Reviewing Accounts: What Lawyers Need to Look for – Tips & Traps.
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4. LESA 53RD ANNUAL REFRESHER: MANAGING WILLS & ESTATES MATTERS, APRIL 30 – MAY 2, 2022
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John Poyser co-chaired the LESA Managing Wills & Estate Matters; Capacity Issues (panel discussion); and Estate Litigation.
John also co-chaired Part 1-Initial Considerations & Managing the Court Process, at the LESA 53rd Annual Refresher, Managing Wills & Estates Matters.
Kimberly Whaley participated in a panel discussion on April 29, with Shelley Waite, Clare Burns, Nancy Golding and David Koski on Making More Money and (Not) Getting Sued.
Kimberly Whaley also participated in a panel discussion co-chaired by John Poyser and Shelley Waite and on “Capacity Issues” along with Jennifer Lamb, and Dr. Arlin Pachet.
Kimberly Whaley presented her article, Capacity Tests for Different Legal Tasks, at the LESA Annual Refresher.
Professor Albert Oosterhoff presented the Keynote Luncheon address on Perpetuities.
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5. CANADIAN LAWYER WEBINAR, MAY 18, 2022
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Kimberly Whaley and Ian Hull delivered a webinar presented by Canadian Lawyer Magazine on “Contentious Estates Updates” May 18, 2022.
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WEL congratulates Ian Hull on receiving the OBA Award for Distinguished Service. The ceremony will be held at Omni King Edward Hotel, on June 9, 2022.
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WEL congratulates the Honourable Louise Arbour on receiving the Toronto Lawyers’ Association Award of Distinction. The Gala Award was held on May 10, 2022 at the Locomotive Hall at Steam Whistle Brewery.
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WEL congratulates Professor Albert Oosterhoff on receiving the LSO Medal Award which ceremony will be held on May 25, 2022.
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WEL congratulates Alexander Procope on receiving the 2022 Hoffstein Book Prize. The award will be presented on June 13, 2022.
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(i) ADEMPTION BY CONVERSION: BEST v. HENDRY[1]
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By Albert H. Oosterhoff
A specific testamentary gift is a gift of an identifiable property that the testator has described with sufficient particularity to distinguish it from her general estate. Thus, a devise of Blackacre is a specific gift. So is a bequest of ‘my Maserati automobile’. In contrast, a legacy of $1,000 is not a specific but a general gift. Specific gifts are subject to the doctrine of ademption.
When a testator leaves a specific gift under her will to a named beneficiary, but the property that is the subject matter of the gift no longer exists at her death, the gift, apart from statutory amendments, adeems. The underlying reason for this is that a testator can only dispose of property that he owns at death and although he once owned the property in question, he now no longer owns it. The law assumes that the testator did not intend to give the beneficiary the value of the property, but that he intended to revoke the gift. Thus, the specific gift fails.
The reasons why the property is no longer in the estate are various. The testator may have sold the property or given it away, it may have been lost or stolen, it may have been expropriated, and it may have destroyed.
The doctrine of ademption often attracts the equitable doctrine of conversion.[2] When a testator has devised or bequeathed specific property but sells or otherwise disposes of it before death, he has converted it into other property and the gift adeems. That kind of conversion is not equitable conversion but an actual conversion that happens at common law. Equitable conversion occurs when the testator has not yet disposed of the property but has entered into a specifically enforceable agreement to sell it.[3] When he dies the property is therefore still in the estate but, apart from remedial statutory provisions, the gift will nonetheless adeem. That is because equity, which deems that as done which ought to be done, takes the view that there has been a notional or equitable conversion of the property into another kind of property.
Suppose that a testator devised Blackacre to his daughter Mary and directed that the balance of his property be divided equally among his other three children. Then, in 2021, he entered into an installment contract to sell Blackacre. Under the contract the purchaser pays $50,000 upfront and agrees to pay the balance in specified amounts over a 10-year period with interest. The testator dies in 2022, when most of money remains owing under the agreement. Equity deems the gift of Blackacre to have adeemed and therefore Mary takes nothing under the will. Unfair? Yes, on the face of it, but the result is simply an application of the doctrine of ademption and equitable conversion. And thus, as Mignault J noted in Re Church,[4] from which I have adapted the above facts, ‘Dura lex, it is true, sed lex’.[5] The problem could, of course, easily have been avoided if the testator had made a substitute gift to the effect that if he sold the property before he died, Mary would be entitled to the sale price from the residue of the estate.
The equitable doctrine of conversion also applies to other property interests, such as options, but that is an issue that can be explored another day.[6]
On occasion a testator will instead direct that a specific property be sold, and the proceeds paid to a beneficiary. In that case the gift of the proceeds is still specific.[7] If the testator sells the property himself and then dies, it may be possible to trace the proceeds into an account into which they have been paid, so long as they have not been commingled with other moneys.[8] If they have been commingled, there has been such a change in name and form that the property which was the subject matter of the specific gift no longer exists.[9] On the other hand, if the testator took back a charge for part of the purchase price, the proceeds are then still identifiable to that extent and the beneficiaries can recover their gifts out of the mortgage.[10]
Moreover, if the property that is the subject matter of the specific gift merely changes in name and form, there will be no ademption.[11] This happens, for example, if a testator bequeaths ‘my 500 shares in ABC Ltd’ and ABC Ltd reorganizes its capital by splitting its stock two for one, so that the testator then owns 1,000 shares. If she still owns them on her death, the beneficiary will be entitled to the 1,000 shares.[12]
On the assumption that the testator did not intend ademption to occur when the property that was given no longer exists, some provinces have enacted legislation that avoids it, at least in part. For example, s. 20(2) of the Succession Law Reform Act[13] provides:
(2) Except when a contrary intention appears by the will, where a testator at the time of his or her death,
(a) has a right, chose in action or equitable estate or interest that was created by a contract respecting a conveyance of, or other act relating to, property that was the subject of a devise or bequest, made before or after the making of a will;
(b) has a right to receive the proceeds of a policy of insurance covering loss of or damage to property that was the subject of a devise or bequest, whether the loss or damage occurred before or after the making of the will;
(c) has a right to receive compensation for the expropriation of property that was the subject of a devise or bequest, whether the expropriation occurred before or after the making of the will; or
(d) has a mortgage, charge or other security interest in property that was the subject of a devise or bequest, taken by the testator on the sale of such property, whether such mortgage, charge or other security interest was taken before or after the making of the will,
the devisee or one of that property takes the right, chose in action, equitable estate or interest, right to insurance proceeds or compensation, or mortgage, charge or other security interest of the testator.[14]
Ontario has also enacted an anti-ademption provision in its substitute decisions legislation. It provides that if an attorney disposes of the property that is the subject of a specific gift, the beneficiary’s interest is transferred to the proceeds, and he is entitled to receive the value from the residue of the estate.[15]
Having now got the law and the general principles out of the way, I turn finally to an examination of Best v Hendry. The facts of the case are rather bizarre, but in the end, I believe that the majority of the Court of Appeal reached the right decision. The testator made her will in 1981. In it she devised and bequeathed her home and contents to her niece Marie and the residue to Marie’s sister Kathy. She appointed the drafting solicitor her executor. In 2007 the testator was diagnosed with dementia and moved into a care home. Kathy was granted Letters of Guardianship of her estate in 2008 with the consent of Marie. The sisters prepared the house for sale and Kathy sold it in 2008. She deposited the proceeds into the testator’s bank account where they were commingled with the other moneys in the account. The testator died in 2011 and the solicitor obtained letters probate.
The solicitor then met with the sisters. He told them that the testator intended to leave the bulk of her estate to Marie, that he was able to identify the funds in the bank account that derived from the proceeds of sale, and that he proposed to pay the amount of the proceeds to Marie and the residue to Kathy. This meant that Kathy would get only about one-fifth of what Marie would receive. The sisters then discussed that advice and, to avoid the delay and expense of getting independent legal advice, Marie proposed that she would pay Kathy $40,000 from the moneys she would receive from the solicitor. When the sisters then met with the solicitor, they did not mention their private arrangement to him. He presented them with a release which absolved him from any further obligation. They signed the release.
Marie never paid the $40,000 to Kathy. Kathy then brought this action, naming Marie as first defendant and the solicitor as second defendant. She claimed that Marie owed her the moneys given to Marie by the solicitor and that the solicitor breached his duty of care to her and was negligent in carrying out his duty. She claimed damages from both defendants. The solicitor brought a contributory negligence claim against Kathy and a third party claim against Marie. The trial judge dismissed Kathy’s claims against both defendants and held that the doctrine of ademption should not apply in this case because: (1) the intended beneficiary (Marie) would be deprived of any benefit from the estate if the doctrine were applied; (2) the property that was the subject matter of the specific gift was not disposed of by the testator, but by another beneficiary (Kathy) who would benefit if the gift were adeemed; and (3) the proceeds could still be found in the estate and were available for distribution. Kathy appealed. LR Hoegg JA wrote the majority decision with which FP O’Brien JA concurred. GD Butler JA also concurred in the disposition of the appeal.
LR Hoegg JA discussed the law governing the duties of executors and trustees, the interpretation of wills, and the law of ademption by conversion at length, and her Honour considered a large number of cases, including several of the cases mentioned above. She held that since the will did not contain a substitute gift in the event the testator did not own the house when she died, the gift to Marie adeemed. Moreover, the solicitor’s evidence that he believed the testator wanted to leave the bulk of her estate to Marie was inadmissible. Further, contrary to what the solicitor believed, the proceeds of sale could not be traced into the bank account, because the testator did not bequeath the proceeds of sale but devised the house instead.[16] Consequently, the trial judge erred in failing to apply the doctrine of ademption.
Her Honour went on to hold that the solicitor breached his duty as executor and trustee in failing to recognize that the specific gift to Marie had adeemed, to pay the funds in the bank account to Kathy, and to advise the beneficiaries about the law of ademption. In the circumstances, the solicitor could not be excused for his breach of trust under s. 32 of the Trustee Act,[17] since his actions were unreasonable. Moreover, the release signed by the beneficiaries did absolve the solicitor. Kathy’s decision to sign it was not an informed one and therefore she did not release her rights as beneficiary under her aunt’s will. Hence, he was liable to Kathy for the amount he paid to Marie.
Her Honour dismissed the solicitor’s contributory negligence claim against Kathy. The fact that she failed to tell him of her private agreement with Marie when she signed the release did not assist him, since Kathy’s acceptance of his proposal for distributing the estate and signing the release were based on incomplete and irrelevant information that he provided to her.
Marie resisted the solicitor’s third part claim against her, in part because she had spent some of the moneys both before and after the solicitor served her with the third party claim. Her Honour found that the solicitor had mistakenly paid Marie an amount equivalent to the sale price of the house. In consequence, she was enriched at his expense and there was no juristic reason why she should not be required to reimburse the solicitor. However, she was only required to reimburse the moneys still in her possession when she was served with the third party claim. She ought not to have spent those moneys until the matter was resolved.
In her reasons, GD Butler JA proposed that the court should modify the law of ademption so that it would not apply to a specific bequest the property of which is not in the testator’s estate at death if a third party has disposed of the property without the testator’s knowledge and at a time when the testator lacks capacity to change her will to make a substitute gift. However, she concluded that her proposed exception to the law could not be applied in this case for lack of evidence about the testator’s intent for a substitute gift. Nor was there any evidence about the balance in the account or the value of the house when the will was written. Thus, her Honour agreed with her colleagues in the disposition of the appeal.
LR Hoegg JA disagreed with her colleague’s suggestion. Comments by judges on the Supreme Court of Canada, cited by her Honour, state that judges should limit themselves to making only incremental changes to the law to keep the common law in step with the evolving fabric of society. They should not intervene if the proposed changes have far-reaching effects, the ramifications of which cannot be gauged accurately. In her Honour’s view the proposed change would alter the substantive law of wills significantly and that could have serious implications to existing rights and could cause confusion and uncertainty. The fact that the testator could no longer change her will to provide for a substitute gift because of her lack of capacity was irrelevant. She had plenty of opportunity until she lost capacity to make such a change. Moreover, no common law jurisdiction has changed the doctrine of ademption judicially. Such a change should be made only by the legislature, as some provinces have done.
With respect, I believe that Justice Hoegg drew the correct conclusion on this point. Courts should not change long-standing principles of property but leave it to the legislature to make desired changes.
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[1] 2021 NLCA 43, 71 ETR 4th 174.
[2] For a more detailed discussion of this doctrine, see Oosterhoff on Wills, 9th ed by Albert H Oosterhoff, C David Freedman, Mitchell McInnes, and Adam Parachin (Toronto: Thomson Reuters, 2021) §14.7 (‘Oosterhoff’).
[3] If the agreement is subject to conditions precedent, the testator dies after entering into the agreement, and the conditions are not satisfied, the agreement is not enforceable and therefore does not cause the gift to adeem. See, e.g., Dearden Estate v Pittman (1987), 26 ETR 111 (Man QB).
[4] 1923 CarswellAlta 152, [1923] SCR 642, para 32.
[5] Somewhat freely translated, the expression means: ‘The law is harsh, but it is the law’ and must therefore be followed.
[6] See, e.g., Lawes v Bennett (1785) 1 Cox 167 (Ch Div); Re Carrington, [1032] 1 Ch 1 (CA); Re Pyle, [1985] 1 Ch 724 (CA); Re Reeves; Reeves v Pawson, [1928] 1 Ch 351.
[7] See, e.g., Culbertson v Culbertson, 1967 CarswellSask 36, 62 FLR 2d 134 (CA).
[8] Re Stevens, [1946] 4 DLR 322 (NSCA); Re Rodd (1981), 10 ETR 117, and Timothy Youdan, comment, ibid. at 118. However, see also Re Cudeck, 1977 CarswellOnt 387, 78 DLR 3d 250 (SC), which came to a different conclusion.
[9] See, e.g., Re Wood (Estate), 2004 BCCA 556ll Re Rodd, 1981 CarswellPEI 21, 10 ETR 117 (SC). New Brunswick, Northwest Territories and Nunavut have enacted legislation that ameliorates the effects of the common law against following the property into a mixed fund. See Wills Act, RSNB 1973, c. W-9, s. 20(3); RSNWT 1988, c. W-3, s. 15(3); RSNWT (Nu) 1988, c. W-3, s. 15(3).
[10] See Hicks v McClure (1922), 64 SCR 361. Cf. Diocesan Synod of Fredericton v Perrett, [1955] SCR 498.
[11] On this point see Oosterhoff, supra, §14.6.3(a).
[12] For a case which applies this principle, see Re Britt, 1968 CarswellOnt 120, 68 DLR 2d) 26. The testator held a first mortgage on real property and in her will bequeathed ‘all monies owing’ on the mortgage to family members in equal shares. The mortgagor defaulted and the testator instituted foreclosure proceedings. She obtained judgment on the covenant and, when the mortgagor did not redeem, obtained a final order of foreclosure. The court held that the gift had not adeeemed.
[13] RSO 1990, c S.26. For similar legislation, see Wills Act, RSNB 1973, c W-9, s 20(2); RSNWT 1988, c W-5, s 14(2), (3); RSNWT (Nu) 1988, c W-5, s 14(2), (3); RSNS 1989, c 505, s. 32; SS 1996, c W-14.1, s 26(2), (3); See also Wills and Succession Act, SA 2010, c W-12.2, s 10. See further Oosterhoff, supra, §14.7.4.
[14] For a case that applies this legislation, see DiMambro Estate v DiMambro (2002), 48 ETR 2d) 22.
[15] Substitute Decisions Act, 1992, SO 1992, c 30, s 36. To the same effect, see Infirm Persons Act, RSNB 1973, c I-8, s 18; Wills Act, CCSM, c W150, s 24; Adult Guardianship and Co-decision-making Act, SS 2000, c. A-5.3, s 61; Wills, Estates and Succession Act, SBC 2009, c 13, s 48. For an application of such legislation, see Doyle v Doyle Estate, 1995 CarswellOnt 826, 9 ETR 2d 162 (Gen Div); Forbes v Millard Estate, 2017 BCSC 361; Re Thorne Estate, 2018 BCSC 934, 37 ETR 4th 326.
[16] For the tracing remedy, see the text at footnotes 8 and 9, supra, and see also Oosterhoff, supra, §14.6.3(b).
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(ii) PRINCIPLES GOVERNING THE DETERMINATION OF TESTAMENTARY CAPACITY |
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By Albert Oosterhoff
1. Introduction
The recent decision, Joy Estate v McGrath,[1] is another case in which the court had to consider the well-known principles that govern determining testamentary capacity, and the governing principles on costs orders in estate litigation. These principles are not new, but questions about them continue to arise, so it is worthwhile to consider them anew. EE Gillese JA wrote the judgment in the case and, as always, it is clearly and carefully argued.
In my discussion of the case, I have followed her Honour’s reasons closely and in considerable detail to indicate how important it is for a court to follow the several principles carefully and not make unwarranted assumptions. Regardless, the case is well worth reading in its entirety.
2. Facts
Mr Joy (‘the deceased’), and his business partner, Steve Ramsundarsingh (‘Steve’), operated two electrical businesses. They reorganized the businesses in 2017 and made Dexter Ramsundarsingh (‘Dexter’), the second Respondent),[2] the son of Steve, the owner of all the common shares of the two businesses, while they retained the preferred shares. The Appellant, Michael McGrath, is the deceased’s stepson and the deceased was the only father he has ever known. The Appellant has a son, Michael Jr, whom the deceased treated as his grandson and to whom he was very close. Michael Jr was represented by the Office of the Children’s Lawyer (‘OCL’) The deceased married the first Respondent, Ms Joy, in 2016. Their marriage was troubled, and they often argued about finances. He left her more than once during the marriage.
The deceased made three successive wills, all of which were in his handwriting. The 2014 Will left bequests to the Appellant, Michael Jr, Dexter, and Ms Joy.
The 2016 Will made bequests to the same four people:
(a) his cabin in Newfoundland to the Appellant and Michael Jr;
(b) a specified garage to the Appellant and Michael Jr;
(c) a specified car to Michael Jr;
(d) a specified boat, skidoo trailer and skidoo to the Appellant;
(e) his ‘50% shares’ of the businesses and a specified unit in Brampton to Dexter;
(f) from the proceeds of his $500,000 insurance policy: $5,000 a year for 10 years to maintain the Newfoundland cabin, $300,000 to be held in trust for Michael Jr until he turned 27, and $150,000 to the Appellant; and
(g) the proceeds of his $600,000 insurance policy to Ms Joy after taxes were paid.
The will named Steve ‘to carry out my request’ and named him his executor.
The deceased made the 2019 holograph Will (the Suicide Note) shortly before committing suicide. In it he apologized for killing himself. Using profanities, he said that Ms Joy ‘drove me to this’ and that ‘I’m beyond my control because of her’. He asked Steve to make sure that Ms Joy did not ‘get anything and continued: ‘This is my declaration that anything in my will that has her name on it is VOID. Everything goes to my stepson Michael & grandson Michael’. He also asked Steve to make sure that Ms Joy was not at his funeral. And he directed, ‘I want my ashes spread in the pond in front of my cabin’.
The evidence showed that the deceased consumed a lot of alcohol and smoked hash oil on the day before he died. However, he had never been diagnosed, treated, or hospitalized for alcoholism, substance abuse, or other mental health issues. He was prescribed medical-grade cannabis for bodily injuries he had sustained.
Steve renounced his right to administer the estate and therefore the Appellant brought an application to probate the Suicide Note as the deceased’s last will. The Appellant submitted the expert report of Dr Mark Sinyor, a psychiatrist and an expert on suicidality. The expert was not able to make a definitive statement on whether the deceased was intoxicated by alcohol, by cannabis, or both when he wrote the Suicide Note or whether the potential intoxication might have meant that he lacked testamentary capacity. Ms Joy and Dexter opposed the application.
The parties agreed that the Suicide Note met the requirements for a valid holograph will, but the Respondents argued that the Appellant had failed satisfy the onus of proving that the deceased had testamentary capacity. In the alternative Dexter argued that if the Suicide Note were found to be a valid will, it should be construed as a codicil to the 2016 Will.
The application judge concluded that because of the deceased’s consumption of alcohol and drugs on the day before he died, he lacked testamentary capacity when he wrote the Suicide Note. He also ordered the estate to pay a small portion of the costs of the Respondents and the OCL and ordered the Appellant to pay most of their costs. He was guided by the following evidence in reaching his conclusion:
(a) Steve believed that the deceased was subject to substance abuse. Dexter thought the deceased was drunk when he spoke with him on the evening before he wrote the Suicide Note and a friend of Ms Joy’s son who spoke with the deceased later that evening on a facetime call thought he was drunk;
(b) Ms Joy testified that the deceased drank and used drugs all day and all evening on the day before he committed suicide;
(c) Dr Sinyor’s evidence was inconclusive of the deceased’s testamentary capacity and lacked the benefit of cross-examination evidence about the deceased’s history of drug and alcohol abuse and of his actual consumption the day before he died;
(d) the fact that the deceased wrote in the Suicide Note that he was beyond his control because of Ms Joy
(e) the handwriting on the Suicide Note ‘was sloppy and nearly illegible’; his sister testified that he was depressed; and the evidence showed that excessive use of alcohol and hash oil cigarettes were part of his daily life; and
(f) the Suicide Note was a ‘profanity laced diatribe against’ Ms Joy.
The Appellant appealed the application judge’s conclusion that the deceased lacked testamentary capacity and the costs order. The Court of Appeal allowed the appeal on both matters.
3. Analysis
3.1 Standard of Review
Justice Gillese held that no deference was owed to the application judge’s conclusion that the Appellant had failed to prove that the deceased had testamentary capacity. He did set out the correct legal principles for determining testamentary capacity but failed to apply them. This was an error in principle and warranted the intervention of the Court of Appeal.
3.2 Legal Principles
Her Honour then stated and applied the well-known principles for determining testamentary capacity. These require that a testator must have a ‘sound disposing mind’ and a sound disposing mind means that the testator must:
(a) understand the nature and effect of a will;
(b) recollect the nature and extent of his or her property;
(c) understand the extent of what he or she is giving under the will;
(d) remember the people that he or she might be expected to benefit under the will; and
(e) where applicable, understand the nature of the claims that may be made by persons he or she is excluding under the will.
3.3 Application of the Principles
(a) Understanding the nature and effect of a will
Clearly, the deceased understood the nature and effect of a will. He had never sought legal advice to make a will, but he made the two earlier wills as well as the Suicide Note. Similarly, he clearly knew he was writing a will when he wrote the Suicide Note. It contained the kind of language that is common in wills.
(b) Recollecting the nature and extent of his property; and
(c) Understanding the extent of what he was giving under the will
Although the deceased was in financial difficulties when he died, it is clear from the Suicide Note that he was aware of one of his significant assets, namely, the $600,000 insurance policy. He bequeathed it to Ms Joy in the 2016 Will but must have remembered that when he said in the Suicide Note that she would get nothing and that everything he gave to her in that Will was now ‘VOID’. He also remembered his cabin in Newfoundland. He did not expressly speak of his interest in the businesses, but that does not necessarily indicate that he did not remember it. In the 2016 Will he bequeathed his 50% interest to Dexter. Later he and Steve gave Dexter the common shares in the businesses, so he may have thought that he had meanwhile given Dexter his interest in the businesses. In particular, the Suicide Note disposed of all his assets and gave it to the Appellant and Michael Jr. Thus, the deceased did recollect the nature and extent of his property.
(d) Remembering the people that might be expected to benefit under his will
Both the Appellant and Michael Jr might be expected to benefit under his will, and they were also named in the 2014 and 2016 wills. Ms Joy and Dexter might also be expected to benefit under his will, and he did benefit them in the earlier wills. The fact that he did not benefit Ms Joy in the Suicide Note did not mean that he did not remember her. He clearly did but disinherited her. He did not mention Dexter in the Suicide Note but since he had already transferred his shares in the businesses to Dexter, he may have thought that he had already honoured his bequest in the earlier wills to him. Thus, this element of the test was met too.
(e) Understanding the nature of the claims people excluded from the will may make
This element was also satisfied because Ms Joy was better off financially than the deceased and owned the matrimonial home. The deceased would have realized that and therefore he would not have been concerned about any claim from Ms Joy.
3.4 Did the Decease Have a Sound Disposing Mind?
The application judge decided the question large because of the deceased’s use of drugs and alcohol, both in general and on the day before he died. But he failed to apply the legal principles already discussed. Justice Gillese then considered the points relied on in his decision.
(a) Substance abuse
Her Honour rightly held that it is an error to infer a lack of testamentary capacity based on the testator’s use of alcohol or drugs. If he suffers from a disorder or condition that might affect his testamentary capacity, that should be considered when applying the relevant legal principles. For this point she discussed the locus classicus on testamentary capacity, Banks v Goodfellow.[3] The testator suffered from paranoid delusions and Cockburn CJ applied the elements for determining whether he had testamentary capacity and paid careful attention to the testator’s condition. The court concluded that the testator was able to discern the elements of the legal test and found in the circumstances that the testator had testamentary capacity.
Her Honour also referred to Dujardin v Dujardin.[4] In it the testator’s testamentary capacity was also questioned because of his alcoholism and the application judge and the Court of Appeal took that into account in applying the relevant legal principles. Her Honour noted that neither court in the Dujardin case began from the premise that a pattern of heavy drinking suggested a lack of testamentary capacity. Instead, they decided whether the testator had testamentary capacity correctly by considering the evidence relevant to each element of the test.
Moreover, none of the witnesses who testified about the deceased’s drinking in this case, said that he presented as irrational, delusional, incoherent, or abnormal.
(b) Expert evidence
It was unsurprising that Dr Sinyor was unable to provide a definitive opinion on the question whether the deceased was intoxicated when he wrote the Suicide Note. No toxicology screen had been performed on the body and there was no clinical evidence of incapacity. But Dr Sinyor had been made fully aware of the deceased’s alcohol and substance abuse, and his report confirmed that none of suicide, alcoholism, or other substance abuse disorders, singly or in combination, are sufficient to infer lack of testamentary capacity.
(c) The appearance and language of the Suicide Note
Her Honour held that the factors relied on by the application judge in this regard (sloppy writing that was almost illegible, profanity, and the deceased’s statement that he was ‘beyond my control’ because of Ms Joy) were irrelevant in the absence of an explanation for how they were relevant to the elements of the issue of testamentary capacity. Thus, they could not be used to decide whether the deceased had testamentary capacity.
Consequently, the deceased had testamentary because he had a sound disposing mind, and the Appellant satisfied the onus on him of showing that he did.
3.5 Was the Suicide Note a Codicil to the 2016 Will?
This was Dexter’s alternative submission. Justice Gillese readily disposed of it. First, section 6 of the Succession Law Reform Act[5] states that a testator may make a valid holograph will. A will is different from a codicil. And since the court found that the deceased had testamentary capacity and because the Suicide Note satisfies the requirements of s. 6, it is his will and not a codicil. Second, the Suicide Note disposes of ‘everything’. To give effect to a bequest in a prior will would contravene that term.
3.6 Costs Orders
Justice Gillese found that the application judge mentioned the principles governing costs orders in estate litigation but failed to follow them. The modern approach to estate litigation is that the ordinary civil litigation approach to costs applies, that is, that the loser pays. But if there are reasonable ground on which the execution of the will or the testator’s capacity to make the will are questioned, it is in the public interest to resolve the questions without costs to those who question the validity of the will.[6] Thus, in deciding costs in estate litigation, the court must begin by determining whether one of the policy considerations applies. If it does, then normally the parties’ reasonable costs will be paid from the estate. If the court departs from this principle, it must justify it.
The application judge failed to take the necessary first step, proceeded on the basis that the civil litigation costs regime operated, and ordered the Appellant to pay most of the costs of the other parties. However, public policy considerations applied and thus the application was necessary to ensure that the estate was properly administered. Hence, the principle governing costs awards in estate litigation applied and the estate should bear the reasonable costs of the application. Contrary to the statement of the application judge that the Appellant acted unreasonably in bring the application and pursued his own self-interest in his attempt to oust the bequests to the Respondents, the Appellant acted reasonably. He had to bring the application because of the suspicious circumstances. Since the deceased’s conduct necessitated the litigation, all parties were entitled to their reasonable costs on the application and on the appeal, except that the OCL was not entitled to costs on the appeal. It gave no reason for changing its position on the appeal (from supporting the Appellant on the application to supporting Ms Joy on the appeal), and because it had very limited involvement on the appeal.
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[2] I mean no disrespect in referring to the father and son by their first names. I do it only to avoid confusion.
[6] McDougald Estate v Gooderham, 2005, CarswellOnt 2407 (CA), paras 78-79; Neuberger Estate v York, 2016 ONCA 191, para 24; Sawdon Estate v Sawdon, 2014 ONCA 101, para 84.
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(iii) MORE CHANGES TO PROBATE FORMS COMING |
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By Tracey Phinnemore
Regulation 709/21 introduced sweeping changes in the area of estates and this included substantial changes to the “probate” forms and applications for various Certificates of Appointment. These changes came into effect as of January 1, 2022 and streamlined the process and forms, resulting in the elimination of 43 forms, amendments to a further 15 and the introduction of 8 new forms.
While the new changes were welcomed, there have been some “growing pains” in putting the new forms into practice and, clearly, the government has been listening as they have recently reported that several of the forms are going to be amended, with the changes coming into effect as of July 1, 2022.
The main changes are to Forms 74A and 74C, more particularly as follows:
74A – Application for a Certificate of Appointment
- Part 2 will now have a section if the date of the Will is missing
- Part 3 will be more clearly defined, which details deceased’s spousal relationships, so that there is a Section B for with a will applications and Section C for without
- Part 6 will require you to reproduce the entitlements section for each applicant
- Part 7 will now require that the relationship between the beneficiary and deceased is reported
- There will be a new Part 9 that will deal with Estate Administration Tax and whether the applicant is seeking to defer payment or based on an estimated value
- There will also be a new Part 10 that will require the applicant to report if bonding is required and whether they are seeking an order to dispense with, reduce or there is an exemption
74C – Certificate of Appointment
- This form is being modified to clarify the type and circumstances of the grant(i.e. With a will, executed remotely, following a court order, deceased estate trustee or person renouncing)
Several other forms have been amended in line with the changes set out above, notably to the applications for a Small Estate Certificate and forms 74I (A,B,C, F) and form 74J, Application for Certificate or Confirmation (succeeding, resealing, ancillary), as well as forms 74D and 74E. The new forms are already up on the government website for review (ontariocourtforms.on.ca) and clearly identifiable as shaded in grey (until they come into force on July 1, 2022). Keep in mind these amended forms when filing any applications after July 1, 2022.
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The International Academy of Estate and Trust Law (TIAETL)
May 22-26, 2022
2022 Annual Meeting, Washington, DC
LSO 6-Minute Estate Lawyer
May 25, 2022
Proving Due Execution
Co-Chairs: Ian Hull and Andrea Hill
Speaker: Kimberly Whaley
OBA ELDER LAW DAY, Matthew Rendely - Chair
June 20, 2022
Predatory Marriages
Speaker: Kimberly Whaley
STEP Global Congress, London UK
July 7-8, 2022
Predatory Behaviours and the Vulnerable Client: A Quiet Welfare Disaster?
Moderator: L Louise Lewis< TEP, Freeths LLP, UK
Speakers: Kimberly Whaley and Daniel Holloway, University of Oxford, UK
OSGOODE ESTATE LITIGATION
October 6, 2022
Locating Missing Beneficiaries
Speaker: Albert Oosterhoff
OSGOODE ESTATE LITIGATION
October 6, 2022
Costs in Estate Litigation
Speaker: Bryan Gilmartin
ILCO ANNUAL CONFERENCE
November 3, 2022
Estate Litigation
Speaker: Kimberly Whaley
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Check out our recent Feature Series which are posted on our Blog:
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