Estate Litigation at Mann Lawyers

We are excited to introduce the inaugural edition of the Mann Lawyers Estate Litigation Page, edited by the members of our Estate Litigation Group, chaired by Heather Austin-Skaret, and made up of members from our Wills and Estates Law Group, our Family Law Group and to assist in complicated estates involving competing corporate and commercial interests, our Commercial Litigation Group. Every two weeks this page will bring you topical news and commentary on matters of current interest.

Updates

On February 16, 2021, Attorney General Doug Downey introduced Bill 245 – the “Accelerating Access to Justice Act”, which if passed proposes some notable changes to Ontario’s wills and estates law, including virtual signings of wills and powers of attorney abolishing the rule that marriage revokes a will, reading down requirements as to formal execution of a will by introducing the concept of substantial compliance, and extending the revocation of gifts or appointments of estate trustee in a will to include separated spouses.   Please see Sarah Macaluso’s recent blog post for more information.

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Ontario Attorney General Doug Downey announces change to the definition of a “small estate” moving the value cap from $50,000 to $150,000 effective April 1, 2021 ensuring that more Ontario estates will enjoy access to a simplified probate process.

In a recent News Release: “The Ontario government is easing the burden on those grieving the loss of a loved one by simplifying the process to apply to manage small estates. The changes, which include setting the limit for a small estate at $150,000, will help people receive their inheritances faster and make Ontario’s probate process for small estates simpler and more accessible…. “To ease the burden on grieving loved ones and ensure fairness for everyone regardless of the size of an estate, the government is making the process to claim a small estate faster, easier and less costly for Ontarians…”We have heard from people across Ontario that the justice system has grown too complex and outdated,” said Attorney General Downey. “Now, more than ever, is the time to boldly press forward with changes that simplify processes and increase access to justice. These changes will move the estates sector forward in Ontario, ensure fairness and save families time and money.”

Practice Tip

When considering whether and what expert evidence to advance to the Court, point one is to remember that our judges are increasingly thoughtful as to whether they need it at all.  Is the evidence of value to the court?  Point two is to remember that experts often talk funny and so do lawyers.  And our judges are not expert in many things.  Your task is to help them speak to and understand one another, and to prepare the evidence accordingly. Consider wherever practical the use of visual aids, models, charts and the like…they tell the story effectively, they draw the judge’s eye to the “page” and they provide useful breaks in the presentation by the expert. (Next: The Participant Expert)

Our Featured Blog – Ontario Superior Court Clarifies Duty of Care in Intestacy

ML Comment: Ontario Superior Court Clarifies Duty of Care in Intestacy

In this ML Comment we look at whether an estate trustee must produce a written receipt for every expense incurred in order to obtain reimbursement, or whether it is sufficient if she adequately documents her accounts by giving evidence under oath along with corroboration from a ledger record and ancillary documents completed at the time.

While Fales v. Canada Permanent Trust Co. stands for the proposition that the standard of care for an estate trustee with respect to accounts is the standard of care of a person of ordinary care and diligence in managing their own affairs, what does “ordinary care and diligence require”?

This was one of the issues recently considered in Toller James Montague Cranston (Estate of) (“Toller Estate”)

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Toller Cranston, five time Canadian champion figure skater, two time Olympian and Olympic and World medalist, recipient of numerous awards and distinctions, a prolific and world renowned artist, died suddenly and intestate in Mexico on January 24th, 2015, leaving a complex estate valued at over $6,000,000 including real estate, 400 original paintings valued at $3,863,907, and approximately 18,000 items including furniture, art, crafts, ceramics, statues of Mexican Saints and household items.  A written will prepared prior to his death, was deemed invalid by Mexican authorities because his beneficiary had predeceased him by two years.

Almost immediately following his death, controversy developed as to the administration of his estate and appears never to have abated.  The eventual trustee, in the course of her ongoing activities which included defence of an application to remove her (after an agreement to support her appointment), brought an interim application to pass her accounts for the period from January 23rd, 2015 until April 30th, 2018. The application was heard in Ottawa applying Ontario law before Justice Robert Smith of the OSCJ whose reasons were recently released following 14 days of trial.

The objectors argued that the trustee incurred some expenses which did not provide any benefit to the estate and that she should be ordered to repay the estate for such expenses and for any expenses where she failed to provide a receipt. In other words, and as highlighted by the court, the objectors argued that the standard of care in these circumstances is perfection: no argument was presented that the accounts filed by the trustee were not accurate.  Rather, the argument was that in every instance where a receipt was not provided supporting an expense incurred by the trustee, the court should overrule that expense and require repayment by the trustee to the estate.

This argument was emphatically rejected by the court.

Duty of Care

Rule 74.17 (1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that “estate trustees shall keep accurate records of the assets and transactions in the estate …” and lists in considerable detail the records and information that shall be included and filed with the court in a passing of accounts.  Notwithstanding this detailed listing, there is no definition of what “accurate records” means, and therefore, no rule based standard as to what will comply and what will not.

There is no apparent stipulation in equity or common law that performance of an act or obligation must be “perfect”.  Nor does any statute effecting trustees provide to that effect. Nonetheless, the objectors submitted that a higher standard, namely one of perfection, is required for an individual acting as an estate trustee.

In Toller Estate the court distinguished the “receipts” authorities relied upon by the objectors. The result in these authorities was dictated in each case by the circumstances; there were no findings such as the finding sought by the objectors; and none of the authorities applied a standard of perfection, or any higher standard akin to or implicating perfection.

The strongest of these authorities, Lanthier v. Cousineau Dufresne Estate, 2002 CanLII 2653 (ON SC) was readily distinguishable by the court. Lanthier, a ruling against the trustee, considered the absence of any supporting receipts for substantial cash withdrawals, the absence of any record from cheques or a chequebook, and the absence of any reasonable explanation for the withdrawals.

In the instant case the estate trustee provided an accurate record of all receipts and disbursements, provided detailed explanations under oath explaining the reasons for each expense, and produced copious records to justify and corroborate the amount of each expense charged to the estate.

Relying on the approach in Laird v. Mulholland, [1998] OJ No. 855, this was attractive to Justice Smith because

“while the estate trustee’s accounting was not perfect, she has accounted for all capital receipts and all expenses accurately in the unique circumstances of this estate, she has explained the reason for each expense under oath, she has provided corroborating evidence for almost all expenses, and I find that she acted honestly, in good faith, and reasonably throughout her administration. As a result, I find that she has met the required standard of care of a person of ordinary prudence using common sense in the complicated circumstances of this estate”.

In the end, “ordinary prudence and diligence was all that was required”.  A trustee does not need to be “perfect.”

This blog post was written by Heather Austin-Skaret, a Partner in the Wills and Estates and Real Estate teams.  She can be reached at 613-369-0356 or at Heather.Austin-Skaret@mannlawyers.com.

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