Below are 5 of the more notable estates and trusts decisions that we saw in 2023.

#1. Palichuk v. Palichuk^[1]

Summary

In March, Nima Hojjati wrote on the Ontario Court of Appeal decision in Palichuk v. Palichuk where the court re-affirmed that a Last Will and Testament cannot be challenged during the lifetime of the testator.^[2]

Facts

The case concerned Ms. Palichuk, who was 90 years old at the time of the appeal. The parties included Ms. Palichuk and her two daughters, Linda (the “Appellant”) and Susan (the “Respondent”). The dispute concerned the validity of four documents executed by Ms. Palichuk:

1. A Will disinheriting the Appellant, and naming the Respondent as her sole beneficiary (the “Will”);
2. A Continuing Power of Attorney for Property appointing the Respondent as her attorney;
3. A Power of Attorney for Personal Care appointing the Respondent as her attorney; and
4. A transfer and declaration of trust transferring her home to the Respondent as a bare trustee.^[3]

At first instance, the Appellant brought an application in the Ontario Superior Court to declare Ms. Palichuk incapable of managing her property and personal care and sought a guardianship order. The Applicant also sought the “opinion, advice and direction of the Court” in respect of the validity of the four documents, including the Will, including whether Ms. Palichuk was unduly influenced. The court found Ms. Palichuk capable of managing her property and personal care and refused a guardianship order. Moreover, the court found that Ms. Palichuk was capable of executing the four documents.^[4]

On Appeal, the Appellant submitted that the application judge erred by not considering the issue of undue influence in respect of the four documents, including the Will.

Decision

In challenging the Will, the Appellant relied on Rule 14.05(3)(a) of the Rules of Civil Procedure^[5] which provides:

14.05(3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,

(a) the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust. [Emphasis added.]

The Court of Appeal noted that the Rule does not contemplate the court providing an “opinion, advice or direction” on the Will of a living person. Moreover, that determining the validity of a Will depends upon the future contingency of a testator’s death. This position is in accordance with section 26 of the Succession Law Reform Act^[6] (“SLRA”) which states:

22 Except when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to,

(a) the property of the testator; and

(b) 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 under subsection 20 (2).

The Court of Appeal noted that some cases have considered Wills during a testator’s lifetime and took issue with some comments made in Dempster v. Dempster^[7]. In that case, the Superior Court stated that the law in Ontario “may well be moving towards” permitting claims of undue influence during a testator’s lifetime.^[8]

The Court of Appeal disagreed, stating that it is neither necessary nor desirable for the law to permit such a challenge and cited public policy reasons why. First, the testator may change their Will as often as they like prior to death. Second, there is no way to determine what property will be left, if any, to distribute until after a testator dies. Finally, beneficiaries may predecease the testator. If Will challenges were permitted during a testator lifetime, “the courts would be inundated with litigation that is hypothetical during the lifetime of the testator, with the potential for re-litigation after their death.”^[9]

#2, Vojska v. Ostowski^[10]

Summary

In July, Brett Book wrote on several of the 2023 decisions that have applied section 21,1(1) of the SLRA. One of those decisions was Vojska v. Ostowski.^[11]

Facts

In Vojska v. Ostowski, Ms. Vojska (the “Deceased”) died on September 9, 2022. The Deceased prepared a will on October 7, 2011. That day, the Deceased and her husband attended a lawyer’s office to sign new wills and powers of attorney. Each spouse signed a will and two power of attorney documents. A lawyer and a law clerk witnessed the signing ceremony. The lawyer, however, in the midst of the six documents to be signed, failed to sign the Deceased’s Will.^[12]

Decision

The court considered section 21.1(1) of the SLRA which provides:

Court-ordered validity

21.1(1) If the Superior Court of Justice is satisfied that a document or writing that was not properly executed or made under this Act sets out the testamentary intentions of a deceased or an intention of a deceased to revoke, alter or revive a Will of the Deceased, the Court may, on application, order that the document or writing is as valid and fully effective as the Will of the deceased, or as the revocation, altercation or revival of the will of the deceased, as if it has been properly executed or made^[13].

The effect of section 21.1(1) of the SLRA is that it  “grants the court a discretion to treat as a valid will, a document that expresses the testamentary intention of the deceased but was not properly executed as required for a will”.^[14]The formal requirements for a Will are included in section 4 of the SLRA and include that the Will must be signed by the testator, in the presence of two attesting witnesses who also sign the document. Section 21.1(1) only applies if the deceased died on or after January 1, 2022.

In his decision, Justice Myers held that the Will was valid and fully effective, and used his discretion under section 21.1(1). In doing so, His Honour stated “it is hard to imagine a more textbook example of a case for which the new power was intended.”^[15]

In Vojska, Justice Myers, provided a thorough analysis which included consideration of two previous decisions rendered by him which considered section 21.1(1): Cruz v. Public Guardian and Trustee^[16] and White v. White.^[17]  Justice Myers opined how in Cruz, he mentioned the test out of British Columbia, requiring “a deliberate or fixed and final expression of intention as to the disposal of the deceased’s property on death.”^[18]

Interestingly, Justice Myers also discussed the decision in White, and remarked how he “mused in obiter dictum about whether an unsigned draft will can ever be sufficiently fixed and final for the purposes of that section. His Honour went on to ask, will the phrase “not properly executed” in s. 21.1 include “unexecuted” (i.e. unsigned) documents.”^[19]

It will be interesting to see how section 21.1(1) decisions continue to develop and in light of some of the considerations addressed by Justice Myers in White.

#3.  D.L v E.C^[20]

Summary

In this case, the Ontario Court of Appeal upheld a decision from the Superior Court in respect of a claim for dependant support under the SLRA. In their decision, the Court of Appeal considered the definition of a dependant, specifically a ‘child’ under section 57 of the SLRA.

Facts

The dependant support claim was brought by a mother (known as “E.C.”) on behalf of her minor child (known as “P.C.L..”) against the estate of the deceased (known as “B.L.”). The parents, E.C. and B.L., had been involved in an on again off again romantic relationship for several years including when P.C.L. was born. They were both in other relationships at the time P.C.L. was conceived. Eight months after P.C.L.’s birth, B.L. passed away unexpectedly from a drug overdose. During that eight-month period, there was evidence that he treated P.C.L. as his child.^[21]

E.C. and B.L. lived together when P.C.L. was born. On the child’s baptismal certificate, B.L. was named as their father. B.L.. named the child and the mother on his life insurance policy as beneficiaries and were listed as dependants on his work’s medical insurance. However, he was not actively involved in P.C.L.’s care, given he suffered from various addictions. Shortly after their birth, B.L.’s right to see P.C.L. was revoked due to his continued drug use. Moreover, a DNA test conducted during the litigation demonstrated that B.L. was not the biological father of P.C.L.^[22]

The Law

In Ontario, a claim for dependant support is brought under section 58 of the SLRA, which provides:

Order for support

58 (1) Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them.^[23]

The question in D.L. v. E.C. was whether P.C.L. met the definition of a dependant, specifically a ‘child’, which is found in section 57(1) of the SLRA:

“child” means a child as defined in subsection 1 (1) and includes a grandchild and a person whom the deceased has demonstrated a settled intention to treat as a child of his or her family, except under an arrangement where the child is placed for valuable consideration in a foster home by a person having lawful custody.^[24]

The application judge, with the Court of Appeal concurring, found that while there was insufficient evidence that B.L..  had demonstrated “a settled intention” to treat P.C.L. as a child,  there was found to be a basic intention to treat P.C.L. as a child, yet, it was not a “settled intention”.^[25]

The application judge concluded that

1. E.C. had not met the onus to demonstrate P.C.L. was the dependant of the deceased;
2. E.C. and B.L. were not common-law spouses under the SLRA; and
3. The DNA demonstrated that P.C.L. was not the biological child of the child.

Moreover, the court found that B.L. believed that P.C.L. was his biological child whereas E.C knew that either he was not the father or may not have been. She took no steps to dissuade him of this belief. Importantly, the application judge stated that “[h]ad E.C. been forthright and honest with B.L. about the parentage, the eight months may have been a sufficient time frame to have allowed for the settled intentions to be manifested”.^[26]

Which factor will figure more predominantly in the analysis of whether a person has “a settled intention” to treat a child as his or her own will therefore depend on the circumstances of the case. As the application judge noted, the finding of a settled intention is a fact-driven exercise.^[27]

In the circumstances, the state of B.L.’s knowledge was relevant but not determinative factor given the very short time period involved and the limited evidence of B.L.’s relationship with P.C.L. The application judge did not consider it to the exclusion of other relevant factors, including P.C.L.’s need for support and her relationship with B.L. as manifested in the very short time they were together.^[28]

For these reasons, the Court of Appeal dismissed E.C.’s appeal, finding that P.C.L. was not a dependant of the deceased for the purpose of a dependant support claim.

#4. Jackson v. Rosenberg^[29]

Summary

In November, Professor Oosterhoff wrote on the Ontario Superior Court decision in Jackson v. Rosenberg that concerned a matter of joint tenancy and the presumption of resulting trust.^[30]

Facts

The deceased, Mr. Taube (the “Deceased”) and Mr. Jackson (the “Applicant”), were partners since in or around 1963. In 2005, both the Applicant and the Deceased executed mirror wills, naming “each other as the sole beneficiary of their respective estates”^[31]. The Deceased also listed his great niece, Ms. Rosenberg (the “Respondent”), as his alternate beneficiary given he had no other family to support.^[32]

Since 1999, the Applicant and the Deceased shared a condominium (the “Condo”) in Toronto. The Condo was owned by the two of them as joint tenants with a right of survivorship.^[33]

The right of survivorship provides that when property is owned jointly in joint tenancy and one owner dies, their interest automatically flows to the other owners. This is distinguishable from tenancy in common, whereby two or more persons may hold property jointly, but each have a distinct share. When an owner dies owning property as tenants in common, their share may flow to a third party and not the remaining owners.

Upon the Deceased death in 2010, the Applicant sold the Condo and used the proceeds to purchase a house in Port Hope (the “Port Hope Property”). In February 2012, the Applicant transferred title to the Port Hope Property as the sole owner to the Respondent as joint tenants with the right of survivorship.^[34]

A decade later, the Applicant grew worried he would be forced out of the home due to the Respondent’s discussions of selling the house with her husband. In September 2020, the Applicant requested his lawyer to sever the joint tenancy with the Respondent, creating a tenancy in common.^[35]

The Respondent’s position was that the Applicant transferred the property to her as joint tenant as a gift. Meanwhile, the Applicant maintained that it was not a gift, and that he intended to transfer the property to the Respondent to avoid probate fees, while retaining full beneficial interest in the Property until he died. The Applicant’s position was that the Respondent was holding the Port Hope Property on resulting trust for the Applicant. The Applicant also stated that he did not understand the implications of joint tenancy from his lawyer when such a transfer was made [36].

Decision

The issue for the court was twofold:

1. Did the Applicant have the right to sever the joint tenancy?
2. Did the Applicant rebut the presumption of resulting trust?

The court considered and applied Kennedy v. Smith^[37], in which the court summarized the three potential scenarios that can arise when a gratuitous transfer/gift of property into joint tenancy is made:

1. A true joint tenancy, in which the joint tenants are each owner of the whole. Each enjoys the full benefit of property ownership, and the ultimate survivor will enjoy the whole title for him or herself;
2. A resulting trust, wherein only one joint tenant has any beneficial interest in the property and the other joint tenant, usually a gratuitous transferee, holds title in trust for the other and has no beneficial interest in the property;
3. A scenario which is sometimes referred to as a “gift of the right of survivorship,” wherein a joint tenant is gratuitously placed on title and has no beneficial entitlement to the property during the lifetime of the donor, but if the donee survives the donor, the donee will receive the entire property by rights of survivorship. In Bergen v. Bergen,[16] Newbury J.A. described a gift of the right of survivorship in a joint account as “an immediate gift of a joint interest consisting of whatever balance exists in the account on the transferor’s death, assuming he or she dies first.”

The court noted that when a person makes a transfer without consideration to a third person who is not his minor child, a presumption of resulting trust arises. Justice Sanfilippo provided a helpful summary of the law of resulting trust in Bradshaw v. Hougassian:

As the Supreme Court has explained, “the underlying notion of the resulting trust is that it is imposed ‘to return property to the person who gave it and is entitled to it beneficially, from someone else who has title to it. Thus, the beneficial interest ‘results’ (jumps back) to the true owner’”

A resulting trust arises where the property is in one party’s name, but impressed with an obligation to return the property either because the holder is a fiduciary or because the transferee gave no value for the property. To determine whether the transfer of property was made for no value, the actual intention of the transferor at the time of the transfer is the governing consideration. Where a gratuitous transfer is made, there is a rebuttable presumption that the transferor intended to create a trust rather than to make a gift, on the principle that “equity presumes bargains and not gifts”. The onus is on the person receiving the transfer to demonstrate that a gift was intended, failing which the transferee holds the property in trust for the transferor.^[38]

Pecore v. Pecore^[39] is the seminal case for resulting trusts in Canada. In Pecore, the Supreme Court of Canada stated that three factors are required to establish an intention of a gratuitous transfer / gift:

• an intention to make a gift on the part of the donor, without consideration or expectation of remuneration;
• an acceptance of the gift by the donee; and
• a sufficient act of delivery or transfer of the property to complete the ^[40]

Having considered the evidence as a whole, the court was satisfied that, at the time of the transfer, the Applicant intended to gift the right of survivorship in the property to the Respondent, so that whatever equity remained on his death would pass to her. He did not intend to give the property to the Respondent during his lifetime but wanted to retain control of it while he lived. Thus, he intended that the Respondent’s beneficial interest would arise only when he died. As made clear by Pecore, this does not preclude a conclusion that he intended to give the right of survivorship to the Respondent.^[41]

In consequence of the severance, the court found that the Respondent had a 50% interest in the Port Hope Property. However, since the severing transfer was a gratuitous transfer the presumption of resulting trust also applied to it and thus the Respondent held her 50% interest on resulting trust for the Applicant. Nevertheless, the Applicant could not and did not revoke the right of survivorship with respect to that 50% share. Thus, when the Applicant dies his 50% interest in the Port Hope Property will become part of his estate, whereas the Respondent’s 50% share will pass to her if she survives the Applicant in accordance with the intention of the 2012 transfer.^[42]

#5, Queripel v. Shaddock^[43]

Summary

In September, Professor Oosterhoff wrote on the decision in Queripel v. Shaddock wherein the court awarded punitive damages against an estate trustee for breach of their fiduciary duties.^[44] The case demonstrates that the court will step in where an estate trustee falls below their standard of care and acts contrary to the best interests of the beneficiaries of an estate.

Facts

Queripel v. Shaddock concerned the estate of Ms. Shaddock (the “Deceased”) who died in 2002. The Deceased was survived by her daughter, Lorali (the “Respondent”), and sons Clifford and Robert. The Deceased left a Will dated June 28, 1996, which appointed the Respondent as one of her co-estate trustees.^[45]

The Will provided Robert with a life interest in the Deceased’s property or any other residence as might be substituted for it. Following the Deceased’s death in 2002, the Respondent sold the Deceased’s residence as estate trustee and purchased a condo for Robert. The respondent lived rent-free at the condo with Robert until his passing in 2022.  A title search on the condo demonstrated that title liens had been registered against it for default in payment of common expenses like rent.^[46]

In February 2022, counsel for Clifford wrote to the Respondent asking for an accounting and an explanation about the liens. He also sought occupation rent, damages, payment of legal fees, and the Respondent’s agreement to be removed as estate trustee. In June 2022 Justice Kimmel made an order requiring the Respondent to pass her accounts. She failed to comply with the order.^[47]

In December 2022, Justice Dietrich removed the Respondent as estate trustee and named Clifford as the succeeding estate trustee. The court also ordered the Respondent to comply with Justice Kimmel’s order, transfer all estate assets to Clifford, inform him of all debts and assets of the estate, have the title to the condo changed to reflect that Clifford, as executor, was the new owner. The court also issued a writ of possession for the condo.^[48]

In an email in March 2023, the Respondent promised to deliver all documents in her possession to Clifford’s counsel, and informed him that there were property tax arrears, legal fees, and a special assessment. However, the Respondent failed to deliver any of the documents.^[49]

Accordingly, Clifford brought a motion for the following relief:

1. to determine the damages caused by the Respondent while estate trustee, and requiring her to pay the damages;
2. requiring the Respondent to pay punitive damages for failing to comply with court orders and otherwise;
3. requiring the Respondent to comply with various court Orders for her to pass her accounts, transfer all estate assets to Clifford.

The motion was heard 23 May 2023. The Respondent had plenty of notice of it, but, did not appear.

Decision

Justice Gilmore found that the Respondent breached her fiduciary duties as estate trustee in that:

• she failed to communicate with the beneficiaries for 20 years and failed to respond to communication from their counsel other than one recent email;
• she failed to provide an accounting of the estate’s assets despite three court orders requiring her to do so (two of which required her to pass her accounts);
• resided in the condo and did not pay rent to the estate, failed to sell it after Robert died as required by the Will, failed to pay real property taxes since 2018, and failed to pay the condo fees and the special condo assessment;
• her failure to maintain estate assets resulted in a lien being placed on the condo and caused the City of Toronto to take steps to distrain for taxes; further, the moving parties incurred legal fees to remove the lien, and they had to use their own resources to remove the line and pay other expenses.^[50]

With respect to the claim for punitive damages, her Honour applied Walling v. Walling,^[51] in which the court awarded punitive damages for the egregious actions of the executor. She held that, as in Walling, the court needed to send a message in this case regarding ‘the abhorrence’ of the Respondent’s conduct when she was estate trustee, which included the fact that her actions caused increased costs, a failure to communicate with vulnerable beneficiaries, and a failure to account. She concluded:

[The Respondent’s] conduct in this matter cannot be considered as anything other than egregious, abhorrent and dismissive of Court authority. An award of punitive damages will communicate to those named as Estate Trustees that breaches of fiduciary duty, and a continuing failure to account or communicate with beneficiaries will be considered conduct that should be the subject of deterrence.^[52]

The Respondent awarded full indemnity costs on the motion to the Applicants in the amount of $49,601.09.^[53]

—

[1] Palichuk v. Palichuk, 2023 ONCA 116 (CanLII) (“Palichuk”)

[2] See Nima Hojjati, “Barriers to Challenging a Will During Life” March 20, 2023, WEL Partners Blog, accessible online: https://welpartners.com/blog/2023/03/barriers-to-challenging-a-will-during-life/

[3] Palichuk at para 2.

[4] Palichuk at paras 3-5

[5] Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules”)

[6] Succession Law Reform Act, R.S.O. 1990, c. S.26 at s.26 (“SLRA”)

[7] Dempster v. Dempster, 2008 CanLII 2747 (ON SC)

[8] Palichuk at para 70

[9] Palichuk at para 71

[10] Vojska v. Ostowski, 2023 ONSC 3894 (CanLII) (“Vojska”)

[11] See Brett Book, “Recent Applications of Ontario’s Validating Provision in S. 21.1 (1) of the Succession Law Reform Act” July 31, 2023, WEL Partners Blog accessible online: https://welpartners.com/blog/2023/07/recent-applications-of-ontarios-validating-provision-in-s-21-1-1-of-the-succession-law-reform-act/#_ftn15

[12] Vojska at paras 1 – 6

[13] SLRA at s. 21(1)(1) [Emphasis added]

[14] Vojska at para 11

[15] Vojska at para 12.

[16] Cruz v. Public Guardian and Trustee, 2023 ONSC 3629 (CanLII)

[17] White v. White, 2023 ONSC 3740 (CanLII)

[18] Vojska at para 21

[19] Vojska at para 24

[20] D.L v. E.C., 2023 ONCA 494 (CanLII) (“D.L.”)

[21] D.L. at para 6

[22] D.L. at para 7

[23] SLRA at s.58(1)

[24] SLRA at s.57(1) (emphasis added)

[25] D.L. at para 11

[26] D.L. at para 8

[27] D.L. at para 8

[28] D.L. at para 14

[29] Jackson v. Rosenberg, 2023 ONSC 4403 (“Jackson”)

[30] See Albert Oosterhoff, “Can you make an irrevocable Gift of The Right of Survivorship?” November 30, 2022, WEL Partners Blog accessible online: https://welpartners.com/blog/2023/11/can-you-make-an-irrevocable-gift-of-the-right-of-survivorship/

[31] Jackson at para 13.

[32] Ibid.

[33] Jackson at para 16

[34] Jackson at para 18.

[35] Jackson at para 28.

[36] Jackson at para 54.

[37] Kennedy v. Smith, 2022 BCSC 1622

[38] Bradshaw v. Hougassian, 2023 ONSC 3266 at paras 38 – 39 [Emphasis added]

[39] Pecore v. Pecore, 2007 SCC 17

[40] Ibid.

[41] Jackson at para 120

[42] Jackson at paras 122-124

[43] Queripel v. Shaddock, 2023 ONSC 3114 (“Queripel”)

[44] See Albert Oosterhoff, “Awarding Punitive Damages Against an Executor” September 19, 2023, WEL Partners Blog accessible online: https://welpartners.com/blog/2023/09/awarding-punitive-damages-against-an-executor/#_ftn1

[45] Queripel at para 8

[46] Queripel at para 9

[47] Queripel at para 13

[48] Queripel at para 17

[49] Queripel at para 17

[50] Queripel at para 35

[51] Walling v. Walling, 2012 ONSC 6580 (CanLII)

[52] Queripel at para 44

[53] Queripel at para 47