1. Introduction
In 2018, I wrote a blog on the proceedings at first instance in this case.[1] The judge at first instance granted the testator’s daughter’s application to set aside a will for lack of capacity and to restore an earlier will but did not give effect to the daughter’s alternative argument that the testator’s son had subjected him to undue influence. The testator’s son and his brother appealed, and the Court of Appeal dismissed their appeal.[2] Since I wrote the blog on the proceedings at first instance, it behoves me to write one on the appeal decision as well.
2. Facts
The testator died in November 2014. He had two adopted children, Gayle Shannon (‘Gayle’), the respondent in the appeal, and Glenn Hrabovsky (‘Glenn’). Glenn and the testator’s brother, Michael Hrabovsky (‘Michael’) were the respondents.
The testator made a series of wills over a period. In the 2002 Will he made a bequest of $30,000 to Michael, and equal bequests of 10% of the residue of his estate to Gayle and Glenn’s children. The Will left the remainder equally between Gayle and Glenn and named Glenn and Michael the executors. In the 2006 Will the testator increased Gayle’s share by also devising the title to his Toronto house to her. (Earlier, he had made Glenn a joint tenant with him of a cottage.) The 2006 Will also named Gayle as the third executor, and increased Michael’s bequest to $35,000. Then, in July 2007, the testator made a new will (the ‘2007 Will). It disinherited Gayle and removed her as executor. The Will increased the percentage share of the bequests to Gayle and Glenn’s children to 15% and left the balance entirely to Glenn. However, it went on to state that if Glenn predeceased the testator, the balance of the residue would pass entirely to his children, so that Gayle’s children would get nothing. The 2007 Will also stated that the testator forgave a debt owed by Gayle for money lent her that she had not repaid. And the will increased Michael’s bequest to $100,000.
In December 2016 Gayle brought an application in which she challenged the validity of the 2007 Will.
On the application the appellants filed a 2017 affidavit from Ms. Woodruff, the drafter of the testator’s wills, in which she stated that the testator did not exhibit any impairment of capacity when he made the 2007 Will
The appellants presented two grounds of appeal:
(1) That the application judge should have found that Gayle’s application was statute-barred because it was not brought within the two-year limitation period in s 4 of the Limitations Act 2002.[3] The appellants sought to present fresh evidence in support.
(2) That the application judge failed to give sufficient weight to the evidence supporting their argument that the testator had testamentary capacity. They also sought to present fresh evidence in support of this ground.
It was established in evidence at first instance that in 2005 Gayle had used her father’s credit card to make certain purchases. Gayle mentioned that she had done so with his knowledge and permission. Ms. Woodruff sent Gayle a letter in 2005 in which she demanded repayment. However, she did not mention this letter in her 2017 affidavit. She testified that she met with the testator and received his instructions to send the letter, but she had no notes of the meeting.
In his decision, the application judge stated that while the limitation period for a will-challenge is presumed to begin on the date of the testator’s death, that presumption is subject to the discovery principle in s 5 of the Act. He held that while Gayle had the facts necessary to commence her application before the testator’s death, she did not know of the existence and contents of the 2007 Will until January 2015, when she received a copy of the will, and those were essential elements of her application. This meant that the two-year limitation period did not begin to run until January 2015 and thus her application was not statute-barred.
3. Analysis and Judgment
The Limitations Issue and Fresh Evidence
The appellants sought to introduce a new 2019 affidavit by Ms. Woodruff who drafted all of the testator’s wills. She appended a letter to the affidavit from Mr. Pease who acted for Gayle (the ‘Pease Letter’) in which he states that Gayle called Ms. Woodruff and was told that Gayle was no longer an executor under the testator’s new will. He also states in the affidavit that Gayle suspected that Glenn is the sole residuary beneficiary.
Justice Dawe quoted from St Amand v Tisi,[4] which outlines the test for admitting fresh evidence. It requires the party seeking to introduce the fresh evidence to show that it:
- Is credible;
- Could not have been obtained by reasonable diligence before trial or application; and
- If admitted, would likely be conclusive of an issue in the appeal.
His Honour held that the fresh evidence in Ms Woodruff’s 2019 affidavit bearing on the limitations issue does not meet the last two prongs of the test.
On the reasonable diligence issue, he found that the appellants could have put the Pease Letter into evidence themselves, and they failed to explain why they did not.
On the conclusive issue, his Honour noted that the Pease Letter showed that Gayle already knew in 2014 that her father had made a new will, so the statement in her 2016 affidavit that she did not become aware of that will until 2015 was incorrect. Although the application judge appears to have relied on that statement, his Honour concluded that this error did not go to ‘to the very core of the outcome of the case’, since Gayle did not learn of the contents of the 2007 Will until January 2015. Besides the degree of knowledge required to realize that one has a claim does not depend on ‘mere suspicion of speculation’. Further, Ms. Woodruff’s telephone conversation with Gayle did not disclose important information about the Will’s contents, and Gayle only decided to challenge the Will when she learnt from the Will that she was disinherited, and her children would potentially also lose their share of the estate.
The Application Judge’s Conclusion That the Testator Lacked Capacity
Justice Dawe noted that the application judge held in accordance with the authorities[5] that Gayle bore the initial burden of introducing evidence of suspicious circumstances with respect to its preparation and execution, and if she met that burden, the burden of establishing testamentary capacity would shift to the propounders of the will. He held that Gayle had met the threshold burden by reference to the following circumstances:
(1) The testator changed his Will in 2006 and increased Gayle’s share, which undermined the appellants’ theory that he was still angry with her in 2007 about the charges she had incurred on his credit card.
(2) The testator had no other known reason for disinheriting Gayle.
(3) The 2007 Will was ‘unusually spiteful’ in eliminating Gayle’s children’s share of the estate if Glenn predeceased the testator.
(4) The application judge found that there was ‘reason to doubt’ that the Demand Letter sent to Gayle in September 2005 represented the testator’s intention.
(5) The application judge accepted Gayle’s evidence that shortly after signing the 2007 Will he told her about his concern about signing a document when he was unaware of the contents.
(6) The application judge accepted the evidence that in May 2008 the testator had given Gayle the deed to his house, thinking that this would protect her entitlement to the house if any other documents he had signed, including a will, would provide otherwise.
The application judge held that the appellants had failed to meet the burden to prove capacity because: (1) medical evidence suggested that the testator suffered from dementia when he signed the 2007 Will; and (2) the overall impression based on the suspicious circumstances was that the Will was sufficiently inexplicable and out of character, so that it was more probably than not that the testator was in a confused state and therefore lacked testamentary capacity.
The appellants sought to introduce fresh evidence in the form of Ms. Woodruff’s April 2019 affidavit in which she dealt with the 2005 Demand Letter and the 2007 Will. She portrayed Gayle in a negative light and suggested that the testator never much cared for her and always preferred Glenn. Thus, the application judge found her to be highly partisan and held that her opinion evidence should not have been included.
Justice Dawe found that this fresh evidence also failed the second and third prong of the test for admitting fresh evidence.
On the reasonable diligence issue, his Honour found that the appellants failed to provide an explanation for not placing the information in Ms. Woodruff’s 2019 affidavit before the application judge.
On the conclusive issue, his Honour noted that the Demand Letter was not central to the issue, which was whether the testator had capacity. In his view there was no realistic prospect that the new evidence about the Demand Letter would have affected the result. In his reasons, the application judge gave the following reasons for holding that the testator lacked capacity when he signed the 2007 Will:
(1) The medical evidence of a geriatric specialist closely linked to the relevant events in 2007 and 2008.
(2) The conclusion that the evidence does not support the appellants’ argument that the loans to Gayle in 2005 explain the provisions of the 2007 Will.
(3) Gail’s evidence that the testator told her that he did not understand the document he signed.
(4) The fact that the appellants’ assertion that the testator remained ‘mentally sharp’ conflicted with the medical evidence.
(5) His assessment of Ms. Woodruff’s evidence about the testator’s condition when he signed the 2007 Will.
Only the fifth point might possibly be affected by the proposed fresh evidence. However, the application judge’s concern about Ms. Woodruff’s failure to make any contemporaneous notes about the testator’s condition would be unaffected by the fresh evidence.
Thus, Justice Dawe concluded that based on the application judge’s reasons as a whole, there was no ‘realistic possibility that he would have found that the appellants had met their burden of establishing’ that the testator had capacity when he signed the 2007 Will.
Justice Dawe went on to dismiss the appellants’ second ground of appeal, holding that, in essence they sought to retry the case.
Hence, he dismissed the appellants’ motion to adduce fresh evidence and their appeal from the application judge’s order.
4. Costs Endorsement
The court delivered additional reasons in a Costs Endorsement.[6] It held that, as the successful party, the respondent is entitled to her costs of the appeal, as well as the costs on an unsuccessful mediation. She sought $83,620 for fees plus disbursements on a substantial indemnity basis, while the appellants sought more than $150,000 in fees and disbursements on a partial indemnity basis. Thus, they could not object that the amount claimed by the respondent is contrary to their expectations of what would be fair and reasonable in the circumstances. The court held that this was an appropriate case for awarding enhanced costs because the appellants made serious allegations of misconduct against the respondent. They accused her of giving ‘false and deceitful evidence’ and the court refused to accept that characterization. It held that litigants who make unsubstantiated allegations of misconduct or dishonesty can expect to pay enhanced costs.
The court held further that this was an appropriate case to order the appellants to pay the costs personally, rather than awarding costs out of the estate. The appellants stood to benefit under the 2007 Will, whereas the respondent was the largest beneficiary under the 2006 Will. Besides, in the court’s view the appeal was entirely without merit and was brought primarily for their own benefit rather than for the benefit of the estate.
However, the court noted that costs on a substantial indemnity scale should be determined by applying a factor of 1.5 to the amount of partial indemnity costs. Consequently, the court held that it was appropriate in this case to estimate substantial indemnity costs at 80% of full indemnity cost, and therefore it fixed the respondent’s costs at $80,000 all inclusive.
—
[1] Shannon v Hrabovsky, 2018 ONSC 6593. See http://welpartners.com/blog/2018/11/there-is-no-presumption-of-undue-influence-in-probate/
[2] Shannon v Hrabovsky, 2024 ONCA 120. J Daw JA wrote the reasons for the panel. LB Roberts and Sossin JJA concurred.
[3] SO 2002, c 24, Sched B.
[4] 2018 ONCA 106, para 8.
[5] Vout v Hay, [1995] 2 SCR 876, and Scott v Cousins (2001), 37 ETR 2d 113 (Ont SC).
[6] Shannon v Hrabovsky, 2024 ONCA 188.
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Written by: Albert Oosterhoff
Posted on: January 28, 2025
Categories: Capacity, Commentary, WEL Newsletter
1. Introduction
In 2018, I wrote a blog on the proceedings at first instance in this case.[1] The judge at first instance granted the testator’s daughter’s application to set aside a will for lack of capacity and to restore an earlier will but did not give effect to the daughter’s alternative argument that the testator’s son had subjected him to undue influence. The testator’s son and his brother appealed, and the Court of Appeal dismissed their appeal.[2] Since I wrote the blog on the proceedings at first instance, it behoves me to write one on the appeal decision as well.
2. Facts
The testator died in November 2014. He had two adopted children, Gayle Shannon (‘Gayle’), the respondent in the appeal, and Glenn Hrabovsky (‘Glenn’). Glenn and the testator’s brother, Michael Hrabovsky (‘Michael’) were the respondents.
The testator made a series of wills over a period. In the 2002 Will he made a bequest of $30,000 to Michael, and equal bequests of 10% of the residue of his estate to Gayle and Glenn’s children. The Will left the remainder equally between Gayle and Glenn and named Glenn and Michael the executors. In the 2006 Will the testator increased Gayle’s share by also devising the title to his Toronto house to her. (Earlier, he had made Glenn a joint tenant with him of a cottage.) The 2006 Will also named Gayle as the third executor, and increased Michael’s bequest to $35,000. Then, in July 2007, the testator made a new will (the ‘2007 Will). It disinherited Gayle and removed her as executor. The Will increased the percentage share of the bequests to Gayle and Glenn’s children to 15% and left the balance entirely to Glenn. However, it went on to state that if Glenn predeceased the testator, the balance of the residue would pass entirely to his children, so that Gayle’s children would get nothing. The 2007 Will also stated that the testator forgave a debt owed by Gayle for money lent her that she had not repaid. And the will increased Michael’s bequest to $100,000.
In December 2016 Gayle brought an application in which she challenged the validity of the 2007 Will.
On the application the appellants filed a 2017 affidavit from Ms. Woodruff, the drafter of the testator’s wills, in which she stated that the testator did not exhibit any impairment of capacity when he made the 2007 Will
The appellants presented two grounds of appeal:
(1) That the application judge should have found that Gayle’s application was statute-barred because it was not brought within the two-year limitation period in s 4 of the Limitations Act 2002.[3] The appellants sought to present fresh evidence in support.
(2) That the application judge failed to give sufficient weight to the evidence supporting their argument that the testator had testamentary capacity. They also sought to present fresh evidence in support of this ground.
It was established in evidence at first instance that in 2005 Gayle had used her father’s credit card to make certain purchases. Gayle mentioned that she had done so with his knowledge and permission. Ms. Woodruff sent Gayle a letter in 2005 in which she demanded repayment. However, she did not mention this letter in her 2017 affidavit. She testified that she met with the testator and received his instructions to send the letter, but she had no notes of the meeting.
In his decision, the application judge stated that while the limitation period for a will-challenge is presumed to begin on the date of the testator’s death, that presumption is subject to the discovery principle in s 5 of the Act. He held that while Gayle had the facts necessary to commence her application before the testator’s death, she did not know of the existence and contents of the 2007 Will until January 2015, when she received a copy of the will, and those were essential elements of her application. This meant that the two-year limitation period did not begin to run until January 2015 and thus her application was not statute-barred.
3. Analysis and Judgment
The Limitations Issue and Fresh Evidence
The appellants sought to introduce a new 2019 affidavit by Ms. Woodruff who drafted all of the testator’s wills. She appended a letter to the affidavit from Mr. Pease who acted for Gayle (the ‘Pease Letter’) in which he states that Gayle called Ms. Woodruff and was told that Gayle was no longer an executor under the testator’s new will. He also states in the affidavit that Gayle suspected that Glenn is the sole residuary beneficiary.
Justice Dawe quoted from St Amand v Tisi,[4] which outlines the test for admitting fresh evidence. It requires the party seeking to introduce the fresh evidence to show that it:
His Honour held that the fresh evidence in Ms Woodruff’s 2019 affidavit bearing on the limitations issue does not meet the last two prongs of the test.
On the reasonable diligence issue, he found that the appellants could have put the Pease Letter into evidence themselves, and they failed to explain why they did not.
On the conclusive issue, his Honour noted that the Pease Letter showed that Gayle already knew in 2014 that her father had made a new will, so the statement in her 2016 affidavit that she did not become aware of that will until 2015 was incorrect. Although the application judge appears to have relied on that statement, his Honour concluded that this error did not go to ‘to the very core of the outcome of the case’, since Gayle did not learn of the contents of the 2007 Will until January 2015. Besides the degree of knowledge required to realize that one has a claim does not depend on ‘mere suspicion of speculation’. Further, Ms. Woodruff’s telephone conversation with Gayle did not disclose important information about the Will’s contents, and Gayle only decided to challenge the Will when she learnt from the Will that she was disinherited, and her children would potentially also lose their share of the estate.
The Application Judge’s Conclusion That the Testator Lacked Capacity
Justice Dawe noted that the application judge held in accordance with the authorities[5] that Gayle bore the initial burden of introducing evidence of suspicious circumstances with respect to its preparation and execution, and if she met that burden, the burden of establishing testamentary capacity would shift to the propounders of the will. He held that Gayle had met the threshold burden by reference to the following circumstances:
(1) The testator changed his Will in 2006 and increased Gayle’s share, which undermined the appellants’ theory that he was still angry with her in 2007 about the charges she had incurred on his credit card.
(2) The testator had no other known reason for disinheriting Gayle.
(3) The 2007 Will was ‘unusually spiteful’ in eliminating Gayle’s children’s share of the estate if Glenn predeceased the testator.
(4) The application judge found that there was ‘reason to doubt’ that the Demand Letter sent to Gayle in September 2005 represented the testator’s intention.
(5) The application judge accepted Gayle’s evidence that shortly after signing the 2007 Will he told her about his concern about signing a document when he was unaware of the contents.
(6) The application judge accepted the evidence that in May 2008 the testator had given Gayle the deed to his house, thinking that this would protect her entitlement to the house if any other documents he had signed, including a will, would provide otherwise.
The application judge held that the appellants had failed to meet the burden to prove capacity because: (1) medical evidence suggested that the testator suffered from dementia when he signed the 2007 Will; and (2) the overall impression based on the suspicious circumstances was that the Will was sufficiently inexplicable and out of character, so that it was more probably than not that the testator was in a confused state and therefore lacked testamentary capacity.
The appellants sought to introduce fresh evidence in the form of Ms. Woodruff’s April 2019 affidavit in which she dealt with the 2005 Demand Letter and the 2007 Will. She portrayed Gayle in a negative light and suggested that the testator never much cared for her and always preferred Glenn. Thus, the application judge found her to be highly partisan and held that her opinion evidence should not have been included.
Justice Dawe found that this fresh evidence also failed the second and third prong of the test for admitting fresh evidence.
On the reasonable diligence issue, his Honour found that the appellants failed to provide an explanation for not placing the information in Ms. Woodruff’s 2019 affidavit before the application judge.
On the conclusive issue, his Honour noted that the Demand Letter was not central to the issue, which was whether the testator had capacity. In his view there was no realistic prospect that the new evidence about the Demand Letter would have affected the result. In his reasons, the application judge gave the following reasons for holding that the testator lacked capacity when he signed the 2007 Will:
(1) The medical evidence of a geriatric specialist closely linked to the relevant events in 2007 and 2008.
(2) The conclusion that the evidence does not support the appellants’ argument that the loans to Gayle in 2005 explain the provisions of the 2007 Will.
(3) Gail’s evidence that the testator told her that he did not understand the document he signed.
(4) The fact that the appellants’ assertion that the testator remained ‘mentally sharp’ conflicted with the medical evidence.
(5) His assessment of Ms. Woodruff’s evidence about the testator’s condition when he signed the 2007 Will.
Only the fifth point might possibly be affected by the proposed fresh evidence. However, the application judge’s concern about Ms. Woodruff’s failure to make any contemporaneous notes about the testator’s condition would be unaffected by the fresh evidence.
Thus, Justice Dawe concluded that based on the application judge’s reasons as a whole, there was no ‘realistic possibility that he would have found that the appellants had met their burden of establishing’ that the testator had capacity when he signed the 2007 Will.
Justice Dawe went on to dismiss the appellants’ second ground of appeal, holding that, in essence they sought to retry the case.
Hence, he dismissed the appellants’ motion to adduce fresh evidence and their appeal from the application judge’s order.
4. Costs Endorsement
The court delivered additional reasons in a Costs Endorsement.[6] It held that, as the successful party, the respondent is entitled to her costs of the appeal, as well as the costs on an unsuccessful mediation. She sought $83,620 for fees plus disbursements on a substantial indemnity basis, while the appellants sought more than $150,000 in fees and disbursements on a partial indemnity basis. Thus, they could not object that the amount claimed by the respondent is contrary to their expectations of what would be fair and reasonable in the circumstances. The court held that this was an appropriate case for awarding enhanced costs because the appellants made serious allegations of misconduct against the respondent. They accused her of giving ‘false and deceitful evidence’ and the court refused to accept that characterization. It held that litigants who make unsubstantiated allegations of misconduct or dishonesty can expect to pay enhanced costs.
The court held further that this was an appropriate case to order the appellants to pay the costs personally, rather than awarding costs out of the estate. The appellants stood to benefit under the 2007 Will, whereas the respondent was the largest beneficiary under the 2006 Will. Besides, in the court’s view the appeal was entirely without merit and was brought primarily for their own benefit rather than for the benefit of the estate.
However, the court noted that costs on a substantial indemnity scale should be determined by applying a factor of 1.5 to the amount of partial indemnity costs. Consequently, the court held that it was appropriate in this case to estimate substantial indemnity costs at 80% of full indemnity cost, and therefore it fixed the respondent’s costs at $80,000 all inclusive.
—
[1] Shannon v Hrabovsky, 2018 ONSC 6593. See http://welpartners.com/blog/2018/11/there-is-no-presumption-of-undue-influence-in-probate/
[2] Shannon v Hrabovsky, 2024 ONCA 120. J Daw JA wrote the reasons for the panel. LB Roberts and Sossin JJA concurred.
[3] SO 2002, c 24, Sched B.
[4] 2018 ONCA 106, para 8.
[5] Vout v Hay, [1995] 2 SCR 876, and Scott v Cousins (2001), 37 ETR 2d 113 (Ont SC).
[6] Shannon v Hrabovsky, 2024 ONCA 188.
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