Canadian Perspectives on International Law

The choice of an executor and trustee is one of the most underestimated of the estate plan.

Deciding how your estate will be distributed among your beneficiaries involves a great deal of consideration. You may wish to place money in trust, make charitable donations or fund specific projects like your child’s education. Once you have decided to spend the time carefully considering your wishes it is vital that you give as much attention to the question of who you trust to put this plan into action.

Everyone who names a good friend or family member as executor and trustee does so because they trust the person they have named wholeheartedly. However court dockets continue to remain full of cases where an executor has abused that trust and caused significant losses to the estate. Recently, Justice Greer of the Ontario Superior Court of Justice [TTL1] sentenced Barry Landen, the trustee of the estate of the late Paul Penna, to 14 months in prison for his mismanagement of the estate and subsequent evasion of court Orders and Beneficiary demands.

Mr. Penna’s estate was worth $24 million dollars at his death was mostly left to various charitable causes. He trusted his friend and colleague, Mr. Landen, to carry out his wishes. Today, over $12 million dollars of that estate are unaccounted for.

You may believe that naming a sibling or friend as executor (provided your spouse predeceases you) is an honour that that person will be happy to take on. However, executing an estate plan can be an arduous task requiring the balancing of competing interests and a degree of financial acumen. If your estate is complex, it may be best to name a lawyer or third party trust company as estate trustee as this will cut down on the possibility of family conflict and prevent the imposition of a burden on your loved ones. It is also vital to ensure that there is some oversight of your estate as leaving a complex estate in the hands of one person can result in undetectable abuses of power that may deplete your estate and leave your beneficiaries with less than that to which they are entitled.

If your estate includes any trusts to be administered after your death or, if your estate plan requires any sort of financial management, pay special attention to who you wish to execute your plan. Failure to do so may result in your plan being altered or, even worse, ignored.

By Michael Duffy, Associate, Cambridge LLP Estates, Trusts & Wealth Planning Group

The Toronto Dominion Bank v. 466888 Ontario Limited et al., 2010 ONSC 3798

In this decision, Justice Lederer considers the burden of each party on a motion for summary judgment and provides additional insight into how counsel may effectively make use of rule 20.01 and the mini-trial.

Brief outline of the case

The Plaintiff bank brought a motion for summary judgment for the recovery of monies owing on a loan made to the Defendants. Although the Defendants had provided real estate as collateral on the loans, once the real estate was sold, the amount recovered did not discharge the debt. The Defendants alleged that the bank had carried out an improvident sale.

After pleadings were exchanged, the Plaintiff bank brought its motion. In support of its motion, the bank provided an Affidavit sworn by the responsible bank account manager, which reviewed the steps taken leading to the sale of the real estate, and also provided evidence on remaining liability under the loan following the sale of the real estate. The bank account manager was not cross-examined on his Affidavit.

The Defendants argued on the motion that the evidence provided by the Plaintiffs was not sufficient to satisfy Rule 20, and asked that the motion be dismissed and allowed to proceed to trial.

Justice Lederer’s Decision

Justice Lederer, at the outset notes, “The onus is on the party bringing the motion to establish there is no genuine issue requiring trial. There is no onus on the responding party. However, if the moving party demonstrates a prima facie right to the remedy, there is an evidentiary burden placed on the responding party to support its position that a genuine issue requiring a trial exists.”[i]

Justice Lederer found that the Plaintiffs had demonstrated a prima facie right to summary judgment by virtue of the evidence provided in the bank account manager’s Affidavit, which established that it took reasonable precautions to obtain an appropriate price for the real estate.

In contrast, Justice Lederer concluded that the Defendant had not successfully discharged its reciprocal burden to show that a genuine issue requiring a trial exists. He found that it was not enough for the Defendant to have relied on the insufficiency of the material produced by the Plaintiff in support of its motion for summary judgment. Furthermore, he stated:

41         [...] The bank is not required, in discharging the onus placed upon it as the moving party, to disprove an allegation found in the Statement of Defence. The presence of the allegation does not, in the absence of evidence supporting it, respond to the evidentiary burden placed on the responding party. Particulars outlined in a pleading are not evidence. They do not show that there is a genuine issue requiring a trial. Rule 20.02(2) of the Rules of Civil Procedure makes this clear.[ii]

Justice Lederer then went on to consider the Defendants’ argument that the court should not rely on the real estate appraisals contained in the Affidavit because they constituted opinion evidence from a bank manager who was not qualified to give such an opinion. They objected to the evidence on the basis that, had the evidence been properly given by an appraiser, it could be considered expert evidence. In finding that the appraisal reports could be relied upon, Justice Lederer stated that because the Defendants had not cross-examined the affiant, the evidence in the Affidavit was unchallenged. Furthermore, he noted that the appraisals were exhibits to the Affidavit and were used for the purposes of demonstrating the steps taken by the bank in making the sale.

Justice Lederer opined as to whether or not a mini-trial would have assisted the court. He concluded that it would not, stating:

The rule makes clear that calling for oral evidence should be in furtherance of resolving the question asked on the motion. Is there a genuine issue requiring a trial? [...] The plaintiff having satisfied the onus there is, in this case, nothing to be gained in asking more. The defendant failed to demonstrate that there is a genuine issue requiring a trial. In attempting to do so, it is required to put its best foot forward. It is assumed to have done so. To allow it a further opportunity would, to my mind, derogate from rule 20.02(2). [...] I fear that to allow this would facilitate an end which was not intended by the amendments to the rule. It would complicate rather than simplify the process. Rather than “play trump”, the responding party could hold back in the expectation that, if it did not provide all that it could, it would be provided with a second opportunity.[iii]

Concluding remarks

Though there have been a number of mini-trials ordered in Ontario,[iv] it remains somewhat of a rarity. This is perhaps due in part to the lack of precedent and the understandable hesitation that comes with this elevated power. Justice Lederer’s obiter, provides useful guidance to judges and practitioners alike, going forward.

[ii] At para. 41

[iii] At paras. 53-55.

[iv] See Dr. Thomas Dentistry v. Bank of Nova Scotia, 2010 ONSC 1227

Those of us who have been asked by friends and relatives to act as the executor (now officially called an “Estate Trustee” in Ontario) of their estate cannot help but be flattered by such an honour. The thought of someone thinking so highly of us that they would trust us with the management and final distribution of their estate’s assets usually garners immediate acceptance on our part. After all, we wouldn’t want to offend such a person, even though many of us have heard that it is a “lot of work” and involves “much responsibility”.

Yet the law seems to continually place more and more responsibility on Estate Trustees, making them personally liable for any miscarriage of their duties. Even when an Estate Trustee enlists the help of professionals, they must understand that they cannot delegate their responsibilities Estate Trustee, and continue to be liable for any misstep.

The recent case of DeLorenzo v. Beresh[1] is another cautionary tale. Here, the testator left legacies to his two grandchildren in trust until age 30. On her 30^th birthday, one of the grandchildren wanted to be paid her legacy in full, as was her right under the Will. At the time of her request, The Estate Trustee, Mr. Beresh, had not obtained a clearance certificate from the Canada Revenue Agency, and wanted to keep Ms. DeLorenzo’s share in the Estate until such time as he had satisfied the tax authorities that no taxes were owed. Ms. DeLorenzo hired a lawyer and sued Mr. Beresh for the release of her inheritance. Mr. Beresh hired a lawyer to defend the action, and paid his lawyer’s fees from the Estate.

One of the issues before the court was whether an Estate Trustee could properly utilize estate assets for his or her legal defense when being sued by a beneficiary. The court indicated that such a suit is personal as against the Estate Trustee, and that he or she personally owes their lawyer for legal fees. As such, unless the Estate Trustee obtains court approval or approval from all of the beneficiaries, estate assets cannot initially be used for litigation costs incurred by the Estate Trustee.

The judge in the DeLorenzo case indicated that the time for the Estate to attempt to recouperate any legal costs is at the time of the “passing of accounts”. Estate Trustees are responsible for the “passing of accounts” of the estate, which essentially involves revealing the financial transactions of the estate on a periodic basis for approval by the beneficiaries or the court. However, until then, the Estate Trustee must fund his or her legal costs personally.

The fact that Mr. Beresh was himself a lawyer is a testament to the risks of acting as Estate Trustee. To be sure, the financial, interpersonal and administrative issues are complex such that even the most scrupulous individual may fall victim to the multitude of considerations.

If and when you are next bestowed the honour of being someone’s Estate Trustee, perhaps a sober second thought is in order before you give an answer. Increasingly, individuals are appointing their accountants or lawyers to act as their Estate Trustees, and many people now also look to enlist the services of professional trust companies. These trust companies have developed successful business models for their services, and in fact, some of their best clients are individuals who previously acted as Estate Trustees, and have personal knowledge of how complicated and stressful that experience can be. The services offered by accountants, lawyers and trust companies are certainly worthy of consideration for the formidable task of carrying out your final wishes, or executing the duties entrusted to you as Estate Trustee.

By Orlando Consoli, Associate, Cambridge LLP Estates, Trusts & Wealth Planning Group

Individuals over the age of 35 and/or those persons possessing lower official language skills, who are interested in immigrating to Canada through the Federal Skilled Workers Program ought to consider applying as soon as possible before proposed changes to the program come into effect.

Citizenship and Immigration Canada (CIC) is proposing to make significant changes to the eligibility requirements of the Federal Skilled Workers Program that will restrict the success rate of older applicants, particularly those with less official language skills. The proposed changes are an attempt by CIC to encourage the success of a younger workforce through the program, as younger applicants, particularly those scoring higher on the official languages skills set, have been found to be better adapted to succeed in Canada’s socio-economic environment.

Pursuant to the proposed changes, applicants up to 35 years of age may receive a maximum of 12 points for age (up from 10, as current).  Similarly, applicants could receive a maximum of 20 points for official language skills, up from the current 16 maximum points.  In order to compensate for the increased maximum points in these two categories, maximum points for foreign work experience would be dropped from 15 to 12 points, while also increasing the number of years of foreign work experience required to obtain maximum points in the category.  Additionally, applicants with professional work experience (doctors, nurses, engineers, etc.) would be required to satisfy a higher minimum official language standard, and would also be required to prove the recognition of their credentials through Canadian licensing bodies.

The changes mean that applicants over the age of 35, who are also less likely to have the official language skills set of younger applicants and whose years of foreign work experience will now be discounted by almost 25%, will be far less successful in obtaining immigration through the Federal Skilled Workers Program once the proposed changes take effect.

Consequently, it is imperative for individuals intending to apply through the Federal Skilled Workers Program who will be negatively affected by the proposed changes to apply now, before the changes come into effect.

By Manjit Singh, Associate, Cambridge LLP International Legal Services Group

Ontario has initiated a new pilot project that aims to encourage the retention of highly skilled professionals by allowing their non-Canadian spouses, common-law partners and/or dependants the right to work in Ontario immediately upon arrival in Canada.

Currently, Canadian citizens or permanent residents may sponsor their non-Canadian spouses, common-law partners and/or dependants for permanent residency in Canada, but the sponsored individuals have no right to work in Canada until they obtain permanent residency – a process that could take months.

The new pilot project in Ontario eliminates this restriction by granting open work permits to sponsored individuals immediately upon arrival in Canada, even while their permanent residency application is still pending. The purpose of the pilot project is to encourage more highly skilled professionals to return to Ontario, in specifically targeted fields.

At present, the pilot project applies only to those Canadian citizens or permanent residents working in the health profession and academic (post-secondary public institutions) fields.

“It’s a reverse brain drain,” said Immigration Minister Jason Kenney. “We’re making it easier for Canadians abroad to bring their skills home and contribute to the Canada of tomorrow. By encouraging highly-skilled workers to come back to Canada, we are laying the foundation for long-term economic growth.”

The impetus behind the plan appears to be the result of Citizenship & Immigration Canada’s economic calculations involving the training of new professionals in the fields (who may, then, leave to work abroad anyways) versus encouraging the return of already trained highly-skilled professionals who can contribute to Ontario’s economy immediately, and may be more likely to resettle if their spouse, common-law partner and/or dependants are able to work in, and contribute to, Ontario’s economy immediately as well.

It is expected that if the pilot project is demonstrably successful, it will be expanded to include other highly skilled professional from other fields.

By Manjit Singh, Associate, Cambridge LLP International Legal Services Group