Archive for January, 2013

January 31, 2013

Speaking from Beyond the Grave

The Court of Appeal for Ontario recently dealt with one of the last remaining anomalies to the modern rules of evidence – the statutory requirement for “corroboration” of evidence in an action involving a deceased person.

While in Ontario this rule is embodied in section 13 of the Evidence Act, a similar rule is enacted in many common-law jurisdictions. Section 13 of the Ontario Act states:

In an action by or against the heirs, next of kin, executors, administrators or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence.

In Brisco Estate v. Canadian Premier Life Insurance Company, the Court was not dealing directly with an estate action but an action against a life insurer by the beneficiaries of a policy owned by the deceased. At issue was whether the deceased had or had not canceled the policy prior to his death. The beneficiaries sought to rely on certain hearsay evidence of the deceased, through the beneficiaries, with respect to the deceased’s intentions regarding his life insurance policies. At issue was whether the hearsay evidence was (1) subject to s. 13 of the Evidence Act and (2) if so, whether the evidence was sufficiently corroborated.

The Court went through an interesting analysis of the rationale for s. 13. It noted that the rule is an anomaly to the common-law rules of evidence and is among the last requiring that evidence be corroborated. The Court noted that “[m]ost statutory and common law requirements have fallen away in the last thirty to forty years, including requirements for corroboration of the evidence of children, rape victims and accomplices”. The Court went on to review the purpose for the rule and the possible dangers that may arise from its application:

The purpose of the rule is to guard against fraud in an action against the estate by a party to a transaction with the deceased. This objective is based on the fact that only the survivor’s testimony is available. Section 13, however, is drawn in broad terms to capture not only those who bring an action against the estate, but those bringing an action on behalf of the estate. And, as in this case, the rule potentially captures a case where the court does have the testimony of the deceased, albeit in the form of hearsay. In this latter case, the primary danger lies in the witnesses’ possible perjury, but they are available for cross-examination.

Given the exceptional nature of the rule and its potentially broad application, the Court in this case restrained the rule, stating:

Given its anomalous place in the modern law of evidence, especially in a case such as this, I see no reason to give s. 13 a broad interpretation when considering its application nor a narrow interpretation when considering the scope of evidence capable of corroborating the evidence of the interested party.

In this particular case, the Court determined that section 13 does not apply, finding that “s. 13 is limited to circumstances in which the interested party claims as an heir, next of kin, executor, administrator or assignee and not simply because, coincidentally, the person happens to fall within one of these categories. In this case, the Brisco children do not claim as next of kin or heirs but under a contractual right as beneficiaries of an insurance policy”. The Court therefore clearly restricted the application of section 13 to actions involving an estate itself and the rights of those claiming in the estate.

The Court also seemed anxious to give wide breadth to the type of evidence available to corroborate evidence to which section 13 might apply. In particular, it agreed that corroborating evidence can include an accumulation of circumstantial evidence, notwithstanding that each item or piece of evidence viewed in isolation may not be corroborative.

Given the Court’s generally negative view of s. 13 in this case, is it possible that the section may not be too far from the grave itself?

January 24, 2013

Bankruptcy’s Effect on Costs Awards Against an Estate Trustee

I have commented previously on the use by courts of costs penalties against estate trustees who breach their fiduciary obligations through the misappropriation of funds under their control. However, a recent Ontario case dealt with one problem that may arise in recovering these costs – bankruptcy of the fiduciary.

In Re Baldwin Estate, the Court dealt with a contested passing of accounts of an attorney for property and later executrix of a deceased. The Court found that the fiduciary had engaged in “massive misappropriation”, failure to produce an accounting and failure to make proper production. While a settlement was reached regarding the misappropriation, the Court was asked to deal with the matter of costs. The Court found that the strict test for awarding costs on a higher, substantial indemnity, basis was met as a result of the fiduciary’s misappropriation of the deceased’s assets, a failure to account and her actions in dragging out the passing of accounts hearing. The Court ordered costs in excess of $87,000 to be paid personally by the fiduciary.

Of note, the Court made a declaration that the costs order is a debt which arises out of misappropriation while the attorney/executrix was acting in a fiduciary capacity and, pursuant to s. 178(1)(d) of the Bankruptcy and Insolvency Act (Canada) (the “BIA”), is a debt that is not capable of release by an order of discharge in bankruptcy. That section states as follows:

178(1) An order of discharge does not release the bankrupt from

(d) any debt or liability arising out of fraud, embezzlement misappropriation or defalcation while acting in a fiduciary capacity or, in the province of Quebec, as a trustee or administrator of the property of others.

The application of section s. 178(1)(d) to the costs ordered in this case provides an additional remedy to the objecting parties in that they will be entitled to pursue the costs even if the fiduciary makes an assignment in bankruptcy. What is particularly interesting here though, is that the declaration was made with respect to a costs order. The Court therefore had to find that the imposition of costs constitutes a “debt or liability arising out of” the fiduciary’s misappropriation of assets. The Court has therefore gone beyond applying s. 178(1)(d) solely to misappropriated funds to find that the section extends to costs consequences arising from legal proceedings instituted for the purpose of remedying the misappropriation – a creative use of the BIA.

January 17, 2013

What Doctors Are Not Willing To Do To Save Their Own Lives

On the radio this morning I heard about this story from RadioLab – a real eye-opener and different perspective on end of life decisions.

January 16, 2013

Solicitor/Client Privilege and the Guardian/Committee/Trustee

An interesting quandry for lawyers and guardians was raised in the recent Alberta case of Wayne v. Wayne. Where, due to mental incapacity, a guardian for property has been appointed for an individual (in Alberta a trustee, in B.C. a committee), does the guardian have a right of access to documentation and communications between the individual and her or his lawyer that would otherwise be subject to solicitor/client privilege? The answer, as is often the case, is “it depends”.

In this case, the guardian, a son of the affected individual (his mother), sought access to a solicitor’s file with respect to certain transfers of land by the mother. On behalf of the mother, the guardian commenced an action in respect of the transfers and on application to the Court sought an order requiring the lawyer to provide his file. The lawyer opposed on grounds of solicitor/client privilege.

In deciding that the son should have access to the lawyer’s file, the Court reviewed Alberta’s Adult Guardian and Trustee Act (“AGTA”), Protection of Personal Information Act (“PIPA”) and the common law on solicitor/client privilege. While recognizing the sanctity of solicitor/client privilege, the Court found that s. 72(4) of the AGTA created a limited legislative exception to the general rule concerning solicitor/client communications, which exception was not overridden by the PIPA. Section 72(4) deals with access to personal information of the affected individual, providing that “[a] trustee is entitled to access, collect or obtain from a public body, custodian or organization personal information about the represented adult that is relevant to the exercise of the authority and the carrying out of the duties and responsibilities of the trustee”. A law firm is an “organization” under that section. The PIPA allows for the release of information where disclosure is “in the interests of the represented individual and consent of the represented individual cannot be obtained in a timely way or the individual would not reasonably be expected to withhold consent”. Given the mental incapacity in this case, consent of the individual was not possible.

The Court found that in interpreting these sections, the legislative scheme “does not grant a trustee full access to the represented adult’s file. Rather, a trustee is entitled to material otherwise protected by solicitor-client privilege that is relevant to the exercise of the trustee’s authority and the carrying out of the trustee’s duties and responsibilities”. In this case, the Court found that the file sought was relevant to the issues raised in the lawsuit commenced on behalf of the mother and therefore disclosure was ordered as relevant to the exercise of the trustee’s authority and the carrying out of the trustee’s duties and responsibilities.

Of note, as part of it analysis, the Court recognized that that in situations where there has been a death, as opposed to a guardianship, the common law recognizes that solicitor/client privilege “survives the death of the client and enures to his or her next of kin, heirs or successors in title”.

Query how this situation might be dealt with in Ontario. The provisions of Ontario’s Substitute Decisions Act (“SDA”) differ from those of the AGTA. Section 31.1 of the SDA states that “[a]ny person who has personal information about an incapable person to which the incapable person would be entitled to have access if capable, including health information and records, shall disclose it to the incapable person’s guardian of property on request”. This section does not include the limitation of the Alberta Act that the disclosure be “relevant to the exercise of the authority and the carrying out of the duties and responsibilities of the trustee”. As for applicable privacy legislation, the commentary included in Schedule 1 of the Personal Information Protection and Electronic Documents Act recognizes that the requirement for consent of the person prior to disclosure of personal information may not be possible (and therefore not always required) in certain circumstances and specifically references the example of mental incapacity. As a result, it is arguable that under the SDA the exception to solicitor/client privilege may be broader in Ontario.

January 9, 2013

Say What You Mean in Your Will – Because a Court Probably Won’t be Able to Figure it Out for You

Happy New Year!

The necessity for a testator to clearly set out his or her intentions in a will is trite.  As a recent Nova Scotia case points out, if a will does not properly deal with the distribution of assets and the intention of the testator is otherwise unclear, the Courts will not “re-write” a will by inferring how the testator intended to deal with such assets.

In Re Das Estate, the testator devised most of his estate to his wife in trust for her own use in her sole and unfettered discretion.  There was a notable exception though.  An investment account worth almost $1 million was not included in the devise to the wife.  The only provision in the will for that account was that, should the wife not survive the testator by 10 days, the balance of the estate (after a devise to his daughter which again excluded the investment account) was to be distributed to various educational institutions and charities.  The wife did survive the testator by more than 10 days.  So what of the investment account?  On a motion for directions, the Court was asked how it should be disposed of.  Could the Court determine from the will and any admissible extrinsic evidence how the testator intended to deal with the account?  Did he mean to leave it to the wife? – the daughter? – the charities?  Is there an intestacy with respect to the account?

The Court went through the process of determining when it can and cannot determine the intention of a testator for the purpose of interpreting a will.  Known as the “armchair rule” of interpretation (because it requires the Court to put itself in the position of the testator), the rule has two requirements:

“The first is that the court must be satisfied that there has been an inaccurate expression by the testator of his intention, and the second is that it must be clear what words the testator had in mind at the time when he made the apparent error which appears in the will.”

The Court appears to have been satisfied that there was an inaccurate expression by the testator of his intentions concerning the investment account but ultimately found that there was insufficient evidence to determine what his intentions were and any inference by the Court would be nothing more than speculation.  Unless there is some indication from other portions of the will or reliable extrinsic evidence as to what was intended, the Court will not infer an intention.  While the Court did find that reliance on extrinsic evidence has been expanded to allow its use outside of situations of patent ambiguity in a will, it was not able to find evidence in this case that would indicate upon which of various potential beneficiaries the testator wished to bestow the investment account.  The result is that, despite the general rule that Courts should strive to avoid an intestacy, the judge here found he had no other choice but to declare an intestacy with respect to the investment account, resulting in it passing to the wife and daughter and leaving the charities out.

I would include a moral here but I think that my intention can be reasonably inferred.