Faithful readers of this blog will be aware of the earlier decision of Justice Dunphy of the Ontario Superior Court of Justice, who held as a result of a “basket clause” found in a standard precedent for Primary and Secondary Wills that the Secondary Will was invalid.

All one needs to know is that as a result of Justice Dunphy’s decision, thousands of Wills created across the province by hundreds of law firms may very well have been invalid. This led to lawyers across the province, including our firm, sending out letters and emails to their clients warning that the estate planning that had been done on their behalf may need to be redone. Luckily the executors of the Milne Estate decided to appeal.
On January 24, 2019, the Ontario Divisional Court reaffirmed the validity of the Will that had been criticized and invalidated by Justice Dunphy.

While the precedent that our firm had been using was a slightly different form than that criticized by Justice Dunphy, it is now academic. The court accepted that the very premise of Justice Dunphy’s criticism of the Will in which he stated that a Will was in essence a Trust was undercut by the Divisional Court.

Bottom line, the Estate Bar and its clients across the province can breathe a sigh of relief as there is no need for an update, there is no need for changes, the existing Wills that our firm had prepared for you are as valid as the date upon which they were originally drafted.

That is not to say that reviewing the factual basis upon which your Wills were drafted, is not a valid exercise.

If things have changed, if the people you had initially felt were appropriate executors no longer hold that title in your mind, then you should return and speak to one of our lawyers. Well done to the appeal counsel and to the Divisional Court in pouring oil upon troubled waters.

Sometimes, third parties who are not related to the deceased may be appointed by the court as an estate trustee.

It has been our experience in highly contested estates when competing parties will not agree on permitting the other acting as estate trustee, the court has the ability to appoint a third party.

On consent, we have even had the situation where a solicitor in our office has been appointed as an estate trustee during litigation.

An example set out in the Taylor Estate decision was a fight between appointed executors/siblings. The Court held that the situation was obviously unworkable, due to the conflict between the siblings.

The court selected and appointed a mutual agreed third party.

Under the Estates Act, a named executor has the ability to nominate a third party to act as estate trustee which can be successful with the court’s authority.

One has to be careful in not looking to a third party who resides outside of Ontario. Looking at S.6 & 29 of the Estates Act, the court can only appoint an estate trustee with a will to a non-resident of Ontario who has the consent of the majority of the persons living in Ontario who otherwise are entitled to apply for such an appointment.

Clearly, there is a considerable expense in having an outside party so appointed as they rarely will act unless they are paid to do so.

This leads back to the author’s own prejudice against naming multiple executors. It is a recipe to create conflict when none is necessary. As we discussed elsewhere, testators often wish to name all of their children as joint executors as an expression of their equal love for them. This is a failed logic for that love should be expressed in the naming of the equal beneficiaries rather than the complication of multiple executors.

What is an estate to do when a beneficiary cannot be found. While relatively rare, this does occur and it has been the author’s experience that in the absence of specific instructions in the will, this can lead to significant costs. There are specialized beneficiary hunters and as one can imagine they are not cheap. Such an effort is required before the court will assist.

One remedy is an application to the court for what is commonly known as a “Benjamin” order. The name arises from an almost 120 year old decision from England. However it has been adopted by a number of Canadian Courts and most relevantly in Ontario by the decision in Kapousouzian Estate v. Stink.

In a recent decision by Justice Rady in Steele v. Smith the judge examined the circumstances. Suffice it to say, the court looked at numerous factors including the lengths that the executors had gone toto try and find the missing beneficiary. The effect of a “Benjamin” orderis a declaration that the missing beneficiary had pre-deceased the testator and as such the will would be interpreted through that lens. In the Steele decision it would mean that the remaining beneficiary would receive the missing beneficiaries’ share.

The Public Guardian and Trustee, a Government agency opposed the “Benjamin” order asking that the monies be paid into court while further searches were made for the missing beneficiary. In the Steele decision, the executors were ultimately successful. Primarily, because they had made extensive efforts to find the missing beneficiary.

One alternative to consider is when a will is being drafted to provide the executor with discretion, after reasonable and extensive efforts to locate a missing beneficiary to simply have their bequest or interest in the estate eliminated. The circumstances in which such a clause is warranted would include naming a beneficiary that the testator had long been alienated from.

We now look at Justice Spiescomments in the 2017 decision relating to the Filippelli estate. In this case, one child lived with mom for two years prior to her death. There was a very loose and rarely observed understanding that the son living with the mother would pay some type of rent. The son rarely did and after mother’s death, continued to live in the family home rent free.

The son remaining in the home was not one of the executors and refused to leave.

The executors then asked the court for an Order for vacant possession and also to require the son in the home to pay occupation rent. The son in the home tried a tactic that everyone was in front of the wrong court and rather that this was a residential tenancy matter akin to a landlord and tenant relationship.

The court did not buy it and ordered that the hold over son move out and pay some type of rent. It is interesting to note that there actually had been four payments over a sixteen month period of $650.00 towards the mother. It is not inconceivable that the decision might have gone the other way and holding that indeed there was a landlord and tenant relationship.

Justice Spies, whose decisions have surfaced in this blog repeatedly,grappled with a group of siblings who suffered delusions as they fought over a $30,000.00 painting. I make no comment about the reasonableness of destroying a sibling relationship for mere money.

In the Newlands decision, the court had earlier found that one brother’s position with respect to a $30,000.00 painting was actually correct. The conclusion was the one brother was to pay the other siblings $30,000.00 and a family painting was his. That is not the point of this particular decision. Rather, it is the astounding fact that the two sides each spent approximately a quarter of a million dollars in legal fees fighting over the rights surrounding the painting.

What was crucial in deciding that the two brothers that failed to recognize at an early stage that their sibling was indeed entitled to purchase the painting for $30,000.00 had caused the parties to waste a combined $500,000.00 for no good financial reason though I am certain emotional and family history played a very large role in the parties’ motivation. When the successful brother asked the court to order costs, the judge carefully looked at all the circumstances. Most importantly the successful brother had made an early offer to settle which in the end reflected almost exactly what the court had done. The court ordered the unsuccessful siblings, out of their own pockets to reimburse almost all of the $250,000.00 spent by the successful brother. Justice Spies held:

“In my view, not ordering them to fully reimburse the successful brother for his legal costs would bring the administration of justice into disrepute.”

Some time ago, the norm was that the estate itself would bear the costs rather than the parties personally but the court has a discretion to order that the parties themselves be personally responsible. In another decision, Tarantino v Galvano, the court looked at the same type of factors and especially the lack of proportionality in deciding that costs should be borne by the contesting parties personally rather than the estate.

You must be very careful in choosing the witnesses to your will. A normal will,(in other words, not a handwritten holographic will which is an entirely different topic,) requires a will to be signed by the person making the will and in front of two witnesses who must also sign their name.

However, no beneficiary or their spouse may be a witness. If they are, to paraphrase, Section 12 of the Succession Law Reform Act “where a will is witnessed by a person to whom or whose spouse is a beneficiary, the inheritance is void as it concerns the witness, their spouse or any person claiming under either of them”. So, be careful, it is important that the witnesses are completely unrelated and also in no way a beneficiary under the will.

What happens to your will if after you sign it, you marry? Unless some magic words are used in the will upon a subsequent marriage it goes poof, it disappears, it becomes void, it becomes invalid. The magic words are along the lines “I make this will in contemplation of my marriage to Kim Kardashian…” In those circumstances, your will will survive your marriage to Kim Kardashian.

What happens to your will if after you make your will you get divorced? In those circumstances the will is interpreted as if the person that you divorced had died immediately before you. So, if you name your wife as the executor and the beneficiary of you will and then you divorce her, unless you use some magic words your will will be interpreted as if your now ex-wife had died just before you. It is important to note, this is a divorce, not separation.

Elsewhere on our website we have described the 3 essential ingredients for a legal gift.

1. An intention to make the gift
2. An actual acceptance of the gift
3. An actual delivery of the gift

In the tragic case of Teixeira, a decision of the Ontario Court of Appeal, we have a gift that just fell short of the finish line.

Mr. Teixeira had, for 15 years been the ultimate good neighbour to Mary. Shortly before Mary died she made a will leaving $100,000.00 to her neighbour. She also wanted to give him a $100,000.00 gift and wrote out a cheque which was delivered to Mr. Teixeira. Mr. Teixeira went to the bank and the bank placed a hold on the cheque. Before the cheque could be negotiated, Mary died.

What actually had occurred was that the specific account that Mary had written the cheque on was $19,000.00 short. Mary had other funds in the bank, more than sufficient to cover the cheque but the bank needed her authority to cover the shortfall in the account. In the end, the bank refused to honour the cheque and Mr. Teixeira sued Mary’s estate.

Mr. Teixeira lost at trial and then lost again on appeal.

The first two steps set out above had been met but the final step of an actual delivery never occurred. Not until the cheque was placed into Mr. Teixeira’s account and the funds had cleared, would there have been an actual delivery and accordingly a completion of the gift.

One area that was not canvassed in the case was whether or not M. Teixeira had a claim of negligence against the bank itself. Did the bank contact Mary prior to her death to advise her that the specific account upon which the cheque had been written was short of funds and sought her authority to transfer enough money so as to permit the cheque to be honoured?

This case is an excellent illustration of the 3 factors that are necessary for a valid gift.