Whaley Estate Litigation Newsletter No. 9 December 2011 






Welcome to our December Newsletter.


Please let us know what you would like to hear about in our Newsletters and Blogs. We welcome your comments, enquiries and contributions. Please direct all enquiries to: 


Whaley Estate Litigation provides litigation, mediation and dispute resolution services to its clients in the following areas: 

  • Will, Estate, Trust Challenges/Interpretations
  • Dependant Support Claims
  • Passing of Estate, Attorney and Fiduciary Accounts
  • Capacity Proceedings
  • Guardianships
  • Power of Attorney Disputes
  • Consent and Capacity Board Hearings
  • End of Life Decision Making
  • Treatment Decision Disputes
  • Elder Law
  • Solicitor's Negligence
  • Opinions
  • Agency Services
  • Counsel to Estate Trustee(s) and Estate Trustee(s) During Litigation

Kimberly A. Whaley
Whaley Estate Litigation





Peter Wacht, President of NAELA, The National Academy of Elder Law Attorneys, in the United States opened the NAELA™ News, Volume 23, Issue 3, June/July 2011, with the following:


"Come gather 'round people

Wherever you roam

And admit that the waters

Around you have grown

And accept it that soon

You'll be drenched to the bone.

If your time to you

Is worth savin'

Then you better start swimming'

Or you'll sink like a stone

For the times they are a-changin.' [per Bob Dylan]


Bob Dylan has it right in "Times They Are A-Changing'." The world is interconnected , commercially, technologically, and in so many other ways.  Global issues predominate. Life is fast and getting faster. And the only constant is change. To survive as an individual, as a professional, as an association, you must demonstrate flexibility and adapt to a world that continues to evolve.  That requires looking at the landscape with an open mind, identifying the trends, seeking out the opportunities, and determining how to overcome challenges."


Since Peter's comments capture all of my sentiments of the change we are seeing in our practice, societal demographics and the particular demands of our client base, I felt I could say it no better myself.  And so, I echo the comments of my friend, Peter.


New Beginnings


As we approach this coming year, it is my practice to take stock of what I did, what I didn't do and what I could do better.  We have looked at how our firm can better serve our clients and the relationships we have established. With these reflections in mind, we hope to provide you with news shortly of the expansion of our practice.


Thank you for your continued support. We look forward to spending the year ahead strengthening our working relationships with you.


Please accept our warmest seasonal greetings from myself,  Mark Handelman,  Ameena Sultan, Amy Cull, Bibi Minoo, Deborah Stade, Joanne Brigmantas, Birute Lyons and our mediation partner, Brian Wilson. Wishing you a Happy and Prosperous New Year.


Passings of Accounts

Kimberly A. Whaley and Amy Cull


(1) Objections: Failure to File and Setting Aside Unopposed Judgments to Pass Accounts


Marino v. Marino Estate (Trustee of)


What is the appropriate test to apply when a beneficiary of an estate, who failed to file a notice of objection to accounts within the prescribed time, moves to set aside an unopposed judgment passing accounts obtained by the estate trustee?


The case of Marino v. Marino Estate (Trustee of) dealt with this issue. In this case, one of the deceased's sons, Gino, acted as the deceased's attorney for property pursuant to a continuing power of attorney for property for the period from June 18, 2003 until the deceased's death on January 16, 2009. Appointed as such under her will, he then acted as his mother's estate trustee. Gino filed a notice of application to pass accounts, dated January 14, 2010. His notice stated that his accounts covered the period from June 18, 2003, when he acted as his mother's attorney, until January 15, 2009.  The notice specified a return date for the application of March 24, 2010.


Since, under Rule 74.18 of the Rules, an objector who is served with a notice of application to pass accounts and wishes to object to the accounts is required to serve and file a notice of objection to accounts at least 20 days before the hearing date of the application, Gino's brother, Biagio, had until March 4, 2010 to file his notice of objection.


Almost a year after the Notice of Application was filed, Biagio retained a lawyer to assist him with reviewing the accounts. Three months later, and ten days after the deadline to object, on March 14, 2010, Biagio's lawyer wrote to Gino's lawyer to request an opportunity for his client to review the accounts, and, if necessary, pose questions and raise any objections he may have with respect to the estate accounts. During the period from March 14, 2010 to March 18, 2010, counsel exchanged correspondence, which indicated a willingness on the part of both counsels' clients to resolve the matter and settle the dispute. However, on or about March 25, 2010, counsel were surprised to learn that on March 13, 2010, Justice Belobaba had granted an unopposed judgement on the passing of accounts.


Although counsel for Biagio sent his notice of objections on April 2, 2010 and although further correspondence ensued with efforts at settlement, these efforts eventually broke down, culminating with a notice by the estate trustee that he was no longer willing to negotiate and planned to distribute the estate at the end of June, in accordance with the terms of the Judgment. In response, Biagio brought this motion to set aside the Judgment, to grant him leave to file a Notice of Objection, and to prohibit Gino from making a final distribution of estate assets without the consent of Biagio or a judgement passing the accounts.


In his analysis of the relevant legal principles, Justice Brown noted that although Rules 74.18(3) and (7) of the Rules entitle a person who has a contingent or vested interest in an estate to file a notice of objection to accounts, the issue that arises is the fact that Rule 74 does not contain an express provision addressing the ability of a person who has failed to file a notice of objection in a timely fashion to move to set aside an unopposed judgment for passing of accounts. However, Brown J. was of the view that, since Rule 74.18(1) requires a passing of accounts to be brought by way of application, the application falls under Rule 14: Rule 14.05(3), which, in turn, triggers the application of Rule 38.11.[1] Brown J. continued as follows:


In the present case the estate trustee served the required notice of application to pass accounts on Biagio, a person with a contingent or vested interest in his mother's estate, but Biagio failed to file a notice of objection to accounts within the prescribed time leading the estate trustee, quite properly, to seek an unopposed judgment: Rule 74.18(9). These circumstances closely resemble the situation where a defendant is served with a statement of claim, but fails to file a statement of defence within the prescribed time, leading to a noting in default and securing of a default judgment. Accordingly, I think it appropriate to apply on this motion to set aside the judgment under Rule 38.11 the principles developed in the jurisprudence for motions to set aside default judgments.[2]


Referring to the Court of Appeal decisions in Peterbilt of Ontario Inc. v. 1565627 Ontario Ltd. (2007), 87 O.R. (3d) 479 (Ont. C.A.) and HSBC Securities (Canada) Inc. v. Firestar Capital Management Corp., 2008 ONCA 894 (Ont. C.A.), Brown J. affirmed the applicability of the principles espoused by the Court of Appeal in situations where a court is faced with a motion to set aside an unopposed judgment.


Thus, as a result of Brown J.'s decision in Marino v. Marino Estate (Trustee of), an objector who has failed to file their objection in time and seeks to set aside an unopposed judgment on the passing may get a second chance to object, provided they are able to demonstrate the following: (i) that the motion was brought without delay after the objector learned of the default judgment; (ii) that the circumstances giving rise to the default were adequately explained; and (iii) that the objector has an arguable objection on the merits, to permit the court to determine whether the interests of justice favour granting the order. As to this last item, Brown J. noted that: "the court should consider the potential prejudice to the moving party if the motion were dismissed, the potential prejudice to the respondent if the motion were allowed, and the effect of any order on the overall integrity of the administration of justice."[3]


Applied to the facts of the case, Brown J. found that although Biagio's motion to set aside the Judgment was not brought forthwith, given that Biagio's counsel's initial email put the estate trustee on notice that a motion to set aside the Judgment might be brought and expressed a willingness to settle the dispute, Brown J. had no hesitation in concluding that the motion was brought without delay.[4] Justice Brown cited Rule 1.04(1) and the principle that the Rules not be interpreted and applied "in a manner that discourages parties from attempting to resolve their disputes through good faith negotiations before resorting to court."[5]


The Court was satisfied by the affidavit evidence produced by counsel for Biagio that indicated that the failure to file a timely notice of objection to the accounts rested solely on Biagio's counsel's shoulders and not Biagio himself and, as such, the Court found that such constituted an adequate explanation of the circumstances giving rise to the default.


Although a number of the objections raised by Biagio centered on the dealings by Gino while acting as their late mother's attorney for property, including the compensation taken by him during this time, the Court found that Biagio had in fact demonstrated arguable objections to the accounts of Gino, in his capacity as a fiduciary.


In applying the third part of the three-pronged test, Justice Brown found that this was a "close case."[6] The two primary competing factors were the need to ensure that fiduciaries fully account for their management of property, on the one hand, and the failure of the beneficiary to raise his objections in a timely manner which, in turn, causes delay that could adversely impact the other beneficiaries, on the other hand.


In the result, the Court concluded that it should act to ensure that a fiduciary fully accounts for his activities. As Biagio raised arguable objections to Gino's accounts, Justice Brown opined that they should be considered. Consequently, he granted Biagio's motion and set aside the Judgment, on terms.[7] He further held that no further steps should be taken in the application to pass accounts until the parties attended at a mandatory mediation.[8]


Noting that Rule 49 offers had been delivered for the motion, the Court reserved his decision on the issue of costs until he received written submissions from the parties, in accordance with the deadlines he provided therein.


Interestingly, although the Court reserved its decision on costs until written submissions were provided, Biagio was ordered "to pay all the mediator's costs."[9]


(2) Appeals and Costs of Unsuccessful Appeals


Penney Estate v. Resetar


In Penney Estate v. Resetar, Tracey Marie Resetar ("Ms. Foster") sought leave to appeal an order to pass accounts. The Estate Trustee During Litigation (the "ETDL") and the Office of the Children's Office (the "OCL") were successful in having Ms. Foster's motion for leave dismissed.


In their written submissions on costs, both the ETDL and the OCL contended that they had no alternative but to respond to the motion for leave. The ETDL sought partial indemnity costs, and had agreed to act in the matter at a reduced hourly rate, which reduction was reflected in the bills as filed. The OCL sought full indemnity costs. Both submitted that their costs were fair and reasonable. Counsel submitted that if there is no payment or shortfall, costs should be paid out of the estate on a full indemnity basis. No submissions or material was provided from Ms. Foster on the issue of the costs sought.


In reaching its decision, the Court reviewed its jurisdiction to order costs, as found in section 131(1) of the Courts of Justice Act,[10] the factors to be considered as set out in Rule 57.01(1) of the Rules. The Court also reviewed the principle espoused in McDougald Estate v. Gooderham;[11] namely, "[u]nless the matter fits with the two enumerated exceptions: (a) the litigation arose as a result of the actions of the testator; or (b) the litigation was reasonably necessary to ensure the proper administration of the estate, the unsuccessful party pays."[12]


The Court found that neither of the estate-related exceptions applies, since the motion for leave to appeal the order for the passing of accounts was not necessitated by the actions of the testator and nor to ensure the proper administration of the Estate.[13] As such, the rules of civil litigation were found to apply.


The Court noted that both the ETDL and the OCL were successful on the motion, and that the reply to the motion for leave was appropriate and necessary to fully respond to the motion. The Court was satisfied that the partial indemnity costs as set out in the Bill of Costs were calculated according to the suggested rates found in the "information for the Profession," as set out in the introduction to Rule 57 of the Rules.


The Court referred to Rule 57, Jung v. Lee Estate,[14] and applied the reasoning in The Estate of John Johannes Kaptyn,[15] wherein Justice Lederer awarded costs on a full indemnity basis, stating:


This is an Estate matter. As a general rule and in this case in particular, problems with a Will can be said to arise from the actions, omissions, instructions and decisions of the Testator. The Trustees are to put in place by the Will to represent the Estate. They are not here out of choice, hence, it is reasonable that they are not to be "out-of-pocket". They should be paid on a full indemnity scale. Here, Jonathan and Jason carried the weight of supporting the Will. They too should be paid on a full indemnity scale.[16]


In the end, the Court held that the ETDL and the OCL were entitled to their costs on a full indemnity basis, stating:


If estate trustees or estate trustees during litigation are expected to bear their own costs during the course of litigation, not only would they refuse to be appointed, estate trustees and estate trustees would also be reluctant to bring proceedings to advance the due administration of the estate and protect the interest of the beneficiaries.[17]


[1] Rule 38.11 provides as follows: "38.11(1) A party or other person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment comes to the person's attention and names the first available hearing date that is at least three days after service of the notice of motion. [...] (3) On a motion under subrule (1), the judgment may be set aside or varied on such terms as are just.

[2] Supra note 6 at par. 21.

[3] Ibid. at paras. 22 & 23.

[4] Ibid. at paras. 24 & 25.

[5] Ibid. at par. 26.

[6] Supra note 6 at par. 41.

[7] Ibid. at par. 42.

[8] Ibid.

[9] Ibid.

[10] Courts of Justice Act, R.S.O. 1990, c. C.43.

[11] McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 (Ont. C.A.).

[12] Supra note 15 at par. 13.

[13] Ibid. at par. 14.

[14] Jung v. Lee Estate, 2007 CarswellBC 2904 (B.C. S.C.).

[15] December 4, 2008, unreported.

[16] Ibid.

[17] Supra note 15 at par. 19.

And Some End of Season Tax Greetings from our Mediation Partner, Brian Wilson, Wilson Vukelich LLP - Tax and Private Client Group

Cross-Border Gifts - Thinking about making a gift to a U.S. Charity? By Jag Gandhi from Wilson Vukelich LLP - Tax and Private Client Group


Thinking about making a donation to a US charity while you are alive? Are charitable tax credits available for such donations?


According to Article XXI(7) of the Canada-United States Income Tax Convention ("Convention") a Canadian donor may claim a charitable tax credits for a gift to a recognized US charity, provided that the charity would have qualified in Canada if it has been a Canadian charitable organization. However, the charitable credit is limited to the donor's US-sourced income and subject to the normal donation ceiling. Any excess credits can be carried forward and used in subsequent taxation years. Therefore, in order to take advantage of this provision under the Convention the taxpayer must have US-sourced income from which the donation was made. The CRA was asked to consider whether a US charitable organization can be considered to be a "qualified donee" for purposes of section 149.1 of the Income Tax Act pursuant to article XXI(7) of the Convention. According to the CRA, article XXI(7) of the Convention does not deem US charities to be Canadian registered charities, therefore, US charitable organizations are not considered a "qualified donee" for the purposes of section 149.1 of the Income Tax Act. [1]


There are three situations under which a Canadian donor can attempt to claim charitable tax credits for donations made to a US charity from their Canadian-sourced income. One, contributions to certain universities and colleges in the US whose student body normally includes students from Canada who are listed in Schedule VIII of the Income Tax Regulations. A Canadian donor who contributes to one of these listed organizations may claim charitable tax credits based on the full amount of the gift, subject to the normal donation ceiling.


Two, Article XXI(7) of the Convention allows donations by Canadian alumni of US universities and colleges. A Canadian donor who contributes to a US university or college may claim charitable tax credits based on the full amount of the gift, provided that the donor or a family member attended the educational institution. The credit is subject to the normal donation ceiling. This tax credit can be claimed regardless of whether the university or college is listed in Schedule VIII of the Income Tax Regulations. Donors can also carry forward any excess contributions they make for up to five years from the year of the donations.[2]


Three, a Canadian donor can make a donation to a US charity if the Canadian government has made a gift to such US charity. If the Canadian government has made a gift to a US charity, a Canadian donor may, in the same year or the following year, make a contribution to the same charity.[3] The Canadian donor will then be eligible to claim charitable tax credits based on the full amount of the gift. The list of charitable organization outside of Canada that Her Majesty in right of Canada has made can be found in CRA Information Circular 84-3R6, Gifts to Certain Charitable Organizations Outside Canada.


What if on death you decide that you want to bequest a portion of your estate to a US charity in your Will, does that change the situation?


Paragraph 1(b) of Article XXIX B (Taxes Imposed by Reason of Death) of the Convention applies where property of an individual who is a resident of Canada passes by reason of the individual's death to a qualifying exempt organization that is a resident of the United States. The determination of a qualifying exempt organization would be based on paragraph 1 of Article XXI of the Convention which includes charitable organizations. In such circumstance, for purposes of Canadian capital gains tax imposed at death, the tax consequences arising out of the passing of the property shall apply as if the individual disposed of the property for proceeds equal to an amount elected on behalf of the individual. The elected price cannot be lower than the purchase price or higher than the fair market of the property. The manner in which the individual's representative shall make this election shall be specified by the competent authority of Canada. Therefore, this provision allows donations made by the Canadian deceased in their Will to a US charitable organization to receive tax treatment as though the donation was made to a charitable organization in Canada. This provision provides an additional multi-jurisdictional estate planning tool by giving the estate the opportunity to eliminate Canadian capital gains taxation on the donated property. 


[1] CRA Views, Tech Interpretation, 9728355 - Article XXI(6) of U.S. Treaty.

[2] Government Publications - Registered Charities Newsletter, 6a - Autumn 1996 - Special Release "Charitable Donations and the Canada-United States Income Tax Convention".

[3] Subparagraph 110.1(1)(a)(vii) and subparagraph 118.1(1)(g) of the Income Tax Act. 



Upcoming Programs


OBA Institute: Capacity to Marry, Divorce, and Separate

February 9, 2012,

Kimberly A. Whaley, Speaker

Info: http://www.oba.org/En/institute2012/programs/default.aspx


OBA Institute: Capacity and Personal Care Decisions

February 9, 2012,

Ameena Sultan, Speaker


OSGOODE Professional Development, Advising the Elderly Client: Remarriages and Common Law Arrangements: Estate Claims by Spouses

February 15, and 16, 2012, 

Kimberly A. Whaley, Speaker

Info: http://www.osgoodepd.ca/cle/2011-2012Fiscal/2012_elder_law/index.html


OSGOODE Professional Development, Advising the Elderly Client: End of Life Decision Making

February 15, and 16 2012, 

Mark Handelman, Speaker 

Info: http://www.osgoodepd.ca/cle/2011-2012Fiscal/2012_elder_law/index.html


LSUC, Six-Minute Lawyer: Disputes over what REMAINS: Burial, fights over the ashes, liquification of remains

April 24, 2012

Kimberly A. Whaley, Speaker


NAELA: Seattle Elder Law Conference: Topics - TBA

April 26-28, 2012,

Kimberly A. Whaley, Speaker



B'Nai Brith - Public Policy: Tataryn Ontario , Summary Trial

June 5, 2012, 

Kimberly A. Whaley, Speaker

Info: http://www.bnaibrith.ca/index.html

STEP Canada,14 Annual Conference
June 11-12, 2012,
Kimberly A. Whaley, Speaker

Info: http://www.step.ca/resources/conferenceRoundtable.asp


CLC CBA Vancouver, Blended Family Presentation: When Once is not Enough: Predatory Marriages

August 12-14, 2012,

Kimberly A. Whaley, Speaker

Info:  http://www.cba.org/CBA/sections_elder/main/


LSUC: The Administration of Estates 2012

September 13, 2012, Web repeat October 23, 2012

Chair, Kimberly A. Whaley



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This newsletter is intended for the purposes of providing information only and is to be used only for the purposes of guidance.  This newsletter is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.


Newsletter Contents
New Beginnings
Passings of Accounts
Tax Advice
Upcoming Programs
Newsletter Archive

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Contact Info

10 Alcorn Avenue, 

Suite 301
Toronto, ON, M4V 3A9
Tel: (416) 925-7400 
Fax: (416) 925-7464

Kimberly A. Whaley
C.S., TEP.
(416) 355-3250
Mark Handelman
(416) 355-3254

Ameena Sultan
(416) 355-3258


Amy Cull
(416) 355-3256
Deborah Stade
(416) 355-3252
Bibi Minoo
(416) 355-3251
Joanne Brigmantas
(416) 355-3255

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