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LAW REVIEW: CASES AND OTHER LEGAL REVIEWS
1. Menecola v. Drzazga [1]
Link: 2012 ONSC 6188 (CanLII)
This is a case where the applicant, in the capacity as Estate Trustee, brought an application for directions from the court with respect to the interpretation of the deceased's Will. Of particular issue, were the bequests made to each of the deceased's three sons and the distribution of the residue of the estate. The estate was worth just under $700,000.00.
Justice Gordon applied legal principles of intention and the plain meaning of the language used in the Will. In His Honour's analysis, the intention of the deceased could not be discerned from a review of the Will alone. Accordingly, the court considered extrinsic evidence of the circumstances surrounding the making of the Will. The court weighed the evidence of the children of the deceased as well as the drafting solicitor who prepared the Will. From this evidence, the court determined that the intention of the deceased was to require his sons to own the real estate in question, for a period of 10 years as a condition of their bequests. There were various other questions asked of the court in the application for directions, including but not limited to, when the gift to each son vested, if any of the gifts failed, and who are the residual beneficiaries.
What was most interesting particularly in a modern costs era, is the treatment of the costs, which Justice Gordon found appropriately to be ordered payable from the estate. The costs outline provided by the applicant and the Children's Lawyer, were ordered payable out of the estate, in what appears to be on a full indemnity basis. It is difficult to ascertain on the Reasons given if indeed the costs claimed were full indemnity. However, Justice Gordon commented that the issues confronting the parties were reasonably complex, substantial sums of money were at play, and though the costs may seem high [per Gordon J.], the time and effort involved was considerable.
2. Minkofski v. Dost Estate [2]
Link: 2012 ONSC 5598 (CanLII)
This is yet another summary judgment decision brought under our new rules for summary judgment motions in which the court held that there was no genuine issue requiring a trial, thus entitling the moving parties to judgment. On the evidence presented to the court, the court found that the validity of the Will was established, and there was no merit to the objection raised.
The Will in question was made at a time when the testator was beginning to show signs of cognitive impairment according to the Reasons of Master Macleod.
This case is also notable in that it was determined by a Master. It is unclear from the Court docket reference whether or not the matter was brought on the Estates List.
It appears from the Reasons for Judgment that the original application was commenced in the usual manner, an Estate Trustee During Litigation was appointed pursuant to Rule 74.10, and the usual production Orders issued.
At paragraph 12 of the Judgment, comments of the Master are interesting in that it is stated:
"Ordinarily there would also have been an order constituting Mr. Minkofski as the plaintiff and the estate as the defendant, and perhaps requiring the plaintiff to deliver a statement of claim. At a hearing for directions there might also be an order for mediation, trial of an issue, exchange of pleadings or other procedural steps. The court did not require these steps at that time because Mr. Moore did not want the assets of the estate to be utilized to fund what might ultimately prove to be unnecessary procedural steps."
It was noted that even after the disclosure requested had been received that the objection which included allegations of incapacity of the testator and undue influence were maintained and not withdrawn. On the evidence of the objector, the Court Reasons included the following notable paragraphs:
[28] Unless it can be successfully challenged, the evidence provided on behalf of the estate trustees is sufficient to establish the validity of the will. In responding to it, the objector need not conclusively persuade the court that he will succeed at trial but need only show that there is a genuine question requiring a trial for resolution. Rule 20.02 (2) reads as follows:
(2) In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party's pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.
[29] The first thing to observe is the fact that the objector did not comply with the rule. He did not file any affidavit in response to the motion. What he did file was a document entitled "Factum III". He clearly understood the necessity of responding to the arguments advanced by the moving party but he also made certain unwarranted assumptions. For example he assumed that the earlier motion record would automatically be before the court and he assumed that because the medical records had been ordered produced a copy would be available to the court.
[30] The court is obliged to make some allowances for parties who for various reasons are not represented by counsel. Specifically the court should not allow minor technical defects to stand in the way of a just result. A self-represented party may have to be specifically directed to applicable rules and may require additional time to correct missteps. On the other hand, the court must still maintain balance and fairness to all parties.[5] Indulgences and allowances for parties without counsel cannot extend to complete disregard of the Rules of Civil Procedure nor of the rules of evidence.
In addressing the test for summary judgment, the Court stated clearly in its Reasons that the Court is entitled to consider whether or not the evidence presented in opposition to the motion is sufficient to demonstrate that there is a genuine issue requiring a trial.
Moreover, the Court stated that both Masters and judges have jurisdiction to hear a motion under Rule 20, stating however that a Master may not go quite as far as a judge in deciding the ultimate question. The reason for this, as stated, is because judges have been given enhanced powers by the January 1, 2010 Rule amendments. It is to these amendments that the decision of the Court of Appeal in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 (CanLII), 2011 ONCA 764 (C.A.) is primarily directed.
Under the Rule, it was stated that a Master or a judge is entitled to determine that there is no genuine issue of fact or law and therefore that no trial is required because there is no merit to the position of one of the parties. By contrast it was stated a judge may now determine that notwithstanding there is merit to the position of both parties and therefore a genuine issue of either fact or law, the judge may, in appropriate case, go on to decide the genuine issue if it is reasonable and just to do so without the forensic machinery of a trial.
The Court also in its Reasons commented that in estate litigation, the Court must also have regard to Section 13 of the Ontario Evidence Act that requires a party may not obtain a verdict 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 other material evidence.
On the law of capacity, the Master opined that occasional confusion and memory lapses do not vitiate testamentary capacity. Indeed, at paragraph 63, it was stated as follows:
"Testators are not required to have either an accountant's knowledge of their estate nor a lawyer's knowledge of the provisions of a will. The question is whether or not the testator had capacity at the time the will was executed. Botnick is also authority that summary judgment is an appropriate tool in estate cases and may be used to dispose of an unsustainable notice of objection."
On the issue of capacity therefore the Court found that the objector failed to show that there was sufficient, relevant, admissible and probative evidence such as to have any chance of success at trial on either ground of undue influence or capacity.
It is unknown what the treatment of costs will be in this matter as no decision has yet been reported.
3. The Fraudulent Conveyances Act, (the "FCA") R.S.O.1990, Chapter F.29
Section 2 of the FCA states as follows:
Where conveyances void as against creditors
2. Every conveyance of real property or personal property and every bond, suit, judgment and execution heretofore or hereafter made with intent to defeat, hinder, delay or defraud creditors or others of their just and lawful actions, suits, debts, accounts, damages, penalties or forfeitures are void as against such persons and their assigns.
The FCA often comes into issue after the death of a spouse, on elections made under Section 5 of the Family Law Act, R.S.O.1990, Chapter F.3 (the "FLA"), which permits an election to take a division of net family property as proscribed for under the FLA after the death of a spouse. The Court of Appeal decision in Stone v. Stone [3] upheld a decision at trial that included within a deceased spouse's net family property, the value of certain inter vivos dispositions made by the deceased in favour of his children prior to the marriage. In the result, it was found that certain of the dispositions were void pursuant to Section 2 of the FCA such that the subject matter was indeed considered property owned by the deceased on the valuation date for the purposes of calculating the net family property of the deceased on the date before death. The judge at trial found that the surviving spouse 'was a creditor or otherwise' of the deceased within the meaning of Section 2 of the FCA.
One of the effects of Section 5 of the FCA is to provide a remedy to a spouse in circumstances where the deceased's spouse sought to divest him/herself of property in anticipation of death and to defeat the surviving spouse's claim to equalization.
In Stone v. Stone, it was found that Mrs. Stone had the legal status of a "creditor or other" for the purposes of Section 5(2) of the FCA. It is clear that Section 5(3) of the FCA provides a right to make an application as a remedy. This right would have existed prior to death where there was a serious danger that the spouse would improvidently deplete the net family property within the meaning of the FCA. Given that Mr. Stone's death was certain because of his illness, and Mrs. Stone's knowledge of it, even if there were no knowledge of the transfers during the deceased's lifetime arguably Mr. Stone's transfers were being conducted within weeks of the ultimate death, therefore, arguably Mrs. Stone would have been in a position to advance her status as a "creditor or other".
In Riseman v. Riseman (2012) ONSC 3148 (CanLII), similarly a spouse moved to set aside an estate freeze of her husband's property for the purposes of a net family property equalization as at the date of separation. This claim was dismissed on grounds which included inter alia, a finding that she was not a "creditor or other" as she had no existing claim against her husband at the time of the estate freeze.
The Court in Riseman referenced Stone v. Stone, relying on the passage which solidified the requirement that a claim had to exist at the time of the transfers.
Often we come across situations in estates where the deceased spouse, prior to death, in an attempt to deplete the assets of the estate for the purposes of defeating the claims of creditors or ensuring that monies are not available to charge against where a Family Law Act election is available or otherwise, a dependent's support or other equitable claims may exist.
In this regard, Stone v. Stone is instructive on the circumstances where a surviving spouse would be entitled to set aside such transfers pursuant to Section 2 of the FCA. Stone v. Stone arguably leaves open the scope of the concept of "creditor or other" in the family law context where there is a death of a spouse.
[1] Menecola v. Drzazga, 2012 ONSC 6188 (CanLII)
[2] Minkofski v. Dost Estate, 2012 ONSC 5598 (CanLII)
[3] Stone v Stone, 2001 CanLII 24110 (ON CA), aff'g 1999 CanLII 15094 (ON SC).
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Megan is a licensed paralegal and has been a member of the Law Society of Upper Canada since 2011. Megan is currently working on her Institute of Law Clerk's of Ontario certification, and has background in estate litigation. 
Eden recently graduated with a Master's in Education from the University of Toronto. Her background experience is in research and administration, both in a legal environment and with non-profit organizations
WEL warmly welcomes Jaël Marques de Souza 
