Justice David Brown: A Lasting Legacy


Written on December 19, 2014 – 6:00 am | by Justin de Vries

Congratulations to Justice David Brown who was appointed to the ONCA this week. I am sure that I speak for the Estates Bar when I wish him well in his new role.

Justice Brown had a profound impact on the Estates Bar (and beyond) and leaves a lasting legacy. He certainly imposed procedural rigour on the Estates Bar. His 2009 Practice Direction for the Toronto Estates List regularized estate procedures, provided for 10 minute scheduling appointments which often functioned like a triage court, and signaled that a new effective and efficient regime of efficacy had begun.

Regardless of what list Justice Brown was hearing, he was a prodigious worker and well prepared. He expected the same of counsel and was unimpressed with unreasonable positions or timewasting behaviour. And while his language could certainly be colourful, his decisions were sharply written, insightful and usually bang on.

His decisions often attracted wide media attention. And why not, his much quoted phrase “parties cannot treat the assets of an estate as a kind of ATM bank machine from which withdrawals automatically flow to fund their litigation” delighted journalists and clients alike. Justice Brown described the continued reliance by the court on paper rather than electronic documents as “a poor excuse of a system” and “scandalous”. He invoked Dr. Seuss’ “green eggs and ham” to criticize counsel who seemingly avoided trial. He referred favourably to the Rules of Civil Procedure as “Lego blocks that allow you to build your own litigation plan.” In issuing injunctions in the Idle No More protests Justice Brown roared that “[n]o person in Canada stand above or outside the law”.

Justice Brown imposed the discipline of cost consequences on the Estates Bar by ensuring that the loser-pay principle ruled supreme. In Smith v. Rothstein, Justice Brown wrote:

“While the will challenge process serves the important public policy objective of ensuring that courts only give effect to valid wills that reflect the intention of competent testators, it must be open to the courts to sanction, through elevated cost awards, meritless will challenges which are driven by blind emotion, but devoid of any material relevant evidence. To do otherwise would risk undermining the stated intentions of testators and testatrixes and risk exhausting an estate, or inflicting financial harm on a beneficiary, by the pursuit of fruitless objections by a ‘slighted relative who is denied the testator’s largesse.’”

Important decisions (in no particular order) included:

  • Applegath Estate (the necessary steps a foreign executor must take to have his/her authority recognized in Ontario);
  • Assaf Estate (an estate trustee must exercise his/her power honestly and with an eye to the best interests of the beneficiaries);
  • Coombs Estate (ordering limited examinations for discovery and hybrid trials);
  • George Weston Limited v. Domtar Inc. (the overuse of complex summary judgment motions);
  • Henderson Estate (when and how a bond can be waived);
  • Ignagni Estate (ex parte orders for assistance – not so fast);
  • Kaptyn Estate (several notable decisions, including whether the court will act as referee between warring brothers and co-estate trustees. Justice Brown compared the case to Jarndyce v. Jarndyce, a reference to Dickens’ Bleak House);
  • McMichael Estate (where to commence an estates application);
  • Mitchell Estate (ordering increased costs in a passing of accounts application);
  • Perkovic v. McClyment (when interim dependant support will be ordered);
  • Salter Estate (the loser-pay principle applies to estate litigation);
  • Szabo Estate (a solicitor can assert a lien over a will for unpaid fees);

Best of luck to Justice Brown. While he will be missed by the Estates Bar here in the trenches, I am certain we have not heard the last of Justice Brown from his new perch on the ONCA.

Happy Litigating, Happy Holidays, and Happy New Year!

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    The Rush to Avoid the 21 Year Deemed Disposition Rule: a Word or Two of Advice


    Written on December 18, 2014 – 7:00 am | by Steven Frye

    As a professional advisor over the years, I have learned to accept good advice as well if not more than giving it.

    Recently, Colleen Ma of Dunphy LLP wrote about how the rush to avoid the 21 year rule for discretionary family trusts can lead to real problems if not executed properly, with some simple but important advice.

    With the 21st anniversary looming large for many discretionary family trusts, trustees are seeking advice from their advisors to find out how they can avoid the 21-year deemed disposition rule. Many advisors are apparently suggesting distribution of the trust assets to the beneficiaries on a tax-free basis under the appropriate sections of the Income Tax Act.

    Ms. Ma reminds us that trustees have a fiduciary duty to use their judgment and act in the best interest of the beneficiaries. Decisions cannot be made arbitrarily. All facts related to the trust and its circumstances must be considered. If not, it could be determined that the trustees have not acted properly. A lack of discretion may mean that the trustees have failed to exercise it at all.

    Beneficiaries may initiate legal action if they believe the trustees have not exercised appropriate discretion. A residuary beneficiary such as a charity or those acting for minor children might take a particular interest. Advisors, such as myself or others may be named in the action for our role in facilitating the improper exercise of the trustees’ discretion or because it is alleged we were negligent in giving advice. Even if in the end, the action is dismissed, defending it is time consuming and costly.

    Ms. Ma advises that litigation can be avoided if proper steps are taken before trustees exercise their discretion and make a decision. Seek experienced professionals with knowledge of these matters. Gather all the relevant facts. Make sure all your deliberations and actions are documented. Good advice indeed.

    Thanks for reading.

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      TRUSTS – A REBIRTH?


      Written on December 17, 2014 – 8:30 am | by Corina Weigl

      The construct of a “trust” has its beginnings in equitable principles developed many centuries ago. Since the creation of this construct, the separation of legal and beneficial enjoyment of property has provided a means to plan one’s property and financial affairs, in a manner that also provided tax benefits. Similarly, since the introduction of the Income Tax Act (Canada) measures have been introduced to attempt to limit the income tax benefits that flow from using a trust as a means to hold and earn income from property.

      While the recently released measures in Budget 2014 might suggest the death of the trust, as a vehicle to hold property, I take this opportunity to close off my blogs for 2014 by reminding readers of the many other reasons where a trust may be an appropriate planning tool. In no particular order, they are as follows:

      • Providing for confidentiality with respect to one’s property. Relying upon a Will, particularly once the new regulations to the Estate Administration Tax Act, 1998 become effective January 1, 2015, will mean more information concerning assets and values will be in the public domain. Using a trust for the disposition of property on death will provide for greater confidentiality.
      • Acting as a substitute to a continuing power of attorney for the management of property in the event of incapacity.
      • Acting as a substitute for a Will for the disposition of property on death and thereby avoiding the payment of probate taxes and, come January 1, 2015, the more stringent compliance obligations required for probate applications.
      • Providing for the protection of assets from future creditors, provided the trust and property transfers are implemented appropriately.
      • Providing for one’s spouse during his/her lifetime, with the balance of the trust to ultimately pass to one’s children. This is particularly useful in a second marriage situation. It may, however, also be appropriate in those situations where one is concerned about his/her spouse being susceptible to influence or finding happiness again, with the risk that one’s assets may find their way into someone else’s hands and not one’s children.
      • Managing property on behalf of minors and thereby avoiding the involvement of either the Children’s Lawyer or a court-appointed guardian of property.
      • Managing property on behalf of those incapable of managing property themselves; and, related to this, structuring the trust in such a manner that the entitlement to government benefits is not jeopardized.
      • Managing property for “spendthrift” family members.

      Wishing you all a Happy Holiday season and a Happy New Year!

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