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What type of search for beneficiaries is sufficient to satisfy a trustee’s obligation to do so? In Stoyan v. Johnson, the Ontario Superior Court of Justice had the opportunity to decide just that on an application by a trustee of a testator whose named beneficiaries had pre-testator him.

Though Mr. Stoyan had named two beneficiaries in his will, unfortunately, by his passing, both had predeceased him, and he had not updated his will. As he had not named any other beneficiaries, the trustee was obligated to ascertain whether any other beneficiaries may have an interest in the estate.

Trustees’ obligations to find and notify beneficiaries

Trustees are subject to several common law and statutory obligations in discharging their duties to an estate’s beneficiaries. In 2018, the Supreme Court of Canada confirmed that estate trustees have to disclose the existence of trust to its beneficiaries. In its decision, the SCC guided courts to review whether a trustee has discharged that duty properly. The SCC cautioned that the court should not review a trustee’s actions with the benefit of hindsight and determine what could have “ideally been done”; rather, a court should look to the “particular circumstances” of the case and what an “honest and reasonably skillful and prudent trustee” would have done under similar circumstances. Types of circumstances that can be considered making that determination include:

• trust terms,
• the identity of the trustee and the beneficiaries,
• the size of the class of potential beneficiaries; and
• pertinent industrial practices.

Adding to the common law obligations is the obligation imposed on Ontario trustees under the province’s Estates Administration Act which requires trustees to ascertain whether there are any beneficiaries by virtue of a relationship traced through birth outside marriage.

Suppose a trustee believes that they have done everything that an honest, reasonably skilful, and prudent trustee would have done under similar circumstances. In that case, that trustee can apply to the court seeking what is known as a Benjamin Order.

Benjamin Orders

A Benjamin Order has a long-standing in common law. The name derives from a 1902 decision of the Chancery Court in Neville v. Benjamin, [1902] 1 Ch. 723, in which the court examined a situation where a trustee could not locate a beneficiary. The testator was survived by twelve living children and one missing child who had disappeared while on vacation after he was suspected of having defrauded his employer. The court determined that the missing child, Philip, would have come forward under the circumstances and granted what is now known as a Benjamin Order.

A Benjamin Order allows the trust property to be distributed while leaving open the possibility of the lost beneficiary coming forward and claiming what is rightfully his or hers if any property remains undistributed. Such an order absolves the trustee and protects the trustee from any claims of breach of trust brought by a beneficiary that comes forward after such an order is granted.

In Steele v. Smith, the Ontario Superior Court outlined the type of questions that a court can ask to determine if a trustee had discharged his duty sufficiently to justify the grant of a Benjamin Order. Examples include:

• Why is the question being asked? Is there specific evidence that there is or may be a missing beneficiary, or does the question arise as a result of the circumstances?
• How much time has elapsed since the death of the testator?
• What are the specific steps that have been taken, and over what period of time, to answer the question?
• Who has conducted the enquiries? Were they appropriately qualified to investigate the matters at issue?
• Do the enquiries take due account of matters such as the possible location of the beneficiary or of potential evidence as to the matter at issue?
• It is possible that pursuing further avenues of enquiry, or deferring the decision, might result in a claim or generate further information? What is the cost and delay associated with pursuing those avenues, and what is the likelihood they may succeed?
• What is the amount at stake?

The trustee in Stoyan did not do enough to ascertain the existence of potential beneficiaries

In Stoyan, the court found that the trustee’s application for a Benjamin Order was premature, as there were still a number of unanswered questions and steps that the trustee could reasonably take to ascertain if the testator had any other beneficiaries, including:

• proper tracing of the testator’s genealogy
• reasonable efforts will need to be made to ascertain whether the testator’s son died leaving any children who survived him;
• whether the testator’s father survived him;
• who the Testator’s aunts and uncles are and whether any of them survived the Testator; and
• who the children of the Testator’s aunts and uncles are and whether any of them survived the Testator

Succession Law Reform Act – Determining the next of kin of a deceased

In formulating the above questions, the court in Stoyan relied in part on the Succession Law Reform Act (“SLRA”), specifically sections 47(6) and 47(8) which outline the guidelines for how an estate is to be distributed if there is no valid will, or the beneficiaries named predecease the testator, as was the case here.

These sections reproduced below outline the line of succession that courts must follow:

S. 47(6): Next of Kin

Where a person dies intestate in respect of property and there is no surviving spouse, issue, parent, brother, sister, nephew or niece, the property shall be distributed among the next of kin of equal degree of consanguinity to the intestate equally without representation.

S. 47 (8): Degrees of Kindred

For subsection (6), degrees of kindred shall be computed by counting upward from the deceased to the nearest common ancestor and then down to the relative. The kindred of the half-blood shall inherit equally with those of the whole-blood in the same degree.

In finding that the above questions, formulated in reliance on legislative requirements, were still outstanding, the court refused to grant the trustee the requested Benjamin Order.

Trustees dealing with situations where beneficiaries are not immediately ascertainable would be well advised to work with an experienced legal team to avoid unnecessarily wasted resources filling premature applications or conducting searches that may not satisfy trustee common law and legislative obligations.

Contact Toronto Estate Lawyers at Derfel Estate Law for Estate Administration

At Derfel Estate Law, our experienced team of estate lawyers is always up to date on estate administration requirements and can assist in acting as an Estate Trustee. Contact us by phone at 416-847-3580 or reach us online to discuss your estate needs.

There may be times during the administration of an estate that a lawsuit is filed on behalf of the deceased. In most cases, the Trustee Act dictates that certain actions brought on behalf of a deceased person must be brought within two years of the person’s death. However, courts have ruled that this limitation period may be suspended if the defendant fraudulently conceals the existence of fraud, meaning that the estate wouldn’t know they had something to bring an action over. This is a fairly nuanced aspect of the law that was recently addressed in a decision from the Court of Appeal for Ontario.

Family alleges medical malpractice

The appeal arose after the estate of the deceased alleged medical malpractice against a hospital as well as some doctors and staff. The estate claimed the deceased was negligently diagnosed and treated at the hospital, which lead to a delay in surgery that they claimed could have saved his life.

The problem the estate faced was that they did not file the claim until two years and three months after the deceased passed away, putting them past the limitation period. The defendants asked for the claim to be dismissed via summary judgment because of the limitation period.

Was there fraudulent concealment?

Upon learning about the request for summary judgment, the estate amended their claim, adding that the defendants’ fraudulent concealment suspended the limitation period. The estate stated that when the deceased’s medical records were provided to them in May and June 2015, certain testing imaging was not included. The estate did not receive these images until more than two years later. The estate’s amended claim said that had they been in possession of the images earlier, they would have had the information they needed to file a claim.

However, the estate was unsuccessful before the motions judge, who dismissed the claim because there was no causal connection between the alleged improper concealment of the imaging and the estate’s failure to sue within the limitation period.

Estate appeals that there was fraudulent concealment

The estate appealed on the grounds that the motions judge incorrectly determined there was no fraudulent concealment that led to the suspension of the limitation period.

At appeal, the court stated that the Trustee Act prescribes a “hard” or “absolute” limitation period starting when the deceased dies. In this case, the limitation period had definitely expired by the time the action was brought. But the question remains as to whether it was suspended.

To answer this question, the court had to determine whether the motion judge was correct in determining the imaging “did not add anything of significance to the (estate’s) knowledge.”

After reviewing case law, the court presented examples of when false or withheld information led to plaintiffs missing the limitation period. That was exactly what the estate was arguing here, that had the imaging been disclosed rather than fraudulently concealed when requested, they would have sued the defendants within the two-year limitation period.

The judge sided with the estate and dismissed the summary judgment. However, that doesn’t mean the estate was successful in its lawsuit. The matter will still have to be heard before the courts. We will keep our eyes on the matter as it progresses through the courts.

If you have been appointed an executor, the estates lawyers at Derfel Estate Law can advise and guide you on all aspects of estate administration, including determining whether or not probate is required, or assisting you if it is. Call us at 416-847-3580 or contact us online to schedule a consultation.

While the idea of appealing a judicial ruling is something most people are familiar with, the grounds on which someone can make an appeal are perhaps not as well known. For example, someone who loses a decision in court can’t appeal simply because they don’t agree with the court’s ruling. In addition, an appeal can’t be brought in order to litigate new issues. The details around this were recently described in a decision from the Ontario Superior Court of Justice’s Divisional Court.

Leading up to appeal

The decision was light on details of the trial before the appeal was brought. The son of the deceased was the Appellant. At the original trial, to substantive determinations were made. The first was that the money from the sale of the home of the deceased and his wife were to be paid out of court and distributed to the terms of the will of the deceased. Secondly, the wife was to be removed as trustee of the deceased’s estate retroactive to her original appointment to the role.

In order to appeal, the Courts of Justice Act requires that the ability to do so (known as “leave”) must be granted. In this case, the court granted leave to appeal, but then dismissed it.

But why?

It seems that the appellant was appealing the earlier decision by the court to not hear a motion (it wasn’t clear what the motion was, other than that it concerned the validity of the will). The reason the court wouldn’t hear it was because it was not properly served, and had been filed in the wrong courthouse. The appeal judge said it was well within the court’s authority and jurisdiction to have refused to hear the issue.

The court noted that the issue of the validity of the will was not one dealt with in the original trial. The court wrote that the appellant “has yet to register any formal objection, either by notice of objection, motion or application to either the validity of the Will or the appointment of the Estate Trustees.”

The court recognized that the appellant wanted to contest the will in order to overturn the distribution of funds as dictated by the will. He instead wanted the funds from the sale of the home to remain available as a security for the enforcement of a counterclaim he had made. However, the counterclaim had no connection to the will or the estate of the deceased. Instead, the appellant was seeking money for a loan he had made to his father as well as for payment for work he had done to winterize a cottage owned by the deceased.

The court determined that there had been no demonstration that the appellant had a strong prima facie case in respect to his counterclaims, which appear to have been barred by the Limitations Act.

As a result, the appeal was dismissed.

If you are considering filing an application to challenge a will, contact the estates lawyers at Derfel Estates Law before you proceed. We can help you determine whether you are eligible to bring such a claim, can help you understand your options and rights, and can represent you throughout the challenge process. Call us at 416-847-3580 or contact us online to schedule a consultation.

While a will is designed to lay out how someone wants their property to be handled following their death, there are plenty of circumstances that lead people, beneficiaries or not, to challenge a will. However, wills can’t be challenged unless certain minimum requirements are met. A recent decision from the Ontario Superior Court of Justice looks at what requirements are needed to challenge a will.

The will

The deceased passed away on April 6, 2017. In his will he left essentially his entire estate to his daughter, leaving his two adult sons out of the picture. The court explained that the siblings had a history of relationship issues, writing,

“The affidavits and the examination transcripts of the parties demonstrate there is substantial disagreement, strained relationships and enmity between at least (the daughter) and (the sons) that involve past loans, loans for a vehicle purchase, addiction allegations, alcohol and marijuana use, misappropriation of funds, the reasons and circumstances for various moves by the parties to and from the (the family home), negative communication allegations by each other vis-à-vis the deceased, among other matters.”

Contesting the will

The sons contested the will, calling into question its validity on the following basis:

a. the Will was a product of undue influence by (the daughter),

b. (The deceased) lacked testamentary capacity; and/or

c. (The deceased) failed to know and appreciate the contents of the Will.

The daughter responded with a motion looking to set aside the sons’ application, stating it failed to meet the threshold of evidence required. The court’s analysis would consist of a review of each of the basis on which the will was contested, and whether the evidence provided by the sons calls into question the validity of the will.

Lack of testamentary capacity

The first ground the court reviewed was whether the deceased lacked testamentary capacity. In order to complete this analysis, the court reviewed the deceased’s interactions with his lawyer in his final years. The sons provided little evidence to support this claim. The court accepted evidence that found the deceased “displayed no signs of confusion or memory loss. There were no behaviours that called into question (the deceased’s) mental capacity or would have prompted him to take regarding testamentary capacity, undue influence or the possibility of fraud overcoming his free will.”

The will was a product of undue influence

The sons argued the daughter exercised undue influence upon their father and provided some evidence to support the claim. First, the daughter had knowledge of a previous will, while the sons did not. She had suggested that he create a new will, and took the deceased to meetings where it was drafted. The daughter denied trying to exercise any influence over the deceased, but the court found that the opportunity to do so existed during the time she spent with her father. It left the court unable to determine if undue influence was applied.

As a result of this, the court determined the will challenge could go ahead. If you are considering filing an application to challenge a will, contact the estates lawyers at Derfel Estates Law before you proceed. We can help you determine whether you are eligible to bring such a claim, can help you understand your options and rights, and can represent you throughout the challenge process. Call us at 416-847-3580 or contact us online to schedule a consultation.