Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90 (Doherty, Feldman, Cronk, Blair and Juriansz JJ.A.), February 3, 2014
Achilles Motors Limited v. 1717222 Ontario Inc., 2014 ONCA 139 (Hoy A.C.J.O., LaForme and Pardu JJ.A.), February 24, 2014
Knowles v. Lindstrom, 2014 ONCA 116 (Doherty, Goudge and Lauwers JJ.A.), February 13, 2014
Reisman v. Reisman, 2014 ONCA 109 (Hoy A.C.J.O., Laskin and Tulloch JJ.A.), February 11, 2014
Sawdon Estate v. Sawdon, 2014 ONCA 101 (Hoy A.C.J.O., Gillese and Strathy JJ.A.), February 5, 2014
1. Green v. Canadian Imperial Bank of Commerce, 2014 ONCA 90 (Doherty, Feldman, Cronk, Blair and Juriansz JJ.A.), February 3, 2014
A five-judge panel of the Court of Appeal heard three appeals --Green v. Canadian Imperial Bank of Commerce, 2012 ONSC 3637, 219 A.C.W.S. (3d) 692, Silver v. IMAX Corp, [2009] O.J. No. 5573, 66 B.L.R. (4th) 222 (S.C.J.), leave to appeal to Ont. Div. Ct. refused, 2011 ONSC 1035, 105 O.R. (3d) 212, and Trustees of the Millwright Regional Council of Ontario Pension Trust Fund v. Celestica Inc., 2012 ONSC 6083, 113 O.R. (3d) 264-- together in order to determine whether to reconsider its decision in Sharma v. Timminco, 2012 ONCA 107, 109 O.R. (3d) 569, leave to appeal to S.C.C. refused, [2012] S.C.C.A. No. 157.
In each of the three appeals, the plaintiffs were representative plaintiffs in a class proceeding, claiming damages under Part XXIII.1 of the Securities Act, R.S.O. 1990, c. S.5, s. 138.3 for misrepresentations alleged to have been made in respect of shares trading in the secondary market. In each case, the representative plaintiff commenced a class proceeding for common law negligent misrepresentation as well as a statutory claim based on the new statutory cause of action which came into force on December 31, 2005, allowing an investor, with leave of the court, to recover for losses suffered without proving any reliance on the misrepresentation in the purchase or sale of shares. In each case, the statement of claim was issued and served within the three-year limitation period for bringing the statutory claim, but leave to commence the statutory action was not obtained within that period.
In Sharma v. Timminco, the Court of Appeal held that the statutory claim is statute-barred if leave to commence the action is not obtained within the three-year limitation period, and that s. 28 of the Class Proceedings Act, 1992, S.O. 1992, c.6, which addresses the operation of limitation periods in causes of action asserted in a class proceeding, does not suspend the running of the limitation period in favour of class members until leave has been obtained. Under Timminco, in order to fall within s. 28 of the CPA, the s. 138.3 cause of action had to have been "asserted" in a class proceeding. The Court held that because the cause of action could not be enforced without leave being obtained, it could not be "asserted" before leave was obtained.
Writing for the Court, Feldman J.A. noted that the effect of Timminco on class actions under s. 138.3 of the Securities Act was that representative plaintiffs were required to move for and obtain leave from the court, as well as commence a class action containing the claim, within the three-year limitation period, a task which would be "either difficult or impossible." Feldman J.A. acknowledged that the Timminco interpretation of "asserted" in s. 28 of the CPA was a viable one based on the arguments made and the record before the court in that case. She conceded that, however, in light of the consequences of that interpretation, which left class members without the normal s. 28 protection from the passage of the limitation period, that interpretation was not correct.
Feldman J.A. found that Timminco wrongly held that a class action properly commenced cannot also assert a cause of action for the statutory remedy under s. 138.3 unless leave has first been obtained, and that before leave is obtained, s. 28 of the CPA does not suspend the limitation period for all class members in a proceeding that claims a remedy under s. 138.3. She concluded that, consistent with David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2005), 76 O.R. (3d) 161, which focused on the "effect and future impact" of correcting the error, the decision in Timminco ought to be overturned. Instead, when a representative plaintiff in a class action brought within the Securities Act s. 138.14 limitation period also pleads a cause of action based on s. 138.3 of the Securities Act, together with the facts that establish the claim, and further pleads the intent to seek leave to commence an action under the Securities Act, then that claim has been "asserted" for the purpose of s. 28 of the CPA, and the limitation period is thereby suspended for all class members.
As a result of this conclusion, none of the three actions under appeal was statute-barred.
In Green v. Canadian Imperial Bank of Commerce, the leave motion in that case was dismissed on the basis of Timminco. The respondent submitted that if the s. 138.3 action was not statute-barred, the motion judge erred in concluding that leave should be granted on the evidence. The respondent argued that the motion judge erred in his interpretation of the "reasonable possibility of success" standard, and that he set the bar for granting leave too low when he held that the standard was intended to screen out cases so weak that they cannot possibly succeed. Feldman J.A. rejected the respondent's interpretation of the motion judge's ruling to mean that a mere possibility of success as opposed to a reasonable possibility is sufficient, finding that the motion judge applied the "correct level of scrutiny" when determining whether leave should be granted in respect to the claims.
Feldman J.A. also addressed the appellants' submission that the motion judge erred by failing to certify some issues in the class action for common law negligent misrepresentation. The motion judge found that proof of reliance is a necessary component of a negligent misrepresentation claim, but that multiple plaintiffs would not be able to prove reliance as a common issue in a claim for negligent misrepresentation in either the primary or secondary markets. Such claims were therefore "fundamentally unsuitable for certification". Feldman J.A. dismissed the appellants' claim that the motion judge should have certified the issue of inferred common reliance based on the "fraud on the market" or "efficient market" theories. She agreed with the appellants, however, that the motion judge erred in restricting his analysis to the issue of reliance, finding that certifying other issues common to the negligent misrepresentation claims would significantly advance those claims.
The Court allowed the appeal in Green v. CIBC to the extent that the order dismissing the class action as statute-barred should be set aside and the common issues in the common law claim relating to the conduct and intent of the defendants were certified.
The Court dismissed the appeals in Silver v. IMAX and Celestica from the decisions granting certification. In these two actions, the motion judges had permitted certification through reasoning that avoided the Sharma v. Timinco decision. Given the Court's decision to overturn Sharma v. Timinco, there was no reason to overturn the decisions granting certification.
2. Achilles Motors Limited v. 1717222 Ontario Inc., 2014 ONCA 139 (Hoy A.C.J.O., LaForme and Pardu JJ.A.), February 24, 2014
In this brief endorsement, the Court of Appeal revisited its twenty-five year old decision in Zangelo Investments Ltd. v. Glasford State Inc.
The appellant, Achilles Motors Limited, and the respondent, 1717222 Ontario Inc., entered into an agreement of purchase and sale two days after, unbeknownst to them, the respondent's corporate charter had been dissolved by the Ministry of Government Services for failure to file a Notice of Change Form. Upon learning of the cancellation, the respondent immediately filed a Form 1 and received a Certificate of Revival. In the interim, however, the parties had dealt with each other on the basis that their agreement was binding.
The appellant brought an application for a declaration that the agreement was void and for the forfeiture and delivery to it of a deposit held by the respondent real estate agent Nucorp Realty Ltd. Brokerage.
The application was dismissed.
Achilles argued before the Court of Appeal that the application judge erred in finding that the revival of the respondent corporation under s. 241(5) of the Business Corporations Act, R.S.O. 1990, c. B.16 was retroactive in effect and that the agreement of purchase and sale was therefore enforceable.
The Court of Appeal considered its decision in Zangelo Investments Ltd. v. Glasford State Inc. (1988), 63 O.R. (2d) 542, in which it found that the revival provision in s. 240(4) of the predecessor Ontario Business Corporations Act, 1982, S.O. 1982, c. 4 was retroactive in effect. Blair J.A. endorsed the decision of Oyen J. in that case, concluding that "the only reasonable inference that can be drawn is that a dissolved company that is revived, is revived as of the date of dissolution..." The appellant submitted that Zangelo ought to be disregarded because it took the form of a short endorsement; the Court rejected this claim, finding that it was entitled to adopt the reasoning of the application judge and that its conclusion was clear.
The Court acknowledged that the language of s. 241(5) of the Business Corporations Act differs slightly from the provision in the earlier legislation, but found that the changes, specifically the words "shall be deemed for all purposes to have never been dissolved" in the current legislation make it even clearer that the provision is retroactive in effect. Moreover, an interpretation in favour of retroactive effect is consistent with the "curative purpose" of s. 241(5) of the Business Corporations Act. The Court also noted that none of the terms and conditions set out in the Certificate of Revival interferes with the retroactive nature of the revival of the respondent corporation.
The Court found that Swale Investments Ltd. v. National Bank of Greece (Canada) (1997), 37 B.L.R. (2d) 324 (Ont. S.C.), which was relied upon by the appellant, wrongly concluded that s. 241(5) is not retroactive in effect, rejecting the findings of Oyen J. which had been upheld on appeal. The Court noted that the conclusion was obiter, as no revival had taken place or had even been sought. Moreover, the appeal in Swale was dismissed on consent without a determination on its merits.
The Court held that its decision in Zangelo remains the law, and that s. 241(5) of the Business Corporations Act has a retroactive effect.
3. Knowles v. Lindstrom, 2014 ONCA 116 (Doherty, Goudge and Lauwers JJ.A.), February 13, 2014
A Canadian woman and an American man lived together in the United States. The dissolution of their relationship and subsequent litigation led to a dispute over jurisdiction and choice of law. In this decision, the Court of Appeal considered these questions.
The parties, who never married, lived together in Florida from 2002 to 2012. Knowles, a Canadian citizen who had lived in Toronto since their separation, brought an application in the Ontario Superior Court seeking spousal support under Part III of the Family Law Act, R.S.O. 1990, c. F.3, and a declaration that she was a beneficial owner of two Muskoka properties purchased by Lindstrom or his company, Canada Realty LLC, a Nevada corporation wholly owned and controlled by Lindstrom, while they were living together. Lindstrom, an American, responded with a motion seeking a stay of the application, submitting that the Ontario Superior Court had no jurisdiction over the claims and that if Ontario had jurisdiction, Florida was the forum conveniens. He also sought an order that, if the application proceeded in Ontario, Florida law should apply to the adjudication of the claims.
The parties' positions turned on the fact that under Florida law, Knowles had no claim for support because she and Lindstrom were never married.
The motion judge concluded that Ontario had jurisdiction and was the forum conveniens. He also held that Ontario law applied to the claims. Lindstrom appealed.
With no statutory provisions applicable to jurisdiction over the claims, the motion judge looked to the real and substantial connection test outlined in the seminal Club Resorts Ltd. v. Van Breda, 2012 SCC 717, [2012] 1 S.C.R. 572. He concluded that Ontario had jurisdiction over the case because there was a "real and substantial connection between the parties, issues and transactions in question" in the case and the province. He noted that the "presumptive factors establishing jurisdiction" are that Knowles' application involves a claim to ownership of Ontario land, a claim for damage suffered in Ontario and a claim for support by a party ordinarily resident in the province. In addition, although the couple's primary residence was in Florida, they lived for a significant portion of each year in Ontario, making Ontario a "real home" and rendering the couple ordinarily resident in Ontario as well as Florida.
Writing for the Court of Appeal, Doherty J.A. noted that while the determination of jurisdiction is a holistic exercise, a Van Breda analysis benefits from a consideration of each claim individually. With respect to Knowles' claim over the Muskoka property on the basis of work she did on the property resulting in Lindstrom's unjust enrichment, Doherty J.A. agreed with the motion judge that the location of the property in Ontario was a presumptive connecting factor. He emphasized: "If the subject of the claim is real property which is alleged to be the vehicle for the alleged unjust enrichment, I find it hard to think of any fact or factors that would provide a stronger presumptive connection than the location of the property within the jurisdiction." The location of the property in Ontario provided a clear link to the courts of Ontario.
The motion judge also found that the damage suffered by Knowles as a result of the unjust enrichment which, in his view, occurred in Ontario, also constituted a presumptive connecting factor. Doherty J.A. noted the difficulty in citing damages as a presumptive connecting factor in a claim of unjust enrichment, as the heart of the claim lies in the benefit to the defendant and not the damage suffered by the plaintiff. In any event, a single presumptive connecting factor is sufficient to ground jurisdiction under the Van Breda analysis. The location of the property was therefore sufficient to give Ontario jurisdiction over the claims.
Doherty J.A. nevertheless gave considerable attention to Lindstrom's challenge to the motion judge's finding that the couple was ordinarily resident in Ontario as well as Florida, and his conclusion that their Ontario residence constituted a presumptive connecting factor in respect of both the property and the support claims. Lindstrom's main submission was that the couple could have only one residence and that, as the motion judge himself recognized, their primary residence was in Florida. In order to justify that Ontario was the "ordinary residence" or "real home" of the couple, and therefore a presumptive connecting factor in accordance with Van Breda, the motion judge turned to the taxation case of Thomson v. Minister of National Revenue, [1946] S.C.R. 209, which held that a person may have more than one ordinary residence at a time. Doherty J.A. noted that there were similarities between the lavish lifestyle enjoyed by Knowles and Lindstrom and that of the taxpayer in Thomson and found that nothing in Thomson suggested limiting the court's analysis in that case to the taxation statute at bar. Doherty J.A. held that the definition of "ordinary residence" determined by the court in Thomson is consistent with the meaning of the phrase and "reflects the reality of the lifestyle that some people lead." He held that the record supported the motion judge's conclusion that Knowles and Lindstrom enjoyed that kind of lifestyle and were ordinarily resident in both Ontario and Florida.
With the Family Law Act silent on the issue of jurisdiction over the claim for spousal support, Doherty J.A. agreed with the motion judge's conclusion that he was not limited to the concept of primary or principal residence when determining jurisdiction over that claim. As Doherty J.A. explained, where there is no controlling legislation, the concept of ordinary residence as defined in Thomson is applicable to a party's connection to a jurisdiction, and is sufficient to constitute a presumptive connecting factor under Van Breda.
Turning to the question of forum conveniens, Doherty J.A. noted that the motion judge's finding that Lindstrom had failed to demonstrate that Florida was the forum conveniens was a matter of judicial discretion, afforded deference in the absence of an error in principle or material misapprehension of the evidence. Doherty J.A. explained that it was not sufficient to demonstrate that the Florida courts also have jurisdiction over the claims; Lindstrom also bears the burden of showing that it would be fairer and more efficient to adjudicate the claims in Florida than in Ontario.
Doherty J.A. noted that the motion judge referred to various factors relevant to the forum conveniens inquiry, including the fact that Knowles would have suffered a loss of juridical advantage if Florida was given jurisdiction over the claims, a factor deemed a relevant consideration by the Supreme Court in Amchem Products Inc. v. British Columbia (Workers' Compensation Board), [1993] 1 S.C.R. 897. He rejected Lindstrom's claim that the motion judge gave undue weight to this issue, finding that the motion judge's conclusion was made in the context of a review of several factors, most of which favoured Ontario and justified the determination that Lindstrom failed to demonstrate that Florida was the more appropriate forum.
Doherty J.A. likewise agreed with the motion judge that Lindstrom failed to meet the burden of showing that Ontario law should not apply to the claims. Lindstrom claimed that Florida law ought to apply to both the property-related claim and the support claim because Florida has the closest and most real connection to the issues, pointing to the fact that he and Knowles had their primary residence in Florida. Doherty J.A., however, found that the property-related claim was much more closely related to Ontario: not only is the property in Ontario, but the work done on the property by Knowles to ground the claim was done in Ontario and the enrichment flowed to Lindstrom in Ontario in the form of an increase in the value of the property. Doherty J.A. recognized that the argument for applying Ontario law to the support claim was a weaker one, but noted that the couple was ordinarily resident in Ontario for the latter half of their relationship, as well as the fact that Knowles lived in Ontario at the time of the application. Moreover, the two claims are closely connected, with the property claim potentially affecting the outcome of the support claim. The relationship between the claims was another reason for applying the same law - Ontario law - to both.<//p>
4. Reisman v. Reisman, 2014 ONCA 109 (Hoy A.C.J.O., Laskin and Tulloch JJ.A.), February 11, 2014
In this appeal, the Court considered the financial fallout of the breakdown of a traditional marriage.
Linda and Howard Reisman divorced after twenty years of marriage. They settled all issues concerning their children and litigated only two issues: whether an estate freeze undertaken by Howard's father in 1998 amounted to a fraudulent conveyance, and the amount and duration of spousal support. The trial judge dismissed Linda's claim that the estate freeze was a fraudulent conveyance and ordered Howard to pay Linda monthly spousal support of $4,500 for ten years and lump sum support of $119,956.34, but awarded costs against Linda in the amount of $250,000.
Linda appealed on several grounds.
Writing for the Court of Appeal, Laskin J.A. first considered Linda's submission that the trial judge erred in both the amount and duration of her support award, focusing on the goal of self-sufficiency and failing to take into account all of the considerations that go into an appropriate support order, notably that theirs was a traditional marriage during which she never held a full-time job outside the home. Although the support order was at the lower end of the Spousal Support Advisory Guidelines, Laskin J.A. opted not to interfere with the amount. He noted that the award must be considered together with the lump sum support order of $119,956.34, the equalization amount that Howard had overpaid in the interim domestic agreement and agreed to forego in return for paying lower monthly support. Taken together, Laskin J.A. found that Linda's effective monthly spousal support was in fact above the high end of the range established by the Guidelines for the Reismans' particular circumstances.
Laskin J.A. did, however, hold that it was unrealistic of the trial judge to impose a time limit of ten years on spousal support. Noting that the trial judge had emphasized Linda's failure to become self-sufficient, Laskin J.A. held that while she was correct to emphasize the importance of economic self-sufficiency in accordance with the Divorce Act, R.S.C. 1985 c. 3 (2nd Supp.), s. 15.2(6), promoting self-sufficiency ought not to be the only consideration that determines the duration of a support order. As the Court of Appeal held in Allaire v. Allaire (2003), 170 O.A.C. 72, "self-sufficiency is not a free-standing concept"; the court must also consider the recipient's age, skill set, education, and job prospects, in addition to the standard of living enjoyed by the parties prior to the breakdown of the marriage. Considering all of these factors, Laskin J.A. determined that spousal support should be indefinite which, he noted, is recommended by the Guidelines for marriages of twenty years or more.
Laskin J.A. next turned to the matter of the intent and effect of the estate freeze undertaken by Howard's father, Fred Reisman. Although Linda maintained her position on appeal that the transaction was a fraudulent conveyance, she primarily argued before the Court of Appeal that certain shares given to Howard on the estate freeze were improperly excluded from his net family property as a gift.
As part of the 1998 estate freeze, Howard received a Class B common share, which he claimed was a gift from his father and therefore excluded from his net family property. Linda agreed at trial that the share was a gift but later sought to retract that position. She claimed, essentially, that Howard went from owning approximately a fourteen percent interest in MRL, a real estate holding company which held income-producing properties, on the date of marriage, to owning a one-quarter interest after the estate freeze. Since 13.89% was deducted from Howard's net family property as a date of marriage asset, only 11.11% should be deducted as a gift. Allowing him to deduct 25% as a gift was a form of "double counting." Laskin J.A. rejected this submission, both due to Linda's initial admission in an agreed statement of facts that the Class B share was "acquired by gift" and her failure to allege otherwise in her pleadings, and because the record showed that the share was indeed a gift. Laskin J.A. held that treating the share as a gift and deducting it from net family property did not constitute double counting. Laskin J.A. also rejected Linda's submission that the trial judge's refusal to allow her to withdraw her initial position had the effect of denying her a fair trial, agreeing both with the trial judge's refusal and her reasons for it.
Linda reiterated her submission on appeal that the estate freeze was a fraudulent conveyance in violation of s. 2 of the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29. She claimed that the transaction was designed to reduce Howard's net family property in the event of a breakdown of their marriage. The trial judge dismissed Linda's claim, noting that she was not a creditor of Howard in 1998, when the estate freeze occurred, and finding, based on an affidavit of Fred Reisman, that the purpose of the conveyance was not to defeat a potential equalization claim.
Laskin J.A. rejected Linda's submission that she had standing to assert a claim under s. 2 of the FCA as an "other" person. He also dismissed her claim that the trial judge should not have relied on Fred Reisman's affidavit because that reliance denied her a fair trial as she was unable to cross-examine him. Laskin J.A. noted that Linda had opportunities to cross-examine Fred Reisman and declined them; moreover, she made no attempt to contradict the position of Howard and of Fred's physician that Fred, who suffered from Alzheimer's disease, was unable to testify at trial. Laskin J.A. concluded that Linda was not prejudiced by her inability to cross-examine Fred on his affidavit, which he noted was corroborated by another witness. Finally, he dismissed Linda's claim that the trial judge failed to take into account that one of the goals of the estate freeze was to take advantage of exclusions under the Family Law Act, deferring to the trial judge's conclusion that the estate freeze was a legitimate transaction undertaken by Fred Reisman to preserve the family's wealth. Laskin J.A. held that the trial judge was correct to dismiss Linda's claim that the estate freeze was a fraudulent conveyance.
The trial judge awarded Howard costs of $250,000, payable by Linda over 10 years, in equal monthly installments of $2,083.33. Linda challenged the amount of the costs ordered as well as the schedule of payments, arguing that the amount was excessive. Laskin J.A. rejected Linda's claim, noting that Howard made three offers to settle, each on terms more favourable to Linda than she obtained at trial. Laskin J.A. found that the trial judge correctly considered the cost factors in Rule 24 of the Family Law Rules before arriving at a figure which she deemed reasonable. There was no basis to interfere with her ruling. Laskin J.A. did, however, reduce the monthly amount Linda is required to pay to satisfy the award. Because the trial judge linked Linda's obligation to pay the costs award with her receipt of spousal support and because Laskin J.A. opted to set aside the ten-year limit on that support, he concluded that she should pay the costs award at a rate of $1,000 per month.
5. Sawdon Estate v. Sawdon, 2014 ONCA 101 (Hoy A.C.J.O., Gillese and Strathy JJ.A.), February 5, 2014
In the years leading up to his death in 2007, Arthur Sawdon transferred several bank accounts into joint accounts, with a right of survivorship, for himself and his sons Wayne and Stephen. He advised Wayne and Stephen that, on his death, the funds in the bank accounts were to be distributed equally among all of his five children. In this appeal, the Court of Appeal considered the decision of the Supreme Court in Pecore v. Pecore to determine whether the funds belonged to the estate, to Wayne and Stephen, or to all of the children.
Arthur's will, which failed to mention the bank accounts, provided that the Watch Tower Bible and Tract Society of Canada, a registered charity representing Jehovah's Witnesses, would receive the share of any child who died without issue, as well as the residue of his estate. After Arthur's death, when Wayne, the estate trustee, sought to pass accounts, a dispute arose between Watch Tower and Arthur's children. Watch Tower claimed that the funds in the bank accounts, in the amount of $1,076,000, formed part of the estate by way of resulting trust. Wayne and Stephen claimed that the funds were to be distributed equally among the five children, in accordance with their father's instructions.
Citing Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, the Supreme Court's most recent ruling on a survivor's entitlement to monies in a joint bank account, the trial judge noted that gratuitous transfers between a parent and an adult child are subject to the presumption of resulting trust in favour of the deceased parent's estate. After considering evidence of Arthur's intention at the time of the transfers, however, he found that that presumption had been rebutted. The trial judge concluded that the funds were not part of the estate and that Arthur's children were the beneficial owners of the bank accounts. He ordered that Watch Tower pay the estate trustee's trial costs on a partial indemnity basis but refused Wayne's request for an order that the estate indemnify him for the balance of his costs as estate trustee.
Watch Tower appealed. Wayne sought leave to appeal the costs order.
Writing for the Court of Appeal, Gillese J.A held that the trial judge correctly concluded that Arthur's children were beneficially entitled to the funds in the bank accounts, but arrived at the same conclusion by way of a different legal analysis. In Gillese J.A.'s view, when Arthur transferred the bank accounts into joint names with Wayne and Stephen, he created a legal trust, and legal title to the accounts immediately vested in the three men jointly. Based on the trial judge's findings, when Arthur, Wayne and Stephen jointly became the legal owners of the bank accounts, they did so on the understanding that on Arthur's death, Wayne and Stephen were to distribute the funds in the accounts equally among the five children. Gillese J.A. concluded that from the time the bank accounts were opened, those holding the legal title to them held the beneficial right of survivorship in trust for the children in equal shares.
Watch Tower also submitted on appeal that Arthur created a secret trust when he asked Wayne and Stephen to distribute the funds in the bank accounts to all of his children equally upon his death, and argued that the trial judge therefore erred in failing by apply the principles relating to secret trusts. Gillese J.A. noted that this issue was raised for the first time on appeal and found that none of the exceptional circumstances outlined in Perez (Litigation Guardian of) v. Salvation Army in Canada (1998), 42 O.R. (3d) 229 existed. She therefore declined to entertain the issue.
Turning to Wayne's cross-appeal as estate trustee, Gillese J.A. granted leave, finding that the trial judge erred in principle in refusing to declare that the estate trustee is entitled to be indemnified for his trial costs not recovered from Watch Tower. Citing the decision of the Court in McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435, (Ont. C.A.), she noted that the modern approach to costs in estates litigation is that unless the court finds that one or more relevant public policy considerations apply, it shall follow the costs rules that apply in civil litigation. In this case, a public policy consideration does apply, namely the need for the proper administration of the estate. Because the estate trustee acted reasonably and for the benefit of the estate, he was entitled to be indemnified by the estate for his trial costs. Gillese J.A. held that the trial judge also erred in finding that the litigation was of no benefit to the estate. In Gillese J.A.'s view, the estate benefitted from being properly administered, and that required the court's determination with respect to the ownership of the funds in the bank accounts.
Gillese J.A. went on to find that there was no problem with a blended costs order: as the losing party, Watch Tower was liable to pay the estate trustee's partial indemnity costs, while the estate must indemnify the estate trustee for his costs not recovered from Watch Tower. She noted that the modern approach to costs in estates litigation, which seeks to ensure that estates are not depleted through the costs of unnecessary litigation, supports the availability of such an approach.
http://lernersappeals.ca/netletters
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
