Law Times

PAGE 10 FOCUS OcTOber 24, 2011 • Law Times Decision shifts onus to beneficiaries: lawyer Daughter stymied in dispute over former cabinet minister's estate BY JULIUS MELNITZER For Law Times A new Superior Court decision improperly shifts the onus to bene- fi ciaries who allege they haven't received a proper distribution of an estate, the lawyer for the plaintiff in the case says. "Th is case sets a really high bar for people seeking to recover what was due to them because it puts the burden of proof on the benefi ciary instead of recognizing the executor's duty to account," says Hull & Hull LLP's David Smith, who represented Norma Irene Jacques in the case against the Canada Trust Co. Th at mat- ter is currently under appeal. Th e case centred around the will of Norman Hipel, a for- mer Ontario cabinet minister who died in 1953. He left a life interest in his estate to his wife Olive with the remainder to be divided equally between his children, George and Norma. Olive died in 1978. In an action commenced in 2005, Jacques claimed she never re- ceived her share. Olive and Waterloo Trust Co., which later merged with Canada Trust, were co-executors of the father's estate. By the time the action began, Waterloo's fi le had been lost. Court records showed that no formal passing of accounts had occurred. Justice Michael Parayeski ruled that Jacques had in fact not received her share and that Canada Trust was liable to her for failing to make a proper distribution. But Ross Earnshaw of Gowl- ing Lafl eur Henderson LLP's Waterloo, Ont., offi ce argued that the claim was statute- barred. Smith countered that Jacques discovered her claim in June 2004 when her daughter ascertained that it existed and therefore the action had begun in time under the terms of On- tario's new Limitations Act. It came into force on Jan. 1, 2004. Parayeski, however, ruled that the new act didn't apply because the documentary evi- dence in the case showed that the claim could reasonably have been discovered before the statute came into force. "Th e defence asserts that Norma could have learned all that was necessary within a year of Olive's death, and I accept that as reasonable," Parayeski concluded. "Accordingly, the limitation period began to run in March 1979 and thus expired six years later in March of 1985." As well, the equitable doc- trine of laches operated to bar Jacques' claim. Th e fi rst branch of the doctrine inquired wheth- er it was reasonable for the plaintiff to be ignorant of her legal rights given her knowledge of the underlying facts relevant to a possible legal claim. "I have already found the plaintiff had, by means of her having read and executed the deeds referred to above, knowl- edge that she was a remainder- man in respect of one half of her father's estate," Parayeski noted. "Reasonable inquiry any time after 1955 and or 1956 could have easily led to the particulars she now says she was missing until her daughter undertook investigation in 2004." Finally, the second branch of the laches doctrine, which focuses on prejudice to the defendant, also applied to bar Jacques' claim. In this regard, Earnshaw argued that Canada Trust had been prejudiced in its defence because of the loss of Waterloo Trust's fi le, other documents, and the death of multiple witnesses. But Smith submitted that Canada Trust was responsible for the loss of the estate fi le. He also suggested that the loss was an attempt to cover up Water- loo Trust's alleged negligence. Parayeski didn't see it that way. PRACTICAL INSIGHT ON HANDLING WITNESSES EFFECTIVELY NEW EDITION THE PORTABLE GUIDE TO WITNESSES, 2ND EDITION PETER SANKOFF, B.A., J.D., LL.M. Gain confidence in evaluating witness evidence with this time-saving resource that you can turn to in a courtroom. The Portable Guide to Witnesses, 2nd Edition pulls together all the law governing witnesses, giving you the understanding and insight you need to prepare, examine and cross-examine witnesses in all manner of judicial proceedings. This compact reference manual and practice guide for court appearances is cross-referenced to the classic work in the field, Witnesses, by Alan W. Mewett and Peter Sankoff. WHAT'S NEW IN THIS EDITION • Major changes in the Rules of Civil Procedure for British Columbia, Nova Scotia, Alberta and Ontario • A new section covering Expert Witnesses and the requirement for independence • A new section covering the rule against Prior Consistent Statements, including the new exception for statements made by a defendant upon arrest ORDER # 983702-65996 $105 Softcover approx. 200 pages August 2011 978-0-7798-3702-1 Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. • Major updates to the rules covering the exclusion of witnesses, including those involving the parties in a civil case • Coverage of recent Supreme Court and leading appellate decisions pertaining to the law of witnesses, including: – R. v. Prokofiew (2010, Ont. C.A.) – Kent v. Kent (2010, N.L.C.A.) – R. v. National Post (2010, S.C.C.) – R. v. Abdullah (2010, Man. C.A.) – R. v. Abbey (2009, Ont. C.A.) – R. v. Ellard (2009, S.C.C.) "Files go missing from time to time in any business or profession," he wrote. "Some- times, they do so quite inno- cently. Other times, they are indeed disposed of to eliminate damning evidence. Th e plain- tiff 's cynicism in respect of the loss of the fi le, however reason- able it might appear to her in the context of this action, does not constitute evidence that the fi le was deliberately lost." At the same time, other fi les had gone missing and impor- tant witnesses had died. Th e plaintiff herself had suff ered a stroke that had impaired her memory and made her subject to suggestion. "Under all of these circum- stances, I fi nd that indeed the delay in bringing this case has created or permitted a situation to arise which it would be un- just to disturb," Parayeski ruled. "Th e plaintiff 's claim is barred under the second branch of the doctrine of laches as well." Nor could the plaintiff rely on the doctrine of fraudulent concealment. Th at doctrine states that a court won't invoke laches or toll a limitation peri- od when a defendant had a spe- cial relationship with the plain- tiff and was guilty of wilful or conscious wrongdoing and such actions were unknown to the other side due to knowing or reckless concealment. Clearly, Waterloo Trust had a special relationship with Norma in its capacity as es- tate executor. But the evidence didn't establish either con- scious wrongdoing or reckless concealment. "Even if the term 'fraudulent' is to be given a broad interpre- tation in the context of consid- ering this doctrine, the plaintiff has not convinced me that the defendant has engaged in wil- ful or conscious wrongdoing," Parayeski wrote. "What she al- leges comes to negligence in the administration of the estate, perhaps even very serious negli- gence, but that is not enough. None of the cases she cites equates negligence with wilful and conscious wrongdoing. " Smith maintains that Pa- rayeski's reasoning improperly shifts the burden of proof. "Th e reason this is such an AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 important case is because it represents a departure from the long-standing principle that a fi - duciary has a duty to account," he says. "While it's true that busi- nesses may lose fi les from time to time, a trust company is in a diff erent position as the name of the business implies. Also, had Waterloo Trust fulfi lled its duty to pass the accounts, there would have been a clear record of ac- counting to my client." Earnshaw tells Law Times he can't comment as the case is still before the courts. www.lawtimesnews.com

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• Extreme Delay
• Polite Affair
• Focus On Trusts & Estates Law