Law Times

Law timeS • September 10, 2012 three more years of minority government and Tim Hudak was on deck to quarter- back the off ence. While nothing much has changed in terms of the government, Hudak's job is I mier Dalton McGuinty was looking at n politics, like football, turnovers will cost you big time. Before last week' s byelections, Pre- now on the line. He' twice. MPP Elizabeth Witmer stepped down from the Kitchener-Waterloo seat she'd held s been tested and come up short — with a plurality of 3,828 votes last October, a scenario that made PC candidate Tracey Weiler the obvious heir to the throne in what has been Tory territory since 2003. Th e Liberal mechanics, however, ran some generic polling and found it was her name and reputation that attracted voters. Still, they mistakenly believed vot- ers would go for their party. Th ey were wrong. It turns out name recognition rules, a fact that allowed longtime school trustee Catherine Fife to come out of the backfi eld for the NDP to scoop the riding. Meanwhile, there was no surprise in Vaughan. It's a Liberal stronghold and Ste- Time for leaders to get back to business COMMENT ven Del Duca is an established party mechanic and former campaign manager. Th e result leaves the Liberal side of the house unchanged, while the NDP gains one seat and the Conservatives lose one. Th e man now on the rack Queen's Park in all of this is Hudak. With his second shot at the target, he missed. Losing a stronghold seat means his message and his leadership aren't gaining trac- tion with voters. He failed to swing a majority in the general election and he' tions. He'll have to spend time shoring up support for his leadership and may be gone soon as the party assassins close in. McGuinty, meanwhile, is still going to s fallen short again in two byelec- especially on fi scal issues, be- cause they know they're hang- ing by a thread and have to cut costs. Hudak, meanwhile, may be able to extract some concessions since the NDP isn't going to accept the idea of bypassing the collective bar- gaining process. Still, bringing the teachers Ian Harvey have to govern with an eye on each side of the house to stay in power. With un- certainty behind him, he now has to look ahead three years to the next general elec- tion and piece together a plan for the party to survive and have a feasible chance at forming another government. It wouldn't be a shocker if we started to see the Liberals lean more to the right, ships no longer count. If the so-called edu- cation premier can bring the hammer down on his friends, imagine what he might do to those whose cause he doesn't particularly care about. Next up are austerity packages for police and health-care workers and an end to perks like bankable sick days. One need only look at the quick settle- Past history, friendships, and partner- ment between College Employer Council and the Ontario Public Service Employees Union (OPSEU). Reading between the lines, it seems the parties fi gured sucking it up and signing a deal was a better plan than posturing and begging the province into line has fi red a warning shot at all other public service unions that the government has run out of money. to pony up more money. Th e NDP and the unions argue that raising revenues is a better path than cut- ting costs on the backs of the civil service, but their own research shows Ontarians pay the highest school fees, out-of-pocket health-care charges, and tuition in the country. Th eir solution, of course, is to raise income taxes. But that, too, cuts into the middle-class salaries of their union con- stituents while the perennial call to hike corporate tax rates hurts competitiveness at a time we can ill aff ord it. McGuinty' PAGE 7 hinges on whether the Liberals can de- liver the goods necessary to make their austerity budget projections work. Th e upshot is we're stuck with a minority gov- ernment. It' s political survival now ers to move forward and get back to the business of running this province. Th at, of course, means putting it back on a sta- ble fi nancial track. LT Ian Harvey has been a journalist for 35 years writing about a diverse range of is- sues including legal and political aff airs. His e-mail address is ianharvey@rogers.com. I BY KIMBERLY WHALEY & AVI DAHARY For Law Times DeLorenzo sends cautionary message to estate trustees u SPEAKER'S CORNER of care, a duty to act personally, and a duty to act in the benefi ciary' t has long been held that the estate trustee is entitled to legal fees reasonably expended from the estate of the deceased. An estate trustee' ies, the estate trustee must prepare a full accounting of the estate administration for the benefi ciaries and in some cases submit the estate accounts for court passing. In cases where estate trustees haven't breached their s best interests. As part of these fi duciary dut- s fi duciary obligations include a duty fi duciary duties, they are entitled to be indemnifi ed under s. 60(1) of the Trustee Act. It provides that a trustee may, without the institution of an action, apply to the Superior Court for the opinion, advice or direc- tion of the court on any question respecting the man- agement or administration of the trust property. Ab- sent fraud, wilful concealment or misrepresentation in obtaining the opinion, advice or direction of the court, trustees shall be deemed to have discharged their duty in the subject matter of the application. Th e court may rule otherwise if it deems there to be a breach or fi nds unreasonable conduct on the part of the estate trustee. Th is principle is refl ected in the cases of DeLorenzo v. Beresh and Craven v. Osidacz. Th e issue of concern in Craven was whether an es- tate trustee ought to be prohibited from paying litiga- tion costs out of estate funds, without court or bene- fi ciary approval, and prior to any resolution of the es- tate litigation or upon the passing of accounts. Th e estranged wife of the deceased, also the applicant reasonableness as follows: "Th e courts have long held that trustees are entitled to be indemnifi ed for all costs in- cluding legal costs which they have reasonably incurred. Reasonable expenses include the cost of an action reason- ably defended. . . . Insofar as such person does not recover his costs from any other person, he is entitled to take his costs out of the fund held by him unless the court orders otherwise; and the court can otherwise order only on the ground that he has acted unreasonably or in substance for his own benefi t, rather than for the benefi t of the fund. Nevertheless, the court in Cr aven noted that where Canada case of Geff en v. Goodman Estate. In Geff en, the Supreme Court considered the test of " an estate trustee and family are the benefi ciaries of the estate, the estate trustee' ent light. "In cases where the executor and close family members have a personal interest in the outcome of the litigation against a benefi ciary or person with an inter- est in the estate akin to a benefi ciary (this may include a creditor with a crystallized claim), it would be inequit- able to use the assets of an estate as a kind of ATM ma- chine from which withdrawals automatically fl ow to fund the litigation whether reasonable or not." Th e court opined that a determination as to whether s duty may be seen in a diff er- in the proceedings, contended that while an estate trustee may move for reimbursement of legal expenses from the estate at the resolution of the litigation and upon the pass- ing of accounts, he should not be entitled to unilaterally pay litigation costs out of the estate funds without the requisite approval. Hence, the applicant moved to com- pel the estate trustee to personally reimburse the estate for monies he had taken to pay his legal fees. In its analysis of the relevant legal principles, the court opined that when counsel is retained by an estate trustee, the lawyer is the solicitor to the trustee and not to the estate. Th e court also noted that estate trustees are "entitled, indeed, obliged to defend claims against the estate so long as the estate assets are expended reasonably" and not for their own benefi t. Whether an estate trustee has acted reasonably is to be determined by reference to the applicable case law such as the Supreme Court of odds with the decision in DeL orenzo, a similar case decided by the same judge in the same court approxi- mately two months prior and not referred to in the subsequent matter. DeL orenzo involved the will of the late Vincent An- s ruling in Cr aven is to some extent at s now up to the three lead- the solicitor for the fees incurred. Similarly, the court referred to the case of Cop- benefi ciaries, it was impermissible for the estate trust- ee to pay the litigation accounts from the estate funds. Th e court further relied on Co ppel for the proposition that the appropriate time to deal with legal fees paid out of the estate is on a passing of accounts. In its reasons, the court drew a distinction between pel v. Coppel Estate, for support for the principle that, without a court order or the consent of the the diff erent proceedings giving rise to legal costs in- curred on behalf of the estate trustee and how such costs ought to be treated. Th e executor and any benefi ciary properly attending and represented by a lawyer on a passing of accounts is awarded full reimbursement for their legal expenses from the estate. According to the court, these charges and ex- penses are normally awarded at the time of the audit. According to the court, this is to be contrasted with contentious or adversarial legal proceedings in which the general rule on costs applies in that it is the successful party that is awarded its costs. Th e court concluded that it was preferable that each expenditures made by an estate trustee are reasonable is best determined at the outcome of the litigation and ought to be determined on a passing of accounts. Th e court' of the parties bear their own costs until the litigation is completed. Th e court was of the view that it would be inequitable to permit the estate trustee to pay his legal costs out of the estate funds while requiring the applicants whose funds are tied up in the estate to bear their own legal costs while the litigation proceeds. In a harsh result, the court ordered the estate trustee to re- pay the estate all legal fees deducted from the date the payments were made out of the estate. Accordingly, the decision, for which leave to ap- thony DeLorenzo, the terms of which set up a trust for each of his grandchildren. At the time the motion was decided, there were three proceedings before the court related to the estate. Th roughout the course of the pro- ceedings, the estate trustee used estate funds to pay all of the legal fees he incurred with respect to the various proceedings. As in Cra ven, the question that ultim- ately arose was whether it was appropriate for an estate trustee to use estate funds to pay legal fees incurred in connection with litigation between himself and the benefi ciaries of the estate. As in Crav en, the court noted that counsel retained by an estate trustee is counsel to that person. Th e corol- lary of this is that an estate trustee is personally liable to www.lawtimesnews.com peal on this point has been granted, seems to be a dif- fi cult pill to swallow for an acting estate trustee. If this decision on point is correct, what does it do to the basic principles upon which the offi ce of the execu- tor has been acting for centuries? Moreover, how is it to be reconciled with Geff en? Most importantly, who would ever accept the role of estate trustee if this truly were the legal premise upon which the offi ce would be founded? No would-be executor or estate trustee would want to be in the position of personally tak- ing on the legal costs associated with the administra- tion and litigation in relation to an estate, particularly when they have no fi nancial interest in it other than compensation and perhaps solicitor' s fees. LT Kimberly Whaley is founder and principal of Whaley Estate Litigation and Avi Dahary is owner of AccounTrust Business Services Inc.

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