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Estates - Temporal Considerations. Palichuk v. Palichuk
In Palichuk v. Palichuk (Ont CA, 2023) the Court of Appeal considered when, in relation to the death or incapacity of a testator or settlor, testamentary instruments or trusts could be subject to RCP 14.05(3)(a) "opinion, advice or direction of the court":[62] At the same time, I agree with the submissions of Nina’s counsel that, terminology aside, the application judge’s broader concern was about engaging in an academic or hypothetical exercise because Nina, having been found capable, could change all the impugned documents. Nina could make the changes to revoke any or all impugned instruments in the middle of that trial, resulting in a waste of judicial time and resources. It would also put the litigants to unnecessary expense. The application judge cited cases where this concern has been expressed: see Re Skinner, 1970 CanLII 360 (ON SC), [1970] 3 O.R. 35 (H.C.J.), at pp. 38-40, and Furfaro v. Furfaro (1986), 22 E.T.R. 241, at pp. 247-48.
[63] Similarly, in Brian A. Schnurr, Estate Litigation, loose-leaf, 2nd ed., vol. 2, (Toronto: Thomson Reuters Canada Limited, 2021), at c. 12.3, the author identified two types of questions that should not be entertained in this context:One type relates to matters of an academic or hypothetical nature. The court will refuse to answer questions in the abstract. The court will only answer questions that apply to the facts of a particular case.
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The other type of question that should not be put to the court is one that may or may not be a problem depending upon the happening of future events. In cases of this nature, the court will refuse to proceed with the action.[4] These principles apply to this case.
[64] This brings me back to the jurisdictional basis upon which this aspect of Linda’s application proceeded – r. 14.5(3)(a). This rule provides:14.5(3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,
(a) the opinion, advice or direction of the court on a question affecting the rights of a person in respect of the administration of the estate of a deceased person or the execution of a trust. [Emphasis added.] This is the only rule to employ the language “opinion, advice or direction.”
[65] Linda sought the “opinion, advice or direction” on the validity of all the impugned instruments. However, the rule does not contemplate the court providing an “opinion, advice or direction” on the will of a living person, the granting of a power of attorney, or the settling of a trust.
[66] More generally, the courts do not entertain requests for its opinion, advice or direction. In 1472292 Ontario Inc. (Rosen Express) v. Northbridge General Insurance Company, 2019 ONCA 753, 96 C.C.L.I. (5th) 1, the court considered an appeal from a decision refusing to make a declaration about rights under an insurance policy. In dismissing the appeal, the court referred to s. 97 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, which empowers the court of appeal, superior court, and the small claims court to make binding declarations of rights. The application judge refused to do so. In upholding this decision, Feldman J.A. wrote, at para. 22:[A declaration of right] is not to be given as an opinion on a hypothetical set of facts, or as an academic exercise to settle what may happen in the future… At p. 26, Riddell J.A. quoted from Curtis v. Sheffield (1882), 21 Ch. D. 1, at pp. 3-4, where Jessel M.R. stated:Now it is true that it is not the practice of the Court, and was not the practice of the Court of Chancery, to decide as to future rights, but to wait until the event has happened, unless a present right depends on the decisions, or there are some other special circumstances to satisfy the Court that it is desirable at once to decide on the future rights. [67] Returning to this case and the application of r. 14.5(3)(a), I accept that determining the validity of a will depends upon a future contingency – the testator’s death. The Succession Law Reform Act, R.S.O., 1990, c. S. 26 clearly states at s. 22 that a will speaks from death:22 Except when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to,
(a) the property of the testator; and
(b) the right, chose in action, equitable estate or interest, right to insurance proceeds or compensation, or mortgage, charge or other security interest of the testator under subsection 20 (2). [68] In the case of Duke of Marlborough v. Lord Godlophin (1750), Ves. Sen. 61, 28 E.R. 41 (H.C. of Ch.), Lord Hardwicke L.C. remarked that the testamentary document of a living person is nothing more than a piece of waste paper, at p. 50: “…[T]he law says, that a testamentary act is only inchoate during the life of the testator, from whose death only it receives perfection: being till then ambulatory and mutable, vesting nothing, like a piece of waste paper.” This decision has been cited in other cases for the proposition that a will only speaks from the moment of death: see Y.P. v. M.L.S., 2006 MBCA 32, 205 Man R (2d) 20, at para. 19; S.A. (Trustee of) v. M.S., 2005 ABQB 549, 18 E.T.R. (3d) 1 at para. 28.
[69] There are a couple of Superior Court of Justice decisions that involve a review of the validity of a trust or will during the grantor or testator’s lifetime. See, e.g. Brandon v. Brandon, [2001] O.J. No. 2986, which was upheld by this court in brief reasons, see Brandon v. Brandon, [2003] O.J. No. 4593, and Rubner v. Bistricer, 2018 ONSC 1934, 36 E.T.R. (4th) 79. Neither case involved a direct challenge to the trust or to the will. Instead, the question of the validity of these instruments was incidental to another dispute. The Brandon case was primarily an action to enforce a mortgage, with a counterclaim to discharge the mortgage and declare an inter vivos trust invalid due to undue influence. In Rubner, the validity of a will was directly relevant to the current management of property by joint attorneys for property for the incapable person.
[70] Another Superior Court of Justice decision, Dempster v. Dempster, 2008 CanLII 2747 (Ont. S.C), cites Brandon in suggesting at para. 9. that the law in Ontario “may well be moving towards” permitting claims of undue influence where a testator remains alive. Given the incidental nature of the validity issue in Brandon, I disagree with this portent. I also disagree with the suggestion that Cullity J.’s comment at para. 28 of Stern v. Stern, (2003) 49 E.T.R. (2d) 129 (Ont. S.C), is intended to open the door to will challenges during the testator’s life:The court should not, I think, close its eyes to the fact that litigation among expectant heirs is no longer deferred as a matter of course until the death of an incapable person. While, in law, the beneficiaries under a will, or an intestacy, of an elderly incapable person obtain no interest in that person's property until his, or her, death, the reality is that very often their expectant interests can only be defeated by the disappearance, or dissipation, of such property before the death. I read this quote consistently with the two cases discussed above: litigation among expectant heirs may occur before death when a present dispute comes before the court. Practically, there will be some cases in which the validity of a will, trust or transfer incidentally comes into play. This does not mean that it is either necessary or desirable for the law to permit direct challenges to these instruments during the grantor or testator’s life.
[71] To the contrary, there are strong public policy reasons not to permit a challenge to a will prior to the death of a testator. A testator may change their will as often as they like. It is entirely unknown how much, if any, money or property there will be left to dispute until the testator dies. It cannot be known if any of the beneficiaries will have predeceased the testator. Thus, the common law insists upon the death of the testator before litigation. Otherwise, the courts would be inundated with litigation that is hypothetical during the lifetime of the testator, with the potential for re-litigation after their death.
[72] The application judge was aware of the problems associated with considering the validity of the will and the property transfer in the circumstances. As he said at para. 126 of his reasons:It is less obvious that I need to assess Nina’s testamentary capacity or her capacity to transfer the Acton property to Susan, when Nina is alive and these instruments are executory. However, if Nina did not have the requisite capacity, and if she was not expected to regain capacity, it might be open to Linda to challenge the validity of the Will at this time. In that case, the issue of the validity of the Will and property transfer might not be premature or hypothetical. Nonetheless, although the application judge refused to consider undue influence in relation to these instruments, he did determine Nina’s capacity.
[73] The application judge should not have provided his “opinion, advice or direction” on either basis because there is every possibility that Nina may decide to reorganize her affairs. As Dr. Shulman reported in his assessment report, Nina said that her will was not “written in stone”. Nina said she might change it if Linda treats her better.
[74] As for the transfer of the Acton property, Susan has no beneficial interest in the property. She simply holds it in trust for Nina. Even absent the trust agreement, since the transfer was gratuitous, the law presumes that Susan holds the property in trust for Nina. In Foley v. McIntyre, 2015 ONCA 382, 125 O.R. (3d) 721, Juriansz J.A. said, at para. 26: “Equity presumes bargains, not gifts. Thus, when a parent gratuitously transfers property to an adult child, the law presumes that the child holds the property in a resulting trust for the parent: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at para. 36”.
[75] For all these reasons, the application judge should not have provided his “opinion, advice, and direction” on the validity of the transfer and settlement of the trust as part of Nina’s estate planning. As the application judge said, at para. 161: “…the transfer of the Acton property might properly be treated as testamentary. Because Susan is a bare trustee, she will derive no benefit from the transaction until Nina dies.”
[76] As for the powers of attorney, again the question of undue influence is premature.[5] Counsel did not point us to any existing cases in which the question of undue influence was determined while the grantor was both alive and capable. The two cases referred to in Linda’s factum to suggest that the court may consider undue influence to undermine the validity of a document or transfer in the face of capacity: Geffen v. Goodman Estate, 1991 CanLII 69 (SCC), [1991] 2 S.C.R. 353 and O’Meara v. Miller, 2021 ONSC 5919, both involved estate disputes after the grantor’s death. There is nothing on the facts of this case that would suggest expanding the law.
[77] I would also add that, if Susan begins to act under the authority of either power of attorney document, she will be held to exacting standards. A person acting under a power of attorney for property is a fiduciary whose powers and duties must be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit: SDA, ss. 32(1) and 38(1). There was no evidence that Susan was acting under the authority of the continuing power of attorney at the time of the application.
[78] Similarly, the powers and duties of an attorney for personal care must be exercised diligently and in good faith according to the incapable person’s best interests: SDA, ss. 66(1), (4) and 67. Susan is not authorized to act on this power of attorney while Nina remains capable of making her own personal care decisions: SDA, s. 49.
[79] In conclusion, the application judge did not err by failing to consider the issue of undue influence as it related to the impugned instruments. Where the grantor was found capable at the time of the application, it would have involved delving into a hypothetical or abstract inquiry, resulting in the waste of judicial resources, and at great expense to the parties. For these same reasons, the application judge’s inquiry into whether Nina was capable at the time that she executed the impugned instruments was also unnecessary.
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