Saskatchewan Estate Litigation Update: Martin v Martin, 2022 SKCA 79

The recent Saskatchewan Queen’s Bench decision in Peters (Estate) (Re), 2022 SKQB 186 prohibits the practice of altering an affidavit without actually re-swearing it.

Factual background:

The background facts in Peters can be described as follows:

  1. Antonia Peters died on March 1, 2022;
  2. She left a Will dated September 17, 2007. In that Will she named her husband, S. Frederick Peters, as executor and sole beneficiary of her estate;
  3. The Will provided that should her husband predecease Antonia, then two of her children (Edie Louise Nelson and Wally David Peters) would act as her executors;
  4. Her estate was then given to her children and grandchildren as well as two charities. There is nothing controversial about the Will itself;
  5. The initial application for grant of probate was filed on June 2, 2022;
  6. By fiat dated June 15, 2022, the Court rejected the application. The Court noted that the Will had named the testatrix’s husband as executor and that if he had predeceased her, then proof of the husband’s death was required under Rule 16-10 of The Queen’s Bench Rules;
  7. As well, what should be paragraph 4 of the probate application originally filed, had stated all beneficiaries named in the Will but did not list the husband as a beneficiary. The Court noted that it appeared that the husband had predeceased the testatrix. This reality required revision to the material;
  8. On July 25, 2022, a representative of the office of the executors’ solicitor removed the application, affidavits and Will to have the material corrected. Subsequently, revised and additional material was filed;
  9. The application and supporting affidavits were later refiled. A change was made only to the application form to read that all named beneficiaries had survived the deceased “except for S. Frederick Peters, who passed away on January 20, 2016”. Previously, on the initial filing, paragraph 4 had read that all named beneficiaries had survived the deceased;
  10. The Court found it problematic, however, that the executors’ affidavits were not re-sworn. What appeared to have occurred was that a new page containing a revised paragraph 4 was “slip-sheeted” into the material;
  11. That is, instead of the entire affidavit (and all of its pages) being re-sworn, the single erroneous page was revised and replaced after the affidavit had already been sworn before the deponents;
  12. Thus, the Court observed that the lack of a re-sworn affidavit meant that neither executor has verified under oath the revised, current content of the probate application.
Guidance offered by Peters:

The Court in Peters noted that the practice of slip-sheeting was being used more and more. However, such a practice was not consistent with the purpose of requiring a sworn affidavit from an executor who applies for probate.

Such an affidavit is not just a procedural hoop through which an applicant must leap. Rather, it verifies under oath the truth of the contents filed by the executor. The Court relies on these contents to be true, and the affidavit is the mechanism to verify that truth (as otherwise, a false sworn affidavit can lead to legal consequences, which incentivizes the deponent to be accurate).

The affidavit essentially takes the place of the deponent showing up in court, being affirmed or sworn, and testifying to the veracity of the application documents.

The “slip-sheeting” process entirely defeats the purpose of the affidavits. The two deponents of the affidavits in Peters could not have verified under oath the ultimate contents of the application (in its present form) when they first swore the affidavit in April.  This is because at the very moment that they had first sworn the original affidavits, the later slip sheeted pages were of course not yet in the affidavits.

Conclusion:

Ultimately in Peters, the court did not grant the application in the current form. The Court required that the executors refile fully sworn new affidavits.

Peters thus reminds us that affidavit exhibits need someone to identify and vouch for them. If a lawyer wants to change the content of an already sworn affidavit, the lawyer must have the client re-swear the affidavit in its final form.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

Saskatchewan Estate Litigation Update: Martin v Martin, 2022 SKCA 79

The recent Saskatchewan Court of Appeal decision in Martin v Martin, 2022 SKCA 79 offers a reminder of the litigation which can ensue when a person puts another family member on title, and a dispute later arises as to whether that person holds beneficial title, or, instead is merely on title as a trustee.

Martin reminds us that such disputes can be best avoided if all parties first sign a written agreement, at the time of the transfer, to document the parties’ intentions.

Overview:

Here, Richard Martin, the son of Martha Martin and Kenneth Martin, transferred title to his home into joint title with his parents, with rights of survivorship. For various reasons, Richard’s parents grew estranged from Richard, and they later applied for partition and sale of the property. Partition means that the property would be sold, and each person on title would be given a share of the sale proceeds (generally an equal division, unless there is a basis to order unequal division).

Richard argued in effect that his parents were on title as mere trustees, and Richard was the sole beneficial owner of the land. Thus, a trial was required to determine which side was correct.

Following a three-day trial, a Court of Queen’s Bench judge made an order directing the sale of the property, against Richard’s protests: Martin v Martin2020 SKQB 272.

Richard chose to appeal from that decision. Richard said that the trial judge committed errors in his fact-finding and placed too much weight on his mother’s evidence, which, he argues, was patently unreliable.

Factual background:

The factual background can be summarized below:

  1. In 1997, Richard purchased property located 20 km northwest of Saskatoon. Title to that property was initially registered in his sole name, but, two years later, he added his wife to the title and moved an old Eaton’s house onto the property;
  2. Richard intended to make renovations to the house. Richard began his renovation project in 2000, aided by his father, Kenneth, who was a skilled carpenter;
  3. Richard and his wife separated in 2001. When his wife assigned into bankruptcy shortly thereafter, the Credit Union demanded repayment of the construction loan. The Credit Union was prepared to reinstate the mortgage, provided Richard’s parents agreed to assume it and to replace Richard’s wife on the title;
  4. To achieve that end, and as part of Richard’s divorce settlement with his wife, Kenneth and Martha signed a loan agreement with the Credit Union, advanced $8,000 to Richard to enable him to settle his family property claim, and agreed to a transfer of title to their names and Richard’s as joint owners;
  5. The mortgage balance at the time of this transfer was $160,249, with the property (including the house) valued at $190,000. While the parties agreed that Richard had received $8,000 from his mother, they differed on the source of those funds, with Richard maintaining the funds were generated from the sale of some of his equipment;
  6. No agreement or memorandum was prepared at the time of the transfer to document the parties’ intentions or, contrary to Richard’s assertion at trial, to reflect that his parents only held legal title in trust for him;
  7. There was evidence from Bruce McDonald, who was Richard’s lawyer at the time of transfer. Mr. McDonald testified that title was transferred from Richard and his ex-wife’s names into the joint names of Richard and his parents because Richard had expressed concerns over the possibility that he would be required to divide the equity in the property with any future spouse in the event of his remarriage;
  8. Richard however testified that he had instructed his lawyer to transfer the property into joint names for estate planning purposes;
  9. As noted, renovations to the house commenced in 2000. It was undisputed at trial that Kenneth had provided considerable assistance to Richard over the years in connection with the renovation project. While the parties differed on how much time Kenneth had devoted to the project, Richard was prepared to concede that it was around 3,000 hours;
  10. The relationship between Richard and his parents broke down in or around 2010 over a financial dispute relating to a family-run towing business;
  11. Kenneth passed away in 2012. Martha is the executor of his  Shortly before Kenneth’s death, he and Martha had commenced an action against Richard alleging “a joint investment in the Land and a business” in which they had made substantial payments towards the cost, upkeep and renovations to Richard’s house;
  12. By way of relief, Kenneth and Martha sought an order for the sale of the property and a division of the proceeds “according to their respective interests” or, alternatively, for partition of the property;
  13. Richard filed a statement of defence in which he denied that:
  1. Martha and Kenneth had obtained title to the property for investment purposes;
  2. Martha and Kenneth had paid for the materials for the property;
  3. Kenneth had worked on his house to the extent asserted in the statement of claim (approximately 13,000 hours); and
  4. His parents had made payments towards the mortgage, utilities or taxes. According to Richard, all of those payments came from a joint bank account that he held with his mother, and the deposits into that account had been generated from income derived from his business
Handwritten ledgers maintained by Martha:

Martha testified on her own behalf at trial and in her capacity as the executor of Kenneth’s estate. She tendered five handwritten ledgers as evidence of how she had documented the various advances she and Kenneth made to Richard over the years, along with expenses they had personally incurred on his behalf. The ledgers included items such as mortgage payments, but also referenced payments related to Richard’s tow-truck business. However, the trial judge found the ledgers to be unclear with regard to how much money Richard allegedly owed his parents. The trial judge remarked on how Martha was uncertain about many of the entries.

Richard in turn argued that he had put approximately $450,000 of his own money into the property. However, the trial judge rejected Richard’s testimony about his alleged financial contributions to the property. However, the trial judge went on to find that it was “impossible from the evidence presented to determine the absolute or relative financial contribution made by Richard on the one hand and Kenneth and Martha on the other to the Land” (at para 24 of the trial decision).

Decision of the Court of Queen’s Bench:

The trial judge ruled against Richard, and found that the circumstances all pointed to an intention on Richard’s part to convey a beneficial interest in the property to his parents. Thus, his parents were entitled to seek partition.

While the trial judge accepted that the sale of the property would cause Richard an inconvenience, particularly if he were forced to move, he nonetheless found this reason was not one recognized at law as a basis to refuse an application for partition or sale. He concluded by saying that “[t]here is nothing in the factual situation of this case that overrides the direction of the Court that a partition shall be ordered” (at para 33).

The trial judge also addressed the issue of the quantification of Richard’s and Martha’s respective interests in the property following Kenneth’s death. The trial judge noted that Kenneth’s share would devolve equally in Martha and Richard, “resulting in them each owning a one-half interest in the property …” (at para 43). That said, the trial judge determined that where a party commences legal proceedings for partition prior to death, the joint tenancy is severed on the commencement of that action, and the estate is entitled to proceed with that action after the death of the party. The trial judge concluded, as such, Kenneth’s estate in its own right, but also Martha and Richard, were each determined to be the owner of an undivided one-third interest in the Land (at para 43).

Based on these findings, the trial judge ordered severance of the joint tenancy. In the event Richard did not purchase the remaining two-thirds interest held by Martha and the estate on an agreed upon or court-ordered price, the property would be listed for sale.

Issues on appeal:

Richard did not ground his appeal in an error of law, nor did he take issue with the trial judge’s crucial findings that:

  1. A trust was not created;
  2. Legal and beneficial title vested in all three parties;
  3. The joint tenancy was severed at the commencement of his parents’ legal proceedings;
  4. His parents were not motivated by a malicious or a vexatious intent designed to oppress him; and
  5. There was no equitable reason to depart from dividing the sale proceeds in proportion to ownership.

Instead, Richard’s grounds of appeal, could be distilled to the following:

  1. Was Martha an unreliable witness and, if so, did the trial judge err in accepting her evidence about financial contributions to the property as alleged in her statement of claim?
  2. Did the trial judge err in rejecting Richard’s evidence in that regard?
  3. Did the trial judge err in not dividing the sale proceeds unequally in Richard’s favour?
Decision of the Court of Appeal:

The Court of Appeal dismissed Richard’s appeal. Its reasons can be distilled to the below.

First, Richard’s core arguments directly challenged the trial judge’s credibility and reliability findings and, most pointedly, took aim at the reliability of Martha’s testimony, the weight assigned to her evidence, and the rejection of his evidence in the face of an alleged patently unreliable witness.

However, credibility and reliability findings are findings of fact. For that reason, the standard of appellate review for such matters is highly deferential. A determination of the weight to be assigned to the evidence is also a matter for the trier of fact: “it is not the role of appellate courts to second-guess the weight to be assigned to the various items of evidence”.

Moreover, the trial judge was entitled to rely on some of Martha’s evidence, but not rely on other parts of it. It was true that the trial judge concluded he could not put any weight on Martha’s ledgers and notebooks or on her testimony about the specific entries in them to determine the quantificationof the amount of money she and Kenneth had put into the property and Richard’s house.

That determination, however, did not preclude him from finding that Martha’s evidence was sufficiently reliable with regard to her overall assertion that she and Kenneth had made financial contributions toward the renovations and upkeep of Richard’s house. The fact that the trial judge found he could not rely on her documentary evidence to quantifythe precise contributions they had made over the years did not mean that he had to reject her evidence outright.

Put another way, the trial judge was satisfied that Martha’s core allegation – that she and Kenneth had financially assisted Richard with the renovations to his house and to its upkeep – was reliable. 

For Richard to succeed on his appeal, he had to do more than simply disagree with the trial judge’s credibility and reliability findings. Richard had to point to the mishandling of specific parts of the evidence that reveal a palpable error and then show how that error affected the outcome. Richard did not do that.

The judge’s failure to order unequal distribution:

Richard also appealed on the basis that the trial judge had wrongly failed to order an unequal division of the sale proceeds.

The Court of Appeal however agreed with the decision of the trial judge. Martha and Kenneth were on title as co-owners in joint tenancy. On the face of it, they were entitled to apply for partition and sale, regardless of whether they had made financial or in-kind labour contributions.

Moreover, as per the facts found by the trial judge, Richard had not demonstrated any basis for an unequal division of the sale proceeds in his favour. Richard had not shown any overriding error in these factual conclusions by the trial judge.

Conclusion:

As the Court in Martin v Martin, 2022 SKCA 79 observed, Saskatchewan case law is replete with situations where a parent gratuitously transfers real property into joint title with an adult child but later changes their mind about the arrangement. The reality is that such a decision is legally difficult to undo.

Martin reminds us that any person who puts anyone else on title, without receiving value in exchange, should take care to speak first with a lawyer about the consequences of doing so. Any such person should anticipate what would happen if they later have a falling out with the person who is going on title. A lawyer can help first advise as to what paperwork should be executed by all sides before the transfer, to later prove what the real intention is behind the transfer, and who is the true beneficial owner.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

Case Commentary: Law Society of Saskatchewan v Abrametz, 2022 SCC 29

In a much-anticipated decision for professional regulators, the Supreme Court of Canada has released its decision in the case of Law Society of Saskatchewan v Abrametz, 2022 SCC 29.

For those working in the professional disciplinary realm, the Saskatchewan Court of Appeal’s decision in this matter was rather shocking. The Court of Appeal stayed the disbarment of Mr. Abrametz because of delay in the investigation and hearing of the professional disciplinary case.

In this recent decision, the Supreme Court of Canada overturned the Court of Appeal’s stay of the penalty and found that the delay in investigation and the hearing process did not amount to an abuse of process.

Facts:

In the original hearing, the discipline committee found that Mr. Abrametz had:

  1. Issued cheques to clients that were then endorsed by the client and cashed by Mr. Abrametz;
  2. Issued three cheques to a fictitious person, endorsed that false name on the cheques and cashed them; and
  3. Loaned (or advanced) money to clients, charging them a flat 30 percent fee of the amount advanced as well as a 30 percent contingency fee and interest.

The investigation was commenced in 2012. The investigation was complex and involved significant work from the Law Society’s auditor.

Ultimately, the discipline hearing took place on various dates between May and September 2017. A decision was rendered on January 10, 2018 finding Mr. Abrametz guilty of conduct unbecoming a lawyer.

After the decision was rendered but prior to a penalty hearing, Mr. Abrametz applied for a stay of proceedings on the basis that the time taken by the Law Society to investigate and decide his case constituted an abuse of process. The stay application was dismissed on November 9, 2018.

On January 20, 2019, the penalty decision was rendered which ordered that Mr. Abrametz be disbarred without a right to reapply for readmission until January 1, 2021.

The Court of Appeal overturned the hearing committee’s decision on the issue of the stay of proceedings application. The Court of Appeal found that the delay in the investigation and hearing of Mr. Abrametz’s case was so significant that it constituted an abuse of process. It found that the appropriate remedy was to retain the finding of conduct unbecoming, but stay the penalty such that there would be no further penalty imposed upon Mr. Abrametz.  In other words, Mr. Abrametz would not be disbarred.

It should be noted that Mr. Abrametz was subject to practice conditions while the investigation and hearing process was taking place. The conditions required that Mr. Abrametz retain another lawyer to supervise and monitor his practice and trust account activities; he had to seek prior approval from the supervisor for withdrawals/cheques from any trust account; and he could not accept the return of trust cheques from clients, nor accept endorsed cheques to be cashed or negotiated. Although there had been threatened interim suspensions, an interim suspension was not imposed.

In totality, there had been a 71-month delay between the commencement of the investigation until the stay decision was completed.

Takeaways from the Supreme Court

Some of the key takeaways from the Supreme Court’s decision are:

  1. The Supreme Court’s prior decision in Blencoe v British Columbia (Human Rights Commission), 2000 SCC 44 was reaffirmed. In Blencoe, the Supreme Court found that delay in an administrative process can result in abuse of process. The test to determine whether there has been abuse of process is relatively high: paragraphs 38 to 44.
  2. There is an express rejection of requests to “Jordanize” the Blencoe Specifically, unlike in Jordan, the Court did not adopt a requirement that a proceeding be completed within a certain number of months, failing which there would be a presumption that the case would be stayed: paragraphs 45 to 48.
  3. There are two ways in which delay may constitute an abuse of process. The first is where the delay has compromised the fairness of a hearing, such as when memories have faded, essential witnesses are unavailable, or evidence has been lost. The second is when significant prejudice has come about due to inordinate delay: paragraphs 41 and 42.
  4. On the second form of abuse of process (ie. prejudice caused by inordinate of delay), there is a three-part test to determine whether delay constitutes an abuse of process:
  1. The delay is inordinate;
  2. The delay must have caused significant prejudice; and
  3. Whether the delay amounts to an abuse of process by being manifestly unfair to a party or in some other way bringing the administration of justice into disrepute: paragraph 43.
  1. In assessing whether delay is “inordinate”, the following considerations apply
  1. The period of delay starts when there is a practical necessity to engage the investigatory process and ends when the proceeding is completed: paragraph 58. Thus, for all practical purposes, the time starts ticking when a complaint is received or an investigation is started;
  2. A lengthy delay is not automatically inordinate. It can be justified where, for example, a case involves parallel criminal and administrative proceedings: paragraph 59;
  3. The reasons for a delay are important. To the extent that the member contributed to or waived parts of the delay, this is an important consideration: paragraph 61;
  4. Delay can be waived explicitly or implicitly. If the member asked for suspension of the proceedings or did not object to a suspension of the proceedings while other investigations proceeded and acted in a way that unequivocally suggests they acquiesce to such delay, it can constitute a waiver: paragraph 63;
  5. The complexity of the facts and issues must be considered in determining whether the delay is inordinate: paragraph 66.
  1. In assessing whether there was “significant prejudice”, the following considerations apply:
  1. Delay alone is not sufficient to lead to an abuse of process. Otherwise, it would be “tantamount to imposing the judicially created limitation period”: paragraph 67;
  2. The prejudice alleged by the member must relate to the delay, not to the fact that such proceedings were undertaken: paragraph 68;
  3. Some examples of prejudice would include: psychological harm, stigma attached to the individual’s reputation, disruption to family life, loss of work or business opportunities, as well as extended and intrusive media attention: paragraph 69.
  1. In assessing whether the inordinate delay amounts to an abuse of process, a decision-maker is to consider whether the delay is manifestly unfair to the party to the proceeding or in some way brings the administration of justice into disrepute: paragraph 72;
  2. In terms of remedies for abuse of process, the Court made the following observations:
  1. It is possible for a hearing committee to permanently stay proceedings because of abuse of process through delay. The threshold is very high. It is only where delay is so significant that it would “shock the community’s sense of fairness and decency” that it would be open for a hearing committee to stay the proceeding: paragraph 76;
  2. There is a duty both on the regulator and the member to ensure that matters proceed without delay. To the extent that a party feels aggrieved by delay, it should avail itself of the tribunal procedures to have matters proceed in an expeditious manner. Further, a member concerned about delay has the option of seeking a court order to have the matters proceed more expeditiously, including through an application for mandamus. A failure by a member to take these steps can be considered in relation to the remedy for abuse of process: paragraphs 78 to 82;
  3. Often, the appropriate remedies for abuse of process by reason of delay are to order a reduction in sanction and/or costs: paragraphs 89 to 99.
  1. The Supreme Court found that, although the Court of Appeal correctly determined that it should provide deference to the hearing committee’s findings of fact, it did not actually do so. Some of the comments in that regard were:
  1. The Court of Appeal erred by analyzing the evidence and making its own findings of fact as to whether various delays were “undue”. In essence, the Supreme Court found that the Court of Appeal interfered with factual conclusions merely because it disagreed with the weight to be assigned to the underlying evidence: paragraphs 107 to 116;
  2. The Court of Appeal failed to set out a proper basis for interfering with the finding that Mr. Abrametz did not suffer significant prejudice from the conditions imposed on his practice: paragraph 122.
Conclusion

The decision from the Supreme Court is good news for professional regulators. The Supreme Court has rejected a presumption that significant delay, on its own, constitutes abuse of process.   Further, the threshold for what constitutes abuse of process and the remedy for a stay of proceedings is high.  Lastly, the Supreme Court makes it clear that appellate bodies hearing professional regulatory appeals are to provide real and meaningful deference to hearing committees.

If you have any questions about this or any other regulatory matters, please feel free to contact Sean Sinclair at 306-933-1367.

Contacting a Lawyer on this Subject

Sean Sinclair, a partner with Robertson Stromberg LLP, has experience in most areas of civil litigation but focuses on family law, professional regulation, estate litigation and media law. Sean is also recognized as a family law arbitrator. Contact Sean at 1-306-933-1367 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

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Saskatchewan Estate Litigation Update: Kaushik v Kaushik, 2022 SKQB 135

The recent Saskatchewan Queen’s Bench decision in Kaushik v Kaushik, 2022 SKQB 135, offers an overview of a situation in which multiple persons concurrently seek to be appointed as the sole administrator of an Estate. 

Overview:
  1. Sadhna Kaushik applied for appointment as the administratrix of the estate of Daya Chand Kaushik [Daya], her late father;
  2. Daya died on June 7, 2019;
  3. Daya’s last will and testament dated September 22, 1987, named his wife, Vimla Devi Kauchik [Vimla] as executrix. It directed further that in the event she predeceased him, Rakesh Kaushik [Rakesh], Sadhna’s brother, and one of the respondents on this application, should serve as executor of his estate;
  4. Vimla predeceased Daya;
  5. To date, no application to have Daya’s will probated had been made, as the original will had been lost;
  6. Rakesh, brother of Sadhna, argued that he himself should be appointed as administrator. Rakesh relied on the below facts:
  1. On or about August 30, 2016, Daya executed an Enduring Power of Attorney naming Rakesh as his personal and property attorney. Rakesh acted in this capacity until Daya’s death in 2019;
  2. However, on or about September 20, 2016, Daya purportedly executed a Revocation of Enduring Power of Attorney setting aside the previous document. However, Rakesh only learned of this after Daya’s death;
  1. The six beneficiaries were divided as to their choice of the appropriate administrator of Daya’s estate. Three beneficiaries, Douglas, Sheila, and Hazel signalled their support of Rakesh, and each formally renounced her right to letters of administration in favour of Rakesh.
  2. The last two beneficiaries – Elizabeth and Neil – adamantly reject the appointment of either Sadhna or Rakesh to be administrator of Daya’s estate. Instead, they proposed that the parties be directed to attend mediation in an attempt to resolve this dispute.
  1. Elizabeth and Neil opposed appointing Sadhna because she allegedly mismanaged the affairs of Vimla’s estate when Sadhna served as her mother’s executrix; and
  2. Elizabeth and Neil opposed appointing Rakesh because of his alleged continuing failure to account adequately for monies transferred from Daya’s accounts during the latter years of Daya’s life, even in the face of an order of the court dated August 13, 2020.
  1. As for Sadhna, only Sadhna supports an order appointing herself to be the administratrix of Daya’s estate.
Who had priority to apply to administer?

Subsection 13(1) of the Administration of Estates Act stipulated that no letters of administration shall be granted to any person unless:

  1. all persons with a prior or equal right have renounced their right to administration; or

  2. a judge has made an order dispensing with the requirement to obtain the renunciation of the right to administration of persons mentioned in clause (a)

In the context of this application, this meant Sadhna was not entitled to be appointed administratrix because Rakesh has not renounced his right to administration, and vice versa. Thus, the court had to intervene to break the deadlock between the two siblings.  

The court ultimately appointed Rakesh as administrator:

As the only surviving children of Daya and Vimla, both Sadhna and Rakesh were potentially entitled to apply to be appointed as administrator of Daya’s estate. The question was which of them, if either, is the most appropriate person to serve in that capacity.

The court ultimately found that Rakesh was the preferable person to administer the Estate. The three main factors could be summarized below:

  1. Reason 1: First, Daya decided in 1987 to appoint Rakesh as the alternate executor of his estate should Vimla predecease him. Despite Vimla’s death in 2016, at no time prior to his death in 2019 is there any evidence to show that Daya revised his will, let alone executed a new one. This consideration weighed heavily in favour of appointing Rakesh as administrator, by showing the intention of Daya as to who would administer his estate;
  2. Reason 2: Rakesh was opposed by some beneficiaries, but he ultimately did have the consent of a majority of the beneficiaries. In addition to himself, Rakesh had the consent of Sheila, Hazel, Douglas, all of whom have formally renounced their rights;
  3. Reason 3: The evidence discloses that Rakesh maintained a closer relationship with Daya than did Sadhna;
  4. Reason 4: Rakesh purported to act as Daya’s attorney pursuant to the terms of an Enduring Power of Attorney dated August 30, 2016. It is true that there is evidence that Daya revoked this, but no one appeared to learn of this until after Daya’s death. The fact that Rakesh did look after Daya’s affairs for a time, would support a finding that Rakesh was well placed to “convert [Daya’s estate] to the advantage of those who have claims against it, either by paying the creditors or by making the appropriate necessary distributions”.

The one aspect which gave the court pause, was about the allegation that Rakesh had refused to provide an accounting of his handling of Daya’s estate from September 1, 2016 – the approximate date when the enduring power of attorney took effect – to June 7, 2019, the date of Daya’s death.

However, the court found that Rakesh in his affidavit had spoken to the steps he took to comply with the order to account. The court took comfort from the fact that Rakesh had retained local counsel, who would direct Rakesh on how to carry out his responsibilities as administrator in an appropriate and lawful manner.  

Moreover, the court found that, while Rakesh has been slow to provide an accounting of his management of Daya’s affairs, he had now provided one in the requisite form prescribed by The Queen’s Bench Rules. Additionally, his affidavit provides further information respecting his dealings with Daya’s estate while he acted as his father’s attorney.

Moreover, the court was not ultimately swayed by  two findings of profession misconduct made against Rakesh by the discipline committee of his professional regulatory body, the Chartered Professional Accountants of Saskatchewan. While these were stain on a professional’s reputation, they were not enough on its own to disqualify him or her from acting as the administrator or testator of a deceased’s estate.

Outcome and costs order:

The court in Kaushik ultimately appointed Rakesh as administrator, but did require that he obtain a bond. Interestingly, despite the success of Rakesh in this application, the court ordered that each side bear its own costs:

63      I am satisfied that considering all the circumstances, this application was necessary in order to settle the question of who should be appointed administrator of Daya’s estate. A stalemate had occurred between the two people legally authorized to apply for letters of administration. It so happens that it was Sadhna who initiated the application. In my view in the unusual circumstances of this case Daya’s estate should not be burdened with the costs of this application. Rather, I have determined that each party should bear his or her own costs of this application, and I so order.

The reasoning above – that “Daya’s estate should not be burdened with the costs of this application”  – is unusual.

In this situation, the Estate benefited from the clarity of this court order, which finally appointed someone to administer the Estate, and which took the estate out of the administrative limbo it had fallen into. Thus, it would have been entirely customary for the Estate to bear some or all of the legal costs incurred by a newly appointed administrator in his successful application.

Lessons learned:

Kaushik reminds us of the some of the factors which a court will rely on, in a situation of competing applicants for administrator. These factors include:

  1. Are there any clues, showing whom the deceased themself had wanted to appoint?
  2. Was there a majority among the beneficiaries, as to whom they want to administer the Estate?
  3. Had one of the potential applicants ever acted as attorney for the deceased before, thus placing them in a better position to now convert the estate to the advantage of the beneficiaries?

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

Saskatchewan Estate Litigation Update: McCabe v Kowalyshyn, 2022 SKCA 56

The recent Court of Appeal decision in McCabe v Kowalyshyn, 2022 SKCA 56, offers various lessons to Estate litigators. These include:

  1. The reality that court approvals of Estate land sales, under s. 50.5 of The Administration of Estates Act, SS 1998, c A-4.1, do not simply focus solely on market value. The court can also look at other considerations, such as whether the sale will reasonably reduce future litigation, wasted effort, or delay in the Estate.
  2. The reality that if parties agree in advance to a certain specified sale process, but do not later like the result, the court may not let them later challenge the outcome of that sale process.
Background:

McCabe arose out of a sale of farmland owned by an Estate. The background of McCabe informs some of the issues addressed by the Court. The background is summarized as follows:

  1. The deceased, Mike Kowalyshyn, died on July 1, 1996, ostensibly leaving a life interest in his estate to his wife and the remainder of it to their 12 adult children. The Estate owned, inter alia, eight quarter sections of farmland (“Farmland”), which had been leased to Nicky (a beneficiary of the Estate) and his wife, Debbie since the 1990s;
  2. Joseph Kowalyshyn was the executor of the Estate and was also one of its beneficiaries;
  3. There were a total of 12 adult siblings involved, who were the children and beneficiaries of their father’s estate, the estate of Mike Kowalyshyn;
  4. In 2017, certain of the Estate’s beneficiaries (the “Objecting Beneficiaries”) commenced proceedings against Joseph and the Estate, as well as against Nicky and Debbie, asserting that the Farmland had been leased at less than fair market rent (thus failing to maximize the Estate value);
  5. The focus of the parties turned to the sale of the Farmland. A variety of purchase offers were made:
  1. Nicky and Debbie offered to buy the Farmland for $987,121, which Joseph “conditionally accepted” as executor of the Estate (Queen’s Bench decision, McCabe v Kowalyshyn, 2021 SKQB 144, at para 8);
  2. This caused rancor amongst the Objecting Beneficiaries because they believed the Farmland was worth more than this price;
  3. On December 9, 2020, the Objecting Beneficiaries advised Joseph Kowalyshyn that some or all of them would be making an offer to purchase the land on more favourable terms, namely a purchase price of $1,000,000.00 (Queen’s Bench decision at para 8);
  4. On January 3, 2021, Nicky and Debbie Kowalyshyn increased their offer to purchase to $1,010,000.00  (Queen’s Bench decision at para 8);

The closed auction process:

  1. The parties could not agree, and the matter went to a court hearing on January 5, 2021, as well as various later conference calls with the Court. As a result of discussions, the parties agreed to a closed, inter-family auction. The process was reduced to writing, and set out a time-sensitive, process-detailed procedure whereby the land would be exposed to offers from the Kowalyshyn family;
  2. In accordance with the proposed method of sale, two groups (Nicky and Debbie Kowalyshyn on one hand, and Joyce Kowalyshyn, Walter Kowalyshyn, Eugene Kowalyshyn and Michael Kowalyshyn on the other hand) presented various back and forth offers on the Farmland;
  3. Nicky and Debbie Kowalyshyn presented the last and highest bid on February 8, 2021 in the amount of $1,325,000.00.
  4. No higher counter offer was received from Joyce Kowalyshyn, Walter Kowalyshyn, Eugene Kowalyshyn and Michael Kowalyshyn;
  5. However, the Objecting Beneficiaries then objected to any sale for $1,325,000.00. They asserted that they had gained evidence that the Land was worth more. For example, on February 24, 2021, Joyce Kowalyshyn contacted SAMA and learned that the Farmland had been newly assessed at $1,422,700.00, an increase from the former assessment of $1,150,681.50;
  6. Further, Joyce Kowalyshyn also contacted Wayne Berlinic, a realtor, and asked him to prepare a marketing plan for the estate land. Mr. Berlinic stated his belief that the most likely sale price for the land would be between $1,448,100.00 and $1,544,800.00 given recent market trends. Counsel for the Objecting Beneficiaries, in correspondence directed to the court, advised that later on March 26, 2021 he was advised that Mr. Berlinic had sold 120 acres of farmland near Buchanan, Saskatchewan for $2,083.00 per acre. If an equivalent price was received for the estate land, the total value of the land would approach $1,778,882.00;
  7. In reply,  the executor, Joseph Kowalyshyn, responded by commissioning a formal appraisal of the land by Robin Johnson, a member of the Appraisal Institute of Canada. He appraised the land using a .86 multiple of the new SAMA assessments and provided a value of $1,209,000.00, including buildings on the home quarter.
Queen’s Bench Ruling in McCabe v Kowalyshyn:

The Objecting Beneficiaries refused to consent to the sale of the land for $1,325,000.00.

The issue for the Queen’s Bench court (“Chambers judge”) was whether to approve the sale for $1,325,000.00, or to send it a future auction on the open market.

For context, s. 50.5(1) of The Administration of Estates Act, SS 1998, c A-4.1  holds that  an executor shall not sell land in an Estate, for the sole purpose of distributing the estate among the beneficiaries, unless those persons concur in the sale. Thus, the executor either needed unanimous agreement of the beneficiaries to the $1,325,000 sale, or, he needed a court order to override the non-consent of certain beneficiaries.

The Chambers judge approved the sale by the Estate of the Farmland to the respondents, Nicky and Debbie Kowalyshyn, for $1,325,000. The Court largely relied on the below grounds:

  1. The Objecting Beneficiaries were reneging (in the view of the Court at least) on a method of sale that they had agreed to, and in which they actively participated;
  2. The Objecting Beneficiaries had changed their position on what was the appropriate value of the Farmland. The Objecting Beneficiaries all agreed in writing that the offer of $1,000,000.00 was “deemed to be in the interest and to the advantage of the Estate.” Notably, that price was not only $325,000.00 below the price offered just weeks later by Nicky and Debbie Kowalyshyn but, more significantly, below the SAMA assessment then in currency ($1,150,681.50);
  3. The sale for $1,325,000 was in the best interest of the Estate. True, such sum may not maximize total market value, but s. 50.5 did not focus solely on market value. It instead allows the Court to look at other facts as well, such as:
  1. What sale would avoid further legal fees and dispute;
  2. What sale would avoid further delay or limbo, for the Estate;
  3. What would avoid having the Farmland sit fallow and unused in 2021.
  1. The Court preferred the appraisal evidence of Mr. Johnson. He used approved methods of appraisal, including comparable land sales as late as April 2021. He had provided topographical photographs of the Farmland. The court said that it would always favour an appraiser’s report over an opinion of value offered by a realtor, particularly a realtor who proposes to be engaged in the sale of the land.
Issue at the Court of Appeal:

The Objecting Beneficiaries appealed to the Court of Appeal. They asked the Court of Appeal to overturn the Chamber judge’s approval of the sale for $1.325 million. They asked instead for the Court of Appeal to direct the Estate to sell the Farmland at public auction.

Court of Appeal decision in McCabe v Kowalyshyn:

The Court of Appeal held that the Objecting Beneficiaries were bound by the process they had helped negotiate, and agreed to. That is, the bidding process had been negotiated and agreed upon by all parties, it had been conducted fairly, and it had established a closed market restricted to Estate beneficiaries and their spouses. Its object was not to achieve a sale at fair market value; it was to resolve the dispute over the sale of the Farmland fairly and finally (Court of Appeal decision at para 35).

Nothing about the new evidence of market value, had impugned the agreed-upon bidding process or how that process had been managed by Joseph.

Thus, the Court of Appeal upheld the Chambers judge’s reliance on factors, which were not limited to market value. For example, the Chambers judge had considered such factors as:

  1. The reality that the Estate faced mounting legal fees due to sharp divisions amongst the beneficiaries and the continuing litigation;
  2. The Estate’s principal asset — the Farmland — would be left fallow in 2021 if not sold, producing neither rent nor crops, until the dispute was resolved;
  3. The Objecting Beneficiaries had not satisfied their burden of proving that the $1.325 million was under value;
  4. Moreover, even if $1.325 million was not the highest possible value, the price was not the sole consideration when giving approval under s. 50.5. Had the Legislature intended for s. 50.5 to solely hinge on market value, when approving a sale, the legislature could have said just that. 
Lessons learned:

First, if beneficiaries agree to the method of sale and, participate in that method of sale, they will have a difficult time in later challenging the outcome.

Second, the criteria of highest “fair market value” is not the only consideration that the Court will consider, when approving a sale under s. 50.5.

Contacting a Lawyer on this Subject

James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or [email protected]. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

Read more on our blog.

The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

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My Contractor Doesn’t Exist, Can I Sue?

It is common for contractors and other service providers to incorporate prior to starting a business. A corporation can provide a certain level of insulation from liability for the people who operate it, and in addition, allows for other advantages such as tax planning. While it provides the operators with liability protection, it can leave an aggrieved customer with nowhere to turn. This is especially true where the issues are not evident at first instance. Many times a construction defect takes years to materialize.

Making this situation even worse for the customer is that by the time the construction defect materializes, the corporation that provided the service may no longer be in business. A corporation can, subject to certain requirements, dissolve and liquidate its assets at any time. If a corporation does so before it is sued, or even knows about the construction defects, any leftover assets can be paid out to its shareholders. At the first instance, the customer is left holding the bag, while the shareholders are left with a windfall.

Thankfully, The Business Corporations Act (Saskatchewan) (the “Act”) contemplated these issues. Section 219 specifically allows someone to sue an inactive corporation. However, even in that instance, you must act fast as you only get two years to do so. While not a perfect solution, it does provide an avenue for aggrieved customers to right the wrong.

In addition, the Act also allows you to attempt to recover the assets or at least their value, that were paid out to the shareholders. This prevents the corporation and its operators from side-stepping its liabilities.

That being said, deciding to sue a dissolved corporation will cost time and money. It may be that the corporation dissolved because it had no assets. In some situations, all of the assets of the corporation may have gone to other creditors such as a bank or someone else who sued the corporation. Therefore, any legal action is unlikely to provide meaningful results.

Before deciding to sue, some background work can be done to determine if legal action is worthwhile. These steps include:

  1. Pulling a corporate profile report from Information Services Corporation. A certificate of dissolution, and sometimes other supporting documents, may be filed online. Recovering a copy of these, for a small fee, may shed some light on the financial situation of the corporation; or
  2. Contact the Ministry of Finance. The Act specifically requires corporations with known creditors, who cannot be located, to payout a certain portion of their assets to the Ministry of Finance for future claims. There is no guarantee that the corporation will have done so, and if it did not know that the construction was faulty, the funds may not have been paid, but it is an inexpensive step that may lead to partial recovery.

At the end of the day, you should ask yourself whether you are ready to commit the time and financial resources to pursue an inactive corporation. In some instances, your first loss is your best loss, and throwing further money down the rabbit hole may only lead to frustration.

However, in others, meaningful recovery may be achieved. You should not simply give up because your contractor has gone out of business, especially where he or she has started a new business. They may have simply taken their assets to avoid their liabilities, and you can still recover.

This article is intended to provide legal information only, not legal advice. 

For further information, please contact:

Travis K. Kusch
Direct: 306-933-1373
Email: [email protected]

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