Contentious Proceedings in Estates Matters…

Aug 13

Contentious Proceedings in Estates Matters…

Please note that the information provided herein is not legal advice and is provided for educational purposes only. If you need legal advice with respect to contentious proceedings in wills and estates matters, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Wills and Estates lawyers in Ontario registered who can assist you and provide you with free information and quotes on contentious proceedings in estates matters.

I thought it would be worthwhile to discuss some of the procedural steps involved in commencing contentious legal proceedings against an estate and / or estate trustee in Ontario. The situation may arise where a person wants to challenge the estate trustee’s administration of a will. Here are some of the major procedural steps involved in this process:

A. Application for Direction
Rules 75.01 through to 75.09 of the Ontario Rules of Civil Procedure deal with commencing contentious legal proceedings against an estate and/or Estate Trustee. To initiate these legal proceedings, a person having a financial interest in an estate must first apply to the court for directions by preparing and submitting an Application for Direction as to the procedure for bringing any matter before the court: Rules 14.05(1) and 75.06(1).

An Application for Directions (Form 75.5) must be served on all persons appearing to have a financial interest in the estate (e.g. trustee and beneficiaries) at least 10 days before the hearing of the application: Rule 75.06(2).

So the steps involved for bringing the Application for Directions are:
(1)   prepare the Application for Directions;
(2)   call and book the application date with the court in the appropriate jurisdiction;
(3)   attend and file the Application for Directions with the court and pay the $173 court fee;
(4)   personally serve the Application for Directions on every other defendant;
(5)   file an Affidavit of Service with the court (this is a sworn document stating that the defendants have been served);
(6)   fax a confirmation form (Form 38B) that the application is proceeding as scheduled by 2:00 p.m. at least 2 days prior to the Application being heard; and
(7)   attend and argue the application before a judge on the motion date.

B. Court Order
On the hearing of an Application for Directions, the court may (among other things) give directions to determine the issues to be decided, identify the parties involved, address the method and times for service, and direct that the plaintiff file and serve a Statement of Claim (Form 75.7): Rule 75.06(3).

An order giving directions shall be in Form 75.8 or 75.9: Rule 75.06(4). The Court has a broad discretion in determining the appropriate procedures going forwards: pleadings (such as a Statement of Claim, Statement of Defence, etc.) may be dispensed with and replaced by a court order that simply directs the issues to be tried. Furthermore, cross-examinations on affidavits could be used to replace examinations for discovery.

C. Statement of Claim
When a Statement of Claim (Form 75.7) is ordered to be delivered, it must be served on each defendant. Among other things, the Statement of Claim could raise allegations against the Estate Trustee and seek damages for:

Breach of trust;
Breach of fiduciary duty;
Acting unfairly and in bad faith;
Unjust enrichment;
Breach of Trustee Act; or
Breach of Estates Administration Act;

The Statement of Claim could also seek an accounting of all of the assets, financial records and documents of the deceased prior to and following the death of the deceased.

D. Claim against Estate
Claims against an Estate are made by way of Form 75.14: Rules 75.08(2).

E. Statement of Defence or Statement of Defence and Counterclaim
Each defendant that is served with a Statement of Claim must serve on every other party and file with the court (with proof of service) a Statement of Defence or a Statement of Defence and Counterclaim: Rules 75.07(1)(a). Alternatively, each defendant can serve and file with the court a Statement of Submission of Rights to the Court, which is discussed below: Rule 75.07(1)(b).

F. Reply or Reply and Defence to Counterclaim
In response to a Statement of Defence or Statement of Defence and Counterclaim, the plaintiff may then deliver a reply or reply and defence to counterclaim: Rule 75.07(2).

G. Statement of Submission of Rights
By submitting a Statement of Submission of Rights to the Court, the defendant acknowledges that it is not entitled to receive their costs in the proceeding and will not be liable to pay the costs of any party to the proceeding, except indirectly to the extent costs are ordered by the court to be paid out of the estate: Rule 75.07.1(b).

The party must also acknowledge that they are not entitled to receive notice of any step taken in a proceeding except for the notice of trial and copy of the judgment disposing of the matter, if the proceeding is not settled: Rule 75.07.1(a). A judgment on consent will not be given to the party submitting their rights unless they have consented or have been personally served with a Notice of Settlement and have not objected to it: Rule 75.07.1(c). The form for giving notice of a settlement to a party who has submitted their rights to the court is Form 75.11: Rule 75.07(1)(c)(ii). If the party who has submitted their rights to the court wishes to object to the settlement, they must file a Rejection of Settlement (Form 75.12): Rule 75.07(1)(c)(ii) [source: Karen M. Gibbs, Archie J. Rabinowitz, Risa Awerbuck, Danielle Joel, Elisabeth V. Atsaidis, and Ryan Lay, The Practical Guide to Ontario Estate Administration, 5^th ed., (Toronto, Canada: Thomson Canada Limited, 2006), p. 239].

Typically, the rule permitting a defendant to file a Statement of Submission of Rights to the Court will be used by a beneficiary who does not wish to become embroiled in costly and protracted litigation. Nevertheless, by filing the Statement of Submission of Rights to the Court, the person is protected by ensuring that they receive notice of the trial or, if the matter is being settled, no judgment can be signed without notice to them or without their written consent [source: Karen M. Gibbs, Archie J. Rabinowitz, Risa Awerbuck, Danielle Joel, Elisabeth V. Atsaidis, and Ryan Lay, The Practical Guide to Ontario Estate Administration, 5^th ed., (Toronto, Canada: Thomson Canada Limited, 2006), p. 239].

H. Notice of Contestation of Claim
If a claim is made against an estate, the defendant representing the estate may serve a Notice of Contestation upon the party making the claim, contesting all or part of the claim: s. 44(1) of the Estates Act. Within 30 days after receiving a Notice of Contestation, the claimant must file with the court registrar a Claim Against Estate (Form 75.14) verified by affidavit and a copy of the Notice of Contestation. The claimant must then bring an application to the Court for an order allowing the claim and determining the amount of it. If the claimant does not make such an application within the time prescribed above, then they shall be deemed to have abandoned the claim and it is forever barred: s. 44(2) of the Estates Act.

Once the claimant files all the necessary paperwork, the court registrar will fix a trial date which then typically proceeds in a summary manner (often without pre-trial discoveries) unless a judge orders otherwise. However, the defendant may request that documentary and oral discovery be held before the trial of the application [source: Karen M. Gibbs, Archie J. Rabinowitz, Risa Awerbuck, Danielle Joel, Elisabeth V. Atsaidis, and Ryan Lay, The Practical Guide to Ontario Estate Administration, 5^th ed., (Toronto, Canada: Thomson Canada Limited, 2006), p. 240]. At the trial, the judge will hear the parties and their witnesses and can make such order as he or she considers just.

I. Next Steps after Pleadings
Once the pleadings (i.e. Statement of Claim, Statement of Defence, etc.) are exchanged, the action will proceed much like any other civil litigation case (i.e. exchange of affidavits of documents and oral discoveries of the parties) unless the court orders otherwise. Once discoveries are completed, a Trial Record is prepared and filed, and the matter goes on the trial list. The matter will come up first for a pre-trial conference. If no settlement arises out of the pre-trial conference, the matter proceeds to trial [source: Margaret E. Rintoul, A Practitioner’s Guide to Estate Practice in Ontario, 3^rd ed. (Markham, Ontario: Butterworths Canada Ltd., 1997), p. 157].

At the end of the trial, a judge will render a decision and will also typically award some legal costs against the losing party to pay for the other side’s legal fees and disbursements.

J. Motion for Summary Judgment
If the defendant does not respond to the Statement of Claim within the time prescribed by the Rules (i.e. typically 20 days after being served with the Statement of Claim), then the claimant may ask the court registrar to note that defendant in default and then bring default proceedings against him or her to obtain an award for damages and proceed to enforce that award: Rules 18 and 19.

If the defendant responds with a Statement of Defence, then the claimant may bring a motion for summary judgment (Rule 20.01(1)) or to strike out that Statement of Defence on the grounds that it discloses no reasonable defence (Rule 21.01(b)).

Conclusion
At the end of the day, commencing and maintaining contentious legal proceedings is complex, costly, and takes time. There are a number of procedural steps along the way, each with its own time limit and substantive requirements. It’s best, if you’re contemplating or in the middle of contentious proceedings, to consult with a lawyer who has the knowledge, skills, and experience in dealing with these kinds of proceedings. FYI, you can make a post on Dynamic Lawyers to find such a professional (it’s 100% free and anonymous!)