The Threshold for Establishing Duress

Milionis v Rivas 2017 ONSC 5001 discussed the law of duress when an application was brought to seek a declaration that a $400,000 mortgage was invalid as it was purportedly signed under duress. The court disagreed as it is difficult to set aside an agreement based on duress.

The Court stated:

Given that the law does not lightly set aside an agreement, the threshold for establishing duress is high. In Barton v. Armstrong, [1976] A.C. 104, at 121 (J.C.P.C.), Lord Wilberforce (dissenting in the result) stated:

The action is one to set aside an apparently complete and valid agreement on the ground of duress. The basis of the plaintiff’s claim is, thus, that though there was apparent consent there was no true consent to the agreement; that the agreement was not voluntary. This involves consideration of what the law regards as voluntary, or its opposite; for in life, including the life of commerce and finance, many acts are done under pressure, sometimes overwhelming pressure, so that one can say that the actor had no choice but to act. Absence of choice in this sense does not negate consent in law: for this the pressure must be one of a kind which the law does not regard as legitimate. Thus, out of the various means by which consent may be obtained — advice, persuasion, influence, inducement, representation, commercial pressure — the law has come to select some which it will not accept as a reason for voluntary action: fraud, abuse of relation of confidence, undue influence, duress or coercion. In this the law, under the influence of equity, has developed from the old common law conception of duress — threat to life and limb — and it has arrived at the modern generalisation expressed by Holmes J. — ” subjected to an improper motive for action ” (Fairbanks v. Snow 13 Northeastern Reporter 596, 598). [Emphasis added]

65 Duress requires proof of pressure that:

(1) the law regards as illegitimate, such as threat of any form of illegal action; and

(2) is applied to such a degree as to amount to a “coercion of the will” of the party relying on this defence.

The following considerations apply in determining whether there is a “coercion of the will”:

(1) did the party relying on this defence protest?

(2) was there an alternative course open to him or her? (3) was he or she was independently advised? (4) after entering the agreement did he or she take steps to avoid the agreement after entering it? See A.A. v. A.G, 2017 ONCA 243, paras. 26-27; Gordon v. Roebuck (1992), 9 O.R. (3d) 1 (C.A.), at para. 3.

66 An agreement obtained through duress is voidable at the instance of the party subjected to the duress unless by another agreement or through conduct, either express or implied, he affirms the impugned agreement at a time when he is no longer the victim of duress: Stott v. Merit Investment Corporation (1998), 63 O.R. (2d) 545 (C.A.), at para. 49.

The Proportionality Principle

The Proportionality Principle

Campoli Electric Ltd v Georgian Clairlea Inc 2017 ONSC 4898 commented on the proportionality principle that is emerging in litigation- the quest for a cultural change to best promote the most expeditious and least expensive determination of every proceeding on its merits.

disinherited.com attempts to utilize the mediation process as much as possible as it is fast, inexpensive and results in settlements in over %90 of the cases that utilize it.

Abrams v. Abrams, 2010 ONSC 2703:

“Proportionality signals that the old ways of litigating must give way to new ways which better achieve the general principle of securing the ‘just, most expeditious and least expensive determination of every proceeding on its merits.’ ”

In Hryniak v. Mauldin, 2014 SCC 7, Justice Karakatsanis was discussing the test for summary judgment, but what she had to say is thematically applicable to lifting these stays. At paragraphs 27 and 28 of her judgment at the Supreme Court of Canada, she stated:

There is growing support for alternative adjudication of disputes and a developing consensus that the traditional balance struck by extensive pre-trial processes and the conventional trial no longer reflects the modern reality and needs to be re-adjusted. A proper balance requires simplified and proportionate procedures for adjudication, and impacts the role of counsel and judges. This balance must recognize that a process can be fair and just, without the expense and delay of a trial, and that alternative models of adjudication are no less legitimate than the conventional trial.

This requires a shift in culture. The principal goal remains the same: a fair process that results in a just adjudication of disputes. A fair and just process must permit a judge to find the facts necessary to resolve the dispute and to apply the relevant legal principles to the facts as found. However, that process is illusory unless it is also accessible – proportionate, timely and affordable. The proportionality principle means that the best forum for resolving a dispute is not always that with the most painstaking procedure. [my emphasis]

Amending Pleadings

Amending Pleadings

The Law regarding Amending pleadings was discussed in Director of Civil Forfeiture v Sanghera 2017 BCSC 863 where the director applied to amend the notice of claim which was opposed by the defendant.

[18]         Mr. Justice Davies clearly set out the law regarding amendments and pleadings commencing at para. 39 in British Columbia (Director of Civil Forfeiture) v. Violette, 2015 BCSC 1372 [Violette]:

[39]         In Mayer v. Mayer, 2012 BCCA 77 at para. 215, the Court of Appeal affirmed that the fundamental purpose of pleadings is to define the issues to be tried with clarity and precision, to give the opposing parties fair notice of the case to be met, and to enable all parties to take effective steps for pre-trial preparation.

[40]         Applications for leave to amend pleadings are considered on the same basis as applications to strike pleadings with the question being whether it is plain and obvious that the proposed amendments are bound to fail. In assessing that question, it is not determinative that the law has not yet recognized a particular claim. In its analysis, the court must be generous and err on the side of permitting an arguable claim to proceed to trial. See: McMillan v. McMillan, 2014 BCSC 546 at paras. 13-14, and cases cited therein.

[41]         In Peterson v. 446690 B.C. Ltd., 2014 BCSC 1531 at para.37, this Court summarized the general principles arising on an application to amend pleadings as follows:

[37]      Finally, the general principles arising on an application to amend pleading can be summarized as follows:

(a) Amendment to pleadings ought to be allowed unless pleadings fail to disclose a cause of action or defence: McNaughton v. Baker, [1988] 24 B.C.L.R. (2nd) 17 [(C.A.)].

(b) Amendments are usually permitted to determine the issues between the parties and ought to be allowed unless it would cause prejudice to party’s ability to defend an action: Levi v. Petaquilla Minerals Ltd., 2012 BCSC 776.

(c) The party resisting an amendment must prove prejudice to preclude an amendment, and mere, potential prejudice is insufficient to preclude an amendment: Jones v. Lululemon Athletica Inc., 2008 BCSC 719.

(d) Costs are the general means of protecting against prejudice unless it would be a wholly inadequate remedy.

(e) Courts should only disallow an amendment as a last resort: Jones, McNaughton, Innoventure S & K Holdings Ltd. et al. v. Innoventure (Tri-Cities) Holdings Ltd. et al., 2006 BCSC 1567.

Life Estate Valuation

Life Estate Valuation

Re: Zarowiecki 1092 CarswellMan 99 dealt with the valuation of a life estate in a homestead and followed the formula dictated by the Supreme Court of Canada in Re Morice v Davidson (1943) SCR 545, utilizing actuarial calculations.

The Supreme Court of Canada decision, Re Morice; Morice v. Davidson, [1943] S.C.R. 94, 545, [1943] 1 D.L.R. 680, [1943] 4 D.L.R. 658, establishes the proper procedure to be followed. At p. 97 Hudson J. states:

When the appellant and respondent agreed to sell the property, they were selling two separate estates: the life estate of the appellant and the remainder of the fee simple held by the respondent as executor of the estate. The proceeds of the sale belonged to the parties in the proportion which the life estate bore to the remainder.


20 “… the value of the life estate must be ascertained on the basis of $4,275”, (the net proceeds of the sale) “being the value of both life estate and remainder, and when this is done the appellant will be entitled to be paid the amount fixed as value of the life estate.” And at p. 98:

If the parties cannot agree no doubt the amount should be fixed on a reference with the aid of an actuary.

21 There has been no agreement in this case nor any apparent hope of agreement.

22 The learned justice concluded, at p. 98:

The net proceeds of the sale of the homestead should be divided in proportion to the respective values of the life estate and of the remainder, the widow accordingly receiving out of such proceeds the share representing the value of the life estate.

23 The net proceeds of the sale of the homestead property amounted to $202,284.51, as agreed by counsel. The value of the widow’s life estate, the amount to which she is entitled out of the sale proceeds, is calculated on the basis of actuarial evidence. The ingredients in the calculation are the interest rate, the value of the property and the life expectancy of the widow: Re Casselman (1974), 6 O.R. (2d) 742, 47 D.L.R. (3d) 354 (H.C.).

24 Two experts were heard in the present case on the application of the three factors. Dr. John McCallum, economist and professor of finance and administrative studies at the University of Manitoba, testified that the interest rate to be used would represent a real rate of return. That would take into account such items as inflation and any other of a negative character, as opposed to the nominal interest rate. He stated that in conventional use in North America, two to three per cent were indicative of a real return. He found that three per cent in this case would be a not unreasonable figure.

25 Mr. John Corp, consulting actuary of Reed Stenhouse, adopted the three per cent interest rate as an acceptable and reasonable real rate of return in his calculation of the life interest based on the sale proceeds. He also took into account, he testified, the age of Mary Zarowiecki, which, it was agreed, was 82 years at the time of sale. He used the Manitoba Life Tables for females, 1975-77, published by Statistics Canada. Mr. Corp found that the proportion of the value of the property attributable to the life tenant is 17.83 per cent. The time of sale, when the life estate was disposed of, was the proper time on which to base the calculation. According to Mr. Corp’s testimony, he followed accepted actuarial practice.

26 I find that the value of the life estate is 17.83 per cent of the net proceeds of the sale of the homestead or $36,067.39, which sum is payable forthwith in a lump sum upon receipt by the estate of the sale proceeds.

Occupational Rent Ordered For Non Vacating Son

Occupational Rent Ordered For Non Vacating Son

An order for occupational rent of $42000 per month was ordered against a son who had lived with his mother and who effused to vacate the estate asset home for ten months after his mother’s passing in Fileppelli Estate 2017 ONSC 4923.

The Court also ordered that the son vacate the property.

I agree with the views of Justice Daley in Bergmann v. McMahon, 2010 ONSC 993, at paras. 37-39, that occupation rent is akin to a claim for unjust enrichment. Mr. Filippelli was clearly enriched by being able to occupy Goldsboro and the Applicants were deprived of both the occupancy of and the use of the property as well as rental income that could have been generated from it. There was no juristic reason for the enrichment received by Mr. Filippelli. I note that Daley J. at para. 7 also found that the property taxes represented a liability of the estate.

21 Furthermore, as stated by Justice Low in Broos v. Broos, 2009 CanLII 68463 (Ont. S.C.) (at paras. 5 and 15), in a similar fact situation, where she found there was no justification for the respondent’s continued occupation of the estate property, she ordered that he vacate the property within 30 days. She found that by not paying compensation to the estate the respondent had denied the estate the opportunity to realize rental income and that he had benefited to the detriment of the beneficiaries. It does not appear that Low J. was asked to order occupation rent.

22 In the circumstances, as we are talking about rent going back to October 2016, I order that the occupation rent payable be $2,000 per month for a total of $20,000 for the period October 2016 to September 2017 inclusive. I also order that Mr. Filippelli pay the pest control services cost in the amount of $282.50 as clearly that was required because of the way in which he was maintaining (or I should say not maintaining) the property. The report from the City states that Goldsboro was not being kept free of rodents on the main floor cupboards and in the laundry room in the basement. This corroborates the evidence of the Applicants that Mr. Filippelli is not keeping the property clean.

Power of Attorney Compensation

Power of Attorney Compensation

An attorney under a power of attorney in British Columbia cannot be compensated for services provided unless the document expressly provides for same.

The attorney may however be reimbursed from the adult’s property for reasonable expenses incurred.

The Act states:

Payment and Expenses of Attorney

24  (1) An attorney must not be compensated for acting as an adult’s attorney unless the enduring power of attorney expressly authorizes the compensation and sets the amount or rate.

(2) An attorney may be reimbursed from an adult’s property for reasonable expenses properly incurred in acting as the adult’s attorney.

Many other provinces in Canada have similar legislation.

Executor Personally Liable for Court Costs

Executor Personally Liable for Court Costs

Craven v Osdacz 2017 ONSC 4396 held an executor of an estate personally liable for costs totalling about $150,000 for reckless and unreasonable behaviour that amounted to reprehensible for opposing a plaintiff’s court action for no valid reason other than to frustrate and delay the court proceeding.

The executor was acting not as estate trustee but personally in carrying out vendetta against plaintiff to limit any compensation she received from estate where liability was clear virtually from start. The groundless defences raised by the executor were designed to ensure that plaintiff would see little or no estate benefits.

The executor occupied a position of fiduciary as estate trustee and used that position and estate assets to conduct litigation in way amounting to harassment of plaintiff to protect his own position. The plaintiff was successful on every major issue raised at trial including issue of trustees’ improper payment of legal fees from estate assets . The only area where the plaintiff was not wholly successful was concerning quantum of repayment of dissipated legal fees to estate, but she was substantially successful on this issue.

The executor’s reckless, totally irrational and totally unreasonable conduct rose to level of reprehensible conduct and personal confrontations with plaintiff rose to level of reprehensible conduct worthy of sanction in form of imposition of solicitor and client costs.

19 Michael Osidacz was acting not as estate trustee but personally in carrying out a vendetta against Julie Craven in order to limit any compensation she received from the estate where liability was clear, virtually from the start and it was obvious that she was entitled to substantial damages that would exceed the value of the estate.

20 I have found that Michael Osidacz advanced “speculative and groundless defences” and acted in a manner that was “anything but reasonable, prudent or appropriate”. I have found that Michael Osidacz raised the estate’s defence on “virtually no evidence” and was totally irrational and reckless in his conduct as Estate Trustee amounting to a dissipation of assets of an overall modest sized estate. I have also found that the groundless and frivolous defences raised by Michael Osidacz were designs to ensure that Julie Craven would see little or no benefits from the estate.

22 Michael Osidacz resisted Julie Craven’s obvious and lawful claims for 10 years until shortly before trial. His actions went far beyond “mis-guided litigation” and amounted to harassment of another party by pursuit of “fruitless litigation”. In the end, the plaintiff was successful on every major issue raised at trial including the issue of the trustees’ improper payment of legal fees from the assets of the estate. The only area where the plaintiff was not 100 percent successful is concerning the quantum of repayment of dissipated legal fees to the estate. Even on this issue, the plaintiff was substantially successful.

23 Based on the foregoing, reckless and egregious conduct on the part of Michael Osidacz, the plaintiff’s position is that “the loser pays” should apply in this case against Michael Osidacz and he should be required to pay her costs personally on an elevated basis, in this case, complete indemnity, except as set out below. I find that his reckless, totally irrational and totally unreasonable conduct and personal confrontations with the plaintiff rise to the level of “reprehensible” conduct in accordance with the case law and is worthy of sanctions as a form of chastisement justifying the imposition of solicitor and client costs.

24 If elevated costs are not awarded to the plaintiff, she would have to spend a substantial amount of her damages judgment on elevated legal fees caused by the conduct of Michael Osidacz, thereby allowing him to achieve his objective of seeing to it that she obtains as little of the assets of the estate as possible.

Trustee Cannot Be in Conflict With Duty

Trustee Cannot Be in Conflict With Duty

Equity will not allow a person who is in a position of trust to carry out a transaction where there is a conflict between his or her duty and his or her interest.

It is a rule of universal application that no trustee shall be allowed to enter into engagements in which he or she has, or can have, a personal interest, conflicting, or which may possibly conflict, with the interests of those whom he or she is bound by fiduciary duty to protect. So strictly is this principle adhered to, that no question is allowed to be raised as to the fairness, or unfairness, of the transaction; it is enough that the interested parties object. It may be that the terms on which a trustee has attempted to deal with the trust estate are as good as could have been obtained from any other quarter or better, but so inflexible is the rule that no inquiry into that matter is permitted. It makes no difference whether the contract refers to real estate, personalty, or mercantile transactions, as the disability arises not from the subject matter of the contract, but from the fiduciary character of the contracting party. Broadly speaking, the reason for the rule is that the trustee should not be placed in a position in which his or her interests are liable to conflict with his or her duty to the cestui que trust. This reason applies equally to a person acting as an agent of the trustee.

For example in Butcher Estate v Hamilton 1997 CarswellBC 1917 (B.C. S.C.) a mother transferred substantial sums of money to her daughter. The transfers were not an  outright gift to the daughter, but were intended to be held in trust by her to use for care of mother and father. The mother and father lacked mental capacity at time of transfers. The daughter breached her  duty as trustee by dealing with funds as though her own.

Life Insurance Denied For Criminal Activity

Life Insurance Denied For Criminal Activity

Velentyne Estate v The Canada Life  2017 BCSC 1444 upheld the insurer’s exclusion clause that mortgage insurance would not be payable upon a death if the death resulted as a result of criminal activity. The Court found that the deceased was a drug dealer who likely died as a result of his criminal activity, despite his body never having been found.

The Court was satisfied based on the wording of the clause that I do not have to find that Mr. Valentyne was actually selling drugs at the time of his death; I need only be satisfied on a balance of probabilities that his death was a result of his involvement in criminal activity.

[14] The distinction between the two types of triggering events has been described as follows in David Norwood and John P. Weir, Norwood on Life Insurance Law in Canada, 3d ed. (Toronto: Carswell, 2002) at page 462:

Causal connection would not seem to be required where the provision excludes death while committing or attempting to commit a criminal offence, but it would appear to be necessary where the exclusion is for death resulting from committing or attempting to commit such an offence. If a bank robber rushes onto a roadway in the course of making a get-away and is knocked down by a car, the causal connection would be established, but if he is casually strolling on the sidewalk away from the scene of the crime, and a brick falls on the robber’s head, it would seem clear that the claims for the accidental death insurance benefit may still be made.

[15] The phrase “a result of” therefore imports some type of causal connection although the phrase is broader than a clause requiring that death be “caused by” a stated activity: Raywalt Construction Co. Ltd. v. Allstate Insurance Company of Canada, 2010 ABCA 320 at paras. 11 and 14.

Trustees Must Sell For Market Value

Trustees Must Sell For Market Value

Estate trustees must obtain fair market value for the assets it sells.

It is trite law that an estate trustee has a fiduciary duty to act in the best interests of an estate and its beneficiaries, and in that regard, whether a professional or non-professional, an estate trustee must exercise the standard of care employed by a person of ordinary prudence in managing his or her own affairs.

This includes an obligation, when liquidating estate assets, to obtain fair market value for the assets being sold, with that value generally being the highest price available in an open and unrestricted market, between informed and prudent parties, acting at arms length and under no compulsion to act, expressed in terms of money or monies worth.

The traditional method of arriving at fair market value is to expose the asset for sale in the marketplace.. Baer v. Baer, 2014 CarswellOnt 10281 (Ont. S.C.J.).

See, for example: Beatrice Watson-Acheson Foundation v. Polk, [2006] O.J. No. 2518 (Ont. S.C.J.), at paragraph 53, and authorities cited therein; Fales v. Canada Permanent Trust Co. (1976), [1977] 2 S.C.R. 302 (S.C.C.), at p.315; and Krentz Estate v. Krentz, [2011] O.J. No. 1124 (Ont. S.C.J.), at paragraph 54.

This includes an obligation, when liquidating estate assets, to obtain “fair market value” for the assets being sold, with that value generally being the highest price available in an open and unrestricted market, between informed and prudent parties, acting at arm’s length and under no compulsion to act, expressed in terms of money or money’s worth. The traditional method of arriving at fair market value is to expose the asset for sale in the marketplace. See Ontario (Attorney General) v. Ballard Estate (1994), 20 O.R. (3d) 189 (Ont. Gen. Div. [Commercial List]), at paragraphs 38-39 and 50.