Warren v. Gilbert et al. [Indexed as: Warren v. Gilbert Estate]

92 O.R. (3d) 241

Court of Appeal for Ontario,

Winkler C.J.O., Feldman and Rouleau JJ.A.

October 10, 2008

Judgments and orders -- Setting aside -- Estate trustees seeking to set aside family law judgment that was confirmed on appeal on basis that estate would have asserted interest in matrimonial home had it been represented at trial -- Motion judge properly dismissing motion -- Trustees being appointed after trial judgment but well before hearing of appeal -- Trustees not moving in timely manner to assert estate's rights -- Estate's claim would not have succeeded at trial as it was taking position contrary to wishes of deceased.

The appellants were the trustees G's estate. G held certain property as joint tenant with her nephew D. Before her death, G was made a party to family law proceedings between D and K. She died before judgment was rendered and her interest passed by right of survivorship to D. At trial, K was awarded a one-half interest in the property by way of resulting trust. After the trial judgment was rendered and before D's appeal was heard, the appellants took out letters of administration and became estate trustees. They made no attempt to intervene in the appeal. After the appeal was dismissed, the appellants brought a motion to set aside the judgment on the basis that had the estate been represented at trial, it would have asserted an interest in the matrimonial home. The motion was dismissed. The appellants appealed.

Held, the appeal should be dismissed.

Per Feldman J.A. (Winkler C.J.O. concurring): A person who should have been made a party to a proceeding but who received no notice of the proceeding can seek to have the proceeding reopened if the person moves in a timely manner and there is potential merit to the person's claim. While the trustees were not yet appointed at the time of the family law trial, they were in place long before the appeal of the judgment. The inference drawn by the motion judge that one of the appellants, who was D's father, chose to wait for the outcome of the appeal and took steps to assert a claim by the estate only after D lost the appeal was an irresistible one. As the appellants did not move in a timely manner, the first criterion for reopening was not met. The second criterion was also not met. Had the estate appeared at trial, it would have had to take a position contrary to the one taken by G while she was alive. During her lifetime, G failed to take any steps to sever the joint tenancy, even after the matrimonial litigation started, because she wanted D to become the sole owner of the property by right of survivorship. It was most unlikely that the estate would have taken the position at the original trial that it now sought to assert, and it was unlikely that the estate would have succeeded had it done so.

Per Rouleau J.A. (dissenting): There was evidence before the motion judge which raised a triable issue as to whether G intended to sever the joint tenancy before her death and took steps to do so. The estate's claim against the property should be determined in a new trial within the family law proceedings. The appellants' delay was relatively short and was fully explained.

APPEAL from the order of Salmers J. dated July 18, 2007 dismissing a motion to set aside a judgment.

Cases referred to Coulson v. Secure Holdings Ltd., [1976] O.J. No. 1459, 1 C.P.C. 168 (C.A.); Han v. Re/Max Town and Country Realty Inc., 1995 CanLII 718 (ON CA), [1995] O.J. No. 303, 77 O.A.C. 391, 53 A.C.W.S. (3d) 275 (C.A.); Hughes v. Fredericton (City), 1998 CanLII 12218 (NB CA), [1998] N.B.J. No. 335, 165 D.L.R. (4th) 597, 204 N.B.R. (2d) 153, 82 A.C.W.S. (3d) 576 (C.A.); [page242] Nu-Pharm Inc. v. Canada (Attorney General), 1999 CanLII 9369 (FCA), [1999] F.C.J. No. 1313, [2000] 1 F.C. 463, 179 D.L.R. (4th) 531, 247 N.R. 227, 38 C.P.C. (4th) 288, 2 C.P.R. (4th) 49, 91 A.C.W.S. (3d) 301 (C.A.); Weinstein v. Weinstein (Litigation Guardian of) (1997), 1997 CanLII 24477 (ON SC), 35 O.R. (3d) 229, [1997] O.J. No. 3445, 19 E.T.R. (2d) 52, 30 R.F.L. (4th) 116, 73 A.C.W.S. (3d) 522 (Gen. Div.), distd

Other cases referred to Trost v. Cook (1920), 1920 CanLII 399 (ON SC), 48 O.L.R. 278, [1920] O.J. No. 46, 56 D.L.R. 305 (S.C. (H. Ct. Div.))

Authorites referred to Feeney, Thomas G., and Jim Mackenzie, Feeney's Canadian Law of Wills, 4th ed., looseleaf (Toronto: Butterworths, 2000) Mowbray, John, and Lynton Tucker, et al., Lewin on Trusts, 18th ed. (London, Ont.: Sweet & Maxwell, 2007)

Alan J. Davis and Sheldon I. Erentzen, for appellant, estate trustees for the Estate of Elizabeth Gilbert. Gerald Sadvari and Paula Armstrong, for respondent, Kellie Warren.

FELDMAN J.A. (WINKLER C.J.O. concurring): -- Introduction

[1] The appellants are estate trustees of the aunt of one of the parties to a family law action, who seek to set aside the family law trial judgment that was confirmed on appeal in December 2006, on the basis that had the estate been represented at the trial, it would have asserted an interest in the matrimonial home. The motion judge refused to set aside the judgment. For the reasons that follow, I would dismiss the appeal.

Facts

[2] The appellants are the trustees of the estate of Elizabeth Gilbert, who held the subject property as joint tenant with her nephew David Gilbert. The property was purchased in 1995 for $125,000, with $10,000 down ($5,000 contributed by Kellie Warren and $5,000 by David Gilbert). By the time of the family law trial, the property was worth over $2 million and, Elizabeth Gilbert having died, her interest had passed by right of survivorship to David. At the trial, Kellie Warren was awarded a one-half interest in the property by way of resulting trust.

[3] Before the trial, Elizabeth Gilbert had been made a party to the family law proceedings between David Gilbert and Kellie [page243] Warren because she was a joint tenant on title to the property, which was both a farm and the matrimonial home of David and Kellie. She filed an answer and an affidavit which stated her position that she held the property as joint tenant with David Gilbert, she was a beneficial owner of her half of the property and not a bare trustee, and she had made some financial contribution to the upkeep of the property. She disputed that Kellie Warren was entitled to any interest in the property.

[4] Elizabeth Gilbert was originally represented by two successive lawyers, but later acted on her own. At no time did she sever the joint tenancy as she could have. This was consistent with her intent that by virtue of the joint tenancy, David would eventually have the whole property by right of survivorship when she died. She had no will and, on an intestacy, those entitled were her two brothers, William and George (and possibly her common-law spouse), but not her nephew, David, William's son.

[5] At the family law trial, counsel for Kellie Warren told the trial judge that Elizabeth Gilbert had died and that David Gilbert was the sole owner of the property by right of survivorship. Counsel for Kellie Warren also told the trial judge that Elizabeth Gilbert had a claim in the litigation that she had abandoned and which had not been pursued by the estate. David Gilbert's lawyer did not seek to take any issue with these statements. He took the position that although David was the sole owner of the property by right of survivorship because Elizabeth had died, the best case for Kellie was a claim to 1/2 of 1/2 of the property because of Elizabeth's joint interest while she was alive.

[6] David's father, William Gilbert, testified at the trial on behalf of his son David. He and his brother George Gilbert were at that time looking for a will by their sister. When no will was found, the brothers took out letters of administration and became estate trustees. This was done several months after the trial judgment had been rendered and four months before David's appeal of that judgment was heard by this court in December 2006.

[7] William Gilbert attended that appeal hearing. The estate trustees made no attempt to intervene in that appeal or to seek any right or status for the estate at that appeal.

[8] It was only after this court had dismissed David's appeal on December 18, 2006 that the estate trustees brought the motion below, asserting an interest in the property for the first time. They did so by seeking to reopen the family law proceeding on the basis that the rights of a party who had died before trial had been determined without notice to the estate and without affording it an opportunity to participate in the proceeding, with the result that the judgment could not bind the estate. [page244]

[9] The motion judge dismissed the motion on three bases. First, he found that the estate was not prejudiced because it can still claim against David for its share of his half of the property. The motion judge concluded that MacDougall J., the judge at the family law trial, had determined that Kellie was entitled to half of the whole property, no matter who owned it on title. However, that finding was in part a factual finding by MacDougall J. based on the record before him.

[10] The second basis was that William Gilbert, one of the estate trustees and David's father, was well aware of all the facts and circumstances throughout the entire period of the litigation and could have raised them at the trial.

[11] The third basis was that Elizabeth Gilbert took no steps to sever the joint tenancy during her life. It was her wish that the property pass to David, as it did. It was not her wish to sever the joint tenancy and have her interest in the property devolve to her beneficiaries under an intestacy.

Analysis

[12] A person who should have been made a party to a proceeding but who received no notice of the proceeding can seek to have the proceeding reopened if the person moves in a timely manner and there is potential merit to the person's claim. See Coulson v. Secure Holdings Ltd., [1976] O.J. No. 1459, 1 C.P.C. 168 (C.A.); Hughes v. Fredericton (City), 1998 CanLII 12218 (NB CA), [1998] N.B.J. No. 335, 165 D.L.R. (4th) 597 (C.A.); Han v. Re/Max Town and Country Realty Inc., 1995 CanLII 718 (ON CA), [1995] O.J. No. 303, 77 O.A.C. 391 (C.A.); Nu-Pharm Inc. v. Canada (Attorney General), 1999 CanLII 9369 (FCA), [1999] F.C.J. No. 1313, 179 D.L.R. (4th) 531 (C.A.); Weinstein v. Weinstein (Litigation Guardian of) (1997), 1997 CanLII 12272 (ON SC), 35 O.R. (3d) 229, [1997] O.J. No. 3445 (Gen. Div.).

[13] In my view, this case fails to meet either condition and is therefore distinguishable from these authorities on both bases.

(1) Failure to move in a timely manner

[14] The trustees did not move in a timely manner to assert any rights on behalf of the estate. Once appointed, they did not seek to assert any position on behalf of the estate in the appeal of the trial judgment, despite the fact that they were fully aware of that appeal, that the subject matter of that appeal was primarily the property that formed the most valuable potential asset in the estate, and despite having been appointed estate trustees four months before the appeal was heard. William Gilbert says this is because he did not know until after the appeal was decided that the estate had a legal argument that the joint tenancy was [page245] effectively severed in law by the circumstances of the purchase, use and ownership of the property by David and Kellie, and on that basis there was an argument that David may not have become owner of the entire property upon Elizabeth's death by right of survivorship.

[15] William Gilbert was not cross-examined on his affidavit. Nevertheless, even accepting this statement as unchallenged, in my view, the reason he relies on is not sufficient to reopen the case. Trustees, once appointed, have an obligation to secure the assets of the estate:

A new trustee should forthwith acquaint himself with the nature and particular circumstances of the trust property, and should take such steps as may be necessary for its due protection.

John Mowbray et al., Lewin on Trusts, 18th ed. (London, Ont.: Sweet & Maxwell, 2007). It is clear that the trustees understood this obligation. They plead in their Statement of Claim that they took such steps and that they did so following Elizabeth's death and before they were appointed as trustees of the estate.

[16] In this case, the main "asset" of the estate was its potential claim to an interest in this property, valued at approximately $2 million, as the value of the deceased's other assets was $50,000. In their Statement of Claim in this proceeding, the estate trustees plead, at para. 32, that while they were looking for a will of Elizabeth Gilbert (before they were appointed estate trustees), they also "undertook action to secure property left by Elizabeth Anne Gilbert, including important papers relating to issues pertaining to the subject property, pending the formal appointment of Estate Trustees to administer her estate". These "papers" include handwritten notes and draft letters that Rouleau J.A. refers to in his reasons. And at para. 40 of the Statement of Claim, they plead that: "After the death of Elizabeth Gilbert her estate, by the plaintiffs as Estate Trustees, remitted payments relating to carrying costs pertaining to the subject property, including, without limitation, payment on account of the First Mortgage in favour of FCC, Second Mortgage in favour of Gorill, property taxes and insurance premiums."

[17] Clearly, based on these actions by the trustees, following the death of Elizabeth Gilbert, and both before and after their appointment as estate trustees, they saw this property as the main "asset" of the estate and were taking steps to preserve it for the estate.

[18] In protecting the assets of the estate, the trustee must act not only honestly, but also reasonably: [page246] Trost v. Cook (1920), 1920 CanLII 399 (ON SC), 48 O.L.R. 278, [1920] O.J. No. 46 (S.C. (H. Ct. Div.)), at para. 16. Since the property was still the subject of litigation when the trustees were appointed, it was incumbent on the estate trustees to seek timely advice to determine whether and how they could assert any interest of the estate in the property in the ongoing litigation, and to take those steps in a timely way.

[19] While the trustees were not yet appointed at the time of the family law trial, they were in place long before the appeal of that judgment. The inference drawn by the motion judge that William Gilbert chose to wait for the outcome of the appeal and took steps to assert a claim by the estate only after his son David Gilbert lost the appeal is an irresistible one.

[20] In my view, where the trustees sat on their potential claim while the case was sub judice, they do not meet the first criterion for reopening a completed proceeding.

(2) The potential merit of the estate's claim that the joint tenancy was severed during the life of the Elizabeth Gilbert

[21] I also agree with the motion judge regarding the justice of the claim by the estate. The question whether Elizabeth's handwritten notes, referred to by Rouleau J.A., would have been sufficient for her to successfully argue that the joint tenancy was severed while she was alive is not relevant here, given that she never asserted any such position during her lifetime. Had the estate appeared at the trial, it would have had to take a position contrary to the one taken by Elizabeth while she was alive and contrary to David's position. It would have sought a result that severed the joint tenancy retroactively so that Elizabeth Gilbert's interest in the property would devolve to the beneficiaries under an intestacy, rather than to David in accordance with Elizabeth's consistent intent. David would have been in opposition to his father and uncle because his position was that he was the sole owner of the property by right of survivorship. Given his father's position throughout, up until the time David lost the appeal, it is most unlikely that the estate would have taken the position at the original trial that it now seeks to assert.

[22] In any event, where Elizabeth Gilbert, during her lifetime, affirmed the joint tenancy both by the position she took in the litigation and by failing to take any step to sever the joint tenancy when she was aware of the litigation and of Kellie Warren's position, I question whether it would have been open to a trial judge to allow the estate, on behalf of Elizabeth, to assert that without her knowledge and contrary to her intentions, the joint tenancy was severed while she was alive by the actions of Kellie Warren, [page247] and to thereby retroactively reverse the transmission of her interest to David by right of survivorship, that had occurred upon her death.

Conclusion

[23] For these reasons, as well as the fact that the trustees effectively sat on their rights while the case was still sub judice, the justice of the case does not compel the result that the decision below be set aside and the matter wholly re- litigated.

[24] I would dismiss the appeal with costs fixed at $20,000, inclusive of disbursements and GST.

ROULEAU J.A. (dissenting): -- Introduction

[25] I have had the benefit of reading the reasons of my colleague, Feldman J.A. I reach a different conclusion and, for the reasons that follow, would allow the appeal and order that the Estate be made a party to the family law proceedings between David Gilbert and the respondent Kellie Warren. I would also set aside the judgment of Justice MacDougall in the family law proceeding dated May 19, 2006, insofar as it dealt with Elizabeth Gilbert's interest in the Lansdowne Street property and remit the matter to the Superior Court to determine the extent, if any, of the Estate's interest in that property.

[26] In essence, the issue at the original trial in 2005 before MacDougall J. was determining who owned the Lansdowne Street property. The trial judge concluded that although David and Elizabeth Gilbert were on title as joint tenants, the legal title did not reflect the true ownership interests. Rather, David and Elizabeth were holding the property in trust. Having been informed that Elizabeth had abandoned her claim to the property, the trial judge found that David and Kellie were the beneficiaries of this trust in equal shares. He therefore found each to be an owner of a 50 per cent interest in the property.

[27] In my view, had Elizabeth's Estate been present and participated at trial, it could, at a minimum, have argued that it was a beneficiary of the trust. Further, the Estate could have argued that Elizabeth was indeed the owner of a half interest in the property and that, even though her interest was nominally held as a joint tenant, the conduct of both David and Kellie had the legal effect of severing the joint tenancy sometime prior to Elizabeth's death. In either case, the Estate would own an interest in the property. [page248]

The Family Law Trial

[28] Well before the commencement of the family law trial in October 2005, Elizabeth had fallen ill, and by July 21, 2005, she had died.

[29] Following Elizabeth's death, David became adverse in interest to Elizabeth's Estate. David's position at that point was that the property was now his by virtue of it having been held as joint tenants. At trial, David's solicitor told the court that he took the "legal position that as a result of the death of the joint owner, he is now the legal sole owner of this property". It was not in David's interest to suggest that anything he or Kellie had done prior to Elizabeth's death had severed the joint tenancy and converted it to a tenancy in common. Neither was it in his interest to show that Elizabeth had made contributions to the property entitling her to an equitable interest. Either of these would likely reduce his interest in the property whether or not Kellie was successful in her claim.

[30] Kellie had been adverse in interest to Elizabeth from the outset. Kellie's position was that Elizabeth had no interest in the property and there was no joint tenancy. She maintained that Elizabeth was a bare trustee with respect to her ownership interest, holding it in trust for Kellie and David.

[31] After hearing the position of both David and Kellie, the trial judge interrupted Kellie's solicitor and asked about what he termed the "Elizabeth Gilbert issue". Kellie's solicitor advised the court that, because Elizabeth had died, David "by survivorship is now the sole owner of the farm property" and Kellie is claiming a 50 per cent interest in the property. She then made three assertions: (1) Elizabeth's original claim had been abandoned. (2) The Estate of Elizabeth did not make a claim in the proceeding. This appeared to confirm that Elizabeth was not intended to have been a one-half owner in the property. (3) There was no evidence to suggest that Elizabeth was intended to be an owner of the property.

[32] Each of these three statements made by Kellie's solicitor was either wrong or misleading. First, Elizabeth had not abandoned her claim. Second, the Estate could not have brought a claim as no will had then been found and no Estate trustee was in place. Third, some of the material filed in the proceedings did suggest that Elizabeth was intended to be an owner of the property. [page249] This information included an affidavit sworn by Elizabeth prior to her death specifically claiming to be an owner of the property, it having been acquired as an investment.

[33] As no one was representing Elizabeth or the Estate at the trial, no one was there to take issue with Kellie's solicitor's statements.

[34] It is not surprising, therefore, that the trial judge's reasons do not address and make no reference to the position taken by Elizabeth in her pleadings. In fact, the reasons largely adopt the statements made by Kellie's solicitor. They state that the Estate was not a party to the proceeding, that Elizabeth had not contributed to the property, that there was no intention that Elizabeth be a co-owner and that Elizabeth had no beneficial interest in the property.

[35] Given the trial judge's finding that "Elizabeth was holding her half interest as a trustee and that she did not have a beneficial interest in the property", it is apparent that the trial judge concluded that Elizabeth and David were not joint tenants but rather that they held the property in trust. The trial judge then determined that the beneficiaries of this trust were David and Kellie in equal shares.

The Reasons of the Motion Judge

[36] As set out in the reasons of Feldman J.A., there were three bases on which the motion judge dismissed the Estate's motion to be joined as a party in the family law proceedings: (1) MacDougall J. had found that Kellie owned a one-half interest regardless of who owned the property. Any claim the Estate had would therefore be against David. (2) All of the issues now being raised on behalf of the Estate could have been raised at the trial by William Gilbert, one of the trustees of the Estate. (3) Elizabeth took no steps to sever the joint tenancy and, therefore, was content that David receive the property by operation of the joint tenancy on her death.

[37] In my view, none of these supported dismissing the motion.

[38] As to the first reason, MacDougall J.'s reasons make clear his finding that, from the outset, Elizabeth had no interest in the property and was holding it as a trustee. It is only after making this finding that he addressed who, as between Kellie and David, were the beneficial owners of the property and in what proportions. Nothing suggests that, had he considered Elizabeth's [page250] contribution to the property and concluded that she also had a beneficial interest, this interest would only reduce David's and still leave Kellie with a 50 per cent share.

[39] With respect to the second basis for the motion judge's decision, whatever information William Gilbert had at the time of trial, he had no standing to raise anything on behalf of the Estate. At that point, William did not know if a will existed or who the beneficiaries were. Other than being there for a portion as a witness, it is unclear how much of the trial he attended. As for his failure to intervene on the appeal, this was fully explained in his affidavit prepared for this motion, which was not challenged by Kellie. There is, therefore, no basis for suggesting that William, on behalf of an Estate he did not represent at the time of trial and for which, at the time of the appeal, he had only recently been appointed trustee, delayed acting until he would see the outcome of the trial and the appeal. Such an inference would be pure speculation. In addition, there is a second trustee who stands to inherit from the estate. This second trustee does not appear to have had any involvement in the trial and had no interest in delaying the estate's intervention until after disposition of David's appeal.

[40] Third, whether Elizabeth took steps to sever the joint tenancy after filing her answer in May 2003 is a central issue to be addressed at a new trial. In that regard, the material before the motion judge was sufficient to raise a triable issue. Specifically: (a) Handwritten notes made by Elizabeth suggested both that she intended to be an owner and that she considered her interest to be quite separate from David's. Although the record before us does not provide detail concerning the dates when or the circumstances in which the notes were made, it does, nonetheless, raise issues. Among other things, the notes state that: (i) "David and Kellie were to have a prenuptial agreement before . . . we made this investment"; (ii) "We never got anything finalized because Steve had to go to a meeting -- prime purpose was to protect my half for me". (iii) "I am told that I said Kellie paid the mortgage payments -- and I wanted to give her my half of the farm -- totally false -- I want my half -- every cent"; [page251] (iv) "I hired you [Elizabeth's solicitor] to represent me on my half of the property -- my half has nothing to do David's half"; and (v) "Ken protect the property Ken & I -- what proceedings I have to take over farm -- take David off title or David and I and put Ken on title". (b) A draft letter prepared by Elizabeth's solicitor dated September 9, 2003 was filed. The deponent was not at that point aware of whether the letter was sent. The letter apparently represented Elizabeth's view. It stated: (i) "in my view my client would be within her rights to sue her joint tenant for singular title to the property following Mr. Gilbert's breach of a verbal agreement to pay the mortgage to the Farm Credit Corporation, and the other significant prejudice to her in the circumstances" and (ii) "she is not content that either Ms. Warren or Mr. Gilbert be on the property. I do not know whether she has the right or ability to keep Mr. Gilbert off the property but at this date she wishes to do so for a period of time until she is certain that her interests are adequately protected." (c) A certificate of pending litigation was filed against the property by Kellie. The legal effect on title of this document, if any, was not addressed. (d) The legal or equitable consequence to Elizabeth, if any, of a declaration that from the outset David acquired the property not as a joint tenant but in trust for himself and Kellie was not addressed.

[41] In addition to this material that was before the motion judge, a new trial would allow the Estate to call witnesses such as Elizabeth's former solicitor, and to question Kellie and David about their interaction with Elizabeth both before and after the separation. Specifically, the Estate could question the parties as to whether Elizabeth raised with them the concerns set out in the notes and her wish to protect her half interest for herself. What, if anything, would emerge from cross-examination on the subject would have to be weighed by the trial judge together with all the other evidence. It may well be that, from this testimony alone or from this testimony considered together with the documents [page252] referred to alone, a judge would conclude that Elizabeth was asserting that the joint tenancy had been severed and, but for her illness and death, this position would have been reflected in her pleadings.

[42] Contrary to the motion judge's conclusion, the materials filed and issues raised were such that the Estate's claim against the property should be determined in a new trial within the family law proceedings.

Submissions on Appeal

[43] At the appeal, the focus of Kellie's submissions was that the appeal should be dismissed because the Estate failed to move in a timely manner and because the Estate's claim that the joint tenancy was severed during Elizabeth's lifetime is without merit. I will deal with both of these in turn.

(a) Did the Estate move in a timely manner?

[44] I agree that the delay in seeking relief is a factor to be considered when deciding whether to set aside a decision. In the present case, however, the delay is relatively short and has been fully explained in the affidavit filed by William. He was not cross-examined on his affidavit, and his evidence is not contradicted in any way by Kellie.

[45] The Estate trustees have explained that they were not appointed as trustees of the Estate until August 17, 2006. By that date, the trial, having commenced almost a year earlier in October 2005, had been completed. Judgment had been rendered on May 19, 2006. An appeal was already underway, and was heard on December 18, 2006, about four months after the trustees' appointment.

[46] Although an executor must not delay in converting or realizing the assets of the estate, the law recognizes the difficulty in getting the affairs of an estate in order by generally providing the executor with a year in which to do so:

The executor must not unreasonably delay in getting in the assets and settling the affairs of the estate and he will be personally responsible for any loss occasioned by undue delay. There is no hard and fast rule as to what constitutes undue or unreasonable delay, but it is the practice to speak of the executor's or administrator's year and the courts attach importance to the question whether the alleged failure to convert or realize assets which resulted in the loss to the estate occurred within or beyond a year.

Thomas G. Feeney and Jim Mackenzie, Feeney's Canadian Law of Wills, 4th ed., looseleaf (Toronto: Butterworths, 2000), at 8.16. [page253] The four months that passed between their appointment and the hearing of the appeal and the six months before this motion was launched both fall well within the general one-year period.

[47] The respondents argue that the appellants should have sought to intervene at the appeal, and that their failure to do so precludes their ability to have the judgment set aside now. The evidence does not suggest, however, that the trustees could have intervened effectively at the appeal. Even by the time of their motion to have the Estate added as party, the trustees were not aware that Elizabeth had filed an Answer in the family proceedings, although they presumed one had been filed on her behalf. In those four months, they would have had to retain counsel, review the judgment, obtain copies of the trial transcripts and review all of the documents left by Elizabeth to discover those that have now been put forward in support of this motion.

[48] It is only through doing all of this work that the trustees could have known that the trial judge's critical finding -- that Elizabeth did not have a beneficial interest in the property -- was made without considering Elizabeth's claim, was contrary to Elizabeth's position, was contrary to much of the documentary evidence available, and was made after the judge had been told by Kellie's counsel that there was no evidence to suggest that Elizabeth intended to be an owner and that Elizabeth had abandoned her claim. According to the trustees' uncontradicted evidence, it was not until January 2007 that they had any idea that Elizabeth's estate may have any valid ownership interest.

[49] Feldman J.A. views the fact that the Estate was making mortgage, tax and insurance payments relating to the property as contradicting this assertion and indicating that the trustees saw the property as the main asset of the estate even before their appointment. I disagree. William's evidence is that Elizabeth had been making similar payments during her lifetime, since she was a guarantor of the mortgages on the property and David was often unable to pay. When she died, the Estate assumed this obligation. Given the trustees' uncontradicted evidence that they had no idea that the estate may have had a valid ownership interest in the property until January 2007, I interpret these payments as protecting the Estate rather than demonstrating that they viewed the property as its main asset. In short, after taking their position as trustees, William and George exercised reasonable diligence in investigating the state of its assets and bringing this motion to have the estate made a party to proceedings that affected its property interests.

[50] Additionally, when weighing the potential prejudice caused by the delay in seeking the relief, it is significant, in my [page254] view, that Kellie's solicitor bears some of the responsibility for the failure of the Estate to participate in the family law trial. From the transcript, it is apparent that the trial judge was concerned about the issue of Elizabeth's Estate participating in the trial. Kellie's solicitor's response to the trial judge was incorrect and contributed to the trial judge deciding the case without input from the Estate. In that sense, Kellie and David, to the extent that his solicitor did not correct the information, are authors of the unfortunate need to return the matter for a new hearing.

[51] Finally, where a trial proceeds in the absence of an affected party, there is a real issue as to whether that party is bound by the result: see Coulson v. Secure Holdings Ltd., [1976] O.J. No. 1459, 1 C.P.C. 168 (C.A.). As a result, I would not give effect to this submission.

(b) Is the Estate's claim without merit?

[52] Kellie argues that it is apparent from Elizabeth's pleading and her conduct that she was and intended to be an owner in joint tenancy with David and was content that the property passed to David on her death. As part of this submission, it is suggested that the Estate could not take a position contrary to the position taken in Elizabeth's initial pleading.

[53] Although I agree that Elizabeth originally pleaded that she was a joint tenant, this was a position she took in 2003 based on the information she had available to her at that time. It does not follow that because this position was advanced at the outset of the proceeding, Elizabeth and the Estate were invariably stuck with that position and would have been unable to change their position up to and during the trial.

[54] As circumstances change and additional information comes available, a party can apply to change its position and its pleadings. Subsequent to the initial pleading filed in 2003, it is apparent from Elizabeth's notes and other materials I have referred to earlier, that Elizabeth's position was changing. The fact that she was gravely ill for some time before her death may well be a factor to consider when viewing her conduct subsequent to the initial pleading. In addition, the death of Elizabeth resulted in a further significant change of circumstances.

[55] My colleague questions whether it would have been open to a trial judge to allow the Estate on behalf of Elizabeth to assert that, without Elizabeth's knowledge and contrary to her intentions, the joint tenancy was severed while she was alive. I disagree. This assumes that Elizabeth did not, during the period of her illness and prior to her death, in fact intend to sever the joint [page255] tenancy and assumes that David or Kellie, through their actions, had not severed the joint tenancy. These are the very issues that were not addressed at trial because the Estate did not participate and that, if established, may have entitled Elizabeth (and, after her death, the Estate) to a remedy in equity.

[56] I would, therefore, not conclude that the Estate would inevitably be bound by the original pleading and would have been unable to change its position had it been present at trial. It has been made clear in submissions before us that, should the matter proceed, the Estate would indeed seek to amend the pleading. Unless some prejudice were shown, the amendment would likely be granted.

[57] Amending the pleading to advance new positions would, however, be of little significance if there was no basis upon which the Estate could emerge from a new trial with an interest in the property. This, in reality, is at the core of this appeal.

[58] As I will explain, in my view there are two potential outcomes that warrant consideration at a new trial. The first assumes that the trial judge's finding that Elizabeth held the property in trust will stand, and the second assumes that this finding will be set aside. Both of these depend on the court setting aside the trial judge's finding that the Estate had made no contribution to the property. The materials filed in this court suggest that this finding may well be set aside, as they show that Elizabeth did did make contributions to the property both in terms of money and by securing the credit needed to fund the purchase. The precise amount of the contribution has not, at this stage, been determined. This is properly a matter for trial, as is the legal effect of such contributions.

(i) Assuming that the trial judge was correct and that David and Elizabeth held the property in trust

[59] If, at a new trial, the court concludes that MacDougall J. was correct and that, from the outset, David and Elizabeth held the property in trust and not as joint tenants, the Estate will then be in a position to argue that MacDougall J.'s finding that Elizabeth made no contribution to the property was wrong. The Estate could present evidence and argue that Elizabeth, and after her death the Estate, contributed to the acquisition and maintenance of the property and are beneficiaries of the trust. If Elizabeth and the Estate contributed to the property, it may well follow that the Estate is properly a beneficiary of this trust. The extent of each party's interest in the trust -- David, Kellie and Elizabeth -- would then be determined. [page256]

(ii) Assuming that the trial judge was incorrect and that the property was in fact acquired and held as joint tenants

[60] If the Estate can show that Elizabeth was not holding the property in trust for David and Kellie but rather as owner in joint tenancy, then the Estate could argue that the joint tenancy was converted to a tenancy in common sometime prior to her death. This would make the Estate owner of a one-half interest in the property.

[61] As set out earlier, there was some evidence before the motion judge to the effect that Elizabeth contributed to the property and suggesting that the joint tenancy may have been converted to a tenancy in common or, alternatively, suggesting that the Estate has an equitable claim to a half interest in the property.

[62] It is not for me to determine what evidence can properly be led at a new trial, the value of that evidence or the strength of any claim. By suggesting that the issues sought to be raised by the Estate have some merit, I should not be taken as suggesting that the Estate has a strong case. Rather, I mean only that there are issues that can properly be raised by the Estate that are not clearly without merit, and that the Estate, through no fault of its own, has been unable to have a court rule on. The fact that a decision has already been made, but on an incomplete record and in circumstances as I have described, including the judge being provided with incorrect information, should not deprive the Estate of an opportunity to make its case.

[63] It would be wrong, in my view, to conclude, based on the materials before us, that the result of a trial at which the Estate was a full participant would invariably have produced the same result as was obtained in their absence. In the course of a trial, positions regularly change and unforeseen outcomes frequently occur. The present case is one where caution dictates that the matter be returned to the Superior Court to have those issues raised by the Estate properly adjudicated.

Conclusion

[64] I would allow the appeal and order that the Estate of Elizabeth Gilbert be made a party to the family law proceedings between David Gilbert and Kellie Warren, that the judgment of Justice MacDougall dated May 19, 2006 be set aside insofar as it deals with the half interest in the Lansdowne Street property claimed by the Estate, and that the issue be remitted back to the Superior Court to determine the extent, if any, of the interest held by the Gilbert Estate. The order of Simmons J.A.'s prohibiting the [page257] distribution of any proceeds of sale of the property would be continued until trial or further order of the Superior Court.

[65] I would award the appellant costs of the motion and of the appeal on a partial indemnity basis. I would fix the costs of the motion at $20,000 and the costs of the appeal at $20,000, both inclusive [of] GST and disbursements.

Appeal dismissed.