COURT FILE NO.: CV-13-2035-00ES
DATE: 20131213
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: IN THE ESTATE OF GAIL SHEARD (also known as GAIL FERRISS SHEARD), deceased
BEFORE: MESBUR J.
COUNSEL: Anne Werker, for the grandchildren beneficiaries, moving parties
Paul Boshyk, for the Estate Trustees, responding parties
HEARD: December 9, 2013
E N D O R S E M E N T
The motion:
[1] The moving parties are the grandchildren of Terence Sheard, the late husband of the late Gail Sheard. I will refer to them as “the grandchildren”. The grandchildren are the beneficiaries of one quarter of the residue of Gail Sheard’s estate. Charities share the remaining three quarters of it.
[2] Gail Sheard died on December 28, 2007. Since then her estate trustees (two of her nieces) have been administering the estate. Through their counsel, they have provided each of the grandchildren with two distributions of $55,000 each, the first in September 2008 and the second in September of 2009. They have also distributed an additional $67,300 to each of the grandchildren.
[3] In the case of the first distribution, each of the grandchildren was asked to sign a formal receipt for it. Each did. The receipt is under seal, and is witnessed.
[4] In the case of the second distribution, the grandchildren received a covering letter from the estate solicitor enclosing a cheque for $55,000, which represented the second distribution of the estate. As well as enclosing the cheque, the covering letter says:
We are also enclosing a set of accounts for the estate for the period from December 28, 2007 [the date of death] to June 30, 2009 for your review. If they are satisfactory, please date and sign the enclosed release and return three copies to the undersigned.
[5] The release enclosed with the cheque, letter and accounts says, among other things:
AND WHEREAS the Executors have now paid to the undersigned the further amount of $55,000.00 as a second distribution on account of [his/her] distributive share of the Estate;
AND WHEREAS the Executors have furnished to the undersigned a sufficient accounting of their administration of the Estate for the period from December 28, 2007 to June 30, 2009;
NOW THEREFORE the undersigned hereby acknowledges receipt from … Executors, of the further amount of $55,500.00 as a second distribution … and acknowledges that [he/she] has received a full and adequate accounting of their administration of the Estate for the period from December 28, 2007 to June 30, 2009 and waives and dispenses with the preparation and production of any further accounts and in particular waives and dispenses with an audit of the accounts by a Judge of the Ontario Superior Court of Justice.
The undersigned releases and discharges Gail Elizabeth Todgham and Mary Hatch [the executors] from all actions, claims and demands in relation to the second payment to the undersigned and the profits and income thereof, and from any act done or omitted to be done by Gail Elizabeth Todgham and Mary Hatch, in their capacities as Executors in the administration of the estate during the period from December 28, 2007 to June 30, 2009 …
[6] Each of the grandchildren executed this release. The releases are signed before a witness, and are stated to be “signed, sealed and delivered.”
[7] The executors then proposed to make a further distribution to the grandchildren in August of 2012. This distribution was to be in the amount of $90,000 each. The lawyer for the estate wrote to each of the grandchildren setting this out. Her letter included a copy of the Executors’ accounts for the period December 28, 2007 to June 30, 2012, along with a calculation of the executors’ compensation for the same period. The estate solicitor included a proposed third distribution schedule together with a final distribution schedule.
[8] The letter asked each grandchild to review the documents and contact the estate solicitor if there were any questions. The solicitor went on to say that if the documents were satisfactory, they should be signed and each grandchild should return three copies of the Receipt and Release. Once those were received, the Executors would make the third distribution.
[9] The estate solicitor then discovered an error in the third distribution schedule. She wrote to each grandchild on August 31, 2012 advising about the error in calculation. She told them the revised distribution would be in the amount of $67,300 each. Again, the letter enclosed a receipt and release for execution.
[10] The grandchildren appear to have retained counsel sometime after receiving this last letter. Their lawyer wrote to the estate solicitor, raising questions about “the distribution, the accounts and the compensation claim by the beneficiaries [sic]”[^1]
[11] Correspondence followed between the two lawyers, with the estate solicitor providing much of the information the grandchildren’s lawyer had requested. Some discussion ensued about the grandchildren providing a release before receiving the third distribution. The executors made the third distribution of $67,300 to each of the grandchildren on December 13, 2012. The grandchildren did not execute the requested release.
[12] The executors then commenced an application to pass their accounts for the period July 1, 2009 to June 30, 2012. The grandchildren filed a notice of objection along with motion seeking an order requiring the executors to file “a complete set of accounts, together with vouchers related to all the accounts referred to in the objection”, from the date of death onward. They also sought an order dispensing with mandatory mediation.
[13] The matter came on before Greer J on September 13, 2013. Greer J noted the grandchildren, as the Objectors were seeking a “full accounting” for the period from the date of death to July 1, 2009, a period for which they had already released the Executors. She ordered that the grandchildren would have to amend their motion to ask for an order to set aside the Releases.
[14] Greer J also ordered the Executors to up-date their accounts for the period July 1, 2009 to June 30, 2012 to include the period up to August 31, 2013. I therefore assume that when the application to pass the accounts is heard, it will include the accounts up to and including August 31, 2013.
[15] The grandchildren delivered an amended notice of motion September 18, 2013 in which they now sought an order setting aside their releases. They did not provide any additional affidavit material. The amended notice of motion asserts the following as the grounds to set aside the releases:
The Releases on which the Estate Trustees rely were signed by the beneficiaries without consideration and do not reflect a fully informed intention to be legally bound. The releases are based on accounts that were incomplete, contained substantial errors and did not balance. The beneficiaries signed the releases at the request of the Estate Trustees’ solicitor without independent legal advice.
[16] This is now the return of the motion to set aside the releases and require the executors to pass accounts for the period covered by the releases, as well as the accounts for the later period. The motion also relates to the request to dispense with the requirement for mandatory mediation.
[17] The executors oppose the relief sought for three reasons. First, they say the motion to set the releases aside is statute barred. Second, they say that even if it is not, there is no legal basis on which the releases should be set aside. Last, they assert there is also no basis to dispense with the requirement for mandatory mediation on contested passings of accounts.
Discussion:
The limitation period
[18] If the executors are correct that the claim to set aside the releases is time-barred, that will be a complete answer to that aspect of the motion. I will therefore deal with that issue first.
[19] Limitation periods in Ontario are governed by the Limitations Act, 2002[^2] and are founded on the concept of discoverability. The Act provides that a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.
[20] Under s. 5 of the Act a claim is “discovered” on the earlier of the day on which the person with the claim (or a reasonable person with the abilities and in the circumstances of the person with the claim) first knew:
a) That the injury, loss or damage had occurred;
b) That the injury, loss or damage was caused by or contributed to by an act or omission;
c) That the act or omission was that of the person against whom the claim is made; and
d) That, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it.
[21] Here, the grandchildren seek relief relating to the Executors’ alleged acts or omissions during the period December 28, 2007 to June 30, 2009. They received the executors’ accounts for this period in September of 2009. They executed releases in relation to these acts in 2009. They launched their motion to set aside the releases in September of 2013. That is clearly well outside the 2-year limitation period.
[22] The grandchildren argue that simply bringing a motion is not the same as commencing a “proceeding” as contemplated by the Limitations Act. The Act does not define the term “proceeding”, although r. 14.01(1) of the Rules of Civil Procedure provides: “A proceeding shall be commenced by the issuing of an originating process.”
[23] Here, the attempt to set aside the releases arises in the context of the executors’ application (originating process) to pass accounts. It seems to me that if the grandchildren want to set aside releases, a cross-application for that new relief would have been appropriate, instead of a motion, since they are seeking independent relief of their own. Applications, by their nature, do not lend themselves easily to the use of “cross” applications. If the passing of accounts arose by way of statement of claim, the grandchildren would have asserted their claim to set aside the releases in a counterclaim. That, of course, is an originating process. In the context of estates litigation like this, the rules mandate applications. Since the grandchildren’s claim is really a new claim asserted in an estates application it seems to me it should be treated in the same way as an originating process starting a proceeding and thus subject to the provisions of the Limitations Act.
[24] Even if it were not, it seems to me a party should not be permitted to do indirectly what it is not permitted to do directly. Clearly, at the very least the grandchildren knew, or should have known, before they signed the releases that they might have cause to complain about what the executors had done up to that point. That was more than two years before they launched this motion to set aside the releases. They would not be permitted to commence a claim now to set the releases aside. They should not be permitted to do so under the guise of a motion. I therefore conclude The claim to set the releases aside is clearly time barred.
Any reasons to set aside releases?
[25] Even if the claim to set the releases aside were not time barred, I am not persuaded there would be any legal basis on which to set them aside otherwise.
[26] Executors must have their administration approved and be discharged. There are two ways of doing so. First, they may apply for a passing of accounts. Alternatively, they can avoid the cost and delay of a passing, and instead ask the beneficiaries to approve their administration and provide for their informal discharge directly.[^3] Releases have been commonly used to do this for decades in Ontario.[^4] It is common and quite proper, to accompany a payment to a beneficiary with a release, which the beneficiary is asked to execute and return. There is nothing unusual or sinister about the releases. The question is whether there would be any basis to set them aside if the request to do so were not already time-barred.
[27] The grandchildren say the reason the releases should be set aside is first, they are without consideration; second, they do not reflect a fully informed intention to be legally bound; third, the releases are based on accounts that were “incomplete, contained substantial errors and did not balance”; and last, the grandchildren signed the releases at the request of the solicitor for the estate, without independent legal advice.
[28] On the question of consideration, the grandchildren’s counsel says the releases are without consideration and not signed under seal. The releases and receipts contained in the motion records all appear to have been signed under seal. All are witnessed, and all contain the words: “signed, sealed and delivered”. I therefore conclude they were all executed under seal, and therefore have consideration.
[29] The supporting material for the grandchildren’s motion is a single affidavit by one grandchild. Nowhere does he depose he did not intend to be legally bound by the release. Since none of the other grandchildren filed affidavits, I have no evidence to suggest any of them did not intend to be legally bound by what they signed. The releases are formal documents, containing legal language. Absent any specific evidence to the contrary, I cannot conclude the grandchildren did not view them as legally binding documents.
[30] As to whether the accounts were incomplete or contained substantial errors, I was referred to no authority to suggest that this would negate the effectiveness of a release.
[31] Finally, though it might have been better for the estate trustees’ lawyer to suggest independent legal advice to the beneficiaries before signing the releases, I do not see this as fatal to their enforceability.
[32] There is nothing to suggest the grandchildren did not know of their right to consult with counsel. Indeed, they have now done so without any suggestion from the solicitor for the estate. The solicitor for the estate invited them to speak to her if they had questions or concerns, or had any difficulty with the releases. There is no evidence they did so.
[33] The grandchildren complain they were given no information about the compensation sought, or the nature of some of the assets in the estate. That may be so; however, there is equally no evidence the grandchildren asked any questions about these issues, or were given no answers. The estate solicitor invited questions from them. They did not accept her invitation. Surely the executors and their counsel are not expected to be clairvoyant.
[34] There is no question here of duress, or of the grandchildren being prevented from seeking and obtaining information. This is not a case of holding the bequests to ransom. The beneficiaries were provided with their bequests at the same time as they were asked to sign the releases. This is not a case like Rooney Estate v. Stewart Estate[^5] where the estate solicitor demanded a release from the beneficiary before delivering his accounts, and also implied payment to the beneficiary was conditional upon delivery of a release. There, the court noted the failure to suggest independent legal advice was a vitiating factor in terms of the releases. Here there are no such allegations.
[35] In this case, it is only in the case of the third distribution that the grandchildren were asked to sign releases before being provided with the funds. At the end of the day, the third distribution was made without any releases being executed.
[36] The only evidence to support the claim to set aside the releases is the affidavit of T. Scott Sheard, one of the grandchildren. He does not suggest he or the other grandchildren were under any duress when they signed the releases. I therefore conclude there was none.
[37] Mr. Sheard does not suggest he did not understand what he was signing. He does not say he had no idea he could consult with a lawyer before signing. To the contrary, he makes reference in paragraph 9 of his affidavit to signing the release “without the benefit of costly legal advice”. From this statement I infer first, he knew he could obtain legal advice; second, he assumed it would be costly; and third, he decided to proceed without it.
[38] Nowhere does Mr. Sheard raise any facts that could lead the court to set aside the release he signed. Since there is no evidence of any kind from any of the other grandchildren, there is no basis to set aside their releases either.
[39] Nothing gives rise to any basis on which the court should set aside the releases, even if the attempt to do so were not time-barred. Accordingly, the motion to set aside the releases must be dismissed. There is thus no basis on which to revisit any of the accounts for the period from the date of death to June 30, 2009, since that is the period to which the valid releases apply.
Mandatory mediation
[40] Any application to pass accounts is subject to the mandatory mediation provisions of the Rule 75.1. The grandchildren say the court should exercise its discretion under rule 75.1.04 and dispense with the necessity of mediation in this case. They seem to be suggesting that since their primary complaint is over executors’ compensation, the quarrel is not really among family members, and thus is less amenable to mediation. I disagree. Mediation is helpful in narrowing issues, focusing cases, and, where possible settling them. Mediation is useful in every kind of litigation before our courts. Its efficacy is not limited to “family relationship” disputes.
[41] The grandchildren also say that where “small amounts” are in issue, mediation is not cost-effective. Here, the amount of executors’ and professionals’ compensation is in excess of $100,000 for the period July 1, 2009 to June 30, 2012. I hardly view that as a “small” amount. Also, since I do not have the additional accounts for the period up to August 31, 2013, I do not know what additional compensation is claimed there. I therefore reject the argument that I should dispense with the requirement for mediation because the amount in issue is “small”.
[42] The grandchildren also argue that what they need is a “referee” not a “coach”. They miss the point of mediation. As I have said, a skilled mediator can focus the parties, narrow the issues, and settle cases.
[43] The grandchildren also suggest settlement has already been explored, and failed. Again, I reject this argument. Often, parties need an independent, third party to help them see past their respective positions and arrive at a resolution that is in the interests of all, without expending further resources. The parties have not had the benefit of this kind of third party intervention. It is extremely beneficial. It could resolve this case.
[44] Although the court retains the discretion to dispense with mediation I have not been persuaded there is any reason for me to exercise my discretion in that fashion. I therefore dismiss the grandchildren’s motion to dispense with mandatory mediation.
Conclusion:
[45] The grandchildren’s motion to set aside their releases is therefore dismissed, for the reasons set out above. Their motion to dispense with mediation on the passing of the accounts for the period July 1, 2009 to August 31, 2013 is also dismissed. Counsel are to return to court for the earliest scheduling appointment available in order to schedule the mediation and all further next steps required for the passing of accounts application.
[46] This leaves the issue of costs. As the rules provide, at the end of argument each lawyer provided me with a bill of costs. They were unable to agree, however, on the appropriate costs disposition. Each bill of costs has similar (though not identical) amounts of time spent. From this I infer the time spent by each side was reasonable.
[47] The grandchildren did not succeed on this motion. It seems to me they should bear the costs of it. If there are compelling reasons why this should not be the case, I will entertain written submissions from counsel of no more than one page each, dealing only with this discreet issue. Any such submissions will be delivered within one week of the release of these reasons.
[48] As to the quantum of costs, Mr. Boshyk has set out a partial indemnity rate for himself of $180 per hour. This is well below the maximum of $225 per hour set out in the Notice to the Profession for lawyers with less than ten years’ experience. Mr. Boshyk has been at the bar for only one year. It seems to me this hourly rate is within the reasonable range for his level of experience. Accordingly, I find his claim for total fees and disbursements of $4,952.89 reasonable in the circumstances.
[49] Accordingly, absent any submissions as set out above, the grandchildren will pay the costs of the estate, on a partial indemnity basis, fixed at $4,952.89 all inclusive.
MESBUR J.
Released: 20131213
[^1]: Letter of Ms. Werker to Ms. Whitaker dated October 30, 2012 [^2]: S.O. 2002 c. 24, Sch B, s. 4 [^3]: Bedont Estate, Re [2004]O.J. No. 4267 (S.C.J.) [^4]: Brighter v. Brighter Estate, 1998 CarswellOnt 3113 (Gen.Div) per Sheard J. [^5]: 2007 CarswellOnt 6560 (S.C.J.)