SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: ES-799-13
DATE: 2015/07/16
RE: Theodore C. (“Ted”) Dueck and Erin Fretwurst, Applicants
AND:
Jan Fretwurst Chaplin, Respondent,
AND: Hinson Simone Chaplin, Wilks Elan Chaplin a minor, Brechin Dhu Chaplin a minor, Santana Rutherford a minor, Max Rutherford a minor and the Children’s Lawyer, as litigation guardian of the minor Respondents and representing any unborn persons who may have an interest in the Estate of Mark Fretwurst, deceased.
BEFORE: Justice A.J. Goodman
COUNSEL:
C. Melville, Counsel for T. Dueck and E. Fretwurst, Applicants
W. R. Bumstead, Counsel for the Respondent, Jan Fretwurst Chaplin
D. Stephens, Counsel for T. Dueck, personally
M. Rodenburg, Counsel for the Office of the Children’s Lawyer
B Wiseman, Counsel for the Respondents, Hinson Simone Chaplin and Wilks Elan Chaplin, a minor
D. Dauphney, Counsel for the Public Guardian and Trustee
HEARD: July 14, 2015
ENDORSEMENT
1This is a motion for directions pursuant to Rule 75.06.
2On January 17, 2013, Mark Fretwurst (“Mark”) executed a Last Will and Testament, which named the applicants, Theodore (Ted) Dueck (“Dueck”) and Erin Fretwurst (“Erin”) as his Estate Trustees. Dueck was Mark’s matrimonial lawyer, and Erin was Mark’s sister.
3The respondent, Jan Fretwurst Chaplin (“Jan”) seeks an order requiring the applicants to propound the 2013 Will and other directions with respect to this estate litigation.
4The fundamental issue in this motion is the identification of the proper party who is required to propound the 2013 Will.
5During the course of this motion, counsel for other parties were permitted to participate without having filed any materials with the Court.
Background:
6Mark died on April 4, 2013 at the age of 47, as a result of complications from a cancerous brain tumour. At the time of his death, Mark was married to Jan, although they had been living separate and apart since 2007 and they were in the midst of contentious litigation regarding the division of assets, child and spousal support and child access.
7Mark and Jan had three daughters, Wilks Elan Chaplin, now an adult; Hinson Simone Chaplin and Brechon Dhu Chaplin, both minors, (collectively the “Chaplin Children”)
8Prior to 2013, Mark executed a Last Will and Testament, dated June 28, 2001 (the “2001 Will”), which named Jan as his Estate Trustee, with Jan’s sister as the alternate. The 2001 Will provides that the residue of the Estate shall be paid to Jan, if she survives him. If she did not survive him (or she disclaims the legacy), the 2001 Will divides the residue of the Estate in equal shares between Mark’s children, subject to a trust until the first child attains the age of 30 (with an interim distribution when the first child attains the age of 25). If none of Mark’s children are alive at the final distribution date, the residue is divided among Jan’s mother and her siblings, per stirpes. The deceased had appointed Jan as his attorney for personal care in 2001.
9Erin accompanied Mark to Dueck’s office on January 17, 2013 and was present during the formalities of the 2013 Will. While at Dueck’s office, Mark signed powers of attorney for property and personal care along with the 2013 Will. The 2013 Will was prepared by Dueck’s partner, Lee Sauer.
10On January 16, 2013, Dueck told Jan that “he was contemplating changing Mark’s power of attorney for property and Mark’s will to appoint himself as Mark’s attorney and estate trustee.” Dueck advised that he believed he was the best choice for those roles because everyone else in the deceased’s family was conflicted.
11The 2013 Will divides the residue of Mark’s Estate (the “Estate”) in equal shares between the three Chaplin children and Erin’s two children; Santana Rutherford, a minor born September 4, 1997; and Max Rutherford, a minor born January 12, 2001, (collectively the “Rutherford children”). The terms of the will include that each are entitled to a one-fifth share with each share to be held in trust until the child reaches the age of twenty-five (25) years, with a gift over to the issue of that children then alive in equal shares per stirpes, and a further gift over to the siblings of that child then alive in equal shares per capita.
12As of the date of the return of this Application and Motion, none of the Chaplin children or Rutherford children have reached the age of twenty-five (25) years, and none of them have any issue. The validity of the 2013 Will affects the interests of Jan, the Chaplin children and the Rutherford children.
13After Mark’s death, Dueck and Erin applied for a Certificate of Appointment of Estate Trustee With a Will for the 2013 Will. Jan filed a Notice of Objection, dated April 19, 2013. Dueck and Erin then delivered a Notice to Objector, dated May 14, 2013. Although Jan did not serve a From 75.4 Notice of Appearance, the applicants were advised by Jan’s lawyer that she continues to dispute the 2013 Will.
14On December 5, 2013, on consent of all parties, Gordon J. ordered the appointment of E. Wayne Farhood as the Estate Trustee during Litigation (“ETDL”).
Positions of the Parties:
15Mr. Melville, for the applicants, submits that his clients, as estate trustees, did not take any substantive steps with respect to the 2013 Will and only acted to protect and preserve the estate. Shortly after Mark’s passing, Dueck and Erin applied for a Certificate of Appointment of Estate Trustee with a Will.
16Mr. Melville submits that between April 4, 2013, and April 19, 2013, the applicants actually undertook very few steps in their (disputed) role as Executor and Trustee of the 2013 Will. Essentially, they paid a few outstanding debts, which are undisputed, took steps to consolidate the assets of the Estate into Dueck’s trust account and paid the Estate Administration Tax Act fees on April 19, 2013. After April 19, 2013, and up to December 5, 2013, a payment of a portion of the outstanding funeral expenses were made, and four interest payments on the investment of the Estate assets were received.
17The applicants submit that the request of the respondent to require them to propound the 2013 Will shall cause the litigation to be more expensive, would be redundant and is unnecessary, and given the developing litigation, would also place them in a conflicted position. The applicants have no beneficial interest in the estate and the submit that the Chaplin and the Rutherford children (and their unborn issue), by their respective litigation guardians, should propound the 2013 Will. As such, the applicants seek the confirmation that their renunciations are effective; seek an order removing them as executors or trustees.
18In the further alternative, the applicants submit that if this Court determines that they are required to propound the 2013 Will, they ought to be entitled to trustees fees and that they be indemnified for their expenses.
19Jan alleges that the 2013 Will is invalid on the basis that Mark lacked testamentary capacity at the time of execution and that he was the subject of undue influence by Erin. Mr. Bumstead, counsel for Jan submits that his client seeks an order requiring the applicants to propound the 2013 Will and, further, that the issues to be tried include a claim against the applicants for recovery of monies paid to them prior to the death of Mark, and for negligence and breach of fiduciary duty.
20The respondent submits that almost immediately after his death, the applicants began acting as estate trustees under the purported authority of the 2013 Will. The applicants took the position that the 2013 Will was valid and they informed Jan and Hinson that they intended to carry out its terms as the deceased’s executors.
21Mr. Bumstead submits that the applicants are the proper parties to propound the 2013 Will, affirm its validity, and ought not to be relieved from that obligation.
22Mr. Rodenburg, for the Office of the Children’s Lawyer (“OCL”), submits that at this point in time there has not been sufficient information provided which would allow the Children’s Lawyer to either propound the 2013 Will or to conclude that it is invalid. As all parties are aware, Brechin Dhu Chaplin (and the other two Chaplin children) have dependant’s relief claims which they have and will be pursuing whether the 2012 Will is determined to be valid or not. The Children’s Lawyer is therefore interested in being involved in obtaining and reviewing what information there is surrounding the drafting and execution of the 2013 Will but should not be one of the parties forced to propound that Will.
23Mr. Rodenburg submits that the parties who ought to be propounding the 2013 Will are those that had the most involvement in causing such testamentary document to be drafted and executed in the same place.
24The Children’s Lawyer is supportive of the Order Giving Directions including the Orders set out in Jan’s Factum at paragraphs: 42(a)(i) and 42(a)(ii), b), (c), & (d).
25Mr. Dauphney, on behalf of the Public Guardian and Trustee (“PG&T”), supports the position taken by Mr. Rodenburg.
26Ms. Stephens, on behalf of Ted Dueck personally, raised concerns about the respondent’s actions in advancing a claim of solicitor’s negligence and breach of fiduciary duty without adequate notice. Counsel submits that his Court ought to ensure procedural fairness to all parties involved in this application and potential future claims yet to be served.
27Mr. Wiseman advises that his clients decline to propound the 2013 Will and supports Jan’s position in the proceeding.
Discussion:
28Section 5 of the Trustee Act provides that this Court may make an order for the appointment of a new trustee or new trustees, either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee. The power of the Court is discretionary.
29The Court has jurisdiction to pass over a named executor or estate trustee where that person has not received a Certificate of Appointment. No such Certificate has been issued in this case.
30I am guided by the provisions found in the jurisprudence, the Trustee Act, Estates Act and Rule 75.06. Rule 75.06 (3) provides authority for the court to issue directions in a contested estate proceeding. The court’s directions may include defining the issues to be decided, the parties (who is the plaintiff and who is the defendant) and setting procedures for bringing the matter before the court in a summary fashion (where appropriate). The directions that may be issued are not limited.
31A person appearing to have a financial interest in an estate may apply to have the deceased’s will proved in such a manner as the court directs. As a general principle, there is a right to have a will proven in solemn form so as to permit scrutiny of all relevant factors. Allegations that call the testator’s knowledge and testamentary capacity into question are in and of themselves sufficient to justify the court exercising its discretion make an order directing a trial of an issue.
32I accept that the validity of the 2013 Will is rightly a matter for judicial determination. There is ample evidence supporting the trial of an issue. I agree with the respondent’s request in seeking an order directing the Will challenge to be tried and establishing an appropriate pre-trial process.
33Dueck and Erin launched this proceeding to obtain the court’s directions. They engaged the court’s authority pursuant to Rule 75.06.
34Erin Fretwurst purported to renounce her right to a certificate of appointment as estate trustee under the 2013 Will on April 8, 2014. Dueck purported to renounce his right to a certificate of appointment as estate trustee under the 2013 Will on June 12, 2014.
35I accept that Dueck and Erin assisted in the preparation and execution of the 2013 Will. The applicants arranged for Mark to attend at Dueck’s office in order to have the 2013 Will drafted and signed. Both Dueck and Erin were witnesses to the events that occurred on January 17, 2013 when the 2013 Will was prepared and executed. In this application, it appears likely that both Dueck and Erin will be essential witnesses for the trial of an issue.
36In addition, Dueck and Erin were the named Estate Trustees of the 2013 Will to be propounded. Contrary to the very able submission of Mr. Melville, I am not convinced that they merely took a few minor steps with respect to preserving the estate. Rather I am persuaded that the applicants undertook several meaningful actions in their capacity as Trustees, including but not limited to applying for a Certificate of Appointment of Estate Trustee With a Will; realizing the assets of the deceased; paying some expenses of the deceased; and commencing the within Application for an Order Giving Directions.
37Dueck and Erin applied for a Certificate of Appointment of Estate Trustee with a Will and in response to Jan’s Notice of Objection; the applicants delivered a Notice to Objector and corresponded with the respondent.
38Mr. Melville urges this Court to find that the OCL and by extension the PG&T have a duty to propound the Will. Mr. Rodenburg and Mr. Dauphney were present and have requested certain disclosure to ensure that any benefits or rights flowing from the estate to a party under disability are sustained. I am satisfied that they are fully engaged and have and will assume their responsibilities to act in the best interests of the minor children and to ensure all of those rights are adequately protected.
39Indeed, it is one matter to diligently attend to the interests of a party under disability and take all reasonable steps to protect their interests. It is another to take an affirmative step in propounding a testamentary document. As Mr. Rodenburg suggests, the OCL has a duty to protect the interests of a minor in litigation, but it does not extend to an affirmative duty or to the point urged by applicant’s counsel.
40In my view, while the OCL and PG&T have a statutory, legal and positive duty to protect the interests of a child or party under a disability, I do not interpret the Rules or mandate of the OCL to actively propound a testamentary document on behalf of a minor child. No authorities have been provided on point to bolster the applicant’s position. I accept Mr. Rodenburg’s submissions and agree with his position on this issue. Having reviewed Rules 7.04 and 7.05 of the Rules of Civil Procedure, I do not accept the mandate of both organizations requires such an obligation as advanced by counsel for the applicants in the circumstances of this case.
41Frankly, the unexplained reasons why the Chaplin minor beneficiaries do not seek to propound the Will are not lost on me. I appreciate the dynamic at play here and I agree with Mr. Wiseman that they are not obliged to do so.
42On this issue of who ought to be required to propound the Will, I have been referred to the decision of the Ontario Court of Appeal in the Estate of Herbert Washington Chambers, deceased, 2013 ONCA 511. In discussing the principle of renunciation, Gillese J.A. stated at para 66:
Renunciation is generally not available if a party has already “intermeddled” with the estate. Intermeddling is the term used to describe the acts of a person who deals with an estate without having been formally recognized as the estate trustee. As Kennedy J. explained, “while executors may renounce at any time, (a right which is usually exercised before applying to probate) the courts have been reluctant to allow an executor to renounce after having intermeddled in the estate, or after having applied for probate”: Stordy v. McGregor (1986), 1986 5133 (MB KB), 42 Man. R. (2d) 237 (Q.B.), at para. 9. Even a slight act of intermeddling with a deceased’s assets may preclude an executor from afterwards renouncing: see Cummins v. Cummins (1845), 8 I. Eq. R. 723 (Ch.), at pp. 737-38. However, this rule has been applied with some flexibility: see e.g. Holder v. Holder, [1968] Ch. 353 (C.A.).
43I accept this proposition of law and find that it is applicable to the facts of this case. I am satisfied that Dueck’s and Erin’s intermeddling precludes them from renouncing at this juncture. In my opinion, the applicants are obliged to propound the 2013 Will and their request that their renunciation be confirmed is denied.
44In my opinion, the parties who ought to be required to propound the 2013 Will are those that had the most involvement in causing such a testamentary documents to drafted and executed, namely the applicants.
45That being said, I agree with the applicants and deny the respondent’s request for the trial of an issue regarding allegations of the applicants’ breach of fiduciary or other duties and negligence. While I am not in a position to decide whether such negligence claims may be statute barred, in any event, such a claim requires the commencement of a separate proceeding and originating process and cannot be “piggy-backed” or as Mr. Melville puts it, “morphed” onto this application for directions.
46I do not accept Mr. Bumstead’s submissions that as there was some mention of Jan’s allegations of negligence found in the applicant’s materials, such opens the door to the relief requested. The fact that there is some reference in the application to unspecified allegations raised by Jan against the applicants neither opens the door in this motion for full disclosure of confidential solicitor files nor does it substantiate a request that the applicants affirm that they breached their fiduciary duty in relation to the 2013 Will. This would have the effect of placing the applicants in an untenable position without due regard to natural justice and fairness.
47As mentioned, an originating action is required and I understand that a statement of claim has been issued against the applicants for negligence and breach of fiduciary duty - among other complaints. While not as yet served on the applicants as of the date of this motion, I am mindful of the concerns raised by Ms. Stephens with respect to this matter.
48I also agree with the applicants that the request for a trial of an issue regarding the compensation received by the applicants prior to the death of Mark Fretwurst be denied as it is not properly part of these proceedings. In my view, only the ETDL has standing to initiate proceedings of that nature at this stage.
49While I accept that the notes and files of the estates solicitor are generally disclosable and producible in this type of application with privilege being implicitly waived as being the best evidence of the testator’s intentions; in this case, given the commencement of an action for solicitor’s negligence and the applicants’ negligence and breach of fiduciary duty, it is incumbent on me to ensure that the applicants are provided with procedural fairness and that their rights are fully considered at the appropriate time with all parties permitted to advance their respective positions. Whether that occurs in this context or in the other proceedings is a matter to be determined on a motion at a later date.
50In balancing the need to keep the costs at a minimum and to reduce duplication of effort by compelling the parties to return to court on a further motion, I am mindful of the serious claims being advanced against the applicants. In my view, the respondent’s request sought here extends beyond the scope of the narrow issues regarding the testamentary validity of the 2013 Will.
51At this juncture, I refrain from ordering production of the solicitor’s entire estates file with some caveats and parameters. Therefore, at this stage, the following requests are denied, without prejudice to any party to revisit the request at a future date on notice, subject to other proceedings.
a) Chaplin affirms and Dueck and Fretwurst deny that Dueck and Fretwurst breach fiduciary duties they owed to Mark Fretwurst;
b) Chaplin affirms and Dueck denies that Dueck was negligent and breach his duty of care owed to Mark Fretwurst and to the beneficiaries of Mark Fretwurst’s Estate;
c) Chaplin affirms and Dueck and Fretwurst deny that Chaplin is entitled to be paid compensation in the amount of $99,930.67 from the Estate of Mark Fretwurst for caregiver services she provided to Mark Fretwurst and reimbursement of expenses she incurred on behalf of Mark Fretwurst;
d) Ted Dueck shall, within 30 days of the date of this order, produce and deliver to counsel for Chaplin copies of all documents relating to the family property and support claims by Mark Fretwurst against Chaplin, including and bank statements, investment statements, estate planning, estate administration and real property transaction files to the same extent as Mark Fretwurst would have been able to if he were alive.
e) Directing that the Estate Trustee During Litigation shall release the “Typhoon” sailing boat that is property of the Estate of Mark Fretwurst to Chaplin. The value of the “Typhoon” shall be set by this Court and set-off against the entitlement of Chaplin to compensation from the Estate, if any, as determined in this action.
52After considering the material filed and hearing the submissions of counsel with respect to the motions for directions, the following orders are made:
53The applicants Ted Dueck and Erin Fretwurst are required to propound the 2013 Will.
54I direct that the following issues be subject of a trial of an issue:
i) Ted Dueck and Erin Fretwurst affirm and Jan Chaplin denies that Mark Fretwurst had testamentary capacity at the time of the execution of his 2013 Will dated January 17, 2013.
ii) Jan Chaplin affirms and Ted Dueck and Erin Fretwurst deny that the making of the 2013 Will was procured by undue influence;
iii) Ted Dueck and Erin Fretwurst affirm and Chaplin denies that Dueck and Fretwurst are entitled to the compensation or other amounts that were paid to them by Mark Fretwurst for caregiver services, property management services and legal services; and
iv) I direct that within 30 days of the date of this order, any document or writing which is testamentary in nature and is in their possession or under the control of Dueck, Fretwurst, Chaplin or the Estate Trustee During Litigation shall be disclosed to each and every party in this proceeding, save and except any document subject to a claim of privilege. In the case of privilege being alleged, a motion for disclosure may be brought on notice.
v) I direct that within 30 days of the date of this order, Ted Dueck and Erin Fretwurst shall produce for inspection all lawyers’ records, notes, affidavits of execution and files relating to Mark Fretwurst’s testamentary wishes, testamentary documents, affidavits of execution and or powers of attorney and to deliver copies of all requested productions to all counsel for all parties; save and except any document subject to a claim of privilege. In the case of privilege being advanced, a motion for disclosure may be brought on notice.
vi) I direct that Ted Dueck and Erin Fretwurst shall within 60 days of the date of this order, provide a full and complete accounting of their dealings as attorneys by Power of Attorney for Mark Fretwurst and disclose this information to all parties to the litigation. As the ETDL has been engaged, I deny the respondent’s request that the applicants commence an application to pass their accounts from the date of their appointment until April 4, 2013;
vii) Where the ETDL has the possession or control of relevant documents ordered produced by this direction, he shall disclose the information to the parties as the case may be, subject to a claim of privilege.
viii) I direct that Ted Dueck shall, within 30 days of the date of this order, provide a full and complete accounting of his dealings with all assets held in the name of Mark Fretwurst as at April 4, 2013, whether held solely or jointly with any other person, including any assets which may have been paid, released or assigned to Dueck as at April 4, 2013, and shall disclose same to all parties, except for Jan. All of the other parties shall abide by an undertaking not to disclose this information to Jan subject to a further order of this Court;
ix) I direct that Ted Dueck, Erin Fretwurst and Jan Chaplin shall serve and file Affidavits of Documents within 60 days of the date of this order;
x) I direct that Ted Dueck, Erin Fretwurst and Jan Chaplin shall attend and submit to Examinations for Discovery, in accordance with the Rules of Civil Procedure.
xi) I grant leave pursuant to Rule 31.10 to examine Lee Sauer and to examine the second witness on 2013 Will;
55I leave it for another day before the judge hearing the trial of an issue to determine whether, as the party who propounds the 2013 Will, the applicants ought to be entitled to trustees fees and that they be indemnified for their expenses.
56Given the modest nature of this estate, I am concerned about the proliferation of litigation, the number of parties implicated in this matter, the escalating fees and costs and the apparent acrimony that has engulfed the parties.
57As such, in order to maintain some consistency and reduce costs, I will remain seized of any further motions for directions regarding the 2013 Will. Should any party have any questions or request for clarification or the need for modifications to these directions, or further directions as the case may be, a further hearing may be scheduled before me on notice to all parties. .
58On the issue of costs, in my view, success being somewhat divided, all parties shall bear their own costs for this motion.
59Order accordingly.
A.J. Goodman J.
Date: July 16, 2015