January 6, 2015

As expected, the Supreme Court of Canada’s major decision in Hyrniak v. Mauldin has led to an increased use of the summary judgement motion in Ontario. On a motion for summary judgement, a court disposes of a case without the need for a costly and time consuming hearing or trial. However, some recent court decisions have indicated that the pendulum may have started to swing too far in the opposite direction. The Ontario Court of Appeal’s decision in Trotter v. Trotter may limit the applicability of the summary judgement motion in contested will challenges where issues of credibility are directly relevant to the outcome of the case.

In Trotter, two of Audrie and Ty Trotter’s five children, Kate and Bill, challenged Audrie’s wills in a highly contested proceeding. Defending the wills was John, in his personal capacity as beneficiary, and John and James Bell (a family friend) in their capacities as co-estate trustees. Two other children (Robert and Phillip) did not actively participate in the appeal.

In 1995, Audrie and Ty signed identical wills leaving their estate equally to their children, except for the shares of the family businesses, Trotter’s Garage Inc. and 50% of Trotter’s Holdings Inc. Shares of those companies were left to John alone, who had worked in the business for most of his life. Ty died in 1996 and the company shares vested in John, who continued to operate the companies. In 1999, Audrie made a new will with her lawyer, Mr. Gordon. In addition to the company shares, Audrie’s 1999 will also left John a farm and surrounding properties. As before, the residue was divided equally among her five children.

In 2000, after she became concerned that Mr. Gordon was not keeping her testamentary wishes confidential, Audrie retained a new lawyer in Toronto, Mr. Heiber. Audrie’s 2000 will gave Kate and Phillip one acre parcels of her farm and 25% of the residue of the estate, with John receiving the remaining shares of Trotter’s Holdings, other properties, and 50% of the residue. Audrie told her Toronto lawyer that John was trying to manipulate her and was being selfish, but was nevertheless taking care of her. She did not tell John about the new will or her visit with Mr. Heiber.

That same year, Audrie returned to Mr. Gordon to have him transfer her residence to herself and John as joint tenants. The following month, Audrie visited with Mr. Heiber to execute a new will, which further increased the entitlements of Kate and Phillip. However, in July 2003, Audrie was once again at Mr. Gordon’s office, this time to transfer the farm to herself and John as joint tenants.

In July 2005, Audrie executed her final will with the help of Mr. Gordon. In this will Audrie left no real or personal property to Kate or Phillip. Unlike previous wills which divided her personal and real property between Kate, Phillip and/or John, her 2005 will gave all the residue to John. The will further confirmed that ownership of her residence and farm vested in John through survivorship. However, John was directed to pay Kate and Phillip $50,000 each and a rental property was left to a man named George Pohle.

Audrie died in March 2008. Following her death, Kate and Phillip brought two related actions challenging Audrie’s 2005 will and the inter vivos transfers of property on the basis of undue influence, among other things. Both actions were ordered to be tried together.

The parties filed affidavits, attended at cross-examinations, and submitted documentary exhibits.  A hearing for summary judgement was held over the course of six days. In his defence, John claimed that the two inter vivos transfers were made in lieu of payment for his work restoring a barn. Kate and Phillip claimed that John acted fraudulently and that the price charged for restoring the barn far exceeded the value of the property on which the barn was located.

John further claimed that the unequal treatment he was granted in Audrie’s wills made sense because Audrie was estranged from Bill and Robert, and Kate didn’t visit regularly. In contrast, he had left university to help run the garage business and was the only one of Audrie’s children who stayed with his parents. Kate and Bill claimed that that John isolated and dominated Audrie. They submitted evidence that John was violent and had a short temper. Nevertheless, the motion judge accepted John’s evidence, claiming the applicants were making “bald allegations,” and dismissed the claim of undue influence. The motion judge awarded costs of $400,000 to the respondents.

The Court of Appeal reversed the motion judge’s decision. The Court took issue with the failure of the motion judge to consider the evidence about the barn repair work. Furthermore, the Court questioned the motion judge’s factual and legal conclusions about undue influence, suggesting there was good evidence that there may have been undue influence. Justice Benotto, writing for a unanimous court, held that since there was evidence of undue influence, the lower court was required to conduct a credibility analysis under Rule 20.04(2.1), which it failed to do properly. The Court held that it is difficult to assess credibility on a written record, and if it cannot be done, the motion judge should hear oral evidence or dismiss the motion and require the matter to proceed to trial.

The Court of Appeal stopped short of saying oral evidence is always required where there are substantial disagreements in the written record. However, it did say that in this case, oral evidence was necessary. The Court left open the option that oral evidence could be presented at the summary judgement hearing.

Because contested claims of undue influence almost invariably involve a conflicting factual record and turns on the reliability of the witnesses, it appears that oral evidence will be required to determine the issue, whether before the judge hearing a summary judgment motion or at trial. A lengthy summary judgement hearing with live evidence can have significant costs, with fewer corresponding savings, which suggests that the traditional trial on the merits may remain the proceeding of choice in these circumstances.