This week on Legally Speaking with Michael Mulligan:
When the divorced father of an adult child with learning disabilities was diagnosed with terminal cancer, he established a trust with $750,000 to provide for his son following his death.
As he had been through an acrimonious divorce, the father was concerned that his ex-wife did not get access to the funds for her own purposes. To prevent this the father made his two sisters trustees with broad discretion to use the funds to assist his son.
The ex-wife, with whom the son lived, had the son sign a power of attorney permitting her to commence a lawsuit on behalf of the son seeking to remove the sisters as trustees and to take over the administration of the trust herself.
A trustee has a fiduciary relationship with the beneficiary of a trust. That means that the trustee must make decisions that are in the best interest of the beneficiary and not themselves.
The ex-wife’s complaints included that the trustees were not paying for everything she wanted them to.
The sisters were concerned about the funds lasting long enough to take care of the son for the rest of his life.
For their part, the sisters offered to have the administration of the trust turned over to a trust company if the judge concluded that was best but did not wish the ex-wife to have control over the funds as that would have been contrary to their late brother’s wishes.
The judge concluded that the sisters had been acting responsibly and in the best interests of the son and that there was no basis to have them replaced as trustees.
Also on the show: brevity in legal arguments is not only good advocacy but, in some cases, as rule.
In the Court of Appeal and the Supreme Court of Canada, there is both a written argument, called a factum, as well as an oral argument. There is a size limit for factums. In civil cases, in the BC Court of Appeal, the limit is 30 pages. If someone wants to file a longer factum, they must obtain permission from a judge.
In the case discussed, an appellant attached a draft 82-page factum to an application for more space. The application was denied. The judge reluctantly permitted the appellant to file a 40-page factum but ordered that they would need to pay costs to the other parties who attended the application.
Finally, on the show, a case involving a financial advisor from Victoria who became involved in a multi-year romantic relationship with a wealthy older client is discussed.
After the relationship ended the financial advisor sought the division of property from her former client and romantic partner on the basis that they had a “marriage-like relationship” of more than 2 years.
Under the BC Family Law Act, if someone is in a marriage-like relationship for at least two years they can be entitled to a share of the couple's property.
A second issue in the case is that the former client asked for repayment of $100,000 he provided to the financial advisor that she used as a down payment on a home.
After considering a range of factors about the relationship, including intimate details of the couple’s sexual practices, living arrangements, and activities, the judge concluded that they were not in a marriage-like relationship.
With respect to the $100,000, when someone claims they received money as a gift they have the burden of proving this. The judge concluded that the financial advisor had not done this and she was ordered to repay the money.
The case also raises important questions about the propriety of a financial advisor engaging in a romantic relationship with a paying client, to whom she owed a fiduciary duty.
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