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Brandon Blog Post

WHEN FAMILY DISPUTES PUT WILLS AND EXECUTORS AT ODDS: OUR COMPLETE GUIDE ON YOUR RIGHTS WHEN THINGS GO WRONG

wills and executors
wills and executors

wills and executors

Wills and Executors: Introduction

Losing a parent hurts deeply. During this difficult time, families should unite to honour their loved one and handle their affairs. But what happens when the person named in the will to manage everything – the executor – isn’t doing their job properly?

If you’re worried about how an executor is handling your parent’s will, you’re not alone. While your parent chose this person in their will, that appointment isn’t permanent, especially if the executor is causing harm to beneficiaries like you.

Wills and Executors Real-Life Example: When Executors Go Wrong

A recent court case, Spellman v. Spellman, 2025 ONSC 1187 (CanLII), shows just how serious these situations can become. In this case, a brother named as executor mishandled his father’s estate so badly that his sister had to take him to court. This Ontario case highlights the problems that can arise with wills and executors, and the legal remedies available.

In this comprehensive guide, we’ll explore everything you need to know about wills and executors in Ontario, including what happens when things go wrong.

wills and executors
wills and executors

Understanding Wills and Executors

Definition and Purpose

A will is a legal document that outlines how you want your property distributed after death. In Ontario, wills are governed by the Succession Law Reform Act, R.S.O. 1990, c. S.26. The primary purpose of a will is to ensure your wishes are followed, to name an executor to manage your estate, and to potentially appoint guardians for minor children.

Ontario law recognizes three types of wills: formal wills (typed and signed with witnesses), holograph wills (entirely handwritten and signed by the testator), and international wills (for those with assets in multiple countries). Each must meet specific requirements to be valid under Ontario law.

Key Elements of a Will

For a will to be legally valid in Ontario, it must contain certain elements:

  1. Testamentary intent – clear indication that this document is intended to be your will
  2. Testator information – your full name and declaration that this is your last will
  3. Revocation clause – cancelling any previous wills
  4. Executor appointment – naming the person(s) who will administer your estate
  5. Distribution of assets – specific instructions for who gets what
  6. Signatures – yours and those of two witnesses (except for holograph wills)

Ontario law requires that the testator (the person making the will) be at least 18 years old and of “sound mind,” meaning they understand what a will does, what assets they own, who their potential beneficiaries are, and how these elements connect in the will.

Common Misconceptions

Many Ontario residents hold misconceptions about wills and executors that can lead to problems:

Misconception #1: Verbal promises count as much as written instructions. In Ontario, verbal promises about inheritance hold no legal weight against written instructions in a valid will. Always ensure important wishes are properly documented.

Misconception #2: The oldest child automatically becomes the executor. There is no legal requirement that the oldest child (or any family member) must be the executor. This is entirely the testator’s choice.

Misconception #3: Executors can do whatever they want. Executors in Ontario have a fiduciary duty to act in the best interests of all beneficiaries and follow the will’s instructions. They can be held personally liable for breaches of this duty.

Misconception #4: A will cannot be challenged. Ontario’s Succession Law Reform Act allows wills to be challenged on several grounds, including improper execution, lack of testamentary capacity, undue influence, or fraud.

Wills and Executors: Role of an Executor

Definition and Responsibilities

An executor (also called an estate trustee in Ontario) is the person named in a will to administer the deceased’s estate. Their legal duties under Ontario law include:

  • Locating the original will and filing it with the Superior Court of Justice for probate
  • Arranging the funeral according to the will’s instructions
  • Notify all beneficiaries named in the will
  • Creating an inventory of all assets and liabilities
  • Protecting the estate assets until distribution
  • Filing final tax returns and obtaining tax clearance from the Canada Revenue Agency
  • Distributing the assets according to the will’s instructions
  • Providing a detailed accounting of all financial transactions to beneficiaries

The Ontario Trustee Act, R.S.O. 1990, c. T.23 sets out the standard of care required: executors must exercise the care, skill, diligence and judgment that a prudent investor would exercise in making investments.

Steps to Take After Death

When serving as an executor in Ontario, these are the immediate steps to take after someone dies:

  1. Secure the original will – You’ll need this to apply for the Certificate of Appointment of Estate Trustee (probate).
  2. Register the death – Obtain a death certificate from the funeral director, which you’ll need for multiple purposes.
  3. Notify relevant parties – This includes Service Canada (for CPP/OAS benefits), banks, insurance companies, and the Canada Revenue Agency.
  4. Apply for probate – In Ontario, this is called a Certificate of Appointment of Estate Trustee. This application goes to the Superior Court of Justice and includes filing an Estate Information Return with the Ministry of Finance within 180 days.
  5. Place a Notice to Creditors – This protects the Estate Trustee from personal liability for unknown debts. Historically, it was published in local newspapers. More recently, advertising for creditors on the NoticeConnect online portal has replaced publishing a notice in the local newspaper.

The Ontario Estate Administration Tax (EAT), formerly called probate fees, must be paid based on the estate’s value. Current rates are $15 per $1,000 for estates over $50,000, with the first $50,000 taxed at $250.

Managing and Protecting Estate Assets

Ontario law places strict requirements on executors regarding estate assets:

  • Estate account – Open a separate estate bank account for all financial transactions
  • Asset security – Ensure valuable property is secured, insured, and maintained
  • Prudent investments – Follow the “prudent investor rule” for any investments
  • Record keeping – Maintain detailed records of all transactions
  • Asset valuation – Obtain professional appraisals of significant assets

In the Spellman case, the executor failed to properly manage and account for estate assets, which directly violated Ontario’s Trustee Act. This resulted in significant financial penalties against the executor.

wills and executors
wills and executors

Wills and Executors: Choosing an Executor

Personal vs. Professional Executor

Ontario law allows you to name either personal connections (family/friends) or professionals (lawyers/trust companies/Smith Estate Trustee Ontario) as executors:

Personal Executors:

  • Cost-effective (may serve without compensation)
  • Familiar with family dynamics
  • May have personal knowledge of your wishes

Professional Executors:

  • Experienced in estate administration
  • Objective third party in family conflicts
  • Knowledge of tax and legal requirements
  • Continuity (won’t die or become incapacitated)

The complexity of your estate, family relationships, and the competence of potential personal executors should guide this decision.

Factors to Consider

When choosing an executor for your Ontario will, consider:

  1. Financial capability – The executor should understand basic financial matters and be capable of working with professionals when needed.
  2. Trustworthiness – Ontario law holds executors to a high fiduciary standard; choose someone with impeccable integrity.
  3. Availability – The role typically requires 1-2 years of active involvement.
  4. Location – While non-residents can serve as executors in Ontario, they face additional requirements and may need to post a bond.
  5. Personal qualities – Organization, attention to detail, and communication skills are essential.
  6. Age and health – Choose someone likely to outlive you and be physically and mentally capable of serving.

Ontario allows for alternate executors to be named in case your first choice is unable or unwilling to serve.

Implications of Multiple Executors

Ontario wills can name multiple executors who must act jointly unless the will specifies otherwise. Potential benefits include:

  • Shared workload and responsibility
  • Complementary skills and knowledge
  • Checks and balances in decision-making

However, this arrangement can also create challenges:

  • Decision gridlock if executors disagree
  • Increased administration time and costs
  • Communication difficulties

If you choose multiple executors in Ontario, the will should specify whether they must act jointly (all decisions require unanimous agreement) or severally (each can act independently).

Wills and Executors: Executor Compensation

Standard Practices

In Ontario, executors are entitled to “fair and reasonable compensation” for their services, even if the will doesn’t mention compensation. The Trustee Act doesn’t specify exact amounts, but Ontario courts have established guidelines:

  • 2.5% of capital receipts
  • 2.5% of capital disbursements
  • 2.5% of revenue receipts
  • 2.5% of revenue disbursements
  • An annual care and management fee of 0.4% of the average gross value

The total typically ranges from 3-5% of the estate value, depending on complexity, time involved, results achieved, and executor expertise.

How Compensation is Determined

Ontario courts consider these factors when assessing appropriate executor compensation:

  1. Size of the estate – Larger estates may justify higher percentage fees
  2. Time spent – Detailed time records strengthen compensation claims
  3. Complexity – Business assets, litigation, or tax complications may justify higher fees
  4. Skill and expertise required and applied
  5. Success in administering the estate efficiently

Executors should keep detailed records of their activities and time spent, as this documentation is critical if compensation is challenged.

Handling Disputes over Fees

Disputes over executor compensation are common in Ontario. If beneficiaries object to proposed fees, these are the typical steps:

  1. The executor “passes their accounts” by filing a formal accounting with the court
  2. Beneficiaries can file objections to specific items or overall compensation
  3. A hearing is held before a judge, who makes the final determination

In contentious cases like Spellman v. Spellman, the court can even deny compensation entirely if the executor has breached their fiduciary duties or mismanaged the estate.

wills and executors
wills and executors

Legal Considerations for Wills and Executors

Jurisdictional Differences

While this guide focuses on Ontario law, executors should be aware that different provinces have varying rules.

  • Ontario’s Estate Administration Tax is higher than some provinces but allows for multiple will strategies to reduce taxes
  • Quebec uses civil law rather than common law, with notarial wills being the norm
  • British Columbia has specific rules regarding will variation claims
  • Alberta has different probate fee structures

If the deceased owned property in multiple provinces or countries, executors may need to apply for probate in each jurisdiction, significantly complicating the process.

Executors and Beneficiaries

Ontario law creates a special relationship between executors and beneficiaries:

  1. Fiduciary duty – Executors must put beneficiaries’ interests first
  2. Duty to inform – Beneficiaries have a right to basic information about the estate
  3. Impartiality – Executors must treat all beneficiaries fairly
  4. No self-dealing – Executors cannot purchase estate assets without court approval

When executors are also beneficiaries (common in family situations), they must be especially careful to separate their interests from their executor duties. The Spellman case demonstrates how severely Ontario courts view executor self-dealing.

Corporate Trustees as Executors

Ontario allows trust companies to serve as executors. Advantages include:

  • Professional expertise in estate administration
  • Continuity (no risk of death or incapacity)
  • Objectivity in family disagreements
  • Infrastructure for record-keeping and reporting

However, corporate executors charge professional fees (typically 3-5% of the estate) and may lack personal knowledge of family dynamics. They’re usually most appropriate for complex or high-value estates or when no suitable individual is available.

Smith Estate Trustee Ontario acts as an independent court-appointed estate trustee. We act impartially as an officer of the court, while being sensitive to the family dynamics.

Wills and Executors: Will Disputes and Resolutions

Common Causes for Disputes

Ontario courts frequently see these common triggers for will disputes:

  1. Validity challenges – Claims that the will wasn’t properly executed, the testator lacked capacity, or was unduly influenced
  2. Executor misconduct – Similar to the Spellman case, where the executor breached their fiduciary duties
  3. Interpretation issues – Unclear or ambiguous language in the will
  4. Dependent support claims – Under Ontario’s Succession Law Reform Act, dependents can claim adequate support if the will doesn’t provide for them
  5. Family law claims – Surviving spouses have special rights under the Family Law Act, R.S.O. 1990, c. F.3

The Ontario Limitations Act, 2002, S.O. 2002, c. 24, Sched. B generally provides a two-year window for most estate-related claims.

Legal Recourse and Mediation

When disputes arise over wills and executors in Ontario, these resolution options exist:

  1. Negotiation – Often the first step, with beneficiaries and executors attempting to resolve issues directly
  2. Mediation – A neutral third party helps facilitate a voluntary resolution (mandatory in some Ontario jurisdictions before court proceedings)
  3. Court applications – Formal proceedings where a judge makes a binding decision
  4. Passing of accounts – A specific court process where executors present a detailed accounting for approval

Ontario courts have broad powers to:

  • Remove and replace problematic executors
  • Order the return of misappropriated assets
  • Interpret ambiguous will provisions
  • Award compensation for damages caused by executor misconduct
wills and executors
wills and executors

Wills and Executors: When No Executor is Named

Appointment of Administrator

If someone dies without naming an executor in their will (or dies without a will), the Ontario Superior Court of Justice can appoint an administrator. The Estates Act establishes this priority order:

  1. Spouse
  2. Children
  3. Grandchildren
  4. Parents
  5. Siblings
  6. Next of kin

The appointed administrator has essentially the same duties and powers as an executor, but typically must post a bond unless the court waives this requirement.

Legal Process and Challenges

The process for appointing an administrator in Ontario involves:

  1. Filing an Application for Certificate of Appointment of Estate Trustee Without a Will (if no will exists) or With a Will (if there’s a will but no named executor)
  2. Providing notice to all interested parties
  3. Paying the required Estate Administration Tax
  4. Posting a bond, in many cases

Challenges in administrator appointments often include:

  • Competing applications from multiple family members
  • Disputes over who is best suited to serve
  • Difficulties in obtaining the required bond
  • Family conflicts that make administration difficult

Smith Estate Trustee Ontario acts many times as a court-appointed administrator where a person dies intestate (without a will).

Wills and Executors: Renouncing Executorship

Reasons for Renunciation

Ontario law allows named executors to decline the role, provided they haven’t “intermeddled” in the estate. Common reasons include:

  1. Health issues – Physical or mental health challenges that make the role difficult
  2. Distance – Living far from where the estate needs to be administered
  3. Time constraints – Inability to devote necessary time to executor duties
  4. Complexity – Feeling unequipped to handle a complex estate
  5. Family conflict – Wanting to avoid being caught in family disputes

In the Spellman case, Dawn initially renounced her right to be an administrator, showing that this is sometimes done to facilitate the process—though in this case, it unfortunately led to problems.

To properly renounce in Ontario, the executor must file a Renunciation of Prior Right to a Certificate of Appointment of Estate Trustee (Form 74.18) with the court before taking any actions that would constitute accepting the role.

Smith Estate Trustee Ontario also acts in situations where the named executor(s) renounces their role.

wills and executors
wills and executors

Frequently Asked Questions About Wills and Executors in Ontario

What is a will in Ontario, and what key elements must it contain to be legally valid?

A will in Ontario is a legal document that outlines how you want your property distributed after death. Under the Succession Law Reform Act, a valid will must include:

  • Clear indication that it’s intended to be your will (testamentary intent)
  • Your full name and a declaration that this is your last will
  • A statement cancelling any previous wills (revocation clause)
  • Appointment of an executor to manage your estate
  • Instructions for distributing your assets
  • Your signature and those of two witnesses (except for holograph wills)

To create a valid will, you must be at least 18 years old and of “sound mind,” meaning you understand what a will does, what you own, who your potential beneficiaries are, and how these connect in your will.

What are some common misconceptions about wills and executors in Ontario?

Several misunderstandings can lead to problems with wills and executors:

  • Verbal promises don’t count: In Ontario, what you’ve written in your will overrules any verbal promises you made about inheritance.
  • No automatic executor: The oldest child or any specific family member doesn’t automatically become the executor – this choice belongs solely to the person making the will.
  • Executors have limits: Executors must follow the will’s instructions and act in all beneficiaries’ best interests, facing personal liability if they don’t.
  • Wills can be challenged: Under the Succession Law Reform Act, wills can be contested for reasons like improper execution, lack of mental capacity, undue influence, or fraud.

What responsibilities do executors have after someone passes away?

Executors in Ontario (also called estate trustees) must:

  • Locate the original will and file for probate with the Superior Court of Justice
  • Arrange the funeral according to the will’s instructions
  • Notify all beneficiaries named in the will
  • Create a complete inventory of all assets and debts
  • Protect estate assets until they’re distributed
  • File final tax returns and get clearance from the Canada Revenue Agency
  • Distribute assets according to the will’s instructions
  • Provide beneficiaries with detailed financial accounting

Ontario’s Trustee Act requires executors to follow the “prudent investor rule” when managing estate investments.

What immediate steps should an executor take after someone dies?

If you’re serving as an executor in Ontario, take these steps right away:

  1. Secure the original will for your probate application
  2. Get a death certificate from the funeral director
  3. Notify important organizations like Service Canada, banks, insurance companies, and the Canada Revenue Agency
  4. Apply for probate (Certificate of Appointment of Estate Trustee) with the Superior Court of Justice
  5. File an Estate Information Return with the Ministry of Finance within 180 days
  6. Place a Notice to Creditors in local newspapers to protect yourself from unknown debts
  7. Pay the Estate Administration Tax based on the estate’s value

How are executors compensated, and what can beneficiaries do if they disagree with the fees?

Ontario executors are entitled to “fair and reasonable compensation,” typically based on court guidelines:

  • 2.5% of capital receipts
  • 2.5% of capital disbursements
  • 2.5% of revenue receipts
  • 2.5% of revenue disbursements
  • 0.4% annual care and management fee based on average gross value

Total compensation usually ranges from 3-5% of the estate’s value, depending on factors like size, time spent, complexity, skill required, and success in administration.

If beneficiaries dispute these fees, the executor must “pass their accounts” by filing a formal accounting with the court. Beneficiaries can then object, leading to a hearing where a judge makes the final decision. In cases of executor misconduct, as seen in the Spellman case, the court may deny compensation entirely.

What’s the difference between choosing a personal executor versus a professional executor?

When choosing between personal and professional executors for your Ontario will, consider:

Personal Executors (family/friends):

  • More cost-effective (may serve without compensation)
  • Better understanding of family dynamics
  • Personal knowledge of your wishes

Professional Executors (lawyers/trust companies):

  • Experience in estate administration
  • Objectivity during family conflicts
  • Knowledge of tax and legal requirements
  • Continuity (won’t die or become incapacitated)

Your decision should be based on your estate’s complexity, family relationships, and the capabilities of potential personal executors.

What legal options do beneficiaries have if an executor isn’t doing their job properly?

If you’re concerned about executor misconduct in Ontario, as illustrated in the Spellman v. Spellman case, you can:

  1. Try negotiation or mediation first
  2. If unsuccessful, apply to the court for:
    • Removal and replacement of the executor
    • Return of misappropriated assets
    • Interpretation of unclear will provisions
    • Compensation for damages caused by executor misconduct

Ontario courts take executor misconduct seriously, as shown in the Spellman case, and will intervene to protect beneficiaries’ interests when necessary.

What happens if someone dies without a will or without naming an executor?

If someone dies without a will (intestate) or without naming an executor in Ontario, the Superior Court of Justice will appoint an administrator. The Estates Act establishes this order of priority:

  1. Spouse
  2. Children
  3. Grandchildren
  4. Parents
  5. Siblings
  6. Next of kin

The appointment process requires:

  • Filing an Application for Certificate of Appointment of Estate Trustee
  • Notifying all interested parties
  • Paying the Estate Administration Tax
  • Usually, posting a bond

Complications can arise from competing applications, disputes over who is most suitable, difficulties obtaining a bond, or existing family conflicts. Once appointed, the administrator has duties similar to an executor’s.

Wills and Executors: Protecting Your Rights Under Wills and Against Problem Executors

Family disputes over wills and executors create tremendous stress during an already difficult time. The Spellman case shows just how serious the consequences can be when executors neglect their duties.

While a will names a specific person as executor, Ontario courts have the power to remove and replace executors who breach their responsibilities. If you’re facing challenges with an executor who isn’t fulfilling their duties under a will, remember that legal options exist to protect your inheritance.

Whether you’re planning your estate, serving as an executor, or dealing with concerns about an existing executor, understanding Ontario’s laws on wills and executors is essential. Seek professional legal advice promptly to understand your specific situation and determine the best way forward for your family and your loved one’s legacy.

Wills and Executors: Seeking Professional Estate Trustee Solutions

When facing the complexities of estate administration or concerns about existing executors, professional expertise can make all the difference. Smith Estate Trustee Ontario, a specialized division of Ira Smith Trustee & Receiver Inc., offers independent court-appointed Estate Trustee services tailored to challenging situations. Our experienced team understands the intricacies of Ontario estate law and provides impartial administration when family disputes arise, when no suitable executor is available, or when professional oversight is needed.

As the Spellman case demonstrates, proper estate administration requires knowledge, integrity, and dedication to fiduciary duty. Whether you’re planning your estate, dealing with executor concerns, or need a professional trustee appointed by the court, Smith Estate Trustee Ontario delivers the expertise and objectivity your family deserves during difficult times.

Contact us today to learn how our professional Estate Trustee services can bring peace of mind and proper administration to complex estate matters.

The information provided in this blog is intended for educational purposes only. It is not intended to constitute legal, financial, or professional advice. Readers are encouraged to seek professional advice regarding their specific situations. The content should not be relied upon as a substitute for professional guidance or consultation. The authors, Ira Smith Trustee & Receiver Inc. and Smith Estate Trustee Ontario, and any contributors do not assume any liability for any loss or damage.

wills and executors
wills and executors
Categories
Brandon Blog Post

CERB CLARITY: A COMPREHENSIVE GUIDE TO ELIGIBILITY AND REPAYMENT

A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

Overview of the Canada Emergency Response Benefit

In the unprecedented times of the pandemic, one of Canada’s COVID-19 Economic Response Plan by PM Justin Trudeau and the Federal Government was the rolling out of the Canada Emergency Response Benefit (CERB) to provide financial aid to those affected by the COVID-19 pandemic. However, the eligibility requirements and repayment process have left many Canadians confused and frustrated.

In this Brandon’s Blog, we will dive deep into the intricacies of CERB eligibility and repayment, providing you with a comprehensive guide to navigate through the confusion. Let’s unravel the mysteries surrounding this together!

Explanation of what CERB was

The CERB has been a source of confusion for many Canadians, particularly when it comes to eligibility and repayment. Despite efforts to clarify the rules, there is still a lack of understanding among the public.

The first step towards clarity is understanding whether you were eligible for this benefit program. The program was designed to support individuals who lost their jobs or experienced a significant reduction in income due to the pandemic. However, the program was rolled out so fast that even those charged with administering the program did not fully understand the eligibility requirements.

With so many government civil servants not understanding the program, no wonder that ordinary Canadians were and are still uncertain about their eligibility status. In this section, we will break down the eligibility criteria, providing you with a clear understanding of who qualified for it and who did not.

Understanding Eligibility Requirements for CERB

Many Canadians are still facing uncertainty and confusion regarding their eligibility for the CERB application process. The ever-changing criteria and requirements had left individuals unsure about whether they qualified for this crucial financial assistance. Let’s delve into the key points causing confusion among applicants. The eligibility requirements were:

  1. Employment Status: To be eligible for CERB, you must have stopped working or experienced a significant reduction in your employment or self-employment income due to COVID-19. This includes individuals who have been laid off, furloughed, or had their business operations suspended.
  2. Income Threshold: The income requirement was that it must have been at least $5,000 in the previous 12 months or 2019. This income can come from employment, self-employment, or certain benefits related to maternity or parental leave.
  3. Residency Requirement: You must be a resident of Canada and have a valid Social Insurance Number (SIN) to qualify. Non-residents, temporary workers, and international students were not eligible.
  4. Exhaustion of Other Benefits: If you were already receiving other benefits, such as Employment Insurance (EI), you were not eligible for CERB. However, if you had exhausted your EI benefits, you could have been eligible.

Purpose of providing financial assistance during the COVID-19 crisis

The benefit was rolled out quickly by PM Justin Trudeau and his Federal Government and there was a lot of confusion about who was eligible for it. It was created to help those in Canada who the COVID-19 pandemic directly impacted. The program provided financial assistance to employees and self-employed workers. The benefit was worth a maximum of $2,000. Eligibility periods were every 4 weeks for up to four months.

The issue that troubles me is that the benefit was mostly paid to people who otherwise would not have been able to afford rent or food during their eligibility periods. The CERB benefit money was spent immediately and a long time ago. So if Canada Revenue Agency (CRA) and Service Canada have now determined that some people should not have gotten that benefit, what are those people supposed to do if CRA demands the money back?

A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

Criteria for Eligibility Not Clearly Communicated

The criteria for qualifying for CERB have been subject to changes and updates by the Federal Government since the program’s inception until it closed. While the intention behind those adjustments may have been to accommodate a broader range of individuals in need, the frequent modifications have created additional confusion. Applicants struggled to keep up with the evolving requirements, making it challenging for them to determine if they were eligible for the benefit.

Moreover, the language used to communicate the eligibility criteria was complex and difficult for the average person to comprehend. The technical jargon and legal terms used in official documents and announcements further exacerbated the confusion, leaving many applicants feeling overwhelmed and uncertain about their eligibility status.

The shifting landscape of eligibility requirements added another layer of complexity for Canadians seeking financial support. As the government responded to changing economic conditions and societal needs, the criteria for qualifying were adjusted to reflect these shifts. While these changes were intended to ensure that those most affected by the pandemic received assistance, they also resulted in confusion among applicants.

For instance, updates to the eligibility criteria regarding income thresholds and employment status left many individuals questioning whether they still qualified for CERB. The evolving nature of these requirements meant that what may have been true one week could be outdated the next, creating challenges for applicants trying to navigate the system.

The confusion surrounding eligibility continues to be a significant issue impacting many Canadians who needed financial assistance during those uncertain times. The reason it continues is because CRA is now demanding repayment from many Canadians alleging that they never qualified for it in the first place.

Clear and transparent communication of the criteria, consistent updates on changes, and accessible language are essential to help individuals understand their eligibility status and navigate the application process effectively.

Understanding CERB Repayment and its Real-Life Challenges

While CERB provided much-needed financial relief to millions of Canadians, it is crucial to understand that the money received through the program was not a grant but a taxable benefit. This means that it needed to be included in each recipient’s income tax return for the taxation year it was received. Failure to do so results in serious consequences. Let’s delve into the repayment process as that was also not properly communicated.

  1. Repayment Deadline: The original deadline for repaying CERB was December 31, 2022. It was essential to plan your finances accordingly to meet this deadline and avoid any penalties or interest charges. As mentioned above, the problem was that everyone used the funds for rent and food. They did not have the money to repay.
  2. Repayment Options: The CRA provides various repayment options to make the process easier for Canadians. You can repay the amount in full, in installments, or through your income tax return. It is crucial to choose the option that best suits your financial situation. However, at this stage, if not repaid immediately upon CRA advising of ineligibility, penalty and interest will be added to the amount paid. This is causing much hardship to many Canadians today.
  3. Avoiding Misunderstandings: Many Canadians have found themselves in a situation where they received the benefit without realizing they were ineligible. CRA is now demanding repayment to rectify the situation.A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

Answers to the CERB Repayment FAQs

Q: What are some common issues people are facing when it comes to repaying the CERB?

A: Some common issues people face when repaying the CERB include confusion about eligibility criteria, difficulties navigating the repayment process, challenges in understanding tax implications, and concerns about financial strain due to the repayment amount. Additionally, delays in receiving communication from the government regarding repayment arrangements and lack of clarity on repayment deadlines are causing stress and uncertainty among recipients.

Q: How is the government addressing the repayment problems faced by Canadians who received the CERB?

A: The Canadian government has implemented various measures to address the repayment issues faced by Canadians who received the CERB. This includes allowing individuals to set up payment plans, extending the deadline for repayment, and providing flexibility in terms of repayment options. Additionally, the government has introduced measures to waive interest charges on outstanding balances for a certain period and has simplified the process for individuals who may have difficulty repaying the benefit. These efforts aim to alleviate the financial burden faced by Canadians and ensure a smoother repayment process.

Q: Can I appeal a decision regarding the CERB Repayment?

A: Yes, you can appeal a decision regarding the Canada Emergency Response Benefit Repayment by contacting the Canada Revenue Agency and providing any relevant documentation or information to support your appeal. It is recommended to review the specific reasons for the repayment request and provide a clear explanation or evidence to support your case during the appeal process. You will need documents to prove your position and may require professional advice from a tax accountant or tax lawyer.

Q: Are there any options available for individuals who are struggling to repay the CERB due to financial difficulties?

A: Individuals who are struggling to repay the benefit due to financial difficulties can contact the CRA to discuss repayment options. The CRA may be able to work out a payment plan or provide assistance based on individual circumstances. It is important to communicate with the CRA as soon as possible to avoid any penalties or further financial burden.

Q: What are the consequences for individuals who are unable to repay the CERB on time?

A: Individuals who are unable to repay the CERB on time may face consequences such as having to pay penalties or interest on the overdue amount, having their tax refunds withheld by the government, or being subject to legal action to recover the debt. It is important to communicate with the Canada Revenue Agency if you are unable to make payments on time to explore potential options for repayment.

Q: What are the acceptable methods for repaying the Canada Emergency Response Benefit?

A: As of now, the CRA has not announced specific repayment methods. However, individuals who have received the benefit but are not eligible or have received more than they were entitled to will be required to repay it. The CRA may provide further guidance on repayment methods in the future, but for now, individuals can contact the CRA to discuss repayment options.

It is just like paying any other amount to CRA. You can do so online, at your bank or by mailing a cheque to CRA. Make sure you include the payment advice stub with your payment and write your social insurance number and how the payment should be directed on the back of your cheque or in the appropriate boxes if paying online.

Q: Can I access financial counselling services for assistance with CERB repayment?

A: Yes, you can access professional advice in the form of financial counselling services for assistance with repayment. Many non-profit organizations and financial institutions offer free counselling services to help individuals navigate their finances and manage any debt repayment, including assistance with repaying CERB funds. It is recommended to reach out to these organizations for personalized guidance on your specific situation.

Q: Can I file either a consumer proposal or bankruptcy to eliminate the CERB repayment debt demanded by the CRA?

A: You can include the CERB repayment debt in a consumer proposal or bankruptcy, but it is advisable to seek professional advice from a licensed insolvency trustee in Canada to understand the specific implications and requirements of each option to your unique financial situation. Each individual’s financial situation is unique, so it’s crucial to receive personalized guidance on the best course of action to address the this repayment debt, your other debts and the effect on your assets.

We have helped several individuals eliminate their CERB repayment debt through both successful consumer proposals and bankruptcy.

CERB Conclusion

The Federal Government has taken steps to address confusion surrounding this program by updating guidelines, improving communication, and providing resources for repayment assistance. However, the CERB part of PM Justin Trudeau’s Canada’s COVID-19 Economic Response Plan seems to be extending the confusion and angst that existed during the COVID-19 crisis itself.

Navigating the complexities of eligibility and repayment is overwhelming, but with the right information, you can ensure a smooth process. By understanding the eligibility criteria and repayment options, you can avoid confusion and potential financial hardships in the future. Remember, it is always better to be proactive and seek clarification if you have any doubts regarding your CERB eligibility or repayment status. Together, we can navigate the confusion and emerge stronger on the other side. Stay informed, stay compliant, and stay financially secure.

Individuals and business owners must take proactive measures to address financial difficulties, consumer debt and company debt and promptly seek assistance when necessary. It is crucial to recognize that financial stress is a prevalent concern and seeking help is a demonstration of fortitude, rather than vulnerability. Should you encounter challenges in managing your finances and find yourself burdened by stress, do not delay in pursuing aid.

Revenue and cash flow shortages are critical issues facing people, entrepreneurs and their companies and businesses with debt problems that are in financial distress. Are you now worried about just how you or your business are going to survive? Are you worried about what your fiduciary obligations are and not sure if the decisions you are about to make are the correct ones to avoid personal liability? Those concerns and more associated with your company debt are obviously on your mind.

The Ira Smith Team understands these financial health concerns. More significantly, we know the requirements of the business owner or the individual who has way too much financial debt. You are trying to manage these difficult financial problems and you are understandably anxious.

It is not your fault you can’t fix this problem on your own and it does not mean that you are a bad person. The pandemic has thrown everyone a curveball. We have not been trained to deal with this. You have only been taught the old ways. The old ways do not work anymore.

The Ira Smith Team uses innovative and cutting-edge methodologies, to adeptly navigate you through the intricacies of your financial challenges, ensuring a resolution to your debt-related predicaments without resorting to the rigours of the bankruptcy process. We can get you debt relief now! We have helped many entrepreneurs and their insolvent companies who thought that consulting with a Trustee and receiver meant their company would go bankrupt. On the contrary. We helped turn their companies around through financial restructuring.

We look at your whole circumstance and design a strategy that is as distinct as you are. We take the load off of your shoulders as part of the debt settlement strategy we will draft just for you.

The Ira Smith Trustee & Receiver Inc. team understands that people facing money problems require a lifeline. That is why we can establish a restructuring procedure for you and end the discomfort you feel.

Call us now for a no-cost consultation. We will listen to the unique issues facing you and provide you with practical and actionable ideas you can implement right away to end the pain points in your life, to begin your debt-free life, Starting Over, Starting Now.

A person wearing a traditional Canadian red and white plaid shirt, surrounded by stacks of paper and envelopes from the Canada Revenue Agency. They look terrified and overwhelmed as they try to figure out how to repay the money they owe. The scene is set against a gray, ominous background with looming shadows representing the fear and stress the person is feeling. The person's facial expression and body language should convey a sense of desperation and hopelessness.

 

Categories
Brandon Blog Post

TENANTS IN COMMON VS JOINT TENANCY IN ONTARIO: THE MODERN RULES OF A 1 CO-OWNER UNHAPPY BANKRUPTCY

tenants in common vs joint tenancy

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

Tenants in common vs joint tenancy in Ontario: Shared ownership of property

There are two different types of property joint ownership: tenants in common vs joint tenancy. Whether you’re married or not, you still face the same problems. Having a co-owned home raises the issue of how the title should be held; tenants in common vs joint tenancy. Both are equally good. The answer really depends on the relationship between the co-owners and their estate planning needs.

A bankruptcy filing by one of the co-owners complicates matters further. A recent bankruptcy case decision in Ontario where only one of the joint owners filed for bankruptcy, highlights the problem, especially for non-bankrupt co-owner. This Brandon Blog discusses the recent bankruptcy case and what it means for both the bankrupt co-owner and the non-bankrupt co-owner regardless of the ownership choices between tenants in common vs joint tenancy.

Home ownership in Ontario: tenants in common vs joint tenants as co-owners

The word “tenants” is normally thought of with property rental. But both joint tenancy and tenants in common reference to a type of shared property ownership. As tenants in common, the ownership rights and all areas of an entire property are owned equally by all members of the group.

When one of the joint tenants dies, the deceased owner‘s share of the property passes to the surviving owner without going through the probate process. With tenants in common, in the event of death, this is not the case.. For asset protection and estate planning purposes, many married couples who want to hold title to the real property in a co-ownership structure, do so as joint tenants to avoid the probate process. Each joint tenant owns a 50% share ownership stake in the property.

Tenants in common may freely decide what ownership percentage of the property each owns. Each tenant in common does not need to own an equal percentage of the property; unequal ownership is fine as long as all co-owners agree on the ownership arrangements of unequal shares. The tenants in common can also transfer their share of the property through a Will, a real estate transfer, or even an arm’s length sale. Tenants in common are well advised to have a signed co-ownership agreement that spells everything out.

This is the primary difference between tenants in common vs joint tenancy in Ontario for the joint ownership of real property.

tenants in common vs joint tenancy
tenants in common vs joint tenancy

Property ownership part 2: tenants in common vs joint tenants in Ontario and the bankruptcy of 1 co-owner

When a co-owner becomes bankrupt, what happens? The Brandon Blog faithful knows that I have previously explained that upon bankruptcy of a person, the non-exempt assets of the bankrupt should be vested in the licensed insolvency trustee, subject to secured creditors‘ rights. For real estate ownership, the answer does not change whether title is held in tenants in common vs joint tenancy.

There is an exemption in Ontario for equity in one’s home of not more than $10,783. It is not an exemption for the first $10K, but rather if the total equity is below that amount. Therefore, we can consider the equity in a bankrupt person’s ownership interest in their home to belong to the Trustee for all practical purposes.

If the bankrupt has a 50% ownership stake due to a joint tenancy agreement, then it is the bankrupt’s equity in half the home. If the bankrupt’s ownership stake is under a tenants in common co-ownership agreement, then it is the equity in only the bankrupt’s co-ownership share. In either scenario, the ownership interest of the non-bankrupt owners are not directly affected. However, the other co-owners’ are affected one way or the other by the bankruptcy of a co-owner. The legal case I am about to tell you about is no exception.

Land Owner Transparency Registry: A Public Database

Upon the person’s bankruptcy, the bankrupt must disclose all assets to the Trustee. With computerization and the internet, it is easy for a Trustee to determine if the bankrupt has an ownership interest in the real estate where they reside. This is whether or not the bankrupt has disclosed such ownership interest.

The decision of the Honourable Justice Pattillo of the Ontario Superior Court of Justice in Bankruptcy and Insolvency dated July 28, 2021, in Re Johansen Bankruptcy, 2021 ONSC 5241 (CanLII) highlights the issues in the bankruptcy of a co-owner of real estate. In December 2016, Mr. Johansen filed a voluntary bankruptcy assignment. In his sworn statement of affairs, he listed no realizable assets and liabilities of $73,968 (unsecured) and $14,950 (secured). No mention is made of any ownership in real estate.

The Trustee learned of the bankrupt’s interest in the home he lived in with his mother in March 2017. In the period from April 2017 to October 2020, the Trustee wrote to the bankrupt and Mrs. Johansen as well as spoke to the bankrupt several times about his interest in the home and why it hadn’t been disclosed. The bankrupt did not provide any information other than denying interest in the property, and his mother did not respond.

A FedEx courier envelope containing a one-page statutory declaration purportedly signed by Mrs. Johansen on October 18, 2018, arrived at the Trustee on October 16, 2020. Her declaration stated, in part, that putting the 20% in the bankrupt’s name was intended to provide her son with an interest in her Estate over and above any other entitlements under her Will. According to her, the 20% was a gift to be realized only after her death.

In the Trustee’s view, the bankrupt and his mother are playing games with each other. The Trustee applied to the court for a declaration that the bankrupt held a 20% interest in the home at the time of bankruptcy, and that he could partition and sell it. Despite the Trustee having a lawyer, the bankrupt represented himself. It would have been better if he had gotten legal advice and been represented in court.

tenants in common vs joint tenancy
tenants in common vs joint tenancy

Tenants In Common vs Joint Tenancy: Can your 90-year-old mother be thrown out of her house?

The Judge determined that the bankrupt owned a 20% interest in the property based on the legal title, and hence, that 20% interest vested in the Trustee pursuant to s. 71 of the Bankruptcy and Insolvency Act (Canada) (BIA).

Mrs. Johansen’s statutory declaration to the effect that the bankrupt did not own the real estate and that the 20% was a gift that only passes to him on her death was not accepted by the Judge. The declaration was signed some two years after the bankruptcy when the Trustee’s ownership interest was well known. Despite repeated requests from the Trustee for information, it was not produced for another two years. In addition to what was noted by the Judge, his main concern was the way she characterized the bankrupt’s interest, given the evidence concerning the property they owned before this home, which Mrs. Johansen failed to mention.

Mrs. Johansen and the former marriage of the bankrupt’s wife, as well as the bankrupt, were the three parties on title to the home they purchased on January 30, 2007. They obtained a mortgage from TD Bank on January 30, 2007, which was discharged on February 21, 2007. Due to a marital split, the bankrupt’s wife was removed from the legal title on October 17, 2008, leaving just his mother Mrs. Johansen and himself as parties on the legal title. The bankrupt admitted that his ex-wife was paid for her interest in that home. On June 28, 2012, the bankrupt and his mother sold that home for $567,000, and the same day purchased the current home for $450,000.

The home was purchased in 2012. The title documents recorded at the time, its ownership is divided between 20% owned by the bankrupt and 80% owned by Mrs. Johansen. Mrs. Johansen and the bankrupt both signed the Land Transfer Tax affidavit showing as between tenants in common vs joint tenancy they chose to own the home as tenants in common. There are no mortgages recorded on the title.

All title searches, including a current title search, did not reveal the nature of the interests of each of Mrs. Johansen, the bankrupt or his ex-wife held in that previous home. However, it did show that each of them had an interest in it. The Judge determined that when Mrs. Johansen and the bankrupt bought the current home, it is a reasonable conclusion that the bankrupt had a 20% ownership interest in it. It was not intended to only pass on Mrs. Johansen’s death.

Justice Pattillo did not accept the bankrupt’s evidence that he has no interest in the property and had no knowledge that he was one of the parties on title. Given the history and the fact that he signed the affidavit of Land Transfer Tax at the time of purchase, Justice Pattillo held that the bankrupt was aware he had an interest in the legal title in the property.

Justice Pattillo found that the Trustee had the standing to bring the application for partition or sale of the property since he is a person with an interest in it. The Judge noted that Mrs. Johansen is 90 years old and does not wish to sell her home. Based on the evidence, however, he did not consider that to be of sufficient hardship to warrant refusing the requested remedy.

Tenants in common vs joint tenancy: The bankruptcy of 1 co-owner will affect the others

The Judge stayed his order for three months. He encouraged the bankrupt and through him his mother to seek professional advice so that this issue can be resolved with the Trustee before the sale process begins. The order will take effect if a resolution is not reached within that timeframe.

Now that the prospect of the sale of the entire home, not just the bankrupt’s co-ownership interest, was a reality, the bankrupt and his mother needed professional guidance. Their professional advice would be that the Trustee is only entitled to 20% of the bankrupt’s equity interest. So, if the mother from her own funds, or by getting a mortgage, can come up with the value of the 20% interest and pay it to the Trustee, then the house will not get sold. She will have bought the bankrupt son’s 20% interest, and the Trustee will have all the money he is entitled to.

If one co-owner goes bankrupt, the other co-owners are affected as well. It is the Trustee’s responsibility to convert the bankrupt’s equity into cash. One or more of the remaining co-owners are the natural buyers of the bankrupt co-owner’s interest. Sometimes non-bankrupt co-owners must sell, as is the case for Johansen if the mother cannot purchase the son’s equity from the Trustee, but most often someone will purchase the Trustee’s equity to maintain the status quo.

Had the choice of ownership interest as between tenants in common vs joint tenancy, this would not have changed the outcome of this case.

tenants in common vs joint tenancy
tenants in common vs joint tenancy

A lawyer can help you understand tenants in common vs joint tenancy in Ontario

I hope that you found the tenants in common vs joint tenancy Brandon Blog interesting. Problems will arise when you or your company are in financial distress, cash-starved and cannot repay debts. There are several insolvency processes available to a company or a person with too much debt.

If you are concerned because you or your business are dealing with substantial debt challenges, you need debt help and you assume bankruptcy is your only option, call me.

It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties with debt relief options as alternatives to bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people with credit cards maxed out and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do as we know the alternatives to bankruptcy. We help many people and companies stay clear of filing an assignment in bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt-free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

tenants in common vs joint tenancy
tenants in common vs joint tenancy
Categories
Brandon Blog Post

STATUTE OF LIMITATIONS IN ONTARIO: THE UNCERTAINTY BEHIND ONTARIO’S LIMITATION PERIOD IN BANKRUPTCY NOW ABSOLUTELY SETTLED

statute of limitations in ontario
statute of limitations in ontario

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

If you would prefer to listen to the audio version, please scroll to the very bottom and click play on the podcast.

Statute of limitations in Ontario: The uncertainty behind Ontario’s limitation period for debt collection

Many individuals have a problem determining the statute of limitations in Ontario for financial debt collection under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. This confusion is all-natural because the time duration is computed based upon the moment when a creditor knew, or ought to have actually recognized that it had a claim to get legal advice on and initiate legal action for recovery.

The unpredictability emerges because the point you need to begin determining from is not necessarily a certain date you can indicate on the calendar. Rather, it may need to be presumed from the realities in any specific situation.

Why does the limitation period matter? It matters because if a creditor does not initiate legal action within the allowed period of time in Ontario within 2 years of knowing, or having out to have known, that it had a claim to litigate, the claim is then statute-barred. What this means is that the claim can no longer be pursued as a valid debt.

In this Brandon Blog, I describe what seems to be the final word now on the statute of limitations in Ontario and proving your claim in bankruptcy.

Statute of limitations in Ontario: Time limits, collections and bankruptcy

If you think it was confusing for only the average Ontario citizen, think again. It was also confusing for lawyers and licensed insolvency trustees. In my March 15, 2021, Brandon Blog titled “STATUTE OF LIMITATIONS: IS STATUTE BARRED DEBT A BASIC PROPER BANKRUPTCY CLAIM IN ONTARIO?“, I described the decision of Master Mills (as she then was) who has since been elevated to the position of a Judge.

Her decision released on March 8, 2021, in. the legal proceeding of In re: John Trevor Eyton, 2021 ONSC 1719 (CanLII), has changed the way we look at creditors who file a proof of claim in either a consumer proposal, restructuring proposal or a bankruptcy. Just to refresh your memory, she decided that if a claim was past the two-year limit under the statute of limitations in Ontario, then the creditor could not even file a proof of claim in bankruptcy on that debt.

In that blog, I also described what the statute means for debt collectors. I also said that the Eyton decision was going to be appealed. Well, it was and we now have the ruling from a Judge of the Ontario Superior Court of Justice (In Bankruptcy and Insolvency).

statute of limitations in ontario
statute of limitations in ontario

Statute of limitations in Ontario and bankruptcy

The appeal raises a rarely-considered and narrow issue: is a claim which is statute-barred under the statute of limitations in Ontario able to be included by a creditor in filing a Form 31 proof of claim in the bankruptcy of the debtor?

On May 19, 2021, Justice S.F. Dunphy released his decision regarding the appeal of the Eyton decision. I won’t repeat the original decision here because I discussed it in detail in my above-noted blog.

Suffice to say that the basis of this litigation is that the Trustee disallowed the creditor’s filed proof of claim because the last payment made on the debt was in April 2016. The creditor did not take legal action against the debtor.

This made the claim now more than two years old before the date of bankruptcy. Therefore the Trustee said since the claim is statute-barred, it cannot be a debt to be proved in this bankruptcy.

Statute of limitations inForm 79 Ontario: When it is too late to sue?

As previously mentioned, the creditor appealed the Trustee’s decision to Master Mills and lost. Now the creditor was appealing the Master’s decision to the Judge.

The issue to be decided was when:

  • it is far too late to take legal action to try to collect on the debt;
  • the debtor has actually submitted either for a restructuring proposal or for bankruptcy under the Bankruptcy and Insolvency Act (Canada) (BIA);
  • the debtor has actually included the amount of that creditor’s claim in the sworn Statement of Affairs; and
  • under the statute of limitations in Ontario, the financial debt is statute-barred yet is not extinguished,

can the creditor file a claim for that financial obligation in the insolvency proceeding?

statute of limitations in ontario
statute of limitations in ontario

Statute of limitations in Ontario and the Effect of Form 79 Statement of Affairs

The creditor’s first point in the appeal was that its debt was listed in the debtor’s sworn Statement of Affairs. Since the debtor recognized the debt, and the debt is not extinguished, then a proof of claim for the amount should be admitted by the Trustee.

The Judge did not think much of this argument. He stated that just because an amount is listed as a liability on the Statement of Affairs, each creditor is still required to prove their claim. The distinction is that a debtor may think that the debt is a provable claim, but a creditor still has to prove their claim. Stated another way, every claim is a potential claim until proven in accordance with the BIA.

In most restructuring proposals or bankruptcy administrations, the debtor’s listing of claims for at least the unsecured debt will never exactly match the final list of proven claims. That is just the way it is.

Can statutes of limitation barred claims be proved in bankruptcy?

As the BIA is federal law, then all provincial limitations laws in Canada are in play. Not just the two-year limitation period in the statute of limitations in Ontario. The creditor’s legal counsel advanced the following arguments regarding civil claims in bankruptcy:

  • The BIA does not define provable claims with any reference or qualification relating to any provincial applicable limitation periods.
  • The Supreme Court of Canada in Schreyer v. Schreyer, 2011 SCC 35 (CanLII), [2011] 2 SCR 605 decided that the meaning of the term provable claims in the BIA is that if the debt exists and can be liquidated and if the underlying obligation exists as of the date of bankruptcy and if no provincial exemption rule applies, the claim will be deemed to be provable.
  • The two-year limitation period in the statute of limitations in Ontario is procedural in nature because it does not extinguish the debt, it just says that a proceeding, such as the issuance of a statement of claim, cannot begin.
  • In one of the Ontario cases I mentioned in my earlier blog (Re: Temple), the Judge, in that case, found that a claim that was older than the basic limitation period in Ontario could be used as a debt owing for the purpose of launching a Bankruptcy Application seeking a Bankruptcy Order being made against a debtor.

The Judge was not persuaded by any of these arguments. He shot them down one by one. I can summarize all of his comments as follows. The purpose of the BIA is to have an equitable distribution of the bankrupt’s assets amongst the creditors, in the priority laid out in the BIA. The claims of all unsecured creditors are to be treated equally and each unsecured creditor is to receive their pro-rata share.

If a creditor who cannot enforce its claim in respect of payment can receive the same share as a creditor who still can enforce its claim for payment, then the claims of all unsecured creditors are not being treated equally.

So Judge Dunphy of the Ontario Superior Court of Justice (In Bankruptcy and Insolvency) dismissed the appeal. I have been told by the lawyer for the creditor who appealed the Master’s decision to the Judge that he does not feel he has a chance to win an appeal to the Court of Appeal for Ontario. So the law on claims barred by the statute of limitations in Ontario in an insolvency proceeding is now settled. Such a claim is not a claim provable and probably cannot even be used as the basis of a claim in a Bankruptcy Application.

statute of limitations in ontario
statute of limitations in ontario

What does this mean for proceedings and intended proceedings in Ontario?

As far as what this means for debt collectors trying to collect a claim in respect of any statute barred debt and for a debt collection agency, whether they are trying to collect on personal debts such as a credit card debt or on commercial debts, look at my previous blog where I discuss what it means for a debt collection agency.

As far as what it means for an insolvency process, there are several takeaways for me on this. First, whenever a creditor files a completed Form 31 proof of claim, there needs to be a schedule attached to the form that clearly shows how the debt is calculated. If there is not going to be any distribution to the unsecured creditors then there is no need to vet every claim to the nth degree.

However, where there will be a distribution to the unsecured creditors, then the Trustee is going to have to take great care in reviewing and vetting each claim. The Trustee will have to make a determination in each case if the claim is barred by the statute of limitations in Ontario or not. If there is insufficient detail in the schedule attached to the Form 31 proof of claim, the Trustee will have to go to each such creditor and get more details. I suspect there will be a whole lot more claims being disallowed than in the past.

Of course, each creditor whose claim has been disallowed by the Trustee because it is barred by the statute of limitations in Ontario has the right to appeal the Trustee’s decision to the Master sitting in the Ontario Superior Court of Justice in Bankruptcy and Insolvency).

Statute of limitations in Ontario: Get a personalized debt free plan today

I hope that you found this statute of limitations in Ontario Brandon Blog interesting. If you are concerned because you or your business are dealing with substantial debt challenges and you assume bankruptcy is your only option, call me. It is not your fault that you remain in this way. You have actually been only shown the old ways to try to deal with financial issues. These old ways do not work anymore.

The Ira Smith Team utilizes new modern-day ways to get you out of your debt difficulties while avoiding bankruptcy. We can get you the relief you need and so deserve. Our professional advice will create for you a personalized debt-free plan for you or your company during our no-cost initial consultation.

The tension put upon you is big. We know your discomfort factors. We will check out your entire situation and design a new approach that is as unique as you and your problems; financial and emotional. We will take the weight off of your shoulders and blow away the dark cloud hanging over you. We will design a debt settlement strategy for you. We know that we can help you now.

We understand that people and businesses facing financial issues need a realistic lifeline. There is no “one solution fits all” method with the Ira Smith Team. Not everyone has to file bankruptcy in Canada. The majority of our clients never do. We help many people and companies stay clear of bankruptcy.

That is why we can establish a new restructuring procedure for paying down debt that will be built just for you. It will be as one-of-a-kind as the economic issues and discomfort you are encountering. If any one of these seems familiar to you and you are serious about getting the solution you need to become debt free, contact the Ira Smith Trustee & Receiver Inc. group today.

Call us now for a no-cost consultation.

statute of limitations in ontario
statute of limitations in ontario

We hope that you and your family are safe, healthy and secure during this COVID-19 pandemic.

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.

 

Call a Trustee Now!