After considering the practical legal factors affecting small estates and probate, including those a new procedure would need to take into account, in this chapter we view the possibility of a separate small estates procedure and the impact on its design through the lens of two fundamental principles: that of accessibility to probate, and that of the desirability of legal protections for those affected by estates administration.
A. The Principle of Proportionality in Balancing Accessibility and Legal Protection
Usually, notions of access and justice are tightly wound together. Improved access should result in more justice. However, a key challenge in law reform is the ever-shifting relationship between these concepts. When we “unpack” the legal processes involved in a particular procedure and assess them against the importance of achieving justice through that procedure, we sometimes find that all these processes are not necessary to achieve the goal. Nevertheless, at some point, encouraging more access to a legal procedure may be at the cost of the significant legal protections that are the very purpose of the procedure. These cases undermine the efficacy of the system and lessen justice. From this perspective, reforming legal processes in order to promote access to justice involves a balancing exercise along a spectrum of access at one end and legal protection at the other end.
A legal system rich in procedure will typically benefit the wealthy rather than the poor, since only the wealthy will be able to afford to access the full range of the legal protection provided by the process. On the other hand, dispensing with protective procedures may leave the process open to abuse, resulting in more harm than good for all parties. For example, in some cases streamlined pretrial procedures may not afford parties the time to fully understand the issues and their respective legal positions. This may result in a longer trial if preliminary matters that might otherwise have been informally resolved must, instead, be played out in a formal adversarial setting. And, in the probate context, simplified procedures may increase the risk of complications in administering the estate. For example, deficiencies with the will which would be revealed in a full probate application might, instead, be discovered only after the estate has been distributed.
The principle of proportionality is widely applied in the legal context to justify the relaxation of procedural protections involved in a legal process in order to reduce the cost for individuals in accessing that process and, thereby, increase access to justice. Proportionality is a response to the concern that our civil justice system “offers perfection for the few and nothing at all for the many”. It recognizes that all the procedures forming part of a particular procedure may not actually be necessary to achieve justice and that, in fact, they may impede realizing justice for more disadvantaged members of our population.
Proportionality has also been recognized as applicable in the context of estate administration. Mr. Justice Brown has called for court staff to adopt a “culture of common sense” in processing non-contentious probate applications. In fact, proportionality is already reflected in the current design of the probate system. In consultations, a government representative estimated that about 80 per cent of probate applications are approved by the Registrar without the need for referral to a judge. This two tier process reflects the fact that, in order to achieve justice, some more complex probate applications require greater judicial resources than do other, more straightforward applications.
Although the principle of proportionality is invoked as a means of improving access to justice, there is a danger is that it may be used instead to promote efficiency at the expense of justice. Colleen Hanycz worries that, in some circumstances, more access may lead to less justice:
Lying at the heart of Woolf’s mandate was the assumption, maintained to this day, that enhancing efficiency results in enhanced access to justice. It is this central, largely untested assumption that is most problematic. Certainly, providing less costly and time-consuming procedural mechanisms would seem logically connected to improving the access of citizens to that procedure. However, the bigger question remains as to whether that same procedure, in the light of its reduced processes, retains the ability to deliver just, accurate outcomes. (emphasis added)
Most of the literature on proportionality in civil justice addresses its application to adversarial dispute resolution processes. Although proportionality is equally applicable to the court’s probate function, it should be applied somewhat more cautiously in this context. This is so for at least two reasons.
First, unlike in adversarial disputes, all the interests at stake in a probate application will not be represented before the court. The court acts not as an adjudicator but as what Frans S. Slatter, in writing about administrative agencies, described as a “determination maker”:
The determination-making function can be distinguished from the adjudicative function in that the former does not involve the resolution of a dispute and is not primarily adversarial. It often involves a finding of the facts that exist and then a decision as to whether these facts fit criteria that may be well or poorly defined.
In probate applications, the testator is no longer able to express her or his intentions to the court and part of the court’s role is to protect these intentions as reflected in the will. Similarly, the court is responsible to protect the interests of beneficiaries and creditors whether or not they are before the court. Any proportionality analysis must be particularly sensitive to these “missing parties”.
A second, and closely related, reason why proportionality must be applied cautiously in probate matters is that the interests before the court are not necessarily quantifiable and, thus, cannot be evaluated by way of a cost/benefit analysis. Justin W. de Vries and Angelique Moss make this point in relation to will challenges and guardianship disputes asking, “[w]hat constitutes costs which are disproportionate when the interests at stake is [sic] the welfare of an incapable individual?”
A cost/benefit analysis must take into account the interests of the parties as well as the system itself. And the interests of the parties may vary. For example, not every estate representative values the legal protection of probate enough to pay the price and undergo the “hassle”, as he or she may perceive it, of obtaining it. Many will be focused on the practical goal of obtaining possession of the estate assets. With their knowledge of the deceased’s family and the circumstances surrounding the estate, they may believe that a legal claim against them is very unlikely. In these circumstances, probate may be perceived as paternalistic and the associated costs will be considered to outweigh any perceived benefits. On the other hand, there may be circumstances surrounding the estate of which the estate representative is unaware. Therefore, the interests of the beneficiaries and creditors must also be factored in here.
Proportionality is a necessary principle informing the design of a small estates procedure that is effective in promoting accessibility while preserving legal protection. However, proportionality is only one piece of the puzzle. In applying a proportionality analysis, it is important not to lose sight of all the interests potentially engaged in a probate application whether or not they are identifiable. It is also important to ensure that the analysis does not slide into a cost/benefit analysis but maintains a concern for protecting vulnerable parties.
B. Other Legal Processes Balancing Accessibility and Legal Protection
This same tension between access and legal protection is played out in a number of other Ontario legal processes. The LCO has examined several processes which might be considered somewhat analogous to probate in order to determine if there are lessons to be learned. In each case we have concluded that there are differences in context which limit the usefulness of these processes as models for a small estates procedure. We discuss four of these here: Small Claims Court, the Simplified Procedure under Rule 76 of the Rules of Civil Procedure, the procedure governing the receipt and administration of monies owing to minors by guardians under section 51 of the Children’s Law Reform Act and unclaimed property programs.
1. Small Claims Court and the Simplified Procedure
Perhaps the most obvious example of a proportional approach to access to civil justice is the development of the small claims court. Ontario’s Small Claims Court has jurisdiction over most civil claims worth no more than $25,000. According to section 26 of the Courts of Justice Act, the Court is required to “hear and determine in a summary way all questions of law and fact and may make such order as is considered just and agreeable to good conscience”. In this section, the word “summary” is intended to reflect a commitment to proportionality and the court procedures involved in a small claims court action are substantially streamlined.
More recently, the Simplified Procedure in Rule 76 of the Rules of Civil Procedure was created in order to improve access to justice for slightly larger claims (currently, less than $100,000). This rule also reflects the principle of proportionality by appreciably reducing pre-trial procedures.
One significant distinction between Small Claims Court and the Simplified Procedure is the extent to which they contemplate that claimants will be legally represented. The Small Claims Court was intended to allow for laypeople to pursue their claim directly, without the added cost of legal representation. In contrast, it is clear that the Simplified Procedure was designed for use by legal counsel.
The extent to which either the Small Claims Court or the Simplified Procedure has improved access to justice has been questioned. A key concern is that any time and efficiency gained by simplified procedures at the pre-trial stages of an action may be lost later on since the parties must resolve outstanding issues in order that the case is ready for determination. In other words, complications are not eliminated but merely deferred.
Both the Small Claims Court and the Simplified Procedure are adversarial processes for dispute resolution. Therefore, the balancing exercise between legal protection and accessibility may be expected to be somewhat different than the balancing exercise appropriate for a small estates probate procedure.
2. Children’s Law Reform Act
The primary purpose of probate is to authorize an estate trustee to receive and administer money owing to the beneficiaries of an estate. A similar process is contained in the Children’s Law Reform Act (CLRA). The purpose of the guardianship of property scheme for minor’s property is to authorize a legal guardian of property to receive and manage money owing to minors and to distribute it once they attain the age of entitlement. In both probate and guardianship, the chosen person acts as a trustee of property beneficially owned by another and there is the same risk that the trustee will either improperly or fraudulently administer the property. Therefore, both regimes have adopted an administrative, court-supervised process for making this determination. However, there is a distinction between these two regimes. Unlike the probate system, the guardianship provisions in the CLRA implicitly recognize that the burden of undergoing the guardianship process may outweigh its benefits where the amount at stake is small. Thus section 51 of the CLRA provides that someone owing money to a minor, other than pursuant to a court order, may pay it to a parent or person having custody (or to the minor directly in certain circumstances) without proof of guardianship so long as the value is less than $10,000.
Interestingly, this provision is not really worded as an attempt to protect parents from the administrative burden of applying to be a guardian of property where only small amounts are at stake. Rather, it seems to be primarily intended to protect third parties owing money to minors from the risk of paying out the money to the wrong person.
In any event, the question for this project is whether it would be appropriate in Ontario to adopt a similar small value exception to the probate process. Like the guardianship provision, this might be designed to protect third party financial and other institutions making small value payments to an estate representative without proof of probate. This type of informal administration of small estates has been adopted in some Australian jurisdictions.
The pros and cons of introducing a similar statutory protection provision into Ontario’s probate system are discussed below. At this point it should be noted that, although there are several points of similarity between the probate and guardianship processes, there are also some differences that limit the analogy.
First, there is an alternative to guardianship that does not exist for probate. Where no guardian of a minor’s property has been appointed, and there is no will, trust or legislative authority authorizing management of the minor’s money, money or property owing to the minor that is worth more than $10,000 can be paid into court and managed on behalf of the minor. Therefore, neither the minors’ caregivers nor third parties holding the money owing to them are reliant on the guardianship process in the same way that estate representatives and financial institutions are reliant on the probate process.
On the other hand, the guardianship process was designed to protect some of the most vulnerable members of society. The beneficiaries of estates (excepting minors or incapable persons) are not vulnerable in the same sense. Once provided with notice of a probate application, beneficiaries are generally able to take steps to protect their own interests.
Therefore, although section 51 of the CLRA provides a useful analogy for considering the potential benefit of similar statutory protection provision in the probate system, the different context must be kept in mind.
3. Unclaimed Property Programs
Where an estate representative decides that the cost of obtaining probate outweighs its benefit, assets owing to the estate may go unclaimed. What happens to these assets? In some jurisdictions, there are programs providing for unclaimed bank accounts and other intangible property to be collected by an administrator and paid out to claimants establishing that they are entitled to it.
For example, federally registered banks hand unclaimed accounts over to the Bank of Canada after 10 years of no account activity. The Bank of Canada acts as a custodian of the funds. It holds amounts less than $1,000 for 30 years and amounts more than $1,000 for 100 years. Available information about the account is inputted into an electronic database which is searchable by the public. Anyone entitled to the money, including a personal representative of the deceased owner’s estate, may make a claim. The Bank of Canada exercises discretion as to the type of proof it will require from claimants in order to establish their entitlement to the money. It may or may not require legal documents proving that the claimant is representing the estate.
Alberta also has an unclaimed property program that makes use of a U.S. online claim process, MissingMoney.com. There are different requirements for proving claims among the various jurisdictions using this service. However, the MissingMoney website states that an heir entitled to the property of a deceased would generally be required to provide “documentation such as death certificate, Letters of testamentary, [or] proof of the account owner’s connection with the last known address….”
In 2003, the Uniform Law Commission of Canada developed a Uniform Unclaimed Intangible Property Act (UUIPA). Estate claims under this uniform Act could be dealt with informally. Under section 17, the administrator would have discretion to allow an estate claim notwithstanding the absence of documentary proof if satisfied that the claimant is entitled to the property but for some procedural impediment such as the fact that the estate has not been probated. Presumably, the effect of this provision would be that any loss resulting from the administrator making payment to the wrong person would be borne by the estate rather than the administrator.
Ontario does not currently have a regime for unclaimed balances under provincial jurisdiction. In 2012-2013, the Ontario Ministry of the Attorney General undertook a consultation process considering the UUIPA and the possibility of introducing an unclaimed property program in Ontario; however, no legislation has yet been produced. Recently, a spokesperson for the Ontario government suggested that unclaimed property legislation was not currently a priority.
These unclaimed property programs provide context for considering the procedural requirements appropriate to establishing the authority of estate representatives claiming small amounts. If Ontario were to adopt legislation similar to the UUIPA, estate assets not paid out due to the failure of the estate representative to obtain probate could eventually find their way into an unclaimed property program. The procedural rigour of the probate process could be replaced by the relatively informal requirements of section 17 of the UUIPA. Under section 17, an estate representative might be able to gain possession of the assets where he or she could not have done so earlier. This incongruity, although perhaps minor, illustrates that there is a need for an alternative process providing for the release of small amounts to estate representatives when probate does not make commercial sense.
The probate system operates in a historical bubble without regard to the contemporary, informal practices that have grown up around it. The application requirements in Rule 74 for establishing the authority of estate representatives make sense where relatively large amounts are at stake. However, for small estates (particularly very small estates), these application requirements are out of step with the relatively informal requirements of several, similar legal processes in Ontario.
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