In some instances, estate litigation can involve challenges to the will by individuals who believe they should have been a beneficiary of the estate in specific capacities.

In the recent decision of Fair v. BMO Nesbitt Burns Inc.,the Court of Appeal of Ontario was asked to determine whether a beneficiary to an investment account was entitled to be notified if their status as a beneficiary was changed. Specifically, the appellant in this case was the wife of the testator, who learned after his unexpected death that she had been removed as a beneficiary of investment accounts he held. She claimed that the respondent financial institution, who helped her husband update his accounts, was obliged to tell her of his decision to remove her.

Wife learns that husband removed her from will

The testator passed away on November 23, 2016. At the time of his death, he held three investment accounts with the respondent. The testator and the appellant had been married for ten years at the time of his death, but the testator had three children from a previous marriage.

Following her husband’s death, the appellant became aware that the testator had removed her as the beneficiary of his investment accounts and instead left them to his three children. She told the respondent that this was a breach of an agreement between herself and the testator and sued the respondent, alleging that it violated a duty to advise her of the change to her beneficiary status. Additionally, the appellant brought an action against the testator’s children, alleging a constructive trust in place and that the doctrine of unjust enrichment should apply.

Motion judge says no duty to advise exists in law

The motion judge dismissed the appellant’s action against the respondent, finding that her argument was premised on a duty to disclose the change but found that no such duty exists in law. The motion judge found that the investment accounts were held in the testator’s name alone, therefore the appellant herself was not a customer of the respondent.

The motion judge further stated that the respondent had a duty of confidence with the testator as a result of their bank-customer relationship:

“There is also no obligation either in [statute] or common law to notify third parties about an individual’s beneficiary choices. I agree with (the respondent), that to impose such an obligation would be an absolute breach of that individual’s privacy and their right to dispose of assets as they choose.”

The motion judge held that there was no genuine issue requiring a trial and dismissed the claim against the respondent.

Was the bank an investment advisor?

In her application for appeal, the appellant argued that the motion judge erred in finding no genuine issue requiring a trial. She claimed that the respondent was not a bank, but instead an investment advisor in this situation, and as such, the motion judge’s comment regarding bank-customer confidence was misplaced. The appellant told the court that she and the testator each held individual investment accounts with the respondent and that the statements of the accounts were regularly shared with both her and the testator regularly.

The appellant referenced the 2005 decision of Davidson v. Noram Capital Management Inc., in which the Ontario Superior Court of Justice stated that an investment advisor “has a duty to ensure that the client is fully informed as to all material matters relevant to his/her investment portfolio.”

Court of Appeal Upholds Motion Judge’s Findings

The Court of Appeal agreed that the motion judge may have misstated the respondent’s role in the testator’s life, but found the mistake to be of no consequence. The Court wrote that the respondent may have shared information about the appellant’s accounts with her husband and vice versa, but this was because each of them had consented to that information being shared. When the testator updated the beneficiaries on his investment accounts, he did not include permission to share that information with the appellant.

The Court added that the appellant’s reliance on the decision in Davidson v. Noram Capital Management Inc. was misplaced, as in that case, the Court was referring to changes to an account when the person who was not notified was an owner of that account. Since the appellant in this matter did not own the accounts in question, the decision did not support her position.

The Court ultimately found that the only evidence that the appellant had was her assertion that her and the testator had an agreement to leave their investment accounts to the other should one of them pass away. The appellant had no documentation of this agreement, and in looking at the testator’s actions, the motion judge was within their boundaries to rule that those actions outweighed the appellant’s claims.Court dismissed the appellant’s claim and ordered her to pay $17,500 in damages to the appellant and her late husband’s estate.

Derfel Estate Law Provides Provides Advice to Estate Trustees Facing Will Challenges

At Derfel Estate Law, our estate litigation lawyers acknowledge that many clients are dealing with estate administration and litigation for the first time. We understand that this can be an intimidating, expensive and emotional experience. Our team prides itself on simplifying the law and guiding clients through the litigation process by providing skilled advocacy for various estate and trust disputes, including matters relating to will challenges by beneficiaries and third-parties. Located in Toronto, our firm proudly serves clients in the Greater Toronto Area and throughout Ontario. Contact us online or by phone at 416-847-3580 to schedule a confidential consultation with a member of our team.