In a recent Ontario Court of Appeal decision, a lower court decision was upheld in which the deceased’s estate asked the court to evaluate which of two promissory notes was valid and enforceable.

Estate Trustee Presented with Two Promissory Notes

The deceased died on June 5, 2015. Her lawyer provided the deceased’s grand-niece, who was the estate trustee, with her will and a promissory note dated July 16, 2014 (“the first promissory note”). The promissory note was for the sum of $142,000 and was in relation to a loan that the deceased had advanced to her daughter after the note was signed.

However, the daughter then provided the estate trustee with a second promissory note dated July 22, 2014, which she said she found at the deceased’s condominium, and which provided that the loan would be forgiven upon the deceased’s death (“the second promissory note”). The daughter told the estate trustee that this reflected the true agreement between herself and her mother. She later also provided a copy of an email from her mother, dated December 12, 2014, that stated that the loan was “cleared upon [her] death”.

The estate trustee brought an application seeking the opinion of the court as to which of the two promissory notes was valid and enforceable. The application was directed to proceed to trial.

Trial Judge Rejects Second Promissory Note

The trial judge concluded that only the first promissory note was valid and enforceable, finding that the deceased never changed her mind about forgiving the loan, did not receive the second promissory note, and did not send the December 12, 2014 email to the daughter.

While the daughter testified as to the signing of the second promissory note, the judge preferred the testimony of the deceased’s lawyers, who claimed to have no knowledge as to the second note or to the fact that the deceased had changed her mind about the loan. As for the December 12, 2014 email, the trial judge did not accept that the deceased had sent it, for a number of reasons.

The daughter appealed the decision.

Court of Appeal Rejects Daughter’s Claims

First, the Court of Appeal rejected the daughter’s argument that the trial judge erred in his treatment of certain evidence that would have supported her version of the events, in particular that the second promissory note was signed after her mother had decided that the loan would be forgiven upon her death. The court found no reversible error in the trial judge’s conclusions on the issue, stating that the credibility and reliability of the evidence of the witnesses was the province of the trial judge to which it owed deference.

Second, the court rejected the daughter’s attempt to introduce fresh evidence and found that, in any event, the admission of the proposed fresh evidence would not have changed the outcome of the trial.

Finally, the court rejected the daughter’s claim that the trial judge erred in assessing the intentions of the deceased. Specifically, the court rejected her argument that the deceased had simply “forgot[ten] that she had received a second note which superseded the first one”. The court found that the trial judge was entitled to conclude that the deceased had accurately conveyed her wishes to her lawyer when she brought the first promissory note and will to him and they met about her estate.

As a result, the appeal was dismissed.

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If you require assistance with the administration of an estate, whether it be guidance through the process or executor services, contact the knowledgeable estate administration lawyers at Cherkowski Marsden LLP. We will provide trusted legal advice to help with the navigation and completion of probate in an efficient and compassionate manner. We can be reached online or by phone at 250-308-0338 (Vernon office) or 250-803-9171 (Salmon Arm office).