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ANSWERS 1. (A) AND (C) Only estate trustees and executors named in a deceased's last will and testament have the authority to conduct litigation on behalf of a deceased person, absent leave of the court. An estate is not a person at law other than for purposes of the Income Tax Act. Actions are therefore properly brought in the name of the executors/estate trustees. If a corporation is served with a claim commenced in the name of an estate that does not name the executors/estate trustees, in-house counsel should consider demanding evidence from the serving solici- tor that s/he has the authority of the executors/estate trustees named in the deceased's last will and testament to commence the litigation. In Ontario such a demand is made under rule 15 of the Rules of Civil Procedure. 2. FALSE. In the recent Ontario Court of Appeal decision in Frye v. Frye, the court concluded that contractual obligations do not constrain a person's ability to bequeath property by means of a will. In the result, pursuant to a provision in the Ontario Business Corporation's Act, shares bequeathed con- trary to a restraint on alienation clause passed to the deceased shareholder's estate trustees. The court held that those estate trustees held those shares as bare trustees for the person to whom the deceased left the shares. The court concluded that the estate trustees were bound by the shareholders' agreement but had discretion as to when to seek the consents necessary to effect the transfer to the person named in the will. The estate trustees were at liberty, in the court's view, to await a change in circumstances or to wait to try to effect a change in the consent procedure. In the interim, the estate trustees were in the court's opinion bound to exercise the rights associated with the shares as the person named in the will directed. The decision gives rise to some serious issues. In particular, it suggests that restraint on alienation clauses in shareholders' agreements on their own, are ineffective to prevent a testator leaving shares to someone in breach of such clauses. More- over, it suggests that the intended recipient of shares pursuant to such a bequest can effectively operate as a shareholder by simply requiring the estate trustees of the deceased share- holder's estate to do their bidding, thus, never engaging the restraint on alienation clause. Prudent in-house counsel should consider reviewing their clients' shareholders' agreements with them in order to deter- mine what amendments or other external arrangements might be made to decrease the risk of such an unpalatable result. 3. TRUE. A person may die with more than one spouse for the pur- poses of estates and pension litigation, either pursuant to statute (where, for instance, a person may be legally married to A but be the common law spouse of B), or pursuant to the terms of pension or other benefit plans (where, for example, survivor benefits may be payable to a deceased's spouse which term is defined to include both legally married and common- law spouses). Faced with disputes of this kind, consideration should be given to paying the funds in dispute into court so that the disputing parties may litigate their right to the funds without the corporation incurring any further legal costs. 4. FALSE. The shares owned by the 16 year old cannot be sold without someone first being appointed by the court as guardian of that child's property pursuant to s. 47 of the Chil- dren's Law Reform Act. A parent is not, as a matter of right, the guardian of a child's property and, therefore, the surviving spouse does not have the authority to authorize the sale of the sixteen-year-old's shares. YOUR RANKING? ■One or fewer correct: Might be time to brush up ■Two or three correct: Not bad, but could do better. ■Four correct: Impressive. way to attract attention? it's easy. Looking for an easier JIL_CL_Aug_08.indd 1 12 • APRIL 2009 INHOUSE 7/15/08 10:18:45 AM A A A A