Notes taken by an investment advisor must meet the test for admissibility — establishing that they were produced in the ordinary course of business and that they weren’t compiled after the fact — an Ontario court ruled in an estate-related dispute.
Last March, a judge from the Ontario Superior Court of Justice ruled that the transfer of $400,000 from a deceased man’s estate to one of his stepdaughters — who also served as trustee of the estate — was invalid after it was challenged by his other stepdaughter, a beneficiary of the estate.
The court found that the trustee/stepdaughter failed to prove that the transfer was a valid “inter vivos” gift — she argued that he intended to give her $400,000 as a gift, but died before the transaction could be completed — and it ordered that the money had to be returned to the estate.
The trustee/stepdaughter appealed that decision, arguing among other things, that the court wrongfully excluded evidence of the man’s intentions — namely notes from his investment advisor at IG Wealth Management — which, she argued, would have proven that the gift was valid.
Now, the Court of Appeal for Ontario has upheld the lower court ruling, finding that the judge was right not to admit the advisor’s notes into evidence.
On the question of the admissibility of an advisor’s notes, the court said that, “It is not sufficient simply to tender the document.”
The notes have to meet certain conditions to count as evidence — namely that they were produced in the ordinary course of business, and that they were produced around the same time as the transaction.
In this case, the trustee/stepdaughter didn’t call the advisor who wrote the notes as a witness, nor did she provide testimony from anyone else who could attest that the notes met the preconditions for admissibility, the court said.
“… The application judge made no error in declining to admit the notes as business records,” it said.
Additionally the advisor’s notes were not admissible under any exception to the rules against hearsay evidence, the court noted.
“While the appellant did not call evidence from the investment advisor, she did not prove that she was unable to do so,” the appeal court said. “As for the reliability of the notes … they constituted double hearsay and there was no basis on which to admit them.”
Even if the advisor’s notes were admissible as evidence, they wouldn’t change the court’s decision on the validity of the transfer, it said.
“The notes do not evidence that the stepfather formed the specific intent to gift a specific amount to the appellant or that he had authorized his investment advisor to make the transfer. At no point did he relinquish control over the $400,000 at issue,” the appeal court said.
The court noted that that there’s no evidence that the advisor received instructions from the stepfather ordering the transfer, between the last time the advisor and her client spoke, on Dec. 22, 2022, and the day that he died, Dec. 26, 2022.
“We see no error in the application judge’s findings that the stepfather did not form the requisite specific intention to make the $400,000 gift, and that the gift remained only a possibility and was therefore not complete,” it said.
As a result, it dismissed the appeal, upholding the lower court’s decision to order that the money must be returned to the estate.