Declaratory Relief Defined

It is well understood that a court can order a party to do something or order a party to refrain from doing something. Another power of the court is its ability to make declarations. The Court of Appeal for Ontario defined a declaratory judgment in Bryton Capital Corp. GP Ltd. v CIM Bayview Creek Inc., 2023 ONCA 363, as follows: “a formal statement by a court pronouncing upon the existence or non-existence of a legal state of affairs.”[1] The Court of Appeal further held that “Declaratory relief, being restricted to a declaration of the parties’ rights … contains no provision ordering any party to do anything or any form of sanction.”[2]

Declaratory relief is not toothless: it has many practical implications. For example, a declaration that a will is valid allows the estate trustees named in the will to begin administering the estate and to submit the will for probate. By way of further example, a declaration that a trust deed grants a trustee certain powers allows the trustee to move forward in ways which, without the declaration, the trustee may not have done. In other words, declaratory relief helps the parties understand the scope of their authority, powers, and/or rights. Once the declaration is made, the parties are at liberty to choose how to act; declaratory relief stops short of compelling the party to behave in a certain way.

By confirming a party’s right, authority, or power, declaratory judgments give parties comfort that any action taken (related to the right, authority, or power) is above reproach. However, the power to issue declaratory relief is discretionary. The Court of Appeal summarized some of the reasons a court may decline to issue declaratory relief: “standing, delay, mootness, the availability of more appropriate procedures, the absence of affected parties, the theoretical or hypothetical nature of the issue, the inadequacy of the arguments presented, or the fact that the declaration sought is of merely academic importance and has no utility.”[3]

When Declaratory Relief is Not Available

The Court of Appeal decision in Bunker v Veall, 2023 ONCA 501, is an example of when the court lacks jurisdiction to issue the declaratory relief sought. In that case, the deceased was a partner at a law firm located in Dubai, United Arab Emirates. After his death, the law firm was sued by two of its clients, Sorient Aviation Ltd. and Sorient General Trading LLC (the “Sorinet Entities”). The proceeding took place in Dubai. The Sorient Entities were successful and the Dubai Court of First Instance granted judgment against the law firm (the judgment was upheld on subsequent appeals). As part of a related settlement, the deceased’s estate agreed to pay funds to the law firm to help satisfy the judgment against it.

The deceased’s estate trustees lived in Canada, where most of the estate assets were also located. The estate trustees were concerned that the Sorient Entities had ties to an alleged terrorist group. As a result, the estate trustees were concerned that the required payment to the law firm (which would be used to fund the payment to Sorient Entities) would contravene s. 83.03 of the Criminal Code, which prohibits individuals from funding, directly or indirectly, any terrorist activity.

The estate trustees brought an application to the Ontario Superior Court of Justice for a declaration that the payment from the estate to the law firm was illegal. The law firm opposed the application and sought a declaration that the payment was legal.

On hearing the application, the judge declared that the payment from the estate to the law firm would be illegal. The law firm appealed.

The estate trustees brought their application under r. 14.05(3) of the Rules of Civil Procedure and under s. 60(1) of the Trustee Act, which authorizes estate trustees to seek the opinion, advice, and direction of the court on any question relating to the management or administration of the estate. The estate trustees and the law firm agreed that the application was properly brought and the Superior Court had the jurisdiction to grant the declaratory relief sought. The Court of Appeal disagreed:

[13]      These types of applications are intended to assist, and in some cases provide legal protection to the trustee against the beneficiaries for actions to be taken by the trustee in the administration of the trust or estate. However, to the extent that such declarations or opinions relate to what steps a prosecutor may take or what findings a court may make in a criminal prosecution against the trustee, they do not provide protection to the trustee from the court or a prosecutor because they do not bind those decision makers.

[14]      Because in this context the court on the application cannot make a binding declaration of legality, courts have held that they will not give a declaration that is intended by the parties to interfere with prosecutorial discretion or to provide immunity from prosecution …

The Court of Appeal noted that declaratory relief is discretionary and should not be granted in every case. The Court of Appeal held that this was one such case. The application judge did not have a full evidentiary record before her which would allow her to make a determination of illegality. Furthermore, the declaration would not be binding on a prosecutor; having been made on incomplete evidence, it would not even be persuasive where a prosecutor had different evidence. As a result, a declaration in this case would have no utility: it would not define the scope of the estate trustees powers, authority, or rights as is the usual purpose of declaratory relief. Having found that the application judge erred in law by exercising her discretion in this case, the Court of Appeal set aside the lower court’s declaration of illegality

It is difficult to fault the estate trustees for seeking the advice of the court: exercising caution before making a payment which could result in up to 10 years of imprisonment should be encouraged. Had the determination of legality or illegality been more straightforward, the Court of Appeal may have found that the application judge had jurisdiction to make a declaration (however, the concerns about not being able to bind prosecutors may have remained). However, given the complexities of the question of legality in this case, the estate trustees must look elsewhere for their answers.

[1] The Court of Appeal was quoting Harry Woolf & Jeremy Woold, Zamir & Woolf: The Declaratory Judgment, 3^rd ed. (London: Sweet & Maxwell, 2002) at page 1.

[2] The Court of Appeal cited Harrison v Antonopoulos (2002), 62 OR (3d) 463 (SC) at paragraphs 27-28.

[3] The Court of Appeal was quoting Gook Country Estates Ltd. v Quesnel (City of), 2008 BCCA 407, at paragraph 10.