tag:blogger.com,1999:blog-153980872024-03-13T19:17:42.558-07:00Rule of LawBritish Columbia Wills, Trusts and Estates Law, Elder Law and Estate Litigation.Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.comBlogger933125tag:blogger.com,1999:blog-15398087.post-87181852906291983162024-02-17T13:28:00.001-08:002024-02-17T13:29:46.289-08:00Zaleschuk Estate<p><span style="font-size: 12pt;">Victor Stephen Zaleschuk died on January 2, 2022,
leaving his spouse, Wendy Chen, and two children, Shane Zaleschuk and Christian
Zaleschuk. Most of his wealth was in California, and was held in two trusts.
This case considers the interpretation of a Will he made on January 12, 2020, governing
his British Columbia assets, which consisted of a residence in Victoria, and a
handful of assets of significantly less value, and no funds. His son Shane was
living in a suite in the residence.</span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">The Will appointed Ms. Chen has his executor and included
the following:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">a). I DISTRIBUTE MY
ASSETS AS FOLLOWS:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">i). Residence
at 750 Pears Road, Victoria, British Columbia, Canada, V9C 3Z8 to Wendy Xin
Hong Chen. All Farm equipment and implements included.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">ii). 2016 Ford Flex
to Wendy Xin Hong Chen.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">iii). 2011 Ford
F-150 to Shane Zaleschuk.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">iv). All shop tools,
Nikon Camera, Gold Bracelet with Lapis & Diamonds to Shane Zaleschuk.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">b). I DISTRIBUTE
ANY RESIDUE OF MY ESTATE AS FOLLOWS:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">To both Wendy Xin Hong Chen and Shane Zaleschuk all Art &
Jewelry and personal belongings as they see fit.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">5). I give my
Executrix the following POWERS:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">Power of sale, realization, employ agents, and power of
dispute resolution.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">***When and if the property is sold: Shane Zaleschuk to
receive $150,000 CAD. Steve Whitner (a minor) to receive $25,000 CAD invested
towards a[n] Educational Trust Fund.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">6). This Will was
executed in Canada for Canadian Assets ONLY. My updated (01-01-2020) USA
Children’s Trust takes precedent of ALL MY ASSETS OUTSIDE OF CANADA.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size: 12.0pt; line-height: 107%;">There was an
error in the description of the beneficiary Steve Whitner, whose last name is
Widner.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">In a letter to his lawyer in California seeking advice
concerning his U.S. estate planning, he described his plans for his residence
in Victoria:<o:p></o:p></span></p>
<p class="MsoNormal" style="text-indent: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">This property to be gifted (***) to Wendy Xin Hong Chen with
the following caveats<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">i). Suite
will remain as Shane Zaleschuk residence. If the property is sold Shane to
receive $150,000 CAD. A $25,000 Education Fund gifted to Steve Whitner.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">A Canadian Trust does not work as I am not a full time
resident of Canada. A Canada Will is included to clarify Canadian assets only.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">ii). As the
mortgage renewal will be due April - 2020.....Wendy will be added to the title.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">***After which Wendy will automatically inherent by Canada
Law. But the Will must be adhered to regarding the sale of the property.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">It should be noted that Wendy Chen was not in fact
added to the title of the residence and it formed part of the British Columbia
estate. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">In her reasons for judgment, in <i><a href="https://www.bccourts.ca/jdb-txt/sc/23/05/2023BCSC0523.htm" target="_blank">Zaleschuk Estate</a></i>, 2023 BCSC 523, Madam Justice Young first
dealt with a challenge by Shane to his father’s capacity to make a will, and
found that he did have capacity and that the Will is valid.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">The more interesting aspects of the decision involve the
interpretation of the will in light of reforms made in 2014 to British Columbia’s
succession laws when the Wills, Estates and Succession Act came into effect. The
reforms liberalized the types of evidence admissible when construing a will,
permitted the court to rectify mistakes in a will, and also permitted the court
to give effect to a document or other record that does not comply with the
formal signing and witnessing requirements of a will.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Wendy Chen argued that she was entitled to the
residence, and that the payments of $150,000 and $25,000 were void because they
are inconsistent with the gift of the residence to her.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Shane Zaleschuk argued that the gift of the residence
was subject to a trust requiring her to pay those cash gifts when she sold the
residence. He also argued that the letter to the California lawyer, referred to
in the decision as the “Record,” gave him the right to occupy the suite in the residence.
<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">The most relevant provisions of the <i>Wills, Estates
and Succession Act </i>are: 4(2), 58 (1) through (3), 59 (1) and (2):<i><o:p></o:p></i></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">4(2) Extrinsic
evidence of testamentary intent, including a statement made by the will-maker,
is not admissible to assist in the construction of a testamentary instrument
unless<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e1363"></a><span style="font-size: 12.0pt; line-height: 107%;">(a)
a provision of the will is meaningless,<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">(b) <a name="d2e1375"></a>a provision of the testamentary instrument is ambiguous<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 108.0pt;"><a name="d2e1386"></a><span style="font-size: 12.0pt; line-height: 107%;">(i)
on its face, or<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 108.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">(ii) <a name="d2e1397"></a>in light of evidence, other than evidence of the will‑maker's
intention, demonstrating that the language used in the testamentary instrument
is ambiguous having regard to surrounding circumstances, or<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e1408"></a><span style="font-size: 12.0pt; line-height: 107%;">(c)
extrinsic evidence is expressly permitted by this Act.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">58 <a name="d2e5875"></a>(1) In this
section, “record” includes data that<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5889"></a><span style="font-size: 12.0pt; line-height: 107%;">(a) is
recorded or stored electronically,<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5900"></a><span style="font-size: 12.0pt; line-height: 107%;">(b) can
be read by a person, and<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5912"></a><span style="font-size: 12.0pt; line-height: 107%;">(c) is
capable of reproduction in a visible form.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><a name="d2e5923"></a><span style="font-size: 12.0pt; line-height: 107%;">(2) On
application, the court may make an order under subsection (3) if the court
determines that a record, document or writing or marking on a will or document
represents<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5934"></a><span style="font-size: 12.0pt; line-height: 107%;">(a) the
testamentary intentions of a deceased person,<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5945"></a><span style="font-size: 12.0pt; line-height: 107%;">(b) the
intention of a deceased person to revoke, alter or revive a will or
testamentary disposition of the deceased person, or<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5956"></a><span style="font-size: 12.0pt; line-height: 107%;">(c) the
intention of a deceased person to revoke, alter or revive a testamentary
disposition contained in a document other than a will.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><a name="d2e5967"></a><span style="font-size: 12.0pt; line-height: 107%;">(3) Even
though the making, revocation, alteration or revival of a will does not comply
with this Act, the court may, as the circumstances require, order that a record
or document or writing or marking on a will or document be fully effective as
though it had been made<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5979"></a><span style="font-size: 12.0pt; line-height: 107%;">(a) as
the will or part of the will of the deceased person,<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e5990"></a><span style="font-size: 12.0pt; line-height: 107%;">(b) as
a revocation, alteration or revival of a will of the deceased person, or<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e6001"></a><span style="font-size: 12.0pt; line-height: 107%;">(c) as
the testamentary intention of the deceased person.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;"><o:p> </o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><b><span style="font-size: 12.0pt; line-height: 107%;">59</span></b><a name="d2e6034"></a><span style="font-size: 12.0pt; line-height: 107%;"> (1) On application for rectification
of a will, the court, sitting as a court of construction or as a court of
probate, may order that the will be rectified <a name="_Hlk130550947">if
the court determines that the will fails to carry out the will-maker's
intentions because of</a><o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><a name="d2e6045"></a><span style="font-size: 12.0pt; line-height: 107%;">(a) an
error arising from an accidental slip or omission,<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">(b) <a name="d2e6056"></a>a misunderstanding of the will-maker's instructions, or<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 72.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">(c) <a name="d2e6068"></a>a failure to carry out the will-maker's instructions.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><a name="d2e6079"></a><span style="font-size: 12.0pt; line-height: 107%;">(2) Extrinsic
evidence, including evidence of the will-maker's intent, is admissible to prove
the existence of a circumstance described in subsection (1).<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Ms. Chen argued that there was no ambiguity in the will
permitting extrinsic evidence, but rather two inconsistent gifts, and the absolute
gift to her prevails over the inconsistent cash gifts. Madam Justice Young
wrote:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[58] The executor
here submits that it is not appropriate to consider extraneous evidence when
constructing a will which needs no clarification. Extraneous evidence is only
considered when there is a need for clarification of a will. She cites <i><a href="https://www.canlii.org/en/bc/bcsc/doc/1998/1998canlii4471/1998canlii4471.html?autocompleteStr=elliott%20estate&autocompletePos=1&resultId=80f6119b826f45c0b97b0f02f2400f21&searchId=caec000394ff4833b2daac29b0af68c6" target="_blank">ElliottEstate v. Elliott</a></i>, 1998 Can LII 4471 which has some similarities to the
present case. Of note, that case predated the enactment of the <i>WESA</i>,
and so deals with the stricter common law rules of construction. The <i>WESA</i> came
into force in 2014. Prior to that, the court had no power to rectify a will (<i>Simpson
v. Simpson Estate</i>, 2022 BCCA 208 at para. 70).<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[59] In <i>Elliott</i> the
will provided the petitioner with an absolute bequest of the testator’s estate.
The respondents who had lived on the property for many years submitted that it
was most probable that the testator intended to bequeath his property in trust
to the petitioner subject to the life estate of the respondents.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[60] The central
issue in the case was what interest under the testator’s will did the
respondents have in the house that they occupied. Justice Edwards found that
this was not a case of a patent omission or even of ambiguity. It was a case
where unambiguous but contradictory bequests were found in the same will. If
the initial bequest to the executor of the property stood alone in the will it
could only be interpreted as an absolute gift of the entire estate to her. If
the other bequests stood alone they could not be said to be ambiguous as to the
intention to create life estates or specific bequests of modest sums. The two
gifts were inconsistent (<i>Elliott</i> at para. 19).<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[61] Justice Edwards
found that the case before him was not a case of ambiguity which would permit
the court to entertain evidence of surrounding circumstances in order to
determine the testator’s intention or supply some omission (para. 20). He found
that it was a case of a will containing incompatible bequests which were
governed by the <i>Blackburn and Cox v. McMillan</i> (1902), 33
S.C.R. 65 line of authority (para. 21).<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Citing <i><a href="https://www.bccourts.ca/jdb-txt/SC/12/06/2012BCSC0629.htm" target="_blank">Theimer Estate</a></i>, 2012 BCSC 629, Justice
Young held that the proper approach is to consider the Will as a whole in light
of properly admissible extrinsic evidence.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">She held that she could consider the letter to the California
lawyer to assist in determining Victor Zaleschuk’s intentions. She found that
it supported the view that he intended to impose a trust on the residence requiring
payment of the cash gifts if and when it is sold.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">In contrast, Madam Justice Young did not give effect
to the statement in the letter permitting Shane to continue to live in the
suite in the residence. The letter, though authentic, did not represent Victor
Zaleschuk’s final testamentary intention. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Justice Young wrote:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[97] I conclude that
the Record is a working paper prepared to obtain advice from Mr. Watt and
possibly from Shelsey Robertson as to whether the deceased’s overall estate
plan is “doable”. It does not set out the deceased’s fixed and final expression
of intention as to the disposal of the deceased’s property on death. I am
influenced by his statement that “this is the second draft that I mailed to Mr
Watts after he made a few changes”.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[98] The gift to
Shane of a life estate to the suite in the Residence is inconsistent with the
gift of the property to Wendy. It is not provided for in the Will.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">….<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[100] The cash legacies to Shane and
to Steve Widner are repeated in the Will and although inconsistent with an
absolute gift, I am satisfied that the deceased did intend that these cash
legacies be paid. I find that the cash legacy clause should be read in as a
trust imposed on Ms. Chen to pay if she sells the Residence.<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">[101] I am not satisfied that the
words “Suite will remain as Shane Zaleschuk residence” should be added to the
Will. The Record is not a testamentary document. It sets out a plan for the
U.S. and Canadian assets but some of it was not implemented, and the note
changed on a few occasions, although the orphan signature page remains the
same.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="font-size: 12.0pt; line-height: 107%; mso-ansi-language: EN-US;">Justice Young declared: <o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 36.0pt;"><span style="font-size: 12.0pt; line-height: 107%;">
iii. the subclause in clause 5 of the
Will as corrected is valid:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left: 108.0pt;"><span style="font-size: 12.0pt; line-height: 107%;"> ***When and if the property is sold: Shane Zaleschuk to
receive $150,000 CAD. Steve Widner (a minor) to receive $25,000 CAD invested
towards a[n] Educational Trust Fund.<o:p></o:p></span></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-78720183775931153492024-01-14T17:27:00.000-08:002024-01-14T17:28:36.818-08:00Tom v. Tang<p>In <i><a href="https://www.bccourts.ca/jdb-txt/ca/23/02/2023BCCA0221.htm" target="_blank">Tom v. Tang</a></i>, 2023 BCCA 221, released in June, 2023, the
British Columbia Court of Appeal clarified that in a wills variation proceeding
the Court applies an objective standard when considering a will maker’s reasons
for disinheriting a child or treating children unequally. Earlier Court of
Appeal decisions have often been interpreted as applying a more subjective
approach to a will-maker’s reasons, allowing a court to uphold disinheritances
or significantly unequal treatments of adult children if the will-maker
provided reasons that were valid (in that they were based on true fact) and
rational (in that they were logically connected with the parent’s treatment of
their child), even if those reasons were not objectively justifiable.</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Before I get to the legal issues, the story in Tom is that
of a couple and their five children, working together to build successful lives
in Vancouver, after having immigrated to Canada in the 1960s. The will-maker,
Bo Kam Tom, and her husband, with the assistance of their children, bought and
operated a grocery store. They later bought a family home. All of the children
obtained university educations. <o:p></o:p></p>
<p class="MsoNormal">Mr. Tom died before Mrs. Tom. Her health declined after she
was hurt in a car accident and diagnosed with cancer. All of the children were
described as “dutiful and devoted to their mother, visiting or calling
regularly, taking her to appointments, dim sum and social activities, staying
with her when she needed support and visiting her when she was at the hospital
and later the hospice.“ They were “devoted and loving children.”<o:p></o:p></p>
<p class="MsoNormal">Two of the children, Rose Tsai and Samsun Tom, provided
significantly greater care for their mother in her last few years. In
recognition of their care, she changed her will to leave her house to those two
children, with the rest of her estate divided among all five children. Her
house was worth approximately $1.7 million and the remaining assets about
$700,000. The effect of the will was that two of her five children would
receive about 85 per cent of her estate, and the other three, Linda Tang, Faye
Wong and Jack Tom, would share about 15 per cent.<o:p></o:p></p>
<p class="MsoNormal">The three children receiving a lesser share brought a wills
variation claim asking the court to provide them with a larger share. <o:p></o:p></p>
<p class="MsoNormal">Section 60 of the <i>Wills, Estates and Succession Act</i>
provides that the Court may vary a will if the will maker does not make
adequate provision for a spouse or child. If adequate provision is not made the
court may vary the will to provide such provision as the court considers
“adequate, just and equitable in the circumstances.” Section 62 provides that
the court may consider evidence of the will-maker’s reasons for making the
provision they made. These legislative provisions were formally in the Wills
Variation Act, which is referred to in many of the cases.<o:p></o:p></p>
<p class="MsoNormal">The trial judge varied the will to increase the provision
for the three children who were left less in the will. The will was varied by giving
an additional $300,000 to each of Rose Tsai and Samsun Tom, and dividing the
rest of the wealth equally among all five children. The decision of the trial
judge reduced the discrepancy among the children, while giving some effect to
the will-maker’s decision to favour two of her children. <o:p></o:p></p>
<p class="MsoNormal">Rose Tsai and Samsun Tom appealed. One of their arguments
was that the trial judge should have upheld the will on the basis that their
mother had rational and valid reasons for making the provisions she made in
view of the additional care they provided to her. <o:p></o:p></p>
<p class="MsoNormal">This raises an important issue. The will-maker’s reasons in
this case, that two of her children had provided her with greater assistance,
were factually accurate. Her decision to provide those two children with
greater shares is logically connected to her reasons. Yet the overall
distribution in her will is arguably disproportionate. She may have good
reasons for favouring two of her children, but leaving them with 85 per cent
seems a bit much in the context of her good relationships with all of her children.<o:p></o:p></p>
<p class="MsoNormal">Some would argue--including me--that there has been a
tension in the cases between an objective standard in assessing whether a
will-maker has made adequate provision for a child, and some of the cases in
which the courts have upheld distributions on the basis of the will-maker’s
reasons. <o:p></o:p></p>
<p class="MsoNormal">The Supreme Court of Canada has articulated an objective
approach to wills variation cases. In a case decided in 1931, <i>Walker v.
McDermott</i>, [1931] S.C.R. 94, the Supreme Court of Canada said that in
applying the legislation the court “would naturally proceed from the point of
view of the judicious father of a family seeking to discharge both his marital
and his parental duty; and would of course (looking at the matter from that
point of view), consider the situation of the child, wife or husband, and the
standard of living to which, having regard to this and the other circumstances,
reference ought to be had.”<o:p></o:p></p>
<p class="MsoNormal">In a more modern case, <i><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1161/index.do" target="_blank">Tataryn v. Tataryn Estate</a></i>,
[1994] 2 S.C.R. 807, the Supreme Court of Canada set out a framework focused on
the will-maker’s legal and moral obligations to a spouse or children. Legal
obligations refer to obligations such s division of property obligations to a
spouse under family law, while moral obligations are based on society’s
reasonable expectations of what a judicious person would do in the
circumstances.<o:p></o:p></p>
<p class="MsoNormal">In three cases, <i><a href="https://www.canlii.org/en/bc/bcca/doc/1993/1993canlii1262/1993canlii1262.html?autocompleteStr=bell%20v.%20roy&autocompletePos=1" target="_blank">Bell v. Roy</a></i>, (1993) 75 B.C.L.R. (2d)
213, <i><a href="https://www.canlii.org/en/bc/bcca/doc/1996/1996canlii1596/1996canlii1596.html?resultIndex=1" target="_blank">Kelly v. Baker</a></i> (1996), 15 E.T.R. (2d) 219, and <i><a href="https://www.bccourts.ca/jdb-txt/CA/11/03/2011BCCA0354.htm">Hall v. Hall</a></i>,
2011 BCCA 354, the Court of Appeal has used language implying a more subjective
standard if the will-maker provides reasons that are valid and rational, even
if not objectively sufficient. <o:p></o:p></p>
<p class="MsoNormal">In <i>Bell</i>, Justice Goldie wrote at paragraph 38,<o:p></o:p></p>
<p class="MsoNormal"><i></i></p><blockquote><i>…that the weight to be given evidence of the testator's
reasons is affected by its accuracy and not by morally acceptable or
unacceptable content. I do not say the legislature swept away any objectively
determined moral duty. I do say, however, that the actual intentions of the
testator are to be given an effect which is largely denied by reliance upon the
notionally objective reasonable testator.</i></blockquote><i><o:p></o:p></i><p></p>
<p class="MsoNormal">In <i>Kelly</i>, Justice Finch (later Chief Justice) wrote,<o:p></o:p></p>
<p class="MsoNormal"><i></i></p><blockquote><i>The law does not require that the reason expressed by the
testator in her will, or elsewhere, for disinheriting the appellant be
justifiable. It is sufficient if there were valid and rational
reasons at the time of her death - valid in the sense of being based on fact;
rational in the sense that there is a logical connection between the reasons
and the act of disinheritance.</i></blockquote><i><o:p></o:p></i><p></p>
<p class="MsoNormal">As I wrote in 2015 in a blog post entitled “<a href="https://rulelaw.blogspot.com/2015/01/its-time-for-court-of-appeal-to-revisit.html" target="_blank">It’s Time forthe Court of Appeal to Revisit its Formulation of ‘Rational and Valid Reasons’in Wills Variation Cases,</a>” these cases have been criticized in other court
decisions as being inconsistent with the objective standard in <i>Tataryn</i>.<o:p></o:p></p>
<p class="MsoNormal">In the Court of Appeal in <i>Tom</i>, Madam Justice Fenlon
considered <i>Bell, Kelly</i> and<i> Hall</i> in the context of the facts and issues in
dispute in each of those cases, and found that the Court of Appeal in each of
those cases did apply an objective approach and was not advocating a more subjective
approach to a will-maker’s reasons. For example, in<i> Kelly</i>, the claimant
submitted that at the time the will was made, four years after the claimant
left home, the reasons did not provide a sound basis for disinheriting him.
Those reasons included that he had abandoned his family and lived a life
morally unacceptable to the will-maker. However, the will was made 16 years
before the will-maker died. Justice Finch was addressing the timing of the
reasons: they did not have to be justifiable at the time the will was made, if
they were consistent with the “discharge of a good parent of her duties to her
family,” at the time of her death. <o:p></o:p></p>
<p class="MsoNormal">After considering all three cases, Justice Fenlon wrote,<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>[51] In
summary, <i>Bell CA</i>, <i>Kelly</i> and <i>Hall</i> do
not stand for the principle that a testator’s unequal treatment of adult
children must be deferred to, without regard to the objective standard of the
reasonable testator and current social norms, as long as the subjective reasons
given for the unequal distribution are valid and rational. These cases
recognize instead that a testator’s moral duty to adult children must be
assessed from the viewpoint of a reasonable testator, and that the moral duty
may be negated where there is just cause.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">The Court of Appeal in <i>Tom</i> went some distance in
re-interpreting it’s earlier decisions, but the result is to bring the
jurisprudence in line with the objective framework of Tataryn. <o:p></o:p></p>
<p class="MsoNormal">This ground of appeal was dismissed. The Court of Appeal did
vary the trial judge’s decision a little, by awarding each of Rose Tsai and
Samsun Tom 30 per cent of the estate with the other three sharing 40 per
cent.<span style="mso-spacerun: yes;"> </span><o:p></o:p></p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span><o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-22601140351350428722023-05-22T14:08:00.004-07:002023-05-22T14:11:59.543-07:00Amendment to Family Law Act Enhances Protection for Inheritances<p> </p><p class="MsoNormal">A recent change to British Columbia’s <i>Family Law Act</i>
provides greater protection for inheritances from claims of spouses on the
breakdown of a marriage or marriage-like relationship. The basic structure of
our <i>Family Law Act</i> provides that some assets are “included property” in the division
of property and other assets are “excluded property.” In most cases, included
assets are divided equally between spouses following the breakdown of the marriage
or marriage-like relationship, and excluded property is, well, generally
excluded from the division. The court may in some circumstances deviate from this
scheme of division, but for the purpose of this blog, lets keep it simple.<o:p></o:p></p>
<p class="MsoNormal">When one spouse receives and inheritance or gift, that
property is excluded. However, if the property appreciates in value during the marriage
or relationship, then the gain is included, and divided equally. Say, for
example, one spouse inherits a house worth $800,000 from her mother (probably not
in Vancouver), and on separation from her spouse, the house is worth $1
million, then she keeps $800,000, but shares the $200,000 gain with her
ex-spouse.<o:p></o:p></p>
<p class="MsoNormal">This seems simple enough, and strikes me as fair. The mother
intended to benefit her daughter, rather than her daughter’s spouse, but on the
other hand, the appreciation in value occurred during the marriage. Where things
get murkier is if the daughter transfers the house into her spouse’s name
during the marriage. Perhaps she transfers title into a joint tenancy with her
spouse, so that if she dies before him, he will receive the house by right-of-survivorship.
In that case, does the house remain excluded property? <o:p></o:p></p>
<p class="MsoNormal">The British Columbia Court of Appeal, answered that if excluded
property is gifted by one spouse to the other, it is no longer excluded. I
wrote about the case of <i><a href="https://www.bccourts.ca/jdb-txt/ca/16/01/2016BCCA0186.htm" target="_blank">V.J.F v. S.K.W.</a></i>, 2016 BCCA 186 <a href="http://rulelaw.blogspot.com/2016/05/what-happens-to-funds-inherited-by.html" target="_blank">here</a>. In that case, the
husband inherited $2 million from his employer, and used most of the funds to
buy land, the title to which he and his wife registered in her sole name. On
the breakdown of the relationship, both the trial judge and the Court of Appeal
held that the residence was no longer excluded property. <o:p></o:p></p>
<p class="MsoNormal">The British Columbia Government published a<a href="https://www2.gov.bc.ca/assets/gov/law-crime-and-justice/about-bc-justice-system/legislation-policy/fla/fla-presumption-advancement-discussion-paper.pdf" target="_blank"> discussion paper</a> in August 2016 discussing this issue and invited comments for potential
legislative change.<o:p></o:p></p>
<p class="MsoNormal">Now, the legislation has been changed, effective May 11,
2023. The following provision has been added to section 85:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>(3)<span style="mso-tab-count: 1;"> </span>If
property is excluded from family property under subsection (1), the exclusion
applies despite any transfer of legal or beneficial ownership of the property
from a spouse to the other spouse.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">85 (1) excludes from family property inheritances as well as
certain other categories of property such as assets brought into the relationship,
and any property derived from the sale of excluded property. <o:p></o:p></p>
<p class="MsoNormal">If this new subsection 85(3) had been in effect when the proceeding
in <span style="mso-spacerun: yes;"> </span>V.J.F. was commenced, it is likely
that the $2 million would have been excluded, rather than shared between the
spouses. <span style="mso-spacerun: yes;"> </span><o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-45805318265768588682023-05-13T16:55:00.005-07:002023-05-13T16:55:25.968-07:00Estates Disputes in British Columbia: A Litigator's Guide<p>The Continue Legal Education Society of British Columbia has published a new manual entitled <i><a href="https://www.cle.bc.ca/estate-disputes-in-british-columbia/#1522170136065-19ba8ff2-35f3" target="_blank">Estates Disputes in British Columbia: A Litigator's Guide.</a> </i>The Chapters are:</p><p></p><blockquote><p>1. Initial Considerations in Estate Disputes</p><p>2. Conflict of Laws in Estate Disputes</p><p>3. Resolving Estate Disputes through Mediation</p><p>4. Proceeding with Estate Litigation</p><p>5. Validity of Wills Disputes</p><p>6. Interpretation, Rectification, and Construction of Wills Disputes</p><p>7. Curing a Defective Will</p><p>8. Wills Variation Claims</p><p>9. Disputes Regarding Attorneys</p><p>10. Disputes Regarding Personal Representatives and Trustees</p><p>11. Committeeship Applications and Claims Against Committees</p><p>12. Inter Vivos Trust Disputes</p><p>13. Inter Vivos Transfer Disputes</p><p>14. Life Insurance, Registered Account, and Benefit Plan Beneficiary Designation Disputes</p><p>15. Resulting Trusts, Unjust Enrichment, Constructive Trusts, and Secret Trusts</p><p>16. Issues of Spousal Status in Estate Disputes</p><p>17. Administration of Intestate Estates Disputes</p><p>18. Passing of Accounts and Trustee Remuneration Disputes</p></blockquote><p></p><p>Shahdin Farsai of our firm authored the chapter, Passing Accounts and Trustee Remuneration Disputes. I am one of the co-editors of the book. </p><p> </p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-20941036587476872542023-02-26T16:34:00.012-08:002023-04-14T17:53:22.594-07:00Canfield v. Bronze Wines Ltd.<p> </p><p class="MsoNormal">Madam Justice Horsman’s decision in <a href="https://www.bccourts.ca/jdb-txt/sc/22/05/2022BCSC0546.htm">Canfield v. Bronze Wines Ltd.</a>, 2022 BCSC 546, additional reasons at <a href="https://www.bccourts.ca/jdb-txt/sc/22/14/2022BCSC1435.htm">2022 BCSC 1435</a>, illustrates the
application of unconscionability to improvident transfers of wealth. The
doctrine may apply where value is given for the transfer, it does not require a
finding that the transferor did not have capacity, nor evidence of undue
influence.<o:p></o:p></p>
<p class="MsoNormal">This case also illustrates the responsibilities of lawyers
and notaries public in witnessing transfer documents. On this point, the trial
judge’s finding of liability of the notary public was overturned in <i><a href="https://www.bccourts.ca/jdb-txt/ca/23/00/2023BCCA0056.htm">Engman v.Canfield</a></i>, 2023 BCCA 56, although the Court Appel agreed with her analysis of
the notary’s responsibilities. <o:p></o:p></p>
<p class="MsoNormal">Jean Canfield signed an agreement to sell her home on an
acreage in Grand Forks B.C. in January, 2012, to Bronze Wines Ltd. for 465,000.
Pursuant to the agreement, Bronze Wines was not required to make a down payment
or any payments for two years, after which Bronze Wines was required to make
monthly payment to her of $2,500 until she was paid in full. Bronze Wines was
required to pay interest at the “Bank of Canada Prime rate + 1%.” The agreement
provided that she could foreclose and reclaim the property if Bronze Wines
missed three consecutive payments.<span style="mso-spacerun: yes;"> </span><o:p></o:p></p>
<p class="MsoNormal">When she made the agreement, she was in her 70s, recovering
in an assisted-living residence in Langley, B.C. from hip surgery. In 2010, she
found it too difficult to manage the acreage and she moved in with one of her
children in Langley, and then into the assisted living residence. She listed
the property in 2010 and then in 2011, but had no success in selling.<o:p></o:p></p>
<p class="MsoNormal">The principal of Bronze Wines was Scot Stewart, who was a
friend of Mrs. Canfield’s son-in-law Max Bottoni. Mr. Stewart wanted to start a
winery. He had no training or experience making wines, was unemployed, and did
not have substantial assets. Mr. Bottoni negotiated the agreement with Mr.
Stewart, who wrote up the agreement using a self-counsel precedent. Mrs.
Canfield met Mr. Stewart for the first time when he took the agreement to her
residence, and they both signed it. She did not request any changes and did not
receive any legal advice before signing. It should also be noted that the trial
judge found that Mr. Bottoni had an interest in Bronze Wines, and was not
acting as an agent for his mother-in-law.<o:p></o:p></p>
<p class="MsoNormal">In order to transfer title to the acreage, Mrs., Canfield
need to sign a Form A transfer in the presence of an “Officer,” under the <i>Land
Title Act</i>, which include a lawyer or notary public. Mr. Stewart scheduled an
appointment for Mrs. Canfield with a notary public, Mr. Engman, in New
Westminster. Mr. Stewart and Mr. Bottoni attended the notary’s office with her.
Mr. Stewart brought a Form A transfer document with him and the notary
witnessed Mrs. Canfield’s signature, and gave the Form A transfer back to Mr.
Stewart, who later arranged for registration of the change in title to Bronze
Wines. <o:p></o:p></p>
<p class="MsoNormal">The meeting between Mrs. Canfield and the notary took about
10 to 15 minutes, for which the notary charged $50. Mr. Stewart paid the fee.
Madam Justice Horseman found that the notary did not take any steps to ensure
that Mrs. Canfield understood the document, had capacity to sign it and was not
subject to undue influence. Mrs. Canfield did not receive and legal advice nor
did she confirm to the notary that she had received legal advice in respect of
the transfer. <o:p></o:p></p>
<p class="MsoNormal">Mr. Stewart and Bronze Wines needed to arrange financing to
carry out repairs and renovations to the property. Bronze Wines granted
mortgages of the property to secure the financing, and at trial there were tow
mortgages: one for the principal amount of $335,000 and the other for $69,440.
Sadly, Bronze Wines’ business failed, and the property went into foreclosure.
It was sold sale proceeds of $338,000 were paid into court.<o:p></o:p></p>
<p class="MsoNormal">Mrs. Canfield never received a payment for the sale of her
home. At the time of trial, she was living in a subsidized residence in Nelson,
B.C. She has no significant assets. <o:p></o:p></p>
<p class="MsoNormal">Several claims were advanced on Mrs. Canfield’s behalf,
including:<o:p></o:p></p>
<blockquote style="border: none; margin: 0px 0px 0px 40px; padding: 0px; text-align: left;"><p class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">1.<span style="font: 7pt "Times New Roman";"> </span></span></span><!--[endif]-->A claim seeking rescission of the agreement with
Bronze Wines and damages on the <span> </span>basis of unconscionability;</p><p class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">2.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]-->A claim for damages against Mr. Stewart
personally;</p><p class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">3.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]-->A claim that the limitation period for one of
the lenders to enforce its mortgage had expired;</p><p class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">4.<span style="font: 7pt "Times New Roman";">
</span></span></span><!--[endif]-->A claim for damages against the notary for
negligence.</p></blockquote><p class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><o:p></o:p></p>
<p class="MsoListParagraphCxSpMiddle" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><o:p></o:p></p>
<p class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -18pt;"><!--[if !supportLists]--><o:p></o:p></p>
<p class="MsoNormal">Mrs. Canfield had settled with one of the lenders. Madam
Justice Horsman dismissed the claim that the other creditor’s right to enforce
its mortgage was out of time, and also dismissed the claim against Mr. Stewart
personally. I will focus on unconscionability and the claim against the notary.<o:p></o:p></p>
<p class="MsoNormal">The leading recent case on unconscionability is the Supreme
Court of Canada decision in <i>Uber Technologies Inc. v. Heller</i>, 2020 SCC
16, decided in the very different context of the enforceability of an
arbitration clause in Uber contracts (the Court held that it was not). <o:p></o:p></p>
<p class="MsoNormal">Unconscionability provides an equitable exception to the
enforceability of contracts when the agreement is both unfair and resulted from
an inequality of bargaining power between the parties to the agreement. As set
out in Madam Justice Horsman’s reasons in paragraph 72:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">Through the doctrine of unconscionability, equity provides
relief where the traditional presumptions underlying freedom of contract—the
“freely negotiated bargain or exchange” between “autonomous and self-interested
parties”—lose their justificatory authority due to the vulnerability of one
party to the contracting process: <i>Uber</i> at paras. 56-60. Courts
will not ignore serious flaws in the contracting process where those flaws
challenge the traditional paradigms of the common law of contract. As explained
by the Supreme Court of Canada in <i>Uber</i>:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>[58] …The elderly person with
cognitive impairment who sells assets for a fraction of their value (<i>Ayres
v. Hazelgrove</i>, Q.B. England, February 9, 1984); the ship captain stranded
at sea who pays an extortionate price for rescue (<i>The Mark Lane </i>(1890),
15 P.D. 135); the vulnerable couple who signs an improvident mortgage with no
understanding of its terms or financial implications (<i>Commercial Bank of
Australia Ltd. v. Amadio</i>, [1983] HCA 14, 151 C.L.R. 447) — these and
similar scenarios bear little resemblance to the operative assumptions on which
the classic contract model is constructed.</blockquote><p></p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">To succeed in an allegation that the agreement is
unconscionable, the weaker party must by “unduly disadvantaged.” But it is not
necessary to show that the stronger party knowingly took advantage of the
weaker party. <o:p></o:p></p>
<p class="MsoNormal">Applying the analysis in Uber to the facts, Madam Justice
Horsman found that Mrs. Canfield established that she was in a position of an
inequality of bargaining power:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[92] There
was an inequality of bargaining power as a result of Mrs. Canfield’s inability
to adequately protect her own interests. I accept the defendants’ submission
that there is no basis in the evidence for a finding that Mrs. Canfield lacked
capacity to contract. However, as <i>Uber</i> makes clear, the
doctrine of unconscionability is not restricted to cases where a party lacks
capacity. In this case, Mrs. Canfield had situational vulnerability as a result
of the circumstances she found herself in at the time of the Agreement. She was
an elderly widow with health problems who felt pressure to sell a Property she
could no longer manage. She was deprived of information that was critical to
her exercise of autonomous decision-making in the contracting process. She did
not know that Mr. Bottoni had aligned himself with Bronze Wines, and thus could
not be relied on to protect her interests. She had no information about Mr.
Stewart’s limited income and assets, nor was she told of his lack of experience
in the wine-making business. She did not know of Mr. Stewart’s plan to mortgage
the Property as soon as it was transferred to Bronze Wines. She was not
provided with full information about the nature of the risks inherent in the
Agreement that Mr. Bottoni and Mr. Stewart wished her to sign.<o:p></o:p></p>
<p class="MsoNormal">[93] This
contracting process did not take place on a level playing field. As a practical
matter, only Mr. Stewart and Mr. Bottoni could understand and appreciate the
full import of the contractual terms, as well as the extent to which the
bargain imperilled Mrs. Canfield’s interests. Unbeknownst to her, she was
agreeing to transfer her only asset of any significant value to Bronze Wines in
return for an unsecured stream of future income that was dependent on the
financial success of a wine-making business operated by someone with no income,
assets, or wine-making experience.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Madam Justice Horsman agreed with Mr. Stewart that there was
no evidence that Bronze Wines deliberately took advantage of Mrs. Canfield, but
it is not necessary to show that he intended to do so for unconscionability to
apply.<o:p></o:p></p>
<p class="MsoNormal">Madam Justice Horsman also found that Mrs. Canfield met the criteria
of an improvident transaction:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>[98] Turning
to the second requirement for a finding of unconscionability, I have no
difficulty in concluding that this was an improvident transaction. A
substantively improvident bargain was struck as a result of Mrs. Canfield’s
inequality of bargaining power. The terms of the Agreement, which are more
favourable to Bronze Wines than to Mrs. Canfield, offered Bronze Wines, a
corporation with no assets, a generous two-year payment holiday as well as a 20
to 40-year amortization period to repay the purchase price without providing
any real security or an agreed interest rate. In the context of Mrs. Canfield’s
situational vulnerability and the informational asymmetry that characterized
this contracting process, she could not have understood or appreciated the
meaning or significance of the contractual terms, as well as how they unduly
disadvantaged her position.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">Ideally, when an agreement is set aside as unconscionable,
the weaker party is restored to the position they were in before the agreement
was made. The contract is rescinded. In this case, because the acreage was
mortgaged and sold, Mrs. Canfield could not have the acreage, nor the full
proceeds of sale, returned to her. Madam Justice Horsman ordered rescission,
but it was limited to restoring the portion of sale proceeds remaining after
the lender was paid. She also ordered that Bronze Wines compensate Mrs.
Canfield for the difference between the fair market value of the acreage of
$465,000 less the amount she receives from the proceeds of sale.<o:p></o:p></p>
<p class="MsoNormal">In view of the fact that the sale price does not appear to
be significantly higher than the amount of the loans, and that Bronze Wines has
no assets, Mrs. Canfield would likely receive little or no compensation, unless
she succeeded in her claim against the notary in negligence.<span style="mso-spacerun: yes;"> </span><o:p></o:p></p>
<p class="MsoNormal">In determining the standard of care required of the notary,
Madam Justice Horsman considered the requirements of the Land Title Act for an
officer witnessing a transfer, and the standards set in the <i>Notaries Guideline</i>
form the Society of Notaries Public of British Columbia. The <i>Land Title Act</i> provides that the signature of a transferor is proof that they know the
contents of the document, has signed it voluntarily and has capacity to execute
it. Accordingly, it is necessary that the notary witnessing the signature
establish those facts. <i>The Notaries Guideline</i> also contained the following
provision:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>2-G6 <i>Unrepresented Persons</i> – A Member
should not advise an unrepresented person in a transaction, but should urge
such a person to obtain independent advice and, if the unrepresented person
does not do so, the Member should take care to see that such person is not
proceeding under the impression that his or her interests will be protected by
the Member.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">Madam Justice Horsman found the standard of care to be as
follows:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[215] For these reasons, I
conclude that the standard of conduct expected of Mr. Engman as a reasonable
and prudent notary witnessing Mrs. Canfield’s execution of a Form A included:<o:p></o:p></p>
<p class="MsoNormal">(1) Confirming Mrs. Canfield’s identity;<o:p></o:p></p>
<p class="MsoNormal">(2) Advising Mrs. Canfield that Mr. Engman was
not providing her with legal advice on the transaction;<o:p></o:p></p>
<p class="MsoNormal">(3) Confirming that Mrs. Canfield had received
independent legal advice, or at least that she had made an informed decision
not to seek legal advice;<o:p></o:p></p>
<p class="MsoNormal">(4) Making inquiries that were sufficient to
satisfy himself that Mrs. Canfield had the capacity to sign the Form A; and<o:p></o:p></p>
<p class="MsoNormal">(5) Making inquiries that were sufficient to
satisfy himself that Mrs. Canfield understood the content and legal effect of
the Form A, and was signing it voluntarily.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">The notary did not meet that standard of care, Madam Justice
Horsman finding that he did not take steps to determine Mrs. Canfield’s capacity,
her understanding of the transaction, whether she received independent legal
advise and whether she was acting voluntarily.<o:p></o:p></p>
<p class="MsoNormal">The next question in determining negligence is whether the notary’s
conduct caused Mrs. Canfield loss. The first test Is cause in fact: but for his
conduct, would she have gone ahead with the transfer? The second is cause in
law :is the relationship between his conduct and the loss too remote?<o:p></o:p></p>
<p class="MsoNormal">Madam Justice Horsman found that Mrs. Canfield had
established that the notary’s conduct caused her loss: <o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[229] If Mr. Engman had
insisted that Mrs. Canfield receive independent legal advice before he
witnessed her signature on the Form A, then she would have had the opportunity
to have the unconscionable Agreement rescinded before the transfer of the
Property had occurred. But for Mr. Engman’s breach of duty, Mrs. Canfield would
have avoided the loss of her Property to Bronze Wines. She could have sold it
in the ordinary course for its full market value. I find, therefore, that the
evidence establishes that Mr. Engman’s breach of his standard of care was a
factual cause of Mrs. Canfield’s injury.<o:p></o:p></p>
<p class="MsoNormal">[230] The loss for which Mrs.
Canfield seeks compensation—the value of her Property at the time of its
transfer to Bronze Wines—is not too remote to be recoverable. Mrs. Canfield’s
actual loss is a reasonably foreseeable consequence of Mr. Engman’s breach of
duty. It was reasonably foreseeable that if Mr. Engman failed in his duty to
make the inquiries necessary to satisfy himself that the transfer was
voluntary, its effect was understood by Mrs. Canfield, and that she had
received legal advice about the transaction, then Mrs. Canfield risked losing
the Property without adequate compensation. I find, therefore, that the
evidence also establishes that Mr. Engman’s breach of his standard of care was
a legal cause of Mrs. Canfield’s injury.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">The Notary appealed the finding of liability against him to
the B.C Court of Appeal.<o:p></o:p></p>
<p class="MsoNormal">The Court of Appeal agreed with Madam Justice Horseman’s analysis of the duty of care owed by the notary to Mrs. Canfield, rejecting the notary’s
argument that his obligations in witnessing the transfer were more limited.<o:p></o:p></p>
<p class="MsoNormal">However, the Court of Appeal allowed the appeal on the basis
that the Mrs. Canfield failed to prove that the notary’s negligence caused her
loss. To establish causation, she would have had to show that if he had
confirmed that she had legal advice or refused to proceed with witnessing the
transfer that she would not have proceeded with the transfer. The evidence did
not establish that she would not have proceeded with the transaction. There were
too many unknowns and a finding that she would not have proceeded with the transfer
was, in the Court of Appeal’s view, speculative.<o:p></o:p></p>
<p class="MsoNormal">Accordingly, although Mrs. Canfield established her case
that the agreement to sell her acreage to Bronze Wines was unconscionable, her
claim against the notary failed, and sadly she will not likely be compensated
for her loss.<o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-36174712868281800712023-01-29T15:21:00.003-08:002023-02-26T16:38:30.791-08:00Remote Witnessing of Powers of Attorney<p> </p><p class="MsoNormal">Recent amendments to the <i>Power of Attorney Act</i> and <i>Power of
Attorney Regulation</i> permit remote witnessing of signatures in British Columbia.
These amendments came into affect on January 1, 2023. <o:p></o:p></p>
<p class="MsoNormal">The donor (referred to as the “adult” in the legislation)
may sign a power of attorney in the electronic presence of a witness who is a British
Columbia lawyer or notary public. Similarly,
the attorney may also sign in the electronic presence of the witness, provided
that the witness is a British Columbia lawyer or notary public. Accordingly, it
is no longer necessary for the donor or attorney to sign in front of a lawyer
or notary public in person, but may be witnessed using audiovisual technology.<o:p></o:p></p>
<p class="MsoNormal">The <i>Regulation</i> includes the following definitions in 2.1(1):<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">“communicate” means communicate using audiovisual
technology, including assistive technology for individuals who are hearing impaired
or visually impaired, that enables individuals to communicate with each other
by hearing and seeing each other;<o:p></o:p></p>
<p class="MsoNormal">“electronic presence” or “electronically present” means the
circumstances in which 2 or more individuals in different locations communicate
simultaneously to an extent that is similar to communication that would occur if
all the individuals were physically present in the same location.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Both the donor (or attorney) and the lawyer or notary public
acting as witness sign and date complete and identical copies of the power of
attorney in counterparts. Although the copies must be substantively identical,
a non-substantive formatting difference will not affect the validity of the
power of attorney.<o:p></o:p></p>
<p class="MsoNormal">I continue to prefer witnessing and signing documents in
person, but there are circumstances, such as isolation that occurred during
Covid-19, as well as when the donor or attorney is in a remote location or outside
of British Columbia, when the ability to witness remotely is welcome. <o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-52361110201535082662023-01-22T17:00:00.004-08:002023-02-26T16:39:07.661-08:00British Columbia Law Institute: Undue Influence Recognition<p>The British Columbia Law Institute has recently publish <i><a href="https://www.bcli.org/publication/undue-influence-recognition-and-prevention-a-guide-for-legal-practitioners/" target="_blank">Undue Influence Recognition and Prevention: A Guide for Legal Practitioners</a></i> together with <i><u><a href="https://www.bcli.org/publication/undue-influence-recognition-and-prevention-a-reference-aid/" target="_blank">A Reference Aid</a></u></i>. </p><p>In 2011, the BCLI published <i>Recommended Practices for Wills Practitioners
Relating to Potential Undue Influence: A Guide</i> in contemplation of changes to our succession law that would in some cases make it easier to challenge wills on the grounds of undue influence. The purpose was to assist lawyers and notaries in recognizing indicia of undue influence and forestalling the exercise of undue influence in respect of wills.</p><p>This new publication is an important update, and expands the purview of the <i>Guide</i> in two ways. First, it considers the risks of undue influence when wills and other documents may now be signed electronically or in the virtual presence of the witnesses. Secondly, the Guide is broader than will-making and considers undue influence relative to other planning such as powers of attorney and gifts made during one's lifetime.</p><p>As with the earlier guide, the new publication was put together by a muli-disiplinary committee comprising of people with legal, medical, psychiatric, social work and psychological backgrounds. Most of the committee changed from the earlier <i>Guide</i>, with the important exception of BCLI lawyer Greg Blue. </p><p>I encourage all lawyers and notaries public who practice in the area of estate planning to read the <i>Guide</i> and to use the <i>Reference Aid</i>. </p><p><br /></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-28846425473691233662022-11-27T16:47:00.002-08:002022-11-27T16:48:43.275-08:00Shamim Aidun Joins Sabey Rule<p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgmcbTMFzs7KFY-VBZ8zum5HVzna7auegAPChK8kqUxXSs0DocXrTVkanCqAhxc8i5ecDUV0e-_LobYq9iNpYCnGpM2eL5i4r1QKXhnVAuhricRLBh-qR96smQV7ojiwr1ypg7QAG-0ll_kUl7D-kOGZl5kn_N7H-yQhjmS92Y2TFysIINFHQ" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="960" data-original-width="1200" height="320" src="https://blogger.googleusercontent.com/img/a/AVvXsEgmcbTMFzs7KFY-VBZ8zum5HVzna7auegAPChK8kqUxXSs0DocXrTVkanCqAhxc8i5ecDUV0e-_LobYq9iNpYCnGpM2eL5i4r1QKXhnVAuhricRLBh-qR96smQV7ojiwr1ypg7QAG-0ll_kUl7D-kOGZl5kn_N7H-yQhjmS92Y2TFysIINFHQ=w400-h320" width="400" /></a></div><br />I am pleased to write that Shamim Aidun has recently joined our firm as an associate. <p></p><p>Shamim has his law degree from the University of Birmingham in England. He articled and began a broad-range law practice in the Cariboo, but decided to return to his home town of Kelowna.</p><p>He is practicing with us primarily in estate planning, including drafting wills, powers of attorney and representation agreements: estate administration, including applications for probate; and estate litigation, including negotiation and litigation of disputes relating to wills, incapable adults and trusts. </p><p>Shamim also speaks Farsi fluently. </p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-85983181653144987262022-11-20T13:33:00.001-08:002022-11-20T13:33:20.444-08:00The Taciturn and Undemonstrative Men of Somerset<p> </p><p class="MsoNormal">A mere promise to leave property to someone in the will is
not enforceable. But, like so much in law, there are exceptions. One exception
that sometimes arises occurs when the person who is promised property reasonably
relies on the promise, making sacrifices as a result. The type of claim I am
writing about has the rather inscrutable label “proprietary estoppel.” I have written
<a href="https://rulelaw.blogspot.com/2017/12/supreme-court-of-canada-decision-on.html" target="_blank">about it before,</a> including a Supreme Court of Canada case, <i><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16898/index.do" target="_blank">Cowper-Smith v.Morgan</a></i>, 2017 SCC 61. <o:p></o:p></p>
<p class="MsoNormal">The principle, as set out by Chief Justice McLachlin in
<i>Cowper-Smith</i>, is as follows:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>[15] An equity arises when (1) a representation or assurance
is made to the claimant, on the basis of which the claimant expects that he
will enjoy some right or 2017 SCC 61 (CanLII) benefit over property; (2) the
claimant relies on that expectation by doing or refraining from doing
something, and his reliance is reasonable in all the circumstances; and (3) the
claimant suffers a detriment as a result of his reasonable reliance, such that
it would be unfair or unjust for the party responsible for the representation
or assurance to go back on her word [citations omitted].</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">My favourite case is an English case predating <i>Cowper-Smith</i>.
The name of the case is <i><a href="http://www.bailii.org/uk/cases/UKHL/2009/18.pdf" target="_blank">Thorner v. Majors</a></i>, [2009] UKHL 18, but I refer to it as
the “Taciturn and Undemonstrative Men of Somerset” case. <span style="mso-spacerun: yes;"> </span><o:p></o:p></p>
<p class="MsoNormal">Perhaps what’s most interesting about <i>Thorner </i>is how
far the trial judge and ultimately the House of Lords were prepared to go to
find that the farm owner made a representation that the claimant would receive
his farm.<o:p></o:p></p>
<p class="MsoNormal">The plaintiff, David Thorner was a farmer who did
substantial work for almost 30 years on his father’s cousin’s farm. He did so
without pay. The farm was in Somerset, a <i>seemingly</i> irrelevant fact.<o:p></o:p></p>
<p class="MsoNormal">The cousin, Peter Thorner, did not ever expressly say he
would leave David Thorner the farm. <span style="mso-spacerun: yes;"> </span>There was, rather, some indirect statements
and conduct that led the plaintiff to believe he would inherit the farm. <span style="mso-spacerun: yes;"> </span>In 1990, for example, Peter handed over an
insurance policy bonus notice to David, and said “that’s for my death duties.”
There were other oblique statements implying that Peter would leave David the
farm. <o:p></o:p></p>
<p class="MsoNormal">Peter did not leave David the farm, but died without a will.
<o:p></o:p></p>
<p class="MsoNormal">The trial judge found that Peter was “a man of few words.”
He also “was not given to direct talking. The simplest example…is that when
Peter said ‘What are you doing tomorrow?’ he generally meant ‘Would you come
and help me tomorrow.’”<o:p></o:p></p>
<p class="MsoNormal">In awarding to David the land, buildings live stock and
other farm assets, the judge found that David had established the elements of
proprietary estoppel. As quoted by Lord Walker of Gestingthorpe at paragraph <span style="mso-spacerun: yes;"> </span>47, the judge<span style="mso-spacerun: yes;">
</span>wrote:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>With regard to all that David did at Steart Farm, and in
looking after Peter, for the further fifteen or so years up to his death, there
is again no need for me here to repeat the various relevant findings I have
already made earlier in my judgment. David’s contribution was not only
unremunerated, but also far in excess of that made by any of the others who
helped at Steart Farm, whose roles I have reviewed in paras 74-80 above. He was
encouraged to continue with his considerable and unremunerated commitment to
this work by what was said and done by Peter on the various occasions I have
already identified. There is a clear and sufficient link between that
encouragement from Peter and what David did for him and on his farm.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">The Court of Appeal reversed primarily on the grounds that
Peter’s assurances were insufficiently clear and unambiguous to be reasonably
relied upon. They were consistent with Peter expressing a current intention to
leave David the farm, rather than as an assurance that he would leave the farm.<o:p></o:p></p>
<p class="MsoNormal">In the House of Lords, there are five separate judgments
restoring the trial judge’s decision. The nub of the reasons in the House of
Lords is that the trial judge considered the circumstances of Peter’s words and
conduct, and the decision is entitled to deference. The trial judge considered
Peter’s words and conduct in the context of the relationship between him and
David and also in the context of the community in which they lived. Lord Walker
of Gestingthorpe wrote:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>59. In this case the context, or surrounding circumstances,
must be regarded as quite unusual. The deputy judge heard a lot of evidence
about two countrymen leading lives that it may be difficult for many
city-dwellers to imagine—<a name="_Hlk95644183">taciturn and undemonstrative
men </a>committed to a life of hard and unrelenting physical work, by day and
sometimes by night, largely unrelieved by recreation or female company. The
deputy judge seems to have listened carefully to this evidence and to have been
sensitive to the unusual circumstances of the case.</blockquote><o:p></o:p><p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-30913477573181640662022-10-30T16:07:00.001-07:002022-10-30T16:07:09.747-07:00Cottrell v. Cottrell<p> When
assisting clients in creating trusts to benefit their children, I am sometimes
asked about potential claims that a child’s spouse might make to trust assets
if there is a breakdown of the child’s marriage or marriage-like relationship. Typically,
the parent is concerned that if she puts assets into a trust to benefit her
children, the trusts in fact benefit the children and not future ex-spouses of
any child. I can’t give a definitive answer to that question, but a recent
decision provides some comfort to parents creating trusts for their children,
provided that the trust does not give the child the right to distributions or
control of the trust. The case is <i><a href="https://www.bccourts.ca/jdb-txt/sc/22/16/2022BCSC1607.htm" target="_blank">Cottrell v. Cottrell,</a></i> 2022 BCSC 1607.</p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Robert and
Patricia Muster contributed all of the funds to two trusts: the Robert and
Patricia Muster Family Trust and the Muster Joint Partner Trust. They were
created in 2010 and 2011 respectively. The beneficiaries were Robert and
Patricia Munster, their son, and their daughter Joanne Cottrell. The trusts are
described in the decision as discretionary trusts in which the beneficiaries received
distributions only at the discretion of the trustees. <span style="mso-spacerun: yes;"> </span>(I suspect from the name, that there were restrictions
in the Joint Partner Trust such that during the lifetimes of Robert and
Patricia, all of the income was payable to them, and no one else would be entitled
to capital until the last of them to die.) The Family trust held shares in a
company, Muster Management Inc., and the Joint Partner Trust held investments. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">When a
trust is completely discretionary, no beneficiary has any particular
entitlement until the trustees decide, and there is no certainty that the beneficiary
will receive anything.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Robert and
Patricia Muster were the original trustees of both trusts, but when Patricia
Muster died in 2012, Joanne Cottrell and her brother became co-trustees with
their father. Decisions required a majority vote. There was evidence that neither
Joanne Cottrell or her brother were active in the management of the trusts and
trust assets, and that their father considered that the assets of the trusts
were his property during his lifetime. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Unfortunately,
Mrs.<span style="mso-spacerun: yes;"> </span>Cottrell’s marriage to Paul
Cottrell broke down. Following their separation, she ceased to be a trustee of
the trusts. In the litigation over the division of their property, Paul
Cottrell claimed an interest in the trusts. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">The way the
Family Law Act (the “FLA”) in British Columbia works there is included family property,
in which spouses share an interest on separation, and excluded family property,
in which they do not. Because all of the funds in the trusts were contributed
by Mr. and Mrs. Muster, and not by Joanne, her interest in the trust property is
excluded. This is set out in section 85(1)(f):<o:p></o:p></span></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">85(1) The following is excluded from family property:<o:p></o:p></p>
<p class="MsoNormal">
…<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">(f) a spouse’s beneficial interest in property held in a
discretionary trust<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">(i) to which the spouse did not contribute, and<o:p></o:p></p>
<p class="MsoNormal">(ii) that is settled by a person other than the spouse....</p></blockquote><p class="MsoNormal"></p></blockquote><p class="MsoNormal"></p></blockquote><p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">However,
the increase in value of a spouse’s interest in excluded property during the marriage
is included property, subject to a claim by the other spouse. This is set out
in s. 84(2)(g) of the FLA: <o:p></o:p></span></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal"></p><blockquote><p class="MsoNormal">84(2) Without limiting subsection (1), family property
includes the following:<o:p></o:p></p>
<p class="MsoNormal">…<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">(g) the amount by which the value of excluded property has
increased since the later of the date<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">(i) the relationship between the spouses began, or<o:p></o:p></p>
<p class="MsoNormal">(ii) the excluded property was acquired.</p></blockquote><p class="MsoNormal"></p></blockquote><p class="MsoNormal"></p></blockquote><p class="MsoNormal"></p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Paul
Cottrell acknowledged that the assets settled on the trusts were not included
family property, but he argued that the assets increased in value, and he is entitled
to a portion of that increase, reflecting Joanne Cottrell’s interest in the
trusts. <o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">The
contrary argument is that because the trusts were discretionary, Joanne has no property
interest in the trust assets, she cannot compel any distributions to her, and
her interest could be defeated such that she might not receive any
distributions in the future.<o:p></o:p></span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Mr. Justice
Brongers held in favour of Joanne Cottrell on this issue. He wrote:<o:p></o:p></span></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[42] Accordingly,
the fundamental question to be determined is whether Joanne’s beneficial
interest in the discretionary Muster Trusts has increased in value since Joanne
acquired her interest on September 14, 2010 (in the case of the Family
Trust) and on January 5, 2011 (in the case of the Partner Trust). Given that Paul
is the party asserting a claim in respect of this alleged family property,
which Joanne opposes, it is Paul that bears the burden of establishing that
there has been such an increase in value.<o:p></o:p></p>
<p class="MsoNormal">[43] On
my assessment of the evidence presented, I am not satisfied that Paul has met
this burden. In particular, I agree with the submissions of Joanne’s counsel
that the uncertain nature of Joanne’s contingent beneficial interest in the
Muster Trusts is such that it cannot be said that, at the time of the trial,
there has been an “increase in value” of this interest. This uncertainty stems
from the fact that Joanne has never had the actual or even an apparent ability
to compel a distribution of the Muster Trusts, and has no reliable assurance
regarding the specific extent to which she may receive such a distribution in
the future. In these circumstances, the Court cannot find that Joanne’s
beneficial interest in the property held in the Muster Trusts is greater now
than it was when the trusts were settled. In the absence of such a finding,
there is no “increase in value of excluded property” to which a s.
84(2)(g) <i>FLA </i>claim can be asserted. Paul’s request for a
remedy in relation to such a claim must therefore be dismissed.<o:p></o:p></p>
<p class="MsoNormal">[44] I
have reached this conclusion notwithstanding Paul’s attempt to value Joanne’s
interest in the Muster Trusts. Leaving aside my significant concerns about its
reliability given the limited scope of the evidence tendered and the lack of a
valuation opinion from a qualified expert assessor, Paul’s estimate relates to
the <u>property</u> held in the discretionary trusts, not to
Joanne’s <u>beneficial interest</u> in that property. As such, even
if I had been inclined to accept his estimated values of the trust assets, they
do not show that there has been an actual increase in the value of Joanne’s
beneficial interest in these assets, which is all that can be claimed pursuant
to ss. 84(2)(g) and 85(1)(f) of the <i>FLA.</i></p></blockquote><p class="MsoNormal"><i></i><o:p></o:p></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Doe this
mean that a separated spouse will never have a FLA claim to an interest in a
discretionary trust? I would not go that far. Key factors in this case were</span><span style="font-size: 7pt;"> </span></p><p class="MsoNormal"></p><ol style="text-align: left;"><li><span style="font-size: 7pt;"> </span>that Joanne
Cottrell did not contribute any of the assets to the trusts,</li><li><span lang="EN-US">her
interest was purely discretionary, </span></li><li><span lang="EN-US">she was
never the sole trustee or in a position to require distributions be made to
her, and </span></li><li>in
practice, she appears to have had little or no influence on the management of
the trust and decisions about distribution.<span style="font-size: 7pt;"> </span></li></ol><p></p>
<p class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo1; text-indent: -18.0pt;"><!--[if !supportLists]--><span lang="EN-US">a.<span style="font-size: 7pt; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; line-height: normal;"> </span></span>One can
envision cases in which, on reading the trust documents, the beneficiary appears to
have no control, but in practice the beneficiary is the one making the decisions.
In such circumstances, the outcome may be different if a separated spouse makes
a family law claim. <span style="mso-spacerun: yes;"> </span></p>
<p class="MsoNormal"><span lang="EN-US" style="mso-ansi-language: EN-US;">Mr.<span style="mso-spacerun: yes;"> </span>Justice Brongers was careful to qualify his
decision:<o:p></o:p></span></p>
<p class="MsoNormal"></p><blockquote>[47] Before
completing my consideration of this issue, however, I wish to be clear that my
finding that Paul has not established that there has been an increase in value
of Joanne’s beneficial interest in the Muster Trusts should not be taken as a
conclusion of law that it is impossible to make a family property claim in
respect of a spouse’s beneficial interest in a discretionary trust under the <i>FLA</i>.
My finding is based on the evidence presented in this case, particularly the
terms of the Muster Trusts instruments, as well as Mr. Muster and Joanne’s
testimony about their intentions and expectations regarding these trusts. That
evidence does not justify a conclusion that Paul is entitled to a remedy in
relation to Joanne’s beneficial interest in the Muster Trusts. A different
conclusion could well be reached in another case involving different trusts,
trustees, beneficiaries, and spouses.</blockquote><span lang="EN-US" style="mso-ansi-language: EN-US;"><o:p></o:p></span><p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-74184505823858215632022-10-16T12:29:00.004-07:002022-10-16T12:29:25.712-07:00Ghag v. Ghag<p><a href="https://rulelaw.blogspot.com/2022/09/re-zaleschuk.html">Last month, I wrote</a> that the courts in British Columbia are reluctant to interfere with a trustees discretion when the trust instrument gives the trustee a wide discretion to make distributions to beneficiaries. I used the case of<i> <a href="https://www.bccourts.ca/jdb-txt/sc/22/09/2022BCSC0943.htm">Re Zaleschuk</a></i> as an illustration of the deference courts often show to the exercise of a discretion. But, as you will see below, there are limits to a court's deference to trustees, especially when the trustees prefer their own interest.</p><p>In <a href="https://www.bccourts.ca/jdb-txt/ca/21/03/2021BCCA0366.htm" target="_blank"><i>Ghag v. Ghag</i>,</a> 2021 BCCA 106, Madam Justice Griffin
set out the principles as follows:</p><blockquote><p class="MsoNormal"><o:p></o:p></p><p class="MsoNormal">[47] A
trustee’s exercise of wide discretion under the express terms of a trust will
rarely be interfered with by a court. Nevertheless, there are grounds that may
justify the court’s interference in the exercise of a trustee’s discretion. As
summarized by Professor Waters, the court may interfere in the exercise of
discretion by a trustee where:<o:p></o:p></p><p class="MsoNormal" style="margin-left: 36.0pt;">a) the decision is
so unreasonable that no honest or fair‑dealing trustee could have
come to that decision;<o:p></o:p></p><p class="MsoNormal" style="margin-left: 36.0pt;">b) the
trustees have taken into account considerations which are irrelevant to the
discretionary decision they had to make; or<o:p></o:p></p><p class="MsoNormal" style="margin-left: 36.0pt;">c) the
trustees, in having done nothing, cannot show that they gave proper
consideration to whether they ought to exercise the discretion.<o:p></o:p></p><p class="MsoNormal">(Donovan W.M. Waters, Mark R. Gillen & Lionel D.
Smith, <i>Waters’ Law of Trusts in Canada</i>, 4th ed (Toronto:
Carswell, 2012))</p></blockquote><p class="MsoNormal"><o:p></o:p></p><p class="MsoNormal">Sukie Ghag settled a family trust for the benefit of his
wife, Charmaine, and his four children, after he was diagnosed with brain
cancer. 100 Class A common shares of Abby Pharmacy Ltd. were held in the trust.
He appointed his son Brendan as trustee and Charmaine as the alternate trustee.
The terms of the trust included the provision:<o:p></o:p></p><p class="MsoNormal"></p><blockquote><p class="MsoNormal">… The Trustee shall exercise the powers and discretions
given to him <u>in what he deems to be the best interests, whether
monetary or otherwise, of the Beneficiaries</u>, whether or not such exercise
may have the effect of conferring an advantage on any one or more of the
Beneficiaries at the expense of the other Beneficiaries ….<o:p></o:p></p><p class="MsoNormal"> [emphasis in
decision.]</p></blockquote><p class="MsoNormal"><o:p></o:p></p><p class="MsoNormal">Brendan Ghag took $100,000 out of the trust bank account,
and he distributed 55 Class A common voting shares
to himself, 15 Class A shares to each of the other children, and none to
Charmaine. He also caused the company to allot 150 Class B common voting
shares, ranking equally with the Class A shares, to himself.<o:p></o:p></p><p class="MsoNormal">Charmaine Ghag and the other three children brought a
petition to remove him as trustee and appoint Charmaine, for an accounting, and
for an order voiding the transfer and allotment of shares. <o:p></o:p></p><p class="MsoNormal">While consenting at the hearing of the petition to his
removal as trustee, and to an accounting, Brendan alleged that the share
transactions were in furtherance to a secret agreement he had with his father.
He claimed that his father intended for him to receive control of the company
in a tax-efficient way, and for his mother to receive no interest in the shares
or voting rights. <o:p></o:p></p><p class="MsoNormal">In the Supreme Court, at <a href="https://www.bccourts.ca/jdb-txt/sc/21/08/2021BCSC0815.htm" target="_blank">2021 BCSC 815</a>, Mr. Justice Tammen heard the petition and granted the relief
sought including declaring the transfer and issuance of shares void. He found
that by acting in accordance with the alleged secret agreement, Brendan<o:p></o:p></p><p class="MsoNormal"></p><blockquote>took into consideration irrelevant and inappropriate
considerations in exercising his discretion as trustee. In addition, his
decision to apportion the majority of the trust assets to himself and to
exclude entirely one of the named beneficiaries is one that no even‑handed,
fair minded trustee could have made in the exercise of his discretion.</blockquote><o:p></o:p><p></p><p class="MsoNormal">
</p><p class="MsoNormal">The Court of Appeal upheld Mr. Justice Tammen’s decision. <o:p></o:p></p><p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-28214293758479369042022-09-24T15:14:00.004-07:002022-09-24T15:17:00.660-07:00Chung v. Chung<p>When a trustee or other fiduciary profits from a breach of their obligations, the court may award the profits to beneficiaries. This discourages trustees from wrongdoing, and is referred to as disgorgement. The principle is illustrated by a British Columbia Supreme Court decision earlier this year.</p><p class="MsoNormal">In <i><a href="https://www.bccourts.ca/jdb-txt/sc/22/15/2022BCSC1592.htm" target="_blank">Chung v. Chung</a></i>, 2022 BCSC 1592, Mr. Justice Taylor imposed a constructive trust
over the fiduciary’s residence and order him to pay occupational rent to the plaintiff
in order to disgorge the benefit the fiduciary received through his breach of
trust.<o:p></o:p></p><p class="MsoNormal">The plaintiff, Jae Chung, and the defendant Won Chung were
brothers. They invested in two apartment buildings in the west end of Vancouver.
The titles were held in two nominee companies, which were subject to bare trust
agreements proportionate to the brothers’ respective interests. Won Chung
managed the properties, while the plaintiff was a more passive investor. Won Chung
refinanced the apartment buildings, Jae Chung also signing the necessary
documents, but Won Chung deposited $1,664,966 in his personal account, without his
brother’s knowledge. He later put the proceeds into GICs.<o:p></o:p></p><p class="MsoNormal">Subsequently, Won Chung cashed in 1,581,860 of the GICs and
applied the funds to the purchase of a residence on South West Marine Drive (the
“Marine Drive Property”) in 2014. The total
purchase price including GST was a little more $1,682,306, the difference made
up in cash. Jae Wong was not aware of the use of funds until later.<o:p></o:p></p><p class="MsoNormal">After Jae Chung sued, the brothers entered into a partial
settlement agreement which required certain accountings, but left open Jae
Chung’s disgorgement, tracing and constructive trust claims in respect of the
Marine Drive Property.<o:p></o:p></p><p class="MsoNormal">Jae Chung sought a 45% interest over the Marine Drive Property
through a remedial constructive trust, representing his 45% equitable interest
in the mortgage proceeds. Won Chung argued that Jae Chung’s remedy was limited
to a return of his share of the funds improperly taken plus interest. He argued
on the basis of <i>Hallett’s Estate</i>, (1880) 13 Ch D 696 (Eng. C.A.), that because
he mixed his own funds with the trust funds the remedy is limited to a lien for
the amount of funds taken in breach of trust.<o:p></o:p></p><p class="MsoNormal">Given the increase in value of Vancouver real estate, the difference
is significant. The Marine Drive Property was appraised at $3,600.000 in 2021.<o:p></o:p></p><p class="MsoNormal">Mr. Justice Taylor rejected the argument that Jae Chung was
limited to the amount of funds wrongfully appropriated, noting that <i>Hallett’s Estate</i>
has been rejected by courts in both England and British Columbia. An award
limited to the amount of funds plus interest would not further the goal of
discouraging breaches of fiduciary duties. He wrote:<o:p></o:p></p><p class="MsoNormal"></p><blockquote>[77] Further,
it is my view that an award of interest only, as asserted by the defendants,
would not serve the necessary prophylactic purpose in this context. If I were
to grant the remedy sought by the defendants, it would have the effect of
allowing Won to benefit from his breach of trust, since the more than doubling
in market value of the Marine Drive Property (of just under $2 million) clearly
substantially exceeds the value of any notional interest payments over that
same period, with the result that Won would benefit from his breach of trust. Such
a result is inconsistent with the policy objective of the disgorgement remedy,
which is to deter faithless fiduciaries.</blockquote><p></p><o:p></o:p><p></p><p class="MsoNormal">The trial judge applied the reasoning in <i><a href="https://www.canlii.org/en/ca/scc/doc/1997/1997canlii346/1997canlii346.html?autocompleteStr=Soulos%20v%20Korkontzilas%2C%20%5B1997%5D%202%20SCR%20217&autocompletePos=1" target="_blank">Soulos v.Korkontzilas</a></i>, 1997 CanLII 346, in holding that the criteria for a
remedial constructive trust had been met imposed a constructive trust to the
extent of a 45% interest in the Marine Drive Property.</p><p class="MsoNormal"><o:p></o:p></p><p class="MsoNormal">Wong Chung argued that funds he used for renovations should
be taken into consideration, but Mr. Justice Taylor did not find sufficient evidence
that the renovations enhanced the value of the Marine Drive Property.<o:p></o:p></p><p class="MsoNormal">Mr. Justice Taylor
also found that Jae Chung was entitled to occupational rent equal to 45% of the
rental value of the house less 45% of Wong Chung’s expenditures on utilities, insurance
and property, for a total award of $128,314.<o:p></o:p></p><p>
</p><div><!--[if !supportFootnotes]-->
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<div id="ftn1">
<p class="MsoFootnoteText"><br /></p></div></div>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-78337174307310127942022-09-17T16:38:00.000-07:002022-09-17T16:38:26.012-07:00Re Zaleschuk<p> </p><p class="MsoNormal">Discretionary trusts are often drafted broadly permitting
the trustees “absolute and uncontrolled discretion.” This may be so, even when
the will maker or settlor had in mind creating a benefit for one beneficiary. Courts
are reluctant to interfere with the trustee’s discretion in such cases, as long
as the trustee is acting reasonably and in good faith.<o:p></o:p></p>
<p class="MsoNormal">In a recent case, <i><a href="https://www.bccourts.ca/jdb-txt/sc/22/09/2022BCSC0943.htm">Re Zaleschuk</a></i>, 2022 BCSC 943, Justice A. Ross
declined to remove trustees who had refused various requests for funds made by a
beneficiary’s mother on behalf of the beneficiary. After Kenneth Zaleschuk (“Kenneth
Sr.”) was diagnosed with cancer in 2014, he settled a trust for his son, Kenneth
Jr., a young adult who had a learning disability and was unable to live independently.
Kenneth Sr. was the initial trustee, and named his sisters as his successor
trustees. His sisters became the trustees following Kenneth Sr.’s death in
2015.<o:p></o:p></p>
<p class="MsoNormal">Kenneth Jr. lived with his mother Marina Zaleschuck. She and
Kenneth Sr. and divorced and there was evidence from Kenneth Sr.’s lawyer and
financial advisor that in settling the trust, Kenneth Sr. was concerned about
protecting the funds from his former spouse, and making sure there were sufficient
funds for his son for life.<o:p></o:p></p>
<p class="MsoNormal">The trustees refused several requests from Marina for funds
for Kenneth Jr. including funds for a motorized scooter, glasses, massage and
acupuncture treatments, a new phone, a new laptop, travel expenses for a trip
to Europe and a new headboard.<o:p></o:p></p>
<p class="MsoNormal">A petition was filed for Kenneth Jr. to remove his aunts as
trustees and replace them with his mother. Although the petition was brought in
his name, the trustees alleged that the litigation was being driven by his
mother who had a power of attorney for him.<o:p></o:p></p>
<p class="MsoNormal">The trustees had provided funds totaling about $26,000 for
Kenneth Jr. including travel expenses for trips with his sister, Marie, glasses
and a helmet. They provided reasons for denying Marina’s requests including that
she did not follow the procedure they put in place for requests, that they
considered that some expenses were for items he did not need or, in the case of
the scooter, potentially dangerous, and that some of the expenses were potentially
covered under his disability benefits. They were willing to step aside as
trustees provided that a professional trustee was appointed, but opposed Marina
becoming the trustee.<o:p></o:p></p>
<p class="MsoNormal">In declining to remove the trustees, Justice Ross found that
they were acting properly within the scope of their discretion. Justice Ross
wrote:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[80] Despite
the criticisms leveled by the petitioner, I note that:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">a) the Trustees have released Trust
funds to the benefit of Kenneth Jr. for travel and other items;<o:p></o:p></p>
<p class="MsoNormal">b) they have considered and rejected
other expenditures on the basis that they were not in Kenneth Jr.’s best
interests (<i>e.g</i>., the motorized scooter) or they were unsure whether the
Province may be reimbursing the expense;<o:p></o:p></p>
<p class="MsoNormal">c) their actions have resulted
in the capital increasing by more than $200,000 since 2015.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">[81] Although
complaints have been leveled regarding the decisions of the current Trustees, I
accept their submission that the Trust Deed imbues them with the full discretion
to decide whether to pay amounts out of the Trust. On that point I accept this
overarching submission of the Trustees:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>They are exercising their discretion (as provided in the
provisions of the Trust Deed) to make sure that there are sufficient funds to care
for Kenneth Jr. for the rest of his life. At present, Kenneth Jr. lives with
his mother and his regular expenses are covered by his disability benefits paid
by the Province. At some point in the future, he will not be able to rely on
living with his mother. The Trustees are administering the Trust in a fashion
that will best ensure that there are funds available for his care in his later
years. The Trustees submit that the Trust Document provides them with the full
discretion to make those decisions.</blockquote><p></p></blockquote><p class="MsoNormal"><o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-60592844019486995012022-08-21T14:23:00.005-07:002022-08-21T19:40:54.374-07:00Supreme Courts of Scotland and Edinburgh High Court of Justiciary, Edinburgh Scotland<p></p><div class="separator" style="clear: both; text-align: center;"><br /><a href="https://blogger.googleusercontent.com/img/a/AVvXsEjNeGjWevGi50fCwHZ0W5qMl2KNyQ5qPBWpxmzBEajrKYU_OCJkrBDsAyT8HzDviQ0q5BqnWAtoSGLwcv1BpVMt0t0-En1bZ_tGMoA5H7nzlyJIOCIKnKQFqwycBzWL5DmWaMeaUTZ1EoPeePDTXt9nCwKMwy1FOp2Wmh-7atQ2kSdK-KrXKg" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="3000" data-original-width="4000" height="300" src="https://blogger.googleusercontent.com/img/a/AVvXsEjNeGjWevGi50fCwHZ0W5qMl2KNyQ5qPBWpxmzBEajrKYU_OCJkrBDsAyT8HzDviQ0q5BqnWAtoSGLwcv1BpVMt0t0-En1bZ_tGMoA5H7nzlyJIOCIKnKQFqwycBzWL5DmWaMeaUTZ1EoPeePDTXt9nCwKMwy1FOp2Wmh-7atQ2kSdK-KrXKg=w400-h300" width="400" /></a><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH-fU9mf3yVaWffyo0ryMFL2qF3zsl5DGuixl8a94ie4WFZWnrS1CK5JgEMR9ZUifPoasBHbinyRuCPxGeLubgGlHDkkeP7X2xVa-DlHyIsz3enzzeoEqx2LtP6wFI6v2dHiYQ6QLc6s3PBg9YshRQ36OLnszz10x-7RdWlL309AREtfZ5xQ/s4000/20220721_194940.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="3000" data-original-width="4000" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhH-fU9mf3yVaWffyo0ryMFL2qF3zsl5DGuixl8a94ie4WFZWnrS1CK5JgEMR9ZUifPoasBHbinyRuCPxGeLubgGlHDkkeP7X2xVa-DlHyIsz3enzzeoEqx2LtP6wFI6v2dHiYQ6QLc6s3PBg9YshRQ36OLnszz10x-7RdWlL309AREtfZ5xQ/w400-h300/20220721_194940.jpg" width="400" /></a></div></div><div class="separator" style="clear: both; text-align: center;"><br /></div><p></p>My friend and colleague Braeden Rahn sent me these photographs he took of <a href="https://en.wikipedia.org/wiki/Parliament_House,_Edinburgh" target="_blank">Parliament House</a>, where the Supreme Courts of Scotland sit, and the <a href="https://en.wikipedia.org/wiki/High_Court_of_Justiciary" target="_blank">High Court of Judiciary</a>, both in Edinburgh, Scotland. Braeden is a law student at the University of Victoria and a paralegal at Geoffrey White Law Corporation in Kelowna. As is evidenced by this photograph he sent me of the Advocate pub, also in Edinburgh, he does find time for dinner. <div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEjOz2420DD12xu0NX_Utd8gvAypGFtm-71wGNzb90UV6QPvSUepal6MFPHMZXQJkbJFS9lMFhyBBpEe9mcJi5BNLiZMGfKMWaBkvjbgALO6cC1yyKzI32e7ATGbeWKUtzO5UvKdFLCbEz8tyQAauZAHdFbRZGJKyMybOowr_b21kD8cRksS4g" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="4000" data-original-width="3000" height="400" src="https://blogger.googleusercontent.com/img/a/AVvXsEjOz2420DD12xu0NX_Utd8gvAypGFtm-71wGNzb90UV6QPvSUepal6MFPHMZXQJkbJFS9lMFhyBBpEe9mcJi5BNLiZMGfKMWaBkvjbgALO6cC1yyKzI32e7ATGbeWKUtzO5UvKdFLCbEz8tyQAauZAHdFbRZGJKyMybOowr_b21kD8cRksS4g=w300-h400" width="300" /></a></div><br /><br /><br /><br /><p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-85953998132779807512022-08-13T13:38:00.002-07:002022-08-13T13:38:14.860-07:00Can the Personal Representative of a Deceased Separated Spouse Start a Claim Against the Surviving Former Spouse?<p> </p><p class="MsoNormal">In a decision released on February 25, 2022, the British
Columbia Court of Appeal confirmed that the personal representative of a
deceased separated married spouse may bring a family law claim against the
surviving spouse if they had not divorced. The case is <i><a href="https://www.bccourts.ca/jdb-txt/ca/22/00/2022BCCA0079.htm" target="_blank">Weaver Estate v. Weaver</a></i>
2022 BCCA 79.<o:p></o:p></p>
<p class="MsoNormal">Lani Jo Weaver and Albert Russell Weaver married in 1993 and
separated in 2005. They did not divorce, sign any separation agreement or bring
any family law proceedings against each other. <o:p></o:p></p>
<p class="MsoNormal">Ms. Weaver died in 2020, and in November 2020, the
administrator of her estate brought a family law claim in British Columbia
against Mr. Weaver seeking a division of family property including jointly
owned real estate in British Columbia and in the United States. Mr. Weaver
brought an application in the Supreme Court of British Columbia in which he
asked to dismiss the claim on the basis that because of Ms. Weaver’s death her
administrator did not have standing to bring the claim and the court did not
have jurisdiction to hear it. Mr. Weaver’s application was dismissed, and he
appealed to the Court of Appeal.<o:p></o:p></p>
<p class="MsoNormal">The Court of Appeal held that Ms. Weaver’s administrator did
have standing to bring the claim on behalf of her estate. The decision is based
primarily on the wording of the legislation.<o:p></o:p></p>
<p class="MsoNormal">The Section 81 of the <i>Family Law Act</i> provides that on
separation each spouse is entitled to an undivided one-half interest in family property
and is equally responsible for family debt. The legislation provides that the
one-half interest is as a tenant in common, the implication of which is that on
death the one-half interest falls into the souse’s estate and does not pass to
the other joint owner by right-of-survivorship as in a joint tenancy. <span style="mso-spacerun: yes;"> </span>The word spouse is defined in section 3 to include
a former spouse. <o:p></o:p></p>
<p class="MsoNormal">The time limits for brining a family law claim for a
division of family property are set out in section 198 and depend on whether the
spouses are married or are spouses by virtue of living in a marriage-like relationship.
Pursuant to section 198 (2), the claim must be filed in court<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">(a)in the case of spouses who were married, the date<o:p></o:p></p>
<p class="MsoNormal"><a name="d2e16719"></a></p><blockquote><p class="MsoNormal">(i)a judgment granting a divorce of the
spouses is made, or<o:p></o:p></p>
<p class="MsoNormal"><a name="d2e16728"></a>(ii)an order is made declaring the
marriage of the spouses to be a nullity, or</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal"><a name="d2e16737"></a>(b)in the case of spouses who were
living in a marriage-like relationship, the date the spouses separated.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">(The running of the time limit may be suspended in some
circumstances.)<o:p></o:p></p>
<p class="MsoNormal">The <i>Supreme Court Family Law Rules</i> contain provisions providing
that claims may survive the death of a spouse and for the appointment of a
litigation representative to start or continue a family law case on behalf of a
deceased’s estate.<o:p></o:p></p>
<p class="MsoNormal">Section 150 of the<i> Wills, Estates and Succession Act</i> provides
(with certain specified exceptions such as defamation claims) a cause of action
or proceeding survives the death a person who has a claim or is a party to a proceeding.<o:p></o:p></p>
<p class="MsoNormal">Madam Justice DeWitt-Van Oosten, for the Court of Appeal,
contrasted the Family Law Act with legislation in some of the other provinces where
the relevant legislation expressly excluded claims by or against the estate of
a deceased separated spouse. If the British Columbia Legislative Assembly
intended to exclude claims by the personal representative of a deceased former
spouse, it could have done so expressly.<o:p></o:p></p>
<p class="MsoNormal">Furthermore, the case law established that a surviving former
spouse could bring a claim against the estate of a deceased former spouse, and
it would be unfair if the personal representative of the deceased former spouse
could not similarly make a claim against the surviving former spouse.<o:p></o:p></p>
<p class="MsoNormal">In light of the language of the legislation, this decision
does not appear to me to be controversial. But there is an interesting point to
consider. In view of the fact that only living spouses may divorce, is there
any limitation period for a claim either made against the estate of a deceased separated
married spouse, or brought on behalf of the estate of the deceased separated
spouse? What if both spouses have been dead for decades?<o:p></o:p></p>
<p class="MsoNormal">Madam Justice DeWitt-Van Oosten commented briefly on this point:<o:p></o:p></p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span></p><blockquote>[81] The
chambers judge did not address this issue. Nor did we receive full submissions
on the point. For present purposes, I simply note that the modern principle of
statutory interpretation, as applied to s. 198(2)(a) of the <i>FLA </i>and
s. 150 of <i>WESA</i>, may support an interpretation that the
administrator of an estate would have two years from the date of death of the
separated and deceased spouse to commence a claim for division.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">I confess that on reading the legislation, I am not sure how
those sections support that interpretation. I hope that this will be considered
in a future case, because in many cases an undue delay would be unfair to
either the living separated spouse or to the beneficiaries of the deceased
spouse. There may perhaps be other defences available particularly if the
claimant’s delay caused the defendant to change their position to their
detriment. From the perspective of the person making the claim, it is best not
to delay. <o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-30679035591160299652022-07-01T15:30:00.008-07:002022-07-01T15:32:50.818-07:00Collins Family Trust<p> In a decision released June 17, 2022, <i><a href="https://decisions.scc-csc.ca/scc-csc/scc-csc/en/item/19423/index.do">Canada (Attorney General) v. Collins Family Trust</a></i>, a majority of the Supreme Court of Canada
held that taxpayers could not rely on equitable recission of transactions to
avoid unintended tax consequences. The decision involved two different, but
similar transactions. I will refer to just one of them, the Colins Family
Trust.</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">After receiving professional tax and legal advice, Todd
Collins, the principal of a company called Rite-Way Metals Ltd. (the “operating
company”) undertook some transactions in order to move assets out of the
operating company and into a trust in order to protect the assets from future
creditors of the operating company. Based on his advice, the was structured in
a way that would not (or so they thought) trigger any tax. <o:p></o:p></p>
<p class="MsoNormal">It is not really necessary to understand the mechanics of
the tax planning to follow the principles in this case, but I will do my best
to set them out in a general way. Mr. Collins incorporated a holding company
and created the Collins Family Trust. The holding company bought shares in the operating
company, which it then sold to the Trust in exchange for a promissory note. The
operating company then declared dividends on the shares held in the Trust, and
these were used to repay the promissory note. The tax planning hinged on an
attribution rule in the <i>Income Tax Act</i>, which attributes income earned
in a trust to a person, including a company, that has contributed property to
the trust in certain circumstances. The idea was that the dividends paid to the
trust would be attributed to the holding company, which in turn could claim a
deduction of the income as inter-corporate dividends. <o:p></o:p></p>
<p class="MsoNormal">This planning was consistent with Canada Revenue Agency’s
own interpretation of the attribution rule, s. 75(2), at the time these
transactions were carried out. The Canada Revenue Agency’s position had been
that the attribution rule applied to a sale of property to a trust, as well as
a gift of property to a trust. However, in another decision made after these
transactions, <i>Sommerer v. The Queen</i>, <a href="https://www.canlii.org/en/ca/tcc/doc/2011/2011tcc212/2011tcc212.html?resultIndex=1">2011 TCC 212</a>, 2011 D.T.C. 1162,
aff’d <a href="https://www.canlii.org/en/ca/fca/doc/2012/2012fca207/2012fca207.html?autocompleteStr=sommerer&autocompletePos=1">2012 FCA 207</a>, [2014] 1 F.C.R. 379, the Tax Court of Canada held that the
attribution rule did not apply to a sale of property, as opposed to a gift. The
court held that the attribution rule only applied to the settlor of the trust. <o:p></o:p></p>
<p class="MsoNormal">As a result, Canada Revenue Agency reassessed the Trust’s
income tax return on the basis that the income was taxed in the trust, which
could not take advantage of the deduction available to the holding company.<o:p></o:p></p>
<p class="MsoNormal">The trustee of the Trust applied to the Supreme Court of
British Columbia to rescind the transactions on the basis that they were made
on a mistake of the tax law. The Supreme Court of British Columbia held that
the Trust was able to rescind the transactions (2019 BCSC 1030), and the Court
of Appeal agreed (2020 BCCA 196). The Attorney General of Canada appealed to
the Supreme Court of Canada.<o:p></o:p></p>
<p class="MsoNormal">Justice Brown for the majority held that rescission was not
available in these circumstances. In doing so, he applied two previous
decisions in which the Supreme Court of Canada held that the taxpayers involved
were not permitted to rectify documents to avoid the unexpected tax
consequences of the transactions, <i><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16281/index.do">(Attorney General) v. Fairmont Hotels Inc.</a></i>,
2016 SCC 56 (S.C.C.) and <i><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/16280/index.do">Jean Coutu Group (PJC) Inc. v. Canada(Attorney General)</a></i>,
2016 SCC 55 (S.C.C.) (I wrote a post about <i>Fairmont </i><a href="https://rulelaw.blogspot.com/2017/01/supreme-court-of-canada-decision-takes.html">here.</a>)<o:p></o:p></p>
<p class="MsoNormal">Rectification and rescission are related, but distinct,
concepts. A court may rectify an agreement where the parties have reached an
agreement, but in error the document does not reflect the agreement. It may
also be applied to wills and trusts, if the documents to not reflect the
will-maker or settlors intentions. Rescission, on the other hand, allows the
court to undue the transaction if it is based on a mistake of fact or law that
underpins the transaction. Rectification involves modifying documents, while
rescission sets them aside. <o:p></o:p></p>
<p class="MsoNormal">Both rectification and rescissions are based on equitable
principles. As set out by Justice Brown for the majority at paragraph 11:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>Generally speaking, a court of equity may grant relief where
it would be unconscionable or unfair to allow the common law to operate in
favour of the party seeking enforcement of the transaction. But there is
nothing unconscionable or unfair in the ordinary operation of tax statutes to
transactions freely agreed upon.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">The reasoning is that taxpayers are permitted to structures
their affairs in a manner that reduces the tax they might otherwise have had to
pay under a different structure, but conversely, if they choose to structure
their affairs in a manner that results in increased taxation, it is not unfair
or unconscionable to hold them to arrangements that they had freely entered
into. <o:p></o:p></p>
<p class="MsoNormal">Justice Brown summarized the principles applicable to both
rectification and rescission in the tax context as follows:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[<a name="par16">16</a>] From <i>Fairmont
Hotels </i>and <i>Jean Coutu</i>, taken together, I draw the
following interrelated principles relevant to deciding this appeal:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">(a) Tax consequences do not
flow from contracting parties’ motivations or objectives. Rather, they flow
from the freely chosen legal relationships, as established by their
transactions (<i>Jean Coutu</i>, at para. 41; <i>Fairmont Hotels</i>,
at para. 24).<o:p></o:p></p>
<p class="MsoNormal">(b) While a taxpayer should
not be denied a sought‑after fiscal objective which they should achieve on the
ordinary operation of a tax statute, this proposition also cuts the other way:
taxpayers should not be judicially accorded a benefit denied by that same
ordinary statutory operation, based solely on what they would have done had
they known better (<i>Fairmont Hotels</i>, at para. 23, citing <i>Shell
Canada</i>, at para. 45; <i>Jean Coutu</i>, at para. 41).<o:p></o:p></p>
<p class="MsoNormal">(c) The proper inquiry is no
more into the “windfall” for the public treasury when a taxpayer loses a
benefit than it is into the “windfall” for a taxpayer when it secures a
benefit. The inquiry, rather, is into what the taxpayer agreed to do (Fairmont
Hotels, at para. 24).<o:p></o:p></p>
<p class="MsoNormal">(d) A court may not modify an
instrument merely because a party discovered that its operation generates an
adverse and unplanned tax liability (Fairmont Hotels, at para. 3; Jean
Coutu, at para. 41).</p></blockquote><p class="MsoNormal"></p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">In these circumstances, where the tax consequences were “a
direct result of the ordinary operation of the [<i>Income Tax</i>] <i>Act</i>
respecting transactions freely undertaken…,” equitable rescission is not
available. <o:p></o:p></p>
<p class="MsoNormal">Justice Côté dissented. The tax planning was based on a widely
held understanding among tax advisors, and was shared by the Canada Revenue
Agency. The planning was not based on ignorance or a “misprediction.” It was
not aggressive tax planning. Canada Revenue Agency exercised a discretion to
reassess the Trust at the same time it was appealing the Sommerer decision arguing
that attribution rule did apply. It was unfair for Canada Revenue Agency to
reassess the return in these circumstances, and rescission should be available.<o:p></o:p></p>
<span face=""Calibri",sans-serif" style="font-size: 11pt; line-height: 107%; mso-ansi-language: EN-CA; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">It will not be much consolation to the trustee
and beneficiaries of the Collins Family Trust, but I prefer the dissent. </span>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-61922025678974143072022-06-14T10:03:00.002-07:002022-06-14T10:03:30.933-07:00Practical Guide to Elder Abuse and Neglect Law in Canada<p> The Canadian Centre for 'Elder Law has an excellent website dealing with elder abuse and neglect, entitled "<a href="http://ccelderlaw.ca/">Practical Guide to Elder Abuse and Neglect Law in Canada.</a>" It includes sections describing abuse, best practices, laws on reserves, with summaries of the law and links to relevant legislation in all provinces as well as federal legislation.</p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-18071374024682779572022-03-27T18:27:00.007-07:002022-03-27T18:33:57.248-07:00Avoidable Legal Expenses in Estate Disputes<p> </p><p class="MsoNormal">Its easy for legal expenses in emotional estate disputes to
get out of hand. Some are surprised when I tell them that legal expenses can be
in the hundreds of thousands of dollars. Although I generally associate
expenses in that range with cases that go through a full trial, even without a
trial, disputes can result in disproportionate expense. In some cases much of
the expense can be avoided by forthright, early communication among the parties. <o:p></o:p></p>
<p class="MsoNormal">My point is illustrated by a recent assessment of lawyers’
bills in <i><a href="https://www.bccourts.ca/jdb-txt/sc/22/04/2022BCSC0406.htm">Mulder Estate</a></i>, 2022 BCSC 406. This dispute was between the daughter of
the deceased will-maker and her two brothers. The daughter, Leondra Ponnusamy,
was named as the executor, and all three were beneficiaries of their mother’s
estate. Her brothers, Ronald Mulder and Robert Mulder, asked for records of
their mother, Alma Mulder’s bank accounts predating her death. Their sister
refused, taking the position that as executor she did not have provide records
of transactions that occurred before death. They claimed that she failed to
repay $20,000 in loans. The also claimed that $35,000 that their mother had
given to her was a loan, which she had to repay, rather than a gift, as she
claimed. They further alleged that she received another $150,000 from their
mom, and that she owed that amount to the estate.<o:p></o:p></p>
<p class="MsoNormal">Ultimately the dispute was settled out of court, after she
did provide records, including records showing that she did not receive $150,000
and that she repaid the $20,000. But by then, the parties had incurred combined
legal bills of about $300,000 in a $1.3 million estate. The sister had two
lawyers involved, and the brothers had one lawyer.<span style="mso-spacerun: yes;"> </span><o:p></o:p></p>
<p class="MsoNormal">Although the Registrar did reduce the bills to some extent
(25% for one lawyer, 20% for another and 5% for the third), the main point is
that most of this could have been avoided. <o:p></o:p></p>
<p class="MsoNormal">Registrar Nielsen disagreed with the position the executor
took initially that she had no obligation to provide disclosure of records
prior to her mother’s death. She had a fiduciary duty, or in other words a duty
of loyalty, to beneficiaries, and the circumstances called for full disclosure.
Had she done so at the outset, the dispute could have been resolved with far
less expense.<o:p></o:p></p>
<p class="MsoNormal">Registrar Nielsen wrote:<o:p></o:p></p><p class="MsoNormal"></p><blockquote>[63] During
the course of her evidence, the executor stated that she did not want her
brothers seeing the per-death financial records as Ron and his wife Tammy had
meddled in Alma’s finances while she was alive, and Alma had confided in
Leondra that she resented this. Disclosure of the records would essentially be
an affront to her mother’s memory. It is difficult to equate this stance with
the definition and duties of a fiduciary provided by Dr. Waters <span face="Arial, sans-serif" style="font-size: 16px;">[from </span><i>Waters’ Law of Trusts in Canada, </i>4th ed].</blockquote><p></p><p class="MsoNormal"><o:p></o:p></p><p class="MsoNormal"><span face="Arial, sans-serif" style="font-size: 16px;"></span></p><p class="MsoNormal"><o:p></o:p></p><blockquote>[64] In
my view this was a case that cried out for full financial disclosure at the
outset when it was first requested. The executor was both executor and
beneficiary, and she had a pre-death history of receiving both gifts and loans
from the deceased. Her relationship with her brothers had been fractured before
she became executor, and Alma had indicated to Ron that Leondra was having
financial difficulties. Mistrust in these circumstances was inevitable. It was
not, in the words of Dr. Waters, “in the interests of the estate, or the
beneficiaries” to withhold the financial information in these circumstances,
from two of the three beneficiaries. </blockquote><blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">[65] When
the executor is also a beneficiary, the fiduciary duty is particularly high
when there is a pre-death history of loans and gifts to the executor by the
deceased. She had a duty to identify and collect any unpaid debts owed to the
estate. She alone had exclusive access to the financial records. Ron and Rob
had no right to access those records without her consent, or court order.
Without disclosure of the pre-death financial records, they were completely in
the dark with respect to any debts owed to the estate, real or imagined.<o:p></o:p></p>
<p class="MsoNormal"><o:p></o:p></p><p class="MsoNormal"><span>[66] As
the litigation progressed needlessly, select financial records were disclosed,
as the executor saw fit, to prove the allegations of the beneficiaries to be
incorrect, or “false”, as submitted by counsel for the executor. Once
disproved, the allegations were eventually withdrawn, although not as quickly
as the executor would have liked. </span></p></blockquote><p class="MsoNormal">The brothers could also have brought an application to court
to get the disclosure to get the documents early on.</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">What I find remarkable is that, although none of the parties
were challenging their own lawyer bills, it took 24 days of hearing time for
the bills to reviewed. We don’t know how additional expense the parties
incurred arguing about each other’s lawyer’s bills.<o:p></o:p></p>
<p class="MsoNormal">Registrar Nielsen noted:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>[72] Following
24 days of evidence and argument in the within proceeding on what should have
been the relatively narrow topic of legal fees, with the benefit of hindsight,
there is no doubt in my mind that early disclosure of the financial records,
when first requested, would have nipped the lion’s share of the subsequent
litigation in the bud. The savings to the estate in legal fees would have been
considerable. It may have also preserved what was left of the sibling’s
fractured, but civil personal relationship.</blockquote><o:p></o:p><p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-51535776323653182132022-01-30T15:53:00.008-08:002022-02-07T16:48:26.186-08:00Unconscionable Procurement: Pinsonneault v. Courtney<p> </p><p class="MsoNormal">The doctrine of unconscionable procurement is a helpful tool
in challenging gratuitous transfers if the person benefiting has been
actively involved in procuring property from the transferor. When it applies,
the person who receives the benefit has the burden of demonstrating that the transferor
had a sufficient level of understanding of the nature and effect of the
transfer for it to be upheld. To succeed in a claim of unconscionable procurement, it is not necessary to show that the transferor did
not have the mental capacity to make the transfer, or that she was subject to
undue influence. This doctrine is not new, but many of the cases are older, and
the concept appears to be enjoying a renaissance in Canada. There is heightened
awareness among lawyers, which I suspect is largely due to John Poyser’s
insightful discussion of unconscionable procurement in his text, <i><a href="https://store.thomsonreuters.ca/en-ca/products/capacity-and-undue-influence-second-edition-30835411">Capacity and Undue Influence</a></i> (now in its second edition; I reviewed the first edition <a href="https://rulelaw.blogspot.com/2014/10/john-poysers-capacity-and-undue.html">here</a>).
If there were any doubt about whether the doctrine still applies in British
Columbia—and there shouldn’t have been—the recent decision in <i><a href="https://www.bccourts.ca/jdb-txt/sc/22/01/2022BCSC0120.htm#_Toc94004695">Pinsonneault v.Courtney,</a></i> 2022 BCSC 120, confirms it is alive and well.<o:p></o:p></p>
<p class="MsoNormal">Marie Reine Denise Pinsonneault moved to British Columbia in
2010 following a breakdown of her marriage. She has six children, one of whom
she believed would try to take whatever he could from her. She settled in the Kootenays,
and had a small business. At the time of trial in 2020 and 2021 she was 87. She
had very poor eyesight, no longer had a drivers license and was “not physically
robust.” On the other hand, Mr. Justice Williams, who heard the trial, described
her as a “feisty, active individual.” It is apparent from the decision that her mental functioning was fine.<o:p></o:p></p>
<p class="MsoNormal">She became good friends with a contractor she had hired to
do some work, Terry Courtney, and also became friends with his wife, Charlene
Courtney, and their daughter. Mr. Courtney was 63 at the time of trial, and he
characterized their relationship as like mother and son. She disagreed with his characterization of their relationship.<o:p></o:p></p>
<p class="MsoNormal">She purchased a lot (“Lot 3”) with a cabin on Kootenay Lake
for $150,000 in 2015. <o:p></o:p></p>
<p class="MsoNormal">According to Ms. Pinsonneault, in early 2017, Mr. Courtney
told her that he and his wife found a way to protect Lot 3, in reference to her
concerns that her family and particularly her youngest son might try to take it
from her. This was through a power of attorney. He took her to a notary public,
where she signed four documents, including a letter explaining that she wanted
to add Mr. and Mrs. Courtney to the title of Lot 3, a “Deed of Gift” of Lot 3
to them, pursuant to which she was gifting the property to them, while she
would continue to be responsible for the property expenses, a transfer to title
into their names and a power of attorney. In the documents, Mr. Courtney was
described as Ms. Pinsonneault’s “step-son,” which was, of course, not accurate.<o:p></o:p></p>
<p class="MsoNormal">Ms. Pinsonneault’s evidence of what happened at the Notary’s
office is set out in the decision as follows:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>[129] The plaintiff testified
that when they arrived, initially Mr. Courtney went and spoke privately with
the notary, that is, not in Ms. Pinsonneault’s presence. She said that she then
met privately with the notary. There were papers present, evidently already
prepared. Her recollection is that the notary asked her if she had read the
“paper I sign”; she replied that she “cannot read”. “The notary then asked “do
you know what you are signing?” and she answered to the effect yes, that “Terry
had explained it to her”. Ms. Pinsonneault said she then signed the papers that
were presented to her; she paid the bill and left with Mr. Courtney. When they
left the notary’s office, she said she had the papers in her hand. Mr. Courtney
told her to give them to him, saying “I will put them in your file at my place”,
but she refused to do so. She said she took them home and put them in her desk.
She did not examine them at that time or until some considerable time later.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">The notary gave evidence, but Mr. Justice Williams found
that “her testimony was disappointing and inadequate. Her responses were a
litany of claims that she did not remember any details or specifics of the
transaction, sometimes falling back on her ‘general practice’.” Her “notes and
file are of no value to her in providing clear and reliable answers.”<o:p></o:p></p>
<p class="MsoNormal">Ms. Pinsonneault and Mr. Courtney later had a falling out over
a dispute about the removal trees from Lot 3. She testified that it was after
this disagreement that she read the documents and found out that she had
transferred Lot 3 to the Courtneys. <o:p></o:p></p>
<p class="MsoNormal">She sued to recover Lot 3.<o:p></o:p></p>
<p class="MsoNormal">In finding in favour of Ms. Pinsonneault, and awarding her
the property back, Mr. Justice Williams applied the presumption of resulting trust,
which is a presumption that applies when one person makes a gratuitous transfer
to another, there is a presumption that the transferor did not intend to make a
gift. If the presumption is applied, the transferee is said to hold the property
transferred on a “resulting trust,” for the transferor.<o:p></o:p></p>
<p class="MsoNormal">The presumption of resulting trust is just that: a
presumption. It may be rebutted by evidence that the transferor did intend to
make a gift. The issue boils down to whether the transferor intended to make a
gift when at the time of the transfer. The documents Ms. Pinsonneault signed,
particularly the Deed of Gift, would on their face lend support for the view that
she intended a gift when she signed the transfer. Mr. and Mrs. Courtney argued
that she intended to make a gift at the time she signed the transfer, but she
changed her mind later.<o:p></o:p></p>
<p class="MsoNormal">Mr. Justice Williams found that the Courtneys had not rebutted
the presumption of resulting trust. Ms. Pinsonneault did not intend to make a
gift nor did she even know she was transferring her property. He wrote:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[207] That said, the
presumption to which I make reference is rebuttable: it is open to the
defendants to adduce evidence to displace the presumption. To do so, they must
show on a balance of probabilities that the transferor (the plaintiff) intended
to make a gift.<o:p></o:p></p>
<p class="MsoNormal">[208] In the matter at hand, as
I have explained in my discussion of the evidence, I find that, at the time of
the transfer, there is no viable basis to believe that the plaintiff had the
intention to gift title to Lot 3 to the defendants. In fact, the evidence
provides a strong reason to conclude that the plaintiff did not know that by
signing the documents, she had in fact transferred title.<o:p></o:p></p>
<p class="MsoNormal">[209] This is not a situation
where it can be argued that, when the plaintiff executed the documents, she
understood the consequences of doing so.<o:p></o:p></p>
<p class="MsoNormal">[210] Furthermore, I am
satisfied that the plaintiff was unaware that title had been transferred until
many months later and, when she realized, she immediately set up a hue and cry,
expressing that. In the time that followed, she steadfastly persisted in that
position.<o:p></o:p></p>
<p class="MsoNormal">[211] In short, there is no
evidence before this Court that can assist the defendants in rebutting the
presumption of resulting trust.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Mr. Justice Williams also considered unconscionable
procurement. He provides an excellent summary of the doctrine:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>[187] The doctrine of wrongful
(or unconscionable) procurement is derived from the principle that where a
donee obtains a benefit from a donor that in turn disadvantages that donor, the
donee must prove that the donor had the “necessary level of understanding to
make a transaction conscionable”: John E.S. Poyser, <i>Capacity and Undue
Influence</i> 2<sup>nd</sup> ed (Toronto: Carswell, 2019) at 629
in <i><a href="https://canliiconnects.org/en/cases/2019onca233">Gefen v. Gaertner</a></i>, 2019 ONSC 6015 at para.158. It is an
equitable principle: Poyser at 628. A finding of wrongful procurement renders a
transfer voidable by the court: <i>Gefen</i> at para. 158.</blockquote><o:p></o:p><p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[188] The Court in <i>Gefen </i>provided
that the onus is on the party attacking the transaction to prove on a balance
of probabilities that: (1) a significant benefit was provided; and (2) active
involvement by the person obtaining the benefit of the procurement: at para.
159. Once these two elements are established, it is presumed that the donor
“did not truly understand what they were doing when they made the
transaction.” <i>Gefen</i> at para. 159.<o:p></o:p></p>
<p class="MsoNormal">[189] Once the presumption is
established, the transaction is voidable and the Court must determine whether
it would be unconscionable to let the transaction stand. As stated in <i>Gefen</i> at
para. 161, at this stage,<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[161] …Both parties must adduce evidence
about the donor's actual understanding of what she was doing. If the evidence
does not come down on either side, the attacker will have failed to meet the
onus and the transaction will stand: Poyser, at p. 570.<o:p></o:p></p>
<p class="MsoNormal">[<a name="par162">162</a>] The attacker must
ensure that there is enough evidence before the court in the final weighing to
allow the court to conclude, as a finding of fact, that the donor failed to
have a conscionable understanding of what she was doing when completing the
transaction. This issue turns on whether the donor appreciated the effect,
nature, and consequence of the transaction in a manner sufficient to render it
fair, just, and reasonable: Poyser, at p. 574.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">[190] The question the court
must ask is whether the donor “fully appreciate[d] [the] effect, nature and,
and consequence” of providing gift: <i>Kinsella v. Pask</i>, 28 O.L.R. 393
at 400, 12 D.L.R. 522.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Mr. Justice Williams found (at paragraph 217) that “… the
doctrine of wrongful procurement is, to my mind, met by the circumstances at
hand.”<o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-46195539948527771132021-11-27T14:21:00.001-08:002021-11-27T14:21:14.791-08:00Jana Keeley Joins Sabey Rule<p> <br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqbzhSfS9i8k3FLOm0OyLJp_Ku7Dlwu8i_t0qelsvKuxue7PJAQr0a9XpoziPUrcatbP7TwaB_4FHuhOlvVDOQsKAuTei3pU8IDyx50q71d7mzEfa-QnuDVzNtil_oGuDrGCHl/s720/Jana_web.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="576" data-original-width="720" height="256" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqbzhSfS9i8k3FLOm0OyLJp_Ku7Dlwu8i_t0qelsvKuxue7PJAQr0a9XpoziPUrcatbP7TwaB_4FHuhOlvVDOQsKAuTei3pU8IDyx50q71d7mzEfa-QnuDVzNtil_oGuDrGCHl/s320/Jana_web.jpg" width="320" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;">I am pleased to welcome <a href="https://sabeyrule.ca/jana-keeley/">Jana Keeley </a>to our firm. Before joining Sabey Rule, she practiced estate and commercial litigation at a leading civil and commercial boutique firm in Kelowna. She will continue to handle estate-litigation matters, and will also be assisting clients with estate planning, estate administration and elder law.<br /></div><div class="separator" style="clear: both; text-align: left;"><span><br /></span></div><div class="separator" style="clear: both; text-align: left;">While she has a stellar legal background, personally I am even more impressed by her previous occupation as a songwriter and musician. </div><p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-65851595444576933552021-10-16T17:49:00.007-07:002022-11-20T12:54:33.540-08:00Land Owner Transparency Reports Must Be Filed By November 30, 2021<p>[After I wrote this post, the deadline was extended to November 30, 2022.]</p><p class="MsoNormal">Registered owners of land held in trust and corporations and
partnerships that own land in British Columbia have until November 30, 2021 to
file a report with the Land Owner Transparency Registry. This is a requirement
under the <i><a href="https://www.bclaws.gov.bc.ca/civix/document/id/complete/statreg/19023">Land Owner Transparency Act</a></i>. There are draconian penalties for
failing to comply. Unfortunately, I am finding that most people are unaware of
the requirement, and the British Columbia Government has done a poor job
explaining the legislation. But there is some information available <a href="https://www2.gov.bc.ca/gov/content/housing-tenancy/real-estate-bc/land-owner-transparency-registry">online here</a>. <o:p></o:p></p>
<p class="MsoNormal">If you are holding land in trust, you may have to file a
report, but there are some exemptions, such as land held in a trust that
qualifies under the <i>Income Tax Act</i> as an alter ego or joint spousal trust. There
is also an exemption for testamentary trusts (trusts created in a will). </p><p class="MsoNormal">If you
are a trustee holding land, or if you have company or are in a partnership that owns land, please consult with
your lawyer. <o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-29312803532816115462021-09-05T15:49:00.000-07:002021-09-05T15:49:05.984-07:00Chichak v. Chichak<p> </p><p class="MsoNormal">In <a href="https://www.bccourts.ca/jdb-txt/ca/21/02/2021BCCA0286.htm"><i>Chichak v. Chichak</i></a>, 2021 BCCA 286, the British Columbia
Court of Appeal confirmed that a creditor who has registered a judgment against
real property held in the name of a debtor cannot enforce the judgement in
respect of an interest of another person who has an equitable interest in the property.
This is so even when the equable interest is not registered on the title to the
land. The creditor may only enforce the judgement to the extent of the debtor’s
interest in the land. <o:p></o:p></p>
<p class="MsoNormal">Derek Chichak and his wife Jennifer Chichak bought real
property together. The title was transferred to Ms. Chichak’s name and then
later she transferred the title into Mr. Chichak’s name. Mr. Chichak was sued
by two creditors, who registered their judgment against the property. Another
creditor had a mortgage against the property and when mortgage went into
default, the property was sold in a foreclosure proceeding brought by another
creditor. After the amount of the mortgage was paid, there remained surplus
funds from the sale of the property, and the two creditors with registered judgements
sought to have the funds paid out to them. Ms. Chichak, however, claimed that
she had a 50% interest in the equity in the property because of her
contribution to the purchase price. When one person pays for or transfers
property to another, there is a presumption that the recipient of the property
holds the property, or in this case half of it, on a resulting trust for the person
who paid the purchase price or transferred the property. Ms. Chichak claimed
that because her husband held a half interest in the property in trust for her,
his judgment creditors were only entitled to recover one-half of the surplus
funds, with Ms. Chichak entitled to the other half.<o:p></o:p></p>
<p class="MsoNormal">The Supreme Court of British Columbia did not make any
finding as to whether Mr. Chichak held an interest in the property on a
resulting trust for Ms. Chichak, but held that even if he did, the judgment
creditors were entitled to be paid first. Their judgment on the title took priority
to Ms. Chichak’s claim. Ms. Chichak appeal.<o:p></o:p></p>
<p class="MsoNormal">Madam Justice Saunders in allowing the appeal held that a
judgment creditor who registered the judgment against the title to real
property could not enforce the receive a greater interest in the property than
that held by the judgment debtor. This principle is referred to in Latin as “<i>nemo
dat quod non habet</i>” which loosely translated means “you can’t give what you
ain’t got.” If Mr. Chichak was only entitled to a one-half interest in the
property, then his creditors can only take his half interest; they are not entitled
to the other half interest if he holds it in trust for Ms. Chichak. <o:p></o:p></p>
<p class="MsoNormal">This common-law principle that a judgment creditor may only enforce
a judgment to the extent of the debtor’s interest in property is supported by
the wording of the Court Order Enforcement Act. Section 83 (3) (a) and (7)
provides:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">(3) <u>From the time of its registration
the judgment forms a lien and charge on the land of the judgment debtor</u> specified
in the application referred to in section 88 <u>in the same manner as if
charged in writing by the judgment debtor</u> under his or her signature
and seal,<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote>(a) <u>to the extent of his or
her beneficial interest in the land</u>,</blockquote><o:p></o:p><p></p>
<p class="MsoNormal">….<o:p></o:p></p>
<p class="MsoNormal">(7) <u>A judgment creditor is not a bona
fide purchaser for value</u>.<o:p></o:p></p>
<p class="MsoNormal"><span style="mso-spacerun: yes;"> </span>[emphasis in decision]</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">The creditors pointed to section 23 (2) of the <i>Land Title
Act</i>, which provides that subject to certain specific exceptions the title “<span style="color: black; font-family: "Arial",sans-serif;">is conclusive evidence at
law and in equity, as against the Crown and all other persons, that the person
named in the title as registered owner is indefeasibly entitled to an estate in
fee simple to the land described in the indefeasible title</span>….” In other
words, people dealing with the registered owner of real property are entitled
to rely on the owner’s title. This protects, for example, buyers of property from
the owner on title form others later claiming that the seller did not in fact
own the property. <o:p></o:p></p>
<p class="MsoNormal">However, Madam Justice Saunders, noting the distinction
between a judgment creditor and a purchaser, held that section 23 (2) of the
Land Title Act does not apply:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[14] By
the registration system, all interests in the property that will affect a
prospective purchaser for value are recorded in the register, with the
intention that the true state of the title – of all the interests pertaining to
the property – will be evident, subject to these few statutory exceptions, and
a <i>bona fide</i> purchaser for value will take priority over the
holder of an unregistered interest. Section 86(7) of the <i>Court Order
Enforcement Act</i>, of course,<i> </i>explicitly provides that a judgment
creditor is not a <i>bona fide</i> purchaser for value.<o:p></o:p></p>
<p class="MsoNormal">[15] In
my respectful view, the judge misapplied the <i>Land Title Act</i> by
effectively equating a judgment creditor, a person who seeks to collect on a
judgment in likely unrelated litigation, to the position of a person who has
relied on the register in acquiring their indefeasible interest in the land.
This would allow a judgment creditor to obtain greater recovery from the land
than even the judgment debtor could derive. This result could be legislated, no
doubt. However, in my view, it has not; the current legislation does not reach
this far. The result, in my view, is contrary to decided authority presented to
us but, it appears, not to the judge of first instance.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">The Court Appeal ordered that the case be remitted to the Supreme
Court of British Columbia to determine whether Ms. Chichak in fact had a
beneficial interest in the property. <span style="mso-spacerun: yes;"> </span>If
she can establish her resulting trust claim, the judgment creditors will not be
entitled to the funds representing Ms. Chichak’s share of the surplus proceeds
from the sale. <o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-36237865449855066682021-08-22T13:17:00.001-07:002021-08-22T13:17:40.378-07:00Supreme Court of British Columbia Gives Effect to an Unsigned Draft Will During Covid-19<p>Getting wills signed during Covid-19 has been a challenge,
especially for persons in retirement communities and care homes when visitors are restrictions.
The process those of us who are estate-planning lawyers like to follow of
meeting our clients in person to review the final drafts of their wills and act
as one of the two witnesses has often been thwarted. No doubt many wills have
gone unsigned for months, with the increased risk of death before the wills are
completed.</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">In a recent decision, <i><a href="https://www.bccourts.ca/jdb-txt/sc/21/15/2021BCSC1571.htm">Bishop Estate v. Sheardown,</a></i> 2021 BCSC
1571, the Supreme Court of British Columbia gave effect to a draft will that
was left unsigned because of Covid-19 restrictions. Section 58 of the Wills, Estates
and Succession Act allows the court to give effect to a document or other record
in British Columbia even though the document has not been signed and witnessed
in accordance with the formal requirements for making a valid will. This
provision has been used in a wide variety of contexts to give effect to a
document if the court is satisfied that the document is authentic and reflects
the deliberate or fixed and final intentions of the now deceased person. As I
have<a href="http://rulelaw.blogspot.com/2016/11/may-lawyers-notes-or-draft-will-be.html"> written before</a>, it may be difficult to satisfy a court to give effect to a
draft will prepared by a lawyer months before the person died, without a good
explanation of why the lawyer’s client didn’t make an appointment with her
lawyer to sign the will. In <i>Bishop Estate</i>, there was a good explanation:
Covid-19.<o:p></o:p></p>
<p class="MsoNormal">On June 27, 2014 Marilyn Carole Bishop and her husband made
wills in which each left everything to the other, and if the other had died, to
the Kelowna General Hospital Foundation. The Bishops did not have any children.
Mr. Bishop had been treated at the Kelowna General Hospital, and their gifts to
the Foundation reflected their gratitude for his treatment. </p><p class="MsoNormal">After Mr. Bishop’s
death, Ms. Bishop’s nephew Robert Sheardown and his wife, Deborah Sheardown, moved
to Kamloops, nears where Ms. Bishop resided. They became very close and they assisted
her. <o:p></o:p></p>
<p class="MsoNormal">In February 2020, Ms. Bishop met with her lawyer to revise
her will. She told her lawyer, Matthew Livingston, that she wanted to give most
of here estate to the Sheardowns. She wanted to give a gift to their daughter
and was considering modest gifts to some o charities. She said the gift to the
Kelowna General Hospital Foundation was her husband’s idea and she had no
connection to Kelowna, which she considered two far away.<o:p></o:p></p>
<p class="MsoNormal">Mr. Livingston drafted a will for her, with some questions.
She delivered a note to him setting out Ms. Sheardown’s full name, that she wanted
to give a brooch to her great-niece and “No charities at this time.” <o:p></o:p></p>
<p class="MsoNormal">On March 17, 2020, she booked an appointment for March 20, to
sign the final draft will, which reflected the changes as set out in her note.
On March 19, she cancelled her appointment. By that time, the care home in which she lived had prohibited residents from leaving other than for medical appointments,
and did not permit visitors, in order to protect residents from Covid-19. Ms.
Bishop died on July 20, 2020, without signing her will. <o:p></o:p></p>
<p class="MsoNormal">The Kelowna General Hospital Foundation argued that the 2020
draft will should not be given effect. They argued that the words “No charities
at this time,” implied that Ms. Bishop had not demonstrate a fixed and final
intention. However, Madam Justice Matthews that wills are by their nature
revocable, and the issue is whether the intentions are fixed and final at the relevant
time. It is not necessary for someone to decide that they would not change the
will in the future. <o:p></o:p></p>
<p class="MsoNormal">In finding that the document did reflect Ms. Bishop’s fixed
and final intentions, Madam Justice Matthews carefully reviewed the facts:<o:p></o:p></p>
<p class="MsoNormal"></p><blockquote><p class="MsoNormal">[38] It
is evident that Ms. Bishop reviewed the draft that Mr. Livingston
sent to her on February 12, 2020. Her handwritten note that she delivered on
March 3, 2020, directly responded to each of Mr. Livingston’s questions in
the comment boxes in the first draft.<o:p></o:p></p>
<p class="MsoNormal">[39] In
her note, Ms. Bishop did not suggest any new changes to the will; she
simply filled in the blanks that Mr. Livingston had left for her. The
first was to fill in Ms. Sheardown’s middle name. The second was to
specify a gift for the Sheardowns’ daughter, whom Ms. Bishop had already
mentioned that she would like to give a gift to. Although Mr. Livingston
had discussed the possibility of a registered education savings plan for her,
Ms. Bishop ultimately decided to give her a gold brooch.<o:p></o:p></p>
<p class="MsoNormal">[40] The
same can be said of Ms. Bishop’s third instruction, “no charities at this
time”. When she met with Mr. Livingston, Ms. Bishop indicated that
while she did not want to give a gift to Kelowna General Hospital Foundation,
she might want to make a couple of modest gifts to specific charities. In the
month that followed, Ms. Bishop decided she did not want to make
charitable gifts. This is not problematic. The gifts initially proposed
were relatively minor: $10,000–$20,000 for each of Thomson Rivers University
and the Firefighters’ Burn Fund. At most, this represented approximately 7% of
her total estate.<o:p></o:p></p>
<p class="MsoNormal">[41] Kelowna
General Hospital Foundation submits that the language of “at this time”
indicates that Ms. Bishop’s intentions lacked finality. I am not satisfied
that it demonstrates that her intentions were not final. As Dickson J. notes
in <i><a href="https://www.bccourts.ca/jdb-txt/SC/15/01/2015BCSC0182.htm">Young Estate</a> </i>at para. 35, a fixed and final intention
cannot mean that the intention is irrevocable, since wills are, by their
nature, revocable until the testator’s death. Rather, the intention need only
“be fixed and final at the material time”.<o:p></o:p></p>
<p class="MsoNormal">[42] Accordingly,
the mere mention of “at this time” is not enough to overcome the considerable
evidence that suggests that her intentions were fixed and final. Her
instruction was not an equivocation; it was a clear expression of her fixed and
final intention at the time she delivered the note on March 3, 2020. Of course,
in this case, the material time stretches beyond March 3 to the date of
Ms. Bishop’s death; nevertheless, as I will discuss, nothing suggests that
Ms. Bishop’s intention to not give to any charities changed in that time.<o:p></o:p></p>
<p class="MsoNormal">[43] Ms. Bishop
did not request any substantive changes to the draft. The manner in which she
responded to Mr. Livingston’s questions suggests that she was satisfied
with the unexecuted 2020 will and was prepared to execute it. When she was
asked if she wanted to review it again in advance of an appointment to sign it,
she made an appointment to sign it. In the circumstances, it cannot be said
that the unexecuted 2020 will “was not seen, or read, or written, or in some
way authenticated, or adopted”: <i>George v. Daily </i>(1997), 143
D.L.R. (4<sup>th</sup>) 273 (Man. C.A.) at para. 56.<o:p></o:p></p>
<p class="MsoNormal">[44] It
is relevant that the unexecuted 2020 will makes considerable sense in the
circumstances: <i><a href="https://www.bccourts.ca/jdb-txt/sc/19/20/2019BCSC2040.htm">Hubschi Estate (Re)</a></i>, 2019 BCSC 2040 at
para. 40. Based on the evidence, it is unsurprising that Ms. Bishop
would wish to name the Sheardowns as the executors and primary beneficiaries of
her estate and to remove Kelowna General Hospital Foundation as a beneficiary.<o:p></o:p></p>
<p class="MsoNormal">[45] The
document and the context in which it is made has the hallmarks of fixed and
final testamentary intention in that bears the title of a will, it was made by
a lawyer retained by Ms. Bishop for that purpose, it revokes her prior
wills, it directs how her remains are to be dealt with, it names executors and
beneficiaries including an alternate beneficiary. The beneficiaries make sense
in the context of Ms. Bishop’s relationships. Ms. Bishop’s response to
Mr. Livingston’s questions provided him with the information necessary to
complete the draft.</p></blockquote><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">Accordingly, the Sheardowns will receive Ms. Bishop’s
estate. <o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-66841991662047598182021-06-12T18:42:00.009-07:002021-06-12T18:54:39.163-07:00Nova Scotia Court of Appeal Allows Appeal in Lawen Estate<p>Both Nova Scotia and British Columbia allow independent adult
children to apply to court to vary their parents’ wills. Although other
provinces in Canada have legislation allowing spouses, minor and dependent
children to apply for dependant’s relief on the death of a spouse or parent who
has provided little or no inheritance, the provisions allowing independent adult
children to apply are not common.</p><p class="MsoNormal"><o:p></o:p></p>
<p class="MsoNormal">British Columbia has had this legislation under various
titles for over 100 years now. The Supreme Court of Canada has decided cases
and outlined principles that are to applied to claims made under British
Columbia’s legislation, including claims by independent adult children. The
most recent Supreme Court of Canada decision is <i><a href="https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/1161/index.do">Tataryn v. Tataryn Estate</a></i>,
[1994] 2 SCR 807. I was a bit surprised when Justice Bodurtha of the Supreme
Court of Nova Scotia held in <i><a href="https://www.canlii.org/en/ns/nssc/doc/2019/2019nssc162/2019nssc162.html">Lawen Estate v. Nova Scotia (Attorney General)</a></i>,
2019 NSSC 162 (CanLii) that Nova Scotia’s <i>Testator Family Maintenance Act</i> offends
section 7 of the <i>Charter of Rights and Freedoms</i> insofar as it permits non-dependant
adult children to apply of vary their parents’ wills. Section 7 of the <i>Charter</i>
says:<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt;">Everyone has the right to life,
liberty and security of the person and the right not to be deprived thereof
except in accordance with the principles of fundamental justice.<o:p></o:p></p>
<p class="MsoNormal">The court found that to the extent that the legislation interfered
with the testamentary autonomy of the will-maker in respect of independent adult
children, it violates the constitutional right to liberty. The Court read down
the legislation so that it would not apply to non-dependant adult children.<o:p></o:p></p>
<p class="MsoNormal">The Nova Scotia Court of Appeal in <i><a href="https://www.canlii.org/en/ns/nsca/doc/2021/2021nsca39/2021nsca39.html?searchUrlHash=AAAAAQAFbGF3ZW4AAAAAAQ&resultIndex=3">Nova Scotia (Attorney General) v. Lawen Estate</a></i>, 2021 NSCA 39 (CanLii) disagreed. On appeal by the
Attorney General of Nova Scotia, the Court allowed the appeal. Justice Farrar,
writing for the Court, held that there was an insufficient evidentiary basis to
find that the legislation violated section 7 of the Charter:<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt;">[<a name="par52">52</a>]
In this case, there was no evidence put before
the application judge to establish an engagement with matters critical to a
testator’s dignity and autonomy. Nor was there any evidence indicating
why – from a public interest perspective – testamentary capacity was a pressing
issue, that testators’ wishes were being arbitrarily ignored, or that
testamentary autonomy to preclude a non-dependent adult child engaged the
liberty interests of an individual. There was no consideration of
whether <a href="https://www.canlii.org/en/ns/laws/stat/rsns-1989-c-465/latest/rsns-1989-c-465.html#sec5_smooth">s.
5</a> of the <i><a href="https://www.canlii.org/en/ns/laws/stat/rsns-1989-c-465/latest/rsns-1989-c-465.html">Act</a></i>,
which outlines the factors to be taken into account when considering a claim of
a dependent, safeguarded a testator’s autonomy.<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt;">[<a name="par53">53</a>]
The application judge did not consider, even if
a breach of <a href="https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-12/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-12.html#sec7_smooth">s.
7</a> was made out, whether it was in accordance with principles of
fundamental justice. He inferred that the AGNS accepted if a violation of
the liberty interest was found it would not be in accordance with principles of
fundamental justice (¶62). The AGNS did not make any such
concession. It was incumbent upon the application judge to undertake this
crucial aspect of the constitutional analysis.<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt;">[<a name="par54">54</a>]
The application judge did refer to <i>Tataryn
Estate, supra</i>, where McLachlin, J., explained that the purpose of the <i><a href="https://www.canlii.org/en/ns/laws/stat/rsns-1989-c-465/latest/rsns-1989-c-465.html">Act</a></i> was
to ameliorate circumstances of women and children at the time when men held
most of the property, to ensure that women and children would receive an
adequate, just and equitable share of the family wealth on the death of the
person who held it, even in circumstances where they were not able to
demonstrate need (<i>Tataryn Estate</i>, ¶ <a href="https://www.canlii.org/en/ca/scc/doc/1994/1994canlii51/1994canlii51.html#par16">16</a>,
cited at ¶ 19 herein). However, he did no analysis nor did he make any
finding as to whether the objects of the <i><a href="https://www.canlii.org/en/ns/laws/stat/rsns-1989-c-465/latest/rsns-1989-c-465.html">Act</a></i> were
in compliance with the principles of fundamental justice.<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36pt;">[<a name="par55">55</a>]
There was no finding that the impugned
provisions caused harm, that they were arbitrary, overbroad or grossly
disproportionate to the objectives of the legislation. All of which would
have been necessary to anchor a breach of <a href="https://www.canlii.org/en/ca/laws/stat/schedule-b-to-the-canada-act-1982-uk-1982-c-12/latest/schedule-b-to-the-canada-act-1982-uk-1982-c-12.html#sec7_smooth">s.
7</a>.</p><p class="MsoNormal">There are no reported decisions in British Columbia at the
time of writing this post that have ruled on the question of whether our
legislation is constitutional. Nor has the Supreme Court of Canada considered
this issue. Neither the Supreme Court of Nova Scotia decision or the Nova Scotia
Court of Appeal decision is technically binding on a British Columbia court,
but a judge in B.C. could find the reasoning persuasive and apply it here. <o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0tag:blogger.com,1999:blog-15398087.post-45225632907137250792021-05-16T16:17:00.000-07:002021-05-16T16:17:00.374-07:00The Bank of Nova Scotia Trust Company v. Rogers<p> </p><p class="MsoNormal">A murderer may not inherit from his victim. This much is
clear. But the implications on the rest of a will are not always so
straightforward. This is illustrated by an Ontario case earlier this year: <i><a href="https://www.canlii.org/en/on/onsc/doc/2021/2021onsc1747/2021onsc1747.html?resultIndex=1">TheBank of Nova Scotia Trust Company v. Rogers</a></i>, 2021 ONSC 1747 (CanLii). <o:p></o:p></p>
<p class="MsoNormal">Cameron Scott Rogers was convicted of the murder of both of
his parents, Merrill Gleddie Rogers and David Blair Rogers. He was their only
child. He was their only child. There is some indication that he suffered from
a disability, but I stress that this is not a case where he was found not guilty
by reason of insanity, which would likely have affected the outcome of the
case.<o:p></o:p></p>
<p class="MsoNormal">His parents made wills leaving their estates to each other.
In each case, the will said that if the other had died first, most of their
estate was to be used to set up a trust for their son during his lifetime. The
trustee would have discretion to make payments out of the income or capital to
or for his benefit, with any income accumulated for 21 years to be paid to charities.
On his death, or if he died before his parents, on the last of them to die, the
remaining funds were to go to his children (or remoter descendants), but if he
did not have descendants, then the remainder was to be used to buy annuities
for Merrill Rogers’ three brothers.<o:p></o:p></p>
<p class="MsoNormal">Justice Labrosse of the Superior Court of Justice held that,
because he was convicted of murdering his parents, Cameron Rogers was not entitled
to the benefits under their wills. This is not surprising. The more interesting
question is: what would happen to their estates? <span style="mso-spacerun: yes;"> </span><span style="mso-spacerun: yes;"> </span>the
estates go to the parents next of kin as if thy died without wills? Under the
wills, if he had died before them their estates would go to Cameron’s children,
but he did not then have any children. Should the funds be held in trust in
case some day he had children? He would be eligible for parole 20 years after
his conviction, and it was possible he could then have children. Or should the
estates be used to buy annuities for Merrill Rogers’ brothers?<o:p></o:p></p>
<p class="MsoNormal">Justice Labrosse identified three approaches to what happens
to a beneficiary’s share of the estate of his murder victim. One approach is to
deem that the beneficiary died before the will-maker, and the will is read as
if the murder had died first. A second approach is a literal reading of the
will. Under the second approach, if the will does not provide for the possibility
that the beneficiary murders the will-maker, the gift fails and a gift of residue
would under Ontario law go on an intestacy as if there were no will (in my view
the law of British Columbia differs because of section 46 of our <i>Wills, Estates
and Succession Act</i>). The third approach, which Justice Labrosse adopted, is the
implied-intention approach. The court strives to determine what the will-maker would
have wanted if the will-maker had contemplated what in fact occurred.<o:p></o:p></p>
<p class="MsoNormal">Applying the implied-intention approach, Justice Labrosse
found that Merrill and David Rogers would not have wanted their estates to go
by an intestacy, but would likely have wanted it to go to the other
beneficiaries named in their wills. This leaves the question of whether the
estates should be held to see if Cameron Rogers had children, or if the estates
should be used to purchase annuities for Merrill Rogers’ brothers as if Cameron
had died without descendants. <o:p></o:p></p>
<p class="MsoNormal">In considering this question, Justice Labrosse looked at the
public policy implications. In his words:<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">[<a name="par52">52</a>]
This analysis also includes a requirement
that the Court apply the “armchair rule” whereby the Court asks itself:
if David and Merrill could have been aware of the possibility of Cameron’s
disentitlement and the reasons for it, would they nevertheless have wanted to
benefit their future grandchildren? If they had living grandchildren at
the time of their death, that question would be easier to answer.<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">[<a name="par53">53</a>]
In considering the “armchair approach”,
the Court must also add to the picture the reality of Cameron leaving prison at
some point during his life sentence. He could be in his mid-forties and
have the knowledge that a two-million-dollar trust lies available to any
children he may have. In the context of the public policy issues surrounding
the criminal forfeiture rule, there is a distinct possibility that this could
lead to some type of misfeasance. This is a distinctive element of
applying the “armchair approach” in these circumstances. If David and
Merrill could have been aware of Cameron’s disentitlement (<i>and the exact
basis for it</i>), would they have wanted for their estates to wait for
Cameron’s release from prison and possibly fuel a decision to have
children? It is my view that this would fly in the face of the original
public policy reasons for disentitlement and would not have been an outcome
that either David or Merrill would have preferred.<o:p></o:p></p>
<p class="MsoNormal">Justice Labrosse treated the murder as a triggering event
that accelerated the trust for Cameron, as though Cameron Rogers had died
before his parents without descendants. He found that this approach most
closely reflected the will-makers’ likely intentions: <o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">[<a name="par63">63</a>]
In returning to the armchair intentions
of David and Merrill, I conclude that their intention was to leave a life
interest to Cameron and if he could not benefit from it as a result of a
triggering event such as his death, it should pass to his children if he had
any living at the relevant time. The wills are structured around
providing contingencies or “gifts-over” to account for a series of triggering
events. The first of these events is the spouse predeceasing, the second is
Cameron predeceasing, the third is Cameron predeceasing or dying leaving no
issue then living and the fourth is one of the brothers either predeceasing or
dying before the annuities have been fully distributed. Cameron’s
disentitlement is a similar triggering event which leads to the gift-over
provisions of the wills. <o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">[<a name="par64">64</a>]
In this context, I conclude that Cameron
is disentitled and that his disentitlement crystalizes at a time where he has
no living issue. The criminal forfeiture rule plays a role in guiding the Court
to accelerate the bequeath to Cameron and also to his unborn children. If
the true intent of the structure of these wills is to be respected, the estates
should be kept in the family. The intent of the testators was to ensure
that upon the triggering events, the estates should pass to the next level of
lineal descendant. The triggering event in question is that Cameron is
disentitled and has no issue surviving. As such, the next level of lineal
descendants are Merrill’s three brothers, subject to the annuities. <o:p></o:p></p>
<p class="MsoNormal">The outcome is that the funds in the estates will be used to
purchase annuities for Merrill Rogers’ three brothers. <o:p></o:p></p>Stan Rulehttp://www.blogger.com/profile/11486906067691727814noreply@blogger.com0