B.C. Case Comment: Lost or Misplaced Will – Presumption of Revocation Rebutted

A will-maker can revoke a will.  There are a number of ways to do so, and there is also a presumption that a will-maker revoked their will if the will was last in the will-maker’s possession and cannot be located.  If the presumption is rebutted by evidence to the contrary, a copy of the will may be submitted for probate instead of the missing original.

First, the ways to revoke a will (other than an electronic will) are set out at section 55(1) of the Wills, Estates and Succession Act [“WESA”]:

  1. By another will made by the will-maker made in accordance with WESA;
  2. By a written declaration of the will-maker that revokes all or part of a will made in accordance with WESA;
  3. By the will-maker, or a person in the presence of the will-maker and by the will-maker’s direction, burning, tearing or destroying all or part of the will in some manner with the intention of revoking all or part of it; or
  4. By any other act of the will-maker, or another person in the presence of the will-maker and by the will-maker’s direction, if the court determines under s. 58 that (a) the consequence of the act of the will-maker or the other person is apparent on the face of the will; and (b) the act was done with the intent of the will-maker to revoke the will in whole or in part.

#3 above has two elements:

  1. The will must be physically burned, torn or destroyed; and
  2. The will-maker must have intended to revoke by that destruction.

In addition to taking one of the active steps above to revoke a will, there is a common law presumption of revocation that may apply in certain circumstances, which has been described as follows:

If a Will last known to be in custody of testator is not found at his death, the presumption is that the testator destroyed it with the intention of revoking it (“animo revocandi”). However, that presumption may be rebutted by evidence, written or oral, of the facts. The strength of the presumption will depend on the character of the custody which the testator had over the Will.

Proof that the will-maker was last in possession and the Will cannot be located leads to the presumed facts of destruction and intention.  The presumption is based upon an assumption that people their important documents safe, and so if an important document like a Will is missing it is more likely than not that the testator intentionally destroyed it.

However, the presumption can be rebutted by evidence.  For example, it could be shown that the will was lost or misplaced.

This issue was recently considered by the B.C. Supreme Court in Galloway Estate (Re) 2023 BCSC 1204.

In Galloway, the deceased made a Will.  He was given the original Will and his law firm retained a copy.  The deceased had no children and no spouse at the time of his death.  Both his parents were deceased and he had one sister.  If there was no will and his estate passed on an intestacy, it would go to his sister.  The Will left his estate to his mother’s god-daughter (who was also named as executor).

The god-daughter argued that the Will was valid (so that she would receive the entire estate).  The sister relied upon the common law presumption of revocation, and argued that the deceased revoked the Will and died intestate (so that she would receive the entire estate).

The god-daughter performed a diligent search of all reasonable places, and no Will was located.

The Court observed that all relevant facts in a case must be considered, and they referred to the following non-exhaustive list of factors from another B.C. Supreme Court case:

  • whether the terms of the will are reasonable;
  • whether the deceased continued to have good relationships with the beneficiaries under the will up to the date of death;
  • whether personal effects of the deceased were destroyed prior to the search for the will being carried out;
  • the nature and character of the deceased in terms of taking care of their personal effects;
  • whether there were any dispositions of property that support or contradict the terms of the will;
  • statements made by the testator confirming or contradicting the terms of distribution set out in the will;
  • whether the deceased was of the character to store valuable papers and whether the deceased had a safe place to store papers;
  • whether there is evidence that the deceased understood the consequences of not having a will, and the effect of an intestacy; and
  • whether the deceased made statements indicating the deceased had a will.

The Court in Galloway held that the presumption of revocation was rebutted.  It was more likely than not that the Will was lost or misplaced by the Deceased, or accidently disposed of by the specialty trauma cleaning company that cleaned the deceased’s property to make it safe to access after death (the deceased having been discovered approximately six weeks after his death).

The Court considered the various facts, but a key factor was that the family had been in previous litigation, in which the deceased was “against” his sister.  If the deceased died without a will, this would give his sister the very property that the litigation was conducted to reclaim.  If he died intestate, then his sister would be relieved of her obligation to pay special costs in that prior litigation, but the deceased had been actively pursuing payment of the cost awards by his sister at his death.

The Court pronounced the force and validity of the Will in solemn form, and ordered that a copy of the Will be admitted to probate.

This case illustrates the complications that may arise if the original will cannot be located.  Of course this would have been avoided if the deceased had kept his original in a safe place, and had advised someone of the location of the original will.

B.C. Case Comment: Court Varies Will that Makes Equal Provision for Will-maker’s Children

You cannot assume that if you leave your estate to your children in equal shares, then the court cannot or will not vary it.  Making equal provision for your children in your will does not mean that the will is immune from a successful wills variation action.  There may be good reason to make greater provision for one child over the other(s), and the child who claims they ought to have received more may successfully bring an action to vary your will to receive a larger share of the estate than their siblings.

This was the case in the recent B.C. Supreme Court decision of Rawlins v. Rawlins 2023 BCSC 466.  In Rawlins, the deceased had three sons.  Her will provided that if she survived her husband (which she did), her estate was to be divided equally between her three sons.  The estate was worth approximately $2.5M.

The plaintiff (one of the sons) brought an action to vary his mother’s will, so that he received a larger share of the estate than his brothers.

In B.C., a spouse or child of a will-maker may bring an action to vary a will if it does not make just and adequate provision for them.  When deciding a wills variation claim, the court must consider (1) whether the will properly accounts for the legal duties owed to the spouse and children during the will-maker’s lifetime, and (2) the moral duties toward the will-maker’s spouse and children.

Legal obligations include spousal support and spousal property rights, child support obligations, and, in some cases, unjust enrichment claims.  Moral obligations are society’s reasonable expectations of what a judicious spouse or parent would do in the circumstances, with regard to contemporary community standards.  The court has a wide discretion to vary a will to make proper provision, and it is a fact specific inquiry.

In Rawlins, the plaintiff argued that he had a legal claim based on unjust enrichment, and a greater moral claim.  He relied on the following grounds in support of his position that he should receive a greater share of his mother’s estate: (1) his role in contributing to and maintaining the deceased’s home; (2) his role in looking after both of his parents in their final years, and (3) his expectation of receiving the home and certain investments upon the passing of his parents, based on statements allegedly made by his parents.

With respect to legal obligations, the plaintiff argued that the deceased’s estate was unjustly enriched by (1) the care that he provided to his parents in their final years, and (2) his alleged contributions to their home.

With respect to the home, the Court held that the plaintiff failed to show that his alleged contributions to the property involved any appreciable material benefit to the estate or materially increased the value of the property.  The plaintiff paid nothing towards the acquisition of the property, or the maintenance of the property (including property taxes or insurance).  The labour that he provided was merely to (1) assist his father with renovations, or (2) provide routine upkeep.  “The most that can be said is that [the plaintiff] contributed toward the Maintenace of the property where he lived, rent free.”

However, the care that the plaintiff provided for his parents did provide a material benefit to the estate.  The plaintiff was the primary caregiver for both of his parents during their final years, and cases have recognized that services by an adult for their parent have a legally recognizable value.  If the plaintiff had not been available to provide care, his parents would have paid for these services, which would have come out of what ultimately became estate funds.  The Court held that the deceased’s estate had a legal duty toward the plaintiff, in the form of an unjust enrichment claim, based upon the care provided.

With respect to moral obligations, the plaintiff’s contributions to the property were minimal, and were not a factor in his favor.  The care that he provided for his parents formed the basis of a legal obligation (the unjust enrichment discussed above), and so the Court did not consider this factor as a separate, independent basis for a moral claim by the plaintiff.  Finally, the Court did not find a moral claim based upon the plaintiff’s alleged expectation that he would inherit a greater share based upon statements made by his parents.  The Court held that his “expectation” of inheriting certain assets was “largely the product of [the plaintiff’s] subjectively-held beliefs and sense of entitlement.”  There was no independent reliable evidence that the plaintiff was given any reason to expect that he would receive a greater share of the estate.

The defendant brothers also pointed out that the plaintiff continued to live in his parents’ house, rent free, after their deaths, and so since his mother died in 2018, the estate has paid the plaintiff’s housing costs.

The Court weighed all of the circumstances, and concluded that apart from the unjust enrichment claim, the plaintiff failed to establish that his mother’s will did not make adequate provision for him.  The Court varied the will to provide that the plaintiff would receive a gift of $115,000, less two thirds of all property taxes paid or payable by the estate for the property from 2018 to 2022.  The rest of the estate was to be divided equally as between the three sons, as provided for in the will.

This case serves as a reminder that just because you provide equally for your children in your will, there may still be a successful wills variation claim.  It is also noteworthy that this relatively modest variation was only obtained after the time and expense to the parties of an eleven-day trial.

Admitting to Probate a Document that does not meet the Formal Requirements of a Will – New B.C. Case

In B.C., there are formal requirements for making a will.  These include requirements that the will be in writing, signed at the end by the will-maker in the presence of two or more witnesses who are present at the same time, and signed by two or more of the witnesses in the presence of the will-maker (see s. 37 of the Wills, Estates and Succession Act (“WESA”).

However, the court may make an order a document be fully effective as though it was the will or part of the will of the deceased person even though it does not comply with WESA, if the court is satisfied that the document represents the testamentary intentions of the deceased person (see s. 58 of WESA).

I have previously posted about s. 58 cases here.

The B.C. Supreme Court recently set out a succinct summary of the principles to be considered on a s. 58 application in Re: Clarke Estate 2023 BCSC 103:

[39]       From the foregoing authorities, I derive the following principles:

a)  The onus in this matter is on the petitioner to prove, on a balance of probabilities, that:

i)  the document is authentic; and

ii) the document embodies the fixed and final, as opposed to irrevocable, testamentary intentions of the deceased.

b)  The factors to take into account in determining whether the document contains the testamentary intentions of the deceased include:

i)  the presence of the deceased’s signature,

ii)  the deceased’s handwriting,

iii)  witness signatures,

iv)  revocation of previous wills,

v)  funeral arrangements,

vi)  specific bequests,

vii)  the title of the documentation,

viii)  such other factors as may be relevant given the context, and

c)  the material time for determining the testamentary intentions can vary depending on the circumstances, but in many if not most cases the material time is when the document was prepared and executed.

In Clarke, the Court was presented with two documents:

  1. A document that was prepared by a lawyer or notary and dated December 22, 1994, which was properly witnessed.  This document left the residue of the deceased’s estate to the deceased’s stepdaughter; and
  2. A document that was handwritten and had only one witness, dated April 25, 2013.  This document left the residue to the deceased’s brother.

The Court concluded that the handwritten will represented the fixed and final testamentary intentions of the deceased and that it was fully effective as the will of the deceased.

The types of documents that parties seek to have declared to be effective as wills vary, as does the extent to which these documents have the characteristics you would expect to find in a “proper” will.

The handwritten document at issue in Clarke had had many of the characteristics of a will although it did not meet all formal requirements. The document was in the deceased’s handwriting, it described itself three times as the last will and testament of the deceased, and it revoked all former wills.  It was also signed by the deceased and signed by one witness.  In the circumstances, the Court was prepared to order that the handwritten document was fully effective as the will of the deceased.

It should be noted that both parties were entitled to their full costs and expenses to be paid from the estate.

What I’m Reading: Interesting Estate Litigation Articles for January 2023

The following is a round-up of noteworthy articles published this month on estate litigation and related issues:

  1. The British Columbia Law Institute published Undue Influence Recognition and Prevention, A Guide for Legal Practitioners:  https://www.bcli.org/publication/undue-influence-recognition-and-prevention-a-guide-for-legal-practitioners/
  2. Darien Murray at Hull & Hull LLP (Ontario) writes about a recent Ontario decision on whether a solicitor owes a duty of care to third party beneficiaries: https://hullandhull.com/Knowledge/2023/01/hall-v-bennett-estate-disappointed-beneficiaries/.
  3. Chris Cook at de Vries Litigation LLP (Ontario) discusses mirror wills and mutual wills: https://devrieslitigation.com/mirror-and-mutual-wills/?v=m
  4. David Morgan Smith at Hull & Hull LLP discusses the duty of an estate trustee to make prudent investments: https://hullandhull.com/Knowledge/2023/01/exercising-discretion-the-duty-of-an-estate-trustee-to-prudently-invest/
  5. Onyx Law (Vancouver) writes about the duty of an executor to communicate with beneficiaries: https://onyxlaw.ca/executor-not-communicating-with-beneficiaries/
  6. Estate Litigation in the News: CBC News recently published an article on a challenge to a handwritten will leaving a condo to a church: https://www.cbc.ca/news/canada/hamilton/common-law-church-condo-court-1.6725883
  7. Estate Litigation and Celebrities:  Priscilla Presley is contesting the validity of Lisa Maria Presley’s will: https://www.bbc.com/news/world-us-canada-64461305

Happy reading!

B.C. Case Comment: Attorney Transfers Donor’s Assets into Trust which Mirrors Donor’s Will

A person acting under a power of attorney (the “attorney”) cannot make or change a will for the adult for whom the person is acting (the “donor”).  However, in certain circumstances, the attorney may settle a trust which mirrors the terms of the donor’s will, and then transfer the donor’s assets into the trust.  This may be done to avoid probate fees which would be payable if the assets formed part of the donor’s estate.  There may also be other advantages in administering and distributing the assets through a trust instead of an estate.

There is a further advantage, whether it is intended or unintended:  if the assets form part of the estate, then they are available for a wills variation claim.  If the assets are settled into a trust then they are not available for a wills variation claim.

A disappointed beneficiary attempted to set aside such an arrangement in the recent B.C. Supreme Court decision of Kramer v. Kramer 2023 BCSC 116.

In Kramer, Clara died leaving two children, Karen and Leanne.  Karen and Leanne were the executors of her estate, and the beneficiaries of the estate.  However, Karen was not happy with what she was to receive under the terms of Clara’s will and codicil.

Leanne held a power of attorney over Clara’s affairs.  Clara died in 2017.  In 2015, Leanne used the power of attorney to authorize the creation of an alter ego trust, transferring the majority of Clara’s assets into the trust, and appointing herself and two solicitors as trustees.  The distribution of the trust assets was to precisely mirror the terms of the will and codicil.  Karen learned of the trust after the Clara’s death.

Karen sought a variation of the deceased’s will.  However, most of the assets of the deceased were transferred during her lifetime into the Trust.  This meant that Karen must first succeed in obtaining a declaration that the trust was void, and an order transferring the assets back into the estate.  Karen brought an action to vary the will, and for an order that the disposition of property to the trust was a fraudulent conveyance, and an order that the property put into the trust is part of Clara’s estate.

The Fraudulent Conveyance Act provides that a disposition of property, if made to delay, hinder or defraud creditors and others of their just and lawful remedies, is void and of no effect against a person whose rights and obligations are or might be disturbed, hindered, delayed or defrauded.

The issue to be determined in Kramer was whether the disposition of property to the trust constituted a fraudulent conveyance.  The defendants argued that the Karen had no standing under the Fraudulent Conveyance Act, because she was not a creditor and had no rights or obligations that had been disturbed, hindered, delayed or defrauded.

A wills variation claim does not create standing as a creditor or other within the meaning of the Fraudulent Conveyance Act.  Karen accepted this, but argued that she was a creditor as a result of a loan that she made to the deceased.  Karen argued that the trust was created to avoid paying her money that was owed to her.

The Court held that Karen was a creditor of Clara in 1998 when Karen loaned money to Clara.  However, it appeared that this amount was repaid in 2012, before the trust was settled in 2015.  At the time the Trust was entered into, Karen had not provided any proof she was owed more than the monies she received in 2012, and after that she never demanded further payment for the loan or took any steps to collect any balance owing.    The Court held that Karen had been repaid, and so she was not a creditor of the deceased at the time of the transfer of assets into the trust.  Since she was not a creditor, she did not have standing under the Fraudulent Conveyance Act.

In the alternative, the Court also found there was no fraudulent intention in creating the trust.  The party claiming a fraudulent conveyance must establish that the person making the transfer of assets did so with the intent to put their assets out of the reach of creditors.  The Court in Kramer held that the trust was created for honest purposes.  It was recommended by the deceased’s tax lawyer and prepared with the assistance of counsel.  At no time during the planning and settlement of the trust did anyone discuss an outstanding debt owing to Karen.  The stated purpose of the trust (which was accepted by the Court) was to facilitate estate planning by avoiding substantial probate fees and to affect an efficient and non-confrontational administration of Clara’s estate.  Again, the distribution of the trust assets was to precisely mirror the terms of the Will and Codicil.

However, the Court declined to rule on the validity of the trust or any suggestion that Leanne acted outside her powers under the power of attorney, because that issue was not raised in the pleadings and before the Court.  Karen may seek to argue that Leanne settling the trust was outside her powers as attorney.  However, there is authority to support the position that an attorney can settle a trust on behalf of a donor when the terms of the trust mirror the terms of the donor’s will (see Easingwood v. Cockroft 2011 BCSC 1154, aff’d at 2013 BCCA 182).

B.C. Case Comment: Court Finds No Enforceable Agreement between Father and Son

I have previously written about the importance of documenting transactions between family members (for example, here and here).  Often, transactions between family members (loans, gifts, property transfers, etc…) are not documented.  This is a common occurrence in transactions between parents and children.  There are numerous cases which illustrate the importance of reducing intentions to writing.

However, the parties must also take care to properly document the agreement, and to make sure the agreement as documented is valid and enforceable.  There must be certainty of terms to create a binding agreement.  The agreement must also not be invalid as a result of the circumstances surrounding its creation.  For example, the agreement must not be unconscionable or procured by undue influence.

In the recent decision of Woods v. Woods 2022 BCSC 2269, the B.C. Supreme Court considered the enforceability of an alleged agreement whereby a son would receive his father’s property in return for the right to remain on the property, as well as a share of his son’s business.  There were some attempts made to document the agreement, but the question was whether there was an enforceable agreement.

The Facts

In Woods, the father owned a 20 acre property in Golden B.C.  He lived a manufactured home on the property, and also used the property as a junk yard.

The son developed a plan to open a tourism business on the property using Volkswagen vehicles, called “Camping in the Woods.”  He took steps to clean up the property, and made improvements to set it up for his business, in which visitors would be able to sleep in converted VW busses on the property.

The father fell behind on his mortgage payments, and the property was in danger of foreclosure.

The father and son began to discuss an arrangement whereby the son would buy the property (saving it from foreclosure) and further develop his business.

There was a meeting between the father, the son and a second son (not a party to the agreement) to formalize the plan.  The son alleged that there was a cocktail napkin agreement, which was actually written on a cocktail napkin.  The Court included a photo of the agreement in the reasons for judgment:

The father denied ever seeing a copy of the napkin agreement before the litigation, and also denied that certain writing was in his handwriting.  He said that they discussed that he would receive a 40% interest in the property, not a 10% interest.  He also said that the business was to be restricted to an acre or less of the property.

There was a subsequent draft agreement prepared for the transfer of the property.  The agreement did not discuss the father getting a share in the business.  The lawyer who prepared the agreement recommended that the father obtain independent legal advice.

The father and son both signed the agreement on a bench following the meeting with the lawyer. The father did not get independent legal advice.  The son conceded that he “urged” his father to sign, but said this was because the property was going to be foreclosed upon the next day.  In hindsight, the son said that he should have forced this father to get independent legal advice, but that his father said he didn’t have the money to pay a lawyer.

The lawyer subsequently wrote to raise concerns that the proposed transaction was unfair, or worse fraudulent, as it did not appear to address the equity in the property, for which the father ought to receive some compensation.

After signing the agreement, the father refused to transfer the property.

Relations between the father and son deteriorated.  The son attended to remove his belongings from the property, the father called the police, the son was arrested for mischief, and a no-contact order was put in place.

The son concluded that there was no way the father was going to proceed with the transfer, and did not take any steps to close the deal.

The son rented an alternative location for his business (which he says was not as attractive a location), and incurred additional expenses.  He also claimed that some of his items were still on the property, and that some of them were damaged.

The son commenced an action claiming specific performance, damages, malicious prosecution and conversion.

After the action was commenced, the father entered into an agreement to sell the property for $350,000 to another party, with the understanding that the father could continue to live in the home on the property for as long as he wishes.

There was no certainty of terms, and therefore no enforceable agreement

The first issue was whether there was certainty of terms sufficient to establish the existence of a contract.

The test that governs whether the parties have formed an enforceable contract involves answering two questions:

  1. whether the parties objectively intended to enter contractual relations; and
  2. whether they had reached agreement on essential terms that are sufficiently certain to enforce.

The court will look at whether a reasonably third-party observer would conclude from all the circumstances, including the document itself, the circumstances underlying execution, and the parties’ subsequent conduct, that the parties intended to enter into binding legal relations.  This is a fact-specific inquiry.

The Court referred to the following recent summary of the law on certainty of terms:

When [parties] agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.

However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract.

Where there is an intention to contract, the court will make a significant effort to give meaning to that agreement. However, a court cannot create an agreement on essential terms where none exists.  The fact that parties may wish to contract, or believe they have entered into a binding contract, does not make it so.

What constitutes an “essential” term will depend upon the nature of the agreement and the circumstances of the case.  The key question is whether the parties have agreed on all matters that are “vital and fundamental” to the arrangement.

In Woods, the son argued that the cocktail napkin agreement and the subsequent document prepared by the lawyer formed the contract.

However, the Court observed that there were uncertainties in the agreement, including but not limited to:

  1. If the father was entitled to a 10% stake in the son’s business, what did this mean? i.e. ownership, gross rental income, profits net of expenses, etc…
  2. Was the father actually only entitled to 10%, or was it 40% as asserted by the father?
  3. Was the son entitled to pay himself a salary before calculating the 10% (or 40%)?
  4. What remedy would the father have if the son simply abandoned his business after getting the property?
  5. What were the implications of the father not remaining sober, and what was the test for sobriety?

The Court also observed that there were contradictions between the two documents, making it impossible to read the two documents together as a single contract.  For example, the signed agreement requires that the father give up vacant possession, but he was supposed to be allowed to remain in the home on the property.

The Court concluded that that the uncertainties and the inconsistencies related to terms that were consequential, vital and fundamental.  No enforceable contract was created, and the claim in contract must be dismissed on this basis alone.

The father argued that he did not sign the cocktail napkin agreement, and that he was never given the entire other agreement before signing it.  The Court held that the father signed both documents (relying upon the evidence of his other son, a disinterested party).  However, the fact that he signed the documents did not address the issue that there was no certainty of terms  and therefore no enforcable agreement.

In the alternative, the agreement was invalid due to undue influence and was unconscionable

The father also argued that any agreement was invalid due to undue influence or unconscionability.

With respect to undue influence, there is a presumption of undue influence where there is the potential for domination inherent in the relationship itself.  Equity recognizes certain relationships that may give rise to the presumption, including parent and child.  Where the presumption applies, the party must be shown to have entered into the transaction as a result of his own “full, free and informed thought.”  This may entail showing that no actual influence was exercised in the particular transaction, that the plaintiff had independent advice, etc…

The test for unconscionability is as follows:

  1. there must be an inequality of bargaining power between the parties; and
  2. there must be an improvident bargain.

With respect to the first element, an inequality of bargaining power exists when one party cannot adequately protect their interests in the contracting process.  With respect to the second element, a bargain is improvident if it unduly advantages the stronger party or unduly disadvantages the more vulnerable party.

In Woods, the Court noted:

  1. The contracts that the son was pressuring his father to sign involved the father’s only major asset;
  2. This was a parent-child relationship, and the father was heavily reliant on his son’s advice;
  3. The father was placed under “substantial pressure and influence” from the son to sell the property to him;
  4. There was a material inequality in bargaining power.  The father was not in good health and was in a very tenuous financial position.  He was vulnerable and this created a dependency;
  5. The proposed transaction was unfair.  There was no financial analysis offered to show that the proposed terms were fair and reasonable.  There was no effort to obtain an appraisal, even though this was recommended by the lawyer;
  6. The Court did not accept that the agreement was explained to the father by the lawyer, or that it was read aloud to the father three times; and
  7. The father did not obtain independent legal advice, despite being advised to do so by the lawyer.  This was identified as a “key issue”.  The Court was confident that any independent legal advice would have resulted in a modification or clarification of the terms.

The Court concluded that there was a presumption of undue influence, that undue influence was exercised by the son over his father, and that the transaction was unconscionable.

The Court also held that if it were necessary, the son failed to satisfy or waive the condition to obtain financing, which was a fundamental term, and constituted a repudiation of the agreement.

The Court also considered claims in malicious prosecution and conversion

There were two further separate claims considered by the Court.

First, the son alleged that the father’s report of him to the RCMP when he attended at the property to pick up his items qualified as malicious prosecution.  To succeed on this claim, the son was required to prove that the prosecution was:

  1. initiated by the defendant;
  2. terminated in favour of the plaintiff;
  3.  undertaken without reasonable and probable cause; and
  4. motivated by malice or a primary purpose other than that of carrying the law into effect.

The Court held that the son failed to establish #3 and #4.  The father held title to the property and had the right to insist that the son leave the property, and the son failed to do so.

Second, the son sued for conversion of certain of his items that remained on the property.  The father did not contest that his son was entitled to attend at the property to collect certain items.  The Court did not award damages to reflect any degradation of items while they were on the property, as there was no agreement that the father would maintain or secure the son’s property.

Conclusion – the importance of properly entering into and documenting agreements between family members

This case serves as yet another example of the importance of properly documenting agreements between family members, and the importance of taking appropriate steps, including obtaining independent legal advice, to create binding and enforceable contracts.  This case would have been further complicated had the father died and then the son brought proceedings, which is often what happens in estate litigation.

What I’m Reading: Interesting Estate Litigation Articles for December 2022

The following is a round-up of noteworthy articles published this month on estate litigation and related issues:

  1. Sara Moledina at Hull & Hull LLP (Ontario) writes about a recent Ontario decision which discusses challenges to the validity of powers of attorney: https://hullandhull.com/Knowledge/2022/12/challenging-a-power-of-attorney-for-lack-of-capacity/
  2. Brett Brock at WEL Partners (Toronto) writes about a recent Ontario Court of Appeal decision regarding interpretation of a clause in a will and the application of the “armchair rule”: Revisiting the “Armchair Rule” in Jonas v. Jonas | WEL Partners Blog
  3. Onyx Law Group published a useful primer on alter ego trusts: What is an Alter Ego Trust? (2023) | Onyx Law Group
  4. James Steele at Robertson Stromberg LLP discusses a recent Saskatchewan case in which the executors of the estate were removed due to extreme delay in administering the estate: Saskatchewan Estate Litigation Update: Nagy v. Graves, 2022 CarswellSask 590, 2022 SKKB 257 | Saskatchewan Estate Law Blog (skestatelaw.ca)
  5. Sara Moledina also discusses an interesting case where one of the witnesses to a will (who was an employee of the deceased) later refused to sign an affidavit confirming that she witnessed the deceased’s signature until her complaint regarding severance was resolved:  https://hullandhull.com/Knowledge/2022/12/witness-to-a-will-refuses-to-provide-affidavit-based-on-contentious-severance-pay/
  6. Albert Oosterhoff (also at WEL Partners) provides a detailed analysis of a United Kingdom Supreme Court case which discusses proprietary estoppel: Proprietary Estoppel: Guest v Guest | WEL Partners Blog

Happy reading and Happy New Year!

BC Case Comment: Court of Appeal Affirms No Binding Agreement to Leave Estate to Niece

I previously wrote about a case in which the B.C Supreme Court found that there was no binding agreement by an aunt to leave her estate to her niece.  The case was Angelis v. Siermy 2022 BCSC 31, and the post can be found here.  The B.C. Court of Appeal has now dismissed an appeal of that decision.

A person may enter into a contract, whereby they agree to leave their estate to another person in exchange for some consideration.  However, the court in Angelis found that no such agreement existed in that case.  The case was unusual because the aunt (the will-maker) was still alive, denied the existence of any agreement, and defended against the claim.

At summary trial in the court below, the niece claimed that in exchange for providing services to her aunt, her aunt agreed to leave the bulk of her estate to the niece.  The agreement was allegedly formalized in 2002 when the aunt executed estate documents to this effect.  The niece said that the aunt also confirmed the agreement in three letters written by the aunt which explained her wills.  The judge had found that the second and third letters were prepared by the niece, and she had either forged her aunt’s signature or obtained the signature surreptitiously.

Then, in 2011, the aunt changed her will to leave most of her estate to the niece’s cousin (unbeknownst to the niece plaintiff/appellant).

The judge dismissed the claim that there was a testamentary contract requiring the aunt to leave the estate to her niece.  The judge also dismissed a claim by the niece in unjust enrichment on the basis that (1) the niece did not come to court with clean hands (because she forged the letters), and (2) there was juristic reason for the services that she provided (she was compensated and received benefit, and also had donative intent).

The plaintiff niece appealed the judgment, which perhaps is not surprising because the claim was that her aunt was bound to leave the bulk of her $30 million estate to her.  The appellant argued that the judge erred in failing to find a binding testamentary agreement.  She also argued that the judge erred in dismissing her unjust enrichment claim.

The appeal was dismissed.  The reasons of the B.C. Court of Appeal can be found at Angelis v. Siermy 2022 BCCA 401.

The Court of Appeal concluded that it was open to the judge in the court below to find that the two letters were not authentic.   The Court of Appeal concluded that there was no error in the judge’s reasoning or his conclusion that the parties had not entered into a testamentary contract.

The Court of Appeal did hold that the judge erred in his application of the “clean hands doctrine.”  A person who seeks an equitable remedy (such as compensation for unjust enrichment) must come to court with clean hands.  However, the clean hands doctrine is limited, and applies only in respect of misconduct “which has immediate and necessary relation to the equity sued for.”  The doctrine does not apply to all aspects of the party’s behavior known to the court.

In Angelis, the niece did not technically need to rely upon her misconduct (the forged letters) to establish a claim in unjust enrichment.  The letters related to a separate issue (whether there was a testamentary contract).  Accordingly, the clean hands doctrine did not apply as a defence to the unjust enrichment claim.

However, the claim in unjust enrichment still failed.

There are three elements to establish unjust enrichment:

  1. An enrichment;
  2. A corresponding deprivation; and
  3. The absence of a juristic reason for the enrichment.

The judge had concluded that there was a juristic reason for the services that the niece provided.  The Court of Appeal had some issues with the analysis of the juristic reason element by the judge in the court below, but ultimately refused to interfere with the judge’s finding that the niece provided services on the basis that “everyone contributes and everyone gains” from the family enterprise.

What I’m Reading: Interesting Estate Litigation Articles for November 2022

The following is a round-up of noteworthy articles published this month on estate litigation and related issues:

  1. Stan Rule at Sabey Rule (Kelowna) writes about when a promise to leave someone property in your will is enforceable, with reference to an English case.  This can be compared to the recent B.C. Supreme Court case that I discussed in a post on expectations to inherit and equitable remedies found here. Stan’s post can be found here: Rule of Law: The Taciturn and Undemonstrative Men of Somerset (rulelaw.blogspot.com)
  2. Suzana Popovic-Montag at Hull & Hull LLP (Ontario) writes about the dangers of distributing an estate before obtaining a tax clearance certificate: H&H | Beware the Dangers of Distributing an Estate Without a Tax Clearance Certificate (hullandhull.com)
  3. Suzana and Geoffrey Sculthorpe (again at Hull & Hull LLP) post about how to prove a lost will: H&H | Revisiting the Rebuttable Presumption: Proving a Lost Will (hullandhull.com)
  4. Albert Oosterhoff at WEL Partners (Toronto) posts about the effect of delusions on testamentary capacity, with reference to an English case: Delusions and Testamentary Capacity | WEL Partners Blog
  5. While not an estates case, a recent B.C. Supreme Court decision made the news, in which the court cancelled a marriage annulment, after finding that the women who appeared at the original hearing (which was conducted remotely, in this case it appears by telephone) was an imposter.  The true spouse did not find out until sometime later that her marriage had been annulled by the court: https://www.cbc.ca/news/canada/british-columbia/imposter-wife-court-marriage-1.6660517

Happy reading!

Spousal Status in Estate Litigation: Who is a “Spouse” and Why Does it Matter?

A few weeks ago, I had an opportunity to speak to an audience of accountants about the issue of spousal status, and why it matters in estate litigation.  The following is a summary of my speaking notes from that presentation.

Spousal Status – Why Does it Matter?

A spouse has certain rights:

Wills Variation Rights:

Section 60 of the Wills, Estates and Succession Act (WESA“) provides that if a will-maker dies leaving a will that does not, in the court’s opinion, make adequate provision for the proper maintenance and support of the will-maker’s spouse or children, the court may, in a proceeding by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the will-maker’s estate for the spouse or children.

While most wills variation cases in the past focused on whether a will was fair, and what variation would be just and adequate, there are now many cases which deal with the issue of standing – you must be able to establish that you are a spouse, or you cannot make a wills variation claim.

Right to receive on intestacy:

If there is no will, then WESA sets out how an estate is to be distributed on an intestacy.  If there is a spouse and no descendants, then everything goes to the spouse.  If there is a spouse and descendants, then the spouse gets the preferred share ($300,000 if all children common to both, $150,000 if not), then half to spouse, half between descendants.  If there is no spouse, then the estate goes to the descendants, or the next closest relative(s).

Clearly, whether or not a person is a “spouse” will have significant consequences on the distribution of an intestate estate.

Other Potential Claims:

“Spouses” have attempted to make other claims which seek to challenge estate plans which move assets out of the estate to avoid wills variation claims:

  • Breach of fiduciary duty – arguing that there is a duty to notify your spouse that you have not made provision in your estate plan, so they can decide whether to initiate family law proceedings – Volovsek v Donaldson, 2019 BCSC 182;
  • Good conscience constructive trust – equitable remedy.

While these claims have not yet been met with a high degree of success, the first hurdle is proving spousal status.

Who is a Spouse – Importance for Executors:

One of the tasks for an executor is to determine if a person qualifies as a “spouse” and if notice under s. 121 of the WESA must be given to that person.  This is important to start the wills variation limitation period, and to protect an executor who seeks to distribute estate assets.

Who is a Spouse?

How is a “spouse” defined in WESA:

  • Section 2 – “when a person is a spouse under this act”
    • Two persons are spouses of each other if they were both alive immediately before a relevant time (usually the date of death of one of them), and
      • They were married; or
      • They had lived with each other in a marriage-like relationship for at least two years.
    • Two persons cease being spouses of each other for the purposes of the act if:
      • In the case of marriage, an event occurs that causes an interest in family property, as defined in Part 5 [Property Division] of the Family Law Act, to arise;
      • in the case of a marriage-like relationship, one or both persons terminate the relationship.
        • This is a determination that requires the court to consider both the expressed and implied intentions of each spouse and any available objective evidence.  The courts have interpreted this section broadly.
      • Two persons are not considered to have separated if, within one year after separation:
        • they begin to live together again and the primary purpose for doing so is to reconcile, and
        • they continue to live together for one or more periods, totaling at least 90 days.

So, there are number of potential issues when considering whether someone is a “spouse”:

  1. Whether there was a marriage-like relationship at all;
  2. If there was, whether it started more than two years before death;
  3. Whether someone terminated the relationship; and
  4. Whether there was a reconciliation, and if so whether it was long enough

There is also the potential for someone to have multiple spouses under the definition of “spouse.”

Whether a Marriage-Like Relationship Exists

There is no specific definition of whether a marriage-like relationship exists.  The precise definitions of the past are no longer valid in our changing world.  Such relationships are no longer defined by financial dependence, sexual relationships or the mingling of property and finances.  There is no “checklist” of characteristics that will invariably be found in all marriages.

The Courts in British Columbia often refer to the following passage from Yakiwchuk v. Oaks 2003 SKQB 124:

Spousal relationships are many and varied. Individuals in spousal relationships, whether they are married or not, structure their relationships differently. In some relationships there is a complete blending of finances and property- in others, spouses keep their property and finances totally separate and in still others one spouse may totally control those aspects of the relationship with the other spouse having little or no knowledge or input. For some couples, sexual relations are very important – for others, that aspect may take a back seat to companionship. Some spouses do not share the same bed. There may be a variety of reasons for this such as health or personal choice. Some people are affectionate and demonstrative. They show their feelings for their “spouse” by holding hands, touching and kissing in public. Other individuals are not demonstrative and do not engage in public displays of affection. Some “spouses” do everything together – others do nothing together. Some “spouses” vacation together and some spend their holidays apart. Some “spouses” have children – others do not. It is this variation in the way human beings structure their relationships that make the determination of when a “spousal relationship” exists difficult to determine. With married couples, the relationship is easy to establish. The marriage ceremony is a public declaration of their commitment and intent. Relationships outside marriage are much more difficult to ascertain. Rarely is there any type of “public” declaration of intent. Often people begin cohabiting with little forethought or planning. Their motivation is often nothing more than wanting to “be together”. Some individuals have chosen to enter relationships outside marriage because they did not want the legal obligations imposed by that status. Some individuals have simply given no thought as to how their relationship would operate. Often the date when the cohabitation actually began is blurred because people “ease into” situations, spending more and more time together. Agreements between people verifying when their relationship began and how it will operate often do not exist.

The parties’ intentions – particularly the expectation that the relationship will be of lengthy, indeterminate duration – may be of importance in determining whether a relationship is “marriage-like”. While the court will consider the evidence expressly describing the parties’ intentions during the relationship, it will also test that evidence by considering whether the objective evidence is consonant with those intentions.

When considering whether two persons are “spouses” the court will consider:

  • The parties’ intentions, particularly their expectation of whether the relationship would be lengthy and of indeterminate duration:
  • Objective evidence of the parties’ lifestyle and interactions supporting a finding that their interactions “closely resembled those typical of married couples;
  • Whether the parties treat themselves as a family unit;
  • Whether cohabitation was coupled with romantic and sexual relations;
  • Evidence of emotional interdependence, mutual commitment, and attachment;
  • Whether the parties co-mingled assets and shared expenses; and
  • Whether the parties treated themselves as single or cohabiting for income tax purposes 

Application of Spousal Status Considerations:

Very often, we are looking at cases where the deceased’s children (or siblings, or other family members) are denying that someone was a spouse.  We see wildly different versions of events.  The claimant says they were a spouse.  The children or other persons opposing may say that the alleged “spouse” was, in fact:

  • Previously in a relationship with the deceased, but the parties broke up, an ex-partner;
  • Casually dating, may have been one of several non-exclusive partners (the deceased said “would never marry again”);
  • Roommate;
  • Caregiver;
  • Friend; or
  • Complete stranger.

A person on the cusp of potentially being a “spouse” may take a shot at a claim, with the knowledge that most claims settle.

Evidence of Spousal Status:

The Courts want evidence of intentions AND objective evidence.  This may include:

  1. Evidence of the surviving “spouse” (concern it is self serving);
  2. Evidence of Opposing parties (again, concern it is self serving)
  3. Documents – tax returns, mail, next of kin, contact forms, direct beneficiary designations;
  4. Other third party witnesses – observed the relationship, statements made to them about relationship.  This may include friends, as well as professionals – solicitor/accountant/banker.

Available Claims if Not a “Spouse”

There are fewer available claims if a person is not a “spouse,” but there are still some remedies.  The claimant does not receive on an intestacy and has no wills variation rights.  However, there may be claims in unjust enrichment or promissory estoppel, claims based on ideas of unfairness and inequity.