What I’m Reading: Interesting Estate Litigation Articles for December 2021

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

  1. CBC published an article on the changes to the Wills, Estates and Succession Act to allow for the digital execution of wills: https://www.cbc.ca/news/canada/british-columbia/make-a-will-in-2022-1.6287279
  2. There were a number of articles published on the treatment of digital assets upon death:
  3. Nick Esterbaur at Hull & Hull LLP (in Ontario) discusses a recent Supreme Court of Canada decision on the limitations of confidentiality in mediation: https://hullandhull.com/2021/12/the-supreme-court-reviews-limitations-of-mediation-confidentiality/
  4. Tyler Lin at de Vries Litigation LLP (in Ontario) discusses testamentary trusts for pets: https://devrieslitigation.com/can-pets-inherit-million-dollar-trusts/
  5. Janis Ko at Onyx Law discusses the issue of costs in contentious estate litigation, with reference to a B.C. Court of Appeal decision: https://onyxlaw.ca/court-clarifies-costs-of-estate-litigation-in-complex-family-dispute/

Happy reading and Happy New Year!

B.C. Comment: Plaintiff not a “Spouse” of the Deceased Entitled to a Share of his Estate – Appeal Dismissed

In estate litigation, spouses have certain rights and available remedies. If there is a will, the spouse of the deceased is entitled to bring a claim to vary the will if it does not make adequate provision for the surviving spouse. If there is no will (i.e. an intestacy), then the spouse is entitled to a preferential share of the estate.

It is increasingly common to see the issue of standing, i.e. whether a person is actually a “spouse,” make its way before the B.C. Courts. I have previously written on this issue here.

The B.C. Court of Appeal considered this issue again in the recent decision of Mother 1 v. Solus Trust Company Limited 2021 BCCA  461.  “Mother 1” asked the Court of Appeal to overturn a decision by the B.C. Supreme Court that she was not a “spouse” of the deceased.

The deceased died in 2015 without a will. His Canadian estate was estimated to be worth up to $21 million. In British Columbia, if someone dies without a will and leaves a spouse and surviving descendants, then the spouse will receive the household furnishings, and a preferential share of the estate. If all of the descendants are descendants of the deceased and the spouse, then the spouse gets the first $300,000. If the descendants are not also the descendants of the spouse, then the spouse gets the first $150,000. The residue of the estate is then divided (1) one half to the spouse, and (2) one half to the deceased’s descendants.

In this case, the deceased had five children with five different women. He did not marry any of the women. He spent time with all of them, and provided them with various levels of financial support and expensive gifts. There was overlap between the relationships. He was described by the court as living a “playboy” lifestyle. As a result of the somewhat sensational facts, this decision did attract some media attention.

Mother 1 did not know about the other four women until after the deceased’s death.  The trial judge observed that there was no evidence of sexual intimacy between Mother 1 and the deceased for years before his death.  While they referred to each other as “husband” and “wife”, the deceased used these terms with two of the other women with whom he had children.  While the deceased supported Mother 1, he did the same with the other women.  The deceased had no intention to live in a marriage-like relationship with Mother 1.

The B.C. Supreme Court concluded that there was no marriage-like relationship between Mother 1 and the deceased. In the alternative, if such a relationship did exist, it was terminated by the deceased.

Mother 1 appealed this decision.

Two persons are spouses of each other for the purpose of the Wills, Estates and Succession Act if they were married to each other, or had lived with each other in a marriage-like relationship for at least two years. Two persons cease to be spouses of each other if, in the case of a marriage-like relationship, one or both persons terminate the relationship.

The Court of Appeal confirmed that the requisite two years of a marriage-like relationship need not immediately precede the intestate’s death.   However, the persons must remain spouses at the time of the death in order to advance a claim. If the parties ceased to be spouses before one party’s death because the marriage-like relationship was “terminated” by one of them, there will be no legal entitlement to advance a claim against the estate as a “spouse”.

This is useful general guidance from the Court of Appeal for persons seeking to bring claims on the basis that they were a “spouse” at the date of death, but it was of no use to Mother 1 because the Court of Appeal was satisfied that Mother 1 and the deceased were never in a marriage-like relationship.

The decision also shows the uphill battle in appealing a finding by a trial judge about spousal status. The trial judge has heard all of the evidence and is in the best position to assess credibility and make the necessary findings to determine whether a spousal relationship exists. The findings are entitled to a considerable degree of deference, and that is what happened in Mother 1.

The trial judge observed that the definition of a “marriage-like relationship” is an “elastic one”, which requires a multi-faceted analysis. There are numerous factors to consider. The Court of Appeal held that it would be inappropriate to re-weigh 14 days of trial evidence and substitute its view of the evidence. Credibility played an important role in the assessment of the evidence, and the trial judgeis in a far better position to make this assessment. The trial judge properly instructed himself on the legal test for a marriage-like relationship, and then considered and applied that test in a “fact-intensive case in which credibility played an important role.”

The decision also includes an interesting discussion about sealing orders and publication bans in estate litigation matters. The Court referred to the recent decision of the Supreme Court of Canada in Sherman Estate v. Donavan 2021 SCC 25, which I have previously discussed here. The Court held that the risks alleged in Mother 1 (as the basis for a sealing order) are risks faced by all individuals who find themselves and their children involved in appeals that proceed in open court and involve claims to substantial sums of money. A mere assertion of harm is not sufficient. The test for a sealing order requires the serious risk to be well grounded in the record or the circumstances of the particular case.   The Court dismissed the application for a permanent sealing order, but the parties were at liberty to replace unredacted materials in the court file with redacted copies, in a manner consistent with a publication ban.

B.C. Case Comment: Resulting Trust – Transfer of Real Property into Joint Ownership not intended to be Irrevocable

The transfer of property into joint ownership, whether it be real property, bank accounts, or other assets, is a common estate planning tool.  Property is often transferred into joint ownership so that it passes to the surviving joint owner outside of the original owner’s estate.  In B.C., you are permitted to put your property into joint ownership to avoid probate fees and potential wills variation claims.  However, disputes still arise with respect to what a deceased person intended when they transferred their property into joint ownership.

The B.C. Supreme Court recently considered this issue in Di Giacomo v. Di Giacomo 2021 BCSC 2313.  In Di Giamoco, the will-maker had two sons.  In 2000, he made a will dividing his estate into three equal shares, one for each of his two sons, and one for his brother.  The evidence was that he did so because (1) he appreciated that his brother provided him with assistance, and (2) he was unhappy with certain behavior of his sons.

The deceased met with a lawyer to prepare and sign the will.  At this meeting, the lawyer explained that if the deceased transferred his real property into joint ownership with his sons and his brother, then (1) he would avoid paying probate fees on this asset, and (2) his sons could not challenge his will, insofar as the real property was concerned.  The deceased transferred title to the property to himself, his sons, and his brother in joint tenancy.

In 2003, the deceased changed his will.  Under the terms of the new will, except for a $500 bequest to his wife, his estate was to be divided equally between his two sons.  His brother would no longer receive anything under his will.

The issue was whether the deceased intended to irrevocably gift the real property in 2000 to his sons and brother in equal shares, or whether the property is held in resulting trust for the estate.

The Court identified the three possibilities when property is put into joint tenancy:

  1. The creation of a true joint tenancy, in which each of the joint tenants is an owner of the whole, with each enjoying the full benefit of property ownership, and with the ultimate survivor enjoying the whole title;
  2. The creation of a resulting trust, where only one joint tenant owns the beneficial interest and the other holding the title in trust for the other with no beneficial interest; and
  3. A gift of the right of survivorship, where a joint tenant is gratuitously placed on title with no beneficial interest in the property until the death of the donor.

Where there is a gratuitous transfer of land to an independent adult child, the presumption of resulting trust applies.  The donee (in this case the brother) must establish, on a balance of possibilities, that the deceased intended to make an irrevocable gift at the time of the transfer.  It should be noted that the donor may intend to gift the right of survivorship, but continue to deal freely with the property throughout their lifetime.

In Di Giamoco, the Court held that the brother failed to prove that the deceased intended to irrevocably gift the right of survivorship.  The evidence regarding the deceased’s intention was “at best, indecisive.”  The court was not convinced that the deceased was fully informed of the consequences of transferring the property into joint tenancy.  The Court observed that the deceased’s English was limited, and he was relying upon a translation of the discussions into Italian.  There was no evidence that the lawyer specifically advised the deceased that the transfer would be irrevocable.  The Court also relied upon the fact that the deceased changed his will three years later to provide for his sons and not also his brother, and the evidence indicated that he believed this would include the real property.

This case serves as a reminder that there are pitfalls when using a transfer into joint ownership as an estate planning tool.  The donor/deceased’s intentions must be clear, and they must be fully informed and understand the effect of the transaction.

What I’m Reading: Interesting Estate Litigation Articles for November 2021

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

  1. Sydney Osmar at Hull & Hull LLP (in Ontario) discusses a recent Ontario case on the production of medical records in the context of an estate litigation claim which may be statute barred due to the expiration of a limitation period: https://hullandhull.com/2021/11/production-of-medical-records-balancing-privacy-and-fact-finding/
  2. Sandy Abley at Onyx Law discusses the importance of reviewing and updating direct beneficiary designations: https://onyxlaw.ca/beneficiary-designations-review-regularly-and-update-as-needed/
  3. CBC reports on a claim by a widow that her husband was duped by a company into selling their home for below market value shortly before his death.  The widow has commenced a lawsuit alleging that the company took advantage of (1) her husband’s diminished capacity in the late stages of his illness, and (2) her lack of involvement in the couple’s finances.  The defendants have not yet filed their statement(s) of defence and they did not provide any comment for the article: https://www.cbc.ca/news/canada/toronto/widow-alleges-dying-husband-duped-1.6266577
  4. Paul Trudelle (also at Hull & Hull LLP) writes about an Ontario decision which is another reminder of the problems that frequently arise when you prepare an at-home “fill in the blanks” will: https://hullandhull.com/2021/11/what-did-he-mean-what-did-he-say-interpretation-issues/

Happy reading!