B.C. Case Comment: Vagueness in Will Invites (Unsuccessful) Challenge to Charitable Bequest

When making a will, you must take care to make sure that your intentions are clearly expressed and not left open for interpretation.  When a will is unclear or uncertain, this provides an opportunity for a disappointed beneficiary to (1) argue an interpretation which favors them over another party, or (2) argue that the will or some part of it is fatally uncertain and therefore void.

The more complicated that you make a will, the more likely these issues may arise.  These arguments tend to occur more in certain circumstances including:

  1. When a deceased decides to include a power of appointment – a power given to a person to select who shall receive an interest in property (instead of deciding who will receive the property and simply making a bequest to that person in your will); or
  2. When there is uncertainty with respect to a charitable bequest.

Both of these circumstances were present in the recent B.C. Supreme Court decision in Royal Trust Corporation Of Canada v. The Welfare Institution Of The Jews Of Athens 2022 BCSC 1454.

In her 1985 will, the deceased set up a trust for her daughter, to pay her the interest “as long as she shall live.”  The deceased further provided in her will:

If my daughter shall by her Last Will and Testament appoint sum [sic] reasonable charity within the country of Greece for such funds they shall be delivered in accordance with the directions made in such Last Will and Testament of my said daughter.

And further:

If my said daughter shall fail to so designate and appoint by her Last Will and Testament then such money shall be paid to the President for the time being of Estia of Constaninopolis, Artistiduu 7, Kolonike, Ahtens, Greece.

“Estia of Constantinipolis” is a non-profit association in Greece that operates nursing homes near Athens, Greece.

In other words, the deceased’s daughter could decide what charity she wanted to receive the rest of her trust fund after she died (the power of appointment), or the default would be Estia of Constantinipolis.

The daughter made a will in Greece in 2017, in which she explicitly exercised the power of appointment, by appointing The Welfare Institution of the Jews of Athens, dab Reston Elderly Care Centre as the beneficiary.  Then, the daughter made a will in Switzerland in 2018, in which she revoked the 2017 will, and left her entire estate to one person.  She failed to appoint a charity in Greece as the beneficiary of the trust property (i.e. she failed to exercise the power of appointment).

The trust property was approximately $500,000, and the issue was who receives it.

First, it was argued that the power of appointment was invalid.  The Court held that it was valid.  The Court then held that the 2017 will (which appointed a charity) was revoked by the 2018 Will (which didn’t appoint a charity).  As a result, the power of appointment had not been exercised, and so the default “Estia of Constantinipolis” would, on its face, receive the monies.

Next, it was argued that the Estia charity could not receive the gift because:

  1. The gift is to the President of Estia personally, or to his office on behalf of Estia;
  2. If the gift is to the President personally, it was unclear whether it was to the President in office at the time of the 1985 will (who was now dead – so the gift would have failed), or the president currently in office; or
  3. If the gift is to the current President by virtue of his office, and such is held in trust on behalf of the charity, the gift also fails because Greek law does not recognize trusts.

The Court did not accept any of these arguments.  The Court had “no hesitation” concluding that the deceased intended to make the gift to the charity.  There was no evidence that she had any relationship with the individual who was the president of Estia.  It logically followed that it was the charity, not the person, who was the intended beneficiary.

While the Court did not appear to have any difficulty interpreting the will, it is likely that the proceedings could have been avoided had the will and the power of appointment been more clearly drafted (or perhaps if no power of appointment had been included at all, and the deceased had simply named the charitable beneficiary in her will).

By drafting the will in the manner that she did, it permitted a disappointed beneficiary the opportunity to argue for an interpretation that would benefit them.  While the arguments were ultimately unsuccessful in this particular case, in some cases this may result in an interpretation that is not consistent with the deceased’s intentions, and in all cases will result in unnecessary expense to the estate.

Equitable Claims: Remedies when you expected to inherit but you didn’t

What if you expect to inherit something from someone’s estate, and when they die you discover that you were mistaken? What if you have acted to your detriment based on this expectation?

This seems to occur frequently in the case of farm properties. Someone works on a farm for little or no compensation, with an expectation that they will inherit the farm upon the owner’s death. Then, the owner leaves the farm to someone else.

It is always risky to provide services based upon an expectation, without setting the terms of the agreement or arrangement out in writing.  However, if the parties do not have a written agreement, the party who has provided services based upon an expectation to inherit, but has not ended up receiving the farm, may have potential remedies. A person in this situation may bring certain claims, including claims in:

  1. Proprietary estoppel;
  2. Unjust enrichment; and
  3. Breach of contract.

Proprietary Estoppel:

Proprietary estoppel is an equitable doctrine which enforces a promise that would not otherwise be enforced under the law. In order for proprietary estoppel to be available, the following three conditions must be present:

  1. A representation or assurance is made to the claimant, on the basis of which the claimant expects to enjoy some right or benefit over property;
  2. The claimant relies on that expectation by doing something, and that reliance is reasonable in all the circumstances; and
  3. The claimant suffers a detriment as a result of this reasonable reliance, such that it would be unfair or unjust for the party responsible for the representation or assurance to go back on their word.

There must be a promise one might reasonably expect to be replied upon by the person to whom it was made.

If these conditions are met and there is an equity which needs to be recognized, then the court must craft a remedy to do justice between the parties.

Unjust Enrichment:

Unjust enrichment is another equitable doctrine. A claimant must establish three elements:

  1. The respondent was enriched;
  2. The claimant suffered a corresponding deprivation; and
  3. The respondent’s enrichment and the claimant’s corresponding deprivation occurred in the absence of a juristic reason.

Breach of Contract:

Parties may enter into an agreement with a term requiring one party to make a will to the other party.  As long as the other elements of a contract are present (i.e. offer, acceptance, consideration, etc…), this type of agreement is enforceable in B.C. Further, the party expecting to benefit from such an agreement does not have to wait until the other party’s death before commencing an action, if the beneficiary becomes aware that the other party no longer intends to abide by the terms of the agreement. I previously wrote about a recent B.C. case on this issue, found here.

Recent B.C. Case – Party Expecting to Inherit Farm does not Receive it:

The B.C. Supreme Court recently considered a claim to a farm on the basis of proprietary estoppel and unjust enrichment in Kennedy v Marcotte Estate 2022 BCSC 1486.

In Kennedy, the plaintiff thought he would inherit the deceased’s farm for much of his life. The plaintiff’s family had been friends with the deceased for many years (the deceased never married, and did not have any children of his own). The plaintiff was a commercial fisherman, but when he was not fishing he would assist the deceased at the farm.

The deceased made comments which the plaintiff understood to mean that the farm would be his after the deceased’s death. However, the deceased in fact left the will to a neighbour and close friend. The plaintiff found out about this while the deceased was still alive. He tried to convince the deceased to change his will, but this did not happen.

With respect to the claim in proprietary estoppel, the plaintiff relied upon various representations which he said gave him an expectation that he would inherit the farm:

  • In the 1970s, the plaintiff’s mother told him that the deceased put the farm in the names of the plaintiff and his three siblings;
  • From 1979-2004, annually, the deceased said that anybody who works on the deceased’s farm will get a piece one day;
  • From 1980-2000 (every two years), the deceased mentioned a man who inherited a farm from a woman who willed the property to him as an expression of gratitude for the work he did on the farm;
  • In 2004, the deceased said that he was changing his will to provide that one individual will inherit the farm (the plaintiff wrongly assumed that this person was him);
  • 2004-2018 (yearly), the deceased says that he hopes that the plaintiff is ready “to fight for the farm one day”; and
  • 2015 or 2018, Mr. Marcotte made a non-verbal gesture (pointing) with a friend which suggested that the plaintiff would inherit the farm.

The court accepted that the above representations were made, and that the plaintiff interpreted them to mean that the deceased would give the farm or part of it to the plaintiff in his will. The court also found that the plaintiff took action motivated partly upon his reliance on these representations, by working on the farm, and refraining from seeking formal paid employment when he was working on the farm.

However, the fundamental question was whether the plaintiff’s reliance on the representations was reasonable. The court held that his reliance was not reasonable. None of the representations were unambiguous or “clear enough” to communicate an assurance that if the plaintiff worked for the deceased while he was not fishing, he would inherit all or part of the farm. The court referred to several other cases of proprietary estoppel and inheriting farms, where the representations were much more unambiguous.

The claim in unjust enrichment also failed. The plaintiff established that his unpaid labor was a benefit to the deceased, and that the plaintiff suffered a corresponding deprivation. However, the claim failed on third element, in that the plaintiff failed to show a lack of juristic reason for the enrichment. The juristic reason was “[the plaintiff’s] donative intention to gift his labour to Mr. Marcotte as a long-time friend, just as his father and others had done over the years.” He did not expect to be paid, although he appreciated the payments and other benefits that were provided by the deceased to express his gratitude for the assistance.

This case is an important reminder of why you should always reduce agreements of this nature to writing. If you have expectations based on representations, the representations must be clear and unambiguous, and you must be reasonable in your reliance on them. The court in Kennedy accepted that from 1979 until 2018, during the months that the plaintiff was not away fishing, he was working on the farm approximately four to six days a week, for several hours each day. However, he was not entitled to anything for this.

BC Case Comment – UPDATE: On Appeal, Surviving Business Owner Still not Entitled to Receive Partnership Property by Right of Survivorship

Estate litigation issues do not just arise as between family members of the deceased (although that is most common).  A death may also result in disputes with respect to the deceased’s business dealings and partnership holdings.  This is why a fulsome estate plan that addresses all interests, personal and business, is key.

In a previous post found here, I discussed what happens when your business partner dies, in particular when the assets of the business are held jointly.  I considered this in the context of the decision of the B.C. Supreme Court in Garland v. Newhouse 2021 BCSC 2021.

A fundamental characteristic of joint tenancy (i.e. registering assets in joint names) is the right of survivorship. When one joint tenant dies, their interest is extinguished, and the surviving joint tenant(s) take full ownership. For example, spouses often register title to their property in joint tenancy, so that the surviving spouse will receive the entirety of the property upon the other spouse’s death. This is accepted as a permissible estate planning tool.

However, where the property at issue is partnership property, there is a presumption that there is no right of survivorship as between partners. The death of a partner in a two-person partnership dissolves the partnership, and on dissolution each partner (including the estate of the deceased’s partner) is entitled to a proportionate share of the partnership assets after payment of debts.

In Garland, the deceased and the spouse of his close friend (“Ms. Newhouse”) purchased an apartment building together in 2003, with the intention of earning a profit from the rental income. They also opened an account to manage the finances associated with the apartment building. The building and the account were both registered in their joint names.

When the deceased died, Ms. Newhouse took the position that the deceased intended for her to receive the apartment building and account through right of survivorship. The deceased’s estate took the position that the deceased intended for the beneficiaries of his estate (his children) to receive his share of the business assets.

The matter proceeded to court by way of summary trial, in which there are no live witnesses, and the court determines the matter based only on affidavit evidence and argument by the parties.   The B.C. Supreme Court stated that in order for the right of survivorship to apply to partnership assets, “there must be evidence of a contrary agreement between the parties that is sufficiently clear and compelling to overcome the presumption that beneficial interest in partnership property does not transfer through the right of survivorship.”  The Court held that Ms. Newhouse was unable to provide this evidence.  The Court concluded that the parties did not intend and agree that on the death of one partner, the partnership property would transfer to the surviving partner for their personal benefit.

Ms. Newhouse failed to rebut the presumption against the right of survivorship in relation to the partnership property, and as a result she held legal title of the apartment building and the bank account in trust for herself and the deceased’s estate.

Ms. Newhouse appealed, and the B.C. Court of Appeal recently provided its decision, which can be found at Newhouse v. Garland 2022 BCCA 276.

A majority of the B.C. Court of Appeal dismissed the appeal, finding that:

  1. The lower court judge did not apply an incorrect legal test.  Ms. Newhouse argued that the lower court judge applied a higher legal burden, but the Court of Appeal disagreed.  They held that the lower court judge properly assessed whether the presumption had been rebutted, on a balance of probabilities, which was the appropriate standard;
  2. The lower court judge did not make a clear and overriding factual error, such as misapprehending the evidence, ignoring material evidence, or drawing inferences unsupported by primary facts.  While some judges may have made different findings, it is not the role of the Court of Appeal to reweigh the evidence and substitute their own findings; and
  3. The lower court judge did not err in exercising her discretion to proceed by way of summary trial instead of requiring a full trial with live witnesses.

The result reflects the role of the Court of Appeal.  The Court of Appeal does not simply re-hear cases and substitute their own decision.  The Court of Appeal may only interfere if there is a legal error, a clear and material factual error, or an error in the exercise of discretion.

One of the three-judge panel would have allowed the appeal, and delivered lengthy dissent reasons.  The judge would have referred the matter back to the B.C. Supreme Court for a full trial.  In the dissenting reasons, the judge notes the difficulties in determining these claims.  The dispute arises after the death of one of the partners, and so one of the parties to the original agreement will always be unavailable to give first-hand evidence.  The surviving partner will have an interest in the result, and so their evidence must be viewed with some caution.

It remains the case (as I noted in my previous post) that it is important to keep in mind business and partnership interests when making your estate plan.  Again, this this dispute likely could have been avoided if there was a written agreement reflecting the terms of the arrangement between the parties.

B.C. Case Comment: B.C. Court of Appeal Again Considers Whether a Claimant has Standing as a “Spouse”

When a person dies without a will and has no descendants, their spouse inherits their estate.  In order to benefit, a claimant must establish that they are indeed a “spouse.”  I continue to frequently see cases in which a person’s standing as a “spouse” is in dispute and is one of the key issues in the litigation.  This is relevant on an intestacy (dying with no will), and also for wills variation claims, which can only be brought by children and “spouses.”  This was one of the first issues that I wrote about when I started this blog, found here.  I have also wrote about it here.

The B.C. Court of Appeal recently considered this issue again in Coad v. Lariviere 2022 BCCA 222.

In Coad, the Court considered an appeal by a “spouse” from an order that the deceased died intestate and without a spouse, leaving her mother as the sole beneficiary.  The plaintiff was living in the same home as the deceased when she died, and he claimed to be in a marriage-like relationship with her at the time of her death.  The deceased’s ex-husband obtained a grant of administration with respect to a will dated August 11, 2011, while the plaintiff received a grant of administration based on an intestacy (on the assumption that he was a spouse).  The orders were in conflict.

The trial judge concluded that the deceased died intestate, but that the plaintiff was not in a marriage-like relationship with the deceased.  As a result, the deceased’s mother was the sole beneficiary of the deceased’s estate.  The plaintiff appealed the order.

A “spouse” is defined in s. 2 of the WIlls, Estates and Succession Act as follows:

2 (1) Unless subsection (2) applies, 2 persons are spouses of each other for the purposes of this Act if they were both alive immediately before a relevant time and

(a) they were married to each other, or

(b) they had lived with each other in a marriage-like relationship for at least 2 years.

(2) Two persons cease being spouses of each other for the purposes of this Act if,

(a) in the case of a 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, or

(b) in the case of a marriage-like relationship, one or both persons terminate the relationship.

(2.1) For the purposes of this Act, spouses are not considered to have separated if, within one year after separation,

(a) they begin to live together again and the primary purpose for doing so is to reconcile, and

(b) they continue to live together for one or more periods, totalling at least 90 days.

(3) A relevant time for the purposes of subsection (1) is the date of death of one of the persons unless this Act specifies another time as the relevant time.

There is no specific definition of when a marriage-like relationship exists.  The presence or absence of any particular factor cannot be determinative of whether a relationship is “marriage-like.”  There is no checklist of characteristics that will invariably be found in all marriages .  While the parties’ intentions may be important, objective evidence will also provide guidance as to whether a relationship was “marriage-like”.  Spousal relationships are many and varied.

Whether people are in a marriage-like relationship is a question of mixed fact and law, and the decision of a trial judge is entitled to deference.

The Court of Appeal held that the trial judge did not take a contextual and holistic approach, and instead applied a “checklist.”  He also placed undue emphasis on the fact that the plaintiff and the deceased did not engage in sexual relations.  The Court of Appeal allowed the appeal, and made an order that the plaintiff was in a marriage-like relationship with the deceased (i.e. was a “spouse”) and therefore received the estate.

As these claims are so fact-specific, and the result is “all or nothing” depending upon whether the claimant is a “spouse”, we can expect to continue to see this issue making its way before the courts.

Mareva Injunctions and Freezing Orders in Estate Litigation

Often there is a concern that a defendant will dissipate assets or put them out of reach of the court if they become aware of a claim against them.   A person who intends to bring a claim wants to make sure that (1) the property that is the subject of the claim is protected until a determination of the claim, and/or (2) the defendant will still have sufficient assets to satisfy the claim.

A Mareva injunction is an order which freezes the defendant’s assets, so that they cannot be disposed of or removed to a place beyond the court’s reach while proceedings are ongoing.  Preservation orders are also available to freeze and preserve the property that is the subject of a claim.

A Mareva injunction is an extraordinary remedy, because it provides the plaintiff with enforcement rights and prejudices the defendant before the court has actually determined the merits of the claim.

These orders are usually obtained ex parte, or without notice to the other party.  Otherwise, there is the risk that the defendant will removal or deal with the assets after they are served and made aware of the application but before the order is made.

Once the party against whom the order is made is served with the order, they may apply to set it aside.

There is a two-part test for granting a Mareva injunction:

  1. The existence of a strong prima facie case or a good arguable case.  This does not mean that the applicant must demonstrate that they are “bound to succeed” with their claim.  The test is satisfied if “either side might win”; and
  2. Having regard to all relevant factors in the case, whether granting an injunction would be just and convenient (the balance of convenience).

For a restraining order over property at issue in the proceeding, there is a lower threshold for #1: whether there is a substantial question to be tried.

The B.C. Supreme Court in Shakeri-Salah (discussed further below) set out the relevant factors which may be considered on the balance of convenience analysis (which factors are relevant will depend upon the case, and this is not a closed list):

  1. the residency of the defendant;
  2. enforcement rights of judgment creditors in the jurisdiction where the defendant’s assets are located;
  3. evidence showing the existence of assets within British Columbia or outside;
  4. evidence showing a real risk of the disposal or dissipation of assets to render a judgment nugatory;
  5. evidence of irreparable harm;
  6. the strength of the plaintiff’s case;
  7. the nature of the transaction giving rise to the action;
  8. the risks inherent in the transaction;
  9. the amount of the claim;
  10. the defendant’s assets;
  11. evidence that the injunction would have a material adverse effect on an innocent third party; and
  12. the history of the defendant’s conduct.

The B.C. Supreme Court recently considered Mareva injunctions and preservation orders in in the context of estate and trust litigation in Shakeri-Salah v. Estate of Ahmadi-Niri 2022 BCSC 700.

In Shakeri-Salah, the defendants sought to set aside a Merva injunction and freezing order.  The plaintiff was the widow of the deceased.  She brought an action against her husband’s estate, the trustees of a trust, corporate entities relating to her husband’s business enterprises, her two older sons, and her husband’s personal advisors.  The plaintiff alleged that as the deceased’s spouse she was entitled to a share in the assets accumulated through a joint family venture.  In the five months prior to his death, the deceased took certain steps to purportedly put assets outside the reach of the plaintiff.  He transferred assets into a trust, the beneficiaries of which were his children but not his spouse (the plaintiff).  He severed joint tenancies, commenced a family claim seeking a divorce from the plaintiff, and made a will in which the plaintiff was not a beneficiary.  All of this was done while the deceased’s health was deteriorating and he had a reduced ability to communicate.

The deceased travelled to Dubai and then Iran, where he died several weeks later.  The plaintiff alleged that her sons took their father to these countries to remove him from her and to exercise undue influence over him.  The sons said they were helping their father “escape an unhappy marriage”, and did so at his request.

The plaintiff alleged there was an unwritten trust arrangement and unwritten agreement between her and the deceased.  She claimed a constructive trust over the assets that her husband amassed during the time that they were married.

The plaintiff applied ex parte and obtained a Mareva injunction and freezing order.  The Court ordered that the assets that were the subject of the claim be frozen.  There was also an order requiring the sons and the corporate defendants to set out their respective assets.

The defendants applied to set aside the order.

One of the grounds to set aside a Mareva injunction is material non-disclosure by the applicant.  If there has been material non-disclosure by the applicant, the court may set aide the order without regard to the merits of the application.  The standard is high when a litigant comes to court on an ex parte basis.  The applicant must disclose all important aspects of the evidence because the other side is not their to make their case.  However, not every omission necessarily results in the order being set aside.

The Court in Shakeri-Salah did not agree that there was material non-disclosure.

If there has not been material non-disclosure, the court proceeds with a new hearing (a “hearing de novo”) on the merits of the application.  The applicant must again meet the test for obtaining the injunction.

In Shakeri-Salah, the defendants argued that there was no evidence of dissipation of assets.  The plaintiff argued that while there was no evidence of active dissipation, there was evidence of pre-existing intentions and steps taken by the deceased to deprive her of assets that would have been received by her as spouse and joint tenant.  The court agreed – the deceased, with the defendants’ knowledge and sometimes with their “loyal support” structured his affairs to remove assets from the plaintiff’s reach.  The court relied upon the commencement of family law proceedings, the severance of the joint tenancies, and the will excluding the plaintiff as evidence of the deceased’s intention to put assets out of the reach of the plaintiff.

The Court varied the injunction to remove the sons from the freezing order.  “Considerations of fairness and justice” did not support continuing the interlocutory relief against them personally.  The order remained in place as against the other defendants, i.e. the trustee and the corporations.

The case also includes an interesting discussion of claims for unjust enrichment brought by one spouse against the other.  A spouse who claims unjust enrichment based on a family venture need not have played an active role in a business venture that is alleged to be the product of the family venture.  The deceased’s business efforts built the family’s wealth, but the plaintiff made that possible through her role in the family, entitling her to a remedy for a proportionate share of the wealth built.

B.C. Case Comment: Does the Doctrine of Unconscionable Procurement Apply in B.C.?

The transfer of property into joint ownership with right of survivorship is a common estate planning tool.  But can you take back the transfer after you have made it?  You can make a new will changing the distribution of your estate, but can you undo the transfer of property into joint ownership?

This is what a 91 year old father tried to do (unsuccessfully) in the recent B.C. Supreme Court decision of Sandwell v. Sayers 2022 BCSC 605.  The father tried to argue that the doctrine of unconscionable procurement applied.

The doctrine of unconscionable procurement provides that where there is a transfer of significant benefit that the recipient actively caused to occur, there must be proof of the donor’s full comprehension and understanding of the effects of the transfer for it to be upheld.

The onus is on the party attacking the transaction to prove, on a balance of probabilities, that it was unconscionably procured.  Once the party challenging the transaction has established a significant benefit and the active involvement on the part of the person obtaining the benefit in the procurement or arrangement of the transfer, then there is a presumption that the donor of the gift did not truly understand what she was doing in making the transaction.

Turning to the facts in Sandwell, the plaintiff father had two children, a son and the defendant daughter.  In December 2020, the father transferred an interest in his home in Kelowna to his daughter, making them joint tenants.  He later brought legal proceedings to get the property back into his sole name.

The father lived alone at the property.  The father was in good health.  There was no issue with his capacity at the time of the transfer.

Back in 2008, the father had executed a transfer of his home to his son for $1.00.  The transfer was never registered, and the original documents were retained by the lawyer who drafted them.  The daughter discovered copies of the documents, along with a note that read “this transfer will not be used except with your consent or in the event that your health fails and there is no likelihood of your recovery.”  The daughter brought this to the attention of her father.  The father claimed that his daughter told him that his son could take his property and leave him broke.

The daughter and the father attended the office of a notary.  The daughter claimed that the father made the appointment, because he wanted to sign over half the property to her (and she would get the rest of it when he died).  The father claimed that the daughter told him that she made an appointment with a notary and that he should go with her, and when he arrived, the notary was expecting him and had prepared documents adding the daughter to the title to the property.

The notary was alive to concerns of undue influence, and he recorded these concerns in his notes.  He met with the father alone and reviewed the pros and cons of transferring title into joint tenancy.  He told the father to take some time to think about it (which he did).

After the initial consultation, the father called the notary and said that he did not want to proceed with the transfer.  A few days later he left four voicemail messages for the notary indicating he wanted to proceed with the transfer, and the daughter also emailed the notary to say that her father wanted to proceed with the transfer.  The transfer was registered.

The father now argued that the transfer into joint ownership ought to be set aside under the doctrine of unconscionable procurement – the daughter caused the transaction to occur (to her benefit) and he did not fully understand the effects of the transaction.  The daughter argued that not only were the requirements of the doctrine not met, but the entire doctrine is not good law and should not be applied in B.C.

The Court went through the history of the doctrine of unconscionable procurement, noting that it was popular in the 1800s and early 1900s, but is rarely mentioned in current case law.  It has been referenced in a few recent cases (and I have noticed that lately it is being pled in more claims), but there has been no detailed analysis of whether the doctrine still has any place in British Columbia.  One concern is whether the courts should endorse claims brought beyond such “traditional” grounds of attack on transactions, such as undue influence, incapacity and resulting trust.

In Sandwell, the Court had “real doubt” about the place of the doctrine of unconscionable procurement in British Columbia law.   However, if the doctrine of unconscionable procurement exists and has any place in B.C., it did not assist the father in this case.

First, at best the daughter arranged the appointment with the notary (although that was disputed) and caused him to fear his son might take his home.  This was not enough to satisfy the requirement that there be “active involvement by the person obtaining the benefit in the procurement or arrangement of the transfer.”

Second, the father failed to present any evidence which indicated a misunderstanding of the impact of his actions.  He did not provide evidence that he failed to understand the effect of transferring the property into joint ownership.

The Court also refused to set aside the transfer on the basis of unjust enrichment.

The Court expressly stated that it did not intend to make a decision that applies beyond the scope of the facts that were before it.  As a result, the B.C. Courts have not stated that the doctrine of unconscionable procurement does not apply in British Columbia.  However, Sandwell contains a strong analysis and argument in support of why the doctrine should not apply in British Columbia, or should only apply in very limited circumstances.

What are the Consequences When a Beneficiary is a Witness to the Will?

Is it appropriate for a beneficiary in a will to witness the execution of that will? The law in B.C. presumes that a gift to the witness of a will or their spouse is void, unless the court declares otherwise.

To be valid in B.C., a maker-maker must sign their will or acknowledge their signature in the presence of two or more witnesses present at the same time, and those witnesses must also sign the will in the presence of the will-maker (but keep in mind the recent changes to allow electronic wills in B.C., discussed here).

Section 40(2) of the Wills, Estates and Succession Act provides that “a person may witness a will even though he or she may receive a gift under it, but the gift may be void under section 43.”   Section 43 provides that “unless the court otherwise declares”, a gift in a will is void if it is to a witness to the will-maker’s signature or the spouse of that witness.  On application, the court may declare that such a gift is not void and is to take effect, “if the court is satisfied that the will-maker intended to make the gift to the person even though the person or his or her spouse was a witness to the will.”

The B.C. Supreme Court recently considered this issue in Wolk v. Wolk 2021 BCSC 1881. In Wolk, the deceased left his estate to his parents. His parents were two of the three witnesses to the will. The will explained the purpose of the gift, which including making that the parents were expected to make provision for the will-maker’s daughters.

The issue for the court was whether the gift to the parents was void since the parents witnessed the signing of the will.  The central concern is testamentary intent: what did the will-maker actually intend? Extrinsic evidence is admissible for establishing the will-maker’s intention.

In Wolk, it was “readily apparent” that the will-maker intended for the two witnesses to receive his estate even though they signed as witnesses. The will-maker “expressly articulated” the basis for the gift in the will. The will-maker also changed his beneficiary designations to make similar provision for his parents. The Court concluded that the gifts to the will-maker’s parents were valid, even though the parents signed as witnesses.

If possible, a will-maker should arrange for witnesses who are not beneficiaries under the will, as the presumption is that any gift to a witness is void. However, this may not be practicable. There may be no one else available, or there may be urgency (i.e. a will made on the will-maker’s deathbed). If it cannot be reasonably avoided and a named beneficiary must witness the will, there is a remedy, but it is an added complication and of course there is no guarantee that an application to declare the gift valid will be successful.

B.C. Case Comment: Person Who Caused Deceased’s Death Cannot Benefit under Will, so Who Does?

In the recent decision of Unger Estate (Re) 2022 BCSC 189, the B.C. Supreme Court considered what happens to a beneficiary’s share of an estate when that beneficiary is convicted of murdering the deceased.  Fortunately, these are extremely rare circumstances (rare enough to be reported in the media).  However, the case did give the Court an opportunity to discuss what happens when a gift cannot take effect for any reason, which is not as rare (for example, a beneficiary dies before the will-maker).

In Unger, the deceased had two sons. She made a will leaving her estate to her sons in equal shares. The will further provided that if a child predeceased her but left children their own, then those children (i.e. the deceased’s grandchildren) shall receive their parent’s share. In the alternative, any part of the estate that did not pass to one of the deceased’s children or grandchildren was to be divided equally between two charities.  At the time of her death, the deceased’s estate was worth approximately $860,000.

One of the deceased’s sons entered a guilty plea to the charge of second degree murder of his mother. He admitted to his role in causing her death, and was sentenced to life imprisonment with eligibility for parole after ten years.

In Canada, there is a rule of public policy which excludes the person responsible for another person’s death of taking any benefit. The son presumably was aware of this and agreed to voluntarily disclaim any entitlement to his mother’s estate.  There are case authorities which suggest that this rule extends to those who claim through the criminal’s estate.

The son who could no longer inherit has a daughter, who was born eleven days after his mother’s death.

The issue for the court was who would receive the son’s share of the estate: his daughter, or the two charities who were named as alternate beneficiaries? The trustees sought advice and direction from the court.

There was some evidence that the Deceased’s relationships was both sons had “eroded”, and she was considering changing her will to provide for her grandchildren. However, this was irrelevant to the issue before the Court because she did not actually change her will.  The Court looked at the deceased’s intentions in making the will.

The Court concluded that the son’s portion of the residue passed to his daughter. The clear intent of the deceased in the will was that if one of the deceased’s children predecease her, any children of that child were to receive the deceased child’s share.  In this case, the son’s daughter was an “alternative beneficiary” of the gift to the son as contemplated by s. 46 of the Wills, Estates and Succession Act which provides as follows:

When gifts cannot take effect

46   (1) If a gift in a will cannot take effect for any reason, including because a beneficiary dies before the will-maker, the property that is the subject of the gift must, subject to a contrary intention appearing in the will, be distributed according to the following priorities:

(a) to the alternative beneficiary of the gift, if any, named or described by the will-maker, whether the gift fails for a reason specifically contemplated by the will-maker or for any other reason;

(b) if the beneficiary was the brother, sister or a descendant of the will-maker, to their descendants, determined at the date of the will-maker’s death, in accordance with section 42 (4) [meaning of particular words in a will];

(c) to the surviving residuary beneficiaries, if any, named in the will, in proportion to their interests.

(2) If a gift cannot take effect because a beneficiary dies before the will-maker, subsection (1) applies whether the beneficiary’s death occurs before or after the will is made.

As a result, the granddaughter was first in priority for distribution of her father’s share.  The headline from the Vancouver Sun article summarizes a concern with this: “Court grants half of murdered Chilliwack woman’s estate to her killer son’s daughter.”

There were also accounts with direct beneficiary designations made in favor of the deceased’s two sons (i.e. which would pass outside of the estate and not be dealt with in the will). The benefits which otherwise would have been designated to the son who caused the deceased’s death were instead to be paid to the other son.

B.C. Case Comment: Court Finds No Binding Agreement to Leave Estate to Niece

A person may enter into a testamentary contract, whereby they agree to leave their estate to another person in exchange for some consideration, for example services that the other person had provided or would subsequently provide.  This creates a binding agreement, and the party no longer has the ability to change the named beneficiary in their estate plan without breaching the agreement.

These agreements can be difficult to prove.  Testamentary autonomy is “a deeply entrenched common law principle,” and this type of agreement deprives a person of their testamentary autonomy (albeit for consideration).

The B.C. Supreme Court recently considered the existence of a testamentary contract in Angelis v. Siermy 2022 BCSC 31.  In Angelis, the court considered whether a childless aunt was obligated to leave her estate to one of her nieces.  In 2002, the aunt executed estate documents that would leave most of her substantial estate to the niece (the plaintiff).  In 2011, the aunt executed a subsequent will changing her main beneficiary to a different niece.

The plaintiff claimed that she had an oral contract with her aunt, whereby her aunt promised to leave the bulk of her estate to the plaintiff in exchange for the plaintiff providing years of unpaid service to the aunt and her company.  She alleged that the changes to the estate plan in 2011 resulted in a breach of that agreement.

The Court observed that this was an unusual case because the will-maker was still alive and in a position to defend the litigation.  She denied the existence of any agreement to leave her estate to the plaintiff.

The plaintiff was the only person who claimed that the agreement existed.  There were no collateral witnesses to confirm her position.

The plaintiff relied upon three letters, allegedly written by the aunt, which allegedly explained the aunt’s reasons for her estate planning decisions.  The aunt admitted that she wrote the first letter (which does not mention any agreement), but denied drafting or signing the second and third letter.

The court found no evidence that supported the existence of a testamentary contract in this case.  Instead, the evidence suggested that no such agreement existed.

The court considered the three letters in great detail (including expert evidence on ink and handwriting analysis).  The court focused on the content of the letters, and concluded that the plaintiff forged the second and third letters.  The plaintiff’s claim in breach of contract was dismissed.

The plaintiff also brought a claim in unjust enrichment, in the event there was no contract.    However, unjust enrichment is an equitable remedy, and a party who seeks a equitable remedy must come to court with clean hands.  In this case, the plaintiff’s claim in unjust enrichment was barred as a result of her forgery of the two letters.  In the alternative, the plaintiff provided any services with donative intent, and further she was compensated for her services.

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.