BC Estate Litigation Blog

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.

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.

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.