Author: Trevor Todd

Varying a Will- Vancouver Estate Lawyer-South East Asian Women and Wills Variance

This article was originally posted on the National Post. ( See the reasons for judgement at Grewal v Litt 2019 BCSC 1154)

The Grewal case was handled by Trevor Todd and Jackson Todd who together have over fifty years experience in handling contested estates including wills variation claims.

A wills variation claim involving four Indo-Canadian daughters was varied from $150,000 each to %60 of the estate — the two sons were slated to collect $4.2 million

Nahar and Nihal Litt were farmers from India who came to B.C. and achieved the Canadian dream, building a future for their six children and accumulating a family fortune worth $9 million.

When the couple died in 2016, their will stipulated that their four daughters — Jasbinder Grewal, Mohinder Litt-Grewal, Amarjit Litt, and Inderjit Sidhu — receive $150,000 each, collectively less than seven per cent of the estate, while sons Terry Litt and Kasar Litt receive 93 per cent, or $4.2 million each.

Last week, the will was overturned in B.C. Supreme Court, a case that is notable because of the glaring disparity between the amounts given to the daughters compared to sons, and the overall value of the estate, said Trevor Todd, the plaintiffs’ lawyer.

Nahar and Nihal Litt were farmers from India who came to B.C. and achieved the Canadian dream, building a future for their six children and accumulating a family fortune worth $9 million.

“All of my sisters and I are happy with the judge’s findings,” said Amar Litt.

She and her sisters challenged the will on the grounds they were discriminated against based on their parents’ traditional Indo-Canadian values that favoured sons over daughters — a belief they argued falls short of the moral standards of Canadian society.

The Litts arrived in B.C. in 1964. At the time, the children ranged in age from three to 14.

Father Nahar worked at a sawmill. The family eventually purchased residential properties and farmland in Vancouver, Richmond and Abbotsford. At the time of the Litts’ deaths, the bulk of their estate came from two properties, the family house in Vancouver and a 73-acre property in Richmond.

The Litt family farm on Cambie Road in Richmond. The property has since been sold. (Submitted photo: Amar Litt) PNG

Throughout their childhood, the sisters felt they were considered less valuable, especially by their mother, because of their gender, court heard during the 15-day trial.

“The sting and the hurt of those memories were apparent as they gave their evidence at trial,” noted Justice Elaine Adair in her reasons for judgment.

“Most of our lives we had not been treated fairly,” said Amar Litt. “My brothers received all the praise because they were boys. We had to fight a lot harder.”

The sons also received “significantly more” gifts and benefits during their parents’ lifetimes than any of the sisters, said the judgement.

All the siblings worked on the farm, but the girls testified they were also responsible for household chores.

With the exception of one brother, the unmarried children were expected to plow their wages back to the farming operations. The exception was Kasar Litt, whose wage was held back even after he was married.

One sister, Inderjit, was working outside the farm, but was expected to make her employment income available to the family business, said the judgment.

The daughters argued their work and wage sacrifice were the “backbone of the farm operations,” it said.

“Throughout our childhood, teen years, and young adult lives, we worked on that farm alongside our brothers,” said Amar Litt. “We helped build our parents’ estate.”

When the elder Litts’ health deteriorated, it was the daughters, particularly the two older sisters, who took care of their parents.

Learning the contents of the will was disheartening, said Amar Litt. “We were anticipating that my parents would recognize us at this point, but it ended up we weren’t. It was very difficult and emotionally painful.”

Their brother Terry, who was executor of the will, testified that between 2006 and 2012, he tried to convince his parents to change the will. His father was open to the idea, but his mother was not.

Both brothers agreed their parents failed to meet their “moral obligations” to their daughters, but the parties could not agree on how the estate was to be divided, despite mediation.

The judge ruled an increase to the daughters’ share was warranted based on factors including the gifts and benefits the sons had received, the influence of outdated cultural values on the parents, and the daughters’ contribution to their parents’ care.

Adair ruled that the daughters be granted $1.35 million and the sons $1.8 million each.

“The judge had to take into consideration what the will said,” said Litt. “We are still able to honour our parents wishes that the sons get more, but there’s more fairness now.”

The B.C. Wills Variation Act allows judges to change a will to make sure it is “adequate, just and equitable” to the testator’s spouse and children.

B.C. is the only province in Canada to have this legislation, adopting it from New Zealand in 1920.

It can be a controversial legislation, said Todd, but argues it doesn’t mean British Columbians don’t have a say in what happens to their assets upon death. Parents can still disinherit a child, for example, but there has to be valid and rational reasons for doing so.

Todd said that over the course of his 45-year practice, he has had met many Indo-Canadian women consult with him over wills they believe to be unfair. But none proceeded with a claim.

“The social pressures, family pressures, and pressure from their community at large prevented some of them from going ahead,” he said.

Contesting her parents’ will was not easy, said Amar Litt, especially for her two older sisters.

“We did it because it was the right thing to do,” she said, adding she hopes their case will “inspire other women in the same situation to stand up for themselves.”

Bc Estate Lawyer-Wills Variation and “Estranged” Children

Trevor Todd and Jackson Todd have over 60 years experience in contested estate matters including the wills variation provisions of S. 60 WESA

In my estate litigation practice I have noticed that a high percentage of children that are disinherited and seek a remedy under for wills variation under S. 60 WESA have been estranged for many years from a parent or parents.

The question I always have is why were they estranged?

If it was not the “fault” of the disinherited child, and they had good reason to distance themselves, then they may still well have a good claim for wills variation.

The Law

J.R.v J.D.M. 2016 BCSC 2265 discusses in great detail the law and related facts of the case in a wills variance case brought by the estranged child of the deceased.

No explanation was left by the deceased for the disinheritance other than the notaries notes that he had not seen his daughter for over ten years.

The daughter’s evidence that she had been sexually and emotionally abused by her father, together with his lack of financial contribution to her education and general welfare was accepted by the court.

As is often the case in estrangement cases that I have dealt with, the child left home at an early age (15).

Any attempt by her in subsequent years to make amends with her father was rejected by him. The court accepted her evidence that there had been nothing positive or healthy in her relationship with her father and that she reasonably believed that her father had no genuine interest in making amends are pursuing any reconciliation.

Generally speaking in my experience, when children leave home at an early age and deliberately have little or no contact with either or both parents, there is usually a valid reason that amounts to the fault on behalf of the parents to have caused the estrangement.

The court somewhat recognize such behavior and are receptive to the notion that the failure of a parent to financially contribute to a child support during his or her minority is a factor in assessing his or her moral claim for a variation of a parents will when the child has been disinherited.

The court found that any telephone calls between the daughter and the father were distressing and demeaning to the daughter. She was not invited to his second wedding but did attend his funeral.

The court found as a fact that it was the father’s mistreatment of his daughter and his voluntary abdication of his parental obligations that cause the fracture of the father daughter relationship. As such, the onus for repairing the relationship and seeking any form of reconciliation with his daughter rested squarely with the father and his moral duty to her was enhanced as a result of his blameworthy conduct.

THE LAW

When faced with a long period of estrangement as in this case, the court will inquire into the role played by the testator. If the estrangement is largely the fault of the testator, it will likely not negate a testator’s moral duty to an adult child. McBride, at para. 132; Gray v. Nantel, 2002 BCCA 94 at paras. 17-21. The Court’s summary at para. 132 of McBride is of particular relevance to this case:

“In the early development of the caselaw, a long period of separation, abandonment or estrangement between a child and testator was frequently, though not invariably, taken to militate against finding a moral duty to an adult child. The modern judicial trend indicates that the court will enquire into the role played by the testator in the estrangement or relationship breakdown, and where it is seen to be largely the fault of or at the insistence of a testator, it will likely not negate a testator’s moral duty, and may even enhance it. The weight of the authorities also indicates that the court may discern a moral duty as a means of rectifying the testator’s childhood neglect of the children: Gray v. Gray Estate, 2002 BCCA 94, 98 B.C.L.R. (3d) 389,”

Doucette v. Clarke, 2007 BCSC 1021, 35 E.T.R. (3d) 98 [Doucette]; Tomlyn v.Kennedy, 2008 BCSC 331, 38 E.T.R. (3d) 289; Wilson v. Watson, 2006 BCSC 53, 21 E.T.R. (3d) 285; P.S.G. v G.G. Estate, 2005 BCSC 1855; Ryan.

[123] The comments of Donald J.A. in Gray in addressing the moral claim of an adult child in a WVA claim are apposite in this case:

“I cannot accept that a child so neglected for his first 18 years and then treated shabbily during a brief reconciliation can be said to forfeit the moral claims to a share in his father’s estate by abandoning any further effort to establish a relationship. The fault in this sad story lies with the father and, in my opinion, the onus to seek further reconciliation was on his shoulders. The testator gave the appellant virtually nothing in an emotional or material way; the will was his last opportunity to do right by his son.”

BC Estate Lawyer-Wills Variation and Adult Independent Children

Trevor Todd and Jackson Todd have over 60 years experience in handling contested estate matters including all aspects of contesting wills under the provision of wills variation found in S. 60 WESA.

The leading case Tataryn v Tataryn (1994) 2 SCR 807 clarified that most people would agree that an adult independent child is entitled to such consideration as the size of the estate and the testator’s other obligations may allow, after he for after firstly satisfying any legal obligations owed to a spouse or dependent children.

The court recognized that while the moral claim of an independent adult child may be more tenuous, a large body of case law existed that suggested that if the size of the estate, permitted and in the absence of circumstances which negate the existence of such an obligation, some provision for such children should be made in an estate.

The court was clear that the testator’s will should only be interfered with to the extent necessary to meet the testator’s legal and moral obligations and also that so long as the testator has chosen an option which is within the range of appropriate options for dividing his or her estate, the will should not be disturbed.

The two leading cases on the summary of overriding principles the courts will consider and a wills variation claim are Clucas estate (1999) 25 ETR 175 at para. 12 and later McBride v Voth 2010 BCSC 443 at paras 129-142.

Subsequently in Dundsdon v Dunsdon 2012 BCSC 1274 at para. 234 the court identified the following 10 considerations as those which have been accepted, in the post Tataryn era, as informing the existence and strength of a testator’s moral duty to independent children:

1. The relationship between the testator and the claimant, including abandonment, neglect and estrangement by one or the other;
2. The size of the estate;
3. The contributions if any, by the claimant;
4. Any reasonably held expectations to inherit of the claimant;
5. The standard of living of the testator and the claimant;
6. Gifts and bequests made by the testator outside of the will or previously by inter vivos gifts;
7. The testator’s reasons for any disinheritance;
8. The financial need another personal circumstances, including disability of the claimant;
9. Any misconduct or poor character of the claimant;
10. Competing claimants and other beneficiaries.

Estrangement

When adult children are disinherited by their parents on the basis of alleged estrangement, the courts will examine the relationship very closely to attempt to determine whether the disinherited child, or the parent, were more at fault than the other for the estrangement.

Estrangement situations often present factual problems for the court to determine in wills variation claims, and the modern judicial trend indicates that the courts will inquire into the role played by the testator in the estrangement, or the relationship breakdown, and where does seem to be largely the fault of her at the insistence of the testator, it will likely not negated testator’s moral duty, and may in fact, even enhance it.

The courts have become familiar with abandonment or purported estrangement between a child and an adult, and more times than not in recent judicial cases, the court has indicated that the it may discern a moral duty, as a means of rectifying the testator’s childhood neglect of the children in the event of abandonment. Gray v Gray 2002 BCCA 94.
See also Doucette v Clarke 2007 BCSC 1021.

The comments made by an appeal court judge in the Gray decision is often quoted with respect to claims brought by children who were abandoned early in life by the deceased:

“I cannot accept that a child so neglected for his first 18 years and then treated shabbily during a brief reconciliation can be said to forfeit the moral claims to a share in his or her father’s estate by abandoning any further effort to establish a relationship. The fault in this sad story lies with the father and, in my opinion, the onus to seek further reconciliation was on his shoulders. The testator gave the appellant virtually nothing in an emotional or material way, the will was his last opportunity to do right by his son. “

In J.R. v JDM 2016 BCSC 2265 the court dealt with a claim brought by a disinherited daughter who the deceased stated he had not seen for over 10 years as his reason for the disinheritance.
The daughters evidence was that she had been sexually and emotionally abused by her father, together with his lack of financial contribution to her education and general welfare, and this evidence was accepted by the court.

As is often the case in these factual estrangement cases, the daughter left home at age 15, and any attempt by her in subsequent years to make amends with her father was rejected by him.

She was not invited to his second wedding for example. The court found that the onus for repairing the relationship and seeking any form of reconciliation with the daughter rested squarely with the father, and his moral duty to her was enhanced as result of his blameworthy conduct.

In Baulne v Baulne Estate 2002 BCSC 1905 the parents of the claimant committed suicide together, taking with them. Their disabled son. The claimant was the only surviving child of the deceased couple and the disinherited him in favor of their grandchildren.

The claimant had in fact refuse to allow his parents to visit their granddaughter, and in fact formalized it in a restraining order against his parents.

The court notwithstanding the truth of the will makers reason for the disinheritance, held that the deceased parents, particularly the mother, were jointly responsible for the estrangement and varied the will, such that the claimant receive 60% from each of his parents estates.

Even though it was found that the plaintiff treated his parents with disrespect, the court found on the evidence that while the plaintiff treated his parents, the court was unable to conclude that it negated the moral obligations of his parents otherwise owed to him.

Generally speaking, there is no law under the wills variation act that says children must be treated equally by a deceased parent, and it has been unusual for a sole disinherited child to receive greater than 50% of an estate in a wills variation claim.

One of the leading cases in wills variation claims in British Columbia is my own decision where I acted for plaintiff, in the case of Ryan vs. Delahaye 2003 BCSC 1081 , the reasons for judgment are which are on this website under my cases. In that decision the daughter had been left 20% of the estate while her brother had been left 80%. More importantly the brother had benefited much more beneficially from his parents then his sister, and his position in life was extremely contrary to that of the plaintiff. The court varied the Will and the sister was awarded an equal share as the brother.
The decision raised national news as many Canadians mostly in other provinces do not adhere to the principle that there is a moral obligation on a parent to provide for an adult independent child who is capable of being self-supporting. British Columbia is the only province in Canada who has such a law and we have had it for almost 100 years.

1. In McMain v. LeBlanc, 2013 BCSC 891, the will-maker’s estranged son was completely disinherited. The $330,000 estate was left solely to the will-maker’s niece. The court found that the will-maker was the primary cause of the estrangement, as he unilaterally withdrew from parent-child relationship. The plaintiff was awarded $180,000 from the estate.

Austin v Janzen 2006 BCSC 2100 was a case of mine where a mother abandoned her daughter at a young age and then later disinherited her, so we filed a wills variation action and took it to trial where we obtained an equal one third share.
19] The plaintiff’s claim is based on her mother’s treatment of her during her life and particularly on a claim that lack of contact with the mother was due to unilateral withdrawal by the mother. And in that regard I agree that the weight of the evidence establishes that the deceased did unilaterally withdraw from her relationship with her daughter Margaret when Margaret was a young child. I find on the evidence that the estrangement between mother and daughter was created by this unilateral withdrawal and I will say no more. At the point when the deceased attempted to bring her daughter back into the fold, more than a long distance telephone call to a young child would be required in the circumstances. In my view, there was no moral obligation on the child Margaret to attempt to initiate or revive a relationship with her mother beyond that point.

McBain v LeBlanc 2013 BCSC 891 adopted the same principle of law, following the BCCA in Gray v Gray Estate 2002 BCCA 94:

“In Gray v. Nantel, supra, nevertheless I would respectfully adopt the spirit of the following observation of Donald J.A. as follows at para. 17 of the judgment:

[17] I cannot accept that a child so neglected for his first 18 years and then treated shabbily during a brief reconciliation can be said to forfeit the moral claim to a share in his father’s estate by abandoning any further effort to establish a relationship. The fault in this sad story lies with the father and, in my opinion, the onus to seek further reconciliation was on his shoulders. The testator gave the appellant virtually nothing in an emotional or material way; the will was his last opportunity to do right by his son.

[90] Here, too, the testator had one last opportunity to behave after the manner of a judicious parent and recognize his moral obligation to his son by means of his will. He failed in this.

[91] In my estimation, as in Gray, this case involves the testator’s unilateral withdrawal from the parent child relationship. I appreciate that there was occasional contact between the plaintiff and testator, but my overall finding is that the plaintiff wanted a relationship, and the testator, for whatever reason, could not be bothered.

[92] In my judgment, the testator cannot resort to his indifference to his parental responsibilities in life as a justification for avoiding his moral obligations to his only son in death.

Here are six cases where the court in a wills variation action varied the will to provide at least %50 to an adult child who was not adequately provided for in their parent’s will.

The cases will not apply to every disinherited adult child but are a good guideline where the court is likely to vary the will to provide at least half to an adult child.
Here are six short summaries of decisions where an adult child was awarded 50% or more of a parent’s estate:

1. McMain v. LeBlanc, 2013 BCSC 891, the will-maker’s estranged son was completely disinherited. The $330,000 estate was left solely to the will-maker’s niece. The court found that the will-maker was the primary cause of the estrangement, as he unilaterally withdrew from parent-child relationship. The plaintiff was awarded $180,000 from the estate.

2. Baulne v. Baulne Estate, 2002 BCSC 1905, the parents of the claimant committed suicide together, taking with them their disabled son. The claimant was the only surviving child of the deceased couple. For various reasons stated in their mirror wills, including the claimant’s refusal to allow them to have access to their grandchild, the deceased couple disinherited the claimant from their estates, which had a combined net value of $467,000.

The claimant’s refusal to allow his parents to visit their granddaughter was true, and in fact, formalized in a restraining order obtained by the claimant. Notwithstanding the truth of the will-makers’ reason for the disinheritance, the court held that the deceased parents, particularly the mother, were jointly responsible for the estrangement, and varied the will such that the claimant received 60% from each of his parents’ estates. The defendant beneficiaries of the wills were the nieces and nephews of the claimant’s deceased parents.

3. Schipper v Schipper Estate 2010 BCSC 1067

The Plaintiff adult daughter was only child of the testator and her husband. The daughter had very close relationship with her parents until about three years before the testator’s death. The Testator’s will gave 25 per cent of estate to the daughter, 50 per cent to an adult nephew J, and 25 per cent to adult nephew A .

The Testator’s rationale was that daughter had not visited her for three years, had not shown interest in her parents, and was not in need of financial assistance .The daughter brought action for wills variation of testator’s will under Wills Variation Act to make adequate provision for her and the action was allowed. The daughters share was increased to %50 with J receiving 2/3 of the remaining and one third of the remaining to nephew A. Daughter found to be loving ,faithful child. The daughter’s claim was not based on financial need as her combined assets with her husband were $980,000.

The sufficiency of reasons for disinheritance was taken as part of the question of whether reasons of the testator were rational .

The testator overreacted to perceived lack of interest by daughter .the testator had little factual information about daughter’s financial need .The reasons expressed by testator for making dispositions were not rational , nor did they provide a proper basis for supporting provision made. The reasons did not have logical connection with reduced inheritance.

4. Pattie v. Standal 42 B.C.L.R. (3d) 211 a child never saw his father again after age seven due to a divorce.

The child’s mother did not receive child support. The deceased left his estate to his common law wife of two years.

There was no memorandum to the will or other evidence as to why the child was disinherited.

The court awarded the child 50% of the estate on the basis of both the failure to meet the moral obligation, as well as failing his legal obligation to support his child during his lifetime.

5. Gray v Gray Estate 2002 BCCA 94:

(89) I cannot accept that a child so neglected for his first 18 years and then treated shabbily during a brief reconciliation can be said to forfeit the moral claim to a share in his father’s estate by abandoning any further effort to establish a relationship. The fault in this sad story lies with the father and, in my opinion, the onus to seek further reconciliation was on his shoulders. The testator gave the appellant virtually nothing in an emotional or material way; the will was his last opportunity to do right by his son.

[90] Here, too, the testator had one last opportunity to behave after the manner of a judicious parent and recognize his moral obligation to his son by means of his will. He failed in this.

[92] In my judgment, the testator cannot resort to his indifference to his parental responsibilities in life as a justification for avoiding his moral obligations to his only son in death.

6. Ryan v Delahaye Estate 2003 BCSC 1081, concluded that inter vivos (life time) transfers and assets passing by right of survivorship pass outside the estate, and are therefore not subject to a wills variance claim.

Nevertheless she ruled that the court can consider them when assessing, from the perspective of a judicious person, whether a parent has met his or her moral obligations to an adult child.
The court considered that the Deceased parents had paid for their son’s education and made interest-free loans to him. The parents had not provided similar benefits to their daughter.
Smith J. found that the 80/20 split in the will (lion’s share to the son) did not provide proper maintenance and support for the daughter.

The court ruled that an adequate, just and equitable distribution would give the daughter an equal share of the residue of the estate and varied the will to divide the residue equally between the two children.

Striking Out a Claim

There are many frivolous claims made is estate disputes and occasionally the court will exercise its discretion to strike out a claim without merit.

In Barrie v. British Columbia (Forests, Lands and Natural Resource Operations), 2021 BCCA 322 commented on Rule 22(7):

[103] An order dismissing a claim or striking out a response to civil claim is a draconian remedy, described by this Court as “a blunt tool, to be used sparingly”: House of Sga’nisim v. Canada (Attorney General), 2007 BCCA 483 at para. 28. Nevertheless, in the most egregious of cases, such an order may be justified. In Rise & Shine Grocery & Gas Ltd. v. Novak, 2016 BCCA 483, this Court upheld an order dismissing the plaintiff’s claim in a negligence action based on its multiple flagrant and unexcused breaches of the Rules and court orders. In explaining why, Justice Goepel quoted from Breberin, in which Justice Willcock, then of the Supreme Court of British Columbia, summarized the principles that apply:

[35] In Breberin v. Santos, 2013 BCSC 560 Willcock J. (as he then was) summarized the jurisprudence dealing with dismissal applications pursuant to Rule 22–7:

Several principles identified in the jurisprudence describe and limit the appropriate application of Rule 22-7.

Dismissal is a “blunt tool, to be used sparingly” in response to procedural delay: House of Sga’nisim v. Canada (Attorney General), 2007 BCCA 483 at para. 28 [House of Sga’nisim]. The remedy is a “draconian” one, “only to be invoked in the most egregious of cases”: Homer Estate v. Eurocopter S.A., 2003 BCCA 229 at para. 4. It is to be avoided where it is reasonable to do so: House of Sga’nisim at para. 30.

Where failure to comply with the Rules or failure to comply with the terms of a court order is established, the party at fault bears the onus of proving a lawful excuse for the non-compliance or non-observance: Balaj v. Xiaogang, 2012 BCSC 231 at para. 36 [Balaj]; Eisele v. B.A. Blacktop Ltd. et al, 2004 BCSC 521 at para. 15.

In this context, a “lawful excuse” is “one which, in the discretion of the judge acting judicially, is worthy of acceptance”: United Furniture Warehouse LP v. 551148 B.C. Ltd., 2007 BCSC 1252 at para. 24.

Because an action may be struck when the lack of production has been occasioned by negligence, the degree of negligence required should be more than moderate on a scale ranging from mere negligence to gross negligence.

Fundamental failures, such as failure to make appropriate disclosure of documents or records, must be treated as a serious default.

A dismissal order will not usually be granted on a first application for relief arising from procedural delay, even intentional delay. Injustice might result from such a course of action.

A dismissal order will not usually be granted until the plaintiff has been warned that result will follow upon further delay or obstruction.

Lesser sanctions ought to be considered where any are available and appropriate.

A self-represented litigant cannot be held to the same standards as a professional lawyer in terms of compliance with court procedures and rules. That said, a litigant who chooses to represent him- or herself cannot ignore his or her responsibilities with impunity.

A persistent pattern of delay on the part of the plaintiff, as well as a persistent failure to comply with the Rules of Court and court orders, may result in a dismissal order. Defaults must be seen in context. The plaintiff’s conduct of the claim from its inception does have a bearing on the seriousness of the default before the court.

When persistent conduct prevents the litigation from progressing at all, and when trial dates are lost through deliberate defaults, the failures may have an irreparable negative effect on the just determination of a case. Failing to comply with an order in a manner that causes an adjournment of trial is seriously prejudicial to the defendants.

[ Refusal to comply with an order for reasons raised before the court and rejected amounts to an overt and deliberate flouting of the court order: Balaj; House of Sga’nisim; Dhillon v. Pannu, 2008 BCCA 514; Kemp v. Dickson, 2006 BCSC 288.

The desire to address claims on their merits is the preeminent objective of the courts. The Rules are written with a view toward achieving that objective in a just and efficient manner. At some point non-compliance with the Rules frustrates the pursuit of a just outcome. Even in cases where a defendant has admitted liability to a plaintiff, it is just to dismiss the plaintiff’s claim if it is not being diligently and fairly pursued. The civil justice system is founded upon the assumption that parties will respect court orders, will comply with the Rules and will work together to resolve the claim or bring it to trial for resolution. A just and efficient outcome will not be obtained if one party frustrates its operation.

The ultimate question on a Rule 22-7(5) application is whether the order sought serves the interests of justice. The order granted must be proportionate and the court must consider whether a lesser remedy will cure the default(s) and inspire confidence in future compliance: House of Sga’nisim at para. 26; Schwarzinger v. Bramwell, 2011 BCSC 304 at paras. 107, 118, 123. In assessing the overall interests of justice, the court must also consider and weigh the relative prejudice caused to the parties if an order dismissing a claim or striking a response to civil claim is granted or denied: Canreal Management Corporation v. Mercedes-Benz Canada Inc., 2010 BCSC 642 at para. 35.

As to lesser possible remedies, the court has a broad discretion under Rule 22-7(2)(e) to impose orders that further the object of the Rules in response to non-compliant conduct. One such order may be an award of special costs, which are available to censure and deter reprehensible conduct in the course of litigation: Smithies Holdings Inc. v. RCV Holdings Ltd., 2017 BCCA 177 at paras. 56–57.

Anonymization and Publication Ban Orders

Anonymization orders and publication bans are exceptional orders and that several competing interests must be balanced by the judge hearing such an application.

These competing interests were considered at length in the leading case of Sherman Estate v. Donovan, 2021 SCC 25. Sherman Estate

In the Supreme Court of Canada decision of Sherman Estate, the court considered whether a sealing order should be granted with respect to a probate file on grounds of privacy.

The Reasons for judgement stated:

[1) This Court has been resolute in recognizing that the open court principle is protected by the constitutionally entrenched right of freedom of expression and, as such, it represents a central feature of a liberal democracy. As a general rule, the public can attend hearings and consult court files and the press — the eyes and ears of the public — is left free to inquire and comment on the workings of the courts, all of which helps make the justice system fair and accountable.

[2] Accordingly, there is a strong presumption in favour of open courts. It is understood that this allows for public scrutiny which can be the source of inconvenience and even embarrassment to those who feel that their engagement in the justice system brings intrusion into their private lives. But this discomfort is not, as a general matter, enough to overturn the strong presumption that the public can attend hearings and that court files can be consulted and reported upon by the free press.

[3] Notwithstanding this presumption, exceptional circumstances do arise where competing interests justify a restriction on the open court principle. …

[7] With respect to limitations on court openness, as stated at para. 38:

[38] The test for discretionary limits on presumptive court openness has been expressed as a two step inquiry involving the necessity and proportionality of the proposed order (Sierra Club, at para. 53). Upon examination, however, this test rests upon three core prerequisites that a person seeking such a limit must show. Recasting the test around these three prerequisites, without altering its essence, helps to clarify the burden on an applicant seeking an exception to the open court principle.

In order to succeed, the person asking a court to exercise discretion in a way that limits the open court presumption must establish that:

(1) court openness poses a serious risk to an important public interest;
(2) the order sought is necessary to prevent this serious risk to the identified interest because reasonably alternative measures will not prevent this risk; and,
(3) as a matter of proportionality, the benefits of the order outweigh its negative effects.

Only where all three of these prerequisites have been met can a discretionary limit on openness — for example, a sealing order, a publication ban, an order excluding the public from a hearing, or a redaction order — properly be ordered. This test applies to all discretionary limits on court openness, subject only to valid legislative enactments …

[8] As the court noted at para. 31, privacy can in some circumstances ground an exception to the openness principle. However, some degree of privacy loss resulting in inconvenience and even upset or embarrassment is inherent in any court proceeding open to the public. The question of when a privacy interest is sufficient to give rise to an exception to court openness is discussed at para. 33:

[33] Personal information disseminated in open court can be more than a source of discomfort and may result in an affront to a person’s dignity. … Dignity in this sense is a related but narrower concern than privacy generally; it transcends the interests of the individual and, like other important public interests, is a matter that concerns the society at large. A court can make an exception to the open court principle, notwithstanding the strong presumption in its favour, if the interest in protecting core aspects of individuals’ personal lives that bear on their dignity is at serious risk by reason of the dissemination of sufficiently sensitive information. The question is not whether the information is “personal” to the individual concerned, but whether, because of its highly sensitive character, its dissemination would occasion an affront to their dignity that society as a whole has a stake in protecting.

[63] Specifically, in order to preserve the integrity of the open court principle, an important public interest concerned with the protection of dignity should be understood to be seriously at risk only in limited cases. Nothing here displaces the principle that covertness in court proceedings must be exceptional. Neither the sensibilities of individuals nor the fact that openness is disadvantageous, embarrassing or distressing to certain individuals will generally on their own warrant interference with court openness … These principles do not preclude recognizing the public character of a privacy interest as important when it is related to the protection of dignity. They merely require that a serious risk be shown to exist in respect of this interest in order to justify, exceptionally, a limit on openness, as is the case with any important public interest under Sierra Club. As Professors Sylvette Guillemard and Séverine Menétrey explain, [translation] “[t]he confidentiality of the proceedings may be justified, in particular, in order to protect the parties’ privacy . . . . However, the jurisprudence indicates that embarrassment or shame is not a sufficient reason to order that proceedings be held in camera or to impose a publication ban” (Comprendre la procédure civile québécoise (2nd ed. 2017), at p. 57).
[11] At paras. 73-76, Justice Kasirer concluded that:
[73] I am accordingly of the view that protecting individuals from the threat to their dignity that arises when information revealing core aspects of their private lives is disseminated through open court proceedings is an important public interest for the purposes of the test.
[74] Focusing on the underlying value of privacy in protecting individual dignity from the exposure of private information in open court overcomes the criticisms that privacy will always be at risk in open court proceedings and is theoretically complex. Openness brings intrusions on personal privacy in virtually all cases, but dignity as a public interest in protecting an individual’s core sensibility is more rarely in play. Specifically, and consistent with the cautious approach to the recognition of important public interests, this privacy interest, while determined in reference to the broader factual setting, will be at serious risk only where the sensitivity of the information strikes at the subject’s more intimate self.

[75] If the interest is ultimately about safeguarding a person’s dignity, that interest will be undermined when the information reveals something sensitive about them as an individual, as opposed to generic information that reveals little if anything about who they are as a person. Therefore the information that will be revealed by court openness must consist of intimate or personal details about an individual …

[76] The test for discretionary limits on court openness imposes on the applicant the burden to show that the important public interest is at serious risk. Recognizing that privacy, understood in reference to dignity, is only at serious risk where the information in the court file is sufficiently sensitive erects a threshold consistent with the presumption of openness. This threshold is fact specific. …

[12] The question of whether a serious risk to a privacy interest, sufficiently sensitive to strike at an individual’s biographical core, is made out is a case specific matter to be determined in the full factual context of the case: Sherman Estate at para. 79.
Issue

Adverse Inferences

656621 BC Ltd v David Moerman Painting 2022 BCSC 1683 discussed the adverse inference discretionary rule of evidence that permits the Court to draw an adverse inference against a party by reason of his or her failure to call a witness who could be expected to give material evidence in their favour at trial: Singh v. Reddy, 2019 BCCA 79 at para. 1 [Singh]; Thomasson v. Moeller, 2016 BCCA 14 at para. 35

The adverse inference rule is discretionary, and a trial judge is not obliged to draw an adverse inference: Singh at para. 9; Thomasson at para. 34.

An adverse inference is not to be drawn unless a prima facie case is established: Thomasson at para. 35; Cranewood v. Norisawa, 2001 BCSC 1126 at para. 127 [

In Singh, the Court of Appeal endorsed the following considerations listed in A. W. Mewett and P.J. Sankoff’s Witnesses (loose leaf) as relevant for consideration in determining whether it is appropriate to draw an adverse inference:
• whether there is a legitimate explanation for the failure to call the witness;
• whether the witness is within the “exclusive control” of the party, and was not “equally available to both parties”’
• whether the witness has material evidence to provide; and
• whether the witness is the only person or the best person who can provide the evidence.

While the plaintiffs argue it is highly irregular for a party witness not to testify in a civil trial (relying upon Solberg v. Carriere, 2014 BCSC 1668 at para. 38), there is no automatic adverse inference drawn when a party fails to testify.

Further, Solberg confirms that if the plaintiff has failed to establish a prima facie case against the defendant “no adverse inference will be drawn should the defendant not testify”: at para. 38. See also O’Connell v. Yung, 2012 BCCA 57 at para. 31; and Kern v. Forest, 2010 BCSC 938 at para. 174.

Plaintiffs must establish a prima facie case

The jurisprudence establishes that the party asking the court to draw an adverse inference must present some evidence that, in the words of Justice Spencer in Alavinejad, “would tend to prove the facts to be inferred to the extent that they demand an answer from the defendant”, and does not require they present evidence that establishes their prima facie case at large.

The adverse inference rule is a discretionary evidentiary rule. I am satisfied the party seeking the adverse inference must establish there is a prima facie case for the specific adverse inference being sought, and not for the case at large. This raises the issue of what standard of evidence is necessary to establish such a prima facie case.
The Manitoba Court of Appeal described the standard for establishing a prima facie case in The Director of Criminal Property and Forfeiture v. Ramdath et al, 2021 MBCA 23 [Ramdath et al], in the following manner:

The “prima facie” standard is situated on the standard of proof spectrum between “balance of probabilities” and “reasonable grounds to believe”. Black’s Law Dictionary defines prima facie as “on first appearance but subject to further evidence or information” (Bryan A Garner et al, eds, Black’s Law Dictionary, 10th ed (St. Paul, Minn: Thomson Reuters, 2014) sub verbo “prima facie”). The term “prima facie” is used in several different contexts and is somewhat loosely defined. The phrases “prima facie proof”, “prima facie evidence” and “prima facie case” have at times been used interchangeably, contributing to the confusion around what, exactly, is the prima facie case standard of proof (Sidney N Lederman, Alan W Bryant & Michelle K Fuerst, The Law of Evidence in Canada, 5th ed (Toronto: LexisNexis, 2018) at sections 3.36-3.44).

The Supreme Court of Canada has provided helpful guidance on what constitutes a “prima facie case” standard in the context of criminal law and extradition law. It is a “case containing evidence on all essential points of a charge which, if believed by the trier of fact and unanswered, would warrant [the order sought]” (Mezzo v The Queen, [1986] 1 SCR 802 at 837; see also United States of America v Shephard, [1977] 2 SCR 1067 at 1074-77)

The Court of Appeal describes the lower or less demanding standard of proof of “reasonable grounds to believe”, which entails an objective test which is based on “credibly-based probability”, and is met “when it is probable that something will happen, and the lower standard of “reasonable suspicion” which must also be grounded in objective fact, and is met “when it is probable that something might happen: Ramdath et al at paras. 23 and 25.

Standing in Partition – Possessory Interest Required

Pallot v Douglas 2017 BCCA 254 dismissed an appeal and held that the appellant did not have standing to apply for partition of a leasehold interest in trust property owned by the Convention of Baptist Churches of British Columbia as the applicant did not have the right to a possessory interest in the lands.

To have standing under the Partition of Property Act a petitioner must have a possessory interest in land.

A possessory interest is:
The present right to control property, including the right to exclude others, by a person who is not necessarily the owner … A present or future right to the exclusive use and possession of property.
Black’s Law Dictionary, 8th ed, sub verbo “possessory interest”.

The possessory interest requirement has been characterized as requiring the petition to have an immediate right to possession of the land:

Although the statutory language in the Ontario Partition Act, R.S.O. 1990, c. P.4, differs, it has been held in Ontario that only persons entitled to immediate possession of an estate in property may make application for partition and sale: Di Michele v. Di Michele, 2014 ONCA 261 at paras. 75 80; Morrison v. Morrison (1917), 39 O.L.R. 163 at 168, 171 72, 34 D.L.R. 677 (Ont. C.A.); and Ferrier v. Civiero (2001), 147 O.A.C. 196 at paras. 6 and 8, 42 R.P.R. (3d) 12 (C.A.)

One of the essential features of a trust is that one or more parties hold title to property and manage it for the benefit of one or more parties who have a right to enjoy the property. The beneficiaries under the trust enjoy the property subject to the terms of the trust.

Professor Waters describes the principle as follows:

The trust is, perhaps, better described by isolating its essential features. The hallmarks, the essential characteristics of the common law trust, are heavily reflective of a particular legal history. The foremost of these is the fiduciary relationship which exists between trustee and beneficiary. One party holds the title to property, and manages it, for the benefit of another who has exclusive enjoyment of the property. As we have seen, it is possible to have a variation on this basic framework, for the trustee may himself be a beneficiary. In that case he will have a share in the enjoyment….

Donovan W.M. Waters, Mark Gillen & Lionel Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters, 2012) at 9.

There are both personal and propriety aspects to a beneficiary’s rights under a trust. The proprietary aspect concerns a beneficiary’s rights to pursue trust property as against, for example, a buyer with actual or constructive notice of the trust. With respect to the personal aspect of a beneficiary’s right, Professor Oosterhoff says this:

If we consider first the personal aspect of the beneficiary’s right, it will be apparent that, since the management and control of the trust property is vested in the trustee, the beneficiary only has a personal right against the trustee that the latter perform the trusts that he is bound to perform. The beneficiary can never “go around” the trustee and assert a claim to the trust property directly. On the contrary, the beneficiary’s claim must always be against the trustee….

…only the trustee, and not the beneficiary, has the right and the duty to make claims against third parties who may have interfered with or damaged the trust property….
A.H. Oosterhoff, Robert Chambers & Mitchell McInnes, Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed. (Toronto: Carswell, 2014) at 38.

The interest of the beneficiary under a trust is the right to claim that the trust be performed in accordance with its terms. It is not an immediate right to possession of the trust property.

This position was clearly shown in relation to a beneficiary’s equitable interest in Taylor v. Grange (1879), 13 Ch. D. 223, aff’d (1880), 15 Ch. D. 165 (C.A.). In Taylor, Fry J. held there was no jurisdiction to order partition at the request of a beneficiary with an equitable estate in the trust property, which was held under a trust for management of real property created by a will. Mr. Justice Fry reasoned at 227:

… For if I were to decree partition I should be putting an end to the active trusts which the testator has directed to be carried on during the lives of his daughters. The effect would be to stop the business of working the quarries and to divide the property in a manner inconsistent with the exercise of the powers given to the trustees.
No doubt an equitable owner may obtain a decree for partition if he be entitled to call for a legal estate, which would have entitled him to partition at common Law. But that is not this case, and I should be doing wrong here to make a decree for partition, the result of which, as no conveyances could be at present executed, would be to cause the trusts of the will to be administered separately as to the different persons entitled.

Interpreting Insurance Policies

Estate litigation occasionally involves the interpretation of coverage under a policy of insurance.

The general principles of interpreting insurance policies was discussed in Co-operators General Insurance Company v. Kane, 2017 BCSC 1720, as follows:

a) the general purpose of insurance is to protect an insured against losses arising from unforeseen and accidental actions: Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24 at paras. 68-69;

b) it is necessary to interpret insurance contracts as they would be understood by the average person applying for insurance, and not as they might be perceived by persons versed in the niceties of insurance law: National Bank of Greece v. Katsikonouris, [1990] 2 S.C.R. 1029 at 1043;

c) courts should interpret a contract of insurance as a whole: Progressive Homes Ltd. v. Lombard General Insurance Company of Canada, 2010 SCC 33 at para. 22, citing Scaleraat para. 71;

d) as contracts of adhesion, courts should prefer interpretations that are consistent with the reasonable expectations of the parties, and avoid interpretations that would give rise to an unrealistic result or that which would not have been in their contemplation at the time the policy was concluded: Progressive Homesat para. 23; Scaleraat para. 71; and

e) as contracts of adhesion, where there is an ambiguity which the rules of construction fail to resolve, courts will construe the policy contra proferentemagainst the insurer. A corollary of the contra proferentemrule is that coverage provisions are interpreted broadly, and exclusion clauses narrowly: Progressive Homes at para. 24; Scalera at para. 70.

These general interpretation principles apply equally to the duty to defend and exclusion clauses: Derksen v. 539938 Ontario Ltd., 2001 SCC 72 at para. 49.

Other general principles that apply in relation to the duty to defend and exclusion clauses are:

a) an insurer is only required to defend a claim where the facts alleged in the pleadings, if proven, would require the insurer to indemnify the insured (i.e. the “pleadings rule”): Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49 at para. 28; Progressive Homesat para. 19; Lombard General Insurance Company of Canada v. 328354 B.C. Ltd., 2012 BCSC 431 at para. 21; Canadian Northern Shield Insurance Company v. Intact Insurance Company,2015 BCSC 767 at para. 18;
b) all that is necessary, in order to trigger the duty to defend, is the mere possibility that a claim falls within coverage under the insurance policy based on a review of the pleadings: Monencoat paras. 29-30; Progressive Homesat para. 19; Lombard at para. 23; Johnson v. Aviva Insurance Company of Canada, 2014 ABQB 688 at paras. 33-35;
c) where pleadings are not framed with sufficient precision to determine whether claims are covered by the policy, the duty to defend will be triggered where, on a reasonable reading of the pleadings, coverage can be inferred: Monencoat para. 31;
d) “the widest latitude should be given to the allegations in the pleadings in determining whether they raise a claim within the policy”: Scaleraat para. 75, citing Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801. This is consistent with resolving any ambiguity in favour of the insured: Monencoat paras. 31-32; Lombard at para. 24; Johnson at para. 33.

This interpretation exercise of the Policy concerns, to a large degree, the scope of Co-operators’ duty to defend the various causes of action raised in the Complaint. In Lombard, Justice Butler discussed the extent of an insurer’s duty to defend where numerous causes of action are alleged, some of which may be covered under the insurance coverage and some of which may not, as follows:

Where the pleadings allege numerous claims against an insured, some of which are covered and some are not, it is axiomatic that an insurer’s prima facie duty to defend arises only in respect of the claims which, if proved at trial, would trigger its duty to indemnify. However, the extent of the insurer’s responsibility to contribute to the costs of defending the action is a separate question that cannot always be determined according to the scope of its prima facie obligation.

It is well settled that where it is possible to distinguish between claims falling within and outside the policy coverage, the extent of an insurer’s defence obligation can be limited accordingly: Continental Insurance Co. v. Dia Met Minerals Ltd. (1996), 77 B.C.A.C. 251. An insurer has no duty to defend claims which clearly fall outside the grant of coverage: Progressive Homes at para. 19.

On these principles, the extent of an insurer’s defence obligation in a case involving a mix of covered and non-covered claims will depend primarily on the precision of the allegations in the pleadings and the operative language in the coverage provisions of the policy. In this respect, it is worth recalling that on a duty to defend application, any uncertainty is resolved in the insured’s favour.

Accordingly, in light of the various Causes of Action alleged in the Complaint, the governing principle here is that, unless all occurrences which potentially caused or contributed to the loss or damage are clearly and unambiguously excluded, coverage for the duty to defend will not be ousted. If there are different causes of action or theories of recovery, one of which is covered under the Policy, Co-operators is bound to defend those causes of action which, if proved, would be within the coverage: Progressive Homes at para. 54; Derksen at paras. 55-56, 67; Hartup v. BCAA Insurance Corp., 2002 BCSC 972 at para. 9; Miller v. Grain Insurance and Guarantee Co., 2005 SKQB 546 at paras. 15-18.

Equity Exoneration

In Zeligs v Janes 2015 BCSC 525 the court imposed a constructive trust on the amount of two mortgages taken out on the property of the donor by his attorneys as a fiduciary breach of trust that wrongfully profited the said attorneys.

The court went on to state that an alternative approach to the same end is by means of equitable exoneration.

It has been summarized by an Ontario court as follows (Slan v. Blumenfeld (1997), 34 O.R. (3d) 713 at 717 (Sup. Ct. J.)):

The principle of exoneration is that a person who has charged property to secure the debt of another stands only in the position of a surety and is entitled to be exonerated by the principal debtor. The doctrine is said to reflect the intentions of the parties. …

The BC Court of Appeal has described the doctrine in the following terms (Bankruptcy of Kostiuk (Re), 2002 BCCA 410):

[57] The argument made by Ms. Kostiuk before Hunter J. was that she was entitled to the benefit of the principle of “equitable exoneration”. That principle is summarized in Re Pittortou, [1985] 1 All E.R. 285 at 287 (Ch.):

As a general proposition, if there is found a charge on property jointly owned to secure the debts of one only of the joint owners, the other joint owner, being in the position of a surety, is entitled as between the two joint owners to have the secured indebtedness discharged so far as possible out of the equitable interest of the debtor. The principle is expressed in 22 Halsbury’s Laws (4th edn) paras 1071-1076, under the general heading “Equity of Exoneration’. Paragraph 1071 begins:

‘If the property of a married woman is mortgaged or charged in order to raise money for the payment of her husband’s debts, or otherwise for his benefit, it is presumed, in the absence of evidence showing an intention to the contrary, that she meant to charge her property merely by way of security, and in such case she in is the position of surety and is entitled to be indemnified by her husband, and to throw the debt primarily on his estate to the exoneration of her own…’
…
However, the equity of exoneration is a principle of equity which depends on the presumed intention of the parties. If the circumstances of the particular case do not justify the inference, that it was the joint intention of the joint mortgagors that the burden of the secured indebtedness should fall primarily on the share of that of them who was the debtor, then that consequence will not follow.

[58] The principle of “equitable exoneration”, as it applies to property dealings involving husbands and wives, is derived from cases that were decided more than one hundred years ago: see Paget v. Paget, [1898] 1 Ch. 470 (C.A.). The laws and social customs governing those dealings have little application today. Nonetheless, the principle is applied, in the proper case, taking into account modern marriage relationships: see Re Pittortou at pp. 288-9 and Slan v. Blumenfeld (1997), 34 O.R. (3d) 713 at 719 and 725 (Ont. Ct.-Gen. Div.). The question is the intention of the parties as to who should bear the burden of the indebtedness and whether the spouse who claims the benefit of the doctrine benefited from the debt: see, in addition to Re Pittortou and Slan, Re Berry, [1978] 2 N.Z.L.R. 373 (C.A.); Farrugia v. Official Receiver (1982), 43 A.L.R. 700 (Fed. Ct.); 317363 Canada Inc. v. Doctor (1997), 50 C.B.R. (3d) 264 (Ont. Ct.- Gen . Div.); McCoy v. Hucker, [1998] O.J. No. 2831 (Ont. Ct.-Gen. Div.)(QL).

The following are other aspects of the doctrine discussed in the cases:

(a) Although it has archaic origins, it continues to apply in Ontario, British Columbia and other Commonwealth jurisdictions such as Australia (Slan at 724, 726; Wong v. Campbell Saunders Ltd., 2005 BCCA 574).

(b) The doctrine began under matrimonial law. However, it is not restricted to matrimonial cases as can be seen in the broad definition in Slan, above. As well, in Slan a decision is referred to where a father was determined to be a surety for a bankrupt son. The father had provided security for the son’s failed business (Re A Debtor (No. 24 of 1971), [1976] 2 All E.R. 1010; Slan at 722).

Further, in Wong, our Court of Appeal stated it will “usually” apply to married parties but it did not expressly limit the doctrine to husbands and wives. I note the following from Wong (para. 11):

Under this principle, a person (usually a wife) who has charged property jointly held with another (usually her husband) to secure that other’s debt stands in the position of a surety and is entitled to be indemnified or, “exonerated”, by the principal debtor. To do this, the burden of the security is “shifted” to the principal debtor.

(c) The intention of the parties is of some significance (Slan at 717). However, intention has been found to be inferred in certain circumstances. For example, in Ken Glover & Associates Inc. v. Irwin et al, 2005 BCSC 1364 Master McCallum discussed equitable exoneration (including the application of Kostiuk) and concluded that intention could be inferred (para. 14):

[14] The evidence here from Ms. Irwin is that loan proceeds were applied for Mr. Irwin’s benefit. There is no direct evidence from Ms. Irwin on the question of intention. The evidence of the collateral mortgage supports her position that there should be an inference drawn of a joint intention that Mr. Irwin would bear the burden of repayment of the debt. That inference is more compelling in this case where the parties were separated when the loan was made. There is no other evidence on the question of intention. In the circumstances, it seems an irresistible inference that the parties intended that Mr. Irwin would bear the burden of the debt. There is no doubt that he received the proceeds of the loan. Ms. Irwin’s evidence, which is unchallenged, is that she received no benefit from the loan proceeds.
(d) The doctrine of equity exoneration is tied to the principles of marshalling and contribution in order to prevent unjust enrichment (Slan at 719, citing R.A. Klotz, Bankruptcy and Family Law (Toronto: Carswell, 1994) at 96; Parrott-Ericson v. Stockwell, 2006 BCSC 1409 at paras. 14, 20, 24, 27; Larochelle v. Larochelle, 2009 BCSC 1430 at para. 29; W.M. Traub, Falconbridge on Mortgages, 5th ed., looseleaf (Aurora: Canada Law Book, 2010) at §23:30).
(e) A co-mortgagor and notional surety under the doctrine may be barred from using it if she or he has benefitted from the mortgage at issue (Kostiuk at para. 58; Re Bankruptcy of Davies Wong, 2005 BCCA 574 at para. 12). An Australian court described this aspect of the doctrine as follows (Parsons v. McBain, 2001 FCA 376 at para. 23):

If a surety receives a benefit from the loan, the equity of exoneration may be defeated. So, if the borrowed funds are applied to discharge the surety’s debts, the surety could not claim exoneration, at least in respect of the benefit received.
But the benefit must be from the loan itself. The question suggested by the Lord Chancellor of Ireland is: “Who got the money?”: see In re Kiely (1857) Ir Ch Rep 394, 405. In Paget v Paget, [1898] 1 Ch. 470 both the husband and the wife “got the money” and this prevented the wife claiming exoneration.

Fiduciary Obligations of Attorney Increase If Donor Incompetent

In Zeligs v Janes 2015 BCSC 525 the court examined the breach of fiduciary duty of two powers of attorney for a mentally incompetent donor who both personally financially profited with the use of the power of attorney by taking two mortgages out on jointly owned property with the donor, selling the property and keeping the net funds for themselves.

The fiduciary obligations of an attorney become elevated once the donor of the power becomes incapable.

This is described by the Ontario Court of Appeal as follows (Richardson Estate v. Mew, 2009 ONCA 403):

48. In Banton [Banton v. Banton (1998), 164 D.L.R. (4th) 176 (Ont. Sup. Ct.)], Cullity J. held that while an attorney acting under a continuing power of attorney is always a fiduciary, the scope of the attorney’s fiduciary duties depends on whether the donor of the power is incapable at the time of the transaction. If the donor is mentally incapable, the attorney’s position approaches that of a trustee. …

49. As a fiduciary, Ms. Ferguson was obliged to act only for the benefit of Mr. Richardson, putting her own interests aside: see Ermineskin Indian Band and Nation v. Canada, [2009] 1 S.C.R. 222, at para. 125.

In British Columbia (Public Guardian and Trustee of) v. Elgi, 2004 B.C.J. No. 796, 28 B.C.L.R. (4th) 375 (S.C.) aff’d [2005] B.C.J. No. 2741, 262 D.L.R. (4th) 208 (C.A.), Garson J. described the prohibition against using a power for the attorney’s profit, benefit or advantage, at para. 82, in the following way:

It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage. The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor. I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members.
…