Parent Money to Children: Gift or Loan?

Wills Variation Refused-Assets Passing Outside of Estate Sufficient

Dheenshaw v Gill 2017 BCSC 319 deals with an increasingly commonly litigation problem- the advancement of large sums of parents money to their children and the subsequent determination whether  the monies were a gift or a loan when matters go ” sideways”.

The court will look start at attempting to determine  the intention of the parties  when making the advancement of the monies which are usually made gratuitously.

There is  usually a presumption that the advancement of funds was not a gift and that the onus of proving a gift is on the recipient children, who must rebut the presumption that they hold the funds as a resulting trustees. The court will examine a number of criteria in analysing such a scenario.

THE  LAW

In Beaverstock v. Beaverstock, 2011 BCCA 413, the Court addressed the correct approach to the resolution of a dispute about whether a gratuitous advance from a parent to an adult child is a loan or a gift. As the Court held at para. 9:

The correct approach to the resolution of this dispute is not in dispute. It is set out in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795. Whether the transfer was a loan or a gift depends on the actual intention of the appellant when she made the advance, which is a question of fact. As the advance was gratuitous, the onus was on the respondent to demonstrate that the appellant intended a gift, since equity presumes bargains, not gifts (para. 24). This equitable principle gives rise to a presumption the son received the money on a resulting trust, which is a rebuttable presumption of law. The trial judge was therefore required to presume the advance was not a gift and to determine whether the respondent had satisfied the burden of rebutting the presumption of resulting trust on a balance of probabilities (para. 44).

73      In Byrne v. Byrne, 2015 BCSC 318, the issue was whether bi-weekly payments of $1,000 made by the claimant’s father to a joint account held by the claimant and the respondent and used to pay for household expenses constituted a gift or loan. Mr. Justice Armstrong began his analysis at paras. 41 and 42:

[41] Payments from a parent to an adult child are generally not presumed to be gifts; they are presumed to form a resulting trust in which the parent keeps an interest in the property. However it is open to a party claiming the transfer is a gift to rebut the presumption of a resulting trust by providing evidence to that effect: Pecore v. Pecore . . .

[42] In Pecore, the Supreme Court of Canada addressed how the presumptions operate in the context of transfers from a parent to an adult child:

(a) the focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer . . .

(b) When the transferor’s intent is unavailable or unpersuasive, the presumptions of advancement (a gift) and resulting trust are useful guides and will apply . . .

(c) gifts from parents to independent adult children are not presumed to be gifts; rather the presumption of a resulting trust applies . . .

(d) there may be circumstances where a transfer between a parent and an adult child was intended to be a gift and it is open to the party claiming that the transfer is a gift to rebut the presumption of resulting trust by bringing evidence to support that claim . . .

(e) the burden on the party claiming a gift was made is proof on a balance of probabilities . . .

74      At para. 43, the court noted that in Kuo v. Chu, 2009 BCCA 405at para. 9, the Court of Appeal adopted the following factors from Locke v. Locke, 2000 BCSC 1300, as applicable to the question of whether a loan or a gift was intended:

(a) Whether there were any contemporaneous documents evidencing a loan;

(b) Whether the manner for repayment is specified;

(c) Whether there is security held for the loan;

(d) Whether there are advances to one child and not others, or advances of unequal amounts to various children;

(e) Whether there has been any demand for payment before the separation of the parties;

(f) Whether there has been any partial repayment; and,

(g) Whether there was any expectation, or likelihood, of repayment.

75      The Locke factors are items of circumstantial evidence relevant to the transferor’s actual intention. They are not exhaustive and are to be weighed by the trial judge, along with all of the other evidence, in order to determine the transferor’s actual intention as a matter of fact: Beaverstock at para. 11.

76      Whether the opposing spouse was aware of the transaction is not determinative of the question of whether a loan was made: Byrne at para. 47.

77      In Beaverstock, the Court held that the trial judge had erred in law by failing to begin his analysis with the presumption of resulting trust and in failing to make a finding concerning the appellant’s actual intention when she advanced the funds to her son.

78      In Savost’Yanova v. Chui, 2015 BCSC 516, where the husband’s father had advanced $60,000 to assist with the purchase of the matrimonial home, Mr. Justice Weatherill held that in determining the intent of the person of who advances money in a family context, the court must weigh all of the evidence to determine whether the presumption of resulting trust has been rebutted: Chui at para. 77.

79      At para. 75, the court adopted the following summary of the applicable legal principles:

[75] The law regarding whether a transfer made by a parent to an adult child is a loan or a gift was summed up by Madam Justice Brown in Hawley v. Paradis, 2008 BCSC 1255at para. 30, after a review of the applicable authorities:

[30] Based on the case law presented to me, I conclude:

1. that the presumption of advancement no longer applies between adult children and their parents;

2. that as between adult children and their parents, the presumption is a resulting trust when the parents make gratuitous transfers to children;

3. that the court must consider all of the evidence in determining whether the parent intended the transfer as a gift or a loan;

4. that the factors considered in Wiens and Locke will assist the court in determining whether the advance was a loan or a gift.

80      Here, I must determine whether the actual intention of the claimant’s mother was to make a gift or a loan. Because the advance was gratuitous, the claimant bears the onus of demonstrating that her mother intended a gift, “since equity presumes bargains, not gifts”. In determining the transferor’s intention, the court must take into account the Locke factors, along with all of the other evidence.

Vancouver Estate lawyer and Contesting Wills under Wills Variance: The Estranged Child

Wills Variance and the Estranged Child

Trevor Todd , a Vancouver estate litigation lawyer has contested wills under  wills variance proceedings for 50 years.

 

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) . When this occurs it is  my experience that  it is done for valid reasons.
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

[98]        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.”

Wills Variation: Disinherited Adult Children vs. Second Spouse

Wills Variation: Court Criteria Between Disinherited Adult Children and Second Spouses

R. (J.) v M. (JD) 2016 BCSC 2265 summarized the court criteria will consider when deciding the competing moral claim of a disinherited  adult independent child  and a second spouse who inherited  the entire estate.

The adult child had been disinherited and had been estranged from her deceased father due to the actions of the father throughout the plaintiff’s life, which included sexual and emotional abuse, as well as a lack of financial or emotional support in her formative years.
There was no explanation for the disinheritance of the adult child in the will or any memorandum to the will.
The second spouse of eight years marriage received assets worth $1 million outside of the will and a lifetime pension of $36,360 per year.
The second spouse was also the residual beneficiary of an estate worth $775,000.
The court varied the will to give the adult child, a bequest of $250,000.
The court set out the criteria to be considered when both considering the moral obligation owed to an adult child as well is the criteria to be considered when dealing with a second spouse.

THE  LAW

[82]         Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807, is the governing authority in British Columbia on the WVA. McLachlin J., as she then was, writing for the Court, articulated the relevant considerations and principles that animate the application of the WVA. The fundamental approach is anchored in her observation that “[t]he search is for contemporary justice”: Tataryn, at 815. The courts must read the WVA “in light of modern values and expectations” and “are not necessarily bound by the views and awards made in earlier times”: Tataryn, at 814-815.

[83]         The Court in Tataryn stated that the determination of whether a will makes adequate provision and, if not, what provision would be adequate, just and equitable, are “two sides of the same coin”: Tataryn, at 814.

[84]         The primary statutory objective of the WVA is the adequate, just, and equitable provision for a testator’s spouse and children. As identified in Tataryn, the other protected interest is testamentary autonomy. However, testamentary freedom must yield to the extent required to achieve adequate, just, and equitable provision for the applicant spouse and/or children. In that sense and to that degree only, testamentary autonomy will be curtailed by the application of the WVA: McBride v. Voth, 2010 BCSC 443 at para. 125. The Court of Appeal in Chan v. Lee (Estate), 2004 BCCA 644 at para. 43 affirmed that courts should not approach the WVA as a means “to right all the perceived wrongs of the past” or “to improve upon the degree of fairness of a will” if the testator has met his obligations under the WVA.

[85]         In addressing the adequacy of the testamentary provision, Madam Justice McLachlin clarified that the question of whether a testator has acted as a judicious parent or spouse is measured by an objective standard, assessed in light of current societal legal norms and moral norms. As outlined in Tataryn, legal norms are the obligations that the law would impose upon the testator during his or her life if the question of provision for a claimant’s spouse or child were to arise. A testator’s moral duties are grounded in “society’s reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards”: Tataryn, at 820-821.

[86]         The concept of adequate provision is a flexible notion which turns on the particular circumstances of the case: Dunsdon v. Dunsdon, 2012 BCSC 1274, at para. 131. Tataryn expressly acknowledged that moral duties are more susceptible to being viewed differently by different people because there is no clear legal standard by which to judge such duties: Tataryn, at 822. However, the analysis in Tataryn underscores that the court must apply an approach that accords with a contemporary view of marital and parental obligations.

[87]         The Court in Tataryn recognized that the foregoing assessment necessarily involved the balancing of competing claims, and held that where the size of the estate permits, all moral and legal claims should be satisfied. Where prioritization is necessary, generally, claims that would have been recognized as legal obligations during a testator’s lifetime take precedence over moral claims. The court must also weigh the competing moral claims and assign each its priority according to their relative strength: Tataryn, at 823. The Court recognized that such an analysis would produce a range of options for the distribution of assets which might be considered appropriate in the circumstances. The court should only make an order to vary a will where the testator’s chosen distribution falls outside of this range.

[88]         The jurisprudence also establishes that in determining whether the will-maker has fulfilled his or her obligations, the court may consider gifts made outside the will. If a will-maker has made inter vivos gifts to individuals other than the claimant or has arranged his affairs to facilitate a passing of assets to such individuals outside the framework of the will, the moral duty to a claimant may be intensified: Wong v. Soo, 2015 BCSC 1741. Conversely and depending on the circumstances, a will-maker’s moral duty may be diminished or negated entirely where he or she has made gifts to a claimant either before death or in consequence of it: Dundson at para. 185; Doucette at para. 84.

[89]         The legislated scheme of intestate succession does not serve as a guidepost in determining whether adequate provision has been made under the WVA: Wilson at para. 379; Hall v. Korejwo, 2011 BCCA 355 at para. 46.

[90]         In reference to the moral claim of independent adult children, the Court in Tataryn observed that while they “may be more tenuous” than that of a spouse or dependent child, some provision for adult independent children should be made if the size of the estate permits and in the absence of circumstances that would negate the existence of such an obligation: Tataryn, at 822-823.

[91]         In Dunsdon Madam Justice Ballance conveniently summarized the considerations that inform the existence and strength of a testator’s moral duty to independent children:

[134]   

  • relationship between the testator and claimant, including abandonment, neglect and estrangement by one or the other;
  • size of the estate;
  • contributions by the claimant;
  • reasonably held expectations of the claimant;
  • standard of living of the testator and claimant;
  • gifts and benefits made by the testator outside the will;
  • testator’s reasons for disinheriting;
  • financial need and other personal circumstances, including disability, of the claimant;
  • misconduct or poor character of the claimant;
  • competing claimants and other beneficiaries:

(See Clucas v. Clucas Estate, [1999] B.C.J. No. 436; McBride v. McBride Estate, 2010 BCSC 443; Yee v. Yu, 2010 BCSC 1464; Wilson v. Lougheed, 2010 BCSC 1868)

[92]         In assessing the strength of the legal and moral obligations owed by a testator to a second spouse, the court will consider factors such as:

(a)            The length of the marriage;

(b)            When and how the testator’s assets were acquired;

(c)            The contribution of the second spouse;

(d)            How family assets would be divided under the applicable family legislation upon marriage breakdown;

(e)            Competing obligations with the children from the first marriage;

(f)              Financial circumstances of the spouse;

(g)            The size of the estate; and

(h)            The magnitude of assets passing to the spouse outside of the estate in consequence of other pre-death transactions undertaken by the testator.

[See Wong v. Soo, 2015 BCSC 1741 at paras. 73-82; Saugestad v. Saugestad, 2006 BCSC 1839, varied on different grounds 2008 BCCA 38; Mawdsley v. Meshen, 2010 BCSC 1099, affirmed 2012 BCCA 91; Ciarniello v. James 2016 BCSC 1699]

Will In “Contemplation of Marriage” Not Revoked

Will In "Contemplation of Marriage" Not Revoked

Pace Estate 2016 BCSC 2306 held that a 2001 will left to “my common law spouse  of four years ” was not revoked by their subsequent marriage under what was then S 15 Wills Act that provided that marriage revoked a will. The parties married over a year  after the execution of the will.

The will did not expressly state that the will was being signed in ” contemplation ” of their marriage.

The parties signed mirror wills at the time leaving the residue of each of their estates to the other.

The parties separated a few years later and divorced in 2009. The effect of S. 16 of the Wills act invalidated the appointment of that spouse as executrix and as the recipient of the residue of his estate when he subsequently died in 2015. In fact he had been living with another spouse for about 2 years prior to his death and there was a dispute as to whether she was his spouse.

Since the introduction of WESA on March 31, 2014 marriage no longer does revoke a previous will.

It is not clear why the first spouse sought an order that the 2002 will had not been revoked by their subsequent marriage, but in any event the court held that it had not been revoked.

Extrinsic evidence was allowed and indicated to the court that the deceased clearly intended his will to be made in contemplation of his marriage even though it did not expressly state so.

The court followed the reasoning of the Court of Appeal in MacLean estate v Christianson 2010 BCCA 374 at paras 30-31 where the court held that it had the right to ascertain all the facts that were known to the testator at the time the will was signed so as to determine the intention.

They had arranged their affairs so that they were the named beneficiaries of each others pensions and insurance.

The court further held that the will could not have been rectified under the provisions of  59 WESA  as his death occurred after the coming into force of WESA  and new statutes are presumed to not have retrospective application where such statutes affect the substantive  rights of others R. Dineley ( 2012) SCJ #58.

The court declared to have held other wise would have frustrated the clear intent of the parties and have run afoul of the presumption against an interpretation that resulted in an intestacy.

The court held that under S 18 of the Wills act the will had been “revived” by showing a contrary intention  that the will had not been revoked by the  subsequent marriage.

Statute Barred Debt to Estate Deducted From Beneficiary

Statute Barred Debt to Estate Deducted From Beneficiary

Re Johnston Estate 2017 BCSC 272 upheld the rule in Cherry v. Boultbee  which provides that where a legatee of a share of the residue is a debtor of the estate, he or she is not entitled to receive his or her legacy without bringing his or her debt into account, even though the debt owed by the beneficiary in that case was 43 years old and was statute barred.

The rule derives from the case of Cherry v. Boultbee (1839), 4 My. & Cr. 442. It is an equitable principle designed to ensure fairness.

The purpose of the rule was to prevent a beneficiary who owed money to an estate from receiving more than his or her fair share of the estate.

In the case of Re: Akerman, Akerman v. Akerman, [1891] 3 Ch. 212, Kekewich J. stated:

A person who owes an estate money, that is to say, who is bound to increase the general mass of the estate by contribution of his own, cannot claim an aliquot share given to him out of that mass without first making the contribution which completes it. Nothing is in truth retained by the representative of the estate; nothing is in strict language set off; but the contributor is paid by holding in his own hand a part of the mass, which, if the mass were completed, he would receive back.

29      The rule has been held to apply even where the debt is statute-barred: see Re: Akerman.

30      The applicant submits that the rule continues to apply in Canada and relies on the decision of the Supreme Court of Canada in Canada Trust Company v. Lloyd et al, [1968] S.C.R. 300.

In that case, the Supreme Court applied the rule in Cherry v. Boultbee in finding that the contribution of three directors who had improperly withdrawn funds from the company some 43 years earlier, had to be taken into account in the distribution of the residue by the receiver. The court noted that the situation was analogous to that of a “legatee who must bring into account even a statute barred debt before he can claim a legacy left to him in the testator’s will”.

31      The applicant also relies on a more recent decision of the Ontario Court of Appeal, Olympia & York Developments Ltd. v. Royal Trust Co. (1993), 103 D.L.R. (4th) 129, where the court confirmed that the rule in Cherry v. Boultbee has been accepted in Canadian decisions and, where appropriate, applied.

The rule in Cherry v. Boultbee does not confer on the estate any right to recoup the amount owing but rather operates to ensure fairness in the distribution of an estate, recognizing that the relationship between a testator and his or her beneficiaries is typically not at arm’s length. The fundamental purpose of the rule is to ensure that beneficiaries are treated fairly and it embodies the principal that he who seeks equity must do equity. As the court noted in Re: Akerman, nothing is being retained by the representative and nothing is being set off but rather, the contributor is paid by what he is holding in his own hand.

The court in Re: Goy & Co Ltd., [1900] 2 Ch. 149, also noted that the claimant has in his own hands that which is applicable to the payment and should pay himself out of that. The question of whether the testator or the estate can recover the debt or whether the debt is statute barred is therefore largely irrelevant to the application of the rule. In my view, the change in approach to limitation provisions by the Supreme Court of Canada in Tolofson does not affect the application of the rule in Cherry v. Boultbee.

37      The decision of the Yukon Territory Court of Appeal in Leeper Estate makes it clear that the rule in Cherry v. Boultbee continues to apply in Canada.

39      The Estate of William Leonide Johnston is, however, entitled to retain and deduct from the share of the estate otherwise payable to the respondent an amount on account of the debt owed to the Estate of William Johnston by the respondent that was outstanding and owing on his death.

Occupational Rent and “Outsted”

Occupational Rent and "Outsted"

At common laws a claim for occupational rent can be brought where one owner is ousted from the property by another owner  Re Johnston estate 2017 BCSC 272 where the court stated:

At common law, a claim for occupation rent may be brought by a co-tenant who has been ousted from the property. An ouster brings to an end to one of the tenant’s right to share the benefit of occupation: it exposes the remaining tenant to liability to indemnity the ousted tenant for the loss of that benefit. In the absence of ouster there is generally no such liability. It cannot be said that a tenant in possession has been unjustly enriched by sole occupation of premises so long as each tenant has an undivided right to the full use of the property. As long as there is no impediment to the exercise of that right by either tenant , no claim for indemnity arises from the abandonment of the property by one of them. (LMR v JFR 2010 BCSC 363)

17     “It is clear from the case of L.M.R. v. J.F.R., 2010 BCSC 363, that a claim for occupation rent can be brought at common law by a co-tenant who has been ousted from a property, because the ouster brings to an end one tenant’s right to share in the benefit of occupation. There is generally no liability to pay occupation rent where there is no ouster.”

In the case of Kostiuk, Re, 2002 BCCA 410, the BC Court of Appeal addressed the issue of conduct that constitutes ouster and the burden of proving ouster. The court noted that:

43 The fact that a co-owner had sole possession does not prove ouster because on co-owner is entitled to be in possession of the entirety, but if possession is demanded and refused, on the grounds that the co-owner in possession claims the whole property as his own, “such possession is adverse and ouster enough” (Doe v. Prosser (1774) 1 Cowp. 217 [at 218], 98 E.R. 1052 [at 1053]). The co-owner alleging ouster must prove that the other co-owner is in possession with the intention of ousting her.

Re Kostiuk followed Dennis v McDonald affirmed (1981) 2 WLR 275 ( C.A) which adopted the definition of “ousted” as stated in M v H ( 1994) 17 ).R. (3d) at page  133 ” the act of wrongfully putting one out of rightful possession of his or her property”.

Dennis v MacDonald ( 1981) 1 WLR 810 , affirmed (1981) 2 WLR 275 (CA) which held in part”:

–“Only in cases where the tenants in common not in occupation were in a position to enjoy their right to occupy but chose not to do voluntarily , and were not excluded by any relevant factor, would the tenant in common in occupation be entitled to do free of liability to pay an occupation rent”.

Re Kostiuk stated at paragraph 43- ” The fact that a co owner had sole possession does not prove ouster because one co-owner si entitled to be in possession of the entirety, but if possession is demanded and refused , on the grounds that the co-owner in possession claims the whole property as his own, ” such possession is adverse and ouster enough”. The co-owner alleging ouster must prove that the other co-owner is in possession with the intention of ousting her ( Allison v smith) ( 1877) 17 NBR 199 ( C.A)

THE EXCEPTION

There is one exception to that rule: occupation rent may be set off against a claim made by a tenant in occupation for expenses associated with the occupation . It would be inequitable to permit a tenant in possession to enjoy undivided possession while seeking a division of the expenses associated with that possession. LMR v JFR 2010 BCSC 363

The Various Types of Trusts

The Various Types of Trusts

Warde v Slater 2017 BCSC 274 contains a discussion about the various types of trusts in deciding who owned the beneficial interest in the shares of a family business.

The decision quotes extensively from Waters on Trusts In Canada.

It is helpful to refer to the definition of a trust adopted as “one of the best” in Waters, Gillen and Smith: Waters’ Law of Trusts in Canada, 4th ed. 2012 (“Waters“) at p 3:

“A trust is the relationship which arises whenever a person (called the trustee) is compelled in equity to hold property, whether real or personal, and whether by legal or equitable title, for the benefit of some persons (of whom he may be one, and who are termed beneficiaries) or for some object permitted by law, in such a way that the real benefit of the property accrues, not to the trustees, but to the beneficiaries or other objects of the trust.”

The following passage from Waters at pp 394-395 is a useful comparison of the different kinds of trusts alleged.

The courts and the various legislatures of the common law world have sometimes used interchangeably the terms “implied trust”, “resulting trust” and “constructive trust”, and the terminology is therefore somewhat confusing

But essentially, while express trusts are those which come into existence because settlors have expressed their intention to that effect, constructive trusts arise not because of anyone’s expression of trust intent but because B ought to surrender property to A and this is the machinery the court employs in order to get B to do that. In between the express trust, a product of the settlor’s intention, and the constructive trust, a machinery imposed by law, are the implied trust and the resulting trust.

The term “implied trust” is commonly used for two situations. The first occurs where the intention to create a trust is not clearly expressed, but has to be discovered from indirect and ambiguous language. This is all that distinguishes such an implied trust from the express trust. A second common use is where one person has gratuitously transferred his property to another, or paid for property and had the property put into another’s name. The intention of the transferor or purchaser is implied to be that the transferee is to hold the property on trust for the transferor or purchaser. The implication arises out of the fact that Equity assumes bargains, not gifts, and requires the donee to prove that a gift was intended.

The term “resulting trust”, on the other hand, does not allude in any way to intention; it describes what happens to the property in question. It results or goes back to the person who, for reasons we shall examine, is entitled to call for the property. For example, because Equity does not assume gifts, the transferee holds title for the transferor or the one who provided the purchase money. In other words, in this “implied trust” situation the beneficial interest results, or goes back, to the transferor or purchaser. . . .

Distinguishing the resulting trust from the constructive trust is also not easy because the lines have been blurred. Sometimes the same facts allow both a constructive trust theory and a resulting trust theory to be deployed. . . .

There is even more overlap between resulting trusts and those constructive trusts which arise to reverse unjust enrichment. The reason is that both kinds of trusts typically perform the same function: they return property to the person from whom it came.

In Fulton v. Gunn [2008 BCSC 1159] for example, an interest in land was acquired by a son using purchase money that came from his mother. It was held that this created a resulting trust for the benefit of the mother; and it was also held in the alternative that the son had been unjustly enriched at the expense of the mother, and so held the property on constructive trust for her. To the extent that resulting trusts are seen as arising by operation of law, they are really just a sub- species of constructive trust. The distinction between resulting and constructive trusts is perhaps best put in this way – while constructive trusts have nothing to do with intention, express or implied, resulting trusts can be explained either on the basis of intention or imposition of law. . . .

10      As Waters makes clear (see also pp. 19-21), the terms “express” and “implied” refer to the intention of the alleged settlor. Intention may also be relevant to a resulting trust, but is irrelevant to a constructive trust. A constructive trust is one constructed by the law to enforce an obligation. It arises out of unjust enrichment and “good conscience”: Waters at p 23; Petkus v Becker, [1980] 2 SCR 834.

Thus, there can be only two sources of a trust obligation: the intention of a property owner to create a trust; or the imposition by the law of a trust obligation upon persons: Waters at p 478.

11      In my view, a resulting trust can be quickly eliminated from contention in this case. An essential characteristic is that the claimant, the would-be beneficiary, must have provided the property or equitable interest vested in the person bound by the trust: Waters at p 399. Neither Elaine nor Brian provided the property here in issue, the shares of (or proprietary interest in) Slatter Holdings, to Fern. If Fern holds that property in trust for either or both of Elaine or Brian, it must be because of an express or implied trust (intention), or because in the absence of such a trust, unjust enrichment and good conscience require that the law constructs a trust in order to enforce an obligation.

12      To demonstrate the creation of an intentional trust, the evidence must establish three certainties: certainty of intention to create the trust, certainty of the subject of the trust, and certainty of the trust object: Waters at p 140 and following; Tozer v Bank of Nova Scotia, 2012 NBCA 57 at paras 10-12. It is not necessary that the trust be set out fully in a document. It may be construed from conduct, or from documents and conduct taken together. See, for instance, Elliott (Litigation Guardian of) v Elliott Estate, [2008] OJ No 4941 (SCJ):

[30] This Court must consider all of the circumstances, including the words and conduct of Robert Elliott and Jean Elliott [the alleged settlors] to determine if certainty of intention exists.

13      Technical words are not required. As Waters put it at p 141:

There is no need for any technical words or expressions for the creation of the trust. Equity is concerned with discovering the intention to create a trust; provided it can be established that the transferor had such an intention, a trust is set up.

14      This is so whether the intentional trust is created by the settlement of property upon a trustee, or by declaration by the owner of property of an intention to constitute himself or herself a trustee of that property. Again, it is not necessary that the donor use the words, “I declare myself a trustee”. Words of any kind and even conduct are sufficient provided it is satisfactorily shown that the donor did in fact intend to constitute himself or herself a trustee: Waters at p 204.

Disinternment aka Exhumation

Disinternment aka Exhumation

Disinternment , also known as exhumation of human remains is provided in the provision of the Cremation, Internment and Funeral Services Act SBC 1974.

At common law a duty is imposed upon an executor to see that the deceased is buried in a manner befitting his or her station in life Schara Tzadeck v Royal Trust Co. ( 1952) 4 DLR 529 (SCC)

Exhumation of human remains is not that common and most people have likely only heard of its occurrence as a result of a police suspicion of foul play or to obtain DNA.

However, exhumation  does occur occasionally in estate litigation, particularly when there are divisive factors amongst the family as to the proper religious procedure for handling a loved one’s remains.
Re Popp Estate 2001 BCSC 183 was such a case where the court investigated the circumstances of the disposal of a husband’s wife’s remains and declared that his conduct was capricious in the sense of being irregular or unpredictable, and found it was appropriate for the court to intervene and direct that her remains be disinterred and her urn ashes placed in columbarium.
The husband had placed his wife’s earn in his mother’s grave, with no plaque or headstone on the grave recognizing the fact that the deceased was buried there.
The husband  stated that upon his father’s death, he would then remove his wife’s urn from the grave, but that he did not have any plans as to the urns ultimate disposal.
The remaining family members sought an order that the remains be disinterred.
Even though the husband was as executor responsible for disposing of her remains, the court found that the rights of other relatives of the deceased should also be determined when inquiring as to whether the husband’s actions involved a capricious change of mind.

Intervention by the Court

17  (1) A person claiming an interest in an exhumation or a disinterment may apply to the Supreme Court for an order to allow or restrain the exhumation or disinterment.

(2) When hearing an application under subsection (1), the Supreme Court must have regard to the rights of all persons having an interest and, without limitation, must consider

(a) the feelings of those related to or associated with the deceased, with particular regard to the feelings of the spouse of the deceased,

(b) the rules, practice and beliefs respecting exhumation and disinterment followed or held by people of the religious faith of the deceased if the cemetery or mausoleum in which the deceased is interred is operated by a religious denomination or religious corporation,

(c) any terms and conditions respecting exhumation or disinterment contained in a contract for the interment of the deceased,

(d) any reasonable directions given by the deceased respecting interment, and

(e) whether the request for exhumation or disinterment involves family hostility or a capricious change of mind respecting the exhumation or disinterment of the deceased.

The Duty of Care Owed By a Will Drafter

The Duty of Care Owed By a Will Drafter

In Korpiel v Sanguinetti (1999) B.C.J. 1048 the court concluded that a will drafter, usually a solicitor or notary, owes no duty of care to beneficiaries beyond the competent and timely fulfillment of the testator’s testamentary instructions.

In the Sanguinetti case, the court considered whether a will drafter owed a duty to beneficiaries who had been named in a client’s former will.  The plaintiffs were relatives of an elderly testator who had instructed his lawyer to prepare a will bequeathing his home to the plaintiffs.  Some years later, the testator changed his mind and instructed the lawyer to draft a new will, leaving the plaintiffs only a small bequest.

The plaintiffs challenged the later will and brought a court action against the lawyer who drafted it for a breach of fiduciary duty owed to them.  Their claim was dismissed.

The court held that if a will drafter were to conduct him- or herself as proposed by the plaintiffs—that is, to refuse to follow the client’s instructions in preference to the interests the potential beneficiaries—it would be impossible for the will drafter to avoid a conflict of duty and interest.  If the will drafter were to be held to advocate for inclusion of persons or terms of disposition that were contrary to the specific instructions of the client, it would clearly result in a conflict with the will drafter’s primary duty to his or her client.  The court found such a situation would be untenable.

Thus a will drafter cannot owe an independent fiduciary duty to the beneficiary of a will, for if the testator’s instructions were to conflict with the beneficiaries’ interests, the will drafter would be unable to avoid conflicting duties to both parties.

In Smolinski v. Mitchell [1995] 10 W.W.R. 68 (BCSC), Sigurdson J. considered the question of the duty of a solicitor to his client, in contrast to the duty to others who may be deprived of an inheritance by reason of a solicitor’s failure to properly carry out his client’s instructions.  His Lordship quoted from the English decision of Ross v. Caunters [1979] 3 All E.R. 580, [1980] Ch. D. 297 at 322:

“The argument seems to me to confuse duties which differ in their nature. In broad terms, a solicitor’s duty to his client is to do for him all that he properly can, with, of course, proper care and attention.  Subject to giving due weight to the adverb “properly,” that duty is a paramount duty.  The solicitor owes no such duty to those who are not his clients.  He is no guardian of their interests.  What he does for his client may be hostile and injurious to their interests; and sometimes the greater the injuries the better he will have served his client.  The duty owed by a solicitor to a third party is entirely different.  There is no trace of a wide and general duty to do all that properly can be done for him.  Instead, in a case such as the present, there is merely a duty, owed to him as well as the client, to use proper care in carrying out the client’s instructions for conferring the benefit on the third party.”

The Alberta Court of Appeal in Graham v. Bonnycastle, 2004 ABCA 270 (leave to appeal to the S.C.C. refused, [2004] S.C.C.A. No. 489) came to a similar conclusion after an extensive review of the law.

In the Graham case the children of the testator had been equal beneficiaries under a 1984 will.  In 1994, after having been diagnosed with Alzheimer’s disease, the testator executed a new will, leaving a small bequest to each of his children and grandchildren and the residue to his new wife.  After the testator’s death the children commenced litigation challenging both the validity of the marriage and the 1994 will on the basis of lack of mental capacity, which any beneficiary is entitled to do.

Both of those actions were discontinued and a settlement agreement was entered into by the parties.  The children subsequently commenced an action against the solicitor who prepared the 1994 will claiming damages for the difference between the bequest they would have received under the original will and the benefits they received pursuant to the settlement agreement.

The Court of Appeal upheld the decision of the trial judge and dismissed the children’s claims on the grounds that the solicitor owed no duty of care to the children who claimed as beneficiaries under the original will, and that the original will had been revoked by both the subsequent will and the subsequent marriage of the testator.  (Note:  In British Columbia, prior to the enactment of the Wills, Estates and Succession Act on March 31, 2014, a subsequent marriage revoked an existing will but that is no longer the case.)

The court made it clear, however, that by extension of the principles set out in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1963] 2 All E.R. 575, a leading House of Lords decision, a will drafter may be liable to an intended beneficiary who, as a result of the will drafter’s negligence, does not receive a benefit which the testator intended to grant.

Thus the general rule that a will drafter owes a duty of care only to his or her client and not to any third party, has been modified to include a duty to an intended beneficiary under a will who does not, as result of the will drafter’s negligence, receive a benefit which the testator intended to grant.  This has been labelled the “third-party beneficiary rule”.

The leading case is the House of Lords decision in White v. Jones [1995] 1 All E.R. 691 at 698-99 in which the court found a testator’s solicitor liable to an intended beneficiary for negligently failing to have the testator’s new will prepared and executed before the testator died.

Thus the only duty of care owed to an identified third-party beneficiary is where the will drafter owes a duty to the third-party beneficiary as well as the client, to use proper care and diligence in carrying out the client’s instructions for conferring the benefit on the third party.

In the Graham case the Alberta Court of Appeal held that the will drafter’s primary duty was to carry out the intentions of the testator, after being satisfied that the testator had testamentary capacity and recording his or her observations in that regard, so that the testator’s will would subsequently be admitted to probate.

The will drafter’s duty to ensure testamentary capacity coincides with the duty to ensure that the will accurately reflects the testator’s wishes.  A will drafter could never owe an intended beneficiary a duty of care that is inconsistent with his or her duty to the client. (Hall v. Bennett Estate (2003), 227 D.L.R. (4th) 263 (ONCA).

The imposition of a duty to beneficiaries under a previous will would create inevitable conflicts of interest for a will drafter that would be contrary to public policy.  A will-drafting solicitor or notary cannot have a duty to follow the instructions of his or her client to prepare a new will and, at the same time, have a duty to beneficiaries under previous wills whose interests are likely to be affected by the new will.

The BC Court of Appeal decision of Johnston v. Johnston Estate 2017 BCCA 59 followed the reasoning of both the Graham and Sanguinetti decisions in disallowing the claims of children who inherited under their father’s 2007 will that was modified against their interests by a 2012 will and a codicil thereto.

The testator’s children had been heirs under the 2007 will but were disinherited under the subsequent will, in which the testator left his entire estate to his new wife.

At trial the court struck out that portion of the plaintiff’s claim that alleged that the drafting lawyer owed the children a duty of care as beneficiaries under the 2007 will to, in effect, not carry out their father’s instructions to prepare a new will in terms inconsistent with the provisions of the 2007 will, finding that such claim was doomed to fail.  The Court of Appeal upheld that decision.

Therefore, the only duty a will drafter has to beneficiaries is to carry out the instructions of the will maker in a competent and timely manner.

BC Estate Lawyer -Dysfunctional Families-Emotional Manipulation

Emotional Manipulation in Dysfunctional Families
Vancouver lawyer Trevor Todd has 50 years experience in understanding and getting justice for parties disinherited from dysfunctional and often toxic  families.
Emotional manipulation refers to the attempt to  indirectly or directly influence or control someone else’s behavior or actions, and is commonly found in dysfunctional families.
In estate litigation, I commonly hear my clients complain of being subjected to various forms of psychological and emotional manipulation, particularly in their childhood, that continues into adulthood through various means of abusive, deceptive or underhanded tactics.
The victims have commonly grown in dysfunctional families that have not provided the support for the growth of high self-esteem, the recognition of healthy boundaries and emotional maturity, that are often caused by the unhealed abuse of family members, especially non-loving and unsupportive parents.

Why people engage in emotional manipulation

There are many reasons why people, commonly parents or siblings, feel compelled to control others, places and things  to fulfill whatever they believe to be their personal needs, desires and wishes.
Manipulators are typically very controlling people that utilize an array of manipulative tactics.
Manipulators generally take the time to learn the characteristics and vulnerabilities of their victims.
Who better is in a position to know those vulnerabilities than parents or siblings of the manipulated person.
Typically the manipulator has a number of possible motivations that are generally along the lines of the need to feel in control, the desire to gain the feeling of power over others, the need to advance their own purposes for personal gain, and sociopathic  tendencies that target the victims financial assets.

There are many identifiable techniques of emotional manipulation, some of which are as follows:

  1. Lying that is done frequently, subtly and well. The manipulator is often an expert at simply not telling the truth, either by outright lying, or  by withholding a significant amount of the truth, or denial of ever having done anything wrong;
  2. Rationalization and minimization of harmful or irresponsible behaviour which could be as simple as a hurtful  insult was only meant “as a joke”;
  3. Diversion or refusal to discuss the matter. The manipulator may simply not want to hear about the victims concerns, nor talk about them  and simply changes the conversation or the topic;
  4. Threats both subtle, indirect or implied, thus causing the victim to become defensive and anxious;
  5. Evasion by giving irrelevant, vague or rambling answers that mean nothing and cause more confusion in the mind of the victim;
  6. Guilt – the guilt trip is probably one of the most common and effective devices used by manipulator that is very effective in keeping the victim in a self doubting anxious and submissive position;
  7. Shaming– somewhat similar to the guilt trip, but typically  involves more sarcasm and putdowns to make the victim feel unworthy and therefore defer to the manipulator;
  8. Blaming others, especially the victim, so that the victim believes that he or she has done something wrong when they simply have not. The ultimate goal is to make the victim believe that the victim deserves to be treated in the manner that the manipulator chooses. A simple example is to label the victim as crazy or paranoid;
  9. Flattery – many manipulators can be very charming, even seductive, in order to cause the victim to lower their defences and give more trust and faith in the manipulator;
  10. Playing the victim – this is where the manipulator falsely portrays him or herself as the actual victim of circumstances in order to gain pity,  compassion and sympathy from the actual victim;
  11. Feigning confusion or innocence – the manipulator continues to tell the victim that any harm done was totally unintentional, even to the point of playing dumb or pretending that he or she does not know of what the victim is talking about. The goal is to intentionally confuse the victim to doubt his or her own accuracy of perception;
  12. Displaying anger or rage is an effective way to shock a victim into submission. Threats may be used to emotionally blackmail the victim to scare and intimidate the victim into submission, causing the victim to focus more on the anger instead of the actual manipulation tactic.

Conclusion

Almost all of the above tactics are used in combination with the other and are designed to exploit vulnerabilities that exist in the victims such as his or her low self  esteem, naiveté, or emotional dependency.
The victim can often become the family scapegoat after years of suffering various forms of emotional manipulation.

Further reading on emotional manipulation

4 Unhealthy Roles Created in Dysfunctional Families

Cutting Ties with the Family and Estrangement

Black Sheep and Scapegoats