5 Survivorship Rules Under WESA

Survivorship Rules Under WESA

Survivorship is concerned with the factual question of determining the order of death in a common disaster between family members .

Much of estate law is based on a body of law and statutes that govern the law of succession- the transfer of personal wealth after death, and the rules relating to Survivorship  form part of this body of law.

Under estate law a gift in a will to a beneficiary who has predeceased the will maker will causes that gift to lapse and fall into the estate residue, and to  the surviving residual beneficiaries.

Thus the law developed under estate law that the younger person is presumed to have survived the older person and thus the estate of the younger person would inherit.

The difficulty that arose over the years in common fatalities is that under the Insurance Act, the beneficiary is presumed to have predeceased the insured person . This presumption applies today and is found S 83 Insurance Act  and s 130 for accident and sickness insurance.

This obvious conflict in the two approaches gave rise to legal conflict and WESA set out to change it by bringing the law more into conformity with the approach  of the Insurance act.

Survivorship Rules Under WESA:

  1. In situations where it is unclear as to the order of death as to who survived who will be determined as if each deceased person is presumed to have survived the other or others;
  2. The aforesaid presumption may be opted out of by expressing a contrary intention in another document, preferably  a will, but WESA contemplates an expanded definition to include deeds, trusts, insurance policy, pension, power of appointment documents such as Powers of Attorney.;
  3. If joint tenants die simultaneously their joint tenancy will be converted to a tenancy in common so their respective estates will benefit from their shares of the jointly held property;
  4. There is a mandatory 5 day survival; requirement in order to inherit, otherwise the person is presumed to have predeceased the other
  5. The 5 day mandatory also applies to posthumous births ( baby conceived but is born after death of will maker)

Mental Capacity Required to Marry and Separate Incorrect

Mental Capacity Required to Marry and Separate Incorrect

As any of the legions of matrimonial lawyers will tell you, it may be easy to get into this simple contract, but it is not at all that easy to extricate oneself from it.

In Wolfman-Stotland v. Stotland, 2011 BCCA 175 (B.C. C.A.), leave to appeal ref’d [2011] S.C.C.A. No. 242 (S.C.C.) the issue was whether Mrs. Stotland had the capacity necessary to form the intention to live separate and apart to support the application for a s. 57 declaration of no possibility of reconciliation, which has the effect of severing their joint assets and crystallizing family assets.

The wife suffered from dementia and her mistaken fear was that her husband’s “ sneaky” nephew would inherit her assets .

Mrs. Stotland suffered from mild to moderate cognitive impairment and was not capable of managing her financial affairs.

She was examined by a doctor, who concluded that she likely had the capacity to instruct counsel on the matter of her divorce.

Her only complaint about her husband of 55 years was that he “falls asleep at bingo” and despite that the court found that she had the mental capacity required to separate ( or conversely to marry) as it is the lowest test required for capacity.

The Court of Appeal dismissed the appeal and found that the wife met the lowest test of mental capacity required to separate under S 57 Family Law act, being the same test as that required to marry:

[23] In A.B. v. C.D., the husband, who opposed the granting of a s. 57 declaration, conceded that his wife had general capacity to manage her affairs and to instruct counsel. The husband sought a medical examination under then Rule 30(1) to establish that his wife suffered from a delusional disorder that informed her intention to live separate and apart. The chambers judge, in reasons indexed as 2008 BCSC 1155, concluded that since the wife had the capacity to conduct her own affairs and to instruct counsel, her adverse mental condition, if it existed, had no bearing on the issues to be determined in the divorce proceeding.

[24] On appeal, this Court upheld the chambers judge and adopted the comments in Professor Robertson’s text, Mental Disability and the Law in Canada, 2d ed. (Toronto: Carswell, 1994) referred to by the chambers judge at paras. 23-24 of his reasons:

[23] The capacity to form the intention to live separate and apart is discussed in Professor Gerald B. Robertson’s Mental Disability and the Law in Canada, 2nd ed., (Toronto: Carswell, 1994) at 272:
Where it is the mentally ill spouse who is alleged to have formed the intention to live separate and apart, the court must be satisfied that that spouse possessed the necessary mental capacity to form that intention. This is probably similar to capacity to marry, and involves an ability to appreciate the nature and consequences of abandoning the martial relationship.

[24] Professor Robertson went on to discuss the capacity to marry at pp. 253-254:
In order to enter into a valid marriage, each party must be capable, at the date of the marriage, of understanding the nature of the contract of marriage and the duties and responsibilities which it creates…. The test does not, of course, require the parties to be capable of understanding all the consequences of marriage; as one English judge aptly noted, few (if any) could satisfy such a test. …the common law test is probably only concerned with the legal consequences and responsibilities which form an essential part of the concept of marriage. Thus, if the parties are capable of understanding that the relationship is legally monogamous, indeterminable except by death or divorce, and involves mutual support and cohabitation, capacity is present. The reported cases indicate that the test is not a particularly demanding one. As was said in the leading English decision, “the contract of marriage is a very simple one, which does not require a high degree of intelligence to comprehend”.

… Capacity to marry may exist despite incapacity in other legal matters. This necessarily follows from the fact that the requirements of legal capacity vary significantly as between different areas of law, and must be applied specifically to the particular act or transaction which is in issue. Thus, for example, a person may lack testamentary capacity yet have capacity to marry. Similarly, a person may be capable of marrying despite having been declared mentally incompetent and having had a property guardian or guardian of the person appointed.

[25] This Court ultimately concluded:

[36] In summary, disordered or delusional thinking which may contribute to an individual’s intention to live separate and apart, does not diminish that individual’s capacity to form that intention, provided it does not reach the level of incapacity that interferes with the ability to manage his or her own affairs and instruct counsel. In this case, there is no probative value to the evidence the husband seeks to obtain by his R. 30(1) application as the wife admittedly has the higher level of capacity to manage her own affairs. As a result, the wife’s mental condition, even if she was found to be suffering from delusional disorder, cannot be an issue in the proceeding.

[26] A useful discussion of the hierarchy of levels of capacity is found in Calvert at paras. 54-56:

[54] Separation is the simplest act, requiring the lowest level of understanding. A person has to know with whom he or she does or does not want to live. Divorce, while still simple, requires a bit more understanding. It requires the desire to remain separate and to be no longer married to one’s spouse. It is the undoing of the contract of marriage.
[55] The contract of marriage has been described as the essence of simplicity, not requiring a high degree of intelligence to comprehend: Park, supra, at p. 1427. If marriage is simple, divorce must be equally simple. The American courts have recognized that the mental capacity required for divorce is the same as required for entering into marriage: re: Kutchins, 136 A. 3d 45 (Ill., 1985).

[56] There is a distinction between the decisions a person makes regarding personal m
matters such as where or with whom to live and decisions regarding financial matters. Financial matters require a higher level of understanding. The capacity to instruct counsel involves the ability to understand financial and legal issues. This puts it significantly higher on the competency hierarchy. It has been said that the highest level of capacity is that required to make a will: Park, supra, at p. 1426. (I note that Mr. Birnbaum felt that, in August 1994, he would have taken instructions for a will but for Dr. Hogan’s concern about her ability to instruct counsel.) While Mrs. Calvert may have lacked the ability to instruct counsel, that did not mean that she could not make the basic personal decision to separate and divorce.

[27] As the authorities make clear, the capacity to form the intention to live separate and apart has been accepted as equivalent to the capacity to enter into a marriage. As the Court stated in Calvert, the intention to separate requires the lowest level of understanding. The requisite capacity is not high, and is lower in the hierarchy than the capacity to manage one’s affairs.
. . .
[31] In my opinion, if, as Dr. Sloan has concluded, Mrs. Stotland has the capacity to instruct counsel, especially on financial matters related to a divorce, the test of capacity to form the intention to live separate and apart was met.
[Underlining added.]

Unconscionable

Unconscionable

In the course of a complex almost month long matrimonial trial, the argument was raised with respect to the marriage agreement that it was unconscionable in its terms.

The court concluded that it was not unconscionable.

S. ( H.S.) v D. ( S.H.) 2016 BCSC 1300 discussed the law re unconscionable contracts:

178 The doctrine of unconscionability, which was developed in the courts of equity in England, is intended to provide relief to parties, in the form of rescission, from bargains that are “contrary to good conscience”: Gindis v. Brisbourne, 2000 BCCA 73 at para. 19. In Canada, the remedy has been imposed in a broad spectrum of relationships and circumstances.

179 Although the precise formulation of the judicial test has varied over the years, the appellate authorities in this province establish that the requisite elements that ground a claim in unconscionability are: (i) proof of inequality in the position of the parties arising out of ignorance, need, or distress of the weaker, which leave him or her in the power of the stronger; and (ii) proof of substantial unfairness in the bargain obtained by the stronger party. If these requirements are proven, a presumption of fraud is established. It then becomes the obligation of the stronger party to rebut the presumption by showing that the bargain was fair, just, and reasonable: Morrison v. Coast Finance Ltd., [1965] B.C.J. No. 178 (C.A.); Klassen v. Klassen, 2001 BCCA 445 at paras. 56-57; Do v. Nichols, 2016 BCCA 128 at para. 26.

180 Newbury J.A., at para. 22 of Gindis, expressed the view that the question of who bears the onus of proof was not entirely clear, but ultimately found it unnecessary to decide the matter. The Court of Appeal in Do recently clarified that the onus lies on the party seeking to establish that a bargain was unconscionable: at para. 26.

181 Crucially, the Court’s inquiry under unconscionability is limited to the circumstances existing at the time of the execution of the agreement: Gindis at para. 32. An agreement cannot become unconscionable on account of its consequences over time.

182 The authorities establish that matrimonial negotiations occur in a unique environment and, therefore, unconscionability in the matrimonial context is not equivalent to that in a commercial context: Toscano v. Toscano, 2015 ONSC 487at para. 64. In Miglin v. Miglin, 2003 SCC 24and subsequently in Rick v. Brandsema, 2009 SCC 10, the Supreme Court of Canada reformulated the common law test for unconscionability to reflect the uniqueness of the negotiating environment for matrimonial bargains. Judicial intervention is justified where agreements are found to be “procedurally and substantively flawed”. The Court in Rick stated:

[40] There is no doubt that separation agreements are negotiated between spouses on the fault line of one of the most emotionally charged junctures of their relationship — when it unravels. The majority in Miglin concluded that because of the uniqueness of this negotiating environment, bargains entered into between spouses on marriage breakdown are not, and should not be seen to be, subject to the same rules as those applicable to commercial contracts negotiated between two parties of equal strength:

The test should ultimately recognize the particular ways in which separation agreements generally and spousal support arrangements specifically are vulnerable to a risk of inequitable sharing at the time of negotiation and in the future…
Negotiations in the family law context of separation or divorce are conducted in a unique environment … [at] a time of intense personal and emotional turmoil, in which one or both of the parties may be particularly vulnerable. [Paras. 73-74]

183 The Court went on to summarize the animating principles:

[44] Where, therefore, “there were any circumstances of oppression, pressure, or other vulnerabilities”, and if one party’s exploitation of such vulnerabilities during the negotiation process resulted in a separation agreement that deviated substantially from the legislation, the Court in Miglin concluded that the agreement need not be enforced (paras. 81-83).

184 Notably, the Court in Rick emphasized the importance of respecting “the parties’ right to decide for themselves what constitutes for them, in the circumstances of their marriage, mutually acceptable equitable sharing”: Rick at para. 45, Miglin at para. 73. The Court endorsed the notion that parties should generally be free to decide for themselves what bargains they are prepared to make. The Court underscored that this contractual autonomy “depends on the integrity of the bargaining process”: Rick at para. 46.

185 I next address whether the jurisprudence draws any distinction between the enforceability of pre-nuptial and separation agreements. The FRA defines “marriage agreements” in s. 61. Both pre-nuptial and separation agreements fall within the definition of marriage agreements under s. 61. Notably, however, both Miglin and Rick addressed family law agreements in the context of separation and divorce.

186 The distinction in the nature and effect of pre-nuptial and separation agreements was addressed by the Supreme Court of Canada in Hartshorne v. Hartshorne, 2004 SCC 22. The majority recognized the distinction but rejected the notion of establishing a “hard and fast” rule that applies a different standard of review to pre-nuptial and separation agreements. The Court stated as follows:

[39] This Court has not established, and in my opinion should not establish, a “hard and fast” rule regarding the deference to be afforded to marriage agreements as compared to separation agreements. In some cases, marriage agreements ought to be accorded a greater degree of deference than separation agreements. Marriage agreements define the parties’ expectations from the outset, usually before any rights are vested and before any entitlement arises. Often, perhaps most often, a desire to protect pre-acquired assets or an anticipated inheritance for children of a previous marriage will be the impetus for such an agreement. Separation agreements, by contrast, purport to deal with existing or vested rights and obligations, with the aggrieved party claiming he or she had given up something to which he or she was already entitled with an unfair result. In other cases, however, marriage agreements may be accorded less deference than separation agreements. The reason for this is that marriage agreements are anticipatory and may not fairly take into account the financial means, needs or other circumstances of the parties at the time of marriage breakdown. [Citations omitted]

193 There must be cogent evidence to warrant a finding that an agreement should not stand on the basis of a fundamental flaw in the negotiation process: Miglin at para. 82. The evidence in support of Ms. D.’s contention that the Marriage Agreement was unconscionable falls significantly “short of the mark”: Dilley at para. 42. I have concluded that the evidence does not support the assertion that Mr. S. exerted overbearance or any inequality of bargaining power over Ms. D. or took any knowing advantage of any vulnerability of Ms. D.’s in the negotiation or execution of the Marriage Agreement.

Executor/Trustees Fees

Executor/Trustees Fees

Zadra v Cortese 2016 BCSC 390 dealt with a passing of executor’s accounts before a registrar to determine the amount of executor/trustees fees for handling a complex estate for ten years but delegating most of the work to professionals.

The value of the estate increased from $800,000 to $4.8 million over this time due to the rise in the real estate market.

The registrar allowed fees of %3 of the gross estate, plus %3 of the estate’s income and a management fee of $12,000.

The executor had pre- taken fees of $70,000 but was not admonished for it as it was done in the belief that the executor was entitled to it.

The Court Stated:

41 Sections 88 and 89 of the Trustee Act, R.S.B.C. 1996, c. 464, provide as follows:

88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper.

(2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

89 The court may, on application to it for the purpose, settle or direct the registrar to settle the amount of the compensation, although the estate is not before the court in an action.

42 The administrator is entitled to remuneration for his work on the estate to a maximum of 5% of the gross aggregate value, including capital and income of all the assets of the estate at the date of passing, pursuant to s. 88(1) of the Trustee Act. The criteria to be considered in determining the amount of remuneration which should be awarded are set out in the much cited case of Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at para. 23wherein the Court states:

[23] From the American and Canadian precedents, based upon statutory provision for compensation to trustees, the following circumstances appear proper to be taken into consideration in fixing the amount of compensation:
(1) the magnitude of the trust;

(2) the care and responsibility springing therefrom;

(3) the time occupied in performing its duties;

(4) the skill and ability displayed;

(5) the success which has attended its administration.

43 It is not required that remuneration be fixed at a specific percentage of the gross value of the estate, it can be calculated as a lump sum provided it does not exceed 5%. In Turley, Re (1955), 16 W.W.R. 72 (B.C. S.C.) at para. 11 the Court stated:

[11] As to grounds 1 and 2 of this application, I think the principles to be applied are well settled. I adopt the statement of the principles as given in, I think, all the cases and found in Re Atkinson Estate [1952] OR 688, that the compensation allowed an executor is to be a fair and reasonable allowance for his care, pains and trouble and his time expended in or about the estate. Both responsibility and actual work done are matters for consideration and, while there should not be a rigid adherence to fixed percentages, they are to be used as a guide. I think that the factors I mentioned in my judgment on the previous motion are found here. It is not only the presence of continuing trusts that makes the realization and administration of estates difficult. It is submitted that the capital fee should be charged only on the amount realized, excluding those assets that go over in specie. While the fact that considerable portions of the estate are transferred in specie is a factor the registrar may consider in settling the percentage he allows, I think it would be quite inappropriate as a rule to exclude these in the computation of aggregate value. There appears to be evidence here of extensive work. It is the duty of the executor to administer the whole of the estate. His work in some things might not be compensated sufficiently by a percentage much in excess of the maximum allowed.

44 Maximum remuneration is not awarded as a matter of routine. Appropriate remuneration is a matter of what is fair and reasonable in all the circumstances. As stated by the B.C.C.A, in Kanee Estate, Re [1991 CarswellBC 654 (B.C. C.A.)] (19 September 1991), Vancouver Registry CA014168:

Maximum remuneration does not go as a matter of course and it is to be expected that there will be disputes over the quantum of remuneration. Section 90(1) does not prescribe an adversarial process. There are no plaintiffs, no defendants, no pleadings, no discoveries, no provisions for offers of settlement or payment into Court, and no other trappings of an adversarial nature, All interested parties are entitled to be heard but in the end the officers of the Court must decide what is fair and reasonable in all of the circumstances.

45 The amount of remuneration to be paid to the administrator is determined on a quantum merit basis which reflects the reasonable value of the services rendered, which is subject to a 5% maximum.

46 In this regard, evidence is required concerning the administrator’s experience in estate matters, the nature of the estate, the tasks undertaken, the time spent, unusual problems arising during the administration of the estate, the skill employed by the administrator, and the results achieved which were directly attributable to the administrator’s efforts. Documentary evidence and time records should be provided where they exist. The administrator provided this evidence over the course of days of testimony. In addition, extensive documentary evidence was provided by both the administrator and the beneficiaries. However, no time records were provided, as the administrator did not keep a record in this regard.

47 An inference may be drawn against an administrator for failure to provide time records in appropriate circumstances. See Lowe Estate, Re, 2002 BCSC 813 (B.C. S.C.) at para. 33.

48 A negative inference in this regard will be appropriate where criticisms in the administrator’s administration of the estate are found to be valid. In these circumstances, the administrator’s remuneration may be substantially reduced. See Lowe Estate, Re , supra, at paras. 27, 28, 41 and 42.

Court Termination of Representation Agreements

Court Termination of Representation Agreements

Baker-McGrotty v Baker 2016 BCSC 699 discuss when the court will exercise its discretion to NOT terminate representation agreements after the appointment of a committee under the Patients Property Act.

26 Section 19 of the Patients Property act provides as follows:

19 On a person becoming a patient as defined in paragraph (b) of the definition of “patient” in section 1,

(a) every power of attorney given by the person is terminated, and

(b) unless the court orders otherwise, every representation agreement made by the person is terminated.

27 In Lindberg v. Lindberg, 2010 BCSC 1127 (B.C. S.C. [In Chambers]), Mr. Justice Willcock noted that the PPA is silent in relation to the factors the court is to consider in the exercise of its residual discretion to uphold a representation agreement following a declaration of incapacity under the PPA:

[49] The law permits the representation agreement to continue to be effective, despite the onset of disability, and recognizes the autonomous choice of a representative by a patient. The difficulty is that s. 19 of the PPA permits a representation agreement to be saved but does not establish the criteria which should be considered in determining whether or not to exercise that discretion. In the absence of further explicit direction in the legislation, I consider the following factors to be appropriate criteria:

(a) the circumstances in which the representation agreement was executed;

(b) the scope of the representation agreement; and,

(c) the basis for the application to set it aside.

28 The foregoing factors were subsequently adopted by Madam Justice Ross in Dawes v. Dawes, 2012 BCSC 1323 (B.C. S.C.), and there has been no suggestion that these criteria should not apply to the case at bar.

Wills Variation: “Family Cottage” Inheritances

Things to Consider For "Family Cottage" Inheritances | Disinheritance
I appeared along with Dawn Schooler of Jericho counseling on CBC radio Almanac show on July 18.16 for a discussion of the inherent problems of family inheritances of  the family cottage or any other recreational property, many of which end of in wills variation claims.
I prefaced my remarks by commenting that a recreational property that has been used by a family for years becomes charged with emotion as it represents many fond memories, family bonding, and often many “firsts”in the coming-of-age sense.
According to a 2000 census, there were 3.5 million recreational properties in Canada. Most of the lake cottages appear to be in central or Eastern Canada and not so many in British Columbia.
For  parents doing estate planning, it is particularly important to pay attention to recreational property as if it has risen in value since its purchase, and it is not your principal residence, there may be a large capital gains tax that is assessed upon death at fair market value.
If not properly planned for the tax bill alone could scrub any possibility of handing the recreational property onto the next generation.
Due to the complicated nature of our society, it is now not uncommon for some children to literally have moved on in  the world scene, and would rather have the money, than share the expense of not ever using the family cottage.
I stated that probably most lawyers would likely advise against attempting to provide for all of the children equally by giving the recreational property equally to them.
It is well-intentioned, but will invariably generate bad feeling, if not under the bequest itself, then in later years when the family becomes frustrated after  trying to work out the usage of the property on a shared basis.
I think in general it is best to sell the family cottage but that suggestion will fall on deaf ears to many who could not bear the thought of the cabin not ” staying within the family.”
It is a very understandable sentiment, but it is increasing becoming impossible to achieve on a long term basis.
Parents should have family discussions with all of the children present to canvass who is interested in preserving the cabin and who is not.
Those results alone may be surprising and the discussion could be very telling about each individual.
Certain steps can be taken to minimize the capital gains tax, such as purchasing life estate, putting the property into a family trust, or selling the property fractionally over time  to the various children interested in acquiring it.
I further stated on radio that if siblings are planning to co-own and co-share the family recreational property, that serious consideration should be given to operating the property, much like a professional timeshare corporation with all of the rules and regulations spelled out in complete detail and the property professionally managed.
Many families would find that suggestion ridiculous, but again I caution that the personal emotional attachment to the cottage can override the close family bond built over generations and make it very difficult to resolve issues to the point of where it can poison family ties.
Dawn Schooler very diplomatically spoke as a family counselor and cautioned the family to  focus on the end result to make matters work.
Legal advice should be obtained as to how to create a sensible cottage succession plan that all parties who are involved in it shall adhere to.
A random few issues that should be considered are:
  • The division of expenses, taxes and utilities;
  • the scheduling of usage
  • the rules of usage
  • first rights of refusal and prohibition to sales to outsiders
  • an annual budget, appointment of a manager, and creation and sustaining of a financial reserve;
  • a dispute resolution formula
  • compensation for sweat equity
  • inability to contribute financially when required-what happens
The list is endless.
I anecdotally told the audience that the last cottage dispute I had involved one side telling the other that they would no longer pay for toilet paper, detergent and gasoline for the boat as they had contributed too much in the past.
You can’t make that up.

Who Should Be Appointed Committee

Who Should Be Appointed Committee

The thorny topic of  who should be appointed Committee was discussed in Baker-McGrotty V Baker 2016 BCSC 699.

The case involved a representation agreement appointing a care giver but was signed when the patient was severely cognitively impaired, so it was suspect in it’s validity.

The Court then decided who should be appointed committee under the Patients Property Act and had the following to say:

[37]        In Stewart (Re), 2014 BCSC 2321 (CanLII), Mr. Justice Masuhara helpfully summarized the applicable law as follows:

[27]      The application for an appointment invokes the parens patriae jurisdiction of the court and is governed by an assessment of who will serve the patient’s best interest.

[28]      Section 18 of the Act states that:

A Committee must exercise the Committee’s powers for the benefit of the patient and the patient’s family, having regard to the nature and value of the property of the patient and the circumstances and needs of the patient and the patient’s family.

[29]      As has been observed in other cases, the Act does not prescribe criteria for the selection of an appropriate Committee. However, cases have identified various considerations; see for example: Vranic (Re), 2007 BCSC 1949 (CanLII); Bowman (Re), 2009 BCSC 523 (CanLII); Palamarek (Re), 2011 BCSC 563 (CanLII); Re Matthews, 2013 BCSC 1045 (CanLII); and Sangha (Re), 2013 BCSC 1965 (CanLII). They include:

(a) whether the appointment reflects the patient’s wishes, obviously when he or she was capable of forming such a wish;

(b) whether immediate family members are in agreement with the appointment;

(c) whether there is any conflict between family members or between the family and the patient, and whether the proposed Committee would be likely to consult with immediate family members about the appropriate care of the patient;

(d) the level of previous involvement of the proposed Committee with the patient, usually family members are preferred;

(e) the level of understanding of the proposed Committee with the patient’s current situation, and will that person be able to cope with future changes of the patient;

(f) whether the proposed Committee will provide love and support to the patient;

(g) whether the proposed Committee is the best person to deal with the financial affairs and ensure the income and estate are used for the patient’s benefit;

(h) whether a proposed Committee has breached a fiduciary duty owed to the patient, or engaged in activity which diminishes confidence in that person’s abilities to properly handle the patient’s affairs;

(i) who is best to advocate for the patient’s medical needs;

(j) whether the proposed Committee has an appropriate plan of care and management for the patient and his or her affairs and is best able to carry it out; and

(k) whether a division of responsibilities such as between the patient’s estate and the patient’s person to different persons would serve the best interests of the patient, or would such a division be less than optimal for the patient.

[39]      The above listing is of course non-exhaustive or in any particular order. The inquiry is fact specific and a particular factor may or may not be applicable and may attract different weight depending on the circumstances of a case.

[38]        In Vranic (Re), 2007 BCSC 1949 (CanLII), Madam Justice Ballance made the following apposite remarks:

[91]      The test for selecting an appropriate Committee is determined on the court’s assessment of who will serve the patient’s best interests: Public Trustee v. Thomas James Pollen, [1996] B.C.J. No. 2394; Re Watson, 2006 BCSC 503 (CanLII), [2006] B.C.J. No. 709, 2006 B.C.S.C. 503; Re Leeming (1984), 1984 CanLII 566 (BC SC), 14 D.L.R. (4th) 315 (B.C.S.C.); Re Rempel, 2001 BCSC 735 (CanLII), [2001] B.C.J. No. 1036, 2001 B.C.S.C. 735. Under the current legislative scheme, a declaration of incapacity and the appointment of a Committee has the effect of being a blunt order which results in a far-reaching fundamental loss of an adult’s liberties. The “best interests” test is a familiar one in law and, in particular, in the judicial determination of issues which affect children.

[92]      For sound reasons, that standard quite properly reflects the protective approach of the court in dealing with matters which affect children. Although the test by the same name applies in considering the appointment of a Committee for a mentally incapacitated adult, its application requires a more nuanced approach which acknowledges and takes into consideration issues concerning the adult’s autonomy, his personal dignity, his idiosyncrasies and the way he has chosen to live his life while capacitated. It also takes into account most assuredly any wishes he has validly expressed while mentally competent or lucid about who he would like to act as his Committee or otherwise make decisions on his behalf.

[93]      These factors should also inform the manner in which a Committee performs his or her duties. Additional important factors the court is to consider are, the proposed Committee’s previous involvement with the patient or his family, the proposed Committee’s knowledge and understanding of the patient’s situation and needs, the proposed Committee’s level of experience or capability in performing the duties of Committee, any kind of plan or scheme of the proposed Committee for the management of the patient and any potentially conflict of interest between the proposed Committee and the patient. Re West (1978), 20 N.B.R. (2d) 686 S.C.A.D.; Re Taylor (1982), 13 E.T.R. 168 (B.C.S.C.); Re Watts, [2002] B.C.S.C. 1331 (Master); Finlay v. Finaly (1997), 16 E.T.R. (2d) 216 (B.C.S.C.).

Tenancy in Common – 3 Ways to Sever Joint Tenancy

ConvertingJoint Tenancy into Tenancy in Common

Zeligs Estate v Janes 2016 BCCA 280 contains an excellent review of the law relating to severance of a joint tenancy, thus converting it into a tenancy in common:

[45]        Like any owner, a joint tenant is entitled to deal freely with his or her interest in property.  Accordingly, a joint tenant may sever a joint tenancy, with or without the consent or knowledge of the other joint tenant(s) and subject to contrary statutory provision.  After a joint tenant dies, however, severance is no longer possible because death extinguishes the joint interest.  For this reason, a testamentary disposition cannot sever a joint tenancy:  Bergen v. Bergen, 2013 BCCA 492 (CanLII) at para. 40; Hansen Estate at para. 63; A.J. McClean, “Severance of Joint Tenancies” (1979) 57 Can. Bar Rev 1 at 2, 38-41.

[46]        When a joint tenancy is severed, the joint tenancy is converted into a tenancy in common and the right of survivorship is extinguished.  In consequence, each affected co-owner becomes entitled to a distinct share rather than an undivided interest in the whole: Bergen at para. 40; Flannigan v. Wotherspoon (1952), 7 W.W.R. (N.S.) 660 at 665 (B.C.S.C.).  In joint tenancies composed of more than two persons, a blend of interests may be present.  For example, if A, B and C are joint tenants a severance of A’s interest will convert it into a tenancy in common, however, B and C will continue to be joint tenants with rights of survivorship between themselves: McClean at 6; Law Reform Commission of British Columbia at 5.

[47]        Severance is typically effected in one of three ways: by one person’s acting unilaterally upon his or her own share so as to destroy the four unities (for example, by selling it); by mutual agreement (for example, by written contract); or by “any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common” (for example, by conduct which demonstrates all tenants mutually dealt with their interests as several).  Other possible modes of severance include bankruptcy, partition or an order made under matrimonial property legislation: Williams v. Hensman (1861), 70 E.R. 862 (Eng. Ch.); Tessier Estate v. Tessier, 2001 SKQB 399 (CanLII) at para. 8.

[48]        Vice-Chancellor Wood described the three primary modes of severance, now known as the “three rules”, in Williams at 867:

3 Ways to Sever Joint Tenancy:

  1. In the first place, an act of any one of the persons interested operating upon his own share may create a severance as to that share.  The right of each joint-tenant is a right by survivorship only in the event of no severance having taken place of the share which is claimed under the jus accrescendi.  Each one is at liberty to dispose of his own interest in such a manner as to sever it from the joint fund – losing, of course, at the same time, his own right to survivorship. 
  2. Secondly, a joint-tenancy may be severed by mutual agreement. 
  3. And, in the third place, there may be a severance by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common.  When the severance depends on an inference of this kind without any express act of severance, it will not suffice to rely on an intention, with respect to the particular share, declared only behind the backs of the persons interested. You must find in this class of cases a course of dealing by which the shares of all the parties to the contest have been effected, as happened in the cases of Wilson v. Bell [(1843), 5 IR. Eq. 501 (Eng. Eq. Exch.)] and Jackson v. Jackson [(1804), 9 Ves. 591 (Eng. Ch.)]   

[49]        Rule 1 concerns the destruction of an essential unity by a joint tenant’s unilateral action.  As a matter of law, any such act automatically severs a joint tenancy: Bergen at para. 40.  Rules 2 and 3 concern the joint tenants’ common intention and operate in equity.  Where it would be unjust to permit parties to assert survivorship rights because of their conduct, equity intervenes to prevent them from doing so: Hansen Estate at para. 39; Ziff at 345.

[50]        Vice-Chancellor Wood’s judgment in Williams is the usual starting point in a severance analysis, although some jurists and commentators disagree on its meaning.  In particular, the extent to which rule 2 and rule 3 differ is controversial, as is the role, if any, that estoppel doctrine plays.  For example, in Tompkins Estate v. Tompkins (1993), 1993 CanLII 1119 (BC CA), 99 D.L.R. (4th) 193 (B.C.C.A.) Southin J.A. opined that Vice-Chancellor Wood was postulating a species of estoppel in rule 3 and disagreed with the trial judge’s view that severance requires either alienation or agreement, preferring to say it requires “… either alienation or agreement or facts which preclude one of the parties from asserting that there was no agreement” (199).  However, to the extent she interpreted rule 3 as a species of estoppel requiring proof of detrimental reliance, Winkler C.J.O disagreed in Hansen Estate, observing that a course of dealing sufficient to sever requires only that the co-owners knew of the other’s position and mutually treated their interests as several (at paras. 46-51).  In addition, some commentators question whether rules 2 and 3 are truly distinguishable: McClean at 16; Ziff at 345-347.

[51]        This case is primarily concerned with rule 1, the unilateral destruction of an essential unity.  As in Farley v. Pearlson, 2003 BCCA 37 (CanLII), it is thus unnecessary to analyse the full reach and meaning of Williams with respect to rules 2 and 3.  Nevertheless, at trial Mr. Zeligs argued that there was a rule 3 severance based on the parties’ course of conduct and the judge considered both rules 1 and 3, noting the diverging authorities.  In these circumstances, I think it prudent to comment on certain factors that may contribute to the controversy and suggest a possible route to its resolution.

[52]        The leading English authorities on severance are Williams and Burgess v. Rawnsley [1975] Ch. 429 (Eng. C.A.).  The reasons for judgment in both state that rules 2 and 3 cover separate methods of severing a joint tenancy, with severance by mutual agreement covered by rule 2.  However, in undertaking a rule 3 analysis courts sometimes focus on whether there was an implied agreement between the parties.  In other words, the parties’ course of dealings is sometimes analysed under rule 3 as evidence of facts from which an agreement to sever is inferred rather than as a separate method of severance: see, for example, Flannigan.  In my view, this approach blurs the line between rules 2 and 3.

[53]        I agree with Winkler C.J.O. in Hansen Estate that rule 3 is a conceptually distinct method of severance which does not encompass implied agreement.  I also agree with Wright J. in Tessier that the parties’ conduct may provide an evidentiary basis from which agreement can be inferred (at para. 12).  Nevertheless, mutual agreement, express or implied, is captured by rule 2 and should be analysed accordingly. The question under rule 3 is whether, in the absence of agreement, it would be unjust to permit a party to assert survivorship rights because of the parties’ mutual treatment of their interests.

[54]        Further, I see no reason to limit Southin J.A.’s rule 3 requirement of “facts which preclude one of the parties from asserting that there was no agreement” to cases involving detrimental reliance, nor do I think she necessarily did so.  Rather, in my view, on the facts of Tompkins Estate Southin J.A. considered it just to permit the respondent to assert survivorship rights, given the matrimonial context and the parties’ conduct, which, unlike the conduct at issue in Williams, included no element of reliance.  However, on different facts it might well be unjust to do so where co-owners have mutually demonstrated a common intention to treat their interests as several.  Depending on the circumstances, this may be true regardless of whether detrimental reliance can be shown: Hansen Estate at paras. 35-51.

[55]        Ascertaining whether a joint tenancy has been severed is a factual question, often determined on the basis of reasonable inference(s).  It requires the application of a legal standard to the facts as found by the trial judge.  Accordingly, on appeal the standard of palpable and overriding error applies to the judge’s finding that a severance has been effected:  Fuller at paras. 36-38; Flannigan at 666; Tessier at para. 12.

Rule 1 – Severance by Unilateral Action

[56]        When a joint tenant transfers his or her property interest the unity of title is broken and severance follows, subject to contrary statutory provision. For example, in some systems of title registration a transfer must be registered or the co-owner’s consent obtained before a severance takes effect: see, Land Titles Act, 2000, S.S. 2000, c. L-5.1, s. 156.  In British Columbia, however, s. 18(3) of the Property Law Act, R.S.B.C. 1996, c. 377 provides that a joint tenant may sever a joint tenancy by transferring property to himself or herself without requiring that the co-owner(s) be notified and s. 30 of the Law and Equity Act, R.S.B.C. 1996, c. 253 allows for severance by transfer of personal property to oneself and another.  In addition, s. 20 of the LTA provides that an instrument purporting to transfer an interest in land does not pass a legal or equitable interest unless the instrument is registered, except as against the person making the instrument.

[57]        In Stonehouse v. British Columbia (Attorney General), 1961 CanLII 48 (SCC), [1962] S.C.R. 103 the Supreme Court of Canada considered a predecessor provision similar to s. 20 of the LTA.  Based on the exception for the maker of the instrument, the court held an unregistered transfer deed executed by a joint tenant severed the joint tenancy.  This result followed because, without purporting to pass the other tenant’s interest, by dealing with her own, the transferring joint tenant changed the character of the other into a tenancy in common by operation of law.  In effect, the exception embedded within the statutory provision preserved the common law rule. 

[58]        Unlike transfers, mortgages do not usually take effect by way of conveyance; they operate by way of security as a charge against title.  In British Columbia, s. 231 of the LTA provides that a mortgage operates to charge the mortgagor’s estate or interest in land.  In consequence, the four unities are not broken when a mortgage is granted and a joint tenancy is not severed: Ziff at 344.  Nor does a unilateral statement of intention to sever effect a severance.  Some form of action or mutual agreement is required to sever a joint tenancy: Walker v. Dubord (1992), 1992 CanLII 2095 (BC CA), 67 B.C.L.R. (2d) 302 (C.A.) at para. 23.

[59]        Property can be converted from one form to another without effecting a severance, but not by unilateral action.  For example, it is possible to convert land into money or vice versa without necessarily severing the joint tenancy.  The law permits joint tenancy in personal property no less than in realty, thus a joint tenancy may carry on following a land sale by all joint owners because joint ownership may continue in relation to the sale proceeds: Allingham v. Allingham, [1932] VLR 469; Walker at para. 41.  However, if the sale proceeds are divided the four unities are destroyed and, in consequence, the joint tenancy is severed: Flannigan at 665-666; Tessier at paras. 11-12; Ziff at 345.

Further reading on tenancy in common

Joint Tenancy vs. Tenancy in Common

Joint Tenancy, Tenancy in Common and the Right of Survivorship

The Nature of a Joint Tenancy

Joint Tenancy, Tenancy in Common and the Right of Survivorship

Joint Tenancy, Tenancy in Common and the Right of Survivorship

The BC Appeal Court in Zeligs Estate v Janes 2016 BCCA 280 had the following to say about Joint Tenancy, Tenancy in Common and the Right of Survivorship.

As people age they often transfer property gratuitously to their adult children, and then hold it with them in joint tenancy. Their goals may vary. Some seek assistance with financial management; some wish to gift survivorship rights; some envisage other forms of shared ownership. As the Supreme Court of Canada explained in Pecore v. Pecore, 2007 SCC 17 (S.C.C.) , the intention of the transferor governs what passes beneficially, if anything, in transfers of this sort.

38      Joint tenancy and tenancy in common are the two most common forms of concurrent property ownership in Canada. In a joint tenancy, the “four unities” of title, interest, time and possession are present and co-owners hold an equal interest in the property as a unified whole. The common law treats joint tenants as a single tenant: each holding the whole for all, with no distinct shares held by anyone. In contrast, in a tenancy in common one co-owner may hold a greater proportionate interest in the property than the other co-owner(s): Hansen Estate v. Hansen, 2012 ONCA 112 (Ont. C.A.) at paras. 29-30; Alberta (Public Trustee) v. Felske Estate 2007 ABQB 682 (Alta. Q.B.) at para. 31, aff’d 2009 ABCA 209 (Alta. C.A.); Rathwell v. Rathwell [1978] 2 S.C.R. 436 (S.C.C.) at 459.

39      Unity of title means the title of each joint tenant arose from the same act or instrument. Unity of interest means their holdings are perfectly equal in nature, extent and duration. Unity of time means all the interests vested simultaneously. Unity of possession means each joint tenant has a right to present possession and enjoyment of the whole property, but no right to exclusive possession of any individual part of the whole. Assuming all four unities are present, the question of whether a joint tenancy or a tenancy in common has been created is determined by the intention of the grantor: B. Ziff, Principles of Property Law, 6th ed. (Toronto: Carswell, 2014) at 336; Felske Estate at para. 31.

40      Joint tenancy is often the chosen form of concurrent ownership for family holdings, usually for estate planning purposes. This is unsurprising. The legal fiction of a unified singularity composed of more than one person may fit comfortably in a family context. Unfortunately, however, unity can be fragile and families are not always happy. As Abella J. remarked in Pecore , when divisions arise that unhappiness often finds its painful way into a courtroom.

41      The principal and distinguishing characteristic of joint tenancy is the right of survivorship, the jus accrescendi. When one joint tenant dies, his or her interest in the property is extinguished and passes to the surviving joint tenant(s). The right of survivorship is, however, a revocable expectancy that manifests only upon success in the so-called “ultimate gamble” – survival – and then only if the joint estate has not been previously destroyed by an act of severance: Estate of Propst, Re, 788 P.2d 628268 (U.S. Cal. Sup. Ct. in Banco 1990) at 631. When given inter vivos, a gift of survivorship rights is to what is left, if anything, when the gamble is won: Simcoff v. Simcoff, 2009 MBCA 80 (Man. C.A.) at para. 64.

42      The interest of a tenant in common is different with respect to survivorship. Unlike that of a joint tenant, a tenant in common’s interest in property remains intact upon death and passes into his or her estate: Fuller v. Fuller Estate, 2010 BCCA 421 (B.C. C.A.) at para. 53.

43      Importantly, parties may hold legal title to property in one form of co-ownership while holding equitable title in another. For example, a mother and daughter may be joint tenants in law and tenants in common in equity with respect to jointly-held property by virtue of a trust or an act of severance. If the mother dies first, the daughter assumes full legal title by right of survivorship, but the mother’s equitable interest, being held in common, passes to her estate and the daughter holds legal title as trustee for the beneficial owners, namely herself and her mother’s estate: Pecore at paras. 4-5; Ziff at 341-342.

44      Equity leans against joint tenancies: Law Reform Commission of British Columbia: Report on Co-Ownership of Land (1988) at 23. As explained in J. McGhee, ed., Snell’s Equity, 31st ed. (London: Sweet & Maxwell, 2005) at 103, the relevant maxim is that equity is equality. When a joint tenant dies the whole belongs to the survivor(s) and the deceased’s estate takes nothing, which favours the tenant(s) of longevity and is thus unequal, except perhaps for an equal chance at survival. For this reason, equity often treats persons who are joint tenants at law, such as business partners or unequally contributing co-owners, as tenants in common: Mischel Holdings Pty. Ltd. v. Mischel, [2013] VSCA 375 (Australia Vic. C.A.) at paras. 60-61.