Category: Probate Litigation

Court Delay & Dismissal Want of Prosecution

Many court actions, including estate litigation are commenced and then just ” sit there” often for years such that inordinate delay can occur.

After certain criteria are met, typically the defendant will apply to the court for dismissal of the plaintiff’s court action for want of prosecution.

In Drennan v. Smith, 2022 BCCA 86 the Court of Appeal summarized principles to be considered on an application for dismissal for want of prosecution at para. 16 as follows:

Relevant factors for consideration are summarized in Wiegert v. Rogers, 2019 BCCA 334:

On an application to dismiss for want of prosecution, it must be shown that

1)there has been inordinate delay,

2)that the inordinate delay is inexcusable,

3) and that the delay has caused, or is likely to cause, serious prejudice to the defendant.

4) In addition, the final and decisive question, which encompasses the other three, is whether, on balance, justice requires a dismissal of the action: Azeri v. Esmati-Seifabad, 2009 BCCA 133 at para. 9; 0690860 Manitoba Ltd. v. Country West Construction Ltd., 2009 BCCA 535 at paras. 27-28.

Inordinate delay is defined in Drennan at para. 16 (citing para. 32 of Wiegert v. Rogers, 2019 BCCA 334 [Wiegert]) as follows:

…Inordinate delay is delay that is immoderate, uncontrolled, excessive and out of proportion to the matters in question: Azeri at para. 8; Sahyoun v. Ho, 2015 BCSC 392 at para. 17. As Justice Saunders explained in Sun Wave Forest Products Ltd. v. Xu, 2018 BCCA 63 at para. 25, the concept is relative: some cases are naturally susceptible of fast carriage or call for more expeditious prosecution than others. Although there is no universal rule as to when time starts to run, the date of commencement of the action is typically identified as the point from which delay is measured. The delay should be analysed holistically, not in a piece-meal fashion, and the extent to which it may be excusable is highly fact-dependent: Ed Bulley Ventures Ltd. v. The Pantry Hospitality Corporation, 2014 BCCA 52 at para. 38; 0690860 at para. 29.

The plaintiff’s diligence and dispatch in advancing the action is relevant to whether a delay is inordinate. Plaintiffs have a particular onus to move expeditiously when a case involves serious allegations that go to a defendant’s character and credit, see Extra Gift Exchange Inc. v. Accurate Effective Bailiffs Ltd., 2015 BCSC 915 [Extra Gift Exchange Inc.].
In considering the issue of whether there has been inordinate and inexcusable delay, the court is entitled to consider the conduct of the defence contributing to that delay, see Tundra Helicopters Ltd. v. Allison Gas Turbine, 2002 BCCA 145 at para. 21 [Tundra].

The burden is on the applicant to establish that there has been inordinate and inexcusable delay. Once the applicant has established inordinate and inexcusable delay, a rebuttable presumption of prejudice arises:

Once a defendant establishes that delay is inordinate and inexcusable, a rebuttable presumption of prejudice arises: Busse v. Chertkow, 1999 BCCA 313 at para. 18. The concern is with the prejudice that a defendant will suffer in mounting and presenting a defence if the matter goes to trial: 0690860 at para. 27. Relevant matters could include failing memories, unavailable witnesses and the loss or destruction of physical evidence.
…
Drennan at para. 16 (citing para. 33 of Wiegert).

The final and overriding question is whether the interests of justice require dismissal of the action, see Drennan para. 16 (citing para. 33 of Wiegert):

…As to the final consideration — whether, on balance, justice requires dismissal of the action — again, the determination is highly fact-dependent. Relevant matters could include the length of and reasons for the delay, the stage of the litigation, the context in which the delay occurred and the role of counsel in causing the delay (although negligence on the part of a plaintiff’s lawyer may not always amount to an excuse): International Capital Corporation v. Robinson Twigg & Ketilson, 2010 SKCA 48 at para. 45; 0690860 at para. 29.

Four questions are to be addressed in an application to dismiss for want of prosecution:

1. Has there been inordinate delay on the part of the plaintiff in pursuing its claim?
2. Has the delay been inexcusable?
3. Has the delay caused serious prejudice, or is it likely to cause serious prejudice to the defendants?
4. Does the balance of justice require an order dismissing the plaintiff’s claim?
Extra Gift Exchange Inc., at para. 41.

The Admissibility of Hearsay Statements of a Deceased

It is a fact that estate litigation is rife with hearsay evidence, often “from” the deceased and if certain criteria are met, such evidence is admissible.

In Peterson v. Welwood, 2018 BCSC 1379 at paras. 69-8o the court considered the admissibility of statements of the deceased:

In Gutierrez v. Gutierrez, 2015 BCSC 185 at para. 34 the court summarized the factors that can be considered when assessing the threshold reliability of a hearsay statement:

1) the presence or absence of a motive to lie

2) independent corroborative evidence that “goes to the trustworthiness of the statement” (Blackman at para. 55; Khelawon at para. 67; R. v. Couture, 2007 SCC 28 (S.C.C.) at para. 83);

3) timing of the statement relevant to the event, contemporaneity (Khelawon at para. 67);

4) the declarant’s mental capacity at the time of making the statement (Khelawon at para. 107);

5) solemnity of the occasion and whether the declarant’s statement was made “in circumstances that could arguably be akin to the taking of an oath where the importance of telling the truth and the consequences of making a false statement were properly emphasized” (Couture at para. 89; Khelawon at para. 86).

It is important to recognize that, as a preliminary threshold issue, the court must first find on a balance of probabilities that the statement was in fact made by a deceased declarant before it goes on to determine the treatment and weight of such evidence: Creutz v. Estate of Kristian Winther, 2007 BCSC 1463 at para. 99.

This assessment turns on the credibility of the witnesses who relate to the court the hearsay statements attributed to the deceased declarant: Halfpenny v. Holien (1997), 37 B.C.L.R. (3d) 186 (S.C.).

Settlement Agreements to Be Upheld

The bar to set aside a settlement agreement is a high one.

There is a great public interest in holding people to their bargains.

BC courts have repeatedly cited the principles set out by the British Columbia Court of Appeal in Robertson v. Walwyn Stodgell Cochran Murray Ltd. 24 BCLR (2d) 385 (BCCA), 1988 CarswellBC 120 at para 9, cited in Lessing Brandon & Company LLP v. Dyck and others, 2019 BCSC 2331 at para 43:

“The fact that the settlement agreement may not have been a desirable one from [one parties point of view], or the fact that they may have received poor advice from their lawyer, or the fact that they later changed their minds, cannot provide grounds for setting aside the settlement agreement, or for a refusal to enforce it […]

Sojka v Sojka 2018 BCSC 562 reviews the law with respect to enforcement of a settlement reached at a mediation where both parties were represented by counsel, and one party attempted to renege on the agreement by utilizing what the court regarded as “settler’s remorse.”

The plaintiff brought on a court application to enforce the minutes of settlement that were signed by the parties and their counsel, and relied upon S 8(3) of the Law and Equity act and the inherent jurisdiction of the court to enforce the terms of settlement, which the court in fact did.

The defendants in their attempt to renege on the settlement argued that they were mistaken as to certain evaluations of property at the mediation, which the court found was not in fact the case, finding that the minutes of settlement and release constituted a clear agreement between the parties.

The court followed the decision of Roumanis v Hill 2013 BCSC 1047 as to when the enforceability of a settlement agreement ought to be decided on a summary procedure.
The court stated:

The question of the proper procedure to adjudicate the enforceability of the settlement was addressed in Mackenzie v Mackenzie (1975) BCJ 1114 were the court reviewed the authorities and concluded that the court ought to enforce settlement upon application in the action of justice could be done by proceeding summarily.

The court found that there is a sound policy for the courts to enforce the terms of a valid settlement agreement as stated by the BC Court of Appeal in Robertson v Walwyn et al (1988) 24 BCLR )2d) 385 (BCCA):

“Justice affects both parties and requires a balancing of their interests. The fact that the settlement agreement may not have been a desirable one from the point of view of the Robertsons, or the fact that they may have received for advice from their lawyer, or the fact that the later change their minds, cannot provide grounds for setting aside the settlement agreement, or refusal to enforce it. And it would do scant justice to the interests of the defendants in this case to recognize the validity of the settlement agreement, and that it will ultimately prevail, but to refuse to enforce it at this time and in these proceedings.”

Hawitt v Campbell 1983 Carswell BC 199 (BCCA) set out that a court could refuse to exercise its discretion to perfect a settlement where:

1. There was a limitation on the instructions of the solicitor known to the opposite party;
2. There was a misapprehension by the solicitor making the settlement of the instructions of the client or the facts of the type that would result in an justice or make it unreasonable or unfair to enforce the settlement;
3. There was fraud or collusion;
4. There was an issue to be tried as to whether there was such a limitation, misapprehension, fraud or collusion in relation to the settlement.

The Importance of Pleadings

Pleadings are important. They delineate the issues between the parties and inform the opposing party of the nature of the case they have to meet. Pleadings prevent surprises at trial and limit the issues to be tried.

Parties must plead the legal basis for seeking relief.

Rule 3-1 of the Supreme Court Civil Rules [Rules] addresses what is properly contained in an originating pleading:

Contents of notice of civil claim

(2) A notice of civil claim must do the following:

(a) set out a concise statement of the material facts giving rise to the claim;

(b) set out the relief sought by the plaintiff against each named defendant;

(e) if the plaintiff sues or a defendant is sued in a representative capacity, show in what capacity the plaintiff sues or the defendant is being sued;

(f) provide the date collection information required in the appendix to the form;

(g) otherwise comply with Rule 3-7.

Rule 3-7(18) addresses particulars:

If the party pleading relies on misrepresentation, fraud, breach of trust, wilful default or undue influence, or if particulars may be necessary, full particulars, with dates and items if applicable, must be stated in the pleading.

Rule 3-7(12) addresses pleadings subsequent to a notice of civil claim:

In a pleading subsequent to a notice of civil claim, a party must plead specifically any matter of fact or point of law that

(a) the party alleges makes a claim or defence of the opposite party not maintainable;
(b) if not specifically pleaded, might take the other party by surprise, or
(c) raises issues of fact not arising out of the preceding pleading.

Rule 6-1(8) provides that amendments to pleadings may be granted at trial. Unless otherwise ordered by the court, “if an amendment is granted during a trial or hearing, an order need not be taken out and the amended pleading need not be filed or served.”

There are numerous cases which discuss the purpose and importance of the Rules with respect to pleadings.

In Sahyoun v. Ho, 2013 BCSC 1143, Justice Voith, as he then was, discussed the function of pleadings generally:

[16] The new Rules alter the structure in which pleadings are to be prepared. The core object of a notice of civil claim, however, remains the same. That object is concisely captured in Frederick M. Irvine, ed., McLachlin and Taylor, British Columbia Practice, 3rd ed.; vol. 1 (Markham, Ont.: LexisNexis Canada Inc., 2006 at 3-4 – 3-4.1:

If a statement of claim (or, under the current Rules, a notice of civil claim) is to serve the ultimate function of pleadings, namely, the clear definition of the issues of fact and law to be determined by the court, the material facts of each cause of action relied upon should be stated with certainty and precision, and in their naturel order, so as to disclose the three elements essential to every cause of action, namely, the plaintiff’s right or title; the defendant’s wrongful act violating that right or title; and the consequent damage, whether nominal or substantial. The material facts should be stated succinctly and the particulars should follow and should be identified as such…

[17] These requirements serve two foundational purposes: efficiency and fairness. These purposes align with Rule 1-3 which confirms that “the object of [the] Supreme Court rules is to secure the just, speedy and inexpensive determination of every proceeding on its merits.”

[18] I emphasize efficiency because a proper notice of civil claim enables a defendant to identify the claim he or she must address and meet. The response filed by a defendant, together with the notice of civil claim and further particulars, if any, will confine the ambit of examinations for discovery and of the issues addressed at the trial itself. Proper pleadings limit the prospect of delay or adjournments. They allow parties to focus their resources on those matters that are of import and to ignore those that are not. They facilitate effective case management and the role of the trier of fact.

[19] A proper notice of civil claim also advances the fairness of pre-trial processes and of the trial. Defendants should not be required to divine the claim(s) being made against them. They should not have to guess what it is they are alleged to have done.
…

There are cases which specifically discuss the importance of pleading fraud and misrepresentation. Some disallow claims under those headings where they were not pleaded in accordance with Rule 3-7(18): Karimi v. Gu, 2016 BCSC 1060, at paras. 183-187.

In Grewal v. Sandhu, 2012 BCCA 26, at para. 19, the Court of Appeal held that “[a]n allegation of fraud must be scrupulously pleaded and fully particularized.” In Grewal, the Court held that the plaintiff could not seek to establish a case of fraud against the defendant that depended entirely on the defendant’s husband’s knowledge since there was no pleaded allegation that the husband was a participant in a fraud.
In Terrim Properties Ltd. v. Sorprop Holdings Ltd., 2012 BCSC 985, the plaintiff framed its argument in negligence but had not pleaded it. Justice Melnick held that the negligence claim could not be maintained since the plaintiff had not pleaded negligence. Justice Melnick said the following:

[17] …It is trite law (as well as R. 3-1(2)(c)) that one must plead the legal basis for seeking relief. Neither counsel for the defendants came to court prepared to deal with a claim for negligence. They anticipated, properly, that they were here to meet a claim in nuisance.
[…]
[19] Given the above, it is not necessary for me to come to any conclusions respecting the capacity of Terrim to maintain all of the claims it advances…

Applying a different approach in Berthin v. Berthin, 2018 BCCA 57, the Court of Appeal left open the principle that a pleading need not explicitly say “equitable fraud”:

[22] With great respect, I am of the view that the judge erred in dismissing the fraud claim on the basis that it disclosed no reasonable cause of action. The judge fell into error because he assessed the pleading against the requisite elements of the tort of civil fraud, rather than equitable fraud relied on by Mr. Berthin. The error occurred no doubt in part because the notice of civil claim unhelpfully failed to use the phrase “equitable fraud”. However, counsel for Mr. Berthin made submissions at the hearing based on equitable fraud and in my view the facts and averments pleaded are capable of supporting that cause of action.

In Anenda Systems Inc. v. AL13 Systems Inc., 2020 BCSC 2077 [Anenda], Justice Lyster considered circumstances where, contrary to Rule 3-7(18), the defendant had not provided full particulars of the fraud in which it alleged the plaintiff had engaged. Justice Lyster found that the defendant should have pleaded equitable fraud and granted leave to file a notice of civil claim rather than further amend its counterclaim.

In Whiten v. Pilot Insurance Co., 2002 SCC 18, the defendant argued that the statement of claim did not plead the factual basis for an independent actionable wrong. The statement of claim did include a claim for punitive and exemplary damages. Justice Binnie, at paras. 89 to 90, stated “if the respondent was in any doubt about the facts giving rise to the claim, it ought to have applied for particulars and, in my opinion, it would have been entitled to them.” Justice Binnie noted there was no surprise except as to the quantum of punitive damages. He further noted that the plaintiff had pleaded a breach of the duty to deal fairly and in good faith in handling the plaintiff’s claim.
In Cook v. Neufeld, 2022 BCSC 6:

The general rule is that amendments to pleadings should be permitted as necessary to allow the real issues between the parties to be determined. Although more stringent considerations apply when amendments are sought at the end of trial, provided the proposed amendments would not cause injustice, unfairness or prejudice to the non-amending party, the amendments are generally allowed so that the real issues between the parties can be adjudicated upon: Argo Ventures Inc. v. Choi, 2019 BCSC 86 at paras. 6, 8 and 9; Lam v. Chiu, 2012 BCSC 677 at para. 10.

Striking Out a Claim

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Anonymization and Publication Ban Orders

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

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

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

The Reasons for judgement stated:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Adverse Inferences

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

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

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

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

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

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

Plaintiffs must establish a prima facie case

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

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

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

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

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

Alter Ego Trusts – Estate Planning Tool

Alter ego trusts are increasingly being used an an estate planning tool for those over 65 years of age.

From the perspective of disinherited.com they are typically used by parents to disinherit a child(ren) so that the child(ren) has no recourse under wills variation proceedings( S. 60 WESA)

In Larochelle v. Soucie Estate, 2019 BCSC 1329 at paras. 174-175, Donegan J. (quoting from Donovan Waters On Trusts ) summarized the nature and function of alter ego trusts:

[174] The particular type of trust at issue in this case is referred to as an “alter ego trust”. This type of trust is defined by its tax consequences. Under the ITA, individuals over the age of 65 are allowed to transfer assets to this special type of inter vivos trust, set up exclusively for that individual’s own benefit in their lifetime. At creation, the same person is generally settlor, trustee, and beneficiary. In Waters Law of Trusts, an alter-ego trust is explained concisely at 633:

An “alter-ego trust” allows a person of the age of 65 or over to settle property upon an inter vivos trust with the right to roll the property into the trust free of capital gains as long as the settlor is entitled to receive all of the income of the trust that arises before his or her death and as long as no person except the settlor may obtain the use of any of the income or capital of the trust before the settlor’s death. This allows settlors to make inter vivos disposition of their property that might otherwise have been made under a will.

[175] As both parties point out, inter vivos trusts in general, and alter-ego trusts specifically, have been recognized as legitimate estate-planning tools.

In Mawdsley v. Meshen, 2012 BCCA 91, Newbury J.A. described the legitimate “protective” functions of corporations and trusts, including alter ego trusts, in the estate planning context this way:

[2] Corporations and trusts also serve “protective” functions in the realm of estate planning. For example, individuals wishing to “freeze” the value of their estates may “roll over” their existing shares to new corporations, or exchange their appreciating shares for fixed-value shares, on a tax-deferred basis. The future appreciation of the corporation may then accrue to the benefit of the next generation, either directly or through trusts.

In recent years, the “alter ego trust” has also been recognized in the Income Tax Act as an estate planning tool. Provided the settlor is age 65 or older, he or she may ‘roll’ assets to a trust that is for his or her sole benefit during his or her lifetime and then for the benefit of his or her chosen beneficiaries. Such trusts have several advantages: they are used to minimize or eliminate probate fees; they permit the control and management of assets located in various jurisdictions to be centralized and to ‘carry on’ after the settlor’s death without the need for court approvals or probate; they obviate the risk of asset diminution due to incapacity or diminished capacity on the part of the settlor; and where beneficial interests are subject to the exercise of the trustee’s discretion, they offer some protection from spendthrift family members, their spouses and others claiming through them: s

Debts Owed By Beneficiary Must Be Accounted For

Re Kolic Estate 2022 BCSC 1527 reviewed an equitable principle in the distribution of an estate , that an indebted beneficiary of the estate must first bring his or her debt back into the estate so as to ensure fairness, even if the debt is statute barred. The equitable principle is known as the rule in Cherry v Boultbee.

In Kolic a sister who was heavily indebted to the estate petitioned to have her 1/6th interest in land registered while a cross petition sought directions under S. 86 Trustee act and obtained an order that the other siblings could sell the property and not register her 1/6th interest because of the set-off between the inheritance and the debt owing by her to the estate.

The equitable principle in Cherry v. Boultbee (1939), 4 My. & C. 442 (Eng. Ch. Div.) was considered by Church J. in Johnston Estate (Re), 2017 BCSC 272, who summarized the law in this area:

28 The applicant relies on what is commonly referred to as 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. 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.
…
36 …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 [sic] 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.

Non Disclosure Leads to Adverse Inference

Sarzynick v Skwarchuk 2021 BCSC 443 held that the defendant who was found to have strategically refused to disclose and produce financial documents could be held to an adverse inference that he had in fact siphoned off monies from his parent’s assets over several years as alleged by the plaintiffs.

The court stated that strategic non disclosure is a risky strategy which typically attracts adverse consequences to the non disclosing party

The court followed the BCCA case of Weintz v Weintz 2014 BCCA 118 in that regard.

Weinst stated:

Non-disclosure of relevant information that is in the possession and control of a party, and is necessary for the determination of an issue in the litigation, is a risky strategy. It has typically attracted adverse consequences to that party. In Kowalewich, Huddart J.A. stated that a trial judge must fix the amount of the compensation order based on the evidence before him when he orders a division in specie of family assets (at para. 21). He cannot ignore evidence because it may be difficult to assess. I would add that he cannot avoid making a necessary order to finalize the litigation because of a lack of evidence in the possession and control of a party that the party may choose not to tender. The making of a compensation order must also be distinguished from an order regarding its terms of payment. The latter is an ancillary order that may be addressed, through terms and conditions, after the compensation order is made.

[44] A similar reasoning may be found in Hausmann v. Klukas, 2009 BCCA 32, 91 B.C.L.R. (4th) 201 at paras. 51-52, leave to appeal ref’d 2009 S.C.C.A. No. 135, where this Court held that the onus was on the payor of child support to provide the necessary evidence that his corporation’s pre-tax income was not available for that purpose. In that case, the payor’s failure to meet that onus resulted in a presumption that the corporation’s pre-tax income was available to the payor for child support.

The Judge in Sarzynick v Skwarchuk followed Le v Milburn (1987) BCJ 2690 at para 2:

“When a litigant practices to deceive, whether by deliberate falsehood or gross exaggeration, the court has much difficulty in disentangling the truth from the web of deceit and exaggeration. If, in the course of the disentangling of the web, the court casts aside as untrue something that was indeed true, the litigant has only himself or herself to blame.”