Trustee Cannot Be in Conflict With Duty

Trustee Cannot Be in Conflict With Duty

Equity will not allow a person who is in a position of trust to carry out a transaction where there is a conflict between his or her duty and his or her interest.

It is a rule of universal application that no trustee shall be allowed to enter into engagements in which he or she has, or can have, a personal interest, conflicting, or which may possibly conflict, with the interests of those whom he or she is bound by fiduciary duty to protect. So strictly is this principle adhered to, that no question is allowed to be raised as to the fairness, or unfairness, of the transaction; it is enough that the interested parties object. It may be that the terms on which a trustee has attempted to deal with the trust estate are as good as could have been obtained from any other quarter or better, but so inflexible is the rule that no inquiry into that matter is permitted. It makes no difference whether the contract refers to real estate, personalty, or mercantile transactions, as the disability arises not from the subject matter of the contract, but from the fiduciary character of the contracting party. Broadly speaking, the reason for the rule is that the trustee should not be placed in a position in which his or her interests are liable to conflict with his or her duty to the cestui que trust. This reason applies equally to a person acting as an agent of the trustee.

For example in Butcher Estate v Hamilton 1997 CarswellBC 1917 (B.C. S.C.) a mother transferred substantial sums of money to her daughter. The transfers were not an  outright gift to the daughter, but were intended to be held in trust by her to use for care of mother and father. The mother and father lacked mental capacity at time of transfers. The daughter breached her  duty as trustee by dealing with funds as though her own.

Trustees Must Sell For Market Value

Trustees Must Sell For Market Value

Estate trustees must obtain fair market value for the assets it sells.

It is trite law that an estate trustee has a fiduciary duty to act in the best interests of an estate and its beneficiaries, and in that regard, whether a professional or non-professional, an estate trustee must exercise the standard of care employed by a person of ordinary prudence in managing his or her own affairs.

This includes an obligation, when liquidating estate assets, to obtain fair market value for the assets being sold, with that value generally being the highest price available in an open and unrestricted market, between informed and prudent parties, acting at arms length and under no compulsion to act, expressed in terms of money or monies worth.

The traditional method of arriving at fair market value is to expose the asset for sale in the marketplace.. Baer v. Baer, 2014 CarswellOnt 10281 (Ont. S.C.J.).

See, for example: Beatrice Watson-Acheson Foundation v. Polk, [2006] O.J. No. 2518 (Ont. S.C.J.), at paragraph 53, and authorities cited therein; Fales v. Canada Permanent Trust Co. (1976), [1977] 2 S.C.R. 302 (S.C.C.), at p.315; and Krentz Estate v. Krentz, [2011] O.J. No. 1124 (Ont. S.C.J.), at paragraph 54.

This includes an obligation, when liquidating estate assets, to obtain “fair market value” for the assets being sold, with that value generally being the highest price available in an open and unrestricted market, between informed and prudent parties, acting at arm’s length and under no compulsion to act, expressed in terms of money or money’s worth. The traditional method of arriving at fair market value is to expose the asset for sale in the marketplace. See Ontario (Attorney General) v. Ballard Estate (1994), 20 O.R. (3d) 189 (Ont. Gen. Div. [Commercial List]), at paragraphs 38-39 and 50.

Domicile

Domicile

Sato v Sato 2017 BCSC 1394 ( upheld at 2018 BCCA 287) discusses in detail the legal issue of domicile. The issue was whether the deceased was domiciled in British Columbia at the time of his marriage to the plaintiff. If so his  2011 Will was revoked by operation of law. If not, the parties agree that the deceased’s domicile was Luxembourg and under  the laws of Luxembourg, the 2011 Will would not be revoked by the plaintiff’s marriage to the deceased. (The facts took place before WESA was introduced on March 31,2014 when marriage still revoked a will)

The plaintiff, Makiko Sato, is the widow of the deceased, Hiroyuki Rex Sato, commonly called Rex.   The defendant, Helen  Sato, is the sister of the deceased and is the executrix of the deceased’s will dated May 19, 2011 (the 2011 Will).

The plaintiff and the deceased were married in April 2013.    The deceased ceased to be a resident of Canada in 1999. From 2009 until his death on March 7, 2015, he was a resident of Luxembourg.

The Court found that the deceased was domiciled in British Columbia when he married the plaintiff in April 2013. As a result, his 2011 Will was revoked. The deceased was found to have had the intention to make British Columbia his domicile.

One of the determining facts was that the deceased indicated to CCRA that he intended to retire in Canada. The defendant had the onus of proving his domicile was in Luxembourg and failed to do so.

Domicile

[8]            In Scott v. Vanston, 2016 SKCA 75, the Saskatchewan Court of Appeal reviewed the law of domicile, and of particular interest in the case at bar, the principles involving domicile of choice and abandonment. Justice Herauf, for the Court, stated:

Domicile of choice

[52]      [Wadsworth v. McCurdy (1886), 12 S.C.R.466] is the earliest decision of the Supreme Court on the law of domicile in Canada. In Wadsworth, all five judges authored opinions but Ritchie C.J. largely sets out the opinion of the three-two majority. Chief Justice Ritchie begins by stating that the law of domicile is well-settled in Canada, having previously been established by the courts of England. He then cites numerous authorities for the principles that form the law of domicile.

[53]      In regard to acquiring a domicile of choice, Ritchie C.J. sets out the law at 475-76:

What will constitute a change of domicile has been frequently enunciated in the highest courts. Thus in Lord v. Colvin the Vice Chancellor:

I would venture to suggest that the definition of an acquired domicile might stand thus: That place is properly the domicile of a person in which he has voluntarily fixed the habitation of himself and his family, not for a mere special and temporary purpose, but with a present intention of making it his permanent home, unless and until something (which is unexpected or the happening of which is uncertain) shall occur to induce him to adopt some other permanent home.

I am disposed to think that the definition thus modified would be found to be in accordance with most, if not all, of the leading decisions on the subject of acquired domicile.

But whatever may be the most correct and proper terms in which to frame a definition of domicile, this at least is clear and beyond controversy, that to constitute an acquired domicile two things are requisite, act and intention, factum et animus. To use the language of an eminent jurist, to whose admirable writings I have before referred, two things must concur to constitute domicile (of course he is speaking of acquired domicile); first, residence; and secondly, the intention of making it the home of the party There must be the fact and the intent; for, as Pothier has truly observed, a person cannot establish a domicile in a place, except it be animo et facto.

Sir J. Romilly, the Master of the Rolls:

It is quite settled that two things are necessary to constitute a change of domicile; first, the factum of the change of residence; and next, the animus manendi. In other words, in order to effect a change of domicile, the person must have settled in a residence out of his former domicile, whether it be the domicile of origin or an acquired domicile; and he must also have the intention of making that residence his permanent home.

[54]      Therefore, based on the preceding analysis, a person establishes a domicile of choice by voluntarily choosing to reside in a location, not temporarily or for some special purpose, with the intention of making it his permanent home unless and until something unexpected or uncertain induces him to adopt some other permanent home.

[55]      This same principle has been cited and followed in numerous subsequent cases. In Trottier, Duff C.J. states at 207:

The principles which ought, I think, to be kept steadily in view and rigorously applied in this case are, first, that a domicile of origin cannot be lost until a new domicile has been acquired; that the process of the acquisition of a new domicile involves two factors, the acquisition of residence in fact in a new place and the intention of permanently settling there: of remaining there, that is to say, as Lord Cairns says, for the rest of his natural life, in the sense of making that place his principal residence indefinitely.

[56]      In Osvath, which is a relatively brief decision, the central principle cited is that quoted by Ritchie C.J. in Wadsworth from Lord v Colvin (1859), 62 ER 141. Further, this Court previously applied the same principle in Gunn v Gunn (1956), 2 DLR (2d) 351 at 353, and quoted Duff C.J.’s formulation of it from Trottier at 207.

[57] Most recently, the Alberta Court of Appeal summarized the law in relation to domicile of choice in Foote Estate, Re, 2011 ABCA 1 at paras 20-22, [2011] 6 WWR 453 [Foote Estate CA]:

[20]      One’s domicile of origin can be displaced by a domicile of choice, a place where a person has chosen to live. The classic description of domicile of choice is found in Udny v. Udny (1869),1866-69 L.R. 1 Sc. 441 (U.K. H.L.):

Domicile of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. … There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation.

[21]      Of particular relevance to this appeal is the requirement that the choice to change domicile must be voluntary, not dictated by business, debts or health. Some authorities speak of one’s domicile of choice as a place where one intends to end one’s days. That language is unhelpful where, as here, a person with a fatal and fast-moving illness makes a trip shortly before his death for treatment. Determining an intention to change domiciles in such a situation is not a simple matter of saying the deceased intended to live out his days in the new location. It could not, in most cases, be described as a voluntary move.

[22]      The acquisition of a domicile of choice involves two factors: the acquisition of residence in fact in a new place and the intention of permanently settling there … in the sense of making that place [one’s] principal residence indefinitely: Trottier v. Rajotte, [1940] S.C.R. 203 (S.C.C.), at 206, [1940] 1 D.L.R. 433 (S.C.C.) [emphasis added].

[58]      The onus of proving that a person has acquired a domicile of choice is on the party alleging the acquisition (see Wadsworth at 470-71).

[59]      Regarding permanency versus indefiniteness in relation to intention, it was noted in Foote Estate QB [Re Foote Estate, 2009 ABQB 654] that indefinite has been interpreted in a number of cases and that different case law has applied different standards but that ultimately it is a factual inquiry (para 46). The high standard that has been applied is that of living out one’s days in a jurisdiction (para 47). While the lower standard that has been applied is that of no fixed intention of leaving (para 48). I would settle any controversy relating to the proper standard to be applied in determining intention to acquire a domicile of choice by endorsing the test set out in para 22 of Foote Estate CA, namely, ¦ the intention of permanently settling there … in the sense of making that place [one’s] principal residence indefinitely.

Abandonment

[60] Just as a person can acquire a domicile of choice, he or she may also abandon a domicile of choice. The principle of abandonment is not fully addressed in any of the three Supreme Court decisions on domicile except in reference to the abandonment of a domicile of origin in favour of a domicile of choice. The principle is, however, considered in Foote Estate CA and Foote Estate QB. The Court in Foote Estate CA sets out the principle of abandonment:

[25]      The following rule is set out in Dicey, Morris and Collins on The Conflict of Laws, 14th ed. (London: Sweet & Maxwell, 2006) at 151:

Rule 13 – (1) A person abandons a domicile of choice in a country by ceasing to reside there and by ceasing to intend to reside there permanently or indefinitely, and not otherwise.

[26]      The test for loss of domicile of choice is two-fold: it requires an intention to cease to reside in a place coupled with acts that end one’s residence. It is described in Dicey as follows:

A domicile of choice is lost when both the residence and the intention which must exist for its acquisition are given up. It is not lost merely by giving up the residence nor merely by giving up the intention. [Emphasis added]

[27]      Castel & Walker, in their Canadian Conflict of Laws at s. 4.8, 6th ed. (Markham, Ont.: LexisNexis Butterworths, 2005), describe the process of abandonment of a domicile of choice as the converse of its acquisition. They also note the dual nature of the test. To paraphrase, for Mr. Foote to have abandoned his domicile of choice on Norfolk Island, it would be necessary for him to cease to reside there and also to cease to have the intention to return to Norfolk Island as his permanent home. Absence without the intention of abandonment is of no effect, nor is intention without any actual change of residence: Castel & Walker at s. 4.8.

[61]      In Foote Estate QB, Graesser J. cites other authorities to support the above proposition:

[51]      It is certainly possible to abandon a domicile of choice or origin in favour of a new domicile of choice, but such change involves more than a change in intention and requires some act of abandonment. That requirement to take some tangible step to abandon was identified in Fedeluk v. Fedeluk as relating to the dual prerequisites to adopt a new domicile of choice:

[12]      It is clear that the abandonment of a domicile of choice requires, as does its acquisition, the combination of factum and intention: See Jones v. Kline, [1938] 3 W.W.R. 65, at 75 (Alta.) and other cases cited at p. 409 of Power on Divorce, 2nd ed. The intention to abandon is insufficient in itself to effect the abandonment so long as the person remains within the domicile or territory: See Zanelli v. Zanelli (1948) 64 TLR 556, 92 Sol J 646. [Emphasis added.]

[53]      Howson J. in Jones v. Kline (Jones), at para. 16, stated the rule as:

… in order to lose the domicile of choice and revive the domicile of origin, it is not sufficient for the person to form the intention of leaving the domicile of choice, he must actually leave it with the intention of leaving it permanently. [Emphasis added.]

[62] As noted above, a person need not acquire a new domicile of choice for a prior domicile of choice to have been abandoned. Rather, a person may abandon a domicile of choice not having any other domicile but for their domicile of origin (see Foote Estate QB at para 77). Important, as well, is the point that a person need not completely cease to reside in a location to abandon it as his or her domicile (see Foote Estate CA at para 33).

[9]            In Osvath-Latkoczy v. Osvath-Latkoczy, [1959] S.C.R. 751, the Supreme Court of Canada considered whether the appellant’s domicile of choice was Ontario. Justice Judson writing for the Court stated at 753:

The principle to be applied is that stated in Lord v. Colvin, which was adopted in Wadsworth v. McCord, and followed in Gunn v. Gunn:

That place is properly the domicile of a person in which he has voluntarily fixed the habitation of himself and his family, not for a mere special and temporary purpose, but with a present intention of making it his permanent home, unless and until something (which is unexpected or the happening of which is uncertain) shall occur to induce him to adopt [some] other permanent home.

Lex Fori

[10]        Domicile is determined in the jurisdiction in which the issue is raised the lex fori: Re Annesley, [1926] Ch 692 at 705.

[11]        In the case at bar, the parties agree that the matter of the deceased domicile should be determined by the Supreme Court of British Columbia.

Onus

[12]        The party who asserts a new domicile of choice has the onus of proving the change in domicile: The Lauderdale Peerage (1885), 10 A.C. 692 at 739.

[13]        The onus of proof is that of a balance of probabilities: F.H. v. McDougall, 2008 SCC 53. As the Court in F.H. stated at para. 46:.. evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of probabilities test.

Only One Domicile at any Particular Time

[14]        A person always has a domicile but never has more than one domicile at any particular time: Wadsworth v. McCurdy (1886), 12 S.C.R. 466 at 468; Udny v. Udny (1869), L.R. 1 Sc. & Div. 441 (H.L.) at 448.

Matrimonial Domicile

[15]        For the deceased’s 2011 Will to have been revoked by his marriage to the plaintiff in April 2013, he must have been domiciled in British Columbia as of that time: Allison v. Allison (1998), 56 B.C.L.R. (3d) 1 (S.C.).

Executors: Specific Bequests and Fees

Executors: Specific Bequests and Fees

Janke, Re 1985 CarswellBC 2298 dealt with the presumption that when an executor is left a specific bequest it is in lieu of fees. This presumption applies only where the bequest is made to the executor in his capacity as executor and yields to very slight indications of a contrary intention on the part of the testator.

Macdonnell, Sheard and Hull on Probate Practice, 2d Ed, at p.329. This quotation was also quoted by Mr. Justice McKay in Re Ross, [1976] 3 W.W.R. 465 at page 466:

In addition to those cases in which the will contains an express provision for the executor in lieu of compensation, there is a presumption that when a legacy or annuity is left to an executor, it is intended to be in lieu of the compensation to which he would otherwise be entitled. But this presumption, like the presumption that such a provision is conditional upon the executor’s proving the will, applies only when the bequest is made to the executor in his capacity as executor and yields to very slight indications of a contrary intention.

In Canada Permanent Trust Co. v. Guinn 1981 CarswellBC 327, the respondent co-executor had been given a substantial legacy under the will, and had had minimal duties, as the bulk of administration was done by the trust company.

The questions submitted were whether the legacy was intended to be in lieu of executor’s compensation to the respondent, and, if not, how to divide the compensation.

The Court held that the Respondent was entitled to share of compensation.

The presumption that a legacy was intended to be in lieu of an executor’s compensation was not a strong one, and would yield to very slight evidence of contrary intention. The indications in the will were that the testator intended the respondent to take beneficially.

Extrinsic evidence was allowable to rebut or support a bare legal presumption. The extrinsic evidence allowed indicated that the respondent was to take beneficially, not as executor.

Executors Personally Liable For Failing to Invest

Executors Personally Liable For Failing to Invest
Re Proniuk 1984 CarswellAlta 285 held the executor personally liable for interest lost to the estate for failing to invest the estate assets for 11 months and for interest lost on their pre taking of executor fees.
In the administration of an estate, executors had failed to invest for approximately 11 months a sum of money which, if invested, would have produced interest of approximately $2,840. In addition, the executors had paid to themselves, without authorization, the sum of $3,600 as interim executors‘ fees. The executors applied to the Court for the passing of their accounts.
The executors were liable to pay to the estate the sum of $2,840 in respect of interest lost to the estate by reason of their lack of care and diligence and consequent non-investment of estate funds. In addition, they wrongly took the amount of $3,600 as interim fees and they were deemed to have received the benefit of the interest thereof. This amounted to $834.48, which they were liable to pay to the estate.

Executor Liable For Lost Rents

Executor Found Liable For Lost Rents

Executors sometimes let friends or relatives live in estate property and not collect fair rent. The executor can be personally liable for lost rent.

Where an executor permits tenants to live rent-free in estate property and the court is satisfied that the property was capable of earning rent money for the estate during that period of time, the executor can be held responsible to the estate for the rental income that was lost as a result.

Sowa Estate, Re, 2003 ABQB 761 (Alta. Q.B.) per Veit J., at para. 3. stated

“I have concluded that Mr. Sowa should repay a total of $28,047 to the estate in relation to rent. The evidence before the Court is that, while he controlled the estate property, Michael Sowa granted tenants rent-free periods and rent reduction periods. While a private owner of property can dispose of that property however he chooses, a trustee holds for the benefit of others and must make prudent decisions concerning the property. In other words, if the property was capable of earning money for the estate, it should have been doing so. I am satisfied with the calculations which indicate that a total of $9,951.00 represents rent available, but lost, during the period. In the result, Mr. Sowa must repay a total of $28,047 representing rent received plus rent lost.”

Mental Suffering

Claiming Damages for Mental Suffering

Even in estate disputes client’s often wish to claim damages for mental suffering caused by other parties. The law relating to such was discussed in the Ontario case of Guschewski v Gushewski 2017 ONSC 4553

In Prinzo v. Baycrest Centre for Geriatric Care, (2002), 60 OR 474 Weiler J.A. stated:

A review of the case-law and the commentator confirms the existence of the tort of the intentional infliction of mental suffering, the elements of which may be summarized as:

(1) flagrant or outrageous conduct;

(2) calculated to produce harm; and

(3) resulting in a visible and provable illness.

51      There is no allegation from Ms. Guschewski that she is suffering from a “visible and provable illness”. The case is similar, in this respect, to B.L. v. Furman, (2011), in which summary judgment was granted dismissing a claim for damages for intentional infliction of mental suffering based on the absence of a pleading of visible and provable illness.

52      The Supreme Court of Canada established the test for claims for damages for mental suffering in Mustapha v. Culligan of Canada Ltd., (2008) 2 SCR 114. McLachlin C.J., speaking for the Court, stated:

[8] Generally, a plaintiff who suffers personal injury will be found to have suffered damage. Damage for purposes of this inquiry includes psychological injury. The distinction between physical and mental injury is elusive and arguably artificial in the context of tort. As Lord Lloyd said in Page v. Smith, [1996] 1 A.C. 155 (H.L.), at p. 188:

In an age when medical knowledge is expanding fast, and psychiatric knowledge with it, it would not be sensible to commit the law to a distinction between physical and psychiatric injury, which may already seem somewhat artificial, and may soon be altogether outmoded. Nothing will be gained by treating them as different “kinds” of personal injury, so as to require the application of different tests in law. [Emphasis added.]

[9] This said, psychological disturbance that rises to the level of personal injury must be distinguished from psychological upset. Personal injury at law connotes serious trauma or illness: see Hinz v. Berry, [1970] 2 Q.B. 40 (C.A.), at p. 42; Page v. Smith, at p. 189; Linden and Feldthusen, at pp. 425-27. The law does not recognize upset, disgust, anxiety, agitation or other mental states that fall short of injury. I would not purport to define compensable injury exhaustively, except to say that it must be serious and prolonged and rise above the ordinary annoyances, anxieties and fears that people living in society routinely, if sometimes reluctantly, accept. The need to accept such upsets rather than seek redress in tort is what I take the Court of Appeal to be expressing in its quote from Vanek v. Great Atlantic & Pacific Co. of Canada (1999), 1999 CanLII 2863 (ON CA), 48 O.R. (3d) 228 (C.A.): “Life goes on” (para. 60). Quite simply, minor and transient upsets do not constitute personal injury, and hence do not amount to damage. [Emphasis added]

53      The Supreme Court recently revisited the test for mental distress claims in Saadati v. Moorhead, (2017) SCC 28, in which the court resisted an effort to extend the reach of Mustapha v. Culligan by requiring evidence of a recognizable mental illness. Brown J. stated:

This Court has, however, never required claimants to show a recognizable psychiatric illness as a precondition to recovery for mental injury. Nor, in my view, would it be desirable for it to do so now. Just as recovery for physical injury is not, as a matter of law, conditioned upon a claimant adducing expert diagnostic evidence in support, recovery for mental injury does not require proof of a recognizable psychiatric illness. This and other mechanisms by which some courts have historically sought to control recovery for mental injury are, in my respectful view, premised upon dubious perceptions of psychiatry and of mental illness in general, which Canadian tort law should repudiate. Further, the elements of the cause of action of negligence, together with the threshold stated by this Court in Mustapha v. Culligan of Canada Ltd., 2008 SCC 27 (CanLII), [2008] 2 S.C.R. 114, at para. 9, for proving mental injury, furnish a sufficiently robust array of protections against unworthy claims. I therefore conclude that a finding of legally compensable mental injury need not rest, in whole or in part, on the claimant proving a recognized psychiatric illness. It follows that I would allow the appeal and restore the trial judge’s award.

Revocation of Wills Post WESA

Revocation of Wills Post WESA - Disinherited

The introduction of the Wills Estates and Succession act (WESA) on March 31,2014 made a few  significant changes to the law relating to the revocation of wills.

Probably the most significant change was that marriage after the execution of a will no longer revokes a will. This largely unknown fact had created much hardship in estate law over a long period of time.

The other significant change is the insertion of section 58 WESA known as the curative provision for  otherwise defective wills.

Section 55 of WESA provides as follows:

55 (1) A will or part of a will is revoked only in one or more of the following circumstances:

  • by another will made by the will-maker in accordance with this Act;
  • by a written declaration of the will-maker that revokes all or part of a will made in accordance with section 37 ;
  • by the will-maker, or a person in the presence of the will-maker and by the will-maker’s direction, burning, tearing or destroying all or part of the will in some manner with the intention of revoking all or part of it;
  • by any other act of the will-maker, or another person in the presence of the will-maker and by the will-maker’s direction, if the court determines under section 58 that

(i)     the consequence of the act of the will-maker or the other person is apparent on the face of the will, and

(ii)     the act was done with the intent of the will-maker to revoke the will in whole or in part.

(2) A will is not revoked in whole or in part by presuming an intention to revoke it because of a change in circumstances.

VOLUNTARY REVOCATION

It should be stated at the outset that section 58 WESA which is discussed later in this paper may well alter the common law stated hereafter quite dramatically if it is applied in the same sweeping effect that the courts have used that section to cure defective wills. To date there have been no reported cases on how the courts will apply section 58 WESA to remedy defective revocations, but I anticipate that the effects will be dramatic.

Voluntary Revocation can be accomplished by any of the following:

  • by executing a subsequent will or codicil that typically contains a revocation clause of the previous will;
  • a written declaration declaring an intention to revoke a will and duly executed in the same prescribed manner as a will;
  • by burning, tearing or otherwise destroying the will by the testator or by someone in the presence and by the direction of the testator

The execution of a subsequent will or codicil is by far the most common method of revoking a will.

In fact, when a testamentary document is valid and contains a revocation clause , there is a very heavy onus on anyone attacking the will attempting to argue that the revocation clause was not intended to be operative. McCarthy v Fawcett ( 1945) 1 W.W.R. 70 ( B.C.C.A)

Drawing a line through the signature and adding the words  I hereby revoke this will was held to be of no legal effect in Bell v. Matthewman ( 1920) 49 O.L.R 364.

A letter properly attested by two witnesses and addressed to the bank manager who held the original will on deposit stating “ will you please destroy the will already made out was held to have effectively revoked the will in Re Spracklan ( 1938) 2 All E.R. 730.

With respect to the destruction of a will, there must be both the act of destruction as well as the intention to destroy the will and any symbolic destruction will not suffice. Partial tearing of the will which leaves the words legible does not necessarily show an intention to revoke. There must be such an injury with intent to revoke that it destroys the entirety of the will to have an effective revocation. Re Shafner ( 1956) 2 D.L.R. ( 2d) 593 ( N.S.C.A.)

The Common Law Presumption of Destruction

Very often in estate disputes the original or a will cannot be found and an attempt is made to probate a copy, giving rise to the legal issue as to whether the will had been destroyed or simply lost.

If an original duly executed will that was in the possession of the testator is not propounded upon death and the executor fails to prove that the original was not merely lost and not destroyed, then there is a common law presumption that is rebuttable by sufficient evidence that the will was destroyed by the testator, that the testator destroyed the will for the purpose of revoking it. Sigurdson v Sigurdson (1935) 4 DLR 529 ( S.C.C.)  and Kumar v Kumari ( 1993) BCJ No. 108.

The evidence necessary to rebut the presumption of revocation need not be such as to amount to a positive certainty , but only such as to produce moral conviction. Re Matt estate ( 1954) 11 WWR ( NS) 28 ( Man.C.A).

The Sigurdson case ibid stated that the evidence to rebut the presumption of revocation must be clear and convincing to satisfy the court that the will had in fact been lost and not destroyed by the testator with an intention of revoking the will.

Various Factors of Consideration by the Court Whether the Presumption Applies

Haider v Kalugin  2008 BCSC 930 enumerated some of the factors the court will consider in deciding whether the presumption of revocation applies, and if so, whether it has been rebutted:

  • whether the testator continued to have good relations with the named beneficiaries in the copy of the will up to the date of death;
  • whether the terms of the will were reasonable
  • the nature and character of the deceased in taking care of personal effects- ie orderly vs hoarding;
  • statements made by the testator to either confirm or contradict the terms of the will copy;
  • whether the deceased understood the consequences of having a will and the effects of an intestacy;
  • were personal papers stored carefully or haphazardly;

The presumption of revocation does not apply where the original will cannot be traced to the possession of the testator. Brimicombe v Brimicombe Estate  (2001) NSJ No. 157 (N.S.C.A). For example if the original was stored at the drafting lawyers office and the will was lost while there, the presumption would not apply.

SECTION 58  WESA

Section 58 of WESA, reads as follows:

58 (1) In this section, record includes data that

(a)   is recorded or stored electronically,

(b)   can be read by a person, and

(c)    is capable of reproduction in a visible form.

(2) On application, the court may make an order under subsection (3) if the court determines that a record, document or writing or marking on a will or document represents

(a)   the testamentary intentions of a deceased person,

(b)   the intention of a deceased person to revoke, alter or revive a will or testamentary disposition of the deceased person, or

(c)    the intention of a deceased person to revoke, alter or revive a testamentary disposition contained in a document other than a will.

(3) Even though the making, revocation, alteration or revival of a will does not comply with this Act, the court may, as the circumstances require, order that a record or document or writing or marking on a will or document be fully effective as though it had been made

(a)   as the will or part of the will of the deceased person,

(b)   as a revocation, alteration or revival of a will of the deceased person, or

(c)    as the testamentary intention of the deceased person.

(4) If an alteration to a will makes a word or provision illegible and the court is satisfied that the alteration was not made in accordance with this Act, the court may reinstate the original word or provision if there is evidence to establish what the original word or provision was.

Section 58 WESA is a dramatic change to the law of revocation given that even if the document attempting to revoke a will is defective, if the court finds that the intention of the testator was to revoke the will, then under Section 58 (3) the court can cure the defect so as to give legal effect to the intention of the testator.

The “curative” provisions of Section 58 was illustrated in Horton v Bruce 2017 BCSC 712 where the court remedied only the revocation clause and not the distributive clauses of a subsequent  draft will that had been signed by the testator but not witnessed by two witnesses in the presence of each other. The legal effect of the imposition of Section 58 (3) was to cause the deceased to die intestate.

Horton v. Bruce relied upon  a Supreme Court of Canada decision Bell Express Vu Limited Partnership v Rex 2002 SCC 42 for the authority to interpret Section 58 to give the courts the power to cure only a part of a document or a writing deemed to be a will, and not the entire document.

CONCLUSION

The effects of WESA will be dramatic upon the law of revocation of wills. Section 55 WESA abolished the revocation of a will by any marriage that takes place after March 31, 2014.

The effect of Section 58 WESA has yet to be recognized but the application of that section in the Horton v Bruce decision leads me to believe that Section 58 will be liberally applied to remedy any defective revocation if the court concludes that it was the intention of a testator to revoke a will but failed to do so in a  manner that the common law previously demanded.

Who Can Bring a Partition Action

partition action

In order to be able to bring any  court action the claimant must have standing. Pallot v Douglas 2017 BCCA 254 is a court of appeal case setting out who has the standing to bring a partition action under the Partition of Property act. It held that a claimant who has the use of a leasehold property pursuant to a trust does NOT have standing to bring an action for partition.

Standing under the Partition of Property Act

[16]         Section 4(1) of the PPA sets out the persons who have standing to bring a partition application, as follows:

4 (1) Any person who, if this Act had not been passed, might have maintained a proceeding for partition may maintain such a proceeding against any one or more of the interested parties without serving the other or others, and a defendant in the proceeding may not object for want of parties.

[17]         This provision codifies the test for standing set out in Morrow v. Eakin, [1953] 2 D.L.R. 593 at 594‑595, 8 W.W.R. (N.S.) 548 (B.C.S.C.), which applied this Court’s decision in Evans v. Evans, [1951] 2 D.L.R. 221, 1 W.W.R. (N.S.) 280 (B.C.C.A.). The test requires looking at the civil law of England as the same existed on November 19, 1858, which was made applicable in this province by the English Law Act, R.S.B.C. 1948, c. 111, subject to modification by provincial legislation.

[18]         A more recent and detailed statement by this Court is that in Jillings v. Blewett Estate, [1993] 101 D.L.R. (4th) 604, 79 B.C.L.R. (2d) 217 (C.A.), which summarizes the principles thus:

10        To continue with the origins of our present Act I quote from Halsbury’s, The Laws of England (1st edition 1912) Volume 21 at 834‑5 (footnote);

Prior to the passing of the Partition Act, 1868 (31 & 32 Vict. c. 40), partition was a matter of right, and the court had no discretion to refuse partition or to order sale in lieu thereof (Warner v. Baynes (1750), Amb. 589; Parker v. Gerard (1754), Amb. 236). This state of the law produced numerous inconveniences and absurdities. In Turner v. Morgan (1803), 8 Ves. 143, Lord Eldon, L.C., decreed partition of a single house, and Mr. Romilly in argument cited a case of a house at Cockermouth which was partitioned by actually building a wall up the middle. This state of the law led to the passing of the Partition Acts, 1868 (31 & 32 Vict. c. 40) and 1876 (39 & 40 Vict. c. 17), under which the court has wide powers to order a sale in lieu of partition where the nature of the property or the interest of the parties makes that more convenient.

[Emphasis added.]

11        Turning to the law in the Province of British Columbia, I take this summary from the reasons for judgment of Mr. Justice Bird in Evans v. Evans (1951), 1 W.W.R. (N.S.) 280 at 286‑7:

The civil law of England as the same existed on November 19, 1858, subject to modification by provincial legislation, was made applicable in this province by the English Law Act, RSBC, 1948, ch. 111.

Therefore the law relating to partition in British Columbia remained as it was in England prior to the enactment of 31 & 32 Vict., ch. 40, until 1880, when the provincial legislature introduced in this province legislation substantially in the terms of 31 & 32 Vict., ch. 40, the substantial change effected in the law by that legislation being to give the court jurisdiction to order sale in lieu of partition “in an action for partition where, if this Act had not been passed, a decree for partition might have been made: Partition Act, 1880, ch. 21, sec. 4. (emphasis added)

12        Section 4 of the statute of 1880 is now Section 7 of the Partition of Property Act, R.S.B.C. 1979, c. 311 and with amendments to the 1880 statute of no consequence for present purposes gives the court jurisdiction to order sale in place of partition.

7. In a proceeding for partition where, if this Act had not been passed, a judgment for partition might have been given, then if it appears to the court that by reason of the nature of the property to which the proceeding relates, or of the number of parties interested or presumptively interested in it, or of the absence or disability of some of those parties, or of any other circumstance, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the court may, if it thinks fit, on the request of any of the parties interested and notwithstanding the dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions. (emphasis added)

13        The words I have emphasized – if this Act had not been passed – are significant because as Mr. Justice Bird pointed out “the law relating to partition in British Columbia remained as it was in England prior to the enactment of 31 & 32 Vict. ch. 40” in 1868. I repeat then what was said in Dogg v. Cattell (cited above):

But in Courts of Equity as well as in those of Common Law the existence of a joint tenancy or a tenancy in common is essential to the jurisdiction.

[Emphasis added in original.]

[19]         As noted in Jillings, the provisions of the PPA dealing with those against whose interests partition may be compelled do not inform the provisions dealing with entitlement to seek partition, i.e., standing:

14        The appellants placed reliance on particular words used in Section 2 to give them standing to obtain an order for partition and in lieu thereof an order for sale. I have underlined the particular words in the section:

 2. All joint tenants, tenants in common, copartners, mortgagees or other creditors having liens on, and all parties interested in, to, or out of, any land may be compelled to make or suffer partition or sale of the land, or any part of it as provided in this Act, and the partition may be had whether the estate is legal or equitable or equitable only; except that in respect of special timber licences no partition shall be made of a single licence, and any odd licences not possible to assign by partition to any of the parties interested shall be ordered to be sold.

15        The appellants submit that they come within the intent of “all parties interested in …. any land”. However section 2 does not describe the parties entitled to partition. As the heading indicates – Parties may be compelled to make partition or sale – the section describes those against whom an order may be made including creditors.

[Emphasis added.]

[20]         A recent summary as to who was entitled to bring a petition for partition under English law in 1858 is found in the British Columbia Law Institute consultation paper Consultation Paper on the Partition of Property Act (June 2011) at 5‑6:

In order to determine who is eligible to seek partition, therefore, the English law pre-dating the English Partition Act, 1868 [31 & 32 Vict., c. 40] needs to be examined. Specifically, it is the law of England as it existed on 19 November, 1858 that needs to be examined, as the Law and Equity Act [R.S.B.C. 1996, c. 253, s. 2] makes English law as it existed on that date applicable in British Columbia except to the extent it has been altered by laws of the province or is inapplicable to local circumstances. As of that date, the classes of persons eligible to seek partition were coparcenary tenants and those co-owners to whom the statutes of 1539 and 1540 had extended the remedy. As coparcenary tenancy no longer exists, the persons eligible to seek partition or sale in lieu of partition in British Columbia are those described in the 1539 and 1540 statutes, namely:

(a) joint tenants of the fee simple or a profit à prendre;

(b) tenants in common of the fee simple or a profit à prendre;

(c) joint tenants or tenants in common of a life estate;

(d) co-owners of a leasehold estate (co‑lessees).

There is another requirement: anyone seeking partition or sale must have an immediate right to possession of the land. Thus owners of a future interest, such as joint tenants of a remainder following a life estate, cannot claim these remedies.

[Emphasis added, footnotes omitted.]

[21]         The persons entitled to seek partition (s. 4(1) PPA) are a distinct class from those against whom partition may be compelled (s. 2 PPA). Up to this point, the persons with standing under the PPA have been restricted to joint tenants, tenants in common, or co‑owners of a legal estate.

B. Possession

[22]         It is not disputed that to have standing under the PPA a petitioner must have a possessory interest in land. A possessory interest is:

The present right to control property, including the right to exclude others, by a person who is not necessarily the owner … A present or future right to the exclusive use and possession of property.

Black’s Law Dictionary, 8th ed, sub verbo “possessory interest”.

The possessory interest requirement has been characterized as requiring the petition to have an immediate right to possession of the land: Morrow at 595, Consultation Paper at 6.

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

[24]         The judge below determined that Mr. Pallot’s beneficial interest is an interest in land for the purposes of the PPA. Thus the crux of the issue as to whether Mr. Pallot has standing to seek partition is the question of whether that interest includes an immediate right to possession.

Beneficiary Trusts in Leasehold Estates

Beneficiary Trusts in Leasehold Estates

Pallot v Douglas 2017 BCCA 254 discusses the interest of a beneficiary of a trust in a decision that held that the beneficiary of a leasehold interest in a trust does not have the standing to partition the property and force a sale. This is because  the very nature of an interest in a trust only gives one the use of an asset as opposed to actually owning an interest in the asset.

The Personal Nature of the Trust Interest

[30]      Regardless of the terminology used, Mr. Pallot says his interest as a beneficiary under a trust of an interest in a leasehold estate gives him a right to immediate possession of the property. However, in my view, that position ignores one of the fundamental features of a trust.

[31]        One of the essential features of a trust is that one or more parties hold title to property and manage it for the benefit of one or more parties who have a right to enjoy the property. The beneficiaries under the trust enjoy the property subject to the terms of the trust. Professor Waters describes the principle as follows:

The trust is, perhaps, better described by isolating its essential features. The hallmarks, the essential characteristics of the common law trust, are heavily reflective of a particular legal history. The foremost of these is the fiduciary relationship which exists between trustee and beneficiary. One party holds the title to property, and

manages it. for the benefit of another who has exclusive enjoyment of the property. As we have seen, it is possible to have a variation on this basic framework, for the trustee may himself be a beneficiary. In that case he will have a share in the enjoyment….

Donovan W.M. Waters, Mark Gillen & Lionel Smith, Waters’ Law of Trusts in Canada,

4th ed. (Toronto: Thomson Reuters, 2012) at 9.

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

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

…only the trustee, and not the beneficiary, has the right and the duty to make claims against third parties who may have interfered with or damaged the trust property….

A.H. Oosterhoff, Robert Chambers & Mitchell Mclnnes, Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed. (Toronto: Carswell, 2014) at 38.

[33]        Professor Oosterhoff further explains the respective rights of trustees and beneficiaries:

Similarly, the beneficiaries are not generally entitled to direct the trustee. For example, the beneficiaries cannot require the trustee to resign and appoint another person as a replacement. In general, then, we see that the structure of the trust is that trust property is held by the trustee, and this gives the trustee rights in rem. rights against the whole world: the beneficiary, on the other hand, can reguire the trustee to use those rights according to the terms of the trust. It is not so much that the beneficiary has an interest in the trust property that lies alongside the interest of the trustee.

Rather the rights of the beneficiary encumber the rights of the trustee, with the result that the trustee can be forced to use his rights in a particular way. As one legal historian has put it, “The interest of cestui que trust depends on the interest of the trustee: the creation of a trust is a process of cumulation, and not division”.

Oosterhoff on Trusts at 39.

[34]        In short, the interest of the beneficiary under a trust is the right to claim that the trust be performed in accordance with its terms. It is not an immediate right to possession of the trust property. This position was clearly shown in relation to a beneficiary’s equitable interest in Taylor v. Grange (1879), 13 Ch. D. 223, affd (1880), 15 Ch. D. 165 (C.A.). In Taylor manages it. for the benefit of another who has exclusive enjoyment of the property. As we have seen, it is possible to have a variation on this basic framework, for the trustee may himself be a beneficiary. In that case he will have a share in the enjoyment….

Donovan W.M. Waters, Mark Gillen & Lionel Smith, Waters’ Law of Trusts in Canada,

4th ed. (Toronto: Thomson Reuters, 2012) at 9.

[Emphasis added.]