Court Appoints Majority Vote Trustee and Denies Judicial Trustee

Re Newton estate 2013 BCSC 799, involves a court application between two competing trustees to be appointed the third majority vote trustee of the family trust. When only two remaining trustees were unable to agree on a replacement. One of the trustees applied to appoint a well-qualified person for the trust position that was opposed by the other party on the basis that he was too friendly with the other trustee.

The dissenting trustee instead asks the court to appoint a Judicial Trustee, but the court refused and appointed the friend of the family who was better qualified.

The trust document require that there be three trustees but did not delineate that any one of them should be an independent, institutional or corporate trustee.

The instrument further was broad in its scope and who should be appointed as trustee, and a principle of law was that the wishes of the trust beneficiaries had to be held above other interests. Neither beneficiary objected to the appointment of the applicant, and in fact they promoted. The other concern that the court has in these situations is that the appointment should promote as opposed to impede the execution of the trust.

Appointment of a Trustee

[49] Pursuant to s. 31 of the Trustee Act, R.S.B.C. 1996, c. 464 (Ac)], the court may appoint a new trustee:

If it is expedient to appoint a new trustee and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, it is lawful for the court to make an order appointing a new trustee or trustees, whether there is an existing trustee or not at the time of making the order, and either in substitution for or in addition to any existing trustees.

[50] The principles that guide the court’s discretion in appointing a new trustee were set out in the English Court of Appeal decision In Re Tempest, (1866) 1 Ch. App. 485 (Tempest) at 487 – 488:

[1.] … the Court will have regard to the wishes of the persons by whom the trust has been created, if expressed in the instrument creating the trust, or clearly to be collected from it. [2.] … the Court will not appoint a person to be trustee with a view to the interest of some of the persons interested under the trust, in opposition either to the wishes of the testator or to the interests of others of the cestuis que trusts. [3.] … the Court in appointing a trustee will have regard to the question, whether his appointment will promote or impede the execution of the trust, for the very purpose of the appointment is that the trust may be better carried into execution.

Appointment of a Judicial Trustee

[51] The Act also provides that the court has a discretionary power to appoint a judicial trustee:

97 (1) If an application is made to the court by or on behalf of the person creating or intending to create a trust, or by or on behalf of a trustee or beneficiary, the court may, in its discretion, appoint a judicial trustee to be a trustee of that trust, either jointly with any other person or as sole trustee, and, if sufficient cause is shown, in place of all existing trustees.

[52] The appointment of a judicial trustee was considered in Wright v. Canada Trust Company (1984), 55 B.C.L.R. 349 (S.C.) at 358 (Wright). The court discussed the function of a judicial trustee and the circumstances where an appointment will be warranted:

Judicial trustees are trustees appointed by the court in those circumstances where the court, on application of the settlor, intending settlor, trustees and beneficiaries, considers that such a person should be appointed. Persons not coming within one of the categories have no status or right to apply under this section. His duties will be determined by the court, and he will either act with the existing trustees or be authorized to act alone, or be required to act in place of the existing trustees. …

In Alexander v. Royal Trust Co., [1949] 1 W.W.R. 867, [1949] 2 D.L.R. 824, the Alberta Supreme Court [Appellate Division] considered s. 58 of the Trustee Act, R.S.A. 1942,c. 215, which is similar to s. [97] of our Trustee Act. The court said a judicial trustee should only be appointed for special reasons and where the circumstances warrant, e.g., where an administration of property by a trustee has broken down, or where the administration is being unduly prolonged and the court does not consider it proper itself to undertake the administration (followed in O’Kelly v. Canada Permanent Trust Co., [1972] 1 W.W.R. 41 (Sask. C.A.), and Re Burr (1968), 1 D.L.R. (3d) 78, (B.C.S.C.)

[53] In view of these reasons, the appointment of a judicial trustee will only be justified on the basis of “special reasons” where the circumstances warrant it.

“Legal Disability” In BC

legal disability

The term “legal disability” is only defined in the BC Rules of Court, and not in any other statute in this province. Rule 20-2(2) of the BC Rules of Court provides that “a proceeding brought by or against a person under legal disability must be started or defended by his or her litigation guardian.”

According to Rule 20-2(8)(a), persons under legal disability are infants or “mentally incompetent” persons.

The phrase “mentally incompetent person” is defined in the Interpretation Act, R.S.B.C. 1996, c. 238, s.29, to mean “a person with a mental disorder as defined by s. 1 in the Mental Health Act”.

The following definition appears in the Mental Health Act:

“person with a mental disorder” means a person who has a disorder of the mind that requires treatment and seriously impairs the person’s ability to react appropriately to the person’s environment, or to associate with others.

In Holland v. Marshall, 2009 BCCA 311 at paras. 29 and 37, Neilson J. A. held that the “environment” referred to in the definition of mental disorder contemplates the larger community of which the person was a part, and not just the environment of the court system and process. It was not enough that the plaintiff in that case had ADHD and memory problems because his mental disorder did not impair his ability to react appropriately to his environment or to associate with others. As such, he was not found to be legally disabled.

While the definition of “mentally incompetent” seems clear, the term “legal disability” has also been determined by the courts to mean something less stringent. In Pavlick v. Hunt, 2005 BCSC 285 at para. 20, for example, the court applied the definition of “a person under disability” found in Kirby v. Leather, [1965] 2 All E.R. 441 (Eng. C.A.), in which it was held by Lord Denning that the issue of whether or not a person was under a legal disability required a determination of: “whether or not the person had the capacity to exercise judgment in relation to the claims in issue in this lawsuit and possible settlement, as a reasonable person would be expected to do.”

– See more at: http://www.disinherited.com/blog/being-under-legal-disability-bc#sthash.Mq8vIT2D.dpuf

Promissory Estoppel

In Anderson v Anderson 2010 BCSC 911, the deceased prior to his death transferred his interest in a cottage to his second wife for one dollar and other good and valuable consideration.

 

The plaintiffs were the deceased’s children from his first marriage. For several years following the deceased’s death, the plaintiffs and their families continue to enjoy access to the recreational property.

 

The defendants second wife however plan to sell the cottage, and the plaintiffs commenced court action for a declaration that the defendant held the property in trust for the plaintiffs, or for relief based on the equitable doctrines of promissory estoppel or proprietary estoppel.

 

The action was dismissed as the court found that the deceased intended to make a gift of the cottage to his spouse, and that she did not hold the property on any conditions of trust.

 

disinherited.com has previously blogged on the issue of proprietary estoppel, but not promissory estoppel.

 

The following is a good excerpt of the law on promissory estoppel:

 

Promissory Estoppel

 

198 As a final point, I address the plaintiff’s claim based on promissory estoppel. Although some other jurisdictions have relaxed the restriction, the law in Canada is that promissory estoppel can operate only as a shield and not as a sword. In other words, promissory estoppel cannot create a new cause of action where none existed before: Romfo v. 1216393 Ontario Inc., 2007 BCSC 1375(B.C. S.C.); and Halsbury’s Laws of Canada, 1st ed., vol. Contracts (Markham, Ont.: LexisNexis, 2008) at 233.

 

199 In view of my findings that the plaintiffs have not established any actionable claim against the defendant, the plaintiffs’ claim must fail.

 

200 Moreover the Supreme Court of Canada in Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50(S.C.C.) at 57 stated that a party who wishes to invoke the doctrine of promissory estoppel must establish:

 

1) That the other party by words or conduct made a promise that was intended to affect the parties’ legal relationship; and

 

2) That, in reliance on the promise, the party has acted or in some way changed his or her position.

 

201 The promise must have been unambiguous and precise; it must have been intended to have a “binding effect”: M. (N.) v. A. (A.T.), 2003 BCCA 297(B.C. C.A.) at para. 19.

Missing Persons and Presumption of Death Order

Missing persons

disinherited.com  obtained a presumption of death order for a missing person, after a police investigation concluded it was clearly a suicide by jumping from a bridge. Her body had not been found for several months and without giving away the details of her circumstances, there was no other conclusion to reach but that she jumped from a bridge and has never been found.

The problem in these types of cases is that at common law, a person had to wait 7 years to obtain such an order unless there was clear evidence for a court to decide to shorten that period of time and make a presumption of death order. In recent years it has become known that several people have faked their own deaths for a myriad of reasons and then surfaced many years later still alive.

The decision of is such – did the missing person disappear because he was a gangster and learned he had a hit on his life, or was he hit and now sleeping with the fish. In Cyr the Judge could not decide which it was and stated that the onus of proof on the balance of probabilities to prove the person is likely dead. Cyr’s application was opposed by an insurance company that refused to pay out on a life insurance policy. My application will not be opposed.

The issue is whether there is sufficient admissible evidence to make the declaration sought by Ms. Byrne. Her alternative, if Cyr is, in fact, dead, is to wait seven years from late October 2003, the date at which Cyr is last known to have been alive. This is because the common law presumes death if a person is not heard of or from for seven years.

[3] Section 3(1) of the Act provides:

3 (1) If, on the application of an interested person under the Rules of Court, the court is satisfied that

(a) a person has been absent and not heard of or from by the applicant, or to the knowledge of the applicant by any other person, since a day named,

(b) the applicant has no reason to believe that the person is living, and

(c) reasonable grounds exist for supposing that the person is dead,

the court may make an order declaring that the person is presumed to be dead for all purposes, or for those purposes only as are specified in the order.

The wording of subsection (c) suggests that the evidence need not establish death on a balance of probabilities but the case law to date in this province seems to import such a requirement. If there were not earlier decisions on the point, including the one discussed immediately below, I would not apply what I perceive to be a higher test than the Legislature intended.

[4] In Re Burgess, 2004 BCSC 62, the missing person had not been seen in the 22 months preceding the hearing. He was a family man who was greatly missed by his two children. The missing person had a historical association with the Hells Angels Motorcycle Club. Based on confidential information received, the police informed the wife of the missing person that the Hells Angels had killed her husband. The court accepted that evidence under the principled exception to the hearsay rule and concluded that the “dark side” of the missing person’s life had “caught up with him and the only reasonable inference is that his life has been ended by ‘person unknown'”. The court concluded on a balance of probabilities that the missing person died by misadventure.

[5] It appears that counsel invited the court to apply the test for proof of death law set out in the Saskatchewan Court of Appeal decision in Re Noga and Prudential Insurance Co. of America (1971), 20 D.L.R. (3d) 331, and the British Columbia Court of Appeal decision inMartin v. Prudential Insurance Company of America, [1954] 1 D.L.R. 762. Both those decisions were concerned with the proof of death required under the applicable provincial insurance legislation and not with survivorship and presumption of death legislation.

[6] In Noga, ss. 170 and 171 ofthe Saskatchewan Insurance Act, R.S.S. 1965, c. 143, permitted the court to make an order declaring that the evidence of death furnished to the insurance company was sufficient to establish the death of the insured. In Martin, the court addressed s. 128 of the Insurance Act, R.S.B.C. 1948, c. 164, which is described in the judgment as raising the sole question of “whether or not the husband of the respondent was dead”. Both cases address the effect of evidence of conflicting probabilities such that “the scales are left in equilibrium” (Noga at 334; Martin at 763) as between the presumption of continuing life and the presumption of death. In Noga, the court concluded that any choice between conflicting inferences of equal degrees of probability is conjecture and inadequate. Instead, there must be evidence to render one probability more reasonable than the other. The court applied that aspect of the test in Martin. If the authorities went no further, it might still have been open to me to apply a lesser test, more consonant in my view, with the wording of the Act in issue here.

[7] It is not open to me to do so. In Re Schmit, 12 B.C.L.R. (2d) 186 (C.A.), the Court of Appeal considered s. 3 of the Act and held, albeit without any discussion, that the applicant was required “to show on the balance of probabilities that the death took place as she alleges” (at 189). I am bound by Re Schmit. I conclude that I must proceed on the basis that Ms. Byrne is required to prove, on a balance of probabilities, the death of Cyr as she alleges.

[8] While there is a reasonable basis for believing that Cyr is dead, there is also some basis for concluding that he has chosen to disappear. I am unable to find on a balance of probabilities that he is dead.

[9] Cyr and Ms. Byrne have a young son. There is strong evidence that Cyr had a very close relationship with his son. It is clear that Cyr moved to Victoria to be near his son and that he took full advantage of his access to the child. I am satisfied that the relationship was a close and loving one. Ms. Byrne invites me to infer from that evidence that Cyr would have been in contact with his son if he were still alive but I do not agree that is the only available inference. If Cyr decided to disappear for the possible reasons set out later, he would be very careful not to contact Ms. Byrne or his son.

[10] At the time of his disappearance, Cyr owned a house in Victoria worth about $1.5 million. Since his disappearance, Cyr has not attempted to sell this property or use it to generate revenue or borrowings. It seems unreasonable that someone who is alive would disappear and leave such a valuable commodity behind. On the other hand, Cyr was a sophisticated businessman who was familiar with off shore corporations. It is likely that he earned money through the illegal drug trade and had sizable hidden assets. He may have had the financial ability to disappear independently of the property in Victoria.

[11] There is evidence that Cyr, as a youth, sold drugs and associated with the Hells Angels. In October 2003, he told his ex-wife that he had to go to Vancouver. The Vancouver police have since informed Ms. Byrne that Cyr was “taken out” by underworld connections and “suffered at hands of associates”.

Proprietary Estoppel- Farm Promised Over Years Awarded

farm promised Proprietary Estoppel:

Sabey v von Hopffgarten Estate 2013 BCSC 64  NB- OVERTURNED ON APPEAL)  is an excellent example of a plaintiff receiving his just claim through the equitable principles of proprietary estoppel.

The plaintiff worked on the deceased’s horse farm for many years, being assured that the farm would be his one day when the couple died. Their wills in fact did leave the farm to the defendant, although the testators had executed subsequent odicils leaving the farm to the plaintiff, the codicils were invalid for lack of proper witnesses. The court held for the plaintiff and applied the broad approach endorsed by the court of appeal. The plaintiff also succeeded on proprietary estoppel as he developed a gradual understanding that he was to be given the farm after their deaths, largely based on his credible evidence that they said this to him any times over the years.The plaintiff relied upon those assurances , and organized his time and work on the assumption that it was to be his. It was not incumbent on the plaintiff to show an economic loss, as his reliance and detriment are often one and the same. Equity demanded that the plaintiff be granted the farm.

PROPRIETARY ESTOPPEL

[41] The plaintiffs primary claim is based on proprietary estoppel.

A. Principles of proprietary estoppel

[42] The Court of Appeal has endorsed the broad approach to proprietary estoppel that had been previously adopted by the courts in England. (This is opposed to the older English approach of looking at a five-part test set out by Fry J. in Willmott v. Barber (1880), 15 Ch. D. 96.) In Sykes v. Rosebery Parklands Development Society, 2011 BCCA 15 at paras. 44-46, the Court of Appeal cited with approval the following statement from Halsbury’s Laws of England, 4th ed. vol. 16 (London: Butterworths, 1992) at para. 1072:

The real test is said to be whether upon the facts of the particular case the situation has become such that it would be dishonest or unconscionable for the plaintiff, or the person having the right sought to be enforced, to continue to seek to enforce it.

[43] The broad approach is not without some rigour. As noted by Mummery LJ, in Scottish & Newcastle Pic. v. Lancashire Mortgage Corporation Ltd., [2007] EWCA Civ 684 at para. 23:

… It is not enough for [the plaintiff] simply to assert to the court, as if it were sitting under a palm tree on a legal and evidential desert island, that it would be unfair for [the defendant] to rely on their statutory right to priority.

Therefore the courts have normally looked to three main elements as a foundation for a proprietary estoppel claim: a representation made to the claimant; reasonable reliance on the representation; and a detriment to the claimant flowing from the reliance.

Thorner v. Major, [2009] UKHL 18 per Lord Walker at para. 29 Suggitt v. Suggitt, [2012] EWCA Civ 1140 at para. 19

 

[44] At para. 47 of Sykes, Finch C.J. said this of detrimental reliance:

While detrimental reliance is sometimes identified as a necessary element, it is perhaps better to consider it as part of the question of unconscionability. In the absence of detrimental reliance it would rarely, if ever, be unconscionable to insist on strict legal rights: see Harpum, Bridge and Dixon, Megarry & Wade: The Law of Real Property, 7th ed. (London: Sweet & Maxwell, 2008) at 711.

[45] In Suggitt, the English Court of Appeal recognised that reliance and detriment often overlap:

He [the trial judge] was satisfied that there was both reliance and detriment and he dealt with both of those matters separately. They are clearly connected matters; reliance is what a person does on the faith of some matter and detriment is usually the result: they are very closely connected. Clearly, the same factual matters may show both reliance and detriment. That is why Walker LJ held in Gillett v Holt at 225 that the concepts were “often intertwined”, (at para. 35)

[46] A central issue in this case is the nature or quality of the assurances. This was also a major issue in Thornerv. Major, which dealt, in part, with the issue of whether the assurances have to be unequivocal and certain. In that case, the trial court found that over the course of 30 years, the plaintiff did substantial work on a relative’s farm without pay because the relative encouraged the plaintiff to believe that he would inherit the farm. There was no express promise, but the Law Lords found that was not necessary in order for the plaintiff to succeed. As stated by Lord Rodger at paras. 24 to 26:

Given the actual situation, there was never going to be what Mr Simmonds described as a “signature event”, such as a family wedding or christening, at which Peter would make a dramatic announcement, in front of the assembled family, about the destination of his estate. Indeed, since Peter was in the habit of saying so little, it was scarcely to be expected that he would ever address the matter directly. But the judge found – and the Court of Appeal accepted – that, by his oblique remarks on a number of occasions, Peter had intended to indicate to David that he was to inherit Steart Farm. David interpreted Peter’s remarks in the way that he intended.

The contention for the respondents was that, even though David had correctly interpreted Peter’s remarks as assurances about inheriting the farm, his remarks were not “clear and unequivocal”. There was therefore no way of saying that they were intended to be relied on and they could accordingly not give rise to an estoppel. I would reject that contention.

Even though clear and unequivocal statements played little or no part in communications between the two men, they were well able to understand one another. So, however clear and unequivocal his intention to assure David that he was to have the farm after his death, Peter was always likely to have expressed it in oblique language. Against that background, respectfully adopting Lord Walker’s formulation, I would hold that it is sufficient if what Peter said was “clear enough”. To whom? Perhaps not to an outsider. What matters, however, is that what Peter said should have been clear enough for David, whom he was addressing and who had years of experience in interpreting what he said and did,

[Emphasis added]

[47] Lord Hoffman said, at para. 8, that it would be unrealistic to try to pinpoint an exact date at which an assurance became unequivocal. Lord Walker, with whom all the other Law Lords concurred, said at para. 56:

/ would prefer to say (while conscious that it is a thoroughly question-begging formulation) that to establish a proprietary estoppel the relevant assurance must be clear enough. What amounts to sufficient clarity, in a case of this sort, is hugely dependent on context. I respectfully concur in the way Hoffmann LJ put it in Walton v Walton (in which the mother’s “stock phrase” to her son, who had worked for low wages on her farm since he left school at fifteen, was “You can’t have more money and a farm one day”). Hoffmann LJ stated at para 16:

‘The promise must be unambiguous and must appear to have been intended to be taken seriously. Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made.”

[48] On a somewhat related note, proprietary estoppel is retrospective in two senses. First, past events can inform subsequent events, and vice versa. Lord Hoffman said, at para. 8:

Past events provide context and background for the interpretation of subsequent events and subsequent events throw retrospective light upon the meaning of past events. The owl of Minerva spreads its wings only with the falling of the dusk. The finding was that David reasonably relied upon the assurance from 1990, even if it required later events to confirm that it was reasonable for him to have done so.

[49] Second, it looks back in time to assess the equities of the situation. As stated by Lord Neuberger at para. 101:

As Hoffmann LJ memorably said in Walton v Walton (unreported, 14 April 1994), para 21, “equitable estoppel [by contrast with contract]… does not look forward into the future [; it] looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept”.

[50] The House of Lords in Thomer v. Major noted that what the representor actually intended was irrelevant. The issue is what the representations would reasonably convey to the plaintiff. Further, it is unnecessary for the representor to know that the plaintiff was thinking about alternate courses of action when the assurances were given.

PROPRIETARY ESTOPPEL

Misrepresentation

Buyer BewareBuccilli v Pillitteri 2012 ONSC 6624, is a misrepresentation case.

It involved a family estate dispute after a tragic death where all the parties had a one third interest in a family business. After the deceased’s death, his surviving widow, on the advice of her brothers-in-law, signed transfers of all her interest in the deceased estate, including the interest in the family business and real property, to one of the defendants in trust, in exchange for receiving a condominium. Eventually the widow brought court action to set aside the transfer agreement, and the action was allowed on the grounds of undue influence, and other reasons including MISREPRESENTATION. In a nutshell, the court found that there was an inequality of positions of the parties, and the widow relied upon her brother-in-law’s for advice and was misrepresentented to neter into the contract.. The transfer agreement was an improvident bargain whereby the widow gave up her interest in the deceased’s estate, which was worth a very substantial amount, in exchange for a condominium worth only $610,000.Patricia also asks that the Transfer Agreement be set aside on the basis that it was induced by a misrepresentation. An agreement induced by a misrepresentation can be set aside if the representation was as to a material fact and reasonably relied on. This applies to a representation whether innocent, negligent or fraudulent. See Waddams at paras. 419-421.
It is necessary for a plaintiff to establish that the misrepresentation was a material inducement upon which the plaintiff relied. It is not necessary for a plaintiff to establish that the misrepresentation was the sole inducement for acting and it matters not if the misrepresentation was only one of several factors contributing to the plaintiffs decision. See Sidhu Estate v. Bains (1996).25B.C.L.R.(3d)41 (B.C. C.A.) at paras 35-36; Kripps v. Touche Ross & Co. (1997). 89 B.C.A.C. 288 (B.C. C.A.) at paras. 102-103; NBD Bank, Canada v. Dofasco Inc. (1999). 46 O.R. (3d) 514 (Ont. C.A.) at para 81.
175 In Sidhu Estate, supra, Finch J. A. (as he then was) quoted with approval from Fleming, The Law of Torts, 7th ed.
(Sydney: Law Book, 1987), which stated at 604

At the same time, a defendant cannot excuse himself by proving that his misrepresentation was not the sole inducing cause, because it might have been precisely what tipped the scales…

 

2012 CarswellOnt 15064, 2012 ONSC 6624, 84 E.T.R. (3d) 208,225 A.C.W.S. (3d) 115

and from Barton v. Armstrong (1973). T19761 A.C. 104 (New South Wales P.C.) in which Lord Cross, who wrote for the majority, in part stated at 118

If on the other hand Barton relied on the misrepresentation Armstrong could not have defeated his claim to relief by showing that there were other more weighty causes which contributed to his decision to execute the deed, for in this field the court does not allow an examination into the relative importance of contributory causes.

[Emphasis Finch J.A.’s]

In this case, I have found that before Patricia signed the Transfer Agreement, Christina told Patricia that she would hold the shares of CDC and Birchland in trust for Patricia. This was a representation of a present fact, i.e. she intended to hold the shares in trust for Patricia. However, Christina was quite clear in her evidence that from the time of the Transfer Agreement, she intended to transfer Patricia’s shares in CDC and Birchland to Ron Venture and Pat Pillitteri. This was a misrepresentation of fact.
Reliance can be inferred from all of the circumstances and it is not necessary for Patricia to have testified that she relied on the representation of Christina. See NBD Bank, Canada v. Dofasco Inc. (1999). 46 O.R. (3d) 514 (Ont. C.A.) at para 81. However, Patricia did testify that she relied on the representation of Christina, and I accept that. In any event, in my view it is an obvious inference from the evidence of Patricia that it was a material inducement to her signing the Transfer Agreement that Christina told her that she would hold the shares of CDC and Birchland in trust for her. Patricia testified that she did not think that she would have signed the Transfer Agreement had she known that Christina intended on transferring the shares to Ron Venture and Pat Pillitteri, and while that is not the issue, the issue being if she relied on what she was told rather than if she would have relied on the statement if told something else, I accept her evidence. It would have been completely different from what she had been told and what she relied on.

Unconscionable Inequality In Bargaining Power

unconscionable

Some transactions are so unconscionably bad that the law will set them aside.

Buccilli v Pillitteri 2012 ONSC 6624, involved a family estate dispute after a tragic death where all the parties had a one third interest in a family business. After the deceased’s death, his surviving widow, on the advice of her brothers-in-law, signed transfers of all her interest in the deceased estate, including the interest in the family business and real property, to one of the defendants in trust, in exchange for receiving a condominium. Eventually the widow brought court action to set aside the transfer agreement, and the action was allowed on the grounds of undue influence, and other reasons including unconscionability. In a nutshell, the court found that there was an inequality of positions of the parties, and the widow relied upon her brother-in-law’s for advice. The transfer agreement was an improvident bargain whereby the widow gave up her interest in the deceased’s estate, which was worth a very substantial amount, in exchange for a condominium worth only $610,000.

153 Unconscionability is closely aligned to undue influence, as stated by LaForest J. in Hodekinson v. Simms. In Norberg v. Wvnrib.  19921 2 S.C.R. 226 (S.C.C.) LaForest J. stated the doctrine of unconscionability to be as follows:

30. An unconscionable transaction arises in contract law where there is an overwhelming imbalance in the power rela­tionship between the parties. In Morrison v. Coast Finance Ltd. (1965). 55 D.L.R. (2d) 710 (B.C.C.A.). at p. 713, Davey J. A. outlined the factors to be considered in a claim of unconscionability:

… a plea that a bargain is unconscionable invokes relief against an unfair advantage gained by an unconscientious use of power by a stronger party against a weaker. On such a claim the material ingredients are proof of inequality in the position of the parties arising out of the ignorance, need or distress of the weaker, which left him in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger. On proof of those circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and rea­sonable.

33. An inequality of bargaining power may arise in a number of ways. As Boyle and Percy, Contracts: Cases and Com­mentaries (4th ed. 1989), note, at pp. 637-38:

[A person] may be intellectually weaker by reason of a disease of the mind, economically weaker or simply situationally weaker because of temporary circumstances. Alternatively, the “weakness” may arise out of a special relationship in which trust and confidence has been reposed in the other party. The comparative weakness or special relationship is, in every case, a fact to be proven.

©2013 Thomson Reuters. No Claim to Orig. Govt. Works

 

Page 34

2012 CarswellOnt 15064,2012 ONSC 6624, 84 E.T.R. (3d) 208,225 A.C.W.S. (3d) 115

As the last sentence of this passage suggests, the circumstances of each case must be examined to determine if there is an overwhelming imbalance of power in the relationship between the parties.

40. It must be noted that in the law of contracts proof of an unconscionable transaction involves a two-step process: (1) proof of inequality in the positions of the parties, and (2) proof of an improvident bargain.

“Debt Owing” In Will Held Not Owing Due to Statute of Limitations

Statute of Limitations

Neudorf Estate v Sellmeyer 2012 SKQB 463 is a sensible decision from the Saskatchewan Queen’s bench interpreting a common situation in will construction disputes, namely the clause that if any of the testatrix’s children owed the deceased money at the time of the deceased’s death, then the amount of the debt would be deducted from the bequest so as to ensure an equal distribution among the children. The common situation however is that often the monies were advanced many years prior, so that by the time of the deceased’s passing, the executor is unable to enforce the debt as it is beyond the statute of limitations. The executor found records of monies owed to the testatrix by some of her children and proposed deducting the monies from their share accordingly. The beneficiaries however objected on the basis that the debts were statute barred and the executor brought an application for directions. The parties did not dispute that the amounts determined by the executor to have been owing to the estate were all statute barred, however in light of the specific construction of the will, the executor sought directions from the court. No evidence existed that the testatrix intended the debts to survive the limitation. So that on a plain reading of the phrase “owe me money” was interpreted to refer to debt. Whether or not the debt existed was a matter of law to be applied to the individual facts. Accordingly, by the time of her death the testatrix could not have sued her children to collect on those debts, as the limitation period for debts was a substantive and not procedural. Consequently at the time of the testatrix’s death, none of her children owed her any monies, and the testatrix’s estate was to be distributed equally among her children.

Indeed, the Supreme Court of Canada’s earliest express recognition of the shift appeared in a case addressing the predecessor of the current Saskatchewan statute, that predecessor bearing wording similar to that in the current statute: Tolofson v. Jensen, [1994] 3 S.C.R. 1022, [1994] S.C.J. No. 110 (S.C.C.).

15 In Tolofson Justice La Forest examined the historical reasons for holding that a statutory limitation provision is procedural and he rejected those reasons, concluding that the Saskatchewan limitation provision under consideration was substantive. Tolofson was a conflict of laws case, but there is no reason for thinking that Justice La Forest’s analysis would differ in any other context. No reason is apparent for limitation periods being substantive in a conflict of laws context but being procedural in other contexts. To the contrary, Justice La Forest’s analysis was not tied to the conflict of laws context. Rather, it was concerned with the logic and practicality of statutory limitation provisions generally being substantive rather than procedural.

16 Indeed, at paragraph 85 Justice La Forest adopted the “substantive” view in broad terms, then remarked on its particular – but not exclusive – application in the conflict of laws context:

… So far as the technical distinction between right and remedy, Canadian courts have been chipping away at it for some time on the basis of relevant policy considerations. I think this Court should continue the trend. It seems to be particularly appropriate to do so in the conflict of laws field ….
[Emphasis added]

17 Since Tolofson the Supreme Court has repeated its view that limitation provisions are substantive, as represented by its remarks in Markevich v. Canada, 2003 SCC 9, [2003] 1 S.C.R. 94 (S.C.C.), at paragraph 41, and in Castillo v. Castillo, 2005 SCC 83, [2005] 3 S.C.R. 870 (S.C.C.), at paragraph 7.

18 For these reasons I adopt Justice Clark’s analysis and conclusions of law as set out in Moody. The expiration of the limitation period served not only to bar a court action but also to extinguish the debt to which the limitation period applied. This result is not affected by the rule in Cherry v. Boultbee (1939), 4 My. & C. 442 (Eng. Ch. Div.) (prohibiting a beneficiary who owes money to an estate from participating in the estate unless the beneficiary pays the debt), a rule whose application has been superseded by the development of the law relating to statutory limitation provisions.

19 The result in this case is that, at the time of Ms. Neudorf’s death, none of her children owed money to her. Therefore, I direct the executor to distribute the estate on the basis that none of the beneficiaries owed Ms. Neudorf money at the time of her death.

The Vexatious Litigant

vexatious litigant

Vexatious litigation generally involves legal proceedings brought solely to harass or oppress the opposing party.

Vexatious litigation may range from a first-time, frivolous lawsuit to repetitive, meritless applications brought within an otherwise proper lawsuit. In a nutshell, vexatious litigation involves an abuse or misuse of the legal system for the litigant’s own ends.

In the case of O’Neill v. Deacons, 2007 ABQB 754, a dispute over a dog, vexatious litigants were described as follows.

[25] What the various common law and statutory criteria suggest is that vexatious litigants are those who persistently exploit and abuse the processes of the court in order to achieve some improper purpose or obtain some advantage. Vexatious litigants tend to be self represented, and quite often the motivation appears to be to punish or wear the other side down through the expense of responding to persistent, fruitless applications. This is why the failure to pay costs for such applications is a significant element in determining whether a litigant is vexatious.

Vexatious litigants may be broadly categorized into two groups:
• those with mental health concerns who launch multiple legal actions against diverse targets, and
• those, unsuccessful in a lawsuit, who become aggrieved and refuse to accept defeat. They hopelessly persist attempting to re-litigate their case.

Vexatious litigants abuse the court process, often with a complete disregard for court orders, while paradoxically seeking their own court orders. One sometimes wonders if they are operating under a delusional belief that eventually they will find a judge who will completely understand them and make things ”right.”
As vexatious litigants are usually self-represented, they are initially given a certain amount of leeway. Only with time does the litigant’s obsession become clear. Ultimately that persistence becomes evidence of the party’s unreasonableness.
We learned first-hand about vexatious litigants in 1982 after winning a successful civil claim. Thereafter, the defendant appealed—alleging the trial judge had been bribed. The defendant went on to sue several parties including the Attorney General and many downtown Vancouver law firms. Ultimately, the court granted an order prohibiting him from commencing any further court proceedings except with leave of the court.
Such orders have been made against litigants ranging from the Church of Scientology, to incarcerated malcontents, to defendants in foreclosure proceedings. In appropriate circumstances, our courts are indeed willing to intervene to prevent abuse of the court process.
The Law
Superior courts, such as the BC Supreme Court and Court of Appeal, have an inherent jurisdiction to control their own process. Supplementary to this, many jurisdictions have enacted legislation to allow the courts to control vexatious litigants.
In British Columbia, Section 18 of the Supreme Court Act permits the court to order that a legal proceeding must not be instituted by a named litigant except with leave of the court. Such an order may be made where a court is satisfied that the person has habitually, persistently, and without reasonable grounds instituted vexatious legal proceedings against the same or different persons.
As to the criteria for determining whether legal proceedings are vexatious, the oft cited case, Re. Lang Michener v. Fabian (1987) 59 O.R. (2d) 353, (H. C. J.) has been applied in many BC decisions. In paragraph [19] of that decision, the court enunciated the following principles.
a. The bringing of one or more actions to determine an issue that has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding.

b. Where it is obvious that an action cannot succeed or if the action would lead to no possible good or if no reasonable person can reasonably expect to obtain relief, the action is vexatious.

c. Vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights.

d. It is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings.

e. In determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just at whether there was originally a good cause of action.

f. The failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious.

g. The respondent’s conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.

In British Columbia (Public Guardian and Trustee) v. Brown, 2002 BCSC 1152, Mr. Justice Halfyard set out two distinct elements that must be established for a section 18 application to succeed.

1. The proceedings themselves must be “vexatious.” In other words, the proceedings must be annoying, irritating, distressing, or harassing and must be taken without reasonable grounds.
2. There must be intent. That intent is judged objectively and requires proof of a knowing and deliberate repetition or continuation of the vexatious conduct. It is not necessary to prove that the vexatious litigant actually knows that his or her conduct is vexatious but rather that a reasonable person in those same circumstances would believe the conduct to be vexatious.
Re. Kaiser (2008) 41 CBR (5th) 200 (BCSC), concluded that section 18 orders apply only to future applications and not retroactively to outstanding applications.
This statutory provision, however, is supplementary to similar powers residing in the court’s inherent jurisdiction. In Household Trust Company v. Golden Horse Farms Inc. (1992) BCJ 652, the Court or Appeal held that under this inherent jurisdiction, the court could bar prosecution of proceedings already commenced and also make orders against those defending actions—in this case, defendants in a mortgage action. The court upheld a direction that none of the litigants would be permitted a court audience, except through counsel i.e. they could not personally make submissions to the court—only their lawyer could do so.
Conclusion
The ability to curb abusive litigation must be balanced against a citizen’s right to legitimate access to the courts.
Section 18 of the Supreme Court Act, together with the court’s inherent jurisdiction, provides our courts with valuable tools to prevent the misuse of legal process.
As Justice Southin aptly stated in Household Trust Company v. Golden Horse Farms Inc. (1992) BCJ 652 at page12:
In my opinion, the Supreme Court of British Columbia has an inherent jurisdiction and a corresponding duty to exercise that jurisdiction to protect a petitioner or plaintiff who seeks relief in that Court from proceedings by a defendant who is vexatiously abusing the process of the court. That it is a jurisdiction to be exercised with great caution, I have no doubt. But not to exercise it where there is no other way to bring reason into proceedings is, in effect, to deprive the plaintiff or petitioner of justice according to law. The court if it fails to act becomes but a paper tiger. (Emphasis added)

Nevertheless, judges are typically very hesitant to forbid a party from instituting legal proceedings except with leave of the court. The courts will afford a litigant great leeway to ensure he or she receives a proper hearing. The case must be very clear for such an order to be made.

How Judge’s Assess Witness Credibility

Credibility bibleJudge’s Assessment of Witness Credibility

Any trial lawyer will attest that one can have the best court case in the world, but if the trier of fact does not believe your witnesses, then it is a foregone conclusion that the trial will be lost. I am taking a quotation of law from the decision Frame v Rai 2012 BCSC 1876, where there was much conflicting evidence concerning the ownership of a property purchased and utilized by various members of the nuclear family.

The leading case in British Columbias is Faryna v. Chorny, [1951] 2 D.L.R. 354 (B.C.C.A) for its guidance as to credibility assessment. In this case, O’Halloran J.A. provided the following remarks:

[10] …On reflection it becomes almost axiomatic that the appearance of telling the truth is but one of the elements that enter into the credibility of the evidence of a witness. Opportunities for knowledge, powers of observation, judgment and memory, ability to describe clearly what he has seen and heard, as well as other factors, combine to produce what is called credibility, and cf. Raymond v. Bosanquet at p. 566, 59 S.C.R. 452 at p. 460, 17 O.W.N. 295. A witness by his manner may create a very unfavourable impression of his truthfulness upon the trial Judge, and yet the surrounding circumstances in the case may point decisively to the conclusion that he is actually telling the truth. I am not referring to the comparatively infrequent cases in which a witness is caught in a clumsy lie.

[11] The credibility of interested witness, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions. Only thus can a Court satisfactorily appraise the testimony of quick-minded, experienced and confident witnesses, and of those shrewd persons adept in the half-lie and of long and successful experience in combining skilful exaggeration with partial suppression of the truth.

[24] More recently, in Re: Novac Estate, 2008 NSSC 283 the Nova Scotia Supreme Court, at para 36, expanded upon the above principle by summarizing the tools for assessing credibility as including a consideration of the following:

a) The ability to consider inconsistencies and weaknesses in the witness’s evidence, which includes internal inconsistencies, prior inconsistent statements, inconsistencies between the witness’ testimony and the testimony of other witnesses.

b) The ability to review independent evidence that confirms or contradicts the witness’ testimony.

c) The ability to assess whether the witness’ testimony is plausible or, as stated by the British Columbia Court of Appeal in Faryna v. Chorny, [1951] B.C.J. No. 152, 1951 CarswellBC 133, it is “in harmony with the preponderance of probabilities which a practical [and] informed person would readily recognize as reasonable in that place and in those conditions”, but in doing so I am required not to rely on false or frail assumptions about human behavior.

d) It is possible to rely upon the demeanor of the witness, including their sincerity and use of language, but it should be done with caution (R. v. Mah, [2002] N.S.J. No. 349, 2002 NSCA 99, paras. 70-75).

e) Special consideration must be given to the testimony of witnesses who are parties to proceedings; it is important to consider the motive that witnesses may have to fabricate evidence. R. v. J.H., [2005] O.J. No. 39 (Ont. C.A.), paras. 51-56).

[25] Justice Warner then continued at para. 37:

[37] There is no principle of law that requires a trier of fact to believe or disbelieve a witness’s testimony in its entirety. On the contrary, a trier may believe none, part or all of a witness’s evidence, and may attach different weight to different parts of a witness’s evidence. (See R. v. D.R. [1996] 2 S.C.R. 291 at para. 93 and R. v. J.H., supra).