Terms of Settlement Must Be Disclosed

Full DisclosureTerms of Settlement Must Be Disclosed

 

It is common in estate litigation to have more than one plaintiff, and on occasion one of the multiple plaintiff’s will settle directly with the defendants, but refuse to disclose the terms of settlement.

The question  is does the settling party have to advise the remaining -plaintiff’s and the Court as to the terms of settlement?

Petrie v Burnett 2008 BCSC 1503 indicates that the settlement terms must be disclosed, and taken into account when the Judge deals with the remaining litigants . In Petrie the terms of the settlement were read into court and the judge redistributed the estate as per his WVA order

 

Justice Nate Smith stated:

“The estate to be distributed under the will consists of cash in various bank deposits, totalling $463,596.78 as of August 31, 2008.  The estate does not include the two real properties, which I have found that Al Burnett validly transferred to the Petries outside his will.  That real property is therefore beyond the reach of the Wills Variation Act claim, but the effect of such transfers can be considered in determining the extent to which the distribution under the will should be varied. (Inch v. Stead Estate, 2007 BCSC 1249, 36 E.T.R. (3d) 79.

[85]            Appraisal reports filed at trial indicate a total value for the two real properties, as of July 15, 2008, of $410,000.  However, I take judicial notice of the fact that the general economic climate has become significantly more uncertain since then and there was no evidence to indicate how those developments might have affected the properties’ current market value.  In the circumstances, more weight must be given to the assessments for tax purposes, which show a total value of $294,700.  For the purpose determining a “fair just and equitable” distribution of the estate, I therefore treat the real property that passed outside the estate as being worth about $300,000.

[86]            If I am going to consider the impact of transfers outside the will, I cannot ignore the fact that the effect of those transfers has been altered by an agreement among some of the parties.  Ms. Chaytors and Ms. Just have settled their wills variation claim with the Petries and their settlement agreement has been produced at trial.  As part of that agreement, Ms. Chaytors and Ms. Just will each receive a 25 per cent interest in the two properties.

[87]            Accordingly my decision of how this will is to be varied is based on the following considerations:

a)         The estate consists of cash in excess of $460,000, which is a sufficiently large amount to permit some provision for the adult children who should have been included in the will.

b)         Although some provision must be made for the children, the Court must also respect the wishes of the testator by allowing the Petries to retain the largest single share of the estate

c)         The share of the estate that should be retained by the Petries is smaller than might otherwise be the case because they also received the testator’s real property by inter vivos transfer.

d)         There is no reason that any of the three adult children should receive more of their father’s property than any of the others and, in the absence of the settlement agreement, they would be entitled to equal portions of the estate.  However, their settlement agreement with the Petries allows Ms. Chaytors and Ms. Just to share in the real property, from which Phillip Burnett is excluded.  Equal division of the estate would therefore leave Ms. Chaytors and Ms. Just in a better position than their brother.  Therefore, in order to maintain rough equality among the siblings, Phillip Burnett should receive a larger share of the estate than his sisters. 

[88]            Taking all those matters into account, I find that a fair, just and equitable division of the estate would be 40 per cent to the Petries, 35 per cent to Phillip Burnett and 12.5 per cent to each of Ms. Chaytors and Ms. Just.  I recognize that, as between the Petries, Ms. Chaytors and Ms. Just, that distribution may in fact be altered by the terms of their settlement agreement.

[89]            In summary, the 2005 will is valid and distribution of the estate, which does not include real property, will be varied as set out above. Counsel will have leave to make submissions as to the cost consequences, if any, that should flow from this divided success.

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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