When one litigant is ordered to pay all or most of the other litigants legal fees it is an award of special costs, and Siemens v Howard 2017 BCSC 1193 is a good summary of when the court will award special costs.
The single standard for the awarding of special costs is that the conduct in question properly be categorized as “reprehensible.” The basic principles are conveniently summarized by N. Smith J. in Gill v. Bassi 2016 BCSC 754, at paras. 9-16:
[9] An award of special costs is intended to chastise a party for reprehensible, scandalous or outrageous conduct, either in the circumstances giving rise to the cause of action or in the course of the litigation: Bradshaw v. Stenner 2012 BCSC 237at para. 9, leave to appeal ref’d 2012 BCCA 481.
. . .
[11] The circumstances under which special costs may be ordered were summarized in Mayer v. Osborne Contracting Ltd., 2011 BCSC 914 at para. 11:
(a) where a party pursues a meritless claim and is reckless with regard to the truth;
(b) where a party makes improper allegations of fraud, conspiracy, fraudulent misrepresentation, or breach of fiduciary duty;
(c) where a party has displayed “reckless indifference” by not recognizing early on that its claim was manifestly deficient;
(d) where a party made the resolution of an issue far more difficult than it should have been;
(e) where a party who is in a financially superior position to the other brings proceedings, not with the reasonable expectation of a favourable outcome, but in the absence of merit in order to impose a financial burden on the opposing party;
(f) where a party presents a case so weak that it is bound to fail, and continues to pursue its meritless claim after it is drawn to its attention that the claim is without merit;
(g) where a party brings a proceeding for an improper motive;
(h) where a party maintains unfounded allegations of fraud or dishonesty; and
(i) where a party pursues claims frivolously or without foundation.
. . .
[14] . . . Special costs are not awarded based on the acceptance or rejection of testimony. “If it were otherwise, instead of being an extraordinary measure, special costs could be imposed whenever credibility was in issue”: Grewal v. Sandhu, 2012 BCCA 26at para. 107, leave to appeal ref’d 2012 CarswellBC 1815 (S.C.C.).
[15] Even if one assumes the plaintiffs’ evidence was dishonest as opposed to merely unreliable and I made no explicit finding on that point dishonest testimony alone is not sufficient to warrant an order for special costs. There must be something more egregious in the impugned conduct for it to be considered reprehensible: Schwabe Estate v. Lisinski, 2005 BCSC 1284at para. 26; Mayer, at para. 13; 380876 British Columbia Ltd. v. Ron Perrick Law Corp., 2009 BCSC 1209at para. 25.
[16] There is a difference between a party who deliberately attempts to mislead the court and a party who fails to prove a case on a balance of probabilities because his or her evidence is not accepted . . .
9 The court must exercise restraint in awarding specials costs, and the party seeking special costs must demonstrate exceptional circumstances to justify an order for special costs: see Westsea Construction Ltd. v. 0759553 B.C. Ltd., 2013 BCSC 1352, at para. 73.
The BC Appeal Court in McDonald v McDonald 2017 BCCA 255 disallowed an award for unjust enrichment for various children who worked on the family farm for years without compensation, finding that “chores” amounted to a juristic reason to refuse a claim for unjust enrichment. The appeal Court in essence said that there must be “exploitation” before there can be a valid claim for unpaid child labour in a family endeavor.
During their childhood and teen years, the plaintiffs performed unpaid work on their parents dairy farm. They continued to work on the farm (on salary) for parts of their early adulthood. Eventually, the parents transferred the farm assets into a corporation. Many years after the plaintiffs ceased to work on the farm, they learned that their parents transferred the shares in the corporation to their brother, except for redeemable preferred shares representing about 10% of the farm’s value. Their own inheritances were to be limited to those preferred shares.
The plaintiffs commenced an action for unjust enrichment in respect of work they had performed on the farm. The judge accepted that they had valid claims in unjust enrichment, but only for the unpaid work they performed as teenagers. He awarded each of the plaintiffs $350,000, less any amount they received in preferred shares. The defendants appealed.
Held: appeal allowed. The work performed by the plaintiffs was in the nature of chores. As a matter of public policy, chores performed by children in a family setting do not, absent indicia of exploitation, attract a right to compensation under the doctrine of unjust enrichment. In any event, the judge’s assessment of damages was the product of palpable and overriding error. Properly assessed, the transfer of the preferred shares would fully compensate the plaintiffs even if the judge’s unjust enrichment analysis were sustainable.
Analysis
[64] In Garland v. Consumers Gas Co., 2004 SCC 25, Iacobucci J. summarized the basic requirements for an unjust enrichment claim as follows:
[30] As a general matter, the test for unjust enrichment is well established in Canada. The cause of action has three elements: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment (Pettkus v. Becker, [1980] 2 S.C.R. 834, at p. 848; Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762, at p. 784).
[65] The parties accept the judge’s finding that the farm work performed by the plaintiffs during their teenage years conferred a benefit on the defendants. They also accept that the work constituted a corresponding deprivation to the plaintiffs. The issue with respect to unjust enrichment is whether there is a juristic reason for the enrichment.
[66] The nature of the an absence of juristic reason test was also discussed in Garland:
[44] [T]he proper approach to the juristic reason analysis is in two parts. First, the plaintiff must show that no juristic reason from an established category exists to deny recovery. By closing the list of categories that the plaintiff must canvass in order to show an absence of juristic reason, [the] objection to the Canadian formulation of the test that it required proof of a negative is answered. The established categories that can constitute juristic reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra), a donative intent (Peter [Peter v. Beblow, [1993] 1 S.C.R. 980]), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.
[45] The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery. As a result, there is a de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for a category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery.
[46] As part of the defendant’s attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. It may be that when these factors are considered, the court will find that a new category of juristic reason is established. In other cases, a consideration of these factors will suggest that there was a juristic reason in the particular circumstances of a case which does not give rise to a new category of juristic reason that should be applied in other factual circumstances. In a third group of cases, a consideration of these factors will yield a determination that there was no juristic reason for the enrichment. In the latter cases, recovery should be allowed. The point here is that this area is an evolving one and that further cases will add additional refinements and developments.
[67] It is common ground that none of the established categories of juristic reason for enrichment are present in this case: the plaintiffs did not have contracts of employment with the defendants during their teen years, nor did they manifest an intent that their work on the farm constitute a gift. Their work was not performed pursuant to a statutory or equitable obligation.
[68] The defendants contend, however, that as a matter of public policy, work done by a teenager for a family enterprise should not be accorded a remedy in unjust enrichment absent extraordinary circumstances. In their factum they express the policy as follows:
Virtually all children, particularly as they get older, are expected to contribute to the family enterprise in one fashion or another, whether it is doing chores inside the house, painting a fence, mowing the lawn or helping in the family business. It seems likely that much of the work done by teenagers will provide some economic benefit to their parents. In exchange, however, their parents provide them with the necessities of life such as food and shelter and provide them with the opportunity to learn life skills which they can take with them into adulthood. To afford teenagers the right to sue their parents for work done as teenagers simply because it is of benefit to the parents sets a dangerous precedent and ignores the substantial benefits which teenagers receive from their parents at that age.
[69] The plaintiffs dispute the idea that there is any public policy reason why teenaged children doing work for their parents should be excluded from unjust enrichment remedies. Among other things, they point out that children (including teenaged children) are a vulnerable group. Where parents exploit their children for economic gain, it is important that the children have a civil remedy.
[70] Despite their contrasting arguments, there is, in fact, a great deal of common ground between the parties. The plaintiffs accept that not every chore done by a teenager (even if it has some economic value to the parents) will found a claim in unjust enrichment. At some level, it is a normal societal expectation that children (particularly older children) will assume responsibility for household tasks. They do not have a legal entitlement to be paid every time they perform routine chores.
[71] On the other hand, the defendants accept that in extraordinary circumstances, a teenager will be entitled to compensation. At some point, parental demands on teenagers to perform unpaid chores will exceed the level of societal tolerance and be properly characterized as exploitative. It is obvious that there is no public policy in favour of allowing parents to engage in the economic exploitation of their children.
[72] The question, then, is not whether public policy and reasonable societal expectations can provide a juristic reason to deny an unjust enrichment to a teenager in respect of unpaid chores. Clearly they can. Rather, the question is the articulation of the public policy. How far does the juristic reason extend?
[73] The parties have cited a few cases in which courts have denied unjust enrichment claims for work done by children for their parents: Strudwick v. Strudwick Estate (1996), 21 R.F.L.(4th) 185 (B.C.S.C.); Kreeft v. Kreeft (2001), 39 ETR (2d) 233 (B.C.S.C.); Oliver v. Blais (November 21, 2014), Winnipeg PR10-01-84749, (Man. Q.B. Gen. Div.), affd 2015 MBCA 99, leave to appeal refd [2015] S.C.C.A. No. 515. They also cite Antrobus v. Antrobus, 2009 BCSC 1341, rev’d on quantum only, 2010 BCCA 356, wherein an unjust enrichment claim that included compensation for unpaid labour during the plaintiff’s teenage years succeeded.
[74] While these cases have limited precedential value, all recognize that, as a general rule, the fact that work giving rise to an enrichment, was performed by a child or teenager in the context of family chores constitutes a juristic reason to deny recovery for unjust enrichment. In Oliver v. Blais, the trial judge noted:
[21] [C]ases demonstrate familial obligations arising between farming parents and their children have been recognized as a juristic reason for justifying enrichment. Farming parents have a legitimate expectation that their children will participate in the chores and activities necessary to make the family farm viable. To find, in the absence of special circumstances, that a child’s contribution to the maintenance of the family farm gives rise to an interest in the farm would undermine normal farm family relationships.
[75] While the court allowed a claim for unjust enrichment in Antrobus, the trial judge observed that unjust enrichment claims will not, as a matter of course, accrue to a teenager performing a reasonable level of domestic chores:
[185] It is part of family life that family members assist one another – perhaps pitching in to help out younger siblings or aging parents, or helping with meal preparation and household chores. Children, teenagers and young adults living with their parents are often expected to do their share in keeping the household running. Working together for the common good of the family, spending time to help other family members, without any expectation of monetary compensation, is generally part of the meaning of a family. It is not the norm, and the law does not contemplate, that family members will do a forensic accounting during their lifetimes and make sure that no one was disadvantaged in the overall exchange of services.
[76] The court found Antrobus to be an extraordinary case, both because of the crushing burden of chores that had been assigned to the plaintiff, and because she had been promised substantial compensation for doing the chores.
[77] In general, we see the performance of chores by children in a family as positive. Such work fosters a sense of responsibility and of family. Ideally, in doing chores, children gain valuable work experience in an environment that is not overly competitive or taxing. They can learn and experience the importance of doing tasks for others without expecting monetary compensation.
[78] These public policy considerations mean that the performance of unpaid chores by children in a family setting will not usually raise issues of unjust enrichment. There are, however, limits that must be observed. While unjust enrichment principles should not interfere with the ability of parents to assign routine chores to their children, they will ensure that children do not fall prey to exploitation.
[79] The parties to this appeal have not, in argument, fully explored the issue of what boundaries ought to be applied in deciding when the law will grant unjust enrichment remedies in respect of chores performed by children. In the absence of full argument, it would be unwise for the court to attempt any exhaustive enumeration of what features might make chores exploitative. I would suggest, however, that exploitation may be characterized by economic benefits to the parents that are grossly disproportionate to the benefits that the children have as members of the family, or by work by the children that is manifestly detrimental to their health or wellbeing.
[80] In the present case, the judge specifically found that the work assigned to the plaintiffs was not so extraordinary in the context of [a] farming household where the social norm [is] that all family members pitch in and perform chores for which strangers would have expected compensation. The judge noted that the children engaged in leisure and outside social activities. While the family lived frugally, there was no suggestion of economic deprivation, nor was it suggested that the children were treated by the parents as profit centres.
England is considering introducing radical reforms to it’s inheritance laws that would allow text messages and voice mails to be valid wills according to an article in today’s Telegraph.
“British people will be able to use voicemail and text messages to make their wills, under a radical overhaul of inheritance laws Law Commission has branded the current legacy system outdated and recommends it be revolutionized to keep up with the digital age.
Under present laws, which date back to 1839, wills need to be written and signed by the testator as well as two witnesses in order to be valid.
The commission suggests those rules are unclear and outdated
The plans drawn up by the Commission call for the law to be relaxed to allow notes, emails and voicemail messages to be used in place of a written will.
Under the proposals, new powers would allow county and high court judges to decide on the balance of probabilities whether a recording or note is an accurate summary of a person’s wishes.
Deathbed changes of heart could even be recorded and used to overrule an existing, valid will.
The consultation document says that there are strong arguments that it should apply not only to traditional written documents, but also where testators express their testamentary intentions in an electronic format, as well as in an audio or audio-visual recording.Â
But the Commission admits that the changes could add to family arguments as possible beneficiaries scour their relative’s communications for evidence that they had changed their mind.
The consultation adds: A person who is seriously ill in hospital may have more immediate access to a tablet or smartphone than to a pen and paper, and may be more able to speak than to write.
On the other hand, the potential recognition of electronic documents could provide a treasure trove for dissatisfied relatives.
“They may be tempted to sift through a huge number of texts, emails and other records in order to find one that could be put forward as a will on the basis of a dispensing power.
The powers already exist in Australia, Canada, South Africa, and several US states.
Law Commissioner Professor Nick Hopkins said: Even when it’s obvious what someone wanted, if they haven’t followed the strict rules, courts cannot act on it.
But experts urged caution amid concerns that older people could be pressured into last-minute changes of heart.
There are a number of ways to get a will drafted. One option is through a solicitor or use a will writing service.
The fee for using a solicitor will vary depending on the firm and the complexity of the will.
Caroline Abraham, charity director of Age UK said: Whilst we welcome this public consultation, any proposed changes must not create further barriers for people who wish to plan ahead, and ensure that older people are able to make their own decisions wherever possible, free from pressure and coercion.
Elizabeth Neale, partner in the private wealth team at law firm Bircham Dyson Bell, cautioned that weakening the current strict rules could have worrying implications for vulnerable people.
She added that there could be pressure on people to write something down or make a voicemail.
Professor Hopkins added: Any new law would protect vulnerable testators against possible undue influence, and certainly if there was any suggestion that that had been exercised, the court isn’t going to use the dispensing power. But this is a consultation, so if anyone has those concerns, they should let us know.
The proposals also suggest changing the law about mental capacity – to make it easier to assess whether someone with dementia is able to make a will.
The current law dates from an 1870 case which provides when someone is making a will that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties that no insane delusion shall influence his will in disposing of his property.
It suggests that the Mental Capacity Act, which is currently used to decide whether someone is capable of making a decision for themselves in other contexts, be used instead.”
The following article on signs of elder abuse is reprinted with the permission of Sally Perkins , an American former home care and hospice manager.
Red Flags That Your Senior Loved One is a Victim of Elder Abuse
If only we lived in a world where people always responded to vulnerability with compassion and care. Unfortunately, elder abuse happens. Its hard to know how common it is, as researchers suspect that only about one in 14 cases ever get reported. The abuse can come at the hands of family members, hired caregivers, or from staff members in an assisted living or nursing home.
Keep in mind that many injuries and seemingly abnormal behaviors in seniors are common results of aging. Try to avoid seeing the possibility of abuse in every little behavioral change or scrape that you notice, but do be on the lookout for signs that could point to a larger issue.
Here are some of the most common symptoms that occur.
Frequent unexplained bruises
A bruise now and then is normal. You’ve probably got one somewhere on you right now and they occur more frequently in seniors due to their skin becoming thinner. If your loved one shows what seems to be an excessive amount of bruising and you have a hard time identifying a cause for them, then it’s worth starting to pay more attention.
Sprains or broken bones
As with bruising, these aren’t uncommon injuries for seniors to experience. Yet if they experience them a lot and don’t seem to have a good explanation for what happened, or seem uncomfortable providing an explanation, then you may have a bigger problem than typical aging-related clumsiness.
Burns
Cigarette burns are harder to obtain by accident and very likely point to elder abuse. Burns that appear to be caused by an iron are another serious indicator, as are burns likely caused by hot water. Â
How to Tell the Difference Between Abuse and Accidents
This is the part that’s a little trickier. Accusations of abuse are a big deal, so you don’t want to call the authorities on a family member or paid caregiver simply because your loved one is prone to falls or tends to burn themselves in the kitchen. On the other hand, of course you don’t want them to be stuck suffering abuse with no help.
There are a couple of signs that will help you gauge when injuries are intentional.
Conflicting Accounts of an Injuries Cause
If your loved one can’t seem to keep their story straight about how they got that burn, or if they seem uncomfortable providing any story or explanation at all, that could point to attempts to cover up the abuse due to fear or dependence on the abuser. Additionally, if their caregiver offers a different story than they do, that could be cause for concern.
Injuries Occurring Frequently
If every time you see your loved one they seem to have some new burn or scratch or bruise, then start paying close attention. Maybe you just have a clumsy loved one, but maybe those injuries are coming at the hands of someone else. Start to make a note of the type of injury and the date so you’ll have an easier time recognizing patterns and figuring out if it really is occurring at an abnormal rate.
Delay in Seeking Care for an Injury
Any time a senior has an accident that causes a serious injury, the first move should be to head to the hospital for care. Even for minor injuries, whoever’s around should go into problem-solving mode to help with bandaging or any other treatment needed. If injuries aren’t healing the way they should because they haven’t been properly treated, or because treatment wasn’t sought out until well after the injury first occurred, then that’s a problem.
If this happens once you should be worried and consider if there are any other signs pointing to abuse. If it happens multiple times, then it’s very likely that abuse is occurring and it’s time to step in.
What to Do if You Suspect Elder Physical Abuse
If you’re pretty sure abuse is occurring or at least have strong suspicions of it, then you need to take action.
Get your loved one somewhere safe.
If the abuser is a caregiver living in their home, then find another friend or family member’s place for them to stay. If you think it’s a staff member at a nursing home, talk to the managers there immediately. You want to make sure your loved one doesn’t continue to suffer abuse any moment longer.
Note: If your loved one has been hurt to the point where they need emergency care, your first step should be to call 911. This will ensure they get the immediate care they need and give you the opportunity to speak with the authorities and share your concerns.
Contact the proper authorities.
The National Center on Elder Abuse ( The Public Guardian and Trustee in British Columbia) offers a state-by-state directory of available resources you can use and agencies to report abuse to. If your loved one denies the abuse, you may be limited in how much you can do here, but it’s worth at least getting in touch with the proper authorities to see what they recommend and can do for your loved one now.
Encourage your loved one to attend therapy.
While the stigmas of therapy have faded for most people in the United States and Canada at this point, some seniors may still find the idea unpalatable. Nonetheless, abuse can have serious negative psychological effects, especially if the abuser is someone that your loved one trusted and loved. Do your best to convince your loved one to give therapy a try to work through their feelings from the experience.
The help of a skilled professional could not only help them better handle the pain they’re feeling from the experience, but can also help them understand how to recognize abuse if it every occurs again so they don’t silently live with it.
We will probably never live in a world where physical abuse of the elderly is entirely eradicated. But if everyone does their part to pay attention and keep an eye out for the people they love, we can do a better job of identifying the problem when it does occur and taking steps to stop it.
Your loved one has lived a long life and deserves to spend their final years comfortable. Make sure no one in their life takes that away from them.
Litigators must choose the appropriate forum to commence a court action: a petition or notice of claim.
Most cases are commenced by the use of a notice of claim while certain types of cases may or must be commenced by petition.
Carphin v Braich Estate et al 2017 BCSC 1140 dismissed the Petitioner’s claim for bringing the court action in the form of a petition rather than using a notice of claim and sets out the criteria for using a petition.
A former lawyer had without having a judgement or having passed his accounts commenced an action to attempt to recover substantial legal fees and accrued interest by proceeding against estate assets.
The Appropriate Form of Proceeding
[75] The respondent administrators argue that a threshold issue in this matter is whether the petition is suitable for a proceeding under Rule 2-1 of the Supreme Court Civil Rules and rely on McDonald v. Lau, 2016 BCSC 1651 at para.39:
As a threshold issue, the Court must determine whether it was appropriate for the petitioner to bring this matter by way of petition. If it was not, then the matter must be converted into an action.
[76] Rule 2-1(1) directs that every proceeding is to be begun by notice of civil claim unless an enactment or the Rules themselves provide otherwise and then sets out a list of circumstances in Rule 2-1(2) which will require a proceeding to be begun by way of petition. The potentially applicable circumstances are as follows:
(2) To start a proceeding in the following circumstances, a person must file a petition or, if Rule 17-1 applies, a requisition:
(c) the sole or principal question at issue is alleged to be one of construction of an enactment, will, deed, oral or written contract or other document;
(d) the relief, advice or direction sought relates to a question arising in the execution of a trust, or the performance of an act by a person in the person’s capacity as trustee, or the determination of the persons entitled as creditors or otherwise to the trust property;
The relief sought here extends far beyond simple questions arising in the execution of a trust or determination of a creditor.
[77] The argument of the respondent administrators is that the petitioner is seeking to enforce a debt claim against Herman Braich Jr. on the basis of the retainer, written and oral, by way of an originating application.
[78] The respondent administrators argue that it is ill-conceived to bring this matter by way of petition given that a proceeding begun by petition can involve interpretation of a contract but not the enforcement of it: see Yates v. Air Canada, 2001 BCSC 127 at para. 36; McDonald at para. 51.
[79] The respondent administrators further argue that, while letters have been placed into evidence, there is no formal written retainer agreement put forward by the petitioner. Given that the onus remains on the solicitor to prove the retainer contract where there is a dispute, there must be evidence of the retainer put forward by the lawyer: see Cox Taylor v. Cochrane, 2007 BCSC 432; Walker v. Takhar, 1994 CanLII 697 (B.C.S.C.).
[80] Accordingly, the onus is on the petitioner to prove his retainer contract with Herman Braich Jr. The respondent administrators caution that, given that Herman Braich Jr. is deceased, the retainer agreement must be examined with some care and scepticism, relying on Johl Estate v. Purewal, 2015 BCSC 2331 at para. 28; Hunt v. Kazmer, 2005 BCSC 1815 at para. 21. While Johl Estate was brought by petition, that case involved only the retainer agreement and not the enforcement of it or all the ancillary matters sought here by the petitioner.
[81] Given that a declaratory judgment would not resolve all the issues between the parties, I find that proceeding by way of petition is inappropriate and agree with the argument of the respondent administrators in this regard: see also Yates at paras. 35-39, when BaumanJ., as he then was, reviewed this point:
[35]As to Rule 10(1)(b), Justice Skipp’s decision in Three Stars Investments Ltd. v. Narod Developments Ltd. (1981), 33 B.C.L.R. 164, is cited.
[36] After reviewing the law Justice Skipp concluded:
From these cases it can be concluded that the R. 10(1)(b) petition is inappropriate where:
(1) Serious questions of law or fact are raised;
(2) A decision will not end the matter, but requires further proceedings to be pursued;
(3) The application involves not the interpretation but enforcement of a contract.
The petitioner has used an inappropriate procedure in its use of a petition. The role of declaratory judgments, as provided for under R.10, was commented upon by Dickson J. in Solosky v. R. (1979), 16 C.R. (3d) 294, 50 C.C.C. (2d) 495, 105 D.L.R. (3d) 745, 30 N.R. 380 (S.C.C.). In that case he adopted the view which asserted that the declaratory action is discretionary and should not be granted if it will not settle the questions at issue between the parties.
In the present case, a declaratory judgment on the construction of the contract will not settle all issues between the parties. They must still proceed to trial to enforce whichever construction is presented. On that ground alone the R.10(1) petition is inappropriate.
[39] He concluded (at 4):
In my view, the test laid down in Three Stars still applies on a Rule 10 application. However, after Douglas Lake, the existence of disputed questions of fact alone will not defeat the application. If disputed questions of fact can be satisfactorily resolved by reference of the documentation between the parties such that the court can concluded that the respondent would be bound to lose if the matter went to trial, then the application can be allowed, provided it still meets the Three Stars test. In Douglas Lake, the issue was one solely of contractual interpretation and the decision on that point ended the matter.
In this case, the respondent advances a misrepresentation claim in the approximate sum of $2,722,000. An interpretation of the contract will not end the mater [sic] and in my view further proceedings will have to be pursued. Finally, it is clear that the petitioner is seeking not only an interpretation of the purchase contract but also the enforcement of the promissory note free of any set-off claim. In my view, this does not fall within the purview of Rule 10 and this matter should be pursued by way of writ and statement of claim.
Accordingly, given the relief sought, I find that proceeding by petition is ill-conceived for the case before me, which will not resolve all the issues between all these parties. No application or submission was made to the Court about converting this matter to an action and, as a result, in these circumstances, it would be inappropriate for the Court to do so pursuant to Rule 16-1(18).
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. Thusthe 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.
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. Aswe have seen, it is possible to have a variation on this basic framework, for the trusteemay 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,
Section 58 WESA was once again successfully used in Re Litke Estate 2017 BCSC 1079 to find a hand written unwitnessed signed “will-like” document to be a valid will.
Such documents are now routinely found valid by the courts if certain criteria are met. The application in Re Litke was not even opposed.
STATUTE, CASELAW AND DISCUSSION
17 Part 4 of the WESA provides:
Part 4 — Wills
Division 1 — Making a Will
Who can make a will
36 (1) A person who is 16 years of age or older and who is mentally capable of doing so may make a will.
(2) A will made by a person under 16 years of age is not valid.
How to make a valid will
37 (1) To be valid, a will must be
(a) in writing,
(b) signed at its end by the will-maker, or the signature at the end must be acknowledged by the will-maker as his or hers, in the presence of 2 or more witnesses present at the same time, and
(c) signed by 2 or more of the witnesses in the presence of the will-maker.
(2) A will that does not comply with subsection (1) is invalid unless
(a) the court orders it to be effective as a will under section 58 [court order curing deficiencies],
(b) it is a will recognized as valid under section 80 [validity of wills made in accordance with other laws], or
(c) it is valid under another provision of this Act.
18 Section 58 of Part 4 provides:
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.
Case Review
19 The decision of Dixon J. in Estate of Young, 2015 BCSC 182 [Young], was the first case to consider the WESA, which came into force in British Columbia on March 31, 2014, apparently modelled after similar legislation in Manitoba.
20 At para 16, Dickson J. noted that the enactment of c. 13 represented “a significant change in wills and estate administration law in the province”, with s. 58 “one of the WESA’s most far-reaching remedial provisions.” She noted that “It marks a departure from the traditional principles of formalism that previously governed the creation, alteration and revocation of wills in British Columbia.”
21 At para. 17, Dickson J. noted:
[17] Section 58 of the WESA is a curative provision. It confers a discretion on the court to relieve against the consequences of non-compliance with testamentary formalities in the “record, document or writing or marking on a will or document”. In prescribed circumstances, s. 58 permits the court to address and cure issues of formal invalidity in such documents. It cannot, however, be used to uphold a will that is invalid for substandard reasons such as testamentary incapacity or undue influence.
22 At para. 24, Justice Dickson referred to George v. Daily (1997), 143 D.L.R. (4th) 273 (Man. C.A.). As noted by Dickson J. at para. 26, Philp J.A. at paras. 62 and 65 of the Manitoba decision, stated the following on “the limits placed on the court’s curative powers”:
Not every expression made by a person, whether made orally or in writing, respecting the disposition of his/her property on death embodies his/her testamentary intentions . . .
The term “testamentary intention” means much more than a person’s expression of how he would like his/her property to be disposed of after death. The essential quality of the term is that there must be a deliberate or fixed and final expression of intention as to the disposal of his/her property on death [citations omitted].
23 At para. 35 of Young, Dickson J noted:
[35] . . . A deliberate or fixed and final intention is not the equivalent of an irrevocable attention, given that a will, by its nature, is revocable until the death of its maker. Rather, the intention must be fixed and final at the material time, which will vary depending on the circumstances.
24 At para. 27, Dickson J. noted the following:
[27] In Kuszak v. Smoley, [1986] M.J. No. 670 (Q.B.), a partially-printed and partially-handwritten document signed by the deceased but not witnessed was found to reflect the deceased’s testamentary intentions. The court relied on several factors in making this determination, including:
(1) the document was in the deceased handwriting;
(2) the document was signed by the deceased in four places;
(3) the date was in four places;
(4) the printed portion identified the document as a will and was properly filled out; and
(5) there was nothing before the Court refuting the conclusion that the document embodied the deceased’s intentions.
In these circumstances, the handwritten document was validated pursuant to s. 23 of the WA.
25 After a further review of cases at paras. 28 to 33, Justice Dickson came to the following conclusion at paras. 34 to 37:
[34] As is apparent from the foregoing, a determination of whether to exercise the court’s curative power with respect to a non-compliant document is inevitably and intensely fact-sensitive. Two principal issues for consideration emerge from the post-1995 Manitoba authorities. The first in an obvious threshold issue: is the document authentic? The second, and core, issue is whether the non-compliant document represents the deceased’s testamentary intentions, as that concept was explained in George.
[35] In George the court confirmed that testamentary intention means much more than the expression of how a person would like his or her property to be disposed of after death. The key question is whether the document records a deliberate or fixed and final expression of intention as to the disposal of the deceased’s property on death. A deliberate or fixed and final intention is not the equivalent of an irrevocable intention, given that a will, by its nature, is revocable until the death of its maker. Rather, the intention must be fixed and final at the material time, which will vary depending on the circumstances.
[36] The burden of proof that a non-compliant document embodies the deceased’s testamentary intentions is a balance of probabilities. A wide range of factors may be relevant to establishing their existence in a particular case. Although context specific, these factors may include the presence of the deceased’s signature, the deceased’s handwriting, witness signatures, revocation of previous wills, funeral arrangements, specific bequests and the title of the document: Sawatzky at para. 21; Kuszak at para. 7; Martineau at para. 21.
[37] While imperfect or even non-compliance with formal testamentary requirements may be overcome by application of a sufficiently broad curative provision, the further a document departs from the formal requirements the harder it may be for the court to find it embodies the deceased’s testamentary intention: George at para. 81.
27 In Yaremkewich, the deceased left documents that failed to comply with the formal execution requirements of the WESA. She purported to appoint her niece, the applicant, as one of the executors. The other executor renounced her co-executorship. The estate property, listed in a Statement of Assets, Liabilities, and Distribution provided by the applicant, included her “principal residence, various banking and investment accounts, her motor vehicle, and some insurance benefits. The only liabilities of the estate [were] relatively small fees, many of which [had] already been paid. . . . [T]he value of the estate [was] approximately $545,000.” [Para. 3.]
28 As in this case, the application was not opposed in Yaremkewich.
29 In Yaremkewich, the deceased had been diagnosed with cancer. Her health continued to decline in the months preceding her death. She took multiple medications (as noted at para. 7) including “hydromorphone (a form of morphine) and Ativan”. As in this case, the evidence did not indicate her medical condition or whether medications seriously affected her mental abilities at the time she drafted the will. In the case at bar, there is no evidence the deceased was ill at the time or taking medications that could have affected her mentation at the time she signed the will-like document.
30 The deceased executed a pre-printed will template form titled “Last Will and Testament”. The document purported to revoke all her former wills, codicils and testimony dispositions, although Watchuk J. noted there was no evidence of any prior will to revoke.
31 The deceased had appointed two persons as executors; one of them who had stepped aside.
32 As noted at para 13, “The original of the pre-printed will was kept in an unsealed envelope first opened on July 7, 2014 after [the deceased’s] death”. The words, “Will of [the deceased]”, were written in what her executor, who the court found seemed to have a strong relationship with the deceased, believed was the deceased’s handwriting.
33 The “Will” appointed executors, set out burial arrangements, and directed payment of certain taxes and expenses to be paid out of the estate. As in this case, it provided “a number of gifts, that included money bequests”. It provided for “a five-way division of the proceeds of [the deceased]’s house” and included with the document was a 12-page, stapled, handwritten list of bequests, organized by beneficiary and type of gift for the 19 beneficiaries which included nieces, nephews, stepsons, extended family and friends. [Para. 15.]
34 A third document entitled “Charitable Bequests” was a one-page, handwritten list of charitable bequests that purported to distribute the “remaining money from [the] estate”. Justice Watchuk noted the list appears to have been stapled to the personal bequests list but, at some point, became loose in the envelope containing the Will template.
35 Justice Watchuk noted many of the gifts were of a highly personal nature.
36 Although “[t]he Will was signed by two witnesses” (para. 19), Justice Watchuk noted that both the purported witnesses recalled the Will they signed was a blank template with no attached pages setting up bequests. They further believed that the deceased had not signed the Will before they signed and they “[did] not specifically recollect” whether she signed the Will the same time as them.
37 Justice Watchuk found it impossible to determine exactly when the deceased executed the Will. She concluded it was likely that the deceased had completed all the various documents referred to at the same time and shortly after the witnesses signed the Will.
38 Justice Watchuk was satisfied the Will did not conform with the formalities of the WESA as the deceased had not signed or acknowledged her signature in the presence of at least two witnesses, present at the same time and signed in the presence of the will maker. It was accordingly clear the form was not validly witnessed as required by the WESA.
The general rule that extrinsic evidence is not admissible in construing a will (the function of a court of construction) does not apply to the probate court whose duty is to determine whether a document is a valid will. Extrinsic evidence is admissible on the question of testamentary intent, and the Court is not limited to the evidence that an inspection of the document provides.
40 Justice Watchuk found (at para. 56) “that the two bequests lists enclosed in the envelope [that contained the Will template] also represented the testamentary intention of the deceased and [were] therefore part of the Will”, noting that “[e]ach of the documents in substance contemplate[d] gifts on her death and in that sense were testamentary in nature.” At para. 57, Watchuk J. found it “obvious that [the deceased had] spent a great deal of time considering which gifts to give to each beneficiary . . . [and] that this represented her carefully-considered testamentary intentions”. Her observations with respect to the charitable bequests were of a similar nature. She found one of the documents found the made provision for care of the deceased’s dog after her death was not a testamentary intention as it did not contain funeral instructions for her for disposition of her property and death. As such that document, she concluded, did not have testamentary status and was now within the curative power of s. 58. She found, however, that the Will, the personal bequest list and the charitable bequest list included in the envelope containing the Will were fully effective as the deceased’s Will pursuant to s. 58 of the WESA.
41 It is apparent from the cases that the analysis that s. 58 engages is heavily fact-based. The circumstances in which a will-like document could be prepared are infinite.
42 As I read the section and the cases, the basic questions are whether the document presented is a valid document prepared by the deceased and that its contents represent a deliberate or fixed and final testamentary intention at the material time for the disposition of the estate.
Mayer v Rubin 2017 ONSC 3498 dealt with the inherent jurisdiction of the court to supervise the management of estates, control its processes and protect those who cannot fend for themselves.
26 The court has broad and inherent powers to supervise the management of estates and to control its own processes. The court may draw upon its inherent jurisdiction where appropriate to protect parties before the court so that justice can be done in the proceeding.
27 In Stelco Inc. (Bankruptcy), Re, 2005 CanLII 8671 (ON CA), Blair J.A. adopted the following description of the court’s inherent jurisdiction as set out in Halsbury’s Laws of England, 4th ed. (London: LexisNexis UK, 1973 — ), vol. 37, at para. 14:
In sum, it may be said that the inherent jurisdiction of the court is a virile and viable doctrine, and has been defined as being the reserve or fund of powers, a residual source of powers, which the court may draw upon as necessary whenever it is just or equitable to do so, in particularly to ensure the observation of the due process of law, to prevent improper vexation or oppression, to do justice between the parties and to secure a fair trial between them.
28 The inherent jurisdiction of the court most readily deals with issues concerning the court’s own processes. It is used to fill gaps where the legislature has not provided an answer such as when is it appropriate to appoint an officer of the court to preserve and protect the assets of an estate which may be at risk during litigation.
Probably every litigator has had the experience of having entered into a settlement agreement only to have the opposing party attempt to repudiate the settlement agreement resulting in a court application to determine if the agreement is valid and enforceable or if it was successfully repudiated.
Kuo v Kuo 2017 BCCA 245 recently upheld a chambers judge who found a settlement agreement to be valid despite the parties not having agreed to the capital gains tax issue.
The BC Court of Appeal reviewed the case law relating to settlement agreements and the desirability of reaching settlement as opposed to a trial.
The judge reviewed several authorities and foundational principles on repudiation. In doing so, he identified the two-question framework outlined in Fieguth v. Acklands Ltd. (1989), 37 B.C.L.R. (2d) 62 (C.A.):
i) was a contract reached?; and
ii) if so, was it repudiated by one party insisting on terms not agreed to?
Legal Framework
37 There is a strong public interest in favour of resolving lawsuits by agreement. As Abella J. observed in Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37at para. 11, “[s]ettlements allow parties to reach a mutually acceptable resolution to their dispute without prolonging the personal and public expense and time involved in litigation”. As a result, the policy of the courts is to promote settlement and to enforce settlement agreements: Catanzaro v. Kellogg’s Canada Inc., 2015 ONCA 779. This judicial policy contributes to the effective administration of justice: Kelvin Energy Ltd. v. Lee, [1992] 3 S.C.R. 235, at 259, citing Sparling v. Southam Inc. (1988), 66 O.R. (2d) 225 (Ont. H.C.).
38 When a dispute arises, the first question is whether the parties have agreed on all essential terms of the purported settlement: Fieguth at 70. The usual principles of contract formation apply. The court must analyse the evidence to determine whether, in all the circumstances, it is clear to the objective, reasonable bystander that the parties intended to contract, and whether the essential terms of that contract can be determined with a reasonable degree of certainty: Lacroix v. Loewen, 2010 BCCA 224at paras. 35-36. If they have, unless otherwise agreed, an obligation to furnish a release is implied: Fieguth at 69-70.
39 After a settlement agreement has been reached, the next stage is its completion: Fieguth at 70. Unless the agreement is terminated, the parties must fulfill their obligations, express and implied. Termination by repudiation occurs when a party evinces an intention not to be bound by the agreement and the innocent party elects to accept the repudiation: Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423 at para. 40. A fundamental breach of a primary obligation may also constitute a repudiation because it deprives the other party of substantially the whole mutually intended benefit of the agreement and thus amounts to a refusal to perform: Mantar at para. 11; Doman Forest Products Ltd. v. GMAC Commercial Credit Corp. – Canada, 2007 BCCA 88at para. 109.
40 An intention not to be bound by an agreement may be evinced by words or conduct: Guarantee Co. at para. 40. Depending on the circumstances, this may include silence in response to a request for performance when and after the request is made. In some circumstances, a repudiation may be ongoing, which, unless the agreement is affirmed, provides the innocent party with a continuing right to accept it. However, regardless of how it manifests, the refusal to perform must be clear and unequivocal to amount to a repudiation: Dosanjh v. Liang, 2015 BCCA 18at paras. 43-44; Doman Forest Products at paras. 108-109.
41 It is rare for subsequent conduct to amount to a repudiation of a settlement agreement: Fieguth at 72. For example, while insisting upon an excessive release may evidence an unwillingness to be bound, the mere proffer of such a release does not necessarily have this effect. On the contrary, as Chief Justice McEachern explained in Fieguth at 70, 72:
. . . [Unless otherwise agreed] either party is entitled to submit whatever releases or other documentation he thinks appropriate. Ordinary business and professional practice cannot be equated to a game of checkers where a player is conclusively presumed to have made his move the moment he removes his hand from the piece. One can tender whatever documents he thinks appropriate without rescinding the settlement agreement. If such documents are accepted and executed and returned then the contract, which has been executory, becomes executed. If the documents are not accepted then there must be further discussion but neither party is released or discharged unless the other party has demonstrated an unwillingness to be bound by the agreement by insisting upon terms or conditions which have not been agreed upon or are not reasonably implied in these circumstances.
ellipsis;
It should not be thought that every disagreement over documentation consequent upon a settlement, even if insisted upon, amounts to a repudiation of a settlement. Many such settlements are very complicated, such as structured settlements, and the deal is usually struck before the documentation can be completed. In such cases the settlement will be binding if there is agreement on the essential terms. When disputes arise in this connection the question will seldom be one of repudiation as the test cited above is a strict one . . . It will be rare for conduct subsequent to a settlement agreement to amount to repudiation.
