Overcoming the Presumption of Indefeasible Title

Overcoming the Presumption of Indefeasible Title

Estate disputes frequently involve issues relating to who is the true beneficial owner of a property due to a myriad of fact patterns, and the legal arguments invariably refer to the presumption of legal and beneficial ownership of indefeasible title.

The first thing any lawyer will do in any dispute as to the legal vs beneficial ownership of a parcel of property is to conduct a land title search.

British Columbia uses the Torrens property regime, and section 23(2) Land title Act creates a statutory presumption that the registered owner on title is presumed to be the legal and beneficial owner of the property.

Fellowship Deaconry Association of BC v Fellowship Deaconry Inc. 2019 BCSC 1476 dealt with a dispute of “ownership” – the plaintiff  Church asserting that the defendant held the property in trust for the Church . The defendant relied inter alia on the presumption of S. 23(2) Land Title Act, that the defendant as registered owner was the presumed legal and beneficial owner of the property.

Like any presumption in law, contrary evidence will often overcome the presumption, and the same section 23(2) of the Land Title act provides three options in which the presumption may be rebutted:

1) The operation of a resulting trust, which may be inferred where no value is given for a legal interest;
2) the operation of an agreement between the parties that is contrary to the registered legal title;
3) taking into account the underlying equitable interests between the parties ( for example, a claim such as unjust enrichment)

Most estate disputes involve the law of resulting trust, and while the Deaconry case did review the law of resulting trusts, it ultimately decided the case on the basis of the parties intention based on a review of correspondence and conduct prior to and at the time of the purchase of the property.

In the Deaconry decision , the court ultimately decided it did not have to result to the presumption of resulting trust, as the court found after a review of the evidence and correspondence, that the defendant did not intend to retain a beneficial interest in the church, and that legal title was transferred to the defendant until some agreement about repayment had been reached or fulfilled. The court found that this was the mutual intention of both parties that both the time of the purchase and when title was transferred in 1971.

The court specifically found that the evidence was sufficient to establish the three certainties necessary to create a trust, namely :

1) certainty of intention,
2) certainty of the object of the trust,
3) certainty of subject matter of the trust.

With respect to the law relating to the three certainties necessary to create a trust, the court referred to Norman Estate v . Watchtower Bible and Tract Society of Canada, 2014 BCCA 277 at paragraph 35.

Court Costs and Substantial Success

Court Costs and Substantial Success

When there is divided success between the parties after a trial, and a dispute arises as to entitlement to court costs, the courts often look to which party had to the “substantial success” as being the justification for an award of costs.

In Webber v Sullivan 2019 BCSC 1784, the court stated:

“Rule 14 –1(9) of the SCCR provides that the costs of the proceeding must be awarded to the successful party unless the court otherwise orders. When the litigation concerns multiple causes of action, it is appropriate to apply the “substantial success” to decide which party has been successful. The Owners, Strata Plan LMS3259 v Sze Hang Holdings Inc 2017 BCCA 34 at paragraphs 91 – 92.

“Substantial success” is determined by looking at the matters in dispute between the parties, assessing their importance to the parties, and doing a global determination of which party succeeded overall. Gagne v Sharp 2015 BCSC at 42.

The determination of substantial success is not require “meticulous mathematical calculation” of the precise amount of court time spent on various issues. Substantial success is measured in broad terms: Stearman v Powers 2017 BCCA 165 at para.65

Broken Promises and Reliance Thereon

Broken Promises and Reliance Thereon

Many estate disputes arise out of alleged “broken promises” to be provided for after death in a certain agreed manner concerning real property in the estate of the deceased that were relied and acted upon by the disappointed beneficiary. Such a claim arises under the equitable law of proprietary estoppel.

A “classic” example of proprietary estoppel occurred in Linde v Linde 2019 BCSC 1586 where the parents promised to provide the family farm in their estates to a son who worked the farm for fifty years for little or no wages and restricted his career paths based on repeated assurances and expectations that he would inherit the farm on his parent’s death.

The court set aside a transfer of the land to a third party after a falling out with the son based on the equitable principles of proprietary estoppel.The law was further clarified by the decision of Cowper-Smith v Morgan 2017 SCC 61, that many of those broken promises that were relied upon may be legally enforceable through the law of proprietary estoppel.

The Broken Promise: Facts

The facts of the leading proprietary estoppel case Cowper-Smith v Morgan are interesting and perhaps even “common”. The promise made by the sister and relied upon by her brother is a scenario that might very well be reasonably agreed upon between siblings.

An elderly mother had three children: two adult sons, N and M, and an adult daughter, G.

In 2001, the mother made a Declaration of Trust, transferring her house and other assets into her own and the daughters names in joint tenancy, and made a will naming her executrix, trustee and beneficiary of half of estate, with balance to the sons “ if the daughter saw fit”.

In 2007, son M moved from England to look after their mother on his sister’s assurance that she would sell him her one-third interest in the house.

M looked after his mother until her death in 2010.

The sister took no steps to divide the estate as per the promise made by her to her brother who cared for their mother for three years, so he brought a successful court action in the Supreme Court of Canada that granted orders declaring that the daughter held the mother’s home and investments in trust for the estate and that brother M was entitled to purchase her one-third interest in the home, and for an order distributing the home and investments in accordance with the mother’s 2002 will.

The trial judge held that M acted to his detriment in moving from England to look after his mother, relying on his sister’s agreement to his conditions for the move, and that, in doing so, M acted reasonably. The Trial judge also held that the brother’s right to purchase the daughter’s one-third interest in house was the minimum required to satisfy equity.

The Supreme Court of Canada agreed with the trial judge, finding inter alia that reasonableness is circumstantial, and it would be out of step with equity’s purpose to make a hard rule that reliance on a promise by party with no present interest in property can never be reasonable.

Of legal note, the daughter did not own any interest in the estate at the time of the brother’s reliance yet this was not barrier to success of proprietary estoppel claim . As soon as the daughter received interest in property, promissory estoppel attached.

The principles that can be derived from Cowper-Smith are:

An equity arises when:

1) A representation or assurance is made to the claimant, on the basis of which the claimant expects that he will enjoy some right or benefit over property;
2) The claimant relies on that expectation by doing or refraining from doing something, and his or her reliance is reasonable in all the circumstances;
3) The claimant suffers a detriment as a result of his reasonable reliance, such that it would be unfair or unjust for the party responsible for the representation or assurance to go back on his or her word.

The representation or assurance may be express or implied. An equity that is under crystallized arises at the time of detrimental reliance on a representation or assurance.

When the party responsible for the representation or assurance possesses an interest in the property sufficient to fulfill the claimant’s expectation, proprietary estoppel may give effect to the equity by making the representation or assurance binding.

The Remedy

Where a claimant has established proprietary estoppel, the court has considerable discretion in crafting a remedy that suits the circumstances.

The claimant who establishes the need for proprietary estoppel is entitled only to the minimum relief necessary to satisfy the equity in his favor, and cannot obtain more than he expected.

There must be a proportionality between the expectation and the detriment. Estoppel claims concern promises which, since they are unsupported by consideration, are initially revocable.

Other Fact Situations

Proprietary estoppel claims need not be limited in their application to estate claims-there is a myriad of factual situations related to real property where promises are made and a person acts on the promises to his or her detriment. Equity arises to enforce the agreement through the application of promissory estoppel.

A claim for promissory estoppel was rejected in Burge v Emmonds Estate 2017 BCSC 2437. The dispute was the interpretation of a mediation agreement and whether it created an easement.

The Court in Burge stated:

The principles of promissory estoppel are well settled. The petitioners must establish that the respondents have, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the petitioners must establish that, in reliance on the representation, they acted on it or in some way changed their position: Maracle para. 13.

76 In order to prove proprietary estoppel, the petitioners must prove four things:

(1) that the claim is brought in a property context;
(2) that the respondents made a representation to the petitioners that an easement would be granted;
(3) that the petitioners reasonably relied on that representation; and
(4) that it would be unconscionable and unjust in all the circumstances for the respondents to go back on the assumption they allowed the petitioners to make:

The claimant must demonstrate why it would be unconscionable or unfair for the other party to be allowed to rely on and enforce its legal rights. In that regard, then, it would “rarely, if ever, be unconscionable to insist on strict legal rights” in the absence of any detriment or prejudice to the claimant: Thus, the claimant typically must demonstrate that it will suffer some detriment if the other party is allowed to rely on its strict legal rights.

Conclusion

Not all promises made by a testator to provide for a claimant are enforceable. as they must relate to real property.

It is the promisee’s detrimental reliance on the promise which makes it irrevocable. Once that occurs there is simply no question of the promisor changing his or her mind.

The detriment need not consist of expenditure of money or other quantifiable financial detriment, so long as it is something substantial.

No Special Costs Awarded in Lost Undue Influence Claim

Special Costs NOT Awarded in Losing Undue Influence Claim

In Webber v Sullivan 2019 BCSC 1784 the court declined to award special costs to a defendant who successfully defended a claim brought by plaintiff alleging undue influence on the part of the defendant.

The court instead awarded costs in favor of the defendant on a party and party basis, which is substantially a lesser amount of money.

For several years now the general rule of thumb with respect to the matter of undue influence allegations and costs, is while the court always has a discretion in the matter of costs, an allegation of undue influence was tantamount to that of fraud, and a failure to succeed at trial, often resulted in an award of special costs against the losing party.

There are plenty of cases to support that general proposition. ( see Stewart v McLean 2010 BCSC 64 for example)

The facts in this case were such that the court varied the will pursuant to the wills variation act portions of WESA ( S.60) , but dismissed the plaintiff application for a declaration that the inter vivos transfer of property by the testator, the party’s mother, was the result of undue influence of the defendant.

The defendant brought application for an award of special costs, but the losing plaintiff on the issue of undue influence successfully argued that special costs should not be awarded and the court agreed with the latter.

The Law

The court referred to in the decision of Allart Estate v Allart 2016 BCSC 768, where the court summarize the principles that guide court’s jurisdiction to award special costs:

15 “ The court is also empowered to order special costs in exceptional circumstances. In the leading decision of Garcia v. Crestbrook Forest Industries (1994) 9 BCLR (3d) 242 (CA) , the court established reprehensible as the single standard for the award of special costs. In recognition of the broad meaning of the word reprehensible, the court explained that in order for an award of special costs to be justified, “something more” is required, such as improper allegations of fraud, or an improper motive for bringing the proceedings, or improper conduct of the proceedings. An action that has little merit is not, without more, reason for awarding special costs (para.23)

Undue Influence and Special Costs

The party seeking special costs must demonstrate exceptional circumstances to justify a special costs order. The court should show restraint in awarding special costs. Westsea Construction LTD v 0759553 BC LTD 2013 BC SC 1352 at paragraph 73.

The court found that the plaintiff allegation of undue influence in this decision was tenuous, but that is different from saying it was bound to fail. The plaintiff did have reason to question the testator’s intent in transferring the apartment to the defendant. Given the statement in her will that she did not intend to create a joint tenancy with the defendant. This is not a case in which there was no evidence whatsoever to support the claim. The court also accepted that the plaintiff did not have improper or ulterior motives in advancing it.

The court merely criticized the plaintiff for bringing a weak claim and that they ought to have exercised greater caution in doing so, but bearing in mind the need to exercise restraint in an award of special costs, the court did not find that the plaintiff’s conduct in pursuing the claim of undue influence was sufficiently reprehensible to give rise to an award of special costs.

Recognizing Personality Disorder

Recognizing Personality Disorder

My experience is that many children of parents with a personality disorder end in estate litigation, and I may be important to recognize this.

Generally speaking, people with personality disorders have poor coping skills and the impact of aging and loss of independence challenges those skills and typically results in an exacerbation of inappropriate and difficult to handle behavior.

Many people with personality disorder are highly anxious, at times dramatic, manipulative, emotionally reactive and verbally aggressive, inappropriate/cold with loved ones and caregivers.

Characteristic of Personality Disorder

Apparently all persons with personality disorder have four characteristics in common:

a) A capacity due to simply” irritate to death” others;
b) strong tendencies to revoke interpersonal conflict;
c) inflexible and maladaptive responses to stress;
d) disability in working with and loving others

Those who deal with people with personality disorders learn early on to avoid any type of criticism whatsoever, and to expect verbal abuse.

The person with personality disorder tends to see the world in terms of black and white, such as good or bad, friends or enemy ,distrusting or gullible.

People with personality disorders often deliberately leave their estate in a conflicted mess – I frequently refer to them as “laughing in their grave”.

Broken Inheritance Promises

Broken Inheritance Promises

Broken inheritance promises generally fall under the law of the doctrine of proprietary estoppel- the leading case Cowper-Smithv Morgan 2017 SCC 61 sets out the general principles of which are as follows:

An equity arises when:

1) A representation or assurance is made to the claimant, on the basis of which the claimant expects that he will enjoy some right or benefit over property;

2) The claimant relies on that expectation of inheritance by doing or refraining from doing something, and his or her reliance is reasonable in all the circumstances;

3) The claimant suffers a detriment as a result of his reasonable reliance, such that it would be unfair or unjust for the party responsible for the representation or assurance to go back on his or her word.

The representation or assurance may be express or implied. An equity that is under crystallized arises at the time of detrimental reliance on a representation or assurance. When the party responsible for the representation or assurance possesses an interest in the property sufficient to fulfill the claimant’s expectation, proprietary estoppel may give effect to the equity by making the representation or assurance binding.

Where a claimant has established proprietary estoppel, the court has considerable discretion in crafting a remedy that suits the circumstances. The claimant who establishes the need for proprietary estoppel is entitled only to the minimum relief necessary to satisfy the equity in his favor, and cannot obtain more than he expected.

There must be a proportionality between the expectation and the detriment. Estoppel claims concern promises which, since they are unsupported by consideration, are initially revocable. What later makes them binding, and therefore a revocable, is the promisee’s detrimental reliance on them. Once that occurs there is simply no question of the promisor changing his or her mind.

It is the promisee’s detrimental reliance on the promise which makes it irrevocable. The detriment need not consist of expenditure of money or other quantifiable financial detriment, so long as it is something substantial.

Generally speaking, the approaches to determine whether a purported repudiation of the promise or assurance is unconscionable and all the circumstances. The issue of detriment must be judged at the moment when the person who is given the assurance six to go back on it.

Executor Ordered to Produce Deceased’s Medical Records

Executor Ordered to Produce Deceased's Medical Records

An Alberta case Petrowski v Petrowski 2005 ABQB ordered the executor to produce medical records of the deceased pointing to her obvious conflict of interest in having the exclusive authority in relation to a doctor’s confidentiality when there was reason to question the testator’s mental capacity at the time of various transfers.

The decision was referred to in Armstrong v Katanko 2019 BCSC 1519 with seeming approval, but distinguishing it on the basis that Petrowski was for production of medical records and Kotanko was for lawyer-client records.

It is often crucial to obtain a complete set of the deceased’s medical records when alleging lack of mental capacity, undue influence, unconscionable contract and similar remedies in the estate litigation.

In Petrowski the deceased transferred property to his daughter, the plaintiff’s sister, during his lifetime. The sister is also the executor of his estate.

The plaintiff sought an order that he be allowed unfettered access to medical information about his father, including the ability to interview the doctors. The sister argued that as executor, she had exclusive authority in relation to a doctor’s duty of confidentiality.

The court noted the sister’s obvious conflict of interest:

“ It seems to be manifestly unfair that Joan, because she is named executrix in a will, the validity of which is also challenged, should have unfettered access to medical information concerning the deceased, and able to deny her brother the same unfettered access.”

Further, if an executrix has exclusive authority in relation to a doctor’s duty of confidentiality to the deceased, it would, in my view, constitute an abuse of that authority for the executrix, to use her authority to advance her own personal position in litigation, as distinct from the position of the estate.

If the inter vivos land transfers had been made to a third-party, and there was reason to question the transferor’s mental capacity at the time of the transfers, it could be the executrix’s duty to challenge the transfers for the benefit of the estate. In that sense the executor’s interest ias inter vivos transferee of the deceased’s land may conflict with her duties as executrix.

Wife Substituted as Executor: Courts Declaratory Powers

Wife Substituted as Executor- Courts Declaratory Powers

Re Rattray estate 2019 BC SC 1611 used the courts inherent jurisdiction to provide declaratory relief in the for of directions in substituting a former common-law spouse as an alternate executor in the place of the testator’s two sisters.

The facts are a bit complicated, but the surviving spouse paid the mortgage and other expenses as were required on the former matrimonial home. The bank took the position that the testator’s death constituted a default and began foreclosing on the property, and the sisters were unwilling to defend the proceeding or commit to refinancing.

Only the surviving spouse had the opportunity to apply for and perhaps receive alternate financing, and she was substituted as executor and the others removed”.
The Courts Declaratory Powers

What was noteworthy about the decision was that the court exercised its inherent declaratory powers to make various orders removing the sisters as executors and substituting the former spouse as the alternate executor and such other usual relief also ordered when removing and substituting an executor.

The court has inherent jurisdiction to provide declaratory relief, but the power to do so is limited by judicial discretion to refuse to do so with the circumstances so warrant. Chambers v. Atty. Gen. Canada 2004 BC SC 854 at paragraph 20, citing Solosky v R. ( 1879) , 50 CCC 495 SCC.

More recently, the BC Court of Appeal in Tele- Mobile Co. British Columbia 2013 BCCA 216 set out the factors that constrain the court in exercising this power:

11-“ while it is clear that the Supreme Court has broad powers to make declarations of rights, even in the absence of live controversies, the power to grant a declaration is discretionary. In general, there is a strong preference toward deciding actual disputes rather than hypothetical ones. The factual components of such disputes place the legal issues in context and allow a more thorough evaluation of them. The requirement that there be a genuine dispute ensures that judicial resources are devoted to resolving real controversies rather than speculative ones. Further, the presence of a concrete dispute

Marriage Annulment For Non-Consummation

Marriage Annulment For Non-Consummation

An Ontario decision Razavian v Tajik 2019 BCSC 5662 granted an annulment of a marriage by reason of a bride’s refusal to have sex with her new husband due to crippling anxiety on her part, thus the marriage was unconsummated.

Since the advent of the Divorce Act in the late 60’s, and the allowance of ” one year separate and apart” as a grounds of divorce, annulments have become increasingly rare, particularly based upon lack of consummation.

Upon reflection, it occurred to me that an occasional fact pattern in estate litigation is the bedside marriage to someone who is mentally or physically infirmed, or terminally ill, or any combination thereof, all to the extent that he or she is incapable of consummating the marriage.

The decision could be noteworthy in the attempt to reduce elder abuse, including marriage where one party is not sufficiently competent to truly understand the nature of marriage.

The fact that the court found that a marriage could be annulled by reason of non-consummation when it is due to a physical inability to consummate the marriage, rather than a deliberate intention is a necessity for a valid marriage.

While this is an Ontario case I believe the case law reviewed in the decisions would be followed in British Columbia. The statute in Ontario is known as the Annulment of Marriage act.

It is clear from the authorities that nonconsummation must be as a result of incapacity or inability to consummate, rather than a flat refusal to do so.

The principles were discussed in detail in the decision in Khan v Mansour 1989 ONSC 4341 , which stated that

“the impediment to consummation must be such as to render complete intercourse in practicable. The rate mere refusal to consummate a marriage due to obstinacy or caprice, is not a ground for annulment. However, nonconsummation refusal to consummate, depending upon the circumstances, the service evidence from which an inference of capacity can reasonably be drawn .”

In 1948 Supreme Court of Canada decision Heil v Heil three SCC 160 stated:

“ It would seem that it is now an accepted principle of the law that if, in an action for annulment of marriage and the ground of nonconsummation