Month: September 2022

Adverse Inferences

656621 BC Ltd v David Moerman Painting 2022 BCSC 1683 discussed the adverse inference discretionary rule of evidence that permits the Court to draw an adverse inference against a party by reason of his or her failure to call a witness who could be expected to give material evidence in their favour at trial: Singh v. Reddy, 2019 BCCA 79 at para. 1 [Singh]; Thomasson v. Moeller, 2016 BCCA 14 at para. 35

The adverse inference rule is discretionary, and a trial judge is not obliged to draw an adverse inference: Singh at para. 9; Thomasson at para. 34.

An adverse inference is not to be drawn unless a prima facie case is established: Thomasson at para. 35; Cranewood v. Norisawa, 2001 BCSC 1126 at para. 127 [

In Singh, the Court of Appeal endorsed the following considerations listed in A. W. Mewett and P.J. Sankoff’s Witnesses (loose leaf) as relevant for consideration in determining whether it is appropriate to draw an adverse inference:
• whether there is a legitimate explanation for the failure to call the witness;
• whether the witness is within the “exclusive control” of the party, and was not “equally available to both parties”’
• whether the witness has material evidence to provide; and
• whether the witness is the only person or the best person who can provide the evidence.

While the plaintiffs argue it is highly irregular for a party witness not to testify in a civil trial (relying upon Solberg v. Carriere, 2014 BCSC 1668 at para. 38), there is no automatic adverse inference drawn when a party fails to testify.

Further, Solberg confirms that if the plaintiff has failed to establish a prima facie case against the defendant “no adverse inference will be drawn should the defendant not testify”: at para. 38. See also O’Connell v. Yung, 2012 BCCA 57 at para. 31; and Kern v. Forest, 2010 BCSC 938 at para. 174.

Plaintiffs must establish a prima facie case

The jurisprudence establishes that the party asking the court to draw an adverse inference must present some evidence that, in the words of Justice Spencer in Alavinejad, “would tend to prove the facts to be inferred to the extent that they demand an answer from the defendant”, and does not require they present evidence that establishes their prima facie case at large.

The adverse inference rule is a discretionary evidentiary rule. I am satisfied the party seeking the adverse inference must establish there is a prima facie case for the specific adverse inference being sought, and not for the case at large. This raises the issue of what standard of evidence is necessary to establish such a prima facie case.
The Manitoba Court of Appeal described the standard for establishing a prima facie case in The Director of Criminal Property and Forfeiture v. Ramdath et al, 2021 MBCA 23 [Ramdath et al], in the following manner:

The “prima facie” standard is situated on the standard of proof spectrum between “balance of probabilities” and “reasonable grounds to believe”. Black’s Law Dictionary defines prima facie as “on first appearance but subject to further evidence or information” (Bryan A Garner et al, eds, Black’s Law Dictionary, 10th ed (St. Paul, Minn: Thomson Reuters, 2014) sub verbo “prima facie”). The term “prima facie” is used in several different contexts and is somewhat loosely defined. The phrases “prima facie proof”, “prima facie evidence” and “prima facie case” have at times been used interchangeably, contributing to the confusion around what, exactly, is the prima facie case standard of proof (Sidney N Lederman, Alan W Bryant & Michelle K Fuerst, The Law of Evidence in Canada, 5th ed (Toronto: LexisNexis, 2018) at sections 3.36-3.44).

The Supreme Court of Canada has provided helpful guidance on what constitutes a “prima facie case” standard in the context of criminal law and extradition law. It is a “case containing evidence on all essential points of a charge which, if believed by the trier of fact and unanswered, would warrant [the order sought]” (Mezzo v The Queen, [1986] 1 SCR 802 at 837; see also United States of America v Shephard, [1977] 2 SCR 1067 at 1074-77)

The Court of Appeal describes the lower or less demanding standard of proof of “reasonable grounds to believe”, which entails an objective test which is based on “credibly-based probability”, and is met “when it is probable that something will happen, and the lower standard of “reasonable suspicion” which must also be grounded in objective fact, and is met “when it is probable that something might happen: Ramdath et al at paras. 23 and 25.

Standing in Partition – Possessory Interest Required

Pallot v Douglas 2017 BCCA 254 dismissed an appeal and held that the appellant did not have standing to apply for partition of a leasehold interest in trust property owned by the Convention of Baptist Churches of British Columbia as the applicant did not have the right to a possessory interest in the lands.

To have standing under the Partition of Property Act 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:

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.)

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.

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 trusts that he is bound to perform. The beneficiary 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 McInnes, Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed. (Toronto: Carswell, 2014) at 38.

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, aff’d (1880), 15 Ch. D. 165 (C.A.). In Taylor, Fry J. held there was no jurisdiction to order partition at the request of a beneficiary with an equitable estate in the trust property, which was held under a trust for management of real property created by a will. Mr. Justice Fry reasoned at 227:

… For if I were to decree partition I should be putting an end to the active trusts which the testator has directed to be carried on during the lives of his daughters. The effect would be to stop the business of working the quarries and to divide the property in a manner inconsistent with the exercise of the powers given to the trustees.
No doubt an equitable owner may obtain a decree for partition if he be entitled to call for a legal estate, which would have entitled him to partition at common Law. But that is not this case, and I should be doing wrong here to make a decree for partition, the result of which, as no conveyances could be at present executed, would be to cause the trusts of the will to be administered separately as to the different persons entitled.

Interpreting Insurance Policies

Estate litigation occasionally involves the interpretation of coverage under a policy of insurance.

The general principles of interpreting insurance policies was discussed in Co-operators General Insurance Company v. Kane, 2017 BCSC 1720, as follows:

a) the general purpose of insurance is to protect an insured against losses arising from unforeseen and accidental actions: Non-Marine Underwriters, Lloyd’s of London v. Scalera, 2000 SCC 24 at paras. 68-69;

b) it is necessary to interpret insurance contracts as they would be understood by the average person applying for insurance, and not as they might be perceived by persons versed in the niceties of insurance law: National Bank of Greece v. Katsikonouris, [1990] 2 S.C.R. 1029 at 1043;

c) courts should interpret a contract of insurance as a whole: Progressive Homes Ltd. v. Lombard General Insurance Company of Canada, 2010 SCC 33 at para. 22, citing Scaleraat para. 71;

d) as contracts of adhesion, courts should prefer interpretations that are consistent with the reasonable expectations of the parties, and avoid interpretations that would give rise to an unrealistic result or that which would not have been in their contemplation at the time the policy was concluded: Progressive Homesat para. 23; Scaleraat para. 71; and

e) as contracts of adhesion, where there is an ambiguity which the rules of construction fail to resolve, courts will construe the policy contra proferentemagainst the insurer. A corollary of the contra proferentemrule is that coverage provisions are interpreted broadly, and exclusion clauses narrowly: Progressive Homes at para. 24; Scalera at para. 70.

These general interpretation principles apply equally to the duty to defend and exclusion clauses: Derksen v. 539938 Ontario Ltd., 2001 SCC 72 at para. 49.

Other general principles that apply in relation to the duty to defend and exclusion clauses are:

a) an insurer is only required to defend a claim where the facts alleged in the pleadings, if proven, would require the insurer to indemnify the insured (i.e. the “pleadings rule”): Monenco Ltd. v. Commonwealth Insurance Co., 2001 SCC 49 at para. 28; Progressive Homesat para. 19; Lombard General Insurance Company of Canada v. 328354 B.C. Ltd., 2012 BCSC 431 at para. 21; Canadian Northern Shield Insurance Company v. Intact Insurance Company,2015 BCSC 767 at para. 18;
b) all that is necessary, in order to trigger the duty to defend, is the mere possibility that a claim falls within coverage under the insurance policy based on a review of the pleadings: Monencoat paras. 29-30; Progressive Homesat para. 19; Lombard at para. 23; Johnson v. Aviva Insurance Company of Canada, 2014 ABQB 688 at paras. 33-35;
c) where pleadings are not framed with sufficient precision to determine whether claims are covered by the policy, the duty to defend will be triggered where, on a reasonable reading of the pleadings, coverage can be inferred: Monencoat para. 31;
d) “the widest latitude should be given to the allegations in the pleadings in determining whether they raise a claim within the policy”: Scaleraat para. 75, citing Nichols v. American Home Assurance Co., [1990] 1 S.C.R. 801. This is consistent with resolving any ambiguity in favour of the insured: Monencoat paras. 31-32; Lombard at para. 24; Johnson at para. 33.

This interpretation exercise of the Policy concerns, to a large degree, the scope of Co-operators’ duty to defend the various causes of action raised in the Complaint. In Lombard, Justice Butler discussed the extent of an insurer’s duty to defend where numerous causes of action are alleged, some of which may be covered under the insurance coverage and some of which may not, as follows:

Where the pleadings allege numerous claims against an insured, some of which are covered and some are not, it is axiomatic that an insurer’s prima facie duty to defend arises only in respect of the claims which, if proved at trial, would trigger its duty to indemnify. However, the extent of the insurer’s responsibility to contribute to the costs of defending the action is a separate question that cannot always be determined according to the scope of its prima facie obligation.

It is well settled that where it is possible to distinguish between claims falling within and outside the policy coverage, the extent of an insurer’s defence obligation can be limited accordingly: Continental Insurance Co. v. Dia Met Minerals Ltd. (1996), 77 B.C.A.C. 251. An insurer has no duty to defend claims which clearly fall outside the grant of coverage: Progressive Homes at para. 19.

On these principles, the extent of an insurer’s defence obligation in a case involving a mix of covered and non-covered claims will depend primarily on the precision of the allegations in the pleadings and the operative language in the coverage provisions of the policy. In this respect, it is worth recalling that on a duty to defend application, any uncertainty is resolved in the insured’s favour.

Accordingly, in light of the various Causes of Action alleged in the Complaint, the governing principle here is that, unless all occurrences which potentially caused or contributed to the loss or damage are clearly and unambiguously excluded, coverage for the duty to defend will not be ousted. If there are different causes of action or theories of recovery, one of which is covered under the Policy, Co-operators is bound to defend those causes of action which, if proved, would be within the coverage: Progressive Homes at para. 54; Derksen at paras. 55-56, 67; Hartup v. BCAA Insurance Corp., 2002 BCSC 972 at para. 9; Miller v. Grain Insurance and Guarantee Co., 2005 SKQB 546 at paras. 15-18.

Equity Exoneration

In Zeligs v Janes 2015 BCSC 525 the court imposed a constructive trust on the amount of two mortgages taken out on the property of the donor by his attorneys as a fiduciary breach of trust that wrongfully profited the said attorneys.

The court went on to state that an alternative approach to the same end is by means of equitable exoneration.

It has been summarized by an Ontario court as follows (Slan v. Blumenfeld (1997), 34 O.R. (3d) 713 at 717 (Sup. Ct. J.)):

The principle of exoneration is that a person who has charged property to secure the debt of another stands only in the position of a surety and is entitled to be exonerated by the principal debtor. The doctrine is said to reflect the intentions of the parties. …

The BC Court of Appeal has described the doctrine in the following terms (Bankruptcy of Kostiuk (Re), 2002 BCCA 410):

[57] The argument made by Ms. Kostiuk before Hunter J. was that she was entitled to the benefit of the principle of “equitable exoneration”. That principle is summarized in Re Pittortou, [1985] 1 All E.R. 285 at 287 (Ch.):

As a general proposition, if there is found a charge on property jointly owned to secure the debts of one only of the joint owners, the other joint owner, being in the position of a surety, is entitled as between the two joint owners to have the secured indebtedness discharged so far as possible out of the equitable interest of the debtor. The principle is expressed in 22 Halsbury’s Laws (4th edn) paras 1071-1076, under the general heading “Equity of Exoneration’. Paragraph 1071 begins:

‘If the property of a married woman is mortgaged or charged in order to raise money for the payment of her husband’s debts, or otherwise for his benefit, it is presumed, in the absence of evidence showing an intention to the contrary, that she meant to charge her property merely by way of security, and in such case she in is the position of surety and is entitled to be indemnified by her husband, and to throw the debt primarily on his estate to the exoneration of her own…’
…
However, the equity of exoneration is a principle of equity which depends on the presumed intention of the parties. If the circumstances of the particular case do not justify the inference, that it was the joint intention of the joint mortgagors that the burden of the secured indebtedness should fall primarily on the share of that of them who was the debtor, then that consequence will not follow.

[58] The principle of “equitable exoneration”, as it applies to property dealings involving husbands and wives, is derived from cases that were decided more than one hundred years ago: see Paget v. Paget, [1898] 1 Ch. 470 (C.A.). The laws and social customs governing those dealings have little application today. Nonetheless, the principle is applied, in the proper case, taking into account modern marriage relationships: see Re Pittortou at pp. 288-9 and Slan v. Blumenfeld (1997), 34 O.R. (3d) 713 at 719 and 725 (Ont. Ct.-Gen. Div.). The question is the intention of the parties as to who should bear the burden of the indebtedness and whether the spouse who claims the benefit of the doctrine benefited from the debt: see, in addition to Re Pittortou and Slan, Re Berry, [1978] 2 N.Z.L.R. 373 (C.A.); Farrugia v. Official Receiver (1982), 43 A.L.R. 700 (Fed. Ct.); 317363 Canada Inc. v. Doctor (1997), 50 C.B.R. (3d) 264 (Ont. Ct.- Gen . Div.); McCoy v. Hucker, [1998] O.J. No. 2831 (Ont. Ct.-Gen. Div.)(QL).

The following are other aspects of the doctrine discussed in the cases:

(a) Although it has archaic origins, it continues to apply in Ontario, British Columbia and other Commonwealth jurisdictions such as Australia (Slan at 724, 726; Wong v. Campbell Saunders Ltd., 2005 BCCA 574).

(b) The doctrine began under matrimonial law. However, it is not restricted to matrimonial cases as can be seen in the broad definition in Slan, above. As well, in Slan a decision is referred to where a father was determined to be a surety for a bankrupt son. The father had provided security for the son’s failed business (Re A Debtor (No. 24 of 1971), [1976] 2 All E.R. 1010; Slan at 722).

Further, in Wong, our Court of Appeal stated it will “usually” apply to married parties but it did not expressly limit the doctrine to husbands and wives. I note the following from Wong (para. 11):

Under this principle, a person (usually a wife) who has charged property jointly held with another (usually her husband) to secure that other’s debt stands in the position of a surety and is entitled to be indemnified or, “exonerated”, by the principal debtor. To do this, the burden of the security is “shifted” to the principal debtor.

(c) The intention of the parties is of some significance (Slan at 717). However, intention has been found to be inferred in certain circumstances. For example, in Ken Glover & Associates Inc. v. Irwin et al, 2005 BCSC 1364 Master McCallum discussed equitable exoneration (including the application of Kostiuk) and concluded that intention could be inferred (para. 14):

[14] The evidence here from Ms. Irwin is that loan proceeds were applied for Mr. Irwin’s benefit. There is no direct evidence from Ms. Irwin on the question of intention. The evidence of the collateral mortgage supports her position that there should be an inference drawn of a joint intention that Mr. Irwin would bear the burden of repayment of the debt. That inference is more compelling in this case where the parties were separated when the loan was made. There is no other evidence on the question of intention. In the circumstances, it seems an irresistible inference that the parties intended that Mr. Irwin would bear the burden of the debt. There is no doubt that he received the proceeds of the loan. Ms. Irwin’s evidence, which is unchallenged, is that she received no benefit from the loan proceeds.
(d) The doctrine of equity exoneration is tied to the principles of marshalling and contribution in order to prevent unjust enrichment (Slan at 719, citing R.A. Klotz, Bankruptcy and Family Law (Toronto: Carswell, 1994) at 96; Parrott-Ericson v. Stockwell, 2006 BCSC 1409 at paras. 14, 20, 24, 27; Larochelle v. Larochelle, 2009 BCSC 1430 at para. 29; W.M. Traub, Falconbridge on Mortgages, 5th ed., looseleaf (Aurora: Canada Law Book, 2010) at §23:30).
(e) A co-mortgagor and notional surety under the doctrine may be barred from using it if she or he has benefitted from the mortgage at issue (Kostiuk at para. 58; Re Bankruptcy of Davies Wong, 2005 BCCA 574 at para. 12). An Australian court described this aspect of the doctrine as follows (Parsons v. McBain, 2001 FCA 376 at para. 23):

If a surety receives a benefit from the loan, the equity of exoneration may be defeated. So, if the borrowed funds are applied to discharge the surety’s debts, the surety could not claim exoneration, at least in respect of the benefit received.
But the benefit must be from the loan itself. The question suggested by the Lord Chancellor of Ireland is: “Who got the money?”: see In re Kiely (1857) Ir Ch Rep 394, 405. In Paget v Paget, [1898] 1 Ch. 470 both the husband and the wife “got the money” and this prevented the wife claiming exoneration.

Fiduciary Obligations of Attorney Increase If Donor Incompetent

In Zeligs v Janes 2015 BCSC 525 the court examined the breach of fiduciary duty of two powers of attorney for a mentally incompetent donor who both personally financially profited with the use of the power of attorney by taking two mortgages out on jointly owned property with the donor, selling the property and keeping the net funds for themselves.

The fiduciary obligations of an attorney become elevated once the donor of the power becomes incapable.

This is described by the Ontario Court of Appeal as follows (Richardson Estate v. Mew, 2009 ONCA 403):

48. In Banton [Banton v. Banton (1998), 164 D.L.R. (4th) 176 (Ont. Sup. Ct.)], Cullity J. held that while an attorney acting under a continuing power of attorney is always a fiduciary, the scope of the attorney’s fiduciary duties depends on whether the donor of the power is incapable at the time of the transaction. If the donor is mentally incapable, the attorney’s position approaches that of a trustee. …

49. As a fiduciary, Ms. Ferguson was obliged to act only for the benefit of Mr. Richardson, putting her own interests aside: see Ermineskin Indian Band and Nation v. Canada, [2009] 1 S.C.R. 222, at para. 125.

In British Columbia (Public Guardian and Trustee of) v. Elgi, 2004 B.C.J. No. 796, 28 B.C.L.R. (4th) 375 (S.C.) aff’d [2005] B.C.J. No. 2741, 262 D.L.R. (4th) 208 (C.A.), Garson J. described the prohibition against using a power for the attorney’s profit, benefit or advantage, at para. 82, in the following way:

It is the attorney’s duty to use the power only for the benefit of the donor and not for the attorney’s own profit, benefit or advantage. The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor. I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members.
…

BC Estate Lawyer-Marriage Like Relationships

Trevor Todd and Jackson Todd have been practicing law in the area of contested estates for over sixty combined years, including the enormous range in what are now considered to be marriage like relationships.

Mother 1 v Solus Trust et al 2021 BCCA 461 reviewed the law on marriage like relationships and concluded that Mother 1 was not a spouse within the meaning of WESA.

Mother 1 was not married to the deceased and thus had to prove on a civil standard that she lived with him in marriage like relationship for at least 2 years.

The trial judge instructed himself on the definition of a marriage like relationship and described it as an “elastic” concept and one that engages a multi faceted analysis .

He enumerated various factors for consideration, citing the often-referred to case of Molodowich v. Penttinen, [1980] O.J. No. 1904, 1980 CanLII 1537 (Dist. Ct.). He noted that the list of factors delineated in Molodowich “cover virtually every aspect of life a couple could engage in together”

Relying on Weber v. Leclerc, 2015 BCCA 492, he cautioned himself against taking a “checklist approach” to the issue before him. Instead, it was his obligation to consider the matter “holistically” and to examine all relevant factors in deciding whether there was a marriage like relationship of at least two years between Mother 1 and the deceased.

The judge specifically noted that a legal capacity to marry is not a prerequisite to finding a marriage like relationship . Nor is financial dependence .
The parties do not have to co reside .

Their subjective intentions are considered; however, one party’s denial of an intention to enter into or remain in a marriage like relationship is not fatal to the analysis. Instead, the credibility of that denial will be tested against objective indicators and may not be believed if “all of the surrounding circumstances strongly imply the contrary” (at paras. 140–42, citing Dey v. Blackett, 2018 BCSC 244 at para. 235 and other cases).

The determination of a marriage like relationship (or not) is a question of mixed fact and law that requires a broad approach- ( Weber v Leclerc)

After the judge rendered his verdict, this Court released its decision in Robledano v. Queano, 2019 BCCA 150, in which it held that the requisite two years of a marriage like relationship need not immediately precede the intestate’s death:

[40] Paragraph 2(1)(b) of the statute uses the past perfect tense (“had lived together”) rather than the past continuous tense (“were living together”). The ordinary grammatical meaning of paragraph 2(1)(b) is that in order for a person who was not married to the deceased to be their spouse, the two must have lived together in a marriage like relationship for two years, but not necessarily for the two years immediately preceding the deceased’s death. In contrast to paragraph 2(1)(b), paragraph 2(1)(a) uses the past continuous tense (“were married”) rather than the past perfect tense (“had been married”). The statute is professionally drafted and the use of these different tenses should be presumed to be deliberate.

However, a WESA claimant and the intestate must remain spouses at the time of the death in order to advance a claim: Robledano at para. 43.
If the parties ceased to be spouses before the intestate’s death because their marriage like relationship was “terminated” by one of them, there will be no legal entitlement to advance a claim against the estate as a spouse (s. 2(2)(b)).

According to Robledano, in deciding whether a party has terminated the marriage like relationship, a judge must:

[55] … consider the expressed and implicit intentions of each spouse, as well as the objective evidence concerning the subsistence of the relationship. The determination is a “judgment call” for the trial judge – the application of a broad legal standard to the factual circumstances of an individual case. It is a question of mixed fact and law. Where a trial judge has correctly identified the standard, and has not made any palpable and overriding error in applying it, deference to the trial judge’s decision is required: Housen v. Nikolaisen, 2002 SCC 33.

The intention of the parties is a factor that must be considered” in deciding whether a relationship was marriage like (at para. 141). Evidence of “mutual intent” to be in a relationship of an indeterminate or lengthy duration is likely to carry significant weight in the analysis (at paras. 141–42). However a finding of mutual intent is not a prerequisite to finding that a marriage like relationship existed at law. It was explained this way in Weber:

[23] The parties’ intentions – particularly the expectation that the relationship will be of lengthy, indeterminate duration – may be of importance in determining whether a relationship is “marriage like”. While the court will consider the evidence expressly describing the parties’ intentions during the relationship, it will also test that evidence by considering whether the objective evidence is consonant with those intentions.

[24] The question of whether a relationship is “marriage like” will also typically depend on more than just their intentions. Objective evidence of the parties’ lifestyle and interactions will also provide direct guidance on the question of whether the relationship was “marriage like”.

Court Approval of a Sale

The test to be established by a party seeking approval of sale is whether the sale is provident and the sale was conducted in a business-like manner, as noted in Mission Creek Mortgage Ltd. v. Angleland Holdings Inc., 2013 BCCA 281, at paras. 40 and 41:

In Woods Lake Development Ltd. v. Renascence Enterprises (Woods Lake) Corp., 2011 BCSC 849, there is no clear case law in British Columbia as to the duties of a mortgagee who has conduct of sale by court order. Nor is there any case in this jurisdiction that organizes factors that govern the court on an application for approval of a proposed sale. The several cases I have read involve various issues and, of course, a variety of circumstances. What I take from them is that the mortgagee must go about finding a buyer in a businesslike manner and the court must be satisfied that the proposed sale is provident in all the circumstances.

Approval by the court is discretionary.

This was confirmed by the court in Paradigm Quest Inc. v. Pacific Pasnak Holdings Ltd., 2021 BCSC 1455, at para. 8.

In Kokanee Mortgage MIC Ltd. v. 669655 B.C. Ltd., 2014 BCSC 458 at para. 27, Justice Gaul defined “provident” as whether “the marketing and sales process has been a fair and proper one for all, and that the proposed price reflects the fair market value for the property”.

In Institutional Mortgage Capital Canada Inc. v. Plaza 500 Hotels Ltd., 2020 BCSC 888, Justice Fitzpatrick summarized the meaning of provident as follows:

IMC refers to certain authorities on the meaning of “provident”. As the authorities cited below indicate, a “provident” price in these circumstances (foreclosure) does not mean certainty that the “best price” obtainable in the market was achieved had the mortgagor sold the property itself. It is inevitable that the market recognizes the “forced sale” nature of the circumstances under a CSO.

In J & W Investments Ltd. v. Black (1963), 1963 CanLII 471 (BC CA), 38 D.L.R. (2d) 251 (C.A.), the court stated at 262:

… the mortgagee has an interest and the right to protect that interest by selling to realize the moneys due, notwithstanding such sale may be at an undervalue, provided always that he exercises such power of sale “in good faith, without any intention of dealing unfairly by his mortgagor” … That is so stated in Farrar v. Farrars Ltd., [(1888) 40 Ch. D. 395] by Lindley, L.J., at pp. 410-1, as follows:

A mortgagee is under obligations to the mortgagor, but he has rights of his own which he is entitled to exercise adversely to the mortgagor. A trustee for sale has no business to place himself in such a position as to give rise to a conflict of interest and duty. But every mortgage confers upon the mortgagee the right to realize his security and to find a purchaser if he can, and if in exercise of his power he acts bona fide and takes reasonable precautions to obtain a proper price, the mortgagor has no redress, even although more might have been obtained for the property if the sale had been postponed

Mental Capacity to Make a Will

Jung Estate v Jung Estate 2022 BCSC 1298 reviewed the law on mental ( testamentary) capacity to make a will and found the will invalid.

The most frequently quoted test for testamentary capacity is the English decision of Banks v. Goodfellow (1870), L.R. 5 Q.B. 549 (Eng. Q.B.) at 567, which remains relevant today.

To prove that a will-maker had testamentary capacity, the proponent of the will must lead evidence that establishes that the will-maker:

a) understood the nature of the act of making a will and its effects;
b) understood the extent of the property of which he or she is disposing;
c) was able to comprehend and appreciate the claims to which he or she ought to give effect; and
d) had no disorder of the mind or insane delusion that influenced his or her making of the will.

Laszlo v Lawton 2013 BCSC 305 at para. 188; Halliday v haklliday Estate 2019 BCCA 554 at para. 26.

This test was restated in modern times in Schwartz v. Schwartz (1970), 10 D.L.R. (3d) 15 at 32 (Ont. C.A.) ,aff’d [1972] S.C.R. 150 [Schwartz] as the will-maker must be sufficiently clear in his or her understanding and memory to know, on their own: the nature and extent of their property; the persons who are the natural objects of their bounty; the testamentary provisions they are making; and they must be capable of appreciating those factors in relation to each other and forming an orderly desire as to the disposition of their property: Laszlo at para. 188.

While will-makers are not expected to know the composition of their estate assets and their respective values in an exact manner “with the metronomic precision of an accountant”, they must have an appreciation of the general nature of their assets and an understanding of their extent. An appreciation of the value of their assets, expressed either in terms of dollars or quantitatively, will suffice: Laszlo at paras. 242 – 249; Henderson v. Myler, 2021 BCSC 1649 at para. 107.

Testamentary capacity is neither a medical concept nor a diagnosis, but rather is a legal construct. While medical evidence may be relevant it is not conclusive in determining the existence of testamentary capacity at the critical times: Laszlo at para. 198; Halliday at para. 29. Whether a will-maker possessed testamentary capacity at the necessary times is a question of fact, to be determined from all of the circumstances: Laszlo at para. 197. A critical and meaningful analysis is required to determine testamentary capacity: Halliday at para. 29. The authorities establish that in assessing testamentary capacity, the evidence of the drafting solicitor, who took instructions and prepared the will, is often given considerable weight, particularly where that person is an experienced wills and estates lawyer: Benekritis v. Gilbert Estate, [1998] B.C.J. No. 171at paras. 41 – 43.

Testamentary capacity requires a “disposing mind and memory” which is described as “one able to comprehend, of its own initiative and volition, the essential elements of will-making, property, objects, just claims to consideration, revocation of existing disposition, and the like …”: Laszlo at para. 194, quoting from Leger v. Poirier, [1944] S.C.R. 152 at 161 [Leger]. Merely being able to provide rational responses is not sufficient or conclusive of capacity; rather, “there must be a power to hold the essential field of the mind in some degree of appreciation as a whole”: Leger at 162.

Bull Estate v. Bull, 2015 BCSC 136 at para. 114 [Bull] held that the test for testamentary capacity is not “overly onerous” and that the presence of cognitive deterioration may not preclude testamentary capacity. Testamentary capacity may be present even if the will-maker is incapable of managing other aspects of his or her life: Halliday at para. 28. However, a disposing mind and memory is “one able to comprehend, of its own initiative and volition, the essential elements of will making, property, objects, just claims to consideration, revoking dispositions and the like”: Moore v. Drummond, 2012 BCSC 1702 at para. 34, citing Leger at 161; Bull at para. 115.

A will-maker must have testamentary capacity when they give instructions for their will, and when they review and execute the will. However, as mental capacity can fluctuate, the case law permits a variation of the degree required at these two key times; for example, if a will-maker is competent to give instructions, but not competent at the time the will is executed, it may nonetheless be valid so long as at the time of execution the will-maker was capable of comprehending she was executing a will drawn in accordance with her prior instructions: Laszlo at para. 189.

The Obligations of a Trustee

Chung v Chung 2022 BCSC 1592 examined the legal obligations of trustees and held that their principle obligation is to preserve the assets subject to the trust.

The primary obligation of a trustee is to preserve the property of the trust on behalf of the beneficiaries. Trustees must strictly avoid self-interest wherever their interest could conflict with the interests of those they are bound to protect: Clock Holdings Ltd. v. Braich, 2008 BCSC 1697 at para. 183.

Trustees are bound by both the “no conflict” rule and the “no profit” rule, which were explained by the Court of Appeal in Louie v. Louie, 2015 BCCA 247 at para. 23:

The two most fundamental and long standing obligations of fiduciaries – the “no conflict” rule and the “no profit” rule. These have been stated on many occasions over several centuries, but this passage from the judgment of the High Court of Australia in Chan v. Zacharia (1984) 154 C.L.R. 178, summarizes the historic approach succinctly:

The first is that which appropriates for the benefit of the person to whom the fiduciary is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage. … [T]he two themes, while overlapping, are distinct. Neither theme fully comprehends the other and a formulation of the principle by reference to one only of them will be incomplete. [At 198-9.]

Bray v. Ford [1896] AC 44 (H.L.) stated at 51: “It is an inflexible rule of a Court of Equity that a person in a fiduciary position … is not, unless otherwise expressly provided, entitled to make a profit; he is not allowed to put himself in a position where his interest and duty conflict.”

The Court of Appeal in Meng Estate v. Liem, 2019 BCCA 127 explained at para. 35 that a breach of a trustee’s duty of loyalty can arise in “circumstances in which there is a breach of the duty of loyalty owed by the fiduciary and includes circumstances involving acting in the face of a conflict, preferring a personal interest, taking a secret profit, acting dishonestly or in bad faith, or a variety of similar or related circumstances.” In this case, the first three of these circumstances were clearly established at trial. In addition, Won’s failure to disclose his secret profit for years and the misinformation he provided when pressed by Jae did not in my view meet the requisite standards for honesty and good faith.

In 0731431 B.C. Ltd. v. Panorama Parkview Homes Ltd., 2021 BCSC 607 [Panorama], Justice Sewell affirmed the existence of a fiduciary relationship between a bare trustee and the trust’s beneficiary, and rejected the argument that a bare trustee could treat the subject matter of the trust as its own property:

[243] The Trustee relied on the fact that 690174 was a bare trustee of Lot 1 and cited a number of cases in support of the proposition that a bare trustee owes only a limited fiduciary duty to the beneficiaries of the trust. However, those cases do not stand for the proposition that the bare trustee may treat the subject matter of the trust as its own property. As pointed out in one of the Trustee’s authorities, Scoretz v. Kensam Enterprises Inc., 2018 BCCA 66 at paras. 21-30, at a minimum a bare trustee has the obligation to transfer legal title to the beneficiaries of the trust upon request.

[244] Despite arguing that 690174 owed only limited fiduciary duties as a bare trustee, the Trustee argues that 690174 had full authority to subdivide Lot 1 and transfer title to the subdivided lots to purchasers. These submissions are inconsistent. More importantly, they ignore the fact that 690174 used its registered title to take steps that profoundly affected the beneficial ownership rights of the 2007 Joint Venturers.

[245] 690174 not only held title to Lot 1 in trust but also undertook the responsibility to apply for all necessary permits required for the development and subdivision of Lot 1. It is clear that by virtue of holding legal title to Lot 1, 690174 had the ability to affect the rights of all of the 2007 Joint Venturers. This made them vulnerable to the actions of 690174. The elements necessary to establish both an ad hoc fiduciary duty (as set out in more detail at para. 474 of these reasons) and a per se fiduciary duty on 690174 were therefore present in this case.

[Emphasis added.]

In Panorama, Justice Sewell also found that the director and principal of a corporate trustee pursuant to a bare trust agreement owes the beneficiary a fiduciary duty:

[241] In this case 690174 held title to Lot 1 in trust for the 2007 Joint Venturers. 690174 agreed that as bare trustee of Lot 1 it was responsible for applying for all necessary permits required for the development and subdivision of Lot 1. The development and subdivision of Lot 1 was the very object of the 2007 Joint Venture. In addition, Jaswant was personally appointed manager of the 2007 Joint Venture project and was the sole director and directing mind of 690174. In my view this gave rise to a per se fiduciary duty on 690174 and Jaswant.

A trustee’s duty of loyalty demands that in the absence of authorization, a trustee is accountable for any right, profit or benefit acquired “by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it”: Donovan Waters, Waters’ Law of Trusts in Canada, (2021 Online Edition), Ch. 18 “Duties of Loyalty” at 18.II. A trustee also has a fundamental duty to account for trust property and to report on how it has been dealt with: N-Krypt International Corp. v. LeVasseur, 2016 BCSC 1539 at paras. 38-39; rev’d on other grounds 2018 BCCA 20.

Withdrawl of an Admission

Generally speaking in litigation it is a safe measure to initially deny everything and admit little until absolutely sure about making the admission, as it is difficult to withdraw it once made

Rule 7-7(5) of the Supreme Court Civil Rules [SCCR] addresses withdrawal of admissions:

Withdrawal of admission

(5) A party is not entitled to withdraw

(a) an admission made in response to a notice to admit,

(b) a deemed admission under subrule (2), or

except by consent or with leave of the court.

The test for withdrawal of an admission is summarized by Master Horn in Hamilton v. Ahmed, [1999] B.C.J. No. 311 (S.C.), as whether there is a triable issue which, in the interest of justice, should be determined on the merits and not disposed of by an admission of fact. In applying that test, all of the circumstances should be taken into account.

He listed six such cirumstances, which were later reframed by the court of appeal in Sidhu v. Hothi, 2014 BCCA 510 [Sidhu] at para. 25:

(a) whether the admission was made inadvertently, hastily, or without knowledge of the facts;

(b) whether the “fact” admitted was or was not within the knowledge of the party making the admission;

(d) whether and to what extent the withdrawal of the admission would prejudice a party; and

(e) whether there has been delay in the application to withdraw the admission and any reason offered for such delay.

The discretion to grant leave to withdraw an admission is broad and unfettered, subject to the discretion being exercised judicially. The court is required to balance the prejudice which would flow from either refusing or granting leave. See Nagra v. Cruz, 2016 BCSC 2469, aff’d 2017 BCSC 347, at para. 5.

Where a deemed admission has been caused by a failure on the part of counsel and party cannot be faulted for the oversight, an order permitting withdrawal normally follows, while allowing the other party costs and accommodations. See Piso v. Thompson, 2010 BCSC 1746 at paras. 23 and 25.