Joint Tenancy Severed Due to Acrimonious Conduct

In Preskar estate v Wagner a BC court found that a joint tenancy with a right of survivorship had been severed so as to become a tenancy in common by reason of the joint owners acrimonious conduct to each other that was inconsistent with joint tenancy unity.

In Preskar an unmarried couple who own the property in joint tenancy had acrimonious family litigation for many years, starting in 2007 that was never resolved. The joint tenancy was never severed and when Mr. Preskar his estate died, his interest in the joint tenancy property immediately went to his partner by right of survivorship.

The estate successfully sued arguing that there acrimonious course of conduct showed that their “notional” unity of ownership under a joint tenancy had been abandoned, and thus the joint tenancy had been severed and a tenancy in common created many years before his death in 2020.

 

This meant that the half interest of the deceased would go to his estate rather than to the former joint tenant by right of survivorhip.

 

The BC court adopted the reasoning of the Ontario Court of Appeal as follows:

Hansen Estate v. Hansen, 2012 ONCA 112 which states as follows at para. 39:

[39]      While the determination under the course of dealing test is an inherently fact-specific assessment, the underlying rationale for rule 3 is that it is a means of ensuring that a right of survivorship does not operate unfairly in favour of one owner (or owners) where the co-owners have shown, through their conduct, a common intention to no longer treat their respective shares in the proper as indivisible, unified whole. For example, in the context of negotiations between spouses who are in the midst of a marriage breakdown, even failed or uncompleted negotiations can lead to severance because “the negotiation of shares and separate interests represents an attitude that shows that the notional unity of ownership under a joint tenancy has been abandoned” . . .

S. 58 WESA Criteria For “Curing” A Defective Will

Re Clarke Estate 2023 BCSC 103 is the latest in many S. 58 WESA applications where the court has “cured” a defective will once satisfied that the document is authentic and that it represents the final testamentary intentions of the deceased at the material time.

One of the leading BC cases Estate of Young, 2015 BCSC 182. stated that the two principal issues are:

(1) whether the document is authentic; and

(2) the core issue, whether the document represents the fixed and final, although not irrevocable, testamentary intentions of the deceased at the material time.

 

 

The BC courts followed the Manitoba decision of  George v Daily  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.

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:

 

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.

Concerning the material time for determining the testamentary intentions of the deceased person, Dickson J. noted at para. 37 that in most cases, the material time for determining testamentary intentions on a s. 58 application is the time when the document in question was created.

In many cases, as here, the material time for determining testamentary intentions on a s. 58 application is the time when the document in question was created.  However, as noted in Estate of Young, depending on the circumstances, the material time may vary on this key issue.  For example, after creating a document, a will-maker may, by words or actions, manifest a fixed and final intention that it expresses how his or her property is to be disposed of on death and thus that it operates as a will.  In other words, a document may acquire a testamentary character by subsequent and sufficient manifestation of the will-maker’s intention: Bennett et al. v. Toronto General Trusts Corporation, 1958 CanLII 49 (SCC), [1958] S.C.R. 392 at 397.  Nevertheless, in most cases, the focus of inquiry will be the will-maker’s intention when the document was prepared and executed: see, for example, Sweeney Cunningham Estate v. Sweeney, 2013 NSSC 299 at para. 29; Komonen v. Fong, 2011 NSSC 315 at para. 23.

The principles from Estate of Young were applied in the cases of Smith Estate (Re), 2016 BCSC 350 and Lane Estate, 2015 BCSC 2162

From the foregoing authorities,  the following principles are established :

  1. a)The onus in this matter is on the petitioner to prove, on a balance of probabilities, that:
  2. the document is authentic; and
  3. the document embodies the fixed and final, as opposed to irrevocable, testamentary intentions of the deceased.
  4. b)The factors to take into account in determining whether the document contains the testamentary intentions of the deceased include:
  5. the presence of the deceased’s signature,
  6. the deceased’s handwriting,

iii.        witness signatures,

  1. revocation of previous wills,
  2. funeral arrangements,
  3. specific bequests,

vii.        the title of the documentation,

viii.        such other factors as may be relevant given the context, and

  1. c)the material time for determining the testamentary intentions can vary depending on the circumstances, but in many if not most cases the material time is when the document was prepared and executed.

Joint Tenancy vs. Tenancy In Common Explained

Joint tenancy and tenancy in common are the two most common forms of concurrent property ownership in Canada.

In a joint tenancy, the “four unities” of title, interest, time and possession are present and co-owners hold an equal interest in the property as a unified whole. The common law treats joint tenants as a single tenant: each holding the whole for all, with no distinct shares held by anyone.

In contrast, in a tenancy in common one co-owner may hold a greater proportionate interest in the property than the other co-owner(s): Hansen Estate v. Hansen, 2012 ONCA 112 at paras. 29-30; Felske Estate v. Donszelmann, 2007 ABQB 682 at para. 31, aff’d 2009 ABCA 209; Rathwell v. Rathwell, [1978] 2 S.C.R. 436 at 459.

Unity of title means the title of each joint tenant arose from the same act or instrument. Unity of interest means their holdings are perfectly equal in nature, extent and duration. Unity of time means all the interests vested simultaneously. Unity of possession means each joint tenant has a right to present possession and enjoyment of the whole property, but no right to exclusive possession of any individual part of the whole. Assuming all four unities are present, the question of whether a joint tenancy or a tenancy in common has been created is determined by the intention of the grantor: B. Ziff, Principles of Property Law, 6th ed. (Toronto: Carswell, 2014) at 336; Felske Estate at para. 31.

Joint tenancy is often the chosen form of concurrent ownership for family holdings, usually for estate planning purposes. This is unsurprising. The legal fiction of a unified singularity composed of more than one person may fit comfortably in a family context. Unfortunately, however, unity can be fragile and families are not always happy. As Abella J. remarked in Pecore, when divisions arise that unhappiness often finds its painful way into a courtroom.

The principal and distinguishing characteristic of joint tenancy is the right of survivorship, the jus accrescendi. When one joint tenant dies, his or her interest in the property is extinguished and passes to the surviving joint tenant(s). The right of survivorship is, however, a revocable expectancy that manifests only upon success in the so-called “ultimate gamble” – survival – and then only if the joint estate has not been previously destroyed by an act of severance: Estate of Propst, 788 P.2d 628 at 631 (Cal. Sup. Ct. 1990). When given inter vivos, a gift of survivorship rights is to what is left, if anything, when the gamble is won: Simcoff v. Simcoff, 2009 MBCA 80 at para. 64.

The interest of a tenant in common is different with respect to survivorship. Unlike that of a joint tenant, a tenant in common’s interest in property remains intact upon death and passes into his or her estate: Fuller v. Harper, 2010 BCCA 421 at para. 53.

Importantly, parties may hold legal title to property in one form of co ownership while holding equitable title in another. For example, a mother and daughter may be joint tenants in law and tenants in common in equity with respect to jointly-held property by virtue of a trust or an act of severance. If the mother dies first, the daughter assumes full legal title by right of survivorship, but the mother’s equitable interest, being held in common, passes to her estate and the daughter holds legal title as trustee for the beneficial owners, namely herself and her mother’s estate: Pecore at paras. 4-5; Ziff at 341-342.

Equity leans against joint tenancies: As explained in J. McGhee, ed., Snell’s Equity, 31st ed. (London: Sweet & Maxwell, 2005) at 103, the relevant maxim is that equity is equality.
When a joint tenant dies the whole belongs to the survivor(s) and the deceased’s estate takes nothing, which favours the tenant(s) of longevity and is thus unequal, except perhaps for an equal chance at survival. For this reason, equity often treats persons who are joint tenants at law, such as business partners or unequally contributing co-owners, as tenants in common: Mischel Holdings Pty Ltd. v. Mischel, [2013] VSCA 375 at paras. 60-61.

Family Verbal Agreement re Property Upheld

In Sojka v Sojka 2023 BCSC 52 the court upheld a verbal agreement made amongst family members as to the beneficial ownership of a parcel of property.

In Suenv Suen 2013 BCCA 313 the British Columbia Court of Appeal addressed agreements between family members:

[40] A contract is promissory in nature, that is, it is an undertaking by the promisor to do something for the promise in exchange for something. The exchange of promises is enforceable only if there is an agreement or consensus on the “existence, nature and scope of their [respective] rights and duties”
or the concept of a bargain, as an essential feature of the common law of contract at 8:

…what is an essential ingredient of a valid, enforceable, legally acceptable contract, is an agreement that can be called “serious,” that is, made with the kind of serious, binding intent that demarcates the casual promise, undeserving of legal recognition, from a promise which should be effective in law and should be obligatory on the future action, as well as the conscience of the promisor.

[42] The common law of contract is distinguishable from equitable or promissory estoppel where, absent consideration, reliance on a promise that is not fulfilled and gives rise to injury or damage, may be actionable. Consequently, if a promise is support only by “moral consideration”, it is generally not enforceable at common law:
The idea that moral justification could be the basis of a contract, for example, where a promise was made because of the familial relation of the parties, or out of “natural love and affection,” has long since been rejected by the common law (Fridman at 9).

[43] Communications in the family context are often no more than statements of intent or wishes. For a promise, in that context, to rise to the level of a binding enforceable contract there must be strict proof of the terms of the bargain including: the parties, the property, and the consideration. See McKenzie v. Walsh (1920), 61 S.C.R. 312 (S.C.C.), and Ross v. Ross (1957), [1958] O.R. 49, 11 D.L.R. (2d) 561 (Ont.C.A.)

The Court, in determining whether there is a verbal agreement, must apply the objective reasonable bystander test, and consider how the promisor’s conduct would appear to a reasonable person in the position of the promisee: Le Soleil at paras. 324–325. The party alleging the existence of a verbal agreement must prove its existence on a balance of probabilities: Bell v. Bell, 1998 CanLII 3194 at para. 14, [1998] B.C.J. No. 1457 (S.C.).

Where there is no written agreement between the parties but a verbal agreement is alleged, the credibility of each party is a key issue. Their evidence must be “tested against those facts that are not seriously in dispute and with the preponderance of the evidence and the probabilities surrounding the events”: Piga v. Uffelman, 2022 BCSC 983 at para. 14.

Who to Sue in a Wills Variation Claim

Rule 21-6(1) and (2) of the Supreme Court Civil Rules read as follows:

21-6 (1) A proceeding under section 60 of the Wills, Estates and Succession Act must be started by a notice of civil claim.

(2) In a proceeding referred to in subrule (1),

(a) the following persons must be parties to the proceeding:

(i) the surviving spouse and children of the will-maker;

(ii) all beneficiaries under the will-maker’s will whose interest may be affected by the order sought;

(iii) the executor of the will, and

(b) the court may order that any other person be joined as a party.

3) In a response to a civil claim , a defendant may raise a claim under S. 60 of WESA on his or her own behalf, and any other party may serve a reply.

Lawyer Disqualified From Acting

Re Waigel Estate 2022 BCSC 2274 examined a lawyers role in acting for a client and found cause to disqualify the lawyer from continuing to act.

The leading decision is In Canadian National Railway Co. v. McKercher LLP, 2013 SCC 39, the Supreme Court of Court considered whether a law firm could accept a retainer to act against a current client on an unrelated matter and bring a lawsuit against a current client on behalf of another client.

McKercher examined a lawyer’s duty of loyalty and found that it has three dimensions:

1) a duty to avoid conflicting interests,
2) a duty of commitment to the client’s cause,
3) and a duty of candour.

The duty of commitment entails that, subject to law society rules, a lawyer or law firm as a general rule should not summarily drop a client simply to avoid conflicts of interest. The duty of candour requires disclosure of any factors relevant to the ability to provide effective representation. A lawyer should advise an existing client before accepting a retainer that will require him or her to act against the client.

The Court examined the risk to effective representation that arises when a lawyer acts concurrently in different matters for clients whose immediate legal interests are directly adverse. The bright line rule against concurrent retainers applies to concurrent representation in both related and unrelated matters.

The duty of commitment to the client’s cause suggests that a law firm should not summarily and unexpectedly terminate a retainer as a means of circumventing conflict of interest rules.

The McKercher firm had committed itself to act loyally for CN on the personal injury, real estate and receivership matters. McKercher was bound to complete those retainers, unless the client discharged it or acted in a way that gave McKercher cause to terminate the retainers. McKercher breached its duty of commitment to CN’s causes when it terminated its retainer with CN on two of these files. It is clear that a law firm cannot terminate a client relationship purely in an attempt to circumvent its duty of loyalty to that client: De Beers Canada Inc. v. Shore Gold Inc., 2006 SKQB 101, 278 Sask. R. 171, at para. 17;

The court in McKercher at paras. 11, 63 and 65 wrote as follows:

[11] As regards the appropriate remedy to McKercher’s breaches, I conclude that the only concern that would warrant disqualification in this case is the protection of the repute of the administration of justice. A breach of the bright line rule normally attracts the remedy of disqualification. This remains true even if the lawyer-client relationship is terminated subsequent to the breach. However, certain factors may militate against disqualification, and they must be taken into consideration. As the motion judge did not have the benefit of these reasons, I would remit the matter to the Queen’s Bench for redetermination in accordance with them.

[63] The third purpose that may be served by disqualification is to protect the integrity and repute of the administration of justice. Disqualification may be required to send a message that the disloyal conduct involved in the law firm’s breach is not condoned by the courts, thereby protecting public confidence in lawyers and deterring other law firms from similar practices.

[65] … [C]ourts faced with a motion for disqualification on this third ground should consider certain factors that may point the other way. Such factors may include: (i) behaviour disentitling the complaining party from seeking the removal of counsel, such as delay in bringing the motion for disqualification; (ii) significant prejudice to the new client’s interest in retaining its counsel of choice, and that party’s ability to retain new counsel; and (iii) the fact that the law firm accepted the conflicting retainer in good faith, reasonably believing that the concurrent representation fell beyond the scope of the bright line rule and applicable law society restrictions.

Removal of an Executor/Trustee 2023

It is difficult to remove and substitute an alternate executor/trustee as a will-maker has the right to choose their executor and trustee.

That choice is entitled to deference and will only be interfered with if there is clear and cogent evidence to do so. In Parker v. Thompson (Trustee), 2014 BCSC 1916, Hinkson, C.J.S.C. stated:

In Haines v. Haines, 2012 ONSC 1816 at para. 10 as equally applicable to the removal of the trustee:

In Johnson v. Lanka, 2010 ONSC 4124, (2010), 103 O.R. (3d) 258 at para. 15, Pattillo J. summarized the principles that should guide the court’s discretion in deciding whether to remove estate trustees:

(a) the court will not lightly interfere with the testator’s choice of estate trustee;
(b) clear evidence of necessity is required;
(c) the court’s main consideration is the welfare of the beneficiaries; and
(d) the estate trustee’s acts or omissions must be of such a nature as to endanger the administration of the trust.

See also Burke v. Burke, 2019 BCSC 383 at para. 29.

In addition, “not every actual or perceived conflict should lead to disqualification of an executor”. Each case turns on its own facts: Burke at para. 43.
s. 30 of the Trustee Act, R.S.B.C. 1996, c. 464 [Trustee Act] . Section 30 states:

Removal of trustees on application

S.30 Trustee Act provides:

A trustee or receiver appointed by any court may be removed and a trustee, trustees or receiver substituted in place of him or her, at any time on application to the court by any trust who is not under legal disability, with the consent and approval or a majority in interest and number of the trust beneficiaries who are also not under legal disability.

s. 31 of the Trustee Act provides the authority needed to replace the executor. Section 31 provides:

Power of court to appoint new trustees

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

s. 158 and 159 of WESA also provides for the removal or passing over of a personal representative.

In Dahle Estate (Re), 2021 BCSC 718 at para. 20 there are four categories of conduct by an executor that will warrant their removal:

(1) endangerment of trust property;
(2) want of honesty;
(3) want of proper capacity to execute the duties; and
(4) want of reasonable fidelity.

Contractual Certainty

The issue of whether a valid contract has ben formed or not arises from time to time in estate litigation.

The area is very fact specific but there are certain guidelines the courts will exercise in their attempt to find a binding contract.

The law on the level of certainty required to establish the existence of a contract was recently summarized in Ai Kang Yi Yuan Enterprises Corp. v. 1098586 B.C. Ltd., 2022 BCSC 1416:

[205] The test that governs whether the parties have formed an enforceable contract essentially involves answering two questions: (1) whether the parties objectively intended to enter contractual relations; and (2) whether they had reached agreement on essential terms that are sufficiently certain to enforce…

[206] The court’s determination of contractual intention is rooted in the facts and requires it to consider whether a reasonable third-party observer would conclude from all the circumstances, including the document itself, the circumstances underlying execution, and the parties’ subsequent conduct, that the parties intended to enter into binding legal relations…

[207] The case law recognizes that the above determinations are fact-driven…

[208] Critical to a determination of the nature of the December 5 Document in this case is the distinction between non-binding preliminary agreements to agree, agreements to enter into further agreements without binding intent, and agreements with binding intent that anticipate further documentation. This continuum was described by the Ontario Court of Appeal in Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 CanLII 2734 (ON CA), 79 D.L.R. (4th) 97 (O.N.C.A.) at 103–104:

As a matter of normal business practice, parties planning to make a formal written document the expression of their agreement, necessarily discuss and negotiate the proposed terms of the agreement before they enter into it. They frequently agree upon all of the terms to be incorporated into the intended written document before it is prepared. Their agreement may be expressed orally or by way of memorandum, by exchange of correspondence, or other informal writings.

The parties may “contract to make a contract”, that is to say, they may bind themselves to execute at a future date a formal written agreement containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.

However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. . .

[260] Where there is an intention to contract, the court will make a significant effort to give meaning to that agreement. However, there are limits to how far a court can go; a court cannot create an agreement on essential terms where none exists…

[261] In Concord Pacific BCSC, Voith J. (as he then was), whose analysis was generally affirmed in Concord Pacific BCCA, helpfully summarized the principles that have developed in Canada, and BC more specifically:

[331] . . . The fact that parties may wish to contract, or that they believe they have entered into a binding contract, does not make it so. That belief or wish will engage other principles. It will likely cause the court to strive to assist the parties and to find meaning in the substance of their agreement: Hoban at para. 4. In Marquest Industries Ltd. v. Willows Poultry Farms Ltd. (1968), 1968 CanLII 581 (BC CA), 1 D.L.R. (3d) 513 (B.C. C.A.), the Court, at 517 — 518, said:

[E]very effort should be made by a Court to find a meaning, looking at substance and not mere form, and the difficulties in interpretation do not make a clause bad as not being capable of interpretation, so long as a definite meaning can properly be extracted . . . [I]f the real intentions of the parties can be collected from the language within the four corners of the instrument, the Court must give effect to such intentions by supplying anything necessarily to be inferred and rejecting what is repugnant to such real intentions so ascertained.

What constitutes an “essential” term in an agreement will depend on both the nature of the agreement and the circumstances of the case: Concord Pacific BCSC at para. 341; United Gulf Developments Ltd. v. Iskandar, 2008 NSCA 71 at para. 14. The key question to answer in analysing certainty of terms is whether the parties have agreed on all matters that are “vital or fundamental” to the arrangement, or whether they intended to defer legal obligations until a final agreement has been reached. What constitutes an essential term is fact specific. Different types of contracts may have different essential terms, though price is generally considered essential in most contractual contexts.

The Admissibility of Hearsay Statements of a Deceased

It is a fact that estate litigation is rife with hearsay evidence, often “from” the deceased  and if certain criteria are met, such evidence is admissible.

In Peterson v. Welwood, 2018 BCSC 1379 at paras. 69-8o the court considered the admissibility of statements of the deceased:

In Gutierrez v. Gutierrez, 2015 BCSC 185 at para. 34 the court summarized the factors that can be considered when assessing the threshold reliability of a hearsay statement:

1) the presence or absence of a motive to lie

2) independent corroborative evidence that “goes to the trustworthiness of the statement” (Blackman at para. 55; Khelawon at para. 67; R. v. Couture, 2007 SCC 28 (S.C.C.) at para. 83);

3) timing of the statement relevant to the event, contemporaneity (Khelawon at para. 67);

4) the declarant’s mental capacity at the time of making the statement (Khelawon at para. 107);

5) solemnity of the occasion and whether the declarant’s statement was made “in circumstances that could arguably be akin to the taking of an oath where the importance of telling the truth and the consequences of making a false statement were properly emphasized” (Couture at para. 89; Khelawon at para. 86).

It is important to recognize that, as a preliminary threshold issue, the court must first find on a balance of probabilities that the statement was in fact made by a deceased declarant before it goes on to determine the treatment and weight of such evidence: Creutz v. Estate of Kristian Winther, 2007 BCSC 1463 at para. 99.

This assessment turns on the credibility of the witnesses who relate to the court the hearsay statements attributed to the deceased declarant: Halfpenny v. Holien (1997), 37 B.C.L.R. (3d) 186 (S.C.).