Dementia In Estate Litigation

I have a number of blogs on  mental capacity  and most of them relate to “dementia” as the cause of the cognitive deficits that had lead to the estate litigation.

Most people immediately assume dementia is Alzheimer’s disease due to its public notoriety and it’s effect as an increasing long-term social problem in an aging population.

While Alzheimer’s disease is in fact the most common type of dementia, there are several other types and there are innumerable various medical conditions that can cause memory loss, confusion, personality changes, problems with walking, speaking in comprehension that may not be related to dementia.

The medical testing for dementia can be quite complex, involving a range of medical assessments from the taking of a detailed family history, a mental assessment test, to possible CT scans, blood tests and other sophisticated medical examinations involving a team approach.

The bottom line is that it is very difficult to assess what is going on inside another person’s brain. This can be complicated by any number of factors ranging from deafness, depression, cultural fears, paranoid thinking, to outright uncooperativeness.

 

The Four Most Common Types of Dementia

 

1. Alzheimer’s Disease

The majority of demented people ( %70?) are inflicted with Alzheimer’s disease, which can start developing many years before any symptoms appear. It frequently takes family members approximately 2 years to notice enough symptoms to take their loved one to a doctor for assessment.
One of the hallmark symptoms of Alzheimer’s is that it is a steady progression of symptoms over several years. The failure of short-term memory might initially be regarded as just an aging process, but the repetitive telling of stories are asking the same questions over and over will typically convince others to suspect dementia.
Onset of the disease typically happens in people’s 60s or 70s or later, but does in about 5% of cases begin earlier will. As the disease progresses, the patient typically becomes more confused, has difficulty with recognition, confuses night and day, has very bad short term memory, and eventually loses the ability to handle personal care, such as feeding oneself.
The hallmark symptom of Alzheimer’s is short term memory loss.

 

2. VASCULAR DEMENTIA

Vascular dementia is the second most common cause of dementia, accounting for about 15 to 20% of cases on average. Most people will recognize this dementia has having been caused by blockages in the blood flow that may result in a series of mini strokes, or a major stroke, brain hemorrhaging are simply narrowing of blood vessels due to high blood pressure, diabetes, or clogged arteries.

The risk of vascular dementia increases with age, and it is also common to have a combination of both Alzheimer’s disease and vascular dementia.
A hallmark of vascular dementia is that the symptoms may appear suddenly, as opposed to the steady progression of Alzheimer’s.

 

3. Lewy Body Dementia

Lewy body dementia is much less common than Alzheimer’s and vascular dementia and typically attacks nerve cells in the brain responsible for memory, motor control, and thinking. The loss of motor control is related to Parkinson’s disease causing the patient to frequently experience rigid muscles, tremors, or trouble walking.

 

4. Frontotemporal Dementia

Frontotemporal dementia is not very common statistically, but it is the most common type of dementia for people under age 60.

The disease starts in the frontal lobe, which is responsible for mood and behavior, causing the patient too often become aggressive, or apathetic, lack empathy using inappropriate language, and even act out sexually. It can often be misdiagnosed as a psychiatric disorder such as bipolar.

Symptoms can also include extreme compulsive behavior such as unusual cravings and eating patterns or repetitive listening and watching entertainment.
Unlike Alzheimer’s disease memory loss is not usually a major symptom.

Fraudulent Conveyances 2021

In Kootenay Savings Credit Union v Brar 2021 BCSC 2027 the court found that the defendant fraudulently conveyed his property to delay, hinder or defraud  creditors under the Fraudulent Conveyance Act, and set aside the transaction.

Facts
The defendant G. Brar in November 2017 transferred his half-interest in a 10-acre residential farm property in Abbotsford (the “Property”) to the co-defendants – his ex-wife and their adult daughters– for “$1.00 and natural love and affection.”
The declared market value of the Property was $2,000,000.
At the time of the transfer G. Brar was under severe financial and legal pressure.
The plaintiff credit union in 2015 had obtained judgment against him personally for $1,496,637, plus interest and costs.

 

The Law

The FCA consists of two brief sections, which set out the claim and a defence:
Fraudulent conveyance to avoid debt or duty of others
1 If made to delay, hinder or defraud creditors and others of their just and lawful remedies
(a) a disposition of property, by writing or otherwise,
(b) a bond,
(c) a proceeding, or
(d) an order
is void and of no effect against a person or the person’s assignee or personal representative whose rights and obligations are or might be disturbed, hindered, delayed or defrauded, despite a pretence or other matter to the contrary.

2 This Act does not apply to a disposition of property for good consideration and in good faith lawfully transferred to a person who, at the time of the transfer, has no notice or knowledge of collusion or fraud.

Abakhan & Associates Inc. v Braydon Investments Ltd., 2009 BCCA 521 leave to appeal ref’d [2010] SCCA No 26, is the leading case.

In Jasmur Holdings Ltd. v Callaghan, 2019 BCSC 1966 at para 17, Giaschi J summarised its key principles:

a) The FCA is to be construed liberally (para. 62);
b) An intent to put one’s assets beyond the reach of creditors is all that is required to void a transaction (para. 73);
c) A dishonest intent or mala fides is not a necessary element to void a transaction under s.1 of the FCA (para. 65);
d) Intent is a state of mind and a question of fact (para. 74);
e) Intent can be proven by direct evidence of the transferor’s intent as well as by inferences from the transferor’s conduct, the effect of the transfer and other circumstances (para. 80);
f) Where a transfer of property has the effect of delaying, hindering or defeating creditors, the necessary intent is presumed (paras. 58-59 and 75);
g) Inadequate consideration paid for the transferred property may be indicative of fraudulent intent (para.76);
h) It is not necessary to show the transferor was insolvent at the time of the transfer (para. 60);
i) It is not necessary for the applicant to show he/she was a creditor at the time of the transfer; future creditors are also protected (paras. 78 and 87]; and
j) It is no defence that the transfer was also in furtherance of a legitimate business objective (paras. 84-85).

A transaction may be voided as fraudulent absent particular findings of moral blameworthiness on the part of transferor or transferee. Wu emphasises that the only intention required is to move assets out of creditors’ reach:

In Abakhan & Associates Inc. v. Braydon Investments Ltd., 2009 BCCA 521 at para. 73, the court explained that, although the requisite intent in the FCA has often been described as fraudulent intent:
The only intent now necessary to avoid a transaction under the modern version of the [FCA] is the intent to “put one’s assets out of the reach of one’s creditors” (per RBC v. Clarke [2009 BCSC 481 at para 20]). No further dishonest or morally blameworthy intent is required.

Thus, the question is not whether the transferor had dishonest or morally blameworthy intent. Similarly, a sham transfer is not required. As the Court of Appeal said in Chan v. Stanwood, 2002 BCCA 474 at para. 24, there is no “comprehensive definition of fraudulent conveyances – [they] may be as varied as the imagination of a creative debtor allows”.

The effect of a transfer is a key factor when determining fraudulent intention: Cabaniss v. Cabaniss, 2009 BCSC 1478 at para. 53. In this regard, the intent to put assets out of the reach of creditors is persuasively shown where the transfer has the effect of putting assets out of reach of creditors.

In Abakhan, the court held: that  intent is a state of mind and a question of fact.

In addition, the transferor’s intent to put assets out of the reach of creditors need not be their only intent.

The victim of a fraud almost always suffers from a significant knowledge imbalance. The law seeks to counteract this vulnerability by imposing on the defendant an evidentiary duty to rebut prima facie suspicious circumstances, referred to in the jurisprudence as “badges of fraud.” Where one or more badges of fraud exist, the requisite fraudulent intent is presumed. The burden of proof then shifts to the defendant to rebut the presumption of fraudulent intent, by establishing that the transaction was made in good faith and for good consideration, and not with the intention of putting one’s assets out of creditors’ reach.

Badges of Fraud

In Balfour v Tarasenko, 2019 BCSC 2212 at para 60 Hori J provides a non-exhaustive list of badges of fraud, itself based on the list provided in Banton v Westcoast Landfill Diversion Corp. et al., 2004 BCCA 293 at para 5:

a) where a transfer of property has the effect of delaying, hindering, or defeating creditors, the necessary intent is presumed;
b) inadequate consideration paid for the transferred property may be indicative of fraudulent intent;
c) a transfer that renders the transferor unable to meet his then existing liabilities or which divests the transferor of all or a substantial portion of his or her assets may be indicative of an intent to defraud creditors;
d) a transfer between related parties in suspicious circumstances may be an indication of an intent to defeat creditors unless the parties present an adequate explanation;
e) the state of the debtor’s financial affairs at the time of the transaction, including his income, assets, and debts, may indicate a specific intention;
f) a transfer of property made in haste may be indicative of a fraudulent intent; and
g) a transfer of property made at a time when a debt or claim against the transferor is in existence or is imminent may be indicative of an intent to defraud creditors.

The badges of fraud inform the analysis under both ss. 1 and 2 of the FCA: Wu at para 88.

Where the defendant transferor alleges that the property in question is held in trust for the defendant transferee, the parties’ conduct and treatment of the property after the alleged trust must be carefully scrutinised: Sangha v Reliance Investment Group Ltd., 2011 BCSC 1324 at para 353.

Where the putative transferor continues to treat the property as their own following the putative trust, it may be evidence of a sham, and thus, in this context, a fraudulent conveyance: Forsyth (Re), 2010 BCSC 1720 at para 24.

Multiple Actions Heard At The Same Time

Li v Liang 2021 BCSC 1856 dealt with the legal procedural issue of whether two family cases involving the same parties should be tried together .

The court reviewed the seven criteria discussed in Merritt v Imasco Enterprises Inc (1992) BCJ 160 and Beazley v ICBC 2004 BCSC 1094 and held that the two claims did not have common claims or disputes that would require them to be either consolidated or tried at the same time. The two actions were not so interwoven as to make separate trials undesirable. There would also be prejudice to the plaintiff that would outweigh any potential benefit.

These applications are common in multi motor vehicle claims for example but I opine could be used in estate litigation situation such as the law as set out in Johnston v Johnston that claims involving both the validity of the will and the wills variation claims should not be heard together as the validity of the will should firstly be determined .

For example It would make procedural sense to have the wills variation claim tried right after the validity claim if the will is found to be valid as it is the same parties and the same evidence. I am not aware if this has been done to date.

THE LAW ( Rule 22-5(8) 

The application seeks to have a civil action consolidated with or tried at the same time as a family law case. It must be considered under Rule 22-5(8) of the Supreme Court Rules.

That rule applies to proceedings, which include a Supreme Court civil action and any other suit, cause or matter.

It provides:

(8) Proceedings may be consolidated at any time by order of the court or may be ordered to be tried at the same time or on the same day.

The matters the court is to consider on an application pursuant to Rule 22-5(8) are set out in cases that considered the previous rule (Rule 5(8)),
which was identical to the present rule. In Merritt v. lmasco Enterprises Inc.,[1992] B.C.J. No. 160

“ I accept that the foundation of an application under R. 5(8) is, indeed, disclosed by the pleadings. The examination of the pleadings will answer the first
question to be addressed: do common claims, disputes and relationships exist between the parties?

But the next question which one must ask is: are they “so interwoven as to make separate trials at different times before different judges
undesirable and fraught with problems and economic expense”? Webster v.Webster (1979), 12 B.C.L.R. 172 at 182, 10 R.F.L. (2d0 148, 101 D.L.R. (3d) 248(C.A.).

That second question cannot, in my respectful view, be determined solely by reference to the pleadings. Reference must also be made to matters disclosed
outside the pleadings:

(1) Will the order sought create a saving in pre-trial procedures, (in particular, pre-trial conferences)?

(2) Will there be a real reduction in the number of trial days taken up by trials being heard at the same time?

(3) What is the potential for a party to be seriously inconvenienced bybeing required to attend a trial in which that party may have only amarginal interest?

(4) Will there be a real saving in experts’ time and witness fees?

In Beazley v. Insurance Corp. of British Columbia, 2004 BCSC 1091, at paras. 12-13, Madam Justice Kirkpatrick, then a Judge of the Supreme Court
of British Columbia, added the following three factors to the four factors set out Merritt

(5) Is one of the actions at a more advanced stage than the other? . .

.
(6) Will the order result in a delay of the trial of one of the actions and, if so, does any prejudice which a party may suffer as a result of that delay
outweigh the potential benefits which a combined trial might otherwise have?

(7) Is there a substantial risk that separate trials will result in inconsistent
findings on identical issues?

In both Merritt (at para. 19) and Beaziey (at para. 12) the Court indicated that the factors listed above are not intended to be an exhaustivelist, but are to be regarded as some matters to be considered before making an order under the rule. The order should make sense in the overall circumstances of the litigation.

Unjust Enrichment- Joint Mortgage Debt After Death

Parrott-Ericson v Ericson Estate 2006 BCSC 1409 relied upon the law of unjust enrichment to hold that the surviving joint tenant of property with a mortgager takes both the property and the entire mortgage debt as the surviving joint tenant would be unjustly enriched if the estate had to pay one half of the mortgage debt as the petitioner sought.

The surviving spouse of the joint tenancy property brought a petition for an order that the deceased’s estate was liable to the surviving joint tenant to pay one half of the $400,000 mortgage on the property.

The parties were jointly and severally liable under lines of credit secured by way of mortgage is a gift to the strata properties.

After the death the wife took sole title to strata lots and the estate refused to pay one half of the loan.

The court dismissed the petition as the wife’s claim for contribution arose in equity, and was based on unjust enrichment. The wife had by operation of survivorship receive the entire interest in secured the joint and several obligations.

In the circumstances the wife could not equitably be entitled to call in the estate to pay half of the debt.

The mortgage debt in land were clearly connected. The loan was based upon which the property was acquired. No arrangement was made that the estate would be liable for one half of the debt.

As the wife received the land entirely should be unjustly enriched as the estate had to pay one half of the debt.

The children of the deceased had brought a wills variation claim.

The court found that the joint debt was used to acquire the land and the petitioner received the land entirely, and thus would be just unjustly enriched if the estate had to pay one half of the debt .

The court followed the decision of Cunningham Reid v Public Trustee (1944) 1 KB 602 held it is a principle of equity that a joint tenant, it takes the entire benefit of an interest in real property through a survivorship must take the burden associated with the benefit, particularly were in that joint debt has been used to acquire the real property.

In equity the claim to contribution in such circumstances must fail.

Contempt of Court

This is a short summary of the law of contempt of court that is a hundreds of years old power of the judiciary and part of the courts method of upholding it’s dignity and effect.

Most of the summary relates to civil court cases and contempt for them. the most common would probably be family/divorce matters.

I made two contempt of court applications over the years in matrimonial matters and both times the court accepted an apology from the “guilty” party as an end to the matter, while my client wanted them incarcerated and flogged.

It wasn’t worth the time and money.

This is not to say that the courts are lenient as they certainly can and will enforce matters where there is a flagrant contempt of a court order, especially after warnings have been given.

The test summarized by the Supreme Court of Canada in Carey v. Laiken, 2015 SCC 17:

Contempt of court “rest[s] on the power of the court to uphold its dignity and process. The rule of law is directly dependent on the ability of the courts to enforce their process and maintain their dignity and respect”: United Nurses of Alberta v. Alberta (Attorney General), 1992 CanLII 99 (SCC), [1992] 1 S.C.R. 901, at p. 931.

It is well established that the purpose of a contempt order is “first and foremost a declaration that a party has acted in defiance of a court order”: Pro Swing Inc. v. Elta Golf Inc., 2006 SCC 52, [2006] 2 S.C.R. 612, at para. 35, cited in Bell ExpressVu Limited Partnership v. Torroni, 2009 ONCA 85, 94 O.R. (3d) 614, at para. 20.

The common law has developed to recognize two forms of contempt of court: criminal contempt and civil contempt.

The distinction, which the parties to this appeal accept, rests on the element of public defiance accompanying criminal contempt: see, e.g., United Nurses, at p. 931; Poje v. Attorney General for British Columbia, 1953 CanLII 34 (SCC), [1953] 1 S.C.R. 516, at p. 522. With civil contempt, where there is no element of public defiance, the matter is generally seen “primarily as coercive rather than punitive”: R. J. Sharpe, Injunctions and Specific Performance (2nd ed. (loose-leaf)), at ¶ 6.100.

However, one purpose of sentencing for civil contempt is punishment for breaching a court order: Chiang (Trustee of) v. Chiang, 2009 ONCA 3, 305 D.L.R. (4th) 655, at para. 117.

Courts sometimes impose substantial fines to match the gravity of the contempt, to deter the contemnor’s continuing conduct and to deter others from comparable conduct: Sharpe, at ¶ 6.100.

Civil contempt has three elements which must be established beyond a reasonable doubt: Prescott-Russell Services for Children and Adults v. G. (N.) (2006), 2006 CanLII 81792 (ON CA), 82 O.R. (3d) 686 (C.A.), at para. 27; College of Optometrists, at para. 71; Bhatnager v. Canada (Minister of Employment and Immigration), 1990 CanLII 120 (SCC), [1990] 2 S.C.R. 217, at pp. 224-25; Jackson v. Honey, 2009 BCCA 112, 267 B.C.A.C. 210, at paras. 12-13;

These three elements, coupled with the heightened standard of proof, help to ensure that the potential penal consequences of a contempt finding ensue only in appropriate cases: Bell ExpressVu, at para. 22; Chiang, at paras. 10-11.

1. The first element is that the order alleged to have been breached “must state clearly and unequivocally what should and should not be done”: Prescott-Russell, at para. 27; Bell ExpressVu, at para. 28, citing with approval Jaskhs Enterprises Inc. v. Indus Corp., 2004 CanLII 32262 (Ont. S.C.J.), at para. 40. This requirement of clarity ensures that a party will not be found in contempt where an order is unclear: Pro Swing, at para. 24; Bell ExpressVu, at para. 22. An order may be found to be unclear if, for example, it is missing an essential detail about where, when or to whom it applies; if it incorporates overly broad language; or if external circumstances have obscured its meaning: Culligan Canada Ltd. v. Fettes, 2010 SKCA 151, 326 D.L.R. (4th) 463, at para. 21.

2. The second element is that the party alleged to have breached the order must have had actual knowledge of it: Bhatnager, at p. 226; College of Optometrists, at para. 71. It may be possible to infer knowledge in the circumstances, or an alleged contemnor may attract liability on the basis of the wilful blindness doctrine (ibid.).

3. The party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels: Sheppard v. Sheppard (1976), 1976 CanLII 710 (ON CA), 12 O.R. (2d) 4 (C.A.), at p. 8. The meaning of this element is one of the main points in contention on appeal and I will turn to consider it in more detail momentarily.

The contempt power is discretionary and courts have consistently discouraged its routine use to obtain compliance with court orders: see, e.g., Hefkey v. Hefkey, 2013 ONCA 44, 30 R.F.L. (7th) 65, at para. 3. If contempt is found too easily, “a court’s outrage might be treated as just so much bluster that might ultimately cheapen the role and authority of the very judicial power it seeks to protect”: Centre commercial Les Rivières ltée v. Jean Bleu inc., 2012 QCCA 1663, at para. 7. As this Court has affirmed, “contempt of court cannot be reduced to a mere means of enforcing judgments”: Vidéotron Ltée v. Industries Microlec Produits Électroniques Inc., 1992 CanLII 29 (SCC), [1992] 2 S.C.R. 1065, at p. 1078, citing Daigle v. St-Gabriel-de-Brandon (Paroisse), 1991 CanLII 3806 (QC CA), [1991] R.D.J. 249 (Que. C.A.).

Rather, it should be used “cautiously and with great restraint”: TG Industries, at para. 32. It is an enforcement power of last rather than first resort: Hefkey, at para. 3; St. Elizabeth Home Society v. Hamilton (City), 2008 ONCA 182, 89 O.R. (3d) 81, at paras. 41-43; Centre commercial Les Rivières ltée, at para. 64.

Gifts to Witnesses of a Will ( S. 43 WESA)

Wolk v Wolk 2021 BCSC 1881 reviewed the law of witnesses to a will receiving a gift under and the effect of S. 43 (4) of WESA .

A gift to a signatory witness is automatically void by statute, but the court may declare such a gift valid on application. The present application seeks a declaration that the gift of the estate to Michael and Lynda take effect.

Section 43 of WESA includes the following:

(1) Unless a court otherwise declares under subsection (4), a gift in a will is void if it is to
(a) a witness to the will-maker’s signature or to the spouse of that witness,
. . .
(3) If a gift is void under subsection (1), the remainder of the will is not affected.

(4) On application, the court may declare that a gift to a person referred to in subsection (1) is not void and is to take effect, if the court is satisfied that the will-maker intended to make the gift to the person even though the person or his or her spouse was a witness to the will.

(5) Extrinsic evidence is admissible for the purposes of establishing the will-maker’s intention under subsection (4).

Absent a declaration of validity under s. 43(4), there will be a partial intestacy under s. 25 of WESA. Here, a partial intestacy would lead to Dawson’s entire estate being distributed in accordance with s. 23 of WESA. Section 23 governs distribution where a deceased dies intestate and without a spouse, but with a “descendant” as defined by WESA.

Section 43(4) is centrally concerned with testamentary intent: Bach Estate, 2017 BCSC 548 at para. 54.

The Court found that the deceased wanted the witnesses to receive the bequests as a gift and allowed such under Rule 43(4)

Children “Adopted Out” Are Not Descendants

Wolk v Wolk 2021 BCSC 1881 applied trite law re that children adopted out to another family are not descendants or issue of their biological parents on an intestacy.

Wolk applied Atrill Estate 2018 BCSC 350 and reviewed the now well settled principle that if a child is adopted out by another family, it is for all purposes and that child is no longer considered to be a descendant or issue of the biological parent, and becomes the child of the adopted parent for inheritance purposes.

The Adoption Act, R.S.B.C.1996, c. 5, s. 37 provides that on the making of an adoption order the pre-adoption parent ceases to have any parental rights or obligations to the child who is the subject of the order.

S. 3 of WESA makes it clear that a child who was adopted out is not entitled to the estate of the pre-adoption parent on an intestacy.

[13] In Boer v. Mikaloff, 2017 BCSC 21, Funt J. held that a child who has been adopted out has no claim on his or her pre-adoption family in the event of an intestacy.

Subsection 37(1) of the Adoption Act provides that when an adoption order is made, “the child becomes the child of the adoptive parent” and “the adoptive parent becomes the parent of the child”. Section 1 of the Adoption Act defines a “child” as “an unmarried person under 19 years of age”.

The Court of Appeal in Clayton v. Markolefas, 2002 BCCA 435, addressed whether an adopted child was “issue” of her birth father enabling her to be entitled to a portion of her birth father’s intestate estate. The Court considered in detail, s. 37 of the Adoption Act as it then read.

It will be seen that s. 37(1) [Adoption Act] retains the concept that upon the making of the adoption order the child becomes the child of the adoptive parent and the adoptive parent becomes the parent of that child. It goes on to provide, subject to an exception which has no application here, that the birth parents cease to have any parental rights or obligations with respect to the child.

Section 37(1)(c) – Because the birth parents cease to have any parental rights or obligations, it must follow that the child ceases to have any rights against the birth parents other than those defined in s. 37(6), i.e., rights which vested in the child before the date of the adoption order. The existence of s. 37(6) is inconsistent with a legislative intention to allow other rights of the child against the birth parent to survive the adoption order.

Section 37(6) [should read 37(5)] of the new Act, which provides that the family relationships of one person to another are to be determined in accordance with s.37, also has a clear bearing on the present issue. The question whether a person is “issue” of another person is a matter of family relationships. The clear effect of s.37(1) is that the adoptive child becomes the child of the adoptive parent. From that it follows that all parental obligations fall upon the adoptive parents. It can therefore be said of the present provisions, as Seaton J.A. said of s. 11 of the former Act:

The thrust of these provisions is to move the child from one family to another family and make it a child of the new family and no longer a child of the old family.

Unless an exception applies, the effect of s. 37(5) of the Adoption Act is that the plaintiff, upon adoption, became the child of his adoptive parents and his adoptive parents became his parents. The plaintiff was no longer a child of his birth mother. Such would be the “family relationships” as determined by s. 37 of the Adoption Act.

Section 3(2)(a) of WESA serves to confirm that an adopted child is not within the family relationships of his or her birth parents for the purposes of WESA. Section 3(2)(a) provides that an adopted child “is not entitled to the estate of his or her own pre-adoption parent except through the will of the pre-adoption parent”. In other words, an adopted child relative to a pre-adoption parent will-maker is in the same position as a non-family member. The only exception is found in s. 3(3) of WESA which provides that the adoption of “a child by the spouse of a pre-adoption parent does not terminate the relationship of parent and child between the child and the pre-adoption parent for purposes of succession…”

 

 

See Also Clayon v Markolefas 2002 BCCA 435 provides some history to this line of case authority:

“The Adoption Act of 1960 became, in the 1979 revision, R.S.B.C. 1979, c. 4.  There was no material change in the Adoption Act from 1960 until the 1979 Act was repealed and replaced by the Adoption Act, R.S.B.C. 1996, c. 5.  It was settled law until 1996 that an adopted child was not “issue” of his or her natural parents for the purpose of intestate succession.  The sole question is whether the 1996 amendment leads to a different result.  The relevant provisions of the Estate Administration Act were in effect during the whole of the period from 1960 to 1996.  There were no amendments to those sections in that period.

[4]         The earliest case holding that there are no rights of intestate succession between an adopted child and his or her birth parent was Re Jensen (1964), 47 D.L.R. (2d) 630 (B.C.S.C.),   The reasoning in that case was approved and applied by this Court in Mernickle v. Westaway (1986), 1 B.C.L.R. (2d) 267.  Those authorities rested entirely upon the effect of these provisions of the former Act:

  1. (1)  For all purposes an adopted child becomes on adoption the child of the adopting parent, and the adopting parent becomes the parent of the child, as if the child had been born to that parent in lawful wedlock.

 

(2)  For all purposes an adopted child ceases on adoption to be the child of his existing parents (whether his natural parents or his adopting parents under a previous adoption), and the existing parents of the adopted child cease to be his parents.

 

(3)  The relationship to one another of all persons (whether the adopted person, the adopting parents, the natural parents, or any other persons) shall be determined in accordance with subsections (1) and (2).”

Mental Capacity to Make a Will

Henderson v Myler 2021 BCSC 1649 discussed inter alia mental capacity to make a will.

 

Determining whether a testator has the mental aka testamentary  capacity to make a will is a highly individualized and fact-specific inquiry. The analysis distinguishes between capacity as a medical concept or diagnosis, and as a legal construct. Testamentary capacity concerns the latter, not the former.

The testator must have a “baseline level of mental acuity” sufficient to appreciate and comprehend the nature and effect of the essential elements of a testamentary act.

The elements include:

(1) the nature and extent of [their] property;

(2) the persons who are the natural objects of [their] bounty;

(3) the testamentary provisions [they] are making;

(4) the appreciation of these factors in relation to each other;

and (5) forming an orderly desire as to the disposition of [their] property:

A testator must have capacity at two points in time. First, when they give their will instructions, and second, when the will is executed: Laszlo at para. 189, citing Parker v. Felgate (1883), L.R. 8 P.D. 171 (Eng. P.D.A.) and Brownhill Estate, Re (1986), 72 N.S.R. (2d) 181 (N.S. Prob. Ct.).

To lack testamentary capacity does not mean that the testator must be in a perpetual state of substandard competence.

Seemingly rational persons may be without it, while seemingly compromised persons may possess it. A testatrix’s cognitive and psychological state is amorphous and seldom static. It may change and fluctuate slightly or wildly, such that at times she is not of sound mind, while at other times she is perfectly lucid. Accordingly, a will made by a compromised testatrix executed during a lucid interval may still be valid.

Implicit and explicit in the jurisprudence is an acknowledgement of the complexity and subtleties of diminished cognitive functioning and the way in which we perceive, present to and interact with the world around us. For example, although it is recognized that dementia can impair a testator’s mental powers such that he is not capable of making a will, a diagnosis of dementia, standing alone, does not automatically correspond to testamentary incapacity … Similarly, a person who is judicially declared incapable of managing his or her affairs pursuant to adult guardianship legislation or suffers a chronic psychotic illness such as schizophrenia may still have the capacity to make a valid will …

It is well-settled that a testator’s ability to provide rational responses to questions or follow a learned pattern or habit is not conclusive of capacity. The reasons of Mr. Justice Rand writing for the majority of the Supreme Court of Canada in the important decision of Leger v. Poirier, [1944] S.C.R. 152 (S.C.C.), at 161, remain instructive of the point:

But there is no doubt whatever that we may have testamentary incapacity accompanied by a deceptive ability to answer questions of ordinary and usual matters: that is, the mind may be incapable of carrying apprehension beyond a limited range of familiar and suggested topics. 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, revocation of existing dispositions, and the like …

Because testamentary capacity is a legal construct and not a medical one, medical evidence—while important and relevant to determining capacity—is not essential or conclusive. This is consistent with cases on testamentary capacity, which recognize—particularly with the elderly—that a testator’s cognitive and psychological state is “amorphous and seldom static”: Laszlo at paras. 189, 191.

While dementia can impair a testator’s mental powers to the extent they may be unable to make a will, a diagnosis of dementia—standing alone—does not automatically negate testamentary capacity. Similarly, being judicially declared as incapable of managing one’s affairs pursuant to adult guardianship legislation does not, in itself, negate capacity: Laszlo at paras. 191–192.

The testamentary capacity analysis also involves the evidence of lay witnesses, and a court may accord greater weight to the lay evidence than to the medical evidence, reject the medical evidence altogether, or even reach a conclusion that conflicts with the medical evidence: Laszlo at paras. 198–199.

Limitation of Actions- New Rules

The Supreme Court of Canada in Grant Thornton LLP v New Brunswick 2021 SCC 31 provided new guidelines for when a plaintiff discovers or should have discovered that a claim has arisen, thus starting the limitation clock.

The SCC upheld the trial judge who dismissed a substantial claim for an auditor’s negligence on the basis that the Province had actual or constructive knowledge of the material facts when if received the draft auditor’s report in 2011.

In June 2014 the Province commenced an action for negligence seeking damages but the court held it was filed out of time as per the Limitation of Actions Act( LAA). The draft report was sufficient to draw a plausible inference that the auditor had been negligent.

Since the province did not bring its claim until June 23, 2014, more than the limitation period for negligence of two years , its claim was therefore statute-barred.

 

THE LAW

The standard to be applied in determining whether a plaintiff has the requisite degree of knowledge to discover a claim under s. 5(2) of the LAA, thereby triggering the two-year limitation period in s. 5(1)(a), is whether the plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn.

This was sufficient to draw a plausible inference that the auditor had been negligent. Since the province did not bring its claim until June 23, 2014, more than two years later, its claim is therefore statute-barred.

In order to properly set the standard, two distinct inquiries are required.

1) The first inquiry asks whether, in determining if a statutory limitation period has been triggered, the plaintiff’s state of knowledge is to be assessed in the same manner as the common law rule of discoverability. Under that rule, a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence.

The common law rule of discoverability does not apply to every statutory limitation period. Rather, it is an interpretive tool for construing limitations statutes and, as such, it can be ousted by clear legislative language. Assessing whether a legislature has codified, limited or ousted the common law rule is a matter of statutory interpretation. Section 5(1)(a) and (2) of the LAA does not contain any language ousting or limiting the common law rule; rather, it codifies it. This interpretation is supported by the words of s. 5, read in their entire context and in their grammatical and ordinary sense harmoniously with the LAA’s scheme and object, and the intention of the legislature.

Accordingly, as established by the rule of discoverability and the LAA, the limitation period is triggered when the plaintiff discovers or ought to have discovered, through the exercise of reasonable diligence, the material facts on which the claim is based.

2. The second inquiry relates to the particular degree of knowledge required to discover a claim.

A claim is discovered when a plaintiff has knowledge, actual or constructive, of the material facts upon which a plausible inference of liability on the defendant’s part can be drawn. This approach remains faithful to the common law rule of discoverability, which recognizes that it is unfair to deprive a plaintiff from bringing a claim before it can reasonably be expected to know the claim exists. It also accords with s. 5 of the LAA, promotes consistency and ensures that the degree of knowledge needed to discover a claim is more than mere suspicion or speculation. At the same time, it ensures the standard does not rise so high as to require certainty of liability or perfect knowledge. A plausible inference of liability is enough; it strikes the equitable balance of interests that the common law rule of discoverability seeks to achieve.

The material facts that must be actually or constructively known are generally set out in the limitation statute. In the LAA, they are listed in s. 5(2)(a) to (c).

A claim is discovered when the plaintiff has actual or constructive knowledge that: (a) the injury, loss or damage occurred; (b) the injury loss or damage was caused by or contributed to by an act or omission; and (c) the act or omission was that of the defendant. This list is cumulative. In assessing the plaintiff’s state of knowledge, both direct and circumstantial evidence can be used. A plaintiff will have constructive knowledge when the evidence shows that the plaintiff ought to have discovered the material facts by exercising reasonable diligence. Finally, the governing standard requires the plaintiff to be able to draw a plausible inference of liability on the part of the defendant from the material facts that are actually or constructively known. This means that in a negligence claim, a plaintiff does not need knowledge that the defendant owed it a duty of care or that the defendant’s act or omission breached the applicable standard of care. All that is required is actual or constructive knowledge of the material facts from which a plausible inference can be made that the defendant acted negligently.

In the instant case, the province had actual or constructive knowledge of the material facts — namely, that a loss occurred and that the loss was caused or contributed to by an act or omission of the auditor — when it received the draft report from the other firm on February 4, 2011.

S. 58 WESA- Curing A Defective Will

Henderson v Myler 2021 BCSC 1649 is another case dealing with the curative powers of S. 58 WESA to fix a will that otherwise would not be valid due to defective witnessing procedures and the like.

 

Section 58 is a curative provision, conferring broad discretion on the court to relieve against the consequences of non-compliance with strict testamentary formalities otherwise required by WESA in order to find that a record, document or writing, or a marking on a will or document, represents the testamentary intentions of the deceased. In Hadley Estate (Re), 2017 BCCA 311 at para. 34, the Court of Appeal describes s. 58 as “remedial in nature”.

The focus is on whether the document represents the testamentary intentions of the deceased.

In Hadley, the Court of Appeal said that s. 58 is similar to a curative provision in Manitoba. It cited and relied on the leading appellate authority from Manitoba, George v. Daily (1997), 143 D.L.R. (4th) 273 (Man. C.A.).

In George at para. 35, the court confirmed that testamentary intention meant more than an expression of how a person would like their property to be disposed of after death and the key question is whether it records a “deliberate or fixed and final expression of intention as to the disposal of the deceased’s property on death” at the material time. Such a finding is intensely context and fact specific.

BC cases, and cases from other jurisdictions with similar curative provisions (Manitoba, New Zealand, and Australia), show the context and fact-specific nature of the analysis.

In George, the court set out the following principles:

  1. The standard of proof on an application under the curative provision is proof on a balance of probabilities (para. 20).
  2. The greater the departure from the requirements of formal validity, the harder it may be for a court to be satisfied that the document represents the deceased’s testamentary intention (para. 19).
  3. The requirements for formal validity of a will serve several functions, including:
  4. an evidentiary function by providing the court with reliable and permanent evidence of testamentary intention and the terms of the will; and
  5. a cautionary function by impressing upon the testator the solemnity, finality, and importance of his actions in making his “last will and testament (at paras. 21–26).
  6. The evidentiary and cautionary functions are particularly relevant to the determination of whether or not a writing or document embodies the testamentary intentions of a deceased (para. 22).
  7. Not every expression made by a person, whether orally or in writing, concerning the disposition of his or her property on death embodies his or her testamentary intentions (para. 62).

In Estate of Young, 2015 BCSC 182 at para. 35, Justice Dickson (as she then was), applying George, said that on an application under s. 58 of WESA.

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.

At para. 36 of Estate of Young, citing Manitoba cases, Justice Dickson set out a list of factors relevant to the determination of whether a document, that does not otherwise comply with the formal requirements of WESA, expresses the deceased’s testamentary intention. The list is non-exhaustive and includes the deceased’s handwriting, the deceased’s signature or witness’ signatures, a revocation of previous wills, funeral arrangements, specific bequests, and the title of the document.