Mental Capacity Required to Live Apart from Spouse is Low

Fuhr (Litigation Guardian of) v. Tingey 2013 BCSC 711 dealt with the issues of whether a claimant had sufficient mental capacity to instruct counsel in divorce proceedings. the claimant died before trial, and while the issue then became moor, the Court provided reason for judgment so that the matter of costs could be dealt with.In this case, the court was faced with conflicting evidence of capacity and thus the summary trial based on affidavits could not be resolved, and the matter would have been referred to the trial list. In Wolfman-Stotland v. Stotland 2011 BCCA 175, the issue was whether Mrs. Stotland had the capacity necessary to form the intention to live separate and apart to support the application for a s. 57 declaration. Mrs. Stotland suffered from mild to moderate cognitive impairment and was not capable of managing her financial affairs. She was examined by a doctor, who concluded that she likely had the capacity to instruct counsel on the matter of her divorce.

[32] The Court of Appeal stated:

[23] In A.B. v. C.D., the husband, who opposed the granting of a s. 57 declaration, conceded that his wife had general capacity to manage her affairs and to instruct counsel. The husband sought a medical examination under then Rule 30(1) to establish that his wife suffered from a delusional disorder that informed her intention to live separate and apart. The chambers judge, in reasons indexed as 2008 BCSC 1155, concluded that since the wife had the capacity to conduct her own affairs and to instruct counsel, her adverse mental condition, if it existed, had no bearing on the issues to be determined in the divorce proceeding.

[24] On appeal, this Court upheld the chambers judge and adopted the comments in Professor Robertson’s text, Mental Disability and the Law in Canada, 2d ed. (Toronto: Carswell, 1994) referred to by the chambers judge at paras. 23-24 of his reasons:

[23] The capacity to form the intention to live separate and apart is discussed in Professor Gerald B. Robertson’s Mental Disability and the Law in Canada, 2nd ed., (Toronto: Carswell, 1994) at 272:

Where it is the mentally ill spouse who is alleged to have formed the intention to live separate and apart, the court must be satisfied that that spouse possessed the necessary mental capacity to form that intention. This is probably similar to capacity to marry, and involves an ability to appreciate the nature and consequences of abandoning the martial relationship.

[24] Professor Robertson went on to discuss the capacity to marry at pp. 253-254:

In order to enter into a valid marriage, each party must be capable, at the date of the marriage, of understanding the nature of the contract of marriage and the duties and responsibilities which it creates…. The test does not, of course, require the parties to be capable of understanding all the consequences of marriage; as one English judge aptly noted, few (if any) could satisfy such a test. …the common law test is probably only concerned with the legal consequences and responsibilities which form an essential part of the concept of marriage. Thus, if the parties are capable of understanding that the relationship is legally monogamous, indeterminable except by death or divorce, and involves mutual support and cohabitation, capacity is present. The reported cases indicate that the test is not a particularly demanding one. As was said in the leading English decision, “the contract of marriage is a very simple one, which does not require a high degree of intelligence to comprehend”.

… Capacity to marry may exist despite incapacity in other legal matters. This necessarily follows from the fact that the requirements of legal capacity vary significantly as between different areas of law, and must be applied specifically to the particular act or transaction which is in issue. Thus, for example, a person may lack testamentary capacity yet have capacity to marry. Similarly, a person may be capable of marrying despite having been declared mentally incompetent and having had a property guardian or guardian of the person appointed.

[25] This Court ultimately concluded:

[36] In summary, disordered or delusional thinking which may contribute to an individual’s intention to live separate and apart, does not diminish that individual’s capacity to form that intention, provided it does not reach the level of incapacity that interferes with the ability to manage his or her own affairs and instruct counsel. In this case, there is no probative value to the evidence the husband seeks to obtain by his R. 30(1) application as the wife admittedly has the higher level of capacity to manage her own affairs. As a result, the wife’s mental condition, even if she was found to be suffering from delusional disorder, cannot be an issue in the proceeding.

[26] A useful discussion of the hierarchy of levels of capacity is found in Calvert at paras. 54-56:

[54] Separation is the simplest act, requiring the lowest level of understanding. A person has to know with whom he or she does or does not want to live. Divorce, while still simple, requires a bit more understanding. It requires the desire to remain separate and to be no longer married to one’s spouse. It is the undoing of the contract of marriage.

[55] The contract of marriage has been described as the essence of simplicity, not requiring a high degree of intelligence to comprehend: Park, supra, at p. 1427. If marriage is simple, divorce must be equally simple. The American courts have recognized that the mental capacity required for divorce is the same as required for entering into marriage: re: Kutchins, 136 A. 3d 45 (Ill., 1985).

[56] There is a distinction between the decisions a person makes regarding personal matters such as where or with whom to live and decisions regarding financial matters. Financial matters require a higher level of understanding. The capacity to instruct counsel involves the ability to understand financial and legal issues. This puts it significantly higher on the competency hierarchy. It has been said that the highest level of capacity is that required to make a will: Park, supra, at p. 1426. (I note that Mr. Birnbaum felt that, in August 1994, he would have taken instructions for a will but for Dr. Hogan’s concern about her ability to instruct counsel.) While Mrs. Calvert may have lacked the ability to instruct counsel, that did not mean that she could not make the basic personal decision to separate and divorce.

[27] As the authorities make clear, the capacity to form the intention to live separate and apart has been accepted as equivalent to the capacity to enter into a marriage. As the Court stated in Calvert, the intention to separate requires the lowest level of understanding. The requisite capacity is not high, and is lower in the hierarchy than the capacity to manage one’s affairs.

Breach of Fiduciary Duty In Widow’s Reliance On Family

Breach of trust 2

A breach of fiduciary duty was found when following her husband’s death, a widow relied upon  family members  to enter into improvident land transfers based on assertions that the widow relied upon.

It is a fact that families financially abuse each other and often in the nature of a breach of fiduciary duty, such as a power of attorney

Buccilli v Pillitteri 2012 ONSC 6624, involved a family estate dispute after a tragic death where all the parties had a one third interest in a family business.

After the deceased’s death, his surviving widow, on the advice of her brothers-in-law, signed transfers of all her interest in the deceased estate, including the interest in the family business and real property, to one of the defendants in trust, in exchange for receiving a condominium.

Eventually the widow brought court action to set aside the transfer agreement, and the action was allowed on the grounds of undue influence, and other reasons including MISREPRESENTATION. In a nutshell, the court found that there was an inequality of positions of the parties, and the widow relied upon her brother-in-law’s for advice and was misrepresentented to enter into the contract.. The transfer agreement was an improvident bargain whereby the widow gave up her interest in the deceased’s estate, which was worth a very substantial amount, in exchange for a condominium worth only $610,000.Patricia also asks that the Transfer Agreement be set aside on the basis that the widow relied upon the sons in law and they breached the fidciary duty that they owed to her.

FIDUCIARY DUTY 179 Elder Advocates of Alberta Society v. Alberta, [2011) 2 S.C.R. 261 (S.C.C.) is the latest S.C.C. case dealing with the tests for recognition of a fiduciary duty. In Frame v. Smith. \ 19871 2 S.C.R. 99 (S.C.C.) Wilson J. stated her view of when a fiduciary duty has been recognized. Her words have been adopted by the Supreme Court and other courts for many years.

 

Relationships in which a fiduciary obligation has been imposed seem to possess three general characteristics:

 

(1) The fiduciary has scope for the exercise of some discretion or power.

2012 ONSC 6624, 84 E.T.R. (3d) 208,225 A.C.W.S. (3d) 115

The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.
The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

In Elder Advocates of Alberta Society, however, McLachlin C.J. stated that as useful as the three “hallmarks” referred to in Frame are in explaining the source fiduciary duties, they are not a complete code for identifying fiduciary duties. She laid down three tests to be applied.
First, the evidence must show that the alleged fiduciary gave an undertaking of responsibility to act in the best interests of a beneficiary. What is required in all cases is an undertaking by the fiduciary, express or implied, to act in accordance with the duty of loyalty reposed on him or her. The existence and character of the undertaking is informed by the norms relating to the particular relationship. The party asserting the duty must be able to point to a forsaking by the alleged fiduciary of the interests of all others in favour of those of the beneficiary, in relation to the specific legal interest at stake. The undertaking may be found in the relationship between the parties, in an imposition of responsibility by statute, or under an express agreement to act as trustee of the beneficiary’s interests.
Second, the duty must be owed to a defined person or class of persons who must be vulnerable to the fiduciary in the sense that the fiduciary has a discretionary power over them. Fiduciary duties do not exist at large. They are confined to specific relationships between particular parties. Historically recognized per se fiduciary relationships exist as a matter of course within the traditional categories of tmstee-cestui que trust, executor-beneficiary, solicitorciient, agent-principal, director-corporation, and guardian-ward or parent-child. By contrast, ad hoc fiduciary relationships must be established on a case-by-case basis.
Finally, to establish a fiduciary duty, the claimant must show that the alleged fiduciary’s power may affect the legal or substantial practical interests of the beneficiary. In the traditional categories of fiduciary relationship, the nature of the rela­tionship itself defines the interest at stake. However, a party seeking to establish an ad hoc duty must be able to point to an identifiable legal or vital practical interest that is at stake. The most obvious example is an interest in property, although other interests recognized by law may also be protected.
.

The remedy for breach of fiduciary duty is discretionary. The only realistic remedy to make Patricia whole from the breach is that the Transfer Agreement should be set aside and an accounting of profits of the defendants from the lands and developments that were the subject of the Transfer Agreement should be taken and one-third should be paid to Patricia.

The Doctrine of “Suspicious Circumstances” In Mental Capacity Cases

Justice Ballance’s reasons for judgement in Laszlo v Lawton 2013 BCSC 305 contain a concise summary of this area of the law:

200] In Vout v. Hay, [1995] 2 S.C.R. 876 [Vouf\, the Supreme Court of Canada laid to rest the thread of confusion that had emerged in earlier decisions concerning the burden of proof and the interrelationship between the doctrine of suspicious circumstances and the issues of testamentary capacity, knowledge and approval, undue influence and fraud.

[201] Vout affirmed that the legal burden of proving due execution of the will and both testamentary capacity and that the testator knew and approved of the contents of the will is with the party propounding the impugned will. Put succinctly, the party seeking to uphold the will must prove that it was duly executed and is the product of a free and capable testator.

[202] In discharging its burden of proof, the propounder is aided by a rebuttable presumption. It is presumed that the testator possessed the requisite knowledge and approval and testamentary capacity where the will was duly executed in accordance with the statutory formalities after having been read by or to the testator, who appeared to understand it. Vout clarified that this presumption may be rebutted by evidence of well-grounded suspicions, known as “suspicious circumstances”, relating to one or more of the following circumstances: (1) surrounding the preparation of the will; (2) tending to call into question the capacity of the testator; or (3) tending to show that the free will of the testator was overborne by acts of coercion or fraud (para. 25).

[203] The presumption places an evidentiary burden on the party challenging the will to adduce or point to “some evidence which, if accepted, would tend to negative knowledge and approval or testamentary capacity”: Vout at para. 27.

[204] Where suspicious circumstances arise, the presumption is said to have been spent, meaning it does not apply and has no further role to play, and the propounder reassumes the legal burden of establishing both approval and capacity. Proving testamentary capacity as well as knowledge and approval of the will provisions, necessarily entails dispelling the suspicious circumstances that have been raised: see generally, Ostranderv. Black (1996), 12 E.T.R. (2d) 219 at 235 (Gen. Div.).

[205] The usual civil standard of proof, namely proof on a balance of probabilities, applies. That said, as a practical matter the extent of the proof required will be proportionate to the gravity of the suspicion, which will vary with the circumstances peculiar to each case: Vout at para. 24.

[206] A “general miasma of suspicion that something unsavoury may have occurred” will not be enough: Clark v. Nash (1989), 61 D.L.R. (4th), 409 at 425 (B.C.CA). In Maddess v. Racz, 2009 BCCA 39 at para. 31, the B.C. Court of Appeal reminded that merely ‘some evidence” was not sufficient and emphasized the stipulation in Voutthat in order to elevate general suspicion to the threshold of suspicious circumstances, the evidence, if accepted, must tend to negative knowledge and approval or testamentary capacity.

[207] Suspicious circumstances have been found to exist in a wide array of situations and are not necessarily sinister in nature. There is no checklist of circumstantial factors that will invariably fit the classification. Commonly occurring themes include where a beneficiary is instrumental in the preparation of the will (especially where the beneficiary stands in a fiduciary position to the testator), or where the will favours “someone who has not previously been the object of [the testator’s] bounty and does not fall within the class of persons testators usually remember in their wills, that is to say their next of kin”: Longmuir v. Holland, 2000 BCCA 53, at para. 69 [Longmuir]; Heron Estate v. Lennox, 2000 BCSC 1553 at para. 67 [Heron Estate]. In Moore, N. Smith J. found the fact that the testatrix’s doctor had described her as no longer capable of managing her affairs and as suffering dementia around the time she made her will constituted a suspicious circumstance sufficient to rebut the presumption.

Joint Tenancy Transfer Between Parent and One Child Set Aside

Turner vTurner 2010 BCSC deals with a common thorny issue in estate litigation.

In 1996 the deceased parent put title to her home into joint tenancy with one of her two children.

The deceased died in 2007 leaving a will that left the sale proceeds of the house equally between both sons.

The house was her only asset, and if the joint tenancy was a “true” joint tenancy, then by right of survivorship, the house would only pass to the surviving joint owner.

The court grappled with the issue that the will ignored the JT transfer that had taken place a decade earlier.

The court held that the surviving joint owner held his property interest in trust for his late mother, and thus the house formed part of her estate, and was shared equally between the sons as per her will.

The court found that the deceased had not received proper legal advice when the JT was created

For example, it was not explained o her that a gift cannot be taken back, while a will can always be changed

Mr. Justice Verhoeven held that James Turner did indeed hold the house on a resulting trust for the estate. The law in British Columbia is that when a parent transfers assets gratuitously to an adult child, there is a presumption that the child holds the assets in trust for the parent and the parent’s estate. This is a presumption only, and may be rebutted if the child can show that the parent intended a gift.

Where the transfer is gratuitous, or made to a fiduciary, the law generally presumes that a resulting trust has been established. This is because equity presumes a bargain and not a gift. Pecore vPecore 2007 1 SCR 795

Where there is a resulting trust, the transfer is effective to convey legal title( ie your name shows as a registered owner), but the equitable, beneficial title remains with the transfer or: Niles v Lakes (1947) SCR 291

Contingency Fee Agreement Not a Lottery

Contingency Fee Agreement Not a Lottery

Mide-Wilson v Hungerford Tomyn Lawrenson and Nichols 2013 BCSC 374 is a very interesting case relating to the intricacies of the “poor man’s key to the courtroom”, the contingency fee agreement is not a lottery for the lawyer.

This is where the lawyer and the client agree to enter into a fee arrangement based on a % of the recovered amount, to be the fee, rather than the traditional pay as you go hourly rate, that no one, client and lawyer alike, prefers anymore.

On December 8, 2008 the date the fee agreement was entered into::

a) Everyone believed they were in the Action for the long-haul;

b) Home had told Rennie on October 17 that he was not interested in paying

Ms. Mide-Wilson anything;

Ms. Mide-Wilson was not interested in a settlement wherein she was paid money by Home and Gibson; she wanted the company back;

A significant amount of legal work would be necessary on a go forward basis;
and

e) The value of the assets was somewhere in the $100 million range.

They settled on a %20 fee agreement, which resulted in the lawyers recovering a $17 million fee, which the client refused to pay on the basis that it was unreasonable.

The supreme court ultimately agreed and reduced the account to $5 million.

On a taxation of the account prior to the supreme court hearing,  the Registrar had  allowed $9 million, but on appeal, Justice Goeppel  of the Supreme Court stated :

“In the circumstances of this case, I find that $9 million is not a proper fee for the work actually done and does threaten the integrity of the profession. While the Solicitors took on a case in which there was great risk, the case and the risk ended within months of the commencement of the retainer.” and “In order to maintain the integrity of the legal profession, a legal account must have some relationship to the actual work carried out. To allow the fees awarded in this case given the work the Solicitors actually did would call into question the integrity of the profession.”

[180] A contingency fee agreement is not a lottery ticket. Success in the action does not guarantee a fee in the amount set out in the agreement. Even if the agreement was neither unfair nor unreasonable at the time it was entered into, the final account must be reasonable and proper given the services provided and the risk undertaken.

Having determined that the CFA was not unfair or unreasonable under the circumstances existing at the time it was entered into, the Solicitors’ account remains subject to review pursuant to the provisions of s. 70 of the LP A. A contract can itself be fair and reasonable and yet the fees purportedly charged pursuant to it may not be recoverable: Doig v. Davidson Muir, 106 B.C.A.C. 80,

48 B.C.L.R. (3rd) 53 at para. 19. As noted in Coad v. Rizk (1999), 68 B.C.L.R. (3d) 340 (S.C.), the provisions of s. 68 and 70 are not mutually exclusive, but work in concert to ensure that both the initial fee agreement and what is subsequently billed pursuant to that agreement are appropriate.

[154] In this case the registrar dismissed the application to cancel the CFA. I have upheld that decision. The matter now to be determined is the proper fee to which the Solicitors are entitled.

[155] In Commonwealth Investors Syndicate Ltd. v. Laxton (1994), 94 B.C.L.R. (2d) 177 (C.A.) [Commonwealth No. 2], the court had to wrestle with the reasonableness of the fee that a contingency contract had generated. McEachern C.J.B.C. said at para. 25:

I take the foregoing to mean that a contingency fee agreement under the old regime had to be reasonable in the result. This brought into play the well established principles which generally govern the fixing of a lawyer’s fee such as those stated in Yule v. Saskatoon (City) (1955), 1 D.L.R. (2d) 540, [17 W.WR. 296], (Sask. C.A.), and, of course, those further considerations that apply only to contingency fees. These include at least the risk of there being no recovery at all and the expectation of a larger fee based upon results than would be appropriate in non-contingency cases.

[183] While the terms of the contract set the maximum fee, the proper fee is ultimately determined by a consideration of the factors set out in s. 71(4) augmented as noted in Commonwealth No. 2 by those further considerations that apply only to contingency fees including the risk of no recovery and the expectation of a larger fee based upon results than would be appropriate in non-contingency cases. Regardless of the terms of a contingency fee agreement, those factors and considerations cap the amount that lawyers can charge. A lawyer is never entitled to more than a proper fee.

Court Prefers Lawyers Opinion Over Doctor’s On Mental Capacity

Testimony

 

Moore v Drummond BCSC 1702 is not the first decision where the evidence of the lawyer who  prepared a will  is preferred over that of a family doctor, on the issue of whether or not a deceased  had mental capacity to prepare a will.

One year before her death the testatrix made a new will naming her neighbours as executors and soul beneficiaries, to the exclusion of her son.

The solicitor who drafted her will had no concerns about her testamentary capacity.

Whoever just one week before, the testator’s family Dr. told the Public Guardian and Trustee that the deceased had dementia and was no longer capable of managing her affairs.

After her death the executors brought action to prove the will in solemn form, and the sons brought a counterclaim to find the will invalid.

The court found the will of valid, and specifically found that the testator had the requisite capacity to make a new will.

The executors could not rely upon the presumption of validity because the suspicious circumstances caused by the fact that the doctor had expressed an opinion that the testator was incapable of managing her affairs.

However the doctors opinion was found to by the court to be a general one that commented in abstract on the testator’s ability to manage her affairs.

The solicitor who met with the deceased was more focused on the question of testamentary capacity, and was satisfied on the basis of his interview with her, observations and extensive experience.

The testator was able to accurately tell the solicitor what her property consisted of, and articulate reasons for disinheriting her son and favouring her neighbours.

The court found that the testator’s decision was consistent with the negative attitude previously expressed about her son and long-standing friendship with her neighbours.

The court commented as follows on the law relating to testamentary capacity:

 

The frequently quoted test for testamentary capacity comes from Banks v Goodfellow (1870), 5 QB 549 at 567:

… [The testator] ought to be capable of making his will with an understanding of the nature of the business in which he is engaged, a recollection of the property he means to dispose of, of the persons who are the objects of his bounty, and the manner in which it is to be distributed between them. It is not necessary that he should view his will with the eye of a lawyer, and comprehend its provisions in their legal form. It is sufficient if he has such a mind and memory as will enable him to understand the elements of which it is composed, and the disposition of his property in its simple forms.

[34]         In Leger v. Poirier, [1944] SCR 152 at 161, the Supreme Court of Canada used the term “disposing mind and memory”, which it defined 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 dispositions, and the like …”

[35]         A more recent formulation of the test is found in Re Schwartz, [1970] 2 OR 61  at 78 (CA), aff’d [1972] SCR 150where Laskin J.A. (dissenting on other grounds) summarized the elements of testamentary capacity:

… The testator must be sufficiently clear in his understanding and memory to know, on his own, and in a general way (1) the nature and extent of his property, (2) the persons who are the natural objects of his bounty and (3) the testamentary provisions he is making; and he must, moreover, be capable of (4) appreciating these factors in relation to each other, and (5) forming an orderly desire as to the disposition of his property….

[36]         This does not mean the testator must have perfect mental capacity for all purposes or be able to remember all details. Diminished capacity does not equate to lack of capacity and a person who has been deemed incapable of managing his or her own affairs may still be able to make a valid will: Royal Trust Co v Rampone, [1974] 4 WWR 735 at 743 (BCSC).

[37]          In Banks the court said at 566:

In these cases it is admitted on all hands that though the mental power may be reduced below the ordinary standard, yet if there be sufficient intelligence to understand and appreciate the testamentary act, in its different bearings, the power to make a will remains.

And at 567:

… his capacity may be perfect to dispose of his property by will, and yet very inadequate to the management of other business, as, for instance, to make contracts for the purchase or sale of property. For, most men, at different periods of their lives, have meditated upon the subject of the disposition of their property by will, and when called upon to have their intentions committed to writing, they find much less difficulty in declaring their intentions than they would in comprehending business in some measure new.

[38]         The existence of testamentary capacity does not depend on scientific or medical definitions and medical opinions are not necessarily determinative: Field v James, 2001 BCCA 267 at para 77; Baker Estate v Myhre (1995), 168 AR 248 at para 39.

[39]         The party seeking to prove a will must show that it is in fact the will of a “free and capable testator,” but there is a presumption in favour of validity where the will has been duly executed, with the requisite formalities, after having been read by or to a testator who appeared to understand it. That presumption may be rebutted by evidence of suspicious circumstances, in which case the burden reverts to the propounder to prove validity on the balance of probabilities. The suspicious circumstances that may rebut the presumption may relate to the preparation of the will, the capacity of the testator, or a suggestion of coercion or fraud: Vout v Hay, [1995] 2 SCR 876. The court in Vout added at paragraph 25:

Since the suspicious circumstances may relate to various issues, in order to properly assess what effect the obligation to dispel the suspicion has on the burden of proof, it is appropriate to ask the question “suspicion of what?”

[40]         The “suspicious circumstances” must do more than create “a general miasma of suspicion”; they must create “a specific and focussed suspicion that the testator may not have known and approved of the contents of the will”: Clark v Nash (1989), 61 DLR (4th) 409 at 425 (BCCA).

SEVERANCE OF JOINT TENANCIES BY A COURSE OF DEALING

SEVERANCE OF JOINT TENANCIES

This article is an update on a recent development of the law in this area subsequent to the author’s previous article entitled “Severance of Joint Tenancies”, and located on disinherited.com.

 

Joint tenancy is a method in which two or more persons may hold property together, with the unique feature that one of the owners dies, his or her interest automatically passes to the survivor(s) by right of survivorship.

 

Severance is the legal process of converting a joint tenancy arrangement into a tenancy in common. The latter method of ownership does not have the automatic right of survivorship that the joint tenancy has.

 

Accordingly there is an increasing trend in both estate and family litigation to carefully examine whether the joint tenants, often spouses, acted in a course of conduct that intimated that the interests of the joint owners were mutually treated as constituting a tenancy in common. The financial rewards of whether or not a parcel of real property devolves on death to a surviving joint tenant, or alternatively that the deceased’s one half portion of the property in a tenancy in common passes to his or her estate pursuant to a will are huge.

 

It may well be, if examined closely, that the parties have even unwittingly indicated at some point in time that the ownership of jointly held property should be treated as a tenancy in common rather than as a joint tenancy with right of survivorship (JTROS)

 

THE ONTARIO CASES

 

Hansenv Hansen Estate 2012 9 RFL (7th) 251,75 ETR (3d) 19, a decision of the Ontario Court of Appeal, is a decision which dictates close observance. As of the date of publication of this article it has not yet been applied or considered in British Columbia, and has only been subsequently distinguished in Ontario by the subsequent Su v Lam decision which follows.

 

The Ontario Court of Appeal followed the chestnut decision relating to the severance of joint tenancies, Williams v. Hensman (1861) 70 E.R. 862 for these three manners in which joint tenancies may be suffered namely;

1.         Unilaterally, by acting on one’s own account, such as selling or encumbering one’s share;

2.         by mutual agreement between the co-owners to sever the joint tenancy;

3.         any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common (the course of dealing rule).

 

Mr. and Mrs. Hansen married for the second time in 1983. Both had children from previous relationships. In 2003 they purchased a property as joint tenants. Financial and marital troubles subsequently ensued with Mrs. Hansen moving out of the home in March 2010.

 

The husband retained a lawyer with respect to this marital breakdown and he was instructed to prepare a new will for him leaving everything to his daughters and nothing to his wife.

 

Mrs. Hansen also retained a lawyer who sent a letter to the husband’s lawyer indicating a desire to negotiate a separation agreement including a division of the property.

 

The parties began to close their joint bank accounts, and prepared financial statements for exchange in furtherance of their settlement negotiations, but before settlement could be finalized Mr. Hansen suddenly died.

 

Mrs. Hansen asserted a right of survivorship in the home and took the position that is a surviving joint tenant she was entitled to the entirety of the property.

 

The executors of the deceased’s will applied to the court for a declaration that the widow was entitled to only an undivided one half interest in the property by reason of the fact that the parties course of dealing had served to sever the joint tenancy.

 

Mrs. Hansen won at trial, but Court of Appeal overturned that decision, and pronounced that with respect to the application of the course of dealing just in Ontario:

 

1.         severance by course of dealing does not require proof of an explicit intention to sever the joint tenancy – the mutual intention can be inferred from the course of dealing between the parties and does not require evidence of agreement;

2.         severance by course of dealing does not require that each owner knew of the others position and that both treated their interest in the property as no longer being held jointly – this could be inferred from communications or conduct;

 

3.         the determination is an inherently fact specific assessment;

 

4.         the purpose of severance by course of dealing is to ensure that one owner does not unfairly obtain the benefit of the right of survivorship where the parties have shown a common intention to no longer treat their interests in the property as an indivisible unified whole.

 

The appeal court in fact stated that the trial judge erred in not appreciating the facts that the parties, amongst other things, prepared a new will, negotiated a division of their assets, and they opened separate bank accounts, acts that were sufficient conduct to sever the joint tenancy.

 

As stated by Chief Justice Winkler at paragraph 7:

” the court’s inquiry cannot be limited to matching fact patterns to those in prior cases. Rather, the court must look to the co-owners’ entire course of conduct – in other words the totality of the evidence – in order to determine if they intended that their interests were mutually treated as constituting a tenancy in common. The evidence may manifest itself in different ways. Each case is idiosyncratic and will turn on its own facts”.

 

Prior to Hansen, the Ontario law had been In Re Walters (1977) 16 O.R. (2d) 702, affirmed 17 OR (2d) 592, (Ont. CA), where the court held that a severance had been affected through the couples’ course of conduct where they had negotiated to buy each other’s interests in the matrimonial home in the course of their separation.

 

British Columbia Law

 

Hansen Estateis of notable surprise to British Columbia practitioners by reason of a 1993 BC Appeal Court decision Tompkins Estate v. Tompkins, Vancouver Registry CA 015039,  which had contrarily held that in order to satisfy the “course of dealing” test, one party must detrimentally rely on the others representation that he or she no longer wants to hold the property jointly.

In other words, in British Columbia,  the current law is that the party asserting that the joint tenancy has been severed, must prove not only that both parties treated their interests as separate, but also that they relied on the other parties representations or actions so that it would now be unjust for the other party to assert that joint tenancy.

 

The Ontario court in Hansen, held that such detrimental reliance was not necessary and the test could be satisfied simply by virtue of each party being aware of the other’s intentions and by both parties treating their interests in the property is no longer being held jointly.

 

By BC standards, the Ontario Court of Appeal found severance of the joint tenancy on rather marginal evidence of intention to mutually treat their matrimonial home as a tenancy in common.

 

The Ontario Court of Appeal however has traditionally been regarded as very persuasive throughout the Canadian courts, and it should not be a surprise if the BC Courts adopt the reasoning of Hansen in future, especially if given the right facts to do so.

 

The second Ontario decision of Su v Lam 2012 77 E.T.R. (3d) 278, (Ont. SCJ), applied Hansen and stated that the mutual intention of the parties as demonstrated by their conduct, must be assessed, and that the intention must be mutual.

 

On her death in 2004 the testator left her estate to her two grown children and appointed her estranged spouse as executor. In other legal proceedings, the plaintiff was found to be the testator’s common-law husband and that the testator had a legal obligation to provide support to him upon her death. Prior to the testator’s death she owned to real estate investments in joint tenancy with her estranged husband.

 

The common-law spouse argued that the joint tenancies between the deceased and her estranged husband had been severed prior to her death, and that the value of the properties constituted an undistributed residue of her estate.

 

The court found that there had not been any severance of the joint tenancies, as the testator had not acted on her own share with respect to the joint tenancies, nor had there been any mutual agreement existing between her and her estranged husband to sever the joint tenancies.

 

There is a high threshold that exists to show joint tenancies are severed through a course of conduct between the testator or her estranged husband and the mere fact that the testator and the estranged husband are separated is insufficient to establish severance.

 

When the parties liquidated their real estate holdings after their separation, neither the testator nor her estranged husband conducted their affairs in a way to suggest that in doing that the joint tendencies had been terminated. No evidence existed that the testator or the estranged husband had entered into negotiations the ownership following the test their separation. The fact that the testator maintain the properties without assistance from the estranged husband was not of its own, evidence of severance. Accordingly upon the testator’s death the properties became owned by the estranged husband by right of survivorship.

 

CONCLUSION

 

The continuing meld of estate, real property and family law principles all come to fore when examining whether or not the course of dealings of parties to a joint tenancy ownership have or have not resulted in a severance of a JTROS. It is reasonably common for parties, married or otherwise, to have disputes and perhaps enter into a course of dealings that might appear to treat jointly held properties as tenancies in common, that may subsequently be forgotten about and a reconciliation achieved only to have argued many years later in an estate litigation dispute, that the course of dealings many years prior had the effect of severing the joint tenancy of property now worth millions. Most spousal joint tenants simply do not appreciate the legal consequences that one or more of the following acts, may result in a severance of a JTROS property:

 

1.         closing joint bank accounts and opening separate accounts;

2.         preparing a new will disposing of the property, to the exclusion of the other,

3.         the expression of an intention to negotiate a division of property, including the subject property;

4.         one owner vacating the premises;

5.         the intention expressed to litigate if a settlement cannot be reached;

6.         the requirement of one party buying out the other’s interest as a condition to stay in the property;

7.         the expressed intention to appraise the property for negotiation purposes.

 

The Hansen case giv

Doctors Speak a Different Language

Doctors Speak a Different Language

I had the benefit of recently hearing prominent geriatric psychiatrist Dr. Donnelly.

She discussed various aspects of testing for mental capacity and in particular when dealing with the legal profession in seeking a medical opinion about same.

Mental capacity is  a legal test – did the person have sufficient mental capacity when he or she signed the will or the transfer of land etc.?

To her credit Dr. Donnelly instructed the attending lawyers that they should specify in detail exactly what they want the doctor  to tell them and in response to specific questions pose the physician.

For example, she mentioned that most lawyers do not even instruct the doctor  as to the legal test for mental capacity, when most doctors, especially family physicians, really have no training or experience in understanding the legal concept, and very little training if any in testing for capacity.

If possible, it is highly preferable that the testing for mental capacity be performed by a geriatric psychiatrist in the case of the elderly, or a psychiatrist in the case of non-geriatrics

I will share aspects of her presentation upon my receipt of them in the future.

I pointed out to her and the audience that the problem is even worse than she described, in that lawyers and doctors do not even use the same words to have the same meaning.

I pointed out for example that the word acute, to a medical doctor means a sudden onset while two lawyers in the general public it means severe.

Similarly alert means awake in medical terms but to others is generally considered to be much more almost to the point of being smart

Lucid to a doctor means that the patient is oriented times three, (he or she knows who they are, where they are, and the date),  whereas to the general public the word lucid again usually means much more.

I also pointed out that lawyers deal with the concept of the test in civil proceedings being on the balance of probabilities, “is it more likely than not.”?

Doctors do not understand this concept unless they are instructed by the lawyers, as to the appropriate legal test to apply when providing their medical opinion.

Dr. Donnelly agreed that doctors are typically trained and think  as scientists who use the scientific method.

They do not  understand the legal concept of causation, or  the thin skull rule in tort law, or any other legal concepts, without the lawyer explaining the  concept to the doctor.

In my almost 40 years of experience with dealing with the medical profession I can categorically state that there is often tension.

That tension can often be broken by the lawyer phoning  the doctor, making it clear that the doctor will be paid for his or her time, and asking to speak with the doctor, in person if possible, in a quiet setting after hours.

The lawyer should then review the file and the opinion sought, in person before it is written, and educate the doctor in the legal concepts and test to be applied when considering the preparation of the medical opinion.

– See more at: http://www.disinherited.com/blog/doctors-speak-different-language#sthash.6NwDhiis.dpuf

Mental State Medical Examinations

disinherited.com recently blogged that the medical profession as a whole is woefully lacking in training and experience in the assessment of testamentary capacity.

The purpose of this paper is to provide a brief overview of some of the criteria that a doctor should utilize when performing a mental state medical examinations.

The doctor should firstly obtain all of the medical and psychiatric notes will him him as well as an outline of the contents of  value of the testator’s estate. This is crucial.

The assessment should always take place face-to-face, and when dealing with the elderly elderly suspected of havinag dementia, it should probably take place in the patient’s own resident so as to reduce anxiety, which can greatly affect the test results..

Many patients have fluctuating capacity scores and the doctor should test on several occasions over a period of time in order to get a more complete diagnosis

The doctor should of course keep detailed contemporaneous notes as well as be informed and instructed by the solicitor as to the legal test for capacity (Banks  v. Goodfellow )

The assessment should definitely be conducted in the absence of anyone who stands to benefit from the will or who might exert influence on the testator.

This is very important in that doctors are typically under a great deal of time pressure and often allow caregivers and other interested parties to provide the history to the doctor, rather than hearing it directly from the patient’s mouth. The patient may very well be unable to express him or herself and thus get lost in the process.

Medications, language barriers, serious depression and general reluctance to be examined are also common problems confronting the physician when conducting a mental assessment of the elderly.

From a legal perspective the standard of proof for court decisions as to whether a person lacks or has testamentary capacity, is on the balance of probabilities, and not beyond a reasonable doubt as is required in criminal cases.

The doctor should understand this and perhaps approach the issue as ” is it more probable than not that this patient lacks or has testamentary capacity?”

During the assessment it is necessary that leading questions, that is questions that suggest the answer, should be avoided as much as possible.

In order to conduct a proper assessment of testamentary capacity, it is necessary to probe the mind and ask detailed questions where the answer is not suggested.

The content of previous wills should be discussed and the reasoning with respect to a new will should be elucidated, particularly where a close family member previously included in a will is now being disinherited.

 

The following table are the various criteria with which the doctor will individually address when performing the mental state examination:

The mental state medical examinations:

Appearance:    posture, dress, personal hygiene, grooming.nonverbal communication, manner, etc

Behaviour:      restlessness, threatening behaviour, degree of cooperation, etc

Mood:          subjective and objective description

Affect:            blunted, inappropriate, appropriate or depressed

Speech:           rate {pressured or slow), volume, tone, quantity, appropriate/inappropriate content, dysarthria, or dysphasia Perception:     hallucinations (auditory, visual, olfactory, gustatory or tactile). depersonalisation or derealisation

Thought:         Stream: slow (psychomotor retardation) or fast (flight of ideas)

Form: illogical, fragmented, logically connected or disjointed

Content : overvalued ideas, delusions, suicidal and homicidal thoughts,  preoccupations, or phobias

 

Insight:                patient’s awareness and understanding of the condition and treatment

Cognition:       Mini Mental State Examination and other cognitive tests Judgement:     response to hypothetical scenarios (e.g. what would you do

if you found a sealed, stamped and addressed envelope on the street

Rapport:         demonstration of warmth, ability to partake in the

doctor-patient relationship

– See more at: http://www.disinherited.com/blog/mental-state-medical-examinations#sthash.RUJr1WKa.dpuf

What Constitutes Testamentary Capacity?

What Constitutes Testamentary Capacity?

Banks v Goodfellow- The “Old Chestnut” Is Still The Leading Case

The most commonly cited criteria for testamentary capacity were established in the English case of Banks v Goodfellow.3 In this case, Lord Chief Justice Cockburn outlined his understanding of a “sound disposing mind”:

“It is essential that a testator shall understand the nature of the act and its effect; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties: that no insane delusions shall influence his will in disposing of his property and bring about the disposal of it which, if his mind had been sound, would not have been made.”

These essential elements of the judgement are paraphrased and summarised in Table 1. These criteria represent the standard reference in the assessment of testamentary capacity and are repeatedly invoked in the international literature on the subject They form a reference base for most American and English commonwealth courts.

The essential elements of the Banks v Goodfellow judgement paraphrased from

Lord Chief Justice Cockburn.3

  1. The testator/testatrix must be capable of understanding the nature of the act of making a will and its consequences, (i.e. the person understands what a will is. when it comes into effect, that it can be changed at a later date, the role of the executor, etc)
  2. The testator/testatrix must be capable of understanding the extent of his/her estate, (i.e. property jointly or solely owned by them, other assets, insurance policies, etc)
  3. Whilst the competent testator/testatrix will ultimately decide who the beneficiaries shall be, he/she must demonstrate understanding of the logical claims of those who might expect to benefit from his or her will. This applies to both those being included and those being excluded from the will.
  4. The testator/testatrix must be capable of understanding the practical effect of the wilL (i.e. who receives what, the impact of the will on the beneficiaries and on those who are excluded, the impact on any previous will, the impact of any changes from a previous will, the impact of any conditions attached to the will, that a beneficiary might pre-decease him/her, etc)
  5. The testator/testatrix must be free of any disorder of mind or delusions (i.e. mental illness) that shall influence his/her will and bring about a disposal of his/her property which, if his/her mind had been sound, would not have been made.

– See more at: http://www.disinherited.com/blog/what-constitutes-testamentary-capacity#sthash.oA7Hewcj.dpuf