Gifts In Contemplation of Death

Gifts In Contemplation of Death

Deathbed gifts happen surprisingly often. It is relatively common for people, during their last days, to make sizable gifts to caregivers and loved ones. Frequently the purported gift is at odds with the will of the dying person. Like deathbed wills, deathbed gifts’ often result in estate litigation. In fact they occur with such frequency that section 18 of Community Care and Assisted Living Act, RSBC 2002, prohibits agents, designates and employees of licensed community care facilities from receiving any gifts or inheritances. The ethical code of nurses similarly prohibits same.

The law recognizes that a person may, in contemplation of his or her imminent death, make a gift transferring the ownership of property. Such a gift will take effect only upon the death of the donor and otherwise may be revoked. The legal expression for a gift made in contemplation of death is donatio mortis causa.

For a donatio mortis causa to be an effective gift in law, there are three requirements, namely:

1) The gift must have been in contemplation of death;

2)The donor must ensure there is delivery of the subject matter of the gift to the donee (recipient of the gift);

3)The gift must be made under such circumstances that show that gift may be revoked should the donor recover.

These principles were set out in the seminal case of Cain v. Moon (1896) 2 Q.B. 283. Although this was an English decision, it has been adopted by Canadian courts and is thus part of Canadian law.

Accordingly a donatio mortis causa is a gift made by a person inter vivos (during his or her life) with the intention that the gift should take effect only upon death. The gift is therefore conditional upon death. Once death occurs, however, the gift takes effect retrospectively and is effective from the date that the gift was initially made. Such gifts are a recognized exception to the general rule requiring all testamentary gifts conform with the provisions of the Wills Act.

The origins of donatio mortis causa are found in Roman law, where they were used to avoid the formal requirements of the law relating to the valid execution of wills.

The Supreme Court of Canada has described donatio mortis causa as a sort of “amphibious gift, between a gift made inter vivos and a legacy left in a testator’s will”. This description is found in McDonald v. McDonald (1903) S.C.R. 145 at page 161.

A donatio mortis causa is similar to a will in that it remains revocable up until the donor’s death renders it absolute. The donee’s title only becomes absolute at the moment of the donor’s death. It is also at the moment of death that the personal representative of the deceased acquires title to all of the deceased’s assets except, naturally, those which are the subject of a valid donatio mortis causa. Thus where disputes arise, the conflict is usually between the beneficiaries under the will and the claimant of any purported donatio mortis causa.

Donatio mortis causa need not be proved as testamentary gifts under the deceased’s estate i.e. there are no formal requirements for execution as there are for a will. Nevertheless any person claiming to benefit from such a gift bears a heavy onus of proof. In order to give effect to the purported gift, the courts will require clear and unmistakable proof that the deceased intended to give the property donatio mortis causa. Often the courts will specifically require evidence to corroborate the deceased’s intention.

In this paper I will review some of the leading Canadian cases dealing with the doctrine of donatio mortis causa.

1. Bank Accounts

In the 1993 B.C. Supreme Court case Slagboom Estate v. Kirby (1993) 48 E.T.R. 219 the deceased was 88 years old when he died. His health had declined rapidly in the last year of his life and he had suffered many illnesses requiring frequent doctors’ visits.

About five weeks prior to his death, the deceased had deposited $42,500 in the defendant’s bank account. She was a longterm friend who provided companionship and assistance in his declining years. Shortly before the deposit, the deceased told her he wanted her to keep the money so that she could do his banking for him. At the time of the deposit, the deceased told her that he did not want his brother to have his money and that if something should happen to him, the money remaining in the account was to be hers.

A couple of weeks later, the deceased made a will leaving his entire estate to his brother, however there remained only $4500 in the estate.

In this action, the plaintiff brother sought recovery of the $42,500 alleging there was insufficient evidence that the gift was made in contemplation of death. The plaintiff claimed the deceased only intended to deposit his money with the defendant so that she could assist him with his banking.

The court awarded the funds to the defendant, however, ruling there had indeed been a valid gift made in contemplation of death. The court found that the phrase “if something happens to me” had been used euphemistically and on the facts of this case indicated a genuine and reasonable contemplation of death.

In Morton v. Dafoe (1926) 30 O.W.N.193, the deceased was hospitalized a few days before her death. She asked for certain documents to be brought to her including money and her bank passbook. She put the passbook into a bag which she handed to the

defendant, an old and trusted friend. As she did so, the deceased said to her friend, in the presence of witnesses “keep it; it is yours if I do not come back.”

On these facts, the Court held that there had been a valid gift. The court ruled that the gift had been made in contemplation of death in circumstances showing the gift was conditional upon that death. The defendant was thus entitled to the monies on deposit with the bank as represented by the passbook.

2. Safety Deposit Box Keys

In Costiniukv. British Columbia (Official Administrator), 34 E.T.R. (2d) 199, the plaintiffs claimed the contents to a safety deposit box as a gift donatio mortis causa.

The deceased died intestate with no next of kin. She left an estate worth nearly $1 million. During the last few years of her life, the deceased had lived alone and was frequently ill. The plaintiffs, who had known her for many years, had greatly assisted her. Before the deceased went into the hospital for the last time, she gave the keys to her safety deposit boxes to the plaintiffs saying that if she ever needed them back she would ask for them.

The day before she died, in the presence of medical technicians, the deceased told the plaintiffs they were to have everything in the boxes.

The safety deposit box contained stamps worth $2300, an RRSP receipt and the state of title certificate for her home. The plaintiffs brought an action claiming entitlement to all of these assets.

The official administrator defended the action claiming there was no effective donatio mortis causa because there had been no delivery to the plaintiffs of the subject matter of the gift.

The court found that handing over the keys to the safety deposit boxes did constitute effective delivery because the keys were essential in order to get possession of the contents of the boxes. Thus the contents of the box passed to the plaintiff as a valid donatio mortis causa. Only the stamps, however, passed in title to the plaintiffs. The court held that neither the RRSP receipt nor the state of title certificate was a valid means of effecting transfer of those assets. Therefore they ruled there was no delivery to the plaintiffs of either the land or the RRSP.

This decision was upheld on appeal.

3. Furniture and Personal Effects

In Re Rosemergey, 49 B.C.R.93, the deceased had employed her housekeeper for many years. When she became ill and learned that her condition was terminal the deceased had signed and delivered a paper giving her housekeeper all the furniture and personal effects in the house. None of the articles mentioned in the written memorandum were mentioned in the deceased’s will.

The court held that there was a valid gift in contemplation of death even though there was no actual physical change of possession. The court reasoned that the deceased, so far as possible, had abandoned possession of the furniture and personal effects, while the donee housekeeper had taken and maintained possession of them to the same degree.

4. Forgiveness of a Debt

The case of Re Calaiezzi Estate, 1993 Carswell Ont 2724 from Ontario illustrates the successful foregiveness of a mortgage debt. Six months before his death, the deceased had loaned the sum of $130,000 to the defendant. This debt was secured by an unregistered mortgage. Payments were made on the loan, however the deceased was heard to tell the defendant to tear up the loan agreement and that she no longer owed the deceased any money. The deceased specifically said that he was dying and the money wasn’t any good to him. The deceased directed witnesses to this conversation to find the loan agreement and destroy it, however were unable to carry out these instructions because they could not find it.

The deceased’s executors brought an action claiming the balance owing on the loan. The defendant successfully argued that the deceased had forgiven the loan as a donatio mortis causa. The court ruled the deceased knew he was dying when the gift was made and it was so closely to time of the death that the gift was conditional upon that death. The court also found delivery had occurred when the deceased instructed the witness to find and destroy the agreement.

5. Real Property

As noted above in the Costiniuk case it appears that delivery of the state of title certificate was not sufficient delivery to be a valid donatio mortis causa.

Similarly, in Dyck v. Cardon 17 E. T. R. 54, the Alberta Court of Appeal held that delivery of keys to a house was not sufficient to complete a gift.

In fact, it would appear that the weight of Canadian judicial opinion is that real property cannot be the subject of a donatio mortis causa.

The English Court of Appeal, however, has ruled otherwise. In Sen v. Headley (1991) 2 All ER 636 the deceased handed over the keys of a steel box containing the title deeds to the deceased’s real property. The court found that in doing so “the deceased had indisputably made a gift of the house to the plaintiff in contemplation of his death to be effective on his death and his parting with the dominion over the title deeds to the house was sufficient to satisfy the third of the requirements necessary to establish a valid donatio mortis causa”

Conclusion

From a review of the caselaw, it is clear that the courts are open to upholding donatio mortis causa in appropriate circumstances where they are satisfied, by credible witnesses, that the three essential criteria have been proven.

Gravely ill people frequently mention such things as the forgiveness of debts or the gift of various assets. These declarations are so frequently at odds with the contents of the will it is surprising there is so little litigation involving claims of donatio mortis causa.

Wills Variation-Assets Passing Outside of the Estate

Assets Passing Outside of the Estate

generally speaking, claimants do not have a claim against assets that pass “outside” of the estate in wills variation claims. The exceptions are if the transfer is tainted and legal remedies such  as resulting trust, undue influence and lack of mental capacity are available.

 

Assets Passing – Probably most people in North America die holding assets that pass from their name to others or their estate that pass both ” inside” and “outside” of the estate.

A deceased’s will only distributes assets that were personally owned by the deceased at the time of his or her death, and these assets are said to pass through, under  or “inside” of the deceased’s estate.

Many other assets owned by the deceased may pass “outside” of the deceased’s estate by mechanisms independent of the will.

In a wills variation action brought under section 60 WESA, a claim is limited to assets in British Columbia that pass “inside of the estate” pursuant to the will of the deceased.

If the deceased is not have a will, then there cannot be a wills variation claim and the assets will pass as an intestacy.

Similarly, there is no wills variation claim in the following assets owned by a deceased:

1.       Property owned as a joint tenant with a right of survivorship with someone else;

2.       named beneficiaries under an insurance policy;

3.       proceeds from pension plans with named beneficiaries;

4.       trusts;

5.       gifts made during the lifetime of the deceased; 

The list may not be exhaustive but it includes probably a majority of assets owned by the majority of Americans and Canadians that pass upon a death.

For example, most spousal couples likely own their property in joint tenancy with a right of survivorship, so that upon the first of the owners to pass, the property automatically goes to the survivor and does not form part of the assets that pass under the will.

As previously mentioned, it is not possible to bring a wills variation claim against a proper joint tenancy.

Leave to Appeal

Leave to Appeal

The legal test for leave to appeal was restated in Ho Estate v. Ho 2016 BCCA 253 , upheld at 2016 BCCA 378, where the decision of one appeal judge was upheld by a panel when he refused leave to appeal on the basis that there was no reasonable chance of success.

16      Orders of a judge of the Supreme Court may be appealed as of right unless they qualify as limited appeal orders. The definition of a limited appeal order is set out in R. 2.1 of the Court of Appeal Rules. This definition includes “an order granting or refusing relief for which provision is made under … Part 7” of the SCCR, other than R. 7-7(6). Maisonville J.’s order is clearly an order made under Part 7 of the SCCR and qualifies as a limited appeal order; therefore, leave to appeal is required.

17      The test for leave to appeal was set out by Madam Justice Saunders in Goldman, Sachs & Co. v. Sessions, 2000 BCCA 326 (B.C. C.A. [In Chambers]) at para. 10:

[10] The criteria for leave to appeal are well known. As stated in Power Consolidated (China) Pulp Inc. v. B.C. Resources Investment Corp. (1988), 19 C.P.C. (3d) 396 (C.A.) they include:

(1) whether the point on appeal is of significance to the practice;

(2) whether the point raised is of significance to the action itself;

(3) whether the appeal is prima facie meritorious or, on the other hand, whether it is frivolous; and

(4) whether the appeal will unduly hinder the progress of the action.

18      The party who is seeking leave to appeal bears the onus of establishing that these four conditions have been met: B.C.T.F. v. British Columbia (Attorney General), (1986), 4 B.C.L.R. (2d) 8 (B.C. C.A. [In Chambers]) at 11.

19      The merits threshold on an application for leave to appeal is relatively low: Bartram (Guardian ad litem of) v. Glaxosmithkline Inc., 2011 BCCA 539 (B.C. C.A. [In Chambers]) at para. 16 (Prowse J.A. in Chambers). However, an appeal that is vexatious, frivolous, or has no reasonable chance of success will not meet this threshold: Gichuru v. Law Society (British Columbia), 2012 BCCA 159 (B.C. C.A. [In Chambers]) at para. 22 (Bennett J.A. in Chambers), aff’d 2012 BCCA 171 (B.C. C.A.).

20      The overarching concern on an application for leave is the interests of justice: Hanlon v. Nanaimo (Regional District), 2007 BCCA 538 (B.C. C.A. [In Chambers]) at para. 2 (Saunders J.A. in Chambers). Even if the applicant has satisfied the four conditions from Power Consolidated (China) Pulp Inc. v. British Columbia Resources Investment Corp. [1988 CarswellBC 615 (B.C. C.A.)], leave may be denied if granting leave is not in the interests of justice: Movassaghi v. Aghtai, 2010 BCCA 175 (B.C. C.A. [In Chambers]) at para. 27 (D. Smith J.A. in Chambers).

 

Entered Court Orders

Entered Court Orders

The Court does not have jurisdiction  to re open entered court orders but may vary the order where has been a change of circumstance.

The court refused to re open or vary an entered court order in Sugrim v Sugrim 2016 BCSC 1644 when after entering a desk order under the Family Relations act under S 57,  (which has the effect of crystalizing matrimonial assets and severing jointly owned titles), the husband became incapacitated and was awarded $1.8 million in damages for the injury.

With the consent of the committee adult child of the patient, the wife’s application to set aside the entered court order was dismissed on the basis that inter alia there was a risk that the wife and her children were acting out of self interest and not in the best interest of the patient.

The Sugren case stated:

 [22]         The PGTBC submits and I agree that the court does not have jurisdiction to reopen and set aside an entered order. The court may, however, entertain a variation of an order on the basis of a change of circumstance.

[23]         I raised a question as to the validity of a consent to a s. 57 declaration. However, having reviewed the circumstances of this case and the authorities, I conclude that the declaration was valid.

[24]         This was not a situation where one party at a judicial case conference requested a s. 57 declaration and the other party opposed it, as was the case in Harrison v. Harrison, 2007 BCCA 120. InHarrison, Finch C.J. found the death of Mr. Harrison was a material new circumstance giving rise to a reconsideration of the previous order to avoid a miscarriage of justice. In that case, the order was not entered, so the court was not functus officio and there was evidence of a possible miscarriage of justice which does not exist in the present case.

[25]         The only issue before me is whether or not a committee has the authority to consent to an application to set aside the s. 57 declaration based on a material change in circumstance.

[26]         The claimant submits that s. 15 of the PPA provides that a committee of the patient has all the rights, privileges and powers with regard to the estate of the patient as the patient would have if of age of majority and of sound and disposing mind. Those rights include the ability to commence defend or otherwise conduct legal proceedings.

[27]         The PGTBC submits that the committee’s power is qualified in that she may only act in the best interests of the respondent.

[28]         In Beadle v. Beadle, 1984 CanLII 806 (BC CA), the PGTBC continued divorce proceedings and set an application for an undefended divorce down for hearing on behalf of an incapacitated claimant, citing Re Swartz, [1947] 2 W.W.R. 979 at 980 (B.C.C.A.) where the court agreed that a committee has the power to bring a divorce action on behalf of the patient and there was nothing in the PPA which limited that power. In Beadle, at para. 8, MacFarlane J.A. held that:

… [the] appointment [of a committee] contemplates … the full management of the affairs of the patient who is incapable of doing so herself. That includes, in my opinion, the management or conduct of any litigation which the patient has undertaken, or which might need to be undertaken in the best interests of the patient. To hold otherwise would put a severe limitation upon the proper management of a patient’s affairs while she is incompetent.

[29]         In Beadle, the court made a distinction between dealing with property matters and dealing with questions of status. In response to this concern, the court said that there are controls in place to ensure that a committee exercises caution in bringing proceedings which involve the status of the patient. Those controls lie in the discretion of the PGTBC under the PPA and under the Supreme Court Civil Rules where the court has the discretion to deny an appointment of a committee as the guardian ad litem of the patient in a proceeding.

[30]         A litigation guardian must declare that he or she does not have any interest in the proceeding that is adverse in interest to the patient (Rule 20-2 of the Supreme Court Civil Rules).

[31]         Protection of the interests of the incompetent party is the primary consideration of the court.

[32]         In a concurring judgment, Lambert J.A. added (at para. 26):

… that where any proceedings are instituted by a committee in which matters of status and morals are involved, there is an obligation on the committee to bring before the court evidence that will satisfy the court that the proceedings are in the best interests of the person who is being represented by the committee.

[33]         In this case, the claimant says there has been a material change in circumstance which should give rise to a variation of the s. 57 declaration because the claimant asserts there is no longer a marital rift that will lead to a final divorce order.

[34]         The claimant asserts that there is a reasonable prospect of reconciliation as one party wishes to reconcile and the other party consents by way of his committee. This submission focuses on the status of the parties and not on what is in the patient’s best interests.  The respondent’s wish prior to his incapacity was to separate from the claimant.  It is unclear to me how the committee could come to the conclusion that he would now want to reconcile. It is open to the committee to satisfy the court that this change in status would be in the respondent’s best interests even though he cannot consent.

[35]         In Anderson v. Anderson Estates, [1990] O.J. No. 1123 (H. Ct. J.), the court considered whether an attorney appointed by power of attorney had the authority to exercise the patient’s right to elect or consent to receive an equalization payment in lieu of entitlement under the deceased spouse’s will. The court concluded that the fact the patient was incapacitated from personally making the election should not diminish her right. The Powers of Attorney Act, R.S.O. 1980, c. 386, s. 5 contemplated an attorney continuing to manage the affairs of the donor after the donor was deemed incompetent.

[36]         In Anderson, at para. 13, the court said:

… the right to elect is a very personal decision that should only be exercised by the surviving spouse and not left to a stranger to the marriage, lest the stranger interfere with the testator’s intentions without knowing whether or not the surviving spouse has made the choice to disregard his or her spouse’s last wishes. …, this concern can somewhat be alleviated by the fact that an attorney under power of attorney will always have a fiduciary duty to act in the best interest of the donor. It may also be possible for the donor to set out in the power of attorney his or her wishes with respect to such an election.

[37]         In the case before me, the claimant also asserts that it is in the respondent’s best interests to “have a home to return to should he ever be able to leave the care of the facility in which he currently resides.”

[38]         This assertion begs the question of whether the respondent is welcome in the home if the claimant is not successful with this application.

DECISION

[39]         The respondent’s incapacity is a material change in circumstance which may give rise to grounds to vary the declaration.

[40]         I agree with the PGTBC’s submission that the entered order cannot be reopened or re-heard and the only way a court can reconsider the order is on a variation application.

[41]         A variation application brought by the committee of the respondent will only be successful if the committee can satisfy the court that it is in the patient’s best interests to vary the order.

[42]         Having considered the reasons for the application, I conclude that while a variation of the s. 57 declaration may well be in the best interests of the claimant and her children, there is no evidence that satisfies me that a variation of the s. 57 declaration is in the best interests of the respondent. There is a risk that the claimant and her children are acting out of self-interest. We will never know what the respondent would want at this time, and his interests must be protected.

[43]         As far as I know, the respondent is being well cared for in a long-term care facility receiving 24-hour a day nursing care. His family visit him on a regular basis, and ensure that the care is adequate. He has sufficient funds in trust to finance his care. The PGTBC monitors the spending of those funds to make sure they are used in only his best interests and not in the interest of anyone else. Upon his death, those funds will be left to the beneficiaries of his estate. There is nothing in the material that leads me to believe the current situation is not in the best interests of the respondent. Accordingly, I dismiss the application.

 

Adoption Purposes

Adoption Purposes

Adoption is for all purposes. I advised a legal enquiry today that he could not claim against the estate of his natural father (“birth parent”) since he had been adopted by another party and that for estate claims, his adoption was for “all purposes”.

Section 3 WESA re Adoption states:

Effect of adoption

3  (0.1) In this section, “pre-adoption parent” means a person who, before the adoption of a child, was the child’s parent.

(1) Subject to this section, if the relationship of parent and child arising from the adoption of a child must be established at any generation in order to determine succession under this Act, the relationship is to be determined in accordance with the Adoption Act respecting the effect of adoption.

(2) Subject to subsection (3), if a child is adopted,

(a) the child is not entitled to the estate of his or her pre-adoption parent except through the will of the pre-adoption parent, and

(b) a pre-adoption parent of the child is not entitled to the estate of the child except through the will of the child.

(3) 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 under this Act.

In other words on an intestacy an adopted child may not inherit from his or her birth parent and a birth parent may not inherit from a child that has been adopted , with the exception of step-parent adoptions.

Nothing however prevents the right of both children and parents to leave a gift by will to each other irrespective of the adoption.

This section also precludes a child who has been adopted out from bringing a wills variation claim ( S 60 WESA) against the birth parent’s estate.

Will Variation: Daughter Awarded Entire Estate

Will Varied to Give Daughter Entire Estate

Hagen-Bourgeault v. Martens 2016 BCSC 1096 varied a will (S. 60 WESA) to give a 25 year old daughter with two young children on social assistance, the entire estate of $2,200 per month until 2025, instead of her husband of two years who was well off but left the entire estate under her will.

The court found that the husband beneficiary of the estate had was financially independent and had limited legal or moral entitlement to the estate.

The daughter in turn had great financial need.

The Court Stated:

The leading Canadian decision on variation principles is Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807; 93 B.C.L.R. (2d) 145. In delivering the Court’s unanimous judgment, McLachlin J., as she then was, confirmed that the language of the WVA confers on the trial court a broad discretion to make orders that are just in the specific circumstances of a case, and in light of contemporary standards. The WVA is to be seen as imposing limitations of testamentary authority. At a minimum, survivors are not to be left destitute, such that they will impose a burden on the state; but what is to be considered “adequate, just and equitable” is not limited to need alone.

Entire estate

[20]         Tataryn further discusses the means by which competing claims are to be assessed:

How are conflicting claims to be balanced against each other?  Where the estate permits, all should be met. Where priorities must be considered, it seems to me that claims which would have been recognized during the testator’s life — i.e., claims based upon not only moral obligation but legal obligations — should generally take precedence over moral claims. As between moral claims, some may be stronger than others. It falls to the court to weigh the strength of each claim and assign to each its proper priority. In doing this, one should take into account the important changes consequent upon the death of the testator. There is no longer any need to provide for the deceased and reasonable expectations following upon death may not be the same as in the event of a separation during lifetime. A will may provide a framework for the protection of the beneficiaries and future generations and the carrying out of legitimate social purposes. Any moral duty should be assessed in the light of the deceased’s legitimate concerns which, where the assets of the estate permit, may go beyond providing for the surviving spouse and children.

[21]         In my judgment, the needs of the plaintiff, in relation to the very modest size of the estate, completely outweigh all claims of Mr. Martens. Mr. Martens, though he was no doubt the loving spouse of the deceased, had only a short relationship and demonstrates no financial dependence upon her during their lifetime. The amount of the structured settlement fund did not increase in value during their relationship. He has no claims founded in unjust enrichments. In the circumstances, he would not have been entitled to spousal support on the breakup of their marriage. His legal and moral entitlement to a share in Michelle’s estate is consequently limited, at best. Furthermore, the size of the estate is so modest that in their entirety, the structured settlement proceeds would appear to be sufficient only just to lift the plaintiff and her two dependent children out of poverty, and then only for so long as the fund lasts.

[22]         In the present case it does little violence to the testator’s intentions to make an immediate full reapportionment in the plaintiff’s favour. It is a fair inference, from the evidence, that the testator’s decision to leave to Mr. Martens’ discretion the amount of support to be paid to the plaintiff, when the will was made in 2012, may have reflected some hesitation as to the plaintiff’s ability to exercise good judgment. Whatever qualms may have led the testator to structure her will in this fashion, as opposed to leaving an outright gift to the plaintiff, there is no evidence now which points to any such concern. Indeed, the mechanism of the structured settlement itself would serve as a check on the funds being squandered. The plaintiff appears, on the evidence, to have survived a difficult adolescence and now to be doing her utmost to see to the need of her children, in very challenging circumstances.

Claim Dismissed For No Standing

Claim Dismissed For No Standing

Re Tomlinson Estate 2016 BCSC 1223 dealt with a nephew contesting his aunt’s will when he was neither a named beneficiary under the will or an intestate heir had his claim dismissed for lack of standing.

Standing is a pre-requisite to advancing claims regarding a will. Standing, in this context, means having a legal interest in the outcome of the action. 

Or in other words, that the legal rights of the person asserting a claim or position will be affected by the result of the proceeding.

 

[23]         In Neumann v. Chudjak Estate, 2001 BCSC 957 (chambers), the deceased left the residue of his estate to the defendants, his neighbours.  The plaintiff was the stepson of the deceased.  The plaintiff made claims in trust.  He also sought a declaration that the deceased’s will was invalid by reason of lack of capacity and undue influence.  The defendants applied under then Rule 18(6) to dismiss the validity claims.

[24]         The court struck the challenges to the will finding the plaintiff had no standing to raise the challenge.  At paras. 8–12 Master Horn wrote: 

[8]        It is agreed that the deceased has no living blood relatives.  Helmut Neumann [the plaintiff], not being a blood relative of the deceased, will not inherit upon an intestacy.  It is not alleged that there is an earlier will under the terms of which the plaintiff Helmut Neumann would have inherited.

[9]        Accordingly, if the will were to be set aside on either of the grounds pleaded, Helmut Neumann will not benefit.  The entire estate will, if he does not succeed in his trust claim, escheat to the Crown.

[10]      The question now raised by the defendant’s application, is whether Helmut Neumann has any standing to contest the validity of the will.

[11]      A plaintiff must, to have standing in an action, be legally interested in the outcome of an issue in the action.  A person is legally interested in the outcome if it will affect him by advancing or curtailing his legal rights.  (See Amon v. Raphael Tuck & Sons Ltd. (1955), [1956] 1 Q.B. 357 (Eng. Q.B.)at pages 381 and 386.)  As Professor Hogg has said, (Constitutional Law of Canada, 4thEdition, s. 56.2)

The question whether a person has “standing” (or locus standi) to bring legal proceedings is a question about whether the person has a sufficient stake in the outcome to invoke the judicial process.  The question of standing focuses on the position of the party seeking to sue, not on the issues that the lawsuit is intended to resolve.

[12]      I take it as a given that no stranger has any standing to contest the validity of a transaction such as a contract, gift or testamentary disposition of property.  In relation to this will, the plaintiff is a stranger.

[25]         In British Columbia (Public Guardian and Trustee) v. Sheaffer, 2015 BCSC 1306, the defendants asserted that an unsigned document dated September 20, 2011, should stand as the deceased’s last will and testament rather than a properly executed will from 1974.  Madam Justice Dardi denied the relief sought, stating at para. 48 that, “Mr. Thurston is not a beneficiary of the Deceased’s estate.  He has no standing to pursue any allegation of wrongful conduct against the PGT with respect to her office’s administration of the Deceased’s estate”.

[26]         The Kamms are not beneficiaries under the will, nor would they inherit upon intestacy.  They are strangers to the will.  Their only interest in the estate is that of a creditor who alleges that the deceased owed them money for services rendered.

Settlement Offers and Court Costs

Settlement Offers and Court Costs

Norris v Burgess 2016 BCSC 1451 deals with settlement offers and court costs, that is how courts adjust cost upwards or downwards either in favour of one party or against the other party depending on the parties conduct and the terms of any formal offers to settle made in accordance with the rules.

Costs are increasingly being awarded against unsuccessful estate litigants on a personal basis and the amount of them has escalated over the years almost like property prices in the lower mainland.

In writing for our Court of Appeal in C.P. v. RBC Life Insurance Company, 2015 BCCA 30, leave to appeal ref’d [2015] S.C.C.A. No. 136, Justice Goepel, in considering a trial award of double costs, sets forth generally the purpose of the costs rules related to settlement offers:

[94]      The underlying purpose of the offer to settle rule was set out in Hartshorne:

[25] An award of double costs is a punitive measure against a litigant for that party’s failure, in all of the circumstances, to have accepted an offer to settle that should have been accepted. Litigants are to be reminded that costs rules are in place “to encourage the early settlement of disputes by rewarding the party who makes a reasonable settlement offer and penalizing the party who declines to accept such an offer” (A.E. v. D.W.J., 2009 BCSC 505, 91 B.C.L.R. (4th) 372 at para. 61, citing MacKenzie v. Brooks, 1999 BCCA 623, Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 (C.A.), Radke v. Parry, 2008 BCSC 1397). In this regard, Mr. Justice Frankel’s comments in Giles are apposite:

[74] The purposes for which costs rules exist must be kept in mind in determining whether appellate intervention is warranted. In addition to indemnifying a successful litigant, those purposes have been described as follows by this Court:

  • “[D]eterring frivolous actions or defences”: Houweling Nurseries Ltd. v. Fisons Western Corp. (1988), 37 B.C.L.R. (2d) 2 at 25 (C.A.), leave ref’d, [1988] 1 S.C.R. ix;
  • “[T]o encourage conduct that reduces the duration and expense of litigation and to discourage conduct that has the opposite effect”: Skidmore v. Blackmore (1995), 2 B.C.L.R. (3d) 201 at para. 28 (C.A.);
  • “[E]ncouraging litigants to settle whenever possible, thus freeing up judicial resources for other cases: Bedwell v. McGill, 2008 BCCA 526, 86 B.C.L.R. (4th) 343 at para. 33;
  • “[T]o have a winnowing function in the litigation process” by “requir[ing] litigants to make a careful assessment of the strength or lack thereof of their cases at the commencement and throughout the course of the litigation”, and by “discourag[ing] the continuance of doubtful cases or defences”: Catalyst Paper Corporation v. Companhia de Navegaçao Norsul, 2009 BCCA 16, 88 B.C.L.R. (4th) 17 at para. 16.

[95]      A plaintiff who rejects a reasonable offer to settle should usually face some sanction in costs. To do otherwise would undermine the importance of certainty and consequences in applying the Rule: Wafler v. Trinh, 2014 BCCA 95 at para. 81. The importance of those principles was emphasized by this Court in A.E. Appeal at para. 41:

[41] This conclusion is consistent with the importance the Legislature has placed on the role of settlement offers in encouraging the determination of disputes in a cost-efficient and expeditious manner. It has placed a premium on certainty of result as a key factor which parties consider in determining whether to make or accept an offer to settle. If the parties know in advance the consequences of their decision to make or accept an offer, whether by way of reward or punishment, they are in a better position to make a reasoned decision. If they think they may be excused from the otherwise punitive effect of a costs rule in relation to an offer to settle, they will be more inclined to take their chances in refusing to accept an offer. If they know they will have to live with the consequences set forth in the Rule, they are more likely to avoid the risk.

[40]         With respect to the first factor in R. 9-1(6), whether the offer ought reasonably to have been accepted, Goepel J.A. in C.P. states:

[97]      Whether an offer to settle is one that ought reasonably have been accepted, is assessed not by reference to the award that was ultimately made, but under the circumstances existing when an offer was open for acceptance: Bailey v. Jane, 2008 BCSC 1372 at para. 24 and Hartshorne at para. 27. This factor is considered from the perspective of the person receiving the offer. It has both a subjective and objective component. The court is entitled to take into account the reasons why a party declined to accept an offer to settle. The court must consider whether those reasons are objectively reasonable.

[41]         I emphasize that R. 9-6(1)(a) uses the word, ought. “Ought” is defined in The Oxford English Dictionary, 2d ed. as follows:

b. In present sense: = Am (is, are) bound or under obligation: you ought to do it = it is your duty to do it; it ought to be done = it is right that it should be done, it is a duty (or some one’s duty) to do it. (The most frequent use throughout. Formerly expressed by the pres. t., OWE v. 5.)

[42]         The use of the word “ought” in R. 9-6(1)(a) evinces a legislative intent that the court may consider whether the offer was one that the offeree should have accepted. Where the offeror is the plaintiff, this wording encourages an offer that falls at the low end of the range of potential trial awards the plaintiff is anticipating. Where the offeror is the defendant, it encourages an offer that falls at the high end of the range of potential trial awards the defendant is anticipating. In short, the word “ought” brings the respective positions of the parties closer, with the object of reaching an agreement and conserving judicial and other resources.

Executor Can Be Liable For Unaccounted Expenses

Executor Can Be Liable For Unaccounted Expenses

Jackson v King 2003 BCSC 328 is a good decision on a passing of accounts and held inter alia that an executor is entitled to be indemnified expect for unaccounted or excessive expenses for which the executor can be held personally liable.

The Court held:

12      As Executors, the Respondents are entitled to be indemnified out of the Estate for all proper expenses incurred in relation to the Estate and this right of indemnity is a first charge upon the capital and the income of the Estate: Halsbury’s Laws of England, vol.17, 4th ed. (London: Butterworths, 1976) at 612, paragraph. 1190. The Respondents are also entitled to be indemnified for all costs including legal costs which are reasonably incurred: Goodman Estate v. Geffen (1991), 81 D.L.R. (4th) 211 (S.C.C.). As well, the Respondents are entitled to full indemnity for all costs and expenses properly incurred in the due administration of the Estate: Thompson v. Lamport, [1945] S.C.R. 343 (S.C.C.).

14      In these regards, the following passages from D.W.M. Waters, Law of Trusts in Canada 2nd ed.(The Carswell Company Limited: Toronto, 1984) are instructive:

A trustee is essentially one who is managing the affairs of others. He may have a personal beneficial interest, indeed, he may for all apparent purposes be the only beneficiary, but as a trustee he still remains subject to the obligation to account for his administration to those who may have an interest in the trust fund, whether as beneficiary or creditor. This obligation has been called the duty to disclose.(at p. 871) (footnotes and citations omitted)

The trustee is expected to have his accounts ready within a reasonable period of time from receiving the request. If the trust has been in existence for some time, the affairs or investments of the trust are complex, and the records are to be found in a series of books and documents, the court would take an appropriate view of what is reasonable. These are the kind of factors which are relevant. It may also make a difference as to what is reasonable whether the person making the request is interested in the accounts at large, or the particular accounts which concern his own interest. Nor will the courts permit the requesting person to use the courts as a means of gaining rapid access to the trust accounts. In Re Smith, McRuer C.J.H.C. followed Maclennan J.A.’s word in Sandford v. Porter that the law only asks of the trustee what is reasonable. This means that no beneficiary or creditor can bring a vexatious motion for the purpose of harassing a trustee. (at p. 872)(footnotes and citations omitted)

Creditors will normally have the right to demand an account as a consequence of statute, but the question arises as to what persons with an interest in the trust can claim an accounting. An “interest” is in fact broadly construed. Persons with vested or contingent interests are entitled to seek an inspection or request the court for an accounting, and next-of-kin and personal representatives of such interested persons are recognized. As far as asking the court for an accounting is concerned, none of these persons has an absolute right. As we have seen, harassing the trustee is vexatious litigation, and whether the court will order an accounting depends entirely upon the court’s discretion and the circumstances of the case. (at p. 873) (footnotes and citations omitted)

Severance of Court Actions

Severance of Court Actions

Severance of Court actions joined together may occur in civil litigation.

The Public Guardian and Trustee for BC v Johnston 2016 BCSC 1388 has an excellent review of the law as to when the courts will order that court actions be severed from the other and heard separately.

This decision was upheld by the BCCA in 2017 BCCA 59.

In that action there were claims that the will was invalid and alternatively in the same action , that if the will was valid, that it should then be varied as per wills variation provisions.

The application was to sever the two claims from the other and the court ordered that the trial firstly be held on  whether the will is valid, and then after that trial, if necessary, the wills variation claim would be tried.

[67]        Rules 22-5(6) and (7) state:

Separation

(6)        If a joinder of several claims or parties in a proceeding may unduly complicate or delay the trial or hearing of the proceeding or is otherwise inconvenient, the court may order separate trials or hearings or make any other order it considers will further the object of these Supreme Court Civil Rules.

Separating counterclaim or third party claims

(7)        If a counterclaim or a third party proceeding ought to be disposed of by a separate proceeding, the court may so order.

[68]        The key factors engaged in a general sense on an application to sever were canvassed in Schaper v. Sears Canada, 2000 BCSC 1575 (CanLII) [Schaper] at para. 19:

  1. …the party making the request must show that hearing the claims together would unduly complicate, delay the hearing, or otherwise be inconvenient. If a party applying does not meet this threshold, the court need not go further in any analysis and the application should be dismissed.
  2. Have the actions of any party in the proceeding been unreasonable and have they contributed to the complication, the delay, or the inconvenience alleged by the party applying? If this found, that would strengthen the argument to sever.
  3. Are the issues between the plaintiff and defendant and the issues between the defendant and the third party sufficiently distinct so as to allow them to be tried separately? If so, that strengthens the argument to sever off third party proceeding.
  4. Is the relief claimed by, or the potential obligation of, any party best determined by hearing the evidence of all parties at one hearing? If so, that weakens an application to sever.
  5. Does the prejudice to the party applying, prejudice based on undue complication, delay or inconvenience, outweigh any benefit of matters being heard together, or outweigh any considerations related to the overall objective of the rules to ensure a just, speedy and inexpensive determination of every proceeding on its merits, including the avoidance of a multiplicity of proceedings for the benefits of litigants and having concern to congestion in the courts generally?

[69]        Guidelines that focused attention more keenly on the efficacy of the trial process were helpfully laid out in O’Mara v. Son, Kim et al., 2007 BCSC 871 (CanLII) [O’Mara] at para. 23:

  1. whether the order sought will create a saving in pre-trial procedures;
  2. whether there will be a real reduction in the number of trial days taken up by the trial being heard at the same trial;
  3. whether a party may be seriously inconvenienced by being required to attend a trial in which the party may have a marginal interest;
  4. whether there will be a real saving in expert’s time and witness fees;
  5. whether one of the actions is at a more advanced stage than the other;
  6. whether the order sought will result in delay of the trial of any one of the actions and, if so, whether any prejudice which a party might suffer as a result of that delay outweighs the potential benefits which a consolidated trial might otherwise have;
  7. the possibility of inconsistent findings and common issues resulting from separate trials.

[70]        Severance may well be appropriate where the determination of one issue will render another one moot: Lawrence v. ICBC, 2001 BCSC 1530 (CanLII) [Lawrence].

[71]        The judicial discretion to sever trials or hearings is to be exercised sparingly: Morrison‑Knudsen Co. v. British Columbia Hydro & Power Authority, 1972 Carswell B.C. 62, 24 D.L.R. (3d) 579 (S.C.); Lawrence at para. 43. The test for severance is not applied in a vacuum; it is to be considered against the backdrop of the nature of the particular case at hand: Wirtz v. Constantini, 1982 CanLII 282 (BC SC), 137 D.L.R. (3d) 393, 1982 CarswellBC 588 (S.C.).  Because the determination involves an individualized assessment of the unique case before the Court, there is no closed list of uniformly applied considerations that inform the exercise of the Court’s discretion.