Proof of Will In Solemn Form vs. Common Form

Solemn FormWhen the validity of a will is in question, the propoundor of the will is often forced to prove the validity of the will in solemn form, by commencing a court action and having a judge determine the wills validity, as opposed to a non contentious probate where the will is approved by a court registrar in common form.

 

The BC Court of Appeal in Romans estate v. Tassone 2009  BCCA 421, the court discussed the difference between proving a will in common form, and proving a will in solemn form as follows:

[48]      Often proof of a will in common form is all that is required for the administration of an estate where there is a will. Proof in common form, however, does not conclusively determine the will to be the valid last will of a person.

[49]      Proof of the will in solemn form provides some protection for the will, in that it will not later be set aside, unless obtained by fraud or a later will is found:  Tristam & Cootes Probate Practice (27th Edition, 1989, p. 572. As noted by the authors of the British Columbia Probate & Estate Administration Manual, 2nd Edition, 2008 Update, at p. 18-17, “[t]he safeguarding effect of a grant in solemn form is an application of the principle of res judicata to what is a judgment in rem”.

[50]      17 Halsbury’s Laws (4th) para. 866 says:

If there is any doubt as to the validity of a will or any apprehension that there may be opposition to it, it is open to the executor, or if there is no executor the person entitled to administration with the will annexed, to prove it in solemn form.

[51]      In Trites v. Johnson, [1945] B.C.J. No. 76, [1945] 3 W.W.R. 100 (B.C.S.C.) Macfarlane J., as he then was observed that “In a case of this kind where the validity of a will has once been called in question I think it is the duty of the executors to prove the will in solemn form of law….”  Proof in solemn form was required even where the party originally requesting such had withdrawn their objection.

[52]      In the circumstances, in my view probate in common form is not sufficient in light of the issues raised in the Conveyance Action and in light of the information that is brought before the court in the Probate Action. If the will is proven in solemn form, or per testes, it must be proven in open court, upon notice to all interested persons, and will not be admitted to probate unless the court is satisfied of the due execution of the will, the testator’s knowledge and approval of its contents, his capacity and non-revocation: Osterhoff on Wills and Succession, 6th Edition, 2007, Thomson, Carswell, p. 44. If the will is proven in solemn form then the issue regarding the caveat will be moot.

Registrar Says It Is Role of Courts to Interpret Documents

Interpret DocumentsA Registrar declined to interpret documents on a  Passing of Accounts hearing in Lam v Daphne’s Fund ( Trustee of) 2015 BCSC 623, in effect stating that it was the role of the  Courts to construe underlying trust documents and not the Registrar.

 

Since the respondent wished to contest the validity of the alter ego trust, he should bring a court action to do so. Due to the complexity of the situation, the Court ordered that the registrar should report to the court and make recommendations to the court but it was the court that should make the final order with respect to the accounts.

I have noted that there is often a great deal of confusion in the practice of estate litigation as to the proper format of determining such questionable transactions and documents at a formal passing of accounts, as opposed to a separate court action. It would appear that the preferable remedy is to have a separate court action to contest the validity of documents in question, and save the passing of accounts for after their validity has been determined.

The Court Stated In Part:

Ms. Chan asks that the court direct the registrar to inquire into and report on matters such as the validity of the alter ego trust and the exercise by the deceased of a special power of appointment under the trust on the validity of terms of paragraphs 9 and 10 of a testamentary instrument dated November 13, 2009, on the appropriateness of the manner, timing and proportionality by which the trustees of the alter ego trust funded a $5 million sum in “Deborah’s fund” it is called, including seeking an assurance and use of the $5 million insurance monies received by certain corporations, and on the nature and extent of the beneficial interest held by Daphne’s trustee in Deborah’s fund, including the $5 million added to Deborah’s fund and further.

Before his death Mr. Lam had engaged in estate planning with the assistance of professionals, including lawyers and accountants. The estate planning resulted in a sophisticated and complex series of inter-related documents that included the creation of an alter ego trust by deed of settlement effective April 26, 2006. Mr. Lam’s will, dated the same day, April 26, 2006, which is the will subject to this petition, as is the alter ego trust I just referred to, Mr. Lam also made a life insurance trust declaration on the same day, April 26, 2006. On November 13, 2009, Mr. Lam executed a codicil to his will and on the same day, November 13, 2009, he executed a testamentary instrument exercising a power of appointment. That last document is not subject to any relief sought in this petition.

Ms. Chan asks that the court direct the registrar to inquire into and report on matters such as the validity of the alter ego trust and the exercise by the deceased of a special power of appointment under the trust on the validity of terms of paragraphs 9 and 10 of a testamentary instrument dated November 13, 2009, on the appropriateness of the manner, timing and proportionality by which the trustees of the alter ego trust funded a $5 million sum in “Deborah’s fund” it is called, including seeking an assurance and use of the $5 million insurance monies received by certain corporations, and on the nature and extent of the beneficial interest held by Daphne’s trustee in Deborah’s fund, including the $5 million added to Deborah’s fund and further.

In deciding whether to order the executors and trustees to pass the estate accounts, I must keep in mind that the executors derive their authority from the will, not from any order of probate. I also bear in mind that, although probate can be recalled or set aside, so long as a probate order remains in effect, it is proof that the will is valid and that it is the last will of the deceased. Conversely, until probate is granted, passing of accounts of an executor and trustee named in a will who has not sought to have the will admitted to probate might turn out to be a waste of judicial resources if a later will is found or if a defect in the will leads to it being found ineffective.

Some of the directions Ms. Chan seeks would have the court attach to the order for the passing of the accounts terms that would call upon the registrar to construe the underlying trust documents. I refer here to the request the registrar be directed to inquire into and report on things like the validity of the alter ego trust and any exercise by the deceased of a special power of appointment under the trust, or the validity of the terms of paragraphs 9 and 10 of the testamentary instrument of November 13, 2009.

[36]         With respect to these requests, these are matters that this court, and not its registrar, should deal with. If Ms. Chan wishes to question the validity of the alter ego trust and/or paragraphs 9 and 10 of the testamentary instrument, it should bring the appropriate action seeking construction of these documents or attacking their validity.

This is a complicated situation. It is no doubt going to be difficult for the registrar to work his or her way through it, meaning absolutely no disrespect to the registrars of this court, these are matters where the responsibility for the final decision should rest with the court and not with the registrar. That means that the registrar should report to the court, make recommendations to the court if appropriate, but that the court should hear from the parties and make the final order with respect to the accounts.

[43]         I therefore decline to order that the registrar certify their findings and they become binding on the beneficiaries without further order of the court, but order instead that the registrar state the results of the passing of the accounts of the alter ego trust and the insurance fund in the form of a report and recommendations to the court.

Who Owns Found Money?

Who Owns Found Money

Who Owns Found Money?

The basic and ancient principle of law that governs such situations where the finder of a chattel/Money acquires good title to it against all but the true owner or one enjoying a superior title   -Armory v Delamirie (1722) 1 Str.505 ( Eng. K.B.)

However, as with most ancient principles of law, and to the delight of estate litigation lawyers , there are a number of exceptions to the rule.

The cases are largely fact driven and simplistically can be divided into two types:

1) where the original owner of the money or object was not known,

2) where the owner of the chattel can be shown to have a superior title to the finder.

 

Reasonable diligence must be used to locate the true owner as the finder cannot have owned it prior to its discovery.

 

Its a fact that a great many people likely hide something of value or significance amongst their possessions or within objects or walls. On most occasions it is probably simply quietly kept.

(I make no comment on how the Proceeds of Crime Legislation Fits Into the Normal Estate Case)

 

An example of where the ownership of the funds was traced back and given to a person having a superior title can be found in Corporation of the City of Cranbrook v Brown, Lester et all, unreported Cranbrook registry 19980511, of Justice Melnyk.

A widow of a deceased person who had a habit of stashing away money in hidden locations in his residence, was ultimately found to be the true owner of a bag of money that fell from a couch that had been sold by her  for $100 in the year following the deceased death, and then subsequently given away to a third party.

While moving the couch a bag of money fell from it.

The court awarded the money to the widow as she was the rightful heir of the deceased’s estate, and was found to have a superior title to the money by virtue of the coach and its money having been vested in her by the estate of the deceased.

The courts further stated that had it not been possible to determine who place the money and the coach, that the case may well have been decided differently.

Similarly in Weitzner v Herman  (2000) 33 ETR (2d) 310, involved a widow who was sole beneficiary under her late husband’s estate. The purchasers of their home that they had occupied together for 38 years, and then by the widow subsequently for another 11 years, demolished the home and found $130,000 in cash and an unquantified amount of silver coins hidden in the fire extinguisher in a crawlspace.

The court again held that the widow was the rightful owner of the money as on the balance of probabilities, it was the testator who hid the money and the fact that the widow did not know about the money did not prevent it from passing under his will investing in her.

For a further discussion on the issue of lost chattels and bailment, I refer the reader to Bird v the Town of Fort Frances, (1949)  2 DLR 791

Funeral Costs Must Be Reasonable

Funeral CostsChernichan v. Chernichan Estate 2001 CarswellAlta 1730, 2001 ABQB 913, basically held that while funeral expenses are a top priority of the estate debts, the funeral costs themselves must be reasonable in relationship to the financial situation of the deceased, particularly where there is an insolvent estate as was this one.
In fact, funeral expenses of $10,800 in this estate were held to be mostly excessive considering that the deceased was insolvent, even to the extent that the funeral lunch and expense was disallowed.
The court went on to give an interesting discussion as to the responsibility for funeral expenses and how it  has been applied in a few situations.
Responsibility for Funeral Expenses
11      The first question is which entity is responsible for the funeral expenses. Professor G.H.L. Fridman in Restitution, (2nd ed.) (Carswell, 1992) summarizes the law at pp. 279-80:
The primary responsibility for insuring the burial of a deceased person falls on the personal representative of the deceased, who will in turn be entitled to an indemnity for expenses in this regard out [of] the estate as a first charge. Where the estate is inadequate to bear the burden, a secondary responsibility falls on the person responsible in law for the support of the deceased. Thus, the surviving spouse will be responsible for the burial of a spouse, and the parent for the burial of a child in the absence of a surviving spouse. Where provincial legislation casts a duty on a child to support a parent, the child should also be responsible for the burial of a parent in whatever order the support duty with respect to the deceased person’s parents and spouse is apportioned. It has also been suggested that there is a common law duty to bury on any landowner or householder on whose premises the deceased has died. As well, in Canada, a statutory duty is imposed on municipalities to bury an unclaimed body discovered within their limits. The legislation would appear to establish that the statutory duty on the municipality is one of last resort.
Thus, primary responsibility for the burial of the deceased rests on his estate. Secondary liability will rest on the surviving spouse, parents, and children of the deceased in the order of support obligations under provincial law. Tertiary responsibility lies on the householder. Finally, a residual responsibility rests on the municipality within whose limits the deceased was discovered. (footnotes omitted)
In Alberta the residual responsibility for the burial of destitute or indigent persons falls on the Minister of Family and Social Services under Reg. 13 of the Cemeteries Act General Regulation, Alta. Reg. 249/98, and the residual responsibility for burial of unclaimed bodies essentially falls on the universities under s. 59 of the Universities Act, R.S.A. 1980, c. U-5. The responsibility at law for funeral expenses is not unlimited, and only extends to “reasonable” expenses.
12      In the will the deceased charged his estate with his funeral expenses. The estate is therefore primarily responsible for the funeral expenses at law and by its terms.
13      At common law a spouse is responsible for the funeral expenses of his or her deceased spouse. The rule originally only applied to husbands, but it has applied to both spouses since wives became entitled to their own estates. This rule applies whether the deceased and the surviving spouse were separated or not: Davey v. Cornwallis (1930), [1931] 1 W.W.R. 1 (Man. C.A.) (citing English authority) and Routtu v. Routtu (1954), [1955] 1 D.L.R. 627 (N.B. Co. Ct.). In this latter case the mother died in the house of her son. He had to bury her, but was able to recover from his father who had a higher obligation to bear the expense.
Accordingly, in this action the Respondent personal representative, being the surviving spouse, would be responsible for the funeral expenses at common law next after the estate. The spouse is only liable for any shortfall in the estate, the estate being primarily liable: Pearce v. Diensthuber (1977), 17 O.R. (2d) 401, 81 D.L.R. (3d) 286 (Ont. C.A.). Here there were sufficient assets in the estate before the C.C.R.A. was paid, so this rule is not engaged.
14      Where one party pays funeral expenses, he or she is generally able to recover them from any person who has a higher obligation to pay them, even if that person had no input into or even knowledge of the funeral: Schara Tzedeck v. Royal Trust Co. (1952), [1953] 1 S.C.R. 31 (S.C.C.) at p. 37.
Funeral arrangements must usually be made in a very short period of time, sometimes before the personal representative is identified, and invariably before probate is issued. The family usually makes the arrangements without regard to who is in a technical sense legally responsible for either making the arrangements or paying the expenses. Because of the public interest in the prompt and dignified disposal of human remains, the law imposes a duty on those ultimately responsible to reimburse the person who actually incurs the obligation. The obligation to reimburse arises in restitution, not in contract, and is founded on considerations of necessity, unjust enrichment and public health: Goff and Jones, The Law of Restitution, (5th ed., 1998), pp. 480-81. Thus the son in Routtu could recover from his father. See also Tkachuk v. Uhryn (1952), 6 W.W.R. (N.S.) 515 (Sask. Dist. Ct.) (daughter entitled to costs of funeral from estate); and Sargent & Son Ltd. v. Buday, [2000] O.J. No. 5476 (Ont. S.C.J.) (estate must reimburse son). The Applicant is therefore prima facie entitled to reimbursement for the reasonable expenses he incurred.
15      The only exception to this liability would appear to arise if the present Applicant voluntarily agreed to pay the funeral expenses, or to put it another way, voluntarily agreed to give up his right to reimbursement from the estate. Since these debts were the responsibility of the estate, this would have in effect been a gift from the Applicant to the estate. There is contradictory affidavit evidence on this point which cannot be resolved on this record. The same holds true for the assertion that the mother of the deceased agreed to pay for the luncheon. Those issues can only be resolved by a trial of an issue.

Reasonable Funeral Expenses

22      The liability of the estate, the personal representative, and the surviving spouse for funeral expenses is not unlimited. That liability is limited to expenses that are reasonable having regard to the deceased’s station in life and the other circumstances. The insolvency of the estate is one significant circumstance that must be kept in mind. It is also relevant whether those concerned knew or ought to have known at the time of the funeral that the estate was insolvent: Stag v. Punter (1744), 3 Atk. 119, 26 E.R. 872 (Eng. Ch. Div.). When an estate is insolvent, it is incumbent on all concerned to ensure that funeral expenses are reasonable.

23      There is no universal answer as to which expenses are reasonable and which are not. The funeral ritual in our society is intricately bound up with cultural and religious beliefs and practices. The law permits the expenditure of estate funds for a decent burial in accordance with the traditions of the deceased so long as extravagant and unreasonable expenses are avoided: Mullick v. Mullick (1829), 1 Knapp 245, 12 E.R. 312 (Eng. Ch. Div.). Where an estate is insolvent, those involved in the burial must limit themselves to the minimum expenses that will accord a dignified interment.

24      It follows that what is reasonable in one context may not be reasonable in another. The case law on what is “reasonable” is impossible to reconcile if this is not kept in mind. Where an estate is solvent, and funeral arrangements are made by the personal representative, he or she will be able to charge to the estate (as against the beneficiaries) all expenses consistent with the culture, religion and station in life of the deceased, even if some of the expenses might be viewed objectively as “luxuries”. Where the estate is solvent, but the funeral arrangements are made by someone other than the personal representative who now seeks reimbursement from the estate, the same rule will generally apply. However, a person seeking reimbursement must exercise greater restraint because the personal representative (who has the right to inter the body), the beneficiaries or ultimately a court, may disagree on what is fitting for the deceased. Some expenses that would be allowed to a personal representative as against beneficiaries may not be allowed to a third party as against the personal representative. Where the estate is insolvent, and funeral expenses are being asserted against creditors, or against someone with a higher duty to pay (see para. 11, supra), a stricter rule applies. With insolvent estates there is authority that only “necessary” expenses are allowed, although the better view is that the test is still “reasonableness”, but the insolvency becomes a primary factor: Edwards v. Edwards (1834), 2 C & M 613, 149 E.R. 905 (Eng. Exch.).

25      The debate respecting the reasonableness of funeral expenses in insolvent estates is summarized in Widdefield on Executors’ Accounts (5th ed., 1967) at pp. 1-2:

Funeral expenses, says Sir Edward Coke, according to the degree and quality of the deceased, are to be allowed of the goods of the deceased, before any debt or duty whatever. But an executor or administrator is not justified in incurring such as are extravagant, even as it respects the legatees or next of kin entitled in distribution: 3 Inst. 202. Nor, as against creditors, is he warranted in spending more than that which is absolutely necessary. For strictness, says Lord Holt, no funeral expenses are allowed against a creditor, except for the coffin, ringing the bell, and the fees of the parson, clerk and bearers; but not for the pall or ornaments: Shelly’s Case, 1 Salk. 296, 91 E.R. 262.

Perhaps, observes Dr. Burn, the expenses of the shroud and the digging of the grave ought to have been added: 4 Burn E. L. 348, 8th ed.

This statement of Lord Holt, though inappropriate to our times, suggests that the line be drawn so as to include what is necessary in the sense of giving a Christian burial, excluding the ornamental accompaniments and provisions for mourners and strangers which they might make for themselves. Thus, at the present day, the undertaker’s and grave digger’s necessary services shall be allowed in addition to those pertaining to religious exercises; also the cost of a plain coffin or casket, the conveyance of the remains to the grave, and the grave itself; all these being essential to giving the remains a decent funeral. On the other hand, mutes, weepers, pall-bearers in needless array; carriages for mourners, and especially carriages for casual strangers; floral decorations, refreshments, hired musical performers, and the processional accompaniments of a funeral, – all these, though appropriate, often, to the burial of those who have left good estates, are inappropriate to the poor and lowly, and to those whose creditors must virtually pay or contribute to the cost. Public demonstrations which increase the outlay, the attendance of societies to which the deceased belonged, military and civic escorts, and the like, are always properly borne by such bodies or the public thus gratified, rather than imposed as a charge upon a private estate which cannot readily bear the burden: Schouler on Wills, 1472.

26      In this estate I am satisfied that the charges for the clergyman, the burial plot and the interment (apart from the grave marker) are reasonable. I doubt that an expensive luncheon is ever justified in an insolvent estate, and it is disallowed; the persons who ordered the luncheon will be responsible for that expense. The parties did not actively challenge the reasonableness of the funeral service charges, or the casket and liner. On the record I can only say that they are higher than some seen in probate applications before the Court, and if there is any dispute there will have to be a trial of an issue on this point. The cost of the grave marker I will deal with separately in the next section.

“Floodgates of Litigation” Held Specious

Floodgates of LitigationI discovered a 1992  court decision  debunking the theory of “floodgates of litigation “– a long time insurance industry alarm akin to the sky will fall, unless restrictions are put on various types of claims, usually through legislation or sometimes the courts, to limit the amount of damages or the types of cases that may be brought before the courts.

It is legally analogous to the “Domino Theory” of communism that prevailed at the United States State Department throughout the last several decades of the last century.

The facts of the case itself are not necessarily important – I think it is simply the recognition by a court of appeal that like most floodgates of litigation arguments, the one raised in this case was specious.

Signalisation de Montréal Inc. v. Services de Béton Universels Ltée

Federal Court of Canada — Court of Appeal

1992 CarswellNat 159F, 1992 CarswellNat 159, [1993] 1 F.C. 341, 147 N.R. 241, 37 A.C.W.S. (3d) 1108, 46 C.P.R. (3d) 199, 58 F.T.R. 230

Finally, the respondent threatened us with the “floodgates” argument: if the purchaser of a patented article is to be held to be an implied non-exclusive licensee and thereby to have the right to claim for damages for infringement pursuant to section 55, there will be no end to infringement actions by all the ultimate purchasers of all the patented monkey wrenches, ballpoint pens, flashlights, clocks and whatnots that human ingenuity has invented and placed on the market.

23      Like most “floodgates” arguments, this one is specious

 

Forcing Sale of a Jointly Owned Property

Jointly Owned PropertyCo-owners of real property often find themselves in situations where one or more owners wish to or have to force a sale of jointly owned property, which is resisted by other co-owners.

The courts generally speaking will grant an order forcing a sale of a jointly owned property unless in the situation of hardship, such as a mother and young children in the matrimonial home being attempted to be forced sold by the estranged husband.

Conflict over jointly owned property  is a fact of life whether it be between spouses, relatives, or business partners- at some point disputes often arise that cause one party to seek legal counsel and to take proceedings under the Partition of Property act to force a sale of the property.

(Re the Partition of Property Act,  Ryser v. Rawlings, 2008 BCSC 1050 at para. 22. I would note in particular, paras. 27-29 in Ryser to the effect that the Court must order a sale of the property if requested to do so by a co-owner and that the Court’s discretion to order otherwise is a narrow one and one which is suggested would involve significant hardship.

[24] Mr. Morris’ counsel has also referred me to Sahlin v. The Nature Trust of British Columbia, Inc., 2011 BCCA 157. Mr. Justice Frankel in that case at para. 24 described the discretion to refuse a sale as broad and unfettered and that it gives the Court the ability, having regard to the particular facts and circumstances, to refuse to order a sale where a sale would not do justice between the parties.

[25] A point of disagreement between the parties concerned the onus of proving any “good reason to the contrary.” In Zimmerman at para. 25, the Court adopted a quote from Dunford v. Sale, 2007 BCSC 1422, to the effect that the onus is on the respondent in that respect. That conclusion is contradicted somewhat by the Court of Appeal in Sahlin at para. 23. It does not appear that the Court in Zimmerman had the benefit of considering this decision, since the reasons of the Court of Appeal were issued between the date of the hearing and the issuance of reasons. In any event, although the Court of Appeal stated that there is no legal onus on the respondent in this respect, the Court did adopt language from the earlier case of Bradwell v. Scott, 2000 BCCA 576, in stating:

This language is neutral in terms of onus. It is for the court to assess the evidence and to determine whether justice requires that such an order be denied. In practical terms, it would be for those opposing the application to put before the court evidence tending to establish a good reason for refusing it.

Court of Appeal Allows Courts to Interpret Trust Documents

Interpret Trust DocumentsCourt of Appeal Allows Courts to Interpret Trust Documents

The almost chestnut re Engleman Estate 1986 23 ETR 30, BCCA,

The will of the deceased made his two brothers co-executors and sole beneficiaries. A major asset of the estate was a farm on which the respondent brother resided. The will empowered the executors to sell and convert property of the estate into money. The petitioner wished to accept a third party’s offer to purchase the farm. The respondent wished to reject this offer and was himself prepared to offer to purchase the petitioner’s interest in the farm for an amount that equalled the proceeds the petitioner would receive from the third party purchaser.
The petitioner sought the direction of the Court pursuant to s. 88(1) of the Trustee Act (British Columbia). The respondent originally took the position that the Court had no jurisdiction under s. 88(1) to make an order directing the sale of the farm since that provision could not be used to decide a question affecting the rights of the parties to property. During the course of the argument, however, the respondent argued that the Court should direct the petitioner to accept the respondent’s offer to purchase his share.
At first instance it was held that the Court should direct the respondent to accept the third party’s offer since the result of the ensuing sale would be to give each party his legal entitlement under the will: this direction would, consequently, give effect to the parties’ rights. However, the Court did not have jurisdiction to require the petitioner to accept the respondent’s offer to purchase his interest: such a direction would alter the petitioner’s right under the will to require that the property be sold and converted into cash.
The respondent appealed.
Held:
The appeal was allowed.
The Judge at first instance incorrectly interpreted the will as containing a direction to sell the property rather than a discretionary power to do so. The executors were not bound to sell the estate and divide the proceeds in cash. It was open to them to distribute the estate in specie. Accordingly, a sale of the farm to one brother could not be said to frustrate the intention of the testator.
Moreover, the Judge was not restricted to the exercise of jurisdiction pursuant to s. 88 of the Trustee Act. In the circumstances that there was a deadlock, the Court had an inherent equitable jurisdiction to intervene to break the deadlock.
The proper order to make was to direct the sale of the farm to the respondent at the same price as the third party had offered. This was just and equitable since the respondent had a particular and long-lasting connection with the property and he had a personal interest in being able to continue to reside on it. Such an order would not, moreover, cause any prejudice to the petitioner since it was established that the price offered was the proper market price and the sale would give to the petitioner his proper share of the value of that part of the estate.

Probate Procedure When Four Wills In Dispute

Re Dow Estate 2015 BCSC 292 an issue of probate procedure arose  due to the fact that the deceased made four wills in the last 2 1/2 years of his life.

The plaintiff was Disputed Willsnamed as a beneficiary in the first and third wills, but not the second or the final fourth will.

The applicant, who stood to inherit $255,000 at of an estate worth approximately $2.6 million, raised the issue of the testator’s capacity when he made his final will, as well as alleging undue influence.

The master found that the applicant met the threshold of Rule 25-2 (1) finding that there was a risk that the applicant would otherwise be prejudiced, since if probate were granted, that the estate could be distributed before her claim as to the alleged lack of mental capacity could be assessed.

Accordingly she was allowed to join in the court action.

 

14]         A person who is interested in an estate including an applicant for the estate grant (in this case, Mr. Cosar) could apply to set aside the notice of dispute pursuant to Rule 25-10(10). The court may remove the notice of dispute if the court determines that the filing is not in the best interests of the estate (Rule 25-10(11)). Whether the court might consider setting the notice of dispute aside on terms which protect Ms. Golos’s interests and at the same time allowing for an interim distribution remains to be seen. Also, s. 103 of the Wills, Estates and Succession Act provides for the court-supervised administration of an estate pending legal proceedings concerning the validity of a will. If those procedures are invoked, then the administration of the estate can move forward pending the applicant’s investigation of her concerns about mental incapacity and undue influence.

[15]         The applicant has met the threshold required by Rule 25-2(14). There is a risk that if she is not included in the class of persons entitled to receive information about the estate and to file a notice of dispute, she will be prejudiced. The prejudice is the risk that Mr. Cosar will be granted probate and the estate will be distributed before the applicant’s claim can be assessed. That prejudice outweighs the possible delay in the distribution of the estate.

UBC Property Transfer Set Aside For Being a “Fraud On a Power”

Fraud On a Power

It is a fraud on a power contained in a will to use a society created in accordance with the terms of the will to achieve indirectly the transfer of property to a non-object of that power which could not be done directly as was quoted by the BCCA in The Land Conservancy of BC v UBC 2014 BCCA 473.

The headnote is interesting and reads:

The University of British Columbia (UBC) challenged the transfer of a historic property known as the Binning House by the executors and trustees of the estate of the owner of the property.  

The testatrix’s will instructed the trustees to either create a society for the preservation of the property and transfer it to that society or to sell the house and give the net proceeds of the sale to a fellowship fund with UBC.  

The trustees entered into talks with the respondent, a society dedicated to historical preservation, about assuming ownership of the property.  After receiving legal advice that the will did not permit them to transfer the property directly to the respondent, the trustees created a society and transferred the property to it.  

The society immediately transferred the property to the respondent.

 When the respondent encountered financial difficulties and proposed to sell the Binning House, UBC challenged the transfer by the trustees as a fraud on the power granted to them in the will.  

The application judge dismissed the challenge, finding that the will granted the trustees significant discretion to fulfill the testatrix’s hope that the Binning House would be preserved for historical purposes. 

Held: appeal allowed.  Although the trustees acted in good faith, they deliberately exercised their power under the will for the ulterior purpose of benefiting a non-object of the power.  The transfer of the Binning House by the trustees to the new society constituted a fraud on the power given to them, and the transfer is void.

In order to succeed in having the transfer of the Binning House declared void, UBC had the onus of proving that the transfer was a fraud on the power contained in the Will authorizing the Trustees to transfer it.  The phrase “fraud on a power” is a term of art, and it does not connote fraud in the usual sense of dishonesty.  This is explained by Geraint Thomas in Thomas on Powers, 2d ed. (Oxford: Oxford University Press, 2012) at para. 9.03:

The doctrine of fraud on a power is not founded upon a state of conscience imputed to the donee in equity.  Dishonesty of some kind is often present, but it is not essential.  Indeed, the donee’s intention or motive may be perfectly honest.  Thus, the doctrine may apply where the donee honestly believes that, by his exercise of the power, he is disposing of the property in a more beneficial manner, or in a way which is consonant with what he believes would have been the real wish of the donor of the power …

[Footnotes omitted.]

[43]         The parties are agreed, as they were before the chambers judge, that the two basic elements of a fraud on a power are as set out in Thomas on Powers at para. 9.02:

(a)      “a disposition beyond the scope of the power by the donee, whose position is referable to the terms, express or implied, of the instrument creating the power;” and

(b)      “a deliberate breach of the implied obligation not to exercise that power for an ulterior purpose”.

[44]         The first element involves the interpretation of the Will to determine whether the disposition of the Binning House by the Trustees was beyond the scope of the power given to them in the Will.  The second element involves a consideration of the Trustees’ actions.

(a)  Scope of the Power

[45]         The parties are also agreed as to the general principles governing the interpretation of wills.  The basic principle was articulated by the Supreme Court of Canada in National Trust Co. Ltd. v. Fleury, [1965] S.C.R. 817 at 829:

            In the construction of wills, the primary purpose is to determine the intention of the testator and it is only when such intention cannot be arrived at with reasonable certainty by giving the natural and ordinary meaning to the words which he has used that resort is to be had to the rules of construction which have been developed by the Courts in the interpretation of other wills.

[46]         Other relevant principles include the following statements from James MacKenzie, Feeney’s Canadian Law of Wills, loose-leaf, 4th ed. (Markham, Ont.: LexisNexis, 2000):

§10.43       … the most influential rule of construction is that the court may construe the words used by the testator in their ordinary sense.…

* * *

§10.60       The testator’s intention is to be gathered from a consideration of the will as a whole and not solely from the words used, say, in an unclear portion of the will.  The ordinary meaning rule and other rules of construction are entirely subservient to the content of the will.  This idea is often expressed by saying that the testator’s intention is to be ascertained, first of all, from the four corners of the will.

* * *

§10.61       It is reasonable to presume that the testator’s intention was that effect be given to every word of his or her will …

[Footnotes omitted.]

[47]         It is appropriate to consider surrounding facts and circumstances only if the language of the will is ambiguous: Feeney’s Canadian Law of Wills at §10.51.

 

 

Appeal Court Disapproves Using Assessments To Value Property

Assessments To Value PropertyProperty assessments

Dosanjh v Liang  2015 BCCA 18 disapproved of the use of using assessments to value property and prove damages in it’s valuation, and that the better practice is to use appraisers, especially for historical valuations.

Here are excerpts paragraphs 57-70 that discus the issue:

A more serious difficulty with the assessment of damages was the trial judge’s reliance on the assessment to determine the property value.

[58] In deciding to admit the assessment as evidence, the trial judge referred to a number of family law cases in which assessments had been used by the trial court to determine the value of real property. She purported to rely on the opening words of Rule 11-7 of the Supreme Court Civil Rules, B.C. Reg. 168/2009, as providing her discretion to admit the evidence.

[59] There is some difficulty in relying on family law cases for the proposition that assessments should be admissible evidence to determine the value of real property. While the rules of evidence are applicable to family law proceedings, they are often applied in a relaxed manner. I agree with the recent observations of Kent J. in Walker v. Maxwell, 2014 BCSC 2357:

[64] Of course, one of the stark realities of family law litigation is that the parties are often unrepresented by counsel and/or are unable to afford the substantial cost of experts and the procuring of expert evidence.

[65] Evidence in family law cases is subject to the same rules applicable to any other area of civil law. In reality, however, the technical yields to the practical and the strict rules of evidence are often ignored or accorded only slight deference.

[60] While trial courts have, with some frequency, admitted property assessments as evidence of property value in family law cases, they have generally done so either with the agreement of the parties, or, alternatively, where no other evidence of value has been tendered (e.g. Chung v. La, 2011 BCSC 1547). Where proper expert evidence of value has been tendered, the courts have been reluctant to consider property assessments as evidence (see, for example, Hall v. Mougan, 2009 BCSC 645).

[61] In family law cases, a court is often faced with having to assess the value of real property in a situation where neither side is clearly subject to any burden of proof. Rather, the court is simply required to estimate the value of property for the purpose of dividing a family asset. It is not surprising, in such situations, that a court may “grasp at straws” in an attempt to reach a just result. It is simply a matter of doing the best job possible with limited evidence.

[62] It seems to me that different considerations arise in non-family cases, where one party or the other will generally bear the onus of producing evidence of property value.

[63] It is not necessary, in this case, to make any pronouncement as to the scope for admission of property assessments as evidence of property value in family law cases, and I will refrain from doing so. In my view, however, there is, absent agreement, no scope for using assessments in place of expert opinion evidence in cases such as the present one.

[64] The trial judge erred in her reliance on the opening words of Rule 11-7. The relevant provisions of the rule are as follows:

 

11-7 (1) Unless the court otherwise orders, opinion evidence of an expert, other than an expert appointed by the court under Rule 11-5, must not be tendered at trial unless

(a) that evidence is included in a report of that expert that has been prepared and served in accordance with Rule 11-6, and

(b) any supplementary reports required under Rule 11-5 (11) or 11-6 (5) or (6) have been prepared and served in accordance with Rule 11-6 (5) to (7).

…

(6)At trial, the court may allow an expert to provide evidence, on terms and conditions, if any, even though one or more of the requirements of this Part have not been complied with, if

(a) facts have come to the knowledge of one or more of the parties and those facts could not, with due diligence, have been learned in time to be included in a report or supplementary report and served within the time required by this Part,

(b) the non-compliance is unlikely to cause prejudice

(i) by reason of an inability to prepare for cross-examination, or

(ii) by depriving the party against whom the evidence is tendered of a reasonable opportunity to tender evidence in response, or

(c) the interests of justice require it.

 

 

[65] Rules 11-6 sets out special requirements for expert opinion evidence. It is designed to ensure that adequate notice is given of the intention to adduce expert evidence, and to ensure that expert reports are presented in a particular form. Rule 11-7 allows the court to dispense with the requirements of Rule 11-6 in certain limited circumstances (see Perry v. Vargas, 2012 BCSC 1537 and XY, LLC v. Zhu, 2013 BCCA 352).

[66] In those limited circumstances, Rule 11-7 allows a judge to admit opinion evidence at trial where the evidence, though otherwise admissible, fails to meet the requirements of Rule 11-6. Nothing in Rule 11-7 purports to allow a judge to admit into evidence an expert opinion that does not meet the requirements of R. v. Mohan, [1994] 2 S.C.R. 9.

[67] The basic difficulty with the property assessment as evidence of property value is that the court had no basis on which to evaluate its cogency. The court was not able to determine how the assessor went about making the assessment, and had no basis for determining what weight to give it. This was a particular problem in this case, as the court had no basis for determining the effect of the recent use of the property to grow marijuana on the property value.

[68] I acknowledge, again, that these sorts of difficulties have not always been seen as precluding the admission of assessments as evidence of value in family law cases (see, for example, Dykman v. Dykman, 2011 BCSC 883). Whatever discretion a court may have to admit such evidence in a family law case, however, it did not have that discretion in the case before us.

[69] As the trial judge observed, there was some evidence before her to the effect that the market value of the property in September 2011 was substantially higher than the contract price. The evidence of how much higher, however, was minimal. Given that the assessment report was not admissible, the trial judge was faced with a formidable (perhaps impossible) task in trying to determine the quantum of damages.