BC Estate Lawyer – Was There a Settlement?

Trevor Todd and Jackson Todd have over sixty combined years of estate litigation which often includes issues such as was there a settlement?

In Hutton v. Hutton, 2020 BCSC 2046, the Honourable Chief Justice Hinkson reviewed various authorities which dealt with summary applications, brought in an action to enforce agreements to compromise that same action. At para. 30, he concluded that he could properly enforce a settlement agreement and grant a stay of proceeding through such motion if he were to find that there was a binding settlement agreement.

Essential Terms
[20] The question then remains—was there a settlement agreement between these parties?

[21] Again, reference to the Hutton case provides recent and persuasive authority on such assessment. At paras. 31–33, Hinkson C.J.S.C. says:

Is there an Enforceable Agreement between the Parties?

[31] The burden of proving the existence of a settlement agreement is on the party seeking to enforce or rely on it: Salminen v. Garvie, 2011 BCSC 339 [Salminen] at para. 26. The standard of proof required is on the balance of probabilities.

[32] To determine if a settlement agreement is enforceable, the court must consider whether the parties reached agreement on all essential terms. In Fieguth v. Acklands Ltd. (1989), 59 D.L.R. (4th) 114 (B.C.C.A), [Fieguth] Chief Justice McEachern stated at 121:

… The first question is whether the parties have reached an agreement on all essential terms. There is not usually any difficulty in connection with the settlement of a claim or action for cash. That is what happened here and as a settlement implies a promise to furnish a release and, if there is an action, a consent dismissal unless there is a contractual agreement to the contrary, there was agreement on all essential terms.

[33] In Apotex Inc. v. Allergan, Inc., 2016 FCA 155, at paras. 32–33, Mr. Justice Stratas phrased the test to determine if an enforceable settlement had been reached as follows:

[32] The court is to view the specific facts of the case objectively in light of the practical circumstances of the case and ask whether the parties intended to be legally bound by what was already agreed or, in other words, whether an “honest, sensible business [person] when objectively considering the parties’ conduct would reasonably conclude that the parties intended to be bound or not” by the agreed-to terms: G Percy Trentham Ltd v Archital Luxfer Ltd. (1992), [1993] 1 Lloyd’s Rep 25, 63 B.L.R. 44 (C.A.) at paras. 50 and 86; Ward at para. 61; Hughes v. City of Moncton, 2006 NBCA 83, 304 N.B.R. (2d) 92 at para 6. Put another way, looking not through the eyes of lawyers, but through the eyes of reasonable businesspeople stepping into the parties’ shoes, was there something essential left to be worked out? See Investors Compensation v. West Bromwich Building Society, [1998] I All E.R. 98; [1998] 1 W.L.R. 896 (H.L,); Chartbrook v. Persimmon Homes, [2009] UKHL 38, [2009] A.C. 1101; Re Sigma Finance, [2009] UKSC 2, [2010] 1 All E.R. 571. Another way of putting it is to ask how “a reasonable [person], versed in the business, would have understood the exchanges between the parties”: Bear Steams Bank pic v. Forum Global Equity Ltd., [2007] EWHC 1576 (Q.B.D. Comm.) at para 171.

[33] When courts find that there has been an agreement on essential terms, they will often imply non-essential terms into the agreement: McCabe, above at para 20; Fieguth, above; Hughes, above at para. 6. The lack of agreement on non-essential terms will not stand in the way of a finding of an agreement. Put another way, “it is not necessary that the original contract include all the ancillary terms that are already implicit in its content”: Ward, above at para. 54. “Even if certain terms of economic or other significance to the parties have not been finalized, an objective appraisal of their words and conduct may lead to the conclusion that they did not intend agreement of such terms to be a pre-condition to a concluded and legally binding agreement”: RTS Flexible Systems, above at para. 45. For example, assuming an agreement on essential terms is otherwise in place, courts can imply terms concerning the granting of a release, the manner of payment and the timing of payment: Fieguth, above at para 21; Hodaie v. RBC Dominion Securities, 2012 ONCA 796 at para. 3; Imperial Oil Ltd. v. 416169 Alberta Inc., 2002 ABQB 386, 310 A.R. 338. Often these will be “mere formalities or routine language” Bawitko, above at p. 106.

BC Estate Lawyer – Joint Tenancy Severance

Jackson Todd and Trevor Todd have over sixty years experience in resolving estate disputes, including where a joint tenant’s conduct may sever the joint tenancy.

JOINT TENANCY v TENANTS IN COMMON

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

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

In contrast, in a tenancy in common one co-owner may hold a greater proportionate interest in the property than the other co-owner(s)

The principal and distinguishing characteristic of joint tenancy is the right of survivorship. When one joint tenant dies, his or her interest in the property is extinguished and passes to the surviving joint tenant(s) automatically by operation of law.

The right of survivorship is a revocable “expectancy” that manifests only upon success in the so-called “ultimate gamble” – survival – and then only if the joint estate has not been previously destroyed by an act of severance.

Unlike that of a joint tenant, a tenant in common’s interest in property remains intact upon death and passes into his or her estate

The Four Unities Required To Create a Joint Tenancy

  • Unity of title- means the title of each joint tenant arose from the same act or instrument.
  • Unity of interest -means their holdings are perfectly equal in nature, extent and duration.
  • Unity of time -means all the interests vested simultaneously.
  • Unity of possession -means each joint tenant has a right to present possession and enjoyment of the whole property, but no right to exclusive possession of any individual part of the whole.

Assuming all four unities are present, the question of whether a joint tenancy or a tenancy in common has been created is determined by the intention of the grantor.

SEVERANCE OF A JOINT TENANCY

A joint tenant is free to deal with his or her interest and may sever a joint tenancy, with or without the consent or knowledge of the other joint tenant(s).

After a joint tenant dies however, severance is no longer possible because death extinguishes the joint interest, thus a will cannot sever a joint tenancy: Bergen v. Bergen, 2013 BCCA 492 at para. 40;

When a joint tenancy is severed , the joint tenancy is converted into a tenancy in common and the right of survivorship is extinguished.

It is important to know that once the joint tenancy is severed it remains such and like a broken “ humpty dumpty” it can only be put together  by starting over and recreating the four unities.

As a consequence of severance each co -owner then becomes entitled to a  distinct share rather than an undivided interest in the whole. Bergen v Bergen 2013 BCCA 492.

Severance Is “Typically” Affected In One of Three Ways:

1) By one person acting unilaterally ( and usually deliberately) upon his or her own interest, so as to destroy the four unities ( ie by transferring his or her interest to his or herself as provided for in the Property Act and the Law and Equity Act) ;

2) By mutual agreement, such as a written marital separation contract;

3) By any “ course of dealing” sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common- for example, conduct which demonstrates both tenants mutually dealt with their interests as several and separate.

The onus of proof rests on the party asserting the severance. McKee v .National Trust Co.(1975) 7 O.R (2d) 614 (CA).

There are several other modes of severance including but not restricted to bankruptcy, partition, and order made under matrimonial legislation.

The BC Court of Appeal in Bergler v Odenthal 2020 BCCA 175 confirmed that both a declaration of trust and a secret trust would have the effect of severing a joint tenancy. ( see also Public Trustee v Mee (1972) 2 WWR 424 where a bare trust declaration was held to sever a joint tenancy)

SEVERANCE BY CONDUCT

The underlying rationale for a course of dealing, severing a joint tenancy is that it ensures that a right of  survivorship does not operate unfairly in favour of one owner, where the co-owners have demonstrated  through their conduct a  common intention to no longer treat their respective shares in the property as an indivisible unified whole.

The following are five courses of conduct between joint tenants that have resulted in a severance of their joint tenancy, sometimes without any knowledge or intention on their  part to have done so.

  1. Acrimonious Conduct between the Joint Tenants

In Preskar Estate v Wagner 20023 BCSC 80 a BC court found that a joint tenancy with a right of survivorship had been severed into a tenancy in common by reason of the joint owners acrimonious conduct to each  that was inconsistent with joint tenancy unity.

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

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

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

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

Hansen Estate v. Hansen, 2012 ONCA 112  dealt with spouses who separated and retained legal counsel, one party prepared  a new will,  and lawyers negotiated dividing  their joint assets, but one spouse died before the negations were completed.

The Appeal court held that even failed or uncompleted negotiations can lead to severance because “the negotiation of shares and separate interests represents an attitude that shows that the notional unity of ownership under a joint tenancy has been abandoned”.

  1. Agreement to Ultimately Pay the Sale Proceeds Into Two Separate Accounts

The Tessier v Tessier 2001 SKQB 399  cautions  that even the simple fact of retiring  parties signing an agreement to sell their  jointly owned property and pay the proceeds into separate accounts can by their conduct sever the joint tenancy into a tenancy in common.

The couple agreed to sell the property to a family member and prior to her death, the wife and husband had agreed that one-half of purchase price would be paid to each of them and the proceeds were to be maintained  in separate bank accounts .

These facts were sufficient indicia of destruction of unities of interest and possession, both by agreement and course of conduct.

  1. Partnership of Jointly Owned Property

In Garland v Newhouse 2021 BCSC 1291  ( upheld at 2022 BCCA 276) a partnership between non-spouses of a jointly owned property ran for profit or loss  was held to sever the joint tenancy when one of the partners died.

The parties had no personal relationship and had equally contributed to the purchase of the investment property, equally shared expenses associated with the property, and equally shared in profits derived. Their objective was to earn profit over time. They opened the joint bank account to manage the financial aspects of the business. The accounting records describe the arrangement as a partnership and individuals as partners.

The court found that there was in fact a partnership and that it was inconsistent with a joint tenancy with right of survivorship. Partners share profits and losses and the legal framework of a partnership is not compatible with the legal principles of a joint tenancy.

Where the property in issue is partnership property, there is a presumption that there is no right of survivorship as between partners, at least as concerns their beneficial interest in partnership assets:

Absent compelling evidence of a contrary agreement, a surviving partner holds legal title to property held in joint tenancy on trust for the surviving partner and the estate of the deceased partner: Agro Estate v. CIBC Trust Corp. (1999), 26 E.T.R. (2d) 314 at para. 44.

  1. Never Intended A Joint Tenancy

Lescano v Unlu 2016 BCSC 1535  – The court found that if the joint tenants ever were a couple their relationship ahd ended long ago, that at least one of the parties, if not both, did not understand the legal effect of a joint tenancy and did not want it from the outset. A hand written will prepared by one of the joint owners indicated that she wished her share of the property to go to her three children equally in the event of her death, and the survivor testifies neither of them ever did want a joint tenancy.

  1. Misuse of Power of Attorney

In  Zeligs v Janes 2016 BCCA 280 the BC Court of Appeal upheld a trial decision finding that a joint bank account was severed when one of the joint tenants withdrew funds from the joint account using a power of attorney that benefitted only herself.

In doing so the joint tenant automatically severed the joint fund and converted it into a tenancy in common thus extinguishing the right of survivorship.

CONCLUSION

It is not exactly clear what evidence  and how much of it the courts may require in order to find that a joint tenancy has been severed by conduct, but it is certainly a growing area of law and the courts have shown a willingness to expand the area.

The courts are being presented with more and more fact patterns  of conduct where the co-owners have demonstrated  through their conduct a  common intention to no longer treat their respective shares in the property as an indivisible unified whole.

What is particularly interesting about this growth area of law is how uninformed the public and even the legal profession are about severance by conduct and  the possible significant financial and emotional consequences of their actions.

More importantly the lack of knowledge of a severance by conduct can lay dormant for many years until typically contested after death,  such as in the  Preskar Estate where the acrimonious behavior that severed the joint tenancy many years before was not reflected on the land title deed.

It will increasingly become the norm in matrimonial and estate litigation cases to explore whether in years past there was ever conduct between the joint tenants that might have severed their joint tenancy so that one half of the property is “ up for grabs” by the estate instead of going to the surviving joint tenant.

Vancouver Estate Lawyer – Lost Wills and The Presumption of Destruction

Trevor Todd and Jackson Todd have over sixty years combined experience in handling estate disputes, including lost wills and the presumption of destruction.

Facts of Re Finsant estate 2024 BCSC 217

The deceased died at the age of 81 years in her home. Searches of the home and her personal effects did not find a will. It was known that she had executed a will, almost 20 years earlier, and that the deceased had possession of it. She lived alone, and had no children or surviving siblings and her home was reasonably orderly.

The court found that she appeared to be mentally competent.

The estate dispute was between the named beneficiaries in the will and her next of kin on an intestacy.

Under these circumstances, the court found that she had either intentionally destroyed the will or was lost, stolen or accidentally destroyed.

There is a presumption of destruction of the will that the court found had not been rebutted, and that she must be presumed to have died intestate.

 THE LAW

The presumption of destruction was set out in Welch v. Phillips (1836), 1 Moo PC 299 at p. 302, and remains the law in British Columbia: Haider v. Kalugin, 2008 BCSC 930, at para. 11. If, as here, a will is traced to the possession of the deceased and last seen there and is not forthcoming on death, it is presumed to have been destroyed by the deceased, a presumption that holds unless there is “good and sufficient reason to repel it.”

In modern Canadian civil law, there is only one standard of proof in civil cases regardless of the nature of the allegation, namely, proof on a balance of probabilities: F.H. v. McDougall, 2008 SCC 53, at para. 40. But the quality of the evidence necessary to make a finding on that standard will depend on the inherit probabilities or improbabilities: McDougall; Canada v. Fairmont Hotels Inc., 2016 SCC 56, at para. 36.

As Justice Ehrcke explained in Thierman Estate v. Thurman, 2013 BCSC 503 at para. 43:

The presumption [of destruction] recognizes that the burden of proof is on the party attempting to rely on a non‑original copy of a will. Thus, the presumption of destruction of a will that had been in the testator’s possession but cannot be found on his death may be rebutted by evidence establishing on a balance of probabilities that the will was inadvertently lost or misplaced.

The ultimate issue is whether, on a balance of probabilities, the will was more likely to have been deliberately destroyed because the testator had a change of heart or was more likely lost, stolen or accidentally destroyed. The legal onus is on the applicant – in this case Ms. Beggs – as the person trying to rely on a non‑original copy. What the presumption adds is the common‑sense point that we would expect a person who wants a will to be executed to keep it where it can be found when they die. In the absence of a contrary reason, this is the more inherent probability. The application of the legal standard and burden of proof will take this into account.

In other words, if a will in the deceased’s possession cannot be found after a reasonable search, the quality of evidence necessary to support the inference that it was destroyed intentionally is less than that required to support the inference that it was lost or inadvertently destroyed.

At para. 13 of Haider,  the court set out the factors typically looked at in deciding whether the presumption of destruction has been rebutted as follows:

  • whether the terms of the will itself were reasonable;
  • whether the testator continued to have good relationships with the beneficiaries in the copy of the will up to the date of death;
  • where personal effects of the deceased were destroyed prior to the search for the will being carried out;
  • the nature and character of the deceased in taking care of personal effects;
  • whether there were any dispositions of property that support or contradict the terms of the copy sought to be probated;
  • statements made by the testator which confirm or contradict the terms of distribution set out in the will;
  • whether the testator was of the character to store valuable papers, and whether the testator had a safe place to store the papers;
  • whether there is evidence that the testator understood the consequences of not having a will, and the effects of intestacy;
  • whether the testator made statements to the effect that he had a will;

Fraudulent Conveyances/Transfers

The issue of whether a transfer of assets gratuitously made is a Fraudulent Conveyance or not vis a vis creditors is found in the caselaw arising from the Fraudulent Conveyance Act (FCA).

Section 2 of the FCA provides:

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

Two key questions arise when determining the validity of the Transfer: (1) whether there was good consideration for the Transfer, and (2) whether the defendants had the requisite intent.

A conveyance of property by a debtor to a creditor to satisfy an antecedent debt is made for good consideration and not void for fraud. As explained long ago by the Supreme Court of Canada in Mulcahy v. Archibold (1898), 28 S.C.R. 523, at 529(para.3):

… So long as there is an existing debt and the transfer to him is made for the purpose of securing that debt and he does not either directly or indirectly make himself an instrument for the purpose of subsequently benefitting the transferor, he is protected and the transaction cannot be held void.

[ The Court of Appeal relied on this proposition more recently in First Royal Enterprises Ltd. v. Armadillo’s Restaurant Ltd. (1995), 15 B.C.L.R. (3d) 254, 1995 CanLII 605 (C.A.) at para. 31, confirming that a pre¬existing debt can furnish good consideration within the meaning of the FCA, and so long as the debt is honestly due and owing, there is good consideration.

Where valuable consideration has passed, the party seeking to impeach the Transfer must show that the transferee actively participated in the fraud: Meeker Cedar Products Ltd. v. Edge (1968), 68 D.L.R. (2d) 294, 1968 CanLll 666 (B.C.C.A.) at 299, aff’d (1968), 1 D.L.R. (3d) 240, 1968 CanLII 776 (S.C.C.); First Royal Enterprises at para. 24; and Chan v. Stanwood, 2002 BCCA 474 at para. 20.

A bare assertion of a defence is insufficient to meet the applicant’s burden of establishing a “meritorious defence”. The applicant’s affidavit material should contain sufficient detail and supporting documents to buttress the asserted defence: Leibenzeder Estate v. MacIntyre, 2023 BCSC 1422 at para. 183.

The applicant must provide, by admissible evidence, sufficient detail to allow the chambers judge to determine whether a meritorious defence exists: Forgotten Treasures International Inc. v. Lloyd’s Underwiters, 2020 BCCA 341 at paras. 26–30.

The only intent necessary to meet the requirements of section 1 of the FCA is to “put one’s assets out of reach of one’s creditors”: Royal Bank of Canada v. Clarke, 2009 BCSC 481 at para. 20. No further dishonest or morally blameworthy intent is required: Abakhan & Associates Inc. v. Braydon Investments Ltd., 2009 BCCA 521 at para. 73.

Previous Wills Ordered Produced

In DeContiis v DeContiis Estate 2023 BCSC 2163 , a wealthy father of seven boys did six wills between 1997 and 2009 which the plaintiff sought to be produced in order to determine the deceased true intentions re his estate planning.

The deceased left a last will, January 2016, which disinherited one son entirely.

In 2019. The deceased established an alter ego trust in which he put substantial assets.

The plaintiff sought and was granted production of the previous six wills of the deceased in order to determine the deceased true intentions re his estate planning

The plaintiff argues that s. 62 of Wills and Estate Succession Act, S.B.C. 2009, c. 13 supports production of the prior wills. Section 62 states:
Evidence

62 (1) In a proceeding under section 60, the court may accept the evidence it considers proper respecting the will-maker’s reasons, so far as may be determined,
(a)for making the gifts made in the will, or

(b)for not making adequate provision for the will-maker’s spouse or children,

including any written statement signed by the will-maker.

(2) In estimating the weight to be given to a statement referred to in subsection (1), the court must have regard to all the circumstances from which an inference may reasonably be drawn about the accuracy or otherwise of the statement.

[The amended notice of civil claim at para. 53 of Part 3, Legal Basis, asserts that “prior wills, executed before 2016 and without the undue influence of the Younger Brothers, included the Plaintiff as a beneficiary”.

Based on these paragraphs of the amended notice of civil claim alone, the defendants ought to have listed the prior wills in their initial list of documents because they are material.

The prior wills are squarely at issue because the court considers prior wills where a will or other estate planning documents are challenged.

The prior wills are relevant to the claim of undue influence because they will disclose how the deceased treated the plaintiff in the prior wills which would be an indication of Innocenzo’s attitudes toward Ivano over time.

In Jung v. Poole Estate, 2021 BCSC 623, the trial judge analyzed the deceased’s attitudes towards his disinherited children by, in part, examining the terms of the prior wills (paras.

51 to 52) and Geluch v. Geluch Estate, 2019 BCSC 2203, in which the trial judge considered prior wills as evidence of the deceased’s prior wishes that were inconsistent with the impugned final will (para. 117).

Rule 7-1(11) requires listing and production of documents that “relate to any or all matters in question in the action”. The test for such disclosure is whether the documents “may enable a party, directly or indirectly, to advance their own case or damage that of their adversary, including documents that may fairly lead to a train of inquiry having either consequence”: Richter v. Richter Estate, 2023 BCSC 105 at paras. 57 and 58.

In Westman v. Westman, 2000 BCSC 236, the trial judge referred to the history of the deceased’s prior wills as indicative of an “inter-family phenomenon” (at para. 34) that was relevant to an assessment of whether the will made adequate provision for the deceased’s spouse. In the present case, the analogy to “inter-family phenomenon” is the changing attitudes Innocenzo had to each of his sons. The prior wills are relevant to this issue.

in Kobzos v. Kobsoz Estate, 2019 BCSC 2254, the documents relating to the deceased’s estate planning were relevant for production.

Enforcing Oral Contracts

Stojka v Stojka 2023 BCCA 446 held that a binding  oral contract existed between two brothers with respect to a beneficial interest in a property.

The court reviewed the law re oral contracts and in particular amongst family members where the communications in the family context are often no more than statements of intent or wishes.

The question of whether a given requirement for the formation of a contract has been met “involves applying a legal standard to a set of facts and is therefore a question of mixed fact and law”: Housen v. Nikolaisen, 2002 SCC 33 at para. 26.

If a party to an oral agreement acts as though there were a binding contract or the other party relies on the agreement to their detriment the party is unable to rely of the lack of a written agreement as a defence: Le Soleil Hotel & Suites Ltd. v. Le Soleil Management Inc., 2009 BCSC 1303 at paras. 342–345 [Le Soleil];

• An enforceable agreement is reached where parties have reached a meeting of the minds and the parties express themselves outwardly in a manner that indicates an intention to be bound: Le Soleil at paras. 322–323;

• Reasonable certainty of the terms of the agreement are required: Le Soleil at paras. 339–340;

• The existence of an oral agreement is determined by applying the objective reasonable bystander test to consider how the promisor’s conduct would appear to a reasonable person in the position of the promise: Le Soleil at paras. 324–325;

• The party alleging the oral agreement must be able to prove its existence on the balance of probabilities: Bell v. Bell, 1998 CanLII 3194 at para. 14, [1998] B.C.J. No. 1457 (S.C.).

Vancouver Lawyer – Wills Variance and Assets Outside of the Estate

Trevor Todd and Jackson Todd have over sixty years combined experience in handling contested estates including wills variation claims.

Only assets passing pursuant to a will and requiring probate can be attacked under the wills variance laws.

Other assets passing outside of the estate such as joint tenancies cannot be attacked under wills variation claims, but the court can take those assets into account.

Assets passing outside of the estate such as inter vivos dispositions and assets passing by right of survivorship are relevant to determining whether a will should be varied under wills variation provisions and the issue of adequate provision for an adult child.

In Inch v. Battie, 2007 BCSC 1249 it was stated:

It thus appears that, although transfers passing outside of the Will are not part of the estate, the effect of such gifts can be considered in determining to what extent, if any, the court should vary the distribution under the Will.

In DeLeeuw v. DeLeeuw, 2003 BCSC 1472, Masuhara J. did consider the assets transferred to the claimant, the surviving spouse, before the testator’s death, in determining whether he made adequate provision for her proper maintenance and support (at paragraphs 98 – 100).

In Ryan v. Delahaye Estate, 2003 BCSC 1081, D. M. Smith J. considered compensation provided to the testator’s son for his devotion during the parents’ lifetime, and an interest-free loan made to him, in determining if there was proper maintenance and support for the other child. I thus conclude that, although inter vivos dispositions, and assets passing as a result of a right of survivorship pass outside the estate, and are thus not subject to a claim under the Wills Variation Act, the court can consider them when assessing, from the perspective of a judicious person, in the circumstances, whether a parent has met her moral obligations to an adult child.

Enforcing Contracts

Meadows v Sward Estate 2023 BCSC 1369 involved a claim for $62,000 pursuant to a loan agreement/contract that was denied as having made a binding contract.

The case reviews the role of the court in attempting to uphold contractual obligations.

There is no legal requirement for a loan agreement to be set out in a written document. While it is obviously prudent to set down the terms of in writing, the law recognizes agreements reached orally or through conduct establishing an intention to be bound. As Justice Dickson (then of this Court) stated in Soleil Hotel & Suites Ltd. v. Soleil Management Inc., 2009 BCSC 1303:

Courts strive to uphold contractual obligations solemnly and freely undertaken. They do not, however, impose them upon parties who have not reached agreement on all essential terms: Catalyst Paper Corp. v. Companhia de Navegacao Norsul, 2008 BCCA 336.

For parties to be bound in a contractual relationship there must be a manifest meeting of the minds. They must express themselves outwardly in a manner that indicates both an intention to be bound and reasonably certain mutually agreed terms: Klemke Mining Corporation v. Shell Canada Limited, 2007 ABQB 176, affirmed 2008 ABCA 257 (CanLII).

These fundamental principles of contract law enable commercial life to operate in a fair, predictable and efficient manner. They apply whether the purported contract in question is concluded in writing, orally, by conduct, or by a combination thereof. The key question in all cases is whether an agreement has been reached on all essential terms, regardless of its form: Catalyst Paper Corp. supra; Periscan Financial Services Inc. v. 519090 B.C. Ltd., 2007 BCSC 707; Leong & Associates Actuaries & Consultants Inc. v. Watt, 2003 BCSC 1885.

The test for determining whether there was an intention to create legal relations is objective. The question is whether the parties “indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract”: Berthin v. Berthin, 2016 BCCA 104 at para. 46, citing G.H.L. Fridman, The Law of Contract in Canada (6th ed., 2011) at 15.

Evidence of the parties’ actual subjective state of mind is not relevant: Hammerton v. MGM Ford-Lincoln Sales Ltd., 2007 BCCA 188 at para. 23. As Justice Blackburn stated in Smith v. Hughes (1871), L.R. 6 Q.B. 597 (Q.B.), the leading English decision on the issue:

If whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms.
Or, as it was put in Osorio v. Cardona 1984 364 BCSC at paras. 32 and 34, evidence establishing that one party had a “secret mental reservation about performing the agreement” does not mean a contract was not concluded.

The intention of the parties must be manifested before or when the contract is made. However, evidence of the parties’ subsequent conduct may be looked to in determining whether a contract was formed: Hoisington v. Johnson & Johnson Inc. 2015 BCSC 1582 at para. 52; Hoban Construction Ltd. v. Alexander, 2012 BCCA 75 at paras. 39 and 43-44 [Hoban Construction Ltd].
Finally, there is a distinction between a concluded agreement that has not been successfully “papered over” and a failure to conclude an agreement. In Hoban Construction Ltd., the Court of Appeal (per Bennett J.A.) wrote:

In [Langley Lo-Cost Builders Ltd. v. 474835 B.C. Ltd., 2000 BCCA 365] at para. 76, this Court referred to Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 CanLII 2734 (ON CA), 79 D.L.R. (4th) 97 (Ont. C.A.), setting out the following excerpt from 103-104:

As a matter of normal business practice, parties planning to make a formal written document [of] the expression of their agreement, necessarily discuss and negotiate the proposed terms of the agreement before they enter into it. They frequently agree upon all of the terms to be incorporated into the intended written document before it is prepared. Their agreement may be expressed orally or by way of memorandum, by exchange or correspondence, or other informal writings. The parties may “contract to make a contract”, that is to say, they may bind themselves to execute at a future date a formal written agreement containing specific terms and conditions. When they agree on all of the essential provisions to be incorporated in a formal document with the intention that their agreement shall thereupon become binding, they will have fulfilled all the requisites for the formation of a contract. The fact that a formal written document to the same effect is to be thereafter prepared and signed does not alter the binding validity of the original contract.

However, when the original contract is incomplete because essential provisions intended to govern the contractual relationship have not been settled or agreed upon; or the contract is too general or uncertain to be valid in itself and is dependent on the making of a formal contract; or the understanding or intention of the parties, even if there is no uncertainty as to the terms of their agreement, is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. In other words, in such circumstances the “contract to make a contract” is not a contract at all. The execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself…

Trustee Care and Management Fees

Bokovic v Borkovich 2023 BCSC 2050 reviewed the law relating to trustee care and management fees of estate assets.

Section 88(3) of the Trustee Act permits an executor to apply annually for “a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.”

In Mikaloff 2018 BCSC 756, Registrar Nielsen also cited Re Pedlar, [1982] 34 B.C.L.R. 185 (S.C.) [Pedlar], in which the Court set out the following list of factors, which can be considered in determining whether any care and management fee should be allowed and, if allowed, the extent of such fee:

· The value of the estate assets being administered;

· The nature of the estate assets being administered;

· The degree of responsibility imposed upon the trustee by the terms of the will or other instrument, including the length or duration of the trust;

· The time expended by the trustee in the care and management of the estate;

· The degree of ability exhibited by the trustee in the care and management of the estate;

· The success or failure of the trustee in the care and management of the estate; and

· Whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate.

[76] In Pedlar, the Court reiterated that each application must be decided upon its own facts and the list of factors is not intended to be exhaustive as there may be other factors deserving consideration depending upon the circumstances (para. 15).

Lawyer Client Privilege Waived By Correspondence Disclosure

In S. (FCA) v S. ( CE) 2023 BCSC 1098 the court determined that the respondent  had waived solicitor client privilege over parts of her former counsel’s file by disclosing correspondence between her and her former counsel in her application to amend pleadings.

Counsel for the respondent was ordered to deliver copies of all communications relating to the topic of the disclosures.

 

THE LAW

Waiver of privilege can be express or implied. A court will deem privilege waived where a party takes a position inconsistent with the maintenance of privilege or makes legal assertions that make it unfair for them to rely on privilege: Do Process LP v. Infokey Software Inc., 2015 BCCA 52 at para. 23.

In an oft-cited passage from S. & K. Processors Ltd. v. Campbell Avenue Herring Producers Ltd., [1983] B.C.J. No. 1499 (BCSC), Justice McLachlin, as she then was, established the basic principles of voluntary waiver of privilege:

Waiver of privilege is ordinarily established where it is shown that the possessor of the privilege: (1) knows of the existence of the privilege; and (2) voluntarily evinces an intention to waive that privilege. However waiver may also occur in the absence of an intention to waive, where fairness and consistency so require. Thus waiver of privilege as to part of a communication will be held to be waiver as to the entire communication…

 

It has long been the rule that where privilege is waived, production of all documents relating to the acts contained in the communication will be ordered: see also Doland (George) Ltd. v. Blackburn, Robson, Coates & Co., [1972] 3 All E.R. 959 (Q.B.), cited in Sopinka et al, The Law of Evidence in Canada (6th ed.) at p. 1102. The policy reasons for this incursion into the sphere of privilege are fairness and consistency: see S. & K. Processors Ltd., supra. A party cannot “cherry-pick” favourable aspects of privileged communications without disclosing the entirety of the communication.

This prohibition against “cherry-picking” and using privilege as both a “sword and a shield” was further defined in Pacific Concessions, Inc. v. Weir and Weir, 2004 BCSC 1682. In that case the defendant sought to rely on email communication between himself and his counsel, which he appended to his affidavit, as evidence to support his position at the summary trial. The plaintiff argued that in appending emails to his affidavit, the defendant waived solicitor-client privilege attaching to his communications with his counsel regarding the subject matter of the action. Justice Kirkpatrick found that solicitor-client privilege had been waived with respect to the email that was appended and any communications passing between the defendants and their solicitor in response to the issues raised in the email as follows: