Unjust Enrichment- Joint Mortgage Debt After Death

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 43 of WESA includes the following:

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

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

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

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

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

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

Wills Variation ( S 60 WESA) Is Discretionary

Kish v Sobchak 2016 BCC65 discussed how the claim of wills variation is discretionary top the trial judge and how the appeal court should deal with such.

The entire jurisdiction of the trial judge under this statute is discretionary in character. The relief which may be granted under it is completely dependent on his opinion, first, as to whether adequate provision for proper maintenance and support has been provided for the spouse and children under the will, and second, if adequate provision is not thought to be made, as to what provision should be made.

 

. This being so, that Court has the power and the duty to review the circumstances and reach its own conclusion as to the discretion properly to be exercised.

 

According to my definition, an issue falls within a judge’s discretion if, being governed by no rule of law, its resolution depends on the individual judge’s assessment (within such boundaries as have been laid down) of what it is fair and just to do in the particular case. He has no discretion in making his findings of fact. He has no discretion in his rulings on the law. But when, having made any necessary finding of fact and necessary ruling of law, he has to choose between different courses of action, orders, penalties or remedies he then exercises a discretion. It is only when he reaches the stage of asking himself what is the fair and just thing to do or order in the instant case that embarks on the exercise of a discretion.

The standard of review applicable in Canada to the exercise of judicial discretion is found in Friends of the Oldman River Society v. Canada (Minister of Transport) [1992] 1 S.C.R. 3. There La Forest J. wrote for the majority:

Stone J.A. cited Polylok Corp. v. Montreal Fast Print (1975) Ltd., [1984] 1 F.C. 713 (C.A.), which in turn approved of the following statement of Viscount Simon L.C. in Charles Osenton & Co. v. Johnston, [1942] A.C. 130, at p. 138:

The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves have exercised the original discretion, had it attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been a wrongful exercise of discretion in that no weight, or no sufficient weight, has been given to relevant considerations such as those urged before us by the appellant, then the reversal of the order on appeal may be justified.

That was essentially the standard adopted by this Court in Harelkin v. University of Regina, [1979] 2 S.C.R. 561, where Beetz J. said, at p. 588:

Second, in declining to evaluate, difficult as it may have been, whether or not the failure to render natural justice could be cured in the appeal, the learned trial judge refused to take into consideration a major element for the determination of the case, thereby failing to exercise his discretion on relevant grounds and giving no choice to the Court of Appeal but to intervene. [At 76-7; emphasis by underlining added.]

This standard was affirmed and supplemented more recently in Penner v. Niagara (Regional Police Services Board) 2013 SCC 19, where the Court stated:

A discretionary decision of a lower court will be reversible where that court misdirected itself or came to a decision that is so clearly wrong that it amounts to an injustice: Elsom v. Elsom, [1989] 1 S.C.R. 1367, at p. 1375. Reversing a lower court’s discretionary decision is also appropriate where the lower court gives no or insufficient weight to relevant considerations: Friends of the Oldman River Society v. Canada …

        Well before Tataryn was decided (but after Swain v. Dennison), summary trial procedures had of course been introduced in British Columbia and elsewhere. It was clear, certainly in this province, that summary trials were not limited strictly to cases in which there were no conflicts in the evidence. In Orangeville Raceway Ltd. v. Wood Gundy Inc. [1995] 6 B.C.L.R (3d) 391 (C.A.), which was not a WVA case, this court discussed the standard of review on appeals from summary trial judgments. At para. 44, the Court considered whether it was entitled to set aside the judgment below and substitute its own views for those reached by the chambers judge “simply because he did not have the advantage of observing the witnesses as their testimony was tested by cross-examination”. Mr. Justice Goldie for the Court answered this question in the negative, adopting the comments of Mr. Justice Taylor in an earlier case as follows:

So far as findings of fact are concerned, the onus on the appellant in an appeal against a summary disposition of issues made without oral testimony under R. 18A, cannot be merely to persuade the appeal court to a different view of the evidence. The appellant must show that the chambers judge reached a conclusion which cannot reasonably be supported. That is a heavier burden than merely to establish that the appeal court would have made different findings, or have drawn different inferences. [At para. 45; emphasis added.]

 

It has been said that an appellate court is in as good a position to draw inferences from proven facts as the trial judge. But this states only half the equation. The appellate court may be in as good a position but the burden is still on the appellant to demonstrate error, that is to say, that the position reached below after a summary trial cannot reasonably be supported.

 

 

Typical Signs of Dementia

Typical Signs of Dementia

1. Short Term Memory Loss:

Everyone nervously laughs when they walk into a room and can’t remember the reason for doing so, but short-term memory loss is a far different matter and is a telltale indication of possible dementia.

Short-term memory loss is typically the first symptom that others pick up on and typically relates to items such as:

• Repeatedly asking the same question
• repeatedly telling the same story or joke
• seemingly having a long-term memory, but subject to verification.

 

2. Depression

• Many seniors suffer from depression and the difficulty with a demented person is that they may not realize they are depressed. Signs of depression can be loss of interest in activities, hobbies, and other people, trouble concentrating, isolation and general apathy.

 

3. Anxiety

Anxiety and general agitation can be caused by a number of different medical conditions, but anyone who is suffering from dementia is experiencing a profound loss of their ability to understand and function properly, and thus it can be frightening and anxiety provoking. Changes in residences, environment, caregiver arrangements, and other related matters can cause confusion and anxiety.

 

4. Difficulty Finding Words or Communicating

• People with the most common types of dementia, such as Alzheimer’s disease and vascular dementia often have aphasia, which can cause difficulty in finding words, and remembering the names of people they know well.

5. Reasoning and Problem Solving

• The accumulated effect of the decline in communication, learning, remembering, and problem solving may occur either quickly or very slowly over time depending on which area of the brain is affected.

6. Difficulty Performing Common Tasks

• having dementia can make many everyday tasks increasingly problematic. This can range from everything from choosing your clothing and dressing oneself to using a coffee machine and everything in between. After having performed many of these tasks innumerable times, it suddenly becomes problematic, and many people begin to hide their problems at this point.

7. Coordination and Motor Impairment

• similarly, many common tasks such as buttoning a button, removing the lid, or even chewing and swallowing can become increasingly difficult

 

8. Confusion and Disorientation

 

• In the earlier stages, the confusion and disorientation may be quite mild, but will typically become more severe over time, so that it can become difficult and recalling recent events, making decisions or understanding what others have stated.

 

9. Personality Changes

It is not uncommon for passive people to become more violent or other such notable significant personality changes.

 

10. Inappropriate Behavior

It is not uncommon for demented people to act or talk inappropriately, such as saying hurtful things to loved ones .

11 Paranoia

It is not uncommon for demented people to become suspicious of those around them, and accuse them of theft of items such as a saucer or cup, or alleging infidelity or other improper behavior.

12. Spatial Problems

• Getting lost while driving is often an indication of a confused mind. The degree of the demented is probably worse if one becomes lost in their own neighborhood

Trustee Must Follow Terms of Trust

A trustee is obliged to follow the terms of the trust – McLeod v. McLeod, 2011 BCSC 1942.

The trustee is obliged to follow the terms of the trust. The principle is so basic that it does not need authority; however, it is described succinctly in Merrill Petroleum Ltd. v. Seaboard Oil Co. (1957), 22 W.W.R. 529 at 557 (Alta. S.C.):

… While it is also true that there are certain general obligations imposed by law on any trustee (e.g., the duty not to profit from the trust at the expense of the beneficiaries) the more specific obligations and duties of a trustee are set forth in the instrument creating the trust – in other words, except for those general duties imposed by law on all trustees, the terms of a trust are to be found within the four corners of the trust instrument. … In other words, the first duty of this trustee (as of all trustees) was to follow implicitly the terms of the trust instrument, and, secondly, to observe those general principles of trustee law which did not run counter to the express terms of the trust.

Where the text of the trust instrument is not ambiguous, it is inappropriate to consider surrounding facts and circumstances.

The settlor’s intention is to be discerned primarily from the text of the trust instrument: TLC The Land Conservancy of British Columbia v. The University of British Columbia, 2014 BCCA 473 at paras. 45–47;

A trustee’s exercise of wide discretion under the express terms of a trust will rarely be interfered with by a court.

 

Court Intervention

There are grounds that may justify the court’s interference in the exercise of a trustee’s discretion.

 

The court may interfere in the exercise of discretion by a trustee where:

 

a) the decision is so unreasonable that no honest or fair dealing trustee could have come to that decision;
b) the trustees have taken into account considerations which are irrelevant to the discretionary decision they had to make; or
c) the trustees, in having done nothing, cannot show that they gave proper consideration to whether they ought to exercise the discretion.

(Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed (Toronto: Carswell, 2012))

These situations have long been recognized as appropriate circumstances for court intervention: Boe v. Alexander (1987), 41 D.L.R. (4th) 520 at paras. 20–21 (B.C.C.A.);

An example of a trustee’s extraneous consideration is a consideration that is not concerned with the welfare or benefit of the beneficiary of the trust, but with something else, such as disapproval of the beneficiary’s choice of spouse for racial or religious reasons

Cost Awards Against Non Parties

The BC Court of Appeal in Hollander v Mooney 2017 BCCA 238 discussed the rare circumstances where the court may award costs against  non parties.

One or more of the circumstances that might warrant an award of costs against a non party are occasionally seen in estate litigation

The Court’s jurisdiction to order costs against a non-party is limited to special circumstances such as:

– fraudulent conduct,
– abuse of process,
– gross misconduct,
– or circumstances where the non-party is the “real litigant”

Anchorage Management Services Ltd. v. 465404 B.C. Inc., 1999 BCCA 771 at para. 21; Perez v. Galambos, 2008 BCCA 382 at paras. 17–18; and Animal Welfare at paras. 53–58.

The previous appeal decision Perez v Galambos summarized the jurisdiction to award costs against a non-party:

“ The court does have jurisdiction to order costs against a non-party: Oasis Hotel Ltd. v. Zurich Insurance Co. (1981), 1981 CanLII 433 (BC CA), 28 B.C.L.R. 230 (C.A.).

However, an award of costs against a non-party is unusual and exceptional, and should only be made in “special circumstances”: Anchorage Management Services Ltd. v. 465404 B.C. Inc., 1999 BCCA 771, 72 B.C.L.R. (3d) 389, at para. 21.

“Special circumstances” have been held to include situations where the non-party has engaged in fraudulent conduct, an abuse of process, or gross misconduct in the commencement and/or conduct of the litigation, or when the non-party is the “real litigant”:

Executor Remuneration When Stipulated

The Supreme Court of British Columbia has no inherent jurisdiction to award or vary  remuneration to an executor/ trustee where the remuneration is agreed to or stipulated  in the trust agreement or  in a will. Re Edy 1982 CarswellBC 311.

The court’s power to fix the remuneration of a trustee is statutory under the Trustee act.

The court found it significant that the provisions of section 90 of the Trustee act RSBC, the section which provides that it is lawful for the Supreme Court to allow a trustee, a fair and reasonable allowance, not exceeding 5% of the gross aggregate value, including capital and income of all of the assets of the estate, by way of remuneration for the trustees care, pains, trouble and time expended in or about the trusteeship.

The court held that it was bound by the previous decision of re Holmes (1916) 10 OWN 354 and re Robertson 1949 OWN 390 to mean that there is no inherent jurisdiction in the Supreme Court to increase the remuneration to a trustee, where the remuneration has been agreed to in the trust agreement.

The same reasoning would likely apply to the trustee of a will

What Is a Trust

PKMB v DHL 2018 BCSC 186 reviewed some of the basic principles relating to what is a trust.

A trust is the relationship, which arises whenever a person called the trustee is compelled in equity to hold property, whether real or personal, and whether by legal or equitable title, for the benefit of some persons, of whom he may be one, and who are termed beneficiaries, or for some object permitted by law, in such a way that the real benefit of the property accrues, not to the trustee, but to the beneficiaries or other objects of the trust.

In order for a trust to be valid, there must be evidence of the three certainties, namely the certainty of intention, the certainty of subject matter, and the certainty of objects.

In the Bankruptcy of Taylor Ventures, LTD 2004 BC SC 1612, the court described the three certainties as follows

Certainty of Intent:

It must be established that there was a clear intention to create a trust and the language used by the settler must be imperative.

As well, the intention of the settlor of the trust must be ascertained at the time of the settling of the property transferred upon the trustee. For a trust to be valid, the certainty of intent must be made known to the trustee. Re New Home Warranty of British Columbia (2000) 29 CBR 232 BCSC;

Certainty of Subject Matter

A trust cannot be established if the subject matter of the alleged trust is undefined;

Certainty of Object

The beneficiaries must be clearly identified as must the way in which the properties to be applied.

There must be no uncertainty as to whether a person is a beneficiary. If a description of a class of beneficiaries is used, the description must be certain, and it must be possible to ascertain who are the members of the class in the total membership in the class.

Wills Variation: The Judge’s Discretion

The BC Court of Appeal in Kish v Sobchak 2016 BCCA 65 reviewed the discretion of the trial judge in a wills variation claim and how that discretion should be exercised.

The Facts:

A woman and the testator were in a relationship for over 20 years, but kept their finances separate and did not wish to be married. After the woman develop memory problems, the testator rented out his house to his brother and moved in with the woman, and became her full-time caregiver.

The testator developed cancer and executed a new will, leaving the estate to only his daughter who was a single mother of three.

The woman executed a new will leaving her estate to her son and grandson.

The woman became incompetent and was placed in a care facility.

The testator died and left his estate of just under $200,000 and his daughter who also received $250,000 outside of the will.

The mother’s son brought a successful action on her behalf under the wills variation act.

The trial judge found that the woman and testator were in a marriage like relationship, that the woman was his spouse for the purposes of the act, the testator had a moral and legal obligation to the woman and failed to adequately provide for her in his will.

The woman was awarded $100,000 and on appeal the award was reduced to $30,000.

The appeal court found that while the testator would have some legal obligation to support the woman during his lifetime, the testator and the woman clearly wished to benefit his and her own children to the exclusion of each other.

It was inappropriate to disregard the express wishes that modest estates, built up through their parties individual effort should be their own, and that the respective children should benefit exclusively therefrom.

A parties particular circumstances and relationship with strongly in favor of respecting testamentary autonomy. And the trial judge should have given more weight to that principle.

The Exercise of Judicial Discretion in Wills Variation

The court examined, discretion and held that the line between the exercise of judicial discretion and the finding of facts is not easy to enunciate.

A judge has no discretion in making his or her findings of fact, and has no discretion in his or her rulings on the law.

But when having made any necessary finding of fact the necessary ruling of law, the judge has to choose between different courses of action, orders, penalties or remedies that he or she then exercises the discretion. It is only when he or she has reached the stage of asking him or herself. What is the fair and just thing to do, or order in the instant case that embarks on the exercise of a discretion.

A judge must exercise judgment, not discretion in finding the facts, and is usually the most difficult and often most exacting task which the civil trial judge has to undertake.

The standard of review applicable in Canada to the exercise of judicial discretion is found in Friends of the Oldman River Society v Canada (Minister of Transport) (1922) 1 SCR 3:

“ The law as to the reversal by a court of appeal of an order made by the judge below in the exercise of his discretion is well-established, and any difficulty that arises is due only to the application of well-settled principles in an individual case. The appellate tribunal is not at liberty merely to substitute its own exercise of discretion for the discretion already exercised by the judge. In other words, appellate authorities ought not to reverse the order merely because they would themselves of exercised the original discretion, headed attached to them, in a different way. But if the appellate tribunal reaches the clear conclusion that there has been her wrongful exercise of discretion in that no wait, or no sufficient weight, has been given to relevant considerations such as those urge before us by the appellant, then the reversal of the order on appeal may be justified..”

A discretionary decision of a lower court will be reversible where that court misdirected itself or came to a decision that is so clearly wrong that it amounta to an injustice. Elsom v Elsom (1989) 1 SCR 1367 at p.1365

Express Trusts

The BC Court of Appeal in Xu v Hu 2021 BC CA 2   overturned a finding of the trial judge who had found an express trust over a parcel of property.

The appeal court found that the findings of fact did not establish the certainties of intention and object necessary to establish an express trust.

In order for a valid trust to be constituted, there must be certainties of intention, subject and object of the trust, and when the property has been vested in the trustee, and express trust is created.

Very often in the X decision, the question is one of what was the intention of the settlor- to make a gift or a trust?

 

What Is a Trust?

“A trust is the relationship which arises whenever a person (called the trustee) is compelled in equity to hold property, whether real or personal, and whether by legal or equitable title, for the benefit of some persons (of whom he may be one, and who are termed beneficiaries) or for some object permitted by law, in such a way that the real benefit of the property accrues, not to the trustees, but to the beneficiaries or other objects of the trust.”

 

 

What Is an Express Trust?

 

In Suen v Suen 2013 BCCA 313  the court stated:

 “     An express trust is created when the requirements of certainty of intention, subject, and objects of the transfer have been established and the trust property has been vested in the trustee: Waters at 132 and 167. Where the trust property has not been vested in the trustee, and there is no way of compelling the settlor to do so, this “incompletely constituted trust” or “shell of a trust” does not operate as a trust and has no legal significance: Waters at 167. Waters describes the “one golden rule” for the creation of a trust (at 168):”

 

The onus of establishing each of the certainties lies with the party asserting the trust’s existence: McInerney v. Laass, 2015 BCSC 1708at para. 36. The standard of proof is the usual civil balance of probabilities: Pavlovich v. Danilovic, 2020 BCCA 239at para. 27.

Certainty of intention is a question of fact; certainty of subject and object are questions of mixed fact and Law: Grewal v. Khakh, 2018 BCCA 357at para. 24. Thus, the trial judge’s conclusion that the requisite certainties were satisfied is reviewable on a standard of palpable and overriding error, except for any extricable questions of law, which are reviewable on a standard of correctness: Housen v. Nikolaisen, 2002 SCC 33.

 The settlor’s intention is the critical element for the creation of an express trust. As explained by Deschamps J.: “Express or ‘true trusts’ arise from the acts and intentions of the settlor and are distinguishable from other trusts arising by operation of law”: Century Services Inc. v. Canada (Attorney General), 2010 SCC 60at para. 83. As explained by A. H. Oosterhoff, Robert Chambers & Mitchell McInnes in Oosterhoff on Trusts: Text, Commentary and Materials, 8th ed. (Toronto: Carswell, 2014) at 193 — 194:

Certainty of intention is a question of construction.

The intention may be express or implied, it may arise from words or acts.

Technical language need not be used. A settlor may create a trust without using the word “trust” and, indeed, without fully understanding the concept of trusteeship.

Intention ultimately is a matter of substance rather than form. Language alone cannot create a trust.

In the Xu decision the evidence was that Mr. HU told Ms. Hu and others that the property in dispute was being GIFTED to Ms. Hu.

The use of the word gift while not conclusive , is very strong indication that a gift was intended, not a trust.

 

There is a presumption that parties usually intend to gift, but rarely constitute themselves as trustees. ( Oosterhoff at 256)

 

The court is not at liberty to constitute words other wise that according to their proper meaning.

 

Further complicating what the intention of the settlor was, in British Columbia trusts are exempted from the general requirement that dispositions of land must be evidenced in writing as per S. 59 (1) of the Law and Equity Act.