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Domicile: It’s Important

Domicile: It's Important

The issue of domicile arises more frequently today in estate disputes, family litigation and taxation law as more and more people have assets in different jurisdictions and spend significant time in more than one.

The issue of domicile can be legally challenging and falls within the area of law known as “Conflicts”, which involves an analysis of which jurisdiction prevails in the circumstances of the case.

Domicile and residence are usually in the same place, but not necessarily. The terms are frequently misused as if they had the same meaning, but they are not identical. A person may have two or more places of residence, but may have only one domicile.

Residence means living in a particular locality, but domicile means living in that locality with the intent to make it a fixed and permanent home.

Residency simply requires bodily presence as an inhabitant in a given place, while domicile requires bodily presence in that place as well as the intention to make it one’s domicile.

The legal domicile of the person is important since domicile, rather than the actual residential address, often decides the jurisdiction of the courts in determining whether or not an estate, family dispute or taxation matter will be heard in British Columbia, as opposed to elsewhere.

The domicile of the person in issue can have significant impact on matters such as distribution of estate assets, division of family assets and income taxation.

We are all ascribed a domicile of origin at birth that is typically recorded where the birth took place. A person can acquire a domicile of choice by having a fixed and permanent intention to remain in that jurisdiction for an indefinite period and by being resident in that jurisdiction. Both criteria must be present at the same time in order for a domicile of choice to be acquired.

The acquisition of a domicile of choice must be clearly proven on a balance of probabilities. Any act, event or circumstance in the life of the person may be evidence which can be used to determine his or her intention to “form” a domicile.

Example:

I currently have a case where the deceased owned $2 million in assets in British Columbia and $10 million in a foreign country. He made a will in British Columbia dated April 2016 with respect to his real and personal property situated in British Columbia. He also made a will in the foreign country dated January 2016, as amended by a codicil dated April 2016 with respect to his property elsewhere in the world but excluding BC.

He married in April 2017 in British Columbia, after signing his foreign will. Under the laws of the foreign country marriage revokes a prior will, and thus his assets there would have been distributed on an intestacy. He was in the process of immigrating to Canada where he had owned property for many years and visited on a frequent basis.

His domicile was determined to be British Columbia. Therefore the law of British Columbia applied to his last will and under British Columbia law, marriage no longer revokes a will.
As the deceased was domiciled in BC at the time of his marriage, the BC will would not have been revoked by his marriage. In the foreign country, that will would have been revoked by marriage if his domicile was in that country, and an intestacy would have occurred.

As his domicile was BC, there was not an intestacy in the foreign country, so the assets there were probated as per the terms of the will.

Factors in Determining Domicile

The determination of domicile is a question of mixed law and fact. Some of the criteria that will be used to determine domicile are as follows:

  • the acquisition of real property in the newly intended domicile;
  • actual residence in the new jurisdiction;
  • change of nationality, or application for immigration or a passport;
  • time spent in the jurisdiction and the periods of time involved;
  • any expressed desires to live in the new jurisdiction for the remainder of his or her life;
  • expressions of intent to change domicile, both written and oral;
  • the political climate, religious situation and customs of the jurisdiction in which the domicile is alleged to have been acquired;
  • any relatives in the jurisdiction or the presence of family graves located within it;
  • whether bank accounts have been opened in the jurisdiction, and other evidence of establishing “roots” therein.

In the taxation case Thomson v MNR 2 DTC 812 (SCC), the Supreme Court of Canada held that residency (meaning spending a certain number of days per year in a country to establish residency) of an individual is determined based on the special bounds within which one spends his or her customary living. The quality of residency is a matter of the degree to which a person in mind and facts settles into his or her ordinary mode of living.

Accordingly, the determination of an individual’s residency (domicile) is highly dependent on the facts and circumstances of his or her particular situation. Over the past several decades Canadian courts have looked to various significant ties that an individual has with Canada to determine whether he or she is either a resident or is domiciled in Canada. Typically the courts examine where the individual has a permanent home, where the individual’s spouse and dependents are located, and where the individual’s finances and social interests are located.

Domicile of Choice

Wadsworth v McCurdy (1866) 12 SCR 466 is the earliest decision of the Supreme Court of Canada on the law of domicile. The court stated that two things must concur to constitute an acquired domicile:

  1. residence, and;
  2. the intention of making it the permanent home of the party.

Therefore, both the fact and the intent must be present for a finding of an acquired domicile.
Thus a person establishes a domicile of choice by voluntarily choosing to reside in a location, not temporarily or for some special purpose, with the intention of making it his or her permanent home, unless and until something unexpected or uncertain induces him or her to adopt some other permanent home: Trottier v Rajaotte (1940) SCR 203 at 206.

In Foote Estate, Re, 2011 ABCA 1 at paras 20-22, [2011] 6 WWR 453 one’s domicile of origin can be displaced by a “domicile of choice”, a place where a person has chosen to live. The classic description of domicile of choice is found in Udny v. Udny (1869)1866-69 L.R. 1 Sc. 441 (U.K.H.L.):

“Domicile of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. . . . There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation.”

The onus of proving that a person has acquired a domicile of choice is on the party alleging the acquisition.

Abandonment

Just as a person can acquire a domicile of choice, he or she may also abandon the domicile of choice.

The following rule is set out in Dicey, Morris and Collins on the Conflict of Laws 14th Edition at 151:

  1. A person abandons a domicile of choice in a country by ceasing to reside there, and by ceasing to intend to reside there permanently, or indefinitely, and not otherwise.
  2. The test for loss of domicile of choice is twofold: it requires an intention to cease to reside in a place, coupled with acts that ends one’s residence. A domicile of choice is lost when both the residence and the intention which must exist for its acquisition are given up. It is not lost merely by giving up the residence, nor merely by giving up the intention.

Therefore abandonment is really the converse of its acquisition. Absence without the intention of abandonment is of no effect. Nor is intention without actual change of residence.

The intention to abandon is insufficient in itself to affect the abandonment, so long as the person remains within the domicile or territory: Zanelli v Zanelli (1948) 64 TLR 556.

Therefore, in order to lose the domicile of choice and revive the domicile of origin, it is not sufficient for the person to form the intention of leaving the domicile of choice. He or she must actually leave it with the intention of leaving it permanently.

Conclusion

The issue of domicile is increasingly significant in the global economy as populations move about the world and often try to change their domicile for tax or matrimonial advantages. Social media posts often comment on celebrities and oligarchs that claim domicile in a jurisdiction that has laws favourable to their claim.

The determination of one’s domicile is a mixture of law and the examination of detailed facts to determine one’s intention. With the complexities of today’s global finances and dual citizenships this is often difficult to assess and may require the use of chartered accountants and legal advisors.

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