Damage Assessments on Appeal

Damage Assessments on Appeal

“An appellate court will not interfere with a trial judge’s assessment of damages unless he or she erred in principle of law, misapprehended the evidence, failed to consider relevant factors or considered irrelevant factors, or there was no evidence on which the judge could have reached his or her conclusion: Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58 at para. 80.  

An award is inordinately low if it falls substantially below the range for damage awards in the same class of case, such that it demonstrates palpable and overriding error: Cory v. Marsh (1993), 77 B.C.L.R. (2d) 248 (C.A.); Le v. Luz, 2003 BCCA 640.”

As stated by the Supreme Court of Canada in the Naylor Group v Ellis-Don case stated:

It is common ground that the Court of Appeal was not entitled to substitute its own view of a proper award unless it could be shown that the trial judge had made an error of principle of law, or misapprehended the evidence (Lang v. Pollard, [1957] S.C.R. 858, at p. 862), or it could be shown there was no evidence on which the trial judge could have reached his or her conclusion (Woelk v. Halvorson, [1980] 2 S.C.R. 430, at p. 435), or the trial judge failed to consider relevant factors in the assessment of damages, or considered irrelevant factors, or otherwise, in the result, made “a palpably incorrect” or “wholly erroneous” assessment of the damages (Andrews v. Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229, at p. 235; Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705, at p. 810; Widrig v. Strazer, [1964] S.C.R. 376, at pp. 388-89; Woelk, supra, at pp. 435-37; Waddams, supra, at para. 13.420; and H. D. Pitch and R. M. Snyder, Damages for Breach of Contract (2nd ed. 1989) 15§5).  Where one or more of these conditions are met, however, the appellate court is obliged to interfere. 

Dementia disease

Dementia disease

An epidemic of dementia disease is predicted to occur within the next 15-20 years.

The most common types of dementia disease such as Alzheimers, frontotemporal dementia, vascular dementia, and Lewy Bodies are expected to dramatically increase by %50  over the next 15 -20 years as our population ages. Dementia is often present in various estate disputes such as lack of mental capacity when signing a will or power of attorney.

The implications of a dementia are substantial for the patient and extremely far-reaching, not only for the patient, but also for the family.
Family members often assume the role of caregivers or guardians, which can be a complete role reversal from previous years.
It is important to remember that patients with dementia usually do not fully understand their diagnosis, prognosis, and treatment options. The family members must be trained regarding the patient’s safe housing and  care.
Because of the lack of personal insight, the demented person may not fully understand that certain activities will no longer be safe for them to do, such as driving or using power tools.
Behavioral problems such as agitation or aggression are often common in patients with dementia, and  can  cause burnout amongst family members who are burdened with their care.

Alzheimers is perhaps the most well known type of dementia but several types of dementia exist.

By definition a dementia constitutes impairment of at least one dominant domain of cognitive function ( such as abstract thought, executive functioning, language, or visual/spatial skills) that results in daily activity  impairment. The diagnosis of dementia requires the exclusion of other cognitive impairments such as delirium and depression.

Many seniors are affected by depression and the cognitive effects of depression can vary in scope and severity and may ultimately result in dementia, but its effects can often be reversed. Dementia and depression often frequently co -concur in seniors.

There is both cortical and sub cortical dementia. Cortical dementias are typically progressive and degenerative and ten to be associated with impaired language skills ( aphasia), perception, reasoning, problem solving, and recall.

By contrast sub cortical dementias  may be  progressive, static or reversible and are associated with cognitive slowing, emotionality, such as apathy or depression, and deficits in attention, arousal, and processing speed.

Alzheimers

Alzheimer disease is the most common type of dementia that affects approximately 1/3 of persons aged 85 years or older in the United States.
One of its telltale characteristics a short term memory loss, coupled with impaired judgment, confused or vague speech, and poor insight.
The aspect of poor insight commonly causes patients to think there is not much  wrong with their memory or health as their social skills are often preserved with patients often being described as “pleasantly confused”.
As the disease progresses, however the patient often exhibits changes in personality, agitated behavior or both.
The typical disease course from symptom onset to death is 6 to 9 years.

Dementia with Lewy Bodies

The disease typically occurs between the ages of 50 and 60 years and is slightly more common in men.
The disease presents with a cognitive profile marked by prominent impairment of attention, Visuospatial functioning and executive function.
The patient typically is more demented in his or her attention spatial ability rather than the prominent short-term memory loss of Alzheimer’s disease.
Visual hallucinations may also occur.

Frontotemporal Dementia

This is the third most common form of dementia, whose onset most commonly occurs between ages 50 and 60 years, but can be 15 years earlier or 15 years later.
The most striking feature that brings the patient to clinical attention is a notable personality change with poor insight.
The behavior is typically impaired social conduct, poor impulse control, sexually inappropriate comments or behaviors, in violation of interpersonal space.
Depending on where the disease occurs in the frontal lobes, the behavior can also manifest itself as passivity, poor personal hygiene and mimicking behaviors.
This type of dementia rapidly progresses over a 5 to 10 year course.

Vascular Dementia Disease

After Alzheimer’s, vascular dementia is the second most common type of dementia, accounting for 10 to 50% of all cases of dementia among adults 65 years or older. It is often referred to as cognitive impairment caused by strokes or mini strokes.
Impairment in vascular dementia ranges in its severity and type depending on the degree of tissue damage to the small blood vessels.
Hypertension and diabetes are significant risk factors that can lead to vascular dementia.

Dementia Due to Parkinson Disease

 Patients with Parkinson disease can develop slowly progressing dementia that usually occurs in the latter stages of the disease, typically about 10 years after its onset.
For patients with dementia due to Parkinson disease, the incidence of dementia it will increase with the greater physical impairment, and the dementia is more pronounced when rigidity is the most prominent  symptom and less pronounced when tremor is the most prominent symptom.
The cognitive profile is notable for predominant executive dysfunction as well as impairment in them in attention and memory.
Approximately 1/3 of Parkinson patients will develop this dementia, which will increase to almost 50% after 15 years from the initial onset of Parkinson disease.

The Law of Mistake

The Defence of Mistake

Teather v Kawashima 2016  BCSC  2231 involved litigation where the defence of mistake was argued and the Court reviewed the law.

When parties are negotiating a contract it may occur that  one party is thinking of one thing while the other party is thinking of another. This will result in a mistake and when that occurs, one of the parties may  attempt to vitiate the contract.

I have seen this occur when negotiating a settlement at a mediation- the parties were mistaken as to the terms of what was intended to be contained in the settlement, and one party sued to vitiate the settlement. There are three types of mistake in law, common, mutual and unilateral

THE  LAW  OF MISTAKE

As to the distinction between the types of mistake giving rise to vitiation of the underlying contract, in whole or in part, Prowse, J.A. adopted the following summary from Ron Ghitter Property Consultants Ltd. v. Beaver Lumber Co. (2003), 17 Alta. L.R. (4th) 243 (C.A.) at paras. 12 — 13:

12. There are three types of mistake: common, mutual and unilateral: see Cheshire, Fifoot & Furmston, Law of Contract, [14th ed. (London: Butterworths, 2001)], supra, at 252-53 for a summary of each.

Common mistake occurs when the parties make the same mistake. For example, one party contracts to sell a vase to another when unbeknown to both, the vase was destroyed and no longer exists. 

Mutual mistake occurs when both parties are mistaken, but their mistakes are different. In this event, the parties misunderstand each other and are, to use the vernacular, “not on the same page”.  

Unilateral mistake involves only one of the parties operating under a mistake. If the other party is not aware of the one party’s erroneous belief, then the case is one of mutual mistake but if the other party knows of it, of unilateral mistake. What adds to the confusion is that the distinction between mutual and common mistake is sometimes blurred when courts use the two terms interchangeably. 

13. The presence or absence of an agreement is one of the foundational differences amongst the three types of mistake. With common mistake, the agreement is acknowledged. What remains to be determined is whether the mistake was so fundamental as to render the agreement void or unenforceable on some basis.

But in the case of a mutual or unilateral mistake, the existence of an agreement is rejected. As explained in Cheshire, Fifoot & Furmston, supra at 253: 

Where common mistake is pleaded, the presence of agreement is admitted. The rules of offer and acceptance are satisfied and the parties are of one mind. What is urged is that, owing to a common error as to some fundamental fact, the agreement is robbed of all efficacy. Where either mutual or unilateral mistake is pleaded, the very existence of the agreement is denied. The argument is that, despite appearances, there is no real correspondence of offer and acceptance and that therefore the transaction must necessarily be void.

Fertility and WESA

Fertility and WESA: Is This Reproductive Matter Property?

A deceased husband’s frozen sperm at a fertility centre was declared to be personal property under WESA and previous case law and thus could be inherited by the widow on an intestacy.

The court in KLW v Genesis Fertility Centre 2016 BCSC 1621 ordered to release of the frozen sperm to the widow as the sole beneficiary despite the deceased not having signed the required consent under the Assisted Human Reproduction Act and it’s  Regulations to create an embryo.

There was evidence that the wife and the deceased had spoken to a number of professionals of their plan to conceive a child even if he died.

The court held that the reproductive material which includes sperm, ovum and other cell or human g3ene or any part of them is  a product under WESA that can pass to beneficiaries.

The fertility centre did not oppose the application and  required  a court order to release the sperm without the proper consent of the deceased.

The court held to deny the wife the use of the reproductive material would be both unfair and an affront to her dignity.

Is the Reproductive Material Property?

[59]        In particular contexts, courts in various jurisdictions have held that human sperm or ovums stored for reproductive purposes are property: C.C. v. A. 1/1/., 2005 ABQB 219; J.C.M. v. A.N.A., 2012 BCSC 584; Lam v. University of British Columbia, 2015 BCCA 2; Yearworth v. North Bristol A/HS Trust, [2009] EWCA Civ 37; Kate Jane Bazley v. Wesley Monash IVF Pty. Ltd., [2010] QSC 118 (Queensland SCTD); Jocelyn Edwards: Re the Estate of the late Mark Edwards, [2011] NSWSC 478.

[60]        In C.C. v. A.W., the parties disputed access to twins born to C.C. through a donation of sperm from A.W. Each party also claimed the four fertilized embryos that remained in a Toronto clinic. A.W. refused to consent to the release of the remaining embryos to C.C. for her use in another attempt to become pregnant.

[61]        At paras. 20 and 21, the court found that A.W. had provided his sperm as an unqualified gift to C.C. to assist her to conceive children. The remaining fertilized embryos remained C.C.’s property. They were chattels she could use as she saw fit.

[62]        In J.C.M. v. A.M.A., the parties, during the course of their spousal relationship, each gave birth to one child using artificial insemination from sperm provided by a single donor. When the parties separated, they entered into a separation agreement that divided all joint property of their relationship. Through inadvertence, the separation agreement did not divide the 13 remaining sperm straws stored at Genesis. Madam Justice Russell concluded that the remaining sperm straws should be treated as property for the purpose of dividing them upon the dissolution of the parties’ spousal relationship. In reaching that conclusion, Russell J. relied primarily upon C.C. and the decision of the England and Wales Court of Appeal in Yearworth v. North Bristol NHS Trust, [2009] EWCA Civ 37.

[63]        In Yearworth, the Court held that stored sperm was property for the purposes of an action for negligent damage to property. The appellants were all diagnosed with cancer. They received treatment at a hospital operated by North Bristol NHS Trust and accepted advice that before undergoing chemotherapy, they could produce semen samples that the respondent would store for their future use. Before any of the appellants attempted to use the sperm, the hospital’s freezing system failed and the sperm perished.

[64]      The Court of Appeal began its analysis at para. 28:

28. A decision whether something is capable of being owned cannot be reached in a vacuum. It must be reached in context; and in this section of our judgment the context is whether an action in tort may be brought for loss of the sperm consequent upon breach of the Trust’s duty to take reasonable care of it. The concept of ownership is no more than a convenient global description of different collections of rights held by persons over physical and other things. In his classic essay on “Ownership” (Oxford Essays in Jurisprudence, OUP, 1961, Chapter V) Professor Honore identified 11 standard incidents of ownership but stressed that not all of them had to be present for ownership to arise. He suggested that the second incident was “the right to use” and he added, at p.116, that:

“The right (liberty) to use at one’s discretion has rightly been recognised as a cardinal feature of ownership and the fact that… certain limitations on use also fall within the standard incidents of ownership does not detract from its importance…”

We have no doubt that, in deciding whether sperm is capable of being owned for the purpose which we have identified, part of our enquiry must be into the existence or otherwise of a nexus between the incident of ownership most strongly demonstrated by the facts of the case (surely here, the right, albeit limited, of the men to use the sperm) and the nature of the damage consequent upon the breach of the duty of care (here, their inability to use it notwithstanding that this was the specific purpose for which it was generated).

[65]        In Yearworth, the Court recognized that historically, the common law did not allow any property interest in the human body, or body parts, living or dead. The Australian High Court in Doodeward v. Spence, (1908) 6 C.L.R. 406 created an exception to this rule when it recognized the right of ownership in a two-headed fetus preserved for commercial display as a curiosity. For the majority, Chief Justice Griffith held:

[W]hen a person has by the lawful exercise of work or skills so dealt with a human body or part of the body in his lawful possession that it has acquired some attributes differentiating it from a mere corpse awaiting burial, he acquires a right to retain possession of it …

[66]        The Court in Yearworth held at para. 45(a) that developments in medical science “now require a re-analysis of the common law’s treatment of and approach to the issue of ownership of parts or products of a living human body, whether for present purposes (viz. an action for negligence) or otherwise.”

[67]        At para. 45 (d), the Court stated that it was not content to see the common law in this area founded upon the principle in Doodeward, “which was devised as an exception to a principle, itself of exceptional character, relating to the ownership of the human corpse. Such ancestry does not commend it as a solid foundation.”

[68]        At para. 45(f), the Court held that for the purposes of their negligence claims, the appellants had ownership of the sperm which they had generated and ejaculated for the sole purpose of its later use for their benefit. Although their rights to use the sperm were limited by legislation, no person other than the appellants had any right in relation to the sperm.

[69]        In Yearworth, at para. 45(b), the Court of Appeal emphasized the claim concerned products of a living human body intended for use by the persons whose bodies had generated them. The Court was not asked to consider whether there was any significant difference between such claims and claims in respect of donated products intended for use by others brought by the donors or by the donees of such products.

[70]        In J.C.M., Russell J., referring to Yearworth, commented at para. 63 that the need for the common law to keep up with medical science is compelling. At para. 69, she found that in the context of the dispute before her, the sperm was the property of the parties. Madam Justice Russell observed that the sperm had been treated as property by everyone involved in the transaction, including the donor, Genesis and the parties.

[71]        Equally, in the case at bar, [A.B.], Genesis and the petitioner all treated the Reproductive Material as property.

[72]        In Lam v. University of British Columbia, the Court of Appeal upheld the trial judge’s finding that frozen human sperm is property for the purposes of the Warehouse Receipt Act, R.S.B.C. 1996, c. 481 (“WRA”). The facts of Lam are similar to Yearworth. The respondent, Mr. Lam, was the representative plaintiff in a class proceeding against the University of British Columbia. Members of the class had cancer. Before undergoing radiation treatment, they stored their frozen sperm in the appellant’s freezer. As the result of a power failure, the stored sperm was damaged or destroyed.

[73]        In Lam, Chiasson J.A., at para. 51, considered the Court in Yearworth had taken the correct approach to the development of the common law in holding that developments in medical science required a re-examination of the issue of ownership of parts or products of a living human body. However, in concurring reasons for judgment, Bennett J.A., writing for herself and Frankel J.A., emphasized at para. 110 that in Yearworth, the Court was determining whether human sperm was property in a very narrow context, and was not determining whether sperm in other contexts, such as probate or matrimonial law, could be considered property.

[74]        At paras. 113 and 114, Bennett J.A. stated:

[113]   The nature and scope of property interests that a person can have in human sperm need not be decided on the facts of this case. This case, unlike for example, J.C.M. v. A.N.A., 2012 BCSC 584, does not deal with competing property interests in human sperm. This case considers whether Mr. Lam, a cancer patient, has ownership of the sperm he produced, such that he can contract for its storage to enable his personal use of the sperm at a later date. If so, the sperm is property, as something must be property if it is capable of being owned. There may also exist things that are property that cannot be owned, but that is not something that needs to be decided in the context of this case.

[114]   Not all of Professor Honore’s 11 incidents of ownership need to be present for ownership to arise (Yearworth at para. 28). Ownership of body parts must be contextual, and often limited by legislation because of public policy reasons. No one would argue that if a cancer patient cut her hair and stored it for the purpose of later making a wig after treatment that she did not “own” her hair in that context. On the other hand, legislation prevents the selling of sperm and organs such as kidneys, but does not prevent their donation. The prohibition on sale does not necessarily mean the legislation is inconsistent with ownership. It has provided limits to ownership in some contexts.

[75]        In concluding that each of the sperm donors had sufficient ownership of their stored sperm for it to be “property” and thus “goods” within the meaning of the WRA, Bennett J.A. applied the same analytical framework as the Court had adopted in Yearworth. The donors had ejaculated the sperm; contracted to store the sperm for their own future use; paid a fee for storage; and could consent to the sperm being tested. Further, they could terminate the storage agreement; could consent to the release of the sperm to their physician to be used by their spouse; and could exclude all others from using the sperm. Although legislation or the storage agreement precluded the donors from disposing of the sperm by leaving it to someone in their will or from selling the sperm, they nonetheless had sufficient rights in relation to their own sperm for it to be defined as property.

[76]        In Bazley v. Wesley Monash IVF Pty. Ltd., the applicant’s husband was diagnosed with liver cancer. Before his death, he provided a semen sample before undergoing chemotherapy. The respondent continued to store the semen samples following Mr. Bazley’s death. When the applicant requested that the respondent continue to store the sperm, a spokesperson for the respondent informed her that in the absence of specific reproductive and assisted technology legislation in Queensland, the respondent operated under national guidelines for the use of assisted reproductive technology. The guidelines provided that clinics must not store or use gametes from deceased persons unless there was a clearly expressed written directive from the donor consenting to the use of the gametes. Mr. Bazley had died without providing such a direction. The respondent informed the applicant that in the absence of such a directive, it was prevented by the guidelines from continuing to store Mr. Bazley’s sperm or using it to procure a pregnancy.

Who Can Be an Expert Witness?

Who Can Be an Expert Witness?

The complexity  litigation issues  has increased the need and use of expert witnesses, and just who can be one is sometime an issue in itself.

Some of the experts that I have  utilized over years of estate litigation are geriatric psychiatrists, accountants and forensic auditors, and on occasion hand writing experts.

Very often the parties present evidence by the expert that they wish to call as to qualifications and experience testifying as an expert and then the cross examination, before the court rules on whether the evidence will be accepted as expert opinion.

Grewal v Khakh 2016 BCSC 2055 recently adopted the long established rule as first set out in Regina v Bunnis ( 1964) 44 C.R. 262 and adopted by the BCCA in Regain v Kinnie  1989 CarswellBC 205 at paragraph 12:

.. The test to be applied by the judge was, if I may say with respect, correctly stated by Tyrwhitt-Drake C.C.J. in Regina v. Bunniss (1964), 44 C.R. 262 at 264. The judge was stating the effect of the definition of an expert witness given by Lord Russell of Killowen C.J. in The Queen v. Silverlock, [1894] 2 Q.B. 766. Tyrwhitt-Drake C.C.J. said this:

From this it is clear that so long as a witness satisfies the Court that he is skilled, the way in which he acquired his skill is immaterial. The test of expertness, so far as the law of evidence is concerned, is skill, and skill alone, in the field in which it is sought to have the witness’s opinion. If the Court is satisfied that the witness is sufficiently skilled in this respect for his opinion to be received, then his opinion is admissible.

Copy of Will Probated

Copy of Will Probated

Under certain circumstances a copy of a will rather than the original, may be admitted to probate as the last valid will of the deceased.

The competing claimants will typically  argue that there is a presumption of revocation when the original will cannot be produced.

There is more information on this topic under my  blog heading of lost wills.

In short reasons for judgement, Canada Trust v MacMillan 2016 BCSC 1909 sets out a situation where the court was satisfied by evidence that the will maker executed a last will that had become lost due to changes in the law firms that held the will. Evidence was also led that she was mentally capable  at the time the will was signed, as it was argues she had suffered from mental illness for much of her life.

Canada Trust v MacMillan 2016 BCSC 1909

APPLICATION by bank for pronouncement of force and validity of last will of deceased in solemn form.

Gray J., In Chambers:

1      I am prepared to make the order requested. I will just give some very brief reasons for judgment.
2      Canada Trust is seeking a series of orders. The most important is a pronouncement for the force and validity of the last will of Joan Margaret MacMillan (“Ms. MacMillan”) dated November 5, 2002, in solemn form.
3      Ms. MacMillan passed away in March 2014 at the age of about 81 years. She had an estate which is presently worth a little bit more than two million dollars.
4      There were really three areas of concern that were addressed. The first is that the original signed will is not available. However, there is evidence that Mr. Argue was the lawyer who prepared the will. He was a lawyer with the law firm Owen Bird at the time he did the initial work on the will, and a few days later he started working at the law firm Campney & Murphy, and he was a lawyer with that firm when the will was executed.
5      A wills notice was filed saying that the will was kept at the law firm Campney & Murphy, but that law firm ceased operations, and the will was not found in the vault.
6      Two copies of the will were found, one in the deceased’s personal documents, and the other with Canada Trust, which was involved in referring Ms. MacMillan to Mr. Argue for preparation of the will. There was also an email from Mr. Argue to the Canada Trust officer who had been involved, saying that the will had been executed.
7      On the basis of all this, I am satisfied that the will was executed in compliance with the Wills Act formalities, even though we do not have the original will itself. We have the copy. It is appropriate with the correction in the name of the cousin, to Dorothy C. Anderson (“Ms. Anderson”). The name originally provided was Dorothy T. Anderson, but that name was incorrect.
8      The will itself provided that the residue would be distributed equally between Ms. Anderson and James V. Bennett, or to the survivor. In fact, Ms. Anderson predeceased the will maker. So pursuant to the will, it would be Mr. Bennett who would receive the entire residue of the estate.
9      Mr. Bennett was not a relative of the will maker. He met her in connection with doing some private investigation work for her. After that, he spent some time assisting her with chores, assisting her around the home, and having some social interaction with her such as lunches and teas and so on.
10      There was a concern about the will maker’s capacity to make the will. Ms. MacMillan had a history of mental illness. She suffered bipolar disorder, with episodes of depression and episodes of manic behaviour. She had some hospitalizations over the course of her lifetime. However, at the time of giving instructions and the execution of the will, she satisfied Ms. Taylor of Canada Trust and the lawyer, Mr. Argue, that she had testamentary capacity. She knew the extent of her estate. She knew that she had no living parents or siblings or children.
11      There is also the evidence of Dr. Sloan, a geriatric physician, and Dr. Hurwitz, a neurologist and psychiatrist, based on their review of medical records, all suggesting that the will maker had testamentary capacity. I am satisfied that Ms. MacMillan had the necessary capacity to execute the will at the time she did so.
12      A concern was also raised about undue influence. I have read Mr. Bennett’s affidavit, and I have not seen any evidence that suggests that there was undue influence.
13      Having considered all these things, I will make the orders sought and I am happy to initial the approved form of order.

Laches

Laches

Laches was discussed and rejected by the court in Grewal v Khakh 2016 BCSC 2055, where the court quoted the Supreme Court of Canada:

52           In  M. (K.) v. M. (H.), , [1992] 3 S.C.R. 6, [1992] S.C.J. No. 85 (S.C.C.) at para. 98, where the court said:

A good discussion of the rule and of laches in general is found in Meagher, Gummow and Lehane, supra, at pp. 755-765, where the authors distill the doctrine in this manner, at p. 755:

It is a defence which requires that a defendant can successfully resist an equitable (although not a legal) claim made against him if he can demonstrate that the plaintiff, by delaying the institution or prosecution of his case, has either

(a) acquiesced in the defendant’s conduct or

(b) caused the defendant to alter his position in reasonable reliance on the plaintiff’s acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb.

Thus there are two distinct branches to the laches doctrine, and either will suffice as a defence to a claim in equity. What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine.

Gifts In Contemplation of Death

Gifts In Contemplation of Death

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

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

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

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

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

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

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

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

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

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

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

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

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

1. Bank Accounts

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

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

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

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

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

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

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

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

2. Safety Deposit Box Keys

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

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

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

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

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

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

This decision was upheld on appeal.

3. Furniture and Personal Effects

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

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

4. Forgiveness of a Debt

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

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

5. Real Property

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

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

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

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

Conclusion

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

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

Wills Variation-Assets Passing Outside of the Estate

Assets Passing Outside of the Estate

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

 

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

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

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

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

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

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

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

2.       named beneficiaries under an insurance policy;

3.       proceeds from pension plans with named beneficiaries;

4.       trusts;

5.       gifts made during the lifetime of the deceased; 

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

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

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

Proper Estate Expenses

Double Costs and Offers to Settle

Re Vince Insurance Trust 2016 BCSC 1992 reviewed the law as to what constitutes proper estate expenses such that the executor would be entitled to be reimbursed for same. It is a question of fact in each case.

The application for the interim distribution was made under section 155 of the Wills, Estates Succession Act, S.B.C. 2009, c.13, ( and Rules 8 — 1, 14 — 1, and 22-1 of the Supreme Court Civil Rules for the payment of an interim distribution of $250,000 from the estate of Patricia May Burns (“Patricia”) to the defendant Brent Arthur Dale (“Brent”).

29      Trustees are entitled to be indemnified against all reasonable costs and expenses they incur as trustees: Geffen v. Goodman Estate [1991] 2 S.C.R. 353. This is reflected in s. 95 of the Trustee Act, R.S.B.C. 1996, c. 464, which provides, in material part, that a trustee “may reimburse himself or herself, or pay or discharge out of the trust premises, all expenses incurred in or about the execution of his or her trusts or powers”.

30      The general test to determine whether an expense is properly incurred, and therefore recoverable, is described in Donovan W.M. Waters, Mark R. Gillen & Lionel D. Smith, Waters’ Law of Trusts in Canada, 4th ed. (Toronto: Thomson Reuters Canada Limited, 2012) at 1209 as:

whether the expense incurred arose out of an act within the scope of the trusteeship duties and powers, whether in the circumstances it was reasonable, and whether it was something that his duty as the trustee required him to do. 

31      The application of this test, generally speaking, would disentitle a trustee to indemnification for expenses arising out of his or her own misconduct: Tebbs v. Carpenter (1816), 1 Madd. 290, and expenses that he or she voluntarily assumed: Waters’ Law of Trusts at 1210. The matter is more complicated, however, in cases where a strict application of the test would preclude indemnity but where the trust benefited from the incurred expense.

32      It has been observed that in such circumstances, it would be reasonable “to indemnify the trustees on the ground that the beneficiaries are unjustly enriched”: Albert H. Oosterhoff, “Indemnity of Estate Trustees as Applied in Recent Cases” in Megan Connolly & Anne E.P. Armstrong eds, Ontario Estate Administration Manual, (Toronto, Thomson Reuters Canada) (WL). Similarly, the authors of Lewin on Trusts, 17th ed. (London: Sweet & Maxwell, 2000) at 539, express the view that where a trustee has acted in good faith and has incurred costs in a transaction benefiting the trust estate, he or she may be entitled to indemnification even where the transaction was unauthorized:

In general, a trustee is not entitled to indemnity if he incurs costs or liabilities in a transaction which is unauthorised and without the request or implied assent of the beneficiaries. However, if the trustee acts in good faith, and the transaction benefits the trust estate, he may be entitled to indemnity to the extent that the transaction benefits the trust estate, though whether the indemnity is a matter of right rather than of discretion of the court is not clear.

[Emphasis added]

33      Ultimately, what is regarded as a properly incurred and therefore recoverable expense is “a question of fact in the circumstances of each particular case”: Waters’ Law of Trusts at 1209. The applicable principle I draw from the foregoing authorities is that there is no absolute prohibition against the indemnification of a trustee for expenses incurred as a result of acts beyond the scope of the trust (including voluntary acts) in circumstances where the denial of indemnification would result in unjust enrichment of the beneficiaries.