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Financial Circumstances and the Wills Variation act

Financial circumstances

Landy v Landy Estate BCCA (1991) 44 ETR 1 is a good case of our BC Court of Appeal that sets out in short that the relevant time to review a wills variation claimant’s financial circumstances is at the time of the testator’s death and at the time of trial.

Landy Estate was recently followed in Houston v Fowwler 2014 BCSC 489.

 

The financial circumstances at the time of death determine whether or not the will should be varied in favour of the claimant, while the financial circumstances at the time of trial determine how much if any the will  should be varied.

 

 

This appeal involved a claim made under the provisions of the Wills Variation Act, R.S.B.C. 1979, c. 435 (the Act) by the testator’s only child, a son aged 54.  The testator had left the major portion of his estate to his second wife who died subsequent to the testator’s death but before the date of trial.

 

Issues

 

1.What is the relevant date to be used in determining whether the testator made adequate provision for the proper maintenance and support of the appellant, the testator’s only child?  The alternatives are the date of the testator’s will, the date of his death, the date upon which the action was commenced, or the date of trial.

 

2.Having determined the relevant date, the next issue is whether the testator in fact made adequate provision for the proper maintenance and support of the appellant.

 

3.If the second issue is answered in the negative can the fact that the major beneficiary under the testator’s will died subsequent to the date of the testator’s death, but prior to the date of trial, be taken into consideration in determining what provision the court should make for the appellant.

 

4.What provision, that the court thinks is adequate, just and equitable in the circumstances, should be made for the appellant.

 

Facts

 

The testator, William Landy, was born on February 16, 1899.  He married his first wife, Emily, on January 3, 1933.  She had been divorced and had two children who were adults at the time of her marriage.  William and Emily Landy had one child, the appellant Larry Landy, who was born in 1933.

 

William Landy worked as a bus driver during most of his working life.  Emily worked at a number of jobs.  In addition to their regular jobs William and Emily Landy owned and operated a coffee shop known as Larry’s Coffee Cup.

 

William Landy purchased a building lot adjacent to the Patricia Bay Highway in Saanich, B.C.  By working on weekends, holidays, and days off over a period of several years in the 1950s, Mr. Landy and Larry Landy constructed a building on the lot.  The materials were purchased by William Landy.  Larry Landy was not paid for his considerable labour.  When the building was completed William and Emily Landy opened therein a new coffee shop called Larry’s Hideaway.  The business of Larry’s Coffee Cup was sold.

 

Larry Landy continued to live at home with his parents and he continued to help them in the operation of the new coffee shop.  He continued to pay board.  In 1961, when he was 28 years old, he left home to get married.  A few years later he and his wife Beatrice established their home in Duncan, B.C.  In due course they had three children, all of whom had left home by the date of trial.

 

William Landy retired from driving a bus in 1964.  He received a pension from B.C. Hydro, his employer.  He and Emily continued to operate the coffee shop until Emily died in 1967.  She left all of her estate, worth approximately $29,000.00, to her husband.

 

Later in 1967 William Landy sold the coffee shop and two years later he sold the family home and purchased a home on Northlawn Terrace, in Sydney, where he remained until his death, in his 89th year.

 

On July 24, 1972, William Landy married his second wife, Amy.  He was then 73 and she was almost 62.  She was a widow and her husband had left her cash of approximately $26,500.00 and a life estate in a farm in Saskatchewan.  It terminated on her marriage to William Landy.

 

After the marriage William and Amy kept their assets and financial affairs separate.  They each contributed in varying degrees to the household expenses and maintenance of the house.  Neither of them spent their total annual income.  Both of them saved and their cash assets, particularly those of Amy, increased substantially between the date of the marriage and the date of William’s death.

 

William Landy died on February 7, 1988.  He left cash of approximately $62,000.00 and the Northlawn Terrace home valued at approximately $94,000.00.  At that time Mrs. Landy had assets of approximately $81,000.00.

 

The learned trial judge described the family relationship and particularly the relationship between Larry and his father in these terms:

In this instance, the testator’s first marriage appears to have been a happy one.  The family was closeknit, and the plaintiff and his father worked together until the plaintiff married and left home when he was some 28 years old.  Father and son maintained a happy and natural association thereafter, and this, I find, continued through the period of the testator’s second marriage.  When the testator and his second wife Amy grew old, they both became somewhat difficult:  the plaintiff on many occasions was summoned by his father to deal with minor family crises at all hours of the day and night; since he lived in Duncan and his father in Sidney this was often inconvenient in the extreme.  Nevertheless, the plaintiff willingly performed these filial duties to the end.

 

 

For many years Amy Landy suffered from poor health.  She was not well at the time of William’s death – indeed she was in hospital.  When she was eventually released she was taken by members of her own family to Saskatchewan where she died on February 8, 1989, one year and a day after the date of her husband’s death.  She left an estate of approximately $80,000.00 exclusive of any share in her husband’s estate.

 

At the date of trial Larry Landy was earning approximately $50,000.00 per year and his wife was earning approximately $18,000.00 per year.   They had an equity of approximately $53,000.00 in their home, approximately $6,000.00 in  RRSPs, approximately $4,000.00 in cash, approximately $7,000.00 in vehicles, and they owed approximately $3,000.00 in debts.  Their net worth was approximately $67,000.00.

 

William Landy had made his last will and testament on August 22, 1978.  It was drawn by his solicitor who had advised him concerning the provisions of the Wills Variation Act.  The will provided:

(a)All coin, paper money and tools to Larry William Landy.

 

(b)All the rest of the personal belongings to his wife, Amy Landy.

 

(c)The house to Amy Landy if she survived her husband by 30 days.

 

(d)Legacies:

(i)$10,000.00 to Larry Landy;

(ii)$1,000.00 to each of 3 grandchildren;

(iii)$1,000.00 to the granddaughter of William Landy’s first wife;

(iv)The residue of the estate to Amy Landy if she should survive William Landy by 30 days; if she died within 30 days, then the residue of the estate was left to Larry Landy.

 

William Landy’s estate was valued at approximately $160,000.00.  It included cash of approximately $62,000.00 and the home worth approximately $92,000.00.

 

Larry Landy brought action seeking a larger share of his father’s estate.  At the conclusion of his reasons for judgment the trial judge had this to say:

… in my opinion, so comparatively small a legacy as was left to Mr. Landy Jr. is an inadequate remembrance of a son whose filial duties were punctiliously fulfilled, often in trying circumstances.  The moral duty of the testator ought to have moved him to make a greater provision than he did; I exercise my discretion here by increasing the legacy from $10,000.00 to $20,000.00.

 

 

The appellant has appealed the Order whereby his legacy was increased from $10,000.00 to $20,000.00.  He seeks an Order “… varying the will to provide for a life estate to the defendant Amy Landy, with the remainder, subject to the other specific bequests, to the only son, Larry Landy.”

 

The respondents seek an order that the decision of the trial judge be set aside and that the will of the testator be left unvaried.

 

Legislation

 

I set forth below the provisions of the Act which are relevant to this appeal:

2.(1) Notwithstanding any law or statute to the contrary, if a testator dies leaving a will which does not, in the court’s opinion, make adequate provision for the proper maintenance and support of the testator’s wife, husband or children, the court may, in its discretion, in an action by or on behalf of the wife, husband or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the estate of the testator for the wife, husband or children.

(2) [Repealed 1985-68-119, effective April 17, 1985 (B.C. Reg. 392/85).]

(3) In an action under this section the court may accept the evidence it considers proper of the testator’s reasons, so far as ascertainable,

(a)for making the dispositions made in his will; or

(b)for not making adequate provision for his wife, husband or children, including any statement in writing signed by the testator.

(4) In estimating the weight to be given to a statement referred to in subsection (3), the court shall have regard to all the circumstances from which an inference may reasonably be drawn as to the accuracy or otherwise of the statement.

 

* * *

 

15. A person who considers himself prejudicially affected by an order of the court may appeal to the Court of Appeal.

 

 

 

The First Issue

 

Section 2(1) of the Act involves a two stage process.  The first stage is for the court to determine whether “adequate” provision has been made for the “proper maintenance and support” of the applicant.  If the determination under the first stage is “no”, the second stage arises.  What provision, that in the opinion of the court, is “adequate, just and equitable in the circumstances”, should be made for the applicant.

 

In order to make the determination under the first stage, and if necessary under the second stage, the court must select the relevant date for the determination.  Numerous authorities have dealt with this problem.  Some of them are not easy to reconcile.

 

In Re Bowe Estate, [1971] 4 W.W.R. 234, Wilson C.J.S.C. summarized the four possible dates by stating, at p. 236:

This question has been raised before me:  in considering whether or not the testatrix made the adequate provision for the petitioner required by s. 3 of the statute, do I take into account the circumstances and health of the petitioner:  (1) at the date of the will, 18th October 1968; or (2) at the date of death, 4th November 1968; or (3) at the date these proceedings were commenced, 17th September 1969; or (4) at the date of the hearing, 24th March 1971?

 

(1)  Authority for the first proposition is Re Hull, 1943 CanLII 113 (ON CA), [1943] O.R. 778, [1944] 1 D.L.R. 14 (C.A.), where Laidlaw J.A. stated at p. 785 that the date of the will was the relevant time.

 

(2) For the second proposition there is abundant authority.  I cite Dun v. Dun, [1959] 2 All E.R. 134; Re Harker-Thomas, [1968] 3 W.L.R. 1267; Re Novikoff (1968), 66 W.W.R. 164, 1 D.L.R. (3d) 484 (B.C.); Re Brown (1969), 1969 CanLII 575 (SK QB), 70 W.W.R. 543 (Sask.).

 

(3) For the third proposition the cases cited are Barker v. Westminster Trust Co. et al., 57 B.C.R. 21, [1941] 3 W.W.R. 473 at 482, [1941] 4 D.L.R. 514 (C.A.), where O’Halloran J.A. said:

 

The Court should therefore consider the merits of the appeal as they existed when the husband was alive.  For with the foregoing objections overruled, the rights of the parties inter se should be considered as they existed at the commencement of the litigation:  Vide Re Keystone Knitting Mills Trade Mark, [1929] 1 Ch. 92.  The court in coming to its conclusions should be governed by the circumstances as they existed when the statute was invoked.  In Walker v. McDermott, 42 B.C.R. 184, [1930] 1 W.W.R. 332, [1930] 1 D.L.R. 945, reversed 1930 CanLII 1 (SCC), [1931] S.C.R., 94, [1931] 1 D.L.R. 662, the subsequent birth of twins to the applicant daughter was excluded from consideration.

 

I followed this decision in Re Calladine; Re Calladine and Farrar (1958), 25 W.W.R. 175 (B.C.).

 

(4) Re Jones, 49 B.C.R. 216, [1934] 3 W.W.R. 726, followed by me in Re Urquhart (1956), 20 W.W.R. 177, 5 D.L.R. (2d) 235 (B.C.), is the authority for the fourth proposition.

 

 

To the foregoing list of authorities I would add the following decisions made subsequent to the decision in Re Bowe Estate:

In support of the second proposition:

 

Morris et al v. Morris et al….. 1982 CanLII 501 (BC CA), 41 B.C.L.R. 239 (B.C.C.A.)

 

                        Lukie et al v. Helgason & Lukie, 1976 CanLII 237 (BC CA), [1976] 6 W.W.R. 395 (B.C.C.A.)

 

In support of the fourth proposition:

 

Griffin v. McCarthy, an unreported decision of Bouck J., dated October 20, 1989, no. 88/926, Victoria Registry, at p. 14.

 

 

At p. 237 Wilson C.J.S.C. expressed his conclusion with respect to the date to be used by stating:

I think that the circumstances to be taken into consideration are those existing and reasonably foreseeable at the date of the testatrix’s death, the last chance she had to make a proper will.

 

In saying this I realize that I am certainly contradicting what I said in the Urquhart case, supra, and qualifying what I said in the Calladine case, supra.

 

 

I note that Chief Justice Wilson included the phrase “and reasonably foreseeable” in his conclusion that the sufficiency of a provision in a will must be determined as of the date of the testator’s death.  There was high authority for the inclusion of that phrase:  see the decision of the Privy Council in Dun v. Dun (supra).

 

In my view the weight of judicial authority supports the conclusion that the relevant date to be used in determining whether a testator has made adequate provision for the proper maintenance and support of a dependant is the date of the death of the testator.  In reaching that determination a court should take into consideration the circumstances existing and reasonably foreseeable to the testator as at that date.

 

The Second Issue

 

The determination to be made under s. 2(1) of the Act is discretionary.  Formerly it was considered that the Court of Appeal should defer to the discretion exercised by the trial judge.  However, the decision of the Supreme Court of Canada in Swain v. Dennison, 1966 CanLII 42 (SCC), [1967] S.C.R. 7 established that on an appeal under s. 15 of the Act this Court should exercise an independent discretion.  This Court should, however, defer to the trial judge on matters dependent upon oral testimony and we should not tinker:  see Price v. Lypchuk Estate (1987), 1987 CanLII 165 (BC CA), 11 B.C.L.R. (2d) 371 (B.C.C.A.).

 

                        Walker v. McDermott, 1930 CanLII 1 (SCC), [1931] S.C.R. 94 is the seminal case for the interpretation of what constitutes “proper maintenance and support” as used in the Act.  Duff J. at p. 96 made the following frequently quoted statement:

What constitutes “proper maintenance and support” is a question to be determined with reference to a variety of circumstances.  It cannot be limited to the bare necessities of existence.  For the purpose of arriving at a conclusion, the court on whom devolves the responsibility of giving effect to the statute, would naturally proceed from the point of view of the judicious father of a family seeking to discharge both his marital and his parental duty; and would of course (looking at the matter from that point of view), consider the situation of the child, wife or husband, and the standard of living to which, having regard to this and the other circumstances, reference ought to be had.  If the court comes to the decision that adequate provision has not been made, then the court must consider what provision would be not only adequate, but just and equitable also; and in exercising its judgment upon this, the pecuniary magnitude of the estate, and the situation of others having claims upon the testator, must be taken into account. [my emphasis]

 

 

In determining, under the first stage of the two stage process to which I have earlier referred, whether the testator has made “adequate provision for the proper maintenance and support” of a dependent, account should be taken of moral as well as economic considerations:  see Allardice v. Allardice, 29 N.Z.L.R. 959, affirmed [1911] A.C. 730 (P.C.).

 

It is clear on the authorities that the moral obligation of a testator can extend to an adult child.  At p. 381 of Price v. Lypchuk Estate, (supra), Lambert J.A., writing for the majority, stated:

Some examples of circumstances which bring forth a moral duty on the part of a testator to recognize in his will the claims of adult children are:  a disability on the part of an adult child, as assured expectation on the part of an adult child, or an implied expectation on the part of an adult child, arising from the abundance of the estate or from the adult child’s treatment during the testator’s lifetime.

 

 

Keeping in mind the foregoing general principles I turn to consider whether William Landy made adequate provision for the proper maintenance and support of the appellant by leaving him a bequest of $10,000.00 out of an estate of approximately $160,000.00.

 

I take into consideration the following factors.  They are not listed in any particular order of importance.

 

1.The appellant had an implied expectation that he would inherit a portion of his father’s estate.  On a number of occasions Larry Landy enquired if his father’s affairs were in order and William Landy would reply:  “Don’t worry, you will be taken care of”.

 

2.The appellant had worked many hours without remuneration in helping to construct the building used to operate the coffee shop, “Larry’s Hideaway”.  It was the sale of that property and business in 1967 which enabled William Landy to build an estate of appreciable size.

 

3.Apart from an increase in value of the home due to inflation, and apart from savings made from his pensions and from interest, most of William Landy’s estate was accumulated before he married his second wife, Amy.  That included the inheritance he received on the death of his first wife, Emily.

 

4.Larry Landy was a dutiful son.  In the words of the trial judge he was “… a son whose filial duties were punctiliously fulfilled, even in trying circumstances”.  There was evidence to support that finding.

 

5.At the time of William Landy’s death it was reasonably foreseeable that Amy Landy had an estate of some considerable size.  He would have been generally aware of her income and expenses over the 16 years of their marriage and of the increase in the size of her estate through her savings.

 

6.At the time of Mr. Landy’s death it was reasonably foreseeable that the life expectancy of Amy Landy was limited.  She had been in poor health for a number of years.  She suffered from several health problems, including malnutrition.  The state of her health was such that in August, 1986, her daughter Marlene Smith journeyed from Saskatchewan to look after her mother in the home owned by Mr. Landy in Sydney.  Because of her mother’s need for care, Marlene Smith stayed and looked after her mother for five months.  Amy Landy was confined to hospital at the time of Mr. Landy’s death and she was not well enough to be told of his death until several days later.

 

7.At the time of Mr. Landy’s death it was reasonably foreseeable if he left the residue of his estate outright to Amy Landy, rather than leaving her a life estate in the bulk of his estate, that upon her death whatever was left of his estate would pass to the beneficiaries named in her will or to her next of kin in the event of an intestacy.  It was reasonably foreseeable that Larry Landy would not be included as a beneficiary in her will and would not inherit from her in the event of her intestacy.

 

Taking into consideration the whole of the evidence, and in particular the factors above referred to, I conclude that William Landy did not make adequate provision for the proper maintenance and support of the appellant.

 

The Third Issue

 

When considering the second stage of the two step process under s. 2(1) of the Act the weight of judicial authority is that evidence of a change in value of an estate asset between the date of death and the date of trial will not be considered.  It is not a “circumstance” to be considered in determining the provision that the court thinks “… adequate, just and equitable in the circumstances …”.  There are compelling policy reasons for that decision.  But should a substantial change between the date of death and the date of trial in the circumstances of a person who may be entitled to make a claim under the Act, viz. a wife, husband, or child of a testator, or indeed a beneficiary, be similarly excluded?  I think not, for the following reasons.

 

In Dun v. Dun (supra), at p. 289, Lord Cohen, who gave the speech on behalf of the Privy Council, referred to the decision in In re A. L. Pichon, 47 N.S.W.S.R. 186.  At p. 289 Lord Cohen stated:

            In re A. L. Pichon does not carry the matter any further.  In that case the testatrix had made no provision for her only child and left the whole of her estate to her executor M. beneficially.  The executor died before the application under section 3 (1) came on for hearing.  On these facts, quite apart from the fact of the death of M., there was a prima facie case of inadequate provision for the daughter.  In exercising his discretion as to the amount of the further provision to be made Roper J. would clearly have been entitled to take into account the fact that the only beneficiary named in the will was dead.

 

 

In various cases the circumstances as of the date of trial of the persons who could apply under the Act, or of beneficiaries, has been taken into consideration.  For example, in the recent authoritative decision of this Court in Price v. Lypchuk Estate (supra), Lambert J.A. at p. 376 reviewed the circumstances as at the date of trial of the petitioner and two of the testator’s other children who were beneficiaries under his will.

 

Moreover, at p. 382 Lambert J.A. expressed the following view in respect of entitlement of a person not directly related to a spouse of a testator:

There is an additional reason for refusing to exercise this court’s discretion to vary the will.  It is that the comparatively modest estate of $81,000 was built up by the joint efforts of the testator and his second wife, to whom he was married for 30 years until she died in 1980.  There is evidence that half of the testator’s estate came from his second wife, who owned half of the family property.  The second wife owed no legal duty to the children of the first marriage under the Wills Variation Act or otherwise.  I see no reason why the property accumulated through her lifetime should be paid over to the children of her husband’s first marriage, whom she never saw and who owed her no duty of support or care.  Nor can I see any reason why the fact that the second wife died three years before the testator should give the applicant a moral entitlement to a share of the assets to which she would have had no entitlement if the situation had been reversed and the husband had died three years before the second wife.

 

 

On the facts in this case, it is apparent that the beneficiaries of the estate of Amy Landy, her five children, have no moral entitlement to a share in the estate of Mr. Landy.  The combined effect of his will and of her will is to enable them to receive by far the major share of his estate.

 

On the basis of the foregoing analysis I have concluded that a substantial change in the circumstances of a person entitled to make a claim under the Wills Variation Act, or of a beneficiary, between the date of death of a testator and the date of trial, is a circumstance which may be taken into consideration when a court is determining, under the second stage of the two stage process involved in s. 2(1) of the Act, the provision that should be made for a claimant that is “adequate, just and equitable in the circumstances”.

 

In the circumstances of this case the fact that Amy Landy died after the date of death of William Landy but before the date of trial is a circumstance which should be taken into consideration when determining the fourth issue herein.

 

The Fourth Issue

 

The factors to be taken into account in the first stage of the two stage process required under s. 2(1) of the Act should also be taken into account in the second stage:  see Price v. Lypchuk Estate (supra) at p. 380.  I therefore take into consideration the seven factors I have previously referred to in reference to the first stage.  In addition, I take into consideration the fact that Amy Landy died after the date of death of her husband but before the date of trial.  Taking those factors into consideration as well as the general evidence adduced at the trial I conclude that provision for the appellant that would be adequate, just and equitable in the circumstances is the sum of $60,000.00.

 

Conclusion

 

I would allow the appeal and direct that the bequest of $10,000.00 to the appellant be increased to $60,000.00.

 

The appellant shall have costs of the appeal on a party and party basis payable out of the estate.

 

 

“The Honourable Mr. Justice Hinds”

 

 

 

I AGREE:  “The Honourable Mr. Justice Macdonald”

 

 

I AGREE:  “The Honourable Mr. Justice Cumming”

 

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