BC Estate Litigation Blog

When there is a challenge to the validity of a will on the basis that (1) the will-maker lacked testamentary capacity, or (2) the will-maker did not have knowledge and approval of the contents of the will, the person seeking to prove the validity of the will (the “propounder”) is assisted by the presumption of due execution.

The presumption of due execution provides that if a will is properly executed in compliance with the Wills, Estates and Succession Act (“WESA“), then it is presumed that the will-maker had knowledge and approval and testamentary capacity, subject to evidence of suspicious circumstances.  It then falls on the person challenging the validity of the will to rebut the presumption.

Section 37(1) of WESA sets out the formalities for making a will:

How to make a valid will

37   (1) To be valid, a will must be

(a) in writing,

(b) signed at its end by the will-maker, or the signature at the end must be acknowledged by the will-maker as the will-maker’s signature, in the presence of 2 or more witnesses present at the same time, and

(c) signed by 2 or more of the witnesses in the presence of the will-maker…

If the will has been validly executed, then the propounder can seek to rely upon the presumption.

The importance of the presumption of due exectuion is illustrated by the recent decision of the B.C. Supreme Court in Grace Estate (Re) 2022 BCSC 1283.

In Grace, the deceased’s father was named as executor in the will.  The deceased’s mother challenged the validity of the will, arguing that the deceased (her daughter) did not read or know the contents of the will before signing it, that she signed the will under suspicious circumstances, and that she may have lacked capacity.

At the first hearing, the court held that there was not sufficient evidence to prove that the will was read by or to the deceased.  That meant there was no presumption of testamentary capacity (another presumption available to the propounder of a will), and the father must prove both that the deceased had capacity, and that she knew and approved of the contents of the will.  The father had failed to prove the will in solemn form by way of application (on affidavit evidence), and the matter was referred to the trial list for proof in solemn form.

However, neither counsel at the first hearing advised the court of the cases discussing the presumption of due execution.  In light of those cases, the father applied for a reconsideration of the original decision.  The order arising from the original decision had not yet been entered, which meant that the original judge could hear further submissions.  The father argued (and the court agreed) that had case authorities on the presumption of due execution been brought to the court’s attention, they would have substantially altered the result.

The court exercised its discretion to reconsider its decision, and concluded that the father has the benefit of the presumption of due execution, and has proven the will in solemn form.  The will had been validly executed in compliance with WESA, and so the facts gave rise to a rebuttable presumption that the deceased knew and approved the contents of the will.  There were no suspicious circumstances.  The mother swore in her affidavit that she asked her daughter whether she had read the will, and her daughter had said “no”.  However, this was not sufficient to rebut the presumption (and was inconsistent with all of the other evidence surrounding the deceased’s intentions)

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The following is a round-up of noteworthy articles published this month on estate litigation and related issues:

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The B.C. Supreme Court recently considered a classic wills variation scenario:  an adult independent child from a deceased’s earlier relationship seeks to vary their parent’s will, which makes no provision for them, and instead provides for their second spouse.  It is very common to see wills variation claims in blended families.

In Pascuzzi v. Pascuzzi 2022 BCSC 907, the plaintiff was 32 years old when her father died.  Her parents had a short relationship, which ended before the plaintiff was born.  A few years later, the deceased met the person who would later become his wife, and he remained married to her until his death.  He had two children with her, and she had two children from a prior relationship.

The deceased left a will that was signed back in 1996, when the plaintiff was only nine years old.  The will provided for a trust that paid $450/month until the plaintiff turned 19 years old.  The remainder of the estate passed to the deceased’s wife.  In effect, the plaintiff was completely disinherited.  She brought a claim to vary her father’s will.

The Court went through the test for variation of a will by an adult independent child.

Wills variation claims must balance two fundamental interests: adequate, just and equitable provision for the will-maker’s spouse and children, and the will-maker’s decision to dispose of their estate as they see fit (testamentary autonomy).  In B.C., testamentary autonomy must yield to what is adequate, just and equitable.

To determine what is adequate, just and equitable, the court must look at the will maker’s legal and moral obligations.  When a wills variation claim is brought by a self-sufficient adult child with full capacity:

The following circumstances are relevant when determining whether there is a moral obligation owed to an adult independent child (and the strength of that obligation):

The Court in Pascuzzi went through each factor, and concluded that the deceased owed a moral obligation to the plaintiff.  Of particular relevance was the evidence that the deceased was in the course of ensuring that the plaintiff benefited from his estate.  For two or three years prior to the deceased’s death, he discussed estate planning with his wife, and agreed that the plaintiff “should get something”, although it was not clear what this would be, and of course he didn’t take steps to make a new will or otherwise benefit the plaintiff before his death.

The deceased’s wife pled that the deceased was not the plaintiff’s biological father.  However, she conceded at trial that she had no evidence to support this allegation.

In Pascuzzi, the Court did not fully accept either of the parties positions: on the one hand, that the deceased effectively abandoned the plaintiff as a child and never made an adequate effort to reconcile, and on the other hand that the deceased was a loving and caring father and any difficulties were caused by the plaintiff’s mother.  The deceased made a “terrible error in judgment” in the plaintiff’s early childhood, but over the course of time and reflection knew that he had made that error.

It appears that the estate was worth approximately $1.8 million.  The Court varied the will to provide that the plaintiff will receive 30% of the net value of the estate.

This case also serves as a useful reminder of the highly intrusive nature of wills variation litigation, especially if the matter proceeds to a trial.  The Court went through the history of the relationship between the plaintiff and her father in great detail.  The Court went so far as to quote from “an ill-advised and inappropriate letter” sent by the deceased to the plaintiff’s mother in 1992 (when the plaintiff was four years old), indicating that he would not be having the plaintiff to visit anymore.  When the Court is asked to consider the nature of the relationship between the will-maker and the person making the claim (including where there is estrangement), this often requires the Court to hear evidence on very personal and private matters, which becomes a matter of private record.

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When a person dies without a will and has no descendants, their spouse inherits their estate.  In order to benefit, a claimant must establish that they are indeed a “spouse.”  I continue to frequently see cases in which a person’s standing as a “spouse” is in dispute and is one of the key issues in the litigation.  This is relevant on an intestacy (dying with no will), and also for wills variation claims, which can only be brought by children and “spouses.”  This was one of the first issues that I wrote about when I started this blog, found here.  I have also wrote about it here.

The B.C. Court of Appeal recently considered this issue again in Coad v. Lariviere 2022 BCCA 222.

In Coad, the Court considered an appeal by a “spouse” from an order that the deceased died intestate and without a spouse, leaving her mother as the sole beneficiary.  The plaintiff was living in the same home as the deceased when she died, and he claimed to be in a marriage-like relationship with her at the time of her death.  The deceased’s ex-husband obtained a grant of administration with respect to a will dated August 11, 2011, while the plaintiff received a grant of administration based on an intestacy (on the assumption that he was a spouse).  The orders were in conflict.

The trial judge concluded that the deceased died intestate, but that the plaintiff was not in a marriage-like relationship with the deceased.  As a result, the deceased’s mother was the sole beneficiary of the deceased’s estate.  The plaintiff appealed the order.

A “spouse” is defined in s. 2 of the WIlls, Estates and Succession Act as follows:

2 (1) Unless subsection (2) applies, 2 persons are spouses of each other for the purposes of this Act if they were both alive immediately before a relevant time and

(a) they were married to each other, or

(b) they had lived with each other in a marriage-like relationship for at least 2 years.

(2) Two persons cease being spouses of each other for the purposes of this Act if,

(a) in the case of a marriage, an event occurs that causes an interest in family property, as defined in Part 5 [Property Division] of the Family Law Act, to arise, or

(b) in the case of a marriage-like relationship, one or both persons terminate the relationship.

(2.1) For the purposes of this Act, spouses are not considered to have separated if, within one year after separation,

(a) they begin to live together again and the primary purpose for doing so is to reconcile, and

(b) they continue to live together for one or more periods, totalling at least 90 days.

(3) A relevant time for the purposes of subsection (1) is the date of death of one of the persons unless this Act specifies another time as the relevant time.

There is no specific definition of when a marriage-like relationship exists.  The presence or absence of any particular factor cannot be determinative of whether a relationship is “marriage-like.”  There is no checklist of characteristics that will invariably be found in all marriages .  While the parties’ intentions may be important, objective evidence will also provide guidance as to whether a relationship was “marriage-like”.  Spousal relationships are many and varied.

Whether people are in a marriage-like relationship is a question of mixed fact and law, and the decision of a trial judge is entitled to deference.

The Court of Appeal held that the trial judge did not take a contextual and holistic approach, and instead applied a “checklist.”  He also placed undue emphasis on the fact that the plaintiff and the deceased did not engage in sexual relations.  The Court of Appeal allowed the appeal, and made an order that the plaintiff was in a marriage-like relationship with the deceased (i.e. was a “spouse”) and therefore received the estate.

As these claims are so fact-specific, and the result is “all or nothing” depending upon whether the claimant is a “spouse”, we can expect to continue to see this issue making its way before the courts.

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The following is a round-up of noteworthy articles published this month on estate litigation and related issues:

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Often there is a concern that a defendant will dissipate assets or put them out of reach of the court if they become aware of a claim against them.   A person who intends to bring a claim wants to make sure that (1) the property that is the subject of the claim is protected until a determination of the claim, and/or (2) the defendant will still have sufficient assets to satisfy the claim.

A Mareva injunction is an order which freezes the defendant’s assets, so that they cannot be disposed of or removed to a place beyond the court’s reach while proceedings are ongoing.  Preservation orders are also available to freeze and preserve the property that is the subject of a claim.

A Mareva injunction is an extraordinary remedy, because it provides the plaintiff with enforcement rights and prejudices the defendant before the court has actually determined the merits of the claim.

These orders are usually obtained ex parte, or without notice to the other party.  Otherwise, there is the risk that the defendant will removal or deal with the assets after they are served and made aware of the application but before the order is made.

Once the party against whom the order is made is served with the order, they may apply to set it aside.

There is a two-part test for granting a Mareva injunction:

For a restraining order over property at issue in the proceeding, there is a lower threshold for #1: whether there is a substantial question to be tried.

The B.C. Supreme Court in Shakeri-Salah (discussed further below) set out the relevant factors which may be considered on the balance of convenience analysis (which factors are relevant will depend upon the case, and this is not a closed list):

The B.C. Supreme Court recently considered Mareva injunctions and preservation orders in in the context of estate and trust litigation in Shakeri-Salah v. Estate of Ahmadi-Niri 2022 BCSC 700.

In Shakeri-Salah, the defendants sought to set aside a Merva injunction and freezing order.  The plaintiff was the widow of the deceased.  She brought an action against her husband’s estate, the trustees of a trust, corporate entities relating to her husband’s business enterprises, her two older sons, and her husband’s personal advisors.  The plaintiff alleged that as the deceased’s spouse she was entitled to a share in the assets accumulated through a joint family venture.  In the five months prior to his death, the deceased took certain steps to purportedly put assets outside the reach of the plaintiff.  He transferred assets into a trust, the beneficiaries of which were his children but not his spouse (the plaintiff).  He severed joint tenancies, commenced a family claim seeking a divorce from the plaintiff, and made a will in which the plaintiff was not a beneficiary.  All of this was done while the deceased’s health was deteriorating and he had a reduced ability to communicate.

The deceased travelled to Dubai and then Iran, where he died several weeks later.  The plaintiff alleged that her sons took their father to these countries to remove him from her and to exercise undue influence over him.  The sons said they were helping their father “escape an unhappy marriage”, and did so at his request.

The plaintiff alleged there was an unwritten trust arrangement and unwritten agreement between her and the deceased.  She claimed a constructive trust over the assets that her husband amassed during the time that they were married.

The plaintiff applied ex parte and obtained a Mareva injunction and freezing order.  The Court ordered that the assets that were the subject of the claim be frozen.  There was also an order requiring the sons and the corporate defendants to set out their respective assets.

The defendants applied to set aside the order.

One of the grounds to set aside a Mareva injunction is material non-disclosure by the applicant.  If there has been material non-disclosure by the applicant, the court may set aide the order without regard to the merits of the application.  The standard is high when a litigant comes to court on an ex parte basis.  The applicant must disclose all important aspects of the evidence because the other side is not their to make their case.  However, not every omission necessarily results in the order being set aside.

The Court in Shakeri-Salah did not agree that there was material non-disclosure.

If there has not been material non-disclosure, the court proceeds with a new hearing (a “hearing de novo”) on the merits of the application.  The applicant must again meet the test for obtaining the injunction.

In Shakeri-Salah, the defendants argued that there was no evidence of dissipation of assets.  The plaintiff argued that while there was no evidence of active dissipation, there was evidence of pre-existing intentions and steps taken by the deceased to deprive her of assets that would have been received by her as spouse and joint tenant.  The court agreed – the deceased, with the defendants’ knowledge and sometimes with their “loyal support” structured his affairs to remove assets from the plaintiff’s reach.  The court relied upon the commencement of family law proceedings, the severance of the joint tenancies, and the will excluding the plaintiff as evidence of the deceased’s intention to put assets out of the reach of the plaintiff.

The Court varied the injunction to remove the sons from the freezing order.  “Considerations of fairness and justice” did not support continuing the interlocutory relief against them personally.  The order remained in place as against the other defendants, i.e. the trustee and the corporations.

The case also includes an interesting discussion of claims for unjust enrichment brought by one spouse against the other.  A spouse who claims unjust enrichment based on a family venture need not have played an active role in a business venture that is alleged to be the product of the family venture.  The deceased’s business efforts built the family’s wealth, but the plaintiff made that possible through her role in the family, entitling her to a remedy for a proportionate share of the wealth built.

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What happens if you are a beneficiary and you believe that the estate ought to make a claim against the person who happens to be the executor of the estate?  This is a common scenario.  Often, the person that a will-maker chooses to be their executor is a person who was involved in their affairs during their lifetime, for example under a power of attorney.  This presents opportunity for undue influence, or for the person who later becomes executor to otherwise benefit from their position of control.  In such a case, the beneficiary will want “the estate” to investigate or pursue claims against the executor, but the executor has no incentive to investigate themselves (and is in a conflict of interest).

This is what happened in the recent B.C. Court of Appeal decision of Hoggan v. Silvey 2022 BCCA 176.

In Hoggan, the deceased divided her estate equally among her three daughters.  Two of the sister beneficiaries had concerns about cheques for substantial amounts ($150,000+) that had been made from the deceased during her lifetime to the third sister (“Lorna”) and her husband (“Ray”).  Lorna and Ray had some control over the Deceased’s finances when the cheques were written.  The matter was complicated by the fact that Ray was the executor of the estate (and Lorna was named as alternate executor).

If beneficiaries want a claim to be made on behalf of the estate against the person who is the executor or administrator of the estate, they have two options:

I have previously written about the issue of applying for standing to bring an action on behalf of an estate here.

In Hoggan, the two sisters pursued both remedies: they applied to remove Ray as executor, and they sought standing to bring a claim against Ray (and Lorna) on behalf of the estate.

At the B.C. Supreme Court level, the chambers judge dismissed both applications.

The chambers judge refused to remove Ray as executor because the deceased had a close and trusting relationship with him and wanted him to be executor, and the estate funds were held in trust.

With respect to the application for leave to bring proceedings on behalf of an estate, the test is set out at s. 151 of the Wills, Estates and Succession Act.  If the executor will not commence proceedings on behalf of the estate, a “specified person” may apply for leave to commence proceedings on behalf of the estate.  The test is set out at s. 151(3):

(3) The court may grant leave under this section if

(a)   the court determines the specified person seeking leave

(i)    has made reasonable efforts to cause the personal representative to commence or defend the proceeding,

(ii)    has given notice of the application for leave to

(A)   the personal representative,

(B)   any other specified persons, and

(C)  any additional person the court directs that notice is to be given, and

(iii)   is acting in good faith, and

(b)   it appears to the court that it is necessary or expedient for the protection of the estate or the interests of a specified person for the proceeding to be brought or defended.

The chambers judge held that the requirement at s. 151(3)(b) was not met, which requires that the proceedings be necessary or expedient for the protection of the estate.  To meet this requirement, three elements had to be established (as will be seen below, the Court of Appeal took a different view as to the elements required):

The chambers judge held that:

The two sisters appealed the dismissal of both applications.

The Court of Appeal dismissed the appeal of the dismissal of the application to removal Ray as executor.  The chambers judge did not err in the exercise of her discretion to not remove Ray at this junction.  Ray was to remain as executor.

However, the Court of Appeal allowed the appeal from the dismissal of the leave application.  The two sisters were granted leave to commence a proceeding on behalf of the estate against Lorna and Ray.

The Court of Appeal looked at the actual language of s. 151(b)(3):

(b)   it appears to the court that it is necessary or expedient for the protection of the estate or the interests of a specified person for the proceeding to be brought or defended.

The Court focused on the disjunctive “or”, which means that the section is to be read as follows:

(b)        it appears to the court that it is necessary or expedient for the protection of the estate

or

that it is necessary or expedient for the protection of the interests of a specified person for the proceeding to be brought or defended.

This means that while the best interests of the estate may be considered, they are not necessarily a factor when the interests of a specified person are raised.

With this in mind, the Court of Appeal concluded that:

This case confirms that beneficiaries ought to be given the opportunity to bring claims that they wish to pursue if the claims are in their interests, even if the claims may not necessarily be in the interests of the estate as a whole.

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The following is a round-up of noteworthy articles published this month on estate litigation and related issues:

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In my estate and trust litigation practice, I often see cases where one party seeks to enforce an alleged promise (for example, a promise to transfer or gift property) by a second party, which is now denied by that second party.  One potential remedy is a finding that the property is held in an express trust as a result of the conduct of the parties, in particular the conduct and the words of party who held the property and is alleged to have promised to gift it.

The B.C. Court of Appeal recently considered such a claim in Virk v. Singh 2022 BCCA 153.  In Virk, Mr. Singh was very close to Mr. and Ms. Virk, until Mr. Singh had a falling out with Mr. Virk.  Mr. and Ms. Virk separated.  Mr. Singh owned the property next door to the Virks’ matrimonial home.  Mr. Singh promised to give that property to Ms. Virk in exchange for money she would receive from her family law action against Mr. Virk (which Mr. Singh encouraged her to bring), and for her help with a lawsuit brought against him by Mr. Virk.  Ms. Singh fulfilled her end of the agreement.  She provided Mr. Singh with monies from the settlement of her family law claim, and she helped him defend against the claim brought by Mr. Virk.  She also lived at the property and paid expenses for the property for many years.  However, Mr. Singh failed to give her the property.

Ms. Virk claimed that the promise to provide the property to her created an express trust.

In order to establish an express trust, there must be three certainties:  certainty of intention, subject and object.

In Virk, the issue was whether there was certainty of intention.  Usually, when you are creating an express trust there is a formal (written) trust agreement.  Where there is no formal agreement, then a court can determine whether there is certainty of intention “by looking to the surrounding circumstances, the evidence of what was agreed upon, and how the parties conducted themselves.”  The critical element is the settlor’s intention (in this case, Mr. Singh).  That intention can be express or implied.  The court must undertake an objective inquiry, to determine whether there is an intention to form an express trust.  The court will look at what a reasonable person would conclude from the words and conduct of the parties, as well as the surrounding circumstances.  The court must look at intention at the time of the transaction.  The court will be very careful when looking at post-transaction conduct.

The trial judge held that Mr. Singh’s promise was a false one and that he never actually intended to give Ms. Virk the property, and therefore there was no certainty of intention.  Ms. Virk appealed.

The Court of Appeal held that the trial judge erred when concluding that Mr. Singh’s promise to give the property to Ms. Virk was a false one because he never subjectively intended to transfer her the beneficial interest in the property.  The Court of Appeal held that one cannot claim to lie to the other party about intention to give the property, carry out the actions necessary to do so, and then rely on the fact that the communication was a lie.  The trial judge erred by failing to assess the certainty of intention on the objective standard.  She also erred in not limiting her consideration to surrounding circumstances at the time of the promise.  The trial judge also relied on post-transaction conduct, which was a problem in Virk because the trial judge had found Mr. Singh to not be credible (and if a party is not credible, then evidence of their post transaction conduct should be given little weight).

However, despite the errors, the Court of Appeal upheld the result.  A reasonable person at the time the promise was made would likely conclude that Mr. Singh intended to benefit Ms. Virk if she fulfilled certain future conditions, but not necessarily that she would benefit on trust.  As a result, there was no express trust.

Fortunately, the trial judge held that Mr. Singh had been unjustly enriched by Ms. Virk’s payments to him (i.e. fulfilling her side of the “deal”) and her contributions to the maintenance of the property, and granted Ms. Virk a constructive trust in the amount of 70% of the increase in the value of the property from the time of the false promise.  This award was upheld by the Court of Appeal.

This decision shows that the court can attempt to make an award that is fair and equitable in the circumstances, but the court will not create an express trust where the requirements are not met.

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The following is a roundup of noteworthy articles published this month on estate litigation and related issues:

Happy reading!

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