Chichak v. Chichak

 

In Chichak v. Chichak, 2021 BCCA 286, the British Columbia Court of Appeal confirmed that a creditor who has registered a judgment against real property held in the name of a debtor cannot enforce the judgement in respect of an interest of another person who has an equitable interest in the property. This is so even when the equable interest is not registered on the title to the land. The creditor may only enforce the judgement to the extent of the debtor’s interest in the land.

Derek Chichak and his wife Jennifer Chichak bought real property together. The title was transferred to Ms. Chichak’s name and then later she transferred the title into Mr. Chichak’s name. Mr. Chichak was sued by two creditors, who registered their judgment against the property. Another creditor had a mortgage against the property and when mortgage went into default, the property was sold in a foreclosure proceeding brought by another creditor. After the amount of the mortgage was paid, there remained surplus funds from the sale of the property, and the two creditors with registered judgements sought to have the funds paid out to them. Ms. Chichak, however, claimed that she had a 50% interest in the equity in the property because of her contribution to the purchase price. When one person pays for or transfers property to another, there is a presumption that the recipient of the property holds the property, or in this case half of it, on a resulting trust for the person who paid the purchase price or transferred the property. Ms. Chichak claimed that because her husband held a half interest in the property in trust for her, his judgment creditors were only entitled to recover one-half of the surplus funds, with Ms. Chichak entitled to the other half.

The Supreme Court of British Columbia did not make any finding as to whether Mr. Chichak held an interest in the property on a resulting trust for Ms. Chichak, but held that even if he did, the judgment creditors were entitled to be paid first. Their judgment on the title took priority to Ms. Chichak’s claim. Ms. Chichak appeal.

Madam Justice Saunders in allowing the appeal held that a judgment creditor who registered the judgment against the title to real property could not enforce the receive a greater interest in the property than that held by the judgment debtor. This principle is referred to in Latin as “nemo dat quod non habet” which loosely translated means “you can’t give what you ain’t got.” If Mr. Chichak was only entitled to a one-half interest in the property, then his creditors can only take his half interest; they are not entitled to the other half interest if he holds it in trust for Ms. Chichak.

This common-law principle that a judgment creditor may only enforce a judgment to the extent of the debtor’s interest in property is supported by the wording of the Court Order Enforcement Act. Section 83 (3) (a) and (7) provides:

(3)   From the time of its registration the judgment forms a lien and charge on the land of the judgment debtor specified in the application referred to in section 88 in the same manner as if charged in writing by the judgment debtor under his or her signature and seal,

(a)     to the extent of his or her beneficial interest in the land,

….

(7)   A judgment creditor is not a bona fide purchaser for value.

 [emphasis in decision]

The creditors pointed to section 23 (2) of the Land Title Act, which provides that subject to certain specific exceptions the title “is conclusive evidence at law and in equity, as against the Crown and all other persons, that the person named in the title as registered owner is indefeasibly entitled to an estate in fee simple to the land described in the indefeasible title….” In other words, people dealing with the registered owner of real property are entitled to rely on the owner’s title. This protects, for example, buyers of property from the owner on title form others later claiming that the seller did not in fact own the property.

However, Madam Justice Saunders, noting the distinction between a judgment creditor and a purchaser, held that section 23 (2) of the Land Title Act does not apply:

[14]         By the registration system, all interests in the property that will affect a prospective purchaser for value are recorded in the register, with the intention that the true state of the title – of all the interests pertaining to the property – will be evident, subject to these few statutory exceptions, and a bona fide purchaser for value will take priority over the holder of an unregistered interest. Section 86(7) of the Court Order Enforcement Act, of course, explicitly provides that a judgment creditor is not a bona fide purchaser for value.

[15]         In my respectful view, the judge misapplied the Land Title Act by effectively equating a judgment creditor, a person who seeks to collect on a judgment in likely unrelated litigation, to the position of a person who has relied on the register in acquiring their indefeasible interest in the land. This would allow a judgment creditor to obtain greater recovery from the land than even the judgment debtor could derive. This result could be legislated, no doubt. However, in my view, it has not; the current legislation does not reach this far. The result, in my view, is contrary to decided authority presented to us but, it appears, not to the judge of first instance.

The Court Appeal ordered that the case be remitted to the Supreme Court of British Columbia to determine whether Ms. Chichak in fact had a beneficial interest in the property.  If she can establish her resulting trust claim, the judgment creditors will not be entitled to the funds representing Ms. Chichak’s share of the surplus proceeds from the sale.

Supreme Court of British Columbia Gives Effect to an Unsigned Draft Will During Covid-19

Getting wills signed during Covid-19 has been a challenge, especially for persons in retirement communities and care homes when visitors are restrictions. The process those of us who are estate-planning lawyers like to follow of meeting our clients in person to review the final drafts of their wills and act as one of the two witnesses has often been thwarted. No doubt many wills have gone unsigned for months, with the increased risk of death before the wills are completed.

In a recent decision, Bishop Estate v. Sheardown, 2021 BCSC 1571, the Supreme Court of British Columbia gave effect to a draft will that was left unsigned because of Covid-19 restrictions. Section 58 of the Wills, Estates and Succession Act allows the court to give effect to a document or other record in British Columbia even though the document has not been signed and witnessed in accordance with the formal requirements for making a valid will. This provision has been used in a wide variety of contexts to give effect to a document if the court is satisfied that the document is authentic and reflects the deliberate or fixed and final intentions of the now deceased person. As I have written before, it may be difficult to satisfy a court to give effect to a draft will prepared by a lawyer months before the person died, without a good explanation of why the lawyer’s client didn’t make an appointment with her lawyer to sign the will. In Bishop Estate, there was a good explanation: Covid-19.

On June 27, 2014 Marilyn Carole Bishop and her husband made wills in which each left everything to the other, and if the other had died, to the Kelowna General Hospital Foundation. The Bishops did not have any children. Mr. Bishop had been treated at the Kelowna General Hospital, and their gifts to the Foundation reflected their gratitude for his treatment. 

After Mr. Bishop’s death, Ms. Bishop’s nephew Robert Sheardown and his wife, Deborah Sheardown, moved to Kamloops, nears where Ms. Bishop resided. They became very close and they assisted her.

In February 2020, Ms. Bishop met with her lawyer to revise her will. She told her lawyer, Matthew Livingston, that she wanted to give most of here estate to the Sheardowns. She wanted to give a gift to their daughter and was considering modest gifts to some o charities. She said the gift to the Kelowna General Hospital Foundation was her husband’s idea and she had no connection to Kelowna, which she considered two far away.

Mr. Livingston drafted a will for her, with some questions. She delivered a note to him setting out Ms. Sheardown’s full name, that she wanted to give a brooch to her great-niece and “No charities at this time.”

On March 17, 2020, she booked an appointment for March 20, to sign the final draft will, which reflected the changes as set out in her note. On March 19, she cancelled her appointment. By that time, the care home in which she lived had prohibited residents from leaving other than for medical appointments, and did not permit visitors, in order to protect residents from Covid-19. Ms. Bishop died on July 20, 2020, without signing her will.

The Kelowna General Hospital Foundation argued that the 2020 draft will should not be given effect. They argued that the words “No charities at this time,” implied that Ms. Bishop had not demonstrate a fixed and final intention. However, Madam Justice Matthews that wills are by their nature revocable, and the issue is whether the intentions are fixed and final at the relevant time. It is not necessary for someone to decide that they would not change the will in the future.

In finding that the document did reflect Ms. Bishop’s fixed and final intentions, Madam Justice Matthews carefully reviewed the facts:

[38]         It is evident that Ms. Bishop reviewed the draft that Mr. Livingston sent to her on February 12, 2020. Her handwritten note that she delivered on March 3, 2020, directly responded to each of Mr. Livingston’s questions in the comment boxes in the first draft.

[39]         In her note, Ms. Bishop did not suggest any new changes to the will; she simply filled in the blanks that Mr. Livingston had left for her. The first was to fill in Ms. Sheardown’s middle name. The second was to specify a gift for the Sheardowns’ daughter, whom Ms. Bishop had already mentioned that she would like to give a gift to. Although Mr. Livingston had discussed the possibility of a registered education savings plan for her, Ms. Bishop ultimately decided to give her a gold brooch.

[40]         The same can be said of Ms. Bishop’s third instruction, “no charities at this time”. When she met with Mr. Livingston, Ms. Bishop indicated that while she did not want to give a gift to Kelowna General Hospital Foundation, she might want to make a couple of modest gifts to specific charities. In the month that followed, Ms. Bishop decided she did not want to make charitable gifts.  This is not problematic. The gifts initially proposed were relatively minor: $10,000–$20,000 for each of Thomson Rivers University and the Firefighters’ Burn Fund. At most, this represented approximately 7% of her total estate.

[41]         Kelowna General Hospital Foundation submits that the language of “at this time” indicates that Ms. Bishop’s intentions lacked finality. I am not satisfied that it demonstrates that her intentions were not final. As Dickson J. notes in Young Estate at para. 35, a fixed and final intention cannot mean that the intention is irrevocable, since wills are, by their nature, revocable until the testator’s death. Rather, the intention need only “be fixed and final at the material time”.

[42]         Accordingly, the mere mention of “at this time” is not enough to overcome the considerable evidence that suggests that her intentions were fixed and final. Her instruction was not an equivocation; it was a clear expression of her fixed and final intention at the time she delivered the note on March 3, 2020. Of course, in this case, the material time stretches beyond March 3 to the date of Ms. Bishop’s death; nevertheless, as I will discuss, nothing suggests that Ms. Bishop’s intention to not give to any charities changed in that time.

[43]         Ms. Bishop did not request any substantive changes to the draft. The manner in which she responded to Mr. Livingston’s questions suggests that she was satisfied with the unexecuted 2020 will and was prepared to execute it. When she was asked if she wanted to review it again in advance of an appointment to sign it, she made an appointment to sign it. In the circumstances, it cannot be said that the unexecuted 2020 will “was not seen, or read, or written, or in some way authenticated, or adopted”: George v. Daily (1997), 143 D.L.R. (4^th) 273 (Man. C.A.) at para. 56.

[44]         It is relevant that the unexecuted 2020 will makes considerable sense in the circumstances: Hubschi Estate (Re), 2019 BCSC 2040 at para. 40. Based on the evidence, it is unsurprising that Ms. Bishop would wish to name the Sheardowns as the executors and primary beneficiaries of her estate and to remove Kelowna General Hospital Foundation as a beneficiary.

[45]         The document and the context in which it is made has the hallmarks of fixed and final testamentary intention in that bears the title of a will, it was made by a lawyer retained by Ms. Bishop for that purpose, it revokes her prior wills, it directs how her remains are to be dealt with, it names executors and beneficiaries including an alternate beneficiary. The beneficiaries make sense in the context of Ms. Bishop’s relationships. Ms. Bishop’s response to Mr. Livingston’s questions provided him with the information necessary to complete the draft.

Accordingly, the Sheardowns will receive Ms. Bishop’s estate.

Nova Scotia Court of Appeal Allows Appeal in Lawen Estate

Both Nova Scotia and British Columbia allow independent adult children to apply to court to vary their parents’ wills. Although other provinces in Canada have legislation allowing spouses, minor and dependent children to apply for dependant’s relief on the death of a spouse or parent who has provided little or no inheritance, the provisions allowing independent adult children to apply are not common.

British Columbia has had this legislation under various titles for over 100 years now. The Supreme Court of Canada has decided cases and outlined principles that are to applied to claims made under British Columbia’s legislation, including claims by independent adult children. The most recent Supreme Court of Canada decision is Tataryn v. Tataryn Estate, [1994] 2 SCR 807. I was a bit surprised when Justice Bodurtha of the Supreme Court of Nova Scotia held in Lawen Estate v. Nova Scotia (Attorney General), 2019 NSSC 162 (CanLii) that Nova Scotia’s Testator Family Maintenance Act offends section 7 of the Charter of Rights and Freedoms insofar as it permits non-dependant adult children to apply of vary their parents’ wills. Section 7 of the Charter says:

Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.

The court found that to the extent that the legislation interfered with the testamentary autonomy of the will-maker in respect of independent adult children, it violates the constitutional right to liberty. The Court read down the legislation so that it would not apply to non-dependant adult children.

The Nova Scotia Court of Appeal in Nova Scotia (Attorney General) v. Lawen Estate, 2021 NSCA 39 (CanLii) disagreed. On appeal by the Attorney General of Nova Scotia, the Court allowed the appeal. Justice Farrar, writing for the Court, held that there was an insufficient evidentiary basis to find that the legislation violated section 7 of the Charter:

[52]         In this case, there was no evidence put before the application judge to establish an engagement with matters critical to a testator’s dignity and autonomy.  Nor was there any evidence indicating why – from a public interest perspective – testamentary capacity was a pressing issue, that testators’ wishes were being arbitrarily ignored, or that testamentary autonomy to preclude a non-dependent adult child engaged the liberty interests of an individual.  There was no consideration of whether s. 5 of the Act, which outlines the factors to be taken into account when considering a claim of a dependent, safeguarded a testator’s autonomy.

[53]         The application judge did not consider, even if a breach of s. 7 was made out, whether it was in accordance with principles of fundamental justice.  He inferred that the AGNS accepted if a violation of the liberty interest was found it would not be in accordance with principles of fundamental justice (¶62).  The AGNS did not make any such concession.  It was incumbent upon the application judge to undertake this crucial aspect of the constitutional analysis.

[54]         The application judge did refer to Tataryn Estate, supra, where McLachlin, J., explained that the purpose of the Act was to ameliorate circumstances of women and children at the time when men held most of the property, to ensure that women and children would receive an adequate, just and equitable share of the family wealth on the death of the person who held it, even in circumstances where they were not able to demonstrate need (Tataryn Estate, ¶ 16, cited at ¶ 19 herein).  However, he did no analysis nor did he make any finding as to whether the objects of the Act were in compliance with the principles of fundamental justice.

[55]         There was no finding that the impugned provisions caused harm, that they were arbitrary, overbroad or grossly disproportionate to the objectives of the legislation.  All of which would have been necessary to anchor a breach of s. 7.

There are no reported decisions in British Columbia at the time of writing this post that have ruled on the question of whether our legislation is constitutional. Nor has the Supreme Court of Canada considered this issue. Neither the Supreme Court of Nova Scotia decision or the Nova Scotia Court of Appeal decision is technically binding on a British Columbia court, but a judge in B.C. could find the reasoning persuasive and apply it here.

The Bank of Nova Scotia Trust Company v. Rogers

 

A murderer may not inherit from his victim. This much is clear. But the implications on the rest of a will are not always so straightforward. This is illustrated by an Ontario case earlier this year: TheBank of Nova Scotia Trust Company v. Rogers, 2021 ONSC 1747 (CanLii).

Cameron Scott Rogers was convicted of the murder of both of his parents, Merrill Gleddie Rogers and David Blair Rogers. He was their only child. He was their only child. There is some indication that he suffered from a disability, but I stress that this is not a case where he was found not guilty by reason of insanity, which would likely have affected the outcome of the case.

His parents made wills leaving their estates to each other. In each case, the will said that if the other had died first, most of their estate was to be used to set up a trust for their son during his lifetime. The trustee would have discretion to make payments out of the income or capital to or for his benefit, with any income accumulated for 21 years to be paid to charities. On his death, or if he died before his parents, on the last of them to die, the remaining funds were to go to his children (or remoter descendants), but if he did not have descendants, then the remainder was to be used to buy annuities for Merrill Rogers’ three brothers.

Justice Labrosse of the Superior Court of Justice held that, because he was convicted of murdering his parents, Cameron Rogers was not entitled to the benefits under their wills. This is not surprising. The more interesting question is: what would happen to their estates?   the estates go to the parents next of kin as if thy died without wills? Under the wills, if he had died before them their estates would go to Cameron’s children, but he did not then have any children. Should the funds be held in trust in case some day he had children? He would be eligible for parole 20 years after his conviction, and it was possible he could then have children. Or should the estates be used to buy annuities for Merrill Rogers’ brothers?

Justice Labrosse identified three approaches to what happens to a beneficiary’s share of the estate of his murder victim. One approach is to deem that the beneficiary died before the will-maker, and the will is read as if the murder had died first. A second approach is a literal reading of the will. Under the second approach, if the will does not provide for the possibility that the beneficiary murders the will-maker, the gift fails and a gift of residue would under Ontario law go on an intestacy as if there were no will (in my view the law of British Columbia differs because of section 46 of our Wills, Estates and Succession Act). The third approach, which Justice Labrosse adopted, is the implied-intention approach. The court strives to determine what the will-maker would have wanted if the will-maker had contemplated what in fact occurred.

Applying the implied-intention approach, Justice Labrosse found that Merrill and David Rogers would not have wanted their estates to go by an intestacy, but would likely have wanted it to go to the other beneficiaries named in their wills. This leaves the question of whether the estates should be held to see if Cameron Rogers had children, or if the estates should be used to purchase annuities for Merrill Rogers’ brothers as if Cameron had died without descendants.

In considering this question, Justice Labrosse looked at the public policy implications. In his words:

[52]           This analysis also includes a requirement that the Court apply the “armchair rule” whereby the Court asks itself:  if David and Merrill could have been aware of the possibility of Cameron’s disentitlement and the reasons for it, would they nevertheless have wanted to benefit their future grandchildren?  If they had living grandchildren at the time of their death, that question would be easier to answer.

[53]           In considering the “armchair approach”, the Court must also add to the picture the reality of Cameron leaving prison at some point during his life sentence.  He could be in his mid-forties and have the knowledge that a two-million-dollar trust lies available to any children he may have.  In the context of the public policy issues surrounding the criminal forfeiture rule, there is a distinct possibility that this could lead to some type of misfeasance.  This is a distinctive element of applying the “armchair approach” in these circumstances.  If David and Merrill could have been aware of Cameron’s disentitlement (and the exact basis for it), would they have wanted for their estates to wait for Cameron’s release from prison and possibly fuel a decision to have children?  It is my view that this would fly in the face of the original public policy reasons for disentitlement and would not have been an outcome that either David or Merrill would have preferred.

Justice Labrosse treated the murder as a triggering event that accelerated the trust for Cameron, as though Cameron Rogers had died before his parents without descendants. He found that this approach most closely reflected the will-makers’ likely intentions:

[63]           In returning to the armchair intentions of David and Merrill, I conclude that their intention was to leave a life interest to Cameron and if he could not benefit from it as a result of a triggering event such as his death, it should pass to his children if he had any living at the relevant time.  The wills are structured around providing contingencies or “gifts-over” to account for a series of triggering events. The first of these events is the spouse predeceasing, the second is Cameron predeceasing, the third is Cameron predeceasing or dying leaving no issue then living and the fourth is one of the brothers either predeceasing or dying before the annuities have been fully distributed.  Cameron’s disentitlement is a similar triggering event which leads to the gift-over provisions of the wills. 

[64]           In this context, I conclude that Cameron is disentitled and that his disentitlement crystalizes at a time where he has no living issue. The criminal forfeiture rule plays a role in guiding the Court to accelerate the bequeath to Cameron and also to his unborn children.  If the true intent of the structure of these wills is to be respected, the estates should be kept in the family.  The intent of the testators was to ensure that upon the triggering events, the estates should pass to the next level of lineal descendant.  The triggering event in question is that Cameron is disentitled and has no issue surviving.  As such, the next level of lineal descendants are Merrill’s three brothers, subject to the annuities.  

The outcome is that the funds in the estates will be used to purchase annuities for Merrill Rogers’ three brothers.

Shahdin Farsai Joins Sabey Rule LLP

I am pleased to post that Shahdin Farsai has joined our firm as an associate lawyer. She was a judicial clerk to six judges at the Supreme Court of British Columbia in 2015-2016. She articled and then was as an associate lawyer in Vancouver at a large national firm, where she practiced in civil litigation. She plans to focus her practice with us primarily in the areas of estate planning, estate administration and estate litigation. 

Most recently,  she spent a year in Finland.  

She speaks Farsi fluently, and can converse in French and Finnish. 

Petrick (Trustee) v. Petrick

 

I have always urged caution in using joint tenancies as an estate-planning tool for the transfer of wealth from a parent to a child. One of my earliest blog posts, from September 17, 2005 is entitled “Six PotentialPitfalls Parents Should Consider Before Transferring Real Estate Into a JointTenancy with Their Children.” Jointures, including joint bank accounts, appear to be deceptively simple. On the death of a joint owner, the title to the asset passes by right-of-survivorship to the other joint co-owner (or owners). But it is not really that simple. In many cases, there is a question about whether the survivor is really entitled to keep the property or whether it is held in trust for the now deceased co-owner. There may also be unintended consequences of owning property in a joint tenancy. The nuances and risks are illustrated in the case I am about to discuss.

Dena Chilton and her son Rock Petrick purchased a condominium in New Westminster, British Columbia. Ms. Chilton contributed the down payment for the purchase and she lived in the condominium. Mr. Petrick did not live with her. They were both on the mortgage. There was conflicting evidence as to whether Mr. Petrick made any mortgage payments, but Ms. Chilton paid the bulk of the mortgage payments and other expenses associated with the condominium. Mr. Petrick later had financial problems, and Ms. Chilton asked him to transfer his interest in the title to her. He did so in July 2014.

Mr. Petrick went bankrupt, and following his bankruptcy, his trustee in bankruptcy applied to court to set aside the transfer of his half interest to his mother. The trustee in bankruptcy argued that the transfer was a fraudulent conveyance intended to defeat Mr. Petrick’s creditors.

Both Ms. Chilton and Mr. Petrick argued that he never had a beneficial interest in the condominium. That is, although he had an interest in the title, he held it in trust for his mother. There is a presumption of law, referred to as a resulting trust, that if someone pays the purchase price for property, but puts it in the name of another, who did not contribute to the purchase, the other person who received the tittle gratuitously, holds in trust for the person who paid the purchase price. This presumption applies to the interest in the title of a joint tenant who has received his interest gratuitously. Ms. Chilton’s evidence was that she had her son’s name on the condominium as a joint tenant so that on her death, the condominium would pass to him, without the requirement that he obtain a grant of probate of her will.

If in fact Mr. Petrick held his interest in the title in trust for his mother, then the transfer of title to his mother was not a fraudulent conveyance. His creditors would not have been entitled to a half-interest in the condominium if he did not have a beneficial interest in it.

Madam Justice Francis, in Petrick (Trustee) v. Petrick, 2019 BCSC 1319, held that Mr. Petrick did have a beneficial interest in the condominium and set aside the transfer to his mother as a fraudulent conveyance.

In her reasons for judgement, Madam Justice Francis nicely summarized three alternative possible ownership interests that joint tenants may have in property. She wrote at paragraph 40:

[40]         Not all jointly owned property is subject to a true joint tenancy. Pursuant to the Supreme Court of Canada’s decision in Pecore v. Pecore, 2007 SCC 17 [Pecore], property that is held in joint tenancy can give rise to three potential scenarios in terms of the beneficial interests of the title holders:

a)    A true joint tenancy, in which the joint tenants are each owner of the whole. Each enjoys the full benefit of property ownership and the ultimate survivor will enjoy the whole title for him or herself.

b)    A resulting trust, wherein only one joint tenant has any beneficial interest in the property and the other joint tenant, usually a gratuitous transferee, holds title in trust for the other and has no beneficial interest in the property.

c)     A scenario which is sometimes referred to as a “gift of the right of survivorship,” wherein a joint tenant is gratuitously placed on title and has no beneficial entitlement to the property during the lifetime of the donor, but if the donee survives the donor, the donee will receive the entire property by right of survivorship.  In Bergen v. Bergen, 2013 BCCA 492 at para. 37 [Bergen], Newbury J.A. described a gift of the right of survivorship in a joint account as “an immediate gift of a joint interest consisting of whatever balance exists in the account on the transferor’s death, assuming he or she dies first.”

Madam Justice Francis found that Ms. Chilton and Mr. Petrick were true joint tenants. She found that he did not receive his interest gratuitously. Because he was a co-borrower under the mortgage, he took a financial risk if the mortgage went into default. The presumption of resulting trust only applies when someone on title has acquired his interest gratuitously. The contributions of the co-owners for property do not have to be equal to avoid the presumption of resulting trust. Pledging credit is a contribution, even if Ms. Chilton could have qualified for a mortgage without Mr. Petrick being a co-borrower. As set out in Madam Justice Francis' reasons:

[65]         Ms. Chilton deposed that Mr. Petrick was not required to pledge his credit in order for her to obtain mortgage financing on the Property and that “he was added on the mortgage simply because he was going to be registered on title.”

[66]         I am not persuaded that simply because Ms. Chilton may have been able to purchase the property without Mr. Petrick pledging his credit, Mr. Petrick did not give up something of value when he became a co-borrower. The pledging of credit exposed Mr. Petrick to risk. Irrespective of Ms. Chilton’s means, Mr. Petrick remained jointly and severally liable on the mortgage debt. Further, it appears that from 2006 to 2011, Mr. Petrick may have been in better financial circumstances than his mother. In his affidavit evidence, he deposed that during that period he made cash gifts in the range of $2,000 to $5,000 to his mother, not exceeding $10,000 a year. Therefore, while it may not have been necessary for Mr. Petrick to have been named on the mortgage, he certainly had the means to service the mortgage and indeed, I find it more likely than not that he did make some payments on the mortgage over the years.

[67]         Therefore, I find that Mr. Petrick gave value for his interest in the Property and Ms. Chilton did not gratuitously make Mr. Petrick a joint tenant. As this was not a gratuitous transfer, the presumption of resulting trust does not apply.

Madam Justice Francis also found that Ms. Chilton did intend for her son to have a beneficial interest in the condominium. Ms. Chilton’s argument that she intended for Mr. Petrick to hold his interest in trust for her, and following her death, for her estate, was inconsistent with her evidence that she did not want the condominium to be subject to probate on her death.

Madam Justice Francis did provide some relief to Ms. Chilton from the potential hardship of having the condominium sold while she resides in it. Madam justice Francis ordered that Ms. Chilton could continue to reside in the condominium for her life, but if she ceased to occupy the condominium, or on her death, the condominium would be sold, and the trustee in bankruptcy would be entitled to half of the net sale proceeds.   

B.C. Supreme Court Civil Rules for Contested Wills Should be Changed

 

Seven years ago, the British Columbia probate rules were overhauled when the Wills, Estates and Succession Act came into effect on March 31, 2014. The changes to the Supreme Court Civil Rules were intended to reduce the complexity and costs of proceeding related to wills and estates. In my experience some of the changes, particularly related to litigation concerning the validity of wills, has had the opposite effect, making litigation more complex and expensive. It is time for a review of the rules.

Most wills in British Columbia are not contested, and the process for probating (in other words proving) a will is not particularly complex. It involves the executor providing notice to beneficiaries and certain relatives of the deceased, and then filing the original will, a submission and affidavits.

But when someone argues that the will is invalid, then it is usually necessary to follow a different process referred to as “proving the will in solemn form.” This is a contested proceeding in which the Supreme Court of British Columbia determines whether the will is valid. These disputes often center around questions about whether the will-maker knew and approved of the contents of the will, had the mental capacity to make the will, and whether she was acting freely and voluntarily, as opposed to being pressured to make her will. Although many of these cases do settle, when they don’t it is usually necessary for each party to conduct a full investigation of the case, including examining the opposing party before trial, obtaining the file from the lawyer who prepared the will, and if capacity is in question getting the medical files and obtaining expert medical and psychological opinions. The facts may be hotly contested. Ultimately, the court may need to determine the validity of a will after a full trial, in which witnesses testify and are cross examined.

Before the Rules were changed in 2014, proving a will in solemn form was usually commenced by a notice of civil claim. This is the method most lawsuits involving contested facts are commence in British Columbia, from personal injury claims to wills variation proceedings. The notice of civil claim sets out the claim, the material facts alleged in support of the claim, and a summary of the legal basis for the claim. The defendants may file responses. Then each party is required to list all of the documents in their possession or control that may prove or disprove a material fact, and each party may examine the adverse parties under oath before trial. There are also rules intended to facilitate obtaining information form third parties. Ultimately, the issues are determined by a trial, although in some cases the trial may proceed on the basis of affidavit evidence, particularly where the conflicts in the evidence may be resolved without live testimony.

When the Rules were revised in 2014, they required that a proof-in-solemn form proceeding must be commenced either by an application in an existing lawsuit, or by petition. This is set out in Rule 25-14.  here is no provision allowing someone to begin the process by a notice of civil claim. Although the old rules did provide for a petition in some cases, these were rare and claims were commenced for the most part by a notice of civil claim.

A petition is a useful process for certain types of clams. For example, Rule 2-1 (2) (c) provides that a proceeding may be commenced by a petition if “the sole or principal question at issue is alleged to be one of construction of an enactment, will, deed, oral or written contract or other document.” A proceeding to interpret a will, where there is no question of its validity, can usually be resolved on the basis of the will itself, and affidavit evidence setting out the surrounding circumstances, such as the relationships between the will-maker and the beneficiaries. The contest is usually about how to interpret the will and facts, as opposed to a dispute about what the facts are (there are of course exceptions). Examinations for discovery and oral testimony are usually not required for the court to resolve the dispute. Petition proceedings are generally less expensive than a trial.

The problem is that petitions do not lend themselves to deciding the types of issues that arise when the validity of a will is contested. Fortunately, there are other rules that allow the court to change the process from a petition-type of proceeding to an action, or do give further directions on the process. These rules are set out in 22-1 (7) and 25-14 (8).

In practice what often happens is that the person wishing to commence a proof in solemn form proceeding will have to prepare, file and serve a petition together with supporting affidavits. Then either the petitioner or one of the respondents makes an application to convert the process into an action, or in other words, the type of process that is brought by notice of civil claim. Often, the order requires a notice of civil claim to be filed and served. The end result is that both time and money have been consumed by beginning the process with a petition and affidavits and then proceeding with a notice of civil claim. I have not kept track of the additional expense, but I suspect this process probably adds between $10,000 and $20,000 to most contested wills proceedings, and it takes additional court time because a judge or court master will often hear the application to change the process.

The other thing I have noticed is that some lawyers are ignoring the Rules altogether and beginning a proof in solemn form proceeding by a notice of civil claim.

I am not aware of any planned reviews of the probate rules, but it is time that the Supreme Court Civil Rules Committee did so.