Nakusp Courthouse, Nakusp B.C.

My son Justin took this photograph of the provincial courthouse in Nakusp in March.

Court Awards Successful Party Costs in Wills Variation Act Claim

In a Wills Variation Act lawsuit in British Columbia, the courts usually award the successful party court costs against the unsuccessful party. The costs don’t fully cover the successful party’s legal costs, but they can be substantial.

This general policy was reaffirmed in a Supreme Court of British Columbia decision released on April 29, 2008. The decision is Doucette v. Clarke, 2008 BCSC 506.

After a trial, reported at 2007 BCSC 1021, Mr. Justice Metzger varied the will of the late Mildred Lucy Doucette, in favour of two of her children, who were left very small portions of their mother’s estate in her will. The other two children, who were beneficiaries as well as the executors, had opposed the Wills Variation Act claim.

At trial, Mr. Justice Metzger also found that the executors held various assets that they claimed by right of survivorship as surviving joint tenants were held by them in trust for their mother’s estate. He also found that one of the other children held an account in trust for the estate.

On the issue of costs in respect of the Wills Variation Act claim, the two children who had opposed the Wills Variation Act claim sought to have their costs paid out of the estate. They sought their costs on the basis that they were acting to give voice to their mother. Mr. Justice Metzger rejected this argument. He held that as executors, the two defending children were required to remain neutral in the Wills Variation Act claim. In defending against the claim, the two children were protecting their interest as beneficiaries.

Mr. Justice Metzger ordered that the two defending children personally pay the plaintiff his costs. (Although the will was varied in favour of two children, only one of them had brought the Wills Variation Act claim.) The defending children argued that the lawsuit was caused by their mother in making a will that did not make adequate provision for their siblings. Accordingly, they argued, the estate should bear the costs, rather than the defending children personally.

In rejecting this argument, the court distinguished those cases in which the court may award costs to all parties because there was a question about whether the person who made the will had the necessary mental capacity or there was some ambiguity in the will, from a Wills Variation Act case. In capacity or interpretation cases, the courts often award costs to all parties on the theory that the lawsuit was caused by some fault of the testator or by other circumstances outside of the litigant’s control. But the policy of providing costs to all parties out of the estate does not apply to Wills Variation Act cases.

Bill 28: Evidence of Testamentary Intent

The proposed new Wills, Estates and Succession Act, recently introduced in the British Columbia Legislative Assembly, has a provision in section 4 setting out the when evidence of the testator's intent may be considered by the court when interpreting a will.

The proposed section 4(2) says,

(2) Extrinsic evidence of testamentary intent, including a statement made by the will-maker, is not admissible to assist in the construction of a testamentary instrument unless
(a) a provision of the will is meaningless,
(b) a provision of the testamentary instrument is ambiguous
(i) on its face, or
(ii) in light of evidence, other than evidence of the will-maker's intention, demonstrating that the language used in the testamentary instrument is ambiguous having regard to surrounding circumstances, or
(c) extrinsic evidence is expressly permitted by this Act.

This is new. Currently, British Columbia does not have legislation setting out the rules for interpreting wills. We have relied on common law rules developed by the courts.

Frankly, I would just as soon leave it that way, and allow the courts to continue to develop rules for admitting evidence in interpreting wills. It is very difficult to codify these rules, and I am concerned that as drafted this provision itself could be misinterpreted.

Usually, the court will not admit direct evidence of what the testator intended. For example, if a will is unclear, you cannot ask the lawyer who drew the will in court what the testator told the lawyer he intended.

Indirect evidence of intention of the surrounding circumstances, such as the testator's relationships with people he or she might have intended to benefit is admissible. For example, see my previous post about the case of Robson Estate (Re), 2006 BCSC 673, in which Madam Justice Dillon considered evidence showing that the testator had attended a particular church to find out what church the testator intended to name as a beneficiary.

The British Columbia Law Institute, in it's Succession Law Reform Project recommendations, recommended this provision to address the rare circumstances in which direct evidence of the testator's intent (in other words, what the testator said he or she meant) is admissible. The report includes the following commentary:

Evidence of the testator’s dispositive intent is not admissible to identify an ambiguity in a term or to interpret one that is apparent on the face of the will (patent ambiguity). Evidence of intent may be introduced to aid in interpreting a “latent ambiguity,” namely ambiguity which does not appear on the face of the will but only when the terms of the will are considered in light of surrounding circumstances. An example of latent ambiguity would be a gift to “my nephew James Scott” if the testator actually had two nephews, each having James as a middle name. In such a case evidence tending to show that the testator intended to benefit one and not the other nephew could be admitted.

Further on the report says that the proposed section,

dispenses with the distinction between patent and latent ambiguity for the purpose of admission of extrinsic evidence. It allows extrinsic evidence of surrounding circumstances, but not evidence of the testator’s intention, to be admitted for the purpose of showing an ambiguity exists. Thus evidence of intent cannot be introduced to identify an ambiguity, but may be used to interpret an ambiguity once one has been identified by reading the will in light of the factual matrix in which the testator made it.

I am concerned about the way this proposed provision is worded. The words "extrinsic evidence testamentary intent," are ambiguous. Evidence of surrounding circumstances is in my view "extrinsic evidence of testamentary intent." It is circumstantial evidence of testatmentary intent, as opposed to direct evidence of intent. Otherwise it would not be relevant. Clearly, the British Columbia Law Institute did not intend to restrict the admissibility of the surrounding circumstances, but this provision could be interpreted that way. The effect would be a more restrictive rule, rather than a less restrictive one.

Perhaps it would be preferrable to add the word "direct" in front of "extrensic evidence."

But, I prefer the "if it ain't broke..." approach in this case.

Gordon v. Venables

What happens when people bring court proceedings relating to an estate in two different provinces?

This is what happened in a recent case of Gordon v. Venables, 2008 BCSC 501.

Percival Gordon created a trust in his will. He directed his trustees to invest his estate, and pay the income to his daughter Helen Venables for her life. On her death, the will left the capital of the trust fund to his two grandsons, Peter Gordon and Michael Venables. He named his daughter as his trustee, and Peter Gordon as the alternate trustee in case his daughter was not able to act.

After Percival Gordon’s death in 1975, his daughter acted as the trustee with the assistance of a trust management company. She lived and managed the trust in the province of Ontario.

Helen Venables suffered a stroke in 2005, and became incapable of continuing to act as the trustee.

Peter Gordon, who lived in British Columbia, then became the trustee. He moved the trust assets to British Columbia employing a management company in British Columbia handle the investments.

Michael Venables and Helen Venables brought proceedings in Ontario to remove Peter Gordon as a trustee and to require him to pass his accounts in that province. They alleged that he had acted improperly.

Peter Gordon brought proceedings in British Columbia seeking approval of fees for his handling of the trust. It is not clear whether he was seeking legal fees as a lawyer or trustee fees, or both.

Michael Venables and Helen Venables brought an application to the Supreme Court of British Columbia asking the court to decline jurisdiction, or in other words, decline to allow Peter Gordon’s application to go forward. They argued that it would be more appropriate for the disputes to be decided in Ontario.

Mr. Justice Metzger held that it was more appropriate for the matter to be heard in Ontario. He considered the factors set out in s. 11 of the Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28, which reads as follows:

11(1) After considering the interests of the parties to a proceeding and the ends of justice, a court may decline to exercise its territorial competence in the proceeding on the ground that a court of another state is a more appropriate forum in which to hear the proceeding.
(2) A court, in deciding the question of whether it or a court outside British Columbia is the more appropriate forum in which to hear a proceeding, must consider the circumstances relevant to the proceeding, including
(a) the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court or in any alternative forum,
(b) the law to be applied to issues in the proceeding,
(c) the desirability of avoiding multiplicity of legal proceedings,
(d) the desirability of avoiding conflicting decisions in different courts,
(e) the enforcement of an eventual judgment, and
(f) the fair and efficient working of the Canadian legal system as a whole.

Although there was some connection to British Columbia because Peter Gordon was managing the trust in British Columbia, Mr. Justice Metzger considered this in relation to the whole of the life of the trust. For most of the life of the trust, it was administered in Ontario. The court would need to consider any entitlement of Helen Venables to remuneration in determining Peter Gordon’s claim, and this would require hearing from witnesses who lived in Ontario. Mr. Justice Metzger wrote at paragraph 36,

With respect to the broader “ends of justice” analysis under s. 11, I note that the petitioner became the Trustee approximately one and a half years ago. He transferred the assets to British Columbia approximately one year ago. In my view, it would be contrary to the ends of justice for this court to rely on the petitioner’s own residency status and his own actions in moving trust assets in order to accede to his submission that British Columbia is the appropriate forum for the resolution of these disputes. I reach this conclusion because the changes that he brought about were extremely recent developments in the life of the Trust.

Bill 28: Definition of Spouse

The proposed new Wills, Estates and Succession Act, recently introduced in the British Columbia Legislative Assembly, will have a new definition of spouse in section 2. It reads as follows:

(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, including a marriage-like relationship between persons of the same gender, 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,
(i) they live separate and apart for at least 2 years with one or both of them having the intention, formed before or during that time, to live separate and apart
permanently, or
(ii) an event occurs that causes an interest in family assets, as defined in Part 5 of the Family Relations Act, to arise, or
(b) in the case of a marriage-like relationship, one or both persons terminate the relationship.
(3) A relevant time for the purpose of subsection (1) is the date of death of one of the persons unless this Act specifies another time as the relevant time.

The criteria for spouses who are not legally married to each other in section 2(1)(b) are similar to the criteria in British Columbia’s current Estate Administration Act (section 1), and Wills Variation Act (section 1). Currently there are some small differences in the wording of the definitions in the Wills Variation Act and the Estate Administration Act, and it will be beneficial to have an identical definitions to avoid inconsistencies (although the courts seem to be interpreting the definitions in a consistent manner in any case).

The provisions in subsection 2(2) dealing when spouses cease to be spouses for the purposes of succession law are new.

The proposal that legally married spouses cease to be considered spouses if they have lived separate and apart for 2 years, with at least one of them having the intention to live separately permanently, has at least a couple of significant implications.

Currently, under the Wills Variation Act, a married spouse has the right to apply to vary the will of his or her deceased spouse regardless of whether the couple had been separated at the deceased’s death. Only divorce terminates the right of a separated spouse to apply. Under the proposed changes, if a spouse has been separated for at least two years, he or she will not be entitled to apply.

Under the Estate Administration Act, a legally married spouse who has been separated for at least one year loses his or her right to inherit from his or her spouse under the intestacy provisions for people who die without a will. This is subject to the court’s discretion to award the separated spouse something on the spouse’s application. See section 98.

The proposed new legislation will allow a spouse who has been separated for more than one year, but less than two, to inherit if the deceased spouse did not have a will, unless there had been a triggering event under the Family Relations Act.

The proposals will reduce the risk that there will be two spouses making competing claims under either the Wills Variation Act, or the intestacy provisions of the Estate Administration Act (though perhaps not in Bountiful). Because a legally married spouse loses his or her status as a spouse after a two-year separation, and common law spouses must live together in a marriage-like relationship for at least two years before they are considered spouses, it should be rare for anyone to have two spouses for succession law purposes.

Cost Award in Stanton v. Stanton Estate

In British Columbia, the court may order an unsuccessful litigant to pay the successful party court costs. This is the usual rule in lawsuits in British Columbia. Cost awards will usually only partially offset the successful party's actual legal costs.

But if the court finds that the unsuccessful party acted reprehensibly in the lawsuit, then the court may award special costs. An award of special costs will often either fully compensate the successful party for his or her legal costs, or come close.

The court may order special costs where a party seeks to challenge the validity of a will, and makes allegations of undue influence without any factual basis.

This is what happened in Stanton v. Stanton Estate. Mrs. Ophelia Stanton challenged her late husband's will, which left most of his estate to his daughter from his first marriage. She waited two and a half years after probate before challenging the validity of the will. She claimed that her husband's daughter had undue influenced him. She also claimed that he did not have capacity to make a will.

She lost at trial, and on appeal.

On the issue of costs, Mr. Bernard in Stanton v. Stanton Estate, 2008 BCSC 470, awarded the defendant daughter special costs against Mrs. Stanton. He wrote, in his reasons for judgment,

[17] In addition to the baseless allegation of undue influence, the defendant alleges that the plaintiff, in launching a challenge to the validity of the will two-and-a-half years after the grant of probate, had oblique motives, one of which was as an act of retaliation to the defendant’s counterclaim in the Wills Variation action. The defendant points out that within three weeks of the defendant’s counterclaim, the plaintiff suggested, for the first time, that she would be challenging the validity of the Will. The defendant also submits that the plaintiff did not pursue the action with an expectation of success, but rather for “collateral benefit” in the Wills Variation action, and that this is borne out in correspondence from the plaintiff. I am satisfied there is merit to the allegation of oblique motives. It accounts for the otherwise inexplicable delay in launching a challenge to the Will, and for the relentless pursuit of a futile case whilst a Wills Variation action was outstanding.

[18] I am satisfied, in light of all the foregoing, that special costs ought to be awarded against the plaintiff. The plaintiff’s conduct throughout the proceedings was reprehensible in the sense that it is deserving of reproof. The plaintiff should not be permitted to diminish the estate with the costs of the proceedings challenging the validity of the Will.

Bill 28: Consolidation and Modernization

The Wills, Estates and Succession Act (Bill 28), will consolidate much of British Columbia’s legislation into one Act. If this legislation passes and is brought into effect, it will repeal and replace the Estate Administration Act, the Probate Recognition Act, the Wills Act, and the Wills Variation Act. I welcome this one-stop-shopping approach.

One of the purposes of the new legislation is to modernize British Columbia’s succession laws, in style as well as in substance. The legislation is drafted in plainer language than much of British Columbia’s current legislation. Although I favour plainer language, it may take me some time to get use to the words “will-maker,” in stead of “testator.”

In future posts, I will be examining many of the substantive changes proposed in Bill 28.