Thursday, October 20, 2005

The Wills Variation Act: What is Adequate, Just and Equitable?

The Wills Variation Act , RSBC 1996, c. 490, gives the Supreme Court of British Columbia the power to vary a will in favor of a spouse or child where the maker of the will (the “testator”) has not made adequate provision for the spouse or child. (See my previous posts, "The Wills Variation Act: An Introduction," and "The Wills Variation Act: Who May Apply?") The court may then decide what provision would be “just, adequate and equitable in the circumstances.” This begs the question.

In the leading modern Supreme Court of Canada case on the Wills Variation Act, Tataryn v. Tataryn, [1994] 2 S.C.R. 807, Madam Justice McLachlin (now the Chief Justice of Canada), sought a principled and coherent approach to deciding what provision is adequate, just and equitable.

In Tataryn, Alex Tataryn left an estate of about $315,000 including the house he and his wife of 43 years, Mary Tataryn, lived in, and a rental property. He had two sons, John and Edward. In his will he allowed Mary to live in the house for her life, and appointed Edward to hold the rest of his estate during Mary’s life in trust. Edward had the power to decide if and when to give Mary funds from the estate. On Mary’s death, Alex’s will left everything to Edward, and nothing to John.

Mary and John brought claims under the Wills Variation Act.

In the Supreme Court of Canada, McLachlin J. considered the competing interests in allowing people to decide where their assets go at death-- their testamentary autonomy--and the claims of spouses and children. She said that in contemporary norms, society expected that a testator provide more than the bare necessities to his or her family where the size of the estate permits. The court must consider what a judicious spouse and parent would do.

McLachlin J. held that there were two sets of criteria that the court should consider when deciding what is adequate, just and equitable. First, the court should consider the testator’s legal obligations, such as his or her obligations to a spouse under family law statutes during the testator’s lifetime for support and division of property. Next, the court should consider the testator’s moral obligations. Where the testator has met his or her legal obligations, the court should consider whether he owed a moral duty to his spouse, or children, beyond the legal obligations the testator had in life. In McLachlin J.’s words,
If the phrase "adequate, just and equitable" is viewed in light of current societal norms, much of the uncertainty disappears. Furthermore, two sorts of norms are available and both must be addressed. The first are the obligations which the law would impose on a person during his or her life were the question of provision for the claimant to arise. These might be described as legal obligations. The second type of norms are found in society's reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards. These might be called moral obligations, following the language traditionally used by the courts. Together, these two norms provide a guide to what is 'adequate, just and equitable' in the circumstances of the case.

The rationale for considering the testator’s legal obligations while alive is the “desirability of symmetry between the rights which may be asserted against the testator before death and those which may be asserted against the estate after his death….”

With respect to the testator’s legal obligations to a spouse,
[t]he legal obligations on a testator during his or her lifetime reflect a clear and unequivocal social expectation, expressed through society's elected representatives and the judicial doctrine of its courts. Where provision for a spouse is in issue, the testator's legal obligations while alive may be found in the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp), family property legislation and the law of constructive trust: [citations omitted].

With repect to children,
[t]he legal obligation of a testator may also extend to dependent children. And in some cases, the principles of unjust enrichment may indicate a legal duty toward a grown, independent child by reason of the child's contribution to the estate.

After the testator has met his or her legal obligations, the next question is whether any moral obligation is owed to the spouse or children:
For further guidance in determining what is 'adequate, just and equitable', the court should next turn to the testator's moral duties toward spouse and children. It is to the determination of these moral duties that the concerns about uncertainty are usually addressed. There being no clear legal standard by which to judge moral duties, these obligations are admittedly more susceptible of being viewed differently by different people. Nevertheless, the uncertainty, even in this area, may not be so great as has been sometimes thought. For example, most people would agree that although the law may not require a supporting spouse to make provision for a dependent spouse after his death, a strong moral obligation to do so exists if the size of the estate permits. Similarly, most people would agree that an adult dependent child is entitled to such consideration as the size of the estate and the testator's other obligations may allow. While the moral claim of independent adult children may be more tenuous, a large body of case law exists suggesting that, if the size of the estate permits and in the absence of circumstances which negate the existence of such an obligation, some provision for such children should be made: [citations omitted]

When there are competing legal and moral claims, McLachlin J. wrote, “it seems to me that claims which would have been recognized during the testator's life -- i.e., claims based upon not only moral obligation but legal obligations --should generally take precedence over moral claims.”

McLachlin J. went on to say that the court should interfere with the testator’s Wills only to the extent necessary to meet the testator’s legal and moral obligations:
I add this. In many cases, there will be a number of ways of dividing the assets which are adequate, just and equitable. In other words, there will be a wide range of options, any of which might be considered appropriate in the circumstances. Provided that the testator has chosen an option within this range, the will should not be disturbed. Only where the testator has chosen an option which falls below his or her obligations as defined by reference to legal and moral norms, should the court make an order which achieves the justice the testator failed to achieve. In the absence of other evidence a will should be seen as reflecting the means chosen by the testator to meet his legitimate concerns and provide for an ordered administration and distribution of his estate in the best interests of the persons and institutions closest to him. It is the exercise by the testator of his freedom to dispose of his property and is to be interfered with not lightly but only in so far as the statute requires.

In the result the Supreme Court of Canada held that the Alex Tataryn’s Will should be varied. The court gave Edward and John an immediate gift of $10,000 each. The court ordered that the rental property be held in trust during Mary Tataryn’s life, with the income going to her, and on her death Edward would be entitled to two thirds of the rental property, and John one third. The court ordered that Mary Tataryn receive the family residence and the rest of the estate outright.

[Since I wrote this post, I have posted the following other articles on the Wills Variation Act:
"Wills Variation Act: A Summary of the Principles" here;
"Time Limits for Bringing a Wills Variation Act Claim" here.]

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