Jung v. HSBC Trust Company – Round Three

Henry Lee decided to change his will. He had made a will in 1977, in which he left his entire estate to his brother Horace. (Mr. Henry Lee was not married, and did not have children.) He made the 1977 will himself using a store-bought will form.

So, Mr. Henry Lee bought another will form from a store. He filled out the will form himself in March 1985. The store-bought form was typewritten, with blanks. Mr. Henry Lee arranged for a couple of friends, Mr. and Mrs. Graham, to witness his signature.

In his new will, Mr. Henry Lee left Horace, hand wrote in the blank spaces:

My shares of Lee Bros. Holding Co. My property of 817 North Park St., Victoria, B.C. and 35% of cash & bonds to my brother Horace. 35% to my sister Estelle of cash & bonds. 35% divided evenly for my sisters Elsie, Edythe, Effie and my brothers Harold & Henry of cash & bonds.

Mr. Henry Lee died a few months after completing his new will. His savings and investments were worth over $600,000.

Horace Lee, whom Henry Lee had named executor of his 1977 will, and co-executor with Estelle Lee Jung of the 1985 will, took both wills to a lawyer, Mr. Barbour. The lawyer spoke on the telephone with one of the witness’s, Mr. Graham, who advised Mr. Barbour that when he witnessed the will, the portion with the gifts to Mr. Henry Lee’s siblings was still blank.

If Mr. Graham was correct in what he told Mr. Barbour, the most important part of the 1985 will, the gifts to siblings, would be invalid. In British Columbia, changes made to a will after it is signed and witnessed are not valid, unless made according to the formal requirements set out in the Wills Act. In this case the changes would not have complied if made after the will was signed and witnessed.

Horace Lee decided to change lawyers. He took the 1977 will—which left everything to Horace—to a second lawyer, who assisted Horace Lee in obtaining probate of the 1977 will. Horace Lee then kept Henry Lee’s entire estate for himself.

Estelle Lee Jung knew about the 1985 will, but she accepted Horace Lee’s word that it was invalid. None of the other siblings were aware of the 1985 will.

Horace Lee died in 2001 without a will. His estate was worth about $2.6 million. It was after his death that the 1985 will came to light. By then all of the other siblings, except Estelle Lee Jung had also died.

This is not the first time I have written about this case. I wrote here about the court’s decision after the first time it went to trial. I later wrote about the Court of Appeal decision ordering a new trial. Today’s post is on the decision after the second trial, in Jung v. HSBC Trust Company (Canada), 2007 BCSC 1740.

This case first went to trial in August and September, 2005. Although both Mr. and Mrs. Graham testified at the first trial that Mr. Henry Lee had written in the portion with the gifts before he and they signed the will, the trial judge preferred the evidence of Mr. Barbour that Mr. Graham had said that the will was not complete. The first trial judge found that the 1985 will was valid, except for the most important part. He also held that the clause in the 1985 will revoking the 1977 will was conditional on Mr. Henry Lee’s belief that he was validly changing the beneficiaries will. Accordingly, the first trial judge held that the portions of the 1977 will leaving the estate to Horace Lee remained in effect. (This is called the doctrine of dependant relative revocation.)

The Court of Appeal overturned the decision of the first trial judge. The Court of Appeal held that although the court could only consider Mr. Barbour’s evidence of his conversation with Mr. Graham for the limited purpose of assessing the reliability of Mr. Graham’s evidence that the Mr. Henry Lee had filled in the blanks before they signed the will.

At the second trial, Mr. Justice Silverman found Mr. Henry Lee had completed the gift portion of the 1985 will before he and the Grahams signed the will. Accordingly, the entire 1985 will was valid. The 1985 will revoked the 1977 will. Mr. Horace Lee should not have applied to probate the 1977 will.

In arriving at his decision, Mr. Justice Silverman applied a presumption that the will was properly completed unless there is some indication on the face of the will that it was not. He also accepted the evidence of Mrs. Graham that it was completed. In view of the previous inconsistent statement Mr. Graham had made to Mr. Barbour, Mr. Justice Silverman did not rely on Mr. Graham’s evidence.

Some of the defendants argued that Ms. Estelle Lee Jung had waited too long to sue. They argued that she knew about the 1985 will at the time Horace Lee applied to probate the 1977 will in 1987. The argued that she had either six years or ten years (depending on which section of the Limitation Act applied) to sue.

Mr. Justice Silverman found that the limitation period did not begin to run against Ms. Jung until after Horace Lee’s death. He found that Mr. Horace Lee had fraudulently concealed his knowledge that the 1985 will was valid from his sister Ms. Jung. He also fraudulently concealed his knowledge of the 1985 will from his other siblings. Accordingly, under section 6(1) of the Limitation Act, RSBC 1996, c. 266, the limitation period did not begin to run as against Ms. Jung until she was fully aware of the fraud. She did not wait too long to sue in the circumstances.

Because so much time had passed since Horace Lee had probated the 1977 will, and because Horace Lee had mixed the estate assets with his own, it would have been difficult to revoke the probate the 1977 will. It was too late to undo everything that happened. Instead, Mr. Justice Silverman ordered a payment out of Horace Lee’s estate to those beneficiaries (and in many cases their estates) who would have benefitted from the 1985 will on the basis of the value of Henry Lee’s estate when he died. In addition the beneficiaries are entitled to interest at rates set by the court registrar for prejudgment interest.

The interest begins to run from the date of the probate of the 1977 will in March, 1987. (It seems to me that this does not fully compensate the beneficiaries of the 1985 will, because the investments likely grew in value between the date of Mr. Henry Lee’s death, and the date of probate.)

The court also had to interpret the words “cash and bonds.” Mr. Justice Silverman found that Mr. Henry Lee intended those words to include Canada Savings Bonds, cash, bearer bonds and term deposits.

The usual rule in lawsuits in British Columbia is that the unsuccessful party pays some costs to the successful party. In this case, Mr. Justice Silverman exercised his discretion to depart from the usual rule, and award all of the parties their reasonable legal fees out of Horace Lee’s estate. He found that the litigation was caused by the conduct of Henry Lee and Horace Lee, rather than the parties to the lawsuit. In the trial judge’s words:

Hubert’s contributing action was his honest, but ill-advised decision, to use a store-bought form will without involving a lawyer. Horace’s contributing action was his bad faith and fraudulent behaviour.