Wednesday, January 30, 2008

Saugestad Appeal

The British Columbia Court of Appeal has varied the Supreme Court of British Columbia’s award in Saugestad v. Saugestad, 2008 BCCA 38. This case is about a claim by a second wife under the Wills Variation Act, RSBC 1996, c. 490, to a share of her late husband’s large estate. Mr. Saugestad left his estate to his two children from his previous marriage. But he had also provided for his second wife outside of his estate by putting their residence in a joint tenancy and by making her the beneficiary of his pension income. I have written about the trial decision in greater detail here.

The trial judge granted the plaintiff, Joan Saugestad, a modest share of the estate consisting of $29,000 and the right to the income from her late husband’s half interest in an investment condominium.

Mr. Justice Mackenzie in the Court of Appeal agreed with the trial judge’s analysis, but varied the award to provide Mrs. Saugestad her late husband’s interest in the investment condominium outright.

The issue was one of balancing on the one hand Mr. Saugestad’s wish to benefit his two sons against the plaintiff’s claim to sufficient assets to “continue the generous lifestyle that she enjoyed” with her late husband without using her capital. Mr. Justice Mackenzie said that the sons’ moral claims outweighed Mrs. Saugestad’s.

But Mr. Justice Mackenzie found that leaving Mrs. Saugestad an interest in the investment condominium for her life created an unnecessary complication. A life interest may be more appropriate where asset is being used personally by one of the parties, such as a matrimonial home. Instead, the Court of Appeal awarded Mrs. Saugestad an outright interest.

Appeals of Wills Variation Act cases differ from most other appeals in that the Court of Appeal exercises an independent discretion to vary an award. In most types of appeals, the appellant must show that the trial judge made a “palpable and overriding error.” Here, the Court of Appeal agreed with the trial judge’s reasoning, but varied the decision because of a relatively minor difference of opinion regarding the appropriate remedy. Yet the variation might result in a fairly large financial benefit to Mrs. Saugestad, because the value of an outright ownership may be significantly higher than the value of a life interest.

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