Saturday, January 24, 2009

Viberg v. Viberg

In a recent Supreme Court of British Columbia decision, Mr. Justice Chamberlist considered the provisions of the Estate Administration Act governing the distribution of intestate estates (for those who die without a will) when balancing the competing interests of a spouse and children in a Wills Variation Act dispute.

In Viberg v. Viberg, 2009 BCSC 27, two of Harland Viberg’s three children applied to vary their late father’s will. Harland Viberg died back in 1995. His will, made in 1979, left his estate to his wife, the plaintiffs’ mother, Sherrie Viberg.

Harland and Sherrie Viberg had separated about three years before Harland Viberg’s death, but he did not make a new will. They parted amicably, had agreed on how to divide the family property, but had not yet agreed on spousal support or concluded a separation agreement.

On his death, Harland Viberg’s estate was worth about $317,000 net of liabilities and expenses. Sherrie Viberg also received life insurance benefits of $382,500 as well as Canada Pension Plan survivor’s benefits.

Sherrie Viberg had some assets of her own when Harland Viberg died. She owned a house, assumed to be worth $184,000, and $72,000 in Registered Retirement Savings Plans.

The plaintiff children were in their mid-twenties when their father died. Their financial circumstances were modest.

Mr. Justice Chamberlist held that Harland Viberg had legal and moral obligations to his separated wife, and moral obligations to the plaintiff children.

The court held that Harland Viberg had not made adequate provision for the plaintiff children. Because his will did not make any provision for his children, Harland Viberg had not met his moral obligations to them.

Mr. Justice Chamberlist considered what portion the children would have received if Harland Viberg had died without a will. He wrote:

The Province of British Columbia, by virtue of s. 85 of the Estate Administration Act, R.S.B.C. 1996, c. 122, has, I believe, come to terms with what the legislature views as an adequate, just and equitable distribution where no will has been left by a testator.

Under section 85, Sherrie Viberg would have been entitled to the first $65,000 of the estate and one-third of the balance. The three children would have then shared two-thirds of the balance of their father’s estate. Based on the net value of the estate of $317,500, Mr. Justice Chamberlist calculated the share of each of the plaintiff’s at $56,090. He held that an appropriate award would be $50,000 for each of the plaintiffs, but reduced the share of the plaintiff Darren Viberg by $5000 to reflect some items Darren Viberg had received from his father’s estate.

The children are also entitled interest on their awards of 5% per annum from the first anniversary of their father’s death.

This is the first case that I am aware since the Supreme Court of Canada’s decision in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807, in which the court has taken into consideration the legislation governing distribution for intestate estates when varying a will under the Wills Variation Act. Prior to Tataryn, the British Columbia Court of Appeal had rejecting using the intestacy distribution as a measure of an award under the Wills Variation Act. I think that the analysis of a testator’s legal and moral obligations in Tataryn does allow the court to consider the provisions for distribution of intestate estates. I also think the provisions for intestate distribution provide a reasonable measure for the court to consider in a case like Viberg, although I would not like to see courts mechanically apply the intestacy provisions to Wills Variation Act cases.

I note that the provision for the first $65,000 to the spouse reflect the economics of an earlier time. Bill 28 – 2008, which was introduced into the Legislative Assembly, but died on the order paper, would have increased the spousal preferential share of an intestate estate from $65,000 to either $150,000 (if the deceased has children or other descendants from another marriage or relationship) or $300,000 (if the deceased’s descendants are the descendants of both the deceased and the surviving spouse).

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