Wednesday, March 14, 2018

Quinn Estate

Estate planning for people with assets and connections to both the United States and British Columbia is fraught with potential legal and tax pitfalls. It is important to get tax and legal advice with respect to the implications on both sides of the border. This is illustrated by the recent decision concerning the former NHL coach Pat Quinn in Quinn Estate, 2018 BCSC 365.

Mr. Quinn and his wife Sandra Quinn settled a trust in the United States which dealt with assets in the United States. Mr. Quinn was an American citizen, and Mrs. Quinn had U.S. Green Card, but they lived in British Columbia. Their U.S. lawyer also draft a will for Mr. Quinn dealing with his assets in Canada. The will provided that the residue of his Canadian Estate would “pour over” into a U.S. trust, referred to as the Quinn Family Trust.

The issue in this case was whether the distributive provision of the Canadian will is valid under British Columbia law. The will was signed by Mr. Quinn in the presence of two witness in accordance with the requirements of section 37 of the Wills, Estates and Succession Act. The will itself was formally valid. The difficulty was the “pour over” clause, which I understand is valid in at least some states. The terms of the Quinn Family Trust allowed Mr. and Mrs. Quinn to amend it. Because they could amend the trust, the beneficiaries could be changed without compliance with the requirements of section 37.

Mr. Justice Funt, who heard the application, applied the decision in Kellogg Estate, 2013 BCSC 2292, appeal dismissed as moot 2015 BCCA2013:

[39]         In Kellogg Estate, Justice Gray held a pour-over clause to a revocable, amendable, inter vivos trust to be invalid. As in the case at bar, the inter vivos trust was amended after the execution of the deceased’s will. In Kellogg Estate, the amendment served to remove one of the primary beneficiaries of the trust.
[40]         After a review of the relevant English and Canadian cases, American legislation and cases, and academic commentary, Justice Gray concluded:
[69]      In my view, the fact that the Pour-Over Clause refers to future amendments of the KF Trust and the fact that the KF Trust Indenture was amended by the Amendment to KF Trust following the execution of the Will is determinative.
[70]      The gift cannot “pour over” to be held by the trustee of the KF Trust on the terms which existed at the time the Will was executed, because that trustee is now obliged to follow the terms set out in the Amendment to KF Trust. The gift cannot “pour over” to be held by the trustee on the basis of the Amendment to KF Trust because the effect would be to permit RPK to have effectively amended his Will without complying with the Wills Act [now section 37 of the Wills, Estates and Succession Act].
[71]      Even though there is some formality associated with acknowledging execution of a document before a single witness who is a notary public, the court does not have jurisdiction to weigh the degree of formality. The failure to comply with the Wills Act is fatal.
[72]      The doctrine of “facts of independent significance” has not been recognized in B.C., and applying such a doctrine here would require bypassing the Wills Act.
There was an amendment to the Quinn Family Trust, but it was administrative in nature. Mr. Justice Funt rejected the argument advanced by one of Mr. Quinn’s children that this case could be distinguished on that basis. Mr. Justice Funt held that the problem with the clause was that the Quinn Family Trust could be amended to change the beneficiaries, and it did not matter whether an amendment had been made.

Since the decision in Kellogg Estate, British Columbia law has changed to allow the court to give effect to a document that does not comply with the formal signing and witnessing requirements for a valid will. Section 58 of the Wills, Estates and Succession Act allow the court to give effect to a non-compliant record if the court finds that it represents the “testamentary intentions of a deceased person.”

Can section 58 be applied to save the “pour over’ clause?

Mr. Justice Funt held that it cannot. In this case, the will itself complied with the formal signing and witnessing requirements. It was rather the structure that is inconsistent with the formal requirements of a will, by allowing changes to be made without compliance. He wrote:
[55]         Section 58 is not an independent provision. From its language, “[e]ven though the making, revocation, alteration, or revival of a will does not comply with this Act”, s. 58 is tethered to s. 37. I agree with Ms. Francis, counsel for Sandra Quinn in her personal capacity, in her written submission:
44. The policy reason behind section 58 is to enable the Courts to step in where a person has taken real steps to make a will, but the formalities have fallen short. It does not exist to enable the court to bless structures that circumvent the formalities all together, which is what a pour over clause to an amendable trust does. If the policy behind section 58 were to do away with testamentary formalities, then our WESA would not contain testamentary formalities. Rather, what section 58 reflects is a policy to ensure that a document that reflects the deliberate, fixed and final intention of a Deceased person is not set aside on the basis of failure to comply with a formality.
[56]         Section 58’s scope is reflected in s. 59(1). Section 59(1) enables a will to be rectified where the will “fails to carry-out a will-maker’s intentions” in specified circumstances. Section 59 does not allow rectification under any circumstances. If s. 58 were to be given an overly broad interpretation, s. 59(1) would have no purpose. Rectification could occur under s. 58 based on a simple assertion of testamentary intentions. Section 58 is a curative provision and not an independent provision designed to change fundamental principles of the law of wills.
[57]         In short, the statutory context shows that the purpose of s. 58 of WESA is to permit the Court to address circumstances of “formal invalidity” where the will-maker’s “deliberate or fixed and final intention” as to the disposal of his or her property on death is found. [Quotation from Hadley Estate (Re), 2017 BCCA 311 omitted.
 [58]         In the case at bar, the deficiency is not one of proper execution. All parties agree that the Will was properly executed. 
[62]         The Quinn Family Trust was a revocable, amendable, inter vivos trust with the deceased being one of the two settlors and trustees. Although, as may be seen from clause 6.04, the Quinn Family Trust was part of an estate plan functioning during the deceased’s life time, it was designed to be flexible, and left matters in flux. For example, shortly before the deceased’s death, counsel had sent the November 21, 2014 letter addressed to the deceased and Sandra Quinn, which Sandra Quinn had the opportunity to read, and which recommended the assets be distributed “now”. The distribution of all of the Quinn Family Trust assets would have had the effect of a revocation.
The result is that the Canadian assets will be distributed to the persons entitled under on an intestacy.

The case does not deal directly with the taxation aspects of Mr. Quinn’s estate plan, but Mr. Justice Funt quoted from a tax opinion letter, which indicated that the structure could result in a significant tax burden to the Quinn family by triggering taxes in Canada that would not be offset by credits in the United States. This highlights the need to get specialized tax advice concerning the implications of a plan in both jurisdictions.

Thursday, March 08, 2018

Estate Litigation Basics Course, April 13, 2018

I have the honour of speaking at the Continuing Legal Education Course on Estate Litigation Basics, at the Rosewood Hotel Georgia, 801 West Georgia Street (I had earlier put the Pan Pacific but the location has changed) in Vancouver on April 13, 2018. I am speaking about evidence in estate litigation. My paper is co-authored (or will be when it's done) by Taeya Fitzpatrick of my firm.

The course is chaired by Lauren Blake of Legacy Tax and Trust Lawyers, Vancouver. The other faculty are:

The Honourable Madam Justice D. Jane Dardi — Supreme Court of BC, Vancouver
The Honourable Sandra K. Ballance — Mediator, Vancouver
Colleen Cattell, QC, C. Med. — Mediator & Arbitrator, Vancouver & Victoria
Coran Cooper-Stephenson — Claims Counsel, Lawyers Insurance Fund, Vancouver
Rhys Davies, QC — DLA Piper (Canada) LLP, Vancouver
M. Scott Kerwin — Borden Ladner Gervais LLP, Vancouver
Kimberly A. Kuntz — Norton Rose Fulbright Canada LLP, Vancouver
Anna Laing — Farris, Vaughan, Wills & Murphy LLP, Vancouver
Amy A. Mortimore — Clark Wilson LLP, Vancouver
Maryanne Prohl — Claims Counsel, Lawyers Insurance Fund, Vancouver

You may attend in person or by webinar.

The agenda and registration information is available at the CLEBC website here.

Saturday, February 17, 2018

Downey Courthouse, Downey California

I took this photograph last October, when I was, perhaps not surprisingly given the photo, in Downey, California.

Sunday, February 11, 2018

Kimberly Rule Presenting at "Death is Not the End" Continuing Legal Education Course

Kimberly Rule of our firm will be one of the group leaders at the two-day estate-administration workshop, "Death is Not the End." The course will be held on March 8th and 9th at the Pan Pacific Hotel, 999 Canada Place, Vancouver, B.C. For further course information and registration, see the Continuing Legal Education website here.

Sunday, January 28, 2018

MacKinnon v. Donauer

There is no shortage of court cases in British Columbia of informal family arrangements going awry. A parent may assist a child and the child’s spouse in purchasing a home with the expectation of sharing the home. The idea may make good sense. Unfortunately, neither side may consider what will happen if the arrangement doesn’t work out. In the case I am about to write about, MacKinnonv. Donauer, 2017 BCCA 437, for example, Madam Justice Newbury, noted at paragraph 3,

As is usually the case in family arrangements of this kind, none of the parties sought legal advice, and no one seems to have considered various contingencies that could arise in the parties’ lives or in their relationship.

Fortunately, the courts do have a fair amount of flexibility in fashioning a remedy consistent with what the parties may have reasonably expected had they turned their minds to the potential problems that might arise. Unfortunately, by the time the matter gets to court, the parties may spend a hundred times as much in legal expense than what they would have spent if each had received independent advice and entered into a formal agreement.

Joy MacKinnon paid $150,000 to her daughter, Tina Maria Donauer, and her daughter’s husband, Michael Donauer, toward the purchase of a home. In return the Ms. MacKinnon and her husband (who later died in 2013), moved in to the new home to live in the basement suite. The understanding among the parties was that Ms. MacKinnon would be entitled to live in the suite indefinitely without paying rent. She was 58 years old when she contributed the funds toward the purchase and moved into the suite,

She lived in the suite for about 9 years. She contributed $28,500 towards some of the property expenses. Following a disagreement with her daughter and son-in-law, Ms. MacKinnon moved out of the suite in January, 2015.

Ms. MacKinnon sued her daughter and son-in-law, claiming a 29 percent interest in the home on that basis that she contributed 29 percent of the purchase price. She claimed the interest on a resulting trust, or, alternatively, unjust enrichment. The trial judge dismissed her claim for an interest in the home, but awarded her $28,500 for the funds she contributed to the expenses. The trial judge found that she did not prove her claim in either resulting trust or unjust enrichment.
Ms. MacKinnon appealed to the British Columbia Court of Appeal, which overturned the trial judge’s decision in respect of the initial contribution of $150,000. Madam Justice Newbury held that on the facts, Mr. and Mrs. Donauer would be unjustly enriched if they were allowed to retain the full benefit of Ms. MacKinnon’s initial $150,000 contribution. They were enriched by her contribution, she suffered a corresponding deprivation, and there was no juristic reason for the enrichment. Madam Justice Newbury held that the family arrangement did not constitute a juristic reason for the enrichment as the trial judge had found, However, Ms. MacKinnon also received the benefit of living in the suite for nine years, without contributing to the full rental value.

Madam Justice Newbury wrote:

[45]         It seems to me that the appropriate analysis emerges if one imagines a situation in which after a short period of living with Ms. MacKinnon under the family arrangement, the Donauers had expelled her from their home. In that event, I suspect a court would have little difficulty in finding that the defendants had been unjustly enriched – i.e., that it would be unjust for them to retain the full $150,000. Ms. MacKinnon would be found to have a reasonable expectation of some remedy – despite the existence of a family arrangement. It was, of course, Ms. MacKinnon who chose to leave – and not, if I may say so, for any reason that would withstand objective scrutiny. Was it reasonable for her to expect she could unilaterally bring the arrangement to an end and claim a proprietary interest in McClure, with the resulting disruption of a forced sale? It is difficult to say she was “prejudiced” by her own decision to leave. On the other hand, would it be reasonable for the defendants to expect to retain the entire benefit of the funds and their appreciation in the real estate market?
[46]         Considering objectively what the parties could have reasonably expected in light of all the circumstances when they entered into the family arrangement, I believe the trial judge erred in ruling that it constituted a juristic reason that justified the Donauers’ retaining the entire benefit of Ms. MacKinnon’s funds. At the same time, the fact the Donauers accommodated her in their home for over nine years and thus provided a benefit to her must be taken into account in fashioning the appropriate remedy for the enrichment. (As the Court stated in Kerr [v. Baranow, 2011 SCC 10], ‘mutual benefit conferral’ is generally to be taken into account at this “remedy stage” of the analysis: see para. 109.)
Madam Justice Newbury considered that a financial award would be appropriate in the circumstances. In arriving at a formula for calculating the award, she took into account the nine years Ms. MacKinnon lived in the suite by directing that the value of a 29 percent interest as at the date of trial, be reduced by a fraction representing the nine years she was in the suite over her life expectancy when the home was purchased. Madam Justice Newbury wrote:

[48]         In normal circumstances, I would calculate a money judgment with reference to Ms. MacKinnon’s life expectancy when she was 58 years old. I would multiply 29% of the fair market value of the house at the date of trial by a fraction the denominator of which would be the number of years the Donauers could have expected Ms. MacKinnon to be in the house from 2005 on, and the numerator of which would be that number minus nine. I would then adjust for contingencies arising on the evidence that was before the Court at trial, including the contingency she would have left the suite during her lifetime – for health reasons, for example. 
[49]         Unfortunately, there is no evidence before us of the life expectancy of women of the plaintiff’s age in 2005, nor of the market value of McClure as at the date of trial. I would therefore allow the appeal and direct counsel to attempt to determine that market value as at the trial date and Ms. MacKinnon’s life expectancy in 2005, and then to calculate the amount of a judgment in accordance with the foregoing – or to settle upon some other amount. If they are unable to determine or agree upon a figure within 60 days of the date of this court’s order, either party shall be at liberty to return to the Supreme Court of British Columbia, which shall determine an amount in accordance with these reasons.

I have tried working through the formula using made-up values. Say the house was worth $1 million at trial. The value of a 29 percent interest would be $290,000. If her life expectancy in 2005 were 27 years, then she would receive two-thirds of $290,000, which is $193,333. Again, I made these values up, and I don’t know what Ms. MacKinnon will receive in addition to the $28,500, which the Court of Appeal did not disturb. 

Thursday, January 04, 2018

B.C. Court of Appeal Confirms that Notaries are Not Permitted to Draw Wills with Life Estates

The British Columbia Court of Appeal confirmed that notaries public are not permitted to draw wills that create life estates or trusts in a decision released December 21, 2017. In British Columbia, generally only lawyers may practice law, which includes drawing wills for a fee. However, members of the Society of Notaries Public of British Columbia are also permitted to draw wills for a fee, but there are restrictions on the types of wills they may draw.  Specifically, as set out in section 18 of the Notaries Act, notaries may,

(b)     draw and supervise the execution of wills 
(i)    by which the will-maker directs the will-maker’s estate to be distributed immediately on death,
(ii)    that provide that if the beneficiaries named in the will predecease the will-maker, there is a gift over to alternative beneficiaries vesting immediately on the death of the will-maker, or
(iii)   that provide for the assets of the deceased to vest in the beneficiary or beneficiaries as members of a class not later than the date when the beneficiary or beneficiaries or the youngest of the class attains majority….
In Society of Notaries Public of British Columbia v. Law Societyof British Columbia, 2017 BCCA 448, the Society of Notaries Public sought a declaration that Notaries Public are permitted to draw wills creating a life estate.

Let me give you an example of a life estate. In my will, I might give my spouse the right live in my house during her lifetime, and provide that on her death, the house will then be divided among my children equally. My spouse would have a life estate or life interest, and my children the remainder interest.

The Society of Notaries Public argued that the remainder beneficiaries would have an interest in the property at death of the will-maker, even though they would not have possession of the property until the death of the beneficiary for life. The interest of the remainder beneficiaries vest at the time of the will-maker’s death. According to the Society of Notaries Public, the property can be said to be "distributed immediately on death," in such a case.

The Society of Notaries Public were unsuccessful in the Supreme Court of British Columbia, and appealed to the Court of Appeal.

The Court of Appeal also rejected the Society of Notaries Public’s argument. Although remainder beneficiaries of a life estate may acquire an immediate vested interest, that is not the same thing as a distribution. Mr. Justice Frankel wrote,

[23]         Reduced to its core, the Notaries’ argument is that the words “distributed immediately on death” should be interpreted as “vested immediately on death”.  For example, they say that when a will-maker leaves real property to A subject to B having a life interest in that property, since A’s interest vests immediately, the property has been “distributed immediately” to A, notwithstanding the fact that A is not entitled to possession or use of the property until B dies.  I am unable to accept this argument.

[25]         There are principles of statutory interpretation that assist in determining the meaning of the words a legislature has chosen to use.  As I will explain, those principles lead to the conclusion that the Legislative Assembly used the expression “distributed immediately” in s. 18(b)(i) of the Notaries Act in its ordinary sense, namely, to describe a will in which the will-maker directs the assets of the estate to be immediately given out or delivered to those entitled to receive them; in other words, a will that directs the immediate transfer of both the legal and beneficial interest in the assets of the estate to the beneficiaries.

This decision means that if you wish to have a professionally drawn will in which you provide the right to a beneficiary to enjoy the property for life, but for other beneficiaries to receive the property after the life beneficiary’s death—which is fairly common in second marriages—then you will need to retain a lawyer to draw the will.

Sunday, December 17, 2017

Supreme Court of Canada Decision on Proprietary Estoppel in Cowper-Smith v. Morgan

The Supreme Court of Canada rendered it judgment in Cowper-Smith v. Morgan, 2017 SCC 61, this last Thursday, December 14, 2017. The main legal issue is whether a person who relies on a promise that he will receive property to his detriment may become entitled to the property even if the person who made the promise did not own the property at the time she made the promise. Let me explain.

Elizabeth Flora Cowper-Smith died in 2010. She had three children: Gloria Morgan, Max Cowper-Smith and Nathan Cowper-Smith. In her will, she named her daughter as her executor and she provided that after payment of debts, her estate would be divided equally among her three children. She had investments and her family home in Victoria, British Columbia.

In 2005, Max Cowper-Smith visited Victoria from England, where he had been living and working as a lawyer. Gloria told Max that their mother could no longer care for herself in her own home. Gloria and Max agreed that he would leave England and move in with their mother, and care for her and the family home, after Gloria agreed that he would be able to live in the home permanently, and that he would be able to acquire Gloria’s one-third interest after their mother’s death. On the basis of his sister’s promises, Max moved back to Victoria, and cared for his mother.

After her mother’s death, Gloria said she was going to put the house on the market.

Nathan and Max sued their sister.

As an aside, there is more to this story. Elizabeth Cowper-Smith had transferred title to her house and investments into joint tenancy with Gloria, and they signed a trust declaration pursuant to which Gloria held her interest in the title to the house and investments for her mother during her mother’s lifetime, but would receive these assets on her mother’s death. The Supreme Court of British Columbia trial judge set aside the transfers into joint tenancies and the trust declaration on the basis that Gloria had exercised undue influence over her mother and that Gloria had not rebutted the presumption that the gratuitous transfer is not a gift, but is held on a resulting trust for her mother and her mother’s estate. The Court of Appeal upheld this aspect of the trial judge’s decision, and it was not part of the appeal to the Supreme Court of Canada.

On finding that the family home was part of Elizabeth’s estate, the trial judge, Madam Justice Brown considered Max’s claim to the right to purchase Gloria’s interest in the home from Gloria on the basis of what is known as proprietary estoppel. In her reasons reported at 2015 BCSC 1170, she summarized the law as follows:

[116]     The claim for proprietary estoppel begins with an assurance or representation in relation to an interest in land. The assurance can be made through words or conduct and does not have to be as precise as it would need to be in order to give rise to a binding contract. The claimant's belief in the assurance must be reasonable. A finding of reliance does not necessarily lead to a finding of detriment and the court must be satisfied that there has been detriment because this is what gives rise to an unfairness. Reliance is a change in a person's conduct as a result of the assurance. Detriment does not flow automatically from reliance and detriment must be assessed on a holistic basis, looking at the overall benefits gained and losses suffered by the claimant. Once inequity has been established, the court must determine the extent of the inequity and the relief needed to satisfy it.

Madam Justice Brown found that Max had established the necessary evidence to support his claim. She wrote at paragraph 118 and 119,

[118]     I am satisfied that Max acted to his detriment in moving from England to Victoria, giving up employment income, the long-term lease of a cottage, his contacts with his children, and his social life to look after his aged dementing mother. He did so relying on Gloria’s agreement to his conditions for the move. In doing so, he acted reasonably. His discussions with Gloria were not done in a moment, they covered several months.
[119]     The relief that Max seeks is the right to purchase Gloria’s one-third interest in the house. I consider the relief sought by Max to be the minimum required to satisfy the equity. In a sense it will cost Gloria nothing. That Gloria now would rather not sell to Max for personal reasons has no bearing on the equity, or the reasonableness, of the relief sought.

Gloria appealed. In the British Columbia Court of Appeal, reported at 2016 BCCA 200, the majority held that because Gloria did not own an interest in the family home when she made the promises to Max, and it was uncertain whether she would receive an interest in the family home, Max could not rely on Gloria’s promises to assert a claim based on proprietary estoppel. Mr. Justice Willcock for the majority (Madam Justice D. Smith dissented on this issue) wrote at paragraphs 106 though 108,

[106]     Even assuming there to be some basis for the view that proprietary estoppel might arise as a result of an assurance given by one about to be the owner of property, I would not expand that class of persons so far as to include a potential beneficiary who gives an assurance to another, years before the death of a testator, with respect to what she will do with an inheritance that she merely anticipates receiving, if the person receiving the assurance acts as requested in the meantime. Not only is there uncertainty, in such a case, with respect to the promisor’s ability to deliver a proprietary interest to the promisee at the time the assurance is given, the uncertainty is not resolved when the promisee acts in reliance upon the promise.
[107]     Leaving aside, for the moment, the question whether Gloria was in a position to exert undue influence upon her mother, there was uncertainty with respect to the property interest Max was being promised. First, there was uncertainty whether Gloria would inherit anything from her mother. She might have predeceased her mother. Her mother might have changed her will and left Gloria more or less than a one‑third interest in the property. Her mother might have sold the house and moved into accommodation more suited to her declining health. Simply by liquidating her property Elizabeth Cowper-Smith would have precluded Max from asserting a right to buy anything from Gloria. Certainly it is not suggested that Elizabeth was in any way restricted in her dealings with the property simply because her daughter made assurances to Max about what she would do on Elizabeth’s death.
[108]     Without exerting undue influence upon her mother, Gloria was not in a position to determine what property interest Max would receive in exchange for his move to Victoria. The fulfilment of Gloria’s promise was entirely conditional on her mother’s actions, which were outside her control.
Max appealed to the Supreme Court of Canada.

Writing for the majority, Chief Justice McLachlin held that Max was entitled to require Gloria to sell him her interest in their mother’s home based on the principles of proprietary estoppel. She rejected the majority’s reasoning in the Court of Appeal. Although Max could not have enforced the promise if Gloria had not acquired an interest in the property, it can be enforced if she later does receive an interest in the home. After summarizing the majority decision in the Court of Appeal, the Chief Justice wrote at paragraphs 35 and 36:

[35]                          I cannot agree. With respect, the conclusion reached by the Court of Appeal majority conflates proprietary estoppel with the equity to which it gives effect. That Gloria did not own an interest in her mother’s property at the time of Max’s reliance is not dispositive in itself: see MacDougall, at p. 456; see also Thorner, at para. 61, per Lord Walker; Re Basham (deceased), [1987] 1 All E.R. 405 (Ch.), at p. 415. An equity arises when the claimant reasonably relies to his detriment on the expectation that he will enjoy a right or benefit over property, whether or not the party responsible for that expectation owns an interest in the property at the time of the claimant’s reliance. Proprietary estoppel may not protect that equity immediately. It may not protect the equity until considerable time has passed. If the party responsible for the expectation never acquires a sufficient interest in the property, proprietary estoppel may not arise at all; where there is proprietary estoppel, there must be an equity, but not vice versa. When the party responsible for the expectation has or acquires a sufficient interest in the property, however, proprietary estoppel attaches to that interest and protects the equity: see MacDougall, at p. 458; Wilken and Ghaly, at pp. 265-66; see also Watson v. Goldsbrough, [1986] 1 E.G.L.R. 265 (C.A.), at p. 267. Ownership at the time the representation or assurance was relied on is not a requirement of a proprietary estoppel claim.
[36]                           An equity arose in Max’s favour when he reasonably relied to his detriment on the expectation that he would be able to acquire Gloria’s one-third interest in their mother’s house. That equity could not have been protected by proprietary estoppel at the time it arose, because Gloria did not then own an interest in the property. But that does not mean that proprietary estoppel cannot attach to Gloria’s share of the house once she receives it. I conclude that it can.

There were a couple of other important issues remaining. First, Elizabeth Cowper-Smith did not give her children the family home in the will. Rather she gave her children a one-third interest in the residue of the estate. Gloria would only acquire an interest in the home if she distributed the home itself to the three beneficiaries, rather than selling it and distributing the proceeds. As an executor she had discretion to sell the house.

In this case, the Chief Justice held that Gloria had a conflict of interest as executor, on the one hand, and as a beneficiary. The court could order her to distribute the home in order to allow Max to be able to purchase Gloria’s interest in the home, and the majority of the Supreme Court of Canada did just that.

Secondly, the question arose as to when Gloria’s interest would be valued. Elizabeth Cowper-Smith had died in 2010 and this decision came out seven years later. The value of the home has likely increased significantly, given the changes in the Victoria real estate market. Chief Justice McLachlin held that the appropriate time for determining the purchase price was the time Max may have reasonably have expected to have purchased Gloria’s interest. The majority used an appraisal as of February 2, 2011.   The Chief Justice wrote at paragraphs 52 through 54,

[53]                          Neither Max nor Gloria could reasonably have expected to wait the better part of a decade to exchange Max’s cash for Gloria’s interest in the property. It is safe to assume that, had Gloria not sought to escape her promise, Max’s equity would have been satisfied and Gloria’s share of the house sold to him not long after February 2, 2011, which is when, in the course of administering their mother’s estate, the property was in fact appraised for $670,000.00. Rather than sell her interest in the house to Max at that point — that is, roughly when both she and he originally contemplated she would — Gloria took the position that she was under no obligation to do so at all. This litigation was the result. In the years since, Max has had the benefit of the money he would have had to pay Gloria in 2011 for her share of the house, Elizabeth’s estate has incurred expenses associated with the upkeep of the property, and the property, the parties agree, has increased in value.
[54]                          February 2, 2011 is a reasonable approximation of when Max expected to be able to purchase Gloria’s one-third interest in the property. That expectation reflects the defined right that Gloria promised Max in exchange for his returning to Victoria to care for their mother. In these circumstances, the claimant’s expectation must be the court’s guide in exercising its remedial discretion. This is because, as Walker L.J. put it in Jennings, at para. 45:
. . . the consensual element of what has happened suggests that the claimant and the benefactor probably regarded the expected benefit and the accepted detriment as being (in a general, imprecise way) equivalent, or at any rate not obviously disproportionate.

The majority of the Supreme Court of Canada also recognized that because of the delay Max has had the benefit of the use of the funds he would have used to purchase Gloria’s interest in 2011, and that estate assets were used to maintain the property. According, Max is required to pay Gloria interest on the purchase price at post-judgement interest rates from February 2, 2011, and also to account to the estate for any expenses paid out of estate funds to maintain the property since February 2, 2011.

This decision was released the day before Chief Justice McLachlin’s retirement on December 15, 2017. She was the longest serving Chief Justice of Canada. Here is a biography from the Canadian Encyclopedia.