Sunday, April 13, 2014

Notice of Dispute

In British Columbia, under the new probate rules, if you wish to dispute the validity of a will, and oppose a grant of probate or of administration of the will, you may file a notice of dispute before the Supreme Court of British Columbia issues the grant.

The procedure is set out under new Rule 25-10, which came into effect on March 31, 2014 with the new Wills, Estates and Succession Act.

The notice of dispute, replaces caveats under the old rules, and are similar but not identical to caveats. I wrote about caveats here

In contrast to caveats, you may only file one notice of dispute, but it remains in effect for one year (rather than 6 months) unless removed.

The Registrar may not issue a grant, an authorization to obtain estate information, or reseal a foreign grant while a notice of dispute is in effect.

The “disputant” may withdraw a notice of dispute by filing a withdrawal in form P 30. The old rules did not prescribe a form for withdrawing a caveat in estates, although the form prescribed for withdrawing caveats in admiralty proceedings was sometimes used.

You may also apply to court to renew the notice of dispute under Rule 25-10 (7).


Any person interested in the estate may apply under Rule 25-10 (10) to court to remove a notice of dispute, and the court may do so “if the court determines that the filing is not in the best interests of the estate.” This is set out in Rule 25-10 (11).

Sunday, April 06, 2014

Bentley v. Maplewood Seniors Care Society

Margaret Anne Bentley lives in the Maplewood care facility in the Fraser Valley of British Columbia. She was diagnosed with Alzheimer’s disease in 1999, and her condition has deteriorated to the point where she moves little, does not speak at all, has her eyes closed most of the time, shows no indication that she recognizes her family, and cannot feed her self.

Staff at the nursing home feed her by placing a spoon or glass by her lower lip. Sometimes she accepts the nourishment or drink, and swallows, and at other times, she does not. If she does not accept it, staff will prompt her again, but they do not force her to eat or drink.

Mrs. Bentley’s condition stands in contrast to her previously vibrant life, during which she had a career as a nurse.

She had written a statement setting out her wishes in 1991 that in which she wrote that if “the situation should arise that there is no reasonable expectation of my recovery from extreme physical or mental disability, I direct that I be allowed to die and not be kept alive by artificial or ‘heroic measures.’”  The statement included a provision that said “No nourishment or liquids.”

After her diagnoses, she described to her husband symptoms that she observed as a nurse in patients with dementia, and told him not to let that happen to her.

She also signed another document that similarly provided that if she was not able to communicate and “suffered from severe physical illness, or from impairment expected to cause me severe distress or render me incapable of rational existence,” she wanted to “be allowed to die and not be kept alive by artificial means…,” but that she would “accept basic care.”  In this second document she also stated that she wished for her daughter Katherine Hammond to be consulted if there were any uncertainty about her wishes.

Her husband and her daughter Katherine Hammond brought a petition to the Supreme Court of British Columbia seeking an order that Mrs. Bentley not be given any nourishment or liquids. The society that operates the nursing home and the Fraser Health Authority opposed the application.

In Bentley v. Maplewood Seniors Care Society, 2014 BCSC 165, Mr. Justice Greyell considered the following issues as set out in paragraph 34:

1)    Is Mrs. Bentley currently capable of making the decision to accept nourishment and assistance with feeding?
 2)    Does assistance with feeding fall within the definition of health care or personal care?
 
3)    If Mrs. Bentley is not currently capable of making the decision to accept nourishment, who has authority to make the decision?
 
4)    Would failure to provide assistance with feeding constitute neglect within the meaning of the Adult Guardianship Act?
 
5)    Would failure to provide assistance with feeding contravene a criminal prohibition?

With respect to the first issue, if Mrs. Bentley is capable of making a decision to accept nourishment and assistance with feeding there would no basis to discontinue offering it to her. Her family argued that she was incapable of making a decision, and her acceptance of nourishment was reflexive.

In his analysis, Mr. Justice Greyell noted that there is a presumption of law in British Columbia that a person is capable of making decisions. Although Mrs. Bentley was not capable of making complex decisions, the law recognizes that a person may be able to make some decisions even if not capable of others.

After considering medical opinions on both sides of the issue, he found that her husband and daughter had not met the onus of showing that she was not capable of deciding whether to accept nourishment. He wrote at paragraphs 59 and 60:

[59]         Based on the evidence before me, I am of the view that the petitioners have not met their onus of rebutting the legislative presumption that Mrs. Bentley is capable of making the decision to accept or refuse to eat and drink. The preponderance of the evidence demonstrates that she has the capacity to make this decision. In coming to this finding, I have carefully considered and weighed the medical evidence as well as the descriptions of Mrs. Bentley’s behaviour. I prefer the evidence of Dr. O’Connor, who has expertise in incapacity assessments, to that of Dr. Edelson, who is a general physician. I find it significant that Mrs. Bentley indicates preferences for certain flavours and eats different amounts at different times. The petitioner has not established that Mrs. Bentley’s behaviour is a mere reflex and not communication through behaviour, which is the only means through which Mrs. Bentley can communicate.
 
[60]         The finding that Mrs. Bentley is currently capable of making the decision to eat and drink and is communicating her consent through her behaviour means that those providing her with care must continue to offer her assistance with feeding in the form of prompting her with a spoon or glass.

While Mr. Justice Greyell’s finding that Mrs. Bentley was consenting to nourishment and hydration was sufficient to dispose of the application, he went on to consider whether offering her nourishment and beverages was “health care” to which the Health Care (Consent) and CareFacility (Admission) Act (“HCCCFA”) procedures for obtaining consent applied if a patient is unable to consent, or “personal care,” which does not fall under the HCCCFA (could our Legislature not have come up with a shorter title for this Act?).

Under the HCCCFA, apart from emergency care, if a patient is unable to consent to health care, a health care provider must obtain substitute consent from one of the following: a court appointed personal guardian (or committee of the person), a representative appointed by the patient under a representation agreement, an advance directive made by the patient, or a temporary substitute decision maker appointed pursuant to the HCCCFA.

In this case, there was no court appointed personal guardian and Mrs. Bentley had not made a representation agreement. So if the provision of nourishment and liquids is “health care,” then the next questions would be whether Mrs. Bentley’s care providers would be required to either follow her statements of wishes as advanced care directives, or obtain consent from a temporary substitute decision maker. But if it is not “health care,” then the substitute consent provisions of HCCCFA would not apply.

Mr. Justice Greyell found that offering nourishment and beverage orally was personal care rather than health care. In reaching that conclusion he considered the definitions of “health care” under the HCCCFA, and “personal care” under the Representation Agreement Act. He wrote at paragraphs 83 and 84:

[83]         It is clear from the Representation Agreement Act, the primary method for appointing a substitute decision maker in British Columbia, that health care and personal care are distinct and that personal care includes decisions relating to an adult’s diet. The legislature has chosen to make a clear distinction between the two by allowing an adult to authorize a representative to make personal care decisions or health care decisions (Representation Agreement Act, ss. 7, 9). Furthermore, the Residential Care Regulation and the Community Care and Assisted Living Regulation address nutrition, assistance with eating, and meal planning as an aspect of daily living outside of the scope of the HCCCFA Act.
 
[84]         I find that providing oral nutrition and hydration by prompting with a spoon or glass is a form of personal care, not a form of health care within the meaning of the HCCCFA Act. It follows from this that the consent scheme laid out in that Act is not applicable in this scenario. This does not mean that service providers may provide oral nutrition and hydration without consent: adults have a common law right to consent or refuse consent to personal care services. When an adult is incapable of consenting, he is entitled to a substitute decision maker who will give or refuse consent, which will be discussed below.

Next, Mr. Justice Greyell considered whether, if the nourishment were health care, Mrs. Bentley’s written statements of her wishes should be given effect as advanced directives to discontinue the provision of nourishment. In concluding not, he found that the 1991 statement was ambiguous. It was not clear whether Mrs. Bentley considered the provision of nourishment and liquids to be an “artificial” or “heroic” measure in itself, or whether she did not want to be given nourishment and liquids in an artificial or heroic manner if “there was no reasonable expectation of my recovery….” He wrote at paragraphs 111 and 112:

[111]     The most likely interpretation appears to be that Mrs. Bentley did not want artificial delivery of nourishment or liquids through measures like a feeding tube. I do not believe many people would consider eating with a spoon or drinking from a glass, even when done with assistance, “artificial”. While “heroic measures” may be a commonly used expression, it does not communicate with any degree of clarity what a particular adult considers “heroic”. As Ms. Duthie’s Clinical Ethics Consult report states, there is consensus in the medical community that assistance with oral nutrition and hydration is neither artificial nor heroic.
 
[112]     I find that the instruction “No nourishment or liquids”, when read in the context of the 1991 Statement of Wishes, is so unclear that even if this document could be considered a valid advance directive, this instruction could not be taken as consent by operation of s. 19.8(1)(b).

He found the second statement of wishes to be even more ambiguous, and because it was not witnessed, did not comply with the formal requirements of an advance directive.

If Mrs. Bentley were incapable of consenting, and if the provision of nourishment constituted “health care,” then under the HCCCFA, her health care providers would be required to appoint a temporary substitute decision maker for her. Under the hierarchy set out in the legislation, her husband could be appointed as a substitute decision maker, but if he were not able or willing to act, then one of her children could act.

Mr. Justice Greyell found that a temporary substitute decision maker would not have authority to discontinue care required to sustain Mrs. Bentley’s life. This is because the authority of a temporary substitute decision maker to do so is limited by section 18(2) of the HCCCFA to circumstances where “there is substantial agreement among the health care providers caring for” her that “the decision to refuse consent is medically appropriate.” 

In this case, Mr. Justice Greyell found,

…it is clear that the majority of the health care providers involved in Mrs. Bentley’s care do not agree that it is medically appropriate to discontinue offering her assistance with eating by prompting with a spoon or glass. With the exception of Dr. Edelson, Mrs. Bentley’s health care providers have indicated that it would be medically and ethically inappropriate to withdraw this care. It is equally clear that this care is preserving Mrs. Bentley’s life as she would die from inadequate nutrition and hydration without it.
 
[120]     Therefore even if assistance with oral nutrition and hydration was considered health care, Mrs. Bentley’s temporary substitute decision maker would not have the legal authority to refuse consent since it would be health care necessary to preserve life and there is no substantial agreement among the health care providers caring for Mrs. Bentley that the decision to refuse substitute consent is medically appropriate. Mrs. Bentley’s health care providers have an obligation to consult with her temporary substitute decision maker, which they have done. However, Mrs. Bentley’s temporary substitute decision maker does not have the legal authority to make a binding decision when her health care providers believe it is medically inappropriate.

Although Mr. Justice Greyell found that offering nourishment and liquids is “personal care” rather than “health care,” he held that the care providers have a duty to consult with friends and family of a person provided with care who is not able to consent. He wrote at paragraphs 123 and 124:

[123]     If an adult has neither a personal guardian nor a representative who has authority to make personal care decisions, it is unclear who consent must be obtained from. An advance directive may not contain instructions relating to personal care; the scope of an advance directive is limited to health care (HCCCFA Act, s. 19.2(1)). There is no statutorily outlined substitute consent system for personal care like the temporary substitute decision maker system in the HCCCFA Act for health care.
 
[124]     I am of the view that when an adult is incapable of making a personal care decision and has no personal guardian and no representative, the common law principles of personal autonomy and bodily integrity require that at minimum a service provider should consult with friends and family of the adult, who are best placed to know what the adult would have wanted, and with any written wishes the adult documented.

In this case, Mr. Justice Greyell found that the Maple wood Seniors Care Society and the Fraser Health Authority had consulted extensively with Mrs. Bentley’s family.

Mr. Justice Greyell found that failure to offer nourishment and liquids to Mrs. Bentley would amount to neglect under the Adult GuardianshipAct. A mentally capable adult may refuse food and liquids, but there are greater risks of allowing a substitute decision maker to refuse consent to personal care. Mr. Justice Greyell wrote at paragraphs: 142 through 145:

[142]     In all three of these cases, the person expressing the wish to stop eating and drinking was found mentally capable of making that decision. It is clearly not settled law that a substitute decision maker has authority to refuse the provision of oral nutrition and hydration, such as prompting with a spoon or a glass, on behalf of an adult who is incapable of making that decision. There are more risks associated with accepting such a direction from a substitute decision maker than from an adult himself.
 
[143]     These risks were discussed by Thaddeus Mason Pope and Lindsey E. Anderson in “Voluntary Stopping Eating and Drinking: A Legal Treatment Option at the End of Life” (2011) 17 Widener L. Rev. 363. Although the authors argue that voluntarily stopping eating and drinking is a dignified and legal option for competent adults in many common law jurisdictions, they acknowledge that the right to refuse oral nutrition and hydration on behalf of an adult who is incapable of making that decision is not widely recognized at this time. They point to several substantive and procedural problems with such a decision being made on an adult’s behalf, including the risk that she has changed her mind since expressing her wishes. They state at 426:
 
Advance directives and surrogate appointments can be revoked by the patient. Revocation is typically straightforward when dealing with a patient with capacity. But what exactly constitutes revocation from an incapacitated patient? A severely demented patient might appear to request or desire food and water. Does a gesture such as pointing to one's mouth constitute a revocation of the patient's earlier (capacitated) instruction to not assist feeding under those circumstances?
 [144]     I am not satisfied that the British Columbia legislature contemplated that reference to previously expressed wishes or substitute decision makers could be relied on to refuse consent to personal care services on behalf of an adult that would lead to her death. The HCCCFA Act sets out that health care necessary to preserve life may be refused on behalf of an adult by a representative or, in some circumstances, a temporary substitute decision maker or an adult’s previously expressed wish. Section 9(3) of the Representation Agreement Act expressly provides that a “representative may give or refuse consent to health care necessary to preserve life”, however, there is no equivalent statement that a representative could refuse consent to personal care necessary to preserve life.
 
[145]     In the circumstances of this case, I am of the view that if Mrs. Bentley was found incapable of deciding whether to accept or refuse oral nutrition or hydration that to withdraw the assistance she is receiving would amount to neglect within the meaning of the Adult Guardianship Act. As a designated agency, FHA would be obligated to respond appropriately to any concern that Mrs. Bentley may be placed in a situation of such neglect.

Mr. Justice Greyell declined to grant a declaration that Mrs. Bentley’s wishes are a lawful excuse for withdrawing nourishment, thereby immunizing her care providers from prosecution under the criminal code. He found that the court did not have authority to bind prosecutorial discretion in a petition.


In summary, Mr. Justice Greyell found that by accepting nourishment and liquids, Mrs. Bentley was consenting to their provision, and that her family did not establish that she was incapable of consenting. The provision of nourishment and liquids orally was personal care rather than health care, and accordingly the provisions of the HCCCFA did not apply. Even if they did apply, the two statements of wishes were ambiguous, and could not be given effect as advance care directives to refuse the nourishment and liquids. Nor could a temporary substitute decision maker refuse consent on behalf of Mrs. Bentley given that there was no agreement among her health care providers that refusing consent to nourishment and liquids was medically inappropriate. If her care providers discontinued offering nourishment and liquids, doing so would be neglect under the Adult Guardianship Act. Even a representative acting under a representation agreement would not have authority to discontinue “personal care” as opposed to “health care” necessary to preserve life.

Monday, March 31, 2014

Wills, Estates and Succession Act in Force Today

The Wills, Estates and Succession Act came into force today, as did Part 25 of the Supreme Court Civil Rules which amends the procedures for probate and other estate applications.

This legislation and the rule changes significantly reform British Columbia's succession laws and procedures.

As I have written before, most (but not all) of the provisions of the Wills, Estates and Succession Act apply in respect of the estates of persons who die today or in the future. The rule changes will apply to applications made today or later, regardless of the date of death.

As I wrote a three weeks ago, Bill 14 will make some changes to the Act if the Bill is passed and implemented. A few days ago, on March 25, 2014, Order in Council No. 126 amended the wording of the Rules.

Some good resources concerning WESA and the rule changes, include this Ministry of Justice Website, and the Courthouse Library Society's Wills and Estates Practice Portal.

Saturday, March 15, 2014

Bill 14 Fixes Wording of Family Law Act Provisions on Rights of Spouses to Interests in Discretionary Trusts

Last week I wrote about one of the changes that Bill 14, Justice Statutes Amendment Act, 2014 will make to the Wills, Estates and Succession Act if the bill is passed and brought into effect.

Bill 14 will also make some welcome changes to the FamilyLaw Act provisions concerning entitlements of spouses to assets held in discretionary trusts on separation. As I have written before, the Family Law Act provisions concerning discretionary trusts were poorly drafted.

Currently section 85 (1) (f) excludes from family property that is subject to a division on separation:
(f) property held in a discretionary trust
(i)  to which the spouse did not contribute,
(ii)  of which the spouse is a beneficiary, and
(iii)  that is settled by a person other than the spouse;

But section 84(2)(g) includes in family property that is subject to a division,
(g) the amount by which the value of excluded property has increased since the later of the date
(i)  the relationship between the spouses began, or
(ii)  the excluded property was acquired.

The problem is that section 85(1)(f) refers property held in the trust, rather than the spouse’s interest in the trust. A beneficiary of a discretionary trust only receives distributions from the trust when the trustee exercises his or her discretion to distribute. The effect of these two subsections together may be that on separation a beneficiary’s spouse may be entitled to half of any increase in value of the property inside of a trust to which the beneficiary has no entitlement. In my previous post, I illustrated how this could lead to the absurd position that former spouses of beneficiaries could be entitled to more than the total value of the trust.

Bill 14 should fix this by changing the wording of the relevant sections. For example, Bill 14 amends section 85(1)(f) so that it refers to “a spouse’s beneficial interest in property held in a discretionary trust” rather than to the “property held in a discretionary trust.”

The relevant amendments are as follows:

11 Section 83 is amended by adding the following subsections:
(3) For the purposes of this Part, property received by a spouse from a trust in respect of the spouse's beneficial interest in property held in the trust must be considered to be property derived from that beneficial interest.
(4) In this Part, "property" includes a beneficial interest in property unless a contrary intention appears.

12 Section 84 is amended
(a) by repealing subsection (1) and substituting the following:
(1) Subject to section 85 [excluded property], family property is all real property and personal property as follows:
(a) on the date the spouses separate,
(i) property that is owned by at least one spouse, or
(ii) a beneficial interest of at least one spouse in property;
(b) after separation,
(i) property acquired by at least one spouse if the property is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either, or
(ii) a beneficial interest acquired by at least one spouse in property if the beneficial interest is derived from property referred to in paragraph (a) (i) or from a beneficial interest referred to in paragraph (a) (ii), or from the disposition of either. , and
(b) by adding the following subsection:
(2.1) For the purposes of subsection (2) (g), any increase in value of a beneficial interest in property held in a discretionary trust does not include the value of any property received from the trust.

13 Section 85 (1) is amended by repealing paragraphs (b) and (f) and substituting the following:
(b) inheritances to a spouse;
(b.1) gifts to a spouse from a third party;
(f) a spouse's beneficial interest in property held in a discretionary trust
(i) to which the spouse did not contribute, and
(ii) that is settled by a person other than the spouse; .
If these amendments are passed and brought into effect, it will be clear that it is only the increase in value of the spouse’s beneficial interest in a discretionary trust that is subject to a division on separation rather than the increase in the value of all of the property in the trust.

Sunday, March 09, 2014

Last Minute Amendments to the Wills, Estates and Succession Act

On Monday, March 2, 2014 the Government of British Columbia introduced Bill 14, Justice Statutes Amendment Act, which, if passed and brought into effect, will amend the Wills, Estates and Succession Act. The new Wills, Estates and Succession Act comes into effect on March 31, 2014.

The amendments include changes to the provision setting out when spousal relationships end for the purposes of the legislation. As I wrote before, when one person ceases to be a spouse, this affects his or her rights to inherit under the will of a former spouse, the right to apply to vary the will, and the right to receive a share of the estate if the former spouse dies without a will.

As it stands without the changes in Bill 14, section 2(2) reads:

2(2) Two persons cease being spouses of each other for the purposes of this Act if,

(a) in the case of a marriage,

(i) they live separate and apart for at least 2 years with one or both of them having the intention, formed before or during that time, to live separate and apart permanently, or 
(ii) an event occurs that causes an interest in family property, within the meaning of the Family Law Act to arise, or
(b) in the case of a marriage-like relationship, one or both persons terminate the relationship.

Bill 14 will change the wording as follows:

(2) Two persons cease being spouses of each other for the purposes of this Act if,
(a) in the case of a marriage, an event occurs that causes an interest in family property, as defined in Part 5 [Property Division] of the Family Law Act, to arise, or
(b) in the case of a marriage-like relationship, one or both persons terminate the relationship.

There will also be a new subsection (2.1):

(2.1) For the purposes of this Act, spouses are not considered to have separated if, within one year after separation,
(a) they begin to live together again and the primary purpose for doing so is to reconcile, and
(b) they continue to live together for one or more periods, totalling at least 90 days.


As I pointed out in my previous post, subsection 2(2)(a)(i) didn't really make sense. Under the Family Law Act, a separation will cause an interest in family property to arise, unless there is a reconciliation within one year, in accordance with section 83 of the Family Law Act, which is similar to the proposed new subsection 2(2.1) above. Accordingly, it is difficult to conceive of circumstances under which subsection  2(2)(a)(ii) would apply that is not already covered under subsection 2(2)(a)(ii).

Saturday, March 01, 2014

Coffee (Estate) v. Coffee (Part 2)

I wrote previously about the Supreme Court of British Columbia decision in Coffee (Estate) v. Coffey, 2014 BCSC 110 that a woman who had defrauded her mother of about $1.6 was  entitled to a gift in her mother’s will despite the fraud.

Chief Justice Hinkson was also asked to decide the following question:

Whether the balance owing by Josephine Frances Coffey to the estate of Elizabeth Margaret Annie Featonby Coffey pursuant to a Restitution Order of the Provincial Court of British Columbia dated May 22, 2007 should be deducted from or set-off against any bequest or legacy owing to Josephine Frances Coffey by the estate of Elizabeth Margaret Annie Featonby Coffey….

This question is significant because Josephine Coffee had declared bankruptcy. If she received the gift under her mother’s will, then it would go to her trustee-in-bankruptcy, and would be available to all of her creditors. Although her mother’s estate might get some of the funds payable to Josephine Coffee back as a creditor, the estate would not receive all of the funds back to apply to Josephine Coffee’s debt to her mother. But if Josephine Coffee’s debt could be set-off against her entitlement as a beneficiary, then the Elizabeth Coffee estate administrators would only have to pay out any amount owing after setting-off the full amount of Josephine Coffee’s debt.

The Chief Justice considered section 97(3) of the Bankruptcy and Insolvency Act which says that:

The law of set-off or compensation applies to all claims made against the estate of the bankrupt and also to all actions instituted by the trustee for the recovery of debts due to the bankrupt in the same manner and to the same extent as if the bankrupt were plaintiff or defendant, as the case may be, except in so far as any claim for set-off or compensation is affected by the provisions of this Act respecting frauds or fraudulent preferences.

The effect of this provision is that when it applies it gives certain creditors, those who are indebted to the debtor, a priority over other creditors. In a decision cited by Chief Justice Hinkson, Husky OilOperations Ltd. v. Minister of National Revenue, [1995] 3 S.C.R. 453, 128 D.L.R. (4th) 1, the Supreme Court of Canada had considered the argument that this priority was unfair. Mr. Justice Gonthier wrote:

57        In the bankruptcy context, a right to set-off necessarily has the effect of securing the claim of the party claiming set-off against assets of the bankrupt's estate. This was recently recognized in unambiguous terms by Lord Hoffman in his speech for the unanimous House of Lords in Stein v. Blake, [1995] 2 All E.R. 961. His Lordship stated at p. 964:

Bankruptcy set-off ... affects the substantive rights of the parties by enabling the bankrupt's creditor to use his indebtedness to the bankrupt as a form of security. Instead of having to prove with other creditors for the whole of his debt in the bankruptcy, he can set off pound for pound what he owes the bankrupt and prove for or pay only the balance.

 59        Indeed, as a result of creating a type of security interest in the estate, the operation of set-off in bankruptcy has been the subject of academic criticism: see Palmer, supra, at pp. 204-7; Judge and Grottenthaler, supra, at p. 117; John C. McCoid, “Setoff: Why Bankruptcy Priority?”(1989), 75 Va. L. Rev. 15, and for counterpoint, Philip T. Lacy, “Setoff and the Principle of Creditor Equality” (1992), 43 S. Cal. L. Rev. 951. The central criticism has been that while outside of bankruptcy set-off strikes a fair balance between two parties with mutual obligations, in bankruptcy the material inquiry should be the rights of the estate's creditors inter se. An inquiry which considers the rights of creditors inter se must necessarily consider a broader range of interests than an inquiry limited to ensuring fairness between only two parties (McCoid, supra, at p. 43). Thus, allowing set-off in bankruptcy has been considered as unfairly limiting the class of relevant interests. The concern has also been voiced that allowing set-off in bankruptcy (Judge and Grottenthaler, supra, at p. 117):

... is disruptive of a complex and sophisticated system developed for establishing priorities amongst creditors of various types, particularly where registration of a secured interest is required.
This second concern is thus to the effect that allowing set-off gives a claimant the benefit of a security interest without imposing the important concomitant obligation of registering that interest.
 60        While this academic debate is undoubtedly interesting, the fact remains that our Parliament has recognized in s. 97(3) of the Bankruptcy Act that the “law of set-off applies to all claims made against the estate of the bankrupt”. As a result, in the bankruptcy context, the law of set-off allows a debtor of a bankrupt who is also a creditor of the bankrupt to refrain from paying the full debt owing to the estate, since it may be that the estate will only fulfil a portion, if that, of the bankrupt's debt. Consequently, in this limited sense the party claiming set-off has Parliament's blessing for the “reordering” of his priority in bankruptcy by virtue of the operation of the law of set-off.

Chief Justice Hinkson held that section 97(3) applied to allow the administrators of Elizabeth Coffee’s estate to set-off the amount Josephine Coffee owed to the estate from her share of the estate. He wrote:


[45]         I am satisfied that the requirements for legal set-off have been made out, and therefore answer the second of the questions framed by the petitioners in the affirmative and direct that the petitioners’ are entitled to the set off the amount owing to Ms. Coffey under the Testatrix’ will against the amount still owed to her estate pursuant to the restitution order. While this may have the effect of elevating the claim of the Testatrix’ estate to that of a secured creditor, to the detriment of others, the Supreme Court of Canada made clear in Husky Oil that this reordering of priorities is what was intended by Parliament under s. 97(3) of the Bankruptcy and Insolvency Act.

Wednesday, February 26, 2014

Why Was the Small Estates Provisions Left Out of the Wills, Estates and Succession Act?

When British Columbia's new Wills, Estates and Succession Act comes into force next month, on March 31, 2014, the Small Estates provisions will be left behind. Division 2 of Part 6 set out a streamlined procedure for personal representatives seeking approval, or confirmation of their authority, to administer small estates. The purpose of these provisions was to provide a relatively simple and inexpensive procedure for the administration of small estates.

I had been wondering why the Government of British Columbia was not bringing these provisions of the legislation into effect, and whether the Government had decided not to bring them into effect at all or was merely delaying their implementation.

I came across the answer to my questions in a Ministry of Justice publication online not surprisingly entitled Wills, Estates and Succession Act and Probate Rules Questions and Answers. Here it is:

14. Why was the small estates provision left out? 
 It was no longer needed. 
 The benefit of the small estate procedure was that it would be simpler and faster. 
 In drafting the new probate rules, we have created prescribed forms very similar to the small estate declaration proposed by the B.C. Law Institute. 
 The new rules make a distinction between simple and complex applications and ensured that their processing is dependent upon the complexity of an application, rather than the value of the estate. 
 Therefore, there wasn’t any advantage to these provisions, as all applicants will get the same benefits under the new probate rules – those with simple applications in particular. 
 As an example, simple applications are those where there is no apparently later will that needs to be explained, where there are no issues surrounding the signing of the will, where there are no hand written alterations to the will and no documents referred to in the will that appear to be missing. 
 It should also be noted that the fee structure has not changed – individuals still will not be required to pay probate fees if the estate is with less than $25,000.