Saturday, August 27, 2016

Courthouse in Akko, Isreal

My friend and colleague Gerry Laarakker sent these photographs of the courthouse in Akko, Israel to me.

Sunday, August 21, 2016

Canadian Bar Association Resolutions relating to Medical Assistance in Dying

Last week, I attended the Canadian Bar Association National Counsel Meeting where the Canadian Bar Association passed three resolutions related to the Supreme Court of Canada deciison in Carter v. Canada (Attorney General), 2015 SCC 5, and the new amendments to the Criminal Code to permit medial assistance in dying in certain circumstances.

I was particularly interested in  the resolution, which I seconded,  relating to advance requests for medical assistance in dying:
Advance Requests for Medical Assistance in Dying
WHEREAS the Provincial-Territorial Expert Advisory Group on Physician-Assisted Dying recommended that the federal government amend the Criminal Code to permit a request for medical assistance in dying (MAID) at any time following the diagnosis of a grievous and irremediable condition when suffering becomes intolerable;
WHEREAS the Special Joint Committee on Physician-Assisted Dying recommended that advance requests for MAID be allowed at any time after one is diagnosed with a condition that is reasonably likely to cause loss of capacity or after diagnosis of a grievous or irremediable condition but before the suffering becomes intolerable;
BE IT RESOLVED THAT the Canadian Bar Association:
1. urge the federal government to amend the Criminal Code:
a) to permit advance requests for medical assistance in dying consistent with the criteria recommended by the Provincial-Territorial Advisory Group and Special Joint Committee; and
b) to exempt from liability all persons assisting in the discussion of end of life choices, including MAID, in the context of an advance request.
2. urge each province and territory to review and, where necessary, enact legislation to permit MAID pursuant to a valid advance request, and to consider and address:
a) consistency across provinces and territories;
b) measures that adequately safeguard individuals where capacity is an issue, but do not impose undue barriers for eligible individuals who wish to make an advance request for MAID;
c) clear requirements to determine the validity of an advance request for MAID;
d) a prohibition against providing MAID based on an advance request if the grantor is capable;
e) retaining the right of every individual who has made an advance request to refuse the administration of MAID regardless of capacity; and
f) who is legally bound to comply with an advance request for MAID.

Sunday, August 07, 2016

Amendments to Strata Property Act Facilitating Termination of Strata Corporations in Effect

It is now easier to terminate a strata corporation in British Columbia. The Strata Property Act used to require the consent of all of the owners to terminate a strata corporation (although the court could allow termination with less than unanimous consent in some circumstances).

Amendments to the Strata Property Act allowing a strata corporation to be terminate by a vote of 80 percent of eligible voters came into effect on July 28, 2016. The threshold remains high, but easier to acheive than unanimity. The amendments are based on the recommendations of the British Columbia Law Institute Strata Property Law Project Committee in its Report on Terminating a Strata

Why terminate a strata corporation? Older buildings may deteriorate to the point where it is uneconomical to retain them in a good state of repair, and it may make more sense to terminate the strata corporation and sell the land to a developer for redevelopment.  

The amendments are summarized by the British Columbia Law Institute as follows: 

The Strata Property Act amendments are found in sections 37 to 55 of the new act. These amendments achieve two important reforms to the law: (1) they lower the voting threshold required to terminate a strata from unanimity to 80 percent of the strata’s eligible voters and (2) they require a strata to apply to court for an order confirming a resolution to terminate—a requirement that is intended to afford some protection to dissenting owners and registered chargeholders.
The amendments begin by defining this new 80-percent voting threshold, making it clear that it requires 80 percent of all eligible voters, not simply 80 percent of the eligible voters who turn up at a meeting. This new voting threshold applies to a new category of resolution, which the amendments call a “winding-up resolution,” and define as a resolution to cancel a strata plan and become tenants in common (i.e,. to terminate the strata) or to appoint a liquidator for the strata.
A special notice period of at least four weeks’ written notice will apply when a strata wants to consider a winding-up resolution at an annual general meeting or a special general meeting.
If a winding-up resolution is passed by an 80-percent vote, then in most cases the strata will be required to apply to the Supreme Court of British Columbia for an order confirming the decision to terminate. An exception applies for very small stratas. If a strata has fewer than five strata lots, then it will have the option to proceed without the necessity of applying to court. Notice that, for stratas of this size, unanimity will effectively be required to terminate, because one eligible voter will have the power to prevent the strata from reaching the 80-percent voting threshold.
Strata-lot owners and registered chargeholders must receive notice of the application. If any of them opposes termination, they will have the opportunity to make their case to the court.
In considering whether to make the order, the court is directed to consider the following:
  • the best interests of the owners; and
  • the probability and extent, if the winding-up resolution is confirmed or not confirmed, of
  • significant unfairness to one or more
  • owners, or
  • holders of registered charges against land shown on the strata plan or land held in the name of or on behalf of the strata corporation, but not shown on the strata plan, and
  • significant confusion and uncertainty in the affairs of the strata corporation or of the owners.

Saturday, July 30, 2016

Kimberly Wallis Presenting at the CBA, Will Estate and Trust Fundamentals for Estate Practitioners

Kimberly Wallis of our firm, Sabey Rule LLP, will be among the faculty at the Canadian Bar Association, Will Estate and Trust Fundamentals for Estate Practitioners. This five-day program will be held from October 26th through October 30th, 2016 at the Westin Prince, in Toronto, Ontario. The program, chaired by Melanie Yach of Aird & Berlis LLP, is directed to junior to intermediate trusts and estate practitioners as well as general practitioners. While held in Toronto, this program is national in scope, and will draw participants from throughout Canada.

You may read the agenda here, and the registration form is available here. Please note that there is a discount on the registration fees for those registering no later than August 8, 2016.

Kimberly will be leading a workshop on Saturday, October 29th on "Busting the Trust."

Sunday, July 24, 2016

Marley v. Rawlings

As I wrote in my most recent post, Fuchs v. Fuchs, I am looking at cases in other jurisdictions dealing with rectification of wills for a paper I am working on. I am not aware of any cases in British Columbia interpreting our new provision allowing for rectification of a will, section 59 of the Wills, Estates and Succession Act. Accordingly, I am looking elsewhere. Fuchs is an Alberta case. 

England has had legislation permitting rectification of wills for longer than either Alberta or British Columbia. Section 20 of the Administration of Justice Act, 1982, c. 53 is similar, but section 20 (1) is worded somewhat more narrowly than section 59 (1) of the WESA. Section 20 (1) provides:

(1)If a court is satisfied that a will is so expressed that it fails to carry out the testator’s intentions, in consequence—
(a)of a clerical error; or 
(b)of a failure to understand his instructions, 
it may order that the will shall be rectified so as to carry out his intentions. 
Section 20 was recently considered by the United Kingdom Supreme Court in Marley v.Rawlings, [2014] UKSC 2 (BAILII). In that case, two spouses intended to make wills leaving their estates to each other, with a provision that if the other did not survive by one month, each left the residue of his or her estate to Terry Michael Marley, who was unrelated, but they considered him to be like a son to them. The wills were straight forward enough, but with one problem: the husband signed will intended for the wife, and the wife intended to sign the will intended for the husband. After the husband’s death, his wife having predeceased him, the United Kingdom Supreme Court rectified his will so that it contained the typed parts of the will signed by his wife.

Sunday, July 17, 2016

Fuchs v. Fuchs

I am still waiting for some reported British Columbia cases interpreting section 59 of the Wills, Estates and Succession Act (“WESA”), which expressly allows the court to rectify a will. Subsections 59 (1) and (2) provide as follows:

Rectification of will
 59  (1) On application for rectification of a will, the court, sitting as a court of construction or as a court of probate, may order that the will be rectified if the court determines that the will fails to carry out the will-maker's intentions because of

(a) an error arising from an accidental slip or omission,
(b) a misunderstanding of the will-maker's instructions, or
(c) a failure to carry out the will-maker's instructions.
 (2) Extrinsic evidence, including evidence of the will-maker's intent, is admissible to prove the existence of a circumstance described in subsection (1).

In the absence of finding a British Columbia cases dealing with this section, I have been looking at cases in other jurisdictions for a paper I am writing for the Continuing Legal Education Society of British Columbia, and have come across some decisions from Alberta.

Alberta, like B.C., recently overhauled its succession law. Alberta’s Wills and Succession Act came into effect in February 1, 2012 (we were a little behind, with B.C.’s WESA coming into effect March 31, 2014). Alberta also now has a provision allowing the court to rectify a will. The wording of subsection 39 (1) of Alberta’s legislation is similar:

Rectification 39(1)  The Court may, on application, order that a will be rectified by adding or deleting characters, words or provisions specified by the Court if the Court is satisfied, on clear and convincing evidence, that the will does not reflect the testator’s intentions because of
(a)    an accidental slip, omission or misdescription, or
(b)    a misunderstanding of, or a failure to give effect to, the testator’s instructions by a person who prepared the will.
One of the cases I have found in which the Alberta Court of Queen’s Bench rectified a will under Alberta’s legislation, Fuchs v. Fuchs, 2013 ABQB 76 (CanLII), is interesting because of an interplay between changes in legislation dealing with the effect of marriage on a will, as well as the transition rules reflecting whether the new legislation applies or the old.

In 1998, Hans Fuchs and Barbara Fuchs began co-habiting. Mr. Fuchs made his will on June 22, 1999 leaving his estate to Barbara Fuchs. They were not yet legally married, and the will did not contain a clause stating it was in contemplation of marriage. Mr. and Mrs. Fuchs were legally married on April 20, 2001. Mr. Fuchs died on February 8, 2012.  

At the time Mr. Fuchs made his will, the old Alberta law, the Alberta Wills Act, provided that marriage revoked a will unless there was a declaration in the will that it was made in contemplation of marriage. Again, this is similar to British Columbia’s old Wills Act. Like British Columbia, Alberta’s new legislation has changed the law so that marriage no longer revokes a will.

If the Fuchs’ marriage revoked Mr. Fuchs’ will, then he would have died without a will, and Mrs. Fuchs would be entitled to half of the estate under Alberta’s intestacy rules, and his children from a previous marriage would be entitled to the other half. But if the will were found to be valid, then Mrs. Fuchs receives the entire estate.

Here is where the transition rules become interesting. You may notice that Mr. Fuchs died shortly after the new legislation came into effect in Alberta. The old law said marriage revokes a will unless there is a declaration that it is made in contemplation of marriage, but the new legislation does not. Associate Chief Justice Rooke held that the old law still applies in this case because under section 8 of Alberta’s Wills and Succession Act, the old law applies if the will was made before February 1, 2012. The date of the will, rather than the date of death, is the key date in respect of whether marriage revokes a will.

However, section 8 also provides that section 39 of Alberta’s Wills and Succession Act allowing the court to rectify a will applies if the will-maker died after the new law came into effect.

Associate Chief Justice Rooke found that Mr. Fuchs intended that his will would remain valid after his marriage, and that he made it in contemplation of his marriage to Mrs. Fuchs. Accordingly, Associate Chief Justice Rooke applied Alberta's rectification provision to rectify teh will by adding the sentence: "This will is in contemplation of my marriage to my friend BARBARA LIPPKA [Mrs. Fuchs' maiden name] at such time as I am legally able to do so." 

In the result, the Court held that Mr. Fuchs' will was not revoked by the marriage, and Mrs. Fuchs was entitled to his estate under the will.

The transition rules in British Columbia are a little different, but I think a court in B.C. could apply the same analysis on similar facts. In British Columbia, although I am not aware of any cases on point yet, the key event for determining whether a marriage revokes a will is likely the date of the marriage (rather than the date of the will or the date of death). This is because of section 186 (3). Section 186 says,

Transition — application of Part 4
186 (1)Subject to subsections (2) and (3) of this section and section 189, Part 4 [Wills] applies to a will, whenever executed, if the will-maker dies on or after the date on which Part 4 comes into force.
(2) Subsection (1) does not invalidate a will validly made before the date on which Part 4 comes into force.
(3) Subsection (1) does not revive a will validly revoked before the date on which Part 4 comes into force.

Under B.C.s old Wills Act, marriage revoked a will unless it was made in contemplation of marriage. If the marriage occurred before WESA came into effect on March 31, 2014, the marriage would have revoked the will, and pursuant to subsection 186 (3), the will would not be revived by WESA.

However, the rectification provision in section 59 applies if the will maker died after WESA came into effect. Accordingly, if a will-maker in B.C. dies on or after March 31, 2014, and the court finds that the will made prior to marriage omitted the phrase “this will is made in contemplation of my marriage to…” because of

“(a) an error arising from an accidental slip or omission,
(b) a misunderstanding of the will-maker's instructions, or
(c) a failure to carry out the will-maker's instructions…,”

the court could rectify the will by adding the necessary words, in which case, the marriage will not have revoked the will.

Sunday, June 19, 2016

New Requirement that Bare Trusts be Disclosed on Property Transfer Tax Returns

The Government of British Columbia has amended the Property Transfer Tax Return to require more information on the purchase of land, effective June 10, 2016. The requirement that a purchaser who is not a Canadian citizen or permanent resident identify his or her citizenship has received some press coverage. Although I don’t like it at all, I am writing about another change: the requirement that the person taking title disclose whether he or she, or it (if a corporation) holds the title in a bare trust.

The question on the Property Transfer Tax Return is “Is this a transfer of a bare trust?” I am not sure how one transfers a bare trust, but the question is intended to elicit whether the person acquiring title will hold title as a bare trustee. To hold land in a bare trust means that although you have title, you hold it for someone else, who is the true owner. Because the title holder has no management powers and is subject to the direction of the true owner, the title holder is an agent of the owner (rather than a trustee in the sense I often write about with significant powers and responsibilities).

If the answer to the question is “yes,” then the Return has a number of other questions. As set out in the Land Title & Survey Authority website here, if the transfer is to register a bare trust,
... an additional page will be created to enter information for the Settlors and Beneficiaries.
Select whether they are an Individual, Corporation or Other.
If Individual is selected, answer Yes or No to the question “On the date of registration, are you a Canadian citizen or a permanent resident as defined in the Immigration and Refugee Protection Act (Canada)?”
Select the country of citizenship. If there is more than one country of citizenship, select all that apply using the “ADD” button.
The address for each of the Settlors and Beneficiaries must be filled in.
If Company is selected, an additional page will be created. Fill in the “Total number of directors”
Fill in the names of all directors, their country of citizenship (all that applies) and address.
I am not clear on why the Government is collecting information on bare trusts. It may be intended to ensure that the Government is able to collect information on the whether the true owners are not Canadian citizens or permanent resident. Otherwise, someone who is neither a  permanent resident or Canadian could avoid disclosing his or her citizenship by using a permanent resident or Canadian citizen as a bare trustee.

Alternatively, the Government may also be considering whether bare trusts are being used to avoid paying property transfer tax. I came across a story on CTV with the headline “Real estate loophole lets wealthy buyers save millions in taxes.” The story was about how people can avoid paying property transfer tax by having a company hold bare title. Instead of transferring title to the land, the land stays in the company, but the control of the company is transferred to the purchaser.

The fact is, though, that anytime a company owns land (whether as the true owner or as a bare trustee), and someone buys the shares of the company rather than the land from the company, title to the land does not change hands, and there is no property transfer tax payable.

If the motive for adding information about bare trust to the Return is related to “loss” of revenue through the use of bare trusts, then I doubt it will be very helpful to the Government. As set out above, it is only when the title is transferred that purchaser is required to file the Return. If a bare trust is used to avoid the property transfer tax, the provincial Government will not know about the subsequent sale. Nor, is it necessary to file a Return, if after purchasing land, the owner later decides to declare that the owner holds title as a bare trustee. I don’t know what mechanism the Government could use to even gather information about changes in beneficial ownership without a change in title, let alone tax those changes. Such a mechanism would no doubt be intrusive and difficult to enforce.

I do use bare trusts to avoid property transfer tax, but in a different context. If I have a client who wishes to transfer real estate into a trust for estate planning, then we have to consider whether to register the trust with the Land Title Office. In some cases, there is an exemption available from property transfer tax. For example, if the property meets the requirements of the Property Transfer Tax Act for a principal residence (which are different from the Income Tax Act, Canada requirements), and if the trustee is a “related individual,” for example a spouse or child, then the land can be transferred to the trustee without paying property transfer tax. But there are plenty of traps for the unwary. For example, if my client wishes to be the trustee of her own trust, and we transfer title to her as trustee, property transfer tax is triggered even if it is her principal residence. Why? Under the legislation, she is not a “related individual” to herself.

When property transfer tax will be triggered by transferring title to the trustee, one option is for the owner, who is settling the trust, to sign a bare trust agreement declaring herself a bare trustee for the trustee of the trust. Some might see this as a loophole from tax. But consider the fact that in most of the trusts created for estate planning, for practical purposes little changes for the person settling the trust. Often she is the sole beneficiary during her lifetime, and it’s only upon her death that her beneficiaries, often children and grandchildren benefit. It is different from a sale of land to an unrelated purchaser, but in many cases, this type of estate planning is caught by the legislation.

Instead of making the Property Transfer Tax Return more intrusive, it would be preferable to scrap the property transfer tax, which is becoming more complex, likely increases the cost of real estate, and collect revenue from some other source. This will involve raising other taxes, but next to probate fees, the property transfer tax is probably the most flawed tax British Columbia has.