Domicile

The laws governing the estate of a person who has died can vary considerable from country to country, and in Canada, even from province to province. For example, in British Columbia, an independent adult child can apply to court under the Wills Variation Act to vary the will of her parent if the parent did not make adequate provision for her. Many other provinces don’t have legislation permitting and independent adult child to vary a parent’s will. It may make a big different to a child wishing to bring a claim whether the law of British Columbia will apply or the law of another province will apply to her parent’s estate.

Sometimes this is fairly straightforward. If the person who died lived in British Columbia all of his life and all of his real estate is located in British Columbia, then British Columbia law will apply.

But in an age where people move all around the world it is not always so simple. Some people may have two or more homes they live in for part of the year. Or they may spend only a short time in a new province before their death.

The law of place where someone is “domiciled” at death will often determine what law governs the administration of that person’s estate (other than interests in real estate which is governed by the law in the jurisdiction where the real estate is located).

Domicile can be an elusive concept as is demonstrated in the decision of the Alberta Court of Appeal in Foote v. Foote Estate, 2011 ABCA 1.

Eldon Foote lived in Alberta for the first 43 years of his life. He built an international business distributing the cleaning product Swipe. In the early 1970s, he bought a large property in Norfolk Island, an Australian protectorate with favourable tax laws, and he moved there.

In 1999, Mr. Foote bought a condominium in Victoria, British Columbia, and spent the summers of 2001, 2002, and 2003 at his Victoria condominium. He and his wife made some plans to sell the Norfolk Island residence to move to Victoria.

In April of 2004, he was diagnosed with cancer, and went returned to Edmonton, Alberta for cancer treatment, where he died in May 2004.

At his death, his estate was worth approximately $130 million. He had three wills dealing with assets in different jurisdictions. He left some of his assets to his wife, his six children, and other family members, but he left most of his wealth to two charities: the Edmonton Community Foundation and the Lord Mayor of Melbourne’s Charitable Fund.

All of the parties agreed that Mr. Foote had established his domicile in Norfolk Island in the 1970s.

Mr. Foote’s children argued Mr. Foote changed his domicile to British Columbia before his death, and that the law of British Columbia governs the administration of his estate. His widow argued that he had abandoned his domicile in Norfolk Island but had not established a new domicile. Accordingly, she argued, his domicile reverted to his domicile of origin, Alberta. She argued that the law of Alberta governed the administration of his estate. The charities argued that Norfolk Island remained Mr. Foote’s domicile at his death, and the administration of his estate was domiciled in that jurisdiction.

The parties’ motives for adopting the positions they did are not apparent from the judgment. Presumably, British Columbia law would be favourable to the children, Alberta law favourable to the widow, and Norfolk Island law favourable to the charities.

The Alberta Court of Appeal in its Memorandum for Judgment explained the concepts of domicile of origin and domicile of choice as follows:

[19] The concept of domicile is relevant to the law governing a person’s status and property. For purposes of this appeal, the relevant point is that the domicile of a deceased person determines the law that will govern estate administration. A person will always have one, and only one, domicile at any point in his or her life. A person begins with a domicile of origin, generally the place where he or she was born. No one disputes that Mr. Foote’s domicile of origin is Alberta, where he was born and lived for the first 43 years of his life, and where he attended university, embarked on the practice of law, married and had five children.

[20] One’s domicile of origin can be displaced by a “domicile of choice”, a place where a person has chosen to live. The classic description of domicile of choice is found in Udny v. Udny (1886), L.R. 1 Sc. & Div. 441:

Domicile of choice is a conclusion or inference which the law derives from the fact of a man fixing voluntarily his sole or chief residence in a particular place, with an intention of continuing to reside there for an unlimited time. ... There must be a residence freely chosen, and not prescribed or dictated by any external necessity, such as the duties of office, the demands of creditors, or the relief from illness; and it must be residence fixed not for a limited period or particular purpose, but general and indefinite in its future contemplation.

The Court of Appeal described how a domicile may change:

[22] The acquisition of a domicile of choice involves two factors: “the acquisition of residence in fact in a new place and the intention of permanently settling there ... in the sense of making that place [one’s] principal residence indefinitely”: Trottier v. Rajotte, [1940] S.C.R. 203 at 206, 1 D.L.R. 433.

….

[25] The following rule is set out in Dicey, Morris and Collins on The Conflict of Laws, 14th ed. (London: Sweet & Maxwell, 2006) at 151:

Rule 13 - (1) A person abandons a domicile of choice in a country by ceasing to reside there and by ceasing to intend to reside there permanently or indefinitely, and not otherwise.

[26] The test for loss of domicile of choice is two-fold: it requires an intention to cease to reside in a place coupled with acts that end one’s residence. It is described in Dicey as follows:

A domicile of choice is lost when both the residence and the intention which must exist for its acquisition are given up. It is not lost merely by giving up the residence nor merely by giving up the intention.

[27] Castel & Walker, in their Canadian Conflict of Laws at s. 4.8, 6th ed. (Markham, Ont.: LexisNexis Butterworths, 2005), describe the process of abandonment of a domicile of choice as “the converse of its acquisition”. They also note the dual nature of the test. To paraphrase, for Mr. Foote to have abandoned his domicile of choice on Norfolk Island, it would be necessary for him to cease to reside there and also to cease to have the intention to return to Norfolk Island as his permanent home. “Absence without the intention of abandonment is of no effect, nor is intention without any actual change of residence”: Castel & Walker at s. 4.8.

The Court of Appeal upheld the trial judge’s decision that Norfolk Island remained Mr. Foote’s domicile on death. The trial judge had found that Mr. Foote planned to change his primary residence to British Columbia at some point, but his plans were provisional. He had not taken any steps to appraise or market his considerable home and property in Norfolk Island. He would not likely have changed his residence without tax planning. He began to receive tax advice in 2002, but had not taken any steps to implement it. The trial judge found that the intention to change his residence to British Columbia, and the preliminary steps Mr. Foote had taken, were insufficient to displace Norfolk Island as his domicile of choice.

Accordingly, the laws of Norfolk Island will govern the administration of Mr. Foote’s estate.