Sunday, February 02, 2014

Coffee (Estate) v. Coffey

Is a beneficiary who is found guilty of defrauding a substantial sum of money from her mother, disentitled to what her mother left to her by will? This is one of two questions the Supreme Court of British Columbia considered in Coffee (Estate) v. Coffey, 2014 BCSC 110.

Josephine Coffee defrauded her mother of about $1.6 million dollars. Her mother, Elizabeth Coffee, had appointed her as an attorney under an enduring power of attorney. She was criminally convicted for a number of crimes including breach of trust and theft for embezzling funds from her mother and others.

She did repay almost half a million of the funds she took from her mother pursuant to an order that she make restitution.

In a will she made before he daughter’s embezzlement had been discovered, Elizabeth Coffee’s had left a portion of her estate to Josephine Coffee.

After Elizabeth Coffee’s death, two of her other children were appointed as administrator with will annexed of their mother’s estate. They brought an application to the Supreme Court of British Columbia asking whether their sister Josephine was disentitled to her share. They maintained that, by the time the fraud was discovered, their mother no longer had the mental capacity to understand their sister’s embezzlement or to make a new will. They argued that if Elizabeth Coffee had sufficient mental capacity, she would have disinherited Josephine Coffee.

Chief Justice Hinkson held that Elizabeth Coffee’s embezzlement did not disentitle her from a share of her mother’s estate. Quoting from a decision of the Saskatchewan Court of Appeal, in Bolianatz Estate v.Simon, 2006 SKCA 16 (CanLII), Chief Justice Hinkson wrote:

[24]         At paras. 57 and 58 of his concurring  reasons, Mr. Justice Richards discussed other authorities relied upon by the administrator:

57        ... it is helpful to consider the broader pattern of the law in this field. In that regard, the authorities appear to have recognized only a limited number of very particular situations where the conduct of a beneficiary, in and of itself, will invalidate an inheritance. The first of these is where the beneficiary perpetrates a fraud on the testator and obtains the legacy by virtue of that fraud. See: Kennell v. Abbott, 31 E.R. 416. The second is where the testator is coerced by the beneficiary into a bequest he or she does not want to make. See: Hall v. Hall (1868), L.R. 1 P. & D. 481; J. Martyn et al., Theobald on Wills, 16th ed. (London: Sweet & Maxwell, 2001) at 3-27. The third is where the beneficiary kills the testator. In such circumstances he or she is debarred from taking under the will or intestacy of the victim. See: Cleaver v. Mutual Reserve Fund Life Association, [1892] 1 Q.B. 147; In the Estate of Hall v. Knight and Baxter, [1914] P. 1.
 58        Aside from such exceptions, the general orientation of the law is very much against involving the courts in superintending the question of whether particular beneficiaries merit their inheritances. Bequests are not denied because a beneficiary is of bad character, has behaved immorally or has been involved in criminal activity.

This case did not come within one of the exceptions. Chief Justice Hinkson found no evidence that the gift in the will was obtained by fraud or coercion, nor could he assume that Elizabeth Coffee would necessarily disinherit her daughter Josephine if she had understood the embezzlement and had capacity to make a new will.

He wrote:

[29]         I respectfully agree with these comments by both Lane and Richards JJ.A., and find that the petitioners have not persuaded me that Ms. Coffey’s bequest under her mother’s will was the result of any fraud upon her mother or any coercion by Ms. Coffey.
 [30]         Nor am I persuaded that, had she known of her daughter’s fraud and theft, the Testatrix would have disinherited her. To the contrary, the Testatrix may have concluded that her daughter had accepted responsibility for her actions, endured a period of incarceration, and made an effort to repay some of what she had stolen, such that she should have a share in her estate equal to her siblings, which in all likelihood would be used only to reduce the amounts that she was obliged to pay by way of the restitution order of Judge Kitchen.
 [Since publishing this post, I have written a second part on this case about whether the administrators of the estate could set-off the amount of Josephine Coffee's debt from the amount payable to her as beneficiary here.]


Anonymous said...

Does this mean that Josephine is legally obliged to use the funds she receives from her Mother´s estate to help repay the funds still owing from the earlier judgement?

Stan Rule said...

Your question relates to the other main issue the court considered, which I have written about in the second part on this case