Monday, March 28, 2016

Kish v. Sobchak Estate

I am always appreciative when a court provides me with fodder for two or three blog posts in one case. I am not suggesting that the five judges  of the British Columbia Court of Appeal in Kish v. Sobchak Estate, 2016 BCCA 65, had my blog in mind when they released their reasons for judgment, but I am thankful for the material nonetheless. The case deals with significant issues in wills variation cases, including the obligations to each other that spouses who marry later in life (each planning on leave his or her wealth to his or her descendants) have to each other, the standard of appellate review of trial decisions in wills variation cases, and the extent to which the court considers family law in determining spouses obligations to provide for each other in wills.

In this post, I will outline the facts and the decision. In the next post I write about this case, I will discuss the standard of review by the Court of Appeal of wills variation judgments made by the Supreme Court of British Columbia. In the third post on this case I will write about the Court’s comments on the relationship between family law and wills variation cases.

Marie Kish and Edward Sobchak had a romantic relationship from no later than 1991 until Mr. Sobchak died in 2013. During at least t he last five years, they lived together in Ms. Kish’s house, and the trial judge found that they were common law spouses. Mr. Sobchak also retained a separate home.
They each kept separate finances, and Ms. Kish’s will left her estate to her son and grandson. In his last will, Mr. Sobchak left most of his estate to his daughter, Kimberly Doyle.

Ms. Kish was 72 years old by the time of trial, and had severe dementia. Her main asset at the time of Mr. Sobchak’s death was her home, with an assessed value of $287,000. The home was mortgaged and about $65,000 was owing on the mortgage. Her income was approximately $19,000 per year, and the costs of her care in the care facility in which she was living were a little under $2000 per month. There was a shortfall of about $5000 per year of income to meet expenses, unless her house were sold or rented out.

The value of Mr. Sobchak’s net estate was $186,000. This amount does not include $62,000 that Mr. Sobchak either lent or gave his daughter, nor $12,000 she withdrew from his accounts. Ms. Doyle also received $250,000 as the beneficiary of her father’s Registered Retirement Income Fund.
The trial judge awarded Ms. Kish $100,000 after a summary trial. Ms. Doyle appealed, and Ms. Kish cross-appealed.

The Court of Appeal reduced the award from $100,000 to $30,000. Two factors were significant in the Court’s decision. One, in view of Ms. Kish’s circumstances, a large award would not provide much practical benefit to her. Secondly, both Mr. Sobchak and Ms. Kish began their relationship later in life, after accumulating their own assets, and both wished to provide for their children.

Madam Justice Newbury, writing for the Court, framed these issues early in the reasons for judgment as follows:

[2]            The case at bar requires us to deal with some other realities being experienced by many in the postwar generation as it passes its wealth to the next. Those realities include the greater frequency of divorces, re-marriages and ‘serial’ relationships. In this case, the testator and the plaintiff were mature adults when they met. Both had been previously married and had acquired adequate property or income to support themselves. They clearly did not wish to be treated as spouses and both hoped to benefit their adult children (by earlier relationships) on their deaths. To this end, they kept their financial affairs separate and kept up separate homes.
[3]            Another reality that confronts us in Canada as life expectancy increases is the incidence of Alzheimer’s Disease and other forms of dementia in seniors. Here, Ms. Kish, who is the surviving spouse and the plaintiff herein, has “severe” dementia and lives in an institution where, one assumes, her care is paid for by government in large part or completely. It seems doubtful that any award from the testator’s estate will be of any real benefit to her.
[4]            Obviously, these circumstances distinguish this case from the majority of WVA cases in which both spouses have contributed not only to mutual support but to the acquisition of ‘family assets’ over the years and expect that the survivor of them will continue to enjoy those assets after the death of the other. The primary question for us is how the “societal norms” of legal and moral obligations discussed in Tataryn [v. Tataryn Estate [1994] 2 S.C.R. 807] are to be applied to the more complex facts before this court.
In considered Ms. Kish’s needs, Madam Justice Newbury noted that although Ms. Kish’s income did not cover all of her expenses, the shortfall could be made up either by renting her house, or selling it and investing the proceeds. Because of Ms. Kish’s dementia, it is unlikely that a large award would be spent on her during her lifetime, and would likely just add to her estate. Madam Justice Newbury wrote:
[53]        Mr. Doyle also submits that the fact Ms. Kish is in a full-time care facility and is mentally incompetent means she is not in a position to spend sale proceeds for her own benefit. Sadly, her needs are now few and are taken care of in the institution. There is little that can be done to increase her enjoyment of life. It is hard to disagree with the suggestion, which we put to counsel during the hearing, that the trial judge’s award under the WVA will only serve the purpose of increasing Ms. Kish’s estate. As noted by Mr. Justice Finch, as he then was, in Frolek v. Frolek [1986] B.C.J. No. 1869 (S.C.):
It is not the purpose of the Wills Variation Act … to enable an applicant to build up an estate of her own, but rather to ensure that she is appropriately maintained and supported during her lifetime.
In balancing the principle of testamentary autonomy, Mr. Sobchak’s legal and moral obligations to his spouse, and his moral obligations to his daughter, the Court gave great weight to testamentary autonomy in this case reflecting what the Court considered to be the expectations of Mr. Sobchak and Ms. Kish. Madam Justice Newbury wrote:
[60]        There is no doubt that claims of adult children do not and should not overshadow a testator’s moral duty to a spouse, especially where (as in Bridger [v. Bridger Estate 2006BCCA 230] and Picketts[v. Hall (Estate) 2009 BCCA 329]) the relationship or marriage was a long-term one. Here, however, the parties met late in life after each had become self-supporting and had had children. They took particular care to keep their finances separate and consistently indicated they did not wish to be married again. From the amendments made to their wills in early 2013, it is clear both wished to benefit their own children on death to the exclusion of the surviving spouse. (Arguably, they had an understanding to this effect.) Mr. Sobchak’s estate was relatively modest (indeed, after payment of the income tax on his RRIF, it was $186,000 – unless one adds in $74,000, representing the $12,000 in cash received by his daughter and the $62,000 amount referred to in the “Lending Agreement” described earlier). Using the larger figure of $260,000, the estate exceeds the equity in Ms. Kish’s house by only $40,000; using the $186,000 figure, his estate (to which she had not contributed) was less than her main asset.
[61]        In Tataryn, the Court stated that testator autonomy is one of the two interests “protected” by the WVA. In the circumstances of this case, it seems to me that “contemporary community standards” would be more respectful of that principle than was found to be appropriate in the ‘traditional’ marriages in Bridger and Picketts. Many today would find it unfair or inappropriate to disregard the wishes of both parties that their modest estates, built up through their own individual efforts, should be their own and that their respective children should benefit exclusively therefrom. And, while it is true that government is presumably supplying Ms. Kish’s needs, most would not regard her as living on some type of subsidy or ‘handout’. Rather, she is receiving benefits from a medical system to which all Canadians contribute and from which all are entitled to receive medical care.
[62]        Like the trial judge, this court can do no better than exercise its discretion based on all of the relevant factors in the particular case before it. In my opinion, the factors that weigh most heavily are the relative sizes of the two estates on the one hand, and on the other, the legal support obligation to which Mr. Sobchak would have been subject if the parties had separated during his lifetime. In all the circumstances, I cannot say the trial judge erred in finding that Mr. Sobchak failed to make “adequate provision” for Ms. Kish, even though she has the equity in her home to meet her basic needs.
[63]        At the same time, I conclude that through the lens of “modern values and expectations”, the parties’ wishes remain an important consideration. The parties’ particular circumstances and their relationship weigh strongly, in my opinion, in favour of respecting testator autonomy. I would, with respect, give more weight to that principle than did the trial judge and would therefore reduce the award to Ms. Kish to $30,000.

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