Court of Appeal Upholds Decision in Sato v. Sato

In Sato v. Sato, 2018 BCCA 287, the British Columbia Court of Appeal upheld Mr. Justice Funt’s decision that Hiroyuki Rex Sato was domiciled in British Columbia when he married Makiko Sato on April 30, 2013, although he was living and working in Luxemburg at the time and had not lived in British Columbia since 1999. Mr. Sato’s domicile was significant because he had made a will before he was married in which he left most of his estate to his sisters, and if he were domiciled in Luxembourg, pursuant to that country’s law, the marriage would not have revoked the will. However, because he was domiciled in British Columbia, under British Columbia law, the will was revoked and his estate will go to his wife on the basis that he died without a valid will. I wrote about Mr. Justice Funt’s decision here.

It is worth noting that British Columbia law has now changed, and marriages on or after March 31, 2014 do not revoke wills.

It was agreed that Mr. Sato at one time was domiciled in British Columbia, where he had moved to as a child, but the question was whether he changed domiciled. To change domicile, one has to both physically move to another jurisdiction and intend to live there permanently. Mr. Justice Funt found that Mr. Sato did not have the intent to live in Luxembourg permanently, in part, on the basis that Mr. Sato had indicated he intended to retire in Canada.

Helen Sato, one of Mr. Sato’s sisters, appealed the decision, arguing that Mr. Justice Funt had placed to much emphasis on a document that Mr. Sato had signed years previously indicating that he intended to retire in Canada. She argued that Mr. Justice Funt effectively required proof that Mr. Sato intended to retire in Luxembourg to show that he was domiciled there.

In the Court of Appeal, Chief Justice Bauman rejected Helen Sato’s arguments. He wrote:

[50]         The deceased’s retirement plans were clearly a relevant consideration in the context of demonstrating his new intention to live in Luxembourg indefinitely and make it his permanent home “unless and until something (which is unexpected or the happening of which is uncertain) shall occur to induce him to adopt [some] other permanent home”: Osvath-Latkoczy at 753. The deceased’s intention to retire to Canada was an important factor in finding that his domicile of choice remained British Columbia. To prove the abandonment of that domicile in favour of Luxembourg it clearly became relevant to show a change in the deceased’s retirement plans.

[51]         It is not the case that, as a matter of law, a person must show they intend to retire where they reside to establish domicile in that place. But, if, as a fact, the person intends to retire somewhere other than where they reside, that may be sufficient to defeat the argument that they are domiciled where they reside since they do not intend to reside in that place permanently. The case at bar is an example of the latter.

[52]         Further, it was not the only factor considered by the judge. He also considered the fact that the deceased did not speak fluent French “a principal language used in Luxembourg”, the fact that the plaintiff was also Japanese, not a citizen of Luxembourg, and the fact that the deceased still had family in British Columbia (at para. 157).

[53]         In my view, the judge correctly stated the law for determining domicile and he made the necessary findings of fact to come to his conclusion based on an extensive record that he carefully reviewed (and edited as necessary based on his admissibility findings).

Chief Justice Bauman did allow Helen Sato’s appeal of the award of court costs against her. The usual rule in litigation in British Columbia is that the unsuccessful party pays court costs to the successful party. These costs usually do not fully cover the legal expenses. But in some cases, the courts will depart from that rule, where the court determines that the litigation was brought about because of the conduct of the deceased person whose estate is disputed.

In this case the Court of Appeal determined that it was appropriate to award all parties costs as special costs (which generally covers nearly all of the actual legal expenses). The Chief Justice wrote:

[56]         It is true that the modern approach to estate litigation is that the normal costs rules generally apply: Hollander v. Mooney, 2017 BCCA 238 at paras. 39–40. However, in McDougald Estate v. Gooderham (2005), 255 D.L.R. (4th) 435 at para. 78 (Ont. C.A.), in a passage cited in Hollander, the Court of Appeal acknowledged that costs may be awarded against the estate “[w]here the difficulties or ambiguities that give rise to the litigation are caused, in whole or in part, by the testator”. The principles are similar with respect to appeal costs: Maddess v. Estate of Johane Gidney, 2011 BCCA 165 at para. 15.

[57]         The judge gave no reasons for his costs order, and in my view it was an error in principle not to have considered whether “the difficulties or ambiguities that [gave] rise to the litigation [were] caused, in whole or in part, by the testator”: McDougald Estate at para. 78.

[58]         Cases where costs are awarded out of the estate generally involve questions of the construction of an ambiguous provision of a will or the testator’s capacity at the time the will was created, and I would similarly here conclude that the conduct of the deceased raised the dispute as to the validity of the will. The deceased drafted his will in 2011, while living abroad, and took no action after he was married to draw up a new one by the time he died in 2015. He was also diagnosed with cancer approximately a year before he died, yet took no steps to update his will. The evidence in this case shows that there was a good faith dispute as to whether the deceased had an intention to reside in Luxembourg permanently at the time he was married such that his 2011 Will might still have been valid. Therefore I would set aside the order with respect to costs, and award the parties special costs of both the trial and appeal against the estate.

Because Mr. Sato’s widow is the beneficiary of the estate, the effect of this order is that she bears the burden of both her own legal expenses and those of Mr. Sato’s sister.