Volovsek v. Donaldson

The provisions of the Wills, Estates and Succession Act (the “WESA”) allowing a spouse or child to apply to vary a will if the will-maker has not made adequate provision for the spouse or child may be avoided by the will maker settling a trust during his lifetime, and holding significant assets in the trust. The relevant sections in Part 4, Division 6 of the WESA do not apply to assets held in trust. Claims that transfers of assets into a trust to avoid a wills variation claim offend the Fraudulent Conveyance Act have not been successful (although I would argue that in some circumstances it may be open to successfully challenge a trust on the basis of the Fraudulent Conveyance Act, but that’s for another post).

In a recent decision, Volovsek v. Donaldson, 2019 BCSC 1820, the plaintiff’s lawyers came up with a creative argument in an unsuccessful attempt to challenge a trust.

Yasmine Volovsek and Fernand Joseph Boisvenu were in a relationship from 1989 until Mr. Boisvenu’s death in March 2015. In 2014 he settled a trust, which held most of his assets, and he also made a will. Under the will and trust, he provided Ms. Volovsek about $1 million. The total value of his assets, including those he held in trust, was about $8 million. The other beneficiaries were relatives and a friend.

Ms. Volovsek alleged that they were in a marriage-like relationship. If so, she would be able to apply to vary his will, and if they had separated during his lifetime, she could have made a claim to a share of the assets pursuant to the Family Law Act.

She alleged that she was financially dependant on him, and he owed her a fiduciary duty, or in other words a high duty of loyalty, which included a duty to tell her of his estate plan so she could take steps to protect her interest including separating from him and making a family law claim. Mr. Justice Myers set out her argument at paragraph 144:

[144]   Ms. Volovsek argues that the fiduciary duties were owed because (quoting from her written argument):

a)         they were spouses; b) he encouraged and asked Ms. Volovsek to be completely financially dependent on him from the beginning of the relationship and she gave up education and job opportunities to be self-sufficient in reliance on these promises; c) he promised to her multiple times that she would be well provided for from his estate ("there's $5 million in the bank and no Japanese, do you want to see my will?"); and (d) based upon these statements and their relationship, Ms. Volovsek stayed and took care of Mr. Boisvenu when he was sick instead of separating from him upon the [Ms. F.] affair to crystallize her family property claim.

The reference to “no Japanese” was a reference to Ms. F. with whom he also had a relationship.

Although Mr. Justice Myers found that Ms. Volovsek and Mr. Boisvenu did not have a marriage-like relationship, he considered the argument that Mr. Boisvenu had a fiduciary duty to Ms. Volovsek on the assumption that they were in a marriage-like relationship.

There are certain relationships which the courts have recognized as fiduciary relationships such as a trustee-beneficiary, lawyer-client, director-corporation. He rejected the argument that a spousal relationship should fall into a similar category when one spouse is financially dependant on the other. Mr. Justice Myers wrote:

[147]   In my view, the proposed category is not appropriate.  First, it is not simply a type of relationship (as, for example, solicitor-client); rather, it adds an additional quality to the relationship, i.e. financial dependence.

[148]   Moreover, but for the qualification of the relationship having to involve financial dependence, it would engage every spousal relationship.  Yet as the courts have recognised, and as discussed in Mother 1, there is no set type of spousal relationship.  Although, Ms. Volovsek's counsel submitted that, "If it looks like a duck, walks like a duck and quacks like a duck, then it is a duck", there is no defined "duck".

In cases that do not fall within a category recognized by the courts as inherently fiduciary, the courts may still find on the particular facts that one person owed the other fiduciary duties. This is referred to as ad hoc fiduciary duties. Mr. Justice Myers summarized the law:

[157]   In Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24 and PIPSC, the court set out the requirements to establish an ad hoc fiduciary duty.  A plaintiff must show that:

a)              the alleged fiduciary has expressly or impliedly undertaken to act in the best interest of the plaintiff;

b)              the alleged fiduciary has scope for the exercise of some discretion or power;

c)               the alleged fiduciary can unilaterally exercise that power or discretion so as to affect the plaintiff's legal or practical interests;

d)              the plaintiff is peculiarly vulnerable to or at the mercy of the alleged fiduciary holding.

He found on that facts that there Mr. Boisvenu did not undertake to act in Ms. Volovsek’s best interest. Statements made by him to her that he would leave assets to her were not ones that she could reasonably rely on. One statement was a vague statement that she was in his will, and the other two indicating that she would get most of his wealth were made when he in a medical emergency. Mr. Justice Myers did not accept her evidence that Mr. Boisvenu asked her to quite work.

Mr. Boisvenu kept his assets separate, and maintained an independent lifestyle. Mr. Justice Myers distinguished the facts from circumstances in which a couple build a business together, or one spouse stays at home to raise the children.

Might the argument that there is a fiduciary duty owed by one spouse to another be successful in a different case? Perhaps, although the types of circumstances in which I think it might be successful could also give rise to other claims such as unjust enrichment or proprietary estoppel.