In the decision of Paige v. Noel, 2025 BCCA 358, the British Columbia Court of Appeal has arguably narrowed the criteria for determining whether to give effect under section 58 of the Wills, Estates and Succession Act (the “WESA”) to a document or other record that does not comply with the formal signing requirements for a will. Traditionally, British Columbia had very strict requirements for signing a witnessing a will in order for the document to be effective, but when the WESA came into effect in 2014 the law gave the court the authority to give effect to a non-compliant record “if the court determines that a record, document or writing or marking on a will or document represents… the testamentary intentions of a deceased person.”

The general test that the courts have applied in B.C. is whether the document or other record reflects “a deliberate or fixed and final expression of intention.”

The Court of Appeal has added the requirement “that the document is intended to operate as a will or as an alteration or revocation to an existing will.” This is quoted from paragraph 50 of the decision.

In Paige, Barbara Kissel died on January 7, 2023. She had made a will dated August 7, 2014, in which she appointed Michelle Noel as her executor and left her estate to Jennifer Paige and Adrian Kissel. There was no issue as to the validity of the will. However, she later sent messages to Ms. Noel indicating that she wanted to take Ms. Paige out of her will. As described in the Court of Appeal decision, there were two messages:

[7]            The record in issue is comprised of two electronic messages sent by the deceased to Michelle in October 2022 (which I will refer to as the Messages, as did the chambers judge). The first was a text exchange sent on October 6, 2022:

The deceased:            On a completely different note ... I have an appointment with the notary on the 14th to redo my will ...

Michelle:                      Oh boy, a redo?

The deceased:            Yes ... redo … Jennifer is out ....

Michelle:                      Well I don’t blame you, that wasn’t an easy decision and one I know you didn’t make lightly

The deceased:            I agree ... Jennifer has cut off her nose to spite her face. Once the redo is done I will give you a copy and explain more ....

                                    …

                                    Oh jeez…I didn’t even ask you…will you continue to be my executrix?

Michelle:                      Oh absolutely

The deceased:            MERCI beaucoup

[Emphasis in original.]

 

[8]            The second was an email sent on October 15, 2022:

… Just to have a paper trail … here is an update regarding my will. The notary I am using is Blandyna Skowronska …

I met with her yesterday and conveyed the changes I wanted. She said it would take about two weeks for the new will to be drawn up and registered. She said one option I had was to destroy all copies of my current will which would remove Jennifer immediately. However, should I pass away before the new will is registered, my estate, such as it is, would go to probate court and could be tied up for years. Going to probate also means that the governments have a say in distribution of assets. So, the current will that you have will stand until I get a new one.

In November, the deceased texted Ms. Noel indicating that she was going to go to a different Notary, and on January 3, 2023, she sent an email to neighbour who was a lawyer asking if her firm dealt with wills stating she wanted to “make a very minor change.” She died a few days later.

The Supreme Court of British Columbia judge found that the text message removing Ms. Paige represented her fixed and final intention and gave effect to the message pursuant to s. 58 of the WESA. Her reasons are set out in the Court of Appeal decision:

[25]         In concluding that the Messages represented the deceased’s fixed and final intention to alter the 2014 will to remove Jennifer as a beneficiary, the judge made the following findings (at para. 53):

·       the deceased did not waiver from her stated intention from October 6 up to her death;

·       her reasons for removing Jennifer were clear;

·       she was taking steps to accomplish this by seeking the assistance of two notaries and a lawyer; and

·       for reasons beyond her control, she was not able to complete a new will.

Ms. Paige appealed, and in allowing the appeal, the Madam Justice Fisher for the Court of Appeal described the criteria as follows:

[23]         The importance of the words “fixed and final at the material time” cannot be understated. As I explain further below, this is because s. 58(2) requires that the record, document or writing represents the testamentary intention of the deceased person, whether to make a will or to revoke or alter an existing will. A fixed and final intention must be grounded in the document itself, in that the document is intended to effect the testamentary intention.

Madam Justice Fisher reasoned:

[52]         The judge’s conclusion that the Messages reflected the deceased’s fixed and final intention cannot be reconciled with the content of the Messages themselves or with the surrounding circumstances. It is clear the deceased was unhappy with Jennifer and expressed an intention to alter her will to remove Jennifer as a beneficiary. But that intention cannot be considered fixed and final because it is equally clear that the deceased intended to effect that alteration by making a new will, and until she did so, the 2014 will was to remain operative.

….

[55]         The extrinsic evidence does not displace the words in the Messages. The deceased expressed the desire to remove Jennifer as a beneficiary to others in October 2022 and again in January 2023. She also set up but did not follow through with an appointment with a second notary in early November 2022 for reasons stated as health reasons. However, there is no evidence about the deceased’s state of health after early November that would explain why she did not take any steps to make a new will for almost two months. There is also no evidence that the deceased provided instructions to a notary or a lawyer after early November. The implications of the deceased’s email to her neighbour in January 2023 indicating that she wanted to make a “very minor change” to her will are at best unclear. In my view, the judge’s interpretation of this as not inconsistent with removing a beneficiary — that the required amendment could be minor despite the significant impact — is speculative.

[56]         The record also includes evidence from Jennifer about her positive interactions with the deceased in November 2022 — which was after the deceased’s communications with Michelle that were found to indicate an attempt to maintain a semblance of normalcy in her interactions with Jennifer. Moreover, while the judge was entitled to place less weight on Jennifer’s perceptions of the deceased’s state of mind, that evidence was not irrelevant.

In the result, Ms. Paige is entitled to a share of the estate.

Although the Court of Appeal’s decision is reasonable on the facts, I suggest that the court may have made the requirements a little too narrow.

I can conceive of circumstances in which the deceased makes a document that clearly demonstrates a deliberate or fixed and final intention without intending that document to be operative as a will. For example, the document may be a very clear instruction to a lawyer on what is to go in a will, but the deceased dies unexpectedly, shortly thereafter without have a reasonable opportunity to meet with the lawyer to sign the new will.

Proposed Legislation Recognizes Electronic Wills in British Columbia

The British Columbia Government has introduced legislation to allow digital wills. There are two main components of Bill 21 – 2020: Wills,Estates and Succession Amendment Act, 2020. First, if passed and brought into effect the legislation will provide that a will-maker may make a will digitally, and the witnesses may also sign digitally. Secondly, the legislation will allow the will to be witnessed remotely, in a manner similar to that provided by the emergency order during the Covid – 19 state of emergency.

The legislation amends section 37 of the Will, Estates and Succession Act, which sets out the formal signing and witnessing requirements for a valid will to recognized wills in electronic form by adding the following subsections:

(3) The requirement under subsection (1) (a) that a will be in writing is satisfied if the will is in electronic form.

(4) An electronic will is a will for all purposes of this Act and any other enactment.

A new section 35.3 recognizes electronic signatures:

35.3 (1) For the purposes of sections 37, 40, 43, 62 and 77,

(a) a reference to a signature includes an electronic signature and a reference to a statement being signed includes the statement being signed electronically, and

(b) a requirement for the signature of a person is satisfied by an electronic signature.

(2) Section 39 (1) [clarification of doubt about signature placement] does not apply to an electronic will.

(3) An electronic will is conclusively deemed to be signed if the electronic signature is in, attached to or associated with the will so that it is apparent the will-maker intended to give effect to the entire will.

Section 54.1 provides that to alter an electronic will, the will-maker must make a new will.

There is also a new section providing for how an electronic will is revoked (you don’t have to smash your computer):

55.1 (1) An electronic will or part of an electronic will is revoked only in one or more of the following circumstances:

(a) by the will-maker, or a person in the presence of the will-maker and by the will-maker's direction, deleting one or more electronic versions of the will or of part of the will with the intention of revoking it;

(b) by the will-maker, or a person in the presence of the will-maker and by the will-maker's direction, burning, tearing or destroying all or part of a paper copy of the will in some manner, in the presence of a witness, with the intention of revoking all or part of the will;

(c) the circumstances described in section 55 (1) (a) and (b) [how to revoke will];

(d) by any other act of the will-maker, or another person in the presence of the will-maker and by the will-maker's direction, if the court determines under section 58 [court order curing deficiencies] that

(i) the consequence of the act of the will-maker or the other person is apparent, and

(ii) the act was done with the intent of the will-maker to revoke the will in whole or in part.

(2) A written declaration made in accordance with section 55 (1) (b) may be in electronic form and signed with an electronic signature.

(3) For certainty, an inadvertent deletion of one or more electronic versions of a will or part of a will is not evidence of an intention to revoke the will.

Section 35.2 is the section that will allow remote witnessing of wills. It says:

35.2 (1) In this Part, except in section 38, a requirement that a person take an action in the presence of another person, or while other persons are present at the same time, is satisfied while the persons are in each other's electronic presence.

(2) For certainty, nothing in this section prevents some of the persons described in subsection (1) from being physically present and others from being electronically present when the action is taken.

(3) If a will-maker and witnesses are in each other's electronic presence when the will-maker makes a will, the will may be made by signing complete and identical copies of the will in counterpart.

(4) Copies of a will in counterpart are deemed to be identical even if there are non-substantive differences in the format of the copies.

Section 35.2 will be retrospective to March 18, 2020.  

Gifts to Beneficiaries Who Die Before the Will-Maker

What happens to a gift in a will if the beneficiary dies before the will-maker? The beneficiary’s death may happen after the will is made, but the will-maker does not make a new will. On rare occasions, the beneficiary may have died before the will is made without the will-maker knowing of the beneficiary’s death. Often, but not always, the will provides for such a contingency. But what if the will is silent?

Section 46 of the Wills, Estates and Succession Act deals with this issue in British Columbia. This section says:

46   (1)If a gift in a will cannot take effect for any reason, including because a beneficiary dies before the will-maker, the property that is the subject of the gift must, subject to a contrary intention appearing in the will, be distributed according to the following priorities:

(a)to the alternative beneficiary of the gift, if any, named or described by the will-maker, whether the gift fails for a reason specifically contemplated by the will-maker or for any other reason;

(b)if the beneficiary was the brother, sister or a descendant of the will-maker, to their descendants, determined at the date of the will-maker's death, in accordance with section 42 (4) [meaning of particular words in a will];

(c)to the surviving residuary beneficiaries, if any, named in the will, in proportion to their interests.

(2)If a gift cannot take effect because a beneficiary dies before the will-maker, subsection (1) applies whether the beneficiary's death occurs before or after the will is made.

In applying this section, first you look at what the will says. If it says for example that if the beneficiary dies before the will-maker, that gift goes to some other beneficiary, then the provision in the will governs.

If the will is silent, then look at the identity of the beneficiary. If the beneficiary is the will-maker’s sibling, child, grandchild or great grandchild (or in theory further generations), then the gift will go to the deceased beneficiary’s own descendants. The way the legislation works is that it would go to the deceased beneficiary’s children, but if a child also died before the will-maker, then that child’s own children receive a share.

If the beneficiary does not fall within one of the categories in 46(1) (c), or if the beneficiary does not have any descendants, then the gift gets divided among the surviving residual beneficiaries.

The court applied section 46 in Terezakis Estate, 2018 BCSC 805. The will-maker, Aikaterini Terezakis, had five children, two of whom died before her. One of the children who died before her, Sophocles Terezakis, had two children, Victor and Katrina. Victor also died before the will-maker and did not have any children.

The case does not set out the wording of the will, which was rectified by consent. Mr. Justice Basran summarizes the will as rectified as follows:

[6]          If Victor had survived the will-maker, then Sophocles’ share would have been divided equally between Victor and Katrina. The issue before the court was what happens to the portion that Victor would have received if he had survived. One of the beneficiaries argued that his notional portion should be divided among the residual beneficiaries.

Mr. Justice Basran applied section 46 (1) (b) and held that Katrina receives the full amount that her father, Sophocles, would have received, including the portion that would have gone to Victor if he had survived. Mr. Justice Basran wrote:

[14]        The first priority in s. 46(1)(a) contemplates an alternative beneficiary of the gift if one is named or described by the will maker.  The will of Ms. Terezakis does not contemplate an alternative beneficiary.  It would have been highly unlikely that an alternative beneficiary would have been named in the circumstances where a mother, Ms. Terezakis, outlives not only her son, Sophocles, but also one of her grandchildren, in this case Victor.  The will understandably does not describe Katrina or any other person as an alternative beneficiary in these unusual and most unfortunate circumstances.

[15]        The next priority is set out in s. 46(1)(b) and is instructive.  Applying it to these facts, Sophocles is a descendant of Ms. Terezakis and at the time of Ms. Terezakis's death on September 3, 2016, the only descendant of Sophocles Terezakis was his daughter, Katrina.  Accordingly, by the operation of s. 46(1)(b), the share of Ms. Terezakis's estate that would have gone to Sophocles goes to Katrina. 

[16]        Having found that s. 46(1)(b) applies, it is unnecessary to consider s. 46(1)(c). 

British Columbia Now Allows Electronic Witnessing of Wills During Covid-19 Emergency

On May 19, 2020, Mike Farnworth, the Minister of Public Safety and Solicitor General,  signed Ministerial Order No. M161 which allows wills to be witnessed electronically during the current state of emergency. If the process set out in the Order is complied with, a will made during the state of emergency will comply with the formal requirements for a valid will. 

It is important for readers of this post to keep in mind that this only applies during the Covid 19 state of emergency, and not to wills made after the state of emergency ceases.

Two witnesses are still required, and if the will is electronically witnessed, at least on of the witnesses must be a B.C. lawyer or B.C. notary.

The requirements are set out in  section 3 of the Order as follows:

3 (1) If a will is made in accordance with this order, the requirements in section 37 (1) (b) and (c) of the Wills, Estates and Succession Act in relation to a will-maker and the witnesses signing and witnessing the will in the presence of each other are satisfied. 

(2) When making a will, the will may be signed and witnessed while the will-maker and the witnesses to the will are in each other’s electronic presence. 

(3) For certainty, nothing in this section prevents some of the individuals described in subsection (2) from being physically present and others from being electronically present when signing and witnessing a will. 

(4) At least one of the witnesses to a will must be a lawyer or a notary public. 

(5) A will may be made by signing complete and identical copies of the will in counterpart. 

(6) Copies of a will are identical even if there are non-substantive differences in the format between the copies. 

(7) A will made in accordance with this order must include a statement that it was signed and witnessed in accordance with this order.

Making a Will in British Columbia if in Isolation During the Covid-19 Pandemic

[Since I wrote this post, the British Columbia government has made an Order permitting electronic witnessing of wills during the Covid-19 emergency, rather than the process I have set out below. See my more recent post. However, the discussion below may still be relevant after the Covid-19  state of emergency ceases in certain (although rare) circumstances.]

Although I much prefer to meet in person with clients to discuss their estate plans, I am getting used to video conferencing or taking instructions by telephone during this covid-19 pandemic. It seems to work well enough most of the time, but what about signing wills?

British Columbia has certain formal requirements for making a valid will. These are set out in section 37 (1) of the Wills, Estates and Succession Act:

37  (1)To be valid, a will must be

(a)in writing,
(b)signed at its end by the will-maker, or the signature at the end must be acknowledged by the will-maker as his or hers, in the presence of 2 or more witnesses present at the same time, and
(c)signed by 2 or more of the witnesses in the presence of the will-maker.

 As at the date of this post, in contrast to some other places, British Columbia has not made any law providing for virtual witnessing of wills, by audio-visual communication, such as skype or zoom. It is necessary to for the two both witnesses to be in the same room when the will-maker either signs or acknowledges her signature. Alternatively, all three could be outdoors within sight of each other.

There is no requirement that the lawyer who drew the will be one of the witnesses. Accordingly, if the lawyer cannot practically attend to witness the will, either because of distance, or because of social distancing during the covid-19 pandemic, the lawyer may provide instructions on how to sign the will, and two others may witness the will. It is important, however, that neither a beneficiary or the spouse of a beneficiary witness the will, because that may invalidate the gift in the will to the beneficiary.

There may be situations where someone is in isolation and cannot get two people to witness the will. What should she do?

I suggest the following:

First, the lawyer should go through the will by audio-visual technology or by phone. The lawyer should confirm that the will reflects the will-maker’s intentions, and make good notes. The lawyer should also make a statutory declaration setting out the circumstances and the fact that the will-maker stated that the document reflects her intentions.

Second, the document itself should contain language indicating that the will-maker intends the document to be effective. I suggest something along the lines of “I am signing this document without any witnesses because I am in isolation during the covid-19 pandemic. This document reflects my deliberate, fixed and final intentions in respect of my appointment of executors and the disposition of my assets. I ask the court to give effect to this document pursuant to section 58 of the Wills, Estates and Succession Act.”

Third, the will-maker should sign and date the will at the end, and initial the bottom of each of the other pages.

Fourth, the will-maker should keep the document in a prominent place where it can be easily found, and advise the lawyer and her executors where she is keeping it.

Fifth, as soon as practical, the will-maker should sign another will in the presence of two witnesses in compliance with section 37 (1) of the Wills, Estates and Succession Act.

But if the will-maker passes away before she is able to complete a will in the presence of two witnesses, her named executor, or another person, may apply under section 58 of the Wills, Estates and Succession Act to the Supreme Court of British Columbia to give effect to the document as the last will despite the fact that it does not comply with section 37(1). Although the applicant seeking approval of the document would have good evidence in support of the application, this is a much more costly process than probating a will that complies with section 37 (1). Accordingly, this approach should be used as a stop-gap and the will-maker should sign a will in the presence of the two witnesses as soon as she is able.

Trezzi v. Trezzi: Can You Leave Assets Owned by a Company in Your Will?

I have on rare occasions seen wills in which the will-maker has left assets that are owned by a corporation to beneficiaries. In each case, I have sought instructions to do a new will, leaving the shares, rather than corporate assets. The problem is that a corporation is in law a separate person than a shareholder. Its natural for people to think of say real estate owned by a company as their own, if they own all of the shares of the company, but that is not how the law works.

The problem with attempting to leave assets owned by a company to a beneficiary in your will is that the court may very well find the gift invalid, even if you own all of the shares of the company. I am not aware of cases that have decided that issue in British Columbia, but I know of cases in Alberta and Saskatchewan in which the courts have said that a will-maker cannot effectively leave assets held in a corporation to beneficiaries.

But in a recent decision, Trezzi v. Trezzi, 2019 ONCA 978, the Ontario Court of Appeal upheld a gift in a will of assets held by a company.

Peter Tezzi died on January 8, 2016. He owned all of the shares of Trezzi Construction Ltd. In his will he had clauses that left all of the assets owned to beneficiaries as follows:

·      Clause 3(d), which gave Albert “[a]ll equipment and chattels owned by Trezzi Construction Ltd.”.

·      Clause 3(e), which gave Albert “[t]he real property municipally known as 220 Regina Road, Woodbridge”, which was owned by Trezzi Construction.

·      Clause 3(m), which gave “[a]ll other assets owned by Trezzi Construction Ltd.” in equal shares to Gina, Albert, Emily, and Bianca.

Gina was Peter Tezzi’s wife, Emily and Bianca are their daughters, and Albert, his son from a previous relationship. Gina, Emily and Bianca challenged the gifts of assets in Trezzi Construction, arguing that he because the company owned the assets, and he did not, he could not gift them in a will.

The application judge who heard the argument upheld the provisions of the will, and the Ontario Court of Appeal agreed. Justice M. Jamal, writing for the Court of Appeal, noted under both the terms of the will and Ontario’s Business Corporations Act, Peter Trezzi’s estate trustees had the power to wind-up the company and distribute its assets. Although he did not expressly say that the trustees should wind-up the company, his intent to gift the assets was clear, and they had authority to wind-up the company to carry out his intentions. As set out in paragraphs 20-22 of the reasons for judgment:

[20]       While this clause does not refer expressly to a power to wind-up Trezzi Construction, but rather refers only to converting the estate’s assets into money, I conclude that the gifts do not fail on this basis. As the application judge correctly noted, the executors’ power to wind-up the corporation already exists under corporate law. I also agree with him that the executors implicitly have this authority in their discretionary power to convert the estate’s assets into money. Because Peter’s shares in Trezzi Construction were part of his estate “not consisting of money”, clause 3(a) of his will authorizes his executors to take any steps that may be needed to sell, call in, and convert those shares into money. This would include winding-up the corporation. As such, I agree with the application judge that Peter’s will conferred on his executors the authority to wind-up Trezzi Construction.

[21]       Because of these two independent sources of authority for Peter’s executors to wind-up Trezzi Construction, I would reject Gina’s contentions that the gifts of the assets of Trezzi Construction fail because Peter did not directly own those assets and that upholding these gifts would disregard Trezzi Construction’s separate corporate personality. While it is true that Peter, as the sole shareholder of Trezzi Construction, did not directly own the corporation’s assets, that does not complete the analysis. In substance, Peter’s shares in Trezzi Construction became part of the estate, and Peter effectively directed his executors to wind-up the company and to distribute its assets in accordance with his will, even though he did not own those assets directly. As already noted, the key question thus boils down to whether this was indeed Peter’s subjective intention in his will: see Re Kaptyn Estate, at paras. 126-144. For the reasons stated above, I conclude that the application judge did not err in concluding that this was Peter’s intention.

[22]       It follows that I also do not agree with the conclusions reached in the Saskatchewan and Alberta cases relied on by Gina, Bianca, and Emily, to the extent that those cases can be read as holding that a sole shareholder of a corporation can never effectively gift corporate assets because they are owned by the corporation: see Re Thornton Estate (1990), 85 Sask. R. 34 (Surr. Ct.), at paras. 4-5; Earl v. Wilhelm, 2000 SKCA 1, 183 D.L.R. (4th) 45, at para. 12, leave to appeal refused, [2000] S.C.C.A. No. 124; Re Meier(Estate of), 2004 ABQB 352, 366 A.R. 299, at paras. 16-22; and OryshchukEstate, 2009 ABQB 688, 485 A.R. 379, at para. 35. As noted, the principle of corporate separateness does not complete the analysis of whether a testator who is the sole shareholder of a corporation can effectively gift corporate assets. The court must go on to consider whether that authority exists under corporate law or under the terms of the relevant will. I agree with the application judge that because both sources of authority are present in this case, Peter could effectively bequeath assets held by Trezzi Construction.

Although I like the result of this decision in giving effect to the will-maker’s intentions, I would still be very reluctant to draft a will leaving corporate-owned assets to beneficiaries in British Columbia. If I did, I would want to include provisions as to how this is to be accomplished, and a fall-back position, such as a gift of the shares to the beneficiaries if the gifts were found invalid.

I have a number of reasons for my hesitancy.

First, although a British Columbia court may find this Ontario decision persuasive, a British Columbia court is not bound to follow it, and could decide to follow the decisions in Alberta and Saskatchewan.

Second, in Trezzi, Peter Trezzi was the sole shareholder, and his estate trustee had the power to wind-up the company acting unilaterally. If there were another shareholder, that would not be the case. Even if at the time the time the will is drafted, the will-maker is the sole shareholder, that may change before death. The will-maker could transfer some or all of his shares, perhaps to other family members. His personal representative would no longer have the power to unilaterally wind-up the company.

Third, the company might dispose of the assets left in the will. This problem is not unique to corporate-owned assets. Anytime a will-maker is leaving specific property to beneficiaries, the will-maker should consider making other provisions in case the property is disposed of between the will and the date of his death.

Geluch v. Geluch Estate

A recent decision, Geluch v. Geluch Estate, 2019 BCSC 2203, illustrates that a court may find part of a will to be valid and another part invalid. To make a valid will, the will maker must have the capacity to understand the nature and effect of the will, or testamentary capacity, and must know and approve of the contents of the will. I am not aware of any cases in which a will made by someone who is found not to have capacity is found to have some valid gifts, but the court may find that the will-maker with capacity knew and approved of some gifts in the will, but not others.

Jean Geluch signed two wills shortly before she died. She signed a will dated January 12, 2016, in which she appointed her brother Ted Josefowich as her executor, left seven charities $50,000 each, 17 individuals cash gifts in varying amounts and the residue to her niece Carol Wells. The cash gifts to individuals included a $15,000 gift to her daughter Sharon Geluch who had developmental disabilities, $105,000 to Mr. Josefowich and $250,000 to Carol Wells.

Eight days later, on January 20, Jean Geluch signed a new will and a transfer of her home into a joint tenancy with Carol Wells. She again named her brother as her executor, and she left $15,000 to her daughter to be held in trust, $105,000 to brother, and the residue to her niece Carol. On January 20, Carol also signed a declaration of trust declaring that upon Jean Geluch’s death, she will not be entitled to the home, but will hold it for the benefit of beneficiaries listed in two schedules, which set out the same cash gifts to the same beneficiaries as were listed in the January 12, will.

Jean Geluch died four days later, on January 24. She had bank accounts worth approximately $384,000 and the home sold for just over $1,423,000. The total value of the assets subject to the lawsuit was approximately $1.8 million.

The Public Guardian and Trustee of British Columbia, acting as litigation guardian for Sharon Geluch, challenged both of the wills, the transfer of the home into a joint tenancy and the declaration of trusts, alleging that Jean Geluch did not have the capacity to make the wills or transfer, and that she did not know and approve of the estate plan.

Although the wills, transfer and trust declaration were drafted by a lawyer, much of the instructions came from Jean Geluch’s brother and niece rather than directly from her. The lawyer did not have a clear recollection of events, and his notes were sparse and were not dated. He did not ask the questions needed to establish her capacity.

In deciding the case, Madam Justice Francis relied to a significant extent on the email correspondence among Ted Josefowich, Carol Wells and the lawyer.

Madam Justice Francis found that Jean Geluch did have the capacity to make the estate-planning documents. She then considered whether Jean Geluch knew and approved of the planning. She summarized the issue as follows:

[124]     In the recent decision of Halliday v. Halliday Estate, 2019 BCSC 554, at para. 178, Hinkson C.J. cites John Poyser’s text Capacity and Undue Influence (Toronto: Carswell, 2014) and its formulation of the distinction between testamentary capacity and knowledge and approval:

Testamentary capacity includes the ability to make choices, whereas knowledge and approval requires no more than the ability to understand and approve the choices that have already been made.

[125]     While I am satisfied that Jean was capable of making choices with respect to her testamentary dispositions in January 2016, I am not at all satisfied that she knew or approved of the choices that she purportedly made.

[126]     To have knowledge and approval of testamentary dispositions, it is necessary for the will-maker to be aware of the contents of the will she is executing: Johnson v. Pelkey (1997), 36 B.C.L.R. (3d) 40 (S.C.) at paras. 114-116.

[127]     Knowledge and approval requires more than simply knowing the contents of the will. The will-maker must be aware of the magnitude of the residue of her estate and must “appreciate the effect” of the disposition of her estate: Russell v. Fraser (1980), 118 D.L.R. (3d) 733 (B.C.C.A.) [Russell] at para. 12.

[128]     Since the plaintiff has established suspicious circumstances, the burden falls on Ted and Carol to prove that Jean had knowledge and approval of the dispositions she made on January 20, 2016. I find that Ted and Carol have fallen far short of meeting that burden.

Madam Justice Francis found that they had not met the burden of proof that Jean Geluch knew and approved of the January 20 will, property transfer or declaration of trust. There was no evidence that the instructions for the changes, which came from Mr. Josefowich and Carol Wells, were confirmed with Jean Geluch. Madam Justice Francis emphasized that these changes were significant:

[130]     There was a wholesale change in the structure of Jean’s estate plan between January 12, 2016 and January 20, 2016. Jean went from having a conventional will that disposed of all her property on death to transferring her primary asset, the Home, to Carol on trust terms that even Jean’s lawyer did not appear to fully understand. The notion that Jean, without ever talking to her lawyer prior to the January 20, 2016 execution date, could have known and approved of the change in plan that would have her most significant asset pass outside her estate, pursuant to a declaration of trust that was signed by Carol and not Jean (and which Jean may never have seen), is simply not plausible.

Madam Justice Francis rejected the argument that the January 20 will could be upheld even if the property transfer and declaration of trust were invalid. The effect would be to disinherit beneficiaries of cash gifts and there was not evidence that Jean Geluch wished to do so.

She then turned to the January 12 will, and her evaluation of the evidence was nuanced. There was evidence that Jean Geluch gave significant consideration to the cash gifts, making changes requiring numerous drafts, which contrasted with the residue clause. Madam Justice Francis wrote at paragraph 157:

It is evident that Jean agonized over the list of Charitable Bequests and Individual Bequests, in terms of whom she wished to benefit, in what amount, and in some cases what trust terms to attach to certain gifts. For example, at one point she considered making the $5,000 gift to Michael Geluch conditional on his marital status. The level of detailed consideration given to these small bequests is completely inconsistent with Carol’s evidence that Jean simply announced one day that Carol was to inherit the residue without further discussion.

In contrast, although the residue clause disposed of approximately $900,000, Madam Justice Francis found it “more probably than Jean did not turn her mind to the residue because no one…pointed out to her that the Charitable Bequests and the Individual Bequests would dispose of less than half of her estate….The only credible explanation for Jean’s scrupulous attention to the Charitable Bequests and Individual Bequests, and her lack of attention to her residue, is that she had no idea of the magnitude of the residue of her estate.

The result is that the cash gifts to charities and individuals in the January 12 will is upheld. The residue was not effectively disposed of in the will, and will go on an intestacy to Sharon Geluch.

Huber Estate

There are very few reported cases in British Columbia in which a will has been rectified under section 59 of the Wills, Estates and Succession Act. This section has been in effect for five years, which is still relatively new. Section 59 allows the court to correct drafting and other errors in wills. The operation of this provision is illustrated in a recent decision of Madam Justice Francis, Huber Estate, 2019 BCSC 866.

Section 59 allows the court to rectify a will if the judge finds that the will does not reflect the will-maker’s intentions because of

(a)an error arising from an accidental slip or omission,
(b)a misunderstanding of the will-maker's instructions, or
(c)a failure to carry out the will-maker's instructions.

The court may consider direct evidence of the will-maker’s intentions, such as the drafting lawyer’s evidence of what the will-maker told the lawyer what she wanted in her will.

When Mary Louise Huber instructed her lawyer to draft her last will, she told her lawyer that she wanted the residue of her estate divided equally among her three sons. The will as drafted provided that her estate was to be payable to her “children.” The will then had the following clause:

"If any of my children are not then living but such child has left children of his who is or are then living, then the portion that such deceased child would have received if he had been living on the 30th day following the date of my death shall instead be divided in equal shares amongst his children who are then living."

The will was dated November 18, 2015, and Ms. Huber passed away March 23, 2018

Ms. Huber had a daughter who passed away in 1986, and her daughter had children. As drafted the will appears to divide the estate into four shares with one share going to Ms. Huber’s daughter’s children.

The lawyer who drafted the will gave evidence that Ms. Huber told her that she wanted to leave her estate to her three sons, and had not advised her that she had a daughter who had passed away.  in an estate-planning questionnaire Ms. Huber completed, she indicated that she only had three children. She told her lawyer that she the only change she wanted to make from her previous will was to change the executor, because her husband, who was her executor, had passed away. Under the previous will, Ms. Huber’s estate would have been divided among her three sons.

Madam Justice Francis granted the order rectifying the will so that the estate would be divided among the three sons. She wrote:

[8]             It is significant, in my view, that paragraph (j) uses the masculine gender in reference to the children of the Will-Maker.  It is also significant that the Will makes specific gifts to named grandchildren but does not include any gifts to the children of the Will-Maker’s predeceased daughter.

She also based her decision on the lawyer’s evidence. She found that based on the questionnaire, the lawyer reasonably understood Ms. Huber’s sons to be her only children. In this case, the error was rectified on the basis that the lawyer had misunderstood the will-maker’s instructions.

Quinn Estate Appeal

In Quinn Estate v. Rydland, the British Columbia Court of Appeal had held that a pour-over clause in former NHL coach Pat Quinn’s will is invalid. As I wrote in my post about the British Columbia Supreme Court decision in this case,

Mr. Quinn and his wife Sandra Quinn settled a trust in the United States which dealt with assets in the United States. Mr. Quinn was an American citizen, and Mrs. Quinn had U.S. Green Card, but they lived in British Columbia. Their U.S. lawyer also draft a will for Mr. Quinn dealing with his assets in Canada. The will provided that the residue of his Canadian Estate would “pour over” into a U.S. trust, referred to as the Quinn Family Trust. 

The issue in this case was whether the distributive provision of the Canadian will is valid under British Columbia law. The will was signed by Mr. Quinn in the presence of two witness in accordance with the requirements of section 37 of the Wills, Estates and Succession Act. The will itself was formally valid. The difficulty was the “pour over” clause, which I understand is valid in at least some states. The terms of the Quinn Family Trust allowed Mr. and Mrs. Quinn to amend it. Because they could amend the trust, the beneficiaries could be changed without compliance with the requirements of section 37.

The Trust was amended, but the amendment was a relatively small administrative change that did not change the beneficiaries. But the fact that it could be amended was sufficient for Mr. Justice Funt in the Supreme Court to find that the clause is invalid.

On appeal, Chief Justice Bauman considered whether the clause could be saved on any of three grounds: the doctrine of incorporation by reference, the doctrine of facts of independent significance or section 58 of the Wills, Estates and Succession Act (the “WESA”).

In a will, the will-maker may incorporate another document. The Chief Justice set out the criteria as follows:

[19]         Incorporation by reference simply contemplates that the terms of the trust are deemed to be incorporated into the will. There are five prerequisites to applying the test, per Leal, A. “Testamentary Additions to Trusts” in Proceedings of the Forty-Ninth Annual Meeting of the Conference of Commissioners on Uniformity of Legislation in Canada (St. John’s: 1967) 207 at 208:

(1) that the reference in the will must show that the testator intended to incorporate the extrinsic document into the will; (2) the language of the will must be such that it refers to the extrinsic document as one already in existence at the time of the execution of the will; (3) the reference in the will must be sufficiently specific that it identifies the extrinsic document with reasonable certainty; (4) the document offered must be proven satisfactorily to be the one referred to in the will; and (5) there must be satisfactory proof that the document was actually in existence at the time of the execution of the will: see Allen v. Maddock (1858), 11 Moore P.C. 427.

The Chief Justice found that the will did not refer to a document, and Mr. Quinn did not intend to incorporate the trust by reference. Rather Mr. Quinn intended to make a gift “to the trust.” The trust c could not be incorporated by reference “because as of the date of that will, the trust, being amendable and revocable, was not a ‘presently existing document’ and the testator cannot, by his will, create for himself a power to dispose of his property by an instrument not duly executed as a will or codicil.”

The doctrine of facts of independent significance refers to facts that are independent of the will that may affect the disposition of the will-maker’s property. For example, if the will-maker leaves his property to those of his children who survive him, the birth of a child after the will affect how is property is divided upon death. 

Chief Justice Bauman described the doctrine as follows:

That doctrine purports to resolve the issue of potential uncertainty in a will. In the Anglo-Canadian cases it would typically respond to resolve the uncertainty inherent in a bequest: “my car to my partner at the time of my death”. Certainty is achieved by reference to a fact of independent significance (i.e., independent of simply testamentary significance), such as the fact of who the testator’s partner was at the time of his death. So too could the fact of the make and model of the testator’s car have independent significance.

In some jurisdictions in the United States, the doctrine of facts of independent significance has been applied to similar pour-over clauses, but the Court of Appeal rejected the application of the doctrine to pour-over clauses in British Columbia. Chief Justice Bauman wrote:

[31]         In my view, this doctrine should not be seen as a device to validate a pour-over clause like that at bar both as a matter of statutory interpretation and as a matter of principle. When WESA came into force in 2014, it heralded a significant overhaul of the wills, estates and trusts law of the province. Nothing in WESA addresses pour-over clauses. Were the doctrine of facts of independent significance applied to pour-over clauses, it would allow a will-maker to avoid the formalities and the necessity of testamentary intent embodied in WESA so long as the will-maker had sufficient assets in the trust at the time of amending the trust (at least on the American authorities). Had the Legislature intended to allow amendments to a will so long as the amendment presently affected significant assets, the legislature could have provided for it. Extending this doctrine to apply to an amendable, revocable trust would permit a testator to avoid the strictures of WESA and thus defeat the legislature’s intent.

[32]         Applying the doctrine to validate a pour-over clause would also differ in character to the existing applications recognized in the Anglo-Canadian jurisprudence. The traditional applications of the doctrine validate de facto amendments to the will only with regard to limited “facts”. The terms “partner” and “car” are inherently limited. A trust document recognizes no such limit. Extending the doctrine to pour-over clauses would grant testators unlimited power to amend the disposition of their estate without following the strictures of WESA. In my view, this is not an extension the common law should permit

Finally, the Court of Appeal considered whether the curative provision in section 58 of the WESA could save the pour-over clause. Section 58 allows the court to give effect to a document or record that does not comply with the formal signing and witnessing requirements for a valid will if the court finds the document or record reflects the deceased person’s testamentary intentions. (I have co- written a paper on section 58, which you can find here.)

The Court held that section 58 has no application. The will met all of the formal requirements, and Mr. Quinn did not intend for the trust to be a will. Chief Justice Bauman wrote at paragraph 37,

That s. 58 is inapplicable here is made stark when we ask what “record or document or writing or marking on a will…” is to be ordered “fully effective” under WESA per s. 58(3). Ms. Rydland does not seek probate of the QFT; rather, she seeks to validate the sixth clause. That clause is part of a will that complies with the formalities. It seeks to create a vehicle — the QFT — that would allow the will-maker to circumvent the formalities altogether. Section 58 simply has no application to that circumstance. The chambers judge did not err in declining to apply s. 58 here.

What is my own view? From a practical perspective, I think it unfortunate that a pour-over clause to an amendable trust is invalid. In some circumstances, it might be a useful tool. Family trusts appear to be quite popular in some U.S. states, such as California. I don’t see any harm from a policy perspective in, for example, allowing someone with a trust in California with California resident beneficiaries to create a will for his British Columbia assets that pours over to his California trust.

I also think this case illustrates an incoherence in our succession law. Supposing that Mr. Quinn’s will made no reference to the trust, but he simply named his wife as the beneficiary of his estate. Suppose he also told her that she was to distribute his estate in accordance with the trust, and she agreed. Supposing further that he decided to amend the trust after he made the will, and he communicated the changes to her and she agreed to deal with the estate in accordance with those changes. Provided that the will did not itself refer to the fact that she would receive his estate as a trustee, this arrangement would be a valid secret trust under British Columbia law, and he would be able to change the terms right up to his death, without complying with the formal requirements for a valid will. I am not advocating the use of secret trusts in this manner as a good estate-planning tool, but merely highlighting the inconsistency.

Interest on Legacies

In British Columbia, if a legacy is not paid within one-year of the will-maker’s death, the beneficiary is entitled to interest at a rate of 5% per year from the first anniversary of the date of death. This rule applies unless the will provides that no interest is payable or provides for a different rate. In my experience, most will-makers do not address this issue in their wills.

The first year is sometimes referred to as the “executor’s year.” The notion is that an estate will be administered in about one year, but in practice estates often take longer to administer. The time is likely to be drawn-out much longer if there is litigation.

This rule was considered and explained in an Ontario case, Rivard v. Morris, 2018 ONCA 181 (CanlII). Alexander Rivard died on October 24, 2013. In his last will, he left legacies of $530,000 to each of his two daughters and his farm land to his son. His daughters unsuccessfully challenged the will. As a result of the dispute, the two daughters did not receive their legacies until October 24, 2016. They sought interest on the legacies but the Ontario Superior Court denied interest, reasoning that it was the daughter’s actions in challenging the will that caused the delay.

In allowing the daughters’ appeal, and awarding them interest, Mr. Justice Paciocco explained the rationale for the rule:

[22]      Centuries ago, Ecclesiastical courts in England developed a practice of giving personal representatives one year after the death of the deceased to wind up the estate. To this day, it is still presumed, including in Ontario, that estates will be wrapped up within the “executor’s year”: Carmen S. Thériault, Widdifield on Executors and Trustees, loose-leaf (2016-Rel. 11), 6th ed. (Toronto: Carswell, 2016), at pp. 5-6.3 to 5-6.4. This involves calling in the assets of the deceased, paying off the estate debts, and converting the remaining assets to enable bequests and legacies to be distributed according to the will, and then doing so.

[23]      For more than two centuries, the law of equity has recognized a related rule, often referred to as the “rule of convenience.” According to this related rule, described in more detail below, “where no special time is fixed for the payment of a legacy, it carries interest ... from the expiration of a year from the testator’s death”: Widdifield, at p. 5-6.3. See also: James MacKenzie, Feeney’s Canadian Law of Wills, loose-leaf (2016-Rel. 64-9), 4th ed. (Toronto: Lexis-Nexis, 2000), at p. 8.22. This rule was thoroughly reviewed in the 1997 article by Rosanne T. Rocchi and Michael W. Kerr, “Legacies: A Matter of some Interest” (1997), 16 E. & T.J. 305 (“Rocchi and Kerr”).

[24]      The “rule of convenience” can be easily explained, in my view. One of the maxims of equity is that it presumes as being done that which ought to be done. Since the beneficiaries should be enjoying the earning power of their legacies by at least the anniversary date of the testator’s death, where that enjoyment is postponed and the testator has not provided an alternative date for payment of the legacy, interest is to be paid: Hutcheon v. Mannington(1791), 1 Ves. Jr. 366, at p. 367, 30 E.R. 338 (Ch.); and Elwin v. Elwin (1803), 8 Ves. Jr. 547, at p. 557, 37 E.R. 467 (Ch.). This does not mean that the interest is itself a legacy: Foster v. Wyles, [1938] 1 Ch.  313, at p. 316. It does mean that equity takes steps to put the legatee in the position they would have been in had the legacy been distributed as the testator, not having set a different date for distribution, is presumed to have intended.

According to Mr. Justice Paciocco, the rule of convenience is not tied to the conduct of the personal representative or the beneficiaries. It applies even if it is not possible to pay the legacy within a year of death. Although he did  not rule out the possibility that a judge might have discretion to deny interest, he emphasized the importance of certainty in the application of the rule, and held that even if there is discretion, the Superior Court Judge erred in principle in tying interest to whether it was reasonable for the two daughters to expect payment within a year in this case.

With respect to the question of whether there is a discretion, Mr. Justice Paciocco wrote:

[53]      As explained, the “rule of convenience” is not predicated on the possibility of payment within the executor’s year. The “rule of convenience” applies even where payment within the executor’s year is impossible. It would involve a significant realignment of the rule, in my view, to permit courts to choose whether to pay interest based on how reasonable it is to expect the distribution of property within the executor’s year to occur.

[54]      No relevant Canadian cases supporting the discretion to deny interest have been found. No English cases doing so have been uncovered either. Re Allen, at para. 32, cites an unreported New Zealand decision, Cook v. Cook (20 April 2004), Greymouth, 2001-418-000004, that apparently recognizes a discretion to deny interest but Re Allen disapproves of Cook v Cook on the basis that the decision was made without supporting authority. After a close examination of the case law, the court in Re Allen, at para. 33, held that “unless the will provides otherwise, a legatee has a right to interest on the legacy as from the end of the executors’ year”.

[55]      The reason there may be no authority supporting a discretion to deny interest may simply be that discretion is seen to be undesirable in this context. In Re Beech, Saint v. Beech, [1920] 1 Ch. 40, at p. 44, quoted in Re Parry, Brown v. Parry, [1947] Ch. 23, at p. 47, Eve J. appears to explain why:

[A] departure from a salutary rule in matters of this kind – introducing as it does an element of uncertainty in practice and administration – can only be justified if the changed conditions on which it is founded continue at least as constant as those upon which the rule was itself framed.

[56]      Expressing the same sentiment in more modern language, certainty is critical to the simplicity and the efficacy of a rule that is most often applied, not by courts, but by personal representatives. It is one thing to identify fixed exceptions to the “rule of convenience”. It is another to leave the operation of the “rule of convenience” free floating. Doing so would undercut its function as a “rule of convenience”.

[57]      In addition, the “rule of convenience” is predicated on what a testator, presumed to know the law, is presumed to intend where they have not opted out of the rule. Denying discretion is arguably a better way of having testators, rather than executors or courts, determine how to distribute their property, including the payment of interest on legacies.

Mr. Justice Paciocco acknowledged that five percent is a high rate in this age of low inflation and investment returns, but the rate for the “rule of convenience,” was not argued in this case, and Mr. Justice Paciocco declined to adjust it. His discussion of the rate is also quite interesting, and I will quote part of it:

[83]      Initially interest amounts varied modestly over time - between 4% and 6% over three centuries - but the rates are now set by statute in England. The rates are regularly reviewed by the Lord Chancellor with the concurrence of the Treasury and are linked to the interest payable on money paid into court. Currently the rate of interest is negligible: 0.1%.

[84]      Conversely, as Rocchi and Kerr explain, at p. 312: “In Ontario, 5% appears to have been the accepted rate, but the cases do not demonstrate any suggestion that the rate is tied to an anticipated rate of return”. Not surprisingly, over the centuries there have been anomalous decisions where judges have applied different rates of interest close to that amount, but judges in these cases tend not to purport to be exercising a case by case consideration. Instead, they appear to have been attempting to define an appropriate general rate at the time: see for e.g. Re Nathanson, 1946 CanLII 104 (ON SC), [1946] O.R. 421 (H.C.).

[85]      Some Canadian cases that have applied a 5% rate appear simply to have been mimicking the English practice of the day, while others tie the rate of interest expressly or by implication to the legal interest rate provided for in s. 3 of the Interest Act, R.S.C., 1985, c. I-15: Lynch’s Estate; and MacIntyre Estate, Re (1989), 92 N.S.R. (2d) 110 (Prob. Ct.). In Merritt Estate, Smily J. commented, at para. 4, that “it is well established that [the rate of interest] should be the legal rate, which is 5%.” Section 3 of the Interest Act  provides:

Whenever any interest is payable by the agreement of parties or by law, and no rate is fixed by the agreement or by law, the rate of interest shall be five per cent per annum.

[86]      It can be seen, then, that the 5% interest rate is not grounded in a uniform or compelling legal basis.  Moreover, a policy case can be made that courts should move away from the 5% rate. Arguably, the current practice of imposing an interest rate that is materially out of line with the market interest rate is not in keeping with the underlying purpose of the “rule of convenience” of ensuring that legatees enjoy the earning potential of a property right that has arisen where enjoyment has been delayed. Perhaps the English example should be followed of using a periodically adjusted but fixed statutory interest rate by analogy for the “rule of convenience”, such as the rates provided for in the prejudgment interest provisions, the postjudgment interest provisions or the rate set under r. 53 of the Rules of Civil Procedure for prejudgment interest on non- pecuniary damages.

[87]      This, however, is not the case for deciding whether such a change should be made. We have not been asked to readjust the rate used under the “rule of convenience,” and we have not been presented with argument on this issue. Even though a 5% interest rate may seem aggressive relative to the current prime rate, given the state of authority and the manner in which this case was presented before us, I see no reason to deviate from the established 5% rate in this case.

In the result, each of Alexander Rivard’s daughters is entitled to $53,000 in interest on her legacy, being two years at 5% per year.

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.

Converting a Petition or Application to Prove a Will into an Action

The Supreme Court Civil Rules provide that a proceeding to prove the validity of a will must be started by either a notice of application, if there is an existing proceeding in which it is appropriate to do so, or by a petition. This is set out in Rule 25-14(4). This is a significant change to the practice. Prior to the changes to the Rules with the coming into force of the Wills, Estates and Succession Act, contested proceedings to prove a will were brought by a notice of civil claim. A proceeding begun by Notice of Civil Claim is referred to as an “Action.” The difference is that an Action has pretrial procedures such as disclosure of documents, and oral examinations for discovery, and ultimately a trial with witnesses testifying in court. In contrast, a notice of application or petition does not have the pretrial disclosure process and the evidence is by way of affidavits.

The changes in the procedure may have significant implications for someone challenging a will, perhaps on the grounds that the will-maker did not have the mental capacity to make a will or was unduly influenced. The person making the claim often will not have as much information as the person seeking to uphold the will, often the named executor. Successful challenges of wills may depend on obtaining pretrial disclosure from the other parties, as well as information from persons who are not part of the lawsuit. Accordingly, the Rule change may tend to work against those challenging a will, including those with meritorious claims.

Fortunately, the Supreme Court Civil Rules allow the application to prove a will to be converted into an Action. Rule 22-1(7)(d) allows the court to convert an application or petition into an action. Rule 25-14 (8) allows the court to give directions about procedure in estate maters and includes such things as ordering examinations for discovery and discovery of documents and how the evidence will be presented.

How difficult is it to persuade the court to convert a proceeding to prove a will into an Action? The criteria were recently considered by the British Columbia Court of Appeal in Kerfoot v. Richter, 2018 BCCA 238. In this case, Mary Richter is claiming that her mother, Bernice Richter’s will dated July 19, 2012 is invalid. In the will, Mary Richter’s brother and sister are each left 45 percent of the residue of their mother’s estate and she is left the other 10 percent. She alleges that her mother did not have capacity to make the will and that her mother was unduly influenced to make the will.

The named executor, Mr. Barry Kerfoot, brought a petition in accordance with the Rules to prove the validity of the will in solemn form. Mary Richter applied to convert the proceeding into an action, and the Supreme Court Judge hearing the application dismissed her application. She appealed to the Court of Appeal.

In allowing the appeal and ordering that the proceeding be converted into an action, Madam Justice Fisher applied the decision in BritishColumbia (Milk Marketing Board) v. Saputo Products Canada G.P. / SaputoProduits Laitiers Canada S.E.N.C., 2017 BCCA 247, which held that a proceeding brought by petition should be converted into an Action if there are disputes of facts or law, unless the party requesting a trial is bound to lose.

Madam Justice Fisher wrote that the judge hearing the application should not weigh the evidence. She wrote at paragraph 27:

[27]       In my view, the Saputo test precludes a judge from weighing evidence. Applying Robertson v.Dhillon, 2015 BCCA 469, this Court confirmed that the test is akin to the test to be applied for summary judgment: whether, on the relevant facts and applicable law, there is a bona fide triable issue. In the context of this case, where there are factual disputes, the chambers judge was to determine whether Mary, as the party requesting the trial, was bound to lose; more particularly whether there was a triable issue with respect to Bernice’s testamentary capacity or the issue of undue influence.

The judge hearing the application may, however, consider affidavit evidence as well as the pleadings in determining whether there is a triable issue. Madam Justice Fisher wrote:

[31]       While a judge is not to weigh evidence, he or she may draw inferences that are strongly supported by undisputed facts. Importantly, a party seeking to establish that there is a triable issue cannot rely on mere allegations but must establish the existence of material issues: Canada (Attorney General) v. Lameman, 2008 SCC 14 at para. 11. It is this latter requirement that precludes a matter from being referred to trial on the basis of mere assertions.

In this case, the Court of Appeal found that Mary Richter had sufficient evidence to establish a trial issue. Madam Justice Fisher wrote:

[34]       I appreciate the chambers judge’s concerns about the weakness of Mary’s evidence, as some of it went no further than mere allegations. However, the fact that Mary had no first-hand knowledge of the events leading up to the making of the impugned will is hardly surprising given the nature of the issues. Proving undue influence is not easy. Section 52 of WESA has shifted the onus of proof to the defender of a will once the person challenging it has shown that the testatrix was in a relationship of dependency with the person alleged to have exerted undue influence, or one in which the potential for domination existed.

[35]       Undue influence may be established through circumstantial evidence. Mary’s pleadings and evidence contain conclusory statements about many of the events leading up to the execution of the impugned will, but they also raise factual issues from which inferences of undue influence could be drawn. These issues relate to Bernice’s advanced age and declining health, her dependence on John and Janet [Mary Richter’s brother and sister] at the relevant times, John and Janet’s advance knowledge of the impugned will, and the marked difference between the impugned will and the prior wills. Mary also provided direct evidence contradicting most of the reasons expressed in the impugned will for disinheriting her.

As I interpret this decision, the party seeking to convert the procedure into an action will generally not be required to have significant evidence (which as noted above, may be difficult for a party challenging the will to obtain without document discovery and examinations for discovery) but must have some basis for demonstrating that there is a triable issue.

This brings me to my criticism of the changes to the Rules when the Wills, Estates and Succession Act came into force. Although a proceeding to prove a will may be relatively easy to convert into an Action, it requires an additional step in the lawsuit, namely the application to court to convert the proceeding. This just adds extra legal expense. It would be preferable if the Rules were changed to allow a proof of a will proceeding to be started by a notice of civil claim.

Quinn Estate

Estate planning for people with assets and connections to both the United States and British Columbia is fraught with potential legal and tax pitfalls. It is important to get tax and legal advice with respect to the implications on both sides of the border. This is illustrated by the recent decision concerning the former NHL coach Pat Quinn in Quinn Estate, 2018 BCSC 365.

Mr. Quinn and his wife Sandra Quinn settled a trust in the United States which dealt with assets in the United States. Mr. Quinn was an American citizen, and Mrs. Quinn had U.S. Green Card, but they lived in British Columbia. Their U.S. lawyer also draft a will for Mr. Quinn dealing with his assets in Canada. The will provided that the residue of his Canadian Estate would “pour over” into a U.S. trust, referred to as the Quinn Family Trust.

The issue in this case was whether the distributive provision of the Canadian will is valid under British Columbia law. The will was signed by Mr. Quinn in the presence of two witness in accordance with the requirements of section 37 of the Wills, Estates and Succession Act. The will itself was formally valid. The difficulty was the “pour over” clause, which I understand is valid in at least some states. The terms of the Quinn Family Trust allowed Mr. and Mrs. Quinn to amend it. Because they could amend the trust, the beneficiaries could be changed without compliance with the requirements of section 37.

Mr. Justice Funt, who heard the application, applied the decision in Kellogg Estate, 2013 BCSC 2292, appeal dismissed as moot 2015 BCCA2013:

[39]         In Kellogg Estate, Justice Gray held a pour-over clause to a revocable, amendable, inter vivos trust to be invalid. As in the case at bar, the inter vivos trust was amended after the execution of the deceased’s will. In Kellogg Estate, the amendment served to remove one of the primary beneficiaries of the trust.

[40]         After a review of the relevant English and Canadian cases, American legislation and cases, and academic commentary, Justice Gray concluded:

[69]      In my view, the fact that the Pour-Over Clause refers to future amendments of the KF Trust and the fact that the KF Trust Indenture was amended by the Amendment to KF Trust following the execution of the Will is determinative.

[70]      The gift cannot “pour over” to be held by the trustee of the KF Trust on the terms which existed at the time the Will was executed, because that trustee is now obliged to follow the terms set out in the Amendment to KF Trust. The gift cannot “pour over” to be held by the trustee on the basis of the Amendment to KF Trust because the effect would be to permit RPK to have effectively amended his Will without complying with the Wills Act [now section 37 of the Wills, Estates and Succession Act].

[71]      Even though there is some formality associated with acknowledging execution of a document before a single witness who is a notary public, the court does not have jurisdiction to weigh the degree of formality. The failure to comply with the Wills Act is fatal.

[72]      The doctrine of “facts of independent significance” has not been recognized in B.C., and applying such a doctrine here would require bypassing the Wills Act.

There was an amendment to the Quinn Family Trust, but it was administrative in nature. Mr. Justice Funt rejected the argument advanced by one of Mr. Quinn’s children that this case could be distinguished on that basis. Mr. Justice Funt held that the problem with the clause was that the Quinn Family Trust could be amended to change the beneficiaries, and it did not matter whether an amendment had been made.

Since the decision in Kellogg Estate, British Columbia law has changed to allow the court to give effect to a document that does not comply with the formal signing and witnessing requirements for a valid will. Section 58 of the Wills, Estates and Succession Act allow the court to give effect to a non-compliant record if the court finds that it represents the “testamentary intentions of a deceased person.”

Can section 58 be applied to save the “pour over’ clause?

Mr. Justice Funt held that it cannot. In this case, the will itself complied with the formal signing and witnessing requirements. It was rather the structure that is inconsistent with the formal requirements of a will, by allowing changes to be made without compliance. He wrote:

[55]         Section 58 is not an independent provision. From its language, “[e]ven though the making, revocation, alteration, or revival of a will does not comply with this Act”, s. 58 is tethered to s. 37. I agree with Ms. Francis, counsel for Sandra Quinn in her personal capacity, in her written submission:

44. The policy reason behind section 58 is to enable the Courts to step in where a person has taken real steps to make a will, but the formalities have fallen short. It does not exist to enable the court to bless structures that circumvent the formalities all together, which is what a pour over clause to an amendable trust does. If the policy behind section 58 were to do away with testamentary formalities, then our WESA would not contain testamentary formalities. Rather, what section 58 reflects is a policy to ensure that a document that reflects the deliberate, fixed and final intention of a Deceased person is not set aside on the basis of failure to comply with a formality.

[56]         Section 58’s scope is reflected in s. 59(1). Section 59(1) enables a will to be rectified where the will “fails to carry-out a will-maker’s intentions” in specified circumstances. Section 59 does not allow rectification under any circumstances. If s. 58 were to be given an overly broad interpretation, s. 59(1) would have no purpose. Rectification could occur under s. 58 based on a simple assertion of testamentary intentions. Section 58 is a curative provision and not an independent provision designed to change fundamental principles of the law of wills.

[57]         In short, the statutory context shows that the purpose of s. 58 of WESA is to permit the Court to address circumstances of “formal invalidity” where the will-maker’s “deliberate or fixed and final intention” as to the disposal of his or her property on death is found. [Quotation from Hadley Estate (Re), 2017 BCCA 311 omitted.

 [58]         In the case at bar, the deficiency is not one of proper execution. All parties agree that the Will was properly executed. 

…. 

[62]         The Quinn Family Trust was a revocable, amendable, inter vivos trust with the deceased being one of the two settlors and trustees. Although, as may be seen from clause 6.04, the Quinn Family Trust was part of an estate plan functioning during the deceased’s life time, it was designed to be flexible, and left matters in flux. For example, shortly before the deceased’s death, counsel had sent the November 21, 2014 letter addressed to the deceased and Sandra Quinn, which Sandra Quinn had the opportunity to read, and which recommended the assets be distributed “now”. The distribution of all of the Quinn Family Trust assets would have had the effect of a revocation.

The result is that the Canadian assets will be distributed to the persons entitled under on an intestacy.

The case does not deal directly with the taxation aspects of Mr. Quinn’s estate plan, but Mr. Justice Funt quoted from a tax opinion letter, which indicated that the structure could result in a significant tax burden to the Quinn family by triggering taxes in Canada that would not be offset by credits in the United States. This highlights the need to get specialized tax advice concerning the implications of a plan in both jurisdictions.