Committeeships

“Committeeship” is the legal term we use in British Columbia when the court appoints a guardian to make decisions for an adult who cannot manage himself or his finances. In other places this is called—logically enough—“guardianships.” In some places the term is “conservatorship.”

Whatever term is used, if someone through illness or accident is unable to make their own decisions, it may be necessary for another to make decisions for them. In British Columbia if a family member or friend is mentally incapable of making decisions, then you can apply to the Supreme Court of British Columbia for an order appointing you as that person’s committee.

The requirements are set out in the Patients Property Act, which unfortunately is somewhat dated (thus the words “committee” and “committeeship”). You apply to court by a petition supported by affidavit evidence, including the affidavits of two medical practitioners stating their opinions that the person (referred to in the Act as the “patient”) is incapable of managing himself or his affairs. You also need to set out the person’s next of kin and financial circumstances in an affidavit for the court.

You usually need to serve the person with the petition and the affidavits before the application is heard. This gives him the opportunity to contest the applications. If there is evidence that serving him with the petition will be injurious to his health, you can apply to court to dispense with the requirement that you serve the person.

You also need to provide the Public Guardian and Trustee of British Columbia notice of the application and copies of the petition and supporting affidavits. The office of the Public Guardian and Trustee will then provide you and the court with a letter setting out its position on the application.

The Patients Property Act does not say who else you need to serve before the court hears your application. It says that the court may direct you to give notice to others. In practice, you should either obtain consents to your appointment as committee from anyone who is a close family member of the person, or arrange for them to serve them with the petition and affidavits. For example, if you are applying to be appointed committee of your mother, and she has a spouse, and two other children, you may ask them for consents to your appointment, or if they won’t consent, serve them with the application.

If the person had signed a nomination of committee when they had capacity to do so and which met the formal requirements for making a valid will in B.C., the court must appoint the nominee if the nominee is willing to act unless there is good and sufficient reason to refuse to appoint the nominee.

If the Supreme Court Judge or Master hearing the application is satisfied that the person is incapable of managing himself and his affairs, and that you are the appropriate person to be appointed committee, the court will grant an order declaring that the person is incapable of managing himself and his affairs, and appointing you as committee of his person and his estate.

I should note that it is possible to be appointed as committee of the person only (which gives the committee authority over health care and personal decisions) or of the estate only (which gives the person authority over property and finances). Often the same person is appointed as committee for both, but sometimes these functions are separated with different people appointed for each.

In some cases you may be required to arrange to be bonded before you can act as committee of the person’s estate. Often the Public Guardian and Trustee will suggest that instead of a bond, restrictions be placed on your handling of real estate and investments. For example, the court order could provide that you cannot spend the person’s capital without the consent of the Public Guardian and Trustee or of the court. You could use the patient’s income for the patient, and keep the capital invested.

After you have been appointed a committee, you must keep complete records of your handling of the person’s finances, and you will be required from time to time to provide the office of the Public Guardian and Trustee with your accounts. Keep all receipts and other records.

Is it always necessary for a committeeship when someone becomes incapable of managing their affairs? No. This process can often be avoided by advance planning. If the person made an enduring power of attorney while he or she was capable, the named attorney may use the power of attorney to look after the person’s property and finances (subject to any restrictions in the power of attorney document). Similarly, if the person made a representation agreement, the representative may make health care and personal care decisions for the person who is now incapable of making his own decisions.

I often get telephone calls from people who say something to the effect of “my mother’s doctor says I need power of attorney over her.” In some cases, the mother may still have sufficient mental capacity to make a power of attorney. But more often than not, by the time her physician says that another family member needs one, it is too late for her to make one. In those circumstances, a committeeship is necessary.

Finally, I should note that new legislation, Adult Guardianship and Planning Statutes Amendment Act, 2007 has been passed by the British Columbia Legislative Assembly to repeal the Patients Property Act and replace it with new legislation. Unfortunately, the government has not brought the new legislation into effect, and I don’t know when, if ever, it will be implemented. If it is, “committees” will be replaced with “adult guardians,” and “committeeships” with “adult guardianships.”

Wilson v. Lougheed

In a recent decision, Wilson v. Lougheed, 2010 BCSC 1868, Madam Justice Ballance varied the will of Norma Yvonne Lougheed to provide Mrs. Lougheed’s daughter, Kelly Wilson, $5.5 million, out of an estate of about $19.5 million. The main beneficiary of Mrs. Lougheed’s will was her husband William Lougheed.


This case was decided pursuant to the Wills Variation Act in British Columbia, which provides that on application by a child or spouse of a deceased person, the Supreme Court of British Columbia may vary the will if it finds that adequate provision has not been made for the child or spouse. The court may then award such provision as the court considers “adequate, just and equitable in the circumstances.”

Norma Lougheed and William Lougheed were married for 35 years, when Norma Lougheed died on May 24, 2007. Kelly Wilson was her only child from a previous marriage. William Lougheed, who also had four children from a previous marriage, adopted Ms. Wilson.

William Lougheed was a very successful real estate developer. As a result Mr. and Mrs. Lougheed lived a privileged lifestyle. They were generous with their daughter and her family, assisting her in acquiring real estate, through gifts and loans, and paid for private schools for her two children. Mr. Lougheed also provided her with substantial investments through a holding company, which was worth approximately $860,000 at Norma Lougheed’s death.

In her will made in March, 1989, Norma Lougheed left her daughter cars, boats, bank accounts and four parcels of real estate, with the rest of her estate going to William Lougheed if he survived her. But before her death, Mrs. Lougheed sold all of the real estate she had left to her daughter in the will. The result was that under the will, Kelly Wilson’s most significant gift was Jewelry worth approximately $273,000, and her share of the estate would be less than 2%.

Not all of Norma Lougheed’s assets passed through her estate. Her half-interest in jointly owned assets with Mr. Lougheed that passed to him by right-of-survivorship was worth over $6,000,000. Kelly Wilson was entitled to her mother’s Registered Income Funds, which were worth about $420,000.

The court found that Kelly Wilson had a close relationship with her mother, and until her mother’s death, with her father, William Lougheed. After Norma Lougheed’s death, William Lougheed became angry Kelly Wilson, and they became estranged.

At the time of her mother’s death, Kelly Wilson and her husband Blair Wilson were having financial difficulties as a result of a failed restaurant business. They had significant debts, and had been depleting their savings. Madam Justice Ballance found that the total net value of Kelly Wilson’s assets was just over $1.2 million.

William Lougheed’s net worth, excluding his share of his wife’s estate, but including the joint assets, was approximately $32 million.

In reaching her decision, Madam Justice Ballance considered the following factors as relevant considerations to a parent’s moral obligations to an adult child:

• relationship between the testator and claimant, including abandonment, neglect and estrangement by one or the other;

• size of the estate;

• contributions by the claimant;

• reasonably held expectations of the claimant;

• standard of living of the testator and claimant;

• gifts and benefits made by the testator outside the will;

• testator’s reasons for disinheriting;

• financial need and other personal circumstances, including disability, of the claimant;

• misconduct or poor character of the claimant;

• competing claimants and other beneficiaries:

In contrast to other recent court decisions, Madam Justice Ballance rejected the view that the court may consider what the claimant would receive under the intestate succession laws if the deceased had died without a will. (See my previous posts here on this issue).

The award in this case reflected the large size of the estate, and Kelly Wilson’s legitimate expectations based on her mother’s history of treating her generously. Madam Justice Ballance wrote:

[357] Moral obligations are independent of a claimant’s financial need. The standard of living a claimant ought to have had or which he or she has become accustomed as facilitated by the testator, may influence the degree of a testator’s moral obligation: Re Berger, [1978] 2 E.T.R. 275 (B.C.S.C.); Mordo v. Nitting, 2006 BCSC 1761 [Mordo]; Walker v. McDermid, [1931] S.C.R. 94; Marsh v. Marsh (Estate), 19 E.T.R. (2d) 184, [1997] B.C.J. No. 1286 [Marsh]. The standard of living and relative financial situation of each person to whom the testator owed a moral obligation are relevant when considering their competing moral claims: Mordo. The standard of living peculiar to the testator may also play a role in determining what constitutes adequate provision: Sawchuk v. MacKenzie Estate, 2000 BCCA 10 [Sawchuk].

[358] It is frequently the case that a claimant’s expectation will be linked to his or her standard of living and the standard of living of the testator, as well as to an appreciation of the nature of any competing interests at play. A testator who has given an assured or implied expectation to an adult child arising from the magnitude of the estate and/or from the testator’s treatment of the child may bring forth or heighten a moral duty: Clucas; Marsh; Saugestad v. Saugestad, 2008 BCCA 38; DeLeeuw v. DeLeeuw, 2003 BCSC 1472.

[359] Throughout their 35-year marriage, William showered Norma with expensive jewellery and other gifts. They drove luxury brand vehicles such as Porsche, Mercedes and Rolls Royce, and owned valuable yachts which they had towed to regattas on the eastern seaboard and raced using hired crews. The palatial custom homes that the Lougheeds constructed over the years were of the finest quality and decorated with the assistance of Norma’s professional designer. Over the years, they owned various vacation properties, including in Hawaii, Palm Desert and on Bowen Island which was purchased, in part, with the proceeds from the sale of Norma’s pre-marriage home. Although Norma was occasionally thrifty over small things, by and large she and William lived in lavish style.

[360] From the time that she married William, Norma looked out for her daughter’s financial prosperity. Although it did not match the pampering that the Lougheeds permitted for themselves, Norma ensured that Kelly enjoyed a financially carefree and privileged lifestyle as a young girl and into her adulthood. Providing for Kelly was considered by the Lougheeds as a natural thing to do given their affluence and love for her.

[361] On account of her parents’ economic means and largesse, Kelly was given vehicles, the use of apartments, her own horse and was able to attend private school, a European finishing school, and other post-secondary institutions, without cost to herself.

[362] Upon Kelly’s marriage, Norma’s benevolence expanded to include Blair and the Wilson children. She periodically helped defray the cost of Kelly’s horseback riding, paid for a membership at the North Shore Winter Club, and covered the initial membership fee of approximately $19,440 for the Wilsons to join an exclusive family recreational club. Kelly was also treated to an occasional shopping spree. The Lougheeds paid for Kelly and Blair to accompany them on holidays abroad, and arranged for the Wilson family to vacation at the Lougheeds’ recreational properties.

[363] Although the gifts and other lifestyle comforts were often paid for using the Lougheeds’ commingled funds or funds out of a Norbill account, I find that as between Norma and William, it was typically her idea to confer such benefits and that she usually funded them. William was not always made privy to the details and did not care to be. He was content to allow Norma to do as she pleased.

[364] Kelly was grateful for her parents’ generosity. She was not a grasping or spoiled daughter, and did not have an inflated sense of entitlement. It was not Kelly’s habit to ask her parents directly for sums of money or other material benefits.
….

[368] Through their actions, Norma and William instilled in Kelly their views about the value of money. Norma encouraged Kelly to look to her for financial assistance and security, and to take comfort in knowing that she would ensure that Kelly would not have to want financially. At no time did Norma tell Kelly or even hint that the financial security would effectively dry up on Norma’s death. Kelly’s upbringing by her generous parents and especially her beneficent mother, coupled with the abundance of Norma’s estate and the independent wealth of her father who did not intend to provide for Kelly in his will, could not help but implicitly raise a legitimate expectation on Kelly’s part that her mother would continue to ensure her worry-free financial well-being in death as it had been in life. These factors also support the companion expectation that Kelly would receive a greater share of her mother’s estate than was left to her under the 1989 Will.

[369] In keeping with her discomfort in speaking about death or dying, Norma did not discuss the contents of her 1989 Will with Kelly. In my view, Kelly had every reason to believe that her mother would provide for her on her death in a manner consistent with her pattern of ensuring a lifestyle of financial security and privilege while she was alive. In this case, Kelly’s bona fide expectations significantly strengthen the moral duty that Norma owed to her.

Madam Justice Ballance further found that there was nothing in Kelly Wilson’s conduct towards her mother to disentitle her to a larger share of the estate, and made the $5.5 million award.

Seniors Outreach Workshops

Seniors Outreach & Resource Centre are presenting a series of weekly workshops from January 11 through February 15, 2011 in or near Kelowna, B.C.

I will be speaking at Trinity Baptist  Church, 1905 Springfield Road, Kelowna,  on Tuesday, February 8, from 10:00 am to noon. My topic is Powers of Attorney, Representation Agreements and Committeeships (Adult Guardianship).

The complete schedule of workshops is as follows:

Jan. 11, 2011
Topic: Housing Options for Seniors: Independent Market Housing,
Subsidized/Low-Income Housing, Supportive Housing, Assisted
Living and Residential Care
Presented by Seniors Outreach and Resource Centre Interior Health
Time and Place
10:00am to Noon
Trinity Baptist Church
1905 Springfield Road

Jan. 17, 2011
Topic: Your Rights as a Tenant:
The Residential Tenancy Act and How it Protects Renters
Presented by TRAC – Tenant Resource & Advisory Centre
OARS—Okanagan Advocacy and Resource Society
First location—same content as January 18th workshop
Time and Place
10:00am to Noon
Westbank Manor,
(Lions Housing)
3715 Gellatly Road

Jan. 18, 2011
Topic: Your Rights as a Tenant:
The Residential Tenancy Act and How it Protects Renters
Presented by TRAC – Tenant Resource & Advisory Centre
OARS—Okanagan Advocacy and Resource Society
Second location—same content as January 17th workshop
Time and Place
10:00am to Noon
Rutland Senior Centre,
765 Dodd Road

Jan. 25, 2011
Topic: Financial Benefits and Resources: Options and Eligibility
Presented by Seniors Outreach and Resource Centre Service Canada
Service BC Veterans Affairs Credit Counselling Society
Time and Place10:00am to Noon
Trinity Baptist Church
1905 Springfield Road

Feb. 1 , 2011
Topic: Wills and Estates Matters: Planning Ahead
Presented by Dylan J. Switzer, FH&P Lawyers
Time and Place
10:00am to Noon
Trinity Baptist Church
1905 Springfield Road

Feb. 8, 2011
Topic: Representation Agreements, Powers of Attorney and
Committeeships: Who Will Act on Your Behalf?
Presented by Stan Rule, Sabey Rule LLP
Time and Place
10:00am to Noon
Trinity Baptist Church
1905 Springfield Road

Feb. 15 , 2011
Topic: Elder Abuse and Neglect: How are You Protected?
Presented by Interior Health
Public Guardian and Trustee
Time and Place
10:00am to Noon
Trinity Baptist Church
1905 Springfield Road

For more information, you may contact Seniors Outreach:
Phone: (250) 861-6180
Fax: (250) 861-6153
Email: seniors2@telus.net
http://www.seniorsoutreach.ca/

The Effect of Offers to Settle on Court Cost Awards in British Columbia

The new British Columbia Supreme Court Civil Rules, which came into effect on July 1, 2010, includes changes to the rules respecting the effect on offers to settle on costs orders.


In British Columbia, the usual rule is that the successful party in a lawsuit is entitled to “costs” from the unsuccessful party. These costs do not usually cover all of the successful party’s legal expense, but cover a portion of it. The court has discretion over whether to award costs.

The Supreme Court Civil Rules allow a judge to consider offers to settle when making costs orders. The offers to settle must never be put before the court before the judge makes a decision on the substantive issues. But once the judge has made a decision, the parties may show the judge any offers to settle made in accordance with the rules.

The judge can take offers into consideration on costs in a number of ways. If the plaintiff has been successful at trial, but could have received as good or a better result if the plaintiff had accepted the defendant’s offer, the court may deprive the successful plaintiff of costs in respect of those steps in the lawsuit taken after the offer. If the claim is dismissed, the court may award the defendant double costs in respect of those steps taken after the offer. On the other hand, if the plaintiff makes and offer, and enjoys greater success than she would have if the defendant had accepted the offer, the court may award the plaintiff double costs from the time she made the offer.

The rules respecting offers to settle have been amended a few times over the last decade. At times they have been rigid.

The current Rule 9-1 is quite flexible. Rule 9-1 (5) and (6) provide as follows:

Cost options

(5) In a proceeding in which an offer to settle has been made, the court may do one or more of the following:

(a) deprive a party of any or all of the costs, including any or all of the disbursements, to which the party would otherwise be entitled in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(b) award double costs of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle;

(c) award to a party, in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle, costs to which the party would have been entitled had the offer not been made;

(d) if the offer was made by a defendant and the judgment awarded to the plaintiff was no greater than the amount of the offer to settle, award to the defendant the defendant's costs in respect of all or some of the steps taken in the proceeding after the date of delivery or service of the offer to settle.

[am. B.C. Reg. 119/2010, Sch. A, s. 21.]

Considerations of court

(6) In making an order under subrule (5), the court may consider the following:

(a) whether the offer to settle was one that ought reasonably to have been accepted, either on the date that the offer to settle was delivered or served or on any later date;

(b) the relationship between the terms of settlement offered and the final judgment of the court;

(c) the relative financial circumstances of the parties;

(d) any other factor the court considers appropriate.

In order to for the court to consider an offer to settle when awarding costs, the offer must be in writing, delivered to all of the other parties of record, and the offer must say that the party making the offer “reserves the right to bring this offer to the attention of the court for consideration in relation to costs after the court has pronounced judgment on all other issues in this proceeding."

B.C. Law Institute Consultation Paper on Proposals for Unfair Contracts Relief

The British Columbia Law Institute published its Consultation Paper on Proposals for Unfair Contracts Relief today.

The B.C. Law Institute is seeking public comments on the proposals. According to today's press release:

"Contract law has traditionally developed case by case in the courts," noted Prof. Joost Blom, Q.C., chair of the BCLI's Unfair Contracts Relief Project Committee. "This consultation paper gives the public the opportunity to participate in policy development on some important longstanding issues in the law of contracts."

The consultation paper contains 46 proposals designed to modernize and clarify how the law of contracts deals with unfairness. Its leading proposal is for British Columbia to enact a Contract Fairness Act. This act would consolidate the major concepts that have evolved in contract law to guard against unfairness.

The consultation paper proposes clarifying the tests for unconscionability, duress, and undue influence and integrating how those concepts operate at the level of procedure and remedy. It proposes establishing an implied duty of good faith in the performance of contracts. And it proposes reforms aimed at modernizing the scope of and remedies available for misrepresentation.

If you wish to comment on the Report, you may provide comments as follows:

by mail:

British Columbia Law Institute

1822 East Mall
University of British Columbia
Vancouver, BC V6T 1Z1

Attention: Kevin Zakreski

by fax: (604) 822‐0144, or

by email: ucr@bcli.org

For comments to be considered before the British Columbia Law Institute prepares its final report, they must be received no later than May 31, 2011.

Parties to a Wills Variation Act Claim

In British Columbia, a spouse or child of a deceased person may apply to court to vary his or her spouse's or parent's will if adequate provision has not been made for the spouse or child. The application is made under the Wills Variation Act.

I have come across a number of Wills Variation Act claims in which the plaintiff has not named all of the proper parties as defendants in the lawsuit.

The proper parties to a Wills Variation Act suit are as set out in Rule 21-6 (2) of the Supreme Court Civil Rules:

Parties

(2) In a proceeding referred to in subrule (1),

(a) the following persons must be parties to the proceeding:
(i) the surviving spouse and children of the testator;
(ii) all beneficiaries under the testator's will whose interest may be affected by the order sought;
(iii) the executor of the will, and

(b) the court may order that any other person be joined as a party.

In a few cases, I have seen the plaintiff name only the executor. More frequently, I have seen the plaintiff name the executor and the beneficiaries, but not a spouse or child who has also been excluded from the will.

The reason it is important to name all of the beneficiaries in a Wills Variation Act claim is that it is the beneficiaries rather than the executor who has an interest in defending against the claim. The executor is supposed to remain neutral in a Wills Variation Act lawsuit.

A spouse or children who have been excluded also have an interest in the lawsuit, because they may advance their own Wills Variation Act claims in the suit. Once one person has brought a Wills Variation Act claim, it has been brought for all persons who are entitled to make a under the Wills Variation Act.

Werbenuk v. Werbenuk Estate

My partner Keith Sabey had the privilege of representing Virginia Derksen, one of the successful parties in the case of Werbenuk v. Werbenuk Estate, 2010 BCSC 1678, which is a Supreme Court of British Columbia judgment released on November 29, 2010.

Mrs. Derksen is the eldest of William Werbenuk’s five children. When she was a young child, her parent’s marriage broke down, and her father abandoned her. He had no contact with her between from when she was 4 until she was 14. He did not obey a court order requiring him to pay child support for her. When she was 15, she approached him and asked for $50 to enter a pageant. He refused.

Mr. Werbenuk remarried and had three daughters, Carrie Werbenuk, Lorraine Werbenuk and Patricia Skwarok, and a son, Randall Werbenuk, with his second wife. Mrs. Derksen wanted to have a relationship with her siblings, but her father discouraged them.

Mrs. Derksen continued in later years to try to have a relationship with her father, and eventually was able to establish some contact with him.

William Werbenuk similarly mistreated his other three daughters. Mr. Justice Wong found the following facts in his reasons for judgment:

[12] The evidence of all of the daughters indicate that their father was a hard and rigid man who ruled his family, and especially the women, with an iron fist. He was a racist whose will and personality dominated his family. He was self absorbed and ordered his wife and daughters about as if they were brought into being merely to satisfy his needs, without regard to their emotional well being. Their evidence provides stark testament to the fact that the father, on frequent occasions, resorted to and engaged in harsh and brutal corporal and other punishments. He ruled those who lived with him and those who incurred his wrath by predictable resort to violence and the threat of violence. The father emotionally abused his wife and daughters on a regular basis and engaged in regular assaults upon their bodies as a form of punishment and, ultimately, as a form of ruling by terror.

[13] The most demeaning form of punishment engaged in by the father on a regular basis was his direction to all of his children, with the exception of Randall, to wash his feet.

When Mr. Werbenuk made his will on March 8, 2006, he left his entire estate to his son, Randall Werbenuk. After William Werbenuk died, Randall Werbenuk as the executor of his father’s will filled an inventory of the estate assets indicating that the gross value of the estate was approximately $434,000. But Mr. Justice Wong found that Randall Werbenuk did not include significant estate assets in the inventory, and the estate is worth more.

William Werbenuk’s three daughters from his second marriage brought a claim under the Wills Variation Act, asking the court to vary their father’s will on the basis that it did not make adequate provision for them. They requested the court to vary the will to make a provision that was just, adequate and equitable.

Because Mrs. Derksen was also entitled to apply, they named her as a defendant in the suit, and she retained Mr. Sabey to represent her.

Mr. Justice Wong varied the will. He held that William Werbenuk had a moral obligation to each of his daughters, which he, Mr. Werbenuk, failed to meet. He found that the three daughters from William Werbenuk’s second marriage had a closer relationship than Mrs. Derksen with their father. He also found that they had greater financial needs. Mr. Justice Wong varied the will to provide Carrie Werbenuk with 23 percent of the estate, Lorraine Werbenuk with 22 percent of the estate, Patricia Skwarok with 20 percent of the estate, Randall Werbenuk with 20 percent of the estate, and Virginia Derksen 15 percent of the estate.

One of the things I find most interesting about this case is the reaction. Very few Wills Variation Act cases get reported in the press, but this case has been covered by media across Canada, including the Vancouver Sun, The Globe and Mail, and the CBC. This afternoon, Keith Sabey was interviewed for a radio show in Toronto. The interviewer seemed shocked that the court could vary the will. Indeed, from reading some comments in the web versions of the press, many people find this decision surprising.

The decision is consistent with the legislation, which expressly provides that a court may vary a will if the maker has not made adequate provision for his or her spouse or children. The facts of this case are remarkable in the egregious conduct by William Werbenuk toward his daughters. But the result is consistent with the principles the courts have developed over decades since the legislation, then called the Testator's Family Maintenance Act, was passed by the British Columbia Legislative Assembly in 1920.

The court will view the will from the perspective of a judicious father, in accordance with contemporary standards. In this case, Mr. Justice Wong found that William Werbenuk fell short of that standard, and the court varied the will substantially. In other cases, the courts have refused to vary wills where parents had rational and valid reasons for leaving children little, or even disinheriting them.

In fairness to the radio interviewer in Toronto, Ontario's legislation is different, each province having its own laws governing wills. But it is interesting to see how surprised some of the media are by the decision.

I am pleased to see the interest in the area of law we practice, and the debate this decision has generated.