WEL Newsletter, Vol.7 No.9, December 2017

WEL Partners provides litigation, mediation and dispute resolution to clients throughout Ontario:

* Albert Oosterhoff, Professor Emeritus Western University, Counsel to WEL consults on matters within his areas of expertise, providing opinions concerning Wills, Estates, Trusts and related Property matters.

Please Enjoy,

Kimberly A. Whaley & Lionel J. Tupman

WEL Partners

CLICK HERE TO VIEW WEL FIRM DIRECTORY

PART I: WEL NEWS

1. CBA NOVA SCOTIA, NOVEMBER 30, - DECEMBER 1, 2017

Kimberly Whaley and Professor Albert Oosterhoff presented at the CBA, Halifax, Nova Scotia Seminar on December 1, 2017, on "Predatory Marriages".

Link to presentation

2. TORONTO PUBLIC LIBRARY, LEASIDE, DECEMBER 6, 2017

Andrea McEwan, Amanda Bettencourt, and Alex Swabuk presented at the Toronto Public Library, Leaside Branch, on Predatory Marriages and POA Abuse on December 6, 2017.

3. LAW TIMES, NOVEMBER 27, 2017

Lionel Tupman was quoted in the Law Times Article "Need to retain original Wills emphasized", Issue November 27, 2017.

Link to article

4. HISTROP, ESTATE PLANNING PRECEDENTS: A SOLICITOR'S MANUAL, NOVEMBER, 2017

The Myth of A Hierarchy Of Decisional Capacity: A Medico-Legal Perspective written by Kimberly A. Whaley, Kenneth I. Shulman, and Kerri L. Crawford, was reproduced in the November 2017 Issue of Histrop Estate Planning Precedents: A Solicitor's Manual, (2017- Rel.6), 6.1-777.

5. HISTROP, ESTATE PLANNING PRECEDENTS: A SOLICITOR'S MANUAL, NOVEMBER, 2017

The Honour of the Crown and Indian Succession and Inheritance Law in Canada: Fiduciary Protection or Creeping Re-Appropriation of Aboriginal Property written by Arieh Bloom and Lionel Tupman, was reproduced in the November 2017 Issue of Histrop Estate Planning Precedents, (2017 - Rel.5), 6.1-741.

6, FAIR CANADA AND THE CANADIAN CENTRE ON ELDER LAW

Fair Canada and the Canadian Centre for Elder Law have released the joint "Report on Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence and Diminished Mental Capacity", which was undertaken as a result of funding from the Law Foundation of Ontario Access to Justice Fund. Kimberly Whaley and Andrea McEwan worked on this consultation with Fair Canada and The Canadian Centre for Elder Law.

Link to press release

7. ARIEH BLOOM AND LIONEL TUPMAN PUBLISHED IN KEY DEVELOPMENTS IN ESTATES AND TRUSTS LAW IN ONTARIO

Arieh Bloom and Lionel Tupman's article " Unequal Treatment Aboriginal Estate and Inheritance Law Under the Indian Act: The Federal Paternalism Continues" has been p ublished in Thomson Reuters' "Key Developments in Estates and Trusts Law in Ontario".

PART II: LAW REVIEW

(i) DOES AN UNIDENTIFIED INTERPRETER EQUAL SUSPICIOUS CIRCUMSTANCES? BHALLA ESTATE

2017 BCSC 1867 (CanLII), http://canlii.ca/t/h6qkw

by Kimberly Whaley

In Bhalla Estate [1] , the British Columbia Supreme Court considered the issue of suspicious circumstances surrounding the execution of a Will. The Will in question was prepared with the assistance of an unidentified interpreter. The testatrix' daughter ( the executrix) sought an Order granting probate of the Will in question. The Will left the entire Canadian estate to the deceased's grandson (also the executrix' son) who was living with the testatrix/deceased at the time the Will was executed. The deceased's other children other than the executrix, opposed the application.

Background

The testatrix, who did not speak English and could not read or write in any language, had three daughters and several grandchildren at the time of her death. Her Will was prepared with the assistance of a solicitor, who had a longstanding relationship with her family. There was evidence indicating that the testatrix had enlisted the assistance of a family member or friend as an interpreter. The Will was duly executed and witnessed.

The solicitor's notes with respect to the transaction were very limited, as was his recollection. While he was absolutely certain that there was an interpreter and that he took and confirmed instructions and later had the Will signed by the testator, he was uncertain about the identity of the interpreter. He believed it was one of the testator's daughters, Malkit, but Malkit denied this. The solicitor testified that he had no doubt that the testator understood the contents of the Will and he had no knowledge of any undue influence.

In his affidavit, the grandson who received the entirety of the deceased's estate indicated that he had no knowledge of the contents of the Will. He also testified that at the time that the Will was purportedly executed, his mother (the executrix) lived abroad and had limited contact with the deceased. The executrix did not provide any direct evidence on this issue.

The executrix argued that the Will was properly executed and witnessed and relied upon the resulting rebuttable presumptions of knowledge and approval of the Will and of testamentary capacity. She argued there were no suspicious circumstances to rebut those presumptions.

The Respondents argued that the absence of evidence from the unidentified interpreter indicates that proper execution had not been established. Furthermore, the lack of information about the interpreter and the exclusion of the daughters from the estate, and the limited notes and recollection of the solicitor, created suspicious circumstances that rebutted the presumptions.

Analysis

Justice Betton noted that, although the propounder of the Will has the onus to prove proper execution, knowledge, approval and testamentary capacity, the propounder is aided by a rebuttable presumption. Where, however, suspicious circumstances are present, that presumption is spent, and the onus shifts back to the propounder.

After concluding that the Will was duly executed and complied with the formal requirements, Justice Betton turned to the issue of suspicious circumstances.

The Respondents' assertions of suspicious circumstances stemmed from the fact that at the time the Will was prepared, the testatrix lived with the grandson and may have been unduly influenced by him or his mother.

With respect to suspicious circumstances, Justice Betton noted, in agreement, the following statement: "[it] is not sufficient that circumstances create a general miasma of suspicion that something unsavoury may have occurred." [2]

Justice Betton ultimately found the Respondents' statements to be speculative and unsupported by evidence. There was no indication or evidence before the Court of undue influence or that the testator was in a particularly vulnerable state at the time that might raise any suspicion. The unequal division of the estate had been properly explained.

The lack of information about the interpreter and unequal division of the estate was not enough to create suspicious circumstances to rebut the presumptions.

Takeaways

Suspicious circumstances involve more than mere speculation that something unsavoury may have taken place. Such circumstances must be proven on a balance of probabilities. Lack of information about the interpreter, unequal division of property (which was explained) and unsubstantiated beliefs was not sufficient to create suspicious circumstances.

[1 ] 2017 BCSC 1867

[2] Justice Wilson in Watson v. Watson & Yelich, 2004 BCSC 1724, at para 64

(ii) "UNEDUCATED" AND "UNSOPHISTICATED" TESTATOR NOT ENOUGH TO PROVE LACK OF TESTAMENTARY CAPACITY OR UNDUE INFLUENCE: KARPINSKI V LOZINSKI

2017 SKQB 278 (CanLII), http://canlii.ca/t/h6hvd

by Kimberly Whaley and Alex Swabuck

In this Saskatchewan case, the testator died with a formally executed Will that was prepared with the assistance of a lawyer. The Will left his entire estate to his sister and her husband and named them as executors. The testator had also appointed the executors as his attorneys under a Power of Attorney.

After the testator's death, the brother of the deceased brought an application challenging the validity of the Will. His arguments included that the deceased had been subjected to undue influence by the beneficiaries, and that he lacked testamentary capacity.

Factual Background

The deceased and his siblings grew up on their parents' farm. The deceased operated the farm alongside his parents and long after their death. His estate included land that was transferred to him by his parents as well as property that he acquired after their death.

The applicant brother and the deceased were not close. The applicant described the deceased as a simple, "uneducated and unsophisticated" man who was looked after by his parents until their death.

The brother's arguments raised issues of undue influence and testamentary capacity, based mainly on his opinion regarding the deceased's capabilities and assertions made by the deceased years after the Will was executed.

Analysis

The Chambers Judge was to determine whether there was a genuine issue for trial. If so, then the Judge could direct the matter to a hearing.

The nature of the allegations challenging testamentary capacity and alleging undue influence are to be considered in regard to a contextual timeframe. For testamentary capacity, the timeframe is at the time the Will was signed. With respect to undue influence, a broader timeframe may be taken into consideration.

In determining undue influence, a Court may take into account the level of the beneficiary's involvement in arranging for, making, and keeping the Will. The Court may also consider events post-execution. However, the Chambers Judge noted that the investigation does not extend to influence that occurs many years after the execution of the Will.

In this case, the notes of the lawyer who prepared the Will were found to be germane to the issues of undue influence and testamentary capacity. The notes confirmed that the lawyer received instructions directly from the testator with respect to a Will and Power of Attorney. The lawyer's account was paid by the testator. Further, the Power of Attorney which was prepared by the lawyer contained a certificate of independent legal advice and witness, part of which stated that in the lawyer's opinion, the testator had the capacity to understand the nature and effect of an Enduring Power of Attorney at the time of execution. The Will was signed at the same time.

Testamentary Capacity

The evidence regarding testamentary capacity at the time the Will was executed came from the solicitor's file. It showed that the testator met with the solicitor and provided instructions regarding a Will and Power of Attorney. There was nothing on file to suggest that the testator lacked capacity. In the circumstances, it was incumbent upon the applicant to show that there was a genuine issue for trial.

The applicant argued that the testator's lack of education and sophistication; the repeated assertions of the testator that the estate would be divided amongst all nieces and nephews (all of which were made years after the Will was signed); the failure of the respondent to correct the testator when those assertions were made; and the testator's inability to retrieve the Will from the respondent's safety box for review; raised a genuine issue. No medical or expert evidence was filed with respect to the testator's mental capacity.

The Court found that none of the issues raised created suspicious circumstances requiring a hearing of the matter.

Undue Influence

The Chambers Judge relied on the definition of undue influence outlined in Thorsteinson [1] as follows: "that which overbears the will of the person influenced so that in truth what he or she does is not his or her own act." Assertions of undue influence must be substantiated with evidence.

The Court in Thorsteinson also set out the underlying basis upon which undue influence may be invoked. The first basis is "actual influence" involving a person expressly applying influence upon the donee. The second is a recognition that persons standing in certain relationships with another will be presumed to be in relationships of influence over the other until the contrary is proven: "presumed undue influence".

The applicant argued that the respondents should be presumed to be in a relationship of influence over the testator.

In response, the respondent testified that her brother provided her with a copy of the Power of Attorney some-time after it was signed and she did not take any action on it until 2015. She also stated that she lived in Saskatoon at the time the Will was executed and had no involvement in any arrangements or discussions or consultations with the lawyer who prepared same. She did not discuss or influence her brother with respect to the contents of the Will.

The Chambers Judge concluded that there was no evidence to support that a relationship of influence existed and dismissed the application with costs payable to the respondents.

Takeaways

Undue influence and testamentary capacity must be considered within a contextual time frame. With respect to undue influence, the investigation includes the nature of the relationship and the level of the beneficiary's involvement in the making of the Will. This may include events preceding and immediately post-execution. However, it does not extend to influence occurring years after the Will was signed.

The contextual timeframe with respect to testamentary capacity, however, is limited to when the Will was signed.

[1] Thorsteinson v Olson, 2014 SKQB 237, 452 Sask R 160 [ Thorsteinson]

(iii) GROSSETH ESTATE V. GROSSETH: BALANCING THE PROTECTION OF OLDER ADULTS AND ADULT AUTONOMY

2017 BCSC 2055 (CanLII), http://canlii.ca/t/hnrpt

By Kimberly Whaley

"The law seeks to protect elderly citizens from predatory and exploitative conduct at the hands of unscrupulous relatives and caregivers. The presumption of undue influence formalises an expression of skepticism about voluntary transfers such as the ones under consideration here. On the other hand, there is the matter of adult autonomy and the individual freedom to dispose of property as one sees fit." [1]

These competing interests were addressed by Justice Baird, in Grosseth Estate v. Grosseth 2017 BCSC 2055. The Deceased had prepared a Will, long before his death, equally dividing his estate amongst his nieces and nephews. In the years before his death, he transferred the "lion's share" of his money, around $157,000, to one of his nephews and that nephew's wife (the Plaintiff's brother and sister-in-law). At the time of his death, approximately $60,000 remained to be distributed.

The Plaintiff brought an action as against his brother and sister-in-law, in his capacity as the Deceased's executor, seeking the return of cash to the estate. He relied upon the presumptions of resulting trust and undue influence. The Defendants maintained that the amounts advanced were gifts. They denied unduly influencing the Deceased in any way.

Background

During the last years of his life, the Deceased lived with the Defendants. According to the evidence presented, the Defendants treated the Deceased well and welcomed him into every aspect of their family life. Initially, the Deceased contributed towards household expenses. The payments stopped in 2003 when the Deceased volunteered to pay $100,000.00 towards the Defendants' purchase of a business property.

A couple of years later, the Defendants' mortgage loan on their principal residence became due. The Deceased offered to pay off the balance of the mortgage ($57,000.00) with no strings attached. He allegedly told the Defendants that if the money remained in the estate it would end up going to people he barely knew. The evidence suggested that the Deceased's other nieces and nephews were not in contact with him in the years before his death.

The Plaintiff, who was the Deceased's attorney under a power of attorney and executor, had only visited his uncle once in the time that he lived with the Defendants, although he maintained that they had a close relationship.

The Defendants' evidence was that they never asked the Deceased for financial assistance and that they were capable of managing the expenses associated with the purchase of the property and their mortgage. They did not influence the Deceased's actions in any way. He gifted the funds to them without wanting anything in return.

The only other beneficiary who testified at the hearing was the Plaintiff's sister. She testified that the Deceased was well treated by the Defendants and that he remained independent and fully capable of managing his own affairs long after he made the second transfer to the Defendants. This evidence was corroborated by other witnesses.

Discussion

Justice Baird acknowledged that certain statements attributed to the Deceased indicating his intentions at the time of the subject transfers were hearsay. However, he found the evidence admissible, relying on prior authorities that dealt with analogous circumstances. [ 2 ]

Gratuitous transfers of wealth between adults come with a rebuttable presumption of resulting trust in favour of the transferor. The monies advanced in the case at bar are captured by that presumption. The onus is on the Defendants to prove that a gift was intended because equity presumes bargains, not gifts.[3] If a conclusion about the Deceased's actual intention is not reached, then the presumption of resulting trust must be applied to "tip the scales" in favour of money being repaid to the estate. [4 ]

Furthermore, the nature of the relationship between the Deceased and the Defendants gave rise to the presumption of undue influence. The Deceased was of advanced age, and he was living in a situation of some dependency with the Defendants: "They were surely in a position, had they wished, to dominate him into acting to their advantage and to his own detriment." It is the potential of domination that triggers the presumption. That presumption can be rebutted by evidence establishing that the donor entered into the transaction of his own full, free and informed. Factors to consider in rebutting the presumption include:

the lack of actual influence or opportunity to influence the donor;
receipt of or opportunity to obtain independent legal advice;
the donor's ability to resist any such influence; and
the donor's knowledge and appreciation about what he or she was doing.

Justice Baird indicated that the totality of the evidence makes it clear that the Deceased was fully capable of managing his own affairs throughout, despite his dependence on the defendants, and found that "the transfers were gifts freely given by a man who was fully capable of making his own decisions uninfluenced by anyone."

There was no evidence to suggest that either of the Defendants prevailed on the Deceased in any way to advance the funds and no evidence to suggest that the Deceased was incapable of resisting such influence. Neither of the Defendants had any control over the Deceased's accounts or finances. The absence of legal advice is a factor to consider but not determinative on its own.

Ultimately, Justice Baird was satisfied that the deceased gifted the funds to the defendants. "...these gestures were freely made by a man of sound mind who, in all likelihood, wished to make a proper contribution to the household economy in which he lived and thrived for nearly ten years. The presumptions of resulting trust and undue influence have been rebutted."

[1] Grosseth Estate v. Grosseth, 2017 BCSC 2055

[2] Pasko v. Pasko, 2002 BCSC 435 at paras. 9-10, and approved in Mondonese v. Delac Estate, 2011 BCSC 82, affirmed 2011 BCCA 501.

[3] Pecore v. Pecore , 2007 SCC 7 (para. 24)

[4] S.M.S. v. D.M.T., 2014 BCSC 2387 at para. 33.