Estates & Trusts Reports

ESTATES & TRUSTS REPORTS Fourth Series/Quatrième série Recueil de jurisprudence en droit des successions et des fiducies VOLUME 17 (Cited 17 E.T.R. (4th)) EDITOR-IN-CHIEF/REDACTRICE´ EN CHEF Sharon Yale, LL.B., M.A. Barrister and Solicitor Toronto, Ontario ONTARIO EDITOR/REDACTRICE´ POUR L’ONTARIO Lori M. Duffy, B.A., LL.B., LL.M. Weir Foulds LLP Toronto, Ontario ASSOCIATE EDITORS/REDACTEURS´ ADJOINTS Timothy G. Youdan, M.A., LL.M. Hugh S. McLellan, B.COMM., LL.B. Davies Ward Phillips & Vineberg McLellan Herbert Toronto, Ontario Vancouver, British Columbia Ian M. Hull, B.A.(HONS.), LL.B. John E. S. Poyser, B.A., LL.B. Hull & Hull Tradition Law LLP Toronto, Ontario Winnipeg, Manitoba EDITORIAL STAFF/REDACTION´ Cheryl L. McPherson, B.A.(HONS.) Rebecca Y. Tobe, B.A., LL.B. Director, Primary Content Operations Product Development Manager Nicole Ross, B.A., LL.B. Julia Fischer, B.A.(HONS.), LL.B. Supervisor, Legal Writing Supervisor, Legal Writing Peggy Gibbons, B.A.(HONS.), LL.B. Barbara Roberts, B.A.(HONS.), LL.B. Senior Legal Writer Lead Legal Writer Martin-Fran¸cois Parent, LL.B., LL.M., Donna Dickson DEA (PARIS II) Content Editor Bilingual Legal Writer ESTATES & TRUSTS REPORTS, a national series of topical law reports, is Recueil de jurisprudence en droit des successions et des fiducies, une published 12 times per year. Subscription rate $493.00 per bound volume in- série nationale de recueils de jurisprudence spécialisée, est publié 12 fois par cluding parts. année. L’abonnement est de 493 $ par volume relié incluant les fascicules.

Editorial Offices are also located at the following address: 430 rue St. Pierre, Le bureau de la rédaction est situé a` Montréal — 430, rue St. Pierre, Mon- Montréal, Québec, H2Y 2M5. tréal, Québec, H2Y 2M5.

NOTICE AND DISCLAIMER: All rights reserved. No part of this publica- MISE EN GARDE ET AVIS D’EXONERATION´ DE RESPON- tion may be reproduced, stored in a retrieval system, or transmitted, in any SABILITE´ : Tous droits réservés. Il est interdit de reproduire, mémoriser sur form or by any means, electronic, mechanical, photocopying, recording or un système d’extraction de données ou de transmettre, sous quelque forme ou otherwise, without the prior written consent of the publisher (Thomson par quelque moyen que ce soit, electronique´ ou mécanique, photocopie, enre- Reuters Canada, a division of Thomson Reuters Canada Limited). gistrement ou autre, tout ou partie de la présente publication, a` moins d’en avoir préalablement obtenu l’autorisation ecrite´ de l’éditeur, Thomson A licence, however, is hereby given by the publisher: Reuters Canada, une division de Thomson Reuters Canada Limitée. Cependant, l’éditeur concède, par le présent document, une licence :

(a) to a lawyer to make a copy of any part of this publication to give to a a) a` un avocat, pour reproduire quelque partie de cette publication pour judge or other presiding officer or to other parties in making legal submis- remettre a` un juge ou un autre officier-pr´esident ou aux autres parties dans sions in judicial proceedings; une instance judiciaire;

b) a` un juge ou un autre officier-président, pour produire quelque partie de (b) to a judge or other presiding officer to produce any part of this publication cette publication dans une instance judiciaire; ou in judicial proceedings; or c) a` quiconque, pour reproduire quelque partie de cette publication dans le cadre de délibérations parlementaires. (c) to anyone to reproduce any part of this publication for the purposes of parliamentary proceedings. « Instance judiciaire » comprend une instance devant une cour, un tribunal ou une personne ayant l’autorité de décider sur toute chose affectant les droits ou les responsabilitiés d’une personne. “Judicial proceedings” include proceedings before any court, tribunal or person having authority to decide any matter affecting a person’s legal rights or Ni Thomson Reuters Canada ni aucune des autres personnes ayant participé a` liabilities. la réalisation et a` la distribution de la présente publication ne fournissent quelque garantie que ce soit relativement a` l’exactitude ou au caractère actuel Thomson Reuters Canada and all persons involved in the preparation and sale de celle-ci. Il est entendu que la présente publication est offerte sous la ré- of this publication disclaim any warranty as to accuracy or currency of the serve expresse que ni Thomson Reuters Canada, ni le ou les auteurs de cette publication. This publication is provided on the understanding and basis that publication, ni aucune des autres personnes ayant participé a` son elaboration´ none of Thomson Reuters Canada, the author/s or other persons involved in n’assument quelque responsabilité que ce soit relativement a` l’exactitude ou the creation of this publication shall be responsible for the accuracy or cur- au caractère actuel de son contenu ou au résultat de toute action prise sur la rency of the contents, or for the results of any action taken on the basis of the foi de l’information qu’elle renferme, ou ne peuvent etreˆ tenus responsables information contained in this publication, or for any errors or omissions con- de toute erreur qui pourrait s’y etreˆ glissée ou de toute omission. tained herein. La participation d’une personne a` la présente publication ne peut en aucun cas etreˆ considérée comme constituant la formulation, par celle-ci, d’un avis No one involved in this publication is attempting herein to render legal, ac- juridique ou comptable ou de tout autre avis professionnel. Si vous avez counting, or other professional advice. If legal advice or other expert assis- besoin d’un avis juridique ou d’un autre avis professionnel, vous devez tance is required, the services of a competent professional should be sought. retenir les services d’un avocat ou d’un autre professionnel. Les analyses The analysis contained herein should in no way be construed as being either comprises dans les présentes ne doivent etreˆ interprétées d’aucune fa¸con official or unofficial policy of any governmental body. comme etant´ des politiques officielles ou non officielles de quelque organ- isme gouvernemental que ce soit.

8 The paper used in this publication meets the minimum requirements of 8 Le papier utilis´e dans cette publication satisfait aux exigences minimales American National Standard for Information Sciences — Permanence of Pa- de l’American National Standard for Information Sciences — Permanence of per for Printed Library Materials, ANSI Z39.48-1984. Paper for Printed Library Materials, ANSI Z39.48-1984.

ISSN 0706-5655 ISBN 978-0-7798-5832-3 Printed in Canada by Thomson Reuters

THOMSON REUTERS CANADA, A DIVISION OF THOMSON REUTERS CANADA LIMITED One Corporate Plaza Customer Relations 2075 Kennedy Road Toronto 1-416-609-3800 Toronto, Ontario Elsewhere in Canada/U.S. 1-800-387-5164 M1T 3V4 Fax 1-416-298-5082 www.carswell.com Contact www.carswell.com/email Andrade v. Andrade 173

[Indexed as: Andrade v. Andrade] Manuela Estrela Andrade, Plaintiff (Respondent) and Henrique E. Andrade and Leonardo Andrade, Estate Trustee for Luisa Cabral Andrade, Defendants (Appellant) Ontario Court of Appeal Docket: CA C59214 2016 ONCA 368 Janet Simmons, K. van Rensburg, C.W. Hourigan JJ.A. Heard: November 12, 2015 Judgment: May 16, 2016* Estates and trusts –––– Trusts — Resulting trust — Creation — Miscellane- ous –––– L was widowed mother of seven children who worked to pay for children’s passage to Canada — Children each left school in their teens to begin work and gave earnings to L to support family — L bought house in 1974, borrowing cash deposit from community member and financing rest of purchase with two mortgages — At L’s direction, house was put in names of oldest son H and daughter MJ and in 1979 on L’s direction, MJ and H transferred house to another brother, J, and H as tenants in common for nominal consideration — Mortgages were renewed in names of J and H — Over time, each of children with exception of youngest child L married, left home, and stopped giving money to L — J died in 2007 and plaintiff, J’s wife, transferred his half interest to her name — Plaintiff brought successful action against H and L for declaration that she was beneficial owner of half interest in house, and counterclaim brought by L for declaration that she was beneficial owner of house was dismissed — L died shortly before trial — L’s estate and H appealed — Appeal allowed — Trial judge erred in failing to find resulting trust in favour of L and made palpable and overriding error of fact in concluding that, at time of purchase and until she died, L had no money of her own — This error caused him to ignore evidence of L’s intention when house was put into her children’s names, and five years later when J went on title, that she would remain beneficial owner — H and J held house by way of resulting trust for L, who was beneficial owner at time of her death — L’s estate was sole beneficial owner of house and plaintiff was ordered to transfer her legal half interest in house to L’s estate — Trial judge incorrectly characterized money given to L by children to pay for house as children’s money — Money was, as matter of law, gift to L — Rent generated by house was also L’s money, as L advertised for and negotiated

* Additional reasons atAndrade v. Andrade (2016), 2016 ONCA 507, 2016 CarswellOnt 10237 (Ont. C.A.). 174 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

with prospective tenants and collected rent — Trial judge did not consider other sources of L’s income despite evidence that, for 24 years, L paid all household expenses without any significant financial contribution from any of children except L who continued to live at house — Trial judge erred in concluding that L had no money of her own and that she had contributed no money of her own to purchase of house. Estates and trusts –––– Trusts — Resulting trust — Rebuttal of presumption of resulting trust — Miscellaneous –––– L was widowed mother of seven children who worked to pay for children’s passage to Canada — Children each left school in their teens to begin work and gave earnings to L to support family — L bought house in 1974, borrowing cash deposit from community member and financing rest of purchase with two mortgages — At L’s direction, house was put in names of oldest son H and daughter MJ and in 1979 on L’s direction, MJ and H transferred house to another brother, J, and H as tenants in common for nominal consideration — Mortgages were renewed in names of J and H — Over time, each of children with exception of youngest child L married, left home, and stopped giving money to L — J died in 2007 and plaintiff, J’s wife, transferred his half interest to her name — Plaintiff brought successful action against H and L for declaration that she was beneficial owner of half interest in house, and counterclaim brought by L for declaration that she was beneficial owner of house was dismissed — L died shortly before trial — L’s estate and H appealed — Appeal allowed — Trial judge erred in failing to find resulting trust in favour of L and made palpable and overriding error of fact in concluding that, at time of purchase and until she died, L had no money of her own — This error caused him to ignore evidence of L’s intention when house was put into her children’s names, and five years later when J went on title, that she would remain beneficial owner — H and J held house by way of resulting trust for L, who was beneficial owner at time of her death — L’s estate was sole beneficial owner of house and plaintiff was ordered to transfer her legal half interest in house to L’s estate — Once it was accepted that L had money of her own, and that it was her money used to purchase house and pay mortgages, purchase money resulting trust could arise — L repaid deposit and paid mortgages using money from her own bank account — There was no evidence that legal title holders considered themselves responsible for making any payments — Relevant question was L’s intention and not whether legal title holders intended to create trust for L — There was no evidence that L intended to confer beneficial ownership on any of her children when house was purchased in 1974 and no evidence of gift of half of property to J in 1979 — L conducted herself in relation to house as its owner from time of purchase until time of her death. Estates and trusts –––– Trusts — Resulting trust — Miscellaneous –––– L was widowed mother of seven children who worked to pay for children’s passage to Canada — Children each left school in their teens to begin work and Andrade v. Andrade 175 gave earnings to L to support family — L bought house in 1974, borrowing cash deposit from community member and financing rest of purchase with two mortgages — At L’s direction, house was put in names of oldest son H and daughter MJ and in 1979 on L’s direction, MJ and H transferred house to another brother, J, and H as tenants in common for nominal consideration — Mortgages were renewed in names of J and H — Over time, each of children with exception of youngest child L married, left home, and stopped giving money to L — J died in 2007 and plaintiff, J’s wife, transferred his half interest to her name — Plaintiff brought successful action against H and L for declaration that she was beneficial owner of half interest in house, and counterclaim brought by L for declaration that she was beneficial owner of house was dismissed — L died shortly before trial — L’s estate and H appealed — Appeal allowed — Trial judge erred in finding that public policy reasons prevented imposition of any trust with L’s estate as beneficiary — Trial judge cast net too broadly in concluding that it would be against public policy to recognize L’s estate as beneficial owner of house when she received tax credits on basis that she was not beneficial owner — There was no evidence that L put property into children’s names to avoid taxes or to obtain tax benefit, and evidence was to contrary — Evidence was that children took legal title because L did not have paid employment and could not qualify for mortgage — Fact that entire family subsequently treated house for tax purposes in manner consistent with legal title, resultant of which L received some benefit was benefit to be considered when determining L’s intention but was not determinative — L’s estate did not seek to profit from manner in which her tax filings were arranged, but rather sought equitable relief regarding L’s interest in family home — L’s tax filings were not fundamental to that cause of action and were not necessary to establish relief sought — Trial judge erred in treating fact that L claimed tax credits as dispositive of her trust claim for public policy reasons alone — While her tax treatment of property, considered alone, was evidence inconsistent with beneficial ownership, her actual intention regarding property was question of fact to be determined based on whole of evidence. Cases considered by K. van Rensburg J.A.: Buist v. Greaves (1997), 1997 CarswellOnt 2243, [1997] O.J. No. 2646, 11 O.F.L.R. 3, 34 O.T.C. 1 (Ont. Gen. Div.) — referred to Kerr v. Baranow (2011), 2011 CarswellBC 240, 2011 CarswellBC 241, 14 B.C.L.R. (5th) 203, 411 N.R. 200, 328 D.L.R. (4th) 577, [2011] S.C.J. No. 10, [2011] A.C.S. No. 10, 93 R.F.L. (6th) 1, 274 O.A.C. 1, [2011] 1 S.C.R. 269, (sub nom. Vanasse v. Seguin) 108 O.R. (3d) 399, 509 W.A.C. 1, 2011 SCC 10, 64 E.T.R. (3d) 1, 300 B.C.A.C. 1, [2011] 3 W.W.R. 575 (S.C.C.) — considered Korman v. Korman (2015), 2015 ONCA 578, 2015 CarswellOnt 12612, 63 R.F.L. (7th) 1, 387 D.L.R. (4th) 579, 126 O.R. (3d) 561, 337 O.A.C. 379, [2015] O.J. No. 4399 (Ont. C.A.) — considered 176 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Nussbaum v. Nussbaum (2004), 2004 CarswellOnt 3731, 10 E.T.R. (3d) 223, 9 R.F.L. (6th) 455, 10 C.B.R. (5th) 54, [2004] O.J. No. 3763 (Ont. S.C.J.) — considered Parnell v. Viger (2003), 2003 CarswellOnt 2711, 41 R.F.L. (5th) 327, [2003] O.T.C. 648, [2003] O.J. No. 2864 (Ont. S.C.J.) — referred to Parnell v. Viger (2005), 2005 CarswellOnt 1125, 196 O.A.C. 256, 14 R.F.L. (6th) 84, [2005] O.J. No. 1123 (Ont. C.A.) — referred to Pecore v. Pecore (2007), 2007 SCC 17, 2007 CarswellOnt 2752, 2007 Carswell- Ont 2753, [2007] S.C.J. No. 17, 361 N.R. 1, 32 E.T.R. (3d) 1, 37 R.F.L. (6th) 237, 279 D.L.R. (4th) 513, 224 O.A.C. 330, [2007] 1 S.C.R. 795 (S.C.C.) — considered Rascal Trucking Ltd. v. Nishi (2013), 2013 SCC 33, 2013 CarswellBC 1716, 2013 CarswellBC 1717, 359 D.L.R. (4th) 575, 45 B.C.L.R. (5th) 1, [2013] 8 W.W.R. 419, 88 E.T.R. (3d) 1, 445 N.R. 293, 336 B.C.A.C. 50, 574 W.A.C. 50, 16 B.L.R. (5th) 1, (sub nom. Nishi v. Rascal Trucking Ltd.) [2013] 2 S.C.R. 438, [2013] S.C.J. No. 33 (S.C.C.) — considered Rosenthal v. Rosenthal (1986), 3 R.F.L. (3d) 126, 1986 CarswellOnt 288, [1986] O.J. No. 2520 (Ont. H.C.) — considered Schwartz v. Schwartz (2012), 2012 ONCA 239, 2012 CarswellOnt 4362, 290 O.A.C. 30, 349 D.L.R. (4th) 326, [2012] O.J. No. 1680 (Ont. C.A.) — considered Tinsley v. Milligan (1993), [1993] 3 All E.R. 65, [1994] 1 A.C. 340, [1993] 3 W.L.R. 126, [1993] H.L.J. No. 24 (U.K. H.L.) — followed Statutes considered: Family Law Act, R.S.O. 1990, c. F.3 Generally — referred to s. 14 — referred to Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) Generally — referred to

APPEAL by defendants from judgment reported at Andrade v. Andrade (2014), 2014 ONSC 4473, 2014 CarswellOnt 10280, 1 E.T.R. (4th) 123 (Ont. S.C.J.), allowing plaintiff’s action for declaration that she was beneficial one-half owner of property and dismissing counterclaim to contest plaintiff’s beneficial ownership.

Gavin MacKenzie, Patrick T. Summers, for Appellant John J. Longo, Pamela Miehls, for Respondent Andrade v. Andrade K. van Rensburg J.A. 177

K. van Rensburg J.A.: A. Overview 1 At issue in this appeal is the beneficial ownership of a house that has been in the Andrade family for over 40 years. 2 The house, located on Crawford Street in Toronto, was purchased in 1974. Luisa Andrade lived there until her death in 2014. Legal title was originally taken in the names of two of Luisa’s children, Henrique (Henry) and Maria Jesus. Five years later, title was transferred to Henry and his brother Joseph. Henry and Joseph remained on title thereafter as the legal owners of the house. 3 Joseph died in March 2007. In May 2007, Joseph’s widow, Manuela Andrade, transferred his half interest in the house into her own name. In 2009, she brought an action against Henry and Luisa seeking a declaration that she was the beneficial owner of a half interest in the house, and an order for partition and sale. Luisa counterclaimed for a declaration that she was the beneficial owner of the house and an order that Manuela and Henry transfer all of their right, title and interest in the house to her. In 2011, Henry transferred his half interest to Luisa. In 2014, a few months before the trial commenced, Luisa died. The action continued against her estate and Henry. 4 Manuela was successful at trial. The trial judge found that she was the beneficial owner of a half interest in the house, and he rejected the counterclaim that the house was held by Joseph and Henry in trust for Luisa. He directed the house to be sold, with half the net proceeds to be paid to Manuela. He awarded costs of $237,396.19 against Luisa’s estate. Lu- isa’s estate appeals and seeks leave to appeal the trial judge’s costs endorsement. 5 For the reasons that follow I would allow the appeal. In my view, the trial judge erred in failing to find a resulting trust in favour of Luisa. He made a palpable and overriding error of fact when he concluded that, at the time of the purchase and until she died, “Luisa had no money of her own”. This error informed his analysis of the parties’ legal rights. It caused him to ignore the evidence of Luisa’s intention when the house was put in her children’s names, and five years later when Joseph went on title, that she would remain the beneficial owner. Henry and Joseph held the house by way of resulting trust for Luisa who was, at the time of her death, its sole beneficial owner. Accordingly, I would dismiss Manuela’s action, declare Luisa’s estate to be the sole beneficial owner 178 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

of the house, and order Manuela to transfer her legal half interest in the house to Luisa’s estate.

B. Facts 6 Luisa, a widow and the mother of seven children, immigrated to Can- ada from Portugal in 1969. She was accompanied by her oldest daughter, Maria Luisa, who was 17. Luisa worked as a cleaner for a number of years, supporting her children in Portugal and saving money for their plane tickets. The rest of the children arrived in 1972. Leonardo (Leo), the youngest, was five years old. 7 Luisa stopped working to care for her children. Each of the children left school and began working when they were teenagers. While they lived at home, they gave their earnings to their mother to support the family. This continued until they got married. Leo never married and he continues to live in the house. 8 The trial judge described the “traditional pattern established by the Andrade family” as follows: Everyone who testified at trial ... described a tight-knit family that greatly respected and continuously supported their mother, and that tended to pool resources to an unusual extent. As each child left school and began their working lives, they contributed their paycheques (or a substantial portion thereof) to their mother for her support and for support of the children still too young to work. 9 Initially, the family lived in a series of apartments. In September 1974, Luisa decided to buy a house, and with the help of a real estate agent, found the house on Crawford Street. The house had two upper floors subdivided into apartments that could be rented out. 10 The purchase price was $58,500. Luisa signed the offer to purchase. She borrowed a cash deposit of $1,000 from a member of the community. The bulk of the purchase was financed with two mortgages, and a balance of $1,395.85 was paid on closing. 11 At Luisa’s direction, the house was put in the names of her oldest son, Henry, who was 19, and her second daughter, Maria Jesus, who was 18, as joint tenants, and they signed the mortgages. Maria Luisa had married and moved out. Henry, Maria Jesus and Joseph (who was 15) were the children who lived at home, and worked and supported the family at the time. 12 In 1979, on Luisa’s direction, Maria Jesus and Henry transferred the house to Joseph and Henry as tenants in common for nominal considera- Andrade v. Andrade K. van Rensburg J.A. 179

tion of $2.00 “brother and sister to brother and brother”. The mortgages were renewed in the names of Joseph and Henry. At the time, Joseph and Maria Ludevina were the working children who provided their earnings to their mother. 13 Over time, each of the children (except Leo) married, moved out and stopped giving their earnings to their mother. Maria Jesus did so in 1976. Henry did so in 1978 (although he and his wife lived in a rented apartment in the house for three years). Joseph married Manuela and moved out in 1980. Maria Ludevina started working in 1976 or 1977 and moved out in 1983. Manuel (Manny) started working in 1980 and married and moved out in 1989. Leo contributed his paycheques from 1980 to 1995. Commencing in 1995, Leo stopped giving all of his earnings to his mother and began giving her a biweekly amount, which continued until 2003. 14 At various times between 1974 and 2011, Luisa rented out the up- stairs apartments. She advertised for tenants, and negotiated and collected the rents. In 1983, Maria Luisa moved into a flat in the house with her three children and paid rent to Luisa until 1990. Henry too paid rent to Luisa when he and his wife lived in an apartment in the house from 1978 to 1981. 15 None of the children, with the exception of Henry for a brief period of time before he married, and Leo, many years later, paid any of the expenses associated with the house directly. Luisa repaid the $1,000 loan and paid all expenses in relation to the house with money from her bank account. The expenses included the mortgages (paid off in 2008), utilities, insurance and property taxes. 16 Until 1990, the money in Luisa’s bank account consisted of her unmarried, working children’s earnings and the rent she collected from tenants. In 1990 Luisa began receiving old age security benefits (eventually about $1,200 per month), and in 2003 she received a $21,000 settlement in a lawsuit. 17 Although they never received rent from the house, or incurred significant expenses without being reimbursed by Luisa, for tax purposes, Jo- seph and Henry declared the rental income from the house and claimed expenses in relation to the house. They paid taxes on the net rental income. Although Luisa never paid rent, she claimed a rental tax credit. 18 After Joseph’s death in 2007, Manuela registered her interest as Jo- seph’s executor on title. By lawyer’s letter, in April 2008, Manuela sought to have the house sold, to recover Joseph’s alleged interest. The 180 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

letter also claimed an “accounting of all revenue earned in respect of the property and expenses paid on account thereof since the property was purchased in 1979 [sic]”. All of the surviving siblings and Luisa resisted the sale, claiming that the house belonged to Luisa as beneficial owner. Manuela brought an action against Henry and Luisa seeking a declaration that she is the beneficial owner of a half interest in the house and an order for partition and sale. 19 Manuela’s position in the litigation was that Joseph had been a beneficial owner of half of the house since it was purchased in 1974. All of the other siblings, and Luisa (whose affidavit, cross-examination and discovery evidence were admitted at trial) testified that the house belonged to Luisa. 20 At one point in the litigation, Henry sought to amend his pleading to assert a beneficial interest in the house. The amendment was refused, and in 2011, Henry assigned his legal half interest in the house to Luisa. In January 2014, Luisa died and her interest in the litigation passed to Leo, as estate trustee. 21 The action proceeded to trial in March and April 2014. The trial judge granted judgment in favour of Manuela and ordered the sale of the property at fair market value, with the net proceeds of sale to be divided evenly between Manuela and Luisa’s estate.

C. Decision of the Trial Judge 22 The trial judge concluded that Luisa put no money of her own toward the purchase of the house. He said that she had no money of her own when the house was purchased in 1974 and thereafter. She had borrowed the deposit, and it was her children’s earnings (along with the rental income) that were used to pay the mortgages and other expenses. 23 The trial judge found that Henry, Maria Jesus and Joseph were working at the time the house was purchased and they gave their earnings to their mother. This pattern was later followed by each of the Andrade children (except, according to the trial judge, Leo). 24 The trial judge rejected the evidence of Albert Miller, the lawyer who acted on the purchase of the house, that he had discussed a trust with the Andrade children and Luisa. Neither Maria Jesus nor Henry recalled any specific discussions about a trust. The trial judge concluded that “no one ever discussed or turned their minds to forming a trust for Luisa’s benefit at the time the property was purchased in [1974]”. Andrade v. Andrade K. van Rensburg J.A. 181

25 The trial judge found that title to the house was taken in the names of Maria Jesus and Henry “as the two contributors who were old enough to go on title”. He did not however make a specific finding that they were beneficial owners of the house when it was purchased. In fact, his reasons do not disclose any finding as to beneficial ownership of the house at that time. 26 As for the transfer in 1979 from Maria Jesus and Henry as joint tenants to Henry and Joseph as tenants in common, the trial judge again rejected Miller’s evidence that the transfer was precipitated by Maria Jesus’ impending marriage and that they had discussed a trust. He concluded that the transfer “had far more to do with Joseph’s coming of age and his financial responsibility for the [house] than with Maria Jesus’ marriage three years previously”, and that the mortgages and all other expenses rested largely on Joseph’s shoulders at the time. 27 The trial judge referred to certain “subsequent dealings with the house” as evidence that Henry and Joseph were the actual owners. 28 First, in July 1981, Henry and Joseph signed agreements of purchase and sale for the sale of the house and the purchase of a new property on Gilbert Avenue. He noted that the documentation does not refer to Henry and Joseph as “trustees”, so “[b]y all appearances” the two were selling one house they owned and buying another. 29 Second, there was the manner in which the house was treated for income tax purposes by Joseph, Henry and Luisa. The trial judge rejected Henry’s explanation that he and Joseph were trying to help their mother by declaring the rental income she earned from non-family member tenants. He said it was contrary to what “any tax accountant” would have advised as both the correct and more tax efficient way to go about their filings. 30 The trial judge also rejected the evidence of Ted Ward, Henry and Joseph’s accountant, regarding the parties’ intentions respecting the property. He concluded that a letter Ward wrote in 2009, which supported the position that Henry and Joseph were trustees for Luisa, was inaccurate in certain respects and that Ward “must have been asked by Henry to play a role in [the] drama, but ... did not quite get his lines right”. 31 Turning to the legal arguments, the trial judge rejected the claim that the property was Luisa’s by way of resulting trust. He stated that this was not a case where “the child acted as agent for the parent in purchasing the house”, nor was it one in which “the parent claims to be beneficial owner because she remains in control of a property after transferring it to a 182 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

child”, because Luisa never owned the house and never paid for it in the first place. 32 In his constructive trust analysis, the trial judge rejected the contention that this was a case where property had been purchased with the money of one person but the conveyance was taken in the name of another, on the basis that Luisa had no money of her own.1 He stated that it was Luisa’s children who worked and earned the money and it was her children, as well as the rental income from the property, that over time paid the mortgages. In his opinion, Luisa did not have a legal right to her children’s paycheques. Disposing of the constructive trust claim, the trial judge concluded that there was no “causal connection” between Luisa and the “acquisition, maintenance, improvement, etc. of the [house]. Having made no financial or other legally cognizable contribution of her own, there is no equity in favour of Luisa.” 33 The trial judge also stated that he found no real evidence of a “commonly shared intention” to purchase and hold the house in trust for Lu- isa. He referred to the fact that Henry, at one stage in the litigation, described Luisa as having what amounted to a “life interest” in the house, and the evidence of some of the children that the house was their mother’s until she died. 34 The trial judge found that there was insufficient evidence that a trust for Luisa’s benefit was intended. He also concluded that it would be contrary to public policy to give credence to Luisa’s ownership claim because of how the property was treated for tax purposes.

D. Issues 35 The appellant asserts that the trial judge erred in failing to find that Luisa, at the time of her death, was the beneficial owner of the house by way of resulting trust, or alternatively that her estate is entitled to the house by way of constructive trust. The appellant’s primary argument is that the trial judge made a palpable and overriding error in concluding that Luisa had no money of her own, and in holding that, without a financial or other legally cognizable contribution of her own, there was no equity in favour of Luisa. The appellant contends that, contrary to the

1 As explained below, such a trust is properly termed a purchase money resulting trust, however the trial judge appears to have considered this argument in the context of his constructive trust and unjust enrichment analysis. Andrade v. Andrade K. van Rensburg J.A. 183

trial judge’s conclusion, this was a case where property was purchased in the name of another with money provided by the beneficiary. The appellant asserts that the trial judge overlooked certain important and uncon- troverted evidence with respect to intention. Finally, the appellant argues that the trial judge erred in invoking public policy as a further reason to reject Luisa’s ownership claim. 36 The respondent asserts that the trial judge made no such errors, and that the result was fully supported by his findings of fact. Luisa contributed no money of her own to the purchase and her estate failed to prove that her money (and not that of her children) was used in the purchase and maintenance of the house. The respondent also contends that the appeal attacks a key finding of fact by the trial judge - that Henry and Jo- seph were the legal and beneficial owners of the property from the date of the purchase in 1974, and that this finding is fully supported by the evidence. The respondent says that all of the alleged errors raised by the appellant are factual errors or errors of mixed fact and law, and the applicable standard of review is palpable and overriding error.

E. Analysis 37 I will address each of the issues raised in turn. Since I have concluded that Luisa was the beneficial owner of the house by way of resulting trust, it is unnecessary to address the constructive trust claim. 38 As a preliminary point, the respondent is wrong to say that the trial judge found that Joseph acquired beneficial ownership in the property when it was purchased in 1974. Manuela’s position at trial was that in 1974 Maria Jesus took title as bare trustee for Joseph, and that she agreed to transfer title to the property to him when he reached the age of majority. There was however no evidence to support that claim. The trial judge concluded only that Joseph “acquired his one-half interest” in the house in 1979. He did not find that Joseph was a beneficial owner of the house in 1974 or that Maria Jesus was a trustee. As I have already noted, he made no finding at all as to the beneficial ownership of the property when it was purchased. 39 Manuela also took the position at trial that while Joseph lived at the house his earnings were used to pay the mortgages and other household expenses, and that after he moved out the rents were sufficient to pay these expenses. The evidence respecting when the apartments were rented and the rental income that was generated was contradictory. In any event, the trial judge did not accept that only the rents were used to 184 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

carry the house, after Joseph moved out, or at any time. Rather, he found that the Andrade children (except Leo) continued to give their paycheques to their mother until they married and it was their money, as well as the rent, that was used to pay the mortgages.

(1) Luisa did in fact pay for the house 40 The cornerstone of the trial judge’s reasoning is not, as Manuela contends, that Joseph acquired beneficial ownership of the house because of his direct financial contributions. Rather, it is his finding that Luisa had no money of her own to purchase the house, and to pay the mortgages, and as such that she could not have been the beneficial owner of the house. That finding permeates his reasons, and is the basis for his rejection of the resulting and constructive trust claims advanced on Luisa’s behalf. 41 Luisa did not have paid employment from the time her children arrived in Canada until her death. From this, the trial judge concluded that “[f]rom 1972 until her death in 2014, she earned no income and was entirely supported by her children who worked”. He noted Luisa’s admission in her examination for discovery, that in 1974 “she had no money of her own to put toward the purchase.” He found that Luisa “had no funds of her own and did not advance anything in respect of the purchase of the [house]”, that “she never contributed any money of her own to the purchase”, and that all of the witnesses agreed that “Luisa put no money of her own toward the purchase of the [house]”. He explained that “[Luisa] had not worked for a number of years prior to 1974, and had no income to contribute to the purchase or financing of the [house].” 42 With respect to the argument that Luisa always paid the mortgages, the trial judge stated: Luisa may have paid the mortgages on the [house] in the sense that the mortgage payments went to the mortgagees from her bank account. But she made those payments with her children’s money, not her own; she had no money of her own. ... [I]t was Luisa’s children (along with the rental income that the [house] generated) who over time paid the mortgages. 43 He stated that the purchase funds were borrowed and the loans were serviced by Luisa’s unmarried working children. 44 In finding that Luisa contributed no money of her own to the acquisition of the house, both at the time of purchase and in paying down the mortgages, the trial judge made a number of errors. Andrade v. Andrade K. van Rensburg J.A. 185

(a) Confusing Luisa’s money with its source 45 First, the trial judge erred in characterizing the money given to Luisa by her children and used by Luisa to pay for the house as the children’s money. The money her children earned, once given to Luisa, became her money, even if it was expected to be used, and was in fact used, for the support of the family, including to pay the mortgages. 46 In finding that Luisa had no money of her own the trial judge con- flated “income from paid employment” and “money”. He confused the question of whether Luisa had money with the source of her money, which at least in the early years was the paid employment of her adult children. He did not explain why or how, once the working children gave their paycheques to Luisa, the money remained “their” money. It was no longer their money because they made a gift of it to their mother, knowing she would use it to support the family. Luisa’s bank account was not a trust account. There was no evidence that the money was earmarked for specific purposes. Once the money was given to Luisa, it became “Lu- isa’s money”. 47 The trial judge observed that Luisa had no “legal right” to her children’s paycheques. Whether she had a legal right is not the issue. Rather, the question is whether the paycheques were a legal gift, or were transferred to Luisa to acquire an interest in the house. 48 There was no evidence that any of the title holders provided their paycheques to their mother intending to acquire a property interest in the house. To the contrary, all of Luisa’s children, whether they were on title or not, behaved in the same manner. They provided their paycheques to their mother while they lived in the house and stopped doing so when they moved out. And the testimony of the children who testified at trial was unanimous. When they gave their mother their earnings, the money was for her to use “as she saw fit”. That is, the money was, as a matter of law, a gift to Luisa.

(b) The rent belonged to Luisa 49 The trial judge referred to the fact that expenses in relation to the house were paid from rent generated by the house. He did not make any finding as to who the rent belonged to, but implicit in his decision is that the rent did not belong to Luisa. 50 Yet the evidence shows that Luisa was the only person (except in later years when she was assisted by Leo) who advertised for and negotiated with prospective tenants and collected their rent. Where rent was 186 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

paid by cheque, the tenants’ cheques were made out to Luisa and deposited into her bank account. The legal title holders never collected rent from tenants or demanded an accounting from their mother. 51 Other than declaring the rent as their income for tax purposes, there is no evidence that Henry and Joseph made any claim to the rent. Henry specifically denied the rent was his, and only after Joseph’s death did his widow Manuela claim an accounting of rent from Luisa (going back to 1974). Maria Luisa paid rent to her mother, not to her brothers, when she lived in the house with her children for some eight years. Leo lived in the house from the age of four, and paid amounts to his mother, but not to his brothers. 52 In all of these circumstances, including those in the foregoing section, the rent generated by the house was also Luisa’s money.

(c) Luisa had other sources of money 53 The trial judge erred in finding that Luisa’s children supplied all the money for the house and in saying that “[f]rom 1972 until her death in 2014, [Luisa] earned no income and was entirely supported by her children who worked.” This is incorrect. Luisa’s children did not support their mother financially after they married and moved out of the house. Joseph, for example, stopped supporting her and his siblings in 1980 when he married Manuela. The last of the Andrade children to marry (Manny) moved out in 1989. 54 In addition to rent, Luisa received old age security benefits commencing in 1990 (ultimately about $1,200 per month) and, in 2003, she received a settlement of $21,000. The trial judge did not consider these sources of Luisa’s money. Yet the evidence showed that for a period of 24 years Luisa paid all household expenses without any significant financial contribution from any of her children, except for Leo, who continued to live at the house. 55 Accordingly, the trial judge erred in concluding that Luisa had no money of her own and that she had contributed no money of her own to the purchase of the house. He was wrong to conclude that “the loans [to purchase the house] were serviced by Luisa’s unmarried children - Maria Jesus, Henry, and Joseph.” The loans were serviced by Luisa from money in her bank account. This included money given to her by her children, the rent she collected from tenants and, after 1990, her pension and settlement monies. Andrade v. Andrade K. van Rensburg J.A. 187

56 The trial judge concluded that the house was not held in resulting trust for Luisa. His rejection of the resulting trust claim was explained on the basis that Luisa never owned the house and never paid for it in the first place, and the fact that “Luisa had no money of her own”. In my view this was a palpable and overriding error that informed the balance of the trial judge’s analysis and ultimately his rejection of the resulting trust claim. I turn now to consider Luisa’s resulting trust claim.

(2) The resulting trust claim (a) The relevant legal principles 57 “A resulting trust arises when title to property is in one party’s name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the original title owner”: Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795 (S.C.C.), at para. 20. 58 A purchase money resulting trust can occur “where a person advances a contribution to the purchase price of property without taking legal title”: Rascal Trucking Ltd. v. Nishi, 2013 SCC 33, [2013] 2 S.C.R. 438 (S.C.C.), at para. 21. It is one of the “classic resulting trust situations” and can arise when a party contributes directly to the purchase price or the mortgage: Eileen E. Gillese, The Law of Trusts, 3rd ed. (Toronto: Irwin Law, 2014) at pp. 113-15. In Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269 (S.C.C.), at para. 12, Cromwell J. noted that it has been “settled law since at least 1788 in England (and likely long before) that the trust of a legal estate, whether in the names of the purchaser or others, ‘results’ to the person who advances the purchase money”. 59 Except where title is taken in the name of a minor child, where property is acquired with one person’s money and title is put in the name of another, there is a presumption of resulting trust. While some authorities refer to a presumption of resulting trust arising when a gratuitous transfer is made between unrelated persons, the presumption of advancement between spouses was abolished by statute in Ontario (see Family Law Act, R.S.O. 1990, c. F.3, s. 14) and between parents and adult children by the Supreme Court in Pecore: see para. 36. 60 In this case the respondent argued both at trial and on appeal that the appellant had not overcome the presumption that the legal title holders owned the house. Given the evidence of Luisa’s contributions to the purchase price and mortgages, however, the presumption here was one of resulting trust. 188 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

61 The decision in this case however does not turn on the application of a presumption. A presumption is of greatest value in cases where evidence concerning the transferor’s intention may be lacking (for example where the transferor is deceased). “[T]he focus in any dispute over a gratuitous transfer is the actual intention of the transferor at the time of the transfer ... “[T]he presumption will only determine the result where there is insufficient evidence to rebut it on a balance of probabilities”: Pecore, at paras. 5 and 44. 62 The trial judge referred on multiple occasions to “the parties’ intentions”, stating that he could find “no real evidence of a commonly shared intention to purchase and hold the [house] in trust for Luisa.” Common intention, however, is not the issue. The intention of the grantor or con- tributor alone counts, as the point of the resulting trust is that the claimant is asking for his or her own property back: Kerr v. Baranow, at para. 25. 63 The relevant time for ascertaining intention is the time of the acquisition of the property, when the funds were advanced: Rascal Trucking Ltd. v. Nishi, at paras. 30 and 41; Pecore, at para. 59. Evidence of intention that arises subsequent to a transfer must be relevant to the intention of the transferor at the time of the transfer. The court must assess the reliability of such evidence and determine what weight it should be given, guarding against evidence that is self-serving or tends to reflect a change in intention: Pecore, at para. 59.

(b) The principles applied 64 Once it is accepted that Luisa had money of her own, and that it was her money that was used to purchase the house and to pay down the mortgages, then a purchase money resulting trust could arise. Luisa borrowed the deposit and paid it back, and she serviced the mortgages using money from her own bank account. Although they signed the mortgages, there was no evidence that the legal title holders considered themselves responsible for making any of the payments. Luisa borrowed their “names”, not their money. All of this is consistent with Luisa having advanced the purchase price of the property. 65 Having concluded that Luisa had not made a contribution to the acquisition of the house, the trial judge did not direct himself to the question of her intention. Rather, he looked at the intentions of Luisa’s children, and concluded that they did not intend to set up a trust for Luisa. The trial judge reasoned that, if Luisa had not put money of her own into Andrade v. Andrade K. van Rensburg J.A. 189

the purchase of the house, then she had no resulting trust claim against those who were on title. 66 The trial judge mischaracterized the claim when he said that Luisa’s estate was not trying to recover something that Luisa once had. That is in fact how the claim was advanced. Luisa’s estate argued that Luisa’s money was used to purchase the house in that she borrowed the deposit and paid it back, paid the lawyers’ fees and other expenses in relation to the purchase, and paid the mortgages, using her money (consisting of the money she received from her children, the rent she collected, and later her old age pension and monies she received from a settlement). 67 The question was not whether the legal title holders intended to create a trust for Luisa (hence the trial judge’s focus on the fact that there was no “trust” document, that the parties did not understand the concept of a trust, and that the tax and other documents did not refer to Luisa as the beneficial owner). Rather, the question was Luisa’s intention. Having contributed the money toward the purchase of the property, did she intend to confer beneficial ownership of the property on the legal title holders, to the exclusion of herself and her other children? 68 Evidence of Luisa’s intention at two points is important — in 1974 when the property was first acquired, and in 1979, when Joseph went on title. 69 It was Luisa who, in 1974, decided to buy a house where she and her children would live. As the trial judge noted, both Maria Jesus and Henry testified that the reason title was taken in their names was that, with the exception of Maria Luisa who was already married, they were the only two family members of age who had sufficient income to potentially qualify for a mortgage. Henry said, “[t]he discussion was simple. [Luisa] couldn’t get a mortgage and we [had] to put our names on it because we [were] working.” Neither Henry nor Maria Jesus asserted that their mother intended to give them property rights. To the contrary, they claimed to be her nominees and regarded the house as her property. 70 Luisa’s evidence, although not mentioned by the trial judge, was to the same effect.2 In her examination for discovery she said, “[i]f the house had been purchased in cash, I wouldn’t have needed their names.” While there was some difficulty with Luisa’s evidence, which was given

2 Except for her concession that she had no money of her own, there is no reference in the trial judge’s reasons to Luisa’s evidence. 190 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

through an interpreter, on this point she was clear. She considered herself the owner of the house. 71 Manuela testified that, in 1974 (when she was 12 years old), Joseph told her that he “bought a house”, and that he referred to the house on Crawford Street as “his house”. Although the trial judge did not make a specific finding about beneficial ownership of the house when it was purchased, there was no evidence to support this theory, and there is nothing in his reasons to suggest that the trial judge accepted that Joseph was a beneficial owner in 1974, and that Maria Jesus was holding his interest as a bare trustee. Rather, he found that Joseph acquired his interest in 1979. 72 There was no evidence at all that Luisa intended to confer beneficial ownership on any of her children when the house was purchased in 1974. 73 As for the circumstances in 1979, there is no dispute that Joseph went on title at the time of a mortgage renewal, and at his mother’s direction. Maria Jesus testified that she did what her mother directed, as it was her mother’s house. This of course is inconsistent with Maria Jesus transferring a beneficial interest to her brother. And, if Maria Jesus was Luisa’s nominee, there was no evidence to suggest a change in Luisa’s intention — that is, to give Joseph a beneficial interest in the property when Maria Jesus had no such interest. 74 Luisa, in her examination for discovery, said that Joseph was un- happy that Henry was “the boss” and that she wanted to keep Joseph happy by putting him on title. She denied that he was the owner; she continued to deal with the house in the same way. The transfer to Joseph occurred without any consideration. Joseph paid nothing to Maria Jesus or his mother for the transfer. Luisa paid the legal fees then, as she had in 1974. The trial judge explained the transfer to Joseph’s name as occurring because, at the time, he was “the senior working sibling, and was providing funds for the entire household.” 75 All of these circumstances are consistent with a change in legal title, but not with a gift of half the property to Joseph. The fact that Joseph (as well as his sister Maria Ludevina) was providing his earnings to Luisa was consistent with the family’s pattern. His contributions were no more “consideration” for a transfer of beneficial ownership than the contributions of his siblings. 76 Not only was there no direct evidence that Luisa intended to favour Joseph in 1979 when he went on title, the rationale for a gift was missing. There was no reason for Luisa to have made a gift of her house to Andrade v. Andrade K. van Rensburg J.A. 191

two of her children to the exclusion of the others. After they married, neither Henry nor Joseph paid any of the household expenses directly. Rather, their younger siblings continued the family pattern of pooling their earnings and providing them to their mother. There is no basis for an inference that Joseph was to be favoured with beneficial ownership of half of the house because of his contribution, which was no greater than, and in fact less than, that of some of his siblings. 77 The respondent argues that the transfer of the house from Henry and Maria Jesus as joint owners to Joseph and Henry as tenants in common is consistent with an intention to confer beneficial ownership. However, there was no evidence to explain why this happened. The trial judge, quite properly, drew no inference of Joseph and Henry’s beneficial ownership from the way title was taken in 1979. 78 As for subsequent conduct, there are several aspects of what occurred that are inconsistent with Luisa having an intention in 1979 to gift the house to Henry and Joseph. 79 Luisa continued to live in the house where she raised her other children, while Henry and Joseph purchased houses for their own families in the 1980s. Luisa collected and kept the rent. Luisa paid all the bills in relation to the house, including the mortgages, property taxes, insurance and the cost of a number of repairs. 80 In 1990, Luisa sourced new lenders for a replacement mortgage which was renewed until it was paid off in 2008. It was Luisa who decided what repairs and renovations were needed and who directed and paid for work, including roof repairs, new flooring, and replacement of the furnace. She paid for materials but not labour that her children supplied. While Henry and Joseph did some work on the house, the other children also made contributions over the years. As the trial judge observed, “the motivation for all of the Andrade siblings’ contributions to the household had more to do with family loyalty than with property rights.” 81 Luisa was not simply a “resident” of the house (as the trial judge described her). She conducted herself in relation to the house as its owner from the time the house was purchased until she passed away. 82 The appellant relies on certain other evidence said to be supportive of the fact that Luisa was the beneficial owner of the house. Maria Jesus, Henry, Manny and Leo all testified that Joseph had complained about being on title and had asked his brothers to go on title for him. While it is true that the trial judge did not mention this evidence, much like the evi- 192 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

dence of Manuela, her son, sister and nephew, that Joseph talked about the house as “his house”, which was also not mentioned, it is self-serving and of doubtful reliability. It is in any event of little assistance in resolving the issue of Luisa’s intention. 83 I turn now to two aspects of the evidence that the trial judge relied upon as “subsequent conduct” that was inconsistent with Luisa’s ownership of the house. Again, I emphasize that the trial judge considered this evidence in the context of whether there was a “commonly shared intention” or an intention by the children to “[form] a trust for Luisa’s benefit”. 84 First, the trial judge relied on the fact that in 1981 Henry and Joseph entered into two agreements of purchase and sale, one to sell the house and another to buy a new property. He noted that there was no reference to them being “trustees” and “[b]y all appearances ... Henry and Joseph were selling one house they owned and were buying another.” 85 What the trial judge did not mention was the evidence of how the proposed transaction came about. Henry testified that Luisa was having trouble paying the mortgages, and she thought she could get by with a smaller house. Manuela, who was already married to Joseph at the time, did not testify otherwise. The fact that Henry and Joseph signed all the documents reflected what was already in place. Luisa could not go on title because she did not qualify for a mortgage. The fact that Henry and Joseph’s names were on the agreements was equally consistent with their position as Luisa’s nominees. 86 I note here that the appellant contends that the trial judge ignored evidence of a note from Miller’s file that stated “no need for a trust agreement, wait to sell”, which was contemporaneous with the proposed 1981 transactions. This evidence is corroborative of Miller’s evidence that he understood the house was held in trust for Luisa and that he had discussed a trust with someone in the Andrade family, at least when the note was made (the note is undated). Miller identified the note in his testimony. Although the trial judge did not mention this evidence, there is no reason to doubt that he considered it. He rejected Miller’s evidence which was proven wrong on certain details. There is no reason to inter- fere with that assessment. I disagree with the appellant’s contention that the note was important evidence that the trial judge overlooked. 87 Second, the trial judge placed significant emphasis on how the parties dealt with the house for income tax purposes — with Henry and Joseph paying tax on the net rental income, including a deemed rent for Luisa, Andrade v. Andrade K. van Rensburg J.A. 193

and Luisa taking a tax credit for rent “paid” to her sons. He regarded the tax treatment as evidence that Henry and Joseph were in fact the “real, beneficial owners” of the house, and, as discussed below, as the foundation for a public policy reason not to recognize Luisa’s beneficial interest in the house. 88 The way the parties dealt with the property for tax purposes was consistent with legal title, but did not reflect what was actually occurring. Luisa received the rents: her sons did not. Luisa never paid rent to her sons, and a fictional amount was used as the rent she “paid” in the parties’ returns. Luisa did not account to her sons for the rent received and expenses on the house. They included as expenses property taxes, mortgage payments and payments for repairs and maintenance which were paid by Luisa (and not only expenses they incurred themselves). 89 There was no evidence that Luisa was involved in any decisions about her taxes or her sons’ taxes. To the contrary, Luisa, who did not speak, read or write English, had her tax returns prepared first by a local travel agent, then by her daughter Maria Ludevina, who simply followed the pattern that had been established. Henry and Joseph’s returns were prepared by their accountant with figures provided by Henry, which were divided equally to attribute income and expenses to each brother. 90 The only evidence about why the tax returns were prepared that way came from Henry. He testified about a meeting in 1998 with the Canada Revenue Agency (“CRA”) who told him that Luisa had to pay rent because she lived in the house and that he and Joseph had to claim income on the property because they each owned and lived in other properties. Henry also said that he and Joseph were trying to help out their mother by paying the tax on the rental income. 91 While the trial judge did not reject Henry’s explanation outright, he observed that it “raises more questions than it answers.” He did not resolve the question of what the tax treatment said about intention, and in particular, Luisa’s intention. Instead he moved directly to the conclusion that the tax returns accurately reflected the beneficial ownership of the property. 92 The issue here however is to determine Luisa’s intention. The fact that a party represents or deals with property in a certain way that is inconsistent with beneficial ownership does not preclude a claim of beneficial ownership in litigation. The tax reporting issue in this case raises concerns similar to those in a line of cases referred to by the appellant — cases where a party transfers property to a spouse to defeat creditors and 194 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

then claims to be the beneficial owner of that property. In each case, the trust claimant makes a claim that is inconsistent with how the property was dealt with at another stage and for another purpose. 93 In Schwartz v. Schwartz, 2012 ONCA 239 (Ont. C.A.), title to a matrimonial home was transferred from the wife to the husband. There were competing claims to the house by the wife and the husband’s judgment creditor. The central issue was whether the wife had conveyed her entire interest in the matrimonial home to her husband. Simmons J.A. held that the fact that the transfer may have been for the purpose of insulating the wife from claims by her own potential creditors did not in itself rebut the statutory presumption of resulting trust between spouses. She stated, at paras. 42-43: In Kerr, the Supreme Court of Canada also confirmed the view expressed in Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795, at paras. 43-44, that where there is a gratuitous transfer, the actual intention of the transferor is the governing consideration. At para. 44 of Pecore, Rothstein J. noted that where a gratuitous transfer is being challenged, “[t]he trial judge will commence his or her inquiry with the applicable presumption and will weigh all of the evidence in an attempt to ascertain, on a balance of probabilities, the transferor’s actual intention.” Further, as Karakatsanis J. observed in Nussbaum v. Nussbaum (2004), 9 R.F.L. (6th) 455 (Ont. S.C.), at paras. 20 and 32, while the “intention to gift property trumps the presumption of resulting trust”, a party’s intention at the time of a conveyance is a question of fact. Further, as she stated, at para. 32, “[w]hile evidence that someone intended to fully evade creditors can be evidence that they intended to gift their entire interest in the property”, a party’s actual intention remains a question of fact to be determined based on the whole of the evidence. 94 See also Korman v. Korman, 2015 ONCA 578 (Ont. C.A.), at para. 38, where, citing the same passage from Nussbaum v. Nussbaum [2004 CarswellOnt 3731 (Ont. S.C.J.)], and the Schwartz decision, this court confirmed that the motivation to shield property from a transferring spouse’s potential creditors does not in itself rebut the presumption of a resulting trust in a gratuitous transfer of property between spouses. 95 Similarly, in the present case, the analysis cannot not begin and end with the tax treatment of the house. The court was entitled to consider the fact that Luisa’s tax filings are contrary to her estate’s argument that she was a beneficial owner of the property, as well as all of the evidence as Andrade v. Andrade K. van Rensburg J.A. 195

to how this came to be. The tax treatment is some evidence of intention, but Luisa’s actual intention at the time of the transaction remains a question of fact to be determined on the whole of the evidence. 96 The fact that Luisa had no part in deciding how the house would be treated for tax purposes is inconsistent with any admission by her respecting her intention. Certainly the tax treatment can be explained other than as an acknowledgment by Luisa that her sons were the beneficial owners of the house. As such, what was in her tax returns sheds little light on whether it was Luisa’s intention to confer beneficial ownership of the property on her sons.

(c) Conclusion respecting resulting trust 97 I have concluded that the money used in the purchase of the Crawford St. property was Luisa’s money. Although its source was in part money given to her by her working children, Luisa was the person who took on the responsibility to pay for the house at the time of the purchase, in 1979, and during the next 35 years until she died. Although the house was in her children’s names, her intention was not to benefit the title holders to the exclusion of her other children by giving them a property interest in the house. The evidence is inconsistent in particular with Manuela’s claim that Luisa intended to give Joseph a beneficial interest in the house from the time it was purchased in 1974. While the parties’ income tax returns treated the house in a way that was consistent with legal title, they did not reflect the reality of how the property was handled — that Luisa, and not Henry and Joseph, collected and kept the rents, that Luisa, and not Henry and Joseph, paid the expenses in relation to the house, and that Luisa treated the house as its owner, and not as a tenant. 98 In these circumstances, I find that Luisa was the beneficial owner of the house by way of resulting trust.

(3) The “public policy” issue 99 In addition to holding that there was insufficient evidence that a trust for Luisa’s benefit was intended, the trial judge concluded that “for public policy reasons this is not an appropriate case in which to impose any trust” with Luisa’s estate as a beneficiary. In my view, the trial judge cast the net too broadly in concluding that it would be against public policy to recognize Luisa’s estate as the beneficial owner of the house when she 196 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

had received tax credits on the basis that she was not the beneficial owner. 100 Rosenthal v. Rosenthal (1986), 3 R.F.L. (3d) 126 (Ont. H.C.), the case relied upon by the trial judge, was a matrimonial case. There was an issue about whether certain shares owned by the husband had been purchased by him (in which case they were part of his net family property) or received as a gift (and thus excluded from net family property). There was evidence that while an initial transfer of shares from a third party was by way of gift, two subsequent transfers of shares by the same party were made in exchange for demand notes bearing no interest. The third party testified that his intention was to gift all of the shares to the husband and that the demand notes were forgiven over time. He said the reason for structuring the latter two transfers in this manner was to avoid payment of gift tax, which was in operation at the time. 101 The trial judge in Rosenthal held that the initial transfer of shares was a gift but the latter two transfers were not and thus the value of those latter shares should be included in the husband’s net family property. He stated, at para. 51, that “it is being argued that for the purpose of the Income Tax Act in 1969, the transfer of shares was not a gift, but for the purpose of the Family Law Act in 1986, the transfer of shares was a gift. Such a result should not be condoned by the court on the grounds of public policy alone.” 102 His logical conclusion was that, having structured a transaction as a purchase specifically to avoid taxes that would be payable if it were a gift, the husband could not subsequently claim that the transaction was in fact a gift. While he did not explain the public policy concern in any detail, it appears to be that a party should not be permitted to structure a transaction in one way to avoid the payment of taxes, and then to subsequently disclaim that very structure. 103 In the present case, there was no evidence that Luisa put the property into the names of her children so as to avoid taxes or to obtain a tax benefit. The evidence was to the contrary — the children took legal title because Luisa did not have paid employment and could not qualify for a mortgage. The fact that subsequently the Andrade family treated the house for tax purposes in a manner that was consistent with the legal title, as a result of which Luisa received some benefit (and her sons some detriment), is, as noted earlier, evidence to be considered when determining Luisa’s intention but is not determinative. Andrade v. Andrade K. van Rensburg J.A. 197

104 Rosenthal does not stand for any general public policy principle that would prevent a party from taking one position for tax purposes, and another in respect of a claim in litigation. In cases where a party must rely on fraudulent documents to prove a claim, the “clean hands” doctrine and considerations of illegal purpose may bar the claim: see e.g. Buist v. Greaves (1997), 11 O.F.L.R. 3 (Ont. Gen. Div.). However actions unrelated to one’s claim will not necessarily bar a plaintiff from her remedy: see e.g. Parnell v. Viger (2003), 41 R.F.L. (5th) 327 (Ont. S.C.J.), rev’d in part on other grounds (2005), 14 R.F.L. (6th) 84 (Ont. C.A.), at paras. 20-23 (fraudulent documents filed with Revenue Canada did not disentitle a plaintiff from an equitable remedy where she did not have to rely on the documents to prove her claim). The governing principle was stated by Lord Browne-Wilkinson of the House of Lords in Tinsley v. Milligan, [1994] 1 A.C. 340 (U.K. H.L.), at p. 375: “A party to an illegality can recover by virtue of a legal or equitable property interest if, but only if, he can establish his title without relying on his own illegality.” 105 In the present case, Luisa’s estate does not seek to profit from the manner in which her tax filings were arranged. Rather, it seeks equitable relief in relation to Luisa’s interest in the family home. Her tax filings are not fundamental to that cause of action. They are not necessary to establish the relief that she seeks. They are relevant evidence, but are not in any way dispositive of her claim. 106 And, the Schwartz and Korman cases referred to earlier confirm that even if a party has transferred ownership of property in one way for one purpose (such as to defeat creditors) a resulting trust claim is not precluded. The question remains one of the transferor’s intention at the time of the transfer. 107 The trial judge erred in treating the fact that Luisa claimed tax credits as dispositive of her trust claim for public policy reasons alone. While her tax treatment of the property, considered in isolation, was evidence inconsistent with her beneficial ownership, her actual intention in relation to the property was a question of fact to be determined based on the whole of the evidence.

F. Disposition 108 For these reasons, I would allow the appeal and set aside the judgment in the court below (including the award of costs). I would dismiss the claims of Manuela Andrade; order and declare that the Estate of Lu- 198 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

isa Andrade is the sole beneficial owner of 510 Crawford St., Toronto (the “Property”); order and declare that Manuela Andrade holds registered title in the Property as trustee for the Estate of Luisa Andrade; and order Manuela Andrade to forthwith transfer all of her right, title and interest in the Property to the Estate of Luisa Andrade. 109 If the parties are unable to agree on costs in the court below, they shall provide their written submissions to this court within 20 days, limited to five pages each, exclusive of any bill of costs or offer to settle. The respondent shall pay the appellant’s costs of the appeal fixed at $30,000, the amount agreed between the parties, which is inclusive of HST and disbursements.

Janet Simmons J.A.:

I agree

C.W. Hourigan J.A.:

I agree Appeal allowed. Kajaks Estate, Re 199

[Indexed as: Kajaks Estate, Re] In the Matter of the Estate of Vilnis Voldemars Kajaks, Deceased British Columbia Supreme Court Docket: Vancouver P091847 2016 BCSC 651 J. Sigurdson J., In Chambers Heard: January 22, 2016 Judgment: February 10, 2016 Estates and trusts –––– Estates — Personal representatives — Executor under will — Alternative appointment –––– Deceased died in 2007 leaving 2004 will with codicil naming stepson ES as executor and GS as alternate executor of will — Probate was granted in 2009 — In January 2015, ES was ordered to make interim distributions of $100,000 each to applicants — Estate residuary beneficiaries received interim distributions in January 2016 — Applicants brought application for removal of ES and other relief — Application granted in part — ES ordered replaced by alternate executor — Main consideration in jurisdiction or removing trustees was welfare of beneficiaries — Court order of January 2015 did not state clearly and unequivocally time by which distribution should have been made — Conduct of ES did not amount to alleged contempt of court, but compliance to court order was not done in reasonable time — In nine years since deceased’s death, estate was not been fully distributed, and ES demonstrated reluctance to distribute estate in accordance with deceased’s wishes — Delay had caused some prejudice because beneficiaries were without their funds for long time — In 2014, seven years after deceased’s death, ES urged residuary beneficiaries to agree to change of will so that ES’s children would get one-half of estate — Delay in administering estate led to inference that rather than properly administering estate, ES persisted in course of conduct to make residuary beneficiaries agree to variation of will to benefit of his children — It was not demonstrated that ES would comply with obligations as trustee in future. Judges and courts –––– Contempt of court — Nature of offence –––– De- ceased died in 2007 leaving 2004 will with codicil naming stepson ES as executor and GS as alternate executor of will — Probate was granted in 2009 — In January 2015, ES was ordered to make interim distributions — Estate residuary beneficiaries received interim distributions in January 2016 — Applicants brought for finding that ES was in contempt of court and for other relief — Ap- plication dismissed — Applicants did not demonstrate that ES was in con- 200 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

tempt — In order to establish that contempt had been proved, alleged breached order had to state clearly and unequivocally what should and should not be done; party alleged to have breached had to have actual knowledge of it; and, party allegedly in breach must have intentionally done prohibited act or failed to do act that order compelled — Court order of January 2015 did not state clearly and unequivocally time by which distribution should have been made — Con- duct amounting to contempt had to be proven beyond reasonable doubt — Order had since been complied with, at least in terms of interim distribution. Cases considered by J. Sigurdson J., In Chambers: Carey v. Laiken (2015), 2015 SCC 17, 2015 CSC 17, 2015 CarswellOnt 5237, 2015 CarswellOnt 5238, 66 C.P.C. (7th) 1, 382 D.L.R. (4th) 577, (sub nom. Sabourin and Sun Group of Companies v. Laiken) 470 N.R. 89, [2015] S.C.J. No. 17, [2015] A.C.S. No. 17, (sub nom. Sabourin and Sun Group of Companies v. Laiken) 332 O.A.C. 142, [2015] 2 S.C.R. 79 (S.C.C.) — considered Conroy v. Stokes (1952), 6 W.W.R. (N.S.) 204, [1952] 4 D.L.R. 124, 1952 Car- swellBC 51, [1952] B.C.J. No. 111 (B.C. C.A.) — considered Dunsdon v. Dunsdon (2012), 2012 BCSC 1274, 2012 CarswellBC 2595, 80 E.T.R. (3d) 235 (B.C. S.C.) — followed Miles v. Vince (2014), 2014 BCCA 289, 2014 CarswellBC 2028, 98 E.T.R. (3d) 60, [2014] 9 W.W.R. 1, 358 B.C.A.C. 280, 614 W.A.C. 280, 63 B.C.L.R. (5th) 23, 36 C.C.L.I. (5th) 1 (B.C. C.A.) — considered Parker v. Christopher Parker Family Trust (Trustee of) (2014), 2014 BCSC 1916, 2014 CarswellBC 3013 (B.C. S.C.) — followed Statutes considered: Wills, Estates and Succession Ac, S.B.C. 2009, c. 13 s. 158(3)(f)(ii) — considered s. 158(3)(f)(iii) — considered

APPLICATIONS by applicants for removal of estate executor and for finding that executor was in contempt of court.

Corey J. Bow, for Applicants, Gaston Kayaks and Rainer Kayaks Stefan R. Currie-Roberts, for Respondent, Eric Savics, Executor of the Estate of Vilnis Voldemars Kajaks, Deceased

J. Sigurdson J., In Chambers:

1 THE COURT: As this is an oral judgment, I reserve the right to edit it when the transcript is prepared, but the result, of course, will remain the same. Kajaks Estate, Re J. Sigurdson J. 201

Application 2 The applicants seek the following: 1. an order that Eric Savics, the executor and trustee of the estate of Vilnis Voldemars Kajaks, is in contempt of a court order of Madam Justice Russell of January 21, 2015; 2. an order that that Eric Savics be removed as the executor and trustee under the last will of Vilnis Voldemars Kajaks; 3. an order that Gaston Kayaks, the deceased’s brother and alternate executor under his will, be appointed in substitution of Eric Savics; 4. an order vesting all assets of the estate in Gaston Kayaks; 5. an order for consequential directions and costs including special costs to be paid personally by Eric Savics [this application was adjourned pending the determination of this motion].

Background 3 This application is brought in an estate where the deceased died nine years ago, leaving his interest in real property to the executor’s children and the residue to eight beneficiaries: one is the applicant Gaston Kay- aks, his son Rainer Kayaks (a co-applicant), and six people who live in Latvia. Although probate was granted in 2009, the estate residuary beneficiaries have only recently received interim distributions and the applicants argue that the executor is in contempt by not complying completely and promptly, that is within a reasonable time, with the order of Madam Justice Russell requiring an interim distribution of the estate. The applicants also argue that Mr. Savics should be removed because he has delayed and acted, they assert, with dishonesty and lack of fidelity, such that he is unsuitable to continue in his role as executor and trustee, having negatively affected the estate and the beneficiaries. 4 The application is opposed by the executor, Mr. Savics, whose counsel acknowledges delay in the administration of the estate but says that contempt has not been proven, particularly absent a specific requirement for the time of the interim distributions, and that as the beneficiaries have been paid under the interim distribution order, a contempt finding, which should be intended to be primarily coercive, would be without its proper purpose. 5 As to the removal of the executor, the executor’s counsel says that such an order should only be made in the clearest of cases, and although 202 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

there has been delay, that delay relates to the inability to obtain information from a Latvian beneficiary concerning a property transaction involving the deceased and, given that the administration of the estate is in its final stages and the welfare of the beneficiaries, the executor says, is not endangered, removal of the respondent executor at this stage would be inappropriate as it would only punish the executor for past behaviour but not serve to protect the welfare of the beneficiaries. 6 With that background, I turn to the facts of the case.

Facts 7 The deceased died on May 4, 2007, leaving a will of 2004 with a codicil dated November 27, 2006, naming Eric Savics as his executor. Gaston Kayaks, the brother of the deceased and the father of Rainer, was named as alternate executor in the will. 8 Mr. Savics, the executor, is the stepson of the deceased, his mother marrying Mr. Vilnis Voldemars Kajaks in 1954, but Mr. Savics was never adopted. 9 The applicants assert that the estate amounts to approximately $2.5 million which appears correct. Mr. Savics’ children inherited the deceased’s portion of real estate in North Vancouver and the eight named residuary beneficiaries are the two applicants, plus six people who were living in Latvia. Each of the seven residuary beneficiaries has a 12/100 share and Rudite Ceruze is to receive 16/100 share of the residue. Mr. Savics was not a beneficiary. 10 Probate was granted over six years ago on November 20, 2009 and in November and December 2009, Mr. Savics made interim distributions of $100,000 each to the applicants Rainer Kayaks and Gaston Kayaks, the two local residuary beneficiaries. In November 2013, the solicitors for the executor advised the applicants that an updated statement of assets and liabilities was being prepared, an update as certain assets were discovered after the initial filing but indicated that the payment made to the applicants of $100,000 represented substantially all the distribution the applicants would be entitled to and any further distribution would be minimal. 11 By order of Master MacNaughton of June 5, 2014, upon application by the applicants in this proceeding, Mr. Savics was ordered to prepare and deliver the estate accounts to the beneficiaries which he did on July 30, 2014, five days before the ordered date. The accounts revealed that two accounts at Haywood Securities totalling over $1.5 million were not Kajaks Estate, Re J. Sigurdson J. 203

included in the original statement of assets prepared at the date of death of the deceased. 12 By order of Master Scarth of June 21, 2005, the passing of the accounts was referred to the registrar. 13 Earlier, on January 21, 2015, upon application of Gaston and Rainer Kayaks, Madam Justice Russell ordered that Mr. Savics, the executor and trustee of the estate, “upon receiving signed indemnities” from the eight residuary beneficiaries indemnifying from any tax liabilities arising from the disposition of any real property in Latvia, make interim distributions of $100,000 to the six in Latvia and $50,000 to Rainer and Gas- ton Kayaks, the remaining two residuary beneficiaries. 14 By affidavit of April 13, 2015, Rudite Ceruze, one of the residuary beneficiaries, confirmed that the deceased had sold her the Latvian properties in 2003 and Mr. Savics through counsel in July 2015 agreed he would not need the indemnity agreement signed by the beneficiaries and confirmed that by waiving the indemnity agreement he was now bound by the court order to provide interim distributions. 15 Although it was unclear why a release was required by the executor for the interim distribution of the estate, as ordered by Justice Russell, four of the six Latvian residuary beneficiaries received the ordered interim distribution on the basis of signing a release, consent and receipt that stated that they would forever release the estate and Eric Savics from all causes of action, etc. The other Latvian residual beneficiaries did not sign the release and in January 2016 the remaining residuary beneficiaries received their distribution under the order of Justice Russell. 16 The issues that I will discuss are firstly whether Mr. Savics should be found in contempt for breach of the order of Madam Justice Russell, and second whether Mr. Savics should be removed as executor of the estate of the deceased and replaced with the alternate executor, the applicant Gaston Kayaks.

Contempt of Court 17 As described in Carey v. Laiken, 2015 SCC 17 (S.C.C.), when dealing with civil contempt where there is no element of public defiance, contempt is generally seen as “primarily coercive rather than punitive” (para. 31). In order to establish that contempt has been proven, the order alleged to have been breached must state clearly and unequivocally what should and should not be done; the second element is that the party alleged to have breached the order must have had actual knowledge of it; 204 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

and third, the party allegedly in breach must have intentionally done the act that the order prohibits or intentionally failed to do the act that the order compels (paras. 33-35 of Carey v. Laiken). 18 On this application the first and third elements are in issue. 19 The respondent, the alleged contemnor, said that he in effect did not intentionally breach the order and provided excuses for the delay in making the interim distributions such as his health and the difficulty he had in finding information about the earlier Latvian transaction. However, it is not on that basis that I dismiss the contempt application. Four of the beneficiaries received their interim share on the basis of the release that I described; the applicants got their interim share on January 4, 2016 and the residuary beneficiaries who would not sign the release were apparently paid on January 21, 2016. 20 I think that the application for contempt must be dismissed on the basis of the first requirement because the order does not state clearly and unequivocally the time by which the distribution should be made. While I think that the actions of the executor in making the interim distribution and the delay that is said to have taken place is relevant to the next application, the question of removal of the executor, I do not think, particularly given the fact that the contempt power is discretionary and the conduct amounting to contempt must be proven beyond a reasonable doubt and the order must clearly and unequivocally state what should be done (which I think in these circumstances includes by what time the distribution must be made) that, particularly given that the order has now been complied with, at least in terms of the matter of the interim distribution, I am not persuaded by the applicants that the executor has been shown beyond a reasonable doubt to be in contempt. For the purposes of the contempt application I am not prepared to imply in the order that the payment had to be made in a reasonable time and that the failure to do so is contempt. 21 I turn to the next application.

Removal of the Executor 22 Under s. 158(3) of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13: ... the court, by order, may remove ... a personal representative if the court considers that the personal representative ... should not continue in office ... including, without limitation, if the personal representative ... Kajaks Estate, Re J. Sigurdson J. 205

... (f) is ... (ii) not responsive, or (iii) otherwise unwilling or unable to or unreasonably refuses to carry out the duties of a personal representative, to an extent that the conduct of the personal representative hampers the efficient administration of the estate ... 23 I refer to the comments of Ballance J. in Dunsdon v. Dunsdon, 2012 BCSC 1274 (B.C. S.C.). [202] Put broadly, a trustee may be removed where his or her acts or omissions endanger the trust property or demonstrate a want of honesty, of reasonable fidelity, or of the proper capacity to execute the duties of office: Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C.C.A.). The existence of friction between the trustee and one or more beneficiaries is usually not sufficient, of itself, to justify removal of the trustee: Erlichman v. Erlichman, 2000 BCSC 173; Re Blitz Estate, 2000 BCSC 1596. However, where there is dissension among the trustees themselves by which the trust administration grinds to a standstill or otherwise hampers the proper administration, the courts tend to remove one or more of them. In those instances, misconduct per se is not an essential prerequisite: Re Consiglio Trusts (No. 1) (1973), 36 D.L.R. (3d) 658 (Ont. C.A.); Wilson v. Heathcote, 2009 BCSC 554. [203] In all cases, the fundamental guide must be the welfare of the beneficiaries: Letterstedt v. Broers (1884), 9 App. Cas. 371 (South Africa P.C.) [My emphasis.] 24 The relevant authorities were reviewed in depth in the judgment of Chief Justice Hinkson in Parker v. Christopher Parker Family Trust (Trustee of), 2014 BCSC 1916 (B.C. S.C.). It appears clear that the court’s main guide in exercising the delicate jurisdiction of removing trustees must be the welfare of beneficiaries: see Justice Levine in Miles v. Vince, 2014 BCCA 289 (B.C. C.A.), where she noted at paras. 84-85, and quoting from Conroy v. Stokes, [1952] 4 D.L.R. 124 (B.C. C.A.) at 126-127 that: ... the acts or omissions must be such as to endanger the trust property or to shew a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity. [My emphasis.] 206 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

25 I share the caution in Parker that the removal of the trustee should not be lightly entertained. Chief Justice Hinkson said at para. 40: [40] But the removal of a trustee should not be lightly entertained. In Radford v. Radford Estate (2008), 43 E.T.R. (3d) 74, [2008] O.J. No. 3526, Mr. Justice Quinn discussed a number of other considerations to apply when considering an application for the removal of a trustee at paras. 102 - 107: Removal must be the only course to follow [102] Removal of an estate trustee should only occur “on the clearest of evidence that there is no other course to follow”: see Crawford v. Jardine, [1997] O.J. No. 5041 (Ont. Gen. Div.)) at para. 18, citing Tempest, Re (1866), 1 Ch. App. 485 (Eng. C.A.) and Owen Family Trust, Re (1989), 33 E.T.R. 213 at 215 (B.C.S.C.). Removal to be guided by welfare of beneficiaries [103] In deciding whether to remove an estate trustee, “the court’s main guide should be the welfare of the beneficiaries”: see Crawford v. Jardine, ibid, citing Letterstedt v. Broers (1884), (1883-84) L.R. 9 App. Cas. 371 (South Africa P.C.) at 385-387 and Anderson, Re (1928), 35 O.W.N. 7 (1928) at 8 (Ont. H.C.). Non-removal must likely prevent proper execution of trust [104] “It is not every mistake or neglect of duty on the part of the trustees which will lead to their removal. It must be shown by the applicant that the non-removal of the trustee will likely prevent the trust from being properly executed”: see Crawford v. Jardine, ibid. ... Removal not intended to punish past misconduct [106] “The authorities are, I believe, consistent in placing the emphasis on the future administration of the estate, and the risks to which it will be exposed if the trustee remains in office. The question is whether the trust estate is likely to be administered properly in accordance with the fiduciary duties of the trustee and with due regard to the interests and welfare of the beneficiaries. The sanction of removal is intended not to punish trustees for past misconduct but rather to protect the assets of the trust and the Kajaks Estate, Re J. Sigurdson J. 207

interests of the beneficiaries”: see St. Joseph’s Health Centre v. Dzwiekowski, supra, at para. 28. [107] But, “past misconduct that is likely to continue will often be sufficient to justify removal ...”: see St. Joseph’s Health Centre v. Dzwiekowski, supra, at para. 29. 26 The applicants make the following points which they argue justify the removal of the executor and trustee: (a) They allege that there has been extensive delay that has endangered the estate. The delay, they say, caused tax penalties and interest diminishing the estate and the estate work is still not complete. (b) The trustee, the applicants say, has acted dishonestly. In his initial affidavit in the probate action he omitted about $1.5 million in assets that they say the trustee must have known, as the investments were held in the same company as Mr. Savics’ employer and presumably were the same investments that Mr. Savics assisted the deceased with for many years. This information was revealed by the accounting firm that discovered it rather than by the voluntary disclosure of the executor. (c) The trustee, the applicants say, was dishonest about the amount of the assets in the estate in 2009, when he indicated that the distribution at that time was basically the entire amount that was to be distributed, when in fact there was, as revealed in 2014, an additional $128,000 to be paid to each of the applicants. (d) The executor, they say, was dishonest with the Latvian beneficiaries, indicating that they would receive the interim distribution if they provided a release. (e) The trustee, they say, was dishonest when he indicated to one of the beneficiaries that she would be getting an interim distribution within two weeks, but did not receive it for over four months later. (f) The executor, they say, acted without reasonable fidelity by transferring $2 million of the estate’s assets into his own personal account rather than making a separate estate account. (g) The executor, they say, persisted in writing to the beneficiaries to get them to agree to change the distribution of the estate contrary to the wishes of the deceased. 27 In sum, the applicant says that the executor has demonstrated through his delay, dishonesty and lack of fidelity, that he is unsuitable in the role 208 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

of executor and his actions have negatively affected the estate and the beneficiaries and he should be removed.

Discussion 28 Again, the question I must address is whether the applicants have met the test in the jurisprudence and demonstrated that the executor endangered the trust property or has shown a want of honesty or proper capacity to execute his duties, or a want of reasonable fidelity. 29 Delay in administering the estate has been lengthy. Although the delay has been extensive I do not think that fact by itself or even the individual incidents of which the applicants complain by themselves justify the removal of the executor and trustee. 30 The question is whether in all of the circumstances that have been proven, the applicants have satisfied the test that I have set out above that justifies the Court ordering removal of the executor and trustee. 31 Let me review the relevant circumstances starting with delay. First of all, I find that the delay has been extensive. In appropriate circumstances, that is relevant to the capacity of the executor to execute his duties. It has been nearly nine years since the deceased passed away and the estate has not been fully distributed. Probate was granted in November 2009. The delay, I find, has caused some prejudice because even if the estate monies are secure, as the executor insists, the beneficiaries have been without their funds for a long time and, in fact, in the waiting period, one of the beneficiaries has passed away. 32 Delay can occur but I find the delay of this length in administering the estate has not been satisfactorily explained. I recognise that I have not found the executor in contempt of the order of Justice Russell but the executor was nevertheless required to comply with the order and although it may have been an answer to the contempt allegation that there was no specific date by which the distribution was to have been made, it appears to me that the compliance with the order by the executor was not in a reasonable time. 33 The lengthy delay in administering the estate is explained (by the executor) in terms of obtaining information about a Latvian property transaction involving the deceased and one of the residuary beneficiaries, where the property was transferred by the deceased while he was alive. The explanation I found was rather general given the extensive passage of time. It now appears the executor can obtain a clearance certificate in Kajaks Estate, Re J. Sigurdson J. 209

Canada, having filed an amended tax return, but it is unclear how long it will take in order that there can be a final distribution of the estate. 34 The delay in administering the estate has required the applicants to retain counsel to request a distribution and also to have to apply for an order for an interim distribution and for an order that there be a passing of accounts. 35 Why has it taken so long for the relatively simple estate to be administered? 36 I find that the evidence shows a reluctance on the part of the executor and trustee to distribute the estate in accordance with the wishes of the deceased. 37 The evidence shows that the executor was aware of the accounts of the deceased when he filed for probate in 2009. The evidence suggests that the accounts were at the executor’s firm and that he had helped the deceased invest his money in his life. I find that the executor must have known about the $1.5 million approximately in assets which were not disclosed in the probate filing; it also appears that information was disclosed by the accounting firm and not the executor himself. 38 The applicant was told by the executor, through the executor’s law firm in 2013, that the $100,000 that he had received in 2009 basically was the entire amount to be received by him, but there was much more. It turned out that there was about $128,000 in addition according to the accounts produced in 2014. 39 As recently as 2014, when the beneficiaries were waiting for their share, the executor and trustee was urging these residuary beneficiaries to agree to a change to the will so that the executor’s children would get one-half of the estate. I set out an excerpt from a letter written by the executor to the beneficiaries when he delivered the accounts ordered by Master MacNaughton. He said in part: I should have delivered these accounts to you a long time ago and I apologize for taking so long to get these to you. In particular, I apologize to Gaston for not getting these accounts to you after he had reminded me of my obligation. One of the reasons I had not sent these accounts to you earlier was because of advice from the accountants for the estate regarding properties my stepfather owned in Latvia. My stepfather owned two properties in Latvia, an apartment he purchased and a rural property that was in his family for a long time and which he recovered after 210 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Latvia left the USSR. I visited these properties in Latvia with my stepfather. While Vilnis’ will only deals with his property in Canada and does not purport to deal, distribute or otherwise account for property outside of Canada, the transmission of property outside of Canada gives rise to tax within Canada and as executor I am responsible for reporting on the transmissions outside of Canada and paying any taxes that arise as a result of such transmissions of property. I have tried for many years to get information on those properties, without success to date. I have contacted various people in Latvia about Vilnis’ properties. I am following up through the government of Latvia and believe I will find out more about these properties in the next number of months. I am also writing to you because my stepfather’s will does not reflect his wishes or the wishes of my mother, so I am asking for your consent to alter the accounts as they now stand. My parents Lucija Toma and Vilnis Kajaks were married for over fifty years and during that time they built a family life together. I was close to them for all of that time. They both took care of me as a child. Later as a working adult, I was able to provide them with funds and help them invest and manage their joint account beginning before I moved back to Vancouver, and continuing after Vilnis gave up fishing. Luckily Vilnis and I invested very successfully over those many years and as a result of those investments, which make up the majority of his estate, Vilnis built a large estate for the beneficiaries to share. My parents’ intent was that half of their estate was to go to my mother’s grandchildren and half of their estate was to go to you, the residual beneficiaries named under Vilnis’ will. The problem is that the legal consequences of my mother and Vilnis’ wills and the manner in which they kept their financial assets created a situation that they did not intend. My mother and stepfather had joint accounts with a right of survivorship when they should have had accounts that went to their estates on death so the funds would be dealt with by their wills. For whatever reason when their lawyers drew their wills the lawyers did not explain or my parents did not understand what they should have done to accomplish their goals. Legally, when my mother Lucija died before my step-father Vilnis, her half of those accounts did not go to her estate through her will but went directly to Vilnis. Because of the way the accounts were opened and the way the wills were drafted, all of that money in the joint accounts under the will was to be distributed only to you. This leaves Kajaks Estate, Re J. Sigurdson J. 211

Lucija’s grandchildren, Eric Christopher and Maija, without the planned inheritance. If my step-father had died first, then the whole estate would have gone to Lucija’s grandchildren and you would have been left without your planned inheritance. Both results are unfair. It is my strong belief that my late parents did not intend this to hap- pen. Rather, they intended that their life together would result in each of their respective families sharing in their joint savings. With your consent, I would like to alter the accounts, so that half of Vilnis’ entire estate, goes to Lucija’s grandchildren, Eric Christopher Savics and Maija Savics, and the other half of Vilnis’ entire estate goes to the remaining beneficiaries named under his will in the pro- portions specified in the will. This means that Vilnis’ half interest in the North Vancouver property would also be split between the two sides of the family, with half of that half interest in the North Van- couver property going to Lucija’s grandchildren, and half of the half interest in that property going to the remaining beneficiaries under Vilnis’ will. If you consent to this arrangement, the remaining tax and any other liabilities still to be determined and owing under Vilnis’ estate will be paid from the proceeds to be paid to Lucija’s grandchildren. If you are agreeable to these terms, provided all of the beneficiaries consent, I will be able to distribute payments to each beneficiary within 30 days of obtaining the consent of all of the beneficiaries. This means that collectively, instead of receiving $1,973,745.52 (Canadian dollars) less taxes, accounting and legal costs, and any other liabilities yet to be determined as the accounts now stand, you would collectively receive $1,148,374.09 (Canadian dollars) and you would each receive the entirety of your proportionate share of that amount, as specified in Vilnis’ will, within 30 days. If you do not all consent to the proposed arrangement, the unsettled estate liabilities must first be determined and then split among the beneficiaries. Because I have not been able to determine the amount of the tax liability and because it could be quite large, I will not be able to make a complete distribution to you until the tax liability is determined. 40 This letter was written in 2014, seven years after the deceased died. This revised distribution was something that the executor apparently believes the testator and his wife intended. But that is not what the testator directed in his will and the executor’s duty is to act in accordance with the wishes of the testator as they appear in the will. I find that it is significant that the executor rather than executing the wishes of the deceased 212 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

as he is required to do has taken steps long after the deceased’s death to attempt to persuade the beneficiaries to alter the will. 41 I find that the evidence demonstrates that in all the circumstances the conduct of the executor and trustee, his delay in administering the estate, leads to the inference that rather than properly administering the estate the executor has persisted in a course of conduct that he hopes will make the residuary beneficiaries agree to a variation of the will to the benefit of his children. 42 While the respondent says the purpose of the application should not be to punish the executor for past misconduct, I think that the persistence of the executor to have the beneficiaries change the will and the delay in administering the estate must be examined in all of the circumstances that I have set out including the failure to disclose the full assets on probate. The evidence as a whole leads me to conclude that the executor and trustee has not acted and will not act with the fidelity required to properly discharge his duties as executor and trustee. 43 The respondent’s counsel said I must not punish the executor for past misconduct and that the estate will be wound up in the future without prejudice to the beneficiaries. However, I think there has been delay and when considered in the context of the evidence that I described it leads me to conclude that the executor will not discharge his duties and complete the administration of the estate in a diligent and honest fashion as he is required to do. 44 While I am not satisfied on the evidence that there have been tax penalties incurred by the executor’s delay, I am concerned that the delay is part of an underlying concern of the executor that the residual beneficiaries are getting more than they should. I also find that it is a concern that in the context of a court order requiring an interim distribution, the executor required the beneficiaries to sign a release and some of them in fact did. 45 In all the circumstances I have concluded that the conduct of the trustee justifies his removal. I am not persuaded that the executor will comply with his obligations as trustee in the future and in the circumstances I order his removal. 46 I order that he be replaced by the applicant, the alternate executor named in the will. No argument that the alternate executor was not an appropriate executor and trustee was advanced. Kajaks Estate, Re J. Sigurdson J. 213

47 In making this order, I want to ensure the estate is wound up promptly; I see no reason, for example, why the accounting firm should not complete their work. 48 As to appropriate directions that I should make following this order, I leave it to counsel to have a discussion between themselves and if they cannot agree on what appropriate supplementary directions I should make, they can appear before me again at 9:00 a.m. in the following weeks: I am available the balance of this week, although I do not think I am available Friday, hearing another matter, so I guess it is really starting the week after next, because I am not available next week, but I will leave that to counsel to discuss. 49 If the parties are unable to agree as to the disposition of costs, I will hear submissions on that issue at that time as well. 50 Anything further at this stage, gentlemen? 51 MR. BOW: Just some clarification, My Lord. Are you meaning that counsel should decide about timing of handing over the assets and — 52 THE COURT: Timing and any other matter involving the administration of the estate to ensure that, to the extent the court can direct, it is done in a seamless way and in as least costly a way as possible. 53 MR. BOW: All right, and did you have a judgment with respect to the costs? We had asked for costs. 54 THE COURT: No, I would like to hear your submissions on costs after you have had a discussion with your friend. 55 MR. BOW: Okay, thank you, My Lord. 56 THE COURT: All right. Order accordingly. 214 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

[Indexed as: Abbott v. BMO Trust Co.] Estate Name: Veronica Ann Cross Martin Gary Abbott, Applicant BMO Trust Company, Veronica Michelle Abbott, Maureen Margaret Abbott, Patrick Douglas Abbott and George Marshall Abbott, Respondent Alberta Court of Queen’s Bench Docket: Calgary ES01-113912 2016 ABQB 177 G.C. Hawco J. Heard: January 25, 2016 Judgment: March 29, 2016 Estates and trusts –––– Estates — Actions involving personal representatives — Practice and procedure — Discovery –––– Deceased appointed trust company as her attorney under enduring power of attorney and as her personal representative — Between 2007 and her death in 2013, deceased made number of inter vivos gifts of lands and other gifts to number of her five children — Her will divided her property fairly evenly among children — Applicant, one of deceased’s children, applied for disclosure of trust company’s files and all transactions made since it was appointed in 2007 — Application was dismissed as fishing expedition — Applicant then applied to have financial information held by trust company produced to independent reviewer who would investigate whether deceased was unduly influenced with respect to various inter vivos gifts she made and whether she had requisite capacity to make such gifts — Application dismissed — Issue of disclosure had already been dealt with in earlier application — Fact that applicant now sought to have material provided to independent investigator did not make it new application — It was res judicata. Estates and trusts –––– Estates — Will challenges — Testamentary capacity — Practice and procedure — Discovery –––– Deceased appointed trust company as her attorney under enduring power of attorney and as her personal representative — Between 2007 and her death in 2013, deceased made number of inter vivos gifts of lands and other gifts to number of her five children — Her will divided her property fairly evenly among children — Application by one of deceased’s children for disclosure of trust company’s files and all transactions made since it was appointed in 2007 was dismissed — Applicant then applied to have financial information held by trust company produced to independent reviewer who would investigate whether deceased was unduly influenced with respect to various inter vivos gifts she made and whether she had requisite capac- Abbott v. BMO Trust Co. G.C. Hawco J. 215

ity to make such gifts — Application dismissed — Applicant and his siblings knew that during last six years before her death, deceased suffered from mild dementia and had memory lapses, was occasionally confused, and often changed her mind about many things — Best evidence of deceased’s capacity in years before her death was that of counsel who drafted her will — Counsel’s evidence confirmed that despite periodic memory lapse, changes of mind, and anger, deceased had periods of lucidity and was still able to make her own decisions about her financial affairs — While deceased had memory lapses and might have then occasionally been influenced by some of her children, counsel was quite satisfied that deceased was aware of what she was doing and clearly had no concerns about her ability to do what she wanted to do at any given time — Evidence of deceased’s testamentary capacity and her capacity to make gifts to her children and her relatives was overwhelming — Deceased was not unduly influenced and had requisite capacity to make inter vivos gifts which she made during last six years of her life — There was no basis for criticism or concern about actions of trust company as attorney. Estates and trusts –––– Estates — Will challenges — Undue influence — Practice and procedure — Miscellaneous –––– Deceased was not unduly influenced and had requisite capacity to make inter vivos gifts which she made. Rules considered: Alberta Rules of Court, Alta. Reg. 124/2010 R. 6.8 — considered

APPLICATION by one of deceased’s children for disclosure of financial information held by trust company which had held enduring power of attorney for deceased.

Blair R. Carbert, for Applicant, Martin Gary Abbott James L. Lebo, Q.C., for Respondents, Maureen Margaret Abbott and Veronica Michelle Abbott Nancy L. Golding, Q.C., for Respondent, Patrick Douglas Abbott Suzanne Porteous, for Respondent, George Marshall Abbott April D. Grosse, for Respondent, BMO Trust Company

G.C. Hawco J.: Background 1 Ms. Veronica Ann Cross died in January of 2013. Her personal representative is BMO Trust Company, one of the Respondents. The Appli- cant is Mr. Martin Gary Abbott, one of her five children and one of the five residual beneficiaries under her will. The Respondents, other than BMO, are her other four children. All of her children are adults. 216 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

2 Ms. Cross appointed BMO as her attorney under an Enduring Power of Attorney (“EPOA”) on July 3, 2007. That took immediate effect. Be- tween 2007 and 2015 Ms. Cross, who was a wealthy woman, had made a number of inter vivos gifts of lands and other gifts to a number of her children. All of her children have benefited from her generosity over the years, perhaps some more than others. 3 In her will, which was drafted by her counsel, Mr. Russell McKinnon, QC, her property was divided fairly evenly among her five children. Pro- vision was made for a “bringing back” into the residue pot, if you will, certain parcels of land and certain monies which had already been specifically given to a number of her children in order to be fair to all. 4 There was also the provision which stated that, other than the “hotch- pot” provision, no child would have to bring into account any money or gift which he had given to him or to her prior to her death. So, while it was clear that she intended to benefit her children equally, pursuant to clause 10 of the will, no one who had received any sum of money which she had already paid or transferred to the person prior to her death had to have it taken into account in determining their “fair share” under the will. 5 Ms. Cross was indeed generous. But she was also independent, determined, sometimes angry and vocal about what annoyed her. And, it was quite clear through the numerous affidavits and examinations or ques- tionings which took place during this process, that any number of her children, indeed, perhaps all of them, would have annoyed her at one time or another. As one of her children stated, she could be quite difficult and was known by her children to both give and to take, as in take back. 6 Ms. Cross began to suffer from some dementia sometime around 2006 to 2007. She was often forgetful and therefore repetitive. She did not like to deal with financial matters but did so on occasion. 7 As stated, BMO was her attorney under the EPOA and Mr. McKin- non was her lawyer, who she very clearly trusted and whom she relied upon. 8 No objection was taken by any of the children to the application for probate. No one challenged the will in any manner. No litigation has been commenced by anyone with respect to any of the children pressur- ing Ms. Cross in any manner. No challenge per se has been taken with respect to her mental health, other than two applications, both taken by Martin Abbott. Abbott v. BMO Trust Co. G.C. Hawco J. 217

9 On July 7, 2014, Martin Abbott brought an application before this Court seeking an order for disclosure from BMO. He sought to have the BMO files and all transactions made since the company was appointed years ago disclosed to him and his siblings. He was the only sibling who sought that disclosure. 10 That matter proceeded before Madam Justice Erb in August, 2014. On August 29, 2014, Justice Erb said this: This application is made independent of any issue arising from probate of Mrs. Cross’ will. There is no litigation contemplated, challenging the terms of Mrs. Cross’ will or her other arrangement. There is no issue raised about her capacity to make her will, or to instruct BMO. There is no issue raised about the legality - or appropriateness of the BMO Trust administrator’s decisions - decision making on behalf of Mrs. Cross, which commenced in 2007...... BMO advised this Court, and this is not disputed, that Mrs. Cross did not want any of her children to have access to her financial and other dealings. She made this clear on numerous occasions throughout her lifetime, and appears to have gone to great lengths to retain privacy. It is not disputed that BMO Trust administrators were instructed by her not to make any such disclosures, either during or after her lifetime. Mr. Abbot raises concerns about certain inter vivos gifts made to Mrs. Cross’ children and grandchildren, and questions whether the funds and benefits were used for the designated purposes. He makes vague suggestions about undue influence, but his counsel candidly advised the Court that the no litigation is contemplated, and there are no issues over probate. He simply asks this Court to apply its inher- ent jurisdiction, exercises discretions in all the circumstances, and to grant an order for disclosure. 11 Justice Erb dismissed the application, believing that Mr. Abbott was engaged in a fishing expedition. She also awarded costs against him on a solicitor client basis.

Current Application 12 In this application Mr. Abbott is seeking to have the financial information held by BMO produced to an independent investigator who would investigate whether Ms. Cross was unduly influenced with respect to various inter vivos gifts she would have made in the six years preced- 218 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

ing her death and whether she had the requisite capacity to make such gifts.

Parties’ Positions 13 The Respondents maintain that Mr. Abbott is trying to pursue the same relief which he was denied in the earlier application before Justice Erb that he is prohibited from doing so under the principle of res judicata. 14 They argue that while this application may appear to be a legitimate objection being taken to the passing of accounts, Mr. Abbott is seeking yet again to review all of BMO’s records in order to determine what was paid to others prior to Ms. Cross’ death and then to have some independent inspector determine whether Ms. Cross had the requisite degree of awareness and independence to make decisions such as the gifting of money or objects to anyone the last six years of her life. 15 The Applicant argues that the real, indeed the only issue before Jus- tice Erb was whether BMO should have to disclose a list of all gifts and to whom they were made. 16 The Applicant maintains that the mental capacity of Ms. Cross was not in issue before her and that the duty owed by BMO to Ms. Cross was not in issue before her.

Issue 17 The issue for this Court to determine is whether this application should or should not be allowed because of the principle of res judicata.

Decision 18 I am satisfied that the issue of disclosure — of having BMO’s files examined — has been dealt with by Justice Erb. That will not be the subject of another application. It is res judicata. 19 While that may well be enough to decide this application, I am also satisfied that Ms. Cross was not unduly influenced and that she had the requisite capacity to make the gifts which she made during the past six years of her life.

Reasoning 20 While Justice Erb did only appear to touch upon the issue of mental capacity, her primary decision revolved around the issue of disclosure. Abbott v. BMO Trust Co. G.C. Hawco J. 219

That might well have been because Justice Erb was quite satisfied that she had Mr. Abbott’s then counsel’s advice, if not assurance, that there was no litigation contemplated which would be with respect to Ms. Cross’ capacity or with respect to undue influence. 21 And yet, here we are. As stated, I am satisfied that the issue of disclosure — that is, the issue of whether BMO’s file should be turned over and examined, has been dealt with by Justice Erb. The fact that Mr. Ab- bott now seeks to have this material provided to “an independent reviewer” does not make this a new application. It is res judicata. While that may well be enough to decide this application, in the event that I am wrong, I am going to deal with the issue of undue influence and capacity and the role of BMO.

Undue Influence and Capacity 22 The person best suited to give any opinion with respect to Ms. Cross’ capacity is and was her own counsel, Russell McKinnon. Counsel for the respondent parties obtained evidence from Mr. McKinnon by serving him with an appointment for questioning pursuant to Rule 6.8 of the Al- berta Rules of Court. The purpose of doing so was to obtain directly from Mr. McKinnon his views on Ms. Cross’ legal capacity and her ability to manage her affairs. I intend to refer to a number of the facts and opinions attributed to Mr. McKinnon, and wish to point out that this information or evidence was not before Madam Justice Erb when she rendered her decision. 23 It is accepted that both the Applicant and his siblings knew that during the last six or so years before her death, Ms. Cross suffered from mild dementia and had memory lapses, was occasionally confused and often changed her mind about many things. Mr. McKinnon’s evidence, particularly in view of a statement that Maureen Abbott made to the effect that he (Mr. McKinnon) was able to determine that Ms. Cross had periods of lucidity, is very important. The evidence from his questioning on December 4, 2015 a p 230 - 232 is captured by the following statement by Mr. McKinnon: Q But Maureen Stewart - sorry. Maureen Abbott makes statements there about: (as read) There is a precedent for people with Alzheimer’s or dementia, that they have periods of lucidity when reasonable decisions can be made, and that 220 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

is what Russ relies on, that he can determine those periods of lucidity. When you received this, is that — was that — did you consider that a fair description of how you were proceeding? Or did you — did you say, No, that’s not — that’s not how I’ve been dealing with it? She’s characterized your conduct in a certain way. A Yes. I think this relates to part of the conversation we had last time, and that is that a person, particularly an older person, who is as part of the aging process in some kind of decline intellectually may still be capable of making decisions that would be legally valid, and that could extend to a change to an estate plan, depending on what it was. It could extend to a change in a personal directive as Mrs. Cross expressed clearly to me what she wanted to do, and I acted on that. So I think as legal advisors we try to be aware of the whole context. We try to be aware of the capabilities of the person in the general sense, and we have to be particularly aware of the capability of a — of a person in a particular situation on a particular issue and what kind of capacity do they have to bring to that in order that it’s legally sound? So I think what Maureen is relating here is her formulation of that, and I agree with it — with that to the extent that I understand what she’s saying. Q So it was your practice to — in particular instances where those types of changes to an estate plan or personal direction were being discussed between you and the client that you were going to do a critical assessment of her capacity and understanding of that particular decision at that particular time. Is that fair? A Well, a considered assessment. I don’t know quite what that would — would be, but, recall, we’ve spoken earlier today and maybe even last time about these — I’ll call them flashes of anger, expression about one of the children that she’s highly displeased about something. And you asked me, I think, more than once today whether I’d read that as an instruction to prepare a change to her will. I think I’d need more — more than a flash of anger to act on that as an instruction. Q It’s part of that — I think you characterized it before — persistent or enduring — not persistent, but enduring intent? A Something consist — yeah, consist — consistently. Q Right. Abbott v. BMO Trust Co. G.C. Hawco J. 221

A Yeah. Consistently and purposefully. Yeah. 24 Mr. McKinnon’s evidence confirmed that despite periodic episodes of memory lapse, changes of mind, and anger, Ms. Cross was still able to make her own decisions about her financial affairs. 25 Mr. McKinnon saw Ms. Cross frequently. He was her independent counsel. He prepared spread sheets for her on a regular basis. She knew what she had given and to whom. 26 Mr. McKinnon was quite satisfied that Ms. Cross was aware of what she was doing and was quite free to do as she wished. While she did, of course, have memory lapses and might have then occasionally been influenced by some of her children, Mr. McKinnon clearly had no concerns about her ability to do what she wanted to do at any given time. Ms. Cross frequently met with her lawyer who was quite satisfied that she knew what she was doing. 27 On the whole, I am more than satisfied of Ms. Cross’ testamentary capacity and her capacity to make gifts to her children and her relatives. The evidence in that regard is, in my view, quite overwhelming.

Role of BMO 28 BMO was appointed as Ms. Cross’ attorney under the enduring power of attorney executed on July 3, 2007. However, as stated by Shawna Al- bornoz who was a trust administrator and vice president of BMO Trust Services, in her questioning which took place on June 23, 2014, BMO “never considered themselves to be working under her power of attorney because she had capacity”. Questioning June 23, 2014 p 9 l 16 - 19. At p 10 l 18 - 20 Ms. Albornoz confirmed that BMO did not consider themselves to be acting under the enduring power of attorney (EPO) because “she had capacity so she always provided direction to us on what to do on her accounts”. Again, the best evidence comes from Mr. McKinnon who recalled, pursuant to his notes, a meeting that he had with Ms. Cross on December 2, 2011. At that meeting Mr. McKinnon recorded that Ms. Cross had “correctly” stated that she could make gifts of whatever she wants to whomever she wishes. Mr. McKinnon confirmed during questioning that he had no concerns about her capacity at that meeting. Throughout his questioning, it was clear that Mr. McKinnon did not have any concerns regarding whether Ms. Cross had capacity to instruct him or BMO regarding her affairs or whether she understood her affairs. As Mr. McKinnon stated in his questioning on November 26 by Ms. Grosse, the EPOA was put in place to allow BMO to handle administrative mat- 222 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

ters since Ms. Cross was moving around at the time that it was executed. It was not put in place with the expectation that BMO would override or second guess the instructions of Ms. Cross. 29 It is to be noted that BMO did make an investigation with respect to Mr. Martin Abbott’s allegation of missing jewelry. BMO did determine that Ms. Maureen Abbott had some black pearls which had belonged to Ms. Cross. These were subsequently given by Ms. Abbott to BMO. 30 There does not appear to have been, from BMO’s investigation, any jewelry taken by anybody else. Mr. Martin Abbott did allege in his affidavit that he believed his mother’s jewelry had a value of between $750,000 to $1,000,000; however no one was able to identify a list of jewelry known to be missing. Further, Ms. Cross 2012 insurance coverage of her jewelry was set at $20,000. BMO determined that no further action was required. 31 Another instance which involved BMO regarded the transfer of $5,000 by Ms. Cross to Maureen. This occurred while Maureen visited her mother on one occasion. BMO was advised that some of the siblings had concerns about this and contacted Mr. McKinnon. Both BMO and Mr. McKinnon met with Ms. Cross and discussed a protocol with respect to any future transfers of monies. 32 I am simply unable to see anything which would persuade me that BMO had done anything during their tenure as Ms. Cross’ attorney under the EPOA which would merit any criticism or concerns. It may be necessary to repeat that BMO did not consider that it was required to act under the EPO because it never had any question with respect to Ms. Cross’ ability to make her own decisions. This was not only their view but the view of Mr. McKinnon. 33 It is clear throughout Mr. McKinnon’s questioning that BMO liaised and consulted frequently with him to ascertain Ms. Cross’ wishes and instructions and the best course of action in any number of circumstances. I find no substance to the allegations by the Applicant. 34 In the end result Mr. Martin Abbott’s application is denied. This is his second attempt to call into question the competence and experience of BMO. It is his second attempt to call into question Ms. Cross’ mental capacity. Justice Erb found no basis for any interference or disclosure in the first application. I am satisfied that there is no basis again. Justice Erb awarded costs on a solicitor client basis, as do I. Application dismissed. McMurtry v. McMurtry 223

[Indexed as: McMurtry v. McMurtry] Mildred McMurtry, Plaintiff and John McMurtry and Mic Mac Realty (Ottawa) Ltd., Defendants John McMurtry, Plaintiff and Jim McMurtry, Defendant Jim McMurtry, Plaintiff by Counterclaim and John McMurtry, Brenda McMurtry, Barry Coons, Bouris Wilson LLP and Mic Mac Realty (Ottawa) Ltd., Defendants by Counterclaim Ontario Superior Court of Justice Docket: Ottawa 12-56265, 11-50312 2016 ONSC 2853 Sylvia Corthorn J. Heard: September 14-18, 21-22, 25, 2015 Judgment: April 29, 2016* Estates and trusts –––– Gifts — Delivery — Acceptance –––– Son claimed that, prior to father’s death, he intended to make or made gift of ten shares in family business to him — Mother claimed that shares formed part of residue of estate of which she was beneficiary — Mother brought action seeking declaratory relief that she was owner of shares — Action dismissed — Evidence did not establish that father intended to make gift of shares to son — When son’s conduct in its entirety was considered, it did not support finding that he accepted gift of shares — After purported gift of shares, son signed tax returns that identified father as owner of shares — Son had opportunities to ensure documents accurately reflected change in ownership of shares as of date of alleged gift but he failed to do so — After father died, son swore that he was beneficiary of shares under will and executed declaration of transmission with respect to shares — Declaration was intended to identify son as beneficiary of shares pursuant to will and not as owner of shares by virtue of inter vivos gift — Son’s conduct supported finding that he did not believe his father gifted him shares and did not amount to acceptance of gift — Evidence did not establish that father completed act that was sufficient to effect gift of shares to son — When father died he remained owner of shares — There was no completed gift of shares to son and shares formed part of residue of estate of which mother was beneficiary.

* A corrigendum issued by the court on May 27, 2016 has been incorporated herein. 224 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Civil practice and procedure –––– Judgments and orders — Declaratory judgments or orders — Availability — Where no consequential relief sought –––– Son claimed that, prior to father’s death, he intended to make or made gift of ten shares in family business to him — Mother claimed that shares formed part of residue of estate of which she was beneficiary — Mother brought action seeking declaratory relief that she was owner of shares — Action dismissed — Mother’s claim with respect to ownership of shares was restricted to declaratory relief and did not include any consequential relief — Resort to court for additional relief would not be required for mother to enjoy benefits of ownership of shares if she were declared owner — As claim was restricted to declaratory relief only, it was not subject to any limitation period and was not statute- barred. Civil practice and procedure –––– Limitation of actions — Principles — Laches and acquiescence — Miscellaneous –––– Son claimed that, prior to father’s death, he intended to make or made gift of ten shares in family business to him — Mother claimed that shares formed part of residue of estate of which she was beneficiary — Mother brought action seeking declaratory relief that she was owner of shares — Action dismissed — Mother was precluded by laches from proceeding with claim for declaration of ownership of shares — Mother admitted that she wrote letter after father died where she confirmed she was witness to father expressing intention to gift shares to son, and instructions were given to company’s accountant to put gift into effect — Letter was written voluntarily and deliberately, mother was aware of purpose to be served by letter, and she was not under duress when she wrote letter — On basis of letter, status quo for 17 years was that son and his wife conducted themselves on assumption that son owned shares — If mother truly believed she was beneficial owner of shares it was incumbent on her to take action in context of administering estate — Mother’s conduct amounted to acquiescence and it was just to apply doctrine of laches — Acquiescence was stand-alone branch of doctrine of laches and prejudice was not required, but there was clear prejudice to son due to mother’s delay in advancing claim — It was reasonable for son to alter his position on reliance of mother’s acceptance of status quo — It would be unjust and unreasonable to disturb status quo more than 17 years after mother wrote letter — Constructive trust was imposed and mother held shares in trust for benefit of son. Estoppel –––– Estoppel in pais — Estoppel by conduct — Acquiescence — Miscellaneous –––– Son claimed that, prior to father’s death, he intended to make or made gift of ten shares in family business to him — Mother claimed that shares formed part of residue of estate of which she was beneficiary — Mother brought action seeking declaratory relief that she was owner of shares — Action dismissed — Mother was estopped by convention from pursuing claim of ownership of shares — Mother admitted that she wrote letter after father died McMurtry v. McMurtry 225 where she confirmed she was witness to father expressing intention to gift shares to son, and instructions were given to company’s accountant to put gift into effect — Mother wrote letter voluntarily, knowing of significance of contents of letter and that son would rely on it for business — Son and mother conducted themselves on basis of mutual assumption that son owned shares — Son relied on mutual assumption as he carried out day-to-day operations of company and it would be unjust and unfair and detrimental to son to allow mother to resile from common assumption — Criteria for estoppel by convention were met — Mother held shares in constructive trust for son. Estoppel –––– Estoppel in pais — Express representation — General principles –––– Son claimed that, prior to father’s death, he intended to make or made gift of ten shares in family business to him — Mother claimed that shares formed part of residue of estate of which she was beneficiary — Mother brought action seeking declaratory relief that she was owner of shares — Action dismissed — Mother was estopped by representation from pursuing claim of ownership of shares — Criteria for estoppel by representation were met — Mother admitted that she wrote letter after father died where she confirmed she was witness to father expressing intention to gift shares to son, and instructions were given to company’s accountant to put gift into effect — In letter mother represented to son that he was owner of shares — Mother knew son would act on that representation — Son acted to his detriment in relying on letter — Mother held shares in constructive trust for son. Cases considered by Sylvia Corthorn J.: Brisco Estate v. Canadian Premier Life Insurance Co. (2012), 2012 ONCA 854, 2012 CarswellOnt 15259, 82 E.T.R. (3d) 211, 299 O.A.C. 283, 113 O.R. (3d) 161, [2012] O.J. No. 5732, 16 C.C.L.I. (5th) 45 (Ont. C.A.) — considered Burns Estate v. Mellon (2000), 2000 CarswellOnt 1990, 48 O.R. (3d) 641, 188 D.L.R. (4th) 665, 133 O.A.C. 83, 34 E.T.R. (2d) 175, [2000] O.J. No. 2130 (Ont. C.A.) — referred to Foley v. McIntyre (2015), 2015 ONCA 382, 2015 CarswellOnt 7680, 125 O.R. (3d) 721, 8 E.T.R. (4th) 175, [2015] O.J. No. 2711 (Ont. C.A.) — referred to Joarcam LLC v. Plains Midstream Canada ULC (2013), 2013 ABCA 118, 2013 CarswellAlta 447, 90 Alta. L.R. (5th) 208 (Alta. C.A.) — considered M. (K.) v. M. (H.) (1992), 142 N.R. 321, (sub nom. M. c. M.) [1992] 3 S.C.R. 6, 96 D.L.R. (4th) 289, 57 O.A.C. 321, 14 C.C.L.T. (2d) 1, 1992 CarswellOnt 841, 1992 CarswellOnt 998, [1992] S.C.J. No. 85, EYB 1992-67549 (S.C.C.) — followed McNamee v. McNamee (2011), 2011 ONCA 533, 2011 CarswellOnt 7168, 69 E.T.R. (3d) 38, 106 O.R. (3d) 401, 335 D.L.R. (4th) 704, 280 O.A.C. 372, 4 R.F.L. (7th) 13, [2011] O.J. No. 3396 (Ont. C.A.) — referred to 226 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Pecore v. Pecore (2007), 2007 SCC 17, 2007 CarswellOnt 2752, 2007 Carswell- Ont 2753, [2007] S.C.J. No. 17, 361 N.R. 1, 32 E.T.R. (3d) 1, 37 R.F.L. (6th) 237, 279 D.L.R. (4th) 513, 224 O.A.C. 330, [2007] 1 S.C.R. 795 (S.C.C.) — referred to R. v. C. (H.) (2009), 2009 ONCA 56, 2009 CarswellOnt 202, 241 C.C.C. (3d) 45, 244 O.A.C. 288, [2009] O.J. No. 214 (Ont. C.A.) — considered Ryan v. Moore (2005), 2005 SCC 38, 2005 CarswellNfld 157, 2005 Car- swellNfld 158, 254 D.L.R. (4th) 1, 247 Nfld. & P.E.I.R. 286, 735 A.P.R. 286, 25 C.C.L.I. (4th) 1, 32 C.C.L.T. (3d) 1, EYB 2005-91679, 18 E.T.R. (3d) 163, 334 N.R. 355, [2005] S.C.J. No. 38, [2005] 2 S.C.R. 53, [2005] R.R.A. 694, 2005 CSC 38 (S.C.C.) — followed Soulos v. Korkontzilas (1997), 1997 CarswellOnt 1489, 212 N.R. 1, 9 R.P.R. (3d) 1, 46 C.B.R. (3d) 1, 32 O.R. (3d) 716 (headnote only), 146 D.L.R. (4th) 214, 100 O.A.C. 241, 17 E.T.R. (2d) 89, [1997] 2 S.C.R. 217, [1997] S.C.J. No. 52, 1997 CarswellOnt 1490, 32 O.R. (3d) 716, 32 O.R. (3d) 716 (note) (S.C.C.) — considered TD General Insurance Co. v. Zurich Insurance Co. (2014), 2014 ONSC 3191, 2014 CarswellOnt 7045, 30 C.C.L.I. (5th) 157, (sub nom. Zurich Insurance Co. v. TD General Insurance Co.) 120 O.R. (3d) 278, (sub nom. Zurich Insurance v. TD General Insurance) [2014] I.L.R. I-5618 (Ont. S.C.J.) — referred to Wasylyk v. Bonnyville (Municipal District No. 87) (2012), 2012 ABQB 348, 2012 CarswellAlta 931, 99 M.P.L.R. (4th) 83, 540 A.R. 394 (Alta. Q.B.) — considered Yellowbird v. Samson Cree Nation No. 444 (2008), 2008 ABCA 270, 2008 CarswellAlta 998, 56 C.P.C. (6th) 24, 92 Alta. L.R. (4th) 235, 433 A.R. 350, 429 W.A.C. 350, [2008] A.J. No. 818 (Alta. C.A.) — considered Statutes considered: Evidence Act, R.S.O. 1990, c. E.23 s. 13 — considered Limitations Act, 2002, S.O. 2002, c. 24, Sched. B s. 5 — considered s. 5(1) — considered s. 5(1)(a) — considered s. 5(1)(b) — considered s. 16(1)(a) — considered s. 45 — considered s. 46 — considered

ACTION by mother seeking declaratory relief that she was owner of shares of family business.

Mark W. Smith, for Mildred McMurtry McMurtry v. McMurtry Sylvia Corthorn J. 227

Jeff Saikaley, Marie-Josee Ranger, for John McMurtry and Brenda McMurtry Daniel Mayo, for Jim McMurtry

Sylvia Corthorn J.: Overview 1 Three members of the McMurtry family are in a dispute as to the ownership of 10 common shares (“the Shares”) in the family business — Mic Mac Realty (Ottawa) Limited (“MMR”). Two companion actions are being tried together. Pursuant to the June 2015 case management order of Master MacLeod, the action commenced in 2012 by Mildred Mc- Murtry is to be tried first. 2 The family members are the matriarch, Mildred McMurtry (“Mrs. McMurtry”), her youngest son, John McMurtry (“John”), and her eldest son, Jim McMurtry (“Jim”). John and Jim are two of Mrs. McMurtry’s children with her late husband Keith McMurtry (“Mr. McMurtry”), who died in 1998. 3 Mrs. McMurtry alleges that the Shares form part of the residue of the estate of Mr. McMurtry (“the Estate”), of which she is the beneficiary. John’s defence to that allegation is that Mr. McMurtry, prior to his death, intended to make or made a gift of the Shares to John. The gift, if not completed prior to the death of Mr. McMurtry, was completed by John in his role as one of the executors of the Estate. 4 MMR is said to have assets totalling several million dollars — with at least one witness estimating the value of MMR’s assets at $6,000,000. Although named as a defendant in the action commenced on behalf of Mrs. McMurtry, MMR did not defend the action. 5 In her action, Mrs. McMurtry seeks declaratory relief with respect to ownership of the Shares. Assuming she is successful in that regard, she seeks oppression remedy and other relief related to John’s involvement in and historical management of MMR. The companion action was commenced by John in 2011. The defendant in that action is Jim. John seeks a declaration that he is the owner of the Shares. He also seeks oppression remedy relief as against Jim, the latter in his capacity as the owner of six out of the total of 22 common shares in MMR. By way of counterclaim, Jim also seeks oppression remedy relief. John’s wife, Brenda McMurtry (“Brenda”) is a defendant to the counterclaim. 6 The parties to the actions agreed that: 228 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

• The only aspect of the claims made on behalf of Mrs. McMurtry to be determined at this stage of the trial is that for declaratory relief with respect to ownership of the Shares. • The determination in that regard in Mrs. McMurtry’s action shall be binding on the parties to companion action. • Following the determination as to ownership of the Shares, the parties shall attend before me to make submissions and for a determination as to the manner in which the balance of the trial of Mrs. McMurtry’s action and the trial of the companion action are to proceed.

a) The McMurtry Family 7 Mrs. McMurtry was born in 1929. When she gave evidence at trial, Mrs. McMurtry was days shy of her 86th birthday. She and Mr. McMur- try were married in 1946. The couple had been together for more than 50 years when Mr. McMurtry passed away in 1998. 8 The McMurtrys had six children: they are, from oldest to youngest, Donna, Linda, Debbie, James, Michael, and John. Michael died in 1983 as a result of an accident. 9 John is 58 years old. Brenda is 56 years old. John and Brenda have been together as a couple since the late 1970s; were married in the late 1980s; and have a daughter, Emily. 10 Jim is 62 years old. 11 None of the McMurtry daughters have been involved in the family business in any way, if at all, that is relevant to this action. They did not give evidence at trial.

b) Mic Mac Realty 12 Mr. McMurtry co-founded MMR with Arthur MacDonald and eventually purchased the latter’s interest in the business to become its sole owner. The business of MMR is the purchase and sale of land, ownership of warehouses, and the construction of sub-divisions and roads. 13 Prior to establishing MMR, Mr. McMurtry ran Keith’s Auto Sales. He eventually turned that business over to Michael. Following Michael’s death in 1983, Jim became the sole owner of Keith’s Auto Sales. 14 Initially, the shareholdings in MMR were as follows: Mr. McMurtry held ten shares, and each of Jim, Michael, and John held four shares (a total of 22 shares). Following Michael’s death, his four shares were McMurtry v. McMurtry Sylvia Corthorn J. 229

transferred equally to Jim and John. The transfer of Michael’s shares to his brothers was effected through an update to the corporate minute book (“the Minute Book”) in August 1984. Mr. McMurtry, Jim, and John attended at the offices of MMR’s lawyers and executed the documents required to transfer Michael’s shares to each of Jim and John. 15 Following the August 1994 transfer of Michael’s shares, the ownership structure of MMR was that Mr. McMurtry owned ten shares and each of Jim and John owned six shares. The point in time at which that ownership structure changed and the manner in which it changed are central to the outcome of Mrs. McMurtry’s and the companion action.

The Positions of the Parties a) Mrs. McMurtry’s Position 16 Mrs. McMurtry’s position is that her late husband remained the owner of the Shares at the time of his death. Mrs. McMurtry alleges that pursuant to the terms of Mr. McMurtry’s will, prepared in 1992 (“the Will”), the Shares: a) fall within the residue of the Estate, of which Mrs. McMurtry is the beneficiary; and b) are to be transferred to her. 17 Mrs. McMurtry admits that in January 1999, in the months following the death of her late husband, she wrote a letter (“the Letter”) in which she confirmed that she was witness in the 1980s to: a) her husband expressing his intention to gift the Shares to John; and b) instructions being given to MMR’s accountant to put the gift into effect. Mrs. McMurtry alleges that the Letter was written under duress — specifically out of fear of backlash from John. She therefore asks the Court to disregard the Let- ter as evidence of the gift of the Shares upon which John relies in defence of the action. 18 It is Mrs. McMurtry’s position that the relief requested with respect to ownership of the Shares is restricted to declaratory relief and, as a result, is not subject to any limitation period. Finally, Mrs. McMurtry says that the equitable doctrines of laches and estoppel do not apply to her claim of ownership of the Shares.

b) John’s Position 19 In response to his mother’s claim of ownership of the Shares John raises substantive defences based on the law of gift and the law of resulting trust, limitation period defences, and the equitable defences of laches and estoppel. In summary, John’s position is as follows: 230 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

• John acknowledges the presumption in equity of ‘bargain’ — that the transfer of property is the end result of negotiation and an agreement between the transferor and transferee as to the consideration to be paid for the property. That presumption is, however, rebuttable. John says that the evidence upon which he relies is sufficient to rebut that presumption. • John argues that the evidence supports a finding that a gift to him of the Shares was either: a) completed by Mr. McMurtry prior to his death; or b) capable of completion and completed by John, in his capacity as an executor of the Estate, subsequent to his father’s death. • The relief that Mrs. McMurtry is seeking is both declaratory and consequential relief. As a result her claim is “not properly a claim for a declaration” and is subject to a limitation period. The applicable limitation period expired before Mildred commenced her action and the action is statute-barred. • In the alternative, one or both of the equitable defences of estoppel and laches apply to bar Mrs. McMurtry’s claim.

The Issues 20 The issues to be determined in this matter are as follows: 1. Ownership of the Shares and specifically, whether: a) By virtue of a gift from his father, completed before or after Mr. McMurtry’s death, John is the owner of the Shares; or b) Mr. McMurtry remained the owner of the Shares as of his death in 1998; and the Shares fell within the residue of the Estate. 2. Is the claim advanced by Mrs. McMurtry solely for declaratory relief or does it include a claim for consequential relief? 3. If Mrs. McMurtry’s claim includes both declaratory relief and consequential relief, is the action statute-barred by reason of the expiration of the applicable limitation period? 4. Does the doctrine of laches apply to bar Mrs. McMurtry’s claim? 5. Is Mrs. McMurtry estopped from bringing her claim? McMurtry v. McMurtry Sylvia Corthorn J. 231

Decision 21 The outcome in this matter turns on equitable principles. I find that Mrs. McMurtry is precluded by reason of both laches and estoppel from proceeding with her claim for a declaration of ownership of the Shares. 22 The letter written by Mrs. McMurtry in January 1999 is central to consideration of the equities in this matter. In the Letter, written a number of months after the death of her late husband, Mrs. McMurtry confirmed that she was witness to: a) the decision of Mr. McMurtry to transfer the Shares to John; and b) steps taken to put that decision into effect. 23 On the basis of the Letter, the status quo since January 1999 is that both Mrs. McMurtry and John have been conducting themselves on the basis of the mutual assumption that John is the owner of the Shares. There is no evidence that prior to the commencement of this action — 13 years after she wrote the Letter — Mrs. McMurtry ever took any step to inform John that she is claiming ownership of the Shares as residuary beneficiary under the Will. 24 Mrs. McMurtry was fully aware of the purpose to be served by the Letter — to permit the Minute Book for MMR to be re-created, identify- ing John as the owner of the Shares. Mrs. McMurtry was also, in 1999, fully aware that John would rely on the Letter for that purpose. It is un- disputed that John and Brenda have, for three decades, including since the Letter was written, devoted their working lives and, at times, personal financial resources to the operation and management of MMR. Mrs. Mc- Murtry acknowledges the extent of the work done by John and Brenda in the operation and management of MMR. 25 It would be unjust and unreasonable to disturb the status quo more than 17 years after Mrs. McMurtry wrote the Letter. As a result a constructive trust is imposed and Mrs. McMurtry holds the Shares for the benefit of John. 26 Absent consideration of the equities, my determination of the first three issues listed above is: 1) There has been no completed gift of the Shares to John and the Shares form part of the residue of the Estate of which Mrs. Mc- Murtry is the beneficiary; 2) The relief which Mrs. McMurtry seeks is restricted to declaratory relief only; and 232 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

3) Mrs. McMurtry’s claim for declaratory relief is not subject to any limitation period and is therefore not statute-barred. 27 In the companion action commenced by John, he seeks a declaration that he is the owner of the Shares. Based on the evidence heard to date, the only determination I am in a position to make is that, based on equitable principles, a constructive trust is to be imposed in his favour. 28 The end result of the imposition of the constructive trust requires a determination of issues that were not before the Court at this stage of the proceeding. Whether John is entitled to a vesting order — with the ownership of some or all of the Shares ultimately being transferred to him — remains to be determined. The oppression remedy claims advanced by John as the plaintiff and by Jim as the plaintiff by counterclaim, both in the companion action, also remain to be determined. 29 The equities with respect to these remaining matters do not begin and end with John and Mrs. McMurtry. The equities are much broader and require consideration of the position over time of each of the parties to the companion actions. 30 Evidence is required with respect to the value of the Shares, the financial circumstances of MMR, payments made by MMR over the years to or for the benefit of each of the parties to the companion actions, the circumstances under which a home owned by Mr. and Mrs. McMurtry was transferred by the latter to John following Mr. McMurtry’s death, and the consideration, if any, paid for that transfer. As of this stage, the Court has heard minimal evidence with respect to these matters. 31 Pending a determination of the remaining issues in the companion actions, the Shares are to remain an asset of the Estate and the executors of the Estate are prohibited from transferring the Shares to Mrs. McMurtry or to anyone else.

The Credibility and/or Reliability of the Witnesses 32 In assessing the credibility and reliability of the witnesses, I rely on the governing principles succinctly stated by Watt J. at paragraph 41 of his decision in R. v. C. (H.), 2009 ONCA 56 (Ont. C.A.): Credibility and reliability are different. Credibility has to do with a witness’s veracity, reliability with the accuracy of the witness’s testimony. Accuracy engages consideration of the witness’s ability to accurately: i. observe; McMurtry v. McMurtry Sylvia Corthorn J. 233

ii. recall; and iii. recount events in issue. Any witness whose evidence on an issue is not credible cannot give reliable evidence on the same point. Credibility, on the other hand, is not a proxy for reliability; a credible witness may give unreliable evidence: R. v. Morrissey (1995), 22 O.R. (3d) 514, at 526 (C.A.). 33 The lack of credible or reliable evidence from either of Mrs. McMur- try and John was more than striking. 34 Given her age, Mrs. McMurtry’s testimony was limited in terms of the number of hours per day over which she testified. She was not pressed by counsel or the Court to give evidence during any period of time in which she was in any way hindered. 35 Mrs. McMurtry gave evidence with respect to the operation generally of MMR and the company of which she is the sole owner (“Landco”). On matters unrelated to ownership of the Shares per se, Mrs. McMur- try’s evidence appeared to be sharp and was for the most part consistent with the evidence of the other witnesses — including as to the extent to which John and Brenda have devoted their working lives to MMR. 36 A significant portion of Mrs. McMurtry’s testimony was with respect to the Letter, which is the only documentary evidence with respect to the alleged gift of the Shares. Mrs. McMurtry does not dispute that she wrote the Letter. 37 In her evidence Mrs. McMurtry addressed the request made of her to write the Letter and the circumstances under which she wrote it. She also gave evidence as to her understanding of the significance — in particular to John — of the substance of the Letter. Mrs. McMurtry’s evidence with respect to these subjects is replete with contradictions and reversals. 38 By way of example, Mrs. McMurtry’s answers to questions related to why the Letter was written included the following: • “I remember writing it but I’ve forgotten what it’s about.” — when first presented with a copy of the Letter during examination- in-chief (“in chief”). • She does not know when John asked her to write the Letter — “in chief”. • Mrs. McMurtry does not recall where she was when she wrote the Letter — “in chief”. 234 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

• Mrs. McMurtry was in Florida when she wrote the letter — “in chief”. • She was asked by John if the Minute Book for MMR was in Flor- ida — “in chief”. • “I don’t recall any of that.” — When asked during cross-examination about John calling her to look for the Minute Book. • Mrs. McMurtry acknowledged that she looked for the Minute Book, did not have it, and told John so in the Letter — on cross- examination. 39 The first answer listed above is problematic given that Mrs. McMur- try clearly understood what her action is about and subsequently admitted that she understood the significance of the Letter when it was written. The first answer is an example of another feature of Mrs. McMurtry’s evidence on subject matters that were clearly material to a determination as to the ownership of the Shares. Her evidence on such matters frequently started with a blanket denial or lack of any memory followed by a series of specific answers, with the answers sometimes including reversals and contradictions. 40 For the reasons set out above, I find that Mrs. McMurtry is an unreliable witness generally and that she lacks credibility. 41 I find that John’s evidence also lacks the veracity of a credible witness. John’s conduct with respect to the Shares, both before and after the Letter was written and given to him, is such that it calls into question his credibility. I discuss in greater detail below a number of occasions on which John certified or swore to the truth of documents which he knew, when signing them, were not true. John’s failure to take seriously the certification or swearing of a document is indicative of a wilful carelessness with the truth. I find that his wilful carelessness with the truth continued throughout his evidence, in particular as relates to the ownership of the Shares. 42 Four other individuals gave evidence at trial. Jim was called as a witness as part of Mrs. McMurtry’s case. The majority of Jim’s evidence was not material to a determination of the ownership of the Shares. Jim admits that he did not until 2009 give much of his attention to the operation of MMR or to the Estate. However, for those matters on which Jim’s evidence is relevant and material, consideration must be given to his overall credibility. McMurtry v. McMurtry Sylvia Corthorn J. 235

43 Jim’s conduct in relation to a mortgage registered on the title to his property, causes me concern as to his overall credibility. Jim admitted that in the 1990s a mortgage/charge in the amount of $175,000, from him to his mother, was registered on the title to his property. That step was taken with no money actually changing hands and specifically so as to protect Jim’s ownership of the property in case he found himself in financial difficulty. The mortgage/charge was eventually discharged in 2012 without any money changing hands. 44 That Jim was willingly a party to such a ‘transaction’ in an effort to protect his assets from potentially legitimate creditors leads me to question the overall credibility of Jim’s evidence. 45 Brenda was called to give evidence as part of John’s case. The manner in which she testified was respectful of the members of the McMur- try family, including Mr. McMurtry. Her evidence demonstrates that she holds no ill will towards her in-laws. Brenda was visibly distressed by the impact which the litigation has had on her relationship with her mother-in-law. Brenda became emotional and tearful in discussing Mrs. McMurtry and the latter’s well-being. 46 I find that the evidence which Brenda gave was logical in terms of the chronology of events which she described. The explanations which Brenda gave for steps taken over time in the operation and management of MMR — including with respect to the Shares — are entirely plausible. 47 I find Brenda to be a credible witness. Where her evidence conflicts with that of others (including John and Mrs. McMurtry), unless otherwise stated, I accept Brenda’s evidence. 48 The two other individuals who gave evidence at trial are MMR’s former accountant, Barry Coons (“Mr. Coons”) and the company’s former bookkeeper, Christine Evraire (“Ms. Evraire). Mr. Coons was professional in his approach to the evidence. He relied on the contents of documents which he or others in his office prepared. He did not try to embel- lish his evidence through recollection independent of the documents. I find that there is no basis upon which to question the overall credibility of his testimony. 49 Ms. Evraire’s evidence was such that it is clear she enjoyed her working relationship with Mr. McMurtry and that she never developed the same level of comfort with John as he took on more responsibility over time in MMR. That said, I do not find that Ms. Evraire’s discomfort with 236 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

John as her employer caused her to in any way attempt to favour Mrs. McMurtry over John.

Issue No. 1 — Ownership of the Shares a) The Law of ‘Gift’ 50 In defence of his mother’s claims, John relies on two alternative positions with respect to a gift of the Shares. First, John says that his father completed a legally valid gift to him of the Shares. In advancing that defence John must address the equitable presumption of bargain; and re- but that presumption to establish that a gift was made of the Shares. 51 John’s position is that his late father completed a valid inter vivos gift, intended to take effect when his father was still alive. The essential elements of such a gift are well-settled: “There must be (1) an intention to make a gift on the part of the donor without consideration or expectation of remuneration, (2) an acceptance of the gift by the donee, and (3) a sufficient act of delivery or transfer of the property to complete the transaction [Footnote omitted]”: see McNamee v. McNamee, 2011 ONCA 533, 106 O.R. (3d) 401 (Ont. C.A.), at para. 24 [McNamee]. 52 In a circumstance such as this, where a parent is alleged to have gra- tuitously transferred property to an adult child, the analysis required is as follows: 1) Begin with the presumption that the child holds the property on a resulting trust for the parent: see Pecore v. Pecore, 2007 SCC 17, [2007] 1 S.C.R. 795 (S.C.C.), at para. 36 [Pecore]. 2) The adult child to whom the property was transferred has the onus of proving, on a balance of probabilities that the parent’s intentions were to transfer the property as a gift: see Foley v. McIntyre, 2015 ONCA 382, 125 O.R. (3d) 721 (Ont. C.A.), at para. 26 [Foley]. 3) All of the evidence must be weighed in an effort to determine the actual intention of the parent at the time of the transfer: see Pecore, at para. 44; and Foley, at para. 26. 53 The evidence required to rebut the presumption of resulting trust de- pends on the facts of each case: Pecore, at para. 55. Regardless, the common law requires corroborating evidence to rebut the presumption. The corroborating evidence can be direct or circumstantial. It can consist of a single piece of evidence. Or, several pieces of evidence can be consid- McMurtry v. McMurtry Sylvia Corthorn J. 237

ered cumulatively: see Burns Estate v. Mellon (2000), 48 O.R. (3d) 641 (Ont. C.A.), at para. 29; and Foley, at para. 29. 54 Consideration can be given to the transferor parent’s post-transfer conduct, as long as it is relevant to the parent’s intention at the time of the transfer. The reliability of evidence as to post-transfer conduct must be assessed and a determination made as to the weight to be given to that evidence. A trial judge is to guard against such evidence that is self-serving or that tends to reflect a change in intention: Pecore, at para. 59. 55 Second, John’s position is that if his late father did not complete the intended gift of the Shares prior to his death in 1998: a) As of 1998 Mr. McMurtry’s intention remained that the Shares would be transferred to John as a gift; b) As one of the executors of Mr. McMurtry’s estate, John had the authority to complete the gift; and c) With the execution, in December 1999, of a Declaration of Trans- mission with respect to the Shares the gift was completed.

Analysis 56 The three essential elements of a gift which John must establish on a balance of probabilities are: • An intention on the part of Mr. McMurtry to make a gift of the Shares without consideration or expectation of remuneration; • An acceptance by John of the gift of the Shares; and • A sufficient act of delivery or transfer of the Shares to complete the transaction.

i) Intention to Make a Gift 57 The evidence with respect to Mr. McMurtry’s intention to make a gift to John of the Shares is limited to: a) John’s evidence as to what transpired at two meetings that he attended with one or both of his parents in the 1980s; and b) Mrs. McMurtry’s evidence as to what transpired at the second of the two meetings. The latter includes both her viva voce testimony and the contents of the Letter. 58 John’s evidence is that in the early to mid-1980s Jim and Mr. Mc- Murtry were at odds because Mr. McMurtry wanted Jim to become more involved in MMR and Jim did not have any interest in doing so. As a result, there were arguments over land purchases and building repairs. It 238 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

is one of those arguments which, according to John, led to his father deciding to gift the Shares to John. 59 John testified that in the mid-1980s MMR received an offer of approximately $600,000 to purchase property, owned by MMR, on Mac Street. The three shareholders — Mr. McMurtry, Jim, and John met to discuss the offer. The meeting occurred at the trailer out of which MMR was operating at the time (“Meeting No. 1”). Mr. McMurtry and Jim dif- fered as to how to respond to the offer; with the former not wanting and the latter wanting to accept the offer. John described a heated argument occurring between Mr. McMurtry and Jim, during which Jim said some “very rude things” and following which Jim stormed out of the trailer. 60 On cross-examination, John was unable to recall whether Meeting No. 1 took place before or after the meeting in August 29, 1984 at the office of the lawyers for MMR to effect the transfer of Michael’s shares to Jim and John equally. 61 It is John’s evidence that following Meeting No. 1 he and his father had a discussion about a transfer of the Shares to John. 62 John testified that a second meeting was held, at which the transfer of the Shares was addressed (“Meeting No. 2”). When cross-examined as to when Meeting No. 2 took place, John gave two answers. At first he said it took place in 1984. He then changed his answer to the “mid-1980s”. John does not recall where Meeting No. 2 took place. 63 In attendance at the Meeting No. 2 were John and his parents. John does not recall whether the company’s accountant and lawyer were also in attendance. According to John, it was at this meeting that his father made the decision to gift the Shares to John. The end result was that John “assumed” the Shares; with the physical transfer of the Shares done at the MMR office and recorded in the MMR Minute Book. When cross- examined on that point, John gave contradictory evidence — saying that he could not recall if documents related to the transfer to him of the Shares were recorded in the Minute Book. 64 Under cross-examination, John testified that he believes he was present when the Shares were actually transferred to him by Mr. McMurtry. John does not recall if his father signed a share certificate or any document consenting to the transfer. John does not have any such documents in his possession. John does not remember any money changing hands at the time of the transfer of the Shares. McMurtry v. McMurtry Sylvia Corthorn J. 239

65 I pause here to address the quality of John’s evidence with respect to what had to have been a significant event in his personal and working life — the alleged gift to him by his father of the Shares; making John the majority shareholder in the business: a) that his father had built from the ground up; and b) in which he had been working for a number of years with his father. The inconsistencies from one answer to the next as to how the Shares were physically transferred to John are striking. I find John’s evidence as to what transpired at both meetings to be unreliable. 66 In support of his allegation that the Shares were gifted to him by his father, John relies on the Letter, which reads in its entirety as follows: I have searched for minute book, on a long shot that it might be here. However I have been unable to locate it. The last time I saw it, was in the mid 1980s, at a meeting in the trailer on Mac ST. As far as contents go, your dad and I discussed his shares in Mic-Mac, and at that time the accountant was instructed to transfer his shares to you (John). I know that this happened and took place at this time, however if we could find the minute book, it would make it a bit easier. I attended meeting and witnessed that Keith instructed that this be done. (Underlining as per original.) 67 The Letter is signed, “Mildred McMurtry”. 68 The Letter was introduced through Mrs. McMurtry during examination-in-chief. There was no objection on behalf of John to the admission of the Letter as an exhibit. The lack of such an objection is not surprising given the position that John takes with respect to the contents of the Let- ter. The hearsay evidence included in the Letter is critical to John’s position and the evidentiary burden he must meet rebutting presumptions in the context of the law of gift and the law of resulting trust. 69 John is the only person who testified at trial and gave evidence that the Shares were gifted to him by Mr. McMurtry. At no point in her testimony did Mrs. McMurtry refer to the Shares as having been “gifted” to John. In the Letter, Mrs. McMurtry refers to the Shares being “transferred”, not given as a gift, to John. 70 Mrs. McMurtry testified that she understood the Letter would be relied on for the purpose of re-creation of the Minute Book. 71 Mrs. McMurtry’s evidence, including the Letter and her evidence with respect to it, when considered in its totality simply does not corrob- orate John’s evidence that Mr. McMurtry gave or intended to give the Shares to John. 240 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

i. The Alleged Duress 72 Mrs. McMurtry testified that she wrote the Letter because she always did what John asked her to do. It is her position that the letter was written under duress — out of a fear of “backlash” from John. Mrs. McMurtry was asked on two occasions what she meant by “backlash”. On both occasions she described an incident in which John took away from her the van she was driving. According to Mrs. McMurtry, John did so because she had not taken care of John’s dog. Mrs. McMurtry is unable to recall when this incident occurred. John denies that such an incident occurred. 73 On cross-examination, Mrs. McMurtry initially testified that John was very controlling and she always did what he asked her to do. She then acknowledged that John never threatened her in any way. She was asked on two occasions to confirm that John never forced her to write the Letter. Her initial response was, “I don’t understand.” She was taken to the transcript from her examination for discovery and her evidence, at that time, that she signed the Letter voluntarily. When asked if her answer on examination for discovery was true, she responded with “I guess so.” 74 Mrs. McMurtry’s inability to recall when the single incident upon which she relies as evidence of potential “backlash” is an example of the lack of credible or reliable evidence from her. Regardless of whether or not the single event described occurred, the event does not support a finding that Mrs. McMurtry was under duress when she wrote the Letter. I find that Mrs. McMurtry voluntarily wrote the Letter.

ii. Alleged Rationale for the Gift 75 John’s stated belief as to the rationale behind Mr. McMurtry’s decision to make a gift to him of the Shares is that Mr. McMurtry was fed up with disagreements with Jim in relation to decisions regarding the business of MMR. By gifting the Shares to John, Mr. McMurtry would no longer have to be involved in resolving disputes with Jim. Even if I were to find that Mr. McMurtry was sufficiently fed up with disputes with Jim to want to extricate himself from situations, such as shareholder meetings, in which such disputes occurred, there were any number of solutions short of gifting the Shares to John that were available to Mr. Mc- Murtry. Those options included: • Mr. McMurtry voting ‘with’ John to the extent possible so as to carry the day with their collective 16 out of 22 shares; McMurtry v. McMurtry Sylvia Corthorn J. 241

• Mr. McMurtry giving John his proxy for voting purposes, elimi- nating the need for Mr. McMurtry to participate in the shareholder meetings at all; and • A transfer by Mr. McMurtry of the Shares to John in trust. There was precedent for shares in MMR to be held in trust. The Minutes of the 1984 meeting at Mr. Clark’s office (with respect to the transfer of Michael’s shares) reflect that each of Mr. Clark and Mrs. McMurtry held one of Mr. McMurtry’s shares in trust. 76 In summary, I find that Mr. McMurtry did not intend to either make a gift of the Shares to John or to transfer the Shares to John on the basis of a resulting trust. 77 Even if I am incorrect in that regard the two remaining elements of a gift must be considered.

ii) Acceptance of Gift 78 Both John and Brenda gave evidence as to the extent to which they have, over the years, each devoted time and energy and made significant personal financial contributions to the operation and management of MMR. Their evidence in that regard is uncontradicted. For example, from time-to-time John personally guaranteed the indebtedness of MMR. The proceeds from the sale of Brenda and John’s home — approximately $300,000 — were invested in MMR. 79 The conduct of John and Brenda, if considered in isolation, supports a conclusion that John believes that Mr. McMurtry transferred the Shares to John by way of gift. 80 However, the balance of John’s conduct — specifically in relation to the ownership structure of MMR over time — is contradictory to a belief on his part that he was given the Shares. When John’s conduct in its entirety is considered, it does not support a finding that John accepted a gift of the Shares.

i. John’s Conduct before Mr. McMurtry’s Death 81 In 1997 Mr. Coons became the accountant for MMR. Included in the 1997 return is a page (exhibit 18) which identifies Mr. McMurtry as owner of 45 per cent and each of Jim and John as owners of 27 per cent of the shares in MMR. John acknowledged that he signed the tax returns for MMR and signed the 1997 return. 242 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

82 The only documentary evidence in which there is any reference to Mr. McMurtry transferring the Shares to John is exhibit 20: an undated document, introduced through Mr. Coons, titled “Mic Mac Share Capi- tal”. The accountant’s note with respect to the Shares is: “Per John: transferred to himself in 1996.” 83 Even though exhibit 20 appears to support John’s position with respect to the alleged gift, John’s evidence was that he does not recall telling Mr. Coons that the Shares were “transferred” to him. John’s testimony in that regard is indicative of the inconsistencies in and overall lack of reliability of his evidence as it relates to the alleged gift and the manner in which the gift is said by John to have been completed by his late father. 84 With Mr. Coons having taken over as the accountant for MMR, it is reasonable that he would have conversations with John with respect to the corporate tax return as it was being prepared. I prefer the evidence of Mr. Coons over that of John with respect to the preparation and contents of the MMR tax returns. Ultimately, the information reflected in the tax return is that the ownership structure of MMR in 1997 was the same as it was in August 1984 immediately following the transfer of Michael’s shares. 85 John’s explanation as to why he signed the 1997 return which listed the ownership in MMR as set out above is that when at the accountant’s office he would sign documents without reading them. 86 Regardless of whether or not he read the tax returns before he signed them, I find that by 1997 John was, by virtue of his experience over the years signing not only the MMR returns but also his personal tax returns, aware of the significance of his signature on the document — including that he was certifying that the information in the return was “true, correct, and complete”. 87 There is no evidence that John ever asked the accountant to change the manner in which the ownership structure was reflected in the 1997 tax return. I find that John’s conduct with respect to the 1997 tax return: a) runs contrary to his position that he had by 1997 accepted a gift of the Shares from Mr. McMurtry; and b) supports a finding that as of 1997 John knew that Mr. McMurtry, who was still alive, had not gifted the Shares to him. McMurtry v. McMurtry Sylvia Corthorn J. 243

ii. Mr. McMurtry’s Will 88 In his will, prepared in 1992, Mr. McMurtry named each of Mrs. Mc- Murtry, Jim and John as his executors. The Will does not state that they are jointly and severally appointed. A copy of the Will was, as part of the plaintiff’s case, made an exhibit at trial. The Will makes no mention of the Shares. Mrs. McMurtry is named as the residuary beneficiary. 89 Mrs. McMurtry’s evidence with respect to her state of knowledge as to the contents of the Will was inconsistent and is inherently unreliable. Mrs. McMurtry vacillated from admitting to denying knowledge prior to Mr. McMurtry’s death: a) of the contents of the Will; and b) that she was appointed as an executor of the Estate. Mrs. McMurtry admitted, however, that in 1992 she and her husband had their wills prepared together. Under cross-examination, she testified that she understood from 1992 to 1998 that she was one of the executors of the Estate and that she was the beneficiary of the residue of the Estate. 90 Jim’s evidence is that he was not aware until approximately 2010 that he was an executor of the Estate. 91 Exhibit 6 consists of copies of a letter and proof of loss form submitted to an insurance company in follow-up to a small ($12,500) property damage claim which arose prior to Mr. McMurtry’s death. The documents were submitted to the insurer in November 2008 (i.e. subsequent to the death of Mr. McMurtry). Both the letter and the proof of loss form are signed by each of Mrs. McMurtry, John, and Jim. They are each identified in the letter and on the proof of loss form as an executor of the Estate. When giving evidence, they acknowledged their respective signatures on the documents. 92 Taking into consideration the contents of exhibit 6 and my findings generally as to the credibility of each of Mrs. McMurtry and Jim, I find that they were both aware no later than November 1998 that they are executors of the Estate.

iii. John’s Conduct after Mr. McMurtry’s Death 93 Mr. Coons testified that in August 1999 he was informed by John that in 1996 Mr. McMurtry transferred the Shares equally to Jim and John. In his letter dated August 1999 (exhibit 17), prepared at John’s request to facilitate the re-creation of the Minute Book, Mr. Coons says, “[p]er John McMurtry, the 10 commons shares of his father were transferred equally to James and John in 1996. (I have no idea how this was done and neither does he.)” John does not recall having a discussion with Mr. Coons to 244 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

this effect. For the reasons set out above, I accept Mr. Coons’ evidence that such a discussion took place. 94 In December 1999, John swore to the truth of another scenario with respect to the change in ownership of the Shares — that he was the beneficiary of the Shares under the Will. John executed a Declaration of Transmission with respect to the Shares (exhibit 26 and “the Declara- tion”). He did so in his capacity as an executor of Mr. McMurtry’s Es- tate. There is no evidence of either Mrs. McMurtry or Jim having re- nounced or having resigned as an executor and trustee as of December 1999. 95 John did not provide an explanation as to why he alone executed the Declaration. The manner in which this document is executed is to be contrasted with the manner in which the letter and proof of loss form were executed in November 1998. There is no evidence that John was, as of December 1999, in a position to take steps on behalf of the Estate without the involvement of the other two executors of the Estate. 96 The Declaration says: IN THE MATTER OF THE ESTATE OF Keith McMurtry, late of Ottawa, Deceased. I/we (the “Personal Representative(s)”), do so solemnly declare that: 1. There are registered in the name of the Deceased on the books of Mic Mac Realty (Ottawa) Limited 10 Common Shares of its capital. 2. The Deceased and Keith McMurtry named in the certificates was one and the same person. 3. All the aforementioned certificates were physically situate[d] in the Province of Ontario at the death of the Deceased. 4. By virtue of the foregoing the shares have devolved upon and become vested in us, being all the personal Representatives, who desire to have the same recorded in the names of the Per- sonal Representatives upon the books of the Company and immediately thereafter transferred to the beneficiaries properly entitled by law to receive the shares, namely: John McMurtry. And I make this solemn Declaration conscientiously believing it to be true, and knowing that it is of the same force and effect as if made under oath and by virtue of the Canada Evidence Act, R.S.C. 1985, c. C-5. McMurtry v. McMurtry Sylvia Corthorn J. 245

97 It is striking that in the document John is described as “the beneficiar[y] properly entitled by law to receive the shares”. On cross- examination, John acknowledged that he is not the beneficiary of the Shares pursuant to the Will. 98 There can, in my view, be no question but that the Declaration is intended to identify John as the beneficiary of the Shares pursuant to the Will and not the owner of the Shares by virtue of an inter vivos gift. When cross-examined John acknowledged that he understood that when he signed the Declaration he was swearing to tell the truth. When asked if he told the truth when signing the document he gave three answers. First, he said, “I signed several documents”. Second, he responded with, “I don’t understand the question.” His final answer was that he told the truth in the document. 99 Also during cross-examination, John said there were two reasons why he signed the Declaration: a) to administer his father’s estate; and b) partially for another reason. When pursued as to the other reason, John changed his answer to say that there was only one reason why he signed the Declaration. 100 In cross-examination it was drawn to John’s attention that the Decla- ration refers to 10 Common Shares being registered in the Minute Book in Mr. McMurtry’s name. In cross-examination John said, “They may have been on the books. It did not mean that they existed. They may have never been taken off. I don’t know. I signed a lot of documents in 1999 ... pages and pages.” 101 John does not specifically recall why the Declaration with respect to Mr. McMurtry’s shares was prepared in 1999 — even though, as he acknowledged, he was the president, leader, and driving force of the company. The execution of the Declaration in December 1999 is consistent with John’s efforts, commencing no later than January 1999 (the date of the Letter) and continuing as of August 1999 (the date of the accountant’s letter to MMR’s lawyer), to re-create the Minute Book. I find that in his efforts John was attempting to re-create the Minute Book with the ownership structure of MMR reflecting him as the owner of 16 shares (i.e. including the Shares) and Jim owning six shares. 102 In cross-examination and with respect to the Declaration, John was asked “What can we believe?” His response was, “I took my father’s shares in the 1980s” and they could still have been on the books even though they were transferred to him by his father in the 1980s. This evidence as to what may still have been “on the books” is inconsistent with 246 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

the alleged trip to the trailer and transfer of the shares reflected in the Minute Book as per John’s evidence with respect to Meeting No. 2. 103 John’s evidence with respect to the Declaration is another example of his approach to giving evidence. He responded in an impulsive manner — without giving thought to the document or, it appears, to the question. He made no apparent effort to remember his answer from one question to the next. The inconsistencies in his evidence are numerous and close together in time. 104 I find that John was aware of the contents of the Will and swore a document which he knew to be untrue. His explanation for doing so is a complete non sequitor. First, John said, “I signed several documents”. Second, he said that he did not understand the question. His third answer was that he told the truth in the document. His fourth and final answer with respect to the Declaration was, “I looked at dozens of documents” and “I obviously didn’t look at this one before I signed it.” Collectively, these four answers are consistent with John’s cavalier approach to documents and to the truth of their contents.

iv. Summary 105 John’s evidence is that Jim was informed of their father’s decision to gift the Shares to John. That evidence was not confirmed by Jim. 106 If as John testified, Jim was informed of the gift of the Shares, there was no reason for John to do anything other than ensure that the accountants and lawyers who worked for MMR were preparing documents which reflected the gift of the Shares. As the individual who signed the MMR tax returns (including the 1997 return), John had numerous opportunities to ensure that the documents accurately reflected the change in ownership of the Shares as of the date of the alleged gift. 107 In addition, if John was confident in his brother’s and his mother’s knowledge of the gift of the Shares, there was no reason for him in De- cember 1999 to execute the Declaration and identify himself as the beneficiary, pursuant to the Will, of the Shares. John’s alternative argument with respect to ‘gift’ (as executor he was in a position to complete the gift) runs contrary to that conduct. 108 John’s conduct with respect to his late father’s Will is troubling for reasons which extend beyond the scope of this action. The Declaration is a misrepresentation of the contents of the Will. In addition, based on John’s evidence it is clear that the specific bequests to the grandchildren McMurtry v. McMurtry Sylvia Corthorn J. 247

were not carried out in accordance with Mr. McMurtry’s instructions in the Will. 109 John’s conduct over time, including the contradictory statements made regarding the ownership structure of MMR and the manner in which the Shares were allegedly transferred to him, supports a finding that he did not, in the 1980s or at any time thereafter believe that his father had made a gift to him of the Shares. As a result, I find that John’s conduct does not amount to acceptance of such a gift.

iii) Act Sufficient to Complete the Transaction 110 When the individual alleging that a gift was made is unable to recall with any degree of accuracy when the gift was made or how it was carried out, it is difficult (if not impossible) to find that the transaction was completed. This is particularly so when the person who is alleged to have made the gift was fully aware, by 1984 at the latest, as to how to facilitate and document the transfer of shares in a company. 111 John gave three different answers as to when Meeting No. 2 took place and Mr. McMurtry made the decision to gift the Shares. At first John said the meeting took place in 1984. He then said it took place in the mid-1980s. He ultimately conceded that he does not recall when the meeting took place. Even when given the August 1984 meeting at Mr. Clark’s office as a ‘marker’, John was unable to recall whether Meeting No. 2 occurred before or after that meeting. 112 As to how the gift was carried out, John also gave contradictory evidence. His answers on the point were as follows: • Following Meeting No. 2, John “assumed” the Shares. • The physical transfer of the Shares was carried out at the MMR office and recorded in the Minute Book. • He does not recall if the documents related to the transfer of the Shares from his father to him were recorded in the Minute Book. • Although he believes he was present when Mr. McMurtry transferred the Shares to him, John does not recall if his father signed a share certificate or any other document consenting to the transfer. • The transfer of the Shares was never communicated to MMR’s lawyers. That lack of communication does not seem odd to John even in light of the 1984 meeting at Mr. Clark’s office with respect to Michael’s shares. 248 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

113 The only evidence as to how the alleged gift was completed is John’s. His evidence is contradictory and does not, on a balance of probabilities, support a finding that Mr. McMurtry took the steps required to complete a gift of the Shares to John. 114 In making that finding I have also considered the evidence with respect to the transfer of Michael’s shares and documentation of that transfer in the Minute Book. As of the August 1984 meeting at Mr. Clark’s office, Mr. McMurtry clearly appreciated the importance of documenting the transfer of shares of MMR. The Minute Book was at Mr. Clark’s office as of that point in time. 115 If a decision to gift the Shares was made by Mr. McMurtry before the meeting at Mr. Clark’s office, there would have been no reason for Mr. McMurtry not to document the change in ownership of the Shares at that or a similar meeting. If such a decision was made subsequent to the meeting at Mr. Clark’s office, there was no reason for Mr. McMurtry not to take the steps necessary to document in the Minute Book the change in ownership of the Shares. 116 I find that the evidence does not, on a balance of probabilities, support a finding that Mr. McMurtry completed an act that was sufficient to effect a gift of the Shares to John. 117 For the same reasons, I find that John has not satisfied the burden of proof and established on balance of probabilities that the Shares, if given to him, were given to him on any basis other than a resulting trust. John has not rebutted the presumption in that regard.

i. Change of Mind 118 Even if there was an intention (and I find that there was not) on the part of Mr. McMurtry to make a gift of the Shares to John, Mr. McMur- try was not bound by that stated intention. He was free to change his mind at any time. 119 As noted above, there were a number of solutions available to Mr. McMurtry — other than to gift the Shares to John — to avoid the difficulties he is said by John to have encountered in dealing with Jim with respect to the business of MMR. 120 Whether the intention to gift the Shares existed and Mr. McMurtry changed his mind or there was never such an intention in the first place, there is no evidence of an act on the part of Mr. McMurtry that is sufficient to complete the gift. McMurtry v. McMurtry Sylvia Corthorn J. 249

ii. Completing the Gift as Executor 121 Having found that Mr. McMurtry did not intend to give the Shares to John, John’s alternative argument that he was in a position to ‘complete’ the gift, if necessary after his father’s death and in his capacity as one of the executors of the Will, must fail. 122 In any event, the evidence does not support a finding that an intended gift (assuming there was such an intention) was completed by John in his capacity as an executor of the Estate. The only document which John completed, in that capacity and with respect to the Shares, was the Decla- ration. In that document John identified himself as a beneficiary under the Will. 123 I find that the Declaration is not evidence of the completion of an intended gift.

b) Section 13 of the Evidence Act 124 Section 13 of the Evidence Act, R.S.O. 1990, c. E.23 provides as follows: In an action by or against the heirs, next of kin, executors, administrator or assigns of a deceased person, an opposite or interested party shall not obtain a verdict, judgment or decision on his or her own evidence in respect of any matter occurring before the death of the deceased person, unless such evidence is corroborated by some other material evidence. 125 It is the position of Mrs. McMurtry that this section applies to John’s defence because the defence is effectively a claim of ownership, by way of a gift, of the Shares with the alleged gift having been made prior to the death of Mr. McMurtry. 126 John’s position is that section 13 of the Evidence Act does not apply to this action because Mrs. McMurtry is not advancing her claim as an heir, next of kin, or executor of the deceased. The fact that Mrs. McMur- try happens to fall within one of those categories does not, in and of itself, bring the matter within the scope of the section. Mrs. McMurtry is advancing her claim as an alleged shareholder. John is a defendant as a shareholder and not as a beneficiary or executor of the Will. 127 In support of his position, John relies on the decision of the Ontario Court of Appeal in Brisco Estate v. Canadian Premier Life Insurance Co., 2012 ONCA 854, 113 O.R. (3d) 161 (Ont. C.A.), at para. 63. 128 I agree with John’s position and find that the action does not fall within the scope of section 13 of the Evidence Act. As a result, corrobo- 250 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

rative evidence is not, on the basis of the statutory provision alone, required. However, my finding in this regard does not eliminate the requirement for corroborative evidence generally.

c) Summary 129 For the reasons set out above, I find that: • Mr. McMurtry did not intend to make a gift of the Shares to John; • Mr. McMurtry did not make a gift of the Shares to John; • As of the date of Mr. McMurtry’s death in 1998, Mr. McMurtry remained the owner of the Shares; and • Pursuant to the terms of the Will, on the death of Mr. McMurtry the Shares fell into and remain part of the residue of the Estate.

Issue No. 2 — Claim for Declaratory Relief a) The Positions of the Parties 130 It is Mrs. McMurtry’s position that her claim with respect to ownership of the Shares is restricted to declaratory relief only and, is therefore not subject to any limitation period. Mrs. McMurtry relies on section 16(1)(a) of the Limitations Act, 2002, S.O. 2002, c. 24, which provides that there is no limitation period in respect of, “a proceeding for a declaration if no consequential relief is sought”. 131 John’s position is that the claim advanced by Mrs. McMurtry is for more than declaratory relief and includes consequential relief. John argues that if Mrs. McMurtry is declared to be the owner of the Shares such a declaration on its own will not suffice to give effect to her claim. It is submitted on John’s behalf that if the declaration requested by Mrs. McMurtry is made, the Shares will have to be transferred to her and the Minute Book updated. John argues that for those two steps to be taken, Mrs. McMurtry will require an order of the Court (i.e. consequential relief). As a result, Mrs. McMurtry’s claim does not fall within the scope of section 16(1)(a) of the Limitations Act. 132 John argues that the claims advanced by Mrs. McMurtry for declaratory relief and consequential relief: a) fall within the scope of either section 5 of the Limitations Act, 2002 (two years from date of discovery) or sections 45 and 46 of the Limitations Act, R.S.O. 1990, c. L.15 (six years for claims that existed prior to 2002); and b) are, as a result, statute- barred. McMurtry v. McMurtry Sylvia Corthorn J. 251

b) The Prayer for Relief 133 Mrs. McMurtry commenced her action by way of a statement of claim issued in December 2012. The prayer for relief is as follows: The Plaintiff claims against the Defendants as follows: a) A Declaration that the Plaintiff, Mildred McMurtry is the lawful owner of ten (10) shares in the capital stock of Mic Mac Realty (Ottawa) Limited (the “Corporation”). b) An Order directing that the Corporate Minute Book of the Corporation be updated to indicate the ownership of shares of the Plaintiff at ten (10) common shares of Mic Mac Realty (Ottawa Limited). c) A Declaration that the Defendant, John McMurtry has acted in a manner that is oppressive of and which unfairly disre- gards and is unfairly prejudicial to the interest of the Plaintiff. d) An Order removing the Defendant, John McMurtry from any and all positions which he holds in any capacity in the Corporation. e) An Order that the Corporation’s assets be valued and liqui- dated and the appointment of a receiver to carry out the said liquidation. f) An Order for damages as against the Defendant, John Mc- Murtry for his oppressive conduct with respect to the Plaintiff and the Corporation. g) An Order that John McMurtry repays to the Corporation all funds since 1998 that were misappropriated by him for his benefit. h) An Order for a full accounting of all personal expenses charged by John McMurtry to the Corporation and repayment of same.

c) Case Law and Academic Authorities 134 The case law and academic authorities emphasize that “declaratory relief” is to be construed narrowly — specifically because relief in that form is not subject to a limitation period. In The Law of Declaratory Judgments, 3rd ed. (Toronto: Carswell, 2007) at p. 3, the author in- troduces the subject as follows: The essence of a declaratory judgment is a declaration, confirmation, pronouncement, recognition, witness and judicial support to the legal relationship between the parties without an order of enforcement or execution ... 252 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

If a declaration is merely ancillary to consequential relief which is statute-barred, the entire recourse is considered as consequential relief and will fall. [Footnote omitted] 135 I find that Mrs. McMurtry’s claim with respect to ownership of the Shares is restricted to declaratory relief. Resort to the Court for additional relief would not be required for Mrs. McMurtry to enjoy the benefits of ownership of the Shares if she were to be declared the owner. It is the potential for additional resort to the judicial process, and not the potential for additional administrative or other steps to be required, that is meant by “consequential relief”. 136 In Yellowbird v. Samson Cree Nation No. 444, 2008 ABCA 270, 433 A.R. 350 (Alta. C.A.), at paras. 45 and 46 [Yellowbird], the Alberta Court of Appeal summarized the meaning of “consequential relief”: Rather, [the trial judge] held that “[t]he coercive nature of a remedial order is captured in the words, ‘requiring a defendant to comply’”, and concluded that a helpful test for determining whether a remedy was declaratory or remedial would be to ask: If the Court granted the declaration, and the defendant resisted the implementation of the declaration, could the plaintiff “leave the court in peace” and enjoy the benefits of the declaration “without further resort to the judicial process”? (para. 35) The trial judge also held, at para. 36, that “[i]f the relief is executory or coercive, it is not declaratory”. Finally, he concluded that by describing remedial relief as being “ancillary’ to a declaration does not change its charter as a remedial order: at para. 38. 137 There is nothing ‘executory’ or ‘coercive’ which would require John to comply in any way with a declaration, if made, that Mrs. McMurtry is the owner of the Shares: see Yellowbird at para. 45; and Joarcam LLC v. Plains Midstream Canada ULC, 2013 ABCA 118, 90 Alta. L.R. (5th) 208 (Alta. C.A.) at para. 5 [Joarcam]. 138 But for my decision with respect to the equitable defences of laches and estoppel, and the imposition of a constructive trust, the Shares would remain in the residue of the Estate and it would be open to the executors and trustees to take the steps necessary, in the context of the administration of the Estate, to facilitate a transfer, unconditionally, of the Shares from the Estate to Mrs. McMurtry. 139 An order of the Court requiring the executors and trustees of the Es- tate to fulfil their obligations would not be required as a consequence of McMurtry v. McMurtry Sylvia Corthorn J. 253

the declaration requested being made. Such an order, if required, would arise from and be consequential to a failure on the part of the executors and trustees of the estate to fulfil their obligations in accordance with the terms of the Will (i.e. as relates to the residue of the Estate). Such an order would be based on a cause of action distinct from that upon which Mrs. McMurtry’s claim for declaratory relief is based. 140 Updating the Minute Book would not require an order of the Court. The lawyer for MMR, when presented with a copy of the declaration, if made, would take the steps necessary to have the Minute Book updated. An order, if required, would be consequential to the process of updating the Minute Book. Mrs. McMurtry would have a cause of action independent of the cause of action upon which the claim for declaratory relief is based. 141 The legal consequences which naturally flow from a declaration which pronounces on a legal position do not constitute “consequential relief”. As noted by Verville J. at paragraph 43 of the decision of the Alberta Court of Queen’s Bench in Wasylyk v. Bonnyville (Municipal District No. 87), 2012 ABQB 348 (Alta. Q.B.): [T]he policy problem created by a situation where the necessary remedial order is barred by the Limitations Act, resulting in a declaratory order that the defendant does not have to obey, and a plaintiff with a support right but no remedy, ... would undermine respect for orders of the Court. But this difficulty would only be avoided where limitations did not pose an issue in the first place. Taking this position to the extreme, no declaratory relief would ever fit the exception contemplated in [section 16] of the Limitations Act. 142 In Joarcam the relief requested was determined to be remedial (not declaratory only) because the declaration sought was as to: a) ownership of the subject assets; and b) entitlement to recover from the defendant immediate possession of the subject assets. The trial judge, whose decision was upheld on appeal, concluded that the plaintiff was seeking an order that would require the defendant to transfer the subject assets — in other words more than a pronouncement of legal rights. 143 Mrs. McMurtry is seeking nothing more than a declaration that she is the rightful owner of the Shares. The declaration, if made: a) would not require John to transfer the Shares to Mrs. McMurtry; and b) is nothing more than a pronouncement on the legal rights as between Mrs. McMur- try and John. On that basis, the matter before me is distinguishable from the decision in Joarcam upon which John relies. 254 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

144 The fact that Mrs. McMurtry included in her pleading a request for an order that the Minute Book be updated does not mean that the request is: a) well-founded; or b) necessary as relates to ownership of the Shares. As noted above, such relief would stem from a separate cause of action. 145 The balance of the relief requested by Mrs. McMurtry is essentially oppression remedy relief to which only an owner of shares in MMR may be entitled. The oppression remedy relief requires a determination that is distinct from the determination with respect to the ownership of the Shares. 146 In summary, I find that the relief requested by Mrs. McMurtry with respect to ownership of the Shares is declaratory in nature and does not include any consequential relief.

Issue No. 3 — Limitation Period a) Declaratory Relief Only 147 Having found that Mrs. McMurtry’s claim is for declaratory relief only, section 16(1)(a) of the Limitations Act, 2002 applies. I find that Mrs. McMurtry’s action is not barred by reason of a statutory limitation period.

b) Declaratory and Consequential Relief 148 If I am incorrect in my finding under Issue No. 2, and the relief claimed on behalf of Mrs. McMurtry includes consequential relief, then I find that Mrs. McMurtry’s claim is statute-barred by virtue of section 5(1) of the Limitations Act, 2002. In all of the circumstances, Mrs. Mc- Murtry knew or ought to have known more than two years prior to the date on which she commenced her action of the nature of the losses and damages which she is alleging in this action that she has suffered and that a proceeding would be an appropriate means to seek to remedy the losses and damages. 149 The statement of claim in this action was issued in 2012. Mrs. Mc- Murtry was aware in 1998 of the terms of the Will and that she is the residuary beneficiary. She also knew as of January 1999 that John was advancing the position that he is the owner of the Shares. 150 Mrs. McMurtry admitted that as of 2009 she knew of the dispute between Jim and John. She knew that her sons were unable, in their capacity as shareholders of MMR, to agree upon a division of the proceeds from the sale of a warehouse. Mrs. McMurtry knew that the disagree- McMurtry v. McMurtry Sylvia Corthorn J. 255

ment arose because John was taking the position that he is the owner of 16 of the 22 shares in MMR (i.e. that John owns the Shares). Mrs. Mc- Murtry testified that as of 2009, “That’s when I knew there was going to be trouble.” 151 Exhibit 5 is a letter dated November 2011 in which Mrs. McMurtry asserts ownership of the Shares (“Letter No. 2”). Addressed “To whom it may concern”, Letter No. 2 consists of a single sentence as follows: “I believe that per the terms of my late husband’s Last Will and Testament, I am the legal owner of his shares in Mic Mac Realty (Ottawa) Ltd.” 152 Mrs. McMurtry acknowledged her signature on Letter No. 2. How- ever, when presented with the document, Mrs. McMurtry had no independent recollection of it. When asked if the document was the first time subsequent to her husband’s death that she put in writing that she claims ownership of the Shares, Mrs. McMurtry responded with “I guess so.” 153 Mrs. McMurtry admitted that she wrote Letter No. 2: a) at a time when she knew Jim and John were involved in litigation (John’s action was commenced in 2011); and b) following a meeting that she attended with Jim and his counsel. Mrs. McMurtry did not type Letter No. 2 herself, as she does not type. 154 Mrs. McMurtry’s evidence with respect to Letter No. 2 is not reliable. I am not persuaded that Letter No. 2 is indicative of the point in time at which Mrs. McMurtry understood that it was incumbent upon her to assert the position that she is the owner of the Shares. When asked if Letter No. 2 was prepared and given to Jim to assist him in his litigation with John, Mrs. McMurtry said, “I guess so, I don’t know.” Jim’s evidence is that he has no idea whether he was given a copy of Letter No. 2. Mrs. McMurtry’s evidence is that she did not give a copy of Letter No. 2 to John. 155 I find that no later than 2009 — more than two years prior to the date on which Mrs. McMurtry commenced her action — “a reasonable person with the abilities and in the circumstances of [Mrs. McMurtry] ought to have known of” the circumstances giving rise to her claim: see ss. 5(1)(a) and (b) of the Limitations Act, 2002. As a result, if her claim includes a request for declaratory and other relief, her action is statute-barred. 256 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Issue No. 4 — Laches a) The Positions of the Parties i) John McMurtry 156 John relies on the equitable doctrine of laches and takes the position that Mrs. McMurtry by her conduct acquiesced to John’s ownership of the Shares. That conduct includes Mrs. McMurtry authoring the Letter in January 1999. 157 In the alternative, John argues that he reasonably relied on Mrs. Mc- Murtry’s acceptance of the status quo from at least 1999 until 2011. John’s reliance is demonstrated by the work he has done on behalf of MMR, the work Brenda has done on behalf of MMR, and the personal financial investment which John and Brenda have made in MMR. 158 John’s position is that he need only prove either acquiescence by his mother or reasonable reliance on his part to succeed on the basis of the defence of laches.

ii) Mrs. McMurtry 159 On behalf of Mrs. McMurtry it is argued that her claim is one in law and, as a result, the doctrine of laches does not apply. No case authority is provided in support of that position.

b) The Law 160 In the Supreme Court of Canada decision in M. (K.) v. M. (H.), [1992] 3 S.C.R. 6 (S.C.C.), at para. 18 [M.(K.)], it was emphasized by La Forest J. that: a) there are two distinct branches to the doctrine of laches; and b) either branch is sufficient as a defence to a claim in equity. Addressing the two branches, he said: What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff con- stitutes acquiescence or results in circumstances that make the prose- cution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine. 161 I agree with the submissions on behalf of John that “acquiescence is a stand-alone branch of laches that does not require a finding of prejudice for laches to apply.”: see TD General Insurance Co. v. Zurich Insurance Co., 2014 ONSC 3191 (Ont. S.C.J.) at paras. 32 to 37. McMurtry v. McMurtry Sylvia Corthorn J. 257

162 In M. (K.) the consideration to be given to the plaintiff’s state of knowledge is described as follows at paras. 101 and 104: As the primary and secondary definitions of acquiescence suggest, an important aspect of the concept is the plaintiff’s knowledge of her rights. It is not enough that the plaintiff knows of the facts that support a claim in equity; she must also know that the facts give rise to that claim: Re Howlett, [1949] Ch. 767. However, this Court has held that knowledge of one’s claim is to be measured by an objective standard: see Taylor v. Wallbridge (1879), 2 S.C.R. 616, at p. 670. In other words, the question is whether it is reasonable for a plaintiff to be ignorant of her legal rights given her knowledge of the underlying facts relevant to a possible legal claim. ... In equity, however, there is a residual inquiry: in light of the plaintiff’s knowledge, can it reasonably be inferred that the plaintiff has acquiesced in the defendant’s conduct? 163 As to the state of Mrs. McMurtry’s knowledge over time, I find as follows: • Mrs. McMurtry was by her own admission aware no later than 1998, in the months following the death of Mr. McMurtry, of the contents of the Will including that: a) she was the sole residuary beneficiary; and b) there was no specific bequest of the Shares. • Brenda gave evidence, which I accept over that of Mrs. McMurtry on the subject, with respect to the extent to which Mrs. McMurtry was, in 1998 following her husband’s death, upset and concerned about her financial well-being given the terms of the Will. Based on Brenda’s evidence in that regard, I draw an inference that Mrs. McMurtry was: • Upset because she was aware that she was the residuary beneficiary only; and • As a result, concerned that the residue of the Estate would not provide her with financial comfort. • Mrs. McMurtry was aware no later than 1998 that she was one of three executors and trustees of the Estate. She chose to do nothing in that role, leaving it entirely up to John to take the steps necessary to administer the Estate. • When she wrote the Letter in January 1999, Mrs. McMurtry understood that John was advancing the position that he was the owner of the Shares and that he would act on the Letter with re- 258 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

spect to the business of MMR, including as may be required to update the Minute Book. • Mrs. McMurtry was aware that John and Brenda were effectively running MMR by the date of Mr. McMurtry’s death and that they had gradually, over time, increased their respective roles in MMR. 164 If Mrs. McMurtry truly believed that she was, by virtue of being the residuary beneficiary of the Estate, the beneficial owner of the Shares it was incumbent upon her personally to take action in the context of the administration of the Estate. Moreover, it was incumbent upon Mrs. Mc- Murtry to fulfil her role as an executor and trustee and address that issue in the administration of the Estate. Mrs. McMurtry sat back and did nothing personally or in her capacity as an executor of the Estate to ensure that the Estate was administered on the basis of what she testified she believed, at the time, to be the intentions of her late husband (i.e. that the Shares would form part of the residue of the Estate). 165 The determination of this matter does not require a detailed review of the case authorities with respect to the fulfilment by an executor of his or her obligations. The case authorities are clear; there is no distinction to be made between sophisticated and unsophisticated individuals in the fulfilment of their obligations as executors and trustees. Mrs. McMur- try’s decision not to be an active executor and trustee of the Estate and to leave the work in that regard to John is a decision the consequences of which she must now bear. 166 With respect to the doctrine of laches, I find as follows: a) By January 1999 at the latest it was not reasonable for Mrs. Mc- Murtry to be ignorant of her legal rights (as residuary beneficiary) given her knowledge of the circumstances existing as of that date — namely John’s pursuit of and/or claim to ownership of the Shares. b) Mrs. McMurtry’s conduct from at least 1999, when she wrote the Letter, until 2011 when she wrote Letter No. 2, amounts to acquiescence; and c) On the basis of acquiescence alone, it is just in the circumstances to apply the doctrine of laches. 167 As noted above, acquiescence is a stand-alone branch of the doctrine of laches and prejudice is not required in addition to acquiescence. In any event, I find that there is clear prejudice to John by reason of his mother’s delay in advancing her claim. McMurtry v. McMurtry Sylvia Corthorn J. 259

168 In all of the circumstances, I find that based on Mrs. McMurtry’s delay in pursuing any claim related to the Shares, it was reasonable for John to alter his position in reliance on her stated acceptance of the status quo as of 1999. The status quo at that time was that John was attempting to re-create the Minute Book and, in doing so, hold himself out as owner of the Shares. 169 I find that Mrs. McMurtry’s decision to write the Letter was a deliber- ate decision on her part. In 1994, Mrs. McMurtry assisted Jim with his financial circumstances by participating in the creation of a $175,000 mortgage which did not exist. Mrs. McMurtry’s willingness in 1999 to facilitate John’s claim to ownership of the Shares is consistent with her desire to ‘assist’ her children over time with their financial circumstances. Mrs. McMurtry was well aware by January 1999 of the work being done by John and Brenda in and for MMR. I find that the Letter was written at least in part in recognition of that work. 170 I also find that by her conduct, Mrs. McMurtry permitted a situation to arise that would be unjust to disturb: see M. (K.), at p. 77. The ‘situation’ includes the personal and financial investment, without remuneration specific to their investment, on the part of both John and Brenda in MMR. Were the status quo to be disturbed and a declaration made that Mrs. McMurtry is on an unconditional basis the beneficial owner of the Shares, John and Brenda would, in my view, be entitled to pursue a claim based on unjust enrichment. 171 I find that the declaration requested by Mrs. McMurtry, if made, would lead to significant disruption in the lives of the McMurtry family members including Mrs. McMurtry, Jim, John, and Brenda, disruption in the day-to-day operations of MMR; and a potential loss to the shareholders of MMR in the value of their shares. 172 The equities of the ‘situation’ also require consideration of what has become of Mr. McMurtry’s businesses over time. Jim is now the sole owner of Keith’s Auto Sales and a 27 per cent shareholder in MMR. John has essentially devoted his working life to MMR. I find that it is just and reasonable in all of the circumstances to impose a constructive trust and determine that Mrs. McMurtry, as the residuary beneficiary of the Estate, holds the Shares in such a trust for the benefit of John. 173 The imposition of a constructive trust in these circumstances is in keeping with the decision of the Supreme Court of Canada in Soulos v. Korkontzilas, [1997] 2 S.C.R. 217 (S.C.C.) [Soulos]. At paragraph 17 of 260 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

her decision for the majority, and in referring to the history of constructive trusts, McLachlin J. said: [The history] suggests that the constructive trust is an ancient and eclectic institution imposed by law not only to remedy unjust enrichment, but to hold persons in different situations to high standards of trust and probity and prevent them from retaining property which in “good conscience” they should not be permitted to retain.” 174 The passage quoted above serves to emphasize, as did much of the balance of the decision of McLachlin J. the “diverse circumstances” (see paragraph 34 of Soulos) in which a constructive trust may be imposed. 175 The next steps include a determination of the end result of John’s entitlement based on the constructive trust imposed. A determination is also required of John’s and Jim’s respective claims for oppression remedy relief. There will, in my view, be an overlap between the financial evidence required to determine each of those claims. It may not be prac- tical or cost-effective to determine John’s claim for a declaration of ownership of the Shares in isolation from the competing claims for oppression remedy relief. Counsel are to attend before me to make submissions as to how the balance of the issues in these actions are to be addressed.

Issue No. 5 — Estoppel 176 It is John’s position that Mrs. McMurtry is estopped by either convention or representation from pursuing her claim of ownership of the Shares. For the reasons set out below I agree. Whether by ‘convention’ or by ‘representation’, Mrs. McMurtry is estopped from: a) resiling from the wording of the Letter; and b) pursuing a claim that she is the owner of the Shares.

a) Estoppel by Convention 177 In Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53 (S.C.C.) [Ryan] the issues of estoppel by convention and by representation were addressed by Bastarache J. who delivered the decision for the majority. At paragraph 59 of the decision he identified three criteria that must be satisfied for the doctrine of estoppel to apply: (1) The parties’ dealings must have been based on a shared assumption of fact or law: estoppel requires manifest representation by statement or conduct creating a mutual assumption. Nevertheless, estoppel can arise out of silence (impliedly). McMurtry v. McMurtry Sylvia Corthorn J. 261

(2) A party must have conducted itself, i.e. acted, in reliance on such shared assumption, its actions resulting in a change of its legal position. (3) It must be unjust or unfair to allow one of the parties to resile or depart from the common assumption. The party seeking to establish estoppel therefore has to prove that detriment will be suffered if the other party is allowed to resile from the assumption since there has been a change from the presumed position. 178 I find that each of the three criteria for the doctrine of estoppel to apply has been established by John. 179 In the Letter which Mrs. McMurtry voluntarily wrote in January 1999, she confirmed John’s assumption or belief that the Shares were transferred to him in the 1980s. On cross-examination, Mrs. McMurtry admitted that she knew John would rely on the Letter for the business of MMR. It was also her evidence that she thought that in 1999 John believed the Shares had been transferred to him. 180 For the reasons discussed above, I find that Mrs. McMurtry was fully aware in January 1999 of the significance, including to John, of the contents of the Letter. I find that from January 1999 forward, Mrs. McMur- try and John conducted themselves on the basis of the mutual assumption that John was the owner of the Shares. The wording of the Letter is certain and clear. Mrs. McMurtry and John were of like mind. I find that the first criterion for estoppel by convention is satisfied. 181 John relied on the mutual assumption as he carried forward with the day-to-day operations of MMR. He and Brenda devoted their working lives to MMR from the 1980s and, subject to John’s limitations by reason of his health concerns, continue to do so to this date. Not only have they invested time, they have personally invested in MMR on a financial basis. John has, on at least one occasion, personally guaranteed indebtedness of MMR. I find that the second criterion for estoppel by convention is satisfied. 182 With respect to the second criterion, John points to the admission by Mrs. McMurtry, that she knew when she wrote the Letter that John would rely on the Letter for business purposes, including re-creation of the Minute Book. Mrs. McMurtry’s knowledge at the time of John’s intention to rely on the Letter is not, in my view, part of the second criterion. In any event, I agree with the submission made — that Mrs. Mc- Murtry was aware when she wrote the Letter of the significance of the 262 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

contents of the Letter and the use to which the Letter would be put by John. 183 For the reasons set out above in the discussion of the doctrine of laches it would be unjust or unfair to allow Mrs. McMurtry to resile or depart from the common assumption made by her and John as of January 1999 at the latest. In addition, in the period subsequent to the mutual assumption being made, John has been and he will continue to be detri- mentally affected if Mrs. McMurtry is permitted to resile from the mutual assumption. I find that detrimental reliance, the third criterion for estoppel by convention, is satisfied.

b) Estoppel by Representation 184 John also relies on the doctrine of estoppel by representation, which does not require that there be a mutual or shared assumption. As set out in paragraph 5 of Ryan, estoppel by representation requires: [A] positive representation made by the party whom it is sought to bind, with the intention that it shall be acted on by the party with whom he or she is dealing, the latter having so acted upon it as to make it inequitable that the party making the representation should be permitted to dispute its truth, or do anything inconsistent with it (Page v. Austin (1884), 10 S.C.R. 132 (S.C.C.) at p. 164). 185 I find that the criteria for estoppel by representation are met in this matter. In the Letter Mrs. McMurtry represented to John (and the rest of the world) that he was the owner of the Shares; Mrs. McMurtry knew that John would act upon that representation; and as noted above John acted to his detriment in reliance on the Letter.

Conclusions 186 It is unfortunate for the members of the McMurtry family that they find themselves embroiled in litigation over the business established by the patriarch of the family, Mr. McMurtry. The strain which the litigation has placed on the family relationships and on the individual members of the McMurtry family who testified at trial was clearly visible. This determination as to ‘ownership’ of the Shares is only the initial step in a series of steps required to bring the proceedings to a conclusion. 187 For the reasons set out above, I order as follows: 1. It is declared that Mrs. McMurtry: a) Is, by virtue of her status as the residuary beneficiary of the Estate of Keith McMurtry (“the Estate”), the beneficial McMurtry v. McMurtry Sylvia Corthorn J. 263

owner of 10 common shares in Mic Mac Realty (Ottawa) Ltd. (“the Shares”); and b) Has in that capacity since January 1999 held and continues to hold the Shares in a constructive trust for John McMurtry. 2. Pending further order of the Court, the executors of the Estate are prohibited from taking any steps to transfer ownership of the Shares from the Estate to Mrs. McMurtry or to any other individual. 188 Counsel for the parties to the companion actions are to contact the Civil Trial Co-ordinator to make arrangements to appear before me and make submissions with respect to both the next steps in the proceedings and the timing for submissions with respect to costs of the proceeding to date. Action dismissed. 264 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

[Indexed as: Zadra v. Cortese] Marian Alba Zadra, Robert Louis Zadra and Yvonne Michelle Zadra, Petitioners and Deni Cortese and Jeremiah Zadra, Respondents British Columbia Supreme Court Docket: Vancouver S133837 2016 BCSC 390 Dist. Reg. Nielsen Heard: September 29-30; October 1, 2014; May 4-6; October 13-15, 2015; January 6, 2016 Judgment: March 7, 2016 Estates and trusts –––– Estates — Remuneration of personal representatives — Measure of compensation — Quantum –––– Testator made his chiropractor administrator of his estate — Testator’s four children were beneficiaries, one of whom lived in Italy and one of whom had mental health issues — Estate consisted of uncompleted home, which testator wanted to be finished before being sold, family home which was occupied by beneficiary with mental health issues, two active blueberry fields and duplex which was divided into four suites, one of which was occupied by beneficiary — Administration of estate was difficult and lengthy — After many years, administrator was removed by consent — Matter of administrator’s compensation was referred to registrar — Administrator was entitled to total payment of $88,804.57 — Estate was significant both in terms of assets and beneficiaries — At time of testator’s death estate had value of roughly $800,000 and at time of administrator’s removal gross aggregate value of estate was roughly $4.8 million — Given that bulk of estate consisted of real property, much of credit for increase in value of estate had to be attributed to rising property values — In order to oversee administration of estate duties of administrator were heavily delegated — Although duties of administrator were heavily delegated, time he invested was considerable — Con- sidering administrator’s lack of prior experience he displayed skill and ability in addressing each of various difficulties as they arose, however various issues involved significant interventions by various professionals paid for by estate — Efforts of administrator achieved overall success as measured by increase in value of estate, however success could not be measured against final result as administrator was removed before estate was resolved — Fact that administrator was able to achieve consensus for better part of seven years was extraordinary — Although administrator honestly believed he was entitled to pre-take Zadra v. Cortese 265 portion of his fees, once he was advised he was not entitled to do so he should have immediately repaid money or sought approval of court to pre-take fees. Cases considered by Dist. Reg. Nielsen: Bernhard v. Wist (2011), 2011 BCSC 101, 2011 CarswellBC 125 (B.C. S.C.) — followed Duhra v. Basram (1991), 60 B.C.L.R. (2d) 78, 4 B.C.A.C. 276, 9 W.A.C. 276, 1991 CarswellBC 239 (B.C. C.A.) — considered Kanee Estate, Re (1991), 43 E.T.R. 292, (sub nom. Goldman v. Kanee Estate) 4 B.C.A.C. 287, (sub nom. Goldman v. Kanee Estate) 9 W.A.C. 287, 1991 CarswellBC 654 (B.C. C.A.) — followed Langley v. Brownjohn (2007), 2007 BCSC 156, 2007 CarswellBC 2165, 35 E.T.R. (3d) 38, 62 R.P.R. (4th) 139, [2007] B.C.J. No. 2776 (B.C. S.C.) — considered Lloyd, Re (1954), 62 Man. R. 279, (sub nom. Lloyd v. Williams) [1954] 3 D.L.R. 834, (sub nom. Lloyd Estate, Re) 12 W.W.R. (N.S.) 445, 1954 CarswellMan 41 (Man. C.A.) — followed Lowe Estate, Re (2002), 2002 BCSC 813, 2002 CarswellBC 1229, 45 E.T.R. (2d) 248, [2002] B.C.J. No. 1144 (B.C. S.C.) — referred to MacLean v. MacLean (2009), 2009 BCSC 292, 2009 CarswellBC 557, 47 E.T.R. (3d) 135 (B.C. S.C.) — considered Pedlar, Re (1982), 34 B.C.L.R. 185, 132 D.L.R. (3d) 538, 13 E.T.R. 140, 1982 CarswellBC 22, [1982] B.C.J. No. 1553 (B.C. S.C.) — followed Prelutsky, Re (1982), [1982] 4 W.W.R. 309, 11 E.T.R. 233, 36 B.C.L.R. 214, 1982 CarswellBC 90, [1982] B.C.J. No. 54 (B.C. S.C.) — considered Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350, 1905 CarswellOnt 449, [1905] O.J. No. 536 (Ont. H.C.) — followed Turley, Re (1955), 16 W.W.R. 72, 1955 CarswellBC 76 (B.C. S.C.) — considered Statutes considered: Trustee Act, R.S.B.C. 1996, c. 464 s. 88 — considered s. 88(1) — considered s. 89 — considered Rules considered: Supreme Court Civil Rules, B.C. Reg. 168/2009 Generally — referred to R. 14-1(3) — considered R. 25-13 — considered R. 25-13(7) — considered

RULING on estate administrator’s compensation. 266 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

D.A. Herbert, for Petitioners L. Spencer, for Respondent, Deni Cortese

Dist. Reg. Nielsen: I. Introduction 1 This reference concerns the administration of the estate of the late Mr. Luigi Zadra. The respondent, Deni Cortese, was the administrator of the estate. The petitioners, Marian Zadra, Robert Zadra, and Yvonne Zadra, are three of the four children of the late Mr. Luigi Zadra and beneficiaries of the estate. The respondent, Jeremiah Zadra, is also a beneficiary of the estate but was not represented at this hearing. 2 All of the beneficiaries were adults at the time of the execution of the will and the passing of the accounts. 3 By order dated July 10, 2014, this matter was referred to the registrar. The court’s order stated: There shall be a reference to the Registrar for the Passing of Ac- counts of Deni Cortese as Administrator with Will Annexed and to settle the amount of remuneration of Deni Cortese for that role on September 29, 30 and October 1, 2014. The Registrar shall certify the findings made on the Passing of Accounts settling the remuneration of Deni Cortese.; BY CONSENT 4 There had been a prior order dated June 14, 2013, which stated in part: 5. There shall be a reference to the Registrar for the Passing of Ac- counts of Deni Cortese as Administrator with Will Annexed on Sep- tember 19, 2013 at 2:00 p.m. or such other date as mutually agreed upon, on the condition that neither Mr. [X], nor anyone from his firm, shall act for the beneficiaries at that Passing of Accounts. The Registrar shall certify the findings made on the Passing of Accounts. 5 Oral evidence was given by the administrator of the estate and the lawyer and accountant for the estate. Two of the four of beneficiaries, Robert Zadra and Marian Zadra, also gave oral evidence.

II. Issues 6 The issues identified by the parties on this reference are threefold: i) First, whether the statements of account for the estate for the period January 3, 2003 through December 31, 2012 in the Form 107 filed November 13, 2013, ought to be passed as presented; Zadra v. Cortese Dist. Reg. Nielsen 267

ii) Second, the appropriate remuneration for the administrator; and iii) Third, the appropriate order for costs. 7 It is clear from submissions of the parties that the central issue is the appropriate remuneration of the administrator.

III. Background 8 The testator had been a patient of the administrator who is a practis- ing chiropractor. During a routine chiropractic visit in the summer of 2002, it was noted that the testator had unusual symptoms, including difficulty breathing. The testator was referred to a specialist and it was discovered that he had advanced terminal lung cancer. Subsequently, while the testator was attending treatment, his wife tragically suffered a heart attack and passed away. 9 Following the death of his wife, the testator executed a will on De- cember 26, 2002 which provided in part: 3. I DIRECT my Executor to pay out of the capital of my estate all my just debts, funeral and testamentary expenses and all succession, probate, estate, inheritance, death and income taxes, duties or fees that may be payable by reason of my death. My Executor, where permitted by law, shall have the power to commute or prepay or pay by instalments or otherwise determine the mode and time of payment of any taxes, duties or fees as he shall consider advisable. 4. I GIVE, free of all probate fees, probate and succession duties and all other taxes, duties, fees and charges, all my household, domestic, and personal goods and effects, including all my articles of personal use or ornament, belonging to me at the date of my death to my children, Jeremiah Zadra, Marian Alba Zadra, Yvonne Michelle Zadra and Robert Louis Zadra, or the survivors of them at the date of my death, and if more than one, as nearly as practicable in equal shares, to be divided among them as they shall agree. PROVIDED HOW- EVER if my children cannot agree as to such division, then as determined by the drawing of lots. 5. SUBJECT AS AFORESAID, I GIVE all my property, both real and personal, including any property over which I may have a general power of appointment, to my Executor upon the following trusts, namely: (a) Subject to paragraph 5(c) below, to use his discretion in the realization of my estate, with power to sell, call in and con- vert into money any part of my estate, at such time or times, in such manner and upon such terms, and either for cash or 268 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

credit, or for part cash and part credit, as my Executor may in his discretion consider necessary or advisable. (b) Subject to paragraph 5(c)(iii) below, to postpone the sale, calling in and conversion of all or any part of my estate and to retain my estate or any part thereof in tire form of investment in which it may be at my death for such length of time as he shall consider advisable, and my Executor shall not be responsible for any loss that may be occasioned by reason of so doing. (c) To transfer the residue of my estate (“my Trust Fund”) to my Trustees (unless otherwise expressly provided), without con- ferring any beneficial interest on my Trustees. I DIRECT my Trustees as follows: (i) To apply to modify the present subdivision of the south portion of the original farm property in such a fashion that the property identified by civic number 11171 Granville Avenue, Richmond, BC, more particularly known and described as Lot 2, Block 4N, Plan 85049, Section 12, Range 6W, New Westminster Land District (“Lot 2”) may result as being more or less 0.420 acres in area while the property presently identified by civic number 11151 Granville Avenue, Richmond, BC, more particularly known and described as Lot 1, Block 4N, Plan 85049, Section 12, Range 6W, New Westminster Land District (“Lot 1”) may result as being more or less 1.315 acres. (ii) To borrow sufficient funds against the title to Lot 1 and to do the following: A. pay testamentary expenses and all succession, probate, estate, inheritance, death and income taxes, duties or fees that may be payable by reason of my death; B. pay the costs and disbursements related to the modification described in paragraph 5(c)(i) above; C. clear title to the property at 4384 Vipond Place, Burnaby, BC, more particularly known and described as Lot 78, Plan 41112, DL 149, Group 1, New Westminster Group 1 Land Dis- trict (“The Duplex”); and D. complete construction of the house on Lot 1. Zadra v. Cortese Dist. Reg. Nielsen 269

(iii) To sell Lot 1 and the two adjacent agricultural plots more particularly known and described as Lot 45, Block 4N, Plan 1452, Section 12, Range 6W, New Westminster Land District and Lot 56, Block 4N, Plan 1452, Section 12, Range 6W, New Westminster Land District (“Lots 45 and 56”). (d) To hold the net proceeds of the sale of Lot 1 and Lots 45 and 56, as well as the residue of my estate, divide it and stand possessed thereof upon the following further trusts 6. I DIRECT my Trustees to hold and invest the property and monies hereinafter detailed: (a) Lot 2, as modified pursuant to paragraph 5(c)(i); (b) the net proceeds of the sale of Lot 1; and (c) one-quarter of the residue of the Estate “Jeremiah Zadra’s Fund” for a period of five years from the date of my death or until such earlier date as my Trustees may receive a medical-legal certificate signed by two practicing physicians, which certificates may unconditionally state that Jeremiah Zadra is fully capable of managing his own affairs. I DIRECT that Jeremiah Zadra’s Fund will not vest absolutely in Jeremiah Zadra, but will be retained by my Trustees upon the following trusts: (a) To pay or apply so much of the income and capital of Jer- emiah Zadra’s Fund as my Trustees in their unfettered discretion consider necessary or advisable for or towards the maintenance and benefit of. Any income not so paid or applied in any year is to be added to the capital of Jeremiah Zadra’s Fund and dealt with as part thereof. (b) To pay to Jeremiah Zadra, Jeremiah Zadra’s Fund five years after the date of my death or at such earlier date as my Trust- ees receive the medical-legal certificate described above. 10 The provisions of the will are relevant to the extent that they directed the administrator to resolve the estate in a manner which added to the estate’s complexity. 11 The will also acknowledges the undiagnosed mental health issues of one of the beneficiaries and provides evidence of the duties which the administrator was to perform, some of which were delegated to lawyers, accountants, and to the beneficiaries. 12 When initially asked to act as the administrator of the estate, the administrator was reluctant, as he had a busy chiropractic practice, a young family, and no prior experience in estate matters. Eventually, the admin- 270 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

istrator agreed on the condition that he could employ an Italian speaking lawyer to assist him. An Italian speaking lawyer and an accountant were retained by the administrator to assist with the administration of the estate. 13 The beneficiaries saw the administrator as an individual whom they could all respect and turn to in the event of a disagreement. 14 The estate consisted of the family home, two blueberry fields, a large partially constructed home next door to the family home, and a duplex which was divided into four suites, three of which were rented, and one in which the beneficiary, Marian Zadra, resided. The will directed the administrator to complete the unfinished home next to the family home. 15 The administrator had no prior experience with home construction. Two construction companies were retained to provide quotes to complete the home. Eventually, the construction firm with an Italian speaking owner was chosen. It was believed that this would be best as the oldest beneficiary with the undiagnosed mental disorder lived in the family home next to the unfinished home and could speak Italian. He had been responsible for much of the prior construction on the unfinished home and it was believed that an Italian speaking contractor would assist and facilitate his involvement in the construction project. It was believed that this would both provide assistance to the builder, and keep the beneficiary occupied and involved in the project. 16 While living in the family home, this beneficiary was also responsible for the two adjoining blueberry fields. During one particularly good year, the blueberry crop generated an income of $50,000. In subsequent years, the blueberry fields did not do as well. The beneficiaries allege that the blueberry fields were not properly maintained and have become ruined over time as a result. They allege it was unwise for the administrator to have left their care and control in the hands of their oldest brother who suffered from undiagnosed mental problems. 17 There is no expert evidence regarding the state of the blueberry fields, or the cause of their alleged ruinous state. 18 It was hoped that the unfinished home would be completed and sold in a timely fashion. It was not to be. 19 There were disagreements, cost overruns, burst pipes, problems with limestone floors, arguments over issues such as kitchen cabinets, a fist fight requiring the attendance of the police, nightly phone calls from the oldest beneficiary with the undiagnosed mental disorder and the eventual Zadra v. Cortese Dist. Reg. Nielsen 271

banning of him from the construction site, the bankruptcy one of the two construction companies with the consequence of only a partial return of the deposit, weekly meetings concerning the construction of the unfinished home which spanned years, the eventual dismissal of the Italian contractor and a subsequent lien being put on the property, a lawsuit and mediation requiring the retaining of another lawyer, the settlement of the lien claim, the youngest beneficiary taking over the contractor role to complete the home, and, the hiring of multiple realtors. 20 The home was finally finished and sold in 2008, four years after the administrator took over control of the construction project. It was originally believed the home would sell for $950,000; however, the eventual sale price was $2 million. 21 In an email dated August 1, 2008, the youngest beneficiary wrote to the administrator thanking him for his efforts in regards to the construction project. The email reads: Deni, just wanted to say thank you on behalf of us Zadras. It has been a long hall [sic], but now is the beginning of better times for all. Wishing you and your family a fun, restfully and stressless vacation. See you when you get back. Robert Zadra 22 At this point in time, it was believed that the estate would be quickly resolved. Again, it was not to be. In October 2008, it was discovered that there was a problem with the will as drafted by the estate’s Italian speaking lawyer. As a result, the Lawyers Insurance Fund was notified, the lawyer withdrew, and a new estate lawyer came onto the scene. 23 The problems with the will surrounded the oldest beneficiary and his share of the estate. If the matter could be resolved, it was hoped the estate could be concluded, if not, litigation would ensue against the prior Italian speaking estate lawyer. 24 A decision was also made in late 2008 to replace the existing estate accountant with a new accountant. The new accountant was the accountant of the youngest beneficiary’s plumbing business. The administrator agreed and the new accountant was retained on the advice and consent of the beneficiaries. 272 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

25 The new accountant prepared the accounts in Form 107, sworn No- vember 5, 2013 and filed November 13, 2013, for which the approval has been sought on this passing of accounts. 26 When the new accountant took over, there was a request for further documentation. Issues were raised with respect to a joint bank account in the name of the testator and the two of the beneficiaries, from which expenses relating to the estate had been paid. There was also an un- resolved issue concerning the contents of the testator’s safety deposit box. An issue concerning the rents relating to the duplex was also raised. None of these issues were resolved to the satisfaction of both the beneficiaries and the administrator. 27 A meeting took place with the new estate lawyer, during which the beneficiaries requested that he represent them in their action against the former estate lawyer. The administrator consented, and as a result, in No- vember 2009, the existing estate lawyer withdrew as counsel for the estate and the administrator was again left without the assistance of an estate lawyer. 28 The administrator began shopping around for a new estate lawyer in early 2010, with limited success. During this time period, the accountant was pressing the importance of remitting information regarding expenses for tax purposes, with a view to settling the estate. By email dated April 20, 2010, the beneficiaries wrote to the administrator requesting he not settle or distribute the estate on the advice of their lawyer, who had previously been the estate lawyer. The email reads: Hi Deni, I’m replying on behalf of me, Marian and Yvonne to your message of April 19 in which you ask for our okay to hire a lawyer (Nicole Garton-Jones), who we assume would be beginning the process of settling and distributing our dad’s will. We asked for advise on this from our lawyer, [X]. [X] advised that it would not be wise to proceed with settling and distributing the will at this time. Therefore, based on Mr. [X]’s advise, we need to request that you do not move forward on this at this time. So this would be a “nay” at this time. Hopefully, this will not be a long delay. All is not lost, because we feel that this time can be used to proceed with another task a=C” [sic] getting Revenue Canada to refund the $100,000 GST payment on 11151 that was made in error. I know you Zadra v. Cortese Dist. Reg. Nielsen 273

have recently spoken to Gabrielle, was this matter brought up, and if so, what was her response? ....if not, this dialogue needs to be started. I am more than happy to take this on. You just need to notify Gabrielle that I will be following up with this on behalf of the estate. Thanks. Robert cc. Marian & Yvonne [Emphasis in original.] 29 Following the meeting with the accountant, the administrator was advised that cheques from the rental of the duplex were not being deposited regularly. 30 Since the death of the testator, Marian Zadra had lived in one of the four units of the duplex. She had managed the property, collecting rents and attending to the expenses involved in maintaining and repairing the duplex. 31 Upon receiving notice from the accountant that the rent monies were not being deposited, the administrator wrote to Marian Zadra by email dated June 8, 2010 making inquiries. The email read: Hi Marian, I want to confirm that you have deposited the rental cheques. The Prospera account does not have these recorded. Before I go in to talk to them at the bank I just want to confirm they have been deposited. Thanks, Deni 32 The administrator received a response by email dated June 9, 2010. The administrator was surprised by the response which he described as “flippant and confrontational” and as “the beginning of a subsequent dis- astrous four-year relationship”. The email from Marian Zadra read: Hi Deni, For a second I did consider taking the dplx rent money and hitting the highway. I had it all figured out. Just me behind the wheel of a hot convertible lookin’ kinda Jackie O, plus SPF 45 of course, with tunes blasting ... a little CCR .... Maybe a little Eros. You get the picture. Yes, I was all prepared to screw my siblings out of the rent money when I realized that building repairs had eaten up this crazy dream, and the money. Ha! I have not deposited rent for the last three months. No need for you to worry as I have the accounting of all income/expenses. 274 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Here are the details: You’ll notice from the list of expenses I provided for 2009 income tax purposes that there’s a shortfall. Mostly, I owed PJB Mechanical some $4,400 for the purchase and installation of new furnaces. (A necessary expense to prevent a potential fire.) In addition to this the following is currently being addressed: Roof • Replacement of the roof has become of critical importance. Every time it rains now water drips inside the house and has caused damage. (Tenant is also not impressed and making threats to leave.) Van has visited twice to bandage the situation, but nothing is working anymore. If we don’t replace the roof asap it becomes a teardown repair which would double the cost. The clogged gutters, caused mostly by the decaying roof tiles, over- flow so much that they’ve turned the front doors into driftwood. (Cost is $8,000 to $10,000 ... maybe more. We’re hoping to use Van if he’s available.) • Tree removal The removal of a huge tree which is further clogging the gutters, but mostly is decayed to the point where it’s ready to blow over in the next windstorm. I called a tree removal company that confirmed it must be removed or risk damaging our house, tearing out our main- line, and hitting the neighbour’s garage. (Cost of tree removal is approx. $1,000). • Stairs The back stairs also need attention as they’re very old and are now unsafe. (Cost unknown.) While Yvonne was here we met with [X] who advised that if us siblings are all in agreement (and we are), that 1 could go ahead and orchestrate these repairs, and to withhold the necessary funds. He said that these decisions fall well within my authority as trustee. So, in an effort to get the necessary work done around here, I am exercising my authority as trustee. I will not be depositing rent money until all repairs are completed. (I’ll need to get you to release the necessary funds to complete the roof repair, of course.) Zadra v. Cortese Dist. Reg. Nielsen 275

There is no need for you to worry about the accounting of this, [D.Z.]. At the end of the day you will receive a full accounting of expenses from me, as necessary. I had meant to send you an email advising you of all of this but I was waiting for Robert to come by so that we could together review the most immediate repairs that need to be made. I noted that in an earlier email you said that you wanted to use the dplx money to pay estate services/fees, however these repairs are not frivolous items and need to be addressed now. ([X] advised that it is an estate requirement to mitigate any losses that could occur from a lack of proper building/asset maintenance.) Cheers, Marian 33 Until this point in time, the administrator was not aware that Marian Zadra was a “trustee”. It was the administrator’s belief that this had been resolved seven years earlier by a revocation on her part. 34 The administrator hired another estate lawyer to assist him and wrote to the beneficiaries an email dated August 2, 2010, which states: Hello everyone, It appears difficult for you to meet with me and I am sure you all want this whole process to move along, so I will send this email in lieu of the meeting. Once I have these issues completed we should meet with the accountant to discuss any questions and in addition with the estate lawyer. 1. the accountant wants all transactions to freeze. They want to put the cash into a non-interest bearing account, the revenue from the duplex will be estimated and a final accounting will be sent to revenue Canada. Marian this requires you to deposit all rent into the Prospera account. If you have any expenses I can issue you a cheque and these can be forwarded to the accountant. If there is a problem with doing this please let me know ASAP. I am meeting with the lawyer and the accountant in the next two weeks. 2. Marian please provide me with any information stating you are a trustee. Obviously there is a fee for your services. This has to be calculated by the accountant and distributed by the lawyer. (By the way the cash in entire estate is to be transferred to the lawyers trust account and she will handle all distributions). 276 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

3. Marian the accountant has informed me that Revenue Canada may attribute you a taxable benefit by living in the house. I informed the accountant that you are owed approx. 40,000 and could this be considered in lieu of rent. She said yes. Robert informs me that you may take issue with this. In this regard you should attend the meeting with the acct. to discuss this. I would like to provide the acct. with as much info prior to the meeting as possible. So if everything is fine let me know or if you take issue with the rent allocation also let me know by email - and i can forward your reasons to the accountant prior to the meeting. 4. This one came as a big surprise to me. But the estate has to pay capital gains tax on the appreciated amounts of the properties. This totals more than 400K. Robert has already contacted the acct. (as this is his accountant too) and indicated his surprise and is there something we can do about re- ducing this number. Another reason to attend the meeting with Ms. Loren. 5. Yvonne, if there were not an error in the will, then in order to pay everyone out, we would probably have had to sell the blueberry fields. But considering the will as it is written, this would go to Jerry anyway therefore no point in selling. Hence I assume that your lawyer will sue the law society for the amount to pay you and your siblings. Understand that I am not the person allocating all these fees and reg- ulations. But there is a clear and legal process that I must abide by. Please respond as soon as possible as now I am leaving it to the accountant and the lawyer to conclude the estate. Kind regards. Deni 35 In December 2010, the matter took another turn for the worse. The administrator was contacted by his accountant responsible for his chiropractic practice. The administrator’s accountant suggested that if the estate was going to be wrapping up shortly, the administrator should take a portion of his fee for being administrator in the current tax year and the balance in the next. The administrator testified that he had been previously advised by two of the estate’s lawyers that his compensation would be 5% of the gross aggregate value, the statutory maximum, given the complexity of the estate. 36 In the belief that the estate would be concluding shortly, and given the tax advice provided by his accountant, the administrator made the Zadra v. Cortese Dist. Reg. Nielsen 277

decision to advance himself $70,000 as a partial payment towards his purported fee. The administrator called the estate lawyer for advice in this regard, however, when he was advised the lawyer was away on holi- days, he made the decision to pay himself $70,000 from the estate. The pre-taking of fees by the administrator was particularly galling for the beneficiaries, given that they had outstanding expenses themselves for which they had not been reimbursed, although properly owed by the estate, in some cases, for years. 37 In addition, the administrator reimbursed himself for expenses properly the responsibility of the estate, but mistakenly reimbursed himself twice for the same expenses. This resulted in an overpayment to the administrator in the amount of $7,162.75. 38 By March 31, 2011, there were no funds in the estate’s chequing account. This was in no small part due to the administrator’s pre-taking of what he believed was a portion of his fee. The pre-taking of the fee was not discussed with the beneficiaries in advance, or done with their consent, and came as a complete surprise to the beneficiaries when it was discovered. 39 Issues regarding the deposit of the rents and expenses surrounding the duplex persisted in the latter half of 2011 and 2012. 40 In 2013, the estate’s lawyer withdrew as counsel and was replaced due to an alleged conflict. Issues had arisen regarding the beneficiaries’ lawyer and the removal of the administrator. Finally, by court order dated June 14, 2013, the administrator was removed by consent and replaced by one of the beneficiaries, effective December 31, 2012.

IV. Legal Principles A. Remuneration 41 Sections 88 and 89 of the Trustee Act, R.S.B.C. 1996, c. 464, provide as follows: 88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administra- 278 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

tion of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper. (2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled. (3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets. 89 The court may, on application to it for the purpose, settle or direct the registrar to settle the amount of the compensation, although the estate is not before the court in an action. 42 The administrator is entitled to remuneration for his work on the estate to a maximum of 5% of the gross aggregate value, including capital and income of all the assets of the estate at the date of passing, pursuant to s. 88(1) of the Trustee Act. The criteria to be considered in determining the amount of remuneration which should be awarded are set out in the much cited case of Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at para. 23 wherein the Court states: [23] From the American and Canadian precedents, based upon statutory provision for compensation to trustees, the following circumstances appear proper to be taken into consideration in fixing the amount of compensation: (1) the magnitude of the trust; (2) the care and responsibility springing therefrom; (3) the time occupied in per- forming its duties; (4) the skill and ability displayed; (5) the success which has attended its administration. 43 It is not required that remuneration be fixed at a specific percentage of the gross value of the estate, it can be calculated as a lump sum provided it does not exceed 5%. In Turley, Re (1955), 16 W.W.R. 72 (B.C. S.C.) at para. 11 the Court stated: [11] As to grounds 1 and 2 of this application, I think the principles to be applied are well settled. I adopt the statement of the principles as given in, I think, all the cases and found in Re Atkinson Estate [1952] OR 688, that the compensation allowed an executor is to be a Zadra v. Cortese Dist. Reg. Nielsen 279

fair and reasonable allowance for his care, pains and trouble and his time expended in or about the estate. Both responsibility and actual work done are matters for consideration and, while there should not be a rigid adherence to fixed percentages, they are to be used as a guide. I think that the factors I mentioned in my judgment on the previous motion are found here. It is not only the presence of continuing trusts that makes the realization and administration of estates difficult. It is submitted that the capital fee should be charged only on the amount realized, excluding those assets that go over in specie. While the fact that considerable portions of the estate are transferred in specie is a factor the registrar may consider in settling the percentage he allows, I think it would be quite inappropriate as a rule to exclude these in the computation of aggregate value. There appears to be evidence here of extensive work. It is the duty of the executor to administer the whole of the estate. His work in some things might not be compensated sufficiently by a percentage much in excess of the maximum allowed. 44 Maximum remuneration is not awarded as a matter of routine. Appro- priate remuneration is a matter of what is fair and reasonable in all the circumstances. As stated by the B.C.C.A, in Kanee Estate, Re [1991 Car- swellBC 654 (B.C. C.A.)] (19 September 1991), Vancouver Registry CA014168: Maximum remuneration does not go as a matter of course and it is to be expected that there will be disputes over the quantum of remuneration. Section 90(1) does not prescribe an adversarial process. There are no plaintiffs, no defendants, no pleadings, no discoveries, no provisions for offers of settlement or payment into Court, and no other trappings of an adversarial nature, All interested parties are entitled to be heard but in the end the officers of the Court must decide what is fair and reasonable in all of the circumstances. 45 The amount of remuneration to be paid to the administrator is determined on a quantum merit basis which reflects the reasonable value of the services rendered, which is subject to a 5% maximum. 46 In this regard, evidence is required concerning the administrator’s experience in estate matters, the nature of the estate, the tasks undertaken, the time spent, unusual problems arising during the administration of the estate, the skill employed by the administrator, and the results achieved which were directly attributable to the administrator’s efforts. Documen- tary evidence and time records should be provided where they exist. The administrator provided this evidence over the course of days of testimony. In addition, extensive documentary evidence was provided by 280 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

both the administrator and the beneficiaries. However, no time records were provided, as the administrator did not keep a record in this regard. 47 An inference may be drawn against an administrator for failure to provide time records in appropriate circumstances. See Lowe Estate, Re, 2002 BCSC 813 (B.C. S.C.) at para. 33. 48 A negative inference in this regard will be appropriate were criticisms in the administrator’s administration of the estate are found to be valid. In these circumstances, the administrator’s remuneration may be substantially reduced. See Lowe Estate, Re, supra, at paras. 27, 28, 41 and 42.

B. Pre-taking of fees 49 The administrator is entitled to remuneration for his work. However, unless otherwise agreed, the amount of remuneration is to be determined by the court pursuant to Rule 25-13 of the Supreme Court Civil Rules. It is a breach of trust for an administrator to take remuneration from the estate without the approval of all the beneficiaries, or before a court order is made fixing remuneration. 50 In administering an estate, an administrator is not to be held to a standard of perfection judged on the basis of hindsight. The standard of care is reasonableness. In Langley v. Brownjohn, 2007 BCSC 156 (B.C. S.C.), the Court addressed the issue of the standard of care in relation to whether a breach of trust ought to be excused. At paras. 64-66, the Court stated: [64] At page 1258 Waters points out that the question of whether a trustee has acted honestly is not typically an issue in the cases. The more contentious question ordinarily focuses on whether the other requisite elements have been established and, in particular, whether the actions of the trustee can be characterized as being reasonable in the circumstances. [65] At 1260, Waters describes in general terms what is considered to be reasonable conduct: Reasonable conduct is what the prudent business person would have exhibited in his own affairs. The court puts itself in the position of the trustee at the time of the disputed conduct, and considers what the prudent business person would have done in the light of the facts as they were then known and the prevailing opinion among business people at the time. [footnotes omitted.] [66] Among the factors to be considered when determining whether a trustee should be excused are: whether the trustee sought out and/or Zadra v. Cortese Dist. Reg. Nielsen 281

relied upon the advice of a professional in relation to the impugned conduct; whether the opinion relied upon was correct; the relationship and communication, or lack of it, between the trustee and the beneficiaries leading up to the commission of the breach; whether the breach was merely technical or a minor error in judgment; whether the trustee is a lay person or a professional; whether the trustee has received remuneration; and the quantum of the loss: Fales; Laird v. Lyne Estate (2004), 5 E.T.R. (3d) 132, 2004 BCSC 39; Re: Potter (2000), 32 E.T.R. (2d) 256, 2000 BCSC 628; Linsley v. Kirstiuk (1986), 28 D.L.R. (4th) 495 (B.C.S.C.); Re Heuvels Estate, 2001 MBQB 73; Verma v. Chopra, [1994] O.J. No. 111 (Ont. Ct. Gen. Div.); Re Stoyko Estate, [1992] M.J. No. 587 (Q.B.); Duthie et al. v. Gallagher and Duthie, [1930] 2 D.L.R. 582 (B.C.S.C). 51 In equity, a trustee had no right to remuneration unless expressly given that right by the trust. In Prelutsky, Re, [1982] 4 W.W.R. 309 (B.C. S.C.). The Court stated at para. 8: What then, of the propriety of the pretaking? In equity a trustee had no right to remuneration unless expressly given that right in the trust. The basis for that rule being that a trustee claiming compensation is in somewhat of a conflict of interest. In accepting compensation he would, in effect, be benefitting from his own trust. ... 52 The Court further stated at para. 10: In my view there is no significant distinction between the pertinent section of the Alberta Trustee Act and section 90 of the B.C. Trustee Act. I adopt the reasoning and conclusions of the learned judge and hold that in British Columbia it is improper for a trustee to pretake trustee compensation without court approval unless all of the beneficiaries are adults and have consented. I also agree that a trustee may estimate its expected allowance and may retain that sum in the trust to ensure a fund to pay the compensation ultimately allowed. The interest earned on that sum’ would, of course, accrue to the benefit of the beneficiaries.

C. Professional Fees 53 The administrator is entitled to be reimbursed from the estate for the fees of professionals such as lawyers and accountants provided these costs were reasonably and properly incurred, and do not amount to work that could have been performed by the administrator. Fees related to work properly performed by the administrator, but done by others, will be deducted from the administrators’ remuneration. This point is made In 282 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Lloyd, Re, [1954] 3 D.L.R. 834 (Man. C.A.) at para. 6 where the Court stated: ... A solicitor for an estate does not administer it and if, while solicitor, he did work which the administratrix herself should have performed, and he is allowed payment for such, the total amount of those items should be taken into consideration and deducted from her compensation when fixing the amount to be allowed the administratrix for her services. ... 54 Lloyd, Re , supra, was followed in Bernhard v. Wist, 2011 BCSC 101 (B.C. S.C.), where the Court stated at paras. 106 and 107: [106] The executor is entitled to be reimbursed from the estate for a solicitor’s bill for legal services rendered provided that those legal costs have been reasonably and properly incurred and do not relate to work that could have been performed by the executor. Fees paid for any services that could have been performed by the executor should be deducted from the executor’s remuneration: Re Lloyd Estate (1954), 12 W.W.R. (N.S.) 445. [107] Furthermore, an executor is not entitled to employ a solicitor to do work that the executor could do, such as ordinary letters, atten- dances, paying insurance premiums and the like, attending to bank- ing matters and other ordinary duties that do not require the skill or expertise of a solicitor: Sharp v. Lush (1879), 10 Ch. 468 applied in Re Smith, [1972] 2 O.R. 256 (Surr. Ct). 55 These are the legal principles which will be applied to the issues in dispute.

V. Position of the Parties 56 The Form 107 filed herein by the administrator sought the statutory maximum remuneration for the capital fee, income fee and care and management fee over a 10 year time frame. The administrator has resiled from that position somewhat, and is now seeking a capital fee in an amount of $217,575 and income fee of $18,683.16, both calculated on the basis of 4.5%. The administrator also seeks a care and management fee totaling $12,000 which is calculated on the basis of .04% over an average of four of the ten years. The administrator submits in this regard that the court could only reasonably award four years of care and management fees for the administrator’s work. 57 The administrator’s total claim for remuneration is $248,258.16. The administrator agrees that from this amount must be deducted the $70,000 pre-taken fee plus interest in the amount of $3,468.36, and the overpay- Zadra v. Cortese Dist. Reg. Nielsen 283

ment of the administrator’s expenses which total $7,332.60, including interest. The administrator’s total net claim for fees is therefore $167,457.20. 58 The beneficiary’s views are diametrically opposed to those of the administrator. The beneficiaries submit a capital fee calculated at 2% would be appropriate in all circumstances and that no income fee, or care and management fee is justified in the circumstances of this case. They further take the position that the 2% fee ought to be calculated on the basis of the estate’s assets being valued at $3,872,000, not the $4,835,000 as calculated in the Form 107 filed herein. 59 The beneficiaries further submit that once all the losses they allege were caused by the administrator are taken into consideration, together with the pre-taking of the $70,000 fee, the administrator owes the estate $412,220.60 plus interest.

VI. Analysis A. The accounts 60 With the exception of those portions of the accounts which impact administrator’s remuneration, the accounts as stated in the Form 107 herein were not seriously disputed. Considerable time was spent review- ing the accounts of the estate’s lawyer and accountant, but emphasis was on the allegation of inappropriate delegation by the administrator of his duties. These are matters which I will canvass under the administrator’s entitlement to remuneration. 61 The accounts were prepared by the estate accountant who was recom- mended and approved by the beneficiaries. Indeed, the estate accountant was the accountant for the youngest beneficiary’s plumbing business. The accountant has had over 26 years of experience and testified she has handled over 600 estates. In addition, she has experience as an auditor with Revenue Canada. 62 The accounting may not be perfect, but the accountant had to step into the shoes of her predecessor and essentially perform what she lik- ened to a forensic audit, taking into account sometimes competing sources of information. She testified that she found the job difficult and that the administrator, who is not a trained accountant, could not possibly have done a proper accounting on his own without professional assistance. 284 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

63 In MacLean v. MacLean, 2009 BCSC 292 (B.C. S.C.), the Court stated at paras. 52-55 as follows: [52] The written accounting provided by Mr. MacLean is not perfect. It does not comply with the Rules of Court. For example, it does not provide asset values as of the date of death. As noted, the Supple- mentary Account is not in Form 136A. [53] However, upon hearing Mr. MacLean’s explanation of these documents, I am satisfied that he has accurately accounted for the monies coming into the Estate and monies paid out. Despite the extensive investigation that preceded this hearing and the broad ranging cross-examination of the executor, there is no evidence to suggest that Estate monies or other assets have been improperly taken or withheld by the executor. [54] The co-mingling of funds in the P.C. Account was not ideal but, again, I am satisfied that the executor has properly accounted for the Estate monies and not derived any benefit (such as interest) from holding the monies. [55] The executor’s accounts in respect to his administration of the Estate from February 6, 2006 to October 12, 2007 are passed as presented. 64 I adopt a similar approach to that followed in MacLean, supra. I accept the accounts of the estate have been sufficiently scrutinized and that the estate accountant has accurately accounted for the monies coming into the estate and subsequently being paid out by the estate. With the exception of the administrator’s remuneration, the administrator’s accounts in respect of his administration of the estate from January 3, 2003 to December 31, 2012 are passed has presented.

B. Remuneration 65 The factors to be considered in relation to the capital and income fee which shall ensure the administrator is fairly compensated for his time and effort in the administration of the estate are stated in Toronto General Trusts Corp., supra. They are: i) the magnitude of the trust; ii) the care and responsibility involved; iii) the time occupied in the ministration; iv) the skill and ability displayed; and, Zadra v. Cortese Dist. Reg. Nielsen 285

v) the success achieved in the final result. 66 The maximum legislative amount allowable for the capital fee is 5% of the gross aggregate value of the capital assets of the estate. Similarly, the maximum legislative allowance for the income fee is 5% of the gross income earned during the administration of the estate. The administrator’s remuneration may be determined other than on a fixed percentage; however, it cannot exceed the 5% statutory maximum. 67 The factors to be considered in awarding the annual care and management fee are set out in Pedlar, Re (1982), 34 B.C.L.R. 185 (B.C. S.C.) at paragraphs 14 and 15: 14 Each application must be decided upon its own facts. Some of the important factors to be taken into consideration in determining whether any care and management fee should be allowed and, if allowed, the extent of such care and management fee (not exceeding 0.4% of the average market value of the assets of the estate), include the following: (a) the value of the estate assets being administered; (b) the nature of the estate assets being administered — such as an active business, a farm, real property held for investment or appreciation, a portfolio of investments and the type of such investments; (c) the degree of responsibility imposed upon the trustee by the terms of the will or other instrument, including the length or duration of the trust; (d) the time expended by the trustee in the care and management of the estate; (e) the degree of ability exhibited by the trustee in the care and management of the estate; (f) the success or failure of the trustee in the care and management of the estate; (g) whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate. 15 While the foregoing list of factors is not intended to be exhaus- tive, it has been derived, primarily, from a consideration of the On- tario Court of Appeal decisions in Re Mortimer, [1936] O.R. 438 and Re Smith, (1953) O.R. 185. It is recognized that there may be other factors deserving of consideration depending upon the circumstances involved in a particular application. 286 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

68 I intend to address the various factors from both Toronto General Trusts Corp., supra, and Pedlar, Re, supra, together, where appropriate.

i) The magnitude of the trust 69 At the date of the testator’s death in 2003, the estate had a value of roughly $800,000. At the time of the administrator’s removal in Decem- ber 2012, the gross aggregate value of the estate was roughly $4.8 million. 70 The trust involved four beneficiaries, one of whom lived in Italy, which gave rise to problems surrounding communication and one of whom had mental health issues, which also gave rise to various difficulties for the administrator over the course of the administration of the estate. The other two beneficiaries were resident in the lower mainland and, from the administrator’s point of view, were also a source of difficulty during the course of his administration. The estate was significant both in terms of assets and beneficiaries.

ii) Care and responsibility involved 71 When the administrator was initially approached to assume the role of administrator of the estate, he was not told there was an unfinished house to be built, nor was he told that one of the beneficiaries had mental health problems. 72 The administrator had no prior experience as an executor of an estate or as a builder, nor did he have any experience in dealing with mental health issues, legal issues or accounting issues. The administrator was a full-time chiropractor with a busy practice and a young family. 73 In addition to the uncompleted home which the testator, according to his will, wanted to be finished before being sold, the estate involved the family home which was occupied by the beneficiary with mental health issues, two active blueberry fields, and a duplex which was divided into four suites, three of which were rented and one of which was occupied by a beneficiary. 74 In order to oversee the administration of the estate, the duties of the administrator were heavily delegated. Throughout the administration of the estate, both a lawyer and an accountant were on retainer. It is common practice, and often best practice, for an administrator to delegate to professionals those duties which require professional qualifications. However, if an administrator delegates to professionals work that is his, Zadra v. Cortese Dist. Reg. Nielsen 287

that will be reflected in the administrator’s remuneration: see Lloyd, Re, supra, at para. 6 and Bernhard, supra, at paras. 106 and 107. 75 The administrator did delegate a substantial amount of responsibility and duties on the estate’s lawyer. The lawyer obtained the two contractors to provide estimates, both of whom were known to her. The lawyer had made the loan inquiries, and had the signing authority on the construction loan accounts, and actually signed the construction loan agreement. Virtually all the correspondence concerning the estate was directed to the lawyer’s office. 76 There were difficulties which arose from this delegation. The construction contractor charged fees on top of his 15% agreed to by contract, and the lawyer could not reconcile all the accounting for construction costs. 77 The lawyer also made the inquiries regarding a loan to clear the title of the duplex at the direction of the administrator. 78 The assistance of an accountant was required in the administration of the estate. Indeed, the evidence of the last accountant involved was that she found it difficult to reconcile the accounts, and was of the opinion that a layperson could not have provided an accurate and appropriate accounting. This no doubt explains why the accountant executed the Form 107, not the administrator. 79 The duplex and the blueberry fields were administered by the beneficiaries during the entire course of the administrator’s administration of the estate. The beneficiaries also made funeral arrangements for the testator and dealt with the realtors involved in the selling of the newly completed house adjacent to the family home. The youngest beneficiary also eventually assumed the role of contractor in order to complete the construction of the unfinished house next to the family home. 80 The administrator did oversee and instruct the lawyers and the accountants involved; however, given the administrator’s lack of experience, the time constraints occasioned by his chiropractic practice, the professional expertise required in the jobs performed, the administrator’s oversight was limited. In some instances, the administrator’s limited involvement and oversight was a result of a lack of basic information that went directly to the professionals, not the administrator. An example is the fact that all the correspondence related to the construction of the house next to the family home went directly to the estate’s lawyer, not the administrator. 288 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

iii) The time occupied by the trust 81 Although the duties of the administrator were heavily delegated, the time he invested was considerable. During the years in which the unfinished home was under construction, there were complications which arose requiring the administrator’s involvement, as well as weekly meetings to keep the beneficiaries informed. There was the dismissal of the contractor responsible for the construction and a subsequent lawsuit and mediation, both of which required the administrator’s time, instructions, and consultations with the beneficiaries and lawyer. Each of the beneficiaries involved a special investment of time on the part of the administrator over the course of the administration of the estate. 82 The controversy involving the accounts from the duplex and the removal of the prior estate lawyer due to a conflict of interest also required the involvement of the administrator. Regretfully, the administrator did not keep a record of his time. However, I am not prepared to draw a negative inference from this fact in the circumstances of this case. The administrator had his hands full during the construction of the house and his eventual remuneration was not a consideration during most of the administration of the estate. 83 In assessing the time spent by the administrator, it is appropriate to also acknowledge the work done by the beneficiaries. The beneficiaries arranged the funeral, took part in overseeing the construction of the house, researched and located realtors, obtained quotes on insurance and entirely managed the duplex and blueberry fields. Marian Zadra also took considerable responsibility for her brother who had mental health issues and eventually became his committee in 2014.

iv) The skill and ability displayed 84 Considering the administrator’s lack of prior experience, he displayed skill and ability in addressing each of the various difficulties as they arose. However, the various issues faced by the administrator involved significant intervention by various professionals paid for by the estate, including lawyers, accountants, and contractors. The duties of the administrator were heavily delegated.

v) The success achieved in the final result 85 The efforts of the administrator achieved an overall success as measured by the increase in value of the estate. However, that success cannot be measured against a “final result”, as the administrator was removed Zadra v. Cortese Dist. Reg. Nielsen 289

before the estate was resolved. Apparently, the estate remains un- resolved. Further, given that the bulk of the estate consisted of real property, much of the credit for the increase in the value of the estate has to be attributed to rising property values in the Lower mainland. 86 The beneficiaries allege that the administrator’s overall success must be discounted for the fact that the construction costs spiraled well beyond what was expected, and was not the “fixed price” they had intended. They submit the administrator’s late filing of income tax records necessi- tated late filing fees and penalties. The beneficiaries attribute the deterioration of the family home and the blueberry fields to the alleged mismanagement of the administrator. The beneficiaries also criticize the administrator for not having invested funds sitting in an estate account between August 31, 2011 and December 31, 2012. 87 In considering the impact of this alleged mismanagement on the administrator’s overall success, a number of factors have to be kept in mind. First, the costs expended for the construction of the unfinished home were necessary to see it completed and sold, not to mention that the testator had directed that it be completed before sale. The construction costs were also affected by the occurrence of unforeseen events that impacted the cost. Second, the income tax returns could not be filed, as required documents had not been provided in relation to the duplex. Third, there is no expert evidence upon which the alleged deterioration of the family home or the blueberry fields can be properly laid at the feet of the administrator. The latter allegation is tempered by the fact that two of the beneficiaries were keeping a close eye on the brother who resided in the family home. The youngest beneficiary’s office was only a five minute drive from the family home. Finally, the administrator had been instructed to not take steps to resolve the estate in an e-mail from the beneficiaries dated April 20, 2010, and the accountant had advised the administrator, as indicated in his e-mail of August 2, 2010, that all transactions were to be frozen and the cash placed in a non-interest bearing account. The administrator cannot be faulted for doing what both the beneficiaries and the accountant requested. 88 The administrator testified that other than being advised that the beneficiary with the mental health issues could use some money, he had not been advised of any express concerns relating to the deterioration of the family home or the blueberry fields. The documentary evidence supports the administrator in this regard. 290 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

vi) Extraordinary services rendered 89 The administrator assumed the administration of the estate with four beneficiaries, three of whom were actively involved in the administration of the estate and imposed their own unique challenges. The administrator emphasized he tried to achieve consensus wherever he could, and I accept this was his goal and approach. For the most part, he was able to achieve this goal for the better part of seven years. The fact that the administrator was able to achieve consensus for as long as he did was extraordinary.

vii) Pre-taking of the $70,000 fee 90 I consider the pre-taking of the $70,000 fee by the administrator to be a serious matter. It was contrary to the Supreme Court Civil Rules which require a court order to pre-take fees, it was a breach of his fiduciary duty to the beneficiaries, and was done without consultation with the beneficiaries or their consent. 91 The pre-taking of the $70,000 fee imposed a temporary hardship on the estate as it depleted the estate account prematurely. Further, it was particularly galling to the beneficiaries, some of whom were likewise owed money by the estate for which they had not been reimbursed. And not surprisingly, the pre-taking of fees without the knowledge or consent of the beneficiaries soured the relationship between the administrator and the beneficiaries. 92 I accept the administrator honestly believed he was entitled to pre- take a portion of his fees, however, when he was eventually advised that he was not entitled to do so, the administrator did not immediately repay the $70,000 to the estate, nor did he seek approval of the court to pre- take fees. Without the consent of all the beneficiaries, he ought to have done so.

VII. Disposition 93 In considering all the factors, circumstances, and applicable legal principles, I find that a capital fee of 3% of the gross aggregate value of the capital assets in the amount of $4,835,000 is appropriate, or a capital fee of $145,050. From this amount, the $70,000 pre-taken fee, plus $3,368.36 in interest is to be deducted, for a net capital fee of $71,681.64. Zadra v. Cortese Dist. Reg. Nielsen 291

94 The administrator is also entitled to an income fee of 3% of the gross income of the estate from January 3, 2003 to December 31, 2014, being $415,181.41, for an income fee of $12,455.53. 95 The administrator seeks a care and management fee for four years over the course of the administration of the estate in the amount of $12,000 which is less than the statutory maximum of 0.4%. I find this amount claimed to be reasonable in all the circumstances and it is awarded. 96 The administrator overpaid himself expenses in the amount of $7,162.75, which is to be repaid together with court order interest in the amount of $169.85, for a total repayment in the amount of $7,332.60. 97 I therefore certify that the administrator is entitled to a total payment of $88,804.57 as the balance of his remuneration owed, broken down as follows: a) capital fee of 3% of the gross aggregate value of the estate ($4,835,000), less the pre-taken fee and interest for a total of $71,681.64 ($145,050 minus $73,368.36); b) an income fee of 3% of the gross income from January 3, 2003 to December 31, 2012 ($415,181.44), for a total of $12,455.53; and c) a care management fee for four years of administering the estate for a total of $12,000; d) less the overpayment to the administrator of expenses and interest in the amount of $7,332.60 ($7,162.75 plus court order interest $169.85). 98 I further certify that the accounts of the administrator from January 3, 2003 to December 31, 2012 in the Form 107 filed November 13, 2013, are passed as presented with the exception of the administrator’s remuneration.

VIII. Costs 99 Rule 25-13(7) of the Supreme Court Civil Rules provides: Unless the court on an application otherwise orders, if costs are payable under an application under subrule (1), those costs (a) must be assessed as special costs, and (b) may be assessed without an order of the court, and Rule 14-1 (3) and (5) applies. [en. B.C. Reg. 44/2014, Sch. 1, s. 11.] 292 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

100 In Duhra v. Basram, [1991] B.C.W.L.D. 2492 (B.C. C.A.), the Court outlined circumstances where an administrator’s claim for cost will be disallowed. At para. 16, the Court stated: [16] Finally, the Estate is protected against unreasonable claims by the Executors because the Court has a discretion as to costs. Mr. Jus- tice Donald recognized that matter when referring to the master’s findings. He said: He saw no unreasonableness in the amount claimed by the Executors, nor did he find any bad faith or other impropri- ety in the matters which led to the reduction, nor do I. The adjustment for mistakes was adequately made by the reduction in remuneration; it was unnecessary to penalize the Executors by denying them costs. There will be cases where the executor’s claim is outrageous or tainted by serious misconduct and the discretion as to costs should be exercised differently. 101 The administrator’s claim to fees has been reduced; however, the claim was not “outrageous or tainted by serious misconduct”. 102 The administrator’s pre-taking of fees was a breach of trust, and contrary to Rule 25-13 of the Supreme Court Civil Rules which requires a court order, however, that has been taken into account in arriving at the administrator’s remuneration. 103 The administrator was a lay person, inexperienced in estate matters, legal matters, and accounting matters. He struck me as an individual who was overwhelmed but sought to do the best he could on the advice of professionals. 104 I see no reason to depart from the usual order that the estate pay the administrator’s costs of passing the accounts, assessed as special costs, and I so order. 105 The petitioners were comprised of three of the four beneficiaries. I am of the view that it would be unfair for three of the four beneficiaries to entirely bear the costs of the passing of the accounts. The petitioners are awarded their costs of the passing of the accounts, payable by the estate, assessed as special costs. 106 The issue of whether Ms. Lauren’s invoices for $3,396.07 for her preparation and attendance to testify at the passing of accounts was “proper or reasonably necessary” in the context of Rule 14-1(3) of the Zadra v. Cortese Dist. Reg. Nielsen 293

Supreme Court Civil Rules is a matter for the assessing officer to determine in the event agreement cannot be reached. Order accordingly. 294 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

[Indexed as: Alberta (Public Trustee) v. McCorriston] The Public Trustee for the Province of Alberta, Trustee of the Estate of Kelly Lorne Craigmile, Applicant and Sherry McCorriston, Calgary Health Trust, Heart and Stroke Foundation of Canada and Schizophrenia Society of Alberta, Respondents Alberta Court of Queen’s Bench Docket: Calgary ES01-115188 2016 ABQB 125 W. Tilleman J. Heard: February 9, 2016 Judgment: March 2, 2016 Estates and trusts –––– Estates — Dependants’ relief legislation — Entitle- ment to relief — Children — Adult children –––– Applicant was 58-year-old man with bi-polar disorder, schizophrenia, hepatitis C and drug abuse tendencies — Both Public Trustee and Public Guardian represented applicant and confirmed he could not earn a living — Applicant’s mother died, leaving estate valued at $800,000, from which she left one-half proceeds of accounts totaling $193,000 to applicant, as well as life interest in house — Applicant was deceased’s only child, and she left parts of accounts and house after applicant’s death to various charities — Applicant received $1,600 monthly from social assistance, which fell short of covering his expenses — Public Guardian confirmed additional funds were needed for maintenance of applicant, and of the house, which could be significant — Public Trustee had set up trust fund of $42,500 that was now in decline — Public Trustee brought application on behalf of applicant for increased maintenance and support for him — Application granted — Deceased owed both moral and legal obligations to applicant, who was over 18-years of age and family member within definition of Wills and Suc- cession Act — Applicant was unable to earn livelihood by reason of disability, and met statutory preconditions for additional maintenance and support — Trust funds were in decline, monthly expenses and other costs were on rise and met requirements set out in case law — Society expected deceased’s estate to take care of her son who could not take care of himself due to his disability — House and contents were to be transferred to life interest trust, with remainder of assets added to trust, and interest generated by trust was to be paid monthly to Public Trustee — Public Trustee had discretion to encroach on capital for maintenance of applicant and house — Upon applicant’s death, assets in trust would be sold and net proceeds distributed to charities. Alberta (Public Trustee) v. McCorriston W. Tilleman J. 295

Cases considered by W. Tilleman J.: Carter v. Alberta Conference Corp. of the Seventh Day Adventist Church (No- vember 10, 1998), Hutchinson J., [1998] A.J. No. 1479 (Alta. Q.B.) — considered Soule v. Johansen Estate (2011), 521 A.R. 238, 2011 ABQB 403, 2011 CarswellAlta 2562, 81 E.T.R. (3d) 55 (Alta. Q.B.) — considered Stadler v. MacDonald (2001), 2001 ABQB 408, 2001 CarswellAlta 588, 38 E.T.R. (2d) 289, 290 A.R. 179 (Alta. Q.B.) — considered Tataryn v. Tataryn Estate (1994), [1994] 7 W.W.R. 609, 46 B.C.A.C. 255, 75 W.A.C. 255, 116 D.L.R. (4th) 193, [1994] 2 S.C.R. 807, 3 E.T.R. (2d) 229, 169 N.R. 60, 93 B.C.L.R. (2d) 145, 1994 CarswellBC 283, 1994 Car- swellBC 1243, [1994] S.C.J. No. 65, EYB 1994-67087 (S.C.C.) — followed Statutes considered: Family Relief Act, R.S.A. 2000, c. F-5 Generally — referred to Wills and Succession Act, S.A. 2010, c. W-12.2 s. 72(b) “family member” (iv) — considered s. 88(1) — considered s. 88(3) — considered s. 90 — considered s. 93 — considered s. 96(1) — considered

APPLICATION for maintenance and support from mother’s estate for her disabled adult son.

Janice M. Elmquist, for Applicant, Kelly Craigmile

W. Tilleman J.: I. Introduction and Background 1 This is an application by the Public Trustee for increased maintenance and support for Kelly Lorne Craigmile. Mr. Craigmile is 58 years old and has bi-polar disorder, schizophrenia, hepatitis C and drug abuse tendencies. He is represented by the Public Trustee, acting as his trustee, and by the Public Guardian, acting as his guardian; the presence of both of whom confirms to my satisfaction that Mr. Craigmile is disabled and unable to earn a living. 2 Mr. Craigmile’s mother, Eva Mary Craigmile, died in 2013. Probate has issued and the net value of the estate is just short of $800,000, the largest portion of which is a House (the “House”) valued at roughly 296 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

$300,000. Under her will, Mrs. Craigmile left her only child, Mr. Craigmile, half of the proceeds of accounts at CIBC and RBC (totalling $193,000), as well as a life interest in the House. The named charitable respondents also were to receive portions of the bank accounts. Addition- ally, the Schizophrenia Society was to get the House after Mr. Craigmile’s death. 3 Currently, Mr. Craigmile receives AISH and other public assistance in the amount of $1,600 per month, which falls short of his overall monthly expenses. The Public Trustee, who has been managing the money to my satisfaction, now seeks additional funds for Mr. Craigmile. The evidence of the Public Guardian is that additional funds are required for companionship, clothing, grief counselling, vacation, recreation, a car, and maintenance of the House, the latter of which could be a significant cost. The Public Trustee had set up a Trust Fund of $42,500 which is now in decline. I note that there is no suggestion that Mr. Craigmile could not take care of the House, only that there are insufficient funds to do so.

II. Issue 4 Should the Public Trustee, on behalf of Mr. Craigmile, receive additional maintenance and support from the estate of Mrs. Craigmile by reason of Mrs. Craigmile having made inadequate provision in her will for Mr. Craigmile?

III. Statute Law 5 The Wills and Succession Act, SA 2010, c W-12.2 (“WSA”), defines family member as follows: 72(b) “family member” means, in respect of a deceased, ... (iv) a child of the deceased who is at least 18 years of age at the time of the deceased’s death and unable to earn a livelihood by reason of mental or physical disability, ... 6 The WSA provides for maintenance and support of family members as follows: 88(1) If a person (a) dies testate without making adequate provision in the person’s will for the proper maintenance and support of a family member, or Alberta (Public Trustee) v. McCorriston W. Tilleman J. 297

(b) dies either wholly or partly intestate and the share to which a family member is entitled under a will or Part 3 or both is inadequate for the proper maintenance and support of the family member, the Court may, on application, order that any provision the Court considers adequate be made out of the deceased’s estate for the proper maintenance and support of the family member... (3) The order may be made in respect of all or any part of the estate, and regardless of whether there is a will or intestacy. 7 An application for maintenance and support may be made pursuant to s. 90 of the WSA: 90 An application under this Division may be made by a family member on his or her own behalf or (a) in the case of a family member who is under 18 years of age, on behalf of that family member by: (i) the family member’s parent or guardian, (ii) the Public Trustee, or (iii) any other person in accordance with the Alberta Rules of Court or the Surrogate Rules made under the Judi- cature Act, or (b) in the case of a family member who is a represented adult or an incapacitated person, on behalf of that family member by (i) the family member’s trustee, or (ii) any other person in accordance with the Alberta Rules of Court or the Surrogate Rules made under the Judi- cature Act. 8 In considering an application for maintenance and support, the Court must take into account the factors set forth in s. 93 of the WSA: 93 In considering an application for the maintenance and support of a family member, the Court shall consider, as applicable, (a) the nature and duration of the relationship between the family member and the deceased, (b) the age and health of the family member, (c) the family member’s capacity to contribute to his or her own support, including any entitlement to support from another person, (d) any legal obligation of the deceased or the deceased’s estate to support any family member, 298 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

(e) the deceased’s reasons for making or not making dispositions of property to the family member, including any written statement signed by the deceased in regard to the matter, (f) any relevant agreement or waiver made between the deceased and the family member, (g) the size, nature and distribution of (i) the deceased’s estate, and (ii) any property or benefit that a family member or other person is entitled to receive by reason of the deceased’s death, (h) any property that the deceased, during life, placed in trust in favour of a person or transferred to a person, whether under an agreement or order or as a gift or otherwise, and (i) any property or benefit that an individual is entitled to receive under the Matrimonial Property Act, the Dower Act or Divi- sion 1 of this Part by reason of the deceased’s death, and may consider any other matter the Court considers relevant. 9 Section 96(1) of the WSA sets out the Court’s authority to make an order and allows the Court to impose any conditions and restrictions it considers appropriate: 96(1) The Court may, in making an order for maintenance and support, impose any conditions and restrictions that the Court considers appropriate and may (a) direct that provision for maintenance and support be made out of and charged against the estate in the proportion and in the manner that the Court considers appropriate, (b) direct that provision for maintenance and support be made out of income or capital, or both, in one or more of the following ways: (i) by an amount payable annually or otherwise; (ii) by a lump sum to be paid or held in trust; (iii) by transfer or assignment of a specified property, whether absolutely or in trust and whether for life or for a term of years, to or for the benefit of the family member.

IV. Case Law 10 The Public Trustee referred the Court to a few cases, the first being Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 (S.C.C.). Counsel also Alberta (Public Trustee) v. McCorriston W. Tilleman J. 299

referenced the cases of Carter v. Alberta Conference Corp. of the Seventh Day Adventist Church, [1998] A.J. No. 1479 (Alta. Q.B.) and Soule v. Johansen Estate, 2011 ABQB 403, 521 A.R. 238 (Alta. Q.B.). In Carter, the Court considered an application under the then Family Re- lief Act and held at para 18 that “The key words coming out of this section are ‘Adequate provision for the proper maintenance and support of the dependent.’” 11 Like Mr. Craigmile, the applicant in Carter suffered from bipolar disorder. Hutchinson J. found that this was a disabling condition and said at paras 23 and 24: I find that the applicant, Donald Carter, being a child of the deceased over the age of 18 years at the time of the deceased’s death was then and is now unable by reason of mental disability to earn a livelihood. No convincing evidence to the contrary has been submitted. Confir- mation that he is disabled, apart from his own testimony, comes from the two sources from which he is presently receiving disability income. One from Great West Life Assurance Company and the other from the administrators of the Canada Pension Plan. Neither one of these sources is inclined to pay disability unless compelled to do so. If judicial notice is required of the fact that bipolar disorder can be disabling then I am prepared to take such notice. ... 12 Justice Hutchinson reviewed older case authorities and concluded it was appropriate to direct all of the residue of the estate to be paid to the applicant for his use entirely. 13 In Stadler v. MacDonald, 2001 ABQB 408, 290 A.R. 179 (Alta. Q.B.), where a life estate was in issue, the Court said this at paras 21 - 22: While the court appreciates the respondents’ willingness to settle the matter, it is precisely these sorts of concerns that make a life estate impractical. As remaindermen the respondents will continually be second guessing Mr. Stadler’s actions for fear of their interest being eroded. I conclude that given the size of the estate and the strength of the legal and moral claims of Mr. Stadler, that adequate provision for the proper maintenance and support of Mr. Stadler is to transfer the home to him. 14 In Soule, the Court commented at para 47 about the obligations of a parent to a disabled child: Mrs. Johansen owed both legal and moral obligations to her son during her lifetime and at her death and owed neither to her chosen ben- 300 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

eficiary. Community standards support the recognition of support obligations of parents towards their children...... In seeking contemporary justice most would say that a parent’s estate should not benefit a charity when that person’s child is permanently disabled and lives on government assistance. In Petrowski Moen J. said at para 521: Uniformly, Alberta courts appear to conclude that the assistance offered by the state to disabled persons does not discharge a parent’s obligation to provide support in a will... 15 Regarding moral decisions and competing claims, the Supreme Court of Canada in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 (S.C.C.) at ps 821-824 set out these principles, applicable in Alberta: ...The legal obligation of a testator may also extend to dependent children. ... The legal obligations which society imposes on a testator during his lifetime are an important indication of the content of the legal obligation to provide “adequate, just and equitable” maintenance and support which is enforced after death. For further guidance in determining what is “adequate, just and equitable”, the court should next turn to the testator’s moral duties toward spouse and children. It is to the determination of these moral duties that the concerns about uncertainty are usually addressed. There being no clear legal standard by which to judge moral duties, these obligations are admittedly more susceptible of being viewed differently by different people. Nevertheless, the uncertainty, even in this area, may not be so great as has been sometimes thought. For example, most people would agree that although the law may not require a supporting spouse to make provision for a dependent spouse after his death, a strong moral obligation to do so exists if the size of the estate permits. Similarly, most people would agree that an adult dependent child is entitled to such consideration as the size of the estate and the testator’s other obligations may allow. While the moral claim of independent adult children may be more tenuous, a large body of case law exists suggesting that, if the size of the estate permits and in the absence of circumstances which negate the existence of such an obligation, some provision for such children should be made: Brauer v. Hilton (1979), 15 B.C.L.R. 116 (C.A.); Cowan v. Cowan Estate (1988), 30 E.T.R. 216 (B.C.S.C.), aff’d (1990), 37 E.T.R. 308 (B.C.C.A.); Nulty v. Nulty Estate (1989), 41 B.C.L.R. (2d) 343 (C.A.). See also Price v. Lypchuk Estate, supra, and Bell v. Roy Es- tate (1993), 75 B.C.L.R. (2d) 213 (C.A.) for cases where the moral duty was seen to be negated. Alberta (Public Trustee) v. McCorriston W. Tilleman J. 301

How are conflicting claims to be balanced against each other? Where the estate permits, all should be met. Where priorities must be considered, it seems to me that claims which would have been recognized during the testator’s life — i.e., claims based upon not only moral obligation but legal obligations — should generally take prece- dence over moral claims. As between moral claims, some may be stronger than others. It falls to the court to weigh the strength of each claim and assign to each its proper priority. In doing this, one should take into account the important changes consequent upon the death of the testator. There is no longer any need to provide for the deceased and reasonable expectations following upon death may not be the same as in the event of a separation during lifetime. A will may provide a framework for the protection of the beneficiaries and future generations and the carrying out of legitimate social purposes. Any moral duty should be assessed in the light of the deceased’s legitimate concerns which, where the assets of the estate permit, may go beyond providing for the surviving spouse and children. I add this. In many cases, there will be a number of ways of dividing the assets which are adequate, just and equitable. In other words, there will be a wide range of options, any of which might be considered appropriate in the circumstances. Provided that the testator has chosen an option within this range, the will should not be disturbed. Only where the testator has chosen an option which falls below his or her obligations as defined by reference to legal and moral norms, should the court make an order which achieves the justice the testator failed to achieve. ...

V. Analysis and conclusion 16 I agree that Mrs. Craigmile owed both legal and moral obligations to her son. Mr. Craigmile is over 18 and is a family member within the definition in the WSA. Further, I am satisfied that he is unable to earn a livelihood by reason of disability. The fact that he is represented by the Public Guardian and Public Trustee is itself some evidence of disability. Accordingly, I am satisfied that he has met the statutory preconditions in the WSA for additional maintenance and support and that the facts of this case (trust funds in decline, monthly expenses and other costs on the rise) meet the requirements set out in the case law. Moreover, as Tataryn suggests, Mrs. Craigmile’s moral obligations also are relevant because society expects her estate to take care of a son who cannot take care of himself due to disability. 302 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

17 In the result, I granted an Order for the following maintenance and support including these terms: • the personal representative of Mrs. Craigmile’s estate will transfer the House and its contents to be held in a separate trust for Mr. Craigmile called the Kelly Craigmile Life Interest Trust; • the personal representative will add the remainder of the estate to the Kelly Craigmile Life Interest Trust for the maintenance and support of Mr. Craigmile during his lifetime; • The interest generated by the Kelly Craigmile Life Interest Trust will be paid monthly to the Public Trustee and be dealt with separate from other asserts held in trust on behalf of Mr. Craigmile; • The Public Trustee has the right to encroach on the capital of the Kelly Craigmile Life Interest Trust for maintenance of the House and contents and as required for maintenance and support of Mr. Craigmile in the sole discretion of the Public Trustee; • In the event that Mr. Craigmile ceases to reside in the House before he dies, the House will be sold and the net proceeds added to and dealt with as part of the Kelly Craigmile Life Interest Trust. At that time, the Public Trustee shall make application to the Court for a review of the Kelly Craigmile Life Interest Trust; and • On the death of Mr. Craigmile, the Public Trustee shall sell all assets remaining in the Kelly Craigmile Life Interest Trust and distribute the net proceeds as follows: 1. If the House and contents have not previously been dealt with pursuant to paragraph 11 of the Order granted Febru- ary 9, 2016, the House and contents shall be sold and the proceeds shall be added to and dealt with as part of the Kelly Craigmile Life Interest Trust; 2. An amount equal to the net proceeds from the sale of the House and contents shall be paid to the Schizophrenia Soci- ety of Alberta or its successor or assign; 3. The sum of $119,000.00 shall be paid to the Heart and Stroke Foundation of Canada or its successor or assign; and 4. The balance then remaining shall be paid to Calgary Health Trust or its successor or assign. 18 In the event that there are not sufficient funds remaining in the Kelly Craigmile Life Interest at the time of Mr. Craigmile’s death to allow the Alberta (Public Trustee) v. McCorriston W. Tilleman J. 303

latter distributions, the Public Trustee may seek further direction from the Court. 19 I find that setting aside further funds as a separate trust as described above is as consistent as possible both with Mrs. Craigmile’s testamentary intent and with respect for the beneficiaries. I note that, to the credit of the Respondents, there appeared to be no real objection to this Order. Application granted. 304 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

[Indexed as: Haigh v. Kent] Randolph Lawrence Haigh, Plaintiff Defendant by Counterclaim Applicant and Leonard Clive Kent and Dee Alexander Kent, Defendants Plaintiffs by Counterclaim Respondent British Columbia Supreme Court Docket: Powell River POR S-S2409 2016 BCSC 333 Grauer J. Heard: September 28-29, 2015 Judgment: February 26, 2016 Real property –––– Interests in real property — Co-ownership — Termina- tion of co-tenancy — Partition — Court-ordered partition and sale –––– Plaintiff assisted defendant L in operation of resort on beachfront property owned by L and his son defendant D from 1980 to 2004 — Parties had falling out and plaintiff brought action claiming interest in property on basis of express or, alternatively, constructive trust — Plaintiff was found to be entitled to 25 per cent beneficial interest in property on basis of constructive trust as remedy for unjust enrichment — Plaintiff applied for vesting order, and for order for partition and sale pursuant to Partition of Property Act — Application granted in part — Declaration of constructive trust gave plaintiff right to, and obliged defendants to deliver, legal title to undivided 25 per cent interest in property — Plaintiff entitled to enforce that right and obligation through vesting order — Defendants not, at present time, entitled to order dissolving and monetizing trust through order for damages — Since order dividing unique property into two separate lots would be impractical and inequitable, order for sale and distribution of proceeds would seem to be more appropriate remedy — However, that would work serious hardship on defendants who had had property in family for more than seven decades and four generations — Appropriate remedy was to order plaintiff to sell interest in property to defendants pursuant to s. 8 of Act — Plain- tiff who had chosen to monetize interest in property by requesting order for sale — Plaintiff entitled to be paid 25 per cent of fair market value of property as resort, less his share of certain expenses — Plaintiff was not entitled to share of profits from resort business, but no deduction should be made in relation to insurance premiums, commercial mortgage on property or mortgage payments. Estates and trusts –––– Trusts — Constructive trust — Miscellaneous –––– Plaintiff assisted defendant L in operation of resort on beachfront property owned by L and his son defendant D from 1980 to 2004 — Parties had falling out and plaintiff brought action claiming interest in property on basis of express Haigh v. Kent 305

or, alternatively, constructive trust — Plaintiff was found to be entitled to 25 percent beneficial interest in property on basis of constructive trust as remedy for unjust enrichment — Plaintiff applied for vesting order, and for order for partition and sale pursuant to Partition of Property Act — Application granted in part — Declaration of constructive trust gave plaintiff right to, and obliged defendants to deliver, legal title to undivided 25 per cent interest in property — Plaintiff entitled to enforce that right and obligation through vesting order — Defendants not, at present time, entitled to order dissolving and monetizing trust through order for damages — Since order dividing unique property into two separate lots would be impractical and inequitable, order for sale and distribution of proceeds would seem to be more appropriate remedy — However, that would work serious hardship on defendants who had had property in family for more than seven decades and four generations — Appropriate remedy was to order plaintiff to sell interest in property to defendants pursuant to s. 8 of Act — Plain- tiff who had chosen to monetize interest in property by requesting order for sale — Plaintiff entitled to be paid 25 per cent of fair market value of property as resort, less his share of certain expenses — Plaintiff was not entitled to share of profits from resort business, but no deduction should be made in relation to insurance premiums, commercial mortgage on property or mortgage payments. Cases considered by Grauer J.: Bradwell v. Scott (2000), 2000 BCCA 576, 2000 CarswellBC 2142, 81 B.C.L.R. (3d) 210, 36 R.P.R. (3d) 112, 143 B.C.A.C. 235, 235 W.A.C. 235, [2000] B.C.J. No. 2151 (B.C. C.A.) — referred to Haigh v. Kent (2012), 2012 BCSC 1361, 2012 CarswellBC 2805, 81 E.T.R. (3d) 71 (B.C. S.C.) — considered Haigh v. Kent (2013), 2013 BCCA 380, 2013 CarswellBC 2577, 89 E.T.R. (3d) 1, [2013] 10 W.W.R. 415, 49 B.C.L.R. (5th) 90, 364 D.L.R. (4th) 544, 343 B.C.A.C. 302, 586 W.A.C. 302 (B.C. C.A.) — referred to Innes v. Bui (2010), 2010 BCCA 322, 2010 CarswellBC 1616, 96 M.V.R. (5th) 22, 289 B.C.A.C. 223, 489 W.A.C. 223, [2010] B.C.J. No. 1269 (B.C. C.A.) — considered Machin v. Rathbone (2006), 2006 BCSC 252, 2006 CarswellBC 349, 42 R.P.R. (4th) 135, [2006] B.C.J. No. 327 (B.C. S.C.) — referred to McRae v. Seymour Village Management Inc. (2014), 2014 BCSC 714, 2014 CarswellBC 1138 (B.C. S.C.) — referred to Minera Aquiline Argentina SA v. IMA Exploration Inc. (2006), 2006 BCSC 1102, 2006 CarswellBC 1776, 58 B.C.L.R. (4th) 217, 32 C.P.C. (6th) 31, [2007] 1 W.W.R. 43, 32 B.L.R. (4th) 165, [2006] B.C.J. No. 1626 (B.C. S.C.) — referred to Minera Aquiline Argentina SA v. IMA Exploration Inc. (2007), 2007 BCCA 319, 2007 CarswellBC 1291, 68 B.C.L.R. (4th) 242, 43 C.P.C. (6th) 45, 32 B.L.R. (4th) 242, [2007] 10 W.W.R. 648, 246 B.C.A.C. 1, 406 W.A.C. 1, [2007] B.C.J. No. 1232 (B.C. C.A.) — referred to 306 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Minera Aquiline Argentina SA v. IMA Exploration Inc. (2007), 2007 Car- swellBC 3065, [2007] S.C.C.A. No. 424, [2007] C.S.C.R. No. 424, 384 N.R. 383 (note), 267 B.C.A.C. 320 (note), 450 W.A.C. 320 (note), [2007] 3 S.C.R. x (note) (S.C.C.) — referred to Mowat v. Dudas (2012), 2012 BCSC 454, 2012 CarswellBC 963, 33 B.C.L.R. (5th) 164, 19 R.P.R. (5th) 91 (B.C. S.C.) — referred to Sun-Rype Products Ltd. v. Archer Daniels Midland Co. (2008), 2008 BCCA 278, 2008 CarswellBC 1419, 41 E.T.R. (3d) 170, 81 B.C.L.R. (4th) 199, [2008] B.C.J. No. 1298, [2008] 11 W.W.R. 454, 257 B.C.A.C. 218, 432 W.A.C. 218 (B.C. C.A.) — referred to Sun-Rype Products Ltd. v. Archer Daniels Midland Co. (2009), 2009 Car- swellBC 255, 2009 CarswellBC 256, [2008] S.C.C.A. No. 416, 395 N.R. 388 (note), 282 B.C.A.C. 319 (note), 476 W.A.C. 319 (note) (S.C.C.) — referred to Zackariuk Estate v. Chepsiuk (2005), 2005 BCSC 919, 2005 CarswellBC 1491, 17 E.T.R. (3d) 100, 33 R.P.R. (4th) 218, [2005] B.C.J. No. 1376 (B.C. S.C.) — referred to Statutes considered: Law and Equity Act, R.S.B.C. 1996, c. 253 s. 37(1) — considered Partition of Property Act, R.S.B.C. 1996, c. 347 Generally — referred to s. 2(1) — considered s. 2(2) — considered s. 6 — considered s. 7 — considered s. 8 — considered s. 8(1) — considered s. 8(2) — considered s. 8(3) — considered Trustee Act, R.S.B.C. 1996, c. 464 s. 59 — considered

APPLICATION by plaintiff for vesting order and order for partition and sale of property.

Ian Fleming, for Plaintiff / Defendant by Counterclaim Sandra L. Kovacs, for Defendants / Plaintiffs by Counterclaim Haigh v. Kent Grauer J. 307

Grauer J.: Introduction 1 The Property at issue in this litigation, known as “Kent’s Beach”, has been in the Kent family since the 1940s. It consists of about 95 acres fronting on Jervis Inlet southeast of Powell River. 2 Title to Kent’s Beach is registered in the name of the defendants, Le- onard Kent, who is 74, and his son Dee. As a result of earlier litigation, however, they hold title subject to a constructive trust in favour of the plaintiff, Randy Haigh, to the extent of 25%. Mr. Haigh now seeks to realize on that interest. He applies for a vesting order, and partition or sale of the Property under the Partition of Property Act, RSBC 1996, c 347 (the Act).

Background 3 Leonard Kent and the plaintiff, Randy Haigh, who were once brothers-in-law, operated a business on the Property, Kent’s Beach Resort, from 1980 until 2004, when Mr. Haigh terminated the business relationship. He and his wife have continued to live on the Property, in an A- frame house on the water, and the Kents have continued to operate the business. Kent’s Beach Resort offers facilities for vacationers, ranging from cabins to campsites and trailer sites. 4 Mr. Haigh commenced the previous litigation in September 2007, claiming that he was entitled to a share of ownership of the Property on the basis of an express, or alternatively, a constructive, trust. 5 That claim was tried before Mr. Justice Saunders in Powell River in January 2012. In Reasons for Judgment delivered September 17, 2012, and indexed as Haigh v. Kent, 2012 BCSC 1361 (B.C. S.C.), Saunders J. found that the Kents had been unjustly enriched by Mr. Haigh’s contributions over 20 years, and that an award of a constructive trust in favour of Mr. Haigh was appropriate. Saunders J. concluded at para 119: ... I assess Mr. Haigh’s interest as being beneficial entitlement to a 25% ownership share in the Property. I find that the defendants constructively hold that ownership share in trust for Mr. Haigh. 6 The Kents appealed that decision, and the appeal was dismissed: Haigh v. Kent (2012), 2013 BCCA 380 (B.C. S.C.). Chiasson J.A., dis- senting, would have substituted a monetary award for the constructive trust. 308 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

7 The background facts are fully canvassed in the trial and appeal decisions. Thereafter, the parties remained at loggerheads. Mr. Haigh sought from the Kents the transfer of title to an undivided 25% interest in the Property. The Kents refused. The Kents sought to buy Mr. Haigh out. Mr. Haigh refused. He wanted 25% of the value of the Property together with 25% of the net profits of the business from the time of the previous judgment. The two, he maintained, go together. The Kents objected to paying any share of the business profits. So they could not agree on the value of Mr. Haigh’s 25% interest. 8 In these circumstances, Mr. Haigh commenced this action seeking re- gistration of an undivided 25% ownership interest in the Property, and an order that the Property be sold and the proceeds divided pursuant to the Act. He now says that the Property should be divided into separate lots under the Act, but if there is to be a sale, his share should include 25% of the profits the Kents have earned from the business since the decision of Saunders J. 9 The Kents say that Mr. Haigh was awarded a beneficial interest and so is not entitled to a legal interest. They maintain that as the holder of a beneficial interest only, he has no standing under the Act. They assert that in any event the trust should be dissolved and damages awarded in lieu thereof. Alternatively, they submit that partition is impracticable and that the Act prohibits an order for sale and division of the proceeds because they have undertaken to purchase Mr. Hague’s share. They seek directions. 10 I will now consider what flows from the constructive trust awarded by Saunders J. I will then turn to the question of how Mr. Haigh’s interest should be valued, as the answer will impact the issues that arise in relation to his claim for partition or sale under the Act. Next, I will ex- plore what relief is available to Mr. Haigh under the Act, and finally, I will consider what directions should be given in that regard.

Discussion A. What flows from the constructive trust? 11 It is clear that Saunders J. awarded Mr. Haigh a remedial constructive trust, employing a “value survived” approach, noting at para 117 that “Mr. Haigh’s efforts have earned him an ownership share in the Property”. Haigh v. Kent Grauer J. 309

12 This is entirely consistent with a long line of authority that provides that a declaration of a remedial constructive trust is a recognition in equity that the plaintiff is entitled to ownership of the trust property. The trustee of a constructive trust does not normally have the duties or pow- ers of an express trustee. Instead, equity merely imposes on the trustee an obligation to transfer legal title in the trust property to the beneficiary on demand: Donovan W. M. Waters, Mark R. Gillen & Lionel D. Smith, eds, Waters’ Law of Trusts in Canada, 4th ed (Toronto: Carswell, 2012) at 501 and 511 [Waters]; Austin Wakeman Scott & William Franklin Fratcher, The Law of Trusts, vol 5, 4th ed (Boston: Little, Brown and Company, 1989) at 304; A.H. Oosterhoof, Robert Chambers & Mitchell McInnes, Oosterhoff on Trusts, 8th ed (Toronto: Carswell, 2014) at 737; Sun-Rype Products Ltd. v. Archer Daniels Midland Co., 2008 BCCA 278 (B.C. C.A.) at para. 75, leave to appeal to SCC refused 2009 CanLII 4263 [(2008), 2009 CarswellBC 255 (B.C. C.A.)]; Minera Aquiline Argentina SA v. IMA Exploration Inc., 2006 BCSC 1102 (B.C. S.C.) at para. 310, aff’d (2006), 2007 BCCA 319 (B.C. S.C.), leave to appeal to SCC refused 2007 CanLII 66723 [(2006), 2007 CarswellBC 3065 (B.C. S.C.)]. 13 Indeed, as the editors of Waters comment at 510: ...in some of its roles, the Canadian remedial constructive trust, seen as a fully discretionary remedy, is better understood as a mandatory injunction to transfer property. 14 It therefore follows that in finding that the defendants constructively hold a 25% ownership share in trust for Mr. Haigh, Saunders J. necessarily found that Mr. Haigh is entitled to the legal interest in that trust property. Mr. Haigh has demanded it, and the defendants are obliged to deliver it. By failing to do so, they are in breach of trust. 15 In these circumstances, I have no difficulty in concluding that Mr. Haigh is entitled to an order vesting in him legal title to an undivided 25% interest in the Property. The authority to make such an order in the circumstances of this case arises under both section 37(1) of the Law and Equity Act, RSBC 1996, c 253 and section 59 of the Trustee Act, RSBC 1996, c 464. 16 The defendants argue that I should nevertheless decline to make a vesting order because it was originally claimed in the first action, but “implicitly denied” and is therefore res judicata. I disagree. 17 There are two forms of res judicata: cause of action estoppel and issue estoppel. Both operate where the court has adjudicated a cause of 310 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

action between parties, and one of them seeks to re-litigate it on the same facts. The parameters are fully discussed in Innes v. Bui, 2010 BCCA 322 (B.C. C.A.) at paras 19-21. 18 In this case, Mr. Haigh is not seeking to re-litigate on the same facts. He is dealing with the consequences of the decision of Saunders J. and the defendants’ failure to abide by their trust obligation flowing from that decision. Those are different facts. 19 Similarly, Mr. Haigh is not seeking to re-litigate the same cause of action. His prior claim alleged an express trust and unjust enrichment. Unjust enrichment was found; a constructive trust was the remedy. The present application is to enforce the rights that flow from that remedy. 20 In articulating his conclusion, Saunders J. did not address the question of a vesting order. He did not have to. His imposition of a constructive trust gave Mr. Haigh the right to, and obliged the defendants to transfer on demand, legal title to an undivided 25% interest in the Pro- perty; Mr. Haigh’s entitlement to a vesting order flows from that right and the failure of the defendants to fulfil that obligation, not from re- litigating the same claim. It is a matter of enforcement, not re-litigation. 21 I observe, however, that the absence of a vesting order from the relief ordered by Saunders J. is of relevance to Mr. Haigh’s allegation that the defendants are in contempt of court. Being in breach of the obligations that flow from the order is one thing. Being in contempt of the order is another. In the rather unusual circumstances that arise here, the first has been established; the second has not. 22 The defendants then argue that the court should “dissolve the trust and monetize it” because of a change in circumstances since Saunders J.’s order. Assuming, without deciding, that I have the power to do so in exceptional circumstances, I decline to do so in this case for two reasons. 23 First, the defendants argued both before Saunders J. and in the Court of Appeal that in the event Mr. Haigh established unjust enrichment, the appropriate remedy was an award of damages rather than a constructive trust. They are now seeking to achieve that same result despite having failed to do so twice before. It would take exceptional circumstances indeed to justify such a result, which raises issues of res judicata. 24 Second, the “change in circumstances” upon which the defendants rely are neither exceptional nor much of a change. These include the hos- tility between the parties (not a change), Clive Kent’s advancing age (entirely foreseeable), and the importance of bringing in Dee Kent to man- Haigh v. Kent Grauer J. 311

age the resort and live on the Property (foreseeable and of questionable relevance). 25 Accordingly, I order that an undivided 25% interest in the Property vest in Mr. Haigh in fee simple.

B. How should Mr. Haigh’s share be valued? 26 This is the principal stumbling block that has prevented a more timely resolution of this dispute. Both parties addressed the question at length in argument. It turns on whether, as an owner of an undivided 25% interest in the Property, Mr. Haigh is entitled to be compensated not only for the value of his share of the amount for which the Property could be sold, but also 25% of the profits generated by the business of Kent’s Beach Resort since his interest was created by order of Saunders J. 27 Mr. Haigh likens it to a situation where a party owns 25% of a rental property. Clearly, he submits, that party is entitled to 25% of the net rents, in addition to his interest in the property itself. He argues that in the particular circumstances of this unusual case, the property and the business were intertwined, and an interest in one equates to an interest in the other. 28 I am unable to agree. In the unusual circumstances of this case, Mr. Haigh was granted an interest in the Property, not an interest in the business. This is evident from the Reasons for Judgment of Saunders J., who drew a distinction between the Property and the resort business. It is true that he spoke of them as being “intertwined” at para 102, but that was in the context of stating that any claim by Mr. Haigh to a partnership in the business was untenable. 29 In carrying out the valuation of Mr. Haigh’s interest at para 118, Saunders J. dealt with questions of the value of the Property and Mr. Haigh’s contributions to the structures used in the business. The judge accepted evidence that the Property, as a resort, was worth approximately $1,600,000 including the value of the improvements. He balanced with this value three factors of particular relevance to this discussion: (1) that the land had substantially appreciated since 2004, during which time Mr. Haigh had made no contribution to the resort; (2) that the improvements (“Mr. Haigh’s most tangible surviving contributions”) had depreciated and would continue to depreciate; and (3) that the Kents have continued to earn income through the use of those improvements, and have continued to benefit from his intangible contributions. 312 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

30 After balancing these factors, the judge awarded to Mr. Haigh a 25% ownership share in the Property as compensation for his contribution. In my view, the fact that the business would continue to earn income from the use of the land and its improvements had already been taken into account by Saunders J. in arriving at that result and was reflected in his award. Accordingly, Mr. Haigh was awarded that interest as compensation for his past contribution to the business, including the ongoing benefits of that contribution to the Kents. To give Mr. Haigh, in addition, 25% of the business profits earned since that judgment would, in effect, result in double compensation. 31 It follows that Mr. Haigh’s share should be valued on the basis of 25% of the fair market value of Kent’s Beach as a resort property, but should not extend to any portion of the profits earned by the resort business, before or since Saunders J. handed down his decision.

C. Should the Property be partitioned or sold? 32 This question turns on the provisions of the Act: 2 (1) All joint tenants, tenants in common, coparceners, mortgagees or other creditors who have liens on, and all parties interested in any land may be compelled to partition or sell the land, or a part of it as provided in this Act. (2) Subsection (1) applies whether the estate is legal or equitable or equitable only. ... 6 In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, and if the party or parties interested, individually or collectively, to the extent of 1/2 or upwards in the property involved request the court to direct a sale of the property and a distribution of the proceeds instead of a division of the property, the court must, unless it sees good reason to the contrary, order a sale of the property and may give directions. 7 In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, and if it appears to the court that because of the nature of the property involved, or of the number of parties interested or presumptively interested in it, or of the absence or disability of some of those parties, or of any other circumstance, a sale of the property and a distribution of the proceeds would be more beneficial for the interested parties than a division of the property, the court may Haigh v. Kent Grauer J. 313

(a) on the request of any of the interested parties and despite the dissent or disability of any other interested party, order a sale of the property, and (b) give directions. 8 (1) In a proceeding for partition where, if this Act had not been passed, an order for partition might have been made, then if any party interested in the property involved requests the court to order a sale of the property and a distribution of the proceeds instead of a division of the property, the court may order a sale of the property and give directions. (2) The court may not make an order under subsection (1) if the other parties interested in the property, or some of them, undertake to purchase the share of a party requesting a sale. (3) If an undertaking is given, the court may order a valuation of the share of the party requesting a sale in the manner the court thinks fit, and may give directions. 33 The Kents maintain that because Mr. Haigh’s interest was equitable, he does not have standing to seek partition or sale under the Act. Given my finding that Mr. Haigh is entitled to a vesting order for an undivided 25% fee simple interest, I do not need to decide that issue. As it is, Mr. Haigh is clearly a person who is entitled to maintain a proceeding for partition, and the defendants are clearly persons who may be compelled to partition or sell the land, or a part of it, as provided in section 2(1) of the Act. 34 The words “may be compelled” bear repeating. Orders for partition or for sale are discretionary. The onus is on the parties (in this case the Kents) who do not wish to “suffer partition or sale” to demonstrate to the court that the interests of justice are such that the order for partition or sale should not be made. The fact remains that the discretion is broad and unfettered, and will turn on whether justice requires that such an order not be made: Zackariuk Estate v. Chepsiuk, 2005 BCSC 919 (B.C. S.C.) at paras 29 and 32; Bradwell v. Scott, 2000 BCCA 576 (B.C. C.A.) at para 26-30; Mowat v. Dudas, 2012 BCSC 454 (B.C. S.C.) at para 141; McRae v. Seymour Village Management Inc., 2014 BCSC 714 (B.C. S.C.) at paras 15-16. 35 The question is whether this is an appropriate case to make such an order. Under the Act, different considerations and processes apply depending upon the circumstances. 314 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

36 The first available process is an order for division of the property. In the context of this case, the result of such an order would be to divide the Property into two separate lots, so that the parties’ respective interests are no longer undivided. Mr. Haigh would then be free to deal with his property as he sees fit. He could mortgage it, lease it or sell it without wor- rying in any way about the Kents. The Kents would be similarly free to deal with their remaining property without having to worry about Mr. Haigh. 37 The second is an order for sale and division of the proceeds at the request of the majority interest. By section 6 of the Act, a party interested 1 to the extent of /2 or upwards in the property (in this case, only the Kents would qualify) may request the court to direct a sale and distribution of the proceeds instead of a division of the property, and the court must do so unless it sees good reason to the contrary. The Kents have made no such request in this case, and it is not available to Mr. Haigh. 38 The third is under section 7 of the Act. This section contemplates a proceeding for partition where the court concludes that, because of the nature of the property involved or any other circumstance, a sale and distribution of the proceeds would be more beneficial than division. Then, if a party so requests, the court may order the sale of the property and a distribution of the proceeds notwithstanding the objection of any other party. 39 The fourth arises under section 8 of the Act. Section 8(1) permits the court to order a sale and a distribution of the proceeds instead of a division of the property at the request of any party interested in the property. But, by subsection (2), the court may not do so if one of the other parties interested in the property undertakes to purchase the share of the party requesting a sale. By subsection (3), where such an undertaking is given (Leonard Kent has given one in this case), the court may order a valuation of the share of the party requesting a sale in the manner it thinks fit, and may give directions. 40 The process contemplated in section 8 arises only where a party interested in the property requests an order for sale and distribution of the proceeds instead of division. Has Mr. Haigh requested a sale instead of a division? If so, the Kents say, then because they have given an undertaking, the court must in essence order a valuation of Mr. Haigh’s share, and direct the sale of that share to the Kents. That would indeed seem to be the effect of the section if it applies. Haigh v. Kent Grauer J. 315

41 Mr. Haigh argues that Mr. Kent’s undertaking must be unconditional, and it is not, because it is offered as an unqualified undertaking only “in the event the Court finds the parties have standing under the [Act]”. I have found that the parties have standing, and so the undertaking is unqualified. 42 Mr. Haigh further maintains that he is not applying for a sale, but is applying for partition. In evidence before me on this application, he put forward two proposals for division of the Property. He submits that if the court concludes that partition would not be more beneficial to the parties than sale, it should order the Property to be sold and the proceeds distributed, 25% to Mr. Haigh and 75% to the Kents, subject to such adjustments as will be discussed later. 43 The alternatives, on this analysis, would be to divide the Property, or order its sale and the distribution of the proceeds. There is, of course, one other option: doing neither and leaving the parties as they are to work it out on their own with such guidance as the court can provide. 44 In these circumstances, it is important to look at the relief for which Mr. Haigh has applied. In his Notice of Civil Claim he pleads the following under the heading “Partition and Sale of the Property”: 24. A sale of the Property is sought on the basis of the nature of the property and other relevant circumstances. ... 26. It is impractical for the parties to continue to cohabit on the Pro- perty due to the animosity and fear that the parties hold for each other. 45 Then, as part of the relief sought in Part 2 of the pleading, Mr. Haigh asks that “The Property be sold pursuant to the Partition of Property Act...”, and further seeks conduct of the sale. 46 In his Notice of Application, Mr. Haigh seeks “an order granting partition and sale of the Property; with directions regarding conduct of sale”. 47 Notwithstanding the position taken by Mr. Haigh in argument, it seems clear to me that Mr. Haigh has sought the sale of the Property and the division of proceeds, both in the alternative generally, and as the pre- ferred alternative to division. Consequently, I find that section 8 is engaged. 48 In any event, I am satisfied that this is a case where an order for the division of the property would be neither equitable nor practicable. 316 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

49 Kent’s Beach is a unique property. It is irregular in shape, with a total area of about 94.7 acres. It is divided by Highway 101. The portion north of the highway, about 42.5 acres, is moderately to steeply sloping, bi- sected by high voltage overhead electrical lines, and subject to a BC Hydro right of way. The area south of the highway includes 3,400 feet of ocean frontage on Jervis Inlet, ranging from sandy beaches to shale to rocky bluffs, and is within the Agricultural Land Reserve. The western portion has been cleared and developed for resort and residential use. Allowances for road access to the eastern portion are limited. 50 Mr. Haigh advanced two different proposals for dividing the Pro- perty. The first would partition off an area of about 8.25 acres surrounding the waterfront location of the house Mr. Haigh presently occupies. This is the most valuable and desirable portion of the Property and includes an important part of the area used for the resort. Dividing the Pro- perty in this way would give Mr. Haigh rather less than 25% of the area of the Property, but substantially more than 25% of its value. It would significantly alter the nature of the resort and the operation of the Kents’ business. 51 The second would partition off a relatively undeveloped area of approximately 21.25 acres along the eastern boundary of the lower portion of the Property, from Highway 101 down to “Frankie’s Point” on the water (Frankie’s Point is identified as a Woodland Sensitive Ecosystem under the Powell River Regional District Official Community Plan). This parcel would benefit from the road access along that eastern boundary, and block access to that road from the remaining parcel. It comprises approximately 22% of the area of the Property, but again, I find, significantly exceeds 25% of the value. This is because it is located entirely in the more valuable area between Jervis Inlet and Highway 101, incorpo- rating none of the much less valuable upland property north of Highway 101. 52 Neither proposal, I find, yields a fair division of the Property. Moreo- ver, in both cases, the prospect of division is greatly complicated by the inclusion of the lower portion of the Property in the Agricultural Land Reserve, as well as other land-use issues, including water and sewer sup- ply, resolution of existing non-conforming uses, and problems of road dedication and construction. The process required to effect a subdivision would involve the Ministry of Transportation and Infrastructure, the Powell River Regional District, and the Agricultural Land Commission. It is not at all clear that subdivision as proposed would be approved, and Haigh v. Kent Grauer J. 317

if it were approved, applicable restrictions would have a significant impact on both residences and business use. No other proposal is proffered. 53 I conclude on the evidence that this is not a case where division of the property would be just or practicable due to its unique nature and topog- raphy, the impracticability of effecting a fair and equitable division, its use, its history, and factors such as subdivision approval, land-use, per- mitting and access issues. As between division of the property on the one hand, and the sale of the property and the distribution of the proceeds on the other, I am satisfied that the latter would be more beneficial. 54 Consequently, to the extent Mr. Haigh seeks it, I decline to order a division of the Property. But there is a problem also with sale and distribution. This process would assist Mr. Haigh in realizing the value of his interest, but only at the expense of inflicting on the Kents the serious hardship of ending seven decades and four generations of their family’s connection to this land, a connection not shared by Mr. Haigh. Indeed, it is clear on the pleadings and the evidence that unlike the Kents, Mr. Haigh is not opposed to the sale of his interest in the Property. The stumbling block has been the question of its value, and that has now been resolved. 55 In these circumstances, I would also decline to order a sale of the Property and the distribution of the proceeds as requested by Mr. Haigh. But that is immaterial in the context of section 8 of the Act. Under this section, I am prohibited from making such an order by section 8(2), given Mr. Kent’s undertaking to purchase Mr. Haigh’s interest. Accord- ingly, in accordance with section 8(3), I will proceed to consider the Kents’ requests for an order that Mr. Haigh’s share be valued, and providing directions.

D. What directions should be given? 56 The effect of section 8, in the context of the Act as a whole, has been interpreted as providing a majority owner some protection, enabling that owner to avoid the loss of his or her interest under other provisions of the Act at the whim of the minority owner: Machin v. Rathbone, 2006 BCSC 252 (B.C. S.C.) at para. 24. Subsection (3) provides that where an undertaking to purchase that minority interest has been given, as it has here by the Kents, the court may order a valuation of the share of the party requesting a sale (Mr. Haigh) in the manner the court thinks fit, and may give directions. 318 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

57 The Kents seek, in essence, an order providing for the valuation of Mr. Haigh’s share, and directing the sale of his interest to the Kents for the appropriate amount. 58 In Mr. Haigh’s submission: Any exercise of discretion under the Partition of Property Act to allow a monetary buyout of [Mr. Haigh’s] interest, ought not to be made because previous courts have already determined [that a] pro- prietary interest is the appropriate award. 59 This echoes Mr. Haigh’s earlier submission, which I accepted, that it would be inappropriate to order dissolution of the constructive trust and substitute a monetary award. But that was in the context of trust law, and the question of what flows from Saunders J.’s award of a constructive trust in relation to a 25% interest in the Property. 60 In the context of relief under the Act, however, it is Mr. Haigh who seeks an order that the Property be sold and the proceeds divided. It is, in short, he who has sought to monetize his interest. In these circumstances, having concluded that division would be inequitable and impracticable, and that sale and distribution of proceeds would cause undue hardship to the Kents, I find it entirely appropriate to exercise my discretion under section 8 to direct Mr. Haigh to sell his 25% interest in the Property to the Kents. 61 Three questions then arise: how should the value of Mr. Haigh’s share be established; what adjustments should be made in relation to expenses incurred by the Kents; and what further directions are required? 62 As to value, I have already decided that it should be based on the fair market value of the Property as a resort, and should not include any portion of the business or of business profits. Saunders J. estimated that fair market value at $1,600,000. 63 In evidence before me were three appraisal reports: (a) An appraisal by David Kirk dated October 21, 2011, obtained by Mr. Haigh, appraising the market value at $1,600,000 as of May 4, 2011. This report was in evidence before Saunders J. (b) An appraisal by Eugene Stickley dated October 29, 2014, obtained by the Kents, appraising the market value at $1,650,000 as of Au- gust 20, 2014. Haigh v. Kent Grauer J. 319

(c) An updated report by Mr. Kirk dated September 15, 2015, obtained by Mr. Haigh, appraising the market value at $1,650,000 as of September 3, 2015. 64 In these circumstances, it would seem pointless and needlessly expen- sive to order a process for further valuation; the appropriate value appears to be $1,650,000, of which Mr. Haigh’s 25% share is $412,500. I do note, however, that we are now nearly six months past the effective date of the most recent appraisal. Consequently, if either party takes the position that the valuation obtained by Mr. Haigh of $1,650,000 as of September 3, 2015, no longer remains reasonable due to a change in market conditions, that party may apply for further directions. The parties should understand that costs consequences may follow. 65 As to adjustments, the Kents maintain that 25% of the expenses they have incurred in maintaining the Property, such as property taxes, insurance, utilities and water rates, should be deducted from Mr. Haigh’s share, because he has contributed nothing to such expenses since Saun- ders J.’s judgment. 66 I am satisfied that Mr. Haigh must account for 25% of the property taxes paid or owing since the date that Saunders J.’s order was pro- nounced. That goes hand in hand with beneficial ownership. 67 On the evidence before me, however, it is not clear to what extent Mr. Haigh should share in other expenses, including water licence charges, highway dust control costs, and utility costs. Since the Kents were running a business on the Property, it may well be that the portion of the costs properly referable to Mr. Haigh is less than 25%. Mr. Haigh’s use of electricity and fuel, for instance, may have accounted for less than 25% of the total utility bills. In addition, the evidence concerning the payment of insurance premiums indicates that the coverage in question related to liability insurance on the business. There is no evidence that Mr. Haigh benefited from it. 68 I turn to consider whether Mr. Haigh must account for any portion of the mortgage on the Property, which currently secures a debt of approximately $120,000. On the evidence, that mortgage is a re-consolidation of previous mortgages taken to construct cabins and the campground used for business purposes. It is described as a “commercial mortgage”. It was increased in approximately 2003 for an additional $40,000 for the benefit of the business of Dee Kent, with which Mr. Haigh would have had nothing to do. The question is whether Mr. Haigh should be responsible for any portion of the balance of approximately $80,000. 320 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

69 In my view, the same reasoning that led me to conclude that Mr. Haigh is not entitled to a share of the profits in the business leads to the conclusion that Mr. Haigh should not be held responsible for any portion of the mortgage. There is no evidence that he obtained the benefit of the proceeds of the mortgage. Moreover, the process in which Saunders J. engaged in valuing Mr. Haigh’s interest leads me to the conclusion that debt incurred by the Kents for the business was intended to remain with the business; Mr. Haigh’s interest was, conceptually, unencumbered. It follows that the mortgage should not to be used to reduce the value of Mr. Haigh’s interest in the Property. 70 Mr. Haigh, then, must account for 25% of the property taxes. He should also account for his fair share of water, highway, and utility costs. If the parties are unable to agree on the amount to be so deducted, they are at liberty to apply and I will order a reference to the registrar. 71 Mr. Haigh’s share of these expenses should be deducted from the purchase price of his 25% interest in the Property. No deduction should be made in relation to insurance premiums, the mortgage or mortgage payments. 72 As to further directions, the parties are to use their best efforts to effect the sale of Mr. Haigh’s undivided 25% interest in the Property to the Kents within 90 days. This is, of course, subject to their ability to reach agreement in the manner I have outlined, failing which they are at liberty to apply. 73 Any further applications may be scheduled by video or telephone conference to minimize expense, and should be scheduled within 60 days.

Conclusion 74 I order that an undivided 25% interest in the Property vest in Mr. Haigh in fee simple. 75 Mr. Haigh is not entitled to an interest in any of the profits of the business earned since the decision of Saunders J. The value of his 25% interest in the Property is a limited to 25% of the fair market value of the Property, less his share of appropriate expenses. 76 On that basis, Mr. Haigh is directed to sell his undivided 25% interest in the Property to the Kents pursuant to section 8 of the Act. The valuation shall be based on the appraisal of David Kirk dated September 15, Haigh v. Kent Grauer J. 321

2015 ($1,650,000), unless either party objects to that appraisal; in that event, the parties are at liberty to apply for further directions. 77 The Kents are entitled to deduct from the purchase price for Mr. Haigh’s interest 25% of the amount they owe or have paid for property taxes since Saunders J.’s judgment, together with Mr. Haigh’s fair share of water licence fees, highway dust control costs, and utility costs (electricity and fuel). No deduction is to be made in relation to the mortgage on the property or insurance premiums. If the parties are unable to agree on Mr. Haigh’s fair share of the specified costs, they may apply and a reference will be made to the registrar. 78 The parties are to use their best efforts to conclude the sale of Mr. Haigh’s interest to the Kents within 90 days. They are at liberty to apply in the event that they cannot reach agreement on the questions outlined above. 79 There will be no costs. Success has been divided, and both sides have demonstrated a stubborn refusal to agree where agreement would have been reasonable. Application granted in part. 322 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

[Indexed as: Kasdorf Estate v. Brandon] In the Matter of: The Estate of Isaac Kasdorf, Deceased Herbert Penner, as Executor of the Estate of Isaac Kasdorf, applicant and Jonny Brandon, Lily Forrest, Stephen Forrest and Jennifer Forrest, respondents Manitoba Court of Queen’s Bench Docket: Winnipeg Centre PR 14-01-98944 2016 MBQB 64 Toews J. Judgment: March 22, 2016 Estates and trusts –––– Estates — Legacies and devises — Lapse — Benefi- ciary predeceasing testator –––– Testator’s will included provisions gifting portions of rest and residue of estate to his wife and children and remainder of residue to grandchildren — Testator’s wife predeceased him — Executor brought application for advice and direction from court on disbursement of estate — Share designated for testator’s wife failed and resulted in intestacy of that portion of estate — That portion was to be distributed pursuant to provisions of Intestate Succession Act — Position of grandchildren that gift to testator’s wife went to enlarge residue if it failed was rejected — Examination of provision of will made it clear that share of estate designated for testator’s wife was residuary share — Section 25 of Wills Act did not apply to residuary gift and therefore did not apply to residuary share. Cases considered by Toews J.: Jayaraman v. DeHart (2007), 2007 NLCA 32, 2007 CarswellNfld 171, 31 E.T.R. (3d) 174, 808 A.P.R. 195, 266 Nfld. & P.E.I.R. 195, 284 D.L.R. (4th) 183, [2007] N.J. No. 184 (N.L. C.A.) — referred to Johnson Estate v. Forbes (2007), 2007 MBQB 101, 2007 CarswellMan 194, [2007] 8 W.W.R. 562, 33 E.T.R. (3d) 123, (sub nom. Bank of Nova Scotia Trust Co. v. Forbes) 216 Man. R. (2d) 156 (Man. Q.B.) — considered Johnson Estate v. Forbes (2007), 2007 MBQB 302, 2007 CarswellMan 511, [2008] 2 W.W.R. 494, 37 E.T.R. (3d) 60, (sub nom. Johnson Estate, Re) 224 Man. R. (2d) 14 (Man. Q.B.) — considered Manitoba (Public Trustee) v. Ballen (1992), 76 Man. R. (2d) 241, (sub nom. Balan’s Estate, Re) 10 W.A.C. 241, 44 E.T.R. 279, 87 D.L.R. (4th) 111, 1992 CarswellMan 73, [1992] M.J. No. 50 (Man. C.A.) — followed McKenzie, Re (1968), [1968] 1 O.R. 567, 67 D.L.R. (2d) 105, 1968 CarswellOnt 250 (Ont. H.C.) — considered Kasdorf Estate v. Brandon Toews J. 323

Sparks Estate v. Wenham (1994), [1994] 6 W.W.R. 731, 4 E.T.R. (2d) 147, (sub nom. Sparks Estate, Re) 95 Man. R. (2d) 181, (sub nom. Sparks Estate, Re) 70 W.A.C. 181, 116 D.L.R. (4th) 308, 1994 CarswellMan 138, [1994] M.J. No. 339 (Man. C.A.) — considered Zindler v. Salvation Army (2015), 2015 MBCA 33, 2015 CarswellMan 165, [2015] 5 W.W.R. 25, 6 E.T.R. (4th) 34, (sub nom. Bereskin Estate, Re) 319 Man. R. (2d) 16, (sub nom. Bereskin Estate, Re) 638 W.A.C. 16 (Man. C.A.) — referred to Statutes considered: Intestate Succession Act, S.M. 1989-90, c. 43 Generally — referred to Wills Act, R.S.M. 1988, c. W150 s. 25 — considered s. 25.1 [renumbered 1989-90, c. 44, s. 3] — referred to s. 25.2 [renumbered 1989-90, c. 44, s. 3] — referred to

APPLICATION by executor for advice and direction from court on disbursement of estate.

Nicole D.M. Hamilton, for Applicant Ken G. Mandzuik, for Respondent, Jonny Brandon Jana Taylor, for Respondent, Lily Forrest Gene G. Zazelenchuk, for Respondents, Stephen Forrest and Jennifer Forrest

Toews J.: Introduction 1 This is an application by Herbert Penner (the applicant), the executor of the estate of Isaac Kasdorf (the testator), for advice and direction from the court on the disbursement of the estate. 2 Probate of the testator’s will was granted to the applicant by the court on November 10, 2014. A question has arisen as to whether, as a result of the testator’s wife (Alice Kasdorf) predeceasing him, the gift intended for her fails, resulting in an intestacy of that portion of the estate. 3 The relevant portion of the will provides: 3. I GIVE, DEVISE AND BEQUEATH all my property of every nature and kind, wheresoever situate, including any property over which I may have a general power of appointment to my said Trust- ees, upon the following trusts, namely: 324 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

..... b) To pay out of and charge to my estate all my just debts, including funeral and testamentary expenses and all estate, inheritance and succession duties or taxes whether imposed by or pursuant to the laws of this or any other jurisdiction. c) To pay or transfer one-half of the rest and residue of my estate to ALICE KASDORF, for her own use absolutely. d) To divide one-sixth of the rest and residue of my estate equally between JONNY BRANDON and LILY FORREST, for their own use absolutely. e) To divide the rest and residue of my estate equally between STEPHEN FORREST and JENNIFER FORREST, for their own use absolutely. 4 There is no disagreement between the parties that if the share of the estate intended for Alice Kasdorf results in an intestacy, the testator’s two children, the respondents, Jonny Brandon (Jonny) and Lily Forrest (Lily), will share it equally pursuant to The Intestate Successions Act, C.C.S.M. c. 185 (The Intestate Successions Act). However, if s. 25 of The Wills Act, C.C.S.M. c. W150, applies to that share, it forms part of the residue of the estate. 5 Section 25 of The Wills Act provides: Lapsed and void devises 25 Subject to sections 25.1 and 25.2 and except when a contrary intention appears by the will, real or personal property or an interest therein that is comprised, or intended to be comprised, in a devise or bequest that fails or becomes void by reason of the death of the devi- see or donee in the lifetime of the testator, or by reason of the devise or bequest being contrary to law or otherwise incapable of taking effect, is included in the residuary devise or bequest, if any, contained, in the will. 6 The parties are agreed that ss. 25.1 and 25.2 referenced in s. 25 of The Wills Act, are not relevant to this case.

Position and Argument of the Applicant 7 The applicant takes the position that the share of the estate intended for Alice Kasdorf results in an intestacy and therefore pursuant to The Intestate Successions Act the testator’s two children, Jonny and Lily, should share that amount equally. Kasdorf Estate v. Brandon Toews J. 325

8 The applicant poses two questions which the court should consider in arriving at that conclusion: (i) Is the share of the estate designated for Alice Kasdorf in paragraph 3(c) of the will a residuary share or a specific gift? (ii) If it is a residuary share, does s. 25 of The Wills Act apply? 9 In response to the first question, the applicant argues that the share designated for Alice Kasdorf in paragraph 3(c) is a residuary share. He states that the very wording of that paragraph makes it clear that the share designated for her was a gift of a portion of the residue of the estate. 10 In response to the second question, the applicant argues that s. 25 of The Wills Act does not apply to residuary gifts and therefore the lapsed gift to Alice Kasdorf fails, resulting in an intestacy of that residuary gift. 11 The applicant relies on the decision of Sparks Estate v. Wenham (1994), 95 Man. R. (2d) 181 (Man. C.A.), which held that s. 25 of The Wills Act does not apply to residuary gifts. 12 The respondents, Jonny and Lily, support the position of the applicant.

Position and Argument of the Respondents Stephen Forrest and Jennifer Forrest (Stephen and Jennifer) 13 Stephen and Jennifer are the grandchildren of the testator and Alice Kasdorf and the children of the respondent Lily. 14 Stephen and Jennifer take the position that on a consideration of the wording of subparagraphs 3(c) (d) and (e) of the will, only the gift under 3(e) would lapse as an intestacy if the beneficiary predeceased the testator. 15 These respondents argue that subparagraphs (c) and (d) are a gift of the “residuary of the estate” while subparagraph (e) is a gift of the “residue of the residuary estate”. They state that only if a gift of the “residue of the residuary estate” lapses is there an intestacy. They argue that on a proper construction of 3(c) - the gift to Alice Kasdorf - there is no intestacy and if it fails, it goes to enlarge the residue. 16 In their brief, Stephen and Jennifer do not argue that Sparks Estate supra, was wrongly decided, but only that the residual clause under consideration is substantially different from subparagraph (c). Simply put, they argue that it is not a relevant precedent. They urge the court to apply the reasoning in McKenzie, Re, [1968] 1 O.R. 567 (Ont. H.C.) on the 326 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

basis that the court there considered a residual clause very similar to subparagraph (c) and in respect of which Stark J. ruled against an intestacy. 17 Furthermore, Stephen and Jennifer submit that in this case the provision under consideration is rationally capable of two constructions, and since one construction results in an intestacy while the other does not, the court should prefer the one that does not (See McKenzie, Re supra; Jayaraman v. DeHart, 2007 NLCA 32, 284 D.L.R. (4th) 183 (N.L. C.A.)).

Decision 18 Before considering the specific wording of subparagraphs (c), (d) and (e) of the will, it is instructive to briefly review the principles applicable to the interpretation of a testamentary document. 19 The law regarding the interpretation of wills is set out in J.B. Clark, Theobald on Wills, 14th ed. (London: Stevens & Sons Limited, 1982) (p. 185): The object is to ascertain the expressed intention of the testator, i.e. the intention which the will itself declares either expressly or by necessary implication. As Lord Simon L.C. put it in Perrin v. Morgan [[1943] A.C. 399 at 406 (H.L. (E.))]: The fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. ... 20 In Johnson Estate v. Forbes, 2007 MBQB 101, 216 Man. R. (2d) 156 (Man. Q.B.), the court reviewed the applicable principles and held (at para. 20): The object of the court should be to determine the precise disposition of the property intended by a testator. The court should attempt to ascertain, if possible, a testator’s actual or subjective intent, as opposed to an objective intent presumed by law. A testator’s intent is to be construed from the will as a whole, which forms the context to the clause, and not solely from the words used. ... (See also: Zindler v. Salvation Army, 2015 MBCA 33, 319 Man. R. (2d) 16 (Man. C.A.)). 21 As stated earlier in these reasons, the respondents Stephen and Jen- nifer urge the court to find that the legal effect of a failure of the gift under subparagraph (e) of paragraph 3 of the will is substantially different than the failure of the gifts under subparagraphs (c) and (d) of the same paragraph. Kasdorf Estate v. Brandon Toews J. 327

22 Stephen and Jennifer ask the court to find that only subparagraph (e) should be interpreted in such a way that a failure of the gift under that provision would result in an intestacy of that gift. In respect of the other two paragraphs, including the gift to Alice Kasdorf, they ask the court to hold that a failure of a gift under either of those two provisions would not result in an intestacy of that gift, but rather the proceeds of the failed gift would go to the residual estate. 23 In my opinion, an examination of paragraph 3 as a whole and those three subparagraphs in particular, do not support the interpretation being advanced by these respondents. 24 Stephen and Jennifer state that because subparagraph (e) does not specifically set out the specific fraction of the “rest and residue” of the testator’s estate which is to go to those respondents, it is the only residual clause which results in an intestacy if that gift fails. The other two subparagraphs specifically set out the precise fraction of the “rest and residue” of the estate that each beneficiary is entitled to receive and therefore fall into the residue of the estate if they fail. 25 They state in their brief that if the wording in the case at bar was as follows (at para. 9): ... the rest and residue of my estate to be divided one-half to my wife, Alice Kasdorf, one-twelfth to Jonny Brandon and Lily Forrest and five-twelfths to Stephen Forrest and Jennifer Forrest ... then the decision of the Manitoba Court of Appeal in Sparks Estate supra, “would provide a useful precedent.” 26 In my opinion, there is no substantive difference in the construction of subparagraphs 3 (c) (d) and (e) of the will. That is, I do not think that in drafting those provisions, the testator or the solicitor who prepared the will in final form, set out to create a distinction between the first of those two subparagraphs by constructing each of them as “a gift of a residuary estate” while the third subparagraph was constructed so as to grant “a gift of the residue of the residuary estate”, which unlike the other two, would create a partial intestacy if the gift failed. 27 Specifically, the fact that subparagraph (e) does not set out a fraction of the “rest and residue of the estate” as the other two subparagraphs do, is not an indication of any substantive difference between them. In my opinion, it was not necessary to set out the specific fraction in subparagraph (e), because it is a simple calculation when that gift is considered in the context of the two preceding subparagraphs. It was not necessary to spell it out. 328 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

28 An examination of subparagraph 3(c) of the will makes it clear that the share designated for Alice Kasdorf was a gift of a portion of the residue of the testator’s estate. 29 In my opinion, the principle in Sparks Estate supra, is applicable to, and binding on, my consideration of the questions raised by the applicant. 30 Accordingly I find that: (i) The share of the estate designated for Alice Kasdorf in subparagraph 3(c) of the will is a residuary share; (ii) Based on Sparks Estate supra, s. 25 of The Wills Act does not apply to a residuary gift and therefore does not apply to the share in subparagraph 3(c) of the will; and (iii) The share designated for Alice Kasdorf fails and results in an intestacy of that portion of the estate. It is to be distributed pursuant to the provisions of The Intestate Succession Act.

Costs 31 The parties to this application have all asked for solicitor and client costs to be paid out of the estate. In coming to the conclusion that the applicant and the respondents are entitled to have their costs paid out of the estate on a solicitor and client basis, I have considered the decision of this court in Johnson Estate v. Forbes, 2007 MBQB 302, 224 Man. R. (2d) 14 (Man. Q.B.), per Duval J. 32 In Johnson Estate supra, the court made it clear that costs unjustifiably incurred in estate actions will be payable by the parties and will not come out of the estate. In that decision, the court identified the principles relating to the issue of costs as set out by the Manitoba Court of Appeal in Manitoba (Public Trustee) v. Ballen (1992), 76 Man. R. (2d) 241 (Man. C.A.) [hereinafter Balan’s Estate], where the court held (at para. 4): (i) Solicitor-client costs will be awarded only in rare and exceptional cases (para. 12), a principle applied in some estate proceedings (para. 13); (ii) An executor is to be indemnified against all reasonable costs and expenses incurred by him/her in the course of the administration of the estate, including solicitor-client costs in proceedings in which some question or matter in the course of the administration is raised as to which the trustee has acted prudently and properly (para. 14); Kasdorf Estate v. Brandon Toews J. 329

(iii) The costs of all parties to estate proceedings have been ordered to be paid out of an estate when it was necessary to apply to the court to construe a testamentary document (para. 16); (iv) Costs unjustifiably incurred in estate actions will be payable by the parties. “An estate should not be eaten up with costs in proceedings which have no substantial merit” (para. 18). 33 I am satisfied in this case that the parties shall be entitled to solicitor- client costs to be determined in a manner consistent with the principles set out in Johnson Estate supra, and in Balan’s Estate supra, and to be paid out of the estate. 34 First, I have reviewed the bill of costs provided to me by the applicant and having reviewed those costs in the context of the principles set out in Johnson Estate, it is my opinion that the applicant will recover his costs from the estate as requested. 35 In respect of the respondents Stephen and Jennifer, it is my opinion that the solicitor-client costs proposed by their counsel are reasonable and I would order costs from the estate in the amount of the total fees, taxes and disbursements set out in that bill of costs. 36 In respect of the bill of costs submitted on behalf of the respondent Jonny, in my opinion, a proper amount to be ordered would be similar to those ordered in respect of the respondents Stephen and Jennifer. Ac- cordingly, I would fix total costs in the amount of $5,900, inclusive of taxes and disbursements, to be paid from the estate. 37 Finally, I note that pursuant to an order of Schulman J. of this court, dated November 16, 2015, the Public Guardian and Trustee of Manitoba was appointed to act as the litigation guardian for the respondent Lily and that in so acting, it shall be entitled to recover its “reasonable solicitor-client costs” from the estate of Isaac Kasdorf. I have reviewed the bill of costs submitted by the Public Guardian and Trustee and approve the amount set out in that bill of costs to be paid from the estate. Order accordingly. 330 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

[Indexed as: Thom v. Thom Estate] Richard Duane Thom, Plaintiff and John Thom, Executor of the Estate of Ralph William Thom and Ronald Danial Thom, Defendants Ronald Danial Thom, Plaintiff and John Thom, Executor of the Estate of Ralph William Thom and Richard Duane Thom, Defendants British Columbia Supreme Court Docket: New Westminster S153668, S153521 2016 BCSC 681 W.G. Baker J. Heard: August 19-21, 2015 Judgment: April 15, 2016 Estates and trusts –––– Estates — Will challenges — Testamentary capacity — Miscellaneous –––– Testator died in July 2012 leaving will that gave $10,000 to each of his two adopted children and left residue of estate to his only sibling, defendant executor brother JT — Testator had adopted children shortly after marrying their mother in 1970s, but had only limited contact with them after separation and divorce in 1986 — Following divorce, testator lived in suite in parents’ home until he was hospitalized in 2011 — Father died in 2006 and mother transferred her home to testator and herself as joint tenants — Mother executed will leaving estate to two sons — It was agreed home would go to last survivor — In 2006, testator had surgery to remove malignant melanoma — In April 2011, testator suffered seizure later attributed to brain tumor — Testator developed variety of medical and mental health problems, and was in and out of hospital until death in 2012 — Testator’s will, dated April 3, 2007, consisted of pre-printed form with blank spaces filled in by hand — Will was signed by two witnesses, aged 73 and 70, who had different and inconsistent recollections of circumstances surrounding execution — Adopted children brought action alleging will was invalid because it had not been drafted and executed in accordance with Wills Act or, alternatively, because testator had lacked capacity to make it — Action dismissed — Witnesses’ testimony at trial was credible and compelling notwithstanding inconsistencies with previous statements — Will appeared to be entirely in order — Events that occurred in 2006 and 2007, including testator’s diagnosis of cancer and father’s death, provided rationale for making will in 2007 — Evidence supported conclusion testator had prepared will, presented it to witnesses as his will, either signed it in front of witnesses or acknowledged signature on will as his, and that witnesses then signed will in his presence — Thom v. Thom Estate 331

Will met requirements of Act and valid — There was no evidence of suspicious circumstances or lack of testamentary capacity. Estates and trusts –––– Estates — Requirements for due execution of will — Knowledge and approval of contents –––– Testator died in July 2012 leaving will that gave $10,000 to each of his two adopted children and left residue of estate to his only sibling, defendant executor brother JT — Testator had adopted children shortly after marrying their mother in 1970s, but had only limited contact with them after separation and divorce in 1986 — Following divorce, testator lived in suite in parents’ home until he was hospitalized in 2011 — Father died in 2006 and mother transferred her home to testator and herself as joint tenants — Mother executed will leaving estate to two sons — It was agreed home would go to last survivor — In 2006, testator had surgery to remove malignant melanoma — In April 2011, testator suffered seizure later attributed to brain tumor — Testator developed variety of medical and mental health problems, and was in and out of hospital until death in 2012 — Testator’s will, dated April 3, 2007, consisted of pre-printed form with blank spaces filled in by hand — Will was signed by two witnesses, aged 73 and 70, who had different and inconsistent recollections of circumstances surrounding execution — Adopted children brought action alleging will was invalid because it had not been drafted and executed in accordance with Wills Act or, alternatively, because testator had lacked capacity to make it — Action dismissed — Witnesses’ testimony at trial was credible and compelling notwithstanding inconsistencies with previous statements — Will appeared to be entirely in order — Events that occurred in 2006 and 2007, including testator’s diagnosis of cancer and father’s death, provided rationale for making will in 2007 — Evidence supported conclusion testator had prepared will, presented it to witnesses as his will, either signed it in front of witnesses or acknowledged signature on will as his, and that witnesses then signed will in his presence — Will met requirements of Act and valid — There was no evidence of suspicious circumstances or lack of testamentary capacity. Cases considered by W.G. Baker J.: Beaudoin Estate v. Taylor (1999), 1999 CarswellBC 749, 27 E.T.R. (2d) 208, [1999] B.C.J. No. 770, 8 B.C.T.C. 302 (B.C. S.C. [In Chambers]) — considered Bolton v. Tartaglia (2000), 2000 BCSC 576, 2000 CarswellBC 799, 33 E.T.R. (2d) 26, [2000] B.C.J. No. 758 (B.C. S.C.) — considered Ellis v. Turner (1997), 1997 CarswellBC 2598, 100 B.C.A.C. 244, 163 W.A.C. 244, 43 B.C.L.R. (3d) 283, 20 E.T.R. (2d) 306, [1997] B.C.J. No. 2768 (B.C. C.A.) — considered Laszlo v. Lawton (2013), 2013 BCSC 305, 2013 CarswellBC 492, 45 B.C.L.R. (5th) 125, [2013] 8 W.W.R. 747 (B.C. S.C.) — considered 332 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

Sills v. Daley (2002), 64 O.R. (3d) 19, 2002 CarswellOnt 5403, 3 E.T.R. (3d) 297, [2002] O.J. No. 5318 (Ont. S.C.J.) — considered Toomey v. Davis (2003), 2003 BCSC 1211, 2003 CarswellBC 1938, 2 E.T.R. (3d) 246, [2003] B.C.J. No. 1847 (B.C. S.C.) — considered Vout v. Hay (1995), 7 E.T.R. (2d) 209, 125 D.L.R. (4th) 431, [1995] 2 S.C.R. 876, (sub nom. Hay Estate, Re) 183 N.R. 1, (sub nom. Hay Estate, Re) 82 O.A.C. 161, 1995 CarswellOnt 186, 1995 CarswellOnt 528, [1995] S.C.J. No. 58, EYB 1995-67432 (S.C.C.) — considered Yen Estate v. Yen-Zimmerman (2013), 2013 BCCA 423, 2013 CarswellBC 2941, 90 E.T.R. (3d) 184, 49 B.C.L.R. (5th) 118, 344 B.C.A.C. 64, 587 W.A.C. 64 (B.C. C.A.) — considered Statutes considered: Wills Act, R.S.B.C. 1996, c. 489 Generally — referred to s. 4 — considered s. 5 — considered Wills Variation Act, R.S.B.C. 1996, c. 490 Generally — referred to

ACTION for ruling will was invalid.

Michael F. Welsh, for Richard Duane Thom Marc A. Misner, for Ronald Danial Thom Cam Mitchner, Graham Buchanan, for John Thom

W.G. Baker J.:

1 Ralph William Thom (“the deceased”, “Ralph Thom” or “Mr. Thom”) died on July 11, 2012. The defendant John Thom (“the executor”) is the brother of Ralph Thom. 2 The plaintiffs Richard Duane Thom (“Richard Thom”) and Ronald Danial Thom (“Ronald Thom”) are twins, born in 1968. They are the biological children of Edith Enzenhofer. Ms. Enzenhofer married Ralph Thom, probably in 1974 or 1975, when the plaintiffs were six or seven years old. When the plaintiffs were 12 years old Mr. Thom adopted them. Mr. Thom and Ms. Enzenhofer separated when the plaintiffs were in their late teens and, in 1986, Mr. Thom and Ms. Enzenhofer divorced. Following the separation and divorce, Mr. Thom and the plaintiffs had limited contact. 3 The plaintiffs allege that a Will made by Ralph Thom and dated April 3, 2007 (“the Will”) is invalid because it was not duly drafted or exe- Thom v. Thom Estate W.G. Baker J. 333

cuted pursuant to the requirements set out in the Wills Act, R.S.B.C. 1996 c. 489, or, in the alternative, that Ralph Thom lacked testamentary capacity to make the Will. In the event the Will is found to be valid, the plaintiffs intend to seek variation of the terms of the Will pursuant to the Wills Variation Act, R.S.B.C. 1996 c. 49. On application by the plaintiffs and with the consent of the defendants, orders were made in both actions that the issue of the validity of the Will be tried and determined before the remaining issues in the actions.

Facts 4 Ralph Thom was born on April 12, 1945. He was 67 when he died. John Thom was his only sibling. Ralph Thom worked at various sawmill jobs for forty years. After his divorce from the plaintiffs’ mother, Mr. Thom did not remarry. For the last twenty-five years of his life, until his hospitalization in April 2011, Mr. Thom lived in a suite in his parents’ home. Ralph and John Thom’s father died in 2006. In February 2007, Mrs. Thom Sr. transferred title to her home into joint names with Ralph Thom. At about the same time, she made a Will making her two sons her beneficiaries. John Thom testified that it was understood at the time that whichever son survived the other would end up with the family home. 5 In 2006, Ralph Thom was diagnosed with a lesion on his left upper arm. It was removed surgically on November 2, 2006 and found to be a malignant melanoma. He had a second surgery in December 2006 to remove additional tissue and lymph nodes. The lymph nodes contained no cancer cells. 6 Mr. Thom was well until March 2010 when another mass was discovered and removed surgically. He was apparently well thereafter. A checkup done in February 2011 indicated “...no lesion worrisome for melanoma...”. 7 On April 2011, Ralph Thom had a seizure while golfing. He was taken by ambulance to Surrey Memorial Hospital. Tests done after Mr. Thom’s admission to hospital revealed a brain tumor. He was transferred to Royal Columbian Hospital where he had surgery to remove the tumor on April 27, 2011. 8 Mr. Thom was discharged from hospital on April 29 but after a few days at home his condition deteriorated. He was re-admitted to Surrey Memorial Hospital and found to have renal failure and deep vein throm- bosis in his right leg and foot. He had radiation therapy from the middle of May until the beginning of June. In July 2011, three toes on his right 334 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

foot were amputated. Mr. Thom returned home for a short time in July 2011, but soon went back to hospital. This time he was admitted to Delta Hospital. 9 Mr. Thom’s mental status began to deteriorate in the summer of 2011. John Thom arranged for a lawyer to meet with Ralph Thom in July or August 2011 in order to have Mr. Thom sign a Power of Attorney. John Thom testified that the lawyer told him that he did not think Ralph Thom had the capacity to grant a Power of Attorney. I recognize this is hearsay evidence, but refer to this testimony for context and as part of the narra- tive only. 10 On August 25, 2011, a physician - Dr. Ruth Turnbull - administered a mini-mental status examination to Ralph Thom and he scored very poorly. By that time, Mr. Thom was considered to be a palliative care patient and had been moved into hospice. However, he proved to be more resilient than anticipated and, in October 2011, he was moved out of palliative care and into an extended care facility. 11 In November 2011, John Thom filed a Petition seeking to be appointed Committee of Ralph Thom’s estate and person, without bond. The plaintiffs and Mrs. Thom Sr. all consented to the application. On March 16, 2012, Master Tokarek made an order that Ralph Thom was incapable of managing himself and his affairs and appointed John Thom as Committee. 12 As stated earlier in these Reasons, Mr. Thom died on July 11, 2012. 13 The Will in issue in this case is a document titled “Last Will and Testament” dated April 3, 2007. For ease of reference, I have had a copy of the document scanned into these Reasons: Thom v. Thom Estate W.G. Baker J. 335 336 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

14 It can be seen that most of the document is a pre-printed form taken from a Will kit. The name of the testator and his address are handwritten. There is other handwriting on the Will - the testator’s marital status, the name “John Thom” as executor, the date and place of signature of the Will, the testator’s signature, the signature and addresses of two witnesses, and three bequests. The names of the two witnesses to the Will are Curt Weant and David V. Rose. As I understand the positions of the parties, there is no dispute that the signature of the testator to the Will is Thom v. Thom Estate W.G. Baker J. 337

that of Ralph Thom or that the signatures of the witnesses are those of Curt Weant and David Rose. 15 Each of the plaintiffs is a beneficiary under the Will. A gift of $10,000 is left to each. The residue of the estate is left to John Thom. 16 David Rose was 73 years old when he testified at trial. He met Ralph Thom when Mr. Thom was only 18 years old. The two men worked together and became life-long friends, although there were times over the intervening years during which they did not see a lot of each other. In later years, after both men were retired, they regularly played golf together. 17 Soon after Mr. Rose met Ralph Thom, he was introduced to Mr. Thom’s friend Curt Weant and they also formed a friendship. Mr. Rose shared a home with Mr. Weant for about a year in 1960. Mr. Rose is also acquainted with Mr. Weant’s wife Bernice. 18 Mr. Rose testified that in 2001 he suffered a concussion in a motor vehicle accident and as a result of that injury has had problems with short term memory. He testified that he might open the refrigerator door and forget what he was looking for; or look for his eyeglasses for 10 minutes and then wonder why he wanted them; but that he does not get lost; still drives his vehicle; and does not forget conversations. During his testimony at trial, Mr. Rose demonstrated some emotional liability. 19 Mr. Rose testified that he lives in Richmond, B.C. He recalled witnessing Ralph Thom’s Will. He, the Weants, and Ralph Thom sometimes met at a pub - the Pioneer Pub - for lunch. He recalled that the night before he witnessed the Will he spoke to Mr. Weant and proposed meeting for lunch. He also called Ralph Thom. He recalled that Mr. Thom agreed to meet for lunch and said words to the effect of “Good, because I want you guys to sign my will”. 20 The next day Mr. Rose drove to the Pioneer Pub. He testified that usually Curt Weant picked him up and drove him to the Pub, but Mr. Weant had to pick Bernice up that day, so Mr. Rose drove his own vehicle. He recalled that when he arrived at the Pub, Ralph Thom was already there and the Weants arrived soon after. After they were all seated Ralph Thom handed a Will to Curt Weant. Mr. Rose recalled that Mr. Weant read the Will. He recalled that Ralph Thom signed the Will, and then Mr. Weant and Mr. Rose both signed as witnesses. 21 Mr. Rose could not recall the date or even the year that this event took place. He said that he had looked at the date on the Will the day 338 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

before he testified at trial. He did recall, however, that some years had passed since he had witnessed Mr. Thom’s Will. He testified that 2007 seemed to be about the right time as Ralph Thom had passed away two years prior to trial and he recalled that the Will he witnessed had been signed about five years before Mr. Thom died. He recalled that the Will he witnessed had been signed “years and years” before Mr. Thom col- lapsed on the golf course and went to hospital. He said he wondered why the Will was being contested as it had been made so long before Mr. Thom became ill and confused. 22 Mr. Rose testified that he and Mr. Weant had spoken about the signing of the Will, but he could not recall how many times. He said that he had spoken with Mr. Weant at the courthouse on the day he testified and that Mr. Weant had told him that the date - April 3, 2007 - that appears on the Will, was written by Mr. Weant. 23 Mr. Rose was called as a witness in the plaintiffs’ case. I permitted counsel for Richard Thom to cross-examine Mr. Rose about an affidavit prepared by Mr. Misner, counsel for Ronald Thom, which Mr. Rose swore on March 25, 2014. Essentially, the content of the affidavit is consistent with Mr. Rose’s testimony at trial except that in the affidavit he stated: Because of the nature of my head injury I do not recall actually signing the will... 24 In the affidavit, Mr. Rose deposed that he did recall having a telephone conversation with Ralph Thom about meeting for lunch and witnessing Mr. Thom’s Will and he recalled that while he was driving to the Pioneer Pub he was thinking about signing the Will. 25 Mr. Rose identified his signature at the bottom of the second page of the Will. He wrote his address under his signature. He identified his initials on the first page of the Will. 26 Mr. Rose testified that at the time he swore the affidavit he did not recall signing the Will, but that when he testified at trial he did recall the event. He testified that when he swore the affidavit he was trying to be truthful, but looking back at it, it was not all true. He said that in the intervening months he had thought about the matter often. He said he was puzzled about why he had taken his own car to the Pioneer Pub on the day the Will was signed but then recalled that Mr. Weant had said he needed to pick up Bernice Weant. He recalled, at trial, that Mr. Weant looked at the Will for a time and that he wondered to himself why Mr. Thom v. Thom Estate W.G. Baker J. 339

Weant was doing that; and that when Mr. Weant handed the Will to him, he signed it. 27 Curt Weant was 70 years old at time of trial. He testified that he and his wife Bernice had moved to Chilliwack in February 2012 but had lived in Richmond before that. He testified that he retired as a real estate agent and property manager in 2012, and that his retirement prompted the move. 28 Mr. Weant’s parents and Ralph Thom’s parents were friends and Mr. Weant and Mr. Thom had known each other all of their lives. They lived across the street from each other at one point and went to elementary school together. Mr. Weant testified that he met David Rose through Mr. Thom and that Mr. Rose was married to Mr. Thom’s cousin. Mr. We- ant’s wife Bernice knew Mr. Thom before she met Mr. Weant. In later years, Mr. Weant, Mr. Rose and Mr. Thom often met for lunch - sometimes at a Legion Hall, but most often at the Pioneer Pub in Richmond. Bernice Weant sometimes joined the three men for lunch. 29 Mr. Weant recalled that he, Bernice Weant, Mr. Rose and Mr. Thom were seated at a table in the Pioneer Pub and had ordered lunch when Mr. Thom pulled a paper out of his pocket. He said words to the effect of “I have a will (or “I have my will”) and I’d like you and Dave to witness it for me”. Mr. Weant looked at the document. He recalled that Mr. Thom’s name was already printed on the Will and that Mr. Thom’s signature was also on the document. He recalled signing as a witness and that Mr. Rose also signed as a witness. 30 Mr. Weant testified that Mr. Thom did not say “That is my signature” but Mr. Weant recognized the signature as that of Ralph Thom, having seen it many times previously. He recalled that he and David Rose also placed their initials on the first page of the Will. Mr. Weant wrote his name and address under his signature. Mr. Weant also wrote the date - April 3, 2007 - on the second page of the document. 31 Mr. Weant testified that he was relying on the date written on the Will because the date was in his handwriting. He testified that at the time he witnessed the Will in 2007 Mr. Thom had been diagnosed with melanoma but was not having any symptoms. 32 Mr. Weant was cross-examined by plaintiffs’ counsel about an interview he had with a private investigator named Michael Miles. Mr. Miles, who had was hired by counsel for Ronald Thom, testified that he met with Mr. Weant at the Weants’ home on September 4, 2013. Mr. Miles 340 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

prepared a three-page handwritten statement. At the end of the statement he included the sentence: The above statement of three pages was read to me by Michael Miles and it is true & correct. Mr. Weant signed the third page of the notes, as did Mr. Miles. 33 Portions of this statement are clearly inconsistent with Mr. Weant’s testimony at trial. In the statement Mr. Weant stated that he and Mr. Rose witnessed Mr. Thom’s Will in Mr. Thom’s room at Surrey Memorial Hospital when Mr. Thom was ill and expecting to have surgery to remove a toe. According to the statement written by Mr. Miles and signed by Mr. Weant, Mr. Weant was just asked to witness the Will and did not read it. He recalled that Bernice Weant was also present. In the statement, Mr. Weant stated that Mr. Thom was lucid and knew what a Will meant at the time. He said that “Mentally, he had no issues”. He described Mr. Thom as “...alert, calm, business like...” 34 Mr. Weant testified that he could not recall if Mr. Miles had a copy of the Will with him when he met with Mr. Miles. Mr. Weant testified that he could not read Mr. Miles’ handwriting; that Mr. Miles read only portions of the statement to him; and that he did not read the handwritten statement in its entirety before signing it. He testified, however, that a typed statement was sent to him in the mail sometime later. 35 Mr. Weant did not dispute having given Mr. Miles the information contained in the statement. He testified, however, that the information in the statement was not accurate; that he was confused at the time and believed that the Will had been signed at the hospital, but realized later that he was mistaken. He agreed in re-examination that he had not attempted to contact Mr. Miles to correct the statement once he realized he had provided inaccurate information. 36 Mr. Miles testified that his usual procedure is to ask an interviewee to tell their story, and after listening to the interviewee, he handwrites a brief formal statement. Mr. Miles did not have any notes of information provided by Mr. Weant taken during the interview - only the handwritten statement he prepared at the end of the interview. Mr. Miles testified that it is his practice to read the statement to the interviewee and to invite the person to make changes. Mr. Miles testified that he believes Bernice We- ant was present when he read the statement to Mr. Weant. He testified that Mr. Weant did not seem unsure about what he was saying. Mr. Miles did not recall having sent a copy of the statement to Mr. Weant. Thom v. Thom Estate W.G. Baker J. 341

37 Mr. Miles testified that he had been told by Mr. Misner’s law firm that he should not show the Will to Mr. Weant during the interview. I infer from that that Mr. Weant was not shown a copy of the April 3, 2007 Will before or during the interview with Mr. Miles. 38 On March 26, 2014, Mr. Weant swore an affidavit prepared by Mr. Misner, counsel for Ronald Thom. A copy of the Will is attached to the affidavit as an exhibit. In this affidavit, Mr. Weant deposed that although he could not recall the date, he recalled that he and Mr. Rose witnessed Mr. Thom’s Will at the Pioneer Pub where they had met for lunch, evidence consistent with his testimony at trial. 39 Mr. Weant testified that at the time he and Mr. Rose signed Mr. Thom’s Will as witnesses, Mr. Rose and Mr. Thom were still golfing regularly. He testified that the three men stopped meeting at the Pioneer Pub when Mr. Thom went into Surrey Memorial Hospital. He testified that he, Bernice Weant and David Rose visited Mr. Thom in hospital at least once a week. 40 Mr. Weant testified that in April 2007 he was living at the Richmond address that he wrote on the Will. He testified that sometime after that he and Bernice Weant moved to a different address in Richmond - 5500 Bridge Street; and then moved to Chilliwack in 2012. He could think of no reason why he would have put an incorrect address on the Will. 41 Bernice Weant was expecting to be in hospital having surgery at time of trial and counsel did a video-deposition of Mrs. Weant on August 11, 2015. A transcript was prepared. 42 Mrs. Weant testified that she met Ralph Thom in 1992. She was working at a London Drugs store in Ladner and Mr. Thom lived in Tsaw- wassen at the time. Mrs. Weant and some of her friends sometimes went to the Legion, and Mr. Thom also went there, and that is how they met. She met Curt Weant sometime later and learned that he was a friend of Ralph Thom. 43 Mrs. Weant testified that she was present when Curt Weant and David Rose witnessed Ralph Thom’s Will. She said they were all seated at a table together in the Pioneer Pub in Richmond, that Mr. Thom pulled out the Will and handed it first to Mr. Weant; and then Mr. Weant handed it to David Rose. She recalled that after the two witnesses signed the Will, Mr. Thom folded it up and put it in his pocket. Mrs. Weant could not recall the date the Will was signed, but she recalled that she and the three men were all wearing short-sleeved shirts; and that it was a week-day. 342 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

44 Mrs. Weant testified that she thought the Will had been signed only a month or so before Ralph Thom had a seizure while golfing and was taken to hospital. She and Mr. Weant visited Mr. Thom every week while he was in hospital and then in palliative care. She recalled that Mr. Thom’s mental abilities declined after he left Surrey Memorial Hospital and went into palliative care, but that the decline was very gradual and that he continued to recognize her when she visited. 45 Mrs. Weant testified that she recalled meeting with Mr. Miles, and recalled reading the handwritten statement Mr. Miles had prepared, along with Mr. Weant. She recalled that they asked for some corrections to be made and Mr. Weant made some changes. When shown the copy of the handwritten statement attached to Mr. Miles’ affidavit, Mrs. Weant testified that it was a “rewritten version” - she believed the original handwritten version had “...a lot of things scratched out...”. She did not recall Mr. Weant having been sent a typed copy of the statement sometime later. 46 Mrs. Weant was adamant that her husband and David Rose did not sign the Will at Surrey Memorial Hospital. She said she was certain they signed the Will at the Pioneer Pub, at a time before Ralph Thom was admitted to hospital. 47 John Thom is the brother of the deceased and the executor and residual beneficiary named in the Will. John Thom was 77 years old when he testified at trial. He testified that he recalled Ralph Thom telling him that he had made a Will and had “Curt and Dave” witness it. Ralph Thom told John Thom that he had named John Thom as executor and beneficiary. John Thom recalled that this conversation took place four or five years before Ralph Thom became ill. Ralph Thom showed John Thom the Will when he told him about having made it but John Thom did not read it at that time. 48 Counsel for the plaintiffs did not suggest to Curt Weant that he had not written the date April 3, 2007 on the Will or that he had back-dated the Will. Neither counsel for the plaintiffs suggested to Mr. Weant or to David Rose that they had falsified any part of the document in order to mislead anyone about the date on which they witnessed the Will; or for any other improper purpose.

Positions of the Parties 49 The plaintiffs submit that the executor has failed to meet the burden to prove that the Will is valid because the evidence of the witnesses - David Rose and Curt Weant - is unreliable; and because there are “suspi- Thom v. Thom Estate W.G. Baker J. 343

cious circumstances” surrounding the making of the Will. The plaintiffs submit that the executor failed to establish the date the Will was signed and that it is therefore impossible to prove, on a balance of probabilities, that Ralph Thom had the requisite capacity to make the Will. 50 The defendants submit that the Will is a valid testamentary instrument that meets all of the legal requirements, including the requirement in s. 5 of the Wills Act, that the testator’s signature be made or acknowledged in the presence of two or more witnesses, present at the same time, who sign the will in the presence of the testator.

Analysis and Decision 51 Section 4 of the Wills Act reads: Subject to section 5, a will is not valid unless (a) at its end it is signed by the testator or signed in the testator’s name by some other person in the testator’s presence and by the testator’s direction, (b) the testator makes or acknowledges the signature in the presence of 2 or more attesting witnesses present at the same time, and (c) 2 or more of the attesting witnesses subscribe the will in the presence of the testator. 52 Despite the clear inconsistency between the testimony given by Curt Weant at trial and the description of events in the statement he gave to Mr. Miles, I found Mr. Weant’s testimony at trial to be compelling and credible and I accept his testimony. There were slight inconsistencies between the evidence provided in Mr. Rose’s affidavit and his testimony at trial, but I also found him to be a credible witness doing his best to recall an event that probably seemed relatively insignificant at the time it occurred. I accept that the witnesses are friends, and that they are motivated by their past friendship with the testator to try to see that his wishes are carried out, but their testimony at trial about the circumstances of the witnessing of the Will accord not only with the document itself, but also with evidence of other circumstances existing at the time the Will was made. 53 The testimony of Bernice Weant that she was present when her husband and Mr. Rose signed as witnesses to Mr. Thom’s signature was also credible and convincing. John Thom testified that sometime around 2007 Ralph Thom told him he had made a Will; that the Will had been witnessed by Mr. Weant and Mr. Rose; and that Mr. Thom had been named 344 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

as executor and main beneficiary. Mr. Thom’s testimony supports that of Mr. Weant and Mr. Rose. 54 The document itself appears to be entirely in order. There is no evidence or even any suggestion that any part of the Will was altered. Coun- sel for the plaintiffs did not suggest to Mr. Rose or Mr. Weant that they had back-dated the Will. 55 There is evidence of circumstances and events in 2006 and 2007 that provide a rationale for Ralph Thom making a Will in 2007. Ralph Thom’s father had died in 2006. His mother was elderly (she was 94 when she died in 2012). His mother had made a Will after his father’s death. She had recently transferred the title to her home into joint names with Ralph Thom. There was an understanding among Mrs. Thom Sr. and her two sons that the surviving son should inherit the family home. It is reasonable to infer that it was assumed at the time that Ralph Thom and John Thom would outlive their mother. In order to ensure that John Thom inherited the family home if Ralph Thom died before he did, Ralph Thom needed to make a Will. 56 Ralph Thom had been diagnosed with skin cancer in November 2006 and had undergone two small surgeries. Although a subsequent check-up in January indicated that the problem had been resolved, I expect that these events probably prompted Ralph Thom to think about making a Will. 57 Counsel for the plaintiffs provided the Court with several authorities in which wills were found to be invalid. In Ellis v. Turner (1997), 43 B.C.L.R. (3d) 283 (B.C. C.A.), two witnesses signed a will presented to them by a friend who later died. The deceased’s name was handwritten at the top of the will, but not at the end of the will. The testator did not acknowledge that the handwritten name at the top of the will was her signature. Neither witness could say that the testator had, in their presence, signed or written on any part of the document. She did not say anything to the witnesses about the origin of any of the writing in or on the document. The will was found to be invalid. 58 In Bolton v. Tartaglia, 2000 BCSC 576 (B.C. S.C.), only one of the two witnesses signed the will. In Toomey v. Davis, 2003 BCSC 1211 (B.C. S.C.), one of the two witnesses who signed the will was not in the presence of the testator when the witness signed the will. In Sills v. Daley (2002), 64 O.R. (3d) 19 (Ont. S.C.J.), only one witness signed the will and she signed it before the testator had signed the will. I am satisfied that these cases are clearly distinguishable from the case at bar. Thom v. Thom Estate W.G. Baker J. 345

59 I conclude that Ralph Thom’s Will was made in 2007, that Ralph Thom presented the Will to Curt Weant and David Rose at the Pioneer Pub in Richmond on April 3, 2007, that he told them the document was his Will and that he wanted them to witness the Will, that his signature was either already on the bottom of the second and last page of the Will when he presented the document to the witnesses; or he signed it in the presence of Curt Weant and David Rose. I conclude that if he did not sign the Will in the presence of the witnesses, his signature was already on the Will; he identified the document as his Will; and in that way acknowledged his signature in the presence of Curt Weant and David Rose. I conclude that Curt Weant and David Rose signed the Will as witnesses in the presence of Ralph Thom. I am satisfied that the testator’s signature on the Will is “at its end” as required by s. 4 of the Wills Act. 60 David Rose recalled Mr. Thom having signed the Will at the Pub just before he handed the document to Mr. Weant. Mr. Weant testified that he recalled that Mr. Thom’s signature was already on the Will when the document was presented to the witnesses. In my view, the Will is valid and the Act has been complied with in either case. Mr. Thom’s signature appears directly above the signatures of the two witnesses. There can be no doubt, in my view, that both men saw Mr. Thom’s signature on the document before they affixed their own signatures. Mr. Thom had told Mr. Rose the night before the meeting at the Pub that he wanted the two men to witness his Will. When he presented the document at the Pub he stated that it was his Will. 61 In Beaudoin Estate v. Taylor [1999 CarswellBC 749 (B.C. S.C. [In Chambers])], 1999 CanLII 6580, Justice Burnyeat reviewed the authorities on the question of acknowledgement. At para. 12 he wrote, in part: In the case at bar, it is clear that the two witnesses were previously told by Mr. Beaudoin that he wanted them to witness his Will. The witnesses were also told by Mr. Beaudoin on September 28, 1995 that it was his Will that he wanted them to witness. As to what is an appropriate acknowledgement of his signature, it is clear that it is sufficient that the testator says words such as “this is my Will” even though the testator does not say “this is my signature”: Re Walterhouse Estate (1922), 65 D.L.R. 670 (Ont. Surr. Ct.); Hudson v. Bower (1968), 67 W.W.R. 564; Balcom Estate (1975), 22 N.S.R. (2d) 707... 62 Counsel for the plaintiffs also argued that there were “suspicious circumstances” surrounding the making of the Will. They provided the Court with the decision in Vout v. Hay, [1995] 2 S.C.R. 876 (S.C.C.). I 346 ESTATES AND TRUSTS REPORTS 17 E.T.R. (4th)

am not persuaded that in the case at bar any “suspicious circumstances” have been raised. In essence, the plaintiffs submit that I should accept as true Curt Weant’s statement that Ralph Thom’s Will was witnessed at Surrey Memorial Hospital after Ralph Thom had been admitted to hospital in April 2011. Curt Weant declined to adopt the statement at trial and there is therefore no evidence that the Will was made or witnessed in 2011. I conclude that Mr. Weant’s memory failed him when he was being interviewed by Mr. Miles. The fact that Mr. Miles had been instructed to refrain from showing Mr. Weant a copy of the Will no doubt contributed to his confusion and lack of recall. 63 In Laszlo v. Lawton, 2013 BCSC 305 (B.C. S.C.), Justice Ballance stated, at para. 206 of the Reasons: A “general miasma of suspicion that something unsavoury may have occurred” will not be enough. Clark v. Nash (1989), 61 D.L.R. (4th), 409 at 423 (B.C.C.A.). In Maddess v. Racz, 2009 BCCA 39 at para. 31, the B.C. Court of Appeal reminded that merely “some evidence” was not sufficient and emphasized the stipulation in Vout that in order to elevate general suspicion to the threshold of suspicious circumstances, the evidence, if accepted, must tend to negative knowledge and approval or testamentary capacity. 64 A lack of recall on the part of a witness is not sufficient, in my view, to cast doubt on the validity of the Will in this case. 65 In Yen Estate v. Yen-Zimmerman, 2013 BCCA 423 (B.C. C.A.), the appellants had filed a caveat challenging the validity of the deceased’s will, and required it to be proved in solemn form. The will had a signature purporting to be that of the deceased. There were also the signatures of two witnesses whose names were Strachan and McGinley. McGinley had died before the testator; and the other witness could not be found. The Court of Appeal upheld the decision of the trial judge to rely on the presumption of due execution. The Court of Appeal wrote, at paras. 18 and 19: At para. 23 of his reasons for judgment, the trial judge quoted the following passage from Laxer at 357 expressing a policy reason supporting the use of the presumption: The authorities supporting the application of the presumption favouring due execution of a testamentary instrument lay down a very sound and salutary principle, since a contrary rule would make the rights of devisees and legatees depend not only upon the honesty, but also upon the frail and slippery memory of witnesses. No man could be sure Thom v. Thom Estate W.G. Baker J. 347

of dying testate, since the dishonesty or forgetfulness of a witness could frustrate all his precautions to comply with the requirements of the law. 66 In this case, there is no evidence casting doubt on the testamentary capacity of Ralph Thom in April 2007. There is evidence to the contrary. There is no evidence that Ralph Thom was subjected to duress or undue influence or that the Will does not reflect his true intentions at the time it was made. Mr. Thom did not have a large or complicated estate. There is no reason to believe he did not know and approve the contents of the Will - he wrote it himself on a form apparently obtained from a kit. 67 I find the Will of Ralph Thom made April 3, 2007 to be a valid Will, duly executed pursuant to the requirement set out in the Wills Act. I find that Ralph Thom had testamentary capacity at the time the Will was made.

Costs 68 The parties did not make submissions about costs. They have leave to file written submissions; or to arrange with Trial Scheduling to appear to make oral submissions. Action dismissed.