News & Blog

Mutual Wills

Although not common, mutual wills between spouses are being increasingly used in blended family. If two spouses make identical (mirror) wills leaving their respective estates to each other, after the first spouse dies the surviving spouse can change their will as they please. This gives the surviving spouse flexibility moving forward with their life and is often not contentious when the only children involved are children of both spouses. However, in blended families, this can prove problematic and lead to litigation. Disputes can arise over whether or not the wills entered into were mirror wills or mutual wills and, if found to be mutual wills, how the assets of the surviving spouse are used during their life time.

In order for a will to be a mutual will it must include terms that create an enforceable contract between the two will makers. Both spouse must give consideration as regards the disposition of their assets. The agreement must be clear and unambiguous. Finally, the wills must include terms that prevent the spouses from changing or revoking their wills without the express consent of the other.

Beneficiaries do not have to wait until the second spouse dies before they can commence legal action to prove that a will is a mutual will. Actions taken by the surviving spouse that are not consistent with the terms of the mutual will can be cause for litigation. Often, the first step in that litigation is to prove that the wills in question are mutual wills. If you are a secondary beneficiary of a mutual will it will be important to seek legal advice if the surviving spouse is disposing of or gifts major assets in a manner not consistent with the mutual wills.

If the court determines that the wills are not mutual wills and are only mirror wills, then the surviving spouse is under no legal obligation to follow the terms of their own will and has the right to alter and change their own will in the future.

If two spouses make mutual wills, disputes can arise between the surviving spouse and the future beneficiaries. The future beneficiaries may be concerned that the surviving spouse is depleting or disposing of assets that will detract from the former’s inheritance. Depleting assets for necessities during the life time of the surviving spouse is less likely to be deemed inappropriate and in contravention of the mutual will then disposing of substantial aspects of the estate to preferred beneficiaries.

Whether or not these steps are appropriate for a surviving spouse to be engaging in will often depend on the terms of the mutual will. Mutual wills can contain stewardship clauses that dictate what a spouse can and cannot do with certain assets during their life in order to prevent the assets from being depleting or disposed of. If the surviving spouse goes against these stewardship clauses they are in breach of the mutual wills and litigation can be commenced by the future beneficiaries to enforce the terms of the mutual wills.

If there is not clear stewardship clauses the courts will have to consider if they think the disposition is meant to defeat the true intention of the mutual wills. This is a subjective test that the court will have to engage in and different interpretations are possible.

If you are the surviving spouse of a mutual will it is important to understand the obligations imposed upon you by the mutual will and seek advice regarding the terms of the mutual will before altering or disposing of any significant assets.

Buying a Home? Buyer Beware!

Everyone’s likely heard the phrase “buyer beware”. It’s not just sage advice, but a legal principle. Also known as caveat emptor, the principle of buyer beware remains a force to be reckoned with especially when it comes to buying a home.

Caveat emptor places the responsibility on the purchaser of real estate to satisfy themselves as to the quality of the property they are looking to buy. If something subsequently turns out to be wrong or with the property, it is the purchaser’s problem and they generally cannot look to the seller for compensation.

There are, however, several exceptions to the application of caveat emptor. These are where the seller:

  1. fraudulently misrepresents or conceals something about the property;
  2. knows of a latent defect rending the property unfit for habitation;
  3. is reckless as to the truth or falsity of statements relating to the fitness of the property for habitation; and
  4. has breached his or her duty to disclose a latent defect that renders the property dangerous.

Two of these exceptions make reference to “latent” defects. A latent defect is one that cannot be discovered by conducting a reasonable inspection of and making reasonable inquiries about the property. A latent defect can be contrasted with a “patent” defect, which is a defect that is capable of being discovered by a reasonable inspection or through reasonable inquiries. If the defect at issue is a patent one, then caveat emptor would typically apply to deny the purchaser the right to claim against the seller. For instance, if you were to buy a house and subsequently discover that a window is broken, that would be a patent defect as it’s one that you could have easily discovered before buying the house. However, even if the defect at issue is one that the average purchaser would not have detected, but is one that a professional home inspector likely would have, the defect can be said to be patent.

As can be seen, getting around caveat emptor can be a very difficult task. For that reason, it is advisable for buyers to make any offers to purchase subject to the property being inspected by a professional.

 

Corporations and LTSA Transparency Reports

On November 30, 2020 the Land Owner Transparency Act came into effect. The government’s intention behind the Act is to make public information on ownership in land and reduce fraud in the real estate market. The Act requires the disclosure of both direct interests in land and parties who have a meaningful interest or indirect ownership in land.

For corporations that have acquired an interest in real property such as purchasing property or acquiring a long term lease after November 30, 2020, they are required to file both a Transparency Report and Declaration when registering their newly acquired interest.

If a corporation is the current registered owner of any property in the B.C. land title system, they must file a Transparency Report and Declaration before November 30, 2021 regardless of when they acquired an interest in the property.

A legal professional can assist with the filing of the Transparency Report and Declaration.

Once filed, the general public can search and obtain partial information about the ownership interest in land. Primarily the only information available will be the party that filed the transparency report and the names of all individuals who are an interest-holder in the land or the settlor of a trust related to the land. The more personal information such as the date of birth and social insurance number of these individuals although required to file the declaration and report will not be publicly accessible.

A sample transparency report showing the information required can be found at: https://landtransparency.ca/wp-content/uploads/2021/09/Land-Owner-Transparency-Report-Sample.pdf

N.S. Court finds Sections of Province’s Wills Variation Legislation Unconstitutional

We rarely comment on cases decided in other provinces as they generally have little to no applicability in British Columbia. Such is not the case with Lawen Estate v. Nova Scotia (Attorney General), 2019 NSSC 162. This decision of the Nova Scotia Supreme Court has the potential to drastically alter wills variation claims throughout the country.

In Lawen, the Court found that sections of Nova Scotia’s wills variation legislation were unconstitutional to the extent they permitted non-dependent, adult children to apply to vary their parent’s will.

The facts underscoring Lawen are not particularly remarkable. The deceased died leaving four adult children who he treated unequally under his will. The children who stood to inherit less subsequently brought a wills variation claim.

Instead of simply defending against the claim in the normal fashion, the respondents (those arguing that the will should be left only) argued that the province’s wills variation legislation breached sections 2(a) and 7 of the Canadian Charter of Rights and Freedoms. Section 2(a) guarantees everyone freedom of conscience and religion while section 7 guarantees everyone the right to life, liberty and security of the person. Specifically, the respondents said that the province’s wills variation legislation insofar as it permitted non-dependent, adult children to make claims violated a will-makers right to liberty.

After engaging in a lengthy analysis, the Court found that the legislation did not violate section 2(a) of the Charter as “conscience” means something analogous to a religious belief, which the legislation did not engage.

With respect to the section 7 argument, much time was spent on whether the right to liberty encompassed testamentary autonomy. The Court found that it did in that testamentary autonomy is not necessarily a purely economic or property matter, which are not protected. As well, testamentary autonomy can rise to the level of fundamental personal choice of the kind contemplated by prior cases.

That was not the end of the analysis, however. As with any Charter challenge, the fact that a piece of legislation violates a person’s rights or freedoms does not necessarily mean it is unconstitutional. Section 1 of the Charter says the rights and freedoms set out in the Charter are “subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democractic society.” To determine whether a particular Charter violation is justifiable, the Supreme Court of Canada developed what is called the Oakes Test, which gets its name from the case in which it was first articulated, R. v. Oakes. To justify a Charter violation, the government must prove:

  1. the goal of the law in question is pressing and substantial;
  2. the provisions of the law are rationally connected to the goal of the law;
  3. the provision minimally impairs the Charter right or freedom it violates; and
  4. the extent to which the law violates the Charter is proportionate to the extent to which the provision advances the goal of the law.

The Court found that Nova Scotia’s wills variation legislation, to the extent it applied to non-dependent, adult children, did not address a pressing or substantive goal, stating:

[85]         If testamentary freedom is an aspect of liberty under s. 7, it is difficult to see how a “pressing and substantial objective” that would justify setting it aside could be rooted in the “proprietary interest” of a non-dependent adult child of a testator. The Attorney General has not identified a coherent objective to be achieved by extending TFMA coverage to non-dependent adults. This conclusion is bolstered by a consideration of the uncertain position of “moral” considerations in Charter analysis. 

Having failed to satisfy the Oakes test, the Court found that Nova Scotia’s wills-variation legislation was unconstitutional to the extent it required will-makers to make adequate provision for their non-dependent, adult children.

Lawen is being appealed to the province’s Court of Appeal and is set to be heard in February 2021. We will report back on the outcome of that appeal.

Given the novelty and potential far-reaching effects of this decision, the case is arguably heading for the Supreme Court of Canada. If the decision is upheld, it will certainly affect British Columbia’s wills variation legislation so as to potentially extinguish the right of independent, adult children to apply to vary the will of a parent.

Evidence at the CRT

The Civil Resolutions Tribunal (or CRT) is an administrative tribunal established by the BC government in 2012 to handle disputes between strata councils and property owners. In 2017, the tribunal’s jurisdiction was expanded to allow them to hear small claims disputes of $5,000 or less. The current BC government drastically expanded the tribunal’s jurisdiction to decide several matters related to ICBC and motor vehicle accidents. Specifically, as of April 1, 2019, the CRT now has exclusive jurisdiction to decide:

  1. whether a person injured in a car accident is entitled to ICBC no-fault or Part 7 benefits;
  2. whether a person’s injuries are “minor” as defined by the BC government; and
  3. claims of $50,000 or less.

Considering the dramatic increase in jurisdiction it is important to know the type of evidence that can be presented and relied upon by the CRT.

Unlike our courts, the CRT is not bound by traditional rules of evidence that have been carefully developed over the decades. Rather, evidence of questionable relevance or probity is perfectly capable of being admitted and relied upon by the CRT. Due to this laxity, many have likened the CRT to the “Wild West” or a “Kangaroo Court”.

Bajracharya v. Rahul, 2020 BCCRT 564 is an example of the CRT basing its decision on evidence that would arguably have been rejected in our courts. In that case, the CRT was called upon to determine fault for an accident. Both drivers gave differing accounts as to the circumstances of the accident, and there were no independent witnesses. The claimant was self-represented while the respondent was represented by an ICBC adjuster.

The first problem was that the CRT made reference to the fact that ICBC had internally found the claimant to be 100% at-fault for the purposes of repairing his vehicle. That evidence would almost always be objectionable in court as it offends what is called the “ultimate issue” rule. This rule prevents the introduction of opinions on the exact issue the court is to decide upon.

The second problem was that the CRT relied on a brief statement made by an ICBC manager to the effect that the claimant’s vehicle was moving as opposed to stopped when it was hit, which, if true, would negate his claim. The ICBC manager didn’t witness the accident. The CRT found his statement didn’t qualify as expert evidence. The ICBC manager’s qualifications were not before the CRT. However, the CRT accepted that it was his “job to assess the condition of post-accident vehicles and that he is competent in that role”. Needless to say, that doesn’t mean that he was qualified to say whether a vehicle was moving or not on impact, but that didn’t matter to the CRT. They accepted his unqualified “opinion” anyways and ruled against the claimant.

This case demonstrates how the CRT’s slack approach to evidence can work against people injured in accidents.  

Part 7 Benefits Denied for Violating Terms of License

As discussed in our previous posts, the Civil Resolutions Tribunal (or CRT) is an administrative tribunal originally established by the BC government in 2012 to handle disputes between strata councils and property owners. In 2019, the jurisdiction of the CRT was significantly expanded by the BC NDP government to include determining when a person is entitled to ICBC no-fault benefits, also known as “Part 7” benefits.

Part 7 benefits are generally available to all British Columbia motorists involved in an accident regardless of whether they are at fault or not. These benefits primarily cover treatment expenses and disability benefits. In 2019, the government also made substantial changes to Part 7 benefits. Principally, they expanded the type of treatments which would be paid for and increased the amount paid for each benefit.

While a person’s entitlement to Part 7 benefits doesn’t depend on whether they were at-fault or not, a person can be denied Part 7 benefits for a host of reasons. For instance, if a driver is found to be in violation of a condition of their driver’s license they are not entitled to Part 7 benefits. This scenario was recently confirmed in Khanna v. Okamoto, 2020 BCCRT 1181.

In that case, Ms. Khanna was injured in an accident. At the time, she had a learner’s license, which required her to be supervised by a licensed adult while driving. Unfortunately, she wasn’t being so supervised when she got into the accident. This was in violation of both her license and the Motor Vehicle Act Regulations. Due to this violation, the CRT found that Ms. Khanna was not authorized or qualified by law to operate the vehicle and was therefore in breach of the Insurance (Vehicle) Regulations.

As a result, the CRT determined that Ms. Khanna was not entitled to Part 7 benefits from ICBC. Due to the fact that all the treatment Ms. Khanna was requesting would have been covered under Part 7 benefits, the CRT dismissed her entire claim for treatment coverage.

Risks of Settling Your “Minor Injury” Claim Early

Thanks to legislation brought in by the BC NDP government, people injured in motor vehicle accidents after April 1, 2019 could be subject to the “minor” injury cap on damages. Crucial to this determination is the definition of “minor” injury. If an injury is determined to be minor an individual’s award for pain and suffering is capped at $5,500.

According to the ICBC minor injury legislation, a “minor” injury includes sprains, strains, general aches and pains, cuts, bruises, road rash, persistent pain, minor whiplash, TMJ disorder, mild concussions, and short-term mental health conditions. An injury may later be determined not to be minor if it continues to impact a person’s life for more than 12 months and, in the case of concussions and mental health conditions, result in a significant impairment beyond 16 weeks.

There are risks if an individual agrees that the injury they sustained is minor and settles their claim with ICBC before it has been appropriately investigated by their medical providers. That’s what happened in Naqvi v. ICBC, 2020 BCCRT 995.

In Naqvi, the claimant was injured in a post-April 1, 2019 motor vehicle accident. He suffered an injury to his low back and missed two days of work after the accident. His family doctor assessed him as suffering from soft tissue injuries that would likely resolve in 6 to 8 weeks. Approximately 4 months after the accident in September 2019, Mr. Naqvi settled his claim for $6,890.

In January 2020, after a flare-up of pain it was determined that Mr. Naqvi had actually suffered a disc bulge in his lower back. He applied to the Civil Resolutions Tribunal (CRT) to overturn his settlement with ICBC and make a determination that his injuries were not in fact minor.

The CRT found that it was irrelevant to the settlement that Mr. Naqvi thought his injuries were minor at the time of settlement and later found out they were more severe. The CRT accepted that it was a risk of settling that a person’s injuries could be more severe than they were aware and determined that the settlement was valid and dismissed Mr. Naqvi’s case.

In this case, the irony of ironies was that Mr. Naqvi was actually an ICBC adjuster; a tidbit that wasn’t lost on the CRT:

[22]   At all material times, Mr. Naqvi was employed with ICBC as a Senior Bodily Injury Adjuster (now called a Claims Specialist). Mr. Naqvi argues his employment with ICBC left him at a disadvantage in negotiating as he did not want to seem “argumentative” or as a “problem maker”. However, I also note that Mr. Naqvi’s position made him uniquely positioned in that he was experienced in negotiating these settlement agreements from ICBC’s side. In fact, as a senior ICBC employee, Mr. Naqvi would have been very familiar with ICBC’s settlement processes and form of release. ICBC also argues Mr. Naqvi was well aware of the “minor injury” legislation, given his role. I find Mr. Naqvi knew the potential consequences of settling his claim. Mr. Naqvi also does not explain whether he sought legal advice about the settlement prior to signing it. There is no evidence Mr. Naqvi was under any sort of legal or medical incapacity when he signed the settlement agreement. I am satisfied ICBC did not take advantage of Mr. Naqvi.

Court Wallops ICBC for Low-Balling Injured Woman

For well over a year, ICBC has been making low-ball offers to injured people, forcing them to either accept much less than their claim is worth or go to trial. This perverse tactic has clogged up our court system resulting in many cases being adjourned to a later date due to a lack of judicial resources. What’s more frustrating, once such a case gets in front of a judge, ICBC often quickly retreats from its ridiculous low-ball offer and suggests something much more reasonable to the Court. It makes one wonder why ICBC doesn’t just make injured people reasonable offers to begin with. Forcing otherwise settleable cases to trial only drives up costs for drivers and taxpayers.

In Johnson v. Heer, 2020 BCSC 1751, ICBC did just that. In Johnson, ICBC offered an injured female plaintiff $41,000 to settle her claim. ICBC agreed that the plaintiff’s out-of-pocket expenses related to her injuries were over $13,000. That meant that ICBC was allocating less than $28,000 for her pain and suffering, past and future wage loss, and future care.

The plaintiff offered to accept $80,000 to settle her claim. When ICBC wouldn’t budge, the case went to trial.

Despite only offering the plaintiff $40,000, at trial, ICBC told the judge that they thought her claim was worth between $69,943 and $111,943! ICBC didn’t call any evidence and barely defended the claim at all.

In the end, the judge awarded the plaintiff over $147,000. This included $75,000 for pain and suffering, $9,500 for past wage loss, and $40,000 for future wage loss.

Because the Court awarded the plaintiff substantially more than the $80,000 she would have accepted, the plaintiff asked the Court to award her double costs. As we’ve discussed before, court costs are meant to compensate a successful litigant for some of their legal fees incurred in prosecuting a case. Double costs are meant to punish a litigant for failing to accept a reasonable offer.

In addition to asking for double costs, the plaintiff asked for “uplift” costs. Uplift costs are normal costs times 1.5. In this case, that meant the plaintiff was essentially seeking triple costs due to ICBC’s behaviour.

In ruling in favour of the plaintiff, the judge berated ICBC for their ridiculous tactics:

[33]         This brings me to what I consider to be the unusual circumstances that warrants an award of uplift costs on the specific facts of this case. At trial, the defendant submitted that the plaintiff’s damages ought to be in the range of $69,943 to $111,943. The lower range of the defendant’s submission was some $28,942 higher than the defendant’s own formal offer to settle, which remained open until the eve of trial. Even more unusual is that the upper range of the defendant’s submission was $31,943 higher than the plaintiff’s final formal offer to settle, (which also had remained open until the eve of trial), and $14,443 higher than the plaintiff’s original formal offer to settle. [Emphasis in original text]

[34]         In these circumstances, it would appear the only reason the defendant did not accept either of the plaintiff’s offers was to simply force the plaintiff to go to trial. This conduct required the plaintiff to expend even more funds than it already had. It is difficult to fathom why the defendant would force the trial to proceed when it could have settled the trial for less money than it submitted the plaintiff was entitled to at trial.

[35]         While the defendant is not required to make an offer, it did. Moreover, while the defendant is not required to accept an offer, they have agreed that they should have. Clearly, this concession is not based solely upon the benefit of hindsight after the judgment was rendered. The defendant knew at the time of trial that it should have accepted the plaintiff’s offer, as evidenced by their submission at trial that the range the plaintiff was entitled to was more than the plaintiff had offered. Instead, the defendant forced the plaintiff to trial to obtain what the defendant itself obviously considered to be a fair result, when there was a clear and open way to avoid the need for the trial at all.

[36]         Moreover, I note that this trial proceeded a matter of just a few weeks after the court resumed limited operations following its closure due to the COVID‑19 pandemic. The pandemic was at its relatively early stages at the time of the trial, and public health officials had urged British Columbians to limit their exposure to public places to only essential matters. In the circumstances I have described, attendance at this trial was not essential and it exposed the plaintiff, her husband, her mother, her counsel and defence counsel to an increased risk of exposure to the virus. In these unusual circumstances, I find that an award of costs on the usual scale would be unjust, and I exercise my discretion to award uplift costs to the plaintiff for trial preparation and attendance at trial for items 34 and 35 of the Tariff. [Emphasis added]

This case serves as a good example of the despicable tactics that ICBC is employing that further victimize already injured people and drive-up the cost of insurance in this province.

Pedrozo v. Hope, 2020 BCSC 1578

In this interesting case, the former spouse of the deceased sued his estate for breach of a family law separation agreement made between the parties while the deceased was alive.

The female claimant and the deceased had been married for 9 years before separating. The deceased was significantly older than the claimant. The claimant had a 4-year-old son from a previous relationship and brought him into the marriage.

The separation agreement entered into by the parties and filed with the Court provided that the deceased would pay the claimant an amount for spousal support and child support for a set period of time. To secure payment of those amounts in case of his death, the agreement required the deceased to maintain a life insurance policy in the amount of $250,000 naming the claimant as beneficiary.

While the deceased duly maintained a life insurance policy in the amount of $250,000, he named his children from a prior relationship as beneficiaries, not the claimant.

The deceased paid spousal and child support payments as required, but died unexpectedly. At the time of his death, he remained obligated to pay spousal and child support as per the agreement. Had he named the claimant as the beneficiary of the life insurance policy as required by the agreement, she would have received $250,000. When the claimant learned that she was not, in fact, the named beneficiary of the policy, she sued the deceased’s Estate.

At the hearing, which proceeded by way of summary trial, the deceased’s son, in his capacity as Executor of the deceased’s Estate, argued that the claimant was only entitled to the balance of spousal and child support owing for the remainder of the term set out in the separation agreement. This amounted to less than $80,000 and had, incidentally, already been paid to the claimant. As such, the parties were arguing over whether the claimant was entitled to a further $170,000.

In ruling in favour of the claimant, the Court found that the claimant would have received $250,000 but for the deceased’s breach of the separation agreement. This was the clear and final intention of both parties when they entered into the agreement following much deliberation involving senior counsel and a professional mediator. It would be manifestly inequitable to arrive at any other result.

Territorial Competence of BC Courts to Hear a Case

The Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, chapter 28 is a provincial statute that sets out the “territorial competence” of BC courts. Essentially, territorial competence has to do with whether a BC court or a court in another jurisdiction (be it another province, country, or subdivision of another country) is best suited to hear a particular case. 

Section 3 of the Act states that a BC court has territorial competence in a proceeding brought against a person (i.e. a defendant or respondent) only if:

  • that person is the plaintiff in another proceeding in the court to which the proceeding in question is a counterclaim,
  • during the course of the proceeding that person submits to the court’s jurisdiction,
  • there is an agreement between the plaintiff and that person to the effect that the court has jurisdiction in the proceeding,
  • that person is ordinarily resident in British Columbia at the time of the commencement of the proceeding, or
  • there is a real and substantial connection between British Columbia and the facts on which the proceeding against that person is based.

Section 10 of the Act contains a non-exhaustive list of circumstances that are presumed to amount to a real and substantial connection. Some common examples include lawsuits that concern:

  • property located in BC;
  • contracts entered into in BC or ones the parties agreed would be subject to BC law;
  • torts committed in BC. This would include negligence claims arising, for instance, from car accidents that happened in BC; and
  • a business carried on in BC.

Even if a BC court lacks territorial competence to hear a case, section 6 of the Act provides that it may nevertheless hear the case if there is no other court in which to commence the proceeding, or if commencing the proceeding in another court cannot reasonably be required.

Conversely, even if a BC court has territorial competence to hear a case, section 11 of the Act provides that it can nevertheless decline jurisdiction if there is a more appropriate court in which to hear the case. In deciding whether another court would be more appropriate, the BC court will consider:

  1. the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court or in any alternative forum,
  2. the law to be applied to issues in the proceeding,
  3. the desirability of avoiding multiplicity of legal proceedings,
  4. the desirability of avoiding conflicting decisions in different courts,
  5. the enforcement of an eventual judgment, and
  6. the fair and efficient working of the Canadian legal system as a whole.