Saskatchewan Estate Litigation Update: Fraser v Mountstephen, 2021 SKQB 192

The recent case of Fraser v Mountstephen offers reminder that not every irregularity with a Will can justify subjecting that Will to litigation.

Background

Blair Fraser died without children. He named a friend, Lori Ann Mountstephen, as Executrix. He left his entire estate to the children of Lori Ann. He left nothing to his siblings. Blair’s siblings suspected that Blair lacked testamentary capacity and/or was unduly influenced by the Executrix. A challenge was brought.

The background was this: after Blair’s father died in 2012, the respondent Executrix and her children spent more time at Blair’s farm assisting Blair in its operation. After Blair’s mother died in 2014 the frequency of that assistance increased. On March 10, 2018, Blair executed a Last Will and Testament before two witnesses: Garth Buitenhuis and Rodney Mountstephen. Rodney was the brother-in-law of the Executrix.

Blair’s will directed that his entire estate be distributed to the Executrix’s two children, Kaibry and Meranda.

Concerns raised in the challenge:

The challengers raised various concerns, including the below:

  1. Blair had had difficulties with school and failed to complete grade 11. Blair was also co-executor of his mother’s estate which took three years to administer. When asked about the delay Blair’s response was that it was “really hard”;
  2. Persons had commonly seen Blair to drink often, and often drinking heavily by 3 pm;
  3. The lawyer who did the will, Garth Buitenhuis, had not disclosed his will file notes.

Decision of the Court:

The Court summarized the factors to be considered when deciding whether suspicious circumstances are present (citing from Grosiak v Grosiak Estate2008 SKQB 232)

18  Therefore, when considering whether or not suspicious circumstances are present, the Court must look at the following factors:

(1) the extent of physical and mental impairment of the testator around the time the will was signed;

(2) whether the will in question constituted a significant change from the former will;

(3) whether the will in question generally seems to make testamentary sense;

(4) the factual circumstances surrounding the execution of the will;

(5) whether a beneficiary was instrumental in the preparation of the will.

The Court then went through each concern and found they failed to raise a genuine issue about capacity or undue influence. In particular:

  1. The evidence did not show that Blair in fact suffered cognitive difficulties, much less showed an inference that Blair’s cognitive difficulties impacted upon his testamentary capacity at the time he signed the will;
  2. At law, any established chronic and longstanding alcoholism of a testator was not sufficient to raise a genuine issue, unless there was medical evidence of alcoholism eroding capacity at the time the will was executed;
  3. The complaint about lack of disclosure of Garth Buitenhuis’s file was simply a fishing expedition, based more on what is unknown than known;
  4. The mere fact that a witness to the will (Mr. Mountstephen) was related to the executor, was not a suspicious circumstance and certainly was not probative evidence of undue influence. In any event, it is Mr. Buitenhuis’ uncontroverted evidence that Mr. Mountstephen witnessed the will at Blair’s specific request because Blair could not contact someone else to perform that role.

    The Court held that all the concerns were nothing more than “suggestions of irregularity”, which did not rise to the level of a genuine issue:

      [54]  In my respectful view, the circumstances raised by the applicants are nothing more than “suggestions of irregularity or evidence on peripheral points”. They do not, whether considered individually or cumulatively, constitute probative evidence on the issue of undue influence. Consequently, I find that the applicants have not convinced me there is a genuine issue to be tried on this issue.

      As such, the evidence offered did not raise a genuine question as to Blair’s testamentary capacity at the time he signed his will nor a genuine question as to whether he was unduly influenced to do so. 

      As such, the challenge was dismissed, and the executrix was given her tariff costs payable by the applicants.

      Lesson:

      Challengers must be careful to ensure they have direct evidence which strikes at the heart of whether a testator had capacity, or acted under coercion.

      The best evidence to challenge a will meets the following grounds;

      1. Stems from the precise time period in which the testator put his or her pen to the Will;
      2. Is not circumstantial, but rather is clear evidence showing that the testator may not have understood the Will, or wished to make it.

      Contacting a Lawyer on this Subject

      James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

      Read more on our blog.

      The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

      Saskatchewan Estate Litigation Update: Choquette v Viczko, 2021 SKQB 167

      The recent case of Choquette v Viczko offers guidance on when an executor is required to seek a beneficiary’s consent to sell land. It also explains when no such consent is needed.

      Facts:

      Joseph Viczko died on September 10, 2011. In his September 24, 2010, will he named his daughter, Donna Boots, as executor and trustee. The primary beneficiaries under the will were Ms. Boots and Joseph Viczko’s other children, Yvonne Choquette and David Viczko.

      Certain land was to be sold and the proceeds divided amongst Yvonne and Donna. The relevant wording was as follows:

      d. I DIRECT my Trustee to distribute my estate as follows:

      1. It is my intention to sell the W1/2 12-39-27 W2, or any other farmland that I own, (all such farmland herein being described as my farmland), while I am living and distribute the proceeds of sale equally between my daughters YVONNE CHOQUETTE of Cudworth, Saskatchewan and DONNA BOOTS, of Saskatoon, Saskatchewan share and share-alike. However, if I still own my farmland at the time of my death, then my farmland shall be sold by my Trustee and the proceeds divided equally between my daughters YVONNE CHOQUETTE and DONNA BOOTS.
      2. If YVONNE CHOQUETTE predeceases me or fails to survive me for 30 days from the date of my death, then her one-half interest in the proceeds of the sale of my farmland shall be divided equally among the children of YVONNE CHOQUETTE for their own use and benefit absolutely.

      Ms. Boots had W1/2 12-39-27 W2 appraised, and she and David Viczko ultimately entered into an agreement for David Viczko and his wife Jennifer Viczko (“the Viczkos”) to purchase the land for the appraised value. The sale was completed, and the land was transferred to the Viczkos on February 23, 2012.

      Objection to the land sale by Yvonne Choquette:

      After the land had been transferred, Ms. Choquette objected to the sale to the Viczkos. Ultimately she commenced an action, in which she seeks to have the sale of the land set aside and the land returned to the estate. She relied on the provisions of s. 50.5 of The Administration of Estates Act, SS 1998, c A-4.1. That provision holds that an executor shall not sell land “for the sole purpose of distributing the estate among the persons beneficially entitled to it unless those persons concur in the sale.”

      However, the provision also gives the court the power to approve the sale of the real property if the court is satisfied that it is in the interest and to the advantage of the estate of the deceased and the persons beneficially interested in it.

      Ms. Choquette asserted that the combination of s. 50.5 of the Act and clause 3(d)(i) of the will means that the land sale is invalid because it proceeded without the consent of Ms. Choquette, who is a person “beneficially entitled” within the meaning of s. 50.5(1).

      Issue 1: Is Yvonne Choquette a beneficiary whose consent to the sale of the land is required under s. 50.5 of The Administration of Estates Act?

      The court held that Yvonne Choquette was not a beneficiary whose consent to the sale of the land was required under s. 50.5 of The Administration of Estates Act?

      The court held that s. 50.5(1) refers to persons who are beneficially entitled to the real property that is proposed to be sold. Here, Ms. Choquette is not such a person. Rather, she is beneficially entitled to a portion of the proceeds of the sale of the real property.

      But more importantly,   the Court found there was no operation of s. 50.5.  Here, where the executor was expressly empowered by the testator to sell the land, there was no need for the executor to resort to s. 50.5 for legislative authority to sell the land.

      Because of the direction in the will (i.e. to authorize the executor to sell the land), s. 50.5 of the Act does not apply to the circumstances at all

      Issue 2: Should the court approve the sale of the land to David Viczko under s. 50.5(4) of the Act?

      Even if Ms. Choquette had been required to be consulted, the Court would have given its approval to the sale, over her objection. The court held that the sale was for fair market value, and was necessary to advance the estate administration. Moreover, the sale took place 9 years ago, and to undo it would be very complicated, and incur needless costs:

      [40]  The circumstances are these. The sale of the land implemented the testator’s intentions. There is no dispute that the sale was for fair market value. There is no prejudice to Ms. Choquette in the sale being approved, because she will benefit from the fair market value sale that was directed by the testator. The other parties, and Ms. Choquette as well, would be prejudiced considerably by the sale not being approved. The sale to the Viczkos took place nine years ago. Reversing that sale, including addressing David Viczko’s farming of the land for the past nine years, would plunge the estate – along with the individual parties – into a morass of complication and the promise of even more litigation. Approving the sale would permit administration of the estate to move towards a conclusion.

      In short, before a beneficiary (who is merely entitled to the proceeds of land, but not actually the land itself) tries to object to a sale of the land, they should examine if they are truly entitled to object to the sale.  

      Contacting a Lawyer on this Subject

      James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

      Read more on our blog.

      The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

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      Saskatchewan Estate Litigation Update: Bryant Estate v Stuart, 2021 SKCA 54

      A recent case from the Saskatchewan Court of Appeal clarifies that a beneficiary who seeks an estate accounting is not required to show possible wrongdoing by the trustee before an accounting can be ordered. Background: The late Franklin Bryant was a beneficiary under...

      Rebutting the Presumption of Resulting Trust – A Refresher

      Today’s post comes from Wagner Sidlofsky LLP, a well-known estate law blog.

      The article talks about the importance of creating a contemporaneous evidentiary record of a parent’s intention when gifting property to their adult children.

      If a parent places an adult independent child on title to property, there is often a dispute after death as to whether the child was intended to get the property outright, or, hold it for the parent’s estate

      The article provides good guidance on what written evidence you should keep if you add your child to a property. It can help avoid a very expensive fight later.

      The article by Estate Law Canada can be viewed here. 

      Contacting a Lawyer on this Subject

      James Steele’s preferred practise area is estate litigation, including will challenges, executor disputes, power of attorney issues, etc. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only, and not legal advice. Parties should always seek legal advice prior to taking action in specific situations.

      Read more on our blog.

      The Saskatchewan Estate Law blog is dedicated to providing practical, real-world information on Estate Law issues that affect Saskatchewan residents. The blog is written by RS lawyer, James Steele, whose practice focuses on estate litigation.

      Enforceability of Parenting Agreements by the Court and Police

      Is my parenting agreement enforceable by the Court or by the police?

      The short answer is no – well, could it be?!

      Will the Court enforce my parenting agreement?

      Parenting agreements between parties are relevant to the determination of children’s best interests but they are not binding on the Court. This principle has been set out by the Supreme Court of Canada and upheld in decisions of our Court of Queen’s Bench, a few examples of which are as follows: Gordon v Goertz, 1996 CanLII 191 (SCC), Jensen v Walters, 2016 SKQB 267, Lloyd v Lloyd, 2018 SKQB 116, Gudmundson v Fisher, 2018 SKQB 264.

      That being said, a parenting agreement is relevant and can speak to the parties’ intentions respecting the parenting of their child or children.

      Whether the Court adopts and orders the terms provided for by an agreement really comes down to the weight the Court affords a parenting agreement.

      The weight the Court gives an agreement is dependent on a number of factors, including how the agreement was reached, the circumstances of negotiation and signing the agreement, the date of the agreement,  whether any changes have occurred since the agreement was reached, whether the parties had legal advice, and whether the terms of the agreement were followed, and whether the terms of the agreement appear to be in the best interests of the child now.

      Meaning that if a parent applies for parenting time or to “enforce” their agreement or brings an application for parenting time that differs from what is set out in the agreement, the Court will consider the agreement along with the above-noted factors and will determine whether the parenting terms as set out in the agreement are in fact in the child’s best interests and make an order as it sees fit, as guided by the best interests of the children.

      Will the police enforce my parenting agreement?

      I think it is fair to say that the police do not want to become involved in parenting disputes. Before turning to lawyers, many parents first ask the police for assistance in having their children returned. However, the police do not enforce parenting agreements and will routinely decline requests for assistance if the child is simply with the other parent, even if it is contrary to the terms of your agreement.

      The Court has jurisdiction under The Children’s Law Act, 2020 to order police enforcement clauses and has done so in situations where there is demonstrated evidence that a party refuses to comply with a parenting order of the Court. Again, not an agreement, but an actual order of the Court.

      Involvement of the police in parenting matters is far from ideal for children, however, it is a remedy that is available through the Act and can become necessary in parenting disputes to assist with the return of children.

      Each parenting arrangement is unique. I recommend you seek legal advice with respect to your family law matter.

      Contacting a Lawyer on this Subject

      Siobhan Morgan’s preferred practise area is Family Law. For more information on this subject, call 306-933-1308 or email sh.morgan@rslaw.com

      The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

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      James Steele Published in CBA Bar Notes – Summer 2021 Edition

      James Steele was published recently in the Summer 2021 Edition of CBA Bar Notes. You can read his article below.

      Covid-19 Insolvencies: What will the next year bring?

      After Covid lockdowns shut down many businesses, one might have expected insolvencies in Canada to rise sharply. However, the reality has been the opposite thus far.

      Consumer insolvencies last year were down 30 percent from 2019, while business insolvencies in 2020 were down 24 percent from 2019. The reasons for this appear to be government help, combined with creditor patience. By August 2020, more than 16% of Canadians were receiving some form of income replacement. For very low-income earners, CERB was beneficial. Such earners may have earned more than they were earning pre-COVID. Businesses were also able to take advantage of subsidies.

      What will happen when the subsidies are turned off?

      However, what will happen to hard-hit businesses when arrangements with creditors end or subsidies are discontinued? The hardest-hit sectors have been retail trade, arts and entertainment, and recreation. Many of these businesses have thus far managed to limp along by making informal arrangements with creditors.

      Debt cannot be deferred forever. Moreover, the economy is not predicted to be back in full swing until late 2021 or early 2022. In the meantime, insolvencies will start to rise.

      There appear to be two schools of thought of predicting what will happen:

      1. One school predicts that with the vaccine and most people inoculated by the fall, the economy will quickly get back to normal, and massive insolvencies may be avoided to some degree;
      2. The other prediction is that we will not in fact return to normal for quite some time. In the meantime, there will be a significant surge in bankruptcy filings.

      While we all may hope for the first prediction to come true, lawyers who act for creditors may be well placed to prepare for a potential surge in collection work or insolvency proceedings. More than a few struggling businesses who have avoided formal insolvency proceedings, may not survive long enough to take advantage of an eventually improving economy.

      Lenders may wish to form an early strategy for dealing with their debtors. Each lender will wish to review their own situation. A debtor with only one creditor involves different considerations than heavily encumbered borrowers, who may have numerous other creditors.

      Multiple creditors pursuing a very small pool of assets is a common reality in debt collection, and can often produce a situation in which a judgment is little more than a piece of paper. Moreover, even aggressive lenders who pursue collection and thereby force some payments from debtors will wish to be aware of the rules prohibiting preferences if other creditors are involved.

      An early conversation with encumbered debtors, to discuss refinancing, a restriction on further lending, a different repayment structure, or still other issues, may be a conversation better had now, rather than later when the situation is more dire.

      The Limitations of Bankruptcy Proceedings

      As an unsecured creditor, you are often placed in a difficult position when it comes to debtors who cannot afford to pay their bills. You can seek judgment, but you are often taken in line with other unsecured creditors who do not expect to receive on their debts as well. Furthermore, you are always subject to the risk that the debtor will simply file for bankruptcy and wipe the slate clean.

      Where the debtor does not make the empty threat, and actually assigns into bankruptcy, the unsecured creditor is often left to take pennies on the dollar. However, section 178 of the Bankruptcy and Insolvency Act provides a laundry list of reasons why a debt may survive the bankruptcy. While there are ten separate situations in which the debt may survive bankruptcy, from a creditor’s perspective the most common is that the debt was incurred as a result of fraud or fraudulent misrepresentation.

      In Saskatchewan, the most common allegation of fraud occurs when a debtor applies for financing and knowingly misleads the creditor in filling out the disclosure forms. The failure to include certain debts, or misleading the creditor about the value of one’s assets, may result in a finding of fraud. In other examples, the creditor may allege that the debtor fraudulently conveyed his or her assets on the eve of bankruptcy and therefore, those assets must be returned.

      Where a creditor suspects this to be the case, and the debtor has filed for bankruptcy, the creditor is left with two, non-exclusive, options:

      1. The creditor may oppose the discharge of the debtor from bankruptcy on the basis of fraud. The fraud claim may then proceed as part of the bankruptcy matter and affect the conditions or suspension of the discharge. Typically, there must be more than a mere allegation of fraud before the Registrar in Bankruptcy will intervene; and/or
      2. The creditor may commence a completely independent action on the basis of fraud against the debtor. This may be started before or after the bankruptcy proceeding.

      Where option two is selected, this brings into play important considerations regarding how a limitations period may be effected. An assignment into bankruptcy automatically stays all proceedings against the debtor and in Saskatchewan, The Limitations Act provides for a two-year window from the date a claim was discovered to commence an action.

      Luckily for creditors, section 25 of The Limitations Act provides that the limitations period is stayed during the course of the bankruptcy proceeding. The two-year calculation stops on the date of assignment and restarts at the date of discharge. This provides creditors with the ability to see how the bankruptcy plays out, determine the amount of their deficit and make an educated decision on whether they should run the risk of attempting to prove fraud and collect. 

      Interestingly enough, the Ontario Superior Court was recently given the opportunity to weigh in on a unique interplay between limitations periods and the Bankruptcy and Insolvency Act. In Re Eyton, 2021 ONSC 3646, Mr. Eyton was assigned to bankruptcy, listing all of his creditors in his initial assignment documents. Notably present was a debt owing to Forty-One Peter Street Inc. from 2001, nearly 18 years prior to his assignment. While some periodic payments were made and Mr. Eyton made plenty of empty promises to Forty-One Peter Street Inc., it was relatively clear that the Forty-One Peter Street Inc. debt was limitations barred had there not been an assignment into bankruptcy.

      Notwithstanding that, upon being listed on the statement of creditors, Forty-One Peter Street Inc. filed a proof of claim for $400,000. The Trustee disallowed the claim by Forty-One Peter Street Inc., and, for obvious reasons, the other creditors also objected to its inclusion. The Court concluded that, notwithstanding the fact the bankrupt conceded the debt, given the debt was statute-barred it was not an enforceable debt and Forty-One Peter Street was not entitled to share with the other unsecured creditors.

      It is interesting to note that the Court concluded that just because a bankrupt lists and concedes a claim, it does not always follow that the creditor is entitled to a share of the Estate. The creditor must still be able to prove their claim in bankruptcy and a limitations period would prevent the creditor from doing so. An assignment in bankruptcy cannot operate to save a creditor and revive an otherwise unenforceable claim.

      The above serves to reinforce that, while in certain circumstances the Bankruptcy and Insolvency Act can provide creditors with additional time, creditors must be ever vigilant of impending limitations periods and be careful not be mislead by creditor’s empty promises and threats. If you are of the opinion the two-year period is approaching, it is best to issue the claim out of an abundance of caution and plan accordingly thereafter.

        Every determination of reasonableness will, of course, always be fact-specific.

        A side question not raised in Bryant Estate, was whether a party in the position of Franklin’s estate could also simply rely on the inherent jurisdiction of the Court of Queen’s Bench to secure an order for an accounting. That specific question will therefore have to await the guidance of a future court.

          If you are interested in bankruptcy and insolvency, commercial litigation, debt collection, and related matters, Robertson Stromberg LLP would be pleased to assist.  For more information, please contact Travis K. Kusch at 306.933.1373 or email  t.kusch@rslaw.com.

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