Saskatchewan Estate Litigation Update: Nelson v Wagner, 2021 SKQB

A very useful lesson comes in the recent Saskatchewan decision in Nelson v Wagner. The decision offers guidance on when a court will override claims of solicitor-client privilege, and disclose the file of the solicitor who dealt with a testator.

In Nelson, the applicants had commenced a proceeding in which they allege undue influence on the part of John James Nelson in respect of both a will and a transfer of land by Hazel Nelson, deceased.

The applicants sought the solicitor’s file of James Turner, the lawyer who had prepared the will. Such a disclosure request is common, as the solicitor’s file notes or materials will often provide helpful evidence on the intentions of the deceased. Such evidence can assist the Court in determining the intention of the testator.

Counsel for James Turner, said that Turner could not disclose the contents of his file, without a court order directing Turner to do so, because to do otherwise would breach solicitor‑client privilege.

Counsel for Turner did acknowledge the “wills exception” to solicitor-client privilege, which posits that privilege may be overcome where such disclosure will help determine the true intentions of the testator. However, Mr. Turner argued that unless and until the court has first directed a trial of the issue of undue influence, the wills exception does not permit the disclosure order sought.

The applicants disagreed, and wanted the solicitor’s file released now, before the Court had decided whether to order  a trial. The applicants said that it was appropriate to disclose it now, because the solicitor’s file itself might reveal evidence which would assist the court in deciding whether to direct the trial of issues in the first place.

Outcome:

The Court agreed with the applicants and ordered the release of the solicitor’s file. The Court reasoned that to do so would further the interests of the deceased client because the evidence would help the Court ascertain what his or her true intentions were.

The Court did recognize that an applicant would need to show more than a mere allegation of undue influence. However, here, there was already significant evidence of undue influence that went beyond a mere allegation. The Court held that as long as there were credible allegations of undue influence, then the appropriate threshold to order disclosure, will have been satisfied:

[13] I do not disagree that there is an initial threshold requirement that should be met before a court orders production of a file that may be subject to solicitor-client privilege. However, that threshold requirement is not that this court must first decide whether or not to direct a trial of the issue regarding undue influence. The two‑step process argued for does not require that I first direct a trial of the issue of undue influence. So long as there are credible allegations of undue influence, as there are here, then in my opinion the appropriate threshold has been satisfied. The production, in advance of the decision whether or not to order trial of such an issue serves Foundational Rule 1-3(3)(a), which states:

(3) To achieve the purpose and intention of these rules, the parties shall, jointly and individually during an action:

(a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense; … .

The Court noted a number of reasons in favour of production of the file:

  1. Early disclosure of the file may significantly assist counsel on whether or not to order trial of the issue of undue influence;
  2. If all parties have this information early on in the process it may result in settlement;
  3. If not, it will surely serve the purposes of having the claim justly resolved in a timely and the most cost effective manner.

For all of the above reasons, the Court ordered that the file was to be disclosed forthwith.

Lesson offered by Nelson v Wagner:

To understand the full implications of Nelson, we must  understand the context of a will challenge under  Saskatchewan law.

Typically, the challenger of a will must go through a two step process:

  1. Stage 1: The challenger must show that their challenge has raised a genuine issue of capacity or coercion, and is not mere speculation or a fishing expedition;
  2. Stage 2: If the court finds there is a genuine issue, the court will set the challenge down for a trial process, to be determined by a trial.

In Saskatchewan, it is not uncommon for a defender of a disputed will, to initially resist giving up the solicitor’s file to a challenger. The defender (as occurred in Nelson) will argue that it is premature to disclose  the privileged will file, until the challenger has passed stage 1, and actually proven a genuine issue.

This position can raise difficulties for challengers, as it can pose a catch 22. If the most crucial evidence of incapacity or coercion may sometimes be in the solicitor’s file, how can the challenger best present their evidentiary case for stage 1, without first accessing the evidence in solicitor’s file.

Thus, Nelson clarifies that the challenger of a Will now has the opportunity to obtain the solicitor’s file, before they have satisfied stage 1. All that appears to be required is that the challenger simply provide evidence raising “credible allegations” of incapacity or undue influence.

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.

6 Robertson Stromberg Lawyers recognized by their peers in the Canadian Legal Lexpert Directory for 2021

Congratulations to Melvin A. Gerspacher, Q.C.,  Leslie W. Prosser, Q.C., M. Kim Anderson, Q.C., Gary D. Young, Q.C., Scott D. Waters, Q.C., and Christopher J.H. Donald, Q.C., who have been acknowledged by their peers in the Canadian Legal Lexpert Directory for 2021.

Lexpert publishes this guide based on extensive peer surveys in the Canadian legal community.

Saskatchewan Estate Litigation Update: McStay v Berta Estate, 2021 SKCA 51

A recent case from the Saskatchewan Court of Appeal, reminds us that a Chambers judge cannot decide conflicting evidence on the basis of affidavits. Rather, any weighing of credibility must wait for the later trial.

The case in McStay arose out of a will challenge.  Linda McStay applied for an order requiring her father’s will be proven in solemn form. She asserted that her father lacked testamentary capacity and was unduly influenced by the executor. Thus, she claimed his  will was invalid.

Solemn form refers to the legal proceeding which arises when a will is disputed. Instead simply probating the will automatically (which occurs for most non-contested wills), solemn form means that the will is examined by the Court in detail, to see if there is a genuine issue affecting the will.

Factual background:

Mihaly Berta (the testator) had been born in Hungary in 1957. Ms. McStay was the daughter of Mr. Berta’s first wife. Mr. Berta adopted her when she was seven or eight years old.

The family lived together until Mr. Berta and Ms. McStay’s mother divorced in 1997. Mr. Berta had no other children. Mr. Berta was divorced as of the date of his death and had no dependents.
Prior wills, including one executed in December of 2010, had named Ms. McStay as his executor and sole beneficiary. Mr. Berta and Ms. McStay had become estranged in 2013 and had not spoken in some years.

In 2017, Mr. Berta was diagnosed with terminal cancer and decided that, when the time came, he wished to use medical assistance in dying [MAID] to end his life in a dignified manner. The testator gave initial instructions to his solicitor, Darryl Lucke, for the drafting of a new will in August of 2017, but needed more time to consider the issues.

Mr. Lucke had been Mr. Berta’s solicitor since 2011. Mr. Lucke met with Mr. Berta at the Pasqua Hospital in April of 2018 and received additional instructions regarding the will, including a proposed distribution, but Mr. Berta had not yet come to a final conclusion with regard to the bequests he wished to make.

In May of 2018, Mr. Berta reconciled with Ms. McStay and then they spent considerable time together in the weeks prior to his death.

The making of the Will:

On May 22, 2018, Mr. Berta spoke with Mr. Lucke on the telephone and gave him further instructions regarding his will. As a result of those instructions, Mr. Lucke drafted a new will appointing a friend, Gregory Lipoth as his executor and setting out the following bequests:

  1. $25,000 to a friend who had provided care for him in his final days;
  2. 5% of his estate, to a maximum of $10,000, to another friend;
  3. 5% of his estate, to a maximum of $10,000, to another friend;
  4. 5% of his estate, to a maximum of $100,000, to his sister-in-law in Hungary, with $50,000 to be paid out immediately and the remainder at $5,000 per year;
  5. 5% of his estate, to a maximum of $100,000, to his brother in Hungary, with $50,000 to be paid out immediately and the remainder at $5,000 per year;
  6. 5% of his estate, to a maximum of $100,000, to Ms. McStay, in payments of $2,000 per month for 12 months, with the remaining $76,000 to be placed in a Registered Education Savings Plan for her children; and
  7. 5% of his estate to Mr. Lipoth, for the benefit of Mr. Lipoth’s children’s education.

The executor, in defending the will challenge brought by Ms. McStay, filed evidence relating to the testator’s capacity. For example:

  1. On the morning of May 24, 2018, a doctor at the Pasqua Hospital assessed Mr. Berta’s capacity for MAID and concluded that there were no concerns about his capacity for that purpose;
  2. Lucke attended to Mr. Berta’s bedside in the palliative care unit of the Pasqua Hospital for the signing of the will in the early afternoon on May 24, 2018. He averred that after Mr. Berta read the will, Mr. Lucke explained the provisions and confirmed that they were in accordance with his wishes. Mr. Berta then executed the will. Mr. Lucke’s legal assistant had attended the hospital with him and the two of them witnessed the will.

Decision before the Court of Queen’s Bench:

At the initial hearing in the Court of Queen’s Bench, the Court held that there was no genuine issue relating to capacity. Thus, she dismissed the challenge.

The Queen’s Bench justice found that the will made sense, and the testator had taken care in  crafting its provisions:

[35] The evidence establishes an earlier will from 2013 naming the applicant as executor and sole beneficiary. The notes taken by the lawyer drawing up the will explain the reason for a “basic will”. Thereafter, the testator and applicant were estranged. Beginning in the summer of 2017, the testator planned a new will, and settled on a new executor. The Executor was someone he had known for decades. He discussed his choice with his close friend, Alex Gedo, and with his lawyer. The testator was uncertain about the bequests and did not finally make any determinations for another nine months. When he did make his final determinations, he was facing death. He was in pain and on medication, but there is no evidence he did not understand what he was doing. On the contrary, the evidence shows the testator acted decisively and carefully.

[36] The bequests were consistent with a person taking care in determining “the nature and extent of his property, [and] the persons who are the natural objects of his bounty” (Kapacila Estate, para 33). The applicant is the testator’s daughter. She would expect to benefit, notwithstanding their estrangement. In fact, she did benefit.

[37] The Will also demonstrated an “orderly desire as to the disposition of [the testator’s] property” (Kapacila Estate, para 33). Everyone mentioned in the Will had a strong connection to the testator. The bequests went to four friends – three of whom the applicant does not object to – his brother, his sister-in-law and his daughter. The errors in the will were minor and do not raise a concern the testator did not know what he was signing.

[emphasis added]

The Court also found that there was no genuine issue relating  to undue influence:

[40] Presumptive undue influence is established “where the relations between the donor and donee have at or shortly before the execution of the gift been such as to raise a presumption that the donee had influence over the donor” (Culbert Estate at para 137). As stated by the Lawyer, the testator was “independent and strong-minded”. His doctors described him similarly. There is no suggestion the testator’s will was overborne by the Executor or anyone else. I do not find suspicious circumstances in the making of the Will.

Decision before the Court of Appeal: 

The Court of Appeal disagreed. It held that there were numerous aspects of the evidence that were controverted on material points. As a result, the Court of Appeal held, the only realistic option was a trial to determine the true facts.

Examples of these conflicts included the below:

  1. McStay visited Mr. Berta in the hospital twice on that day, once around noon and again later in the afternoon. She averred that he was heavily medicated and his behaviour was not consistent with his typical behaviour. She observed that he was sedated, not alert and kept dozing off. It was difficult to have a conversation with him. Thus, this conflicted with the evidence that the testator had been of wholly sound mind;
  2. McStay averred that Mr. Lipoth himself told her that he had many in-depth conversations with Mr. Berta about the will and the designated percentages and that Mr. Berta did not understand the percentages versus the dollar amounts (in short, Ms. McStay suggest that Mr. Lipoth may have been too involved in the making of the will, which he denied);
  3. There was a factual disagreement on just how close the testator had been to Mr. Lipoth (Ms. McStay suggested that they were not close, whereas Mr. Lipoth suggested that they were);
  4. The previous wills named Ms. McStay as the sole beneficiary and executor. However, the final will signed on May 24, 2018, was significantly different than the prior wills. The Court implied that this was a fact requiring further investigation.

From the above, the Court concluded that there  were conflicts on material issues:

[50]  As can be seen from the above examination of the evidence, there were significant conflicts regarding Mr. Berta’s mental state at the time the will was signed, his intentions, his relationship with his daughter and her children, his relationship with Mr. Lipoth and his children, the actions and role of Mr. Lipoth and the circumstances surrounding the making of the will. These are not mere contradictions on immaterial issues. There are major conflicts in relation to material issues that could affect a determination of capacity and undue influence. Despite these conflicts, the Chambers judge determined the evidence was overwhelming in favour of upholding the validity of the will. In the face of this controverted evidence on material issues, the only way she could have done so was by engaging in a weighing exercise by, inferentially, conducting an evaluation of credibility.

[emphasis added]

The Court held that the Queen’s Bench justice had engaged in an impermissible weighing of credibility, based on affidavit evidence. As the Court of Appeal held, the “conflicts in the evidence on material points were simply too pronounced to support a finding that there was no genuine issue for trial unless there were adverse findings of credibility.” (para 51) For  the Queen’s Bench justice to make “adverse findings of credibility” was impermissible  on the basis of affidavits.

As such, the appeal was allowed and a trial was directed, to prove the last will and testament in solemn form.

Ms. McStay received her costs of this appeal, payable from the estate, on a solicitor–client basis. However, the costs of the Queen’s Bench application were ordered to be costs in the cause. This meant that a future  trial court would decide if Ms. McStay should get her prior Queen’s Bench costs out of the estate.

Lesson learned:

McStay is an interesting decision for estate litigators. The evidence before the Court of Queen’s Bench, supporting the testator’s capacity and intent, appeared to be very strong evidence. It was not necessarily surprising that the Court of Queen’s Bench found no genuine issue requiring a trial.

After all, there is established case law reminding us that solemn form is a lengthy and expensive process and should not be entered into without sufficient foundation. Otherwise a substantial portion of an estate is at risk of being wasted in litigation. Moreover, the executor offered sworn evidence from a lawyer, and medical records, showing that the testator had sound mind. This is very powerful evidence from independent parties, and is not likely to change in any future trial.

Moreover, there was also evidence from friends of the testator that the testator had indicated his intention to name Mr. Lipoth as his executor, and leave money to Mr. Lipoth’s children, etc. (paras 37-38). It is difficult for a challenge to portray such intentions as being suspicious, when the deceased himself told others that these were his wishes.

However, there are no certainties for those who go to court, as McStay shows. Thus, the lesson appears to be that defenders of wills should be confident they have un-challenged evidence on all major factual issues. Otherwise, there is the chance that a Court may place the will into the expensive process of solemn form.

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. 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.

Secured Lending in Aircraft Objects – Framework Overview of the International Registry of Mobile Assets

Lenders or creditors taking security in assets relating to Aircraft Objects (described further below) need to understand the framework of the International Registry of Mobile Assets (the “Registry”). Below is a brief outline of this framework and the security a lender may expect to receive in Aircraft Objects.

International Registry of Mobile Assets

The Registry is an asset-based international registry system that allows individuals and organizations to register and search financial interest in Aircraft Objects by their serial number. The IR operates under the legal framework of the November 16, 2001 Cape Town Convention and Protocol (the “Convention”). The Convention was adopted by Canada and a number its provinces, including Saskatchewan, and came into effect on April 1, 2013.  It is important to note that not all countries have signed onto the Convention and information contained in the Registry may be incomplete or non-existent when dealing with Aircraft Objects in a non-signatory state.

The main objective of the Convention is to facilitate the efficient financing and leasing of Aircraft Objects by creating a single international registry system whereby parties (current owners, perspective buyers, lenders, etc.) may confidently rely on the security interests registered against such Aircraft Objects. The international interests created by the IR are recognized by signatory states with respect to priority matters and such registrations in the Registry will have priority over similar registrations made in provincial registries, such as the Saskatchewan Personal Property Registry, even if such provincial registrations pre-date the date of registration in the Registry.  The Convention further provides secured lenders with a range of basic default remedies and speedy interim relief options in an effort to facilitate orderly and efficient enforcement of security.

Given the specific remedies offered by the Convention, lenders should consider tailoring security agreements, and potentially other security documents, to account for these enforcement remedies along with other matters specific to Aircraft Objects. It can also be helpful to explicitly provide for the Convention’s remedies in other agreements as well, such as a lease of Aircraft Objects, when such agreements may form part of the security to be granted by a debtor.

Not all assets used in the aviation industries are captured by the Convention. Aircraft Objects must meet certain size or power minimums. The following Aircraft Objects are captured by the Convention:

    1. Airframe means airframes (other than those used in military, customs or police services) that, when appropriate aircraft engines are installed thereon, are type certified by the competent aviation authority to transport:
    1. at least eight (8) persons including crew; or
    2. goods in excess of 2750 kilograms, together with all installed, incorporated or attached accessories, parts and equipment (other than aircraft engines), and all data, manuals and records relating thereto,
    1. Helicopters means heavier-than-air machines (other than those used in military, customs or police services) supported in flight chiefly by the reactions of the air on one or more power-driven rotors on substantially vertical axes and which are type certified by the competent aviation authority to transport:
    1. at least five (5) persons including crew; or
    2. goods in excess of 450 kilograms, together with all installed, incorporated or attached accessories, parts and equipment (including rotors), and all data, manuals and records relating thereto,
    1. Aircraft Engines means aircraft engines (other than those used in military, customs or police services) powered by jet propulsion or turbine or piston technology and:
    1. in the case of jet propulsion aircraft engines, have at least 1750 lb of thrust or its equivalent, and
    2. in the case of turbine-powered or piston-powered aircraft engines, have at least 550 rated take-off shaft horsepower or its equivalent, together with all modules and other installed, incorporated or attached accessories, parts and equipment and all data, manuals and records relating thereto.

    Individuals or organizations that wish to perform registrations, including lenders taking security against Aircraft Objects, in the IR will need to become Transaction User Entities (“TUE”). The TUE will need to further appoint an administrator that will be authorized to perform registrations on behalf of the TUE. While all registrations on behalf of the TUE will need to be performed by the administrator, an administrator can provide one-off authorizations to allow another entity to perform registrations on behalf of the TUE. This may be convenient in a transaction involving an owner of the Aircraft Objects, perspective purchaser of such objects and lender that are all represented by a different administrator.

    Personal Property Security Registries

    As stated above, registration in the Registry will defeat or have priority over registrations in provincial personal property registries where the Convention applies. However, it is common for lenders to continue to register security interests against debtors, including serial numbered goods such as Aircraft Objects, in provincial registries. While it can be somewhat cumbersome for a seller or vendor to deal with multiple jurisdictions for the same Aircraft Object, it is important to search all provincial registries in which these Aircrafts Objects are operating in as provincial registrations will govern priority in the absence of an international registration in the Registry.

    IDERAs

    An IDERA (Irrevocable De-Registration and Export Request Authorization) is another Convention based security mechanism that can provide additional security to a lender.  An IDERA can be filed with Transport Canada which will prevent anyone but the authorized holder (typically a lender) from deregistering the Aircraft (Airframes and Helicopters) with Transport Canada.  It provides lenders with the assurance that Transport Canada will cooperate with the holder if it requests the deregistration of the Aircraft.  In order the revoke the IDERA, the holder must provide written notice to Transport Canada of such revocation. To note, multiple IDERAs cannot be filed with Transport Canada on the same Aircraft.

    Conclusion

    The above is a very brief explanation on the framework of International Registry of Mobile Assets and the security a lender may expect to receive when taking a security interest in Aircraft Objects. Our legal team at Robertson Stromberg LLP would be happy to discuss these matters in further detail or any questions you may have with respect to secured lending involving Aircraft Objects.

    Marinko Jelovich is a partner with Robertson Stromberg. His areas of practice include Indigenous Law; Commercial Transactions and Real Estate; Natural Resources; Residential Real Estate; Small Business; and Wills, Estates, Trusts, Healthcare Directives and Powers of Attorney. Contact Marinko Jelovic at 1-306-933-1322 or m.jelovic@rslaw.com. The above is for general information only. Parties should always seek legal advice prior to taking action in specific situations. 

    The potential dangers of adding children as joint tenants

    Many people like to add the name of a child, or children, to their home. The hope is to avoid probate fees on the death of the parent, and have the asset go directly to the children.

    However, before you make this decision, be aware of the following potential danger:

    • First, if you later have a change of heart and do not wish to leave property to that child, it may be impossible to “undo” what you have done
    • Second, if the child who is now on title, attracts a judgement creditor, the judgement creditor may be entitled to go after the child’s share of the home

    In short, sometimes circumstances cannot be controlled. Once you add a person to your title, you have given legal rights to that individual. Creditors will be entitled to rely on the legal position you create when you add a joint tenant.

    James Steele’s preferred practise area is estate litigation. Contact James Steele at 1-306-933-1338 or j.steele@rslaw.com. The above is for general information only. 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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