Sunday, April 17, 2016

Prince Edward County District Court-House and Gaol, Picton, Ontario

I took these photographs last fall while visiting Prince Edward County in Ontario. The courthouse was the site of Sir John A. Macdonald's first trial, apparently defending himself on an assault charge. Here is a photograph of Sir John A. and me, also taken in Picton:
There are some differences. If I recall correctly, my first trial was in small claims court in Vancouver, and I was not defending myself. I also never became the first Prime Minister of any country.

Saturday, April 09, 2016

Kish v. Sobchak Estate: Application of Family Law to Wills Variation Cases

Wills variation cases in British Columbia and family law are related. The Family Law Act deals with division of property and support on the breakdown of marriages and common law relationships, while Part 4, Division 6 of the Wills, Estates and Succession Act deals with obligations of a deceased spouse to make adequate provision for the surviving spouse. With changes to legislation governing both family law and succession law in recent years, it will be interesting to see how the courts adapt and apply principles from one to the other.

In the leading modern case on wills variation, Tataryn v.Tataryn Estate, [1994] 2 SCR 807, the Supreme Court of Canada  said that when determining whether a will maker has made adequate provision for his or her spouse or children in a will, the courts should consider whether the will-maker met his or her legal and moral obligations. In determining whether the legal obligations to a spouse are met, the courts are to consider what the spouse would have received if the relationship had broken down. Madam Justice McLachlin (now Chief Justice) wrote,
The legal obligations on a testator during his or her lifetime reflect a clear and unequivocal social expectation, expressed through society's elected representatives and the judicial doctrine of its courts.  Where provision for a spouse is in issue, the testator's legal obligations while alive may be found in the Divorce Act, R.S.C., 1985, c. 3 (2nd Supp ), family property legislation and the law of constructive trust: Pettkus v. Becker, [1980] 2 S.C.R. 834; Sorochan v. Sorochan, [1986] 2 S.C.R. 38; Peter v. Beblow, [1993] 1 S.C.R. 980.  

The rationale for looking at family law is to provide symmetry between obligations between spouses during their lifetimes, and on the death of one.

In some wills variation cases, the courts have done a fairly detailed analysis of how property would have been divided on a notional breakdown of the marriage or common law relationship, while in others this appears to be less central to the decisions (which may reflect the evidence and how the lawyers presented each case).

I have written two posts on the recent Court of Appeal decision in Kish v. Sobchak Estate, 2015 BCCA 65, one dealing with the facts and decision, and the other with the amount of deference to be given by the Court of Appeal to a judge’s findings of facts in a wills variation summary trial.

Although not central to the reasons for judgment, a couple of paragraphs in the Kish decision caught my eye.  The court appears to me to be placing less emphasis on family law. Madam Justice Newbury for the Court wrote:
[48]        The Court in Tataryn (which was on appeal from this province) suggested that where provision for a spouse is in issue, guidance concerning the testator’s legal obligations while he or she was alive may be found in the Divorce Act, family property legislation, or the law of constructive trusts. The Court, however, did not carry out a detailed examination, or make specific findings, concerning what property or how much support Mrs. Tataryn would have been entitled to in the event of a separation. The Court awarded her certain real estate and the residue of her husband’s estate after allowing for gifts to the testator’s sons.
[49]        I infer that the analysis of legal obligation need not be a detailed or exact one, given the difficulty of drawing a direct analogy between the consequences of a marriage breakdown – which leaves both spouses with needs and obligations – and the death of a spouse. McLachlin J. stated that “there will be a wide range of options, any of which might be considered appropriate in the circumstances.” (Tataryn at 824.) An action under the WVA should not normally become a proxy for divorce proceedings, complete with the elaborate features and special rules applicable to a family law trial.

Sunday, April 03, 2016

Kish v. Sobchak Estate: Standard of Appellate Review of Findings of Fact in Wills Variation Summary Trial

In the recent decision in Kish v. Sobchak Estate, 2016 BCCA 65, a five-judge panel of the British Columbia Court of Appeal considered how much deference the Court of Appeal is required to give a Supreme Court Judge’s finding of facts in a wills variation case decided on the basis of affidavit evidence, as opposed to a conventional trial where witnesses testify in person.  (This is my second post on this case. I reviewed the facts and the judgement in my previous post. )

An appeal is different from a trial. It is not a rehearing. Rather the appellant has to persuade the appellate court that the trial judge made an error, and that the error was of a nature such that the appellate court should interfere by either changing the decision or ordering a retrial.

The amount of deference the appellate court is required to give the trail judge’s decision may vary depending on the nature of the alleged error. It may be one of a question of law, a finding of fact, an inference of fact or it may involve the exercise of discretion. Some findings are said to be a mixed questions of law and fact.

An appellate court is not required to defer to a trial judge’s rulings on pure questions of law. If the appellate court holds that the judge has made an error of law, the appellate court will substitute its decision.

But generally greater deference is required for findings of fact. The leading case in Canada is a decision of the Supreme Court of Canada in Housen v. Nikolaisen, in which the Supreme Court of Canada reaffirmed that an appellate court may only interfere with a finding of fact if the court finds that the trial judge made a “palpable and overriding error.” Another formulation of the test is that the trial judge’s finding of facts will be upheld if there is some evidence to support it.

The reasons for this degree of deference on findings of fact were set out by Justices Iacobucci and Major in the majority judgment as follows:

15                               In our view, the numerous bases for deferring to the findings of fact of the trial judge which are discussed in the above authorities can be grouped into the following three basic principles.
 
(1)   Limiting the Number, Length and Cost of Appeals
16                               Given the scarcity of judicial resources, setting limits on the scope of judicial review is to be encouraged.  Deferring to a trial judge’s findings of fact not only serves this end, but does so on a principled basis.  Substantial resources are allocated to trial courts for the purpose of assessing facts.  To allow for wide-ranging review of the trial judge’s factual findings results in needless duplication of judicial proceedings with little, if any improvement in the result.  In addition, lengthy appeals prejudice litigants with fewer resources, and frustrate the goal of providing an efficient and effective remedy for the parties.
(2)  Promoting the Autonomy and Integrity of Trial Proceedings
17                               The presumption underlying the structure of our court system is that a trial judge is competent to decide the case before him or her, and that a just and fair outcome will result from the trial process.  Frequent and unlimited appeals would undermine this presumption and weaken public confidence in the trial process.  An appeal is the exception rather than the rule. 
 (3)   Recognizing the Expertise of the Trial Judge and His or Her Advantageous Position
18                               The trial judge is better situated to make factual findings owing to his or her extensive exposure to the evidence, the advantage of hearing testimony viva voce, and the judge’s familiarity with the case as a whole.  Because the primary role of the trial judge is to weigh and assess voluminous quantities of evidence, the expertise and insight of the trial judge in this area should be respected.

In Kish, the Court of Appeal considered the application of the requirement in Housen that an appellate court defer to a trial judge’s finding of facts to a wills variation case that was decided on the basis of affidavit evidence rather than oral testimony. Although usually three judges hear an appeal in the Court of Appeal, the Court may sit as a five-judge panel if requested in order to reconsider prior decisions.

One rationale for deferring to a trial judge’s finding of facts is that the trial judge has the advantage of seeing and hearing the witnesses, and an appellate court does not. But it is fairly common for the Supreme Court of British Columbia to hear summary trials in which the evidence is put in by affidavits, and witnesses either do not testify in the presence of the judge at all, or there is more limited oral testimony. In a previous post, I reviewed the number of summary versus conventional trials in reported decisions over a three year period and found that just under half were summary trials. In a summary trial without oral testimony, it could be argued that the trial judge does not have an advantage in making findings of fact over an appellate court which may review all of the written evidence.

The Court of Appeal also considered the case authorities dealing with the standard of review of the exercise of the trial judge’s exercise of discretion when varying a will to make the provision he or she considers “adequate, just and equitable in the circumstances.” In a Supreme Court of Canada case, Swain v. Dennison [1967] S.C.R. 7, the Court held that the British Columbia Court of Appeal may “reach its own conclusion as to the discretion properly to be exercised.” Based on the Swain decision, there appears to be a lower standard of review of an exercise of a trial judge’s discretion when varying a will than when a judge exercises discretion in other areas of law.

Madam Justice Newbury, writing for the Court of Appeal, distinguished between a finding of fact and the exercise of discretion. The judge does not exercise discretion in finding facts. The judge may have discretion in choosing a course of action once he or she has made findings of fact.

She considered whether a lower standard should be applied in making findings of fact if the trial proceeded summarily based on affidavit evidence in a wills variation case than if the trial was a conventional trial based on oral testimony.  The Court of Appeal held that the same standard for findings of fact applies in both cases: palpable and overriding error. She wrote:

[43]        Drawing all of these threads together, there are two possible approaches to the relationship between Housen on the one hand, and Swain/Price on the other in appeals from summary trial judgments under the WVA:
(a)      All “findings” of a trial judge, including those that involve the exercise of judicial discretion, are reviewable by this court without deference, except findings based on oral testimony, which are subject to the Housen standard; or
(b)      A trial judge’s exercise of discretion may be reviewed without deference, but all findings of fact (whether based on oral or affidavit evidence) are subject to theHousen standard.
[44]        In my view, the second alternative is the preferable one. It is simpler than the first and does not require this court to determine in every case whether a trial judge’s findings were based on oral or affidavit evidence or both, whether the witness was cross-examined on the point, etc. More importantly, it reflects the trend to increased deference to trial judges that has characterized civil law in Canada in the last few decades. This is not to suggest that there is no principled reason for distinguishing between oral and affidavit evidence (the reason being that the trial judge sees the witness at trial and a court of appeal does not); but Housen and its predecessors did not make that distinction in formulating the current standards of review. (Indeed the Court observed at para. 25 of Housen that there were other reasons to defer to trial judges.) Further, as we have seen, the distinction was not made in Swain itself.
[45]        I propose to address the grounds of appeal and cross-appeal, then, on the basis that while this court must defer (i.e., apply the “palpable and overriding” or “no supporting evidence” standard) to findings of fact made by the trial judge, we are not bound to defer to her exercise of discretion – i.e., we are not bound to apply the standard described in Oldman River[v.Canada (Minister of Transport) [1992] 1 S.C.R. 3] and Penner, supra.

Monday, March 28, 2016

Kish v. Sobchak Estate

I am always appreciative when a court provides me with fodder for two or three blog posts in one case. I am not suggesting that the five judges  of the British Columbia Court of Appeal in Kish v. Sobchak Estate, 2016 BCCA 65, had my blog in mind when they released their reasons for judgment, but I am thankful for the material nonetheless. The case deals with significant issues in wills variation cases, including the obligations to each other that spouses who marry later in life (each planning on leave his or her wealth to his or her descendants) have to each other, the standard of appellate review of trial decisions in wills variation cases, and the extent to which the court considers family law in determining spouses obligations to provide for each other in wills.

In this post, I will outline the facts and the decision. In the next post I write about this case, I will discuss the standard of review by the Court of Appeal of wills variation judgments made by the Supreme Court of British Columbia. In the third post on this case I will write about the Court’s comments on the relationship between family law and wills variation cases.

Marie Kish and Edward Sobchak had a romantic relationship from no later than 1991 until Mr. Sobchak died in 2013. During at least t he last five years, they lived together in Ms. Kish’s house, and the trial judge found that they were common law spouses. Mr. Sobchak also retained a separate home.
They each kept separate finances, and Ms. Kish’s will left her estate to her son and grandson. In his last will, Mr. Sobchak left most of his estate to his daughter, Kimberly Doyle.

Ms. Kish was 72 years old by the time of trial, and had severe dementia. Her main asset at the time of Mr. Sobchak’s death was her home, with an assessed value of $287,000. The home was mortgaged and about $65,000 was owing on the mortgage. Her income was approximately $19,000 per year, and the costs of her care in the care facility in which she was living were a little under $2000 per month. There was a shortfall of about $5000 per year of income to meet expenses, unless her house were sold or rented out.

The value of Mr. Sobchak’s net estate was $186,000. This amount does not include $62,000 that Mr. Sobchak either lent or gave his daughter, nor $12,000 she withdrew from his accounts. Ms. Doyle also received $250,000 as the beneficiary of her father’s Registered Retirement Income Fund.
The trial judge awarded Ms. Kish $100,000 after a summary trial. Ms. Doyle appealed, and Ms. Kish cross-appealed.

The Court of Appeal reduced the award from $100,000 to $30,000. Two factors were significant in the Court’s decision. One, in view of Ms. Kish’s circumstances, a large award would not provide much practical benefit to her. Secondly, both Mr. Sobchak and Ms. Kish began their relationship later in life, after accumulating their own assets, and both wished to provide for their children.

Madam Justice Newbury, writing for the Court, framed these issues early in the reasons for judgment as follows:

[2]            The case at bar requires us to deal with some other realities being experienced by many in the postwar generation as it passes its wealth to the next. Those realities include the greater frequency of divorces, re-marriages and ‘serial’ relationships. In this case, the testator and the plaintiff were mature adults when they met. Both had been previously married and had acquired adequate property or income to support themselves. They clearly did not wish to be treated as spouses and both hoped to benefit their adult children (by earlier relationships) on their deaths. To this end, they kept their financial affairs separate and kept up separate homes.
[3]            Another reality that confronts us in Canada as life expectancy increases is the incidence of Alzheimer’s Disease and other forms of dementia in seniors. Here, Ms. Kish, who is the surviving spouse and the plaintiff herein, has “severe” dementia and lives in an institution where, one assumes, her care is paid for by government in large part or completely. It seems doubtful that any award from the testator’s estate will be of any real benefit to her.
[4]            Obviously, these circumstances distinguish this case from the majority of WVA cases in which both spouses have contributed not only to mutual support but to the acquisition of ‘family assets’ over the years and expect that the survivor of them will continue to enjoy those assets after the death of the other. The primary question for us is how the “societal norms” of legal and moral obligations discussed in Tataryn [v. Tataryn Estate [1994] 2 S.C.R. 807] are to be applied to the more complex facts before this court.
In considered Ms. Kish’s needs, Madam Justice Newbury noted that although Ms. Kish’s income did not cover all of her expenses, the shortfall could be made up either by renting her house, or selling it and investing the proceeds. Because of Ms. Kish’s dementia, it is unlikely that a large award would be spent on her during her lifetime, and would likely just add to her estate. Madam Justice Newbury wrote:
[53]        Mr. Doyle also submits that the fact Ms. Kish is in a full-time care facility and is mentally incompetent means she is not in a position to spend sale proceeds for her own benefit. Sadly, her needs are now few and are taken care of in the institution. There is little that can be done to increase her enjoyment of life. It is hard to disagree with the suggestion, which we put to counsel during the hearing, that the trial judge’s award under the WVA will only serve the purpose of increasing Ms. Kish’s estate. As noted by Mr. Justice Finch, as he then was, in Frolek v. Frolek [1986] B.C.J. No. 1869 (S.C.):
It is not the purpose of the Wills Variation Act … to enable an applicant to build up an estate of her own, but rather to ensure that she is appropriately maintained and supported during her lifetime.
In balancing the principle of testamentary autonomy, Mr. Sobchak’s legal and moral obligations to his spouse, and his moral obligations to his daughter, the Court gave great weight to testamentary autonomy in this case reflecting what the Court considered to be the expectations of Mr. Sobchak and Ms. Kish. Madam Justice Newbury wrote:
[60]        There is no doubt that claims of adult children do not and should not overshadow a testator’s moral duty to a spouse, especially where (as in Bridger [v. Bridger Estate 2006BCCA 230] and Picketts[v. Hall (Estate) 2009 BCCA 329]) the relationship or marriage was a long-term one. Here, however, the parties met late in life after each had become self-supporting and had had children. They took particular care to keep their finances separate and consistently indicated they did not wish to be married again. From the amendments made to their wills in early 2013, it is clear both wished to benefit their own children on death to the exclusion of the surviving spouse. (Arguably, they had an understanding to this effect.) Mr. Sobchak’s estate was relatively modest (indeed, after payment of the income tax on his RRIF, it was $186,000 – unless one adds in $74,000, representing the $12,000 in cash received by his daughter and the $62,000 amount referred to in the “Lending Agreement” described earlier). Using the larger figure of $260,000, the estate exceeds the equity in Ms. Kish’s house by only $40,000; using the $186,000 figure, his estate (to which she had not contributed) was less than her main asset.
[61]        In Tataryn, the Court stated that testator autonomy is one of the two interests “protected” by the WVA. In the circumstances of this case, it seems to me that “contemporary community standards” would be more respectful of that principle than was found to be appropriate in the ‘traditional’ marriages in Bridger and Picketts. Many today would find it unfair or inappropriate to disregard the wishes of both parties that their modest estates, built up through their own individual efforts, should be their own and that their respective children should benefit exclusively therefrom. And, while it is true that government is presumably supplying Ms. Kish’s needs, most would not regard her as living on some type of subsidy or ‘handout’. Rather, she is receiving benefits from a medical system to which all Canadians contribute and from which all are entitled to receive medical care.
Conclusion
[62]        Like the trial judge, this court can do no better than exercise its discretion based on all of the relevant factors in the particular case before it. In my opinion, the factors that weigh most heavily are the relative sizes of the two estates on the one hand, and on the other, the legal support obligation to which Mr. Sobchak would have been subject if the parties had separated during his lifetime. In all the circumstances, I cannot say the trial judge erred in finding that Mr. Sobchak failed to make “adequate provision” for Ms. Kish, even though she has the equity in her home to meet her basic needs.
[63]        At the same time, I conclude that through the lens of “modern values and expectations”, the parties’ wishes remain an important consideration. The parties’ particular circumstances and their relationship weigh strongly, in my opinion, in favour of respecting testator autonomy. I would, with respect, give more weight to that principle than did the trial judge and would therefore reduce the award to Ms. Kish to $30,000.

Wednesday, March 23, 2016

Federal Budget Confirms that the Department of Finance is Reversing 2015 Changes to Taxation of Life Beneficiary Trusts

In yesterday's 2016 Federal Budget, the Minister of Finance confirmed that the Department of Finance, Canada will reverse the recent changes to the way certain life beneficiary trusts are taxed on the death of the life beneficiary. 

In 2015, the previous Government changed the way that life beneficiary trusts are taxed. Instead of taxing the trust on the deemed disposition of assets on the death of the life beneficiary in the trust, the Income Tax Act was amended so that the life beneficiary’s personal representative would declare the income in the life beneficiary’s return. It was unclear whether the tax would ultimately be borne by the life beneficiary’s estate or the trust. These came into effect this year.

Earlier this year, Department of Finance Canada has drafted proposed legislation to tax the gains in the trust, except that in case of the death of a life beneficiary in 2016, an election will be available to tax the gains in either the trust or the life beneficiary’s estate.

You have to look carefully to find it, but there is a short statement in Tax Measures: Supplementary Information confirming that the Government intends to proceed with the proposed legislation:

Budget 2016 confirms the Government’s intention to proceed with the following tax and related measures that were announced in the current session of Parliament but have not yet been legislated:
***
legislative proposals on the income tax rules for certain trusts and their beneficiaries (draft legislative proposals were released for comment on January 15, 2016).
I wrote about some of the potential problems with the 2015 changes here, the Department of Finance Canada's draft legislation here, and the Canadian Bar Association, Wills, Estates and Trust Section's response here.

Sunday, March 13, 2016

Community Care and Assisted Living Amendment Act

Last week, the British Columbia Minister of Health introduced the Community Care and Assisted Living Amendment Act, 2016. The proposed amendments are consistent with the British Columbia Law Institute and Canadian Centre for Elder Law's Report on Assisted Living in British Columbia, published in 2013.

As set out in the British Columbia Law Institute's press release on March 8, 2016,

Among the recommendations in the Report on Assisted Living in British Columbia published by BCLI and CCEL in 2013 were to repeal the restriction on assisted living residences limiting them to providing no more than two prescribed services. Bill 16 would remove this restriction. This will allow for a greater range of living and care options to residents and allow them to remain longer in the same apartment-style setting and retain much independence as possible.
Other recommendations included clarifying the mental status requirement for eligibility to enter and remain in assisted living, and amending the meaning of “spouse” in the Community Care and Assisted Living Act to include a person who has been in a marriage-like relationship with a resident for at least two years as well as a legally married spouse. Bill 16 would also make these legislative changes in terms that coincide closely with the recommendations in the BCLI / CCEL report.

Saturday, March 05, 2016

British Columbia Court of Appeal Consultation Paper for Civil Rule Reform

The British Columbia Court of Appeal published a Consultation Paper for Civil Rule Reform in November 2015. As set  out in the Report, "[t]he purpose of the British Columbia Court of Appeal’s rule reform initiative is to simplify the rules, make appeal proceedings more affordable and address anomalies in the existing Court of Appeal Act and Rules."
 
Anyone wishing to make submissions may do so by March 18. 2016 by email to BCCACivilRules@courts.gov.bc.ca.