Funeral expenses: Why executors should pay them promptly

This article discusses the payment of funeral expenses out of an estate, and why executors should pay them promptly.

The first reason is practical. After death, the funeral home is often the first to provide a service to the estate. It disposes of the body in a safe and respectful manner. As such, the funeral home understandably expects to be paid. To pay this expense promptly will ensure the estate is not later sued for the invoice, and interest charges are not incurred. Moreover, it means there is one less expense for the executors to later deal with.

The second reason to pay promptly, is that the law prioritizes funeral expenses. Almost every will drawn by a lawyer, will include a clause directing the executor “to pay out of and charge to the capital of my general estate my just debts, and funeral and testamentary expenses.”

Thus, the will of a deceased usually expressly requires the estate to pay the funeral expenses. Thus, even in situations where is a dispute over which will is valid, it is very unlikely there will be a dispute over whether it was legitimate to pay funeral expenses. Again, it is simpler to pay those expenses, get them out of the way, and then move on to other issues (like which will is valid etc).

For an example of how the law prioritizes the payment of funeral expenses, we may look to the Alberta decision in Chernichan v. Chernichan Estate, 2001 CarswellAlta 1730, 2001 ABQB 913, [2001] A.J. No. 1429. There, the Court spoke of the “public interest in the prompt and dignified disposal of human remains”, and that the funeral costs should be paid promptly:

14      Where one party pays funeral expenses, he or she is generally able to recover them from any person who has a higher obligation to pay them, even if that person had no input into or even knowledge of the funeral: Schara Tzedeck v. Royal Trust Co. (1952), [1953] 1 S.C.R. 31 (S.C.C.) at p. 37. Funeral arrangements must usually be made in a very short period of time, sometimes before the personal representative is identified, and invariably before probate is issued. The family usually makes the arrangements without regard to who is in a technical sense legally responsible for either making the arrangements or paying the expenses. Because of the public interest in the prompt and dignified disposal of human remains, the law imposes a duty on those ultimately responsible to reimburse the person who actually incurs the obligation. The obligation to reimburse arises in restitution, not in contract, and is founded on considerations of necessity, unjust enrichment and public health: Goff and Jones, The Law of Restitution, (5th ed., 1998), pp. 480-81. Thus the son in Routtu could recover from his father. See also Tkachuk v. Uhryn (1952), 6 W.W.R. (N.S.) 515 (Sask. Dist. Ct.) (daughter entitled to costs of funeral from estate); and Sargent & Son Ltd. v. Buday, [2000] O.J. No. 5476 (Ont. S.C.J.) (estate must reimburse son). The Applicant is therefore prima facie entitled to reimbursement for the reasonable expenses he incurred.

[emphasis added]

Even where an estate is insolvent, funeral expenses have a priority among the debts. Indeed, we find this enshrined in s. 46.2 of the Administration of Estates Act, SS 1998, c A-4.1 which says that reasonable funeral expenses are to be paid in priority to virtually all other debts. The provision reads below:

Ranking of debts

46.2 (1) When the assets of an estate are not sufficient to pay all the debts of an estate, the following debts shall be paid proportionately and without any preference or priority of debts of one rank or nature over those of another:

  1. debts due to the Crown in right of Saskatchewan and to the executor or administrator of the deceased person; and
  2. unsecured debts.

(2) Reasonable funeral, testamentary and administration expenses are to be paid in priority to the claims mentioned in subsection (1).

(3) Nothing in this section prejudices any lien or charge existing during the lifetime of the deceased on any of the deceased’s property

[emphasis added]

We even find that the federal Bankruptcy and Insolvency Act makes clear that funeral expenses have a priority, where an estate has assigned into bankruptcy:

Priority of claims

136. (1) Subject to the rights of secured creditors, the proceeds realized from the property of a bankrupt shall be applied in priority of payment as follows:

(a) in the case of a deceased bankrupt, the reasonable funeral and testamentary expenses incurred by the legal representative or, in the Province of Quebec, the successors or heirs of the deceased bankrupt;

(b) the costs of administration, in the following order,

  1. the expenses and fees of any person acting under a direction made under paragraph 4.03(1)(a),
  2. the expenses and fees of the trustee, and
  3. legal costs;

[emphasis added]

Thus, there is a super-priority for funeral expenses. In the Chernichan decision referenced above, the Court even held that funeral expenses have a priority even over unpaid taxes owing by the estate. Because the executor, in that case, should have paid the funeral expenses before the taxes (and she did not), she was personally liable to pay any unpaid reasonable funeral expenses.

What if the funeral expenses are unreasonable?

Funeral expenses only have a priority to be paid, to the extent that they are reasonable. We see the qualifying word “reasonable” used in both the Administration of Estates Act, and the Bankruptcy and Insolvency Act.

What then is reasonable? There is some prior guidance from courts, suggesting that the cost of the funeral should be sensible, having regard to the deceased’s financial assets, and other circumstances. Thus, if a deceased died with very little in assets, it is reasonable that their funeral should contain only that is necessary. Indeed, the Chernichan decision held that ‘in insolvent estates only the simplest and most modest tombstones can be charged against the creditors.”

If the executor of a small estate insists on a magnificent and expensive service or headstone, the funeral home should obtain appropriate assurances from the executor (i.e. pre-payment, or a contract stating that the executor will be personally liable to pay the cost, if the estate cannot afford it).

What if the estate bank accounts are frozen?

Some delays in payment are frustrating but legitimate.

In many, even before probate is obtained, a bank will release monies from an account to pay the funeral costs. If an executor says that the bank will not release money to pay the funeral cost, the funeral home should ask the executor to find out why this is.

What about the case of a disputed will, where someone says Will A is valid, and someone argues Will B is valid? In such a case, the bank may be reluctant to deal with any executor until the one true will is determined in a court proceeding (and thus, once this is determined, it will also determine who is the true executor)

Should a will challenge be a good reason to hold up payment of funeral costs? From a common sense perspective, the two conflicting sides should ideally come to a negotiated agreement on the issue of funeral costs. That is, they may agree to immediately pay the funeral costs out of a bank account, on the basis that, regardless of which will is later found to govern, there is no reason the funeral expenses could not be paid in the interim. Of course, the above outcome requires the reasonableness of the two sides, which is never guaranteed in litigation.

What can funeral homes do to ensure they get paid?

If the circumstances of the deceased are complex (i.e. no local family to act as “decision maker” or pursue probate) the only way to guarantee payment is to ask for payment up front, before  providing services. One situation which occurs is there the funeral home does the work, but is left holding its unpaid invoice when no family member will take the effort to take steps to administer the estate etc. If the funeral home has evidence before the funeral that this may occur, the funeral home may wish to ask for money upfront.

Second, a funeral home should always make sure that it is obtaining instructions from the true representative of the estate. This is already required in the Funeral and Cremation Services Act, which requires a funeral home to obtain written authorization from the authorized decision-maker, before providing services (see s. 92). This due diligence should ensure that a funeral home does not do a lot of work at the request of person A, only to find out that person B was the true executor.

If a funeral home has tried all reasonable attempts to secure payment of an overdue invoice, they may need to simply sue the estate. If the bill is for less than $30,000, which most will be, you can sue in Small Claims court. However, note that in Small Claims court you cannot recover any legal fees, if you use a lawyer. Also note that, due to limitation periods, you must sue within 2 years of the non-payment. Indeed, when suing estates, the sooner you sue the better, to ensure that estate assets are not distributed out of your reach.

Sometimes the question arises – can a funeral home sue the executor personally, as well as the estate, for unpaid expenses? The executor’s personal money, is separate from the estate’s money. The most reliable way to ensure you can sue an executor personally, is to ensure the executor signs a contract in advance, stating that they are personally liable (in addition to the estate) to pay the funeral home. Not all executors may be willing to sign such a clause however, so you should clarify this before the funeral.   

That said, if an estate legitimately incurs a debt to a funeral home, and then later the executor distributes all the assets of the estate before paying the funeral home, that executor may become personally liable. Each situation is unique, and it is recommend to consult a lawyer for specific situations.

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 [email protected]. 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 [email protected]. 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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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 [email protected]. 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: 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 his mother’s will.

    Franklin’s executor had concerns about how Franklin’s mother’s estate had been administered. This led Franklin’s estate to ask a Queen’s Bench Chambers judge to require the executrix of the mother’s estate to provide an accounting. The Chambers judge declined to make the order requested, in large part on the basis that there was no evidence of misconduct in the administration of the estate.

      Queen’s Bench decision:

      The Queen’s Bench judge first found that s. 35(1) of Administration of Estates Act did not apply here. Section 35 of the Administration of Estates Act only applied where there had a grant of letters probate or letters of administration. If probate was granted, an accounting was due within 2 years.

      Here, however, the Will of Franklin’s mother did not receive probate. As such, the Queen’s Bench judge found s. 35(1) to be inapplicable.

      Second, the Queen’s Bench judge seemed to suggest that an accounting should only be ordered when there was some suggestion of wrongdoing by the executor. The Queen’s Bench judge wrote as follows:

        [20] Just because the court has the inherent jurisdiction to order an accounting, does not mean it should. I want to be clear that there is no evidence before me that there has been misconduct such that an accounting is necessary. The applicant believes that an accounting will show what has happened to the Corporation’s assets but, as I have indicated, the assets of the Corporation did not pass through the estate of [the Mother]. At the hearing, it became apparent that the applicant was seeking information on his late father’s share in the Corporation that, upon his death, became part of his estate. An accounting of the administration of [the Mother’s] estate will not yield the type of information the applicant seeks. To the extent that the applicant wants information on how the executrix disbursed the bequests, much, if not all, of that was set out in her affidavit.

          Court of Appeal decision:

          The question on appeal was whether the Chambers judge erred in declining to order an accounting of the administration of Franklin’s mother’s estate.

          The Court held that an accounting should have been ordered. The court relied on section 55 of The Trustee Act, which provides as follows:

            55 (1) On the request of a beneficiary of the trust, or the beneficiary’s property attorney or property guardian, a trustee shall provide an accounting to the beneficiary.
            (2) If a beneficiary of the trust, or the beneficiary’s property attorney or property guardian, has been unable to obtain an accounting from the trustee in accordance with subsection (1), the beneficiary of the trust, or the beneficiary’s property attorney or property guardian, may apply to the court for an order directing the trustee to provide an accounting to the court or to the beneficiary.
            (3) Notwithstanding anything to the contrary in the terms of a trust, if a beneficiary of the trust or other interested person has requested information concerning the accounts of a trustee, and the trustee has refused to comply with the request in a reasonable and timely manner, the court may order the trustee to pass accounts in accordance with section 54.

              Section 2(h) of The Trustee Act defines “trustee” to mean, among other things, “an executor or administrator”. 

              The Court of Appeal held that s. 55 imposed an unavoidable obligation on a trustee to provide an accounting.

                [33] In broad terms, it is entirely appropriate to understand s. 55(1) as imposing an unavoidable obligation on a trustee to provide an accounting. That kind of duty is consistent with, and reflects, the fundamental nature of the relationship between a beneficiary and a trustee. Being able to hold a trustee to account ensures that the trustee discharges its fiduciary obligations.

                [40] In this case, it was entirely reasonable for Franklin’s estate to request an accounting. The following points inform my conclusion in this regard:

                  1. The Mother died in November of 2015. Her estate was not probated.
                  2. Christian averred that, notwithstanding many requests for a copy of the Mother’s will, Dorothy had refused to provide one. Dorothy responded by saying only that Christian had not asked “directly” for a copy of the will.
                  3. Dorothy averred that, prior to his death, Franklin had “received funds as a named beneficiary, or joint account holder”. However, she also said, “I am not aware of the particulars of these payments or amounts”.
                  4. Dorothy explained that the bulk of the Mother’s assets were “jointly held” and thereby were “automatically transferred to the name of the individual with who the assets were jointly held”. But, she provided no detail as to the nature of those assets or information about the individuals who had held them jointly with the Mother.
                  5. The only other bequests distributed to beneficiaries, according to Dorothy, were $2,000 for each grandchild, an amount that she averred had been personally delivered to Christian, and $1,000 for each of several designated beneficiaries (who were not identified), including Christian and his siblings. These funds were said to have come from an investment when it had matured. Christian takes issue with this and avers that he and his siblings received only $1,000 each.

                  Franklin’s estate was also held entitled to costs, payable by the Mother’s estate, in the usual way. If there were no assets in the Mother’s estate with which to pay costs, they were to be paid by Dorothy personally because, in the circumstances here, there was no reasonable basis for her to refuse the request for an accounting.

                    Lesson learned:

                    Bryant Estate makes clear that an accounting must not be lightly denied.

                    As per the clear language of s. 55(1), a beneficiary is entitled to an accounting as a matter of course on making a reasonable request. The beneficiary has no obligation to show cause or present a justification for that request.

                    The Court of Appeal did however clarify that frivolous requests for an accounting could be denied by the Court. Examples of frivolous examples could include the below:

                      1. A request for accounting that is made too closely on the heels of another accounting might be unreasonable on the basis that not enough time has passed;
                      2. Second, where the situation concerning the administration of a trust makes a request for an accounting unreasonable. Thus, for example, if the administration of an estate is on the very brink of being completed, it might be unreasonable to request an accounting until matters have been finally wrapped up;
                      3. Third, at some point in time, it may become simply too late in the game for a beneficiary to properly expect an order requiring an accounting. This might be the case, for instance, if a request for an accounting is made many years after the time by which it might have been expected that the administration of an estate would have been completed.

                        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.

                          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 [email protected]. 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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                          Estate Litigation Update: Munro v James, 2020 BCSC 1348

                          A 2020 decision from the British Columbia Supreme Court makes clear that an agreement to leave a gift in one’s will, is a binding agreement. As such, if one breaches that agreement, the person can be held liable even during their life.

                          In Munro v James, 2020 BCSC 1348, the plaintiffs made an agreement with one Ms. James. Key terms of the agreement included:

                          1. The plaintiffs, Munro and Boughy, would pay Ms. James $100,000;
                          2. The plaintiffs would take care of her farm and ponies for the remainder of Ms. James’ life;
                          3. In exchange for this, the plaintiffs would be allowed to live at the Ms. James’ property, and build a home on the property;
                          4. Moreover, the plaintiffs would be entitled to Ms. James’ estate when she passed (the above terms are the “Contract”)

                          The plaintiffs did indeed move to the James property and took up the tasks involved in managing the farm.

                          Eleven years later, James changed her mind about the Contract. She said she was unhappy with the plaintiffs’ management of her farm. She notified them that she was naming someone else as her beneficiary and gave them 3 months notice that she was terminating the Contract. She then changed her will, naming a friend as the beneficiary.

                          The plaintiffs brought a claim against James, relying on the Contract

                          The Court’s decision  in Munro:

                          The court held that the literal meaning of the Contract was clear: the parties agreed that the plaintiffs would inherit James’ estate upon her death.

                          The Court also affirmed that the law would award specific performance for this Contract by James. Specific performance basically refers to a declaration by the court compelling a party to perform its contractual obligations.

                          The Court said that James had made an anticipatory breach of the Contract. That is, even before her obligation had fallen due, she had repudiated her obligation, without justification. Since the Plaintiffs had substantially performed their side of the Contract, James must do the same. The court made a thorough examination of the plaintiffs’ actions and concluded that they had held up their end of the Contract. 

                          Remedy imposed by the Court in Munro:

                          As such, the plaintiffs were entitled to specific performance, being an entitlement to receive Ms. James’ estate on her death. The Court also ordered:

                          1. That the subject property could not be further encumbered or disposed of without consent of the plaintiffs or order of the Court; and
                          2. That the judgment and a related mortgage between the parties to be registered on title among other things.

                          Contracts to make testamentary dispositions:

                          The decision in Munro offers an opportunity to review prior Canadian decisions on promises to leave testamentary bequests.

                          The overriding principle which emerges from prior cases is that, if the plaintiff can prove the existence of the agreement, the Court will enforce it. Typically, prior decisions arise from situations of a laborer, who has worked for the testator in reliance on an oral promise that the testator will leave them certain property in their will. Often, the property at issue is some piece of land or a home.

                          The Statute of Frauds can offer hurdles to the enforcement of a verbal agreement in relation to land, unless there has been part performance. That is, there must have been actions by the plaintiff, which are  unequivocally in relation to the specific land in issue. If the Court is satisfied that the agreement has been proven, then the Court will typically order  specific performance of that agreement.

                          In Briese v. Dugard, 1936 CarswellMan 8, [1936] 1 W.W.R. 193 (MB CA), one Mr. Streich offered to leave to the plaintiff his house, property, furniture and one half of his money, left after paying his debts, if the plaintiff should keep house for him and look after him until his death, in a manner satisfactory to him. The letters containing the offer could not be produced.

                          The plaintiff accepted the offer and kept house for Streich for 14 months. Then, on September 26, 1934, Streich made a will making said provision for her. The will also provided that the devises and bequests to her should be null ad void if she “shall leave me and cease to care for me.”

                          On February 5, 1935, plaintiff and Streich had a brief quarrel and the plaintiff left his house. On that day he made a new will which made no mention of her. On the second day after she had left him Streich realized he had made a mistake, and asked plaintiff to return. The plaintiff did so and continued her duties as housekeeper and nurse until Streich ‘s death. No wages were ever paid to the plaintiff.

                          The second will (which left the plaintiff nothing) was the one admitted to probate. The plaintiff sued for specific performance of the contract. The Court of Appeal held that the departure of the plaintiff from Streich’s house was not a breach of the contract which had put an end to it. Rather, it was Streich who considered himself in the wrong.

                          The Court held that the parties had affirmed the contract as strongly as they could by conduct. If any memorandum was needed to satisfy the Statute of Frauds , it was supplied by the above-referred-to clause in the will, which had said that the gift would be void if the plaintiff would “leave me and cease to care for me.”

                          The Court made clear its sense that fairness required enforcement of the agreement:

                          40      The plaintiff Briese was not employed for wages either fixed or on a quantum meruit . Unless she can have the house and half the money in the bank she will get nothing. She performed her part in full, and the deceased carried out his promise to the letter, but at the last repudiated it without any valid reason for doing so.

                          41      I would direct the entry of judgment for the plaintiff against the executor for specific performance of the contract to convey to the plaintiff the house and furniture.

                          For example, in Davidson Estate, Re, 1947 CarswellNB 13, 20 M.P.R. 53 (NB CA), an older man had arranged with another woman, to provide housekeeping services for him in his home.

                          The man did not pay her wages, but only some occasional money for herself. In 1938, the man made a will in which he gave the woman the home in which he lived, and the sum of $1,000. He showed the will to her at that time. She said that $1,000 was too small for all the work she had done, but $3,000 would be agreeable. The man agreed, and therefore wrote out the following and signed it:

                          This is to certify that Thomas Davidson at his death has willed Isabelle Johnson his present dwelling house on Carleton Street and Three Thousand Dollars in money.

                          After his death, the woman’s claim to $3,000 was disputed. A beneficiary suggested that the document had been altered, and $3,000 had been improperly inserted for $1,000.

                           The court agreed with the woman, and found no evidence of alteration. Thus, she was entitled to the full $3,000. What is especially interesting, is that the Court in Davidson explicitly affirmed that a contract to leave property by will, is enforceable if it can be proven:

                          6      There is no doubt that a contract to leave a sum of money by a will if satisfactorily proved is enforceable: Ridley v. Ridley (1865), 34 Bev. 478; Briese v. Dugard, [1936] 1 D.L.R. 723; Smith v. McGugan, 21 O.A.R. 542.

                          Finally, in Brownscombe v. Alberta (Public Trustee), 1969 CarswellAlta 31, [1969] S.C.R. 658, the claimant had worked for some 26 years for a disabled farmer. The claimant received little in the way of wages during the whole period but relied on repeated oral promises that the farmer would leave the farm by will to the claimant.

                          The farmer later died without a will. There was no written contract. The Supreme Court however held that the contract had been partly performed, and thus could be enforced, and property given to the claimant.

                          In short, for persons who have provided labor in response to a promised testamentary gift, the law will provide a remedy. Depending on the specific facts, such remedy would likely be available  under  a combination of contractual rights, proprietary estoppel or unjust enrichment.

                          Lessons offered by Munro:

                          Munro is unique, in that few (if any) prior decisions involve a court proceeding which was brought while the testator is still alive.

                          Munro shows that such a contract is enforceable, should the testator attempt to violate the contract. In other words, the person will be held to their promise, and lose any testamentary autonomy to decide what will happen to their estate.  

                          From a practical view, a contract to receive property under the will of another person is not always an ideal way of proceeding. First, it is subject to various uncertainties:

                          1. For example, what if the “testator” falls on hard financial times, and is required to dispose of certain property during their lifetime (after all, a Will operates from the date of death, and only governs what property exists as of death);
                          2. Second, what if they go rogue and make a new secret will without disclosing it (such a will could be challenged, but that  takes time and money to do so);
                          3. Third, unless the agreement is carefully documented, providing its terms in court may take time and expense. A common thread throughout most cases of contractually promised bequests, is that the underlying agreements were drawn up without lawyers (or never put in writing at all).

                          Thus, in a perfect world, a labourer would instead insist on a lawyer-drawn contract, which provided for specific value to be exchanged by the other side, during the lifetime of the other party. However, all lawyers find their client’s situation as they come. Moreover, it may be that the person one is dealing with, will not agree to anything but a promise to leave property by their will.

                          Thus, for such circumstances, the outcome in Munro proves that a valuable judicial remedy exists for those who have been promised property under the will of another person. While Munro was a decision of a British Columbia court, there appeared to be nothing in it that was specific to British Columbia law or legislation. As such, it would be open to other Canadian courts to follow its lead.

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

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                          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.

                          Area of ExpertiseWills, Estates, Trusts, Health Care Directives and Powers of Attorney