Factual background:

1. The application was brought by Ms. Lisa Armstrong (“Lisa”) to seek an order removing the respondent, Ms. Cheryl Lee Grant (“Cheryl”) as a trustee of the trusts created by the Last Will and Testament of her husband, the late Brent Patrick Gibson (“Deceased”).
2. As well, Lisa sought orders:

1. Vesting all of the property held by the Lisa Trust in Lisa absolutely;
2. Collapsing the trust and vesting its’ capital in her absolutely in accordance with the rule in Saunders v Vautier(1841), 41 ER 482;
3. Finally, in the alternative, Lisa asks for relief under TheDependants’ Relief Act, 1996, SS 1996, c D-25.01 (“DRA”), and particularly to have title in the family home given over to her absolutely.

3. The Deceased’s Will had created two trusts:

1. One was for Lisa (“Lisa Trust”);
2. One was for Emma (“Emma Trust”).

4. The Deceased designated in his Will that the trustees would be both Lisa, and his father, Mr. Brian Wayne Gibson (“Brian”). Should either of these individuals be unable or unwilling to act, then the Deceased designated his sister Cheryl to be the alternate trustee.
5. There was tension between Brian and Lisa, in relation to the administration of the Lisa Trust. Thus, in 2019, Brian resigned as trustee, and Cheryl took over as the second trustee. Lisa remained as a trustee.
6. Lisa brought this application with the object of obtaining the capital currently held by the Lisa Trust.
7. Since approximately 2008, Lisa had been unable to work due to her MS. She has been on disability from her employment with the Government of Saskatchewan.

Terms of the Lisa Trust:

8. The material terms of the Lisa Trust included the below:

1. During the lifetime of Lisa, the trustees shall pay to Lisa such portion of the net income derived from the assets held in the Lisa Trust, and may pay amounts of capital. Such payments shall be made in the absolute discretion of the trustees, as considered appropriate for Lisa’s support and benefit;
2. Any income not paid out or distributed by the Trustees shall be accumulated and added to the capital of the Lisa Trust.
3. Upon the death of Lisa, the remaining income and capital, if any, held in the Lisa Trust shall be paid or transferred to the Emma Trust.

9. The Emma trust provided, among other things, that on the twenty-first anniversary of Brent’s death, the trustees would pay and transfer the remainder of the Emma trust, to Emma for her own use.

Issues:

The below issues were before the Court:

1. Should Cheryl be removed as a co-trustee of the Lisa Trust?
2. Can Lisa trigger the application of the rule in Saunders v Vautier, and collapse the Lisa Trust?
3. Can Lisa obtain relief under The Dependants’ Relief Act, 1996, SS 1996, c D-25.01

Decision of the Court of King’s Bench:

1. Issue 1: Should Cheryl be removed as a co-trustee of the Lisa Trust?

The Court held that a trustee should not be removed and replaced unless it is demonstrated that such a drastic step is in the best interests of the trust and its beneficiaries.

The Court ultimately declined to remove Cheryl as trustee. It offered the below reasons:

1. Lisa had argued that Lisa and Cheryl were deadlocked. However, the Court did not conclude that Cheryl was ignoring the terms of the Will or refusing to fulfil her obligations as trustee. The affidavit evidence disclosed that Cheryl had ensured that Lisa receives monthly payments of $2,000 from the Lisa Trust, and $2,000 from the Emma Trust. These are net payments with the trusts paying all taxes owed by Lisa to the Canada Revenue Agency. As well, Cheryl had agreed to Lisa’s reasonable request for a lump sum payment of $150,000 for renovations to the family home.

   The Court concluded that when creating the Lisa Trust and the Emma Trust, Brent deliberately created a balance of power between the two trustees. To remove Cheryl because she disagrees with Lisa respecting transferring legal title to the family home to Lisa would, in my opinion, disrespect Brent’s wishes and disrupt the power balance he wanted. 

2. The Court did not conclude that Cheryl had failed to act in the best interests of Lisa. The Court noted that the language of the trust provided that the trustees had a broad discretion to decide when, if at all, to encroach upon the capital. Here, the evidence discloses that monthly payments from the trust continued to be paid to Lisa – $2,000 from the Lisa Trust, and $2,000 from the Emma Trust. There was no evidence, for example, which suggests that Lisa’s medical bills, equipment and other personal requirements remain unsatisfied.

2. Issue 2: Can Lisa trigger the application of the rule in Saunders v Vautier?

Next, Lisa alternatively invoked the rule in Saunders v Vautierand asserts that as the sole beneficiary of the Lisa Trust the rule permits the Lisa Trust to be collapsed and the property given over to Lisa.

The rule in Saunders provides that if a trust beneficiary has an absolute indefeasible interest in trust property, the trust beneficiary is not bound to wait until the expiration of any future period, but may require payment of the trust property, the moment they become a capacitated adult.

Put simply, the common law rule in Saunders v. Vautier allows beneficiaries of a trust to depart from the settlor’s original intentions provided that they are of full legal capacity and are together entitled to all the rights of beneficial ownership in the trust property.

Here, however, the Court held that Saunders did not apply. The Court held that Lisa was not the sole absolute beneficiary. Brent directed that Lisa would be entitled only to “the net income derived from the assets held in trust” under the Lisa Trust. Moreover, and crucially, the Will provided for a “gift over” to the Emma Trust should Lisa die before the Emma Trust is collapsed. The Emma Trust shall be collapsed on the twenty-first anniversary of Brent’s death so as to avoid the operation of the rule against perpetuities. Consequently, any capital remaining in that trust must be given over to Emma “for her own use absolutely”, and thus Lisa was not the sole absolute beneficiary. In other words, so long as the Emma Trust is existing, Lisa cannot dispose of the Lisa Trust in the manner she wishes.

Additionally, Article VI, the final provision of the Will entitled “Wishes”, explicitly set out Brent’s intention. This intention was that “the income, including capital gains, and the appreciation of capital which arises from any interest in trust for any beneficiary under my Will, and specially any benefit under either the Lisa Trust or the [Emma] Trust…shall not be the property of the beneficiary or beneficiaries unless actually paid out by my Trustee to that person”

In the Court’s view, for all of the above reasons, Lisa did not have an absolute interest in the property of the Lisa Trust. Thus, the rule in Saunders could not be invoked.

3. Issue 3: Can Lisa obtain relief under The Dependants’ Relief Act, 1996, SS 1996, c D-25.01

The final ground Lisa advanced was that she is entitled to relief under the DRA, including but not limited to the transfer to her of title to the family home.

The Court declined to make any award on this basis either. It relied on the below grounds:

1. First, Lisa had waited in excess of 15 years to bring her DRA application. That was too long of a delay;
2. Second, in his Will, Brent had in fact adequately provided for Lisa by creating the Lisa Trust. The capital in the Lisa Trust includes real property such as the family home, and the fourplex rental property. Indeed, Lisa has resided in the family home since Brent’s death and continues to do so to the present. Additionally, she receives a monthly net income of $4,000 which is comprised of $2,000 from the Lisa Trust, and $2,000 from the Emma Trust.

The Court found that Brent had permissibly divided his assets in a manner that was within the realm of what was reasonable. Thus, there was no need to make an order for Lisa’s future maintenance. Given that his existing bequest was reasonable, Brent’s freedom to distribute his property in a manner of his choosing, should not be interfered with.

Conclusion:

For the above reasons, the Court declined to make any of the orders that Lisa had sought. The facts in Armstrong were certainly sympathetic, and one entirely understands why Lisa wished to seek the relief she did. However, Armstrong offers a reminder that the remedy of collapsing a trust will simply not be available, where the applicant does not have an absolute indefeasible interest in the trust property.

One interesting order which was made, was that Cheryl (the trustee) was permitted by the Court to receive a costs award from the Lisa Trust. However, the costs order was only in the amount of $2,000.

This award bears note, as it would mean that Cheryl (in her role of trustee) was likely required to pay her lawyer the remaining legal fees incurred by Cheryl, which likely exceeded the sum of $2,000 (given the large amount of work this application would have put both sides to).

Typically, when a trustee is acting solely as trustee (i.e. here, Cheryl had no personal interest at stake), and they are successful in a legal position, a court will often ensure that the trustee is not left out of pocket for any measure of their legal fees. Such makes sense, as few people would wish to take on the role of trustee, if they had to spend their personal monies on legal fees which were solely required by virtue of their role as trustee.

The recent Saskatchewan Court of Appeal decision in Bell v Bell, 2023 SKCA 53 upheld a Court of Queen’s Bench decision, in which a Chambers Judge had dismissed a will challenge.

Factual background:

In his application in Queen’s Bench, Wayne Bell had challenged the will of his mother, Laurette Bell. Wayne had argued that Laurette lacked testamentary capacity and was unduly influenced at the time of her will’s execution on January 8, 2020 (“Will”). The Will effectively excluded Wayne and his immediate family as beneficiaries to Laurette’s estate.

The relevant factual background before the Court included the below:

1. Several years before Laurette’s death, a rift arose between her, Wayne, and his siblings, primarily over two matters. The first matter involved an allegation that Wayne misused business funds and assets for his and his immediate family’s personal use.  The second matter was a conflict between Laurette and Wayne’s daughter Dawn, over an allegedly unpaid loan owed by Dawn to Laurette. Dawn asserted that she had repaid the loan in full in October of 2004. However, Laurette remained doubtful as to whether it had in fact been repaid;
2. In January of 2020, Laurette executed the Will, at age 87. She specified that Wayne and his children were not to receive any portion of her estate. She did so with the assistance of lawyer Wayne Bernakevitch, who noted no issues with Laurette’s testamentary capacity. At the same time, she raised concerns with Mr. Bernakevitch about Wayne’s conduct in relation to the business;
3. Laurette had executed a different will approximately four months prior, also with Mr. Bernakevitch’s assistance;
4. In his evidence relating to capacity, Wayne noted that Laurette was very elderly, and was increasingly forgetful, and had on one occasion, just months prior to the execution of the Will, become confused and disoriented after attending a coin shop;
5. On the issue of undue influence, Wayne asserted that his brothers had made disparaging comments about him to Laurette, specifically alleging that he misused business funds and assets. He argued this was evidence that Laurette was unduly influenced;
6. However, the evidence of Wayne’s siblings was that Laurette was capable and independent until shortly before her death in August of 2021. Her son Garth had moved in with Laurette in December of 2020, and remained until she moved into a care home and subsequently palliative care. Garth deposed that Laurette made all her own decisions, booked her own appointments, paid all her bills, and expressed her wishes clearly until the date of her death;
7. The lawyer who drafted the Will, Mr. Bernakevitch, deposed that, upon execution of the Will, he made note that Laurette was “quite competent and quite adamant about” her exclusion of Wayne and his immediate family from the Will. Mr. Bernakevitch noted that when Dawn raised in a letter to Mr. Bernakevitch the issue of undue influence in relation to the alleged loan, Mr. Bernakevitch recorded in his notes “undue influence on her is unfair to her. She is very capable and doing this of her own initiative”. Bernakevitch further averred that Laurette was concerned about Wayne misusing business funds, as well as the debt she believed Dawn owed her.

Issues:

In his appeal, Wayne focused on two grounds of appeal:

1. Did the Chambers judge err by improperly weighing controverted evidence and making credibility findings?
2. Did the Chambers judge err by misapprehending the evidence or disregarding material evidence?

Decision of the Court of Appeal:

Issue 1: Did the Chambers judge err by improperly weighing controverted evidence and making credibility findings?

On the first issue, the Court of Appeal held that the Chambers Judge had been careful not to determine contested points, including whether the loan to Dawn had in fact been repaid, or whether Wayne had misappropriated assets and funds of the business. Rather, the Chambers Judge remained focused on whether Wayne had adduced some evidence that could negate testamentary capacity or tend to prove undue influence.

Ultimately, the Court of Appeal concluded that at no point in his analysis did the Chambers Judge overstep the confines of this stage one evidentiary focus.

Basically, the Chambers Judge assessed Wayne’s allegations in their most favourable light, but held that such allegations still did not amount to “any evidence which, if accepted at trial, would tend to negate testamentary capacity or establish undue influence”.

The Court of Appeal appeared to agree that the below allegations by Wayne simply did not raise a genuine issue of capacity or undue influence:

1. Regarding the loan to Dawn, even if Laurette was mistaken in the belief that the loan was still outstanding, it did not lead to the conclusion that Laurette was not competent to execute the Will. The Chambers Judge concluded that many people forget details of the past, and the fact that one may have been mistaken does not mean that a person is incompetent or not capable of executing a valid will;
2. Even if Laurette had forgotten some names and may have gone in the wrong direction after leaving a coin shop on one or more occasions, this was not evidence of a lack of testamentary capacity (i.e. capacity about one’s property and intentions for it);
3. Even if Laurette was wrong about her presumptions and perceptions about Wayne, there was no evidence that there was influence that would have overburdened her will.

Ultimately, the Court of Appeal agreed that the Chambers Judge had been faced with no conflicting evidence on relevant points. There was uncontroverted relevant first-hand information from all of Laurette’s children (except for Wayne and Melanie). Moreover, Bernakevitch, a senior lawyer, had met with Laurette and had found her to have testamentary capacity.

In short, the Chambers Judge had properly been careful not to weigh conflicting evidence or make findings of credibility. The Chambers Judge had enough uncontroverted evidence before him, to enable him to “weed” out a claim that did not have sufficient merit to proceed to trial.

Issue 2: Did the Chambers Judge err by misapprehending the evidence or disregarding material evidence?

Further, Wayne argued that the Chambers judge had disregarded material evidence which demonstrated “suspicious circumstances”, and called for a trial. Wayne pointed to the following evidence:

1. Laurette had executed a different will four months prior in 2019;
2. Wayne’s brothers admitted to discussing with Laurette allegations that Wayne misused business assets and funds prior to the execution of the Will;
3. Bernakevitch was aware of the Bell family conflict but asked no specific questions to assess undue influence or Laurette’s competency at the time of the Will; and
4. Wayne deposed to a conversation in which Laurette’s daughter, Linda, had expressed concerns with Laurette’s mental state, and that Linda did not specifically deny having that conversation in her affidavit (despite her other comments that she viewed her mother to be capable and competent until her death).

Wayne essentially argued that these facts were suspicious, and called for cross-examination (which a trial process would offer).

However, the Court of Appeal held that the Chambers Judge had not disregarded material evidence. The Chambers Judge was alive to all material evidence, but had properly concluded that such evidence did not negate testamentary capacity or supporting undue influence.

For example, the Court of Appeal simply did not find it suspicious that Laurette had executed two wills in the space of approximately four months. The Court of Appeal also rejected the argument that Mr. Bernakevitch should have questioned Laurette more rigorously about her family dynamics at the time of the execution of the Will. Such an argument did not properly reflect that the evidentiary onus here was on Wayne alone.

As such, there had been no requirement in law for cross-examination to reconcile all collateral and narrative aspects of both sides. On the crucial points – that of testamentary capacity and voluntariness at the making of the Will – the Chambers Judge had properly concluded that the firsthand evidence was uncontroverted.

Conclusion:

Bell is an example of a case where the challenger no doubt had genuine concerns about what caused his mother to remove him from the Will. Such is a natural emotional reaction. That said, Bell reminds us that circumstantial concerns about unexplained actions by a testator (even if the testator’s actions are shocking to a disinherited family member) are not the same as firsthand evidence of incapacity or actual coercion on the date of the signing of the Will.

Courts will generally require firsthand evidence of incapacity, or of coercion before the Court will subject a Will to the expense and delay of trial. If a challenger adduces evidence which is more circumstantial, than firsthand, the Courts may find that there is no genuine issue.

The recent Saskatchewan King’s Bench decision in Vaudreuil v Madson is an example of a testamentary document in which a trial was required to determine its validity. This was because of contradictory evidence which had been adduced as to require findings of credibility at trial.

Factual background:

A brief summary of the factual background in Vaudreuil was as follows:

1. Paul Shlahetka (“Deceased”) died on August 6, 2021, at 91 years of age. The Deceased had six siblings, all of whom predeceased him.  His sister, Annie, died in 2019. Annie had three daughters, Adeline McPhee, Ms. Vaudreuil, and Ms. Nehring.
2. The applicant, Gloria Vaudreuil, and her sister, Irene Nehring (“Applicants”), were nieces of the Deceased. They filed a caveat against the Estate of Paul Shlahetka on August 12, 2021 preventing anything from being done in relation to the Estate. They suggested that the valid testamentary document for the Deceased was a Last Will and Testament dated May 7, 2014, prepared by the Tourney Law Office in Yorkton, Saskatchewan.
3. In contrast, the respondents, Irvin Madson and Cynthia Madson (“Respondents”), contended that a handwritten document dated July 8, 2016 (“July 8 Document”) was the valid holographic last will and testament of the Deceased. The Respondents operated their own farm in the District of Springside. They were neighbours and friends of the Deceased.

Evidence of capacity in relation to the Deceased:

4. There was contrasting evidence filed by the parties, in relation to the capacity of the Deceased, from 2015 onwards.
5. The Court found, for example, that on or about February 9, 2015, the Deceased, while driving his car on a rural road near his home, hit the ditch, and became stuck in the snow. He was found by the RCMP who returned him to his home. The next day, the Deceased was driving his truck, ostensibly to retrieve his car, and again hit the ditch. He tried to dig himself out of the snow using his hands in -25-degree weather. The RCMP found him by his truck, disoriented and with his hands frostbitten by the cold. The RCMP took him to Yorkton Hospital where the Deceased was admitted for treatment.
6. While in hospital, the Deceased remained disoriented to time, place and person. His attending family physician, Dr. Oduntan, identified that the Deceased had an extensive family history of dementia and a past history of confusion and memory loss in 2009, but that his memory loss in 2015 had become more significant.
7. Oduntan performed three separate Mini-Mental State Examinations on the Deceased between February 10, 2015 and March 5, 2015. The Deceased scored very low on each one. He was diagnosed with advanced dementia and a certificate of incompetence was forwarded to the Public Guardian and Trustee.
8. The Deceased was placed at Canora Gateway Lodge where he continued to reside until his death on August 6, 2021.
9. On June 28, 2016, the Madsons removed the Deceased from the Gateway Lodge and took him to see a Yorkton lawyer. This lawyer indicated he thought the Deceased  had capacity to do a will, although the notes he made of this attendance appear to have been limited in scope.
10. Apparently, on July 8, 2016 the Deceased remained concerned about re-doing his will. Mr. Madson took the Deceased  to his own home and sat him down at his kitchen table with a pen and a piece of paper. Mrs. Madson was not present.
11. The Chambers Judge described what happened next, as follows:

53]     …Mr. Madson said, based on what [the Yorkton lawyer] had advised with respect to a holographic will, that he told Mr. Shlahetka to write down what he wanted and left him on his own for about 20 minutes. During that time, he said Mr. Shlahetka wrote down the first part of the July 8 Document. Mr. Madson averred Mr. Shlahetka then called him back, but when he looked at what Mr. Shlahetka had written Mr. Madson said he told him “it was not really a will but more of a power of attorney” and it “did not really say what was to be done with his estate after he died”. Mr. Madson averred he then left Mr. Shlahetka for a further 30 minutes “or so” during which time Mr. Shlahetka wrote out the second part of the July 8 Document. Mr. Madson averred that when Mr. Shlahetka called him back in, he said words to the effect “now take this and rub it under Gloria’s nose”. Mr. Madson further averred: “He knew that at this point that Gloria was trying to get guardianship over him and felt she was trying to get his property, and was very unhappy about that”. Mr. Madson averred that after doing the July 8 Document Mr. Shlahetka was very content and felt everything was looked after.

Issue:

A key issue in Vaudreuil was whether proof on solemn form was required to determine the validity of the July 8 Document.

Findings of the Court:

The Court held that solemn form was required. The Court held that the Applicants had adduced evidence, which if accepted at trial, would tend to negate the Deceased’s testamentary capacity at the time of the July 8 Document. The evidence on capacity was contradictory. Thus a trial, and the tools of cross-examination offered by trial, would better allow a trier of fact to truly determine which side’s evidence was more reliable.

The below findings of the Chambers Judge, taken from his decision, outline some of his factual conclusions:

[26] First, Mr. Shlahetka’s capacity remained in issue from and after his placement in Gateway Lodge in or about March 2015 to at least July 8, 2016, as well as after that date.

[27] Second, the affidavit evidence raises a serious issue as to Mr. Madson exerting undue influence over Mr. Shlahetka, including in his comments with respect to Mr. Shlahetka’s relationship with his nieces and nephew and more particularly regarding Ms. Vaudreuil’s motivation in seeking to manage Mr. Shlahetka’s affairs. Further, based on his own affidavit, it is apparent Mr. Madson coached Mr. Shlahetka in the preparation of the July 8 Document.
…

[35] The evidence regarding Mr. Shlahetka’s capacity is highly contradictory.
…

[69] As can be seen from the above examination of the evidence, there were significant conflicts regarding Mr. Shlahetka’s mental state at the time the July 8 Document was signed, his intentions, his relationship with his nieces and nephew, his relationship with the Madsons, the actions and role of Mr. Madson and the circumstances surrounding the making of the July 8 Document. 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. Having regard for the summary of the affidavit evidence set out above, controversy remains on several critical matters in dispute, some of which overlap, and many of which will require an assessment of credibility by a trier of fact.

Conclusion:

Ultimately, the Chambers Judge made the following order:

1. He directed a trial to prove the July 8 Document in solemn form to determine what portion, if any, of the July 8 Document expressed the testamentary intention of the Deceased;
2. The issues to be determined at trial included (without limitation) the below:

1. Whether the Deceased, at the time of the execution of the July 8 Document, had testamentary capacity; and
2. Whether the Deceased, at the time of the execution of the July 8 Document was subject to undue influence.