The recent Saskatchewan Court of Appeal decision in Klaptchuk v Johnson is a reminder of the principle of devastavit, which forbids an executor from distributing estate assets in disregard of a creditor’s outstanding claim against the estate. 

That said, Klaptchuk also reminds us that an executor who is sued in devastavit, is entitled to obtain a ruling as to whether they should be relieved from liability (under s. 45 of the Trustee Act), if they erred but had nevertheless acted honestly. Moreover, Klaptchuk also reminds us that there must be clear evidence of what value existed in the estate, before a court should summarily determine (on affidavit evidence) that a devastavit has in fact occurred.

Factual background:

Klaptchuk arose out of an appeal brought by Sylvia Klaptchuk (“Ms. Klaptchuk”) and the Estate of Peter Klaptchuk (“Estate”) against the decision of a judge of (what was then) the Court of Queen’s Bench. The Chambers Decision had granted summary judgment in favour of certain judgment creditors (the “Judgment Creditors”), and had held that Ms. Klaptchuk was personally liable to such creditors for an unsatisfied judgment they had previously obtained against the Estate.

Some of the material facts included the below:

1. Peter Klaptchuk was the sole director, officer, and shareholder of two corporations: Ozonator Industries Ltd. (“Ozonator”) and Peter’s Sewer Service Ltd. (“PSS”);
2. On March 9, 2017, the Judgment Creditors obtained judgment in a civil action against Mr. Klaptchuk and Ozonator, in the amount of $160,000 (Johnson v Klaptchuk(9 March 2017) Regina, QBG 1001 of 2014 (Sask QB) (“Judgment”);
3. Eight days later, on March 17, 2017, Mr. Klaptchuk unexpectedly passed away.
4. Shortly after Mr. Klaptchuk’s death, on March 27, 2017, counsel for the Judgment Creditors sent a letter to Mr. Klaptchuk’s solicitor, Merrilee Rasmussen, K.C., notifying her of the Judgment and advising that they would hold off on any enforcement proceedings for a reasonable period of time, to allow Mr. Klaptchuk’s family to grieve his passing;
5. The Judgment Creditors’ counsel also requested that Ms. Rasmussen bring the Judgment to the attention of the representative of the Estate;
6. By April 27, 2017, Ms. Rasmussen had replied to the Judgment Creditors’ counsel, saying that Ms. Klaptchuk was the executrix of the Estate, and that she was in the process of settling the Estate’s assets and debts and developing a plan to retire the Judgment. However, the Judgment was never paid;
7. On August 24, 2017, a notice of change of shareholders for Ozonator was filed with the Director of Corporations. It named Ms. Klaptchuk as the sole shareholder for that corporation. Ms. Klaptchuk would later take the position that this transfer of shares had been made without her knowledge or authorization. Ozonator subsequently became inactive and was ultimately struck from the Corporate Registry;
8. Shortly after the Ozonator share transfer had taken place, Ms. Klaptchuk engaged new counsel, David MacKay, and arranged through him to transfer all of the shares in PSS to herself. The requisite notice, naming Ms. Klaptchuk as the sole shareholder for PSS, was filed with the Director of Corporations on October 3, 2017;
9. Although Mr. Klaptchuk’s will named Ms. Klaptchuk as executrix, Ms. Klaptchuk had never applied for a grant of probate or letters of administration. Nor had she renounced the appointment or given any explicit indication that she has refused to accept it. In addition to the transfers of shares mentioned above, Ms. Klaptchuk had taken other steps to administer the Estate, including paying Mr. Klaptchuk’s funeral expenses and his tax arrears, and by paying certain debts owed by PSS out of her own funds. She had also continued to operate PSS as a business;
10. On July 24, 2019, the Judgment Creditors commenced a civil action against Ms. Klaptchuk by filing a statement of claim. In it, the Judgment Creditors claimed the below, among other things:

1. That, even though Ms. Klaptchuk had not formally assumed the role of executrix, she had intermeddled in the estate property. Namely, she had taken it on herself to possess and administer estate property even though she had not been appointed as executor or administrator, and she had transferred Estate property to herself;
2. That Ms. Klaptchuk was liable for devastavit because she had transferred Estate property, namely, shares of the capital stock in Ozonator and PSS, and shareholder loans owned by Mr. Klaptchuk, to herself without first satisfying the Judgment.
3. That these transfers were fraudulent conveyances, as they had been transferred knowing that such actions would delay, defeat or hinder their enforcement efforts.

11. On August 12, 2021, the Judgment Creditors filed an application in the Court of Queen’s Bench, seeking summary judgment against  Klaptchuk and an order directing her to provide a full accounting for the Estate, and tracing any assets she had removed from it. This application led to the hearing that resulted in the Chambers Decision, which found her personally liable to the Judgment Creditors in the amount of $160,000.

Chambers Decision:

12. The Chambers Judge found that, despite the fact that Klaptchuk said that she never accepted the appointment as executrix, her conduct amounted to an acceptance of the role of executrix. The Chambers Judge found that she had exercised significant authority over the Estate assets and had paid Estate debts.
13. The Chambers Judge then found that even though Ms. Klaptchuk was aware of the unsatisfied judgment against the Estate, she distributed assets — including her late husband’s shares in two businesses — to herself, before paying the Estate’s lawful debts.
14. The Chambers judge concluded that Ms. Klaptchuk’s conduct constituted a devastavit. A devastavit is committed where an executor or administrator wastes the estate’s assets by mismanaging, misapplying, or neglecting them, contrary to the duty imposed on them as a personal representative of the estate. The types of conduct that can give rise to personal liability on the basis of devastavit include, among other things, paying legacies to beneficiaries before paying the estate’s lawful debts, where the result is to leave insufficient funds to satisfy the claims of creditors.
15. The Chambers judge also found that Ms. Klaptchuk had not fully and properly administered the Estate and, for that reason, was not entitled to rely on the common law defence of plene administravit, which is available when there are insufficient assets to satisfy a claim by a creditor against an estate.
16. The Chambers Judge found that Ms. Klaptchuk was aware of the existence of the Judgment and, thus, she had “distributed Estate assets to herself in disregard of the Judgment” and that such conduct “amounts to devastavit which renders her personally liable for the Judgment”.
17. With the above conclusion made, the Chambers judge determined that it was unnecessary to consider the Judgment Creditors’ alternative claim of fraudulent conveyance.
18. Accordingly, the Chambers Judge found that Ms. Klaptchuk was found to be personally liable for the entire amount of the unsatisfied judgment, being $160,000.

Issues on Appeal:

On appeal, Ms. Klaptchuk contended that the Chambers judge erred in several ways, including (without limitation):

1. By granting summary judgment in the face of disputed factual issues; and
2. By failing to consider s. 45 of The Trustee Act, 2009, SS 2009, c T-23.01 (“Trustee Act”), which says that if a trustee is liable for a breach of trust, by reason of their act or omission, a court may still relieve them from liability if the court finds that they acted reasonably and ought to be excused for the breach.

Determinations of the Court of Appeal:

The Court of Appeal reversed the Chambers Decision and determined that the Chambers Judge had erred in a number of ways.

Failure to consider whether it would be fair to relieve Ms. Klaptchuk of personal liability:

The Court of Appeal held that the Chambers Judge should have (but did not) consider whether it would be fair to relieve Ms. Klaptchuk of personal liability under s. 45 of the Trustee Act.

S. 45 reads below:

45 If a trustee is or may be personally liable for a breach of trust as the result of any act or omission of the trustee or of an agent of the trustee, the court may relieve the trustee either wholly or partly from personal liability if the court is satisfied that the trustee:

1. acted honestly and reasonably; and
2. ought fairly to be excused:

1. for the breach; or
2. for omitting to obtain the directions of the court in the matter in which it was committed.

The Court of Appeal held that there was material in the record before the Chambers Judge that should have prompted him to turn his mind to whether s. 45 of the Trustee Act was properly applied in this situation. For example:

1. Ms. Klaptchuk had explicitly raised the applicability of s. 45 of the Trustee Actin the brief of law she filed in opposition to the summary judgment application;
2. In her statement of defence, she had pleaded that she viewed the shares in PSS as having no value because the company was losing money and its only physical assets were “old trucks and a lease on a building”;
3. Ms. Klaptchuk had stated in her affidavit that she had paid various Estate debts and other expenses related to the administration of the Estate out of her own pocket and, because of that, also viewed herself as a creditor of the Estate;
4. Ms. Klaptchuk also deposed that she had taken control of PSS as “[Mr. Klaptchuk]’s wife and as a creditor of the company” (due to the outstanding shareholder loan), and not simply as executor for the Estate;
5. Ms. Klaptchuk argued that she believed, given the state of the business, the provisions in Mr. Klaptchuk’s will, and her status as a beneficiary, that the transfer of shares to her was authorized by the Business Corporations Act.

As the Chambers Judge did not consider s. 45, the Court of Appeal held that this was an error of law, and the decision could not stand.

There was a genuine issue requiring trial:

The Court of Appeal also found that it was an error to grant summary judgment, when there were contested material facts.

For context, the Chambers judge had found that there was no genuine issue requiring a trial, and that the action was suitable for summary judgment. The Court of Appeal disagreed.

The Court of Appeal held that the value of the Estate was a material issue. The reason why it is material is as follows. For example, the Chambers Judge had found Ms. Klaptchuk to be personally liable to the Judgment Creditors in the amount of $160,000. But what if the value of the entire Estate had not even been $160,000? If so, how could it then be equitable to find that Ms. Klaptchuk should pay the amount of any shortfall difference, when the underlying Judgment was not one rendered against her personally.

With “thin and contradictory” evidence on the issue of the value of the Estate, the Court of Appeal held that this matter should be remitted for trial. As a result, this was not an appropriate case for summary judgment.

Conclusion:

The Court of Appeal set aside the Chambers Decision in its entirety, and remitted it to the Court of King’s Bench. Ms. Klaptchuk received her costs of the appeal. The amount of costs awarded to her was reduced due to the fact that Ms. Klaptchuk had brought an unsuccessful application to introduce fresh evidence on appeal.

The recent Saskatchewan King’s Bench decision in Kowalinski v Kowalinski (Estate) is an example of how some estates can devolve into bitter quarrelling between the children of a deceased.

Factual background:

This matter arose out of the Estate of Maria Kowalinski (“Estate”). Maria (“Deceased”) had died on February 3, 2016. Since that time, her children had been engaged in costly and exhausting disputes over various aspects of the Estate. The Estate was still not fully distributed as a result, despite the fact that the deceased had died quite a few years previous.

There were four beneficiaries of the Estate, being

1. Maria’s son Terry;
2. Maria’s daughter Beth;
3. Maria’s daughter Iris; and
4. Maria’s grandson, Delaney.

A summary of some of the background is below:

1. Marie executed her Will on April 23, 2013. She appointed her three children, Terry, Beth and Iris as executors. It is clear that there had been a pattern of Maria loaning money to her children, particularly Terry and Iris. This habit of lending monies had led to suspicion amongst the other children;
2. At one point, Terry was meeting with Maria and, for some reason, discovered that there was a collateral mortgage registered against Maria’s home on Shea Crescent in Saskatoon in the amount of $60,000. Maria confirmed that a mortgage (“Iris Loan”) was granted in order to secure a $60,000 loan from Maria to Iris.
3. Terry took Maria to Maria’s lawyers.  The lawyers recommended that Maria prepare a holographic codicil removing Iris as an executor. This was done, and the codicil, written on October 7, 2015, read as follows:

This is a codicil to my will dated April 23, 2013. I remove Iris Theresa Kowalinski as an executor of my Esetate (sic).

Iris Theresa Kowalinski owes me $86,600.00 for amounts I have lent loand (sic) to her which remain unpaid. Therefor (sic) her chare (sic) shall be reduced by $86.600.00$ (sic) plus any adittional (sic) debt and interest (sic) which may apear (sic).

Any costs of collecting (sic) from Iris shall be charged to her share.

4. Unfortunately, it appeared that no one actually looked to discover that the Iris Loan had already been paid off and Maria was in a position to insist that the mortgage be discharged.
5. Terry thereafter began to take steps to place the Estate in a position where probate would not be necessary. Terry arranged for Maria’s tax-free savings account to be placed in his sole name. He also had title to Maria’s home registered in his and Maria’s names, as joint tenants. He also then confronted Iris about the line of credit and the mortgage on Maria’s home. Iris took that opportunity to explain to him that the line of credit had been paid in full. In due course, that mortgage was discharged.
6. Notwithstanding Maria’s declining health, Iris importuned Maria on January 30, 2016 for an additional $15,000 loan. The loan is recorded in a purple notebook, which was the manner in which Maria kept track of what her children owed her.
7. Maria passed away on February 3, 2016.

Will challenge allegations:

8. After Maria died, there were multiple court applications wherein Iris sought a trial to bring into question Maria’s mental capacity at the time of the codicil and to require that the Will be proved in solemn form. This was not successful.
9. There were also a number of applications engaging Terry and Beth and requiring them to disclose personal property at Maria’s residence on Shea Crescent. 
10. There was an application brought by Iris to permit cross-examination of Terry, Beth and Delany on their affidavits. This engendered significant legal fees, but created evidence which the Court described as of “only moderate probative value.”

Issue:

The Court determined that a number of issues required determination. This case comment focuses on the below issues:

1. Should Terry and Beth receive executors’ fees, and, if so, how much?
2. Who pays the parties’ respective legal expenses?
3. There are a number of personal items whose ownership is contested. How should those chattels be divided?

Findings by the Court:

1. Should Terry and Beth receive executors’ fees and if so, how much?

The Court found that there was no question that Terry and Beth put in a significant amount of time dealing with matters arising from the Estate. However, the Court held that much of their efforts had nothing to do with the administration of the Estate, but such efforts were rather in engaging in battle with Iris.

For context, in Saskatchewan, a court will often award compensation which in an amount which is a global 2-3% of the Estate. In this context, the Court ordered that Beth and Terry were to receive compensation on the lower end of the spectrum:

1. That Beth was to receive 1% of the Estate for her compensation;
2. That Terry was to receive 0.5% of the Estate.

2. Who pays the legal expenses?

Terry and Beth took the position that Iris was the primary cause of the entire litigation and that she should pay the costs of such legal expense.

The Court however found that there was plenty of blame to be spread around all three siblings. Accordingly, the Court ordered that each person shall bear their own costs.

However, the Court ordered that any future legal fees from this date onwards, shall be borne by the Estate, subject to being taxed by the Court.

3. There are a number of personal items whose ownership is contested. How should those chattels be divided?

The siblings were disputing how to divide certain chattels. These ranged from wood carvings, a nutcracker bowl to a black diamond pendent necklace. Unfortunately, in their respective briefs, each side creates a slightly different list of chattels in debate.

The Court held that there was no correct way to divide the chattels, but yet it was “a task that must be accomplished in order to bring the estate bickering to an end.”

The Court ultimately selected a unique and uncommon method of dividing up the chattels. The Court directed that the judge would draw names from a hat to determine ownership:

44         I conclude that “luck” is the best arbiter. I direct counsel to prepare a list of chattels that are in debate. Perhaps the siblings can agree on some so that we do not have a raft of items to deal with. However, I leave that to them.

45        In any event, when the list is prepared, it is to be forwarded to me through the Local Registrar and I will then set a date to draw names from a hat to determine ownership of the chattels in issue. The draw will take place in a courtroom and on the record.

Conclusion:

Any person who has hired a litigation lawyer in Saskatchewan knows that the legal fees to go to court (and prepare written evidence and argument) are significant. For any thoroughly disputed matter, the legal fees will easily get into the five figures for each side.

Despite this, estate disputes can often be extremely controverted, because there is an understandable emotional dynamic, when one family member perceives that there are questions of whether their beloved love one (usually a parent) was taken advantage of, or whether another sibling is trying to get more than their fair share.

Kowalinski reminds us that such disputes, even when the positions are sincerely held, may not result in an outcome that all parties (or, at the very least, the Court) may consider to be proportionate to the time and legal cost of litigation. However, to be candid, this problem shows no sign of resolving itself. So long as there are situations in which siblings distrust each other, and there is some murkiness as to exactly what a deceased parent intended for their money and estate, emotional estate disputes will continue to exist.

One proactive cure for this, is for persons to ensure better communication with their own children or estate beneficiaries, during their life. If the Deceased in this situation had sat all of her children down, and calmly explained exactly who had received what monies from her in the past, and what the Deceased nevertheless wished for her Estate in future, some of this litigation may have been avoided.

The recent Saskatchewan Court of King’s Bench decision in Riben Estate (Re), 2023 SKKB 72 offers a reminder that a will challenger who alleges coercion must offer direct evidence to actually prove that pressure resulted in the creation of the challenged will. If they cannot offer such direct evidence, a court may find that there is no genuine issue for trial, and dismiss the will challenge.

Factual background:

1. Judy Riben (“Judy”) died on September 1, 2021, leaving behind:

1. Son, Paul Riben (“Paul”);
2. Son, Carl Riben (“Carl”);
3. Daughter, Juanita Menard (“Juanita”).

2. Judy had executed a will on April 21, 2021 (the “April Will”), before lawyer Marianne Kramchynsky in Blaine Lake, Saskatchewan;
3. On July 20, 2021, Judy had executed a revised will (the “July Will”), which gave less to Paul than the prior April Will.
4. At the time of Judy’s death, there was an outstanding lawsuit that was initiated by Paul against Judy (while she was alive), and also against Carl and Carl’s wife, Maria Riben.;
5. There were a variety of applications before the Court in Riben Estate. For the purpose of this blog article, the writer focuses on the application by Paul to have co-executors Carl and Juanita prove the July Will in solemn form.

Issues in dispute:

The issue was whether Paul had adduced evidence which presented a genuine issue for trial, on the issue of alleged undue influence. If so, the court would order a trial which would determine if the July Will was valid.

Steps involved in a will challenge:

To challenge a will in Saskatchewan, a challenger must go through two levels of hearings:

1. The first stage is a threshold Chambers hearing to determine if there is sufficient merit in the challenge to warrant a trial;
2. The second stage (if the applicant is successful) is a trial hearing to actually determine the allegations made against the will.

Positions of the Parties:

Paul made various submissions as to why he felt solemn form should be ordered:

1. While Paul did not contend that Judy lacked mental capacity to make the July Will, he contended that Carl unduly influenced Judy in the preparation of the July Will;
2. Paul attempted to offer the below as “suspicious circumstances” relating to the preparation of the July Will:

1. There had been significant revision of Judy’s will in Carl’s favour and to the detriment of Juanita and Paul. This was in contrast to the April Will, which had been made only three months prior;
2. Judy had made a inter vivos transfer of land from Judy to Carl and Judy jointly, which would have the effect of resulting in a direct transfer to Carl once Judy passed away.
3. Paul pointed to the fact that Judy allegedly expressed in August 2021 to Juanita that the joint transfer to Carl by Judy had been a “mistake” and that the property was supposed to be divided equally between Carl, Paul and Juanita;
4. Paul said that, due to her cancer diagnosis and narcotics and anti‑anxiety medications, Judy was more susceptible to coercion and undue influence at the time of the preparation of July Will; and
5. Paul found it suspicious that Carl drove Judy to the appointment to execute and sign the July Will. Paul said that Carl “exerted significant pressure by constantly telling her she needed to sign it and yelling at her to get into the car before the appointment”.

3. Paul also alleged that  Carl would bully and abuse Judy and would yell and threaten her whenever he visited and, eventually, Judy had to start taking anti‑anxiety medication whenever she had to see Carl;
4. Paul and Carl had at all material times been embroiled in litigation. Paul believed that Carl pressured Judy to execute the July Will because Carl was upset that Paul wanted his land back and Carl was envious of Paul’s success with his distillery business.

Paul also offered an affidavit from Juanita, in which she said in part:

1. She observed that Judy began to feel unwell in January or February 2021. An MRI on April 9, 2021, revealed that Judy had metastatic breast cancer which had spread to her lungs and spine. Judy had surgery and returned home on April 21, 2021, but she was hospitalized again at the end of June, recovered for a short while;
2. Around July 25, 2021, Judy had a breakdown and was carried out of the house by Paul; she was hospitalized until August 6, 2021. After her discharge from the hospital, Judy moved into Juanita’s condo in Saskatoon, where she lived until she died on September 1, 2021;
3. Juanita had concerns about whether Carl unduly influenced Judy to sign the July Will. Juanita apparently offered however no specific dates and alleged specifics of such coercion;
4. A few days before the second appointment to sign the July Will, Carl had told Judy not to take narcotics on that day, but Juanita states Judy took them that day anyway;
5. Juanita said that Carl insisted on driving Judy to the appointment and “exerted significant pressure by constantly telling her she needed to sign it and yelling at her to get into the car before the appointment”;
6. Juanita states that she was concerned about Judy signing the July Will but did not interfere because Carl said if she did anything to interfere, he would contact his lawyers because she was “obstructing Mom’s wishes.”
7. Juanita said that there was extensive discussion between Judy, Juanita and Carl, as to how to effect a subdivision that Judy allegedly wanted. However, the matter remained unsettled and in the meantime, Judy passed away before it could be resolved.

Carl, in response to the above evidence, offered his own evidence.

He stated that, in his observation, Judy had capacity until shortly before her passing, including having capacity during the month of July 2021. Carl noted that she was doing her own banking, engaging in the day‑to‑day affairs of the farm and was fully aware of everything and everyone going on around her. Carl denied pressuring Judy to execute the July Will or any other document. In short, Carl denied that he had unduly or inappropriately influenced Judy in any fashion.

Carl also provided an affidavit of lawyer Marianne Kramchynsky, who had met with Judy at various times:

1. The first communication that Ms. Kramchynsky received on the file was on April 6, 2021, when Ms. Kramchynsky received email instructions for a will, power of attorney and health care directive for Judy from Juanita;
2. Kramchynsky met Judy in person on April 9, 2021, when she was brought to her office by Juanita. Judy was not capable of leaving the car on that occasion due to a cancerous tumour on her spine;
3. Kramchynsky witnessed Judy’s signature on the email instructions but did not provide any advice as to form or content that day;
4. On June 24, 2021, Ms. Kramchynsky received email instructions from Juanita to amend the April Will for Judy. The significant contemplated changes for the will in the appended email included a clause that if Judy is unable to drive, then her vehicle would be gifted to Juanita. As well, the home quarter, house and yard were to go to Carl, but he was to let Juanita reside in the home “as long as she needs”, which could be “indefinitely”;
5. Given the volume of material received from people other than Judy, Ms. Kramchynsky was careful to discuss Judy’s wishes with her directly, both in telephone and in person;
6. Interestingly, Ms. Kramchynsky wrote that Judy clearly indicated during their phone call of July 5, 2021, that Judy did not want Juanita’s instructions followed;
7. Kramchynsky then saw Judy on July 20, 2021, in her office to execute the July Will. Judy attended the office alone and that none of her children were present in her office or in the building as the documents were reviewed or executed;
8. Kramchynsky found Judy to be alert, did not complain of pain. Judy was very sure she wanted to transfer her property to joint tenancy with Carl. Judy wanted all three of her children to share in personal belongings, and said that Juanita was already using her car. Judy mentioned working on a settlement with Paul regarding stuff that Paul had taken and any funds from that Judy would decide how to allocate;
9. Kramchynsky wrote in her notes that, given the effort it took for Judy to call Ms. Kramchynsky and arrange for this appointment, and given her lucidity and independence, Ms. Kramchynsky had no doubts about Judy’s capacity.

Determination by the Court:

Ultimately, the Court in Riben held that the evidence filed by Paul was not capable of raising a genuine issue for trial, of undue influence.

The Court gave no real weight to the evidence of Juanita. The Court went on to note:

1. The Court held that Juanita’s evidence of the July 25, 2021, breakdown was not relevant as it did not have a close proximal nexus to the date of execution of the July Will or the events leading up to it;
2. Juanita’s opinions of Judy’s mental capacity are irrelevant and not useful. Juanita was not qualified to give a medical opinion and her statements are of a general undated nature;
3. Juanita’s base concerns with respect to Carl’s “undue influence” are irrelevant as there was no factual underpinning for those concerns;
4. The evidence relating to Judy taking narcotics “a few days before” her appointment to sign the July Will, was not helpful as there is no evidence provided about how this may have compromised her mental capacity that day or in the few days after. Further, the fact that Carl had told her not to take the narcotics would suggest Carl wanted to ensure her mind was clear when she eventually signed the will. As well, the fact that Judy did not listen to Carl would be suggestive of Judy not being under Carl’s control.

The Court also made the below findings:

1. The court placed great significance on the evidence of Ms. Kramchynsky. Her notes depicted Judy as a lucid, independent individual who was capable of making decisions at a difficult stage of her life, given her ill health;
2. The Court did not find place much weight on the allegation that Carl was yelling at Judy to get in the car and telling her she needed to sign the will. The Court wrote that while yelling at your elderly mother to get in the car and telling her she needed to sign the will before driving her to the appointment are evidence of impatience, in this context they did not show undue influence. There is no evidence that Carl told her what to give away in the will at the time of the appointment or shortly before;
3. The Court placed significance on the presence in the wills of a “non‑Contest Clause – Gifts Not Equal” clause. Such showed that Judy knew that she was not distributing her estate equally but yet believed the distribution was fair in light of assets already transferred to her children during her lifetime;
4. The evidence clearly establishes that none of Judy’s children had been controlling her movements to the exclusion of another. In fact, Juanita, as co‑executor of both wills and Judy’s power of attorney, appeared to play an important role in Judy’s life. There was no evidentiary basis to believe that Carl had a level of control over Judy’s thoughts or movements in any manner during the events leading up to the making of the July Will;
5. Moreover, the evidence showed that Paul sued his mother (and Carl and Maria) one day after the execution of the April Will. The Court held that common‑sense showed that such conduct would logically have a major effect on Judy’s distribution of assets in the will. Therefore, the fact that Paul received less in the July Will than the April Will was not suspicious at all when the timing of the lawsuit is taken into consideration.

Conclusion:

Both of the counsel in Riben were excellent lawyers, and the issues were carefully and comprehensively argued.

Ultimately, the Court found no evidence which, if accepted at trial, would prove undue influence. It is no doubt difficult for a challenger to prove an allegation of undue influence, given that undue influence typically does not occur in front of witnesses.

The outcome in Riben shows that it is never easy to predict what level of evidence a court will find to be required, in order to raise a genuine issue of undue influence. Undue influence remains one of the hardest issues to prove, when challenging a will.

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.