Wills, Capacity, Trust and Variation (in one case!)

Last month, the Supreme Court of B.C. released reasons for judgement in the case known as Wachter v. Carlson. It was in essence a follow-up to the judgement that the Court arrived at in the case last year. 

The case is worth looking at because it touches so many important areas of law that affect many people these days. So let’s first take a look at the initial judgement from last year, and then the somewhat unusual (but most interesting) judgement from last month.

2012 Judgement
The claim was brought by the Plaintiffs, the parents of one of the defendants. The parents lived in a house in the B.C. Interior whose title was registered in the names of their daughter and son-in-law (the defendants). The Plaintiff parents brought this action, claiming ownership based on a Trust.

The Plaintiffs lived for years on Vancouver Island. Both had good jobs, but suffered health problems and job losses in the 1990s that, by 2000, left them with lower incomes and in shaky financial circumstances. By 2003, they decided to move to the Okanagan, where they felt the cost of living would be lower.

They could not qualify for a mortgage themselves, given their credit situation, so they asked their son if he could help them. They were unsuccessful. They approached their daughter, who then lived in Calgary with her family. She was agreeable with respect to arranging a mortgage.

The Plaintiffs were able to pay the down payment and the monthly living costs. They found a house, and a mortgage was arranged. The purchase concluded in 2004 with the defendants going on title as registered owners.

The defendant daughter told the Plaintiffs that the lender required a rental agreement, and she asked her mother (Plaintiff) to prepare the agreement. The mother reluctantly did so. The parents were listed on the as tenants. The Plaintiffs paid all the costs of maintaining the home, including paying property taxes, mortgage payments, insurance and some improvements to the property. The defendants, by comparison, contributed “little” (the Court stated).

The parties’ relationship deteriorated over time. By 2008, the defendants felt that the Plaintiffs did want ownership and the defendants were not prepared to relinquish the title. The Court, however, held that the Plaintiffs were accurate in their assessment of the legal relationship between the parties. The Plaintiffs were the proper owners of the property, and so the defendants were ordered to transfer the title to the Plaintiffs.

The Court also held that the Defendants had been unjustly enriched, and that they held the property on a resulting trust for the Plaintiffs. So in every category of remedy, the Plaintiffs succeeded. Before the judgement was rendered, however, the Plaintiff husband unfortunately died.

The 2013 Judgment

In its 2012 reasons, the Court allowed the parties to seek clarification of any part(s) of the Orders it made. One of the parts was in connection with the transfer of the title. The question was whether the title should transfer to the Plaintiffs as joint tenants, or as Tenants in Common.

This question is relevant because, with the Plaintiff husband deceased, a joint tenancy ownership would effectively mean that the Plaintiff (surviving) wife would become sole owner of the property.

The Plaintiff wife stated that this was the goal of the action that the Plaintiffs had, and that it was intended in the Will of the deceased Plaintiff. Also, the lender of the new mortgage on the title advised the Plaintiff that she had to be sold title holder to have the financing.

However, there was another significant aspect to the title transfer. The defendant wife is the daughter of the deceased Plaintiff, but not of the surviving wife (Plaintiff). Therefore, if title to the property were given to the surviving Plaintiff, in her sole name, no action would be possible under the Wills Variation Act — at least regarding the house.

The deceased Plaintiff’s Will speaks to this fact. The Will refers to his two children (one of whom is the defendant wife). The clause in question is a scathing, frustrating comment on the deceased’s two children and how they affected the last few years of his life. It was, to say the least, not pleasant, and the Court considered it.

The Court held that title should transfer to the name of the Plaintiff wife alone, and that equity required this remedy. The transfer does prevent a challenge to the Will of the deceased, at least insofar as the house is concerned. The claim was fully resolved in favour of the Plaintiff parents.

Summary
The Court did not seem to have much difficulty with this case on the facts. The defendants clearly did not give very good evidence, and it appeared that they came across as being perhaps somewhat greedy. 

It is not uncommon for parents and children to purchase property together. Sometimes it is done by older, aging parents to help their children acquire a home, where it also helps the parents who live in part of the home and are looked after by their children. When the parents pass, the children tend to keep the home.

Whatever the arrangement, it is always unfortunate when the parties’ relationship deteriorates. But the Court will look beyond the documents that may exist governing the relationship to determine the full circumstances, and adjudicate accordingly. 

I do not know whether this particular case will be appealed, but one critical aspects of the Court’s judgement is that it did not directly “vary” the Will of the deceased husband. However, it did in effect prevent a variation action (at least regarding the house) by the two children. 

You might consider it an indirect variation of sorts, which in my view is significant.

This column ran in the Richmond News on March 29, 2013.