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Discrete Functions of Courts of Probate and Construction Revisited

Two matters arose during and after I presented my paper, “The Discrete Functions of Courts of Probate and Construction,” at the 19th Annual Estates and Trusts Summit, Day 1, 3 November 2016.[1] I believe that they are of sufficient importance to merit a few further remarks.[2]

Is Mediation Permissible in Probate?

The first matter was a question about whether mediation is possible in probate.[3] I had not addressed this in my paper, but shall do so now. I took the question to be not whether probate precludes mediation entirely, but whether mediation may conflict with the legal principle that beneficiaries and next of kin cannot normally validate or invalidate testamentary documents by their consent or agreement.

Traditionally, the court would not normally approve such an agreement. It would only do so exceptionally when there is uncertainty, supported by evidence, that raises an issue about the testator’s capacity, his knowledge and approval, or whether the document was properly executed. In those circumstances, if certainty is not possible, the court will admit a testamentary document to probate when it appears prima facie to be valid, on the ground that it usually better to do so than enter into a prolonged investigation of the issues.[4]

Apart from such exceptional circumstances, however, the court did not, in the past, grant or deny probate of a testamentary document simply because all interested parties consent. The reason is that the court has a special duty to investigate what the testator’s wishes are and to give effect to them.[5]

The problem is that Rules 75.1 (Mandatory Estates Mediation) and 75.2 (Court-Ordered Estates Mediation) appear to have ignored the special role of the court of probate to inquire into these matters and the principle that the decision of the court of probate does not merely bind the adversarial parties, but operates in rem. As I have demonstrated in my paper, this is a serious fallacy that was exposed by the Court of Appeal in Neuberger v. York,[6] albeit without reference to those rules. Indeed, these rules seem to have drafted on the assumption that estate litigation is no different than any other kind of civil litigation. This is apparent from the fact that the language of Rules 75.1 and 75.2 is very similar to that of Rule 24.1 (Mandatory Mediation for general civil litigation).

Rules 75.1 and 75.2 do provide for the enforcement of mediated agreements by the court, but only on a motion by a party.[7] The court “may” then grant judgment as sought by the party. This would suggest that the court can refuse to enforce a mediated agreement on the basis of the principles in Re Muirhead,[8] if there is no genuine dispute or genuine uncertainty on an issue of validity or invalidity. However, if there is no failure to comply with a signed agreement, the only requirement seems to be that the mediation report and a notice that the agreement resolves all the issues in dispute be filed with the court,[9] unless one of the parties is under a disability, in which case court approval is required under R. 7.08.[10]

In my opinion, this is an unfortunate situation, because it denies and ignores the special role of the court of probate. I hope that these rules will be amended to reflect the law as confirmed in Neuberger.[11]

Does this mean that mediation is impossible in probate? Not at all. Indeed, it is desirable for the parties to reach an agreement if possible. In fact, beneficiaries and next of kin can always agree on how to divide an estate, either through a mediated agreement or otherwise. What they cannot do, save in the exceptional circumstances mentioned, is to agree on the documents that should be submitted to probate, or their contents. One question that the rules don’t seem to address is whether a mediated agreement can bind unborn or unascertained beneficiaries who are not parties to the mediation. One would think that that is not possible.

  1. The Incompatibility of Probate and Equity

The second matter concerns a case of which I was not aware:[12] Re Morrison Estate.[13] It is a very unfortunate decision for a number of reasons.

A father left his estate, in the events that happened, equally to his four children (except for the amount of a loan given to one child which was deducted from that child’s share and the amount of the deduction was left equally to the deceased’s grandchildren). The father appointed two children, Douglas and Heather, his executors. They discovered that the father had designated Douglas as the sole beneficiary of a RRIF, which was his largest asset. The father signed the beneficiary designation in 2002, shortly after he made his will. Unfortunately, the tax burden of the proceeds of the RRIF on the father’s death fell on his estate, while the proceeds went to Douglas. This meant that there were insufficient assets in the estate to pay the gift to the grandchildren. Another child brought an application for a declaration that Douglas held the RIFF proceeds in trust for the estate under a resulting trust.

Justice Graesser concluded that the balance of probabilities, albeit by a very small margin, namely 50.01 percent, favoured a gift to Douglas.[14] This bothered his Honour greatly, because in his view it was unfair that the estate should bear the burden of the tax, while Douglas enjoyed the benefit of the gift. He drew the inference that the father was unaware of the tax consequences and that, had he been, he would have wanted Douglas to be responsible for paying the tax. With respect, this conclusion seems far-fetched considering the skimpy evidence. His Honour then cast about for a remedy to redress the perceived injustice. He held that he could not rectify the will, since the facts did not fall within the language of s. 39 of the Wills and Succession Act.[15]

However, his Honour concluded that s. 8 of the Judicature Act[16] gave him jurisdiction to fashion an equitable remedy. Section 8 provides:

  1. The Court in the exercise of its jurisdiction in every proceeding pending before it has power to grant and shall grant, either absolutely or on any reasonable terms and conditions that seem just to the Court, all remedies whatsoever to which any of the parties to the proceeding may appear to be entitled in respect of any and every legal or equitable claim properly brought forward by them in the proceeding, so that as far as possible all matters in controversy between the parties can be completely determined and all multiplicity of legal proceedings concerning those matters avoided.

Then his Honour said:[17]

Probate law’s origins are in equity, so I do not find it inappropriate to consider equitable remedies where the common law is inadequate to remedy a wrong.

His Honour found that the tax paid by the estate conferred a benefit in like amount on Douglas, Douglas was therefore unjustly enriched and so he could make a direction that Douglas reimburse the estate for the amount of the tax.[18] Alternatively, his Honour held that the tax paid by the estate resulted from the father’s mistaken understanding of the consequences of beneficiary designation and so the father’s mistake could be remedied in equity by requiring Douglas to reimburse the estate.[19]

With the greatest respect, this reasoning contains several errors. I shall mention only two[20]. First, s. 8 of the Judicature Act is an exact copy of s. 9 of the 1980 revision[21] and has existed in that form for many years. The section was drafted with reference to courts of law and equity and not courts of probate, just as the sections of the Ontario Courts of Justice Act,[22] discussed in my paper, were. Thus, like the Ontario provisions, s. 8 of the Alberta Act existed well before the Surrogate Courts were abolished in Alberta and their jurisdiction was transferred to the Court of Queen’s Bench. Hence the section could obviously not have been intended to extend to the probate jurisdiction of the latter court, since it did not acquire that jurisdiction until much later.[23] In any event, the cases Justice Graesser cited in support of applying s. 8 were not estate cases.

Second, I believe that it is abundantly clear from my paper that probate law does not originate in equity.[24] Justice Graesser’s statement to the contrary in para. 104 of his reasons is presented as fact without any supporting authority. Hence, it is without any foundation and is, with great respect, wrong. It follows that the remedy fashioned by his Honour is impermissible in probate.

But it is arguable that, contrary to what his Honour believed, the matter was not a probate matter, but one concerning the administration of the estate. If so, the matter would have fallen within the jurisdiction of equity[25] and in that case s. 8 of the Judicature Act might have been applicable and the remedy fashioned by his Honour might have been possible.

The case has not been appealed, which is regrettable. It would have been good to have these matters explored at the appellate level.

—-

[1]  Link to paper: “The Discrete Functions of Courts of Probate and Construction,”

[2]      I am indebted to the Honourable Maurice Cullity, who graciously allowed me to bounce the issues discussed in this blog post off him and provided valuable insight on them. Of course, I am solely responsible for any errors that remain.

[3]      I am grateful to Jan Goddard for raising the question, because it addresses my argument that probate is unique and does not lend itself to many approaches that are common in other kinds of civil litigation.

[4]      See Re Muirhead, [1971] P. 263 (P.D.A.), p. 265, quoted in Otis v. Otis, 2004 CanLII 311, 7 E.T.R. (3d) 211, para. 25.

[5]      Otis v. Otis, ibid., paras. 24-26.

[6]      2016 ONCA 191 at para. 103, application for leave to appeal dismissed 15 September 2016, 2016 CanLII 60508 (SCC), paras. 67, 68, 103.

[7]      See R. 75.1.12(6), R. 75.2.09(6).

[8]      Footnote 4, supra.

[9]      See R. 75.1.12(1), (3); R. 75.2.09(2), (4).

[10]    See R. 75.1.12(5); R. 75.2.09(5).

[11]    Footnote 6, supra.

[12]    I am very grateful to Thomas Grozinger for drawing the case to my attention.

[13]    2015 ABQB 769.

[14]    There are questionable aspects to the reasons on this point, namely, whether beneficiary designations are testamentary or inter vivos dispositions, and the applicability of the presumption of resulting trust to beneficiary designations. Justice Graesser was of opinion that beneficiary designations are testamentary and that the presumption of resulting trust should not apply to beneficiary designations. With great respect, I think that these holdings are erroneous, but they do not touch the point in discussion in this blog post, so I shall not discuss them further.

[15]    S.A. 2010, c. W-12.2.

[16]    R.S.A. 2000, c. J-2.

[17]    Footnote 13, supra, para. 104.

[18]    Ibid., paras. 105, 106.

[19]    Ibid., para. 107.

[20]    It can also be argued that Douglas was not unjustly enriched. Payment of the tax did not benefit him. The gift did, but that benefit was not unjust. Similarly, his Honour made a rather sweeping statement about equity’s ability to redress mistake without citing any authority and without referring to recent cases, such as Pitt v. HMRC; Futter v. HMRC, [2013] 26 (U.K.S.C.) and Re Pallen Trust, 2014 BCSC 1791, affirmed 2015 BCCA 222.

[21]    R.S.A. 1980, c. J-1.

[22]    R.S.O. 1990, c. C.43, supra.

[23]    See further §4 of my paper, including especially the Excursus.

[24]    See §2 of my paper and passim. If further authority is required, I refer to what Pollock and Maitland wrote in History of English Law (reissue 1968), vol. 2, p. 341:

The history of probate law lies outside England . . . and in England we do not see it until the 13th century has dawned, and by that time testamentary jurisdiction belongs and belongs exclusively, to the spiritual courts.

[25]    See §2.1 of my paper.

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