Blog by Henry Howe of case review by Kimberly Whaley for STEP Toronto, September 2019
A “no-contest clause” is intended to discourage litigation over a will by ensuring that if a beneficiary challenges the will and does not succeed, that beneficiary’s bequest is forfeited. Beneficiaries are therefore disincentivized from pursuing difficult or dubious claims.
In Mawhinney v. Scobie, the Court of Appeal of Alberta discussed the requirements for a no-contest clause to be enforceable, and what type of application could trigger one. At issue was whether a beneficiary would trigger a no-contest clause if she applied to obtain formal proof of the will, alleging suspicious circumstances.
The applicant (“Mawhinney”) had allegedly been the testator’s fiancée, though this was apparently disputed. The testator (“JC”) had made a total of five wills. All of the first four wills, the most recent of which was dated a few months before his death, had left the residue of his estate in equal shares to his three adult children, and to Mawhinney. The last will, dated approximately one month before his death, left some specified assets to Mawhinney, but left the residue only to JC’s children.
The will contained a no-contest clause, which stated:
If any beneficiary of this my Will challenges the validity of this my Will or any Codicil hereto or commences litigation in connection with any provision of my Will or any Codicil hereto, other than for:
(a) Any necessary judicial interpretation or for the assistance of the court in the course of administration of my estate; or
(b) Seeking to enforce or obtain any rights or benefits conferred by the laws of the Province of Alberta;
then, such beneficiary shall absolutely forfeit and lose all entitlement to benefits or to any gift to him or her hereunder, and every such benefit or gift so forfeited shall fall into the residue of my estate and the residue of my estate shall be distributed as if such beneficiary had predeceased me and left no issue surviving me.
Mawhinney alleged that JC’s capacity had been diminished, and that there had been suspicious circumstances surrounding the execution of his last will. She applied to the court for advice and direction to determine whether an application for formal proof of the will would constitute a challenge to its validity that would trigger the no-contest clause.
The lower court held that Mawhinney had not presented enough evidence to rebut the presumption of capacity, but could present more evidence under an application for formal proof of the will without triggering the no-contest clause. Because Rule 75(1) in Alberta’s Surrogate Rules confers a right on a person interested in an estate to make this application, the court found that it would fall under the “rights or benefits conferred by the law of the Province” exception that JC had included in the clause. JC’s children, and the personal representatives of his estate, appealed this decision.
No-Contest and In Terrorem Clauses
The Court of Appeal considered whether the no-contest clause in JC’s will was valid, and agreed with the lower court’s finding that it was.
A no-contest clause is in terrorem (“in fear” or “as a warning”) if there is no specified consequence for breaching it. An example is clause that threatens the forfeiture of a bequest, but does not include any gift over if the bequest is forfeited. This type of clause is not normally enforced. On the other hand, when a no-contest clause does include a gift over – often by directing that the bequest will become part of the residue – then it is not in terrorem, and is normally enforceable.
The court also noted that a no-contest clause is normally unenforceable if it purports to:
“…oust statutory benefits (such as maintenance and support under dependants’ relief legislation) or deprive the court of its jurisdiction to deal with requests for assistance in interpreting the will, which do not impugn the will”.
JC’s no-contest clause included both a gift over and appropriate exceptions, and so was not in terrorem.
The Court of Appeal overturned the lower court’s decision, and held that if Mawhinney applied for formal proof of the will, the application would constitute a challenge to the will’s validity, and would trigger the no-contest clause.
The majority rejected the personal representatives’ argument that the exception applied only to dependents’ relief applications, but interpreted “rights and benefits” conferred by law to refer only to “a substantive benefit or right created by statue that the testator did not provide for, or provide for adequately”. Mawhinney’s “procedural right to challenge the will” did not fall under the exception.
The majority next considered the two-stage test under the Surrogate Rules that would be used if Mawhinney proceeded with her application: whether she could adduce some evidence that would tend to negate capacity, and whether the court should then order the personal representatives to apply to obtain formal proof. The majority found that both stages ultimately addressed the same question: whether the testator had capacity to make the will.
An application that questioned the testator’s capacity would necessarily challenge the will’s validity. This challenge was its “very essence”. If it succeeded, the will would be invalid. As the majority put it, the question of whether to make an application that could result in either the will being declared invalid or a bequest being forfeited was “exactly the type of dilemma the no contest clause is designed to create, and what was presumptively intended by JC”.
In response to Mawhinney’s argument that the clause effectively precluded a beneficiary from bringing suspicious circumstances before the court, the majority noted that a no-contest clause does not prohibit challenges, but only aims to discourage them. The purpose of the clause is to “test the fortitude of a potential challenger to the validity of the will, and how strongly they believe they can successfully challenge the will”. If Mawhinney brought a successful challenge, then the clause would be invalid, along with the rest of the will, and would not affect her interests.
O’Ferrall J.A. disagreed with the majority’s findings that the relevant exception in the no-contest clause only applied to substantive rights, and that Mawhinney was only seeking to exercise a procedural right. He noted that the application would be the necessary first step in a process that could have a range of substantive outcomes, such as the will being deemed invalid. He therefore found that the right to make the application had a “substantive aspect”. He agreed with the lower court judge that the right to make the application was a “right conferred by the law of… Alberta” that fell under the exception.
O’Ferrall JA declined to take a position on whether the application’s “very essence” would be to challenge the validity of the will, and instead declared that the right to seek proof of a will is a “fundamental” right conferred by law. He also noted that the lower court had not ordered a hearing on the will’s validity, but only on whether Mawhinney could establish suspicious circumstances that would trigger a need for formal proof.
The enforceability and specific function of a no-contest clause are not always straightforward, and can easily depend on its wording. A no-contest clause is not always in terrorem, and can be valid and enforceable if drafted appropriately.
 2017 ABQB 422
 Alta Reg 130/1995