IN THE SUPREME COURT OF BRITISH COLUMBIA
|
Citation: |
Grosseth Estate v. Grosseth, |
|
|
2017 BCSC 2055 |
Date: 20171115
Docket: S68839
Registry: Nanaimo
Between:
The Estate of Wilmer Morten Grosseth and Myles Jentoft Grosseth
as the Executor of The Estate of Wilmer Morten Grosseth
Plaintiffs
And
Brian Lynn Grosseth and Helen Jean Bergstrom
Defendants
Before: The Honourable Mr. Justice Baird
Reasons for Judgment
|
Counsel for the Plaintiffs: |
R.D. Oliphant |
|
Counsel for the Defendants: |
K.G. Walker |
|
Place and Dates of Hearing: |
Nanaimo, B.C. July 4 & 5, 2017 |
|
Place and Date of Judgment: |
Nanaimo, B.C. November 15, 2017 |
[1] Wilmer Morten Grosseth, known to everyone as “Mort”, was born on January 5, 1915 and died on September 15, 2011 at the age of 96. He was a lifelong bachelor. He had no children. On June 6, 2001 he executed a will providing that the residue of his estate was to be divided equally amongst his 11 nephews and nieces. These included brothers Myles and Brian Grosseth, who, along with Helen Bergstrom, Brian’s spouse, are the principal parties to this lawsuit. For simplicity’s sake I will refer to all concerned by their first names.
[2] In the decade or so that remained of Mort’s life after he made his will, he transferred the lion’s share of his money, around $157,000, to Brian and Helen. In the end there was only around $60,000 to be distributed amongst the other nieces and nephews. Myles is suing Brian and Helen as Mort’s executor. He seeks return of the cash to the estate. He relies upon the presumptions of resulting trust and undue influence. Brian and Helen maintain that the amounts advanced were gifts. They deny that they influenced Mort in any way.
[3] Mort spent most of his life in the St. Paul region of Alberta working on family farms. In 2001, when he was approximately 86 years old, he moved to Nanaimo to live with Brian and Helen. Brian was a stay-at-home father looking after the couple’s young daughters while Helen was practicing full-time as a chiropractor. Mort moved into their self-contained basement suite. By all accounts this was a happy arrangement for everyone. Mort occupied the basement suite for the better part of a decade. He was welcomed into every aspect of Brian and Helen’s family life. He was included in family outings and holidays. Brian took him in the car for his appointments and errands. There were family dinners every night. Mort became like a grandfather to Brian and Helen’s daughters and enjoyed his role as family elder.
[4] In the early going, on an informal basis, though he paid no rent, Mort gave Brian and Helen several hundred dollars per month to defray household costs. These payments stopped in June 2003. By that time Brian and Helen had resolved to buy a commercial property for Helen’s chiropractic practice. A suitable property was found in foreclosure. Brian and Helen decided to make an offer. When Mort heard about this he volunteered to donate $100,000 towards the purchase price. Brian and Helen maintain that this was a surprise. There had been no prompting from them. The idea of seeking Mort’s financial assistance, they claim, had never occurred to them.
[5] The asking price for the property — approximately $180,000 — could have been raised from Brian and Helen’s own funds and a manageable bank loan. They had already decided to proceed with their bid before Mort spoke up. Brian tried to talk Mort out of giving them money. He suggested a middle ground whereby Mort would take title to the property in proportion to his contribution to its acquisition. Mort wouldn’t hear of it. Instead, on June 20, 2003, he handed over a banker’s draft for the amount discussed. He made it clear to Brian and Helen that it was a gift and nothing was expected in return.
[6] Although the issue was never discussed, over the years that Mort continued to live in the basement suite, he made no further contributions to household expenses, and Brian and Helen never asked him for any. I conclude that there was a tacit agreement amongst the three of them that Mort’s generosity had cancelled any notion that further payments might be required. I have no difficulty accepting that Mort would have considered his gesture to be fitting given the high quality of life that Brian and Helen were providing him. The evidence was unanimous about this. Mort was well looked after and treated throughout as a valued and respected senior member of the family.
[7] In 2007, Brian and Helen’s mortgage loan on their principal residence came due. When Mort got wind of this he volunteered to pay off the balance with no strings attached. Once again Brian and Helen told him that he was under no obligation and they didn’t need the money. The outstanding principal amount was quite small — approximately $57,000 — and the modest monthly payments were easily managed within the family budget. Once again, according to Brian and Helen, Mort would not be dissuaded. He preferred to give his money to them in honour of their years together as a family. Mort allegedly told Brian that if the money remained in his estate it would go to people he barely knew and who had never showed much interest in him. Brian confirmed in evidence, and no one contradicted him, that in the decade or so that Mort lived in Nanaimo, most of the nieces and nephews named as residual beneficiaries in his will never visited or communicated with him at all.
[8] Even Myles, who was Mort’s power of attorney, executor, and is now the principal force behind this lawsuit, travelled to Nanaimo to see Mort only once in all the time that he lived with Brian and Helen. He popped by for a quick reunion with his uncle that lasted a couple of hours sometime in the summer of 2007. Myles’s evidence on this score was that for a number of years after 2001, Mort returned to Alberta each summer for an extended visit, and stayed with Myles at his farm. Myles maintained that he had a close relationship with Mort throughout his life.
[9] The only other residual beneficiary to give evidence was Donna Grosseth, a sister to Brian and Myles. She expressed no interest in Mort’s money. Her evidence simply confirmed that Brian and Helen took good care of Mort and that he remained independent and fully capable of managing his affairs well after he transferred the second amount of money in 2007.
[10] A word or two, first of all, about the admissibility of hearsay evidence submitted on this summary trial. Counsel did not argue about this, so I will limit myself to the general observation that certain statements were attributed to Mort indicating his intentions when he transferred the money to Brian and Helen. Such evidence was ruled to be admissible as an exception to the rule against hearsay in analogous circumstances in Pasko v. Pasko, 2002 BCSC 435 at paras. 9-10, and this reasoning was adopted and approved in Mondonese v. Delac Estate, 2011 BCSC 82, affirmed 2011 BCCA 501. I would propose to take the same approach here, but I have by no means blinded myself to the fact that, coming from Brian and Helen, such evidence is self-serving and may not be reliable in the ultimate – rather than “threshold” – sense.
[11] In Pecore v. Pecore, 2007 SCC 7, it was established that gratuitous transfers of wealth between adults come with a rebuttable presumption of resulting trust in favour of the transferor (para. 24). I think it a straightforward proposition that the monies advanced in the present case are captured by this presumption. The evidentiary onus is on the defendants to demonstrate that a gift was intended because equity presumes bargains, not gifts (Pecore at para. 24). I must weigh all the circumstantial evidence surrounding the transfers. If I am unable to reach a conclusion about Mort’s actual intention when the transfers were made, then the presumption of resulting trust must be applied to “tip the scales” in favour of the money being repaid to the estate: S.M.S. v. D.M.T., 2014 BCSC 2387 at para. 33.
[12] In my view, furthermore, the nature of the relationship between Mort, Brian and Helen gives rise to the common law presumption of undue influence. The law seeks to assure that gratuitous transfers are free from the taint of manipulation or coercion. Mort was well advanced in years when the transfers under consideration were made, and he was living in a situation of some dependency on Brian and Helen. They were surely in a position, had they wished, to dominate him into acting to their advantage and to his own detriment: Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 at 377. I remind myself that it is the potential for domination that triggers the presumption of undue influence, not its actuality. The presumption may be rebutted by evidence, direct or circumstantial, establishing that the donor entered into the transaction of his or her own full, free and informed thought: Cowper-Smith v. Morgan, 2016 BCCA 200 at para. 49, leave to appeal to SCC granted [2016] S.C.C.A. No. 312 (QL), referencing Geffen at 379. Factors relevant to rebuttal include: (i) the lack of actual influence or opportunity to influence the donor; (ii) receipt of or opportunity to obtain independent legal advice; (iii) the donor's ability to resist any such influence; and (iv) the donor's knowledge and appreciation about what he or she was doing: Stewart v. McLean, 2010 BCSC 64 at para. 97.
[13] On all of the evidence, I find that both of the legal presumptions in play have been rebutted. As to the notion that the transfers might have been loans, I bear in mind that there were no contemporaneous documents evidencing a loan, no manner for repayment was specified, no security was taken or held, no demand for repayment was made, there was no partial repayment, and no evidence of any expectation of repayment: see Kuo v. Chu, 2009 BCCA 405 at para. 9, citing Locke v. Locke, 2000 BCSC 1300.
[14] As regards the first advance of monies in 2003, furthermore, I received evidence that a gift was intended from Wendy Turner, who was Helen’s office assistant from 2003 to 2008. She met Mort on many occasions and got to know him pretty well. She testified about an open house celebrating the opening of Helen’s new office back in 2003. She recalled that Mort was proud about having helped to purchase the property. He told her that he had done it because Brian and Helen let him stay in their house and did not charge him for room and board.
[15] I consider this hearsay evidence, as previously mentioned, to be admissible on authority of Pasko and Mondonese, and I would hold, furthermore, that apart from the relevant exception, this evidence satisfies the test of the modern day principled approach to the reception of hearsay evidence. First of all, it is necessary. Mort is gone and cannot testify for himself. His intention in transferring the money is front and centre in this case, and naturally a just resolution requires me to consider any reasonably reliable evidence that may go to resolving the issue.
[16] Ms. Turner’s evidence has the advantage that it is totally independent. She no longer works in Helen’s office. She has no interest in the outcome of this lawsuit. The accuracy of her testimony was not seriously questioned. I haven’t the slightest doubt that Mort expressed himself to Ms. Turner in precisely the terms alleged. There is no doubt that the underpinning of Mort’s statement was true: he was not paying rent to Brian and Helen. That being so, it was logical and reasonable, in my view, that he should have been motivated to make a financial gift in return and to be satisfied about having done so. This is my interpretation of what Mort said to Ms. Turner. I am satisfied, in short, that the alleged statement was made to Ms. Turner, that she transmitted it accurately in evidence, and there were circumstantial guarantees of trustworthiness and reliability such that I may rely on it as evidence that Mort intended the money transferred to be a gift.
[17] I am mindful, of course, that Mort was 88 years old at the time of the first transfer and 92 when he made the second one. The totality of the evidence, however, makes it clear that he was fully capable of managing his own affairs throughout. There was no evidence whatsoever to substantiate the claim made in Myles’s pleadings that Mort was of diminished capacity due to age, dementia, or other causes. I am satisfied, to the contrary, that the transfers were gifts freely given by a man who was fully capable of making his own decisions uninfluenced by anyone.
[18] In my assessment, Mort’s decision to advance the funds to Brian and Helen came from a natural sense of loyalty and gratitude for their years of service to him. It seems natural to me that he should have been strongly motivated, in all the circumstances, by a desire to contribute to a family economy from which he benefited so generously, and to secure his place in the esteem of a family to which he had become strongly bonded. I come to this conclusion despite my acceptance of Myles’s evidence regarding his relationship with Mort and Mort’s visits to Alberta. His evidence does not negate what I have determined to be Mort’s logical desire to provide for Brian and Helen’s family. My conclusions in this direction rely, not on Brian and Helen’s evidence of what Mort said to them about his intentions, but on inferences that arise from established facts independent of those alleged utterances.
[19] On the issue of capacity, Donna Grosseth gave evidence that she had seen Mort a number of times during his years living with Brian and Helen. She said that he was healthy, active, and intelligent, including on their last visit together in August 2008, after the second transfer of $57,000 had been made. On this occasion she observed Mort to be as alert and engaged as ever. She believed that Mort was completely capable of making his own decisions, and made this avowal in the full knowledge that it would weigh in favour of Brian’s defence of this lawsuit and auger against her own pecuniary interests as a residual beneficiary named in Mort’s will.
[20] Alma Grosseth, Brian and Myles’s mother and Mort’s sister-in-law, made similar observations of Mort when she saw him in September 2008. By then Mort was 93 years old, but according to Alma he was still walking to two different malls to do his own shopping. He liked to watch the TV and discuss current events and politics. He was mentally alert and displayed a good memory. She had known Mort since 1949 and said that his capacities were little changed from earlier days, aside from the fact that he had become somewhat hard of hearing.
[21] A friend of Brian and Helen’s called Dirk Becker who saw Mort regularly during the years he lived with Brian and Helen gave evidence of a similar ilk. He said that Mort continued to be bright and witty throughout. There was no observable decline in mental fitness or acuity. He was sound of mind and very clear in any decision he made.
[22] Clara Sharp, Helen’s sister, last saw Mort in September of 2008. She said that Mort came to dinner every night during her visit and participated fully in table conversation. He was quick to disagree with people whose opinions conflicted with his. She said that he had a wide-ranging knowledge about life and affairs, exhibited a charming sense of humour, and was in great physical shape for someone his age. He liked “doing his own thing” in his downstairs apartment, including cooking bacon and eggs in the morning with the radio or TV turned up.
[23] Mary Roy, Helen’s cousin, said that Mort was always bright and interested in things. He had a strong character and was not shy to share his views with others. He was physically active and could fix any kind of electrical or mechanical equipment. Mort read a lot of books and newspapers, and was alertly engaged with the world around him. When she last saw him in 2008 she noticed that Mort’s hearing was not as good as it had been but otherwise he was the same as ever.
[24] Finally, another of Helen’s sisters, Judith Hinshaw, said that she visited a number of times while Mort lived with Brian and Helen. Mort was always around, she said. He had a favourite chair at the kitchen table. He was treated as part of the family and not a guest or a tenant. When she last saw Mort in August 2008 there was no sign of confusion or memory loss. He remained involved and engaged in family life. He continued to express his political views. He did not shrink from stating his opinions and standing his ground.
[25] This body of evidence was not contradicted or questioned. I have no reason to disbelieve it. Mort obviously enjoyed good physical and mental health until the onset of major illness right at the end of his very long life. He depended on Brian and Helen, there is no doubt about that, but I am satisfied that he remained independent and capable throughout. There is not a shred of evidence to suggest that either Brian or Helen prevailed on him in any way to advance the funds under contemplation, and no evidence to suggest that he would not have been perfectly capable of resisting such influence had they exerted it. Neither Brian nor Helen had access to Mort’s accounts or any control over the management of his finances. The absence of legal advice is but one factor to be considered. It is not determinative in the present case, in my view, even if such advice might have been sensible to give certainty to the parties’ arrangements and to prevent this lawsuit.
[26] The law seeks to protect elderly citizens from predatory and exploitative conduct at the hands of unscrupulous relatives and caregivers. The presumption of undue influence formalises an expression of scepticism about voluntary transfers such as the ones under consideration here. On the other hand, there is the matter of adult autonomy and the individual freedom to dispose of property as one sees fit. The residual beneficiaries named in Mort’s will had no moral claim to his support and it is easy to understand why, in all the circumstances, he preferred to give his money to Brian and Helen.
[27] On the totality of the evidence, I am satisfied that Mort intended the money transfers in 2003 and 2007 to be gifts. He was motivated, I find, by a natural and understandable gratitude to Brian and Helen for the happiness and comfort of his final years. I find that these gestures were freely made by a man of sound mind who, in all likelihood, wished to make a proper contribution to the household economy in which he lived and thrived for nearly ten years. The presumptions of resulting trust and undue influence have been rebutted.
[28] One last issue that I have not previously addressed is Mort, Brian and Helen’s purchase of a property on Nicol Street in 2004. Mort contributed about half of the purchase price for this property. This issue is now resolved as the parties entered into a Consent Order in July 2017 providing for the sale of the property, however brief remarks are appropriate. There is no evidence to support the assertion in Myles’s pleadings that the defendants held their interests in the property, or a portion of their interests in the property, in trust for the plaintiff. Furthermore, I am satisfied that Mort made this investment under his own will and while of sound mind.
[29] The action is dismissed. Costs may be spoken to if necessary, in the absence of which the defendants are entitled to costs on Scale B.
“Baird J.”