IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Sharma v. Sharma, |
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2018 BCSC 1262 |
Date: 20180727
Docket: 17-2894
Registry: Victoria
Between:
Prem Lata Sharma
Plaintiff
And:
Raj
Rani Sharma as Executor of the Estate of
Rama Rani Sharma, Radha Soami Society Beas Canada,
Raj Rani Sharma, and Simmi Sharma as Beneficiaries of the
Estate of Rama Rani Sharma
Defendants
Before: The Honourable Mr. Justice Punnett
Corrected
Judgment: These reasons have been corrected on the first page
to show the correct spelling of the word “Defendants” on August 16, 2018.
Reasons for Judgment
(In Chambers)
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Counsel for the Plaintiff: |
A.J. Broadley and D. Williams |
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Counsel for the Defendants: |
A.A. Mortimore |
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Place and Date of Hearing: |
Victoria, B.C. May 3, 2018 |
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Place and Date of Judgment: |
Victoria, B.C. July 27, 2018 |
[1] The parties are siblings. Their deceased mother’s Will divides her estate equally between the defendants. As a result of her exclusion from the estate the plaintiff has sued the defendants under the wills variation provision at s. 60 of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 (WESA). The estate itself is worth approximately $100,000. However, the deceased also owned a home valued at approximately $1.5 million that she excluded from her estate by registering it jointly with the two defendants. As a result, it passed by survivorship to them and did not become part of the estate.
[2] The plaintiff in her action seeks a declaration that the jointly held home is held by the personal defendants on a resulting trust for the estate. On this application the defendants apply to strike the resulting trust claim brought by their sister. At issue is her standing to seek a declaration that her late mother’s home is impressed with a resulting trust. The defendants take no issue with the s. 60 pleading.
[3] Rama Rani Sharma died on May 3, 2017. She was survived by three daughters, the plaintiff Prem Lata Sharma, and the two defendants Raj Rani Sharma and Simmi Sharma. On February 22, 2017 she transferred her interest in the Property to the defendants as joint tenants. In her Will she excluded the plaintiff. She explained that exclusion. The plaintiff claims the Will does not adequately provide for her.
[4] The defendants submit that the resulting trust claim is actually a claim by the estate, that s. 151 of WESA governs, and therefore that unless the court grants leave to the plaintiff under s. 151 of WESA an action on behalf of the estate can only be brought, continued, or defended by the estate representative. They argue WESA is a complete code and the plaintiff (who is neither executor nor administrator of the estate) has no standing outside of s. 151 to commence or pursue the claim for a declaration of resulting trust. Their application to strike pleadings as vexatious and an abuse of process flows from the alleged lack of standing.
[5] The plaintiff submits the estate is not seeking a declaration of resulting trust, but instead the plaintiff is seeking that relief in her personal capacity. The plaintiff argues that s. 151 of WESA has no application because it requires that an application be brought by a “beneficiary or an intestate successor” and there is no intestacy given the existence of the Will, and the plaintiff will only become a beneficiary if she succeeds in her claim under s. 60 of WESA.
[6] The first issue for determination is whether s. 151 applies.
[7] WESA came into force on March 31, 2014. Section 151 states:
Beneficiary or intestate successor may sue with leave of court
151. (1) Despite section 136 [effect of representation grant], a beneficiary or an intestate successor may, with leave of the court, commence proceedings in the name and on behalf of the personal representative of the deceased person
(a) to recover property or to enforce a right, duty or obligation owed to the deceased person that could be recovered or enforced by the personal representative, or
(b) to obtain damages for breach of a right, duty or obligation owed to the deceased person.
(2) A beneficiary or an intestate successor may, with leave of the court, defend in the name and on behalf of the personal representative of a deceased person, a proceeding brought against the deceased person or the personal representative.
(3) The court may grant leave under this section if
(a) the court determines the beneficiary or intestate successor seeking leave
(i) has made reasonable efforts to cause the personal representative to commence or defend the proceeding,
(ii) has given notice of the application for leave to
(A) the personal representative,
(B) any other beneficiaries or intestate successors, and
(C) any additional person the court directs that notice is to be given, and
(iii) is acting in good faith, and
(b) it appears to the court that it is necessary or expedient for the protection of the estate or the interests of a beneficiary or an intestate successor for the proceeding to be brought or defended.
(4) On application by a beneficiary, an intestate successor or a personal representative, the court may authorize a person to control the conduct of a proceeding under this section or may give other directions for the conduct of the proceeding.
[8] According to the Ministry of Justice in its Interpretive Guide for WESA: British Columbia, Ministry of Justice, The Wills, Estates and Succession Act Explained, online: <https://www2.gov.bc.ca/assets/gov/law-crime-and-justice/about-bc-justice-system/legislation-policy/wesa/wesaexplanation.pdf> at p. 80:
· Section 151 overcomes a gap in the present law, by allowing a beneficiary or an intestate successor to bring or defend proceedings on behalf of the estate in the name of the personal representative.
o Approval of the court is required.
· Currently a beneficiary or an intestate successor is not permitted to bring or defend proceedings on behalf of the estate if the personal representative refuses or is unable to do so.
o Therefore, if a beneficiary wishes to bring an action and is faced with a refusing personal representative, the beneficiary must apply to remove the personal representative.
· While a personal representative can be removed in accordance with section 158, it may not be convenient or useful to remove a personal representative in order to bring or defend a proceeding. The personal representative may be doing a fine job of administering the estate, but may simply have differing views than the family of the deceased on the risk and return of bringing or defending an action. For example:
o The personal representative is primarily concerned with preserving and distributing the estate. Therefore, they may be more risk adverse than the beneficiaries and more conservative in their assessment of the potential for success in bringing an action. However, the beneficiaries may be willing to pursue an action, either for non-monetary reasons or because the potential return is deemed worth the risk;
o With respect to defending an action the personal representative may feel that settling an action against an estate is more cost effective than defending the claim, as again their primary concern is preserving the estate. Whereas, family members may believe that it is worthwhile to defend the good name of the deceased even though there may be a potentially higher cost in doing so.
· The procedure contemplated by section 150 is similar to the derivative action in company law. Sections 232–33 of the Business Corporations Act permit a shareholder or director to bring or defend proceedings on behalf of a company in certain circumstances.
· NOTE: Any person, not only a beneficiary or intestate successor, may be given control of the conduct of the proceeding under subsection (4).
[9] Since s. 151 is a new provision it has had limited judicial consideration.
[10] In Werner v. McLean, 2016 BCSC 1510, the deceased died without a will. The administrator and the applicant were siblings and the sole intestate successors. The applicant sought leave to commence an action in the name of and on behalf of the administrator of the estate regarding property jointly owned by the administrator and the deceased in joint tenancy prior to the death of the deceased. At the death of the deceased the administrator had become sole owner of the property by survivorship. The applicant argued that one-half of the property was held in trust for the estate.
[11] The court held it was “empowered to grant leave to Ms. Werner as an intestate successor to commence proceedings in the name and on behalf of the personal representative if certain preconditions (i.e., reasonable efforts, notice, and good faith) are met. I understand the administrator not to contest that the preconditions are satisfied in this case” (para. 16). Leave was granted.
[12] In Bunn v. Bunn Estate, 2016 BCSC 2146, the applicant sought leave under s. 151 of WESA to commence an action on behalf of the estate against the applicant’s brother and a company controlled by him. She wished to challenge certain transactions benefitting her brother and his company based on undue influence and non est factum. The brother opposed the application because the transactions were gifts to him by the deceased.
[13] Justice Gray noted at para. 42 that “[t]he powers that the court may grant to beneficiaries to pursue claims on behalf of an estate under s. 151 of WESA are similar to those that the court may grant to shareholders to pursue claims on behalf of a company under ss. 232 and 233 of the Business Corporations Act, S.B.C. 2002, c. 57 …” The Court also discussed the appropriate test for leave under s. 151.
[14] In Byrn v. Farris, Vaughan, Wills & Murphy LLP, 2017 BCCA 454 (leave to appeal to S.C.C. being sought), the Court of Appeal held with respect to s. 151 of WESA that:
[31] Section 151 of the Wills, Estates and Succession Act, S.B.C. 2009, c. 13 recognizes that there are situations in which it is appropriate for a beneficiary or successor to have the right to bring an action in the name of the personal representative of the estate. The section requires a person in the plaintiff’s situation to follow specific procedures to obtain leave to bring such an action. The section is an attempt to balance the rights of beneficiaries and successors with the broader interests of the estate as a whole.
[32] Ms. Byrn has not made an application to bring this action under s. 151, nor is it an action brought on behalf of the personal representative. As it is not a case in which a lacuna in the law requires the recognition of a direct right on the part of a beneficiary to bring action, the plaintiff lacks standing to make the claim.
[15] The authorities indicate that leave is required whenever an individual who is not a personal representative wishes to commence a claim on behalf of the estate. As noted the plaintiff asserts firstly that she is not advancing a claim on behalf of the estate and secondly that s. 151 does not apply as she is not a beneficiary nor an intestate successor. As a result, she submits that were she to bring a s. 151 application it would be dismissed due to her lack of standing.
[16] The application turns on whether the plaintiff is an intestate successor and therefore required to apply under s. 151 of WESA. If not, then does she have a personal right to seek the relief sought?
[17] Given the deceased had a will and it did not benefit the plaintiff, the plaintiff is not a beneficiary. The plaintiff submits that nor is she an intestate successor under s. 151 given the definition of “intestate successor” in WESA. She submits she is a stranger to the estate and s. 151 does not permit such a person to bring a s. 151 application, hence she has a direct right to seek a declaration. She argues that otherwise, to advance her claim would be an unwieldy procedure requiring she bring a s. 60 application to vary the Will, succeed, and secondly, as a result become a beneficiary, and then she would have to apply under s. 151. She submits such a procedure with its multiple proceedings would run contrary to s.10 of the Law and Equity Act, R.S.B.C. 1996, c. 253, which requires that so far as possible all matters in controversy be completely and finally determined and that a multiplicity of proceedings is to be avoided.
[18] This issue does not appear to have arisen in the authorities that have considered s. 151.
[19] WESA provides these definitions in s. 1(1):
"beneficiary" means
(a) a person named in a will to receive all or part of an estate, or
(b) a person having a beneficial interest in a trust created by a will;
…
"intestate" means a person who dies without a will;
"intestate estate" means the estate of a person who dies without a will;
"intestate successor" means a person who is entitled to receive all or part of an intestate estate;
[20] I turn first to the interplay of the Supreme Court Civil Rules, B.C. Reg. 168/2009 (the “Rules”) and WESA. Specifically, Part 25 of the Rules applies to estates and WESA. Section 1 of the Court Rules Act, R.S.B.C. 1996, c. 80:
1. (1) The Lieutenant Governor in Council may, by regulation, make rules that the Lieutenant Governor in Council considers necessary or advisable governing the conduct of proceedings in the Court of Appeal, the Supreme Court and the Provincial Court.
(2) Without limiting subsection (1), the rules may govern one or more of the following:
…
(f) all matters arising under … the Wills, Estates and Succession Act;
[21] Rule 25-2(2) sets out the notice requirements for a person intending to apply for an estate grant or for a resealing of a foreign grant in relation to the estate of a deceased person. If the deceased left a will, the Rule requires notice of such an application be provided to anyone who is named as an executor (subsection (a)(i)), a beneficiary (subsection (a)(ii)), or, under subsection (2)(a)(iii):
[E]ach person who, under Division 1 of Part 3 of the Wills, Estates and Succession Act, would have been an intestate successor if the deceased did not leave a will and who is not referred to in subparagraph (i) or (ii) of this paragraph; [Emphasis added.]
[22] The Rule therefore anticipates notice to be given to a person who is not a beneficiary under a will notwithstanding there is no intestacy. Such notice is logically required as those who would be entitled on intestacy may have a claim against the estate. This also accords with s. 60 of WESA, which allows for a spouse or a child to apply to vary a will if it does not adequately provide for them.
[23] Section 60 of WESA reads:
Maintenance from estate
60. Despite any law or enactment to the contrary, if a will-maker dies leaving a will that does not, in the court's opinion, make adequate provision for the proper maintenance and support of the will-maker's spouse or children, the court may, in a proceeding by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the will-maker's estate for the spouse or children.
[24] Part 3 of WESA governs the distribution of intestate estates. A spouse and children are the first to be entitled to the estate on an intestacy (see Division 1, Part 3).
[25] Further, Rule 25-1(2) provides that the interpretation sections of WESA apply to the Rules “unless the context requires otherwise.”
[26] The difference in wording in Rule 25-2(2) as compared to WESA is that the Rule requires notice to be given to a person who “would” have been an intestate successor if there was no will. The definition in WESA states that an intestate successor is a person entitled to receive all or part of an intestate estate. It does not state that such entitlement must be determined before an individual falls within that definition. That entitlement is subject to orders of the Court under s. 60.
[27] The interpretation of a statute is governed by what Professor Driedger called the “modern principle” (see Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27 at para. 21):
Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
[28] While the Rule refers to an intestate successor as a person who “would have been an intestate successor” if there were no will, WESA lacks the words “would have”. As a result, on a plain reading of s. 151 the plaintiff is not a beneficiary nor an intestate successor. The definitions of “intestate” and “intestate estate” in WESA, that is, a person who dies without a will and the estate of a person who dies without a will, make it clear the plaintiff is not an intestate successor. The lack of similar wording to that in the Rule is telling. Had s. 151 been intended to capture a person who “would have” been an intestate successor it could easily have said so.
[29] In addition, the purpose of s. 151 must be considered. It addresses the situation where a personal representative refuses to take action leaving an intestate party with the remedy of removing the personal representative in order for a beneficiary or intestate successor to commence or defend proceedings on behalf of the estate. As noted in the Interpretive Guide at p. 80 “section 151 overcomes a gap in the present law, by allowing a beneficiary or an intestate successor to bring or defend proceedings on behalf of the estate in the name of the personal representative.”
[30] Also, as noted by the Court of Appeal in Byrn “[t]he section is an attempt to balance the rights of beneficiaries and successors with the broader interests of the estate as a whole” (para. 31). It does not address a claim brought by a person who is not a party, in this instance by being neither a beneficiary or intestate successor.
[31] As noted the plaintiff asserts she is personally seeking a declaratory judgment respecting the present legal status of the Property. She is not advancing a claim on behalf of the estate to recover property.
[32] In Kaiser Resources Ltd. v. Western Canada Beverage Corporation (1992), 71 B.C.L.R. (2d) 226 (S.C.) (CanLII), the court stated that a judicial declaration is “an unusual legal animal … its legal existence is based upon a Rule of Court” (10-11). Justice Bouck then stated at 11:
Once a court grants a declaration, it is binding on those affected. However, unlike a judgment finding a breach of contract and awarding the remedy of specific performance, "the declaratory judgment merely declares and goes no further in providing relief to the applicant than stating his rights": Sarna, The Law of Declaratory Judgments, 2nd Ed. (1988), page 1. Put another way, a declaration is both a decree that declares an infringement of a right and an order prescribing the remedy.
When applying for a declaration, applicants must show the infringement of a right. That right may arise under a statute, the common law or in equity: Simmonds v. Newport Abercan Black Vein Steam Coal Company, Limited, [1921] 1 K.B. 616 at 627 (C.A.).
[33] Rule 20-4 provides that “[a] proceeding is not open to objection on the ground that only a declaratory order is sought, and the court may make binding declarations of right whether or not consequential relief is or could be claimed.”
[34] Since the plaintiff is a child of the deceased she has standing to claim for variation of the Will under s. 60 of WESA.
[35] The size of the estate is an essential consideration in determining if provision should be made for a plaintiff (Tataryn v. Tataryn Estate, [1994] S.C.R. 807 at para. 31). In this instance it is not disputed that the real property was transferred to the defendants gratuitously. The issue of whether a gift was intended or if the beneficial interest remains with the estate arises. As a result, the size of the estate will be affected by resolution of that issue (Doucette v. McInnes, 2007 BCSC 289 at para. 12).
[36] In Doucette the court found a non-executor had standing to seek a declaration of trust alongside a will variation claim. The court noted that in Mordo v. Nitting, 2006 BCSC 1761, a Wills Variation Act action, the plaintiff was not a beneficiary and was completely excluded by the will and all of the estate passed by jointure to the deceased’s daughter. Justice Wedge permitted the plaintiff’s arguments respecting the jointures to go forward. There was no challenge to the plaintiff’s standing to advance that argument. A person then with an interest in an estate is entitled to inquire about assets that may form part of the estate. See also: Drummond v. Moore, 2012 BCSC 496 at paras. 29 to 35, Kuo v. Kuo, 2014 BCSC 519 at paras. 202-208, and Kurmis v. Zilinski, 2011 BCSC 1433 at paras. 22-24.
[37] As a result, the plaintiff, who has an interest in the estate and its potential assets is entitled to seek declaratory relief. Were that not the case and given her lack of ability to apply under s. 151 of WESA, the plaintiff and the court would be denied access to a consideration of the assets that may properly form part of the estate.
[38] As a result, the plaintiff is not required to obtain leave from the court pursuant to s. 151 of WESA before commencing her action.
[39] The defendants also allege the pleadings for a resulting trust are frivolous and should be struck given leave under s. 151 was not obtained. As noted by the court in Demers v. British Columbia (Ministry of Social Development and Social Innovation), 2017 BCSC 332 at para. 17, “[a] pleading is frivolous if it is without substance, is groundless, fanciful, ‘trifles with the court’ or wastes time.” The issue is determined by reference to the pleadings which are assumed to be true. Since leave is not required and given the plaintiff’s pleadings allege facts that give rise to a presumption of resulting trust, and her wills variation claim forms a basis for her interest in the legal status of the property, the pleadings are not frivolous.
[40] Nor is there any substance to the defendants’ argument that the action constitutes a misuse of the court’s process that would bring the administration of justice into disrepute. The defendants’ material goes to the alleged strength of their case while the issue is to be resolved on the pleadings. The applicant bears a heavy onus and must show the alleged abuse is plain and obvious (Hare v. Lit, 2013 BCSC 33 at paras. 24 and 25). That has not been shown here. The application to strike for abuse of process is dismissed.
[41] The application of the defendants is dismissed.
[42] Costs shall be in the cause.
“R.D. Punnett, J.”
The Honourable Mr. Justice Punnett