2006 BCSC 448 Ward v. Ward et al

Before: The Honourable Mr. Justice Macaulay

Reasons for Judgment

(In Chambers)

Counsel for the Plaintiff:	P.B. Newman
Counsel for the Defendants: Ross Forsyth Ward and David Stirling Ward	J.C. Fiddes
Date and Place of Hearing:	20060227
	Victoria, B.C.

[1] The defendants, Ross Forsyth Ward and David Stirling Ward, are beneficiaries of their deceased father’s estate. Their father, David Forsyth Ward, divorced their mother and, in 1986, married the plaintiff, Shirley Ann Ward. Two days before their wedding, David Forsyth Ward and Shirley Ann Ward signed a pre‑nuptial agreement (the "marriage agreement"), clause 14 of which states:

14. The Wife is not either during the Husband’s lifetime, or after his death, should he predecease her, save and except as may be expressly provided in a valid Will and Testament of the Husband, to take, claim, demand or receive any right in any property that he might own at his death, nor is she to demand, take or receive any dependant’s award or allowance as provided for by the Wills Variation Act, or similar legislation; AND SAVE as otherwise herein provided each party hereby forever waives, releases and relinquishes to the other and to the heirs, executors, administrators, devisees, legatees and assigns of the other all rights, interest or claims of inheritance and to a distributive share in the estate of the other (in the event of intestacy), either as widow, widower, heir, survivor, distributee, or next of kin in and to all of the estate of the other whether now owned or hereafter acquired.

David Forsyth Ward died in September 2004. By a will dated December 22, 2000, he left the entirety of his estate, with the exception of his pension benefits, to his two adult sons (the "will").

[2] In April 2005, the plaintiff commenced an action claiming, in part, under s. 2 of the Wills Variation Act, R.S.B.C. 1996, Chap. 490, for a declaration that the will fails to make adequate provision for her proper maintenance and support.

[3] The two defendants seek a final determination under Rule 18A as to whether the marriage agreement prevents the plaintiff pursuing any claim under the Wills Variation Act. Specifically, the defendants seek a declaration that the plaintiff is estopped from proceeding with the claim under the Act and an order dismissing her claim.

[4] Counsel for the defendants conceded that the claim will have to proceed to trial if the agreement does not operate as a legal barrier. Counsel for the plaintiff contended that the existence of the agreement is simply evidence for the court to consider, along with the other evidence to be led, at the trial. In other words, the existence of the marriage agreement does not, as a matter of law, dispose of the issues under the Wills Variation Act.

[5] Even if the defendants succeed, that is not the end of the proceedings. The plaintiff also claims a remedial constructive trust against the family home or, alternatively, compensation for unjust enrichment. The present application does not impact those claims.

[6] Because of the narrow scope of the issue argued, I can set out the relevant facts shortly. Ross Forsyth Ward and David Stirling Ward are the adult sons of David Forsyth Ward and his first wife. David Forsyth Ward and the plaintiff began their relationship in 1977 and married on October 10, 1986. He died on September 9, 2004. According to the plaintiff, they were still married and living together at the time of his death.

[7] The defendants dispute the plaintiff’s evidence respecting the course of the marriage. They sought to rely on reply affidavits, in which they say, in part, that the couple occupied separate bedrooms. Counsel for the plaintiff objected to the admissibility of the reply affidavits on the basis that they are unnecessary for the determination of the issue raised. I have decided that little turns on the question of admissibility because the dispute about the course of the marriage cannot be resolved by preferring one affidavit over the other. Having regard to the concession by defendants’ counsel set out earlier, this application is to be determined on a consideration of the terms of the marriage agreement and whether the court has an independent obligation to review the distribution of the estate.

[8] In my view, the court has an independent obligation to review and, as a result, the application for summary dismissal of the plaintiff’s claim under the Wills Variation Act must fail. My reasons follow.

[9] Both parties had access to independent legal advice before signing the marriage agreement dated October 8, 1986. The agreement is comprehensive. In addition to clause 14 set out above and clause 15 which provided a mirror prohibition against the husband claiming under the Wills Variation Act, the following are significant, commencing with parts of the preamble:

WHEREAS:

A. The parties intend to marry each other at Victoria, British Columbia, on October 10th, 1986.

B. The parties wish to confirm mutual commitments made prior to their marriage and to bring certainty to their relationship, and now wish to enter into this agreement to provide for the management, ownership and division of their property during marriage and on its termination, whether by death or otherwise.

…

16.1 Each party desires to accord to the other the absolute and unrestricted privilege and power to dispose of any and all property on death which may belong to him or her at such time. Each clearly understands that if the other should predecease him or her, his or her statutory interest in the others’ estate would be greatly in excess of the provision herein made for each other. Each party hereby stipulates that he or she has been fully advised in the premise of this agreement in its entirety by legal counsel of his or her own selection and of the legal effect of this clause specifically.

16.2 Each party is to refrain from any action or proceeding that may tend to void or nullify to any extent or in any particular way the terms of any such last Will of the other.

...

17. Each party has adequate independent means of support and if either of the parties at any time after the marriage finds, for cause or otherwise, that he or she is unable or unwilling to continue the marriage or if either party violates the bonds of matrimony as provided by the laws of Canada or any other jurisdiction in which they may be domiciled, then and in that event neither party is to be entitled to any alimony, maintenance, money, costs, legal fees, or to any other money by virtue thereof. This provision may be cited by either party in any Court of competent jurisdiction as a waiver and release of any payment as aforesaid by one to the other.

18. Provided that at the date of the death of the Husband the parties hereto are married, and are not living separate and apart, each party intends that the other receive all of the survivors benefits under any pension plan in which he or she has or may hereafter acquire an interest.

19. Nothing in this agreement shall be construed so as to affect in any way the rights that may accrue to either the Husband or the Wife as against any third parties, save and except the heirs, executors, administrators, devisees, legatees, and assigns of the other, in the event of the death, accidental or otherwise, of either the Husband or the Wife.

Against that backdrop, the plaintiff deposed that she knew the marriage agreement was unfair when she signed it because she received independent legal advice to that effect. According to her, she signed the agreement at her husband’s insistence so that she could demonstrate to the defendants that she was marrying their father for love, not money.

[10] The rest of the plaintiff’s affidavit addressed the circumstances of her life with her husband and their respective roles in their marriage up to the time of his death. Much of that evidence is in dispute. I need not set out any of it as it is not necessary for my conclusion.

[11] Counsel for the defendants relied on Hartshorne v. Hartshorne, [2004] S.C.J. No. 20 (S.C.C.), to demonstrate that the court should give effect to the bar to any Wills Variation action, found in clause 14 of the marriage agreement. I approach this argument with caution for two reasons.

[12] First, Hartshorne did not directly address the point at issue here. Hartshorne was concerned with the interplay between marriage agreements and the statutory framework for reapportionment of property under the Family Relations Act, not with the question under the Wills Variation Act of whether the husband made adequate provision for his wife, and if not, what provision would be adequate, just and equitable in the circumstances. As I set out later, the determination under the latter statute requires a consideration of the circumstances at the time of the husband’s death.

[13] Second, the Hartshorne analysis does not focus solely on fairness of the marriage agreement but also requires a consideration of fairness at the point of distribution. A marriage agreement represents a presumptive entitlement but is later subject to potential review for fairness, pursuant to s. 65, having regard to the factors enumerated in the section. Those factors require a consideration of the intervening events.

[14] According to counsel for the defendants, I should extract and apply the following propositions from Hartshorne:

1. When private parties are permitted to take personal responsibility for their financial well-being upon dissolution of marriage, courts should be reluctant to second-guess the arrangement on which the parties reasonably expected to rely. Individuals may choose to structure their affairs in a number of ways and it is their prerogative to do so: (at para. 36);

2. The court may interfere with an agreement if it is convinced that the agreement does not substantially comply with the overall objectives of the statute in question, be it the Family Relations Act or the Divorce Act: (at para. 42);

3. However, the court cannot conclude that an agreement is unfair simply because it deviates from the statutory regime: (at para. 67);

4. An agreement that is fair when it is formed may not remain fair if the parties circumstances have unfolded in a manner other than they originally anticipated. To determine whether an agreement is fair, the court must consider how accurately the parties predicted, when they formed the agreement, what their actual circumstances would be at the time of distribution, whether they truly considered the impact of their decision and whether they adjusted their agreement during the marriage to meet the demands of a situation different from the one expected, either because the circumstances were different or proved to be unrealistic. But if the parties’ lives unfold in precisely the manner they contemplated at the time the agreement was made, then a finding that the contract operates unfairly at the time of distribution is simply a substitution of the parties’ notion of fairness with the court’s notion of fairness. In other words, if the parties thought the agreement was fair when they made it and nothing unexpected has happened, who is the court to say otherwise: (at para. 44);

5. Many changes that might occur over the course of a marriage are foreseeable and, if foreseeable, should not form the basis of a variation of an agreement. For the change to have an effect on the agreement, it must be such that the terms of the agreement, in light of the new circumstances, no longer reflect the spouses' intentions at the time they made the agreement: (at para. 43); and

6. In determining fairness, the court must also have regard to the other entitlements of each spouse arising from the marriage. An agreement as to property division may not be unfair if a spouse is also entitled to an appropriate spousal support award or benefits as the custodial parent from a generous child support award: (at para. 47, 51).

[15] Counsel emphasized that the pre-nuptial agreement, by its nature, defined the expectations of the parties before any rights vested or any entitlement arose. Further, he argued that there is no evidence that the circumstances after the signing of the agreement unfolded other than as the parties expected. Because Hartshorne reflects current social norms, it should apply, according to counsel, to the Wills Variation claim.

[16] I will address the propositions set out in para. 14 of my reasons in turn. Unfortunately, they were presented out of order and omitted important parts of the passages taken from Hartshorne. Below, I will set out the propositions again, in Italics, for convenience and add other necessary references from Hartshorne to demonstrate that the decision does not support the narrow contention made in the present application, namely that the marriage agreement necessarily operates as a bar such that the defendants need only prove that the plaintiff agreed to its terms.

1. ... [When] private parties are permitted to take personal responsibility for their financial well-being upon dissolution of marriage, courts should be reluctant to second-guess the arrangement on which the parties reasonably expected to rely. Individuals may choose to structure their affairs in a number of ways and it is their prerogative to do so: (at para. 36);

[17] To put the foregoing in context, one must have regard to the preceding paragraph of the judgment which states that marriage agreements, although recognized by the Family Relations Act, must operate fairly at the time of distribution to be enforceable (at para. 35). Further, in the paragraph immediately following the one referenced, the court observed (at para. 37) that:

... while both the parties and the courts speak of the contract being fair or unfair, it is really the apportionment under the contract that is under scrutiny. ...

And later in the same paragraph:

... The provisions of a contract could well be fair if the marriage lasted one year and unfair if the marriage lasted 30 years.

Viewed in this context, it is apparent that the marriage agreement may be a very important consideration and, depending on all the circumstances, even determinative, but the existence of the agreement does not relieve the court of its obligation to assess fairness at the time of distribution.

2. The court may interfere with an agreement if it is convinced that the agreement does not substantially comply with the overall objectives of the statute in question, be it the Family Relations Act or the Divorce Act: (at para. 42);

[18] The foregoing is a general proposition extracted from Miglin v. Miglin, [2003] 1 S.C.R. 303, which the court described as helpful but went on, at the end of the paragraph referenced, to point out that "adopting Miglin without qualification would distort the analytical structure already provided in the British Columbia legislation".

3. However, the court cannot conclude that an agreement is unfair simply because it deviates from the statutory regime: (at para. 67);

[19] The foregoing is part of the conclusion of the court. Earlier, in paragraph 67, the court reemphasized that an agreement that appeared fair at the time it was made may become unfair by the time of the triggering event. The paragraph ends with the following which provides the necessary context:

Fairness must first take into account what was within the realistic contemplation of the parties, what attention they gave to changes in circumstances or unrealized implications, then what are their true circumstances, and whether the discrepancy is such, given the s. 65 factors, that a different apportionment should be made.

It is apparent from the foregoing that the court must have regard to the continuum of events to determine fairness at the time of distribution even if it was fair for the parties to agree to depart from the statutory scheme in the beginning.

4. An agreement that is fair when it is formed may not remain fair if the parties circumstances have unfolded in a manner other than they originally anticipated. To determine whether an agreement is fair, the court must consider how accurately the parties predicted when they formed the agreement what their actual circumstances would be at the time of distribution, whether they truly considered the impact of their decision and whether they adjusted their agreement during the marriage to meet the demands of a situation different from the one expected, either because the circumstances were different or proved to be unrealistic. But if the parties’ lives unfold in precisely the manner they contemplated at the time the agreement was made, then a finding that the contract operates unfairly at the time of distribution is simply a substitution of the parties’ notion of fairness with the court’s notion of fairness. In other words, if the parties thought the agreement was fair when they made it and nothing unexpected has happened, who is the court to say otherwise: (at para. 44);

[20] While this extract accurately reflects an earlier paragraph in the judgment, I have underlined the qualifiers that are reflected in the final conclusion. Counsel for the defendants submitted that the lives of the plaintiff and her husband unfolded precisely as anticipated and that nothing unexpected happened but I do not know that to be so having regard to the limited and disputed evidence put before me.

[21] This is a further reference to a passage in Miglin, and can be found at paras. 88 and 89 of Miglin, but the reference omits the additional requirement that the terms of the agreement must reflect the objectives of the Divorce Act as well as the spouse’s intention.

[22] Viewed in the overall context of the two paragraphs referenced, the passage refers only to the initial question whether the agreement was fair when made but not to the second stage of the analysis, whether the contract operates unfairly at which point "consideration must be given to the parties' personal and financial circumstances, and in particular to the manner in which these circumstances evolved over time" (para. 47).

[23] Counsel for the defendants relied on Ven Den Oetelaar v. Van Den Oetelaar Estate, [2004] O.J. No. 1424 (O.S.C.), in which a similar argument succeeded on a summary judgment application to dismiss a claim under the Ontario Wills Variation legislation. Nonetheless, the process differed significantly in that case. The plaintiff was cross-examined. The judge described his evidence as disingenuous (para. 17). In the result, the court never considered the two-stage analysis required by Hartshorne, or whether a similar two-stage analysis is required under the Ontario Wills Variation legislation. I respectfully refuse to apply Ven Den Oetelaar in the case at bar.

[24] The nature of the judicial analysis required for a Wills Variation Act claim in British Columbia is set out in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807. McLachlin J., as she then was, for the court, described the legislation, at para. 15, as follows:

... The language of the Act confers a broad discretion on the court. The generosity of the language suggests that the legislature was attempting to craft a formula which would permit the courts to make orders which are just in the specific circumstances and in light of contemporary standards. This, combined with the rule that a statute is always speaking [citation omitted], means that the Act must be read in light of modern values and expectations. What was thought to be adequate, just and equitable in the 1920s may be quite different from what is considered adequate, just and equitable in the 1990s. This narrows the inquiry. Courts are not necessarily bound by the views and awards made in earlier times. The search is for contemporary justice.

Elsewhere in the judgment, she discussed the need to consider not only the legal obligations imposed on a testator during life to provide for a spouse but to also consider the moral duty owed. As to the latter, she said, at para. 31:

... There being no clear legal standard by which to judge moral duties, these obligations are admittedly more susceptible of being viewed differently by different people. Nevertheless, the uncertainty, even in this area, may not be so great as has been sometimes thought. For example, most people would agree that although the law may not require a supporting spouse to make provision for a dependent spouse after his death, a strong moral obligation to do so exists if the size of the estate permits. ...

Where there are conflicting moral claims, for example, as between a spouse and adult children, McLachlin J. states that where the estate permits, all should be met (para. 32).

[25] Unless death followed marriage within a very short time, it would be impossible, in my view, to consider the moral claim of a spouse solely on the basis of an agreement not to claim entered into before the marriage. The court must consider the circumstances of the relationship thereafter up to the time of the death of the testator. This reasoning is well reflected in the appellate decisions of this province dealing with the effect of separation and pre-nuptial agreements on the right to claim under the Wills Variation Act.

[26] Counsel for the defendants sought to minimize the significance of two leading British Columbia appellate decisions stating that separation agreements, with a provision similar to clause 14 in the case at bar, do not automatically bar a claim under the Wills Variation Act. In my opinion, those decisions are consistent with the two-step process in Hartshorne as outlined immediately above and remain accurate statements of the current law as it relates to the legal issue raised here.

[27] In Boulanger v. Singh, [1984] B.C.J. No. 3163 (C.A.), the court upheld the decision of the trial judge that the separation agreement was not a bar to recovery under the Wills Variation Act. Without discounting in any way the evidentiary importance of the separation agreement, the court said this:

Thus, an agreement between parties may be perfectly suitable at the time it is made, and it may be treated as binding upon the parties during the lifetime of the testator. But, having regard to the scope and policy of the statute and the public interest, the moral duty of the testator may have to be reviewed in a wider context, and in the light of the circumstances existing at the date of the death of the testator.

Later, the court referred to the "facts of their marriage, separation arrangements and conduct after separation" as affecting the appellant’s moral claim upon the testator (at para. 29). The court reapplied the Boulanger test in Wagner v. Wagner Estate, [1991] B.C.J. No. 3404 (C.A.). There, the court reaffirmed that the moral duty must be assessed as at the date of the death of the testator.

[28] Counsel contended that Boulanger and Wagner represent a high water mark from which the tide has since receded. Lobe v. Lobe Estate, [1996] B.C.J. No. 1210 (S.C.), (upheld on appeal for the reasons given by the trial judge [1997] B.C.J. No. 1414 (C.A.)), also involved a claim under the Wills Variation Act. Lowry J. concluded that the marriage agreement in that case "completely addressed any obligation Mr. Lobe may have had to his wife during his lifetime concerning both property and maintenance" but went on to say:

It is not suggested that an action of this kind can be barred by agreement but, depending on its terms, a marriage agreement may serve to reduce or nullify any legal obligation a testator may otherwise have had during his lifetime leaving only his moral obligation at the time of his death to be assessed. Where an agreement purports to preclude estate claims, it becomes a consideration to be taken into effect in assessing the moral obligations of a testator at the time of his death having regard to the circumstances prevailing at that time. (para. 25)

It is apparent from the foregoing that the trial judge was alive to the Tataryn distinction between the testator’s legal and moral obligation, both of which must be assessed.

[29] Howard v. Howard Estate, [1997] B.C.J. No. 609 (C.A.), is to similar effect. There, the court referred to the pre-nuptial agreement as it related to the testator’s obligations at the date of his death according to current legal and moral standards and said this:

Obviously, the agreement is not determinative as a matter of law; but in the particular circumstances of this case, it seems to me that current societal norms do not require or justify our disturbing the parties’ arrangements. (para.8).

[30] Finally, counsel referred to the trial and appellate court decisions in Chutter v. Chutter Estate. I need only refer to the latter, found at [2000] B.C.J. No. 653 (C.A.), in relation to the issue at hand, namely whether the agreement operates as an automatic bar. Mackenzie J.A., for the court, stated:

The trial judge correctly, in my respectful view, did not consider the separation agreement to be an automatic bar to the appellant’s claim, but that it was a factor to be considered in weighing the merits of the appellant’s moral claim. (para. 9)

In my view, neither Chutter nor any of the other cases referred to by counsel support the proposition that the courts have moved significantly from the Boulanger and Wagner principles.

[31] The movement, to the extent any is discernable, relates to the determination of contemporary standards in assessing the moral obligation of the testator but that issue is not resolved, as a matter of law, solely on the basis that the parties signed a pre-nuptial agreement. The relatively narrow point at issue here under Rule 18A is whether the marriage agreement operates as an estoppel to prevent the plaintiff claiming under the Wills Variation Act. In my view, it does not so operate.

[32] Given the concession that the evidence is contested on material points, it would be manifestly unjust to attempt to determine the moral obligation of the testator without hearing the evidence. The plaintiff has also made other claims arising out of the relationship. There would be no judicial economy or savings to the parties in ordering cross-examination under the summary judgment rule. The most economical approach is to deal with all issues in a single trial.

[33] At the conclusion of the trial, the court may conclude that the circumstances, including the existence of the agreement, do not support any finding of moral obligation to support the claim under the Wills Variation Act but it is also possible that the court will conclude otherwise. It would be inappropriate for me to express any opinion on the matter.

[34] In conclusion, I am not persuaded that the defendants' central legal position is sound. I am persuaded that it would otherwise be unjust to attempt to decide the issues raised by the claim under the Wills Variation Act under Rule 18A. The application for summary dismissal of that claim fails. Costs will be in the cause.

“M.D. Macaulay, J.”
The Honourable Mr. Justice M.D. Macaulay