IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Mordo v. Nitting et al, |
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2006 BCSC 1761 |
Date: 20061130
Docket: L021994
Registry: Vancouver
Between:
Alexander Mordo
Plaintiff
And
Viviane
Lolita Nitting and Gary Wilson
in his capacity as Trustee of the
Eida Mordo Alter Ego Trust
Defendants
Before: The Honourable Madam Justice Wedge
Reasons for Judgment
| Counsel for the Plaintiff |
Howard Shapray, Q.C.
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| Counsel for the Defendant Nitting |
Hugh S. McLellan |
| Counsel for the Defendant Wilson |
P. Donald MacDonald |
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Date and Place of Trial/Hearing: |
June 5 - 9, 12 - 16, 19 - 23, |
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Vancouver, B.C. |
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PAGE |
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I. |
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INTRODUCTION.......................................................................................... |
3 |
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II. |
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ISSUES........................................................................................................ |
4 |
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III. |
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BACKGROUND........................................................................................... |
5 |
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(a) |
1950 - 1975: Family history......................................................................... |
5 |
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(b) |
1975 - 1983: The family business............................................................... |
7 |
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(c) |
1983 - 1984: Termination of Viviane’s employment with the Company...... |
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(d) |
1984 - 1992: Ongoing family difficulties...................................................... |
17 |
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(e) |
1992 - 1996: Wills and joint assets............................................................. |
19 |
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(f) |
1996: Gabriel’s death and Eida’s 1996 Will................................................ |
26 |
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(g) |
1996: The Investment Accounts, Warehouse and the Deed of Gift........... |
32 |
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(h) |
1997 - 2000: Eida’s relationship with Alex................................................... |
35 |
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(i) |
2000: Alex’s Offer of the car and driver....................................................... |
39 |
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(j) |
2000: Eida’s will and the Trust.................................................................... |
42 |
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(k) |
2001 - 2002: The Dispute over the car and driver...................................... |
50 |
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(l) |
2002: Eida’s death....................................................................................... |
58 |
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IV. |
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DISCUSSION............................................................................................... |
60 |
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(a) |
Alleged admissions in the defendant’s pleadings........................................ |
60 |
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(b) |
The Condominium........................................................................................ |
62 |
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(c) |
The jointly held accounts.............................................................................. |
68 |
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(d) |
The Deed of Gift........................................................................................... |
72 |
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(e) |
The Trust...................................................................................................... |
76 |
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(f) |
The car and driver expenses....................................................................... |
116 |
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(g) |
Undue Influence...................................................................................................................... 123 |
123 |
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(h) |
Breach of fiduciary duty................................................................................ |
129 |
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(i) |
The WVA claim............................................................................................ |
132 |
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V. |
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SUMMARY OF CONCLUSIONS.................................................................. |
147 |
[1] Gabriel and Eida Mordo had two children, the plaintiff Alexander Mordo and the defendant Viviane Nitting. Alex and Viviane have been estranged most of their adult lives.
[2] For many years before they died, Gabriel and Eida expressed their common intention to leave all of their assets to Viviane. They feared Alex would challenge any will favouring Viviane, and took steps over the years to ensure none of their assets would pass to their estates upon their deaths.
[3] Eida outlived Gabriel. By the time of Eida’s death in 2002, all of the Mordos’ substantial assets were held either jointly with Viviane or in trust for her benefit. Some personal effects were the subject of a deed of gift [“Deed of Gift”] in Viviane’s favour.
[4] Alex has challenged all of the dispositions on the basis that they are testamentary in substance and the result of undue influence on the part of Viviane. He says they form part of Eida’s estate, and are subject to his claim for reapportionment under the Wills Variation Act, R.S.B.C. 1996, c. 489 [WVA]. Alex, a businessman of considerable wealth, acknowledges he has no need for a share of the estate. He seeks reapportionment on moral grounds.
[5] Alex also seeks reimbursement of $133,000 for the cost of a car and chauffeur he provided his mother for approximately 18 months before her death.
[6] The defendant Gary Wilson was joined as a party in his capacity as trustee of the Eida Mordo Alter Ego Trust [the Trust] and executor of Eida’s estate. Mr. Wilson was joined only for the purpose of binding him to the declarations sought by Alex.
[7] In light of the common last names of Alex, Eida and Gabriel, I have referred throughout these reasons to each of the members of the Mordo family by his or her first name. I do so only for ease of reference and convenience.
[8] The issues are the following:
(a) Did Viviane admit in her pleadings that none of the transactions were inter vivos in nature?
(b) Was the transfer of the condominium to Viviane a valid inter vivos transfer?
(c) Were the transfers of the joint accounts to Viviane valid inter vivos transfers?
(c) Was the Deed of Gift valid?
(c) Was the Trust a valid inter vivos trust?
(e) Was there undue influence on Viviane’s part with respect to the creation of the joint assets and the Trust?
(f) Is Alex entitled to reimbursement for the car and driver expenses?
(g) Assuming some assets passed by Eida’s will, does Alex have a moral claim under the WVA for reapportionment?
[9] I will address each of the issues in turn after reviewing the facts.
[10] Viviane, the elder of the two Mordo children, is 63 years of age. Alex is 58 years of age. They were raised in Istanbul, Turkey, where their father, Gabriel, had established a successful import-export business. Their mother, Eida, was assisted in the home with domestic help. The family as a whole enjoyed an affluent lifestyle.
[11] Viviane was sent to a lycée in France and then to a finishing school in England. She did not attend university. Viviane met and married her first spouse, Max Ciprut, soon after leaving school. When she married, her parents provided her with the down payment for a small apartment in Haifa, Israel, where she and Max lived briefly before returning to Istanbul. Their daughter, Galia, was born in 1967.
[12] Alex was sent to university in Vienna, Austria, where he studied mechanical engineering from 1965 to 1972. His parents provided generously for him during that time. They paid for Alex’s apartment and bought him a car. Gabriel maintained a bank account in Switzerland, and gave Alex unlimited access to the account to pay for his living expenses in Vienna. Alex spent freely for about five years, until the manager of the Swiss bank became alarmed by the rate at which Alex was taking money from the account. The bank manager contacted Gabriel, who then placed Alex on a budget.
[13] In 1971, Gabriel and Eida immigrated to Canada, settling in Vancouver. They bought a home on West 52nd Avenue. Viviane and Max also moved to Vancouver, and bought a house on Heather Street less than a block from Gabriel and Eida. Gabriel and Eida were fluent in several languages, but English was not one of them. They relied heavily on Viviane to help them as they became familiar with their new way of life in Canada.
[14] Soon after arriving in Vancouver, Gabriel bought two commercial warehouse properties, one located on West 5th Avenue in Vancouver, and another on Regent Avenue in Burnaby. Given his age and lack of fluency in English, Gabriel decided not to pursue new business interests in Vancouver. He and Eida supported themselves using the rental revenues the warehouses generated and their life savings from Turkey.
[15] Gabriel and Eida loaned Viviane and Max money for the initial down payment on the Heather Street home because the apartment in Haifa had not yet been sold. They also gave Max approximately $100,000 to help him with various business ventures. Max was not an astute businessman and eventually lost most of the money.
[16] Alex graduated from engineering in 1972, and immediately moved from Vienna to Vancouver. He was accompanied by a woman, Erika, with whom he had begun a relationship in Vienna. Erika was twelve years Alex’s senior and recently divorced. Gabriel and Eida were disappointed with Alex’s choice of partner. Alex married Erika approximately a year later. In 1979, they had a son named Gabriel [“Gabby”].
[17] Alex initially obtained work in Vancouver as an engineer, but soon found other business interests. During his university years in Austria, Alex developed a friendship with the son of the manufacturer of a popular European brand of skis known as “Amman” skis. While skiing on one of the local mountains soon after his arrival in Vancouver, Alex was offered a significant sum of money for his Amman skis. Alex immediately recognized a business opportunity. He decided to purchase Amman skis and resell them in the Vancouver area.
[18] Alex approached his father for capital to start a business importing skis. Gabriel loaned Alex approximately $100,000 by way of shareholder loans. In 1975, Gabriel and Alex incorporated Gabriel A. Mordo & Son [the Company] (later renamed by Alex as A. Mordo & Son). The loans were not interest bearing. In order to maintain control of his investment, Gabriel held 55% of the common voting shares. Alex held the balance of the shares.
[19] Initially, the business was seasonal in nature. Alex sold skis on the local mountains during the winter months. Soon, however, the Company began importing other sporting goods and, as a result, was conducting its business year round.
[20] From the inception of the Company, Viviane was responsible for the accounts receivable. In the first few years, she worked on a part-time basis from a small office in the basement of Gabriel’s home. She had a young daughter and other family responsibilities. She was also significantly involved in her parents’ lives. By 1978, she was working for the Company on a full-time basis.
[21] At about the same time, Max’s business ventures became insolvent. Alex assisted with the liquidation of the assets in Max’s companies. Max worked as a warehouseman for the Company for about six months following the insolvency of his business. Max was also responsible for managing Gabriel’s warehouse properties, which he did until he and Viviane separated in 1979.
[22] Alex was not happy about employing his sister or, however briefly, his sister’s husband. The relationship between Alex and Viviane was strained. Alex resented the close relationship Viviane had with Gabriel and Eida, and believed that Viviane took every opportunity to undermine his relationship with their parents. He testified at trial that Viviane was difficult to work with. He felt that she was too aggressive, and at times rude, when dealing with customers and their outstanding accounts. Alex suspected that Viviane was complaining to Gabriel about Alex’s stewardship of the Company.
[23] By 1978, the Company was operating from space in Gabriel’s West 5th Avenue warehouse. In August of 1978, on Alex’s initiative, the Company borrowed $500,000 from a bank. Gabriel, as the majority shareholder and the only shareholder with assets, was required to personally guarantee the loan.
[24] Although Gabriel was the controlling shareholder, Alex managed the business of the Company. Disputes soon arose between father and son concerning the finances of the Company. In Turkey, Gabriel had operated his business on the basis of cash sales. In Canada, businesses similar to that of the Company delivered inventory to customers on credit terms, permitting payment at a later date. The Company obtained working capital and lines of credit from the bank on the basis of the value and quality of its receivables. Gabriel was uncomfortable with this practice, particularly because of the potential liability arising from his personal guarantee.
[25] The Company’s bank was, at the time, the Toronto Dominion Bank (the “TD Bank”). Due to his level of discomfort with the financial arrangements, Gabriel met every week or to with the Company’s bank manager, Bill Liedemann, to review the accounts receivable. He also carefully reviewed the Company’s monthly financial statements, which were prepared by the Mordo family’s accountant, Gerry Blanchard.
[26] In December of 1978, Gabriel suffered a heart attack while travelling with Eida in Italy. Fortuitously, Gabriel and Eida were spending Christmas with a physician who was a close family friend. The physician made the immediate arrangements for Gabriel’s hospitalization and care. Alex borrowed money on the Company’s line of credit and went to Italy for several weeks to assist the family. Viviane could not afford the trip, and remained in Vancouver.
[27] Following his recovery and return to Vancouver, Gabriel continued to be concerned about his personal guarantee of the Company loans. Friction continued between him and Alex concerning the manner in which the business was being operated. By way of example, Gabriel was of the view that Alex spent too much money on client development initiatives such as sport fishing trips. Alex’s view was that these initiatives were necessary for the growth of the Company. More fundamentally, Alex wanted to expand the Company by obtaining national distribution rights to various lines of sporting goods and clothing. Gabriel did not agree that the Company should expand its business beyond British Columbia.
[28] As a result of their disagreements, Alex told his father in mid-1979 that he wished to become the Company’s majority shareholder. In October, 1979, after considerable discussion with the Company bank manager and accountant, Gabriel reluctantly agreed to relinquish control by transferring 45 of his 55 shares to Alex. Alex paid book value for the shares, which was $700 per share. Gabriel took a promissory note from Alex in the amount of $31,490, which represented the total purchase price of the shares. As part of the sale agreement, the shares were to be held in escrow until Alex had paid for them.
[29] As holder of 10% of the shares, Gabriel continued to guarantee the Company’s loans. He and Alex continued to have periodic disagreements as to the growth and management of the Company. When Viviane remarried, her husband, Bjorn Nitting, was also employed by the Company for a time. Alex got along quite well with Bjorn, but resented the fact that he was required to continue employing family members.
[30] In 1979 or 1980, Alex bought a warehouse on West 5th Avenue next to the one owned by his father. He testified that his father opposed the purchase because of the debt Alex would incur. Alex proceeded with the acquisition, and made a significant profit three years later when he sold the warehouse. He relocated the Company to a warehouse on Main Street from which it continues to operate today.
[31] The Mordo family had a tradition of gathering each Friday for Sabbath (Shabbat) dinner. The dinners were hosted by Gabriel and Eida, and, on alternating Fridays, by Viviane. For the first while after the family moved to Vancouver, Alex and Erika attended these dinners. At some point they stopped attending them with any regularity. Alex said he grew tired of his family’s coldness toward Erika. He believed Viviane fuelled his parents’ dislike of his wife. He was often away on business, and was otherwise too occupied with work and family to attend the dinners.
[32] The differences between Alex and Gabriel eventually came to a head with an incident at one of the family dinners Alex did attend. Alex was 32 or 33 years of age at the time. He recalled that something appeared to be bothering Viviane during the dinner, and that Gabriel asked her whether there was something wrong. Viviane replied that a $5,000 cheque from an Ontario client had been returned due to insufficient funds. Gabriel became very angry, but soon regained his composure. However, when Alex went to see his father the next day, Gabriel berated Alex for putting the Company in the position of receiving “NSF” cheques. They argued. Gabriel slapped Alex across the face.
[33] Alex was shocked. He had always known Gabriel to be a stern but invariably fair and honest man. Alex reacted by saying he would defend himself if Gabriel ever hit him again. He also said he should not have continued to allow family members to work for the Company.
[34] Alex testified that on the Monday following the slapping incident, he confronted Viviane in the Main Street warehouse. He accused her of attempting to alienate Gabriel from him so that Gabriel would disinherit him. Alex said Viviane initially tried to deny the allegation, but then said, “Yes, and what are you going to do about it?” According to Alex, two people witnessed this exchange, Levant and Ramis Semiramis. The two are brothers. Ramis was one of the Company’s employees, and Levant was employed by a company occupying space in the warehouse adjacent to the space occupied by the Company.
[35] Viviane testified that no such confrontation occurred. She also said she did not bring the NSF cheque to her father’s attention. She surmised that as Gabriel attended the bank every week or so to review the Company accounts, he may have seen the cheque there.
[36] Levant Semiramis testified at trial. He considers Alex, who has helped him financially over the years, a good friend. Levant began working at the Main Street warehouse in 1981. He said that, for the most part, he did not witness Alex and Viviane argue about personal matters. He observed them to argue about business matters. He recalled that Alex often complained about the receivables and the shortage of cash, and Viviane’s reply was to the effect that she was calling customers day and night, and could do nothing else to obtain payments.
[37] Levant testified that he recalled a conversation between Alex and Viviane in the warehouse, during which Alex said the following: “I heard rumours you are trying to influence my mother and father to cut me off from my inheritance”. Levant recalled that Viviane first denied the allegation, and then said, “So what?” or “What can you do about it?”
[38] In late 1982 or early 1983, Alex approached his father with an ultimatum about the ownership of the Company. His evidence concerning the conversation with Gabriel was as follows:
A After the slapping incident ... I told my father that we had three choices. I didn’t want any more to continue in this fashion, after having the discussion with my sister, having all the trouble, having everybody in the family getting a job, now my sister’s second husband had to have a job. You know, this was becoming really difficult for me. I told my father that we had three options. Option 1, he and my sister buys me out. Option 2, I buy him out. Option 3, we go -- we appoint a court liquidator, we go and we liquidate the company, everybody takes their chips and go. But there would be peace.
Q Did -- did he -- how did he react to this proposition?
A My father got quite offended. He says, are you threatening me with a court liquidator? And … I was not threatening anybody. What other option did I have? I was not threatening.
(Transcript, June 6, 2006, A. Mordo, In chief, p. 45, lines 4 - 22)
[39] Alex acknowledged that he told his father he would apply to have the Company liquidated if negotiations did not result in an agreement to sell the Company, and that it would likely cost about $40,000 to liquidate.
[40] In April of 1983, Alex instructed his solicitors to present a written offer to purchase Gabriel’s ten shares for $7,000 and to pay out his shareholder loan for $85,120. The purchase price was to be paid in instalments of approximately $30,000 over a three year period, interest free. In addition, Gabriel was required to forgive the outstanding $31,490 promissory note signed by Alex in 1979 for the purchase of the 45 shares Gabriel agreed to sell to Alex in 1979. Finally, Gabriel was required by the terms of the offer to forgive a $14,000 loan he had made to Alex to purchase his first home in Vancouver in 1975. Alex stipulated that his offer was open for acceptance for only seven days.
[41] Gabriel rejected the offer. Negotiations stalled. Eventually, Gabriel agreed to allow his brother-in-law, Isaak Alfandairi, to mediate or arbitrate a resolution to the impasse with Alex.
[42] Ultimately, as a result of mediation, Alex agreed to pay his father $134,640 payable by an initial $25,000 and a promissory note for $109,640. The promissory note was paid in equal instalments over a four year period without interest. Alex testified that Gabriel was relieved to obtain the money because one of his warehouses was empty and earning no revenue. Gabriel was also relieved to be removed as a guarantor for the Company loans.
[43] Alex had driven a hard bargain. The book value of Gabriel’s ten remaining shares was approximately $37,000. In addition, Gabriel was owed a total of $120,000 in shareholder loans. He was also owed the $14,000 (without interest) for the home loan he made to Alex in 1975, and the $31,490 (without interest) still outstanding for the 45 shares purchased by Alex in 1979. The total of these amounts is $202,490, which is $67,850 more than Alex ultimately paid as a result of the agreement. Gabriel did not draw a salary, bonus or director’s fee, or receive any dividends or interest payments while he was a shareholder of the Company between 1975 and 1983. There was no premium paid to Gabriel for relinquishing control of the Company.
[44] It was at about this time that Alex stopped attending the family Shabbat dinners altogether. In cross-examination, he acknowledged that he had a standing invitation to attend the dinners but said “the tradition went to hell” as a combination of his travelling and the slapping incident.
[45] Approximately six months after he gained complete control of the Company, Alex fired Viviane. Viviane had no formal education in accounting at the time. She was responsible for invoicing customers and dealing with the accounts receivable. Alex testified that her work was impeccable in that regard. The problem involved her interactions with clients. Alex said there were complaints about her manner, which was reportedly abrupt and, at times, rude.
[46] In mid-1984, shortly before firing Viviane, Alex decided to hire an accountant to work “in house” with the Company. It was time, he said, to computerize the Company’s accounting system. He hired Elaine Leong, who began upgrading the accounting system. Alex testified that shortly after she was hired, Ms. Leong advised Alex there were problems with Viviane. In Alex’s words, Ms. Leong told him she was “…quitting because she [did not] want to get involved [in] family affairs, and she [would] rather quit” than have Alex fire Viviane. Alex said that was the last straw. He called Viviane in and fired her. Viviane begged Alex to reconsider but he told her “it [was] over” (Transcript, June 6, 2006, A. Mordo, In chief, p. 62, lines 4 - 7, 23). Ms. Leong was not called as a witness at trial.
[47] Viviane’s evidence was that she had never worked with Ms. Leong, who was hired while Viviane was on a three week vacation in July, 1984. She said that on her first day back, Alex called her into his office and fired her. She begged to keep her job because of her precarious financial situation. She had by then remarried, and her husband had serious health problems at the time.
[48] Alex was unmoved. He fired Viviane and refused to pay her any severance. His position was that he could not afford to pay severance because of his obligation to pay Gabriel for his shares in the Company.
[49] Gabriel was furious, both with Viviane’s termination and Alex’s refusal to pay her any severance. Once again, members of the family circle and close friends of the family were called in to help resolve the dispute. Following a lengthy meeting, the group told Alex he must pay Viviane 12 months severance in lieu of notice. Alex reluctantly agreed to pay Viviane her monthly salary, which was $1,500 per month, in bi-weekly instalments for 12 months. Gabriel asked Alex for his personal guarantee that the severance would be paid. Alex refused, but his uncle offered to give the guarantee on Alex’s behalf.
[50] Alex, for his part, was angry that Viviane had “made such a fuss” about her termination. He resented that she complained to Gabriel, and was angry that his parents involved others in the dispute about severance. He acknowledged that he had never seen his father as furious as he was about Viviane’s firing. Gabriel told Alex he was “despicable”, and called Alex “every name in the book”, including “monster” and “thief”.
[51] From Alex’s perspective, his parents eventually forgave him for Viviane’s firing, particularly as he had agreed to pay her severance. However, after the firing, Gabriel wrote two letters, both addressed to Alex (one apparently a draft of the other), but never delivered them to him. In those letters Gabriel expressed his profound dismay with his son. The letters also reveal Gabriel’s disaffection with Alex resulting from the negotiations concerning Alex’s buyout of Gabriel’s share of the Company. Calling Alex a “vile thief”, Gabriel wrote that he had decided to disinherit Alex because of the manner in which Alex had treated Gabriel and Viviane. Gabriel urged Eida to do the same. Gabriel expressed the view that Alex had abused the Swiss bank account; that he had manipulated Gabriel to take all the financial risk in the family business without any return; that he had threatened Gabriel with a lawsuit to force the company into liquidation; and fired Viviane unfairly and without reasonable compensation. Gabriel also expressed disappointment at not seeing his grandson Gabby. The authenticity of the letters was not in issue. They were put in evidence by Alex.
[52] On August 31, 1984, Gabriel and Eida Mordo executed wills disinheriting Alex with the exception of a specific gift of $10,000.
[53] Following Viviane’s termination, Gabriel and Eida had no communications with Alex for some time. Gradually, however, visits between Alex and his parents began to occur again. Alex spent about half of each year travelling, and was busy with the Company and his family, so his visits with his parents were sporadic. The Company was thriving at the time. Alex bought a 5,000 square foot home on Selkirk Street in Vancouver.
[54] Viviane returned to school and became certified as an accountant. She then obtained a job working as comptroller for the Vancouver Chamber Choir. She maintained her Heather Street home close to her parents and spent a great deal of time with them. She spent every Friday evening and most Sundays with them. Gabriel and Eida loved the symphony and the opera; Viviane and Bjorn took them to many concerts. After her divorce from Max, Viviane assumed responsibility for management of her parents’ warehouse properties, and refused to accept any payment for it.
[55] Alex acknowledged that he did not pay attention to family birthdays or religious holidays. He said he did not call or visit his parents on Mother’s Day, Father’s Day, or birthdays. Gabriel and Eida observed the Jewish faith, but Alex did not.
[56] The years following Viviane’s termination appear to have been relatively uneventful in the Mordo family. However, Gabriel and Eida continued to harbour resentment toward Alex as a result of his purchase of the Company. Alex testified that when Eida came to his home on Selkirk Street some two years after Gabriel sold his last shares in the Company to Alex, she told Alex that he “had bought the home with Gabriel’s money”. Alex suspected that Viviane was behind this comment.
[57] In 1988 or 1989, Alex suffered business reversals. His marriage with Erika broke down and he was ejected from the family home on Selkirk Street. The home was eventually sold. Erika obtained custody of Gabby.
[58] In 1990, Gabriel suffered a second heart attack while vacationing in Hawaii. Alex travelled to Hawaii to assist his parents, as did Viviane.
[59] In August of 1990, Eida Mordo made a new will. It provided that if Gabriel predeceased her, her interest in the West 52nd Avenue home was to pass to Viviane and Viviane’s daughter Galia. Alex’s son, Gabby, was to receive $20,000. Of the residue of the estate, which at that time consisted primarily of the warehouse on West 5th Avenue [the “Warehouse”], 60% was to pass to Viviane and 40% to Alex. In her will, Eida declared that she had given a greater proportion of her estate to Viviane in recognition of her “continuing and long standing support and assistance”, and that she had taken into consideration the “substantial financial assistance I have made to my son Alex Mordo during his lifetime.”
[60] At about the same time, Gabriel gave Alex a non-interest bearing loan of $71,000 to assist the Company to purchase a running shoe inventory. Alex eventually repaid the loan.
[61] In October 1992, Gabriel told Alex he was not happy with the return on his investment portfolio. Alex suggested that his parents consult with Bill Liedemann, the Company’s bank manager at the TD Bank. A meeting was arranged, and Alex attended at Mr. Liedemann’s office with his parents. Mr. Liedemann discussed various options with Gabriel and Eida, and they made various investment choices. At the end of the meeting, Mr. Liedemann asked the Mordos how they wanted their investments registered. They indicated that they wanted their investments registered jointly with Viviane.
[62] Alex did not say anything at the time. However, he was shocked and angered by his parents’ decision to register their investments jointly with Viviane. A few days later, Alex went to his parents’ home and confronted them about their decision. An acrimonious meeting ensued. Alex described his own behaviour at the meeting as akin to a volcano erupting. He told his parents he felt betrayed by their apparent lack of gratitude for the kindnesses he had shown the family over the years. He felt that Viviane was being given preferential treatment at his expense.
[63] Gabriel and Eida did not agree with Alex’s perspective, and the meeting grew even more acrimonious. Alex said he ended the meeting by shouting a Turkish insult at his parents which, loosely translated, means “He (God) will burn you”. His parents interpreted the insult differently. In notes written by them some time after the incident, they wrote that Alex “became crazy” and said, “I will burn you”. They understood this to be a threat by Alex to destroy them because they wished to leave their assets to Viviane.
[64] A few weeks later, Gabriel and Eida sought legal advice from Mary Richter, a lawyer who specializes in wills and estates. Ms. Richter practiced at the time with a small firm in Kerrisdale, not far from the Mordos’ home. Ms. Richter’s recollection of the first meeting with the Mordos was as follows:
A …From the very, very beginning they had -- they were very, very disappointed in their son. They didn’t want him to participate in the estate. They were very, very upset. And the way they described him indicated to me that they were afraid of him. Afraid of what he might do or what he might, like, make -- conspire to do. They were -- it wasn’t they were afraid of him physically but afraid of him just what he might plan. And how he -- what he might do to them, but also what he might do to their daughter if they weren’t here. And that was kind of the same -- that never really changed over ten years. …
(Transcript, June 22, 2006, M. Richter, In chief, p. 66, lines 21 - 33)
[65] Ms. Richter readily acknowledged that there were many meetings about the Mordo estate, particularly with Eida Mordo, and that her specific recollection concerning the first meeting with Gabriel and Eida may not have been entirely accurate:
A ... You know, I can tell you generally, but I’m not sure if it was specifically what was said at 1992. They consistently told me that their daughter was very supportive of them, that they relied on her. She was kind of their mainstay. And the impression that I had from the beginning was that their son was, like, successful, he had done well in business. They were afraid of what he might do, he had money to do things and they were afraid. And they were afraid for them and they were afraid for their daughter, what they might leave for her to deal with after their death. That was consistent from the beginning. …
(Transcript, June 22, 2006, M. Richter, In chief, p. 68, lines 18 - 31)
[66] In the course of their meeting, Ms. Richter explained to Gabriel and Eida the effect of the WVA. She told them that if Alex challenged their wills, they would not be in a position to express their views, and should consider keeping notes as to their reasons for the disposition of their assets to Viviane.
[67] Gabriel and Eida told Ms. Richter they already held some of their assets jointly with Viviane. Ms. Richter confirmed that assets held jointly with Viviane would, upon their deaths, likely roll over to Viviane rather than passing to their estate. Ms. Richter recalled that following the discussion about the WVA, Gabriel and Eida decided to leave 30% of the residue of the estate to Alex. Again, according to Ms. Richter, the reason they expressed for doing so was their fear that Alex would fight with Viviane over the estate.
[68] Ms. Richter’s notes of her initial meeting with Gabriel and Eida in 1992 read as follows:
Mr. and Mrs. Mordo do not have a close relationship with their son. He causes them ongoing heartache. Both were very emotional, tears when speaking of him. He has money, he spends loosely. Their daughter works hard and is supportive of them. They do not want their son to receive anywhere near as much as their daughter.
[69] On December 2, 1992, both parents signed general powers of attorney in favour of Viviane. They also executed mirror wills. Under the wills, their home on West 52nd Avenue was to devolve to Viviane. Of the remainder of their estate, 70% was to devolve to Viviane and 30% to Alex. At the time, the remainder of the estate consisted of the Warehouse which, by the time of Eida’s death, was worth approximately $960,000.
[70] Following the meeting with Ms. Richter, Eida began writing letters and notes designed to leave a record as to her reasons for settling her estate as she did. Eida clearly took Ms. Richter’s advice literally. Many of the notes are addressed to “the Honourable Mr. Justice --”. All the notes are written in florid prose. They contain numerous complaints about Alex, dating from his university days in Vienna, and praise for Viviane and her ongoing support for her parents.
[71] On June 1, 1993, Gabriel and Eida met with Gary Wilson. Mr. Wilson was called to the bar in this province in 1976 and his practice is in the area of estate planning, estate administration and probate. Gabriel and Eida wished to discuss estate planning issues with Mr. Wilson. In addition, they were in the process of buying a condominium and wanted Mr. Wilson’s firm to act on the conveyance.
[72] Mr. Wilson’s notes of the June 1, 1993, meeting state the following:
Meeting with Mr. Gabriel Mordo and Mrs. Mordo and daughter, Viviane Nitting. Problem with son. Son saw father’s will and displeased with provision made for him. He is financially well off. Objective-avoid litigation, re parent’s wills. Assets: warehouse on 5th Avenue in both names as joint tenants; residents in both names as joint tenants being sold, moving to apartment in Kerrisdale (to be purchased), house on the market, offer on apartment accepted, bridge financing arranged; chequing account, savings account at TD bank to be changed to Royal Bank in both names, in joint names. Also, Viviane is on the account. Viviane writes cheques, pays bills, looks after management of warehouse for her parents… Household articles: jewellery, Persian carpets, silverware. Daughter always helped parents and brother. Mrs. Mordo has kept diary of incidents with son. Mr. and Mrs. Mordo would like to purchase apartment in their and their daughter’s names as joint [tenants]. Warehouse would be divided 70% to Viviane and 30% to son. Mr. and Mrs. Mordo are French, speak six languages, but have limited fluency and understanding of English. Not sophisticated but very clear minded. They clearly wish to benefit their daughter (spoke with them for about one-half hour without Viviane in the room) more than their son. No undue influence. They are very definite in their thinking.
Recommendations:
1) Purchase apartment in joint tenancy with daughter;
(2) Safekeep wills, including previous wills, which also make unequal provision for son and daughter and state why, and diary.
3) Keep bank accounts joint with daughter with notation on bank card that gift intended.
4) Sell 70% of warehouse to Viviane for appraised value on agreement providing for payment of price over five years. Take reserve re capital gain. Use lifetime capital gains exemption. Forgive each year’s payment of price. Assuming either of Mr. and Mrs. Mordo live for five years, estates would have only a 30% interest in warehouse to pass by wills and subject to WVA.
[73] Mr. Wilson explained to Gabriel and Eida that by putting the condominium in joint tenancy, they were making a present gift to Viviane of an interest in the property. As such, Viviane would be a co-owner. Mr. Wilson explained that as an asset held jointly by Viviane, the condominium was at risk to claims by creditors and a matrimonial claim should her marriage break down. He told them that, by operation of law, on the death of any one of the three co-owners passed, title to the property would pass to the surviving co-owners. Mr. Wilson said Eida and Gabriel appeared to understand his advice.
[74] Mr. Wilson also explained to Gabriel and Eida the effect of having placed their bank and investment accounts in their names jointly with Viviane. He told them the legal effect of the joint accounts was that they had made a gift of an interest in the accounts such that, on the death of one or more of the joint account-holders, the surviving account-holder(s) would own the funds in the accounts.
[75] As they had confirmed in their discussions concerning the joint accounts with Ms. Richter, Gabriel and Eida confirmed with Mr. Wilson their intention to gift the accounts to Viviane.
[76] In the latter part of June of 1993, Gabriel and Eida completed the purchase of a condominium on Balsam Street in Vancouver (the “Condominium”). They instructed Mr. Wilson’s firm to place title to the Condominium jointly in the names of Gabriel, Eida and Viviane. Viviane provided her Canada Savings Bonds as collateral to assist in bridge financing while her parents’ home was on the market. She signed the mortgage on the Condominium as a joint owner, and became an active member of the Strata Council.
[77] Soon after the purchase of the Condominium, Alex conducted a title search on the property and discovered that it was held in joint tenancy by Gabriel, Eida and Viviane. He testified that he felt cheated because, in his view, his sister had two or three houses given to her in her lifetime. He expressed his views to his parents.
[78] Relations between Alex and his parents were strained for some time after the purchase of the Condominium in 1993.
[79] However, Alex was doing well financially by 1993. The Company was prospering. The mainstay of the Company’s business eventually became the importing of bicycles. Alex designs private label bicycles for retailers such as Costco, Canadian Tire and Sportchek. Once he has designed the “specs” for the bicycles, he contracts with manufacturers in China to build them and ship them to Canada.
[80] In October of 1993, Alex bought a waterfront home on Point Grey Road in Vancouver. He paid $1,325,000 for the home, and renovated it extensively. He purchased or leased several expensive cars.
[81] In 1993, Edmond Minasyan, a childhood friend of Alex from his days in Turkey, visited Vancouver. Edmond’s parents had been close friends of Alex’s parents in Turkey. Alex told Edmond of his difficulties with Gabriel and Eida, and his fear that they had disinherited him in favour of Viviane.
[82] Mr. Minasyan testified at trial. He said Alex was distressed by the treatment at the hands of his parents, and, as a result, Mr. Minasyan decided to intervene on Alex’s behalf. He paid a visit to the Mordo home. Mr. Minasyan testified that although he had not seen Gabriel and Eida for many years, he raised the issue of Alex’s inheritance in the course of the visit. He testified that Gabriel assured him equal provision had been made in his will for his two children.
[83] In 1994, Alex told Gabriel he required a formal release from him acknowledging that Alex had paid the amounts due under the 1983 buyout. Alex said his father’s reaction was surprise and dismay that Alex did not trust him.
[84] In January of 1996, Gabriel suffered a stroke. He was hospitalized for about three weeks. Thereafter, he was intermittently at home and in hospital. He required oxygen during this time. Eida was also ill, having suffered a fall. The couple had nursing care at home. Viviane was responsible for co-ordinating her parents’ in-home care and visited them daily throughout this period of time.
[85] Clemencia Hernandez was a housekeeper employed by Gabriel and Eida. She testified that in the months before Gabriel’s death, he required oxygen while at home. The oxygen cylinder was replaced on a weekly basis. On one occasion, Gabriel ran out of oxygen before the cylinder was due to be replaced. The home-care nurse told Eida that arrangements had to be made for the delivery of more oxygen. Eida, who was ill at the time, asked Ms. Hernandez to call Viviane. Ms. Hernandez called Viviane at work but could not reach her. Eida then told Ms. Hernandez to call Alex. Ms. Hernandez did so. She testified that she spoke directly with Alex, who told her that the arrangements for oxygen were Viviane’s responsibility. Ms. Hernandez related to Eida her conversation with Alex. Viviane was eventually contacted, and she brought the oxygen.
[86] Alex testified that he visited his father regularly during his last hospitalization in 1996. He said he recalled his father requiring oxygen in hospital, but did not recall him requiring it when at home between hospitalizations. Alex did not recall a telephone call from Ms. Hernandez about a problem with Gabriel’s oxygen while being cared for at home.
[87] Gabriel died in late April of 1996. In accordance with his will, his entire estate passed to Eida.
[88] Shortly after Gabriel’s death, Alex approached Eida with the suggestion that he loan her $200,000. He made the offer, he said, because Eida was always expressing her concern that she would not have enough money to live comfortably for the rest of her life. Alex proposed that Eida provide him with a promissory note that would ensure he was repaid the money from her estate when she died. Eida refused Alex’s offer.
[89] Ms. Richter was involved in the administration of Gabriel’s estate. In order to minimize the cost of estate administration, Ms. Richter asked both Viviane and Alex to consent to the transmission of Canada Savings Bonds in their parents’ investment portfolio to Eida. With the transfer, probate of Gabriel’s will, with its attendant costs, would not be necessary. Alex signed the transfer form on June 7, 1996. However, he noticed upon reviewing the form later that it stated Gabriel’s will was appended. The will had not been appended to the form. Alex saw this as an opportunity to see his father’s will and what, if any, provision it made for him.
[90] Alex told Eida he wanted a copy of Gabriel’s will. Eida became angry. According to Alex, her anger was “like Mount St. Helens erupting”. Eida refused to produce the will. Alex then instructed his legal counsel, Howard Shapray, to send a letter to Ms. Richter advising that the consent form Alex had signed was invalid unless he was provided with a copy of the will. Mr. Shapray’s letter was sent on June 12, 1996.
[91] Eida maintained her refusal to provide the will. According to Ms. Richter, Eida was afraid that providing the will to Alex would “inflame things”, and was upset that Alex would retain legal counsel in an attempt to extract the will from her despite her clear indication that she did not wish to produce it.
[92] In the face of his mother’s refusal to produce the will, Alex instructed Mr. Shapray to send another letter on June 17, 1996. That letter requested the return of the Canada Savings Bonds transfer forms “until the issue between Mr. Mordo and his mother has been resolved to our satisfaction.”
[93] Ms. Richter testified that she explained to Eida the difficulty presented by Alex’s position. If Alex did not consent to the transfer of the bonds, Eida would be forced to probate the will at considerable cost. In the course of probating the will, Alex would obtain a copy of it. As a result of this advice, Eida reluctantly agreed to provide Gabriel’s will to Alex. According to Ms. Richter, Eida was very upset by Alex’s insistence on seeing the will. She was also angry that he had retained legal counsel to write letters threatening her with the withdrawal of his consent to the transfer of the bonds, particularly at a time when she was struggling with grief over Gabriel’s recent death.
[94] At some point following Gabriel’s death, Eida accessed the couple’s safety deposit box. She read the letter Gabriel had written in 1984, describing the affect on him of Alex’s buyout of Gabriel’s interest in the Company and the firing of Viviane shortly thereafter.
[95] Eida met with Ms. Richter several times in May and June of 1996. A note to file by Ms. Richter dated June 20, 1996, states, in part, the following:
Had several meetings with Mrs. Mordo in May/June 1996 both at her home and at our office. After her husband died, she said her son started coming around-being suddenly nice to her. She doesn’t trust her son. He has caused much heartache to her and had to her husband. Prior to her husband’s death, her husband had mentioned to her many times that he did not want the son to have anything and that he had reluctantly left him 30% but wanted to change it. Mr. Mordo was just too sick to come to our office to do so and the will did not get changed. But he told his wife he did not want her leaving anything to the son. Their daughter has been wonderful to them - they both wanted all to go to the daughter. Mrs. Mordo changed her will to leave all to their daughter. She said their daughter had worked very hard and cared for them. She said no matter what they do, their son will contest their wills, likely, so why shouldn’t they leave their estate to their daughter because that is what they want. All is set up joint with their daughter except the commercial building and some bonds. She said she and her husband had seen a C.A. regarding adding their daughter’s name to the building but there were tax ramifications so they did not proceed. Ideally they wanted their daughter’s name jointly on all so their son could not contest, and they changed what they could. Their son has a lot of money, he spends money all over, he does not need their money.
[96] At trial, Ms. Richter testified that Eida told her that she did not understand why Canada had wills variation legislation, that she was afraid of what Alex might do to challenge her will, and that she did not want Alex to have any of her estate.
[97] In her will executed on July 22, 1996, Eida provided nothing for Alex. In the text of the will, she stated her reasons as follows:
I WISH it clearly understood, and I HEREBY DECLARE, that I have not enjoyed a close relationship with my son, Alexander Mordo. He has caused me much heartache over the years. He has sufficient assets and income in his own right to adequately take care of his own financial needs now and in the future.
[98] Ms. Richter recommended that Eida swear a statutory declaration setting out her reasons for making no provision in her will to Alex. Eida swore the declaration on July 25, 1996. It is quite lengthy, but sets out in considerable detail Eida’s reasons for leaving her entire estate to Viviane. For that reason, I will reproduce most of it:
I, EIDA MORDO, Homemaker …make this sworn statement to set out under oath my decision not to leave my son, Alexander Mordo (“Alex”) any part of my estate.
My husband and I had years of heartache and disappointments from our son Alex. We received no gratitude from Alex for the hundreds of thousands of dollars he received from us over the years.
In fact, he has treated us with contempt for most of his life. Nothing we have done for him has ever been enough for him. He has taken from us and taken from us shamelessly. We paid to educate him and paid his living expenses while he studied. Alex had signing authority on our Swiss bank account and withdrew large sums of money. The representative of the bank, out of concern for us, advised us this was occurring so that it could be stopped before there was nothing left. When we came to Canada, Alex assured us he would be different.
My husband invested over $100,000.00 in a business Alex started in Canada with my husband. He used the money for approximately ten years and made sure that we received no interest, dividends or profits from the business. Alex treated my husband like an “imbecile”. He said to my husband that my husband did not know how to do business in Canada.
They fought and fought and fought. He caused my husband so much suffering and heartache. I cannot forgive him for this.
Prior to my husband’s death, my husband was very sick. He wanted to change his Will and leave Alex out completely. He had only included Alex because of the concern that Alex may challenge the Will. He was not well enough to go to the lawyer’s office to change his Will and he died before he could change his Will. Prior to my husband’s death, my husband told me over and over that nothing is to go to our son. After my husband died, I found the attached letter in the Safety Deposit Box written by my husband in which my husband refers to some of Alex’s actions and the anguish he caused my husband and me over the years.
My daughter has been the one who has cared for my husband and me and treated us with love and respect. My daughter is the one who has been there for me since my husband died and was there for my husband and me prior to my husband’s death. She calls me every day at least once a day. She comes by my apartment to make sure I am alright almost every day, morning and evening. She has worked hard all her life and I wish my estate to go to her with nothing to my son.
My husband and I arranged our estate such that we held most of our assets jointly with each other and with our daughter jointly because we wanted all of our assets to go to our daughter upon the death of both my husband and myself. We did not re-register the commercial building jointly with our daughter because there were income tax complications, but it had always been the wish of my husband and myself, and now is my wish, that the commercial building go to my daughter with no part of it to my son.
I am not close to my son, I do not trust him. I am always wondering what he is planning to do next. Even after my husband died and I needed him to sign a form so that the Canada Savings Bonds could be provided to me without having to probate my husband’s Will, my son, after signing the form, then insisted that the form not be used until he was provided with a copy of my husband’s Will. He insisted, even though my husband left all of his estate to me and it was not my wish that he receive a copy of my husband’s Will, and my son knew this.
My son has more than sufficient money to look after himself. He does not need anything from me to look after himself and he does not deserve anything.
[99] Appended to the statutory declaration was Gabriel’s 1984 letter.
[100] It was Ms. Richter’s evidence that Viviane attended none of the meetings with Eida. Ms. Richter met Viviane on only one occasion in 1996 when she brought Eida to a meeting at the law firm. Viviane did not sit in on the meeting. It was Ms. Richter’s view that Eida was a strong-willed and independent person entirely capable of making her own decisions about her estate.
[101] In June of 1996, Eida decided to move the investments previously held with the TD Bank to a new investment account with RBC Dominion Securities. The account was opened in the joint names of Eida and Viviane. The representative of RBC Dominion Securities, Mr. Wolfe, discussed with Eida the effect of the joint nature of the investment account. He provided Eida and Viviane, for their signatures, a document entitled “Joint Account Agreement (with right of survivorship)”.
[102] Paragraph 2 of the document states that each signatory, acting alone “will have the full power and authority to operate the Account…” without notice to, or permission of, the other account-holder. Paragraph 4 states, in bold print:
[U]pon the Customer’s death, all of the Customer’s interest in and to any monies or Securities in the Account shall pass to the surviving Customers and the surviving Customers, or any of them, may operate the Account in the manner provided in section 2.
[103] On August 28, 1996, Eida and Viviane met with Mr. Wilson. Although Viviane accompanied her mother, Mr. Wilson recalled that Eida did most of the talking. Mr. Wilson’s notes of the meeting state the following:
Met with Eida Mordo and Viviane Nitting. Assets: house joint with daughter Viviane Nitting, joint bank accounts with daughter, jewellery, warehouse. Testamentary objective: entire estate to daughter, disinherit son Alexander Mordo. Advice: deed of gift re jewellery (described in attached excerpt from previous will). Delivery of jewellery to Viviane for her to place in her safety deposit box. Warehouse: transfer into joint tenancy. Need tax cost – (adjusted cost base) – to determine capital gain.
[104] Mr. Wilson recalled Eida telling him that she and her husband had previously executed wills with Mary Richter, and that she had recently executed a new will disinheriting her son Alex. The focus of this meeting was the transfer of the Warehouse. Mr. Wilson advised Eida that he would look into the issue of capital gains on its disposition. He recalled that his discussions were, in the main, with Eida. According to Mr. Wilson, Eida was a very outspoken lady. In his words, “She spoke her mind and she made herself very clear in terms of what she wanted and how she felt about things.” He saw no signs of any influence being exerted by Viviane over her mother.
[105] Mr. Wilson determined that the capital gain taxes on a transfer of the Warehouse into joint tenancy would be significant. He then looked into the implications of an estate freeze, which would involve incorporating a holding company and taking back preferred shares in Eida’s name for the value of the property.
[106] Eida left Vancouver on a trip shortly after the August 28 meeting. On September 18, in Eida’s absence, Mr. Wilson contacted Viviane about the results of his inquiry into the possible transfer of the Warehouse. He described the cost implications and the complex nature of the estate freeze option. Viviane’s response was that she did not want to complicate her mother’s life with that type of plan. She told Mr. Wilson not to proceed further with the transfer.
[107] Mr. Wilson testified that Eida, not Viviane, was his client, and that Viviane merely assisted Eida where necessary.
[108] Mr. Wilson prepared the Deed of Gift for the jewellery because Eida had indicated during the August 28 meeting that she wanted to make the gift to Viviane. His evidence concerning the matter was as follows:
A I proceeded to prepare the deed of gift of the jewellery, which I had recommended to Mrs. Mordo in my August 28th meeting with her. You’ll appreciate that what I was doing there is, in looking at her assets and her -- what she identified to me as her testamentary objective of leaving her entire estate to her daughter, looking at the assets, the house or the condo was already joint with her daughter. The bank accounts were joint with her daughter. It was only the jewellery and the warehouse which were still in her name, which would be problematic in terms of ensuring that the entire estate went to her daughter…
(Transcript, June 21, 2006, G. Wilson, In chief, pp. 37 - 38, lines 37 - 47, 1 - 3)
[109] The Deed of Gift prepared by Mr. Wilson was dated October 9, 1996. Mr. Wilson explained to Eida that the effect of the document was to make a present gift of her entire interest in the property described in the Deed of Gift, and that upon Viviane’s acceptance, it would be a completed gift. Both Eida and Viviane signed the document.
[110] In April of 1997, Alex married his current spouse. He did not invite any of his family to the wedding. In October of 1997, Alex’s spouse had a surprise birthday party for Alex, who was celebrating his 50th birthday. Eida was invited to the party but did not attend. Viviane’s daughter, Galia, also did not attend, although she too, was invited. Viviane was not invited.
[111] Alex said that between 1997 and 1999, he visited his mother periodically when he was not travelling. He occasionally had her over to his house for barbeques, or took her for dinner to her favourite Italian restaurant. Alex’s next door neighbour testified that he saw Alex’s mother and father visiting from time to time, and that Alex sometimes spoke to the neighbour, a physician, about his mother’s health problems.
[112] Khairoon Abdul Quadir testified that she first began working for Gabriel and Eida in 1996. She looked after Gabriel Mordo for about a month before his final hospitalization in 1996. Ms. Quadir had retired from the civil service and was working as a reflexologist when she met the Mordo family. She looked after Gabriel during the week while Viviane was at work. Eida was in hospital at the time with a hip injury. She saw Alex only once during that time, when he dropped by one day for lunch.
[113] Ms. Quadir recalled that she was performing reflexology one evening with Gabriel when he told her he was feeling quite sad and upset about the fact that his son, Alex, did not visit him more often.
[114] After Gabriel died, Ms. Quadir was hired as a companion for Eida. She was with Eida from Thursday through to Monday each week, from 9:00 a.m. to about 8:00 p.m., with a two or three hour break in the afternoon while Eida played bridge or visited friends. She was with Eida for at least two years after Gabriel’s death.
[115] Ms. Quadir said Eida quite often said she felt neglected by her son. Eida complained that while Alex called her from time to time, he seldom visited her. Ms. Quadir never saw Alex during the time she was employed by Eida in the two years after Gabriel’s death.
[116] Eida told Ms. Quadir she was quite concerned about a dispute between Alex and Viviane about Eida’s estate after she passed away. She asked Ms. Quadir to testify in the event a dispute over her assets did arise after her death.
[117] In 1999, after Ms. Quadir no longer worked for Eida, Parin Shariff was hired to be Eida’s companion. She was with Eida every Wednesday through Saturday. Ms. Shariff continued working that schedule until Eida died in 2002. Ms. Shariff had her own vehicle and drove Eida anywhere she wished to go.
[118] Ms. Shariff saw Viviane on a consistent basis. Eida told Ms. Shariff that Viviane looked after her and had always been there for her.
[119] Ms. Shariff said that Alex visited his mother on two or three occasions during the time Ms. Shariff worked for Eida. On one of those occasions, Alex took Eida and Ms. Shariff to a restaurant for lunch.
[120] Ms. Shariff described Eida as an intelligent and alert woman with a mind of her own. She was a very active woman for her age. She took great pride in her appearance and her home.
[121] Clemencia Hernandez worked for the Mordo family from 1989 until Eida died. She spent most Tuesdays and Wednesdays cleaning Eida’s home. She also worked for Viviane and Bjorn. Ms. Hernandez said she rarely saw Alex between 1989 and 2000. She did not see him at all between 2000 and Eida’s death in 2002.
[122] In August of 1998, Eida attended at Ms. Richter’s office and requested a living will. Ms. Richter drafted it for her. In each of her meetings with Ms. Richter, Eida spoke of her strained relationship with Alex.
[123] In the years after making her statutory declaration in July, 1996, Eida occasionally came to Ms. Richter’s office on an informal basis for social visits, often bringing the staff a cake she was fond of baking. On some of those visits, she dropped off notes she had prepared and asked that they be placed in her file.
[124] On a visit in April of 1999, however, Eida wanted to swear another statutory declaration. She told Ms. Richter that in the three years since Alex had seen his father’s will, he had not visited her or offered her assistance. Eida recounted that Alex had remarried in April of 1997, but did not invite her to the wedding or tell her about it.
[125] Eida’s statutory declaration, sworn April 7, 1999, states the following:
1. My husband passed away three years ago and after his death my son, ALEXANDER MORDO, who had had a strained relationship with my husband and myself for many years before my husband’s death, was in contact with me a few times.
2. My said son insisted on having a copy of my husband’s Will and after he was provided with the same, he stopped all contact with me both by telephone and in person.
3. My daughter has cared for me during this time.
4. She either comes by or telephones me on a daily basis.
5. During the last couple of years I have had health problems and my daughter has assisted me and looked after me throughout this time.
[126] Eida was hospitalized in April of 2000 for approximately six weeks. Viviane went to the hospital every day to bring her mother meals and oversee her care. Alex could not recall whether he visited his mother in the hospital during that time.
[127] Following her hospitalization, Eida returned home. Ms. Shariff and Ms. Hernandez continued to work for Eida, and Viviane remained involved in her mother’s life and care. From the perspective of her caregivers, Eida was managing well at home.
[128] Alex testified that on several occasions in and around 2000, he told Eida that she should divide her estate equally among Gabby, Viviane, and Galia. He made clear to Eida that if she did not divide her estate in this manner, he may challenge her will.
[129] In July of 2000, Alex decided to provide Eida with a Jaguar car and a driver. According to Alex, his mother was depressed at her lack of mobility. She could not drive her car, and had little opportunity to go out. Alex said Eida told him she had a falling out with Viviane because Viviane suggested Eida should move into an extended care facility.
[130] At about the same time, Alex reiterated to Eida his position that she should divide her estate equally among Gabby, Galia and Viviane. At the time, Alex saw the proposal (in his words) “as a kind of rapprochement” with his mother. He told her that she could achieve peace in the family if she acquiesced to his view.
[131] It was Alex’s evidence that he approached Eida with his plan to lease a Jaguar and provide her with a driver who would also be her personal assistant. He said he told Eida he would pay the cost of the car and driver but expected to be repaid from her estate after her death.
[132] According to Alex, Eida’s initial response was that she did not need a car and driver. However, on the same day he made the offer, she decided to accept it on the terms he had stipulated.
[133] In cross-examination, Alex acknowledged that he did not discuss the cost of the car and driver on the day they made their agreement about it. Alex himself did not know the cost at that time. He had no reason to believe Eida would know the cost of leasing the Jaguar and paying a driver, but said he thought the cost per month would be “a few thousand dollars”. Alex testified that he understood Eida would give instructions to Viviane to reimburse Alex out of Eida’s estate.
[134] The Company entered into a two year lease for the Jaguar. Alex said he contacted a friend, Daniel Moskovsky, who ran a limousine business. Alex told Mr. Moskovsky he “needed a favour”. He explained that he wanted to hire a driver for his mother, and said he would pay Mr. Moskovsky whatever amount he earned from his limousine business. Mr. Moskovsky told Alex he earned approximately $4,000 per month working a four day week. Alex agreed to pay him that amount to work Monday through Thursday for Eida.
[135] Mr. Moskovsky was paid $250 per day, but not by Alex. The car and driver expenses were paid by the Company. Mr. Moskovsky presented invoices for his hours and other expenses to the Company’s accountant, and received a Company cheque on a bi-weekly basis as reimbursement. There was no written agreement between Mr. Moskovsky and the Company (or Alex) with respect to the terms of his employment. Alex said it was a “handshake agreement” whereby Mr. Moskovsky would be employed for at least until the two year lease on the Jaguar expired.
[136] The total cost of the car and driver was approximately $6,000 per month.
[137] The arrangements for the Jaguar were in place by early August of 2000. Mr. Moskovsky had previous commitments until August 22, 2000, and arranged to have his son fill in as driver for a couple of weeks prior to August 22. Eida soon discovered that she enjoyed being chauffeured about. Mr. Moskovsky took Eida and Ms. Shariff on excursions to places such as Whistler, White Rock and Bellingham.
[138] At the time Alex provided the car and driver Ms. Shariff was also working four days per week for Eida. She continued to do so. Ms. Shariff had previously driven Eida to her various destinations, but ceased doing so after Mr. Moskovsky was hired. Ms. Hernandez continued working for Eida two days per week.
[139] Eida did not tell her caregivers that Viviane had spoken to her about moving into a nursing home. They were not aware of any disagreement between Viviane and Eida in July of 2000 concerning a nursing home. Viviane denied ever making such a suggestion to her mother. Ms. Hernandez testified that Viviane appeared committed to keeping Eida at home in the Condominium.
[140] On August 21, 2000, Viviane and Bjorn went to see Mr. Wilson. Viviane’s evidence was that she wished to discuss the issue of a cheque written on the joint bank account with her mother that had been returned to her as a “stopped payment”. The cheque, which was in the amount of $13, was payable to the organization for which she worked.
[141] In fact, the bank did not stop payment on the cheque until August 22.
[142] Mr. Wilson had a vague recollection of a discussion with Viviane about a cheque with a ‘stop payment’ on it, which may have occurred at the meeting or in a telephone conversation at about the time of the meeting. However, his understanding of the purpose of the meeting was Viviane’s concern that Alex would challenge his mother’s will. Viviane was concerned about litigation over the estate. She also expressed concern that her brother was suddenly back in his mother’s life after having little contact with her since their father’s death, and was now providing a car and driver for their mother. She was concerned about her brother’s motives.
[143] Mr. Wilson’s notes of the meeting with Viviane read as follows:
Father died in ’96, Gabriel Mordo, mother Eida Mordo, daughter Viviane Nitting, son Alexander Mordo. Mother’s assets: apartment joint with Viviane, bank account joint with Viviane, warehouse sole name. Concerned re brother (Alexander’s) influence on mother. Both father and mother have issues with brother. Viviane also has issues with her brother. Brother likely to challenge mother’s will.
[144] Mr. Wilson told Viviane that it had been four years since he had reviewed Eida’s estate plan with her. He thought a review of the estate plan with Eida was overdue, and offered to meet with her about it. Viviane told Mr. Wilson she was about to leave town on a holiday, so he offered to arrange the meeting with Eida.
[145] Mr. Wilson testified that he did not discuss with Viviane any specifics about Eida’s estate plan or any recommendations he might make to Eida when he met with her. He said he would not have had such a discussion with Viviane in Eida’s absence. He discussed the estate plan, including any disposition of the Warehouse, only with Eida.
[146] Mr. Wilson met with Eida on August 29, 2000, while Viviane was still away from Vancouver on vacation. Mr. Wilson’s notes, which he took during the meeting, read as follows:
Meeting with Mrs. Mordo. 267-0099. After husband died, son Alexander [did] not see her for four years. Then he called to see her. Wanted to buy a car and provide a driver. “Enjoy rest of your life.” But she doesn’t want it. Provided it anyway. She is age 82. She is now quite fond of the driver, Danny (age 52). Before [her] husband died, son fought with husband all the time. He was very “nasty” to his father. Son wants her to split her estate equally between Viviane, Viviane’s daughter and his son, but she doesn’t want to. Alexander’s son is wealthy, doesn’t need money. Son is very wealthy. Wants to leave everything to Viviane. Daughter works very hard. Her health is not good. Viviane can provide, save for her daughter.
Assets: apartment … Purchased in names of husband, her name and Viviane’s as joint tenants. Bank account, Royal Bank … joint with Viviane. Warehouse in her sole name. Her son will “fight” any estate plan that he doesn’t like or [that] doesn’t divide her estate as he wants it divided. Viviane has also worked hard and helped her, helped with [the] management of [the] warehouse. She has written in French an account of what happened between her husband and her son - is in safety deposit box. Has given $45,000 to granddaughter to buy a car.
Recommendation - alter ego trust to hold warehouse, will - state reasons for provisions made.
[147] Mr. Wilson testified that, early in the meeting, Eida told him her son had not seen her since her husband’s death. Then, recently, he had come to her with the offer of a car and driver, telling her to “enjoy the rest of her life”. Eida told Mr. Wilson that she did not really want the car and driver, but they were provided anyway, and now she was quite enjoying having them. She indicated that she “quite liked” the driver.
[148] Mr. Wilson did not recall Eida mentioning, in the August 29, 2000, meeting, Gabriel’s 1984 letter which Eida had read shortly after Gabriel’s death. Eida had mentioned that letter when she saw Mr. Wilson in 1996, but not thereafter. Mr. Wilson recalled that during the August 29, 2000, meeting, Eida was feeling somewhat remorseful about the past relationship with her son, particularly now that he had re-established contact and given her the car and driver.
[149] Mr. Wilson did not recall Eida saying during the August 29, 2000, meeting that Alex had made a suggestion as to the division of her estate in order to resolve his concerns about the estate. According to Mr. Wilson, Eida simply said Alex wanted her to divide her estate equally among his son, Viviane’s daughter, and Viviane. Eida told Mr. Wilson, as she had on earlier occasions, that she believed Alex would fight if she did not divide her estate in the manner Alex wanted. Eida told Mr. Wilson she did not wish to divide her estate in that manner. She wanted to leave her assets to Viviane because she had done so much for Eida; Alex was wealthy and did not need any inheritance.
[150] Mr. Wilson testified that he had a lengthy discussion with Eida in the course of reviewing her present estate in order to determine her objectives for her assets when she passed away. They discussed the Deed of Gift concerning the jewellery that Eida had executed in 1996. Mr. Wilson pointed out that she could also make a gift in her lifetime by placing her property in joint tenancy, as had been done with the Condominium and the bank accounts. Mr. Wilson explained that as the Condominium was in joint tenancy with Viviane, it would pass outside her will and be protected from any challenge Alex might make against her estate. Similarly, he explained that as the bank accounts were held jointly with Viviane, they too would pass outside the will and be protected from any claim.
[151] The only asset that was not held jointly with Viviane was the Warehouse. In light of Eida’s objective to leave her entire estate to Viviane, Mr. Wilson recommended that she establish an “alter ego” trust to hold the Warehouse.
[152] Mr. Wilson explained the nature of the Trust to Eida in the course of their meeting. He emphasized that the Trust would hold the property for Eida’s lifetime, and she would be entitled to the income and capital during her lifetime. When she passed away, the terms of the Trust would provide for the passing of the property to Viviane. As such, the Warehouse, as with the Condominium and joint accounts, would not form part of her estate passing by her will or be exposed to potential WVA claims. Mr. Wilson again explained the effect of the WVA to Eida.
[153] Eida accepted Mr. Wilson’s advice concerning the Trust and instructed him to proceed with its preparation. She also instructed Mr. Wilson to make two changes to her will: first, to change the executor from Viviane to Mr. Wilson; and, second, to restate the reasons for the provision that she was making for Viviane and Alex. The change in executor was the result of advice from Mr. Wilson that even though steps had been taken to place her assets outside of the will, the will was still an important document in her estate planning. In the event the will was challenged, and there was litigation, the executor would be the one called upon to defend the validity of the will. Mr. Wilson suggested he be appointed executor to avoid putting Viviane in the position of having to defend the will in any litigation.
[154] With respect to a restatement of the reasons for the provisions of her will, Mr. Wilson advised Eida that it was important to state, as she had done in her 1996 will, the reasons for the provisions she had made. Mr. Wilson asked Eida whether the reasons she had stated in her 1996 will were still her reasons for the current will provisions. According to Mr. Wilson, Eida expressed regret about the fights between Alex and Gabriel over the Company. However, she told Mr. Wilson the reason she wanted to leave her estate to her daughter was Viviane’s care and devotion to Eida and her late husband. She was not leaving anything to Alex because he was wealthy and did not need anything from her.
[155] On those instructions, Mr. Wilson prepared a new will. He appointed himself executor. He also included a paragraph in the will (paragraph 4.2) stating the following:
I DECLARE that I have not made any provision in my Will for my son ALEXANDER MORDO for the reason that he is financially secure. Furthermore, my daughter is deserving of the entirety of my estate in recognition of her many years of devotion, love and care for both myself and her late father. She has been of immeasurable help to me at great sacrifice of her own personal time and without ever asking for or accepting financial reward from me.
[156] Mr. Wilson also drafted the Trust, titled the “Eida Mordo Alter Ego Trust”, using a precedent he had developed for such trusts. Under the terms of the Trust, Eida was the named “Settlor” and Mr. Wilson was the named “Original Trustee”. Eida and Viviane were the defined “Beneficiaries”. The relevant provisions of the Trust are reproduced in Appendix A to these reasons.
[157] Mr. Wilson met with Eida again on September 5, 2000, to review with her the documents he had prepared. Eida attended alone, as Viviane was still away on vacation. With them in the meeting was another of the firm’s lawyers, Royce Frith. Mr. Wilson asked Mr. Frith to attend for two reasons. First, Mr. Frith was fluent in French, which was Eida’s first language. Eida understood English and expressed herself well in English, but Mr. Wilson wanted the presence of counsel who could converse with Eida in French should she feel more comfortable doing so at any point in the discussions. Second, Mr. Wilson wanted another lawyer in his firm to observe Eida for purposes of ensuring she was competent and understood the documents as they were explained to her.
[158] Mr. Wilson took Eida through the provisions of the will, and asked whether it remained her intention to leave her estate to Viviane for the reasons contained in paragraph 4.2. Eida confirmed her intention, and that her reasons were as described in paragraph 4.2.
[159] A memo drafted by Mr. Frith following the meeting recounts the meeting with Eida. The memo states, in part, the following:
Mrs. Mordo confirmed that those were her intentions last week and were still her intentions, but now she was feeling “remorse”. She said that her son was being good to her now by providing her with a car and a driver. The driver had told her that a son and a daughter should share equally in their parent’s estate.
Mrs. Mordo stated that her son had told her that she should leave her estate 1/3 to Viviane, 1/3 to Viviane’s daughter and 1/3 to his son. Her son told her this at the same time that he told her that he was buying a car for her and would hire a driver for her. Mr. Wilson told her that she had to be certain as to her intention and he had to understand what her intention was so that he could prepare the necessary documents to achieve that intention.
There was lengthy discussion about her intention during which Mr. Wilson read to her paragraph 4.2 of the Will which he had prepared for her. He asked her if that statement was correct, whether it accurately stated her reasons for leaving all of her estate to her daughter. She confirmed that it was correct and accurate.
[160] In the course of the meeting, Mr. Wilson reviewed the provisions of the Trust. Among other things, he explained that she was the named “Settlor”, the person creating the Trust, and Mr. Wilson, as the “Original Trustee”, was the person holding the property she was transferring to the Trust. The Trust property, described in Schedule A, was the Warehouse. He went through paragraphs 4.2 and 4.3.2 of the Trust document, explaining that she was the beneficiary for her lifetime, holding a life interest in the property. Upon her death the Trust property would be distributed to Viviane. If Viviane was not then living, the property would go to Viviane’s issue.
[161] Mr. Wilson also explained that as the trustee, he would administer the Trust property, but would appoint Viviane to manage the Warehouse as she had done before. He reviewed with Eida the property transfer document, explaining that by signing it, she was transferring legal title to him. Thereafter, the transfer was kept by Mr. Wilson with the other Trust documents for safekeeping. As the trustee, he was the person who was authorized to make the decision as to when the transfer should be registered with the Land Title Office. Until registered, the transfer remained in his possession.
[162] Mr. Wilson testified that he explained to Eida at the time she signed the document that its effect was to transfer legal title to him from the moment of its signing. He told her he could register the transfer at any time, but that to do so now would only incur property transfer tax. He explained that standard practice was to hold the transfer until Eida passed away, at which time it would become necessary to carry out the terms of the Trust.
[163] Mr. Wilson prepared for Eida’s signature a declaration of trust, which she signed. The declaration indicated that Eida was still the registered owner of the property but that she held legal title in trust for the Trust.
[164] As to Eida’s intention in making the Trust, Mr. Wilson testified that he understood Eida wanted to receive the income from the property until her death, and, thereafter, wished to have the property pass to Viviane. Eida wished to achieve those objectives without paying more taxes than necessary. Mr. Wilson testified that as far as he was aware, Viviane took no part in the decision to create the Trust.
[165] Mr. Wilson’s understanding as to the lack of Viviane’s involvement in the decision to create the Trust was based on a number of factors. First, he was aware that Viviane was away on holidays throughout the time of the August 29, 2000, and September 5, 2000, meetings with Eida. Second, the Trust was Mr. Wilson’s recommendation. Third, Mr. Wilson did not discuss his recommendation with Viviane. Mr. Wilson recalled speaking to Viviane by telephone after her return to Vancouver, at which time he simply told Viviane that he had dealt with Eida’s estate plan.
[166] In cross-examination, Mr. Wilson was asked about his explanation to Eida of the effect of paragraph 4.2 of the Trust. Mr. Wilson said he advised Eida that she could call for the Trust Property so long as she was competent to do so.
[167] In April of 2001, Eida again visited Mr. Wilson. She wished to make a codicil to her 2000 will in order to provide a gift of $20,000 to Galia. Eida did so, according to Mr. Wilson, simply because she wished to formally recognize her granddaughter in her will. In all other respects, she confirmed the disposition of her assets.
[168] In late October, 2001, Eida paid a visit to Alex at his office. The occasion was Alex’s birthday. Eida brought Alex an umbrella with a Ferrari logo for his birthday because he drove a Ferrari and was particularly fond of that model of car. At some point during the visit, the issue of payment for Eida’s car and driver arose. Alex could not recall why or how the issue arose. He said he reminded Eida that he expected to be reimbursed from her estate. He recalled that Eida became upset, and there was a brief argument. Eida left his office soon thereafter.
[169] Following Eida’s visit to Alex, Eida and Viviane made an appointment to see Mr. Wilson. They saw him on November 9, 2001. Mr. Wilson testified that Eida told him she had visited Alex on his birthday, and that Alex told her he expected to be repaid for the expenses related to the car and driver. Eida said she was surprised, as she had understood the car and driver to be a gift from Alex. She said she did not want the car and driver if she was now expected to pay for them.
[170] Mr. Wilson testified that Eida was also concerned because the driver had told a home care nurse that Eida was forgetful, that she was leaving the gas stove on and was forgetting to take her medicine. Eida was suspicious of the driver’s reasons for making those comments. As a result, she had seen her doctor to arrange for a mental capacity assessment.
[171] Eida asked Mr. Wilson whether he thought it advisable to send a letter to Alex confirming Eida’s understanding that the car and driver were a gift and advising Alex that Eida would not repay him for the expenses. Mr. Wilson advised Eida that a letter should be sent, but that it ought to come from her. He emphasized that she ought to draft the letter in her own words rather than having him draft it for her.
[172] Eida, with Viviane’s help, drafted a letter to Alex. The letter is dated November 27, 2001, and states the following:
I write you this letter, because I almost never have the occasion to see you and talk to you alone.
During my last visit to you at the office, when I came to wish you a happy birthday, you talked about the economic state [of the Company] which was going very badly, and you mentioned having to let go about 20 workers. As a mother I went home feeling very uneasy and guilty because of the fact that you make a gift to me of a chauffeur (4 days a week) who costs a fortune. As you know I am a person who has never had a chauffeur all my life and I can continue like this for the rest of my life!!
It was because you insisted that I accepted, Daniel the chauffeur as a gift. I have to admit that if it hadn’t been a gift I would have never been able to afford it. I thank you from the bottom of a mother’s heart!
Now, it is time that you think of yourself; I would not want for anything in the world to be a burden for you, and if you want to and when you want to, you can stop this extravagance. Thank you and thank you again!
Your mother who loves you
[signed Eida Mordo]
[173] Alex responded by letter dated December 5, 2001. He testified that he did not have any assistance drafting the letter, which states, in part, the following:
I read your letter; I had tears in my eyes! It really touched me deeply. I am happy that you enjoy the car and driver that I arranged for you when you were helpless and had a disagreement with your daughter. At that time you needed somebody to look after you, take you shopping or take you to the Doctor and or assist you with any other chores.
As I told you many times, any expenses in connection with the car and driver were not intended to be a gift. …
Mama, all of us will pass away one day and as I told you after your death I fully expect to get paid from your Estate. That is no hardship to you, nor should it be a source of anxiety for you. …
Mama, you are worth between 2 – 3 million dollars. Make the most out of your life while you can, do not worry, spend your money to give yourself pleasure, including having a car and a driver. Take trips and do not feel guilty about it. Whatever you leave in the end will never be enough for everybody, especially if they do not know how to make it themselves. Spend, enjoy, have fun!!!!
Coming back to the chauffeur I will continue paying him until August when the car lease expires. Please keep in mind you are under no obligation to pay anything while you are alive. Needless to say, Mama if you need anything else I will be pleased to do my duty as a son.
[174] Eida drafted a response to Alex’s letter. Viviane faxed it to Mr. Wilson for his review before sending it to Alex. The letter, dated December 16, 2001, states, in part, the following:
I can’t say that I have been moved reading your letter but on the contrary it hurt my heart. …
You have to know that your sister Viviane and I did not have any disagreement. She has always been by my side at my darkest days. Another incorrectness in your letter is that I have never been alone, had always my personnel around me four times a week (I pay them myself) and they are in charge of washing, cleaning[,] cooking and my lady companion drives me around, stays with me during day time. Viviane joins me at the Doctors’ offices…
… It has never been an agreement between you and I, that the car or the driver and its expenses were to be paid after my death from my Estate. We never spoke about it, never asked you for it and as you pretend if there was one I would surely asked you the accounting of it. I regret to say that this story is a “fait accompli”. I persist in repeating I had no part of it, the first time I heard it was the day I came to wish you Happy Birthday at your office October 29, 2001.
My dear Son, it is on this subject that I would like to make troublesome things clear and tell you that I don’t want to owe you anything now or later (at the time of my death). I have no financial obligations towards you. It hurt me to repeat, I had no knowledge of your intentions, I have never been told. It was my impression that it was a gift (a very generous one I have to admit) as you said it was for me to have fun. If what I am writing is contradictory to you I’ll beg you to stop immediately this frivolous and extravagant expense. I am self-sufficient, will continue my life as God has offered it to me. …
[Underlining in original]
[175] Upon receiving Eida’s December 16, 2001, letter, Alex sought legal advice and with the assistance counsel, drafted a response letter, dated January 3, 2001 (dated in error; it should read January 3, 2002). That letter states, in part, the following:
I was very much disturbed by the tone and contents of your letter of December 16th. I have spent a good deal of time searching my soul as to how best to respond. My first instinct was not to respond at all but, upon bitter reflection, I have decided that I cannot leave falsehoods unanswered. It is clear to me that your letter has been ghost written by Viviane. It appears that the truth is not important to either of you any more.
Your letter confirms for me that you are not able to think clearly, that your memory of past events and discussions regarding Viviane has become distorted and that you are subject to undue influence and pressure from my sister. There, I can not help you.
With respect to Daniel Moskovsk[y], based upon what you have said, I would, if I could, terminate him immediately. However I feel legally and morally obliged to give him a reasonable notice as he and his family have become dependent on this job over the past year and a half. As I told you previously, I will continue to pay Daniel as well as pay for the lease of the car until the end of July. However, as mentioned before, I still expect to get paid one day.
[176] Alex’s letter was provided to Mr. Wilson, who decided he ought to respond to it. He was particularly concerned about the comments concerning Eida’s competence and undue influence by Viviane. As noted earlier, Eida’s doctor had arranged to have Eida undergo a mental capacity examination. In November 2001, Eida saw a psychologist who conducted a mental status evaluation. On Eida’s instructions, the psychologist sent her report to Mr. Wilson in early January of 2002. The report describes Eida’s physical and mental functioning, and concludes as follows:
Mrs. Mordo presented as a well-groomed, witty, intelligent, and pleasant 83 year-old. She responded to questions in a frank, respectful, warm manner, and appeared to enjoy our conversation. Her level of judgment and insight was apparent during the interview. In my opinion, she seems to be currently able to make informed decisions and understand their consequences.
[177] Mr. Wilson wrote a letter to Alex on January 9, 2002. In it, he advised Alex that Eida accepted the car and driver as a gift from Alex, and that she would not accept them on any other basis. Mr. Wilson advised further that neither his mother nor her estate would be responsible for the expenses, and that Alex ought to commence legal proceedings now if he intended to make a claim for reimbursement. Finally, Mr. Wilson stated the following:
In addition to your repudiation of the gift of the car and driver, your mother is most upset by your allegation in your letter dated January 3, 2002, that, “… you are not able to think clearly, that your memory of past events and discussions regarding Viviane has become distorted and that you are subject to undue influence and pressure from my sister.”
I have been your mother’s solicitor for over 6 years and am completely satisfied that she is clear thinking, has excellent memory and has not been subject to undue influence or pressure from your sister or from anyone else. My opinion in this regard is confirmed by medical reports and observations by other solicitors. Your allegation is unfounded.
[178] Alex testified that he felt insulted by Mr. Wilson’s letter. He instructed his counsel, Mr. Shapray, to respond to Mr. Wilson’s letter. Mr. Shapray’s letter states, in part:
Having advanced to date approximately $100,000 dollars to provide Mrs. Mordo with a Jaguar and a driver for her comfort and convenience, a service which she had no hesitation to use, Mr. Mordo expected some expression of genuine gratitude, not the rude, self-serving tone of your correspondence.
Mr. Mordo was not only shocked by the tone of your letter but also by the fact that you have injected yourself personally into this family situation and have elevated the temperature of any controversy to the point that you invite Mr. Mordo to sue his 86 year old mother and, by doing so, irreparably destroy any potential future relationship. Fortunately, Mr. Mordo’s sense of decency and filial responsibility transcends the provocation contained in your letter. He has no intention of commencing a restitutionary action at this time.
…
As to the issue as to whether Mrs. Mordo is thinking clearly or is, perhaps, under the undue, poisonous influence of Viviane, a most powerful piece of contemporaneous evidence is, in fact, your own letter. It is unimaginable that Mrs. Mordo, a woman of substantial means, would, were she acting without the undue influence of her daughter, invite her son to launch a suit against her over such a relatively small sum. If there is such unnatural antipathy on the part of Mrs. Mordo toward her son that could have lead to such instructions to you, then it is well that you have disclosed it so that Mr. Mordo can govern himself accordingly in the future. Suffice it to say, there is, in Mr. Mordo’s view, a very pungent aroma of unseemly conduct that lingers over this entire matter.
[179] Mr. Shapray ended the letter with a demand that Mr. Wilson provide particulars as to the basis for his conclusion that Eida was mentally competent.
[180] Eida ceased using the services of Mr. Moskovsky and the Jaguar in January of 2002. Alex testified that the Company continued to pay Mr. Moskovsky $4,000 per month until the end of July of 2002 because he felt a moral obligation to do so. The Company gave Mr. Moskovsky odd jobs to perform which were, according to Alex, of little value to the Company.
[181] Alex testified that although the costs of the car and driver were charged to the Company, they were ultimately borne by him by way of shareholder loans.
[182] In cross-examination, Alex acknowledged that approximately $61,000 of the car and driver expenses may not have been charged to his shareholder loan until an audit of the Company’s expenses was performed in November, 2002, by the Canada Customs and Revenue Agency [CCRA], now known as the Canada Revenue Agency. He said he was sure the balance of the car and driver expenses he was claiming in the litigation had been charged to his shareholder loan at some point in time, but could not be certain when that occurred.
[183] Correspondence from CCRA indicate that the audit covered the period 2000 and 2001, and that $61,356 of the car and driver expenses claimed by the Company as a business expense should have been charged to Alex’s shareholder loan account as a personal expense. The balance of the expense (approximately $51,000) remained on the Company books as a business expense. It appears CCRA allowed some of the car and driver expenses as a legitimate business expense.
[184] The Company’s accountant, Ronald Chisholm, confirmed that it was not until November, 2002, as a result of the CCRA audit, that the amount of $61,356 was charged to Alex’s shareholder loan with respect to the car and driver. Until that time, those expenses attributable to the car and driver had been claimed by the Company. Mr. Chisholm was not employed by the Company until 2005, but was able to confirm the transaction from a review of the Company records.
[185] Mr. Chisholm also confirmed that the balance of the car and driver expenses, which totalled $51,000, was charged to the Company as a business expense until June 2, 2006, when Alex instructed Mr. Chisholm to adjust his shareholder loan by that amount. Mr. Chisholm was not aware that Mr. Moskovsky had been employed by the Company from January to July of 2002. In his view, the Company could have continued to claim Mr. Moskovsky’s salary as a legitimate business expense during that time.
[186] Alex acknowledged in cross-examination that he did not see his mother again after she terminated the services of Mr. Moskovsky. He said he recalled phoning her and urging her to use the car and driver. He thought Eida passed away soon thereafter.
[187] Eida became ill in late March, 2002. Viviane cared for Eida at home until she was hospitalized in early April, 2002. Eida died on April 11, 2002. Alex was travelling abroad on business at the time Eida fell ill. He was notified of her death, but did not attend her funeral because he continued to have business commitments abroad.
[188] Viviane advised Mr. Wilson of Eida’s death. On April 15, 2002, Mr. Wilson registered the property transfer respecting the transfer of the Warehouse to him as trustee. He then obtained an appraisal of the Warehouse for purposes of determining the income tax consequences of the transfer. He subsequently transferred the property to Viviane in accordance with the Trust.
[189] None of Eida’s assets passed by her will. For that reason, Mr. Wilson did not apply for probate of the will. At the time of Eida’s death, her assets were worth approximately $1.8 million. The joint bank account contained $20,000. The jointly held RBC Dominion investments were worth $312,000. The Condominium sold for $550,000. As noted earlier, the Warehouse was appraised at $960,000. The jewellery that passed to Viviane by way of the Deed of Gift was never appraised but is likely worth between $100,000 and $200,000.
[190] The Warehouse is now worth approximately $1.75 million, and the accumulated revenue generated by the Warehouse since April, 2002, is in the range of $250,000.
[191] Viviane was working for the Vancouver Chamber Choir at the time of Eida’s death, and still works there. Her employment income is approximately $40,000 annually. Her only asset at the time of Eida’s death was her home, then worth about $600,000. She and Bjorn continue to live in their house on Heather Street, the value of which is now approximately $750,000. Bjorn is now retired. In 2001 and 2002, his taxable income was in the $100,000 range as a result of stock options he exercised upon his retirement after 14 years with Ballard Power Systems. His taxable income in 2004 was $18,000. Viviane’s daughter, Galia, is self-employed.
[192] Alex’s taxable income between 2001 and 2005 has been in the range of $350,000 per annum. The Company has approximately 30% of the market share for bicycles in Canada. The assessed value of his home on Point Grey Road is $3,650,000. His net worth is between $7 million and $8 million. No evidence was led concerning the financial circumstances of Alex’s spouse.
[193] Alex has purchased a home for Gabby, located on West 1st Avenue, Vancouver, about a block from Alex’s home on Point Grey Road. Alex has also purchased a condominium for Gabby, which has been placed in trust, and a car. Gabby is currently employed by the Company.
[194] Alex testified that this litigation “is not about the money”. He acknowledged that he is financially secure, although the Company is always at risk of a reversal in fortunes. He said he commenced these proceedings to obtain the justice his parents did not see fit to give him in their lifetimes.
[195] An issue arose as to whether Viviane admitted in her pleadings that none of the disputed assets were inter vivos gifts or transfers.
[196] The pleadings in this case were amended in the course of the litigation. Amended Statements of Claim and Defence were filed, and, subsequently, Further Amended Statements of Claim and Defence were filed.
[197] The Amended Statement of Defence contains the following at paragraph 7:
7. In answer to paragraph 8 of the Amended Statement of Claim, the Defendant received income from employment at all material times and never received assets from her parents.
[198] Alex argued that the above paragraph constituted a judicial admission by Viviane that none of the disputed assets were valid inter vivos transfers. I do not accept that argument. The alleged admission must be read in the context of the pleadings as a whole. The specific pleadings operate to clarify the general pleadings. Viviane specifically joined issue with the assertions in the Amended Statement of Claim that the transfers were not inter vivos in nature. Read in the context of the pleadings as a whole, paragraph 7 merely sets out Viviane’s position that she earned her own living and did not receive monetary support from her parents while they were alive.
[199] Alex filed a Further Amended Statement of Claim which revised and particularized much of the claim. In response, Viviane filed a Further Amended Statement of Defence, in which her position with respect to the disputed dispositions was clarified further. The relevant portions of the Further Amended Statement of Defence are as follows:
5. In answer to paragraph 7 of the Further Amended Statement of Claim, the Defendant was a joint owner with right of survivorship of the said Accounts and therefore the Defendant had a legal and beneficial interest in the said Accounts.
6. In answer to paragraph 8 of the Further Amended Statement of Claim, the Defendant was a joint owner with right of survivorship of the said Condominium and therefore the Defendant had a legal and beneficial interest in the said Condominium.
7. In answer to paragraph 11 of the Further Amended Statement of Claim, Gabriel and Eida Mordo provided less funds to the Defendant and her first husband than they provided to the Plaintiff. Gabriel and Eida Mordo provided gifts of the Accounts and Condominium to the Defendant.
[200] Viviane confirmed her position throughout the trial that she had received the disputed assets as gifts from her parents during their lives.
[201] The question of whether the transfers were inter vivos in nature was the central issue in this lengthy trial and the subject of a great deal of evidence. Counsel for Alex led evidence and cross-examined witnesses on the circumstances surrounding the creation of the jointly held accounts and the joint tenancy of the Condominium and the Trust. There was no objection to the admissibility of the evidence on the basis that it was at variance with the pleadings. I am satisfied that Alex was not misled by the impugned pleading in the Amended Statement of Defence or in any way prejudiced by it at trial.
Conclusion regarding judicial admissions
[202] I conclude that the alleged judicial admissions were not made.
Summary of key facts regarding the Condominium
[203] Gabriel and Eida purchased the Condominium in 1993. The Condominium was bought in the names of Gabriel, Eida and Viviane as joint tenants. Before the purchase, Mr. Wilson explained to Gabriel and Eida the legal effect and consequences of making Viviane a joint tenant.
[204] Soon after the purchase of the Condominium, Alex conducted a title search on the property and discovered that it was held in joint tenancy by Gabriel, Eida and Viviane.
[205] Viviane contributed her Canada Savings Bonds as collateral to assist her parents in obtaining bridge financing for the Condominium because their home on West 52nd Avenue had not yet been sold. Viviane also signed the mortgage on the Condominium as joint owner at the time of the purchase. She was an active member of the Strata Council during the years her parents occupied the Condominium and, after Gabriel’s death, during the years until Eida’s death.
[206] Following Gabriel’s death in 1996, the Condominium was registered in the joint names of Eida and Viviane. When Eida went to see Ms. Richter after Gabriel’s death, Ms. Richter confirmed with Eida her intention to hold the property with Viviane in joint tenancy with a right of survivorship. When Mr. Wilson reviewed the estate plan with Eida before drawing her 2000 will, Eida again confirmed her intention to gift the Condominium to Viviane.
[207] The transfer of the Condominium to Viviane as joint tenant was challenged by Alex on the basis that it was not a valid inter vivos transfer.
The law of gifts of real property
[208] In Saylor v. Madsen Estate (2005), 261 D.L.R. (4th) 597 (Ont. C.A.) [Saylor], leave to appeal to the Supreme Court of Canada granted, [2006] S.C.C.A. No. 558 (QL), the rule presuming resulting trusts was stated as follows:
[A] resulting trust is presumed where a person makes a gratuitous transfer of property into another person's name, or into the joint name of him or herself and another. There is then a presumption that the transferee intended to transfer legal title, but retain beneficial title. This presumption may be rebutted by evidence showing that the transferor intended a gift (Saylor at para. 14).
[209] However, when a father purchases real property and it is jointly registered in the names of the parent and child, a rebuttable presumption of advancement arises. This was confirmed in Clemens v. Clemens Estate, [1956] S.C.R. 286 [Clemens]:
Where a father purchases either real or personal estate in the name of a child alone . . . there is no resulting trust for the father; but the father is presumed to have intended to advance the child, especially where he is an infant….The presumption may be rebutted by evidence of a contrary intention (Clemens at 294 citing Halsbury's Laws of England, 2nd Edition, Vol. 17, page 677).
Still, however, as it is a presumption, it may be repelled by evidence, and, in my opinion, the burden of proof lies on the plaintiff to rebut the presumption of advancement by evidence sufficiently strong to lead to an opposite conclusion. The evidence ought to be distinct, because, as observed in several cases, this is a principle which is not to be frittered away by nice refinements. The evidence ought to be contemporaneous, or nearly so, because subsequent acts or subsequent declarations by a father will not enable him to convert an advancement for his son into a beneficial purchase for himself (Clemens at 294 citing Jeans v. Cooke (1857), 24 Beav. 513 at 521).
[210] Subsequent acts of the donor are admissible as evidence against him or her to prove that a beneficial interest was gifted: Romaine v. Romaine (2001), 95 B.C.L.R. (3d) 95 at para. 59, 2001 BCCA 509 [Romaine].
[211] In Edwards Estates v. Bradley, [1957] S.C.R. 599 [Edwards], the Supreme Court of Canada held that a presumption of advancement did not automatically arise in the case of an alleged gift from a mother to a daughter. Instead, the court considered the relationship of the parties and the intention of the donor. In that case, because of the distant relationship between the mother and the daughter, and the clear intention of the mother to provide for all her children, the court concluded that the presumption of advancement did not apply.
[212] As I read Edwards, one must consider the nature of the relationship and the intention of the transferor.
[213] In Goodfriend v. Goodfriend, [1972] S.C.R. 640 [Goodfriend], Mr. Justice Spence concluded that the real issue is the true intention of the transferor, which can only be determined by considering the circumstances of the particular case:
It is abundantly clear that whatever presumptions may arise from the circumstances of any particular case, the Court is under a duty to go into the actual facts, and to consider all the circumstances of the case, so as to arrive at the real intention of the transferor, giving due weight to the presumptions that are raised by the circumstances (Goodfriend at 647 citing Walsh v. Walsh, [1948] O.R. 81 at 94).
[214] The paramount importance of determining the transferor’s intention, and the role of the presumptions in making that determination, was reiterated in Saylor:
Reliance on the presumptions has diminished because the courts are now first examining all the evidence to determine the transferor’s intent. That is to say, courts are tending to examine the evidence in its entirety, and base findings regarding intention on all the facts. It will only be where the evidence itself is unclear that reliance on the presumptions becomes necessary (Saylor at para. 24, per LaForme J.A.).
Indeed, my colleague, Gillese J.A. in Essentials of Canadian Law: The Law of Torts (Irwin Law: Concord, 1996), advocates the approach that there is no need to resort to the presumptions where evidence of intention is clear. This approach is both contemporary and reasonable since the overall purpose is, after all, to ascertain the transferor’s intention (Saylor at para. 25, per LaForme J.A.).
[215] In Saylor, LaForme J.A. questioned whether the presumption of advancement, to the extent it is relevant, applies equally when gifts are made by fathers or mothers. LaForme J.A. declined to decide that question because in Saylor the gift was by a father.
[216] In Clarke v. Hambly (2002), 46 E.T.R. (2d) 166, 2002 BCSC 1074 [Clarke v. Hambly], Kirkpatrick J. (as she then was) dealt with presumptions of advancement in the case of a gift by a mother to her daughter, and found that the presumption of advancement was not rebutted. In that case, the parties agreed there was a presumption of advancement when the gift was made by the mother. Kirkpatrick J. dealt only with the issue of whether the presumption was rebutted.
[217] In Saylor, LaForme J.A. also questioned whether the presumption of advancement arises only in circumstances of dependent children, or can apply to an independent adult child. He concluded at para. 20 that the presumption of advancement depends on parental affection towards the child and not on financial dependence by the child. The presumption may thus apply to independent adult children. However, as noted above, LaForme J.A. held that the presumptions come into play only where the intention of the donor is unclear.
Application of the law to the Condominium
[218] Whether Viviane was in substance a joint owner of the Condominium depends on the intentions of Eida and Gabriel at the time the Condominium was purchased.
[219] On the basis of the evidence of Mr. Wilson and Viviane regarding the events surrounding the purchase of the Condominium in 1993, I am satisfied that Gabriel and Eida intended Viviane to be a beneficial joint tenant. At that time, Mr. Wilson explained the nature and effect of joint tenancy to Gabriel and Eida, who then chose to proceed with their plan to name Viviane as a joint tenant.
[220] On Gabriel’s death, the Condominium was registered in the joint names of Eida and Viviane. At that time, Eida confirmed her intention that Viviane be a joint owner. Eida’s 1996 will, as well as her 1996 and 1999 statutory declarations, establish that she continued to intend that Viviane be a joint owner taking sole ownership upon Eida’s death. The evidence of Mr. Wilson and Ms. Richter, which I accept, was that Eida well understood the effect in law of holding her property in joint tenancy with Viviane.
[221] Alex argued that the presumption of advancement does not apply in this case, or that if it does, it was rebutted. Having concluded that Gabriel and Eida intended to make Viviane a beneficial joint owner, I need not consider the operation of the presumptions. Nevertheless, applying the presumptions yields the same result in this case. Common sense suggests that, all else being equal, the presumption of advancement should apply equally to gifts by mothers and fathers. However, even if the presumption of resulting trust applies, I conclude that the evidence of Mr. Wilson and Viviane regarding the events surrounding the purchase of the Condominium rebut that presumption. Gabriel and Eida, and latterly, Eida, clearly intended that Viviane be a beneficial joint owner of the Condominium.
Conclusion regarding the condominium
[222] I conclude that the transfer of the Condominium was a valid inter vivos gift to Viviane and passed to Viviane by right of survivorship upon Eida’s death.
Summary of key facts regarding the jointly held accounts
[223] The bank account and investment account were held jointly by Eida and Viviane at the time of Eida’s death. These jointly held assets were challenged by Alex on the basis that they were not valid inter vivos transfers.
[224] Gabriel and Eida transferred their bank account from TD Bank to the Royal Bank after purchasing the Condominium in 1993.
[225] The investment portfolio of Gabriel and Eida was originally held with the TD Bank. In 1993 Gabriel and Eida decided to hold their investments jointly with Viviane. In 1996, after Gabriel’s death, Eida transferred the investment portfolio to the RBC Dominion Securities account. The RBC account was opened in the joint names of Eida and Viviane on June 4, 1996.
[226] Viviane did not deposit her own money into her parents’ bank account and considered the money in that account to be theirs while they were alive. With respect to the RBC investment portfolio, Viviane’s evidence was that she did not contribute to the portfolio and considered it to belong to her parents while they were alive. She understood the accounts to be gifts to her from her parents that would be realized upon her parents’ deaths.
[227] There was approximately $20,000 left in the joint bank account at the time of Eida’s death, from which funeral, taxes and legal expenses were paid.
The law of gifts and jointly held accounts
[228] The law of gifts discussed earlier is generally applicable to gifts of money. As with gifts of land, the central question is the intention of the transferor: Saylor at paras. 24 - 25. The presumptions are engaged only if the evidence of transferor’s intention at the time of transfer is unclear.
[229] In Saylor, LaForme J.A. observed at para. 22 that, if needed, the presumption of advancement would apply in the case of a father’s gift of bank account funds to his daughter. On the facts of that case, the court concluded the father created the joint accounts purely for his convenience and did not intend to gift them to his daughter. LaForme J.A. commented as follows on the significance of the terms of the bank account providing for a right of survivorship:
Bank documents can be strong evidence of a party's intention at the time the parties signed them. I do not, however, agree that the bank documents should be assigned presumptive value when trying to determine a party's intention. The probative value of such documents, like any other relevant evidence, can only be ascertained after an assessment of the totality of the relevant evidence. As this case demonstrates, the document does not always provide accurate evidence of the parties' intent (Saylor at para. 27).
…
…there is no reason to treat the documents as dispositive of the actual relationship between the parties. Documents remain a piece of evidence -- perhaps a very important piece of evidence -- going to the intention of the parties who created the document. Nevertheless, the weight to be assigned to such documents in any given case must be left to the trier of fact (Saylor at para. 31).
[230] LaForme J.A. then summarised the approach that should have been taken by the trial judge with respect to the joint accounts:
First, the court should have evaluated the whole of the evidence, including the bank documents, to determine whether there was a clear intention at the time of the transfer on the part of the late father to gift the joint accounts to [the donee]. Second, if, the intention of the late father remained unclear after this evaluation, then the court should have resorted to an analysis of the application of the presumptions of advancement or resulting trust (Saylor at para. 31).
[231] I agree with the analysis of LaForme J.A.
[232] In Clarke v. Hambly, the parties admitted that the presumption of advancement applied when a mother named her daughter as a joint owner of her bank and investment accounts. The presumption was not rebutted. At para. 10 of her reasons, Kirkpatrick J. noted (citing W.J. Mowbray, Lewin on Trusts, 16th ed. (London: Sweet & Maxwell, 1964) at 135) that “advancement is a question of intention”. I view the approach of Kirkpatrick J. as consistent with that of LaForme J.A. in Saylor.
Application of the law to the jointly held accounts
[233] Viviane did not regard the joint bank and investment accounts as hers to deal with as she wished during her parents’ lifetimes. However, she understood her parents placed both their bank and investment accounts jointly in her name as a gift of a future interest that she would receive upon their deaths. She also understood that Eida, after transferring the investment account to RBC Dominion Securities, registered the investments as a joint account for the same reason.
[234] In any event, Viviane’s intention or understanding concerning the accounts she held jointly with her parents is not determinative of the issue. The authorities establish that the central question is the intention of the transferor or donor. What then, were the intentions of Gabriel and Eida when they decided to hold their accounts jointly with Viviane? And, ultimately, what was the intention of Eida when she transferred her investments to the RBC Dominion Securities joint account in 1996?
[235] In my view, the true intentions of the transferor in this case are abundantly clear. Both Mr. Wilson and Ms. Richter advised Gabriel and Eida in 1993 of the effect of placing their bank accounts in their names jointly with Viviane. Both lawyers told Gabriel and Eida that the effect was to make a present gift of the accounts, and that if Viviane survived them she would be the sole owner of the funds in the accounts. The evidence of both Mr. Wilson and Ms. Richter, which I accept, was that upon being given that advice, Gabriel and Eida confirmed their intention to gift the accounts to Viviane by having her hold the accounts jointly with them during their lives.
[236] When Eida transferred the investment portfolio to RBC Dominion Securities, Mr. Wolfe, the bank’s representative, explained to her the effect of placing the portfolio jointly in Viviane’s name. Eida was told, for example, that as joint owners of the investment account, she and Viviane had equal access to and control of the account. She was also told that as a consequence of Viviane’s present joint ownership of the investments, the account was subject to claims by Viviane’s creditors and by her spouse should her marriage break down. Eida also received advice from Ms. Richter about the jointly held investment portfolio at the time it was opened with RBC Dominion Securities. That advice was reiterated by Mr. Wilson in 2000, when he drafted the new will for Eida on her instructions.
[237] Eida went to extraordinary lengths to ensure that her intentions with respect to the accounts were unambiguous. She did not set up the joint accounts for her convenience. She made clear in her 1996 will and her statutory declarations of 1996 and 1999 that she intended the jointly held accounts to pass to Viviane by right of survivorship rather than having them pass by her will to her estate.
Conclusion regarding the joint accounts
[238] I am satisfied that the transfers of the joint accounts were valid inter vivos gifts and that both accounts passed to Viviane by right of survivorship upon Eida’s death.
Summary of key facts regarding the Deed of Gift
[239] In the years preceding the execution of the Deed of Gift, Eida took photographs of her various items of jewellery and wrote notes on the back of the photographs to indicate various earlier dates and occasions on which she purported to “give” Viviane the items. Evidently, Eida was not satisfied with this photographic record and wanted a more formal arrangement for the jewellery. In 1996, she told Mr. Wilson that she wanted to gift the jewellery to Viviane as part of her estate plan. As a result, Mr. Wilson prepared a Deed of Gift for the jewellery, dated October 9, 1996.
[240] Prior to drafting the Deed of Gift in 1996, Mr. Wilson explained to Eida the effect of executing the deed with respect to her jewellery and other personal items. Mr. Wilson explained that the effect of the document would be to make a present gift of her entire interest in the property described in the Deed of Gift, and that upon acceptance of the gift by Viviane, it would be a completed gift. Thereafter, Eida instructed him to draft the Deed of Gift, which was created under seal. Viviane also signed the document acknowledging her acceptance of the property described in it.
[241] After the jewellery was conveyed to Viviane by the Deed of Gift, Eida was free to use the items covered by the deed, but much of the jewellery remained or was placed in the safety deposit box held jointly by Viviane and Eida.
[242] The Supreme Court of Canada has relatively recently affirmed the efficacy of sealed contracts. Because a contract under seal derives its validity from its form alone, there are several incidents of such a contract which differ from those of a simple contract. The fundamental difference between contracts under seal and simple contracts is in relation to the doctrine of consideration. The law will enforce a contract under seal even without consideration. Therefore, a gratuitous promise which is expressed in an instrument under seal is enforceable (Friedmann Equity Developments Inc. v. Final Note Ltd., [2000] 1 S.C.R. 842 at para. 20, 2000 SCC 34 [Friedmann Equity]).
[243] The court set out the requirements for the enforceability of a sealed contract:
At common law, a sealed instrument, such as a deed or a specialty, must be signed, sealed and delivered. The mere inclusion of these three words is not sufficient, and some indication of a seal is required: see, e.g., 872899 Ontario Inc. v. Iacovoni (1998), 163 D.L.R. (4th) 263 (Ont. C.A.). To create a sealed instrument, the application of the seal must be a conscious and deliberate act. At common law, then, the relevant question is whether the party intended to create an instrument under seal (Friedmann Equity at para. 36).
[244] In Romaine it was confirmed that the mere affixing of a wafer seal may not be sufficient to form a valid deed. Rather, the seal must be affixed by a party with an intention to create legal obligations:
The presence of the wafer seals on the Gift Documents when they were signed satisfies the "form and material substance" requirement (Romaine at para. 40).
Whether there was a "sufficient act of sealing" relates to the procedure followed when the document was executed. There must be "acts or words sufficient to show that it is intended by the party to be executed as his deed and presently binding upon him" (Romaine at para. 41. citing Xenos v. Wickham, (1867) L.R. 2 H.L. 296 at 312).
Application of the law to the Deed of Gift in this case
[245] There is no dispute that Eida and Viviane signed the Deed of Gift. It was not suggested that Eida was not mentally competent at the time the deed was executed. It was suggested that Eida was unduly influenced by Viviane. I have rejected the allegations of undue influence for the reasons discussed below.
[246] The Deed of Gift states on its face that it was "signed, sealed and delivered". Mr. Wilson testified that the documents were sealed and I accept that the seals were placed on the documents at the time of execution. Thus, in all respects, the Deed of Gift meets the form requirements for sealed instruments. The only question remaining is whether Eida intended to create legal obligations when executing the Deed of Gift.
[247] The photographs with notes on the back were taken some time before the Deed of Gift was executed and are not determinative of Eida’s intention at the time of execution. I take the photos and notes to be merely expressions of Eida’s ongoing intention to give the items to her daughter and her somewhat crude means of leaving a record of having done so, prompted by her concerns about a dispute over her estate and before receiving the advice of Mr. Wilson concerning the Deed of Gift.
[248] Eida explained to Mr. Wilson that she wanted to leave her jewellery to Viviane. I have no doubt that at the time the Deed of Gift was executed, Eida intended Viviane to have the jewellery. Before the Deed of Gift was executed, Mr. Wilson explained to Eida the significance of executing a sealed instrument. I conclude that Eida appreciated the legal significance of executing the Deed of Gift and intended to gift to Viviane the specific property described.
[249] Any ongoing use by Eida of the jewellery and other items listed in the Deed of Gift would not affect Viviane’s acceptance of the gifts or her right of ownership. In any event, there was no evidence to suggest that Eida did continue to wear the jewellery. Neither Ms. Quadir nor Ms. Shariff, regular companions of Eida, saw Eida wearing jewellery other than a signet ring she always wore.
Conclusion regarding the Deed of Gift
[250] I conclude that the Deed of Gift was effective from the time of its execution in October of 1996.
Summary of key facts regarding the trust
[251] The Trust was created as an inter vivos trust to hold the Warehouse until Eida’s death. Eida instructed Mr. Wilson to draft the Trust to prevent the Warehouse passing under her will, in the hope that she could thereby preclude a WVA claim by Alex. In order to avoid capital gains tax on the Warehouse at the time of settlement, the Trust was designed to comply with s. 104(4) of the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp.) [ITA].
[252] Eida did not reserve the right as settlor to revoke the Trust (Paragraph 1.4 of the Trust Indenture).
[253] Eida had the right, as a beneficiary, to call for Trust Property to be transferred to her during her lifetime. She did not exercise that right.
[254] Upon Eida’s death, the Trust Property was transferred to Viviane as the ultimate beneficiary.
[255] Although the Trust allowed for additional property to be added, the Warehouse, and the income from it, were the only property ever held by the Trust.
[256] The Trust Indenture and the Form A land transfer document were executed by Eida on September 5, 2000.
[257] Mr. Wilson did not register the Form A in the Land Title Office until after Eida’s death. On his own initiative, Mr. Wilson held the transfer. He did so in order to prevent the triggering of property taxes that would have occurred upon the transfer of the Trust Property from Eida to himself as Trustee.
[258] Eida died on April 11, 2002.
Summary of issues and approach to analysis of the Trust.
[259] In order to determine whether the Trust was a valid inter vivos trust, I have considered the following issues:
· Was there a valid act of transfer to a clearly identified trustee?
· Was the act of transfer vitiated by the circumstances of the transfer?
· Was the Trust certain?
· Where the formalities for inter vivos trusts complied with?
· Was there a resulting trust for lack of consideration?
· Was the Trust testamentary in nature?
· Was any part of the Trust void for repugnancy?
· Was the Trust properly constituted?
· Is the Trust void on public policy grounds?
Significance of the ITA provisions
[260] Before turning to those issues, I will make the following comments about the alter ego trust provisions of the ITA. Those provisions have no bearing on whether the Trust was properly formed or valid. The ITA merely determines whether the settlor is required to pay capital gains tax at the time of settlement, or defer the triggering of capital gains until his or her death. Section 104(4) of the ITA deals with the issue of when trusts are taxed. The section reads, with parts not relevant to this case excluded, as follows:
Deemed disposition by trust 104 (4) Every trust is, at the end of each of the following days, deemed to have disposed of each property of the trust … that was capital property… at the end of that day and to have reacquired the property immediately after that day for an amount equal to that fair market value, and for the purposes of this Act those days are (a) where the trust … (ii.1) is a trust … that was created after 1999 by a taxpayer during the taxpayer's lifetime and that, at any time after 1999, was a trust under which … (iv) in the case of a trust described in subparagraph (ii.1) created by a taxpayer who had attained 65 years of age at the time the trust was created, (A) the taxpayer was entitled to receive all of the income of the trust that arose before the taxpayer's death and no person except the taxpayer could, before the taxpayer's death, receive or otherwise obtain the use of any of the income or capital of the trust, … the day on which the death…occurs.[261] Section 104(4)(a)(iv)(A) suggests that under a valid inter vivos trust the settlor may receive capital property. This may occur where the trust document provides that specified amounts of capital will be transferred to the settlor as beneficiary at specified times. This ITA provision does not imply that the settlor may reserve the right to call for trust capital, but does not prohibit such a trust. Whether the reservation of that right affects the validity or inter vivos nature of the trust is a matter of trust law, not tax law.
[262] Because compliance of the Trust with the ITA was not in issue in this case, the tax aspects of the Trust will not be considered further.
Was there a valid act of transfer to a clearly identified trustee?
[263] To form a valid inter vivos trust, there must be a valid act of transfer to a clearly identified trustee.
[264] It is clear from the Trust Indenture that Mr. Wilson was to be the original Trustee. Further, a Form A transferring the Warehouse to Mr. Wilson “as Trustee” was executed by Eida on September 5, 2000. Accordingly, in this case, the identity of the Trustee was clear.
[265] However, the creation of a valid inter vivos trust requires a valid act of transfer to that clearly identified trustee. In this case, was it enough for Eida to complete the Form A and hand it to Mr. Wilson, or was it also necessary to register the Form A before the Trust came into existence? As noted, Mr. Wilson did not register the Form A until after Eida’s death for property tax reasons.
Legal authorities concerning the requirements for a valid transfer
[266] The rule as to the formation of a valid trust was stated in Milroy v. Lord (1862), 45 E.R. 1184 (C.A.) [Milroy]:
[I]n order to render a voluntary settlement valid and effectual, the settler must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him (Milroy at 1189).
[267] In Milroy, the trustee was given share certificates and a power of attorney under which he could transfer the shares into his name. The shares were such that legal title did not pass until the new owner’s name was entered in the share register; that was not done until after the settlor’s death. The court concluded it was not sufficient that the trustee was capable of transferring the shares. The transaction was incomplete without the actual transfer having occurred. The court would not compel the agent of the settlor to complete the transfer because it could not compel the settlor to complete the transfer:
Equity could not, I think, decree the agent of the settlor to make the transfer, unless it could decree the settlor himself to do so, and it is plain that no such decree could have been made against the settlor (Milroy at 1190).
[268] The court in Milroy refused to hold that the settlor held the legal title on trust for the trustee:
[T]here does not appear to me to be any sufficient ground to warrant us in holding that the settlor himself became a trustee of these bank shares for the purposes of this settlement (Milroy at 1190).
[269] In the case of Re Rose, [1952] Ch. 499, [1952] 1 All E.R. 1217 (C.A.) [Re Rose] the English Court of Appeal distinguished Milroy and found a valid trust. In Re Rose, the registration of the shares could not be completed until the board of directors approved the transfer. The court concluded that the settlor had done all that he could by completing the documentation and forwarding it to the board for approval, and accordingly held that legal title passed before registration, when the settlor gave up possession of the documents.
[270] In Fenton v. Whittier (1977), 26 N.S.R. (2d) 662 at paras. 86 to 96; 40 A.P.R. 662 (S.C.) [Fenton], the Nova Scotia Supreme Court, considering Re Rose, concluded there was no inter vivos gift of shares. Although the donor had completed the share transfer forms, she kept them in a safety deposit box until her death because she wanted the benefit of the dividends during her lifetime. The court concluded that the donor intended the gift to take effect only upon her death.
[271] In Pennington v. Waine, [2002] 1 W.L.R. 2075, [2002] EWCA Civ 1587 an aunt intended to make a gift of shares to her nephew. However, the share register was not updated with the name of the new owner, and the donor kept the completed share transfer forms rather than handing them to her nephew. On a strict application of the principle in Re Rose, there was no valid inter vivos gift. However, the English Court of Appeal held that it would have been unconscionable for the executors of the giftor to refuse to hand over the share certificates, and found that the gift was valid. In so concluding, the court relaxed the rule in Milroy and imposed a trust on the settlor such that she held the legal title to the shares in trust for the trustee until the transfer of ownership was completed.
[272] In Bank Leu AG v. Gaming Lottery Corp. (2003), 231 D.L.R. (4th) 251 at para. 56 (Ont. C.A.) Weiler J.A. (for the court), referring to Pennington, affirmed the principle in Re Rose that a transfer may be valid notwithstanding that the transferee must perform further acts to complete the transfer.
[273] The foregoing cases deal with the transfer of shares. As noted in Milroy, what constitutes “everything necessary” to achieve an effective transfer depends on the nature of the property being settled. In the case of real property, what is “everything necessary” to effect a transfer?
[274] In Mascall v. Mascall (1989), 50 P. & C.R. 119 (C.A.) the plaintiff father applied for a declaration that a transfer of real property to his son, the defendant, was invalid. The plaintiff had completed the land transfer forms and handed them to the defendant, anticipating that any further steps concerning the forms would be taken by the defendant. At the time of the plaintiff’s death, the defendant had not yet registered the forms. The English Court of Appeal, applying Re Rose, found that the plaintiff had done all that he could to complete the transfer and therefore the transfer was complete. In the result, the son was the holder of legal title despite registration having not yet taken place.
[275] The acts necessary to affect a valid transfer of land is more a question of the legislation governing land transfers than a matter of trust law: The Australian Law Journal, [1968] A.L.J. Vol. 42 at 227. Section 20 of the Land Title Act, R.S.B.C. 1996, c. 250 [Land Title Act] deals with the transfer of land in British Columbia:
20. Except as against the person making it, an instrument purporting to transfer, charge, deal with or affect land or an estate or interest in land does not operate to pass an estate or interest, either at law or in equity, in the land unless the instrument is registered in compliance with this Act.
[Emphasis added]
[276] In Davidson v. Davidson, [1946] 2 D.L.R. 289 (S.C.C), aff’g [1945] 2 W.W.R. 576 (B.C.C.A), the Supreme Court of Canada, considering language of the Land Title Act almost identical to that now contained in s. 20, held that an unregistered transfer of land took effect on the day the transfer was executed and not on the day it was registered. More recently, in Chung Estate v. Chan (1995), 4 B.C.L.R. (3d) 370 (S.C.) [Chung], aff’d (1995), 13 B.C.L.R. (3d) 157 (C.A.) the court held that if the transferor has properly completed a freehold transfer form, the opening words of s. 20 -- “except as against the person making it” -- apply such that the form may be registered after the transferor’s death to effect a transfer of the property.
[277] Chung was distinguished in the case of Kovacs v. Tuteckyj (2000), 147 Man. R. (2d) 161, 2000 MBQB 104 [Kovacs]. In Kovacs, the transferor had executed the transfer form and given it to another, but instructed that it not be registered until after he had consulted with his solicitor. The court held that the intention of the transferor at the time he handed over the transfer form was relevant. The court drew the inference from the circumstances that the transferor had not done everything necessary to complete the transfer and, as such, the transfer was not complete.
[278] As the foregoing case law indicates, the intention of the transferor is crucial. If the transferor intends to transfer the property, the transfer will be complete when the transferor has relinquished control of the property and put the transferee in a position to complete the transfer. The importance of control was discussed in Re Evans, Royal Trust Co. v. Lloyd’s Bank Ltd. (1956), 7 D.L.R. (2d) 445 (B.C.S.C.) [Re Evans]. The Court, citing Austin W. Scott, The Law of Trusts, 1st ed. (Boston: Little, Brown and Company, 1939) at 225 [Scott] said the following:
A conveyance, whether absolute or in trust, is ineffective if the transferor does not surrender control of the property…. A conveyance in trust is incomplete unless the settlor has passed the title to the property to the trustee by delivery of the subject matter of the trust or of an instrument of transfer. On the other hand, if the conveyance in trust is completed by such delivery, the trust is not incomplete merely because the settlor reserves power to revoke or to alter the trust. There is a sufficient surrender of control over the property if the settlor transfers the title to it to the trustee, even though he reserves power to undo what he had done. The surrender of control is sufficient even though the settlor reserves power to reassume the control (Re Evans at 451 - 452).
[279] Alex argued that Eida did not effectively transfer the property, or relinquish control of it, because Mr. Wilson did not register the transfer form. As such, said Alex, Eida had the unrestricted right to deal with the property. In particular, Alex relied on the following words from Re Pfrimmer Estate [1936], 2 D.L.R. 460 at para. 10 (Man C.A.) [Re Pfrimmer Estate] citing Malim v. Keighley (1794), 30 E.R. 659 at 660:
I will lay down the rule as broad as this; wherever any person gives property, and points out the object, the property, and the way in which it shall go, that does create a trust, unless he shews clearly, that his desire expressed is to be controlled by the party; and that he shall have an option to defeat it.
Application of the law to this case
[280] Eida executed the Form A and handed it to Mr. Wilson for eventual registration.
[281] Applying the principles in Milroy and Re Rose, I conclude that Eida did everything necessary to create a valid trust by completing the Form A and giving it to Mr. Wilson. Her intention to transfer legal title to Mr. Wilson is underscored by her execution of the Declaration of Trust in which she confirmed that although the executed Form A was not at that point registered, she held the legal title to the Warehouse only as trustee on behalf of the Trust.
[282] Unlike the transferor in Kovacs, Eida did not give instructions to delay registration of the land transfer form until she had considered the matter further. It was Mr. Wilson’s decision as Trustee to wait until Eida’s death to register the Form A. To that end, he drafted the Declaration of Trust for Eida’s signature to ensure it would be clear that until registration, Eida held legal title to the property on trust for the Trust.
[283] Even in the absence of the Declaration of Trust, the principle in Pennington would apply. Until Mr. Wilson registered the Form A, Eida as settlor held legal title to the Warehouse in trust for Mr. Wilson as Trustee of the Trust. The Declaration of Trust merely provides a further factual basis bringing the transaction within the rule in Pennington. I am satisfied there was a valid act of transfer to create the Trust.
[284] Alternatively, s. 20 of the Land Title Act is engaged. In accordance with the conclusion of the court in Chung, the Form A executed by Eida was effective against her “as the person making it” even before it was registered. For that reason as well, legal title passed to Mr. Wilson as Trustee upon execution by Eida of the Form A.
[285] In Re Evans, the court held that the settlor could reserve the right to revoke the trust. Eida did not reserve a right of revocation as settlor. By completing the Form A and handing it to Mr. Wilson, Eida surrendered control over the Trust Property. The facts in Re Pfrimmer Estate were quite different. There, the settlor was capable of defeating the transfer and, as such, there was no valid transfer. In this case, Eida could not defeat the original transfer; she could only request that a new transfer take place.
[286] Further, it must be borne in mind that Eida had separate roles as settlor and beneficiary under the Trust. As settlor, Eida had no right to revoke the trust. (paragraph 1.4 of the Trust Indenture). Eida’s right to call for Trust Property was a right she held as beneficiary. Eida as settlor had no ability to defeat the original transfer to Mr. Wilson as Trustee. She had only the power as beneficiary to call for the Trust Property.
[287] Moreover, paragraph 4.2 of the Trust Indenture provided that Eida’s right to exercise that power of appointment would terminate upon Eida becoming incompetent. That potential limitation is further evidence of Eida’s intention to relinquish control over the Trust Property.
[288] It is clear from paragraphs 2.1.6 and 3.1 of the Trust Indenture, read with paras. 3 and 9 of Schedule B (incorporated by paragraph 5.1 of the Trust Indenture), that the Trustees had the power to modify and convert the Trust Property. Accordingly, Eida had the right to call for the Warehouse property only so long as it remained Trust Property. Under the terms of the Trust, she would lose all power to obtain the Warehouse in the event the Trustees exercised their power to convert the Warehouse into another form of trust investment. Put another way, Eida did not have the power to obtain the Warehouse property; she had the power to call for Trust Property in whatever form it existed at that point in time.
[289] Whether one applies the “everything necessary” test in Re Rose, the equitable principles of Pennington, or the effect of s. 20 of the Land Title Act, the result is the same: there was a valid act of transfer to create an inter vivos trust.
Was the act of transfer vitiated by the circumstances of the transfer?
[290] Alex alleged undue influence on the part of Viviane with respect to the Trust. Because Alex also alleged undue influence with respect to the jointly held assets i.e. the condominium and the bank accounts, the issue of undue influence is considered later in these reasons. Suffice to say here that I have concluded there was no undue influence on the part of Viviane with respect to the creation of the Trust.
[291] It was not argued that fraud, lack of mental capacity or mistake vitiated the act of transfer in creating the Trust.
The three certainties: certainty of intention and the issue of sham
[292] In order to be valid, trusts must comply with the three certainties at the time of settlement:
It is of course trite law that for a valid trust to come into existence, the three certainties - certainty of intention, objects and subject matter - must be met…. If the first requirement is not met -- i.e., a transfer of property is construed as not intended to have been subject to a trust obligation - the transferee takes the property beneficially … If the first test is met but the intended trust fails due to uncertainty of subject matter or objects, then … the property is held on a resulting trust in favour of the settlor...(Lewis v. Union of B.C. Performers, (1996) 18 B.C.L.R. (3d) 382 at para. 21 (C.A.) [Lewis]).
[293] To meet the first certainty, there must be an intention on the part of the settlor to impose enforceable trust obligations on the trustee. The language used by the settlor is critical and must show a clear intention that the recipient of the trust property holds that property on trust: Lewis at para. 22.
[294] The Plaintiff argued that the Trust was a sham because of the degree of control Eida retained over the Trust Property.
[295] The issue of sham trusts is treated in different ways by different authors. W.J. Mowbray et al., Lewin on Trusts, 17th ed. (London: Sweet & Maxwell, 2000) at paras. 4 - 19 to 4 - 28 [Lewin] considers that whether a trust is invalid as a sham depends primarily on the intention of the settlor at the time the trust is created (citations omitted):
The sham concept…would appear to involve a finding of fact akin to, but nevertheless falling short of, actual fraud. In the trust context, a finding will be necessary that, whilst an apparent settlor did not in fact intend to part with the beneficial interest in the trust property, nevertheless he executed documentation with the apparent effect of so parting (Lewin at paras. 4 - 21).
…
If at the [time of execution] the settlor genuinely intends the documentation to take effect according to its terms, and those terms are such as to create a trust, then nothing the settlor or trustees do thereafter can render a valid trust a sham (Lewin at paras. 4 - 22).
…
Mere examination of the deed itself will, of course, be incapable of revealing its sham nature (Lewin at paras. 4 - 22).
…
[Courts have] distinguished between the class of case where parties entered into a written agreement which was “a sham intended to mask their true agreement”, and the distinct class of case where, without any question of sham, there “has been held to be some objective criterion in law by which the courts can test whether the agreement the parties have made does or does not fall into the legal category in which the parties have sought to place their agreement (Lewin at paras. 4 - 24).
...
The difference [between a sham and merely an improperly constituted trust] is that between an apparent settlor who has no relevant intention to create a trust, but executes documentation by which he pretends to have such an intention; and the quite distinct settlor who fully intends his documentation to take effect according to its terms, but, as a matter of proper legal analysis, fails to create a trust (Lewin at paras. 4 - 25, emphasis in original).
…
[A] finding of sham makes it unnecessary for the court to consider the requirement of certainty of intention at all, because it has evidence before it that the settlor’s documentation has been crafted to mislead (Lewin at paras. 4 - 27).
…
[T]he mere retention of wide beneficial powers and interests by the settlor does not of itself make the trust a sham, so long as the trustee genuinely has control over the assets and exercises his own independent discretions in respect of those matters where the terms of the trust require him to do so (Lewin at paras. 4 - 28).
[296] Simply put, Lewin distinguishes between a settlor with devious intent and a settlor who signs a document that does not have the legal effect he or she thought it would have. The discussion in Donovan Waters et al., Waters’ Law of Trusts in Canada, 3rd ed. (Toronto: Thomson Carswell, 2005) at 145 - 149 [Waters] is consistent with the Lewin approach. Guided by Lewin, I will deal with the argument that the Trust was a sham as a precursor to the question of whether there was certainty of intention.
[297] On the issue of whether the trust was a sham, the question is this: Did Eida intend to create a valid trust, or were the documents executed to mask an intention to retain full control over the Trust Property? To answer the question, one must look behind the documents which are said to conceal the sham, and weigh the other evidence of intention at the time the documents were executed.
[298] The Plaintiff argued that Eida’s sole purpose in creating the Trust was to defeat Alex’s WVA claim. However, motive is distinct from intent:
A transaction is no sham merely because it is carried out with a particular purpose or object. If what is done is genuinely done, it does not remain undone merely because there was an ulterior purpose in doing it (Lewin at paras. 4 - 26 citing Miles v. Bull, [1969] 1 Q.B. 258 at 264 [Miles v. Bull]).
Regardless of her motive, if Eida genuinely intended to create a trust, the Trust was not a sham.
[299] Intention is a question of fact. I am satisfied that Eida genuinely intended to create a trust. Mr. Wilson explained to Eida the effect of the Trust and the fact that the Trust would hold the property during Eida’s lifetime. Further, at the time Eida executed the Form A on September 5, 2000, Mr. Wilson explained that she was transferring legal title to him as Trustee. He explained that Eida was relinquishing control of the Warehouse and was making a present gift to Viviane.
[300] Eida was advanced in years. Her stated objective was to put the Warehouse property beyond the reach of a WVA claim. She intended to create a trust on the understanding that she would receive the benefit of the property for life, but that it would then pass to Viviane such that Alex could not reach it. As a woman of advanced years, she also understood she may not remain competent to handle her affairs until her death. For that reason, she included a provision in the Trust Indenture that should she become incompetent, the Trustees would deal with the income and Trust property in a manner that would provide for her care until she died. The inclusion of a clause addressing the possibility of her incompetence is indicative, in my view, of a bona fide intention to create a trust.
[301] Eida acted on Mr. Wilson’s advice that a trust could be set up to achieve those goals and also be tax-efficient. I conclude that Eida believed she was creating a valid trust when executing the documents and genuinely intended to create a trust.
[302] Alex argued that the manner in which the Trust was managed proves that it was a sham. In particular, he argued that Mr. Wilson did not establish a trust account and did not personally receive the income from the Trust Property. Vivian continued to collect the rents and remit them to her mother.
[303] In my view, that argument must fail. I accept Mr. Wilson’s evidence that Viviane continued to manage the Warehouse as the Trustee’s agent. In any event, even assuming Mr. Wilson did not fulfill his duties under the Trust (and there was no evidence upon which to make such a finding), the trust is not a sham. That is clear from the passage earlier reproduced from Lewin:
If at the [time of execution] the settlor genuinely intends the documentation to take effect according to its terms, and those terms are such as to create a trust, then nothing the settlor or trustees do thereafter can render a valid trust a sham (Lewin at paras. 4 - 22).
[304] It is clear from the language of the Trust Indenture that Eida intended to impose enforceable trust obligations on the Trustee. The language of the Trust Indenture and the Form A shows a clear intention that Mr. Wilson would hold the Trust Property on trust. Accordingly, I find that the Trust was certain for intention.
[305] Although the Trust was certain for intention, the question remains whether, on a true construction of the Trust Indenture, a valid inter vivos trust was created.
The three certainties: certainty of objects.
[306] The Trust was a trust for persons, not purposes. For a trust for persons, certainty of objects requires that the group of persons intended to benefit from the trust (that is, the objects) are clearly identifiable.
[307] This is not a case of an ill-defined group of beneficiaries. In this case, it is clear from the Trust Indenture that Eida, Viviane, and possibly Viviane’s issue, were the intended beneficiaries. This is evident from:
a) paragraph 2.1.1, which states “’Beneficiaries’ means Eida Mordo and her daughter Viviane Nitting and ‘Beneficiary’ means any one of them”;
b) paragraph 4.2, which describes Eida’s beneficial interest; and
c) paragraph 4.3.2, which defines Viviane’s, or her issue’s, beneficial interest.
[308] For the objects of the Trust to be certain, it must be certain to whom the term “issue” refers. Although the word “issue” is sometimes open to interpretation (Re Linklater (1967), 66 D.L.R. (2d) 30 (B.C.C.A.)), in this case paragraph 2.1.4 of the Trust Indenture defines the word issue to mean all lineal descendants. Accordingly, the objects of the Trust were certain.
The three certainties: certainty of subject matter
[309] There are two elements to certainty of subject matter: First, the property which is subject to the trust must be clear. Second, the nature of the interest due to each beneficiary must be clear.
[310] To satisfy the first of the two elements, the subject matter must be described with “sufficient exactness to permit that such matter be ascertained at the time the trust was created”: Re Beardmore Trusts, [1952] 1 D.L.R. 41 at 46 (Ont. H.C.) [Beardmore]. Clearly, the subject matter must also be certain on future dates when the trustees are required to deal with the trust property. However, the trust property need not be fixed in quantity or nature; property can be added later, and the nature of existing property may be changed by the trustees exercising their power of investment. If the initial trust property is certain, and the property which may be added is certain, then the subject matter is certain because at any point the current trust property can be determined by tracing the original property to its current form: Waters at 155 - 156.
[311] According to paragraph 2.1.6 of the Trust Indenture, the Trust Property consisted of:
a) the property described in Schedule A to the Trust Indenture i.e. the Warehouse;
b) any other property added, with the consent of the Trustees, to the Trust; and
c) all income accumulated from the Trust Property.
[312] In this case, the subject matter of the Trust was clear.
[313] The second element of certainty of subject matter requires that it be clear what beneficial share each beneficiary will receive in the trust property: Boyce v. Boyce (1949), 60 E.R. 959 (C.A.). In this case it is evident from paragraphs 4.2 and 4.3.2 of the Trust Indenture that Eida, as beneficiary, had the right to possession of all the Net Income from the Trust Property during her lifetime, and that upon Eida’s death all of the Trust Property was to be distributed to Viviane or, if Viviane pre-deceased Eida, to Viviane’s issue in equal shares per stirpes. The meaning of “per stirpes” is defined in paragraph 2.1.4 of the Trust Indenture. Accordingly, the beneficial shares going to each beneficiary were clear, or could be clearly determined.
[314] I conclude both elements for certainty of subject matter are satisfied.
Was there compliance with the formalities required for the creation of an inter vivos trust?
[315] In order to create a valid trust, the settlor must comply with all form requirements the law imposes. There are no specific form requirements for inter vivos trusts: Re Evans, at 452. However, in all cases, the settlor of a trust must comply with the form requirements for the particular property being transferred.
[316] Section 59 of the Law and Equity Act, R.S.B.C. 1996, c. 253 [Law and Equity Act] states that writing is required for transfers of land. Section 59(1)(a) makes an exception for trusts; writing is not required. In this case the transfer of the Warehouse was in writing (the Trust Indenture).
[317] The Trust complied with the formal requirements for inter vivos trusts in British Columbia.
Was there a resulting trust for lack of consideration?
[318] As discussed earlier, a resulting trust may occur, depending on the transferor’s intention, when property is transferred for no consideration.
[319] In this case the Trust Indenture was under seal. Eida also executed a Form A transferring the Warehouse to Mr. Wilson. These facts, combined with the other evidence regarding Eida’s intention when creating the Trust, establish that Eida intended to transfer the Warehouse to Mr. Wilson for no consideration. Thus, no resulting trust occurred in this case.
Was the Trust a testamentary disposition?
[320] Alex argued that the Trust ought to be set aside on the basis that it was, in substance if not in form, a testamentary instrument. If that is the case, the Trust must fail because it does not meet the requirements of the Wills Act, R.S.B.C. 1996, c. 489 [Wills Act], and the Warehouse would instead form part of Eida’s estate.
[321] Whether a trust is inter vivos or testamentary depends on the intention of the settlor: Anderson (Administratrix of Costello Estate) v. Patton, [1948] 1 W.W.R. 461 at 463 per Ford J.A. (Alta. C.A.) [Anderson (Costello Estate)]. If the settlor of a trust “intends that it shall not take effect until after his death and it is dependent upon his death for its vigour and effect, it is testamentary”: Cock v. Cooke (1866), L.R. 1 PROB & DIV 241 at 243 (Eng. Prob. Ct.), Anderson (Costello Estate) at 463.
[322] The interpretation of this rule is well-settled. If the document creates a trust which takes immediate effect, even though it is to be performed after the death of the settlor, it is not dependent upon the settlor’s death for its vigour and effect: Anderson (Costello Estate) at 463, Wonnacott v. Loewen (1990), 44 B.C.L.R. (2d) 23 at 26 - 27 (C.A.) [Wonnacott] citing Corlet v. Isle of Man Bank Ltd., [1937] 2 W.W.R. 209 at 211 (per Ford J.A.) (Alta C.A.), Goodman Estate v. Geffen (1987), 80 A.R. 47 (Q.B.) (Goodman Q.B.).
[323] Alex referred to various cases in which trusts were found to be testamentary. However, the intention of the settlor is a question of fact. Those cases are helpful only to the extent they establish rules or principles of general application.
[324] At least three paragraphs of the Trust Indenture clearly indicate that Eida intended the Trust to have immediate effect.
[325] Paragraph 1.2 provides as follows: “The Settlor hereby settles upon the Original Trustee and the Original Trustee acknowledges the receipt of the property described in Schedule A hereto”. Cast in the present tense, the provision indicates that Eida intended the trust to take effect immediately. Paragraph 1.4 provides: “The Trust shall be irrevocable by the Settlor”. This provision would be redundant if Eida intended the Trust to come into existence only upon her death.
[326] Paragraph 2.1.1 defines Eida as a Beneficiary; paragraph 4.2 entitles her to the Net Income from the Trust Property until her death. Her present entitlement to the income would only be possible if the Trust came into effect immediately. Indeed, payments were made under the Trust to Eida as beneficiary during her lifetime.
[327] Other evidence confirms Eida’s intention to create a Trust taking immediate effect. Mr. Wilson’s explained that the effect of the Trust was to hold the property during Eida’s lifetime. Further, Mr. Wilson explained to Eida that she was transferring legal title to him as Trustee when she executed the Form A.
[328] I am satisfied that Eida understood the implications of her acts on September 5, 2000, and intended to, and actually did, create a trust which took immediate effect.
[329] Alex argued that because Eida reserved the right to call for the Trust Property pursuant to paragraph 4.2 of the Trust Indenture, the Trust was, in effect, testamentary.
[330] For ease of reference, I will reproduce here the relevant provisions of Paragraph 4.2:
Until Eida Mordo’s death, Eida Mordo shall be entitled to receive all of the Net Income and the Trust Property and the Trustees shall pay, transfer or apply such amount or amounts thereof to or for the benefit of Eida Mordo at such time or times and in such manner as Eida Mordo shall request, or, if Eida Mordo should become incompetent, as the Trustees in their discretion shall determine to be required for Eida Mordo’s maintenance, care and comfort…. No person except Eida Mordo may, before Eida Mordo’s death, receive or otherwise obtain the use of any of the Net Income or the Trust Property.
[331] I do not accept that the Trust is testamentary in nature for two reasons: First, reservation of the power to call for the transfer of legal title does not necessarily make a trust testamentary. In Re Evans at 451, Manson J., citing Scott at 337, said the following: “The reservation of a power of revocation does not prevent the creation of a trust in the lifetime of the settlor”. Similarly, in Wonnacott at 27 the British Columbia Court of Appeal, citing Ford J.A. in Anderson (Costello Estate) at 463, said: “The reservation of a power of revocation is not inconsistent with the creation of a valid trust and does not have the effect of making the document creating it testamentary.”
[332] These cases accord with the view of the Supreme Court of Canada in Schmidt v. Air Products of Canada Ltd. (1994), 115 D.L.R. (4th) 631 at 657 (S.C.C.) per Cory J. [Schmidt] regarding the powers a settlor may retain:
The settlor of a trust can reserve any power to itself that it wishes provided the reservation is made at the time the trust is created. A settlor may choose to maintain the right to appoint trustees, to change the beneficiaries of the trust, or to withdraw the trust property. Generally, however, the transfer of the trust property to the trustees is absolute. Any power of control of that property will be lost unless the transfer is expressly made subject to it.
[333] Similarly, Waters, at 207 notes that “the power to bring the trust to a close does not constitute such a degree of control over the trust property that the inter vivos trust becomes in fact testamentary”.
[334] I conclude that the retention by a settlor of the power to revoke a trust does not, by itself, render a trust testamentary.
[335] Second, as discussed earlier, the central issue is the settlor’s intention. If the settlor’s intention is clear, it is determinative. It is only where the settlor’s intention is not clear that the court will look to the effect of the document to determine whether it is testamentary in effect. For example, where the settlor’s intention is unclear, the court may conclude that because the settlor retained significant control over the trust property, he or she must have intended the trust to be testamentary. In that context, the degree of control a settlor retains over the property during his or her lifetime is relevant to his or her intention to create an inter vivos or testamentary trust. However, no such analysis is necessary when the settlor’s intention to create an inter vivos trust is explicit from the trust document itself.
[336] In support of his argument that the Trust was testamentary, Alex relied on an article by Professor David Hayton entitled “When is a Trust not a Trust?” (1992), 1 J.T.C.P. 3 [the Hayton Article]. Professor Hayton observed that if the settlor intended to benefit the beneficiary to some uncertain extent, but not until after the settlor’s death, that evinced an intention to make a testamentary disposition. This may be true where the intention of the settlor is not clear from the trust document or from the events surrounding its execution. In the present case, Eida clearly intended to create a trust with immediate effect.
Is the trust void for repugnancy?
[337] The issues of repugnancy and certainty of subject matter are distinct. A trust will be void for repugnancy when the settlor purports to give a beneficiary a certain interest, and then retracts from that interest by attempting to take part of it back, or by giving it to another person. As discussed above, a trust will be uncertain for subject matter when it is not clear what property, or what interest in that property, each beneficiary will receive. These separate issues are sometimes confused or confounded because they both relate to whether it is clear what property or interest each beneficiary will receive.
[338] As noted, the subject matter of the Trust was certain.
[339] The Trust would be void for repugnancy if it gave an interest to Viviane and then took back part of that interest, or provided Eida with the power to encroach on the interest that had been given to Viviane.
[340] The type of interest actually conferred on Viviane depends on the construction of the whole of the Trust Indenture, but particularly on the construction of paragraph 4.3.2:
4.3.2. Upon Eida Mordo’s death, the Trustees shall distribute the Trust Property to Viviane Nitting. If Viviane Nitting should die before Eida Mordo leaving issue living at the death of Eida Mordo, the remaining Trust Property shall be distributed to the issue of Viviane Nitting and, if more than one, in equal shares per stirpes.
[341] One must first establish when Viviane’s interest vested. That is, did Viviane receive her interest at the time of settlement of the Trust, or only upon Eida’s death?
[342] The rule that early vesting is preferred was confirmed by the Privy Council in Browne v. Moody, [1936] 2 All E.R. 1695, [1936] O.R. 422 (P.C.) [Browne] rev’g [1934] S.C.R. 324. The testatrix in Browne had a son and three daughters. The key clauses of the testatrix’s will were as follows:
5. Whereas I have now the sum of $100,000.00 invested in the name of E.H. Watt … I hereby direct that the said fund is to be continued to be invested … by the said E.H. Watt during the lifetime of my said son William … and the income arising therefrom is to be paid to my said son during his lifetime. In the event of the death of the said E.H. Watt during the lifetime of my said son I direct that the fund … be invested by my executors … as trustee investments and the income therefrom is to be paid to my said son during his lifetime. On the death of my said son … the said fund of $100,000.00 is to be divided as follows: One half … to my granddaughter, Enid Browne, daughter of my son William … and the remainder of the said fund to be divided equally between my daughters Florence, … Constance… and Helen…, share and share alike (Browne at 1696).
…
7. In the event of my granddaughter Enid Browne or any of my said daughters predeceasing me or predeceasing my said son leaving issue I direct that the child or children of the person so dying shall take the interest to which their mother would have been entitled had she survived (Browne at 1697).
[343] Although the trust in Browne was set up by will, it is analogous to the Trust: Like the daughters in Browne, Viviane was to receive certain property if she was alive at the death of the person previously receiving the income for life (that is, Eida), and, if not, the property was to go to Viviane’s descendants.
[344] Browne at 1700, citing Henry S. Theobald, Theobald on Wills, 8th ed. (London: Stevens and Sons, 1927) at 656, confirmed the rule of early vesting unless there is a contrary intention expressed by the donor:
When the only gift is to be found in the direction to pay or divide (a) if the postponement of division or payment is merely on account of the position of the property, if, for instance, there is a prior gift for life . . . and a direction to pay upon the decease of the legatee for life . . . the gift in remainder vests at once . . . (b) but where the payment is deferred for reasons personal to the legatee, the gift will not vest till the appointed time.
[345] The rule, referred to as the rule in Browne v. Moody, was recently restated by Kelleher J. in Re Campbell Estate (2005), 49 B.C.L.R. (4th) 148 at para. 26, 2005 BCSC 1561 as follows:
[A] gift of the remainder will be treated as vested if (a) it is postponed in the will solely for the convenience of the testator's estate or (b) it is postponed by the creation of some prior interest, such as a life estate.
[346] When a trust is set up to pay income to B1 for life and then, on the death of B1, to distribute to B2 if B2 be alive or else to the issue of B2, it makes little difference when considering the issues of vesting and repugnancy whether the trust was testamentary or inter vivos. Accordingly, the rule in Browne v. Moody is applicable to this case. As there is nothing in the Trust Indenture to suggest that Eida intended to delay the vesting of Viviane’s interest until Eida’s death, the rule in Browne v. Moody applies. Accordingly, Viviane received a vested interest when the Trust was settled on September 5, 2000.
[347] Because Viviane’s interest vested at the time of settlement, there would be a repugnancy problem only if her interest was then limited or encroached upon by other terms of the Trust. Conversely, there would be no repugnancy problem if Viviane’s gift was limited from the outset; that is, if she was given a vested interest subject to divesting. According to paragraph 4.3.2 of the Trust Indenture, read in the context of the entire document and particularly paragraph 4.2, Viviane’s vested interest was subject to variation in two ways:
a) Viviane’s interest would decrease to the extent Eida as beneficiary called for Trust Property to be transferred to her, and increase to the extent Trust Property was added to the Trust; and
b) Viviane’s interest would disappear if she predeceased Eida.
[348] The question is whether either of these means by which Viviane’s interest might vary renders the gift to Viviane void for repugnancy. Particularly with regard to the means by which Viviane’s interest may be reduced, the question is whether these are valid divesting mechanisms of a vested interest subject to divesting.
[349] I will deal first with the reduction of the Trust Property by Eida, as beneficiary, calling for some or all of the Trust Property. By definition, the property in which Viviane received an interest was variable. The first line of paragraph 4.3.2 of the Trust Indenture gave Viviane an interest in “the Trust Property” on the date of Eida’s death. The Trust Property was, by definition, variable: it could increase or decrease. Viviane never received an absolute interest in any permanently defined property. On any day before Eida’s death, the extent of the Trust Property was certain, and Viviane had a vested interest in that property subject to divestment or enhancement depending on whether Eida as beneficiary called for Trust Property, or Eida as settlor added to the Trust Property. While the physical property to which Viviane was entitled may have changed, the property to which she had a right was constant; she was not deprived of something she was previously given. Accordingly, I find that the variable nature of the Trust Property does not make the gift to Viviane void for repugnancy.
[350] Viviane’s interest would also be reduced if she predeceased Eida. In Browne, the Privy Council said the following at 1702:
A legatee predeceasing the son without leaving issue would not be affected by the clause and the interest of such a legatee would pass on her death to her representatives. But the contingency of death "leaving issue", with the gift-over in that event to such issue, is, in their Lordships' opinion effectual to render the legacies subject to defeasance or divestiture in that event. The contingency of predecease "leaving issue", in other words, is a resolutive, though not a suspensive condition; it does not prevent vesting a morte but it prevents that vesting from being absolute and renders it subject to divestiture in the event of this specified contingency happening. This is in accordance with well-settled principles.
[351] As noted above, the daughters’ interests in Browne were analogous to Viviane’s interest: they would be lost if the person due to receive the remainder predeceased the person holding the prior life interest.
[352] Applying the rule from Browne, Viviane had a vested interest subject to divesting if she predeceased Eida. If Viviane had predeceased Eida (not leaving issue surviving at the time of Eida’s death), the Trust Property would have gone to Viviane’s estate.
[353] Alex argued that the gift to Viviane was repugnant because Eida had the right to call for all of the Trust Property to be transferred to her during her lifetime; having so retained the right to call for the income and capital, there would be nothing left that she could give Viviane. I was not given any authority to support that proposition. A gift of a vested interest is not repugnant merely because it is subject to total divestment: Browne, James MacKenzie, Feeney's Canadian Law of Wills, 4th ed, looseleaf (Markham, Ontario: Butterworths, 2000-) at para. 17.2. In my view, it makes no difference whether the total divesture occurs because of the early death of the donee (as in Browne) or because a power of appointment is exercised.
[354] Accordingly, I conclude that Viviane received a vested interest in the Trust Property, subject to divesting, with possession postponed until Eida’s death. Viviane’s interest was not void for repugnancy.
Was the Trust improperly constituted because it gave Eida absolute control over the Trust Property?
[355] Alex argued the Trust was not a property constituted inter vivos trust because it gave Eida “absolute control” of the Trust Property. He rested his argument on paragraph 4.2 of the Trust Indenture, which gave Eida the right to “receive all of the Net Income and the Trust Property” and obliged the trustees to “pay, transfer or apply” any amount of the Trust Property as Eida might request. According to Alex, those provisions amounted to retention of the entire beneficial interest and thereby rendered the Trust invalid as an inter vivos trust.
[356] I will once again reproduce paragraph 4.2 of the Trust, this time in its entirety:
4.2 Until Eida Mordo’s death, Eida Mordo shall be entitled to receive all of the Net Income and the Trust Property and the Trustees shall pay, transfer or apply such amount or amounts thereof to or for the benefit of Eida Mordo at such time or times and in such manner as Eida Mordo shall request or, if Eida Mordo should become incompetent, as the Trustees in their discretion shall determine to be required for Eida Mordo’s maintenance, care and comfort. Any Net Income not paid to or for the benefit of Eida Mordo in any fiscal period shall be accumulated. No person except Eida Mordo may, before Eida Mordo’s death, receive or otherwise obtain the use of any of the Net Income or the Trust Property.
[357] As discussed above, motive is not relevant to the issue of sham: Lewin at paras. 4 - 26 citing Miles v. Bull at 264. Similarly, motive is not relevant to whether the Trust was properly constituted. It is of no consequence that Eida, by creating the Trust, sought to defeat Alex’s WVA claim.
[358] I have already concluded that legal title to the Trust Property was validly transferred to the Trustees when Eida executed the Form A and handed it to Mr. Wilson. After Eida surrendered the Form A, she could not deal with the Trust Property without involving the Trustee. However, the issue of whether a trust is validly constituted does not turn solely on whether there was a valid act of transfer. Whether a trust is validly constituted depends on the true legal construction of the trust document as a whole.
[359] Before turning to Alex’s argument that Eida retained absolute control over the Trust Property, I make two preliminary observations: First, to the extent a trust document provides, a settlor can be a beneficiary of a trust: Sadler v. Watson Wyatt (2001), 27 C.C.P.B. 291, 2001 BCSC 246. Second, a trust that grants a beneficiary the right to call for trust property does not make the trust invalid. Such a trust will sometimes be a bare, or simple, trust. In Christie v. Ovington (1875) 1 Ch.D. 279 at 281 [Christie] Hall V.C. described a bare trustee as:
[A] trustee to whose office no duties were originally attached, or who, although such duties were originally attached to his office, would, on the requisition of his cestuis que trust, be compellable in equity to convey the estate to them, or by their direction, and has been requested by them so to convey it.
[360] This court has cited Christie with approval on the point: G & F Logging Co. v. British Columbia, [1975] 1 W.W.R. 111 at 113 - 114 (B.C.S.C.). Christie is authority for the proposition that a trust may grant a beneficiary the right to call for trust property. In this case, the right to call for Trust Property was a right Eida held as beneficiary.
[361] According to Alex, Eida had “absolute control” because, although the legal estate was in the Trustee, Eida could insist on the return of all the Trust Property should she choose to do so. As such, argued Alex, she held the whole equitable interest and could demand the return of the legal estate at any time.
[362] In my respectful view, that argument confounds the distinct rights of a power of appointment and a right in property. The difference between the two was made clear by Fry L.J. in Ex Parte Gilchrist, Re Armstrong (1886), 17 Q.B.D. 521 (C.A.) at 531:
No two ideas can well be more distinct the one from the other than those of “property” and “power”… A “power” is an individual personal capacity of the donee of the power to do something. That it may result in property becoming vested in him is immaterial; the general nature of the power does not make it property. The power of a person to appoint an estate to himself is, in my judgment, no more his “property” than the power to write a book or to sing a song. The exercise of any one of those three powers may result in property, but in no sense which the law recognises are they “property”. In one sense no doubt they may be called the “property” of the person in whom they are vested, because every special capacity of a person may be said to be his property; but they are not “property” within the meaning of that word as used in law. Not only in law but in equity the distinction between “power” and “property” is perfectly familiar, and I am almost ashamed to deal with such an elementary proposition.
[363] Eida did not have an equitable right to any Trust Property until, in accordance with paragraph 4.2 of the Trust Indenture, she called for some or all of the Trust Property to be transferred to her: “Eida Mordo shall be entitled to receive [Trust Property] … at such time or times and in such manner as Eida shall request” (emphasis added). Thus, it is not correct to say that Eida had the whole equitable interest in the Trust Property. In fact, she had no equitable interest at all until she exercised her power of appointment. Moreover, Eida’s power to call for Trust Property would terminate upon her becoming incompetent. In my view, Eida had no absolute right to the Trust Property. She had only the power, while of sound mind, to create for herself an equitable right in the Trust Property.
[364] Alex relied on the Hayton Article to support his argument that the Trust was not a properly constituted inter vivos trust, because Eida had absolute control of the Trust Property until the moment of her death. I referred to the Hayton Article earlier with respect to a different issue. I will now deal with the article as it relates to the issue of whether the Trust was properly constituted as an inter vivos trust.
[365] The Hayton Article is a slightly expanded version of a section in a chapter of David J. Hayton, Underhill and Hayton, Law Relating to Trusts and Trustees, 16th ed. (London: Butterworths, 2003) at 59 - 61 [Underhill and Hayton] dealing with sham trusts. I will deal with the argument concerning the proper constitution of the Trust by referring to the more readily available, and very similar, Underhill and Hayton text.
[366] Underhill and Hayton notes the following (citations omitted):
[A] trust which appears on its face to be an active trust with sundry beneficiaries may be held to be a sham, so that, despite the appearance of creating equitable rights in others, the equitable beneficial ownership is intended to remain with the settlor and the agreed real duty of the trustee is only to manage and distribute the property as the settlor directs (Underhill and Hayton at 59).
…
The substance of the matter is that the settlor has all the rights, even if it appears that it is the beneficiaries who have all the rights (Underhill and Hayton at 59).
…
Close attention must be paid to the terms of the trust. Thus where S transfers property to trustees on trust in S’s lifetime to pay the income or capital to him or at his direction and, after his death, to hold the capital equally for his children or for such persons in such shares as S may designate in signed writing, the trustees will be holding the property to S’s order, the full equitable interest remaining in him [i.e. S], with the purported disposition after his death being testamentary and void if not complying with the Wills Act… By way of contrast, S would have formally divested himself of his equitable ownership if he had settled his property on trusts for others but had reserved a general power of appointment or a power of revocation: the trustees would not hold such property to the order of S until he ordered it in the exercise of his reserved power (Underhill and Hayton at 60).
…
[T]he critical distinction between a trustee holding to the order of the settlor and a trustee holding to the order of the settlor only if the settlor orders is a fine one, which a trustee can easily overlook by treating itself as bound to do what the settlor directs, even though he [i.e. the settlor] has not exercised his power of appointment or revocation to recover full equitable ownership of the settled property (Underhill and Hayton at 60).
[367] In the above excerpts, Underhill and Hayton draws a distinction between a settlor who has the right to deal with the trust property without calling for the property from the trustee, and a settlor who has the power to call for trust property from the trustee. The former is an invalid inter vivos trust; the latter is a properly constituted inter vivos trust. The Hayton Article makes the same point, noting at p. 4 that the trust described in the example is invalid because:
…the equitable interest in capital belongs to S in his lifetime, so that without any formality (concerning the exercise of power of revocation or appointment) he can freely dispose of the settled property as he wishes.
[Emphasis added]
[368] In other words, there is not a properly constituted inter vivos trust unless the settlor is required to go through some formality to obtain the right to deal freely with the property, as distinct from retaining outright the right to deal freely with the property. The rights held by the settlor are determinative and are defined by the trust document. The examples of the settlor having reserved excessive rights are almost identical in Underhill and Hayton at 60 and the Hayton Article at 4. For ease of reference I will again reproduce the example from Underhill and Hayton at 60:
S transfers property to trustees on trust in S’s lifetime to pay the income or capital to him or at his direction and, after his death, to hold the capital equally for his children or for such persons in such shares as S may designate in signed writing.
[369] The above example is an improperly constituted trust because the settlor has the unrestricted power to dispose of the trust property as he wishes during his lifetime. There is no provision requiring the settlor to exercise his power of appointment in order to recover full equitable ownership of the settled property. It also gives the settlor the option to designate, at some later time, what will ultimately happen to the property. In short, the settlor has retained the whole equitable interest in the property.
[370] That is not the case with the Trust. Paragraph 4.2 of the Trust Indenture required that Eida “request” the transfer of the Trust Property to her. The Trust complied with the requirement discussed in Underhill and Hayton that, in order to be properly constituted, the settlor must exercise the formality of calling for the Trust Property from the Trustee.
[371] The analysis of Professor Hayton (in both the Hayton Article and Underhill and Hayton) is consistent with the conclusion of Fry L.J. that a power is not a right in property. Both authorities conclude that the beneficiary must exercise his or her power by actually calling for the property before any right to the property is created. Eida’s power to appoint Trust Property to herself did not give her any rights in the Trust Property nor the unrestricted power to dispose of it. The power to appoint merely gave her the ability to create for herself an equitable right in some or all of the Trust Property by calling for its return from the Trustees. For that reason, in my view, Eida did not have absolute control of, or full equitable title to, the Trust Property.
[372] The fact that Eida’s powers of appointment could be cut short in the event of her medical incompetence is one more indication that Eida did not maintain, or intend to maintain, control over the Trust Property.
[373] Alex argued that Mr. Wilson was not a Trustee, but merely Eida’s agent. He relied on the decision of Trident Holdings Ltd. v. Dannard, [1988] 49 D.L.R. (4th) 1 (Ont. C.A.) [Trident] for the proposition that the same person may be both agent and trustee, and, where this occurs, the law of agency prevails. Reliance was placed specifically on Trident at 9 - 10 which includes the following quotations from Austin W. Scott & William F. Fratcher, The Law of Trusts, 4th ed. (Boston: Little, Brown and Company,1987):
An agent acts for, and on behalf of, his principal and subject to his control; a trustee as such is not subject to the control of his beneficiary, although he is under a duty to deal with the trust property for the latter's benefit in accordance with the terms of the trust, and can be compelled by the beneficiary to perform this duty. The agent owes a duty of obedience to his principal; a trustee is under a duty to conform to the terms of the trust [Vol. 1 at 88].
A person may be both agent of and trustee for another. If he undertakes to act on behalf of the other and subject to his control he is an agent; but if he is vested with the title to property that he holds for his principal, he is also a trustee. In such a case, however, it is the agency relation that predominates, and the principles of agency, rather than the principles of trust, are applicable [Vol. 1 at 95] (emphasis added).
[374] That argument supposes the Trust Indenture was in fact an agency agreement instructing Mr. Wilson, as Eida’s agent, to transfer the Trust Property to Viviane after Eida’s death in the event Eida did not call for it while she was alive. However, under the Trust Indenture, Mr. Wilson did not undertake to act “on behalf of” Eida. On the contrary, Mr. Wilson undertook to deal with the Trust Property in accordance with the Trust Indenture. Mr. Wilson was not at liberty to comply with just any instructions Eida gave regarding the Trust Property, as would an agent. Rather, Mr. Wilson was obligated to comply with Eida’s instructions only insofar as they complied with the Trust Indenture. Whereas an agent can accept any modification to instructions given by his or her principal, Mr. Wilson was restricted by the Trust Indenture.
[375] This distinction between an agent and a trustee was explained in Ingram v. I.R.C., [1997] 4 All E.R. 395 (C.A.):
[The solicitor] was not independent of [the beneficiary], but neither was he a mere cypher. His duty was “to deal with the land as [the beneficiary] might direct”. He was bound to convey the land to her or to whom she might direct. But he was not bound to comply with other directions which she might give (Millet L.J. at 424d dissenting. Millet’s views on this point were adopted in by the House of Lords on appeal: [2000] 1 A.C. 293 at 305D-H and 310G (H.L.)).
[Emphasis added]
[376] Mr. Wilson was bound to comply only with directions Eida gave in accordance with the Trust Indenture. He was, for example, bound to comply with directions made by Eida pursuant to her powers of appointment under 4.2 of the Trust Indenture. In doing so, Mr. Wilson was not acting as Eida’s agent, but as a Trustee.
[377] Eida retained the right to appoint additional Trustees and to remove existing Trustees (Trust Indenture paragraph 6.9). However, trust law allows a settlor to retain such powers:
The settlor of a trust can reserve any power to itself that it wishes provided the reservation is made at the time the trust is created. A settlor may choose to maintain the right to appoint trustees, to change the beneficiaries of the trust, or to withdraw the trust property. Generally, however, the transfer of the trust property to the trustees is absolute. Any power of control of that property will be lost unless the transfer is expressly made subject to it (Schmidt at 657).
[378] The authors of Underhill and Hayton give an example of the type of clause that may be inserted in a trust to neutralise the rights of the beneficiaries and protect the ability of the settlor to control the trust:
[D]uring the settlor’s lifetime, the trustees in no circumstances are under any duty to the beneficiaries and are always to be exempt from any liabilities howsoever arising to such beneficiaries (Underhill and Hayton at 60).
[379] There is no similar clause in the Trust Indenture. To the contrary, under paragraph 6.1, the Trustees are generally liable to the beneficiaries for negligence. There is no indication that the Trustees were relieved of the fiduciary duty that ordinarily exists between trustees and beneficiaries.
[380] The argument that the Trust was improperly constituted must fail.
Is the Trust void on Public policy grounds?
[381] According to Alex, the Trust was a device employed by Eida and her solicitor to defeat his anticipated WVA claim. Alex argued, on public policy considerations, that the court cannot uphold the Trust as an inter vivos transaction because to do so would be to neuter the Probate Fee Act, S.B.C. 1999, c. 4, the WVA and the Wills Act. I cannot agree. Inter vivos trusts, including alter ego trusts, are standard estate planning tools. As noted in Waters at 593 - 594, trusts are often used to avoid probate fees and achieve other legitimate estate planning objectives.
[382] The issue of arranging one’s affairs to avoid possible claims under the WVA in circumstances such as these was decided many years ago by this court in Hossay v. Newman (1988), 22 E.T.R. (2d) 150 (B.C.S.C.) [Hossay]. Mr. Justice MacKenzie (as he then was) held that the claim of an independent adult child under the WVA on moral grounds is not a claim by “creditors or others” under the Fraudulent Conveyance Act, R.S.B.C. 1996, c. 163. Despite the passage of eighteen years since Hossay, the legislature has not seen fit to pass legislation or amend existing legislation to prevent the avoidance of claims under the WVA.
[383] As to claims by the Crown for probate or other fees, the Crown is not entitled to claim probate fees (and thereby become a “creditor” within the meaning of the Fraudulent Conveyance Act) unless assets pass through an estate and an application for probate or administration is granted. There is no liability to the Crown if no application is made or no assets pass through the estate.
[384] Accordingly, I find that the Trust was not void on grounds of public policy.
Conclusion regarding the Trust
[385] I find that the Trust was formed by a valid act of transfer and was properly constituted as an inter vivos trust in accordance with all the requirements of trust law. For the reasons discussed below, I conclude there was no undue influence of Eida by Viviane. Accordingly, the Trust Property did not form part of Eida’s estate and is not subject to any WVA claim by Alex.
[386] Alex argued that Eida agreed to reimburse him for the car and driver expenses with funds from her estate. He argued in the alternative that he is entitled to repayment of the value of the car and driver in equity. In argument, Alex advanced his position as follows: “If A advances money to or for the benefit of B, B has an obligation to repay it unless A objectively intended to make B an unconditional gift”.
[387] The issue is whether there was, at the time Eida accepted the use of the car and driver, or at any time thereafter, an agreement between her and Alex regarding reimbursement for the expenses from Eida’s estate.
[388] In the absence of an agreement, the question is whether Eida was unjustly enriched by her acceptance of the car and driver. Three requirements must be satisfied before an unjust enrichment is established: the plaintiff’s enrichment, the defendant’s corresponding deprivation, and an absence of any juristic reason for the enrichment: Lord Goff of Chieveley & Gareth Jones, The Law of Restitution, 4th ed. (London: Sweet & Maxwell,1993) at p. 16.
[389] Alex alleged an agreement or understanding between him and his mother that he would be reimbursed for the cost of the car and driver following Eida’s death. He said his offer to provide the car and driver was precipitated by Eida’s complaint that she could no longer drive, and her suggestion to him that she recently had a falling out with Viviane over Viviane’s suggestion that Eida move to a nursing home.
[390] Alex’s evidence as to the nature of the agreement was less than precise. In direct evidence he said the agreement was that Eida would make provision in her will for Alex’s reimbursement. In cross-examination, he said he did not think Eida would provide for reimbursement in her will. Rather, he understood that Eida would advise Viviane of the agreement, and upon her death Viviane would “do the honourable thing” by reimbursing him from Eida’s bank account.
[391] There are a number of difficulties with Alex’s evidence which cast doubt on his version of events and undermine his claim for reimbursement of the expenses.
[392] At the time, Eida had a personal assistant who drove her to bridge games and any other places Eida wished to go. Eida was paying her assistant for those services, and continued to do so after Alex provided the car and driver.
[393] Eida’s caregivers denied any knowledge of a discussion between Viviane and Eida about Eida moving to a care home. Although she had recently suffered a fractured pelvis, Eida had recovered and was managing very well at home with paid assistance. By all accounts, Viviane was committed to having Eida live out her days in the Condominium.
[394] Shortly after Gabriel’s death in 1996, Alex offered Eida $200,000. Eida had refused the offer because it was contingent upon her providing a promissory note to Alex indicating repayment from her estate.
[395] By Alex’s own admission, Eida was very careful with her money. He testified that Eida was “stingy” even though she was, in his words, a “moneybag”. He said she would drive from Vancouver to Richmond to save a dollar on vegetables. Yet, according to Alex, Eida accepted the offer of a car and driver without being provided with any information regarding the cost of the service. Alex acknowledged that even he did not know the cost at the time he made the agreement with Eida about reimbursement.
[396] Alex did not attempt to negotiate a salary with the driver, Mr. Moskovsky. Instead, he offered to pay the equivalent of what Mr. Moskovsky was earning from his limousine business because he “needed a favour” from Mr. Moskovsky. Alex did not discuss the cost of the salary with Eida before entering into the arrangement with Mr. Moskovsky, nor did Alex tell Eida of the two-year commitment he had made to Mr. Moskovsky. Eida had no input into the discussions between Alex and Mr. Moskovsky about the terms of his employment. There is no evidence to suggest that Eida ever knew the cost of the arrangement, as Mr. Moskovsky rendered his invoices to the Company. The costs were steep. By the expiry of the Jaguar lease in July of 2002, the expenses totalled $113,000.
[397] The most telling evidence, in my view, consists of Mr. Wilson’s notes of his meeting with Eida on August 29, 2000, only a matter of weeks after Alex provided her with the car and driver. Mr. Wilson testified, and his notes reflect, that Eida told him Alex had called to see her after a four year absence and wanted to buy her a car and provide a driver. She said she did not want it, but Alex provided it anyway.
[398] In her meeting with Mr. Wilson and Mr. Frith on September 5, 2000, Eida again spoke of the car and driver. She said she was feeling some “remorse” about her relationship with Alex because now he was “being good to her“. Eida did not suggest that she would require sufficient funds in her estate to pay for the car and driver arrangement. Indeed, she was well aware that having created the Trust, there would be no assets passing by her will.
[399] Eida’s statements in the meetings with her legal counsel in 2000 are admissible on the basis of the principled exception to the hearsay rule (R. v. Smith, [1992] 2 S.C.R. 915 at 931 - 32 [Smith]). In my view, they meet the threshold requirements of necessity and reliability. Necessity is obvious as Eida is dead. The statements are also reliable. They bear the “circumstantial guarantees of trustworthiness” as discussed in Smith. It is most unlikely that Eida was mistaken about the arrangement, or was being untruthful about it when speaking to her legal counsel. First, her statements were made very soon after the arrangement concerning the car and driver was first made, and long before any dispute arose about the nature of the arrangement. Second, Eida had no reason to be other than truthful to her counsel. She expressed regret about Alex during the September 5 meeting because he was at that time being a good son. When he provided the car and driver to Eida, he told her to “enjoy the rest of her life”.
[400] I do not accept that Eida misunderstood the basis on which the car and driver had been provided. Either Alex told his mother he expected repayment after her death or he did not. The inference I draw from Eida’s statements to Mr. Wilson and Mr. Frith is that she was told by Alex that he was providing her with a gift to ensure she enjoyed her last years. Eida did not need the car and driver because she had other arrangements in place (arrangements for which she was paying and continued to pay), but accepted the service because she knew it was gratuitous.
[401] Alex testified that he approached his mother with the offer of the car and driver as a kind of “rapprochement” or peace-making gesture. At about the same time he reiterated his position as to the manner in which Eida ought to divide her estate. It is difficult to understand how Alex thought the offer would make peace with his mother if it was contingent on reimbursement from her estate.
[402] Alex had previously offered his mother money contingent on her providing him with a promissory note to ensure repayment after her death. Alex made no similar request for documentation on this occasion.
[403] A disagreement arose between Alex and Eida when Eida visited Alex in late October, 2001, on the occasion of his birthday. Alex testified that he could not remember how the discussion arose, but at some point during the visit he told his mother he expected to be repaid for the car and driver after her death. His evidence was that he and his mother argued. Eida left soon thereafter. In my view, the question is why Eida would have argued with Alex at all if she knew from the outset that she was expected to repay him. Alex was vague as to how the issue arose and the extent of the argument.
[404] Eida was clearly upset by the news that she was expected to pay for the car and driver. She immediately advised Alex that she would no longer use Mr. Moskovsky’s services if they were not a gift.
[405] Mr. Wilson reiterated Eida’s position in his letter to Alex of January 9, 2002. He invited Alex to bring a claim immediately if he took a different view. Alex did not do so. He testified that he did not want to subject his elderly mother to the stress of litigation. However, it must have been apparent to Alex that that the dispute would be stressful for Eida, litigation or no litigation, particularly in light of his allegation that she was no longer competent.
[406] The Company continued to pay the driver $4,000 per month and gave him work at the Warehouse until the Jaguar lease expired at the end of July of 2002.
[407] At the outset, Alex did not pay for any of the expenses related to the car and driver out of his own pocket. The Company entered into the lease for the Jaguar; the Company paid the driver. Although Alex testified that he expected the Company to increase his shareholder loan by the amount of the expenses, he did not give those instructions to the Company’s accountant at the time.
[408] As a seasoned and successful businessman, Alex must have understood the implications of having the Company employ the driver and hold the Jaguar lease. The car and driver expenses were recorded as Company expenses, and claimed as such, until the CCRA audit in November, 2002. When CCRA disallowed $61,000 of the expenses, those were charged to Alex’s shareholder loan. The balance of $51,000 remained on the books as a Company expense for four more years, and as such must have been allowed as a legitimate business by CCRA. On the last business day before the trial of this action commenced, Alex instructed the Company accountant to charge the balance to his shareholder loan account.
[409] The inference I draw from this evidence is that Alex arranged to have the car and driver expenses paid by the Company in order to claim them, at least initially, as Company expenses. That arrangement undermines Alex’s contention that he paid for the car and driver personally, expected to be repaid personally from his mother’s estate, and conveyed that expectation to his mother at the time he provided the car and driver.
[410] Until the eve of trial, $51,000 of the cost of the car and driver remained a Company expense. The accountant testified that so long as the driver provided services to the Company between January and July of 2002, the expense could have been legitimately attributed as a Company expense.
Conclusion regarding the car and driver arrangements
[411] I conclude that Alex told his mother in August, 2000, that the car and driver were a gift. Eida accepted them as a gift. When Alex advised Eida approximately 14 months later that he expected reimbursement for the car and driver, Eida put Alex on notice that she would no longer accept their use.
[412] Alex did not establish any agreement for reimbursement. Nor did he establish that Eida was unjustly enriched. Eida did receive a benefit, and it was gained at Alex’s expense. However, the juristic reason for the benefit was Alex’s offer of the car and driver as an unconditional gift, and Eida’s acceptance of it on that basis. For these reasons, Alex’s claim concerning the car and driver expenses is dismissed.
[413] Alex alleged undue influence on the part of Viviane with respect to the joint assets and the Trust.
[414] In Geffen v. Goodman Estate, [1991] 2 S.C.R. 353 [Goodman Estate S.C.C.] (upholding the decision of Hutchinson J. in Goodman Estate Q.B., supra). Wilson J. described undue influence as follows:
It seems to me rather that when one speaks of “influence” one is really referring to the ability of one person to dominate the will of another, whether through manipulation, coercion, or outright but subtle abuse of power (Goodman Estate S.C.C. at 377).
[415] Madam Justice Wilson went on to say (at 379) that once it is established that the relationship between the parties was such that the potential for influence existed, the person seeking to uphold the validity of the transaction must show there was no actual influence exerted in the particular transaction, or that there was independent legal advice given at the time.
[416] Undue influence has been defined by the British Columbia Court of Appeal as “influence which overbears the will of the person so that in truth what she does is not his or her own act”: Longmuir v. Holland (2000), 81 B.C.L.R. (3d) 99 at para. 71, 2000 BCCA 538, per Southin J.A. (dissenting in part).
[417] Where there is potential for domination, undue influence with respect to an inter vivos transaction is presumed. The presumption operates, for example, where the relationship is one between solicitor and client or guardian and ward, or where a person is dependent on a caregiver.
Application of the law of undue influence to this case
[418] In the present case, Viviane was not in a position of domination or potential domination over Eida. While Viviane provided ongoing support and companionship to Eida, she was not providing day to day care. Viviane was involved in Eida’s care during hospitalizations for hip and pelvis fractures, but Eida recovered from each of these injuries and was generally in good physical health. Eida also remained financially self-sufficient throughout her lifetime, and employed her own personnel for home assistance. She did not rely on Viviane to provide or pay for that assistance.
[419] Eida had full mental capacity at the material times. The evidence overwhelmingly establishes that until within days of her death, Eida’s mental capacity was intact. As noted by the psychologist who tested her in late November, 2001, Eida’s judgment and insight were apparent. She presented as witty and intelligent, and clearly able to make informed decisions on her own behalf.
[420] Viviane at all times enjoyed a much closer relationship with her parents than Alex did. At times, Alex had no relationship at all with them. Viviane was a large part of their day to day lives from the time they moved to Vancouver from Turkey. After Gabriel’s death, Viviane was Eida’s mainstay. However, that close relationship was not one of dominance by Viviane over her mother.
[421] Eida’s companions and caregivers, Ms. Shariff and Ms. Quadir, both of whom spent a great deal of time with Eida from 1996 until her death, were of the view that Eida was a proud, independent and strong-willed woman. Neither saw anything other than a caring, loving relationship between Eida and Viviane.
[422] Many other witnesses testified to their observations of Eida in the years following Gabriel’s death in 1996, and echoed the views of Eida’s caregivers as to her independent nature, her strong will and her mental acuity.
[423] There was no evidence of actual undue influence on Viviane’s part. With respect to each of the transactions in question, Eida had independent legal advice. At times, she was receiving legal advice from more than one source.
[424] Ms. Richter and Mr. Wilson are, and were at the material times, legal counsel with extensive experience in the area of wills and estate planning. They both testified that they are always alive to the issue of undue influence when dealing with estate matters. Neither had any concern about Gabriel and Eida, and later, Eida alone, being unduly influenced by Viviane.
[425] Ms. Richter first met with Gabriel and Eida in 1992, when the couple signed general powers of attorney in favour of Viviane and executed mirror wills. Viviane was not present during any of those discussions with Ms. Richter.
[426] Mr. Wilson first met with Gabriel and Eida in June of 1993. Mr. Wilson was involved in the conveyance of the Condominium in joint tenancy with Viviane later that same month. Viviane was present with her parents at their initial meeting with Mr. Wilson, but left the meeting for about a half-hour while Mr. Wilson discussed with them their specific intentions concerning their estate planning. Mr. Wilson’s notes of this meeting reflect his opinion that Gabriel and Eida were “clear minded” and “very definite in their thinking”. He also noted, “No undue influence”.
[427] Ms. Richter and Mr. Wilson both met with Eida in 1996 after Gabriel’s death. Mr. Wilson was involved in the drafting of the Deed of Gift. Ms. Richter was involved in the drafting of Eida’s 1996 will. Once again, both were satisfied that Eida was not being unduly influenced in her decisions concerning her estate. Ms. Richter was particularly struck by Eida’s vigour, independence and strong-mindedness.
[428] Mr. Wolfe, the representative of RBC Dominion Securities who dealt with Eida and Viviane at the time of the creation of the joint investment account, was also alive to the issue of undue influence and had no concerns.
[429] It is clear that Viviane was aware of Eida’s intentions with respect to the disposition of her assets. I have no doubt that Eida discussed her objectives with Viviane at various points in time. Viviane sat in on her parents’ meeting with Mr. Wilson in 1993, and attended Eida’s meeting with Mr. Wilson in 1996. Viviane’s role as a joint holder of the accounts and joint tenant of the Condominium, as well as her designation as a beneficiary of the Trust, were integral to the overall estate plan. However, her involvement does not establish undue influence. In my view, Viviane’s assertion that she did not discuss estate-planning matters with Eida stemmed from her sensitivity to Alex’s position that Viviane had undermined his relationship with their parents and exerted improper influence on them in order to deprive him of his rightful inheritance.
[430] Viviane could easily have attempted to persuade Eida, in 1996, to accept the complex estate freeze plan proposed by Mr. Wilson that would have resulted in the outright transfer of the Warehouse to her. Yet Viviane did not want Mr. Wilson to present the option to Eida. In her words, she did not want to “complicate her mother’s life” with the structure of the estate freeze and the resulting tax consequences. That is not the action of a daughter attempting to exert influence on a parent for her own gain.
[431] Alex pointed to Viviane’s meeting with Mr. Wilson in August of 2000 as evidence of undue influence in the creation of the Trust. I am satisfied that Viviane went to Mr. Wilson’s office at that time not because of the “stop payment” on the cheque, but because of her concern as to Alex’s motive for providing a car and driver to Eida. Nevertheless, the question is whether the evidence of the circumstances surrounding that meeting, and subsequent meetings between Eida and Mr. Wilson, establishes that the creation of the Trust was tainted by undue influence on the part of Viviane. In my view, it does not.
[432] Viviane’s concern may have precipitated the meeting between Eida and Mr. Wilson. However, the Trust was created on the advice of Mr. Wilson. Viviane had no involvement in its creation, and was away from Vancouver throughout the time Mr. Wilson met with Eida and discussed the implications of the Trust. Mr. Wilson’s involvement was as Eida’s solicitor. He was retained by Eida and was careful, throughout his dealings with her, to ensure that she understood his advice and agreed with it.
[433] Mr. Wilson’s evidence, which I accept, is that Eida made it clear from the outset of the meeting on August 29, 2000, that she still wished to transfer the Warehouse to Viviane such that it would not pass by her will. According to Mr. Wilson’s notes, one of the first matters Eida raised was Alex’s unexpected return to her life and his offer of the car and driver. Eida advised Mr. Wilson that despite this gesture, she was still not willing to accede to Alex’s position that she ought to divide her estate equally amongst Gabby, Galia and Viviane.
[434] Mr. Wilson met again with Eida on September 5, 2000. Mr. Wilson’s colleague, Mr. Frith, was also present. In the lengthy meeting on that date, Mr. Wilson reviewed in detail with Eida the draft of the Trust they had discussed earlier. Viviane was still away from Vancouver on vacation. Eida once again confirmed her intentions with respect to the disposition of her estate and the transfer of the Warehouse by way of the Trust. Mr. Wilson and Mr. Frith satisfied themselves that Eida was under no undue influence when she signed the Trust documents.
Conclusion regarding undue influence
[435] I conclude that Eida was not unduly influenced by Viviane with respect to any of the transactions in issue. Thus, the transactions involving the Trust, Condominium, joint accounts and Deed of Gift were not invalidated by undue influence.
(h) Breach of fiduciary duty
[436] Alex also argued that Viviane had a fiduciary duty to her mother and breached that duty.
[437] In Gladstone v. Canada (Attorney General), [2005] 1 S.C.R. 325 at para. 26, 2005 SCC 21 the Supreme Court of Canada observed that fiduciary relationships generally have the following characteristics:
(1) The fiduciary has scope for the exercise of some discretion or power;
(2) The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary's legal or practical interests; and
(3) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.
[438] These characteristics were originally enumerated by Wilson J. (dissenting) in Frame v. Smith, [1987] 2 S.C.R. 99 at 136. With respect to the issue of vulnerability, in Hodgkinson v. Simms, [1994] 3 S.C.R. 377 [Hodgkinson], McLachlin J. (as she then was), dissenting (writing for herself, Sopinka and Major JJ.), said:
Vulnerability is the one feature which is considered to be indispensable to the existence of [a fiduciary] relationship (McLachlin J. at para. 119 citing Sopinka J. dissenting in Lac Minerals Ltd. v. International Corona Resources Ltd., [1989] 2 S.C.R. 574 at 599).
[439] In Hodgkinson, LaForest J., writing for the majority, did not agree that vulnerability was an essential feature of fiduciary relationships.
[440] In Hodgkinson, McLachlin J. said the following about vulnerability:
[Vulnerability] comports the notion, not only of weakness in the dependent party, but of a relationship in which one party is in the power of the other. To use the phrase of Professor Weinrib, "The Fiduciary Obligation" (1975), 25 U.T.L.J. 1, at p. 7, quoted in Guerin at p. 384 and in Lac Minerals at p. 600, ". . . the hallmark of a fiduciary relation is that the relative legal positions are such that one party is at the mercy of the other's discretion" (Hodgkinson at para. 129).
Vulnerability does not mean merely "weak" or "weaker". It connotes a relationship of dependency, an "implicit dependency" by the beneficiary on the fiduciary (D. S. K. Ong, "Fiduciaries: Identification and Remedies" (1984), 8 U. of Tasm. L. Rev. 311, at p. 315); a relationship where one party has ceded power to the other and is, hence, literally "at the mercy" of the other (Hodgkinson at para. 129).
[441] Whether vulnerability is an essential feature of fiduciary relationships, or is merely an important one, it is clear that Eida was not in a position of vulnerability with respect to her relationship with Viviane. As noted earlier, Eida was a strong-willed, independent and mentally acute woman. Viviane did not exercise control over Eida and there is no basis for imposing a general fiduciary relationship in this context. Viviane owed Eida a fiduciary duty only when acting as her attorney under the power of attorney. There was no evidence to suggest that Viviane used the power of attorney improperly. It was not used to purchase the Condominium, establish the joint accounts or create the Trust.
Conclusion regarding fiduciary duty
[442] All of the steps taken by Eida concerning the disposition of her assets were taken after seeking independent legal advice. Viviane did not give instructions to Eida’s legal counsel in any capacity. Both Mr. Wilson and Ms. Richter were clear that Eida was their client and that the instructions they received were from Eida. Accordingly, Alex’s argument concerning breach of fiduciary duty fails.
[443] I have concluded that none of Eida’s assets passed by her will. As there are no assets in the estate, any variance of the will to provide a gift to Alex can have no effect.
[444] Alex claimed that the Will (and Codicil) should be varied to provide him with a bequest in the range of 25% to 33% of the estate. I will address that claim in the event that my conclusions concerning the inter vivos nature of Eida’s dispositions are wrong.
[445] The WVA provides that if adequate provision for the proper maintenance and support of the testator’s children has not been made, a court may order provision that is adequate, just and equitable in the circumstances (WVA, s. 2).
[446] Subsections 5(1) and (2) of the WVA provide:
(1) In an action under section 2 [for maintenance from the estate] the court may accept the evidence it considers proper of the testator’s reasons, so far as ascertainable,
(a) for making the dispositions made in the will, or
(b) for not making adequate provision for the spouse or children,
including any written statement signed by the testator.
(2) In estimating the weight to be given to a statement referred to in subsection (1), the court must have regard to all the circumstances from which an inference may reasonably be drawn about the accuracy or otherwise of the statement.
[447] In Bell v. Roy Estate (1993), 75 B.C.L.R. (2d) 213 (C.A.) [Bell], aff’g [1989] B.C.J. No. 1130 (QL), Goldie J.A. said the following with respect to provisions not significantly different to the above sections:
It is clear the legislature wished to ensure that otherwise inadmissible evidence was before the court and an aid to the court in the exercise of its discretion (Bell at para. 37).
Moreover, it is apparent from subs. (4) [now s. 5(2)] that the weight to be given evidence of the testator’s reasons is affected by its accuracy and not by morally acceptable or unacceptable content (Bell at para. 38).
[448] The trial judge in Bell held that the burden fell upon the claimant to show that the testator acted, when making the will, upon reasons that were false or unwarranted. Goldie J.A. endorsed that approach: “This places more emphasis on the intentions of the testatrix and less on those which might be imputed to her by reference to the reasonable testator” (Bell at para. 36).
[449] In Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 [Tataryn] the Supreme Court of Canada clarified the law of wills variations and held that a will may be varied under the WVA where there are legal or moral obligations to provide maintenance and support for a spouse or child. To place the statements of law made in Tataryn in context, I will outline the facts of the case.
[450] In Tataryn, the testator husband and his wife had been married 43 years and, through their joint efforts, had amassed a home (in the testator’s name), a rental property and bank funds. There were two adult sons, J. and E. The testator disliked J. (for reasons that were not apparent). He feared that if he left his estate to his wife, she would pass it on to J. By his will, the testator gave E. full title to the rental property and created a discretionary trust dealing with the residue of the estate, including the home. Under the trust the wife was the beneficiary of a life interest in the home. E. was the trustee and residuary beneficiary taking full title to the home upon the wife’s death. J. received nothing under the will or the trust it created.
[451] The trial judge in Tataryn revoked the bequest of the rental property to E. and granted the wife a life interest in that property; directed that J. and E. each receive an immediate gift of $10,000 out of the residue of the estate. The trial judge also directed that when the wife died the residue of the estate, including the home and the rental property, was to be divided one-third to J. and two-thirds to E.
[452] The wife’s appeal was dismissed by the British Columbia Court of Appeal: Tataryn v. Tataryn Estate (1992), 74 B.C.L.R. (2d) 211 (C.A.).
[453] The wife successfully appealed to the Supreme Court of Canada. The court granted the sons an immediate gift of $10,000 each. The wife was granted title to the family home, a life interest in the rental property and the entire residue of the estate after payment of the immediate gifts to the sons. Upon the death of the wife, the sons were entitled to the rental property (one-third to J.; two-thirds to E.)
[454] In Tataryn, McLachlin J. (as she then was) discussed the twin interests protected by the WVA. McLachlin J. described the “main aim” as the “adequate, just and equitable provision for the spouses and children of testators” and that at the very least, that means preventing spouses and children from becoming a charge on the state (Tataryn at 815). However, said McLachlin J., it is equally reasonable to suppose that the legislators were concerned with wives and children receiving a just and equitable share of the family wealth even in the absence of demonstrated need.
[455] The second interest protected by the WVA is testamentary autonomy:
The Act did not remove the right of the legal owner of property to dispose of it upon death. Rather, it limited that right. The absolute testamentary autonomy of the 19th century was required to yield to the interests of spouses and children to the extent, and only to the extent, that this was necessary to provide the latter with what was “adequate, just and equitable in the circumstances” (Tataryn at 815).
[Emphasis in original]
[456] The court went on to note that what is “adequate, just and equitable” must be judged by contemporary standards. Current standards require that both legal and moral societal norms be considered:
If the phrase “adequate, just and equitable” is viewed in light of current societal norms, much of the uncertainly disappears. Furthermore, two sorts of norms are available and both must be addressed. The first are the obligations which the law would impose on a person during his or her life were the question of provision for the claimant to arise. These might be described as legal obligations. The second type of norms are found in society’s reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards. These might be called moral obligations, following the language traditionally used by the courts. Together, these two norms provide a guide to what is “adequate, just and equitable” in the circumstances of the case (Tataryn at 820-821).
[457] With respect to variation on moral grounds, the court in Tataryn observed that dependent adult children are entitled to such consideration as the size of the estate and the testator’s other obligations may allow. With respect to independent adult children, the court said:
While the moral claim of independent adult children may be more tenuous, a large body of case law exists suggesting that, if the size of the estate permits and in the absence of circumstances which negate the existence of such an obligation, some provision for such children should be made… (Tataryn at 822-823) (emphasis added).
How are conflicting claims to be balanced against each other? Where the estate permits, all should be met. Where priorities must be considered, it seems to me that claims which would have been recognized during the testator’s life – i.e., claims based upon not only moral obligation but legal obligations – should generally take precedence over moral claims. As between moral claims, some may be stronger than others. It falls to the court to weigh the strength of each claim and assign to each its proper priority. …. Any moral duty should be assessed in the light of the deceased’s legitimate concerns which, where the assets of the estate permit, may go beyond providing for the surviving spouse and children (Tataryn at 823) (emphasis added).
I add this. In many cases, there will be a number of ways of dividing the assets which are adequate, just and equitable. In other words, there will be a wide range of options, any of which might be considered appropriate in the circumstances. Provided that the testator has chosen an option within this range, the will should not be disturbed. Only where the testator has chosen an option which falls below his or her obligations as defined by reference to legal and moral norms, should the court make an order which achieves the justice the testator failed to achieve. In the absence of other evidence a will should be seen as reflecting the means chosen by the testator to meet his legitimate concerns and provide for an ordered administration and distribution of his estate in the best interests of the persons and institutions closest to him. It is the exercise by the testator of his freedom to dispose of his property and is to be interfered with not lightly but only in so far as the statute requires. (Tataryn at 824) (emphasis added).
[458] McLachlin J. concluded that the testator’s only legal obligation was to his wife. Further, the wife had the highest moral claim on the testator. Both claims were very strong. By contrast, the claims of the sons were not strong:
The remaining moral claims on the testator are those of the two grown and independent sons. The testator gave nothing to one, everything to the other, subject to his provision of money to Mrs. Tataryn. The moral claims of the sons cannot be put very high. There is no evidence that either contributed much to the estate (Tataryn at 825).
[459] The Tataryn decision was discussed by the British Columbia Court of Appeal in Kelly v. Baker (1996), 15 E.T.R. (2d) 219 (B.C.C.A.) [Kelly]. Mr. Justice Finch (as he then was) noted that Tataryn did not change the rule that testators may be justified on moral grounds in disinheriting an independent adult child so long as their reasons are valid and rational:
The latter two cases cited [by the court in Tataryn] are examples of factual circumstances where the testator was held to be justified, for valid and rational reasons, in disinheriting the claimant (Kelly at para. 57).
[460] Finch J.A. described the requirement for valid and rational reasons as follows:
In deciding a claim under s. 2(1) [now s. 2] of the [Wills Variation] Act, the task of the court is to decide whether, at the date of the testator’s death, her will was consistent with the discharge by a good parent of her duties to her family: Landy v. Landy Estate (1991), 60 B.C.L.R. (2d) 282 (C.A.), Morris v. Morris (1982), 41 B.C.L.R. 239 (C.A.), and Lukie v. Helgason (1976), 1 B.C.L.R. 1 (C.A.). The law does not require that the reason expressed by the testator in her will, or elsewhere, for disinheriting the appellant be justifiable. It is sufficient if there were valid and rational reasons at the time of her death – valid in the sense of being based on fact; rational in the sense that there is a logical connection between the reasons and the act of disinheritance (Kelly at para. 58) (emphasis added).
Here there was ample evidence to support the trial judge’s conclusions. There was good reason for the testator to believe that the plaintiff had abandoned the family, and good reason for her to feel that the plaintiff had treated her and her husband in a hateful and hurtful way. Both reasons afford logical explanations for the testator’s decision to disinherit the plaintiff (Kelly at para. 59).
Application of the law to this case
[461] In the present case, Alex seeks reapportionment on moral grounds. He did not suggest there was any legal obligation on Eida’s part to leave him part of her estate. He repeatedly advised the court that the litigation was not about money. He argued that Eida’s decision to leave none of her estate to him was an option falling below her moral obligation to him.
[462] As noted earlier, Eida’s stated reason for making the disposition as she did is contained in paragraph 4.2 of her 2000 will. She stated that she had not made any provision for Alex “for the reason that he is financially secure.” She stated:
[M]y daughter is deserving of the entirety of my estate in recognition of her many years of devotion, love and care for both myself and her late father. She has been of immeasurable help to me at great sacrifice of her own personal time and without ever asking for or accepting financial reward from me.
[463] Alex pointed to the many diary notes kept by Eida over the years in which she recounted, often in colourful and exaggerated terms, the misdeeds she perceived Alex to have committed against her and Gabriel during their lives. Eida from time to time delivered her notes to Ms. Richter and asked her to keep them in her file. It was Alex’s submission that these notes reveal the true, and unsubstantiated, reasons underlying Eida’s decision to disinherit him.
[464] I cannot accept that submission. First, Eida did not discuss the contents of the diary notes with either Ms. Richter or Mr. Wilson. She did not even refer to their existence when meeting with Mr. Wilson. When Eida made her 1996 will, she discussed the reasons for disinheriting Alex with Ms. Richter. She stated her reasons in her will, and supplemented them with a statutory declaration.
[465] Second, Eida swore another statutory declaration in 1999, reiterating her reasons for the dispositions in the 1996 will. In the declaration, she described the conduct on the part of Alex that caused her “heartache” over the years. However, the central, ongoing and unchanging reasons for not providing for Alex in her will was his financial status relative to that of Viviane, and Viviane’s unflagging devotion to her parents in the last 30 years of their lives.
[466] In any event, the 1996 will was not Eida's last will. It appears her notes stopped at about the time she swore the statutory declaration in 1999. The notes were retained on the advice of her legal counsel. The will under challenge is the one drawn by Mr. Wilson in 2000.
[467] In August of 2000, the relationship between Eida and Alex had been somewhat restored. Eida was pleased by the gesture of the car and chauffeur, and felt that Alex was being good to her at the time. However, that gesture did not change Eida’s mind about the disposition of her estate. Before signing her will in September of 2000, Eida reiterated to Mr. Wilson and Mr. Frith the reasons underlying her decision to leave her estate to Viviane. She confirmed those reasons in paragraph 4.2 of the Will. Those reasons were Alex’s financial security and Viviane’s care and devotion. On the evidence, they are valid in the sense that they are based on fact. The reasons are also rational; there is a logical connection between the reasons and the act of disinheritance.
[468] The evidence of Viviane’s dedication to her parents was considerable. From the time they moved to Vancouver in 1971, she gave them constant assistance and attention. The level of her devotion to her parents was extraordinary.
[469] Although employed by the Vancouver Chamber Choir, Viviane was available to her parents whenever they needed her. She saw them in the morning before work and at the end of the day. She had dinner with them every Friday and brunch with them every Sunday. She took them to their medical appointments and ran errands for them. She provided them with emotional support and companionship, and cared for them when they were ill. Viviane managed the Warehouse from the time of her separation from Max in about 1979. She refused any remuneration for that work.
[470] Eida’s Will was, in my view, consistent with Eida’s moral obligation to provide for Viviane.
[471] There can be no doubt that Alex is financially secure. His net worth is approximately $8 million. The Company has consistently performed well. Alex’s income in 2001 was $369,000, which is typical of what he earns. Alex has purchased his son a home and an apartment. Gabby has a job with the Company.
[472] Alex’s evidence was that he is not in need and does not require any money from his mother’s estate for his maintenance or support.
[473] The standard of living and relative financial situation of the testator’s children are relevant when considering their moral claims: Griffin v. McCarthy Estate (1989), 36 E.T.R. 130 at 136 (B.C.S.C.). After she was fired by Alex in 1984, Viviane returned to school and obtained an accounting certification. Her employment with the charity since 1987 has earned her, on average, $38,000 to $39,000 per year. She has lived in the same house for 35 years. At the time of Eida’s death, Viviane’s house was worth about $600,000, and was her only asset. The estate was worth approximately $1.8 million.
[474] Alex’s net worth is at least three times the value of the estate and many times that of Viviane’s.
[475] As noted in Tataryn, the moral claims of independent adult children are more tenuous, but should be recognized so long as the size of the estate permits and there are no negating factors. The conduct of the child toward his or her parent can be a negating factor: see Kelly.
[476] As is sometimes the case with children and their parents, Alex’s relationship with his parents varied at different times. It was often not a happy one. It was seldom a close one, particularly after Alex gained control of the Company and terminated Viviane. Significant conflicts marred the relationship. Those conflicts permanently changed the feelings of Gabriel and Eida toward their son.
[477] Alex blamed Viviane for his poor relationship with his parents. For example, he argued that with Viviane constantly at the family dinner table, there was no room for him. Yet he testified that he decided not to attend the Friday dinners for other reasons. He did not like the way his family treated his first wife, Erika. He was busy with his business and his family. He acknowledged that family and religious holidays meant nothing to him and he did not observe them for that reason. In my view, there was ample opportunity for Alex to involve himself in his parents’ lives, had he chosen to do so. He chose instead to devote his time to his business and other pursuits. A consequence of that choice was the lack of a relationship with his parents in their later years, and, in particular, the lack of a relationship with his mother following Gabriel’s death.
[478] Alex pointed to the slapping incident and its aftermath, which occurred sometime in the early 1980s, as evidence of Viviane’s attempts to undermine him in the eyes of his parents. He said that Viviane admitted, in the presence of Levant Semiramis, of attempting to alienate Gabriel and Eida from Alex in order to deprive him of his inheritance. Viviane denied the encounter.
[479] In my view, it is unlikely that the confrontation occurred. It is the only direct evidence advanced by Alex of a deliberate effort on his sister’s behalf to have him disinherited, yet he first described the confrontation at trial. He did not mention the incident in his examination for discovery two weeks before trial or in answer to a request following his discovery that he provide Viviane’s counsel with a description of any major incidents between himself and Viviane.
[480] Alex said he had decided the previous day to confront Viviane as soon as he arrived at work. In other words, the confrontation was planned and not spontaneous. In my view, it is most unlikely that he would carry out his plan in the presence of two warehouse workers, one of whom was not even employed by the Company at the time.
[481] Levant Semiramis was employed by a company occupying space next to the Company. He said he did not recall Alex and Viviane arguing about personal matters, but did recall a conversation in which Alex told Viviane there were rumours Viviane was trying to have him disinherited and that Viviane said words to the effect of, “So what?” or “What can you do about it?” He did not explain how he recalled a conversation he overheard more than twenty years earlier, or why he would be present in the Company warehouse at the time (which was first thing in the morning, according to Alex).
[482] The relationship between the Semiramis brothers and Viviane was not a good one. Alex had made them aware that Viviane suspected them of taking goods from the warehouse. It defies common sense that Viviane would admit to the alleged misconduct in the presence of other persons, particularly the Semiramis brothers whom she distrusted.
[483] Levant Semiramis was not a convincing witness on this and other matters. I do not accept his evidence concerning this incident.
[484] In any event, this exchange is alleged to have occurred almost two decades before Eida made her last Will in September of 2000. If it did occur, it preceded many of the difficulties that occurred in the relationship between Alex and his parents. Furthermore, for purposes of determining the reapportionment claim under the WVA, the central inquiry concerns the circumstances existing at the time the testator made her last will and immediately before her death.
[485] There was ample evidence on which to base the conclusion that responsibility for the difficulties between Alex and his parents must be laid at Alex’s feet.
[486] Gabriel and Eida were unhappy throughout Alex’s adult life with some of his lifestyle choices. They disagreed with his spending habits. They disliked what they viewed as his excessively confrontational style.
[487] It is evident that the buyout by Alex of his father’s interest in the Company significantly affected Gabriel and Eida, and permanently altered their view of him. During the years Gabriel was majority shareholder, a creditor of the Company and guarantor of its loans, he received no dividends or remuneration. When Alex decided he did not want family involved in the business, he told his father he would apply for liquidation of the Company if an agreement on the buyout could not be reached. Mediation was required. In the end, Alex drove a hard bargain for the purchase of Gabriel’s shares. As evidenced by Eida’s comment to Alex about the purchase of his home on Selkirk Street (to the effect that the home had been bought with Gabriel’s money), she did not believe Alex had been fair to Gabriel.
[488] Alex’s termination of Viviane from her employment with the Company caused an enormous rift in the family. Alex testified that his father called him a “monster” and a “thief”, and told him he was “despicable”. There was little evidence to suggest that Viviane’s firing was for cause. Alex said he was unhappy with Viviane’s interactions with clients who owed the Company money, but acknowledged Viviane was under considerable pressure from Gabriel to pursue outstanding accounts receivable. He also acknowledged that he never told Viviane her position with the Company was in jeopardy. However, he refused to pay her severance until Gabriel sought the intervention of other family members and friends.
[489] Alex had ongoing disputes with his parents about their estate planning. He made it clear to them he would engage in a legal battle with Viviane if he was not satisfied with his inheritance. The 1992 dispute arising from the decision of Gabriel and Eida to include only Viviane as a joint holder of their investment account caused a huge rift. Gabriel and Eida heard their son threatening to “burn them” as a result of their decision. Alex said the expression he shouted was, “He (God) will burn you”. Another dispute occurred a year later when Alex discovered, by searching the title of the Condominium, that it was held by his parents in joint tenancy with Viviane.
[490] In 1993, Alex complained to his visiting childhood friend, Mr. Minasyan, that he suspected his parents would disinherit him. According to Mr. Minasyan, he attempted to intervene on Alex’s behalf by speaking to Gabriel about Alex’s inheritance. He did so with Alex’s knowledge. According to Mr. Minasyan, Gabriel told him he had provided equally for his children. It is odd, in my view, that Mr. Minasyan would feel comfortable raising such a personal issue with Alex’s father after many years of little or no contact with the family. However, if the topic was discussed, it is not surprising that Gabriel would mislead Alex’s friend. Gabriel knew of Alex’s willingness to fight Viviane over the estate, and had expressed his fear of such a fight to Ms. Richter.
[491] Alex had a different relationship with his father than he did with his mother. Despite their many differences, Alex respected his father. It was apparent from his evidence that he did not hold his mother in the same regard. He made several disparaging remarks about her at trial. After Gabriel’s death, Alex saw Eida only sporadically. He had no real involvement in Eida’s life. He occasionally had her over to his home for dinner, or took her to a restaurant. One of the caregivers who spent a great deal of time with Eida never saw Alex. Another caregiver saw him only two or three times in the two years she spent as Eida’s companion.
[492] When Alex remarried in 1997, he did not ask his mother to attend the ceremony.
[493] The incident involving Gabriel’s will is a telling example of Alex’s attitude toward his mother. Gabriel had been dead only a matter of weeks when Alex demanded to see his father’s will. He instructed his lawyer to write his mother demanding to see the will at a time when she was still struggling with the recent loss of her husband. Alex showed little regard or love for his mother at a time she particularly required it.
[494] The dispute over the car and driver is also reflective of Alex’s relationship with Eida. Alex did not hesitate to send his mother a letter in January of 2002 alleging that she was no longer competent. He did so in an effort to obtain reimbursement for expenses that were, at the time, being claimed as Company expenses.
[495] Although Alex did not see his mother often, he made no secret of his ongoing and intense interest in her estate. He repeatedly made clear his intention to fight with Viviane over Eida’s will if Eida did not divide her estate in a manner that satisfied him. He offered Eida “peace” in the family so long as she acquiesced to his position. That, in my view, was not the action of a son who had the best interests of his elderly mother in mind. It was a threat designed to influence Eida with respect to the division of her estate.
[496] Eida expressed her fear to Ms. Richter and Mr. Wilson concerning her son’s stated intention to fight with Viviane over the estate. She also feared Alex would dispute her mental capacity. She took the unusual step of obtaining a mental competency examination. In light of the comments made by Alex in his letter to Eida in January of 2002 about her competence, it appears those fears were well-founded.
[497] Alex did not visit Eida again after the dispute over the car and driver in January of 2002. He said he thought he spoke to her by telephone at some point before her death, urging her to use the car and driver. Eida died three months later. Alex did not attend her funeral due to business commitments abroad.
[498] In all of the circumstances, I have concluded that it would not be equitable to vary Eida’s will.
[499] In summary, I have concluded the following:
1. Viviane made no admission in her pleadings that the transfers of the joint assets were not inter vivos in nature.
2. The transfers of the joint assets (specifically, the Condominium and the joint accounts) to Viviane were valid inter vivos transfers.
3. The Deed of Gift resulted in a valid inter vivos gift.
4. The Trust was a valid inter vivos trust.
5. There was no undue influence or breach of fiduciary duty with respect to transfer of the joint assets or the creation of the Trust.
6. The provision of the car and driver was an unconditional gift from Alex to Eida. Accordingly, Alex cannot claim reimbursement for the expenses he incurred.
7. Alex does not have a claim on moral grounds to a share of Eida’s estate pursuant to the WVA.
[500] The issue of costs was deferred at the request of the parties, and may now be addressed if necessary.
“C.A. Wedge, J.”
The Honourable Madam Justice C. A. Wedge
APPENDIX “A”
1. SETTLEMENT OF TRUST
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1. 2 The Settlor hereby settles upon the Original Trustee and the Original Trustee acknowledges the receipt of the property described in Schedule A hereto. No further property may be contributed to the Trust or otherwise given to the Trustees for the purpose of the Trust without the acceptance of the Trustees.
1.3 The Original Trustee hereby accepts the Trust and the duties and powers contained herein.
1.4 The Trust shall be irrevocable by the Settlor.
2. DEFINITIONS
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2.1.1 “Beneficiaries” means Eida Mordo and her daughter Viviane Nitting and “Beneficiary” means any one of them;
2.1.2 “Income” means the income of the Trust for a fiscal period determined without reference to the Income Tax Act;
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2.1.4 “Issue” means all lineal descendants of every degree of consanguinity and when used with the phrase “in equal shares per stirpes” means that the descendants of any degree of consanguinity only take the share which their deceased ancestor would have been entitled to and thus by representing such ancestor;
2.1.5 “Net Income” means the Income less all costs, disbursements, expenses, commissions, charges and outgoings incurred or payable in connection with the management and administration of the Trust;
2.1.6 “Trust Property” means the property settled upon the Original Trustees in paragraph 1.2 and all property which may from time to time with the consent of the Trustees be paid, assigned, transferred, conveyed, delivered, loaned or bequeathed to the Trustees for the purpose of the Trust, and any property in or into which the foregoing may from time to time be invested or converted, and the proceeds of any redemption or repurchase of stocks or shares held as part of the Trust Property, and all Income accumulated by the Trustees as herein provided;
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3. ADMINISTRATION OF THE TRUST
3.1 The Trustees shall invest and keep invested the Trust Property in any investments of any kind whatsoever and wheresoever which the Trustees consider advisable…without being limited to investments authorized by law for investment by trustees.
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4. BENEFIT ENTITLEMENT AND DISTRIBUTION
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4.2 Until Eida Mordo’s death, Eida Mordo shall be entitled to receive all of the Net Income and the Trust Property and the Trustees shall pay, transfer or apply such amount or amounts thereof to or for the benefit of Eida Mordo at such time or times and in such manner as Eida Mordo shall request or, if Eida Mordo should become incompetent, as the Trustees in their discretion shall determine to be required for Eida Mordo’s maintenance, care and comfort. Any Net Income not paid to or for the benefit of Eida Mordo in any fiscal period shall be accumulated. No person except Eida Mordo may, before Eida Mordo’s death, receive or otherwise obtain the use of any of the Net Income or the Trust Property.
4.3.2 Upon Eida Mordo’s death, the Trustees shall distribute the Trust Property to Viviane Nitting. If Viviane Nitting should die before Eida Mordo leaving issue living at the death of Eida Mordo, the remaining Trust Property shall be distributed to the issue of Viviane Nitting, and if more than one, in equal shares per stirpes.
5. POWERS OF THE TRUSTEES
5.1 Subject to any limitations imposed by law, the Trustees shall have, without other or further authorization and free from any power or control on the part of the Beneficiaries, the exclusive and absolute power, control and authority over the Trust Property and the administration of the Trust to the same extent as if the Trustees were the absolute owners of the Trust Property in their own right including, without limiting the generality of the foregoing, the specific powers enumerated in Schedule B hereto.
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8. INTERPRETATION
8.1 The words “discretion of the Trustees” or “Trustees’ discretion” and other words of like import, wherever used herein, shall be read and construed as vesting in the Trustees the absolute and unfettered discretion to dispose of the matter or matters in good faith in respect of which they have been vested with discretion.
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SCHEDULE B
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3. SELL TRUST PROPERTY The Trustees may sell (whether by public or private sale or with or without notice, for cash or on credit, or partly for cash and partly on credit), assign, transfer, exchange, pledge, convey, lease, mortgage or otherwise dispose of or encumber and Trust Property or any part thereof at any time or from time to time as the Trustees in their discretion may deem advisable, and at such price or prices and on such terms as they may consider advisable, which terms may extend beyond the duration of the Trust hereby created.
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9. REAL PROPERTY The Trustees may manage real or leasehold property entrusted to them or from time to time held by them hereunder and make ordinary and extraordinary repairs and alterations and improvements as the Trustees in their discretion deem advisable…make any payment for repairs, alterations and improvements to the Trust Property out of capital or out of income or partly out of capital and partly out of income, as the Trustees in their discretion deem proper…and generally manage any real or leasehold property.
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