IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

MacKinlay v. MacKinlay Estate,

 

2008 BCSC 994

Date: 20080725
Docket: S067953
Registry: Vancouver

Between:

David Simmons MacKinlay, Kenneth Bruce MacKinlay,
Donald Drew MacKinlay and Carmen Zella MacKinlay

Plaintiffs

And:

Iris Sophie MacKinlay and Iris Sophie MacKinlay,
Executrix of the Estate of John Munro MacKinlay, Deceased

Defendants


Before: The Honourable Mr. Justice Savage

Reasons for Judgment

In Chambers

Appearing on their own Behalf:

D.S. MacKinlay
K.B. MacKinlay
D.D. MacKinlay

Counsel for the Defendant:

A.D. Francis

Date and Place of Hearing:

July 16-17, 2008

 

 

Vancouver, B.C.

Introduction

[1]                This application is brought by the defendant, Iris MacKinlay (“Mrs. MacKinlay”) in her personal capacity and as executrix of the estate of her late husband, John Munro MacKinlay (the “Testator”) for judgment dismissing the plaintiffs’ claim pursuant to Rule 18A of the Rules of Court

[2]                The plaintiffs David Simmons MacKinlay, Kenneth Bruce MacKinlay, Donald Drew MacKinlay and Carmen Zella MacKinlay (the “Plaintiff’s”) are the independent adult children of the Testator.  David, Kenneth and Donald MacKinlay (the “Adult Sons”) are the children of his first marriage.  Carmen MacKinlay is the surviving child of his second marriage.  The action was brought by the Plaintiff’s, for whom no disposition is made in the Testator’s will, to vary the terms of the will of the Testator pursuant to the Wills Variation Act, R.S.B.C. 1996, Ch.490. 

[3]                Before me, David Simmons MacKinlay who is a solicitor spoke on behalf of the Plaintiff’s.  Kenneth Bruce MacKinlay was present in the courtroom and sat at the counsel table.  Donald Drew MacKinlay also addressed the court in final submissions.  Carman Zella MacKinlay was not present.  Mrs. MacKinlay was present and represented by counsel. 

[4]                All the parties before me agreed that this application was appropriate for final disposition under Rule 18A. 

The Claim

[5]                The Testator was in relatively good health but died unexpectedly on May 24, 2006 in Kelowna, B.C.  His will is dated March 8, 1999 (the “Will”).  Under the terms of the Will, his second wife Mrs. MacKinlay is appointed executrix and is the sole beneficiary of the Testator’s estate.  The Testator cohabited with Mrs. MacKinlay for 35 years and had been married to her for 33 years at the time of his death. 

[6]                The Testator was secretive about his financial circumstances and dealt alone with the family finances.  The only asset in the Testator’s estate is an investment account with Cannacord Capital having a value of $284,050.12.  The funds in the investment account include monies realized from the sale of properties that the Testator long held as well as the residue from a gift the Testator received from his late brother Richard MacKinlay.  There was comingling of these and other funds in this account. 

[7]                The action to vary the Testator’s will is confined to a request to have those funds which are a residue from Richard MacKinlay’s gift to the Testator paid out to the Plaintiff’s.  Although the Plaintiff’s did not at any time specify the exact figure, I understood their submission to suggest that the residue represented about half of the funds in the investment account. 

Factual Background

[8]                In order to understand the nature of the issue between the Plaintiff’s and Mrs. MacKinlay it is necessary to review the circumstances surrounding Richard MacKinlay’s gift to the Testator. 

[9]                Richard MacKinlay is the brother of the Testator and described by the parties as a recluse.  He was frugal and lived a very simple existence, without companionship or the usual amenities most people take for granted in modern life.  He had no telephone or television.  He lived alone in rural Ontario.  By his own choosing Richard MacKinlay had very little to do with his family or, for that matter, society in general. 

[10]            In 1998 Richard MacKinlay was 83 years old.  The Testator was 74.  Living frugally and having invested wisely Richard MacKinlay accumulated funds totalling $350,000.  He had no use for these funds so he wrote to the Testator as follows: 

Am hoping you will take on a little job for me.  When I was still working I started a small account with an investment company.  I haven’t added to it for 25 years but it has grown slowly.  If is of no use to me as I have enough to get by on and I was thinking of dishing it out to nephews & nieces etc. might be handy for university etc. which I believe is rather costly these days.  As I don’t know who needs what I wonder if you would handle the dishing out – to any of the family who might be short of funds. 

If you agree let me know ASAP & I’ll send a Royal Bank cheque or draft or money order….

[11]            Some time after this letter he wrote again to the Testator.  He told the Testator that he had taken steps with regard to the funds.  Richard MacKinlay was concerned about his failing health.  He wrote: 

I understand that the cost of higher education is going thru the roof so maybe you could set up some trust funds etc. but it is up to you to do what’s best (or booze it away if you wish). 

[12]            In September 1998 the funds were transferred to the Testator.  The Adult Sons learned of the monies that Richard MacKinlay gave to the Testator from the Testator.  According to David MacKinlay: 

After Ken learned in November 1998 that the Deceased had received $350,000.00 from Uncle Dick to be distributed among family members to help with the costs of higher education, he informed Don and I of that fact, we waited over the following months for the Deceased to discuss the situation with us in a meaningful way. 

[13]            David MacKinlay and Donald MacKinlay then travelled to Brampton, Ontario and met with Richard MacKinlay on March 5, 1999 to discuss the funds that had been given to the Testator.  David MacKinlay took copies of some of Richard MacKinlay’s letters and a copy of his Will.  That visit was followed by another visit from Donald MacKinlay on April 13, 1999.  At that meeting Richard MacKinlay signed a statement regarding his intentions for the gift dated April 13, 1999:

To whom it may concern ---

In September 1998 (approx) I sent my brother John (Jock) in trust three hundred fifty thousand dollars ($350,000.00) to be distributed among the younger members of the family to be used for their education. 

The following children should receive equal shares held in trust by their parents until required for higher education….

[14]            The Testator then visited Richard MacKinlay later in April 1999.  Richard MacKinlay signed another statement which is referenced below. 

[15]            These actions caused a falling out between the Testator and the Adult Sons.  The Adult Sons wanted Richard MacKinlay’s gift to be distributed by the Testator to the nieces and nephews including their own children in equal shares.  The Testator resented what he viewed as their interference in the matter and their copying his own letters and his brother’s personal correspondence.  On March 9, 1999, the Testator wrote to David MacKinlay cancelling his 75th birthday party advising that he had decided “that it is in the best family interest that I booze it away”. 

[16]            On March 15, 1999, he wrote Richard MacKinlay disapproving of David and Donald MacKinlay’s actions earlier that month.  After his own visit to Richard MacKinlay in April 1999 he forwarded a copy of a letter signed by Richard MacKinlay to the Adult Sons as follows:

I would advise you that the funds that I put in your father account are a private matter between brothers. 

I have reviewed your interference with your father and still being of sound mind, have gifted the funds to him, free of any restrictions.  I have asked your father to ignore any instructions in any letter written by me prior to this date.  As ever, … . 

[17]            The Testator took some initial steps to establish trust funds, but decided against that, instead asking that children or parents in need request funds from him.  It is acknowledged by the Adult Sons that the Testator gave some $90,000 of Richard’s MacKinlay’s gift to various nieces, nephews, and Carmen MacKinlay.  He received some requests and acted on them.  He wrote to David MacKinlay on September 29, 2000 as follows:

You are aware that I have established a fund to provide financial assistance for post secondary education for students who would no otherwise be able to do so due to lack of resources.  In other words, the purpose is to meet a demonstrated “need” and assure that family members are not denied an opportunity to pursue an education due to lack of funds. 

It was never intended to replace parental responsibilities for educating their children nor is it an inherited right of birth.  Its purpose is to provide financial support for obtaining an education to those not having their own resources for doing so.

[18]            The Adult Sons and Testator differed on their views of how the money should be dispersed, and the Testator’s obligations in respect of them, and this caused a falling out between them.  That falling out is evidenced in the affidavits of Mrs. MacKinlay, and those of the Adult Sons.  Attached to the affidavit of Kenneth MacKinlay is an email from Mrs. MacKinlay as follows: 

When David and Don made their infamous trip to the east to snoop into Richard’s personal affairs Jock became absolutely livid.  As you know it was not unusual for Jock to lose his temper but this was different.  It was a combination of anger, embarrassment (that his sons would do such a thing) and deep pain.  He went absolutely ballistic and then cried!  I have never seen him more hurt…. 

[19]            The Testator was of a view to disburse funds “for basic education costs to those who are unable to provide same thus depriving a post secondary education” (letter to Katheryn, January 2001, Exhibit K, 1st Affidavit of Iris Sophie MacKinlay).  On the other hand, David MacKinlay, writing on behalf of his brothers, was of the view that the concept of “need” is “…simply that funds must be expended, as in, ‘I need money to pay my mortgage each month’”. 

[20]            The concept of need was germane because of Richard MacKinlay’s concern about the cost of education and those who might be “short of funds”.  Part of the information before the court concerns the financial position of the Adult Sons. 

Financial Position of the Parties

[21]            The information before the court includes information on the financial position of the Adult Sons, Carmen MacKinlay, and Mrs. MacKinlay. 

[22]            Regarding the Adult Sons, all are doing very well.  Family income (including spousal income) per annum for the Adult Sons ranges from $147,000 per annum to just over $350,000 per annum.  The net worth of each family exceeds $1,000,000, with the most wealthy being in excess of $3,000,000.  Each family owns recreational property.

[23]            The financial circumstances of Carman MacKinlay are different, however, like the Adult sons, her claim as advanced before me is restricted to a “moral” one, not one based on need, but based on the circumstances of Richard MacKinlay’s gift and restricted to its residue.  During the last years of his life the Testator paid out some $50,000 to Carman MacKinlay for education and other matters. 

[24]            The circumstances of Mrs. MacKinlay are that she owns outright the matrimonial home (which she purchased and built with the Testator some 33 years earlier), and has pension and other income slightly under $36,000 per annum.  She is 66.  She is recovering from cancer.  Her expenses exceed her income by approximately $400 per month.  In his submission Donald MacKinlay argued that the Testator had been living beyond his means.  It is clear that Mrs. MacKinlay must access savings to fund her current level of expenses or to pay for any extraordinary expenses. 

Legal Issues and Analysis

[25]            The Plaintiff’s rely on there being a moral obligation arising from Richard MacKinlay’s gift that the monies disburse to the nieces and nephews.  This is not a trust claim or, for example, a claim for equitable tracing. 

[26]            Section 2 of the Wills Variation Act, R.S.B.C. 1996, Chap. 490 reads as follows: 

2          Despite any law or statute to the contrary, if a testator dies leaving a will that does not, in the court's opinion, make adequate provision for the proper maintenance and support of the testator's spouse or children, the court may, in its discretion, in an action by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the testator's estate for the spouse or children. 

[27]            The leading case on the interpretation of Section 2 of the Act is that of the Supreme Court of Canada in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807.  McLachlin J., as she then was, giving judgment for the Court, held that the first consideration in determining what is “adequate, just and equitable” is the testator’s legal responsibilities during his or her lifetime. 

[28]            In this case, the Testator had a legal obligation to support and maintain his wife Mrs. MacKinlay.  He had no legal obligation to his adult independent children. 

[29]            The second consideration is the Testator’s moral duties toward spouse and children.  Clearly there are strong moral obligations to support and maintain a dependent spouse.  The situation of independent adult children has another perspective.  As noted by the Court in Tataryn

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: Brauer v. Hilton (1979), 15 B.C.L.R. 116 (C.A.); Cowan v. Cowan Estate (1988), 30 E.T.R. 216 (B.C.S.C.), aff'd (1990), 37 E.T.R. 308 (B.C.C.A.); Nulty v. Nulty Estate (1989), 41 B.C.L.R. (2d) 343 (C.A.).  See also Price v. Lypchuk Estate, supra, and Bell v. Roy Estate (1993), 75 B.C.L.R. (2d) 213 (C.A.) for cases where the moral duty was seen to be negated. 

[30]            Where there are conflicting claims and where the size of the estate permits, all claims should be considered.  Where priorities must be considered, legal claims recognized during a testator’s lifetime should generally take precedence over moral claims. 

[31]            Moreover, Tataryn makes it clear that there may be a number of different ways of disposing of 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. 

[32]            As did Curtis J., in Bruce v. Bruce, 2003 BCSC 1683, I find a helpful summary of the law in Clucas v. Clucas Estate (1999), 25 E.T.R. (2d) 175, at ¶ 12:

Many cases have been decided under the Wills Variation Act.  The considerations governing the court's decisions have evolved over time and there is a fairly comprehensive set of competing principles to which effect must be given.  I have endeavoured to summarize these as follows:  

1.     The main aim of the Act is the adequate, just and equitable provision for the spouses and children of testators.  (Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 (S.C.C.)) 

2.     The other interest protected by the Act is testamentary autonomy.  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 insofar as the statute requires.  (Tataryn, supra

3.     The test of what is ‘adequate and proper maintenance and support’ as referred to in s. 2 of the Act is an objective test.  The fact that the testator was of the view that he or she adequately and properly provided for the disinherited beneficiary is not relevant if an objective analysis indicates that the testator was not acting in accordance with society's reasonable expectations of what a judicious parent would do in the circumstance by reference to contemporary community standards.  (Tataryn, supra; Walker v. McDermott (1930), [1930] S.C.R. 94 (S.C.C.); Price v. Lypchuk Estate (1987), 11 B.C.L.R. (2d) 371 (B.C.C.A.); Dalziel v. Bradford (1985), 62 B.C.L.R. 215 (B.C.S.C.)) 

4.     The words ‘adequate’ and ‘proper’ as used in s. 2 can mean two different things depending on the size of the estate.  A small gift may be adequate, but not proper if the estate is large.  (Price v. Lypchuk Estate, supra

5.     Firstly, the court must consider any legal obligations of the testatrix to her spouse or children and secondly, the moral obligation to her spouse or children.  (Tataryn, supra

6.     The moral claim of independent adult children is more tenuous than the moral claim of spouses or dependent adult children.  But if the size of the estate permits, and in the absence of circumstances negating the existence of such an obligation, some provision for adult independent children should be made.  (Tataryn, supra

7.     Examples of circumstances which bring forth a moral duty on the part of a testator to recognize in his Will the claims of adult children are: a disability on the part of an adult child; an assured expectation on the part of an adult child, or an implied expectation on the part of an adult child, arising from the abundance of the estate or from the adult child's treatment during the testator's life time; the present financial circumstances of the child; the probable future difficulties of the child; the size of the estate and other legitimate claims. (Dalziel v. Bradford, supra and Price v. Lypchuk, supra

8.     Circumstances that will negate the moral obligation of a testatrix are ‘valid and rational’ reasons for disinheritance.  To constitute ‘valid and rational’ reasons justifying disinheritance, the reason must be based on true facts and the reason must be logically connected to the act of disinheritance.  (Bell v. Roy Estate (1993), 75 B.C.L.R. (2d) 213 (B.C.C.A.); Comeau v. Mawer Estate, [1999] B.C.J. 26 (B.C.S.C.); and Kelly v. Baker (1996), 15 E.T.R. (2d) 21 (B.C.C.A.)) 

9.     Although a needs/maintenance test is no longer the sole factor governing such claims, a consideration of needs is still relevant.  (Newstead v. Newstead Estate (1996), 11 E.T.R. (2d) 236 (B.C.S.C.)) 

[33]            The Plaintiff’s cite two cases in support of their position.  The decision of the Court of Appeal in Champoise v. Prost 2000 BCCA 426.  That case involved an allegation of a secret trust.  The circumstances are not generally similar to the case here, but the case follows the principles established in Tataryn.  In Champoise, a secret trust was not established so the court proceeded to consider the Wills Variation Act claim. 

[34]            The Plaintiff’s also cited Coles v. Olsen et. al. 2003 BCSC 715.  In that decision Powers J. cited with approval the summary of Satanove J. referenced above from Clucas v. Clucas Estate (1999), 25 E.T.R. (2d) 175.  The circumstances in Coles involve competing moral claims of independent adult children where the testatrix chose to disinherit one child.  The circumstances are not similar to the case here. 

The Legal Obligations

[35]            In my opinion the resolution of this case is appropriately made by a consideration of the legal obligations of the Testator juxtaposed with a consideration of the size of the estate and an analysis of the moral claim of the Plaintiff’s. 

[36]            The primary legal obligation of the Testator, during his lifetime and thereafter, was to maintain and support his spouse of many years, Mrs. MacKinlay.  The Testator’s will does that as she is the sole beneficiary of his estate. 

[37]            The Adult Sons and Carmen MacKinlay are independent adult children.  There is and was no legal obligation to maintain and support them.  

The Moral Claim

[38]            With respect to the moral claims of the independent adult children, the only claim they advance is that arising out of the circumstances of Richard MacKinlay’s gift to the Testator.  The decision of the Supreme Court of Canada in Tatayrn makes it clear that a moral claim of an independent adult child is contingent on “whether the size of the estate permits”. 

[39]            In my opinion, the moral claim of the Plaintiff’s, such as it is, must be subordinate to the legal claim, in this case because of the size of the estate.  By contemporary standards the size of the estate is relatively modest.  When the legal obligations of the Testator are considered in the context of the financial circumstances in which the Testator leaves his spouse, the size of the estate would not permit effect to be given the moral claim. 

[40]            In the case of the Adult Sons, I am reinforced in this view by a consideration of their own financial circumstances.  They are each relatively well off and have good prospects.  They and their spouses are certainly well able to finance the education of their children.  The receipt of funds from the Testator’s estate would represent a windfall to them, at the expense of jeopardizing the financial security of the defendant. 

[41]            While the financial situation of Carmen MacKinlay is not the same her moral claim must be considered in light of the funds the Testator already provided to her, various sums exceeding in total $50,000.  In my view, the funds the Testator provided to her more than account for any moral claim she might have to funds in the Testator’s estate. 

[42]            Moreover, in my opinion the moral claim is not strong. 

[43]            In most of the authorities a moral claim is advanced that arises out of the position of the proposed recipients.  In this case, however, the argument was advanced based on a consideration of the nephews and nieces.  Of course, they are not parties to this action. 

[44]            In any event, as I have noted, the consequence of giving effect to the claim of the Adult Sons is to relieve them of some of their own financial obligations.  However their claim does not easily fit the examples where a moral duty has be found on a testator to recognize the claim of an adult child, such as where there is disability, an assured expectation, an implied expectation arising out the abundance of an estate or the adult child’s treatment, the financial circumstances of the child, the probable future difficulties of the child, or the size of the estate and other legitimate claims:  Berryere v. Berryere, [2000] B.C.J. No. 581, Price v. Lypchuk Estate (1987), 11 B.C.L.R. (2d) 371(C.A.), Dalziel v. Bradford et. al. (1985), 62 B.C.L.R. 215 (B.C.S.C.).  I do not suggest by this that these examples are exhaustive of the circumstances where a moral duty may be found.

[45]            Although in correspondence with the Testator, the Adult Sons took the position that the gift was a trust that position is not advanced here.  Before the jockeying that took place between the Adult Sons, the Testator and Richard MacKinlay, it seems clear that Richard MacKinlay wanted to benefit those in need, i.e., those that were, in his words, “short of funds”, but that the Testator could use the funds for his own purposes if he so chose.  That clearly constituted a gift. 

[46]            The Adult Sons were of a view that “need” did not mean being “short of funds”.  When they met with Richard MacKinlay the letter they obtained from him contains discussion about a trust and reference to the dispositions being “in equal shares”.  This language is not contained in the original correspondence between Richard MacKinlay and the Testator.

[47]            This difference with the Testator, and their failed efforts to establish a legal trust, led to their estrangement from him, which continued to be evidenced at this hearing.  They sought through their actions to convert the gift into a legal trust.  They did not succeed, although David MacKinlay did write to the Testator on their behalf saying:

Since I am a lawyer, I could not help making a legal analysis of the situation.  …. It is clear that legally the transfer of the funds to you is in the nature of a transfer in trust, and that you hold them as a trustee.  The beneficiaries of that trust are Uncle Dick’s nephews and nieces and their offspring. 

…All this is so despite Uncle Dick’s statement in his letter to you that you were free to ‘piss the money away on booze.’  Such a statement does not change the legal nature of the transfer, and is really only Uncle Dick’s way of saying that he trust you completely to do the right thing with the trust funds. 

[48]            Parenthetically I note that Richard MacKinlay’s letter to the Testator is not as quoted but said “... but it is up to you to do what’s best (or booze it away if you wish)”. 

[49]            The Adult Sons affidavits refer to the Testator “misleading” them and “falsely” saying that he was going to establish trust funds, although in my view the Testator answered those matters in his letter of September 29, 2000.  In Donald MacKinlay’s view, the Testator was living beyond his means.  These and other statements evidence a continuing estrangement that is confirmed in the affidavit of Mrs. MacKinlay. 

[50]            In light of my findings regarding the circumstances of Richard MacKinlay’s gift those descriptions are inappropriate, however, I note that the Adult Sons were aware of this fundamental disagreement with the Testator early in 1999.  David MacKinlay’s letter of March 5, 1999 includes an argument that “need” means something other than being short of funds.  Kenneth MacKinlay wrote the Testator on January 31, 2001 returning funds because of his disagreement with the manner in which the Testator was dealing with them – on the basis of financial need. 

[51]            As pointed out by the defendant, the Adult Sons had from 1999 until the Testator’s death to resolve the issue, but chose not to do so.  However, it was unlikely that any agreement could be reached as the situation of the Adult Sons and their families simply could not qualify as they were not “short of funds”. 

[52]            The defendant asks, in the alternative, that I dismiss the Plaintiff’s claims based on Section 6 of the Wills Variation Act.  Under this section, a court may refuse to make an order “in favour of a person whose character or conduct, in the court's opinion, disentitles the person to the benefit of an order under this Act”.  In light of my findings regarding the moral claim, it is unnecessary to consider whether the conduct of the Plaintiff’s would disentitle them to relief under this provision.

[53]            The application of Section 2 of the Wills Variation Act involves a balancing between two competing factors, the testator’s obligation to meet his legal and moral obligations to a spouse and children, and the testator’s autonomy to dispose of his estate as he may wish. 

[54]            I have no doubt that the Testator was well aware of the respective financial positions of the parties to this proceeding, including that of the defendant in the event of his demise.  Although his anger and disappointment at the conduct of the Adult Sons may have precipitated a change in his will, that change at the end of his life represented one of a range of possible dispositions of his estate.  In my opinion, in all the circumstances here, the disposition of the Testator was within the range of possible dispositions that was adequate, just and equitable.

Disposition

[55]            The action of the Plaintiff’s is dismissed.  In the ordinary course, costs would follow the event.  If there is an issue as to costs the matter make be spoken to.

“The Honourable Mr. Justice Savage”