IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Graham v. Chalmers,

 

2008 BCSC 1246

Date: 20080717
Docket: S071544
Registry: Vancouver

Between:

Janet Laurie Graham

Plaintiff

And:

Sandi Margaret Chalmers, both in her personal capacity
and in her capacity as the Executor of the Will of Dolores Graham,
Shannon Nicole Chalmers, Paul Graham Chalmers,
Kevin Chalmers, and William John Henderson-Deeves

Defendants

Before: The Honourable Madam Justice Fenlon

Oral Reasons for Judgment

In Chambers
July 17, 2008

Counsel for the Plaintiff

R. Lee
J. Ross, A/S

Counsel for the Defendants

S.N. Baldwin
M.D. Murphy

Place of Hearing:

Vancouver, B.C.

 

[1]                THE COURT:  The plaintiff, Janet Graham, asks this Court to vary her mother’s will.  Her sister, Sandi Chalmers, in her capacity as executor of the will and as a beneficiary, defends the will and says that her mother’s wishes should be followed.  Shannon Chalmers and Paul Chalmers, the other two beneficiaries under the will and Sandi’s children, support that position.

[2]                The law recognizes that there are two main competing principles to be protected in cases brought under the Wills Variation Act, R.S.B.C. 1996, c. 490:  first, the obligation of a mother to make adequate provision in her will for her children, and, second, her right to dispose of her property as she wishes — also referred to as testamentary autonomy or freedom.

[3]                In this case, Janet Graham says that her mother’s will fails to satisfy the first principle.  Sandi Chalmers and the other beneficiaries say that the will is fair and should not be interfered with by this Court.  There is, as many judges before me have recognized, a tension in the Act.  This family is caught up in that tension, each sister believing strongly in the rightness of the position taken in these proceedings.  This Court must decide which position is to prevail.

BACKGROUND

[4]                I want to begin by reviewing some general background.  By all accounts, the testatrix, Dolores Graham, loved both her daughters well and equally.  They were her only children, twins she raised in a home where life was made difficult by an abusive husband.  Dolores Graham seems to have been one of those remarkable women who faced her problems not with anger or bitterness, but with strength and dignity.  She encouraged her daughters to believe in themselves and to pursue their goals.  Both sisters testified that their mother had a good relationship with each of them and that they in turn loved her and enjoyed her company.

[5]                Their father was hard on his daughters and ordered them both out of the house as soon as they finished high school in 1979.  Sandi Chalmers left and married Kevin Chalmers a few years later.  Janet Graham defied her father and stayed on so that she could, in her words, protect her mother from his abuse.  After their father’s death in 1983, Janet remained in the home.  She and her mother shared a close, comfortable, and companionable life together in the West Vancouver home until Mrs. Graham’s death at age 71 in June of 2004.  Janet lived her entire life with her mother and, at age 46, has modest financial means.  Janet stayed initially to protect her mother from abuse and, albeit quite happily, did not pursue obtaining her own home and family.  She and her mother were a help to each other and it appears, at least to some extent, that Janet’s residence with her mother made it easier for Mrs. Graham to continue living in the family home until her death.

[6]                Sandi Chalmers and her husband Kevin were close to Mrs. Graham as well.  Kevin helped with a kitchen renovation and did some of the yard work.  There were frequent visits and family dinners.  Sandi and Kevin’s two children, Shannon, now 22 and Paul, now 16, were the only grandchildren and had a special place in their grandmother’s affections.  They had regular sleepovers at her house when they were younger and regular visits back and forth throughout their lives.  Their grandmother spent more time with them on summer holidays when their parents were working, taking them to activities and paying for camps and sports and lessons.

[7]                All of the witnesses agreed that this was a close-knit family who enjoyed each other’s company.  There was no dispute on the facts that Mrs. Graham wanted to fund her grandchildren’s education.  She had, apparently, an active and curious mind and believed strongly in education.  Mrs. Graham wanted Paul and Shannon to achieve their educational goals. 

[8]                This, then, is a general background of the family that has come before the Court sadly divided over the will of their mother and grandmother.

ANALYSIS

[9]                Dolores Graham made a will in February of 2003, more than a year after finding out that she had cancer.  She named her daughters as co-executors under that will.  As set out in the agreed statement of facts, the will made the following provisions for the distribution of the estate:  To Janet Graham, a $25,000 bequest and a 25-percent interest in the residue of the estate; to Sandi Chalmers, a 25-percent interest in the residue of the estate; to Shannon, a 25-percent interest; and to Paul, a 25-percent interest.

[10]            At the time of the testatrix’s death in June of 2004, her estate was valued at about $645,000.  The most significant asset by far was the house on Nelson Avenue in West Vancouver, worth $725,000 and against which two mortgages totalling $100,000 were registered, leaving equity of $625,000.  The house was sold by the estate in May of 2006 for $1.16 million netting just over $1 million, most of which remains in trust. 

[11]            I turn now to the position of the parties.  Janet Graham says that one-quarter of her mother’s estate does not amount to fair and adequate provision when her sister’s family is, in effect, to receive three-quarters of the estate.  Sandi Chalmers says her mother was following the same course her own father did, equal shares to the children and grandchildren so that all of the people closest to her are provided for equally and, in particular, so that the two grandchildren have money for their education. 

[12]            I turn now to the law.  Section 2 of the Wills Variation Act governs.  It provides as follows:

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.

[13]            The issue in this case, of course, is whether Dolores Graham adequately and properly provided for her daughter, Janet, when she left her $25,000 and one-quarter of the residue of the estate which is worth about $1 million in total.  I have no doubt that Mrs. Graham intended to adequately and properly provide for Janet, but that is not enough.  The test is an objective one and requires me to look beyond what the testatrix thought and inquire whether the gift is in accordance with society’s reasonable expectations of what a judicious parent would do in the circumstances applying contemporary community standards.  That test requires me to determine whether Dolores Graham had a legal or moral obligation to Janet that she failed to meet. 

[14]            The parties all agree with respect to the legal obligation that Mrs. Graham did not owe her daughter a legal duty because Janet Graham is independent and an adult. 

[15]            Turning to moral obligations, Mrs. Graham did have a moral obligation to her two children, but not to her two grandchildren.  The real question is whether the moral duty has been met.  As the Supreme Court of Canada noted in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 there is no clear line that can be drawn and moral obligations are “more susceptible of being viewed differently by different people.”  Here, Mrs. Graham provided equally for both daughters and the case turns on whether one-quarter of the estate is just and equitable in the circumstances where there are no other competing legal or moral claims on the estate, half of which was left to two grandchildren. 

[16]            I am going to, from hereon, use first names and in doing so I do not mean any disrespect to the parties.  There are a number of parties with the same last names so first names will be clearer. 

[17]            The next issue to address is:  what are the circumstances of the two beneficiaries who do have the moral claim? (i.e., the daughters of the testatrix).  Janet has worked with Revenue Canada for 28 years and currently earns about $50,000 a year as a collections officer.  As I have noted before, she has never married, she has no children, and it appears that she entered into her first marriage-like relationship about two years after her mother died.  At the time of her mother’s death, Janet had savings of $34,000 and, credit card debt of $19,000.  She owned a car with an outstanding loan of $26,000. 

[18]            Sandi has worked for the past 17 years as a legal assistant with a law firm in Vancouver earning about $35,000 a year.  In 1990, Mrs. Graham gave $20,000 to help Sandi and her husband buy their first home for $155,000.  Sandi acknowledged on cross-examination that they were strapped for cash at the time and would not have purchased the house without her mother’s help.  Other than a car and savings of about $27,000 in 2004, that house is Sandi and Kevin’s major asset.  In 2004, it was worth $500,000 and today is valued at $715,000 with equity of about $570,000.  Sandi and Kevin have been married for 23 years and he earns $60,000 per year currently, $46,000 at the time of the testatrix’s death. 

[19]            It was to balance out her earlier gift to Sandi that Mrs. Graham left $25,000 to Janet in her will before directing that the residue be divided into four parts and distributed.  While in a strict sense, each daughter received roughly the same lump sum, the timing of the gifts was such that Sandi was able to invest in a home and obtain a good return on the investment, while Janet has not had that advantage.  In her previous will made in 1994, Mrs. Graham divided her estate equally between her two daughters.

[20]            Janet Graham testified that after the 2003 will in issue was made, Mrs. Graham discussed putting the house into Janet’s and Sandi’s names so that probate taxes could be avoided and also so that the house would not be a source of friction between them.  Janet said her mother wanted them to be equal and share in the house and do something for the grandchildren.  Sandi and Kevin agreed in their evidence that Mrs. Graham had discussed transferring the house during her lifetime to avoid taxes, but Sandi said her mother had raised the idea of transferring the house into both names without specifying precisely that she wanted each of the daughters to have half.  Sandi did agree that her mother had raised this again about six months before she died.

[21]             Robert Hume, a friend and co-worker of Janet, testified that Mrs. Graham called him in March or April of 2004, two months before she died, to ask him some tax questions relating to capital gains and probate.  She asked him if there would be a capital gain if she transferred the house to Janet and Sandi and if she could borrow against the house if it was in their names.  Robert Hume understood that Mrs. Graham wanted to avoid taxes and any disputes between the girls over the house.

[22]            The day before Mrs. Graham died, she was admitted to hospital to palliative care.  In a discussion at the hospital, a friend of Mrs. Graham suggested to Sandi and Janet that the house should be transferred to avoid taxes.  It was an emotional time, everyone was upset, and it appears that Janet and Sandi agreed to use their powers of attorney to put the house into Kevin’s name.

[23]            Kevin and Sandi said that on at least two occasions Mrs. Graham also mentioned wanting to do what her father had done; that is one-quarter to each of her children and to her grandchildren.  I note, however, that on examination for discovery, Sandi said only that her mother had said she wanted to leave something for the children and did not specify one-quarter of the estate. 

[24]            I turn now to whether there are circumstances in this case that negate or minimize the testatrix’s moral obligation to Janet.  The question, really, is whether Mrs. Graham had valid and rational reasons negating or minimizing her moral obligation to her daughter.  To constitute valid and rational reasons negating or minimizing that moral obligation, the reasons Mrs. Graham had must be based on true facts and the reasons must be logically connected to the reduction in what would otherwise be due to Janet, in a sense, to meet Mrs. Graham’s moral obligation to her daughter.

[25]            Here, Mrs. Graham had two reasons.  First, she wanted to provide for her grandchildren’s education, and, second, she felt she had already given Janet benefits during her lifetime.  I want to look at each of these reasons now. 

[26]            As for providing for her grandchildren’s education, this is, as I have said, the main reason Mrs. Graham changed her will from the 1994 version, which gave half to Janet and half to Sandi, to the distribution she made in her 2003 will of one-quarter to each of Janet, Sandi, Shannon, and Paul.

[27]            That change, there is no dispute on the evidence, was motivated by Mrs. Graham’s realization that a plan she had discussed with her sister, Shirley, to provide for Paul and Shannon’s education was not going to work out.  Shirley, or Aunt Shirley to Janet and Sandi, and their mother had planned that Shirley and her husband, Uncle Murray, would set up a trust for Shannon and Paul.  After Shirley died, Mrs. Graham returned from the funeral with the sense that Uncle Murray would not see the plan through.  She told Janet and Sandi this and that she would change her will to provide for the grandchildren’s education. 

[28]            There was evidence that Mrs. Graham’s only objective was to ensure that Paul and Shannon had enough to cover their educational expenses.  She knew Shannon would receive $10,000 from money Mrs. Graham had held in trust for her from her - that is Mrs. Graham’s - father’s estate and that Shannon and Paul would receive money under a RIF which turned out to be about $8,000 each on her death. 

[29]            At the time of Mrs. Graham’s death, the estate was worth $645,000 making the share to each of the grandchildren approximately $155,000.  Shannon is about 21 years old.  She lives with her boyfriend and she is a student at Vancouver Community College taking prerequisites for a dental hygiene course.  She is planning to train as a dental hygienist and hopes to work and then become a dentist one day.  She may have to go away for part of her training.  Paul is 16, lives at home, and is going into Grade 11.  He plans to go to BCIT to qualify as a plumber.  He then wants to take a two-week course in Texas in fire fighting and obtain his heavy truck licence as well as first aid.

[30]            I find that Mrs. Graham’s desire to provide for her grandchildren’s education is a valid one, but that the extent of the reduction in Janet’s share of the estate is not rationally connected to that objective.  Mrs. Graham appears to have believed the grandchildren would need one-quarter of her estate to cover their educational expenses.  Whether that was because she was not aware of how rapidly the house was increasing in value or did not appreciate the cost of college courses or planned to transfer the house to her daughters so that it would not be part of the estate, we do not know, we cannot know, nor is it necessary for this Court to determine.

[31]            In my view, it was not necessary to reduce Janet’s share of the estate so significantly in order to achieve the goal of providing for the grandchildren’s education.  So this reason for reducing the moral obligation is not rational in that sense. 

[32]            The second reason for making a smaller provision for Janet was the testatrix’s belief that Janet had received the benefit, in effect, of subsidized living by living at home with Mrs. Graham throughout her life.  Mr. Holmes who prepared the will said he raised the potential for a Wills Variation action with Mrs. Graham because she was giving her daughters an equal share with the grandchildren.  He said Mrs. Graham’s only reason as stated to him was that Janet had already received some benefit because she lived with Mrs. Graham.  There were no extraordinary gifts, no payment for travel, and so on, based on the evidence before me.   While there is no doubt that Janet received some financial benefits from the arrangement, she also contributed to her mother’s well-being both by paying rent of $400 to $600 per month and by sharing in household chores, although I accept that Mrs. Graham bought most of the groceries and did all of the cooking.

[33]            I want to pause to address here the dispute over whether or not Janet paid rent while she lived with her mother, which was a major issue in this case.  A fair amount of time was spent addressing it.  The defendants argued that there was no lease, and there was no hard evidence that Janet had paid rent to her mother.  But in my view, it is not be expected that a mother and daughter would enter into a lease in this type of arrangement where, in effect, room and board was being paid.

[34]            The second thing the defendants point to is that rental income was not reported on any of Mrs. Graham’s income tax returns.  Again, however, I find that that is not surprising.  As Sandi herself acknowledged, when she had home-stay students stay with her who paid room and board, she understood that under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp), she was not required to report it. 

[35]            Third, the defendants say that the testatrix never mentioned that Janet was paying rent and Janet never told her sister, Sandi that she was.  However, from the evidence, it was clear that Mrs. Graham was a very private person about her finances and I do not find it surprising that this topic did not come up. 

[36]            The plaintiff called two witnesses, Jackie Hiscox and Robert Hume, who testified that they were told by Janet in the 1990s that she was paying rent to her mother.  That occurred long before any dispute in this litigation.  For those reasons, I accept that Janet Graham was paying some rent to her mother, but I recognize, as the defendants pointed out, that there was still a benefit to Janet from living at home because the amount of rent paid did not completely offset the expenses that she would have had to pay if she were someone at arm’s length living in the home.

[37]            In my view, though, the shared living arrangement is not a benefit which in itself is a valid and rational reason negating the moral obligation of the testatrix to her daughter, Janet, on the facts of this case.  Sandi, too, received benefits from her mother by way of help with childcare, assistance driving the children to activities while Sandi and her husband worked, and payment by Mrs. Graham of the children’s summer camps and lessons.  As Sandi said of Mrs. Graham, “She practically raised my kids.”

[38]            I therefore find that there are no valid and rational reasons negating or minimizing the testatrix’s moral obligation to Janet in the circumstances of this case.  I also find that the testatrix did not make adequate provision for Janet and that the court should exercise its discretion under the Wills Variation Act to order that the will be varied to make adequate, just, and equitable provision for her.

[39]            Before turning to the question of how it should be varied, I want to address the defendants’ submissions that the Court applying s. 6(b) of the Wills Variation Act should:

(b)        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.

A number of things, including not moving out of the house after Mrs. Graham’s death as requested by Sandi, and letting Mrs. Graham’s friends live there free of charge and so on, were referred to.  These were set out in detail in the defendants’ written submissions, and I will not detail them here, but they are referred to in paragraph 60(e), (f), and (h). 

[40]            I have considered the type of conduct complained of, which includes Janet commencing an action claiming that her mother did not have capacity when she made the will and opposing the sale of the house.  In general, the tenor was that Janet had made things very difficult for the management of the estate and for her sister, Sandi, who was trying to administer it.  However, the plaintiff acknowledged her error and I note that some of the actions, in particular in relation to the legal proceedings, were taken on advice of previous counsel.  After Janet retained new counsel she discontinued that action and paid costs. 

[41]            In my view, this is not the type of conduct that would warrant refusal to make an order to vary because none of the conduct complained of affected the testatrix herself and indeed all of it was conduct which occurred after Mrs. Graham’s death.  I rely on Sammon v. Stabler, 2000 BCSC 1048, para. 45.  I would not, in any event, find the conduct to be so egregious as to warrant a refusal to vary the will even if the test were not restricted to conduct towards the testatrix.

[42]            Returning to how the will should be varied, in making my decision in this regard, the objective is to follow the testatrix’s wishes in so far as that is possible.  The estate is large enough that Mrs. Graham’s wish to provide for her grandchildren’s education and her wish to provide for her daughters can both be satisfied.  I direct that the will be varied to provide for a lump sum of $100,000 to each of Shannon and Paul.  In effect, this will give Shannon about $118,000 for her education, but at least $108,000 when the RIF is taken into account, and Paul $108,000, as well.

[43]            The specific bequest to Janet of $25,000 remains in place.  I direct that the remainder of the estate of approximately $800,000 be divided equally between Janet and Sandi.  In the result, Sandi’s share, too, is increased by $150,000.  These figures are approximate.  I realize that they may be slightly off, given the precise figures in the estate.  When the will is varied in this way, each daughter receives approximately $400,000 from the residue of the estate.

[44]            In terms of costs, the plaintiff, Janet Graham, is entitled to her costs from the defendants in accordance with Rule 66; that is $6,600 plus disbursements.

[45]            Counsel for Sandi Chalmers argued that she should be entitled to special costs from the estate as an executor required by the Rules of Court to be made a party to the Wills Variation action proceedings.  I direct that if Sandi Chalmers has incurred any costs in that role exclusively prior to trial which she would not have incurred in any event as a party or beneficiary, she is entitled to those actual costs, and I rely here on Vielbig v. Waterland Estate (1995), 121 D.L.R. (4th) 485 (B.C.C.A.).  If there is a dispute on the issue of what are appropriate costs to be paid to Sandi as executrix out of the estate, that can be addressed and resolved when the executor’s accounts are passed.

[46]            By way of after-word, I note that Sandi Chalmers and the other beneficiaries, the grandchildren, are not here, but Janet Graham is, and I would like to just say to the parties directly that these are hard cases, and they are hard on families and on relationships.  I expect that there are hard feelings on both sides and that things have been said that will be difficult to forget or forgive.  You are, though, to be commended and your counsel, as well, for focusing on the legal issues and for your candid evidence recognizing the strengths and contributions of each other and Mrs. Graham’s affection for both of her daughters and for her grandchildren.  Both Sandi and Janet came here trying to do the right thing.  It is the hope of the Court, now that this litigation is behind you, that you will find a way with time to regain your sense of family and to be the support to each other that your mother no doubt hoped you would be after her death.

[47]            Is there anything further, counsel?

[48]            MR. MURPHY:  My Lady, in terms of the costs from the defendant, I assume that you’re only awarding one set of costs --

[49]            THE COURT:  Yes, one set of costs.

[50]            MR. MURPHY:  -- amongst all of the defendants?

[51]            THE COURT:  Yes.

[52]            MR. MURPHY:  Thank you, My Lady.

[53]            MR. LEE:  And I suppose, just to be absolutely clear, My Lady, with respect to the costs for the executor’s role, it’s for anything that is explicitly -- or would not have been incurred as her role as a beneficiary?

[54]            THE COURT:  That is correct.

[55]            MR. LEE:  So in other words, if there was some duplication, then she doesn’t get the costs for that?

[56]            THE COURT:  That is right.

The Honourable Madam Justice L. A. Fenlon