COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Maddess v. Estate of Johanne Gidney,

 

2009 BCCA 539

Date: 20091120

Docket: CA036663

Between:

Lisa Maddess

Respondent

(Plaintiff)

And

Estate of Johanne Gidney

Appellant

(Second Defendant)

Before:

The Honourable Mr. Justice Donald

The Honourable Madam Justice Huddart

The Honourable Madam Justice Bennett

On appeal from: Supreme Court of British Columbia, November 17, 2008
(Maddess v. Racz, 2008 BCSC 1550, Vancouver Reg. S053343)

Oral Reasons for Judgment

Counsel for the Appellant:

G. van Ert
T.C. Boyar

Counsel for the Respondent:

K.B. Friesen
I. Friesen

Place and Date of Hearing:

Vancouver, British Columbia

November 20, 2009

Place and Date of Judgment:

Vancouver, British Columbia

November 20, 2009


[1]             BENNETT J.A.: Mrs. Rosalie Racz died on August 27, 2004 at the age of 94 years, leaving behind a substantial estate and a will. She had three children, Johanne Gidney, Ernie Racz and Ethel (or Etus) Racz. Lisa Maddess, the granddaughter of Rosalie Racz brought an application to the Supreme Court to have the will proved in solemn form. Lisa Maddess is the daughter of Rosalie Racz's son, Ernie. Ernie Racz passed away in 2000, predeceasing his mother. The application was opposed by Johanne Gidney

[2]             The trial took almost three weeks. The learned trial judge concluded, after a comprehensive review of the evidence and law, that the will was valid and subsisting and proven in solemn form.

[3]             The defendant, Johanne Gidney, passed away prior to the matter proceeding to trial and the action and appeal were taken in the name of her Estate. Rosalie Racz's other daughter, Etus Racz, also filed an appeal but has not taken any steps to advance it.

[4]             I sometimes refer to the parties by their first names. This is not out of disrespect, but for ease of writing as most have the same last name.

[5]             Rosalie Racz was Hungarian. She had a grade five education, and married Louis Racz when she was 19 years old. Johanne, was born in 1930. Louis Racz moved to Montreal in that year, and Rosalie Racz and Johanne joined him in 1936. Ernie Racz was born in 1938 and Etus Racz was born in 1940.

[6]             While in Montreal, Louis Racz started several successful businesses. Johanne (now Johanne Gidney) was given a duplex and a building lot in Mount Royal as gifts from her parents. Ernie Racz received four shares of one his father's companies as a gift.

[7]             In 1966, Louis Racz, Ernie Racz and Ernie's wife Rita moved to West Vancouver. Rosalie and Etus Racz moved to West Vancouver in 1967. Etus lived with her parents in West Vancouver for six years. She returned to Montreal permanently in 1973. While living in West Vancouver, her parents covered all of her living expenses.

[8]             Louis Racz incorporated another company in 1967. Two-thirds of the shares were owned by Louis, Rosalie, Ernie and Etus. Johanne did not own any shares in this company. In 1967 the family, through a company, bought the Port Royal apartment building at 1919 Bellevue Avenue, West Vancouver, which by 1968 was owned 50% by Louis and Rosalie personally, 30% by Ernie and 20% by Etus. Etus paid $25,000 for her share.

[9]             In 1968, Louis Racz' company bought another apartment building, Cedar Terrace, also in West Vancouver. Ernie Racz worked for this company in the apartment buildings’ operations for 32 years.

[10]         Louis Racz executed a will on June 18, 1985. The will was prepared by the family and company lawyer, Mr. Brister. The will provided that Louis Racz’s estate would go to Rosalie if she survived him, and would be divided equally between the three children if she predeceased him.

[11]         Around 1988, Louis Racz gave his daughter, Johanne Gidney, at least $350,000-$400,000 to buy out the shares in her family's company from other shareholders. This money was not repaid, and may have been a gift. In 1988 Louis Racz transferred a house valued at $125,000 into Ernie Racz's name.

[12]         Louis Racz passed away on October 22, 1991, and his estate passed to Rosalie Racz. Rosalie Racz was the executrix of Louis Racz's estate. In November 1991, Rosalie Racz swore an affidavit confirming that she was aware of the value of the estate assets, which included the company that owned Cedar Terrace, other property and a term deposit of $867,133.61. The Port Royal apartment was in joint tenancy and thus did not appear in this statement of assets.

[13]         In 1993, Mr. Brister sent Rosalie Racz to another lawyer, Mr. Mazzei, for the purpose of drafting her will. Mr. Brister was concerned that as he acted for the company and Ernie Racz, he might have a conflict of interest if he drafted Rosalie Racz's will. Mr. Brister and Mr. Mazzei only knew each other professionally. Mr. Brister said that an accountant would look after giving her tax advice. Mr. Brister provided Mr. Mazzei with a list of Rosalie Racz's assets as well as a number of documents in relation to the assets.

[14]         Mr. Mazzei met with Rosalie Racz on one or two occasions by herself. He had notes of their meeting which suggested that Louis Racz had given Johanne $400,000, that “Etus did not do anything” and was a teacher, that the son [Ernie] had always looked after the building with his late father and that 1919 (the Bellevue apartment) was to go to Ernie and the rest was to be divided equally between the three children. Rosalie Racz was clearly aware of the substantial amount of money given or loaned to Johanne Gidney.

[15]         Mr. Mazzei testified that Rosalie Racz spoke English to him with a heavy accent. He did not feel the need to obtain a translator for her, which he had done for other clients. He did not find her hesitant about her instructions to him.

[16]         Mr. Mazzei said that Mrs. Racz wanted her son to get more of the estate as he had worked with her and her husband, looking after the properties and was partly responsible for the estate. She had this plan already in place when she came into his office. The will was prepared and had two pages of content.

[17]         Mr. Mazzei is sure that he sat down with Rosalie Racz and went through each paragraph of the will with her and explained the effect of the clauses. In essence, the will left Rosalie Racz's half interest in the Port Royal apartment building to her son Ernie. The rest of the estate was to be divided by the three children equally, per stirpes. The taxes were to be paid from the residue of the estate.

[18]         Paragraph 4 of the will set out an explanation why Ernie Racz received more of the estate, which was essentially that Ernie worked in the business, Johanne had received $400,000 and Etus had an education and could look after herself.

[19]         As noted above, Ernie Racz died in 2000. After his death, Lisa Maddess took on more of the care of her grandmother's financial affairs. Ms. Korneluk, a home care provider, had been hired to care for Rosalie.

[20]         In April 2001, Johanne and Etus decided they would move Rosalie back to Montreal. In May 2001, Etus came to Vancouver and moved in with Rosalie.

[21]         In June 2001, Rosalie's doctor deposed that Rosalie suffered from moderately advanced dementia of the Alzheimer's type and was mentally infirm. She had had the disease for at least three years and was rapidly deteriorating. Lisa Maddess was appointed committee over her grandmother's affairs, despite opposition by Etus Racz. Etus returned to Montreal in October 2001 but Rosalie stayed in West Vancouver. In December 2002, Rosalie moved to a seniors' home. Rosalie passed away on August 27, 2004.

[22]         The validity of the will was challenged at trial on the basis that Rosalie Racz did not have knowledge of the will due to: a) to her difficulties with English, b) that there was unequal treatment of her children, c) her lack of sophistication in business and d) documents received by Mr. Mazzei. Also in issue were questions about testamentary capacity and undue influence. On appeal, the appellant only challenges the confirmation of the will based on lack of knowledge of the nature and value of the assets and the effect of her will. Testamentary capacity and undue influence were not pursued.

[23]         The defendants submitted to the trial judge that there were "suspicious circumstances" (in the legal meaning) which should rebut the presumption of validity of the will.

[24]         The trial judge considered whether there were "suspicious circumstances" that would rebut the presumption that Rosalie Racz knew and approved of the contents of the will and had testamentary capacity. The trial judge carefully considered all of the evidence and applicable law. She concluded that Rosalie Racz's poor English skills were not sufficient to give rise to suspicious circumstances. She concluded that Mr. Mazzei's notes reflect key information communicated to him including the instructions for the contents of the will.

[25]         She further considered the way the parents treated the children over the decades since they were born, pointing out that the children were frequently treated unequally from a financial perspective. The trial judge concluded that the unequal treatment was not irrational and did not give rise to suspicious circumstances.

[26]         The documents received by Mr. Mazzei provided legal descriptions of property, contacts and other like information. The trial judge concluded that there was nothing suspicious about the receipt of these documents by Mr. Mazzei.

[27]         The trial judge concluded, after reviewing the evidence and case law, that there was nothing that amounted to suspicious circumstances that would rebut the presumption that Rosalie Racz had sufficient knowledge of the residue of the estate and approved of the contents of the will.

[28]         The Appellant argues that the trial judge imposed too high a standard on her to rebut the presumption that the testatrix knew and approved of the contents of the will. The Appellant also submits that the trial judge failed to apply the legal requirement that the propounder of the will proved that the testatrix knew the extent and value of her assets and the effect of her proposed testamentary dispositions.

[29]         The propounder of a will has the burden of proving that the testator knew and approved the contents of his or her will. In doing so, the propounder is aided by a rebuttable presumption that once it is established that the will was read by the testator, or the contents otherwise brought to his or her attention, and that he or she appeared to understand it, the testator will be presumed to know and approve of the will.

[30]         This presumption can be rebutted by adducing or pointing to some evidence which, if accepted, would tend to negative the knowledge and approval. This is known as the suspicious circumstances doctrine. If the presumption is rebutted, the propoundeer of the will is required to prove the will on a balance of probabilities. See Vout v. Hay [1995] 2 S.C.R. 876 at para. 27:

Where suspicious circumstances are present, then the presumption is spent and the propounder of the will reassumes the legal burden of proving knowledge and approval. In addition, if the suspicious circumstances relate to mental capacity, the propounder of the will reassumes the legal burden of establishing testamentary capacity. Both of these issues must be proved in accordance with the civil standard. There is nothing mysterious about the role of suspicious circumstances in this respect. The presumption simply casts an evidentiary burden on those attacking the will. This burden can be satisfied by adducing or pointing to some evidence which, if accepted, would tend to negative knowledge and approval or testamentary capacity. In this event, the legal burden reverts to the propounder.

[31]         The Appellant relies heavily on this passage from Vout. So did the trial judge. The trial judge clearly and carefully set out the applicable law. The test is “adducing or pointing to some evidence, which if accepted, would tend to negative the knowledge and approval”. The important aspect of the test is not “some evidence”, it is “some evidence... that would tend to negative the knowledge and approval.” The trial judge found that none of the evidence met the requirement of negating “knowledge and approval”. For example, the trial judge found that the fact that Rosalie Racz did not speak very good English did not, in and of itself, tend to show that she did not have the required knowledge. The fact she was not sophisticated in business, again, does not tend to show that she did not know the effect of her clear instructions to Mr. Mazzei.

[32]         The Appellant submitted that the only way the trial judge could come to the conclusion that she did in the face of the evidence was to apply the wrong standard or impose too high a threshold before finding that the presumption was rebutted. The Appellant submits that the trial judge weighed the evidence, rather than just considering whether there was “some evidence”. However, in order to determine whether there was some evidence which would tend to negative the knowledge or approval requirement, the judge surely must, as this judge did, consider all of the evidence.

[33]         The Appellant submitted that Rosalie Racz would not have known the tax implications of her will, which would result in her two daughters each paying one-third of the capital gains tax on the interest in the Port Royal property. This would reduce the gift to the daughters, and, it is submitted, is therefore a suspicious circumstance sufficient to rebut the presumption. The difficulty with this argument is two-fold: first, while there is evidence that Mr. Mazzei did not provide tax advice, there was evidence that Rosalie’s accountant would provide tax advice. The evidence does not show whether she received tax advice or not. Secondly, even if she did not receive tax advice, this evidence does not give rise to suspicious circumstances that would tend to negate knowledge and approval. The evidence of Mr. Mazzei was firm regarding her instructions of unequal distribution and is supported by the notes he made in that respect.

[34]         In essence, the Appellant is seeking to have this court come to a different conclusion on the facts that did the trial judge. The trial judge applied the correct legal test and her conclusion than the presumption of validity applied is fully supported by the evidence.

[35]         I would dismiss the appeal.

[36]         DONALD J.A.: I agree.

[37]         HUDDART J.A.: I agree.

[38]         DONALD J.A.: The appeal is dismissed.

(submissions on costs)

[39]         DONALD J.A.: We are going to ask that counsel file written submissions on costs of the appeal. Mr. Friesen will go first and Mr. van Ert will have an opportunity to respond. Counsel will work out a timetable. Insofar as costs in the Supreme Court are concerned, because this would be in relation to a fresh order a Notice of Appeal would be required or a Notice of Application for leave to appeal. Your friend does not put you to the latter course. There would be an appeal as of right on the Supreme Court costs if you receive instructions to proceed with that. You will have until December 13, 2009, to file if you decide to proceed. Then the matter can proceed as an appeal as of right.

[40]         If counsel think that we should remain seized, the logistics of reconstituting this division are very difficult and could lead to delay. So if it is counsel’s wish that we remain seized then the appeal will have to proceed in writing. There will not be an oral hearing. If you want to preserve the right to have an oral hearing then we will not be seized.

(discussion with counsel)

[41]         DONALD J.A.: We are not seized. I think that is the prudent course to take. Thank you, counsel.

“The Honourable Mr. Justice Donald”

“The Honourable Madam Justice Bennett”