COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

York v. York,

 

2011 BCCA 316

Date: 20110712

Docket: CA038336

Between:

Devey Susanna Theresa York, and Devey Susanna Theresa York as Administrator of the Estate of Stanley James York, Deceased

Appellants

(Plaintiffs)

And

Ken York and Morley Stonehouse

Respondents

(Defendants)

Corrected Judgment: The text of the judgment was corrected on page 1 where a change was made on July 14, 2011.

Before:

The Honourable Madam Justice Huddart

The Honourable Mr. Justice Groberman

The Honourable Madam Justice Garson

On appeal from:  Supreme Court of British Columbia, May 19, 2010,
(York v. York, 2010 BCSC 707, Kamloops Docket No. 40240)

Counsel for the Appellant:

R.D. Holmes, Q.C. and A. Goeujon

Counsel for the Respondent, K. York:

K.E. Ducey

Counsel for the Respondent, M. Stonehouse

Q.T. Duong

Place and Date of Hearing:

Vancouver, British Columbia

March 4, 2011

Place and Date of Judgment:

Vancouver, British Columbia

July 12, 2011

 

Written Reasons by:

The Honourable Madam Justice Garson

Concurred in by:

The Honourable Madam Justice Huddart
The Honourable Mr. Justice Groberman


 

Reasons for Judgment of the Honourable Madam Justice Garson:

Introduction

[1]             Devey Susanna Theresa York, the plaintiff at trial and one of the appellants on appeal, is the daughter of the deceased, Stanley James York.  She has lived her entire life in a modest home in Merritt, British Columbia, together with her mother and father until their deaths, respectively in 2003 and 2005.

[2]             In 1989, Stanley York transferred a one-half interest in the Merritt home to Devey York.  As a consequence of this transfer, title to the home was registered in the names of Stanley and Devey York as tenants in common.

[3]             Ken York is the natural son of Stanley York, but he was adopted at birth by Stanley York’s parents.  Despite the adoption, the York family treated Ken as the son of Stanley.

[4]             On August 21, 2003, Stanley York and Devey York signed a transfer of ownership of the Merritt home as tenants in common to Ken York and Devey York as joint tenants.  It is this transaction that grounds the appeal.

[5]             The appellants alleged at trial that the respondents, Ken York and Morley Stonehouse a notary public,  who prepared and registered the transfer of title to Ken and Devey York, procured the transfer of the one-half interest in the property to Ken York by means of duress and unconscionable conduct in failing to ensure that Stanley and Devey York understood the nature and consequences of the transaction.  It is also alleged that neither Stanley York nor Devey York had the mental capacity to transfer the property.  The trial judge dismissed the action following a three-day trial (2010 BCSC 707).

[6]             The appellants assert a number of grounds of appeal including that the trial judge erred in: dismissing the estate’s claim; finding Devey York had the requisite mental capacity to agree to the transfer; finding the respondents did not breach their fiduciary duties; and, in the case of the notary, failing to find that he was negligent.  The appellants further contend that the notary acted in a conflict of interest in representing all three family members whose interests were not all the same.

[7]             I turn now to the background to this appeal.

Background

[8]             Devey York was, at the time of trial, 41 years of age. 

[9]             On June 19, 1989, the property was transferred into the names of Devey and Stanley York as tenants in common.  At trial the parties agreed that the 1989 transfer erroneously registered Devey and Stanley York as tenants in common.  The solicitor who prepared and registered the transfer acknowledged in her evidence that it was intended to be a joint tenancy between Devey and Stanley York.

[10]         During the course of this litigation Devey York became aware that Ken York, as a consequence of the adoption, was not legally her brother.  This family relationship is relevant because Ken York may not inherit on an intestacy from Stanley York, because of his adoption (Estate Administration Act, R.S.B.C. 1996, c. 122 [EAA] ss. 81, 84, 87(1)).

[11]         It is relevant too that both Stanley York and Devey York were alcoholics.  Ken York is a recovered alcoholic.  He testified that he had not consumed alcohol for about 20 years prior to the date of the trial.  Ken York lives in the lower mainland and visited Stanley York in Merritt several times a year.

[12]         Shortly before August 21, 2003, Ken York arrived in Merritt, having arranged an appointment with Morley Stonehouse, a local notary public.  On August 21, 2003, he took Stanley and Devey to the offices of Morley Stonehouse where they executed a transfer of the York family home from Stanley and Devey York as tenants in common to Devey and Ken York as joint tenants.  Devey York asserts that on the morning of August 21st, Ken York arrived with beer and procured their cooperation by first encouraging Stanley and Devey to drink the beer.  Ken testified that he did not bring beer to the house and that neither Stanley York nor Devey York was drunk at the time they signed the transfer.  Ken York’s evidence is corroborated by Morley Stonehouse who denies that either of them appeared intoxicated when he met with them at his office.  It is also common ground that Ken York paid Morley Stonehouse for his professional services. 

[13]         Morley Stonehouse had originally prepared the transfer of land to effect a transfer to Stanley, Devey and Ken, all in joint tenancy, but he testified that Stanley York said that he wished to entirely divest himself of the property and insisted that the transfer result in Devey and Ken York holding the property in joint tenancy.

[14]         Devey York maintains that she did not understand the nature of the transaction or its consequences to her.  She received no independent legal advice.

[15]         Although she admits to receiving, in the years following the transfer, property tax assessments noting Ken York as an owner of the property, Devey York says it was not until sometime after her father’s death, when she received a letter from a lawyer acting on behalf of Ken proposing a sale of the property, that she learned the nature of the transaction.

[16]         The property is said to be worth about $75,000 to $100,000.  As a consequence of her alcoholism, Devey York is unable to work.  She is disabled and has no significant assets apart from her interest in her home.

Reasons for Judgment

[17]         The trial judge made findings of fact and drew conclusions as set out in the following passages from his reasons for judgment at paras. 39 and 40.  He rejected Devey York’s evidence that she was either drunk or coerced to sign the transfer:

[39]      After reviewing and considering the evidence with particular reference to the matters referred to in these reasons, I am not satisfied that Ms. York has established on a balance of probabilities the claims she makes against the defendants, Ken York and Morley Stonehouse. Based on the whole of the evidence I find that:

1.         there is no evidence, only speculation and unsubstantiated assertions, from which I might conclude that the defendants conspired to defraud Devey York;

2.         the 2003 transfer of the property did not result in any loss to Devey York as she held a half interest in the property prior to and after the registration of the 2003 transfer;

3.         the evidence does not establish on a balance of probabilities that Ken York plied Devey York with alcohol prior to her signing the 2003 transfer;

4.         Devey York has not established on a balance of probabilities that she suffers a diminished mental capacity such that she was unable to understand and agree to sign the 2003 transfer;

5.         Devey York was aware or should have been aware that in signing the 2003 transfer her father transferred his half interest in the property to Ken York;

6.         the 2003 transfer to Ken York of the half interest in the property was confirmed by Ken York assuming financial obligations with respect to the property and by the assessment and tax notices received by Devey York after 2003 which refer to Ken York as an owner of the property;

7.         Devey York has failed to establish on a balance of probabilities that the defendants, and specifically Ken York, exercised duress or undue influence in the form of oppression, coercion or abuse of power or authority from which I might conclude that she was forced to sign the 2003 transfer; and

8.         the claim by Devey York against the defendants with respect to her potential lost inheritance lacks a legal basis and is too remote to found such a claim.

[40]      In conclusion, I dismiss the claims advanced by Devey York against both defendants, Ken York and Morley Stonehouse. ...

Grounds of Appeal

[18]         In their factum the appellants state these issues:

1.       Did the learned trial judge err in dismissing the claims advanced on behalf of the estate of Stanley York, deceased, on grounds of a lack of standing by the Appellant Devey York?

2.       Did the trial judge err in relying upon the Adult Guardianship Act presumption of competence as to Devey York in the circumstances of this case?

3.       Did the learned trial judge err in failing to find that, given the manner and circumstances in which the August 21, 2003, transfer of the Property was executed and that both Respondents/Defendants were present at the execution of the August 21, 2003, transfer and had notice thereof, that transfer ought to have been set aside?

4.       Did the learned trial judge err in failing to find that [the] Respondents/Defendants owed and breached a duty of care to Stanley York and Devey York?

5.       Did the learned trial judge err in failing to find that the Respondents/Defendants owed and breached a fiduciary duty to Stanley York and Devey York?

6.       Did the learned trial judge err in failing to find that the Respondents/Defendants engaged in undue influence, unconscionable behaviour or fraud?

7.       Did the learned trial judge err in failing to assess damages and ought the issue of damages be remitted to the trial court for assessment?

[19]         I find it convenient to consider these grounds of appeal in the following manner.  I will first consider the question of whether the trial judge erred in dismissing the claims of the estate on the grounds that no one had been appointed as administrator of the estate as well as the question of the competency of Devey and Stanley York.  Then I will consider, together, all the grounds of appeal concerning the claims against Ken York.  Last, I will consider, together, all the grounds of appeal concerning the claims against Morley Stonehouse.

Analysis

Statement of Claim

[20]         The statement of claim is a statement of evidence rather than material facts (in breach of Rule 3 - 7 (1) previously Rule 19(1)) but nevertheless, clearly discloses the following claims as I have paraphrased them below:

1)       It is asserted that Stanley York was incompetent and thus the transfer of land should be set aside.  The result of setting aside the transfer of land would be that Devey York would inherit either on her father’s intestacy or, if the title were joint, by right of survivorship.

2)       Devey York asserts on her own behalf and on behalf of Stanley that neither of them understood or consented to what they were signing on August 21, 2003.  The pleadings would support a claim based on non est factum or duress based on either Stanley York’s dementia, alcoholism or lack of sophistication and in respect to Devey York, on the basis of her intoxication and lack of sophistication.

3)       The pleadings also disclose an alternative claim that even if Stanley York was competent, and both he and Devey York were capable of understanding the nature and effect of the transfer of land which they signed, Morley Stonehouse, a notary public, was negligent in his professional duties in failing to explain to Devey York the consequences of her agreeing to sign the transfer.  It is asserted that the notary public was in a conflict of interest in acting for all three parties to the transaction.

4)       The plaintiffs sought a declaration setting aside the transfer.  Alternatively, in their statement of claim they sought damages from Mr. Stonehouse and Ken York.

The Estate’s Claim and Capacity to Transfer

[21]         This action was commenced by Devey York on her own behalf and as administrator of the estate of Stanley James York.

[22]         If Stanley York was incapable of understanding the purpose and effect of the transfer of land at the time he signed the transfer then what he did sign would be ineffective.  It is this issue that was, or should have been, the threshold issue at trial.  The statement of claim challenges his competency both on the grounds of his diminished mental faculties owing to age and ill health, or alternatively, on the grounds of his intoxication.  Paragraphs 26–29 and 37, of the statement of claim squarely raise the issue of Stanley York’s competence and at para. 44, the plaintiffs seek relief that as a consequence, inter alia, of Stanley York’s inability to understand the nature of the transaction that the August 21, 2003, transfer of land should be set aside. 

[23]         At the opening of the trial on March 15, 2010, Mr. Goeujon, indicated that he represented the two plaintiffs, that is, the estate of Stanley James York and Devey Susanna Theresa York.

[24]         At the end of the first day of trial, counsel for Mr. Stonehouse applied for an order dismissing the claims of the estate on the grounds that no administrator had been appointed to represent the estate.  Mr. Goeujon explained that at the time of death there was no value to the estate but if the impugned transfer of land was set aside the estate would then have some value.  He argued that the estate was “still in existence”.  The judge agreed with counsel for Mr. Stonehouse and summarily dismissed the claims of the estate.

[25]         The judge’s attention was not drawn to then Rule 5(19) and the provisions of s. 3 of the EAA, in which the court is empowered to appoint an Administrator for the estate to protect the assets of the estate. 

[26]         Section 3 provides as follows:

From the death of a person dying intestate until administration is granted in respect of the person's estate and effects, the personal estate and effects of the deceased person are vested in the court, subject only to the power of a court of competent jurisdiction to grant administration in respect of them.

[27]         Rule 5(19) [now Rule 20-3(12)] provides as follows:

(19)  Where the estate of a deceased person has an interest in a matter in question in a proceeding, but there is no personal representative, the court may proceed in the absence of a person representing the estate of the deceased person or may appoint a person to represent the estate for the purposes of the proceeding ...

[28]         After the trial judge dismissed the estate’s action, he focused his attention solely on the question of Devey York’s competence and understanding of the transaction.  As I have said, in my view, the threshold question at this trial was whether Stanley York had the necessary competence to transfer his one-half interest in the property to Ken York. 

[29]         In his factum, Mr. Stonehouse argues that this ground of appeal should be rejected because the appellants specifically abandoned this issue in their notice of appeal (although it was the first ground of appeal raised in the factum).  More substantively Mr. Stonehouse argues that Devey York chose not to apply to be appointed administrator.  Mr. Stonehouse says that despite the dismissal of the estate’s claim, the judge heard evidence about Stanley York’s capacity.

[30]         Ken York argues, in a similar vein, that the “standing issue” was raised in his statement of defence on October 29, 2007, and the appointment of an Administrator could easily have been accomplished then or at a subsequent time.  Ken York also says that the trial judge implicitly accepted that Stanley York was capable of understanding and agreeing to the transfer of the one-half interest in the property to his son as a gift. 

[31]         The trial judge dismissed the estate’s claims on the following basis:

[7]        Before discussing the circumstances of the 2003 transfer, I will address the claim brought by “Devey Susanna Theresa York, Administrator of the Estate of Stanley James York, Deceased”. Stanley York died intestate and Devey York testified that she had not sought to be appointed administrator of his estate as her father left no assets requiring administration. The defence asserted that as neither Devey York nor any other individual had been appointed the administrator of Stanley York’s estate, she could not pursue claims on behalf of the estate.

[8]        I concurred with the defendants’ position that as Devey York had not been appointed administrator, she lacked standing to advance the claims found in her pleadings on behalf of the estate. I dismissed the claims she advanced on behalf of the estate. ...

[32]         However, the trial judge proceeded to consider as being relevant to this issue, the question of Stanley York’s competence:

[8]        ... The plaintiff’s case included evidence as to Stanley York’s ability to understand and agree to the transfer of his interest in the property to his son, Ken York. While my decision that Devey York lacked standing to advance claims by the estate of Stanley York against the defendants renders such evidence moot, I would note that the evidence, including that provided by Donald McLeod, the deceased’s general physician, suggests that while Stanley York suffered from alcoholism, that disease did not necessarily prove that he was unable to understand and agree to the transfer of his interest in the property to his son, Ken York.

[9]        The notary, Mr. Stonehouse, testified that Stanley York on August 21, 2003 discussed the transfer and understood that he was transferring his remaining half interest in the property to his only other natural child, Ken York.

[Emphasis added.]

[33]         The judge dismissed Devey York’s claims that Ken York plied her with alcohol in order to dupe her into signing the transfer of land.  I agree that implicitly he found that Stanley York was not plied with alcohol because the allegation that Stanley York was plied with alcohol was based on the same events that founded the claim made in respect to Devey York.  The judge dismissed the claim that Devey York was not competent.  He found she had the requisite capacity.  He dismissed Devey York’s claims that either defendant exercised duress or undue influence or forced her to sign.  I agree with the respondents that these claims are mirrored in respect to Stanley York and based on the same events, thus it is fair to say that the trial judge implicitly found that Stanley York was not improperly coerced or forced to sign.  To the contrary, the judge accepted Mr. Stonehouse’s evidence that Stanley York was insistent that the transfer of land remove his own name completely from title rather than leaving title in the name of the three of them as Mr. Stonehouse had recommended.  This discussion with Mr. Stonehouse and ultimate rejection of his advice is quite compelling evidence that Stanley York did understand the nature of the transaction.  Finally, as noted above, the judge found at para. 8 of his reasons for judgment that Stanley York’s alcoholism did not necessarily prove his inability to understand the nature and effect of what he was signing.

[34]         To succeed in the lawsuit Devey York did not necessarily have to establish any of the allegations she personally advanced (as outlined above).  She needed only to prove that Stanley York lacked the necessary capacity.  The trial judge did not make any explicit finding that Stanley York did have the necessary capacity because, as I have already explained, he dismissed the estate’s entire action.  The judge did not describe the test for capacity.

[35]         The appellants argue on appeal that the judge erred in relying on the presumption of capacity contained in the Adult Guardianship Act, R.S.B.C. 1996, c. 6, s. 3 in respect to Devey York.  That section provides:

  3(1)  Until the contrary is demonstrated, every adult is presumed to be capable of making decisions about personal care, health care, legal matters or about the adult’s financial affairs, business or assets.

[36]         It was unnecessary for the trial judge to resort to this statutory presumption (which I do not find it necessary to consider the applicability of, to this case) because the rebuttable presumption of capacity found in common law is applicable:  see for example Vout v. Hay, [1995] 2 S.C.R. 876 at para. 26 in the context of a testamentary gift and also Gilmour Estate v. Parchomchuk, 2011 BCCA 207 at para 15; and Maddess v. Racz, 2009 BCCA 539 at para. 29.  The common law presumption of capacity has been applied in cases of inter vivos transfers:  Dacyshyn v. Dacyshyn Estate, [1996] B.C.J. No. 626 at paras. 31-32.

[37]         The testamentary capacity test is set out in the leading English case: Banks v. Goodfellow (1870), L.R. 5 Q.B. 549 at 565 and was adopted by Wilson J.A. in Re: Rogers (1963), 39 D.L.R. (2d) 141, [1963] B.C.J. No. 133 (C.A.) at para. 32:

It is essential to the exercise of such a power that a testator shall understand the nature of the act and its effects; shall understand the extent of the property of which he is disposing; shall be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind shall poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties -- that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

[38]         In Re: Rogers, Wilson J.A. held that the test applied to inter vivos transfers should be the same as for testamentary dispositions:

[29]      I think that, since here the donee of the power was concerned with the interests of others rather than with his own interest, the testamentary test is the right one to apply.

[30]      Having concluded that the testamentary test is the right one to apply, I cannot see that, so far as degree of understanding or capacity is concerned, there is any real difference. I do not think that a man requires any higher or lower degree of capacity to consider his own interest than he needs to consider the interests of other persons. Nor do I think that the degree of capacity required differs in respect to any disposition by gift or otherwise.

[39]         To summarize, the question to be decided in each case is whether the donor was capable of understanding the nature and effect of the transaction: Royal Trust Co. v. Diamont, [1953] 3 D.L.R. 102, [1953] B.C.J. No. 126 at para. 37 (S.C.), cited approvingly by this court in Ewart v. Abrahams, 22 B.C.L.R. (2d) 138, [1988] B.C.J. No. 68 (C.A.).

[40]         If Stanley York lacked the capacity to change the state of title on August 21, 2003, then there seems no question that on Stanley York’s death, Devey York would have inherited either all or one-half of what is now Ken York’s one-half interest.

[41]         Dr. MacLeod wrote a brief report that was tendered in evidence.  Dr. MacLeod had been Stanley York’s family physician for many years.  He described Stanley York’s severe alcoholism, and noted that Stanley York was a binge drinker.  In his report he wrote:

As of the date August 21/04 my medical opinion is that Stanley York (B.D. Feb. 17/26) was not able to manage his own affairs due to medical problems and alcohol abuse up to the date of his death July 16/05.  [I] was his doctor since 1982.

[42]         However, under cross-examination he clarified his opinion in a quite specific manner.  He testified as follows:

Q         ... Well let me break it down a little bit.  He was -- there’s no evidence he wasn’t capable of understanding the nature of the assets that he owned; is that fair?

A          No, I think he could understand that, yes.

Q         All right.  And he was able to understand who his close family members were?

A          Yes.

Q         And you’d agree that in 2003 he would have been capable of deciding he might want to gift some of his assets to family members?

A          Yeah.  Yes.

Q         And you’d agree that in August 2003 he would have been able -- capable of understanding the effect of giving -- for example, giving his house to one of his children?

A          Perhaps.  I mean, I don’t know much about this.

...

Q         Okay.  And I think you’ve already agreed with me that he would have been capable of making a decision about giving a gift and understanding that?

A          Perhaps.

Q         You certainly can’t say otherwise, or you can’t give a medical opinion otherwise?

A          No.

This evidence would not support a finding of incompetency.

[43]         There was conflicting lay evidence from other witnesses about Mr. York’s mental capacity.

[44]         One can reasonably infer from the trial judge’s reasons, supported by the evidence, that he was persuaded Stanley York was competent, as that term is used in Banks and Re: Rogers, to transfer title to his son.

[45]         Similarly with respect to Devey York, there was ample evidence on which the trial judge could have concluded that she was competent for the purposes of signing a transfer of land.

[46]         There was also ample evidence to support the trial judge’s findings of fact that neither Stanley York nor Devey York was coerced in any unconscionable way either by alcohol or as a consequence of their lack of sophistication to sign the transfer. I would not accede to this ground of appeal.

[47]         The trial judge’s summary dismissal of the estate’s claim based on lack of standing was an error of law.  The trial judge did not give any consideration to the operation of s. 3 of the EAA or Rule 5(19).  

[48]         The evidence discloses that, at the time of trial, the personal estate did not have any value for the court to protect.  Put another way, if the 2003 transfer was effective, then there would have been no reason to consider s. 3 of the EAA.

[49]         The trial judge was apparently alive to the fact that the outcome of the proceeding might be to attach some value to the estate.  He decided to leave that issue to be dealt with at the end.  Since the judge concluded that the 2003 transfer was effective, the need to address this issue never arose in the context of the claims against Ken York and the notary.

[50]         For whatever reason, Devey York did not apply to be appointed as administrator of her father’s estate even though she had notice that the defendants intended to dispute the estate’s standing.  Her counsel argues on appeal that a potentially meritorious claim should not be dismissed on the basis of a procedural defect alone: Rule 2(1); International Forest Products v. Moody, 36 B.C.L.R. (3d) 257 at 261, [1997] B.C.J. No. 1557 at para. 16.

[51]         The respondents argue that the estate has not suffered any loss as the trial judge implicitly accepted that Stanley York was capable of understanding and agreeing to the transfer of his one-half interest in the property to his son as he saw fit.  

[52]         In conclusion, part of the deceased’s/estate’s interest in the proceeding related to the threshold question of whether Stanley York had the necessary competence or capacity to transfer his one-half interest in the property to Ken York.  Although he dismissed the estate’s claims, the trial judge went on to consider evidence of Stanley’s capacity to make the transfer (at paras. 8-9).  As stated above, there was evidence upon which the trial judge could reasonably have concluded that Stanley York had the capacity to make the 2003 transfer to Ken York.

[53]         Thus, I would not accede to the first ground of appeal, insofar as it relates to what I would broadly describe as the capacity of Stanley York or Devey York’s to effect the transfer.  The trial judge erred in dismissing the estate’s action but, for the reasons below, I see no merit in allowing the estate’s appeal.  This is so because I conclude that allowing the estate’s appeal would not alter the result of the appeal of the judge’s decision regarding the claims against Ken York or the notary.

Claims against Ken York

[54]         On appeal the appellants contend that Ken York owed a fiduciary duty to the appellants. 

[55]         It was not pleaded in the statement of claim that Ken York owed any fiduciary duty to Devey York or Stanley York.

[56]         The trial judge was not asked to determine if there was a fiduciary relationship owed by Ken York to the appellants.  Consequently, he did not pursue the necessary factual and legal enquiry to determine if such a relationship, and the correlative duty of care, existed.  Having no notice of a claim for breach of fiduciary duty, Ken York did not respond to such a claim.  Consequently, I would not accede to this ground of appeal: Quan v. Cusson, 2009 SCC 62 at para. 37; Canadian Bar Assn. v. British Columbia, 2008 BCCA 92 at paras. 59-60.

[57]         The appellants also contend on appeal that Ken York owed a duty of care to the appellants and that he breached that duty of care.  At paras. 91 and 92 of their factum the appellants say:

91.       The requisite elements for establishing a duty of care are present here:

(a)        There is a relationship of proximity;

(b)        There is obvious reliance by Stanley York and Devey York;

(c)        Given the frailties of Stanley York and Devey York it cannot be argued that their reliance on the Respondents/Defendants was unreasonable;

(d)        There is foreseeability of harm from a failure of the Respondents/Defendants to take care in advising Stanley York and Devey York. 

92.       Breach of the duty of care is clear here.  It is patent that Stanley York and Devey York were not each advised in a competent and careful manner.  Statements that what they were signing was in their best interests are misleading and wrong.  Neither Ken York nor Mr. Stonehouse were able to set out at trial what was explained as to the nature and effect of signing this transfer.  Their recollections were hazy, at best.  Neither testified that full information and advice was provided as to, among other things, alternate means of effecting a transaction, the significance of the adoption of Ken York, the fact that the 1989 intended joint tenancy had not been accomplished, the ability to use a will or trust or other means to provide for Devey York and for a continuing interest for Stanley York, or the risks that partition might be sought by Ken York. 

[58]         The whole thrust of the claims against Ken York was the assertion that he plied them with alcohol, that he knew they were incompetent, and that he conspired with Mr. Stonehouse.

[59]         The trial judge made explicit findings of fact dismissing all those claims.  I do not see how the inclusion of the estate as a party in order to press the issue of Stanley York’s competence could have affected the findings of fact against Ken York.  I find no error in the trial judge’s findings of fact.  There was evidence to support his conclusions.

[60]         I would dismiss the appeal against Ken York.

Claims against Mr. Stonehouse

[61]         The appellants argue that if Mr. Stonehouse had appreciated he was acting in a conflict of interest, and had he properly advised both Stanley and Devey York of their interests, “it is beyond question they would not have signed” (see also the excerpt from appellant’s factum at para. 92 quoted above).  The appellants note in particular, that given Devey York’s inability to work and lack of assets, she would have been particularly concerned about Ken York’s ability to turn her out of her home by applying for partition and sale, had that possibility been explained to her.

[62]         Mr. Stonehouse denies that he was in a conflict of interest, and denies that he owed a fiduciary duty to Devey York.  He says that this was a family arrangement and that they all appeared to be in accord.  He says there was no obligation on him to take steps to give either particular or independent advice to Devey York.

[63]         In their statement of claim the plaintiffs asserted that: at the meeting with the Yorks, Mr. Stonehouse told Stanley and Devey that it was in their best interests to sign; that he did not tell them what the document was for, or what legal consequences flowed from signing; that he did not read the document to them; that he knew it was not in Devey’s interests to sign because she would no longer inherit Stanley’s one-half interest; that as a licensed notary, Mr. Stonehouse owed a fiduciary duty to Devey and Stanley York; and that he should have recommended they seek independent legal advice.  It is further pleaded that Mr. Stonehouse acted in breach of his professional ethics as a notary public.

[64]         The trial judge did not address the pleaded claims for breach of fiduciary duty (statement of claim 41) or the claim in negligence for damages (statement of claim 43).  Once he determined that Devey York had not proven the claims that she and Stanley were drunk and did not know what they were signing, or that she was coerced, he dismissed the claims against both defendants in their entirety.

[65]         The appellants argue that Mr. Stonehouse should have been aware that the transfer of either a one-third interest, (as Mr. Stonehouse recommended), benefitted Ken York to the detriment of Devey and Stanley York or that a transfer of one-half, (as insisted upon by Stanley York), benefitted Ken York to the detriment of Stanley and possibly Devey York.

[66]         Having dismissed the claim against the estate, the trial judge did not consider if Stanley York or Devey York required independent legal advice.  In particular, the trial judge did not consider if Stanley and Devey York would have signed the transfer had the right to apply for partition and sale, under the Partition of Property Act, R.S.B.C. 1996, c. 347, been explained to them.  As seemingly acknowledged by Mr. Stonehouse, in his testimony, regardless of whether title, before the transfer to Ken York, was a joint tenancy or tenancy in common, Devey York’s signature was necessary to transfer title to the whole property to herself and Ken York as joint tenants.  Without that transfer, Ken York would not have received the right to take Devey York’s half interest upon her death nor she his, by operation of ss. 11(2) and 18 of the Property Law Act, R.S.B.C. 1996, c. 377 and the common law of joint tenancies.

[67]         On appeal, Mr. Stonehouse argues, in response, that if the transfer is not set aside, then that will have been due to a finding that Stanley York intended to transfer his interest in the property to Ken York.  Mr. Stonehouse says that no damages can arise in such a circumstance.  In my respectful view, this argument fails to differentiate between the question of incapacity and the question of damages that might flow from allegations of breach of fiduciary duty or negligence arising from a failure to fully explain the ramifications of the transaction to Devey York’s personal interests.  In other words, the trial judge failed to consider Devey York’s independent claims against the notary for damages flowing from the alleged breaches of his professional duties.

[68]         Mr. Stonehouse acknowledged at his examination for discovery, read in at trial, that he did not explain to Devey York that the transfer of land she signed “divest[ed] herself of being an heir to the half that her father owned.”  He testified that he reported on the transaction only to Ken York; he felt he was acting for all three of the Yorks; and, he did not consider that he was in a conflict of interest in acting for all three. 

[69]         At trial he testified that he thought the only one of the three who needed legal advice was Stanley York.  He considered that Ken York did not need legal advice because he was acquiring property and Devey did not need legal advice because she “was getting back the same thing she already had.  She wasn’t losing anything.”  He testified that he had also been told that there were no other children; that when he had contemplated preparing the transfer of land to the three Yorks as joint tenants he did not appreciate the significance of the fact that Devey and Stanley would be reducing their interest to one third; and, that he did not advise any of them of the possibility that one joint tenant could apply for partition and sale.  He acknowledged that Devey York lost at least one-quarter of the property she might inherit by signing the document; that he did not recommend any of the three Yorks get independent legal advice; and, that he did not consider there was any conflict among the three of them.

[70]         Mr. Goeujon attempted to cross-examine Mr. Stonehouse on the Notary Public Rules respecting his acting for more than one party, but objection was taken because the rules that were tendered were not the rules in force in 2003. 

[71]          There was some evidence upon which the judge was required to consider  at common law the claim that Mr. Stonehouse breached either his professional standard of care or that he owed and breached a fiduciary duty to Devey York and the question of damages flowing from either of those breaches.  As we are not in a position to weigh that evidence, I would order a new trial of Devey York’s claims against Mr. Stonehouse.  I should add that the appellants’ submissions at trial on the question of damages were unhelpful and that it is therefore not surprising that the judge did not deal specifically with the damage claim. However, given my conclusion that despite the inadequacy of the submissions there was a pleaded claim and evidence to support it, that had to be resolved, it is not appropriate for me to comment further on whether such duties were proven, whether the standard of care was proven, whether those duties were breached or whether that breach resulted in damage to Devey York. 

[72]         Although it is my view that this aspect of the case must be remitted for a new trial, I do not see how the estate would have a claim in damages that would not be subsumed in the claim of Devey York, thus as I have already said, there seems no purpose to allowing the appeal of the estate.  However, this conclusion is not to preclude an inquiry in a new trial concerning what steps, if any, either or both Devey or Stanley York may have taken if they had received the advice they allege the notary ought to have given them.

Disposition

[73]         The appeal against the order dismissing the claims of the estate is dismissed.

[74]         The appeal against the order dismissing the claims against Ken York is dismissed.

[75]         The appeal against the order dismissing the independent claims against Morley Stonehouse for breach of his professional duties and breach of fiduciary duties owed to Devey York is allowed and a new trial ordered on the question of his liability to Devey York and damages.

“The Honourable Madam Justice Garson”

I agree:

“The Honourable Madam Justice Huddart”

I agree:

“The Honourable Mr. Justice Groberman”