eLaw

eLaw - Property & Succession Update | September 2017 - No. 88

The Law Society of Manitoba
Professional Education and Competence

eLaw Property & Succession Update

September 2017

In This Issue

Verbatim Reading of Will Not a Prerequisite
to Establishing Knowledge and Approval: MBCA

Municipality Can Impose Levy As a Condition of Development Agreement: MBCA
Unproven Allegation of Fraud/Ignoring Proportionality Costly: MBCA
Court Intervention Not Justified Despite Suspicious Circumstances: MBQB
Lapsed Gift Passes On Intestacy Where Will Contains No Residuary Clause: MBQB
Shooting First and Asking Questions Later Fundamentally Unfair: MBQB

Agreement Void Due to Mental Incompetence
and Undue Influence Concerns: MBQB

Determining When “Twilight Becomes Darkness:” MBQB
Other Contentions Family Estates Cases: MBQB
Legislative Update
Changes to Rule 74
Property Registry Notice and Directives
Mortgage Toolkit: CBA
Rent Increase Guideline 2018
Recommended Reading
2017 Isaac Pitblado Lectures
Fall CPD: LSM
MBA Program
Fall Programs: STEP

Verbatim Reading of Will Not a Prerequisite to Establishing Knowledge and Approval: MBCA

In Garwood et al v Garwood et al, 2017 MBCA 67, a son was unsuccessful in appealing a lower court decision upholding the validity of his mother’s will. The will contained a residuary clause benefitting the son and his wife, provided they were residing together at the date of death. The wife left the marriage several months after probate was granted and declared bankruptcy after filing an application seeking payment of her portion of the estate. The son then sought to revoke the grant of probate. The court found that the trial judge did not err in finding the will valid, despite concerns relating to its preparation and execution. In particular, the court noted at para. 22 that:

... proof of a verbatim reading of a Will is not a prerequisite to establishing knowledge and approval. In many cases, it will be sufficient to show that the lawyer summarized and explained the contents of the Will to the testator prior to execution. Ultimately, it is a question of fact as to whether the particular words in question were brought to the attention of the testator and adopted by him as his words.

Municipality Can Impose Levy As a Condition of Development Agreement: MBCA

Allside was unsuccessful in appealing the dismissal of its application for a declaration of invalidity concerning a levy imposed by the town as a condition of their development agreement facilitating subdivision of Allside’s property in Allside Exteriors & Renovations Ltd v The Town of Morden, 2017 MBCA 66. The court rejected Allside’s argument that the levy constituted a local improvement tax subject to the provisions of ss. 311 and 315(3) of The Municipal Act. In the court’s view, Morden’s ability to recover the cost of the road was not limited by the fact that its construction may have fallen within the broad power granted to municipalities to undertake local improvements. In this case, s.250(2)(b) of the Act provided Morden with the authority to construct the road and s. 250(2)(d) allowed them to enter into an agreement “regarding anything the municipality has power to do within the municipality,” including a subdivision development agreement under The Planning Act.

Unproven Allegation of Fraud/Ignoring Proportionality Costly: MBCA

The purchaser of a house with significant foundation defects (discovered following basement flooding after she took possession) was unsuccessful in appealing the dismissal of her action for fraudulent misrepresentation against the vendors and their real estate agent in Tregobov v Paradis et al, 2017 MBCA 60. The court found that it was open to the trial judge to conclude that the plaintiff had not been induced to enter into the contract to purchase the home, and noted that statements of opinion or a salesman’s puffery are typically insufficient for the purposes of establishing the element of reliance. Although the court expressed concern about the award of elevated (Class IV) costs, it found no evidence that it amounted to an injustice, particularly in view of the fact that the purchaser pursued the allegation of fraud when her case was weak and conducted the claim as if it were a regular civil action as opposed to a QB r 20A action, contrary to the principle of proportionality. According to the court at para. 25, “(p)roportionality is the watchword for expedited actions,” and ignoring the sage advice of the case conference judge to narrow the claim resulted in an unnecessarily long eight-day trial.

Court Intervention Not Justified Despite Suspicious Circumstances: MBQB

“It is well established that evidence of mental incompetence on the part of a donor is a prerequisite to a third party applying for an accounting,” according to the court in Robertson v. Harding, 2017 MBQB 142, which declined to exercise its broad power to order the attorney under an enduring power of attorney to account for funds missing from the bank account of the donor, the applicant’s father. Despite finding suspicious circumstances “which seem to fly in the face of any reasonable interpretation of the fiduciary duties owed by an attorney to a donor” and “troubling” allegations of unaccounted for funds totalling $145,000, the court found it could not justify the intervention sought.

Lapsed Gift Passes On Intestacy Where Will Contains No Residuary Clause: MBQB

In Re Estate of Daniel George Nadoryk; Nadoryk et al. v. Wiebe, 2017 MBQB 120, the court considers whether and how ss. 25 and 25.1 of The Wills Act apply to a bequest to a beneficiary who predeceased the testator. In the two-sentence holograph will the testator left all his “assets and possessions” to his parents and brother. The father died before the testator, and the other beneficiaries argued that his share lapsed and, by virtue of s. 25, should be divided between them. The testator’s sister argued that s.25.1 applied and she should get a share of the father’s bequest. The court found s.25.1 did not apply since, although the assets included real property, the terms of the will did not create an estate tail. Less clear was the issue of whether s.25 applied, since the will contained no residuary devise or bequest. Citing authorities from other jurisdictions with similar provisions, the court found that the specific lapsed bequest to the father failed and, because the will contained no residuary clause, s. 25 did not apply and the beneficial interest passed on an intestacy.

Shooting First and Asking Questions Later Fundamentally Unfair: MBQB

A condo board who completely disregarded the interests of a unit holder by ignoring the provisions in the Act for written consent as to substantial changes acted oppressively and in bad faith, according to the court in Shen v. Winnipeg Condominium Corp. No. 16, 2017 MBQB 119. The board was ordered to permanently remove a metal safety ladder it installed adjacent to the applicant’s unit, which the court found materially altered the manner in which she used and enjoyed the common elements of the complex and met the definition of “substantial change” requiring the written consent of 80 per cent the of unit owners under s.176(1) of The Condominium Act. The court took judicial notice of the fact that the esthetic value of a view from inside a residential property is a significant part of its market value and that the external appearance or “curb appeal” of a residential property greatly affects its market value. It also agreed with the applicant’s submission that the ladder interfered with her sense of privacy and safety. In addition, the court pointed out the irony of the fact that, had the board complied with the notice provisions in the Act and obtained consent, the reasonableness standard of review may have called for deference to its decision to install the ladders. The court concluded by noting that

By ignoring the requirements set out in the Act as to written consent to substantial changes and riding roughshod over the rights of potential dissenting voices among the unit owners to be heard, the Board turned any notion of fairness into a farce. (para.57)

The board was also ordered to pay compensation of $10,000.00 to the applicant “for the interference with her view and her loss of enjoyment of the property that took place without giving the benefit of due process as set out under the Act” and to avoid any charge back to her arising from compliance with the court order.

Agreement Void Due to Mental Incompetence and Undue Influence Concerns: MBQB

In Gauthier et al. v. Gauthier, 2017 MBQB 116, the court declared invalid a Bare Trust Agreement under which two elderly parents (one of whom the court found was mentally incompetent) effectively lost control over their land in favour of the son who orchestrated the deal. The court was satisfied that the agreement was beyond the comprehension of most people lacking legal advice or training and was certainly not understood by the father, who the son knew suffered from dementia (a fact he intentionally withheld from the lawyer he hired to provide independent legal advice to the parents). In addition to finding that the father did not have the capacity to make the agreement, the court also found undue influence on the part of the son.

Determining When “Twilight Becomes Darkness:” MBQB

Despite acknowledging that suspicious circumstances surrounded the execution of a new will by an 81-year-old man who had some cognitive impairment, the court in Klaprat v. Chezick, 2017 MBQB 105, found that the cumulative evidence of three independent and uninterested witnesses was enough to overcome the argument by those challenging the will that the testator lacked capacity. The will was admitted to probate. Among other things, the court examines the test for testamentary capacity and the onus of proof in suspicious circumstances.

Other Contentions Family Estates Cases: MBQB

Glesby v. Glesby et al., 2017 MBQB 133 - the court ordered the estate of a father who contravened the oppression provisions of The Corporations Act and decimated the equity interest of his shareholder son in a family corporation, to repay the money to the corporation (now controlled by the son following the court’s order to remove the remaining family members as directors).

In Mucz et al. v. Popp et al., 2017 MBQB 101, the court found no basis on which to deny the application of two sisters for sale of farm property bequeathed to them and their two brothers by their mother on the basis that each would receive an undivided one-quarter interest in the land. The brothers, whose offer to buy the sisters’ shares at fair market value was rejected, argued that partition or sale was unnecessary, vexatious and oppressive given the farm’s sentimental value and the fact that one of the brothers made a living farming the land. The court found that, since the testatrix did not recognize either of those factors in making her bequest, the appropriate order was to direct a sale of the land. The order included a direction allowing the brother presently farming the land to match any third party arm’s length offer.

Legislative Update

Bill 5, The City of Winnipeg Charter Amendment, Planning Amendment and Real Property Amendment Act (Conforming to Construction Standards Through Agreements), received royal assent and came into force June 1, 2017. It amends The City of Winnipeg Charter, The Planning Act and The Real Property Act to permit building code and zoning requirements concerning setbacks and access to streets to be met by agreements between property owners and permit issuers which, once registered, run with the land. For more detail see the explanatory note and Ned Brown’s article Beware of the Possibility of New Land Use Restrictions.

Changes to Rule 74

Practitioners are reminded of recent amendments to Rule 74, which came into force July 1, 2017 or earlier. As detailed in this notice from the Court of Queen’s Bench, these include the recent repeal of Rule 74.13 (concerning deposit of wills with the Registrar), as well as amendments to Rules 74.12 (concerning procedures for passing of accounts) and 74.14 (detailing changes to Form 74AA). The 74AA amendments will be discussed at the upcoming Hot Topics in Wills and Estates programs described below. Or order the DVD of the June 2017 program Changes to Probate QBR.

Property Registry Notices and Directives

The Property Registry issued two new notices over the summer:

Approval of updated electronic Caveat form (version e10.2) – announcing approval of an updated version of the electronic Caveat form, available for download on the website.

Standardized processing date for land titles documents – indicating that effective August 1, 2017, land titles documents submitted for registration will be examined in order of date of registration, regardless of where the documents were submitted.

Mortgage Toolkit: CBA

Members of the CBA’s Real Property section have developed a toolkit to raise awareness of an increase in the scope of onerous and sometimes inappropriate lender instructions on mortgages and to provide practice tools to help lawyers respond to common instruction requests in residential real estate transactions. The toolkit can be found on the CBA website.

Rent Increase Guideline 2018

The Residential Tenancies Branch has confirmed that the 2018 rent guideline has been set at an increase of 1.3 per cent, effective January 1, 2018.

Recommended Reading

Modernizing the Law of Wills in the UK – Should Canada Follow Suit? – this Slaw post discusses “Making a Will”, a consultation paper on reforming the law in this area, published by the UK Law Commission on July 13, 2017.

Financing a Commercial Tenant’s Leasehold Improvements– this Pitblado blog post highlights the importance of carefully reviewing commercial lease terms pertaining to rights and obligations relating to leasehold improvements, particularly those dealing with the tenant's right to remove or pledge same.

2017 Isaac Pitblado Lectures

The 2017 Isaac Pitblado Lectures, #140Down – Now What? The Future of Lawyering is Here, will be held November 3, 2017 (the one day format is new this year) at the Grand Ballroom, Fort Garry Place. The lectures will explore the future of the legal profession, examining such topics as the future of adjudication, client centred service, and the role of technology in practice. The early bird discount ends September 29, 2017, so register soon to reserve your spot.

Registrants will also receive a copy of Keynote Speaker - Jordan Furlong's 2017 book, Law is a Buyer's Market: Building a Client First Law Firm. Follow us on twitter @pitbladolecture to for the most up-to-date information.

Fall CPD: LSM

Hot Topics in Wills and Estates - Presenters Eleanor Wiebe, Q.C. and Caroline Kiva will address a wide range of topics at this upcoming half-day program, including the recent Rule 74 amendments, estate planning issues with US vacation property, powers of attorney, and recent case law. The first scheduled date for this program in Winnipeg on September 26 has sold out. This program is available in Brandon on October 4 (1:00 to 4:00 pm), plus a second Winnipeg date has now been added on December 7 (9:00 to noon). Registrants will receive a copy of the 2d edition of Drafting Wills in Canada: A Lawyer’s Practical Guide.

Land Titles eRegistration & Electronic Funds Transfer - the new Land Titles eRegistration system will be open for use on December 17, 2017 and mandatory for all lawyers to use as of April 3, 2018. This education session will provide training on how to register documents electronically; the new Law Society Rules on electronic funds transfers; and what firms need to do to be ready to use the new system. One session will be held September 18, 2017 in Brandon, but all three half-day sessions scheduled for Winnipeg (Sept 27, Oct 2 and 5, 2017) have sold out, with a wait list now being maintained. Additionally, the Law Society does plan to offer a DVD replay of this program later this year.

MBA Programs

E-Filing Initiatives – this joint lunch session on LDRC's E-Filing system mandated by the Court of Queen's Bench for use by lawyers in CCAA and judicial review applications will be held September 28, 2017 at the Law Society classroom. The possibility of expanding the E-Filing system to include probate and other matters will also be discussed.

Acquisition and Disposition of Interests in Crown lands in Manitoba Provincial Parks - representatives from Manitoba Crown Lands and Property Agency will discuss the rights and obligations of persons acquiring and disposing of recreational properties owned by the Crown within the boundaries of provincial parks at this Real Property section meeting on September 28, 2017. The meeting will be held at the offices of Pitblado LLP, 360 Main St., starting at 5:00 pm.

Fall Programs: STEP

The Winnipeg branch of the Society of Trust and Estate Practitioners (STEP) is offering a full slate of educational sessions this year, including programs on Millennials and Advice (September 19, 2017); Life Insurance Policy Transfer Update (October 17, 2017); Topics in Real Estate (November 21, 2017); and “If CRA Comes Knocking” (December 12, 2017). To register, or for information on how to become a member of STEP, check their website.

ISSN 1916-3916

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