eLaw - Property & Succession Update | July 2018 - No. 91

The Law Society of Manitoba
Professional Education and Competence 		The Law Society of Manitoba
eLaw Property & Succession Update July 2018
In This Issue
Mental Incompetence Not a Prerequisite to an Accounting: MBCA
Mortgagor’s Equitable Right to Redeem Protected From Mischief
Sisters Prevail in Family Farm Dispute: MBCA
Right to Veto Homestead Disposition Dies With Non-Owning Spouse: MBQB
Section 25.2 Applies to Both Specific and Residuary Gifts: MBQB
Property Registry Updates
Manitoba Law Reform Commission Reports
CBA Mortgage Instructions Toolkit
Recommended Reading
Summer CPD Replays: LSM

Mental Incompetence Not a Prerequisite to an Accounting: MBCA

Unlike in most other jurisdictions, in Manitoba mental incompetence is not a prerequisite to an accounting to a third party under The Powers of Attorney Act, according to the Court of Appeal in Robertson v Harding, 2018 MBCA 67. The court overturned the lower court judge’s decision declining to order an accounting sought by the donor’s son (despite finding suspicious circumstances and “troubling” allegations of unaccounted for funds totalling $145,000). According to the Court of Appeal, the court has both statutory (s. 24(1)(e) of The Powers of Attorney Act) and inherent equitable jurisdiction to order an accounting where the donor is competent, but the decision to do so is discretionary and should not be made “in the absence of compelling evidence giving rise to serious concerns….Obvious examples would include situations involving fraud, coercion or undue influence; less obvious examples might arise where the donor is physically or mentally dependent or otherwise vulnerable, fears loss of affection, or where there is evidence of abuse or exploitation.” (para. 42 and 45) Circumstances to consider are outlined in para. 46 and include: the terms of the power of attorney, the donor’s intentions, health and vulnerability, the extent of the attorney’s involvement in the donor’s financial affairs, concerns raised, and potential limitations of actions. In this case, there was compelling evidence giving rise to serious concerns and the attorney was ordered to provide an accounting within 90 days.

Mortgagor’s Equitable Right to Redeem Protected From Mischief

A company in the business of seeking out homeowners in arrears on their mortgages and offering to help them by taking title to the land and leasing it back with an option to repurchase was the subject of court action in two recent decisions. In Brown et al v Boon et al, 2018 MBCA 14, the court upheld a lower court finding that Boon, the corporation’s directing mind, had waived the corporation’s right of forfeiture of the option agreement by his words and conduct. In Aguiar v. 5026113 et. al., 2018 MBQB 70, the court dismissed the corporation’s delay motion and granted the homeowner’s summary judgment action to remove caveats placed on the property by the corporation. Among other things, the court found that the transaction was unconscionable, given both the inequality of the parties and the improvidence of the bargain. In the Brown case, the Court of Appeal offers guidance on such ventures and their potential for mischief at paras. 21-23, concluding that:

Where there is concern of an attempt to defeat or evade a mortgagor’s equitable right to redeem, the Court must determine the factual question of “What was the true character of the transaction?” ….Because such an inquiry relates to a right in equity, it must go beyond the form of the transaction that the documents purport and take into consideration not just the surrounding circumstances, but also any relevant extrinsic evidence as to the parties’ real intentions.  Where there is clear and conclusive evidence that the objective and purpose of the transaction is a mortgage, contractual stipulations interfering with the mortgagor’s equitable right of redemption are void based on repugnancy.

Sisters Prevail in Family Farm Dispute: MBCA

In Mucz et al v Popp et al, 2018 MBCA 6, the Court of Appeal upheld the trial judge’s decision to order a court-supervised sale of the portions of family farmland left to two sisters in their mother’s will, against the wishes of their brothers who wanted to continue farming the land. Although the brothers’ offer to purchase the land (for an amount in excess of the appraised value) was eminently reasonable, the court found “nothing improper, let alone egregious, about the sisters wanting to attempt to obtain an even higher price” given their prima facie right as tenants in common to sell the land and the genuine interest of a land developer in the property.

Right to Veto Homestead Disposition Dies With Non-Owning Spouse: MBQB

A non-owning spouse’s veto right under s. 6 of The Homesteads Act (to contest the improper disposition of homestead property) is a personal right which dies with the spouse, according to the court in Lander v. McDonald, 2018 MBQB 34, leaving personal representatives no legal basis on which to challenge the validity of a sale agreement or lease of the property. In this case, the court rejected the argument of two daughters that agreements made by their father to sell or lease his farmland to the husband of their since estranged sister were invalid dispositions because their mother had not signed a valid homestead consent while alive. The court also rejected their claim for payment of rent on a quantum meruit basis and for arrears of rent. Finally, the court cautioned at para. 77 that the preferred way for an aggrieved spouse to assert their rights in this type of case is to bring an application under s. 6 of The Homesteads Act, rather than issue a 30-day notice relative to the caveat, which resulted in lengthy and costly litigation.

Section 25.2 Applies to Both Specific and Residuary Gifts: MBQB

In McGregor et al. v. Krall, 2018 MBQB 7, four grandchildren were successful in asserting entitlement to their deceased father’s one-third share of the residue of their grandmother’s estate by virtue of s. 25.2 of The Wills Act. Relying on Estate of Gordon Austin Wittick, 2009 MBQB 140, their aunt, a residuary beneficiary, argued that s.25.2 does not apply to residuary gifts. The court disagreed, concluding that other case law (from Manitoba and elsewhere in Canada), the 2003 Manitoba Law Reform Commission report on Wills and Succession Legislation, and Feeney’s Canadian Law of Wills, all agree that s. 25.2 applies to all testamentary gifts.  

Property Registry Updates

Use of eRegistration is now mandatory for all law firms in Manitoba. Read the original Directive, dated April 11, 2017, on the use of electronic registration at www.tprmb.ca/tpr/rg_directives/directiveindex.html.

The Registration Details Application Form is not required in eRegistration. More information is available at www.tprmb.ca/tpr/rg_directives/directiveindex.html.

Minimum browser requirements have been updated for all of The Property Registry’s online services. A list of the stand system requirements is available at www.tprmb.ca/tpr/whats_new.html.

A Directive outlining recent statutory officer changes at Land Titles can be found at www.tprmb.ca/tpr/rg_directives/directiveindex.html.

The Registrar-General has released a Directive outlining encumbrances which survive mortgage sale and foreclosure proceedings. It also repeals a Directive dated March 30, 2006 titled “Easement Agreement Tax and Mortgage Sale or Foreclosure.” Both Directives are available at www.tprmb.ca/tpr/rg_directives/directiveindex.html.

The Registrar-General has released a Directive about unpaid condominium fees and mortgage sale proceedings. Read the Directive at
http://www.tprmb.ca/tpr/rg_directives/unpaid_condominium_fees_and_mortgage_
sale_proceedings20180316.pdf.

Dennis Barnhart has been named General Manager of The Property Registry. More information is available at www.tprmb.ca/tpr/whats_new.html.

Manitoba Law Reform Commission Reports

The Commission released its final report on Updating the Administration of Small Estates in Manitoba on March 20, 2018. Among other things, it recommends increasing the monetary jurisdiction of the summary administration of small estates under s.47 of The Court of Queen’s Bench Surrogate Practice Act and allowing it to be adjusted upward by regulation; changes to the disclosure of assets requirement under the summary administration process; and the imposition of a residency requirement for administrators.

Several consultation reports have also been published in recent months: The Beneficiary Designation Act (Retirement, Savings and Other Plans) considers possible amendments to improve the legislation and procedure related to beneficiary designations in Manitoba; The Builders’ Liens Act: A Modernized Approach considers modernizing and clarifying The Builders’ Liens Act in Manitoba and examines the possibility of introducing provisions for prompt payment down the construction contract chain; and The Expropriation Act of Manitoba  considers the possibility of legislative reform in the area of compensation payable for injurious affection and disturbance and the payment of consulting costs.

CBA Mortgage Instructions Toolkit

The CBA has amended its Mortgage Instructions Toolkit to include new chapters on conflicts of interest, access to property, independent legal advice and the responsibility to ensure or certify. The toolkit is designed to help lawyers respond to common lender instruction requests in residential real estate transactions. More updates are expected in the fall.

Recommended Reading

Modernization of Manitoba’s Builders’ Liens Legislation – Will Prompt Payment Protections be Coming to Manitoba? – this MLT Aikins article reviews Ontario’s recent lien legislation amendments (particularly respecting prompt payment protections) and speculates on whether Manitoba will follow a similar approach.

Electronic Wills – Update – this Slaw article discusses law reform developments on electronic wills in the US and in Canada.

Option to Renew v. Option to Extend – this TDS LLP article outlines the different rights and obligations arising from options to extend or to renew a commercial lease. 

How Do You Challenge The Validity Of A Will In Manitoba? – this Tapper Cuddy LLP article outlines the four typical legal grounds on which to challenge a will in Manitoba.

Planning for succession of your cottage or vacation home – this O’Sullivan client advisory points out why it is crucial for cottage owners to plan for succession and provides an overview of the personal, succession and tax issues to consider.

What Happens to Cryptocurrencies When You Die? – the author of this Slaw post questions whether blockchain itself might provide a solution to the issue of establishing ownership of cryptocurrencies when owners die without sharing their login credentials.

SCC rules landowner waited too long to challenge bylaw but has right to seek damages – this Canadian Lawyer article discusses Lorraine (Ville) v. 2646‑8926 Québec inc., 2018 SCC 35, a recent SCC decision in which a property owner was tardy in contesting a zoning by-law he argued was a disguised expropriation.

Insights on dealing with death in the digital age – these videos feature a wills and estates lawyer discussing how to deal with stored genetic material and digital assets.

Summer CPD Replays: LSM

For those looking to catch up on CPD hours during the quieter summer months, there are still several programs of interest to property and estates lawyers in the CPD Summer Replay series, including the sold-out Hot Topics in Wills and Estates. Find a program and date that works for you, with a wide variety of programming topics offered until August 15, 2018.

ISSN 1916-3916

 

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