Previous Issues of The Posner Page

In This Issue of the Posner Page

DOES THE GREAT GRANDDAUGHTER GET OR NOT GET?

WHEN IS JOINT PROPERTY NOT JOINT PROPERTY

COMMISSION PAYABLE THOUGH NO SALE SAYS COURT

THOUGHTS FOR 2008

DOES THE GREAT GRANDDAUGHTER GET OR NOT GET? (revised October 16, 2008)

A recent case in Saskatchewan highlighted the question as to whether or not an heir of a testator is disqualified from an inheritance by virtue of the fact that he or she might not be the biological descendant of the deceased. In this case, the trial judge, Justice Duane Koch ruled that the applicant, one JAR, was entitled to share in the estate and in this case, receive the $5,000.00 bequest as set out in the will of one Stanley Peterson.

The facts disclosed that the mother of the applicant, a woman known as Nadine lived with and in fact was married to an Eric Schreiner at the time when JAR was born. Subsequently, the couple divorced. Even later, the will of Stanley Peterson, who was the grandfather of Schreiner, revealed that he had given each of his surviving great grandchildren the sum of $5,000.00 when each turned 18. When JAR reached that milestone, she asked for her money but was refused by the executors. The reason they gave was that she was born out of wedlock to Nadine and hence was not the biological child of Eric Schreiner. Ergo, she was not a surviving great grandchild of the deceased. The evidence adduced at the trial by Schreiner was that JAR was conceived at a time when he and the mother were separated. The trial judge did not find that evidence persuasive. What did not assist in the determination of the case was that JAR did not provide DNA evidence and neither did her mother give any evidence as to whether or not Eric Schreiner was the natural father.

The argument, as advanced by the applicant, was that she was in fact named as a great granddaughter in the obituary and in fact in the notice to the Public Trustee by the executors. In effect, she argued that even if she were not the biological great granddaughter of the deceased, she was entitled to share by virtue of the Saskatchewan legislation. The court took the step it felt was appropriate to try to determine the actual intention of the testator and the court concluded that when he made his will in 1998, it was made in the context of the law as it then stood. At that time, the law provided (since changed) that an illegitimate child was allowed to share in an estate as if that child was a legitimate child of the mother or if the child was the legitimate child of the father subject to certain conditions. These conditions were that the court had to be satisfied that during the lifetime of the father, that the father in public or in other ways indicated that he was the father of the child or that at the time of the birth of the child, the father was living with the mother as the husband and further after the birth, that father had acted like the father to the child. The court then applied this same reasoning to a grandchild.

Therefore, what the court concluded was that in this case, when the testator made his will, “Eric Shreiner [sic], by his own acts and conduct, placed himself squarely within both (i) and (ii) of S.33 (b) and, in absence of evidence to the contrary, knowledge of that must be imputed to Stanley Peterson. Accordingly, it must be presumed that when Stanley Peterson made his will, he intended to include persons within the framework of S. 33(b) who would not necessarily be his biological progeny.” And so this young woman who took on this case for only $5,000.00 was the winner after all.

WHEN IS JOINT PROPERTY NOT JOINT PROPERTY

Not so long ago, two decisions from the Supreme Court of Canada were given dealing with questions of jointly owned assets. The court dealt with three kinds of situations. They were firstly, the gratuitous transfer of an asset by a parent to a minor child, secondly, a gratuitous transfer from a parent to an adult child and thirdly, a gratuitous transfer from a parent to a dependent adult child. The court concluded that there was a difference between these kinds of transfers. The result of these two cases is that now one must look at the true intent of the transaction. In fact, a court will have to hear (assuming the issue gets to a court) evidence of the “true intent“ of the deceased person relating to what he or she wanted to happen to these assets when they were placed into joint tenancy. Was it really meant as a gift with the idea that the survivor would get it all after the death or was it meant not as a gift but in the form of a trust with the notion that on death, the asset would revert to the estate of the deceased?

To reach a conclusion, a court will look at a number of factors including what might be called direct evidence and also circumstantial evidence, like conversations or notes the deceased had with other parties. It appears to be the case that unless you can show a clear intention to create an asset that will go to the survivor, then a trust will be presumed. In fact, without such clear evidence, a resulting trust will be inferred and the assets you thought were joint will now revert to the original owner or in this case, the estate.

As to what kind of evidence will work the best, I suggest that the very best would be a formal deed of gift signed by the deceased and properly witnessed. That document could be challenged but it is harder to win such a challenge. One way to create a document that would be immune from such a successful challenge is to have it witnessed and even an Affidavit of Execution taken by the witness to state that when he or she witnessed the signing, the person so signing did so in a state of mind that was competent, free of any impediment or even undue influence or coercion. In addition, it might be prudent for any advisor providing advice, keep notes as to the intention of the person signing. It is a lot of trouble to go to for what used to be commonly done and still is done regularly, but the standards of care to make sure that what was intended by the creation of a joint account seems to have increased. This is of importance to everyone from the person setting up the account to the professional advisors. I might add that as the baby boomers start to reach that age when they will be wanting to create more of these kinds of accounts, it seems likely that the number of problems associated with just this kind of issue will multiply. Hence, I see this as an area that will be the source of all sorts of law suits.

COMMISSION PAYABLE THOUGH NO SALE SAYS COURT

It might surprise some people to learn that a real estate commission can be required to be paid even under circumstances when a deal does not close. You may ask how that can be but it does occasionally happen. Such a case arose in the reported decision of J.J.Barnicke Limited vs. 1471422 Ontario Limited.

The facts were that in 2003, Barnicke, the agent entered into a Multiple Listing Agreement with the numbered company as shown in the paragraph above. The agent was a guy named Love and the chap he dealt with for the numbered company, later the Defendant, was Brian Cunningham. The agreement, like many others, was for 6 months with a holdover period of another 6 months. Also relevant was the fact that Cunningham was also the principal officer of another corporation, Digital Prototypes which corporation was a tenant in the property being listed for sale. An offer to Purchase was submitted to the Defendant on February 4, 2004 by a party known as Anthony Galea in trust for a company to be incorporated. But, the offer was not accepted.

Later, in June, Galea made another offer, this time for $1, 470, 000.00 with a mortgage back to the vendor for most of it. This offer was also refused. Mr. Love still tried to sell the property but the fact was that the initial 6 month listing agreement and 6 month holdover clause expired. A year later in June, 2005, another offer was made by Galea to Cunningham. This offer was a version of the June 2004 offer. However, this offer was accepted by Cunningham. The offer, although similar to that offer, was different in the respect that the lease provisions incorporated into the Offer were amended and a new schedule was added to the offer setting out in some detail the space to be given to Digital Prototypes. The purchase price was for $1,433,250.00.

Subsequent to the closing, an invoice was sent by the real estate agent, later the Plaintiff in the law suit. The Defendant, as you might have guessed, refused to pay the commission. And thus was the law suit initiated. The Ontario Superior Court awarded in favour of the Plaintiff Barnicke. The basis for the decision was founded in s. 23 of the Ontario Real Estate & Business Broker’s Act. That section provides that to entitle an agent to real estate commission, that agent must prove that he or she had obtained an offer in writing that was in fact accepted. The court accepted the evidence of the offer and counter offers made in June, 2005 as ample evidence of the fact that the Plaintiff had obtained an offer in writing.

But, there was the second requirement of s. 23(b) of the Act. That was that the written offer that was in fact accepted was the offer obtained by the broker. Cunningham stated in no uncertain terms that the offer he had accepted on behalf of the Defendant was not in fact identical to the one presented originally by the agent. Moreover, Cunningham pointed out that he had dealt directly with Galea relating to the terms of the lease that was ultimately entered into by the buyer and Digital Prototypes. However, the court concluded that the offer that Cunningham did accept was basically the same as the other offer prepared by Love. The price change reflected the omission of commission payable. The lease amendments were interpreted by the court as being similar in nature to the previous lease clauses. And in that way, the court stated that the accepted offer was “a direct sequence of events in which the Plaintiff real estate agent was intimately involved”.

THOUGHTS FOR 2008

Please accept my best wishes to you for a happy and healthy 2008. The days seem to fly by faster and faster, a fact you no doubt have realized. Well let us all sit back and enjoy the moment. I tried. See my letterhead as well as by my picture on page 1; I can now perform civil marriages and I have performed two of them in 2007.