Beazer v Tollestrup, 2016 ABQB 567

Court of Queen’s Bench of Alberta Citation: Beazer v Tollestrup, 2016 ABQB 567 Date: 20161011 Docket: 1006 00192, 1006 01042 Registry: Lethbridge Between: Action No. 1006 00192 Harry D. Beazer, Marion I. Beazer and Leonard L. Jensen Plaintiffs - and - James Tollestrup, Litigation Representative for the Estate of Carol Mary Tollestrup Defendant - and - Mark A. Baldry Third Party

And Between: Action No. 1006 01042 James Tollestrup, Litigation Representative for the Estate of Carol Mary Tollestrup Plaintiff - and - Harry D. Beazer, Marion I. Beazer and Leonard L. Jensen and Mark Baldry Defendants _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice J.H. Langston _______________________________________________________ Background [ 1 ] Carol Tollestrup died on July 18, 2012 at the age of 75. The only significant asset in her estate was her home and the property upon which it was located.

This property was the former Tollestrup matrimonial home which had passed to Carol in 1999 following bitter and divisive divorce proceedings. [ 2 ] Carol’s attempt to deal with this property is the subject matter of these various actions. [ 3 ] Carol was not well educated. However she was described by her younger sister, Karen Olsen, as being a strong woman. After acquiring the matrimonial home, Carol left for Oregon in 2002 to start a business. This venture soon failed and Carol returned to Alberta.

By this time her home had been damaged by a flood and by people who occupied her home while her son Tim resided there. [ 4 ] Carol had few resources to repair the home. Friends and some family came to her aid and assisted, without compensation, to get the property repaired. Carol became convinced the property was very valuable because of its proximity to the City of Lethbridge. She also investigated its potential use for various commercial enterprises. Karen assisted Carol with computer searches which appear to have reinforced, in Carol’s mind, the view that this property was worth six million dollars.

However, this estimate of value had no factual basis. Attempts to sell the property resulted in an offer of only one million dollars. Carol’s view of the property’s value was not supported by the opinions of realtors who listed the property. Nor is that value supported by the evidence of Laurie Kramps, an Accredited Real Estate Appraiser who concluded that the retrospective value of this property, as at September 2008, was slightly over one million dollars. I accept Mr. Kramps’ qualifications and his opinion.

It is clear that Carol, and those within her sphere of influence, were convinced that the City of Lethbridge would soon need this land for development. The evidence of Mr. Kramps makes it clear that this land was not part of the City’s development plans for many decades. [ 5 ] Despite a lack of positive information Carol held to her views. It is clear from all of the evidence that Carol felt an obligation to family and friends who had come to her aide. This led Carol to try to quantify and satisfy her obligations to these people.

As with other aspects of Carol’s life, this endeavour ended badly. [ 6 ] With the assistance of a lawyer, Mark Baldry, Carol prepared a will which, in part, contemplated the repayment of her debt obligations. In order to further secure those named in the will to whom she felt a financial obligation, Carol authorized the preparation of mortgages and promissory notes in specified amounts. The consequences which flowed from these and subsequent transactions give rise to the present litigation.

The Actions [ 7 ] Carol’s sister Marion Beazer, Marion’s husband Harry Beazer, and Carol’s friend Leonard Jensen sued Carol Tollestrup to enforce their mortgages and promissory notes. Carol defended on the basis that there was no consideration for the granting of the mortgages and promissory notes. She further argued that the documents were the result of undue influence on the part of the Plaintiffs. Carol then sued the Beazers, Jensen and Mr. Baldry the lawyer.

As against the Beazers and Jensen Carol sought to have the mortgages removed and the promissory notes declared null and void on the basis of false representation and undue influence. As against Mr. Baldry Carol alleged negligence in relation to his duty vis-a-vis Carol. The Beazers and Jensen then served a Third Party Notice on Mr. Baldry seeking redress if it was determined that the mortgages and promissory notes were found to be invalid or unenforceable. Carol’s estate was substituted for Carol in both actions after she passed away.

Evidence from Carol was not obtained before her passing. [ 8 ] Although the estate is therefore also a plaintiff, the estate will always be referred to as “the estate”, and any reference to “the plaintiffs” is to Marion Beazer, Harry Beazer, and Leonard Jensen. [ 9 ] Prior to calling evidence the parties sought a determination on the enforceability of the mortgages. The only evidence put before the Court were the mortgages and promissory notes.

The parties then argued points of law based on the Bills of Exchange Act, RSC 1985, c B-4, the Land Titles Act , RSA 2000, c L-4 and the Law of Property Act , RSA 2000, c L-7. [ 10 ] I concluded that the mortgages were valid but there was nothing owing on them because the mortgages referred to the future advancement of funds. [ 11 ] Evidence was then heard on the various claims. Evidence [ 12 ] Mr. Baldry is a 57 year old lawyer who practises in Taber, Alberta. At the time of trial, he had almost 30 years of experience as a solicitor focusing on real estate, estate planning and wills.

He has prepared thousands of wills but he has limited experience in tax matters or the use of sophisticated trusts. [ 13 ] On September 3, 2008 Mr. Baldy met with Carol Tollestrup, Marion Beazer, her other sister Karen Olsen and Mr. Leonard Jensen, a former client of Mr. Baldry’s. Mr. Baldry was aware of the Tollestrup family name because of gossip relating to the bitter divorce action. According to Mr. Baldry the discussion initially involved all of the parties who had arrived at his office and that discussion related to two items.

The first was the imminent sale of Carol’s property and the second the fact that Carol wanted a will drawn. Mr. Baldry recalls that all parties were present for the discussion about the property. He does not recall who was present for the discussion about the will. His general practice is to not have family present for such discussions, but there are occasions when others will be present to help. It appeared to Mr. Baldry that all present wanted to help Carol. Mr. Baldry understood that Leonard Jensen was a good family friend. [ 14 ] Mr. Baldry felt Carol was the oldest of the group.

He did not ask her age and he observed that she was using a cane. He also concluded that Carol understood what was transpiring since she was pointed in her discussions. [ 15 ] Other than Carol, Karen was the most active in discussions about the property and its potential sale. Based on their representations, Mr. Baldry concluded that the land would soon be sold and he was aware that the value being discussed was six million dollars. Mr. Baldry’s view of the value was bolstered by the fact that Karen and Carol mentioned the name of a realtor who was well known to Mr. Baldry. Mr.

Baldry’s evidence is that he was not asked to determine a value for the land nor did he consider doing so. He was not aware of the parameters of the search done by Karen or Carol. [ 16 ] A title search done on the morning of September 3, 2008 showed two encumbrances on the land. One of these, the McNabb encumbrance, apparently arose from one of Carol’s unpaid debts. It had increased in value from $3,500.00 to approximately $50,000.00. Carol was concerned that her liability might somehow increase if knowledge of a land sale became obvious. Mr. Baldry testified that Carol wanted this encumbrance discharged.

So during the meeting Mr. Baldry contacted a lawyer by the name of Richard Low who had previously acted on Carol’s behalf. Mr. Baldry felt that a litigator might be necessary in order to solve the problem and a name was suggested to Carol. Carol subsequently instructed Mr. Baldry to resolve the McNabb matter. [ 17 ] As the result of the discussions, a will, power of attorney and personal directive were prepared. Mr. Baldry clearly sensed that Carol trusted her sisters, Mr. Harry Beazer and Mr. Jensen. It was equally clear to him that Carol wanted the people with her to get her assets.

She made it clear that her children had not stood by her in the divorce. She wanted the majority of her estate to go to her sisters and Mr. Jensen. Mr. Baldry characterized these people as being Carol’s allies and confidants. Carol’s concern was that she wanted these people paid back for all of their previous help and support. She indicated that she wanted Mr. Jensen as her Executor with her two sisters as alternates. [ 18 ] Some children were named in the will. Mr. Baldry did not inquire about the existence of previous wills nor did he recall discussions about other assets held by Carol.

He proceeded on the basis that the only real asset was the land in question. Mr. Baldry had no concerns about Carol’s capacity although he noted that she had strong emotions regarding her children. The issue of the McNabb encumbrance appeared to be more urgent than the preparation of the will. [ 19 ] On September 11, 2008, Mr. Baldry met with a lawyer to discuss a resolution of the McNabb encumbrance. On September 12, 2008, Mr. Baldry met with Carol to sign her will. Changes were made to a draft copy and the will was signed on that date. The will made

specific bequests to seven of the Tollestrup children. These bequests totalled 40% of the residue of the estate. The remaining 60% of the residue was to be divided equally between Mr. Jensen, Marion Beazer and Karen Olsen. Mr. Baldry recalled that Carol was again concerned with the issue of the McNabb encumbrance and she was also concerned about the ability of the children to interfere with the sale of her property and their potential ability to contest the provisions of the now executed will. The solution proposed by Mr. Baldry was to make Jensen, Marion, and Karen secured creditors.

This was achieved by means of mortgages and promissory notes. Mr. Baldry was satisfied that Carol understood the nature of these transactions and he was instructed to proceed. Mortgages and promissory notes were prepared which provided security to Marion Beazer and Harry Beazer in the amount of $400,000.00; and to Jensen in the amount of $100,000.00. Subsequently Mr. Baldry was instructed to prepare additional security in favour of Karen Olsen in the amount of $200,000.00. [ 20 ] Mr.

Baldry’s practice was to personally draft the promissory notes and leave it to his assistant to draft the mortgages by filling in the blanks of pre-printed documents. [ 21 ] There was no discussion of how these figures were arrived at, nor was there discussion about the bequests under the will. [ 22 ] The McNabb encumbrance was resolved by way of negotiation which resulted in a payment of approximately $40,000.00. Mr. Jensen provided the money and he also paid for associated costs including Mr. Baldry’s fees. [ 23 ] On November 12, 2008, Carol executed an additional promissory note and mortgage in favour of Mr.

Jensen in the amount of $50,000.00. Again, Mr. Baldry is not sure how the amount was calculated. Presumably it took into account the money advanced by Mr. Jensen for the discharge of the McNabb encumbrance plus some associated costs. [ 24 ] Throughout his testimony Mr. Baldry maintained the position that Carol seemed knowledgeable about legal matters. She was receptive to the use of mortgages and promissory notes to secure the interests of those she wished to reward for their help. And she was confident in discussing issues including her feelings regarding her children. [ 25 ] The evidence provided by Mr.

Baldry and that of the other witnesses who were close to Carol at this time demonstrates that all of these security documents were intended to be a temporary bridge providing for security until such time as the land was sold. Mr. Baldry’s evidence was that a sale was imminent [ 26 ] In every case where a mortgage was executed a discharge was also executed. It is apparent that these were executed in furtherance of the idea that all transactions were simply a temporary precaution pending the sale of the land. [ 27 ] Mr. Baldry maintained the view that he had no reason to value the assets.

He made no inquiries about Carol’s assets or her financial situation. Nor did he inquire about tax related issues. It is clear that Mr. Baldry has no experience or training in relation to the creation of sophisticated trusts or devices to minimize tax consequences which may involve estate matters. [ 28 ] Mr. Jensen paid all of Mr. Baldry’s accounts, the largest of these relating to the McNabb encumbrance. [ 29 ] Mr. Baldry sent all correspondence to Carol in care of Harry and Marion Beazer. At no time did any of the parties request independent legal advice nor did Mr. Baldry suggest they needed it.

It is apparent that during this time period all the parties appeared to have a common goal and all acted like they were a family. [ 30 ] However, by early December of 2009 Mr. Baldry became aware that there was a problem. He was advised by the Beazers and Jensen that Carol had turned against them. In fact a will purporting to be signed by Carol and dated November 3, 2009 appointed her sister Karen Olsen and her husband Gary Olsen as executors. This will specified that Carol’s son Richard Tollestrup was to receive $150,000.00 in cash.

The residue of the estate was to be used to create a trust for the benefit of the poor and indigent of Lethbridge and area. Mr. Baldry testified that he was surprised that the land had not sold and that the parties were trying to enforce their previous agreements. [ 31 ] Karen Beazer is the daughter of Marion Beazer and the niece of Carol Tollestrup. Chateau Isabella, a commercial resort operation in the Alberta foothills, was her home and place of employment as she grew up. She recalls Carol, who was homeless, staying at the Chateau.

Carol advised her that she had nowhere else to go and she had been abandoned by her family. Carol stayed in a room of the main facility before moving into a cottage on the property. Karen described Carol as a hoarder and a poor housekeeper. The cottage was described as being unlivable after Carol left, and it took six weeks to clean it up. Carol had goats and horses on the property and they often ran free. Karen testified that Carol seemed content staying on the property but she paid nothing during her stay.

Carol was not expected to work and she appeared to spend her time focusing on legal issues. [ 32 ] John Beazer worked at the Chateau from 1994 to 1999. He testified that Carol felt abandoned by her children. He also testified that Carol stayed in the cottage for six years and he did various chores to help her. These included cleaning stables, building sheds and driving her around. John estimated that the cost of the labour he supplied was approximately $11,500.00. He confirmed Karen’s evidence about the state of disrepair in which the cottage was left when Carol vacated the property.

He also testified that the stove in the cottage was used all day, that things burned, that soot was visible on the ceiling of the cottage, that the bathroom was used for pets, and that cats and goats were frequently in the house. [ 33 ] Karen and her brother John calculated the labour costs of cleaning and refurbishing the cottage at approximately $19,000.00. In addition, supplies cost approximately $9,600.00, including repairing and replacing appliances. [ 34 ] Sharon Widdup worked at Chateau Isabella doing a variety of jobs including bookkeeping.

She recalls Carol living in the cottage, which was full of clutter. According to Ms. Widdup the Beazers fed Carol and took her places, since Carol had no vehicle. In 2010, at a time when the relationship between Carol and the Beazers had soured, Ms. Widdup helped find records of expenses relating to Carol’s stay at the Chateau and the costs relating to the upkeep of Carol’s home in Lethbridge. This inventory of expenses covered a variety of specific items relating to the costs of helping Carol, and included items such as food, telephone, insurance and utilities.

The accounting also outlined a commercial approach to calculating the time and effort which the Beazers expended on meeting Carol’s needs.

For example, since the Beazers drove Carol to a variety of meetings or they drove to help fix her Lethbridge home, they detailed the expense based on the cost of rental vehicles and the cost of fueling the vehicles. Labour costs were calculated at what appears to be an estimate of the cost of hiring a suitably trained craftsman. Included in the inventory of costs was a calculation of the rental price of the cottage, utility and food costs. There were also expenses associated with Carol’s son Tim occupying the cottage for a period of time.

The inventory goes on to itemize costs for paralegal services provided to assist Carol in her legal battles. Other items listed include the payment of legal fees and the cost of repairing the cottage when Carol left. The estimate put forward totals $266,948.50, inclusive of interest. [ 35 ] A review of the accounting used to justify this figure reveals a self-serving approach to retrospectively assessing this unspecified debt owed by one family member to another. There was no such detailing of the quantum of Carol’s obligation when the parties attended on Mr.

Baldry. [ 36 ] Leonard Jensen, who farms east of Taber, met Carol in the fall of 2006. Mr. Jensen is a friend of the Beazers and it was through them that he met Carol. They spoke about her financial problems and she asked for his help. Mr. Jensen visited Carol’s Lethbridge home and described its state of disrepair. He testified that he physically cleaned and repaired the property at a significant cost. According to Mr. Jensen Carol told him she would keep track of the money owed. Bills were not given to Carol since Mr. Jensen was not worried about keeping track of the amounts.

He was satisfied that Carol would, in some fashion, repay her debt. Carol’s need for money continued. Mr. Jensen even made mortgage payments on her behalf. Mr. Jensen, who was divorced about this time, testified that he felt sorry for Carol and he described a never ending battle to fix her home. It is clear that he had the resources to help her. [ 37 ] Like the Beazers, Mr. Jensen calculated the cost of helping Carol. In 2007 he spent $1,058.32 on fuel costs to either drive Carol around or to attend her Lethbridge residence for maintenance.

In addition he calculated the wear and tear on his vehicle based on rental rates provided by an agency. He also calculated his time for driving and maintenance work at the rate of $25.00 per hour. He supplied a cargo trailer which was used to haul garbage and store Carol’s property. Mr. Jensen again used quotes from a rental business to calculate the cost of this trailer. In cross-examination he admitted that the $29,550.00 “cost” of this rental was approximately twice the cost of purchasing such a unit. Including documented material costs for fixing Carol’s home, Mr. Jensen’s bills for 2007 totalled $36,593.94.

Mr. Jensen’s claimed expenses for 2008 came to $112,623.14. This sum includes legal fees, monies advanced as loans, expenses for Carol, maintenance costs, travel costs and trailer rental. [ 38 ] The accounting which was tendered to the Court was prepared for the purposes of this law suit and obviously was intended to demonstrate that Mr. Jensen’s financial commitment to Carol was significant. However, it is also clear from all of the evidence that Mr. Jensen had a genuine emotional attachment to Carol. He described Carol as being nice to him and being good to him.

I accept his statement that he would have walked away from any debt obligation on the part of Carol. [ 39 ] Mr. Jensen suggested Mr. Baldry when Carol indicated she wanted a will drawn. Mr. Jensen, Carol, Marion and Karen met Mr. Baldry. Mr. Jensen thinks Carol and Mr. Baldry met alone. He testified that he had no discussions with Carol about the contents of her will before meeting with Mr. Baldry. He agreed to be an executor only on condition that both Marion and Karen were also added as executors. Mr.

Jensen says that as a result of this first meeting he was unaware of the contents of the will nor did Carol suggest he would be compensated by means of the will. He recalls discussion about compensation occurring at the second or third meeting and it was Carol who came up with a figure of $100,000.00. Mr. Jensen felt that this was a satisfactory amount since something was better than nothing. He also understood that Mr. Baldry was taking care of the interests of all when the security documents were drafted. I am satisfied that before the will was signed on September 12, 2008 Mr.

Jensen was aware that some provision had been made for him in that will. [ 40 ] When the issue of the McNabb debt surfaced Mr. Jensen knew Carol needed money to discharge that debt. He agreed to help her and gave Mr. Baldry a cheque for $42,000.00 in order to take the McNabb encumbrance off title. Mr. Jensen understood the $100,000.00 mortgage was for money previously advanced and the $50,000.00 mortgage related to the discharge of the McNabb encumbrance and associated costs. [ 41 ] Mr.

Jensen testified that although he had attended a City of Lethbridge zoning meeting he was not aware of the value of the land except to the extent of Carol’s statements that it was worth many millions. He did not specifically recall the figure of six million dollars being discussed. I accept Mr. Jensen’s evidence that he did not suggest a value to anyone and I accept his evidence that it was Carol and Karen who came to conclusions about value. He was also aware that Carol was concerned about her children being able to interfere with any possible sale. Mr.

Jensen understood that the only way he would be paid for helping Carol was by means of a sale of the property. He had no knowledge of Carol’s education or business experience. [ 42 ] Mr. Jensen is also clear that he did not specifically seek advice from Mr. Baldry in relation to the transactions. [ 43 ] By the summer of 2009 Mr. Jensen felt he was losing contact with Carol and she seemed to be losing focus in terms of her sale of the property. In December 2009 he asked for Mr. Baldry’s assistance to regain what he lost. By the time he and the Beazers met with Mr.

Baldry on December 16, 2009 about foreclosure proceedings, it appeared the property would not be sold, and that Carol and Karen were aligned against them. Mr. Jensen testified that he was heartbroken and felt that Carol had lied to him. [ 44 ] As previously indicated Marion Beazer is Carol’s sister. She testified that Carol arrived at their home with her animals, no extra clothes, and in a bad emotional state. She stayed in the cottage on their property from 1994 to 1999. Marion was privy to correspondence by and to Carol, in 1999 and 2000, regarding her divorce and matrimony property issues.

A review of this correspondence suggests Carol was not particularly focused on advice given by her current lawyer nor was she making herself available for discussion. [ 45 ] Marion says she and her family helped Carol for years and they were told by Carol they would be compensated. Marion attended Carol’s matrimonial property trial in 1999 and was aware that it settled on the first day. Carol was given the matrimonial home and a significant cash settlement. [ 46 ] Marion recalls going with Carol, Karen and Mr. Jensen to see Mr. Baldry. She knew Carol was having a will drawn but she

says her participation on the first meeting of September 3, 2008 was merely the passing of pleasantries. At the second meeting of September 12, 2008 she only recalls sitting in a hallway of Mr. Baldry’s office. According to Marion, Carol kept some records of what was owing. It was Carol who, at Mr. Baldry’s office, asked if the amount she proposed was enough to satisfy any debt obligation. Marion testified she agreed to that amount. She was also aware that Carol wanted to put something in place to prevent the children from interfering with the terms of the will.

Marion was aware that Carol wanted to sell her house and it appeared that she was looking for a home in Raymond. Marion is the one who called Karen, who then lived in Oregon, to return to Alberta to help in the cleanup of the Lethbridge property. Marion denies any suggestion that she was hounding Carol for money or that she or any of the others retained Mr. Baldry to work on their behalf to get money from Carol. [ 47 ] Harry Beazer testified that following her divorce Carol stayed at the Chateau for a period of six years, in a cottage on the property.

No compensation was demanded nor offered but Carol promised to repay the Beazers for their kindness. With Carol came her livestock consisting of cows, horses, goats, cats and dogs. Carol did not help run the Chateau in any sense. [ 48 ] While Mr. Beazer was not present for the first two meetings with Mr. Baldry he testified that the figure of $400,000.00 for compensation, was one suggested by Carol without influence or pressure. This was in furtherance of Carol’s promise to pay and her ongoing sense of obligation. Mr. Beazer described Carol as strong willed and not easily persuaded or pushed.

She was also described as being kind and loving. [ 49 ] Mr. Beazer testified that the action taken by Mr. Beazer and the others to foreclose on the mortgages was precipitated by Carol’s failure to pursue a sale of her property and her actions in changing the terms of the will which was drafted by Mr. Baldry. [ 50 ] Rachel Atwood is Carol’s daughter and one of ten siblings. After living away from Lethbridge since 1994, she and her family returned in 2006 to help take care of her father. Her husband is employed in a Tollestrup family business.

While away she says she kept in touch with her mother and she visited her mother “a little”. Ms. Atwood testified that in 2007 her mother called her from the Beazer residence requesting help to leave because Marion was being mean to her and wanted money. Ms. Atwood describes her mother as frazzled. She appeared to have injured herself while dealing with an animal. Carol stayed with Ms. Atwood for two days only and then went to another sibling’s home. Ms.

Atwood testified that she became aware of the mortgages on Carol’s home and when asked about them Carol replied to the effect that “they battered the hell out of me” and they were going to report a family member in relation to a bankruptcy. Ms. Atwood also testified that her mother declared she did not owe any money. Apparently Karen, who was nearby, agreed with this statement. In March 2011, while Carol was hospitalized, Ms. Atwood saw her mother sign a revocation of will document prepared by a lawyer.

Carol later came to live with the Atwood family and after three months everyone moved to the Lethbridge property. The home was in disrepair. Renovations were done and Ms. Atwood’s immediate family left on October 14, 2011 at which time her sister Joanne moved in. Joanne remained in the home until Carol was again hospitalized in 2012. [ 51 ] Despite testifying about her concern for her mother, this witness had little contact with her. In fact she saw her only on two occasions in the 12 years she was absent from the Lethbridge area.

She was not aware of the details of the legal battle between her parents other than that it was acrimonious. She does not know why Carol returned to the Beazers. She knew Carol was comfortable with Karen. She was also aware that Carol was taking pain medication daily. [ 52 ] Roy Boettger is a lawyer with 40 years of experience in the area of estate planning. He was qualified as an expert in that area and in the related area of real estate transactions.

He was retained by the estate of Carol Tollestrup and was asked to respond to six hypothetical questions relating to the standard of care which should be exercised by a reasonably competent solicitor. He testified that in taking instructions from a client a solicitor should inquire about the assets held by the client either individually or collectively, make inquiries about family members in order to consider potential beneficiaries, determine the future value of assets and discuss the potential for a material change in value of the assets and how this may impact on the original intentions for distribution.

He also testified that the solicitor should make inquiries about the current and future financial needs of the client, and respond to concerns about potential challenges to the terms of the will including the possibility of changing property ownership and the use of trusts. [ 53 ] Mr. Boettger expressed the view that executing a mortgage against a client’s only asset in favour of an intended beneficiary would not be a common or prudent recommendation to deal with concerns about delay or interference with beneficiaries receiving their share of the estate.

Granting the mortgage would not prevent interference and it would risk changing an intended future benefit of an uncertain amount into a current obligation for a fixed amount. He also expressed the view that a solicitor must ensure that the client understands the current value of their assets, income and expenses and that the future income stream will allow for future support.

A solicitor should advise against such a move if it is unclear whether the client will continue to be financially independent following such a transfer. [ 54 ] He acknowledged, in his evidence, that some of his recommendations for a client may be beyond the usual knowledge level of the average practitioner. He also acknowledged that the standard of care as applied to his practice of estate law may also be different from that applied to the average practitioner. [ 55 ] Karen Olsen is Carol’s younger sister. She described a close relationship.

When Karen was living in the United States in June 1999 she received a request from Carol to return to help with the repair of the matrimonial home which had now been awarded to Carol. Carol and Karen subsequently returned to Oregon in 1999 and opened a business which soon failed. Carol then returned to Alberta in 2002 to find her home damaged by a flood and the presence of people involved in the drug trade. [ 56 ] Karen also described the work done and money advanced to Carol by Mr. Jensen. According to Karen she and Carol calculated, in August 2009, Mr.

Jensen’s contribution to Carol to have a value well in excess of $200,000.00 as he paid many of Carol’s bills and provided money for living expenses and maintenance of her home. Karen also confirmed that Harry and Marion Beazer made many contributions to Carol’s welfare between 1994 and 2008. [ 57 ] According to Karen, Carol wanted to sell her land and pay off her many debts. The evidence suggests that Karen was an active participant in discussions about the sale and the valuation of the land.

Karen described the intense effort expended by Carol and her in determining the value of the property: she said Carol monitored property sales in Lethbridge and collected binders of material. She

does not recall anyone saying the land was worth six million dollars at the time of the meeting with Mr. Baldry but she does recall Carol suggesting a value of $50,000.00 per acre based on someone’s opinion. A Listing Agreement of November 3 rd , 2008 specified a price of four million dollars. Karen testified this was a price set by Carol without input from the realtor. [ 58 ] Karen says an extension agreement for the sale of the property, dated December 2 nd , 2008, set a price of $2,300.000.00. This value was apparently based on a comparison Carol made with a piece of property in Raymond, Alberta.

Again there was no input from a realtor. [ 59 ] On December 19 th , 2008 an offer to purchase in the amount of one million dollars was made. Carol countered at two million dollars. No sale resulted. On February 9 th , 2009 Carol extended the listing and the asking price was now three million dollars. By February 18 th , 2009 Carol was asking $4,350,000.00. [ 60 ] In cross examination Karen suggested that before meeting with Mr. Baldry, she and Carol spoke of the land being worth two million dollars.

She added that Carol was motivated to sell the land, and that she had promised to pay what was owed to all the people who had helped her: Karen, the Beazers, and Jensen. But Karen also knew any compensation which Carol wished to pay to her and the Beazers and Mr. Jensen could only be done if Carol’s land was sold. [ 61 ] Karen confirmed that Carol wanted a will drawn, and Carol asked Mr. Jensen for the name of a lawyer. Mr. Baldry was suggested. Karen recalls that those in attendance at Mr. Baldry’s office were Carol, herself, Marion and Mr. Jensen. Karen confirms that there were some group meetings and that Mr.

Baldry would also speak with Carol alone. Karen testified that no one exerted any pressure on Carol, nor was she influenced nor overwhelmed by anyone, when they were at Mr. Baldry’s office. [ 62 ] According to Karen, Carol did not reveal her intentions relating to the preparation of a will. Karen recalls there being three meetings. At the first there was general discussion. At the second meeting there was discussion of selling the land and the McNabb mortgage. According to Karen, Carol wanted the McNabb encumbrance off title because she felt McNabb was harassing her.

At this meeting Karen suggests that Carol indicated the land was worth six million dollars. There was apparently a general view that the property would sell soon. It was at this meeting that Mr. Jensen volunteered to pay off the McNabb mortgage. [ 63 ] Karen testified that Carol also had a lot of experience with lawyers.

She points to the fact that from 1999 till her death, Carol had retained 19 different lawyers to act on her behalf and had paid out approximately $593,000.00 for their services. [ 64 ] Karen knew that Carol saw Ron McDonald and had a new will drafted on November 3 rd , 2009, but she denies participating in that process. [ 65 ] In January, 2010, Carol and Karen were contacted by a lawyer, Mr. Farrington, acting for the Beazers and Mr. Jensen. A demand was made on Carol for payment of the monies owing on the mortgage held by the Beazers in the amount of $400,000.00 and for the mortgage held by Mr.

Jensen in the amount of $100,000.00. [ 66 ] On February 4 th , 2010 Mr. McDonald, now Counsel for Karen and Carol, responded by saying that no consideration was ever provided to either Carol or Karen by the Beazers or Mr. Jensen. [ 67 ] The Beazers and Mr. Jensen sued Carol on March 8 th 2010 seeking foreclosure pursuant to the mortgages. On April 6 th , 2010 Mr. McDonald defended this claim by denying any indebtedness and alleging fraud and undue influence in relation to the creation of the documents.

Although Karen is not a party to this action the statement of defence refers to the potential for a debt owing to Karen and denies any such debt. Karen acknowledges that she was present with Carol when the statement of defence was discussed and she knew of its contents. [ 68 ] On May 20 th , 2010 Carol, Karen and Karen’s sister-in-law Francoise Coombs purported to enter a Joint Venture Agreement for the development of Carol’s property. All three were to be added to title, each with a one-third interest, and all three were to share in the profits.

There was an agreement that the parties would try to remove the mortgages and promissory notes held by the Beazers and Jensen. Karen’s contribution was to be her $200,000.00 mortgage of October 8 th , 2008, that was registered against Carol’s property. For her one-third interest Francoise was to contribute money and help develop the property. Karen conceded that at the time of the Joint Venture Agreement she felt the property was worth approximately two million dollars. In her evidence Karen was unclear as to the author of the Joint Venture Agreement.

It is apparent from the nature of this document that it was not the product of a lawyer’s hand. At no time while Mr. McDonald was acting for Carol and Karen was there any discussion of the Joint Venture Agreement. [ 69 ] Interestingly, even though the Joint Venture Agreement was executed on May 20 th , 2010 and Karen executed a discharge of mortgage on March 31 st , 2011 in relation to the mortgage of October 10 th , 2008, Karen, on February 22 nd , 2012 made a demand on Carol for $200,000.00. This was founded on the promissory note.

Additionally Karen gave notice that she wanted to set aside the discharge of mortgage and proceed to foreclosure. This discharge states that Karen did not lend or advance sums as set out in the mortgage. Karen stated in evidence she did not instruct Mr. Moodie, the lawyer who drafted the document, to execute such a document. Karen says that Mr. Moodie knew about the Joint Venture Agreement. [ 70 ] Carol passed away in July of 2012. [ 71 ] Karen, Harry Beazer, Marion Beazer and Leonard Jensen, and their lawyer Mr.

Thompson entered an agreement on May 1, 2013 whereby Karen acknowledged the justification for the foreclosure action brought by the Beazers and Jensen. She agreed to assist in the prosecution of that claim. The Beazers and Jensen agreed to assist Karen in prosecution of her debt action against Carol’s estate and to assist Karen in her probate application regarding Carol’s estate. That action related to the November 3, 2009 will in which Karen and her husband Gary were named as joint executors.

New Evidence [ 72 ] The trial of these actions concluded on November 14 th , 2014, with written arguments received by February 2015. In October of 2015, before the release of judgment, the estate filed an application to re-open the trial based on the discovery of new evidence which, it was alleged, impacted on the credibility of Karen Olsen, one of the Plaintiff’s chief witnesses. I allowed this new evidence to be admitted and it was heard on March 15 th and 16 th , 2016.

This evidence was essentially a further cross-examination of Karen Olsen in relation to a transaction which became known after the close of trial. Written argument respecting the nature and impact of this evidence was received by May of 2016. [ 73 ] The transaction was Karen Olsen’s assignment to the Beazers and Jensen of her interest in the mortgage and promissory note which she had been granted by Carol Tollestrup on October 8 th , 2008. This assignment was dated July 7 th , 2014.

The existence of this assignment was not discovered by the estate until the conclusion of trial. [ 74 ] At trial Karen had testified that the mortgage and associated debt had been effectively surrendered as her contribution to the Joint Venture Agreement which was executed on May 20 th , 2010.

The discharge of Karen’s mortgage was registered on April 28 th , 2011. [ 75 ] A chronology of Carol Tollestrup’s mortgage indebtedness is relevant to the estates argument that Karen’s credibility, and that of all the Plaintiffs’, is suspect in relation to the granting of the mortgages in 2008. [ 76 ] On September 11 th , 2001 Carol Tollestrup granted a first mortgage to Maple Trust in the amount of $250,000.00. This mortgage was later assumed by the Bank of Nova Scotia. On September 22 nd , 2014 the Plaintiffs purchased this mortgage.

The second mortgage on the property was granted to Marion and Harry Beazer and was registered on September 23 rd , 2008, in the amount of $400,000.00. A third mortgage was granted to Leonard Jensen and registered on September 23 rd , 2008 in the amount of $100,000.00. The fourth mortgage was the one granted to Karen Olsen which was registered on October 10 th , 2008 in the amount of $200,000.00.

The fifth mortgage was one granted to Leonard Jensen and registered on November 17 th , 2008, in the amount of $50,000.00. [ 77 ] After acquiring Karen’s mortgage the Plaintiffs purported to add on or “tack on” its value to the first mortgage, which they had purchased on September 22 nd , 2014. By this manoeuvre Karen then had a priority over the subsequent mortgages.

The estate points to this assignment of Karen’s now discharged mortgage as a conspiracy between her and the Plaintiffs to defeat the interests of the estate by effectively avoiding the impact of the discharge to ensure that after payment of all secured creditors there will be no surplus from any sale proceeds for the estate.

The estate also points to a Retaining Agreement entered in August 2012 between the Beazers, Jensen and Karen and the Carle Law Office which purported to give the law office authority to deal with all matters relating to the estate of Carol Tollestrup. [ 78 ] In an unrelated action the Beazers and Jensen have now commenced a foreclosure action against the estate in relation to the first mortgage on title. That mortgage value is said to have increased, according to the Plaintiffs’ position, by the value of the now “tacked on” Karen Olsen’s mortgage.

Analysis [ 79 ] The evidence establishes that Carol Tollestrup was a strong willed person who had fallen on hard times after her divorce. Her only asset was her home, despite having received a substantial cash award at the time of her divorce. All the evidence points to the conclusion that she was, but for her home, destitute. It is clear that family and friends assisted Carol financially for many years. There is no evidence that Carol compensated any of those who had helped her.

The evidence before me establishes that Carol acknowledged that she was indebted to those who had helped her. [ 80 ] I am satisfied that many of these costs are not actual costs but rather convenient translations of how a stranger may have dealt with Carol. However, it is clear that Carol was a significant economic burden on all with whom she associated. I am also satisfied that no one did any real calculations upon which Carol’s directions to Mr. Baldry were based. However, Carol’s professed indebtedness to these people was significant. [ 81 ] When the parties attended in Mr.

Baldry’s office I am satisfied that Carol, alone, was the one who quantified her debt obligation. I base that conclusion primarily on the evidence of Mr. Jensen and the Beazers. Mr. Jensen was emotionally tied to Carol and his conduct is consistent with someone who was selfless in his commitment. There is no issue that he advanced the funds to deal with the McNabb encumbrance. There is no reason to suggest that he did this for any reason other than what he believed was in Carol’s best interest. The fact that, objectively, the encumbrance would have little or no effect on a sale only points to the commitment Mr.

Jensen had for Carol’s wellbeing. It was she who had the concern about this issue. The Beazers had subsidized Carol for years. They housed her and her menagerie. They fed her, transported her and always supported her. The use and abuse Carol made of their home and property is well documented by the evidence at trial. The after the fact calculations of the debt Carol owed to the Beazers and to Mr. Jensen is relevant only to the extent that Carol absorbed a great deal of resources from all of these individuals. The actual debt owing is lost in the history of Carol’s turbulent life.

I am satisfied that Carol did owe the Beazers and Mr. Jensen a significant amount of money and I am satisfied she felt an obligation to repay these people. I accept that it was Carol, uninfluenced by any other party, who proposed the amounts which were used by Mr. Baldry. Those figures may have been based on Carol’s assessment of actual dollars advanced or a combination of such figures plus a “bonus” for all the trouble she inflicted on these people. [ 82 ] I accept Mr. Baldry’s evidence that Carol, alone, gave instructions as to the content of the will.

I am also satisfied that the security documents, that is the mortgages and the promissory notes, were intended as a temporary safeguard to protect the interests of

Carol’s family and friends until the house was sold. In furtherance of this view Mr. Baldry held the executed discharges which were to be used when the debts were satisfied. Foreclosure was obviously not an issue contemplated by Mr. Baldry. [ 83 ] Mr. Baldry testified that during his time with Carol he was satisfied that her actions were voluntary and that she was not being unduly influenced by anyone. It is also clear from the evidence that throughout his dealings with Carol, Mr. Baldry took his instructions from Carol. That included directions as to the mortgage documents and the promissory notes.

It is obvious that Mr. Baldry was acting on both sides of these transactions and that he believed that all parties were consenting to him so acting. It is equally clear that of all the parties, Carol was his only client. It is also clear that none of the other parties were given legal advice about the transactions by Mr. Baldry or other independent counsel. Mr. Baldry’s view was that the preparation of the security documents was for the benefit of the other parties.

But he knew that even if, in his view, he was not performing legal services for them, they would rely on his expertise. [ 84 ] There is no issue that Mr. Baldry owed a duty of care to Carol Tollestrup and the standard of care is that of a reasonably competent solicitor. Having regard to all of the evidence which has been heard at this trial and the uniqueness of the situation which unfolded, I am not satisfied that the Plaintiffs have demonstrated that Mr.

Baldry failed in the exercise of his duty to Carol Tollestrup. [ 85 ] Karen’s position as set forth in letters from her lawyer in February 2010 is certainly inconsistent with her evidence at trial that the Beazers and Jensen helped Carol financially. [ 86 ] The evidence of Karen Olsen is troubling. Her actions are erratic and they defy logic. She has vacillated between positions to the point where I place little reliance on her evidence. However, I am not satisfied that she orchestrated the scene which unfolded in Mr.

Baldry’s office nor am I satisfied that her evidence, as compared with that of the Beazers and Mr. Jensen, taints the conclusions to which I have come. She is not a party to these actions and the assessment of her credibility in her litigation is for another day. [ 87 ] When Mr. Baldry dealt with Carol and the others in his office, it was apparent that he was being asked to draft a will whose primary focus was the repayment to the individuals who had helped Carol. It is equally clear that the mortgages and promissory notes were in furtherance of that objective.

The wisdom of approaching this task as he did may be curious. However, one must view the situation in its proper context. Lawyers are not soothsayers or clairvoyants. They deal with everyday people in everyday situations. Mr. Baldry could have done more to investigate the information before him. But he was satisfied that Carol was in charge of her situation. He was satisfied that a sale of Carol’s property was imminent, a conclusion which is supported by the evidence of the other parties who testified at trial. It was apparent that all in attendance had Carol’s best interest at heart. It was obvious to Mr.

Baldry that Carol wanted to ensure that her debt obligations would be satisfied at all costs. The information available to Mr. Baldry was that the property was about to be sold , and none of the parties before him disputed Carol’s opinion of the value. His efforts, based on the available facts, were to put in place an immediate and tamper proof method of paying Carol’s debts. The paying of the McNabb encumbrance was but one of the steps taken. [ 88 ] While Mr. Boettger’s expert evidence is of some assistance in assessing Mr. Baldry’s actions, it is not determinative of the issue of Mr. Baldry’s competence. Mr.

Boettger’s opinion is articulated in a vacuum. He was unaware of the totality of the circumstances confronting Mr. Baldry. For example, Mr. Boettger did not consider the scenario of acknowledgment of and security for a pre-existing debt, which was a major issue before Mr. Baldry. Thus, many of the opinions expressed by Mr. Boettger are unhelpful in the situation which faced Mr. Baldry. Mr. Baldry’s actions must be viewed in the context of the situation in which he found himself and the information available to him.

While his solutions may have been somewhat unorthodox, they must be assessed having regard to the circumstances with which he was confronted. The situation he faced was that of an older client who was apparently focused and who described a poor relationship with family members. She was surrounded by people she obviously trusted and who apparently were focused on her welfare. There was concern expressed about encumbrances on title and the potential for disruptive behaviour from children.

And the resources which would be the foundation for the will, and the basis for the mortgages and promissory notes, would soon be liquidated. It could have been more thoroughly done but I am not satisfied that Mr. Baldry was negligent in his representation of Carol Tollestrup with the solutions he proposed to address her concerns. His potential negligence lies in his failure to properly draft the mortgages. The debt had been long since created. There were no future funds to be advanced, as contemplated by the wording of the mortgages.

The inconsistency in the wording resulted in my conclusion that nothing was owing on those mortgages. Rectification [ 89 ] Following the preliminary ruling in relation to the status of the mortgages, leave was given to the Beazers and Jensen to amend their claim to include a request for rectification. Whatever may have been the intent of the parties in inviting the preliminary ruling, it is obvious that the resulting decision was made in a vacuum which was devoid of all surrounding circumstances. [ 90 ] The evidence establishes that Carol wanted to repay those who had helped her.

She wanted to ensure that the no one could interfere with the sale of her land or with the bequests she made in her will. The sale of the land was imminent and the evidence clearly establishes that the disposition of the land was the event which would cause Carol’s obligations to be discharged. [ 91 ] The evidence of the Beazers and Jensen make it clear that they did not cause Carol to include them in her will. Nor did they initiate the discussions to safeguard their interests in the will. [ 92 ] The will, its contents, and the security documents all resulted from Carol’s concern to satisfy her obligations.

Those obligations had been longstanding without any ability of Carol to satisfy them or any action taken by the Beazers and Jensen to collect upon them. It is obvious that no one contemplated that the security documents would immediately be acted upon, despite the wording of the Promissory Notes which places no restriction on the ability of the parties to make a formal demand for payment. [ 93 ] The conclusion to be drawn from the actions of the parties was that all would continue to patiently wait for the land to be sold or in the alternative to be disposed of upon Carol’s death.

The frailty of attempting to secure a bequest in the fashion attempted here is obvious. But that is what Carol wanted and it is what the parties accepted. The common intention of the parties, which was not clearly articulated in the mortgages, was twofold. Firstly, the mortgage must reflect the fact that there are no new obligations to be created. All

monies had been lent. Secondly, the obligations created by the mortgages only crystalized upon the disposition of the land, that is, through a sale or the death of the mortgagor. [ 94 ] The mistake which is apparent in the mortgages prepared by Mr. Baldry’s secretary is a repeated reference to the fact that money would be advanced in the future. There is no evidence to suggest there would be future advances to Carol. Indeed the focus of discussion was an acknowledgement of an obligation and the anticipation that the debts would soon be discharged.

The parties clearly intended that the mortgages reflect the actual situation which existed at the time the documents were created. [ 95 ] In my view the fact that the parties failed to read the documents or to have them interpreted does not change the fact that all the parties were of a like mind. Rectification is a remedy that rectifies the terms of a contract to accord with the parties understanding of the terms. In this case there was a mutual mistake. That fact is borne out by the only evidence which has been presented to this Court. That evidence is consistent and convincing.

The Beazers and Jensen argue that the mistake which requires rectification relates to the use of words “to be lent” in the pre-amble of the mortgages. In my view the parties clearly acknowledged that the funds being discussed related to a sum which had already been advanced. The circumstances support the view that the mortgages should reflect the fact that the money had been lent. Accordingly, the pre-amble to the mortgages will be rectified to accord with the intention of the parties. The words “to be lent” in the pre-amble of the mortgages will be replaced with the words “having being lent”.

However, this rectification to the documents does not completely address all the issues of common intention. The mortgages and promissory notes, despite their words, were created in contemplation of the disposition of the property. They should not be given a broader meaning. To remedy the inconsistencies in the mortgages they must be further “rectified” to reflect the fact that they were to be enforceable upon the sale of the land or upon Carol’s death. There can be no other

interpretation of the dealings which unfolded in Mr. Baldry’s office. The will was prepared naming the Beazers and Jensen as beneficiaries. Any interest they had in the will, and therefore in Carol’s property, could only materialize upon her death. The security documents were drafted to reflect both a sale of her land and the consequences which would result upon her death. [ 96 ] Accordingly the mortgages will each be rectified to reflect what was actually transpiring in Mr. Baldry’s office. Paragraph 8(

e) of the mortgages will be replaced with the following: the whole of the monies hereby secured shall become due and payable upon the sale of the said land, or upon the death of the mortgagor. The Result [ 97 ] Action number 1006 00192 which is the action brought by Harry D. Beazer, Marion I. Beazer and Leonard L. Jensen against James Tollestrup, Litigation Representative for the estate of Carol Mary Tollestrup is allowed and the following is directed. The mortgages held by the Beazers and Mr. Jensen are each valid and enforceable by way of foreclosure proceedings under the Law of Property Act .

The mortgages incorporate the default provisions of the promissory notes. Since the land was not sold the mortgages became due and payable on the date of Carol’s death. The third party action as against Mr. Baldry is dismissed. [ 98 ] Action number 1006 01042 brought by James Tollestrup, Litigation Representative for the estate of Carol Mary Tollestrup against Harry D. Beazer, Marion I. Beazer and Leonard L. Jensen and Mark Baldry is dismissed in its entirety. [ 99 ] The parties have not spoken to the matter of costs. If they are unable to agree they can apply to the Court on notice.

Heard on the 6 th , 8 th , 9 th , 10 th , 20 th , 21 st , 22 nd , 23 rd , and 24 th day of October, 2014, and the 12 th and 14 th day of November, 2014, and the 15 th and 16 th day of March, 2016. Dated at the City of Lethbridge, Alberta this 11 th day of October, 2016. J.H. Langston J.C.Q.B.A. Appearances: D. C. Thompson, D. C. Thompson Law Office for Harry D. Beazer, Marion I. Beazer and Leonard L. Jensen K. Staroszik, Q.C., Wilson Laycraft

for James Tollestrup, Litigation Representative for the Estate of Carol Mary Tollestrup G. G. Chase, Miles Davison LLP Edward W. Halt, Q.C., Peacock Linder Halt and Mack LLP for Mark A. Baldry