Duhn Estate, 2021 ABQB 35

Court of Queen’s Bench of Alberta Citation: Duhn Estate, 2021 ABQB 35 Date: 20210113 Docket: ES01 125134 Registry: Calgary Court File Number ES01 125134 Court Court of Queen’s Bench of Alberta (Surrogate Matter) Judicial Centre Calgary Estate Name Alice Jean Duhn Applicants Randall Duhn and Deanna Forest Respondents Michael Bruce Johnson and William Halden Anderson, Rosalund Linda Johnson, Rhonda Lucille Calon, Teresa Jean Anderson, Crystal Andrea Palin, and Glenn Anders Duhn Personal Representatives Michael Bruce Johnson and Wiliam Halden Anderson _______________________________________________________ Memorandum of Judgement of the Honourable Madam Justice K.M.

Eidsvik _______________________________________________________ [ 1 ] The Applicants, Randall Duhn and Deanna Forest, children and beneficiaries of the testator, Alice Jean Duhn, (the “Testator”) seek full financial disclosure regarding inter vivos transfers of money and real and personal property made by the Testator during the last four years of her life.

[ 2 ] The Respondent Personal Representatives of the Testator, her grandchildren Michael Johnson and William Anderson, take the position that they investigated and reported about the Testator’s assets as they existed at the date of her death. They were never instructed or authorized by the Testator to review or investigate transactions made prior to her death, and there is no legitimate reason or duty to do so here. Nor do they have consensus from the beneficiaries to investigate further.

They seek the direction of the Court. [ 3 ] The Respondents Rosalund Linda Johnson and Rhonda Lucile Calon, also children of the Testator, support the application for further financial disclosure. The remaining children and Respondents, Teresa Jean Anderson, Crystal Andrea Palin and Glenn Anders Duhn object to any further documentary production. Overview [ 4 ] The Testator died March 27, 2018 at 84 years old.

She had seven children and lived on a successful farm with her husband Robert Larsen Duhn, who pre-deceased her on March 30, 2014. [ 5 ] The family farm was sold in around 2009 and several million were transferred to the Testator, her late husband, and two of the children who had had interests (Randall Duhn and Glenn Duhn). When Robert Duhn died in 2014, he left his whole estate to the Testator. Over the next four years, the Testator spent a great deal of that money (several million) on her children and grandchildren.

By the time of her death, her estate was worth approximately $4.5 M – several million less than it had been in 2014. [ 6 ] The Testator was competent throughout her life. Dr. Emery, who had been her personal physician for 20 years indicated in April 22, 2017 that she was “in full control of her mental faculties.” The Applicants led evidence of some confusion she experienced when she suffered a bout of sepsis. If anything, this was a temporary problem that resolved quickly. [ 7 ] The Testator was very involved in her financial affairs. She kept meticulous notes of all of her financial activity.

She wrote checks, visited the bank, her doctor and her lawyer frequently. She was fully aware of what she wanted to do with her estate – and specifically that she wanted to give a lot of it away before she died. This, she accomplished. [ 8 ] The Testator had some physical mobility problems and could no longer drive. She relied on her children, and especially Teresa Anderson, Crystal Palin and Glenn Duhn, in the latter part of her life, for help with some chores. However, she lived independently and was never isolated.

She was in charge of her life and her affairs. [ 9 ] There is no action alleging that the Testator’s will, that split her estate evenly between all of her children, is invalid on the basis that the Testator lacked capacity or was unduly influenced. Nor is there any action that any inter vivos gift is invalid.

Instead, the Applicants seek to review the Testator’s financial affairs and decisions she made prior to her death, based on allegations made in this application for disclosure, that she may have lacked capacity, was unduly influenced and that certain transactions may have been made without her knowledge by way of forging her signature. Accordingly, the Applicants maintain, her estate may have other assets that should be included in it for distribution.

Issue [ 10 ] Should the Personal Representatives disclose to the Applicants and other beneficiaries financial information for the period of 4 years before the Testator’s death? Position of the Parties Applicants’ position [ 11 ] The Applicants, two children of the Testator, and joined by two others, the Respondents Rosalund Johnson and Rhonda Calon, (the group of which I will refer to as the Applicants), argue that the Personal Representatives have a duty to ascertain the assets of the Estate.

They rely on the Estate Administration Act SA 2014, c E-12.5, s. 7(1) (a), that states that identifying the estate assets and liabilities should include assets transferred prior to death. [ 12 ] The parties rely on the decision of Justice Lema in Novosell v Bolster 2019 ABQB 18 where he ordered a fuller accounting of the pre-death activities of the testator in that case. There, the testator had transferred a great deal of his estate to the Respondent, and others, that they were seeking to review.

Justice Lema held, in face of evidence of incapacity and allegations of forgery and transfers without consideration, that where there was a possibility that the estate retained a beneficial interest in property transferred prior to death, a proper accounting must include those assets which may have been held in trust for the estate.

Reliance was also had on Surrogate Rule 98(5). [ 13 ] Further, the Applicants argue that: • some gifts may have been made gratuitously or for nominal value and as accordingly they are presumed to be held in a resulting trust – this should be investigated. • some documents which evidenced a gift were potentially forged in that they were photocopies of the Testator’s signature. They may not express her true intentions. • it is suspicious that certain gifts were given to two children, Glenn Duhn and Teresa Anderson, both by cheque and by bank

transfer on the same day. They say that this is a rebuttable presumption of fraud. • that there was undue influence between Teresa Anderson, Crystal Palin and Glenn Duhn in terms of their gifts and sale transactions below value that needs to be rebutted. • that the Testator “may not have had the capacity to make all of the alleged gifts” (para 147 of the Applicant’s brief). This needs to be investigated.

There was “unconscionable procurement” in that regard. • that since Teresa Anderson was a joint signatory on the Testator’s joint account, she was a trustee and must account to the personal representatives and the beneficiaries. • that the Personal Representatives agreed to provide disclosure and the List of Gifts that was provided on February 11, 2019 is not sufficient. • Enhanced costs are appropriate as against Teresa Anderson and the Personal Representatives. [ 14 ] The Applicants initially sought an extensive accounting during the period between March 30, 2014 to March 28, 2018.

At the hearing, in light of concerns raised, as an alternative position, they sought only a copy of the bank records for this period, a copy of the Testator’s handwritten notes regarding her financial transactions, and documentation with respect to land and property transactions between the testator and Glenn Duhn..

Personal Representatives’ and Respondents’ position [ 15 ] The Personal Representatives and objecting Respondents, including Teresa Anderson, Glenn Duhn, and Crystal Palin, (who I will refer to as the “Respondents”), deny that it is their duty or obligation in these circumstances to provide the private information of the Testator for any period prior to her death. [ 16 ] They argue that financial disclosure for the period requested is not appropriate for the following reasons: • The Applicants have not brought any action with respect to any of the allegations and they have not met the minimal evidentiary threshold that is necessary to have pre-death financial disclosure ordered. • the Testator was competent throughout and made her wishes clear that she wanted to make large gifts to her children prior to her death. • The Testator had the right to keep her financial transactions private even after her death • the Testator took significant steps to ensure that her gifts would be valid and visited her solicitor and doctor on multiple occasions to ensure that this was the case.

This included changing her will to add a “no contest” clause to attempt to avoid litigation over her estate once she passed. • on the advice of her solicitor she tried to document her gifts – this included noting the gifts on pre-printed documents that were photocopied (including her signature on them in some instances) for convenience sake – there were no “forged” signatures involved and if the Applicants want to allege fraud then they should start the appropriate action. • there is nothing necessarily suspicious about the fact that identical cheques and separate gifts were granted to Teresa Anderson and Glenn Duhn from the bank on the same day.

Nor is there evidence that the sale transaction with Glenn Duhn was for an inappropriate amount – in any event it need not be investigated. • there is no evidence of undue influence – the Testator was competent and independent. She lived on her own and only required occasional help because of her physical disabilities. She was never isolated and had her own friends that she kept in touch with. She had strong opinions that the Applicants did not agree with.

She was quite private about her affairs in the last years of her life and did not want all of her family to know about what gifts she was giving to whom. • There is no evidence that she lacked capacity when she made any particular gift or sale transaction – quite the opposite in fact. • Although Teresa Anderson was on a joint account with the Testator, she did not manage the Testator’s financial affairs. The Testator made all the of her own financial decisions, wrote her own cheques or visited the bank personally. She kept meticulous notes of her transactions.

In these circumstances it is not appropriate or necessary for Teresa to pass accounts. Teresa Anderson never exercised the Power of Attorney that the Testator granted her as it was never necessary. Any duty to account would have been owed to the Testator only. She has filed affidavit evidence and has been extensively cross-examined. • The List of Gifts is sufficient disclosure of the gift transactions that occurred prior to the Testator’s death.

It balanced some transparency with the privacy concerns of the Testator. • Enhanced costs against the Personal Representatives or Teresa Anderson would be wholly inappropriate. Analysis Must Personal Representatives account for pre-death financial

transactions of a testator? [ 17 ] Personal representatives owe a duty to account for the administration of a testator’s estate. This is a “core task” set out in the Estate Administration Act . Our Surrogate Rules 97-117 detail the accounting obligations. A good

summary of this law is set out in Novosell at paras 40-42 and 53-55 . [ 18 ] The accounting period is generally for the period of the administration of the estate, that is, for the period after the testator’s death once the assets have been listed. [ 19 ] Here, as mentioned, the Applicants seek an accounting and further document production for the period prior to the Testator’s death.

A myriad of cases have been provided dealing with financial document production orders dealing with a testator’s pre-death finances but usually, these orders are made only in situations where there was a prior duty under a power of attorney or other formal trustee relationship to account for, the production is ordered in conjunction with an action for undue influence or lack of capacity, or importantly, they are made in circumstances where there is “a minimal evidentiary threshold” of evidence that there was a lack of capacity, fraud, or sufficient evidence of other suspicious circumstances needing the intervention of the court to shed light, on what otherwise would be private information of the testator (as in Novosell ). [ 20 ] Rarely, if ever, will the court order an investigation into a competent testator’s private pre-death financial affairs without an evidentiary threshold that raises a “significant concern” that there has been some potential abuse that needs to be investigated further, and then, only after considering a testator’s privacy rights: see the discussions in Seepa v Seepa , 2017 ONSC 5368 , Robertson v Harding , 2018 MBCA 67 at paras 44 and 45 , Tinline v Tinline Estate , 2013 SKQB 167 , Fair v Campbell Estate 2002 OJ No 5926 and Gastle v Gastle , 2014 ONSC 7099 . [ 21 ] I disagree with the Applicants that Novosell stands for the proposition that in order for a personal representative to administer an estate, a complete accounting must be done of a competent testator’s pre-death financial affairs.

Justice Lema stated at paras 59 – 60: “It may be that Brian [the executor] paid fair market value for the lands, or that Roy [the testator], with full capacity, decided to gift the lands to Roy and did so via valid transfers....In such instances, the omission in Brian’s accounting of any reference to the lands would be justifiable.” (italics mine).

Notably, Justice Lema went on to find that there was sufficient evidence of mental incompetency of the testator, including medical records of the testator’s mental and physical health, coupled with evidence of “notional consideration” paid to the testator for property, which provided the basis to order the production of further particulars. [ 22 ] The Applicants also submit that an accounting must be ordered since Teresa Anderson was on the joint account of her mother, the Testator. As such, they argue, she was a trustee over the bank accounts.

Further, that the court then has the inherent authority to order a trustee to account. [ 23 ] The Respondents argue that here Teresa Anderson is not making any claim over the property in the joint account and points out that the only reason she was placed on the joint account after her father’s death was for convenience. Unlike the situation in Re Mittelstadt Estate , 2002 ABQB 656 , where a joint trustee holder was ordered to account because he had intermingled his funds with the other joint holder of the account and had used it to pay his own debts, here there is no evidence that Teresa Anderson did the same.

Indeed, the evidence is the opposite – the Testator wrote her own cheques or made her transactions personally at the bank. [ 24 ] In my view, there may be instances where an accounting when a joint account holder has used the account (like the one in Mittelstadt ), but I disagree that the law is as suggested by the Applicants, that is, in all cases a joint account holder must account for all transactions in the joint account.

Where the testator, a joint account holder, is competent, and has been making most, if not all of the decisions regarding the account, then how can a joint holder of the account possibly account? They would be put in an impossible position of trying to explain transactions for which they had no influence or involvement: see Campbell Estate at paras 29-33. [ 25 ] Justice Barrington-Foote explained it well in Tinline at paras 21 and 22 : The fact that the court has the authority to grant an order for an accounting does not mean I must grant that order.

That is so notwithstanding the language of s. 55(1) of The Trustee Act, which states that the trustee shall provide an accounting on request. The learned authors of Waters’, supra, make the point in the following terms (at pps. 1065-66): ... As far as asking the court for an accounting is concerned, none of these persons has an absolute right. As we have seen, harassing the trustee is vexatious litigation, and whether the court will order an accounting depends entirely upon the court’s discretion and the circumstances of the case.

Only where the trustee can be shown to be in default of his duties will this normally be given.... See also Liddell v. Deacou, [1873] O.J. No 148 (QL) (Ont. Ct. Ch.) . Although it is my view that it is not always necessary to prove that there has been a default by the trustee before an accounting is ordered, an accounting should not be ordered if no cause is shown. In this case, the applicant has failed to meet that burden.

He has asked for an order that the respondent account despite the fact that there is no evidence she exercised her authority except to carry out very limited and specific instructions from the grantor. There is no evidence she exercised her authority after he became incompetent. A property attorney should not be required to provide an accounting for a period when her power was neither effective nor exercised, and in the absence of evidence that she had exercised her authority other than as instructed and in what was essentially an agency capacity. I note on this point the reasoning in Fair v.

Campbell (Estate), 3 E.T.R. (3d) 67, [2002] O.J. No. 5926 (QL) (Ont. Sup. Ct.), at paras. 29 - 33 . [ 26 ] See also Lacroix v Kelman 2015 ONSC 19 , where Ms. Kalman held a joint account with her mother for many years while her mother was competent. At one point her mother became incompetent and Ms. Kelman then exercised a power of attorney over her mother’s affairs. She was only ordered to produce bank records for the period after her mother’s incompetence, not before. [ 27 ] I also note some suggestions in the Applicants brief that Ms. Anderson must account since she was a Power of Attorney.

Although, the Testator named Teresa Anderson as a potential Power of Attorney, this was never exercised since she was competent to

her death. Accordingly, Ms.

Anderson never became a Power of Attorney trustee of the Testator’s estate prior to death for this alleged reason. [ 28 ] In sum, although I agree that a personal representative has to review certain financial information of a testator in order to properly list their assets, and may in this regard, in certain circumstances, have to account for pre-death financial transactions of a competent testator, these circumstances should be extremely limited (i.e. where there is sufficient evidence of the need to do so) and allowed only when also balancing the testator’s rights to privacy and control over their estate.

Nor, for the same reasons, must a joint account holder with a competent testator necessarily need to account to the personal representative, although in some limited circumstances it may be warranted.

Should an accounting of the Testator’s financial situation be ordered for 4 years prior to her death? [ 29 ] Considering that I agree that in certain limited circumstances the court has the ability to order further financial accounting of pre-death transactions, the more difficult question to be answered here is whether further financial documentation should be ordered. [ 30 ] Firstly, I must deal with the Applicants’ allegation that the Testator may have been incompetent when making some of the gifts she made.

This suggestion was made on the scant evidence that at one point she was having confused thoughts while being transported to the hospital. This has been explained by the fact the Testator was suffering from sepsis when being transported – and that this was therefore a very temporary condition. [ 31 ] The Applicants suggest that “absent evidence to the contrary” it is reasonable to consider that the Testator did not have the capacity to make all the gifts in question.

In my view, firstly, the legal test is not “absent evidence to the contrary” but rather that the Applicants must show “sufficient evidence” of a reason to further investigate, such as evidence of incompetence. [ 32 ] Here there is scant evidence of anything but a brief and treatable period of incompetence and direct evidence of the opposite – i.e. competence until the Testator’s death.

In this regard I rely on the evidence of the Testator’s doctor that she had capacity throughout and the evidence of the “independent” witnesses such as her friend and her brother who swore to her competence until days before her death. The Applicants have not satisfied me that the Testator was anything but competent throughout her life. Any fleeting issues are not relevant to the overall issue here. [ 33 ] The fact that the Testator’s estate’s value decreased substantially between 2014 and 2018, on the face of it raises some concerns. However, this state of affairs has been reasonably answered on the evidence.

The following are the explanations that I accept: • The Testator here declared to her family that she wanted to gift her estate in large measure before she passed away, so the fact that there were large gifts over those years coordinates with that evidence. • The Testator went to great lengths to try and protect her wishes about who and why she gifted to any one party – and in that regard she consulted lawyers, and her doctor regularly. This is evidence that opposes any suggestions that she was being unduly influenced. • The Testator dealt with many requests for funds and allowed most but not all of them.

She was discerning in this regard. There is no evidence that she ever denied any request from any of her children. Indeed, ironically, upon request, she gifted one of the Applicants $1 M but then this Applicant destroyed the cheque. The Testator did treat her children and grandchildren differently in the end, but she kept her will intact dividing her estate equally (despite some thoughts to change that situation). She rightly, or wrongly, had concerns with Randall Duhn, which explains why she left him less than others.

It was her right to do this if she wished. • The issues surrounding the photocopied gift declarations have been satisfactorily explained – in any event this is only evidence of her intention about the gifts and was put into place from legal advice because of her fear of having her wishes challenged by one of the Applicants, Randall Duhn. There is no evidence that the cheques or bank transfers which actually allowed the transfers to be made were forged.

And without more, an order allowing the Applicants to see each of these transactions and cancelled cheques is not warranted. • With respect to the questions that arose because cheques and bank transfers gifted Teresa Anderson and Glenn Duhn on the same day on April 2, 2015, I note that these transactions occurred years before the Testator’s death. She kept meticulous notes of all of her financial transactions based on all of the evidence (indeed Roselund Johnson’s evidence was that the Testator wanted further reconciliations than what even the bank provided showing a very high level of oversight of her affairs).

I cannot accept that bank transfers of over $1.4 M would have gone unnoticed by this Testator – or that if she had noticed this, years before her death, that she would not have had it dealt with by her solicitor with whom she was in constant contact with. Why she decided to transfer her gifts like this may never be known and it is irrelevant with no credible evidence that this was done improperly. • I do not find that there is “sufficient” or indeed of any evidence of undue influence being placed on the Testator by any of the Respondents.

I note that the Testator lived on her own, visited with friends and family often, and although she needed help to get to certain places, from all accounts she attended when and where she wanted to. Importantly, these visits included meetings with her solicitor, doctor and the bank and she made her wishes known. She was competent until her death as discussed above.

Although she may have been more secretive in her latter years is not, in these circumstances, evidence of any undue influence. • With respect to the sale transaction of land and farm property to Glenn Duhn, the Applicants seek a complete accounting of this transaction. They suggest that Glenn Duhn needs to show that the transaction occurred at fair market value since the Testator had mentioned that sales would occur in this manner.

Again, since the Testator was competent when this transaction occurred and that there is no credible evidence of undue influence or abuse with respect to this transaction, it is not appropriate to order further disclosure surrounding the details. There may be reasonable explanations about how indeed the amount of this transaction could have varied between vague estimate in Robert Duhn’s NC 7 to actual sale amounts, but in any event, it is not the Personal Representatives or other

beneficiary’s business. • The Personal Representatives provided a List of Gifts to shed some transparency over the many gifts that the Testator generously provided to her children and grandchildren prior to her death. They provided this List with some effort to keep the names of the recipients private – which was of great concern to the Testator (indeed she instructed the bank to ensure that the Applicant Randall Duhn in particular not be given any access to her records).

This was an appropriate balance in the circumstances between disclosure and privacy. • The list is overcomplete since it included gifts made outside the 4 years, but it also does not add up to exactly the diminution of the Estate between 2014 and 2018 (about a $1M difference). There was some explanation from Teresa Anderson (who prepared this List as best she could from bank records and the Testator’s meticulous notes) about why there would be a difference, but as I indicated above, since Ms. Anderson was not making the decisions, it is difficult for her to answer – nor should she have to.

Notably however, she filed two affidavits attempting to do so and submitted to lengthy cross-examinations for this application – so the Applicants did have an opportunity to explore, to some extent, noting some objections, about the Testator’s pre-death financial situation through her. [ 34 ] To a certain extent I can understand the Applicants’ concern that they are not party to all of the information their mother kept about her financial business prior to her death so that they can double check all of the transactions she entered into.

Further, it would be fairly economical and not take up too many resources to simply order the alternative request of the Applicants that photocopies of all of her banking records, meticulous notes, and documents relating to the land and property sale to Glenn Duhn, be provided. However, although the economy of providing information is a factor to be considered, and in the circumstances, it is not appropriate here. [ 35 ] Competent testators, like Mrs. Jean Duhn, are allowed to keep their financial decisions private and confidential if they so desire.

Certainly, this Testator’s wishes to do so were plain and evident. The Applicants have not raised a sufficient evidentiary basis for this wish to be displaced in order to allow her beneficiaries to comb though her financial life. [ 36 ] I also want to add a comment about the allegations that the Applicants have made against the Personal Representatives acting improperly or in a biased fashion by failing to provide the extensive level of pre-death information that has been requested.

They suggest that this is in part because one of the Personal Representatives is Teresa Anderson’s son and the fact that her activities may be scrutinised. [ 37 ] Firstly, I note that the other Personal Representative is the son of one of the beneficiaries in favour of the Applicants’ position: Rosalund Johnson. So, any alleged bias, which I do not find, would presumably be both ways. And secondly, I note that Teresa Anderson has not only filed affidavits about her knowledge of her mother’s pre-death estate, but she has been cross-examined on it.

There already has been significant scrutiny over Teresa Anderson’s involvement with her mother’s estate. [ 38 ] The Personal Representatives have been acting reasonably in terms of requests to review and provide information about their grandmother’s life. It was reasonable for them to rely on the List of Gifts prepared by Teresa Anderson without a further accounting audit. It is very unfortunate that they have had to be placed in the middle of this war between their aunts and uncles.

Summary and Conclusion [ 39 ] In

summary, although I agree with the Applicants that this court has the authority to order further production of accounting information for the period prior to the Testator’s death, it is not appropriate to do so here as they have not met the minimum evidentiary threshold to displace this Testator’s rights to keep her pre-death financial life private and confidential as she clearly desired. [ 40 ] The Applicants’ application for further documentary production is dismissed. [ 41 ]

Schedule C Costs incurred by the Respondents Michael Johnson, William Anderson, (on behalf of the Estate and in their personal capacity), Teresa Anderson, Glenn Duhn, and Crystal Palin for this special written application are allowed against the Applicants. They were not successful, and the whole of the Estate should not have to incur the burden of the costs of this application in light of the efforts that the Personal Representatives had already made to enquire into this competent Testator’s pre-death financial life. The Respondents Rosalund Johnson and Rhonda Calon will bear their own costs.

Heard on the 24 th and 25 th days of November, 2020. Dated at the City of Calgary, Alberta this 13 th day of January, 2021. K.M. Eidsvik J.C.Q.B.A.

Appearances: Jared Kantor and Caitlin Merritt for the Applicants Randall Duhn and Deanna Forrest and for the Respondent Rosalund Linda Johnson J. Edward Crane and Yvonne M. Williamson for the Respondents Michael Bruce Johnson and William Halden Anderson John Poyser and Ken Mandzuik for the Respondent Teresa Jean Anderson Layne Thiessen for the Respondent Glen Anders Duhn Predrag Tomic for the Respondent Crystal Andrea Palin William Herman for the Respondent Rhonda Lucille Calon