2012 NBCA 56, 2012 NBCA 56

COURT OF APPEAL OF NEW BRUNSWICK 155-10-CA THE ESTATE OF AMÉDÉE GOGUEN, deceased, EVA NICKERSON and RITA EARLE, administrators of the Estate of Amédée Goguen APPELLANTS LA SUCCESSION D’AMÉDÉE GOGUEN, personne décédée, EVA NICKERSON et RITA EARLE, administratrices de la succession d’Amédée Goguen APPELANTES - and - - et - ALICE HACHEY RESPONDENT ALICE HACHEY INTIMÉE Goguen (Estate of) v. Hachey, 2012 NBCA 56 Goguen (Succession) c.

Hachey, 2012 NBCA 56 CORAM: The Honourable Justice Richard The Honourable Justice Bell The Honourable Justice Quigg CORAM : L’honorable juge Richard L’honorable juge Bell L’honorable juge Quigg Appeal from a decision of the Court of Queen’s Bench: October 25, 2010 Appel d’une décision de la Cour du Banc de la Reine : Le 25 octobre 2010 History of case: Decision under appeal: Unreported Preliminary or incidental proceedings: N/A Historique de la cause : Décision frappée d’appel : Inédite Procédures préliminaires ou accessoires : S.O.

Appeal heard: November 16, 2011 Appel entendu : Le 16 novembre 2011 Judgment rendered: June 28, 2012 Jugement rendu : Le 28 juin 2012

Reasons for judgment by: The Honourable Justice Bell Motifs de jugement : L’honorable juge Bell Concurred in by: The Honourable Justice Richard The Honourable Justice Quigg Souscrivent aux motifs : L’honorable juge Richard L’honorable juge Quigg Counsel at hearing: For the appellants: Brian Delaney For the respondent: Thomas Maillet and Emilie Savoie Avocats à l’audience : Pour les appelantes : Brian Delaney Pour l’intimée : Thomas Maillet et Emilie Savoie THE COURT The appeal is dismissed, and the respondent isentitled to costs of $3,500. LA COUR L’appel est rejeté et l’intimée a droit à des dépens de3 500 $.

English version of the decision of the Court delivered by BELL, J.A. I. Introduction [1] Eva Nickerson and Rita Earle, administrators of the estate of Amédée Goguen (“Mr.Goguen”), appeal a decision rendered on October 25, 2010, by a judge of the Court of Queen’s Bench: Goguen (succession) v. Hachey,2010 NBQB 370, 364 N.B.R. (2d) 381. At trial, the appellants disputed the validity of a beneficiary card signed under the Credit UnionsAct, S.N.B. 1992, c. C-32.2 (the “Act”).

Although the expression “beneficiary card” does not appear in the Act, s. 47(2) allows a memberof a credit union to “nominate a person to whom the member’s interest in the credit union is to pass and vest upon the member’s death”,by “document, signed by the member, witnessed, and filed with the credit union.” For the sake of simplicity, I will employ theexpressions “beneficiary card” or “nomination of beneficiary” to refer to the document, signed under s. 47(2) of the Act, which is thesubject matter of this litigation. [2] In addition, while on the subject of terminology, I note that the French expressions “abusd’influence” and “influence indue” are used interchangeably to translate “undue influence”.

The Supreme Court used the expression“abus d’influence” in Vout v. Hay, (SCC), [1995] 2 S.C.R. 876, [1995] S.C.J. No. 58 (QL) and Geffen v. GoodmanEstate, (SCC), [1991] 2 S.C.R. 353, [1991] S.C.J. No. 53 (QL). This Court used it in DeWitt v. Williams, DeWitt andNason, 2005 NBCA 69, 286 N.B.R. (2d) 50; Murphy v. Hoyt, 2004 NBCA 19, 268 N.B.R. (2d) 322; Sweed Estate, Re (1988), (NB CA), 91 N.B.R. (2d) 416, [1988] N.B.J. No. 1045 (C.A.) (QL) and Spence Estate, Re (1988), (NBCA), 87 N.B.R. (2d) 415, [1988] N.B.J. No. 236 (C.A.) (QL).

However, the expression “influence indue” appears in older decisions ofthe Supreme Court: see Goldsworthy v. Thompson, (SCC), [1975] 2 S.C.R. 271, [1974] S.C.J. No. 96 (QL); andSchwartz v. Schwartz, (SCC), [1972] S.C.R. 150, [1971] S.C.J. No. 96 (QL). This Court used the same expression in

Breau v. The Estate of Ernest St. Onge et al., 2009 NBCA 36, 345 N.B.R. (2d) 101 and McKean Estate, Re (2000), (NB CA), 224 N.B.R. (2d) 321, [2000] N.B.J. No. 43 (C.A.) (QL). [3] Since the expression “undue influence” is used in the English version of each of the decisionsreferred to, the expressions “abus d’influence” and “influence indue” carry the same meaning. Although this Court recently employedthe expression “influence indue”, the Supreme Court seems to prefer “abus d’influence”. Therefore, I will use the expression “abusd’influence” in these reasons. [4] To sum up, the administrators contend that when Mr.

Goguen signed a beneficiary card at theCaisse populaire de Kent-Centre, he lacked the requisite mental capacity, and that the respondent exerted undue influence on him at thetime he signed it. II. Background [5] Mr. Goguen died intestate on August 12, 2007, at the age of 95. He never married and waschildless. However, he still had three sisters living at the time of his death: Rita LeBlanc, Eva Nickerson and Irène Hachey. Ms. Hacheyis the mother of Jean-Paul Hachey, Roger Hachey and Rita Earle. Mrs. Nickerson and Mrs. Earle are the administrators of Mr. Goguen’sestate.

The respondent, Alice Hachey, is married to Roger Hachey. [6] Mr. Goguen remained very close to his younger brother, Wilfred, until the latter’s death in2005. Wilfred was the sole beneficiary and executor of Mr. Goguen’s estate under a will signed in 1983. In 1986, Mr. Goguen alsodesignated Wilfred as sole beneficiary of his account with the Caisse populaire. [7] In 2000, Mr. Goguen moved in with Wilfred, as Wilfred was no longer able to live on his own.Wilfred became seriously ill in 2004. As a result, he asked Alice Hachey to help Mr.

Goguen and to take care of the house while he wasin the hospital, since she lived nearby and visited him on occasion. Alice was acquainted with Mr. Goguen since her marriage to RogerHachey in 1967, and, according to the trial judge, she and Mr. Goguen shared some “common interests” (para. 12). [8] In 2005, Wilfred’s death being imminent, Mr. Goguen was forced to move into a nursinghome. However, at Wilfred’s request, Alice was to continue caring for him once he moved to the home. Wilfred suggested toMr. Goguen that he change the beneficiary of his bank account, and Mr.

Goguen went to the Caisse populaire de Kent-Centre onFebruary 28, 2005, with Alice’s help. The evidence shows that Mr. Goguen did not inform Alice of his intentions, and that she stayed inthe car while Mr. Goguen took care of his business. According to the trial judge, it is upon leaving the Caisse that Mr. Goguen toldAlice: “Now it’s yours” (para. 41), thus informing her that he had named her beneficiary of his account. [9] After Mr. Goguen’s death, Mrs. Nickerson and Mrs. Earle applied to be appointedadministrators of Mr. Goguen’s estate.

After their appointment, they found that the estate had mostly devolved to Alice through thebeneficiary card. They later disputed the validity of the card, alleging that Mr. Goguen lacked the requisite mental capacity when hesigned it, and was the subject of undue influence by Alice. III. Trial decision [10] The trial judge began his analysis by noting that the requirements regarding capacity and undueinfluence which apply to wills also apply to beneficiary cards. He then referred to Randall v.

Hare, 2010 NBQB 85, 356 N.B.R. (2d)263, in support of his finding that the onus of proving undue influence rests on the party who contests the validity of the card, while theonus of proving capacity rests on the party who defends it if a doubt is raised in that regard. [11] Applying these principles, the trial judge found that the administrators had produced littleevidence in support of their arguments, and he gave little weight to their evidence.

He did not find any evidence of duress with regard tothe allegation of undue influence, and found that the circumstantial evidence did not allow him to draw any inference in that regard. [12] In his assessment of the witnesses’ credibility, the judge noted that Alice’s testimony wasconsistent and precise, and that Alice [TRANSLATION] “was not on the defensive” (para. 64). Conversely, he considered that the

administrators’ testimonies were inconsistent and that [TRANSLATION] “far-fetched explanations were given for relevant facts or situations [such as] Mr. Goguen’s mental and physical condition” (para. 66). He added the following regarding the administrators’ evidence: [TRANSLATION] There is no doubt that the plaintiffs meant to present Mr. Goguen as suffering from mental illness and easy to influence. Some parts of their oral evidence were clearly contradicted by other witnesses for the defence. These statements were unquestionably meant to further their personal interests.

It cannot be disputed that their statements concerning the signing by Mr. Goguen of the beneficiary card and the events preceding it were exaggerated and without merit. Nothing in the medical records adduced into evidence gives rise to any doubt regarding mental capacity. […] In all respects, where there were contradictions between the plaintiffs’ evidence and that of Mrs.

Hachey or the employees of the nursing home, I prefer the latter. [ paras . 67-68] [ 13 ] In short, the trial judge was of the opinion that the administrators [TRANSLATION] “should have realized that their action was totally devoid of merit” (para. 79). He found that [TRANSLATION] “they were motivated by greed and by the hope of benefitting from their uncle’s estate” (para. 80), and that on the whole they did not act in the interest of the estate. For that reason, the Court ordered that the administrators be held personally responsible for the costs. IV.

Issues [ 14 ] The appellants rely on the following grounds of appeal: 1) Did the trial judge err in law in refusing to apply a presumption of undue influence? 2) Did the trial judge err in law in ordering that the administrators be held personally responsible for the costs? They abandoned the third ground of appeal which raised an issue of hearsay. V. Analysis and decision A. Undue influence [ 15 ] The appellants contend the trial judge erred in applying testamentary law to determine undue influence.

They maintain the relevant principles are those applying to inter vivos gifts, and that the judge erred in law in indicating that the onus of proving undue influence rested on the appellants.

(1) Burden of proof with regard to undue influence [ 16 ] In matters of undue influence, the burden of proof differs depending on whether the gift is inter vivos , or takes effect upon the donor’s death.

[17] When the gift takes effect during the life of the donor, the onus of proving the absence of undueinfluence rests on the party defending the validity of the gift. In such cases, the person contesting the gift may demonstrate that there wasa relationship of influence or trust between the donor and the beneficiary of the gift, such that a presumption of invalidity should apply(see Krys v. Krys, (SCC), [1929] S.C.R. 153, [1928] S.C.J. No. 86 (QL) and Csada v. Csada, (SKCA), [1984] S.J. No. 925 (C.A.) (QL), leave to appeal refused [1985] S.C.C.A. No. 209 (QL)).

The Csada decision notes that apresumption of invalidity also applies to a gift within the context of a fiduciary relationship (para. 19). The principle was summed up byA.H.

Oosterhoff in Oosterhoff on Wills and Succession, 6th Ed., (Toronto: Thomson Carswell, 2007): With respect to Inter vivos gifts, if the person who receives the gift was in a position to exert undue influence over the donor and stood ina fiduciary or confidential relationship to him or her, a presumption of undue influence is raised. [p. 225] [18] However, a person who defends a gift made in such circumstances may rebut this presumptionon a balance of probabilities (Oosterhoff, p. 225).

The application of these principles is dependent upon the circumstances of therelationship between the donor and the recipient. [19] Conversely, where the recipient only receives the gift upon the donor’s death, the onus ofproving undue influence rests on the party who disputes the validity of the gift. In Stephens v. Austin, 2003 BCSC 341, [2003] B.C.J. No.470 (QL), Neilson J. set out these principles in the following manner: In the case of testamentary instruments, the burden of proof with respect to undue influence lies on those attacking the will.

Suspiciouscircumstances surrounding its execution, while relevant, do not give rise to any presumption that assists in discharging that burden: Voutv. Hay, (SCC), [1995] 2 S.C.R. 876 at para. 28. [para. 162] [20] Therefore, there is no presumption of undue influence where suspicious circumstances existsurrounding a testamentary gift. Rather, such circumstances constitute relevant evidence. Suspicious circumstances only displace theburden of proof to the party defending the will when testamentary capacity is called into question (Vout v.

Hay, at paras. 19-22 and 26).In Vout, the Supreme Court described suspicious circumstances as follows: The suspicious circumstances may be raised by (1) circumstances surrounding the preparation of the will, (2) circumstances tending tocall into question the capacity of the testator, or (3) circumstances tending to show that the free will of the testator was overborne by actsof coercion or fraud. [para. 25] [21] For undue influence to be proven in one of these three cases, or in other circumstances, it mustbe shown that the person making the gift was subjected to coercion by the recipient of the gift (Marsh Estate, Re, (NSCA), [1991] N.S.J.

No. 230 (C.A.) (QL)).

(2) Is the nomination of a beneficiary comparable to a testamentary instrument? [22] Beneficiary cards signed under the Credit Unions Act are different from wills. They are not akinto simple gifts which come into effect upon the donor’s death, since a nomination is valid even though it does not meet the tests set out inthe Wills Act, R.S.N.B. 1973, c W-9 (Halsbury's Laws of Canada, 1st Ed., (Markham, Ont.: LexisNexis, 2009), at p. 204; Mary JaneMossman and William F.

Flanagan, Property Law, Cases and Commentary, 2nd Ed. (Toronto: Emond Montgomery Publications, 2004),at p. 476). [23] However, the issue here is whether such a nomination is sufficiently similar to a testamentaryinstrument such that the testamentary test pertaining to undue influence is applicable.

Section 47 of the Act reads as follows:

[…] 47(2) A member of a credit union may, by document, signed by the member, witnessed, and filed with the credit union, nominate aperson to whom the member’s interest in the credit union is to pass and vest upon the member’s death. 47(3) The interest of the member referred to in subsection (2) shall, on the death of that member, pass and vest in the person sonominated as fully as though passed and vested during the lifetime of the member. 47(4) A member of a credit union may vary or revoke a nomination made by the member under subsection (2) by a document, signed bythe member, witnessed, and filed with the credit union. [Emphasis is mine.] [24] Notwithstanding the tests set out in the caselaw to distinguish testamentary gifts from inter vivosgifts (see Elliott v.

Turner and Turner, (ON SC), [1944] O.J. No. 508 (H.C.) (QL) and Anderson Estate v. Polson, 2003BCSC 1721, [2003] B.C.J. No. 2617 (QL)), the issue in this matter is the

interpretation of s. 47(3), which provides that “[t]he interest ofthe member [...] shall, on the death of that member, pass and vest in the person so nominated as fully as though passed and vested duringthe lifetime of the member.” [25] A nomination made under s. 47 of the Act only takes effect upon the death of a member.However, s. 47(4) allows the person who made a nomination to vary it during his or her life. This demonstrates that a nomination madeunder the Act can be revoked. These are two important characteristics of a testamentary gift. [26] In addition, the only possible

interpretation of the phrase “as fully as though passed and vestedduring the lifetime of the member” which is harmonious with the intention of the Legislature is one that does not raise a presumption ofinvalidity pertaining to beneficiary cards. As a result, the burden of proving undue influence should rest exclusively on the party whoalleges it, as in the case of testamentary instruments.

This finding is compatible with the clear intention of the Legislature that abeneficiary card takes effect upon the death of the donor, absent its validity being called into question by an allegation of undueinfluence. [27] Other courts have ruled on instruments that compare with wills. In Fontana v. Fontana, [1987]B.C.J. No. 452 (S.C.) (QL), the British Columbia Supreme Court examined the validity of a designation of beneficiary in a life insurancepolicy. Callaghan J. relied on Tamblyn v. Leach, [1981] M.J.

No. 39 (Q.B.) (QL) (“Tamblyn”), which dealt with the validity of anomination of beneficiary through which the deceased bequeathed his pension benefits. The judge in Tamblyn stated the following: I concur with the submission of counsel for the plaintiffs that a designation of beneficiary of the character in issue here can best becompared to a testamentary disposition.

Therefore I see no reason why the principles referred to should not be appropriate in consideringthe validity of a designation of this kind. [para. 19] [Emphasis is mine.] Concurring with this opinion, the judge in Fontana found as follows: [A] designation of beneficiary is more closely akin to a will than a gift inter vivos, and as such should be treated in law like a will.Consequently a presumption of undue influence is not available to the plaintiff in this case. [28] In Stewart v. Nash, (ON SC), [1988] O.J.

No. 960 (H.C.J.) (QL), Steele J.confirmed that with regard to a nomination of beneficiary in a life insurance policy and a pension plan, the onus of proving undueinfluence rested on the party contesting the nomination. Steele J. said the following: The onus is upon the wife who attacks these designations to show that they were signed while the husband was under the undueinfluence of Nash. I am supported in this view of onus by the decision in Tamblyn v Leach; Public Trustee of Manitoba v Leach, (1981) (MB KB), 13 Man. R. (2d) 398, 10 E.T.R. 178, and in Fontana v Fontana […]. [para. 19]

[ 29 ] In Flack v. Rossi , 2008 BCSC 670 , [2008] B.C.J. No. 964 (QL) , Parrett J. reaffirmed the principles applicable to the onus of proving undue influence with regard to the nomination of a beneficiary of pension benefits. He found that such a nomination is similar to a testamentary provision: Within these principles the 1993 Nomination Form and the 1998 Pension Application beneficiary designated are c onsidered to constitute testamentary dispositions under which the plaintiffs cannot rely on any presumption of undue influence.

With respect to these documents the plaintiffs bear the onus of proving that the defendant exerted undue influence on the deceased to cause him to name the defendant as one of three beneficiaries in 1993 and as the sole beneficiary in 1998. [ paras. 89-90] [Emphasis is mine.] [ 30 ] In conclusion, I am of the opinion the beneficiary card signed under s. 47 of the Credit Unions Act is more akin to a testamentary provision than to an inter vivos gift. Considering the nature of the beneficiary card, I find that the presumption of undue influence does not apply.

The onus of proving undue influence on a balance of probabilities rested on the appellants . Therefore, the trial judge did not err in law in applying the testamentary test . For this reason, I would dismiss the first ground of appeal. B. Personal responsibility regarding costs [ 31 ] The appellants contend the trial judge’s decision to order that costs be personally paid by the administrators is clearly wrong. They claim the judge erred in finding there was no evidence of Mr. Goguen’s alleged incapacity. In addition, they maintain that there was sufficient evidence to raise a presumption of undue influence.

Since I have already determined that such a presumption does not apply in the instant case, there is no need for me to consider this issue further. I would state, however, that I agree with the trial judge that there was no evidence of undue influence. [ 32 ] In Breau v. The Estate of Ernest St. Onge et al . , this Court noted that a certain confusion had developed regarding the rules which apply to costs in matters relating to estates (para. 53) and clarified the law . The Court acknowledged that the rule that costs are in the cause in matters of succession is subject to certain exceptions which can arise in the

interpretation of a will or a document establishing a trust. [ 33 ] Such an exception is described in Jumelle v. Soloway Estate , 2001 MBCA 61 , [2001] M.J. No. 178 (QL) , where the Manitoba Court of Appeal stated that a party who brings an action on behalf of an estate in circumstances where there is no substantial merit to the litigation is personally responsible for paying the successful party’s costs. This principle was cited with approval in St. Onge (para. 63). [ 34 ] In the instant case, the issue is whether the litigation was without substantial merit.

The trial judge found that the administrators should have realized their application had no merit. This is an inference for which the standard of review is that of palpable and overriding error. The trial judge had the opportunity to hear all of the evidence, observe the administrators’ demeanor, determine the credibility of the witnesses and rule on whether there was evidence which could constitute a basis for an action. He made the following findings: [TRANSLATION] 71 I reached the conclusion that the plaintiffs’ allegations are without merit . To contend that Mrs. Hachey could have influenced Mr.

Goguen’s actions is pure hogwash. It is an attempt to take advantage of the situation after learning the value of Mr. Goguen’s estate upon his death. 72 One would have to be very ill-intentioned to claim that Mr. Goguen was afflicted with mental incapacity. The fact that they commenced this action and claimed to do it as representatives of Mr. Goguen’s estate has not been well received at all . In bringing this action, the plaintiffs, Eva Nickerson and Rita Earle, were solely motivated by the prospect of easy financial gain. The interest of Mr. Goguen’s estate was never considered.

A reading of the documents prepared in the course of their inquiry is sufficient to conclude that these people were very ill-intentioned. They absolutely disrespected Mrs. Hachey with their sordid allegation of undue influence. Both in manner and speech, Mrs. Hachey presented herself as a generous person toward Mr. Goguen, which this Court recognizes.

[ Goguen , paras. 71-72] [ 35 ] In the absence of any palpable and overriding error, I must show deference to the trial judge. No such error is present since the evidence supports the findings. Therefore, I would dismiss the second ground of appeal. VI. Disposition [ 36 ] I would dismiss the appeal and order the administrators, Eva Nickerson and Rita Earle personally, to jointly pay the costs on appeal, which are set at $3,500. _____________________________ B. Richard Bell, j.c.a. NOUS SOUSCRIVONS À L’AVIS : ________________________________ J.C. Marc Richard, j.c.a. _________________________________ Kathleen A. Quigg, j.c.a.