McLeod v. Balakrishnan, 2018 BCSC 908

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: McLeod v. Balakrishnan, 2018 BCSC 908 Date: 20180601 Docket: S165530 Registry: Vancouver Between: William Ronald Thomas McLeod Plaintiff And: Desmond Balakrishnan, Executor of the Will and Trustee of the Estate of Ross John McLeod, deceased, Sheila Elizabeth McLeod and Malcolm Roy McLeod Defendants Before: The Honourable Mr. Justice Johnston Reasons for Judgment Counsel for the Plaintiff: K.A. Kuntz Counsel for the Defendant: Sheila Elizabeth McLeod S.M. Tucker, Q.C. Counsel for the Defendant: Malcolm Roy McLeod D.J.

Herbert Place and Date of Hearing: Vancouver, B.C. March 16 and 28, 2018 Place and Date of Judgment: Vancouver, B.C. June 1, 2018 [ 1 ] The defendant Malcolm Roy McLeod has brought two applications: the first was brought in July 2017 and sought an order that the defendant Sheila Elizabeth McLeod provide a comprehensive list of documents to include documents described in 21 classes or categories; the second is for an order that Sheila McLeod produce 29 documents requested of her at her examination for discovery on January 18, 2018. [ 2 ] Ms.

McLeod objects to listing or producing the documents sought in the first application, and consents to produce 20 of the 29 documents requested at her examination for discovery on condition that she be given reasonable time to do so. [ 3 ] The action in which the application is brought is a claim under the former Wills Variation Act , R.S.B.C. 1996, c. 490, brought by William Ronald Thomas McLeod, in which he alleges that his late father, Ross John McLeod, failed to make adequate provision in his will for his proper maintenance and support, contrary to s. 2 of the Act.

William McLeod and his brother Malcolm Roy McLeod are the sons of Ross McLeod by his second marriage. [ 4 ] Malcolm McLeod was born July 21, 1992, William McLeod was born December 29, 1994. [ 5 ] Ross John McLeod died September 5, 2011, leaving a will in which, after several specific bequests, he left the entire residue of his estate to his widow, Sheila McLeod.

Malcolm McLeod was 19 years old, William McLeod was 16, when Ross McLeod died. [ 6 ] The specific bequests left two real properties to Sheila, one called Winskill in Delta, B.C., the other a leasehold interest in a property called Knightsbridge in London, England. The will also bequeathed to Sheila all the testator’s shares in Terra Palms Holdings Ltd., Ross McLeod Financial Corporation, and Big Two Investments Inc., as well as his Class A common voting and Class A preferred non-voting shares in Red Dog Financial Corporation.

Sheila McLeod was also given by specific bequest promissory notes payable by either Red Dog Financial or Big Two Investments to Ross McLeod. [ 7 ] I am informed that the residue remaining in the estate after these specific bequests is currently valued at $19 million. [ 8 ] The defendant and application respondent, Sheila McLeod, was Ross McLeod’s third wife. Ross McLeod’s first marriage was of short duration.

His second marriage to the mother of William and Malcolm was longer. [ 9 ] In 2007, following an uncontested trial, Ross McLeod became sole guardian of Malcolm and William, and his home became their principal residence.

[10] When Ross McLeod and Sheila McLeod married, Sheila had three children by a prior relationship. [11] The date of death of Ross McLeod is the point when the question of whether adequate provision has been made for Malcolmand William McLeod is considered: Eckford v.

Vanderwood, 2014 BCCA 261 at paras. 49, 53. [12] If the court concludes that the testator’s will did not make adequate provision for William and Malcolm McLeod, it canconsider circumstances that would have been reasonably foreseeable at the testator’s death, as well as any substantial change in thecircumstances of either or both of William and Malcolm McLeod between the testator’s death and trial, to arrive at what the Courtconsiders to be adequate, just and equitable provision for one or both of them. [13] For the purposes of the applications, I accept the submission of Malcolm that, apart from the estate passing under his will, RossMcLeod had created trusts that included: 1.

McLeod III Trust, of which Sheila, Malcolm and William McLeod are beneficiaries; its after-tax trust assets are valued atapproximately $24,700,000; 2. McLeod IV Trust, valued after tax at approximately $108,300,000. This trust named Sheila as sole beneficiary.Apparently the trustee has purported to add Malcolm and William as beneficiaries after Ross McLeod’s death.

By petition in theVancouver Registry, the trustee has sought the opinion, advice or direction of this court concerning both his own appointment as trusteeand his appointment of William and Malcolm McLeod as beneficiaries along with Sheila McLeod of the McLeod IV Trust. SheilaMcLeod is contesting that petition; 3.

Roy McLeod Trust, with Malcolm and William as beneficiaries, valued before taxes at approximately $8,300,000. [14] I shall first deal with the application to compel a further and supplementary list of documents. [15] The principles to be considered on applications for document disclosure were summarized in Marsh Canada Limited v. BFLCanada Insurance Services Inc., 2014 BCSC 1171, beginning at para. 65: [65] The Rules provide a two-tier process for document disclosure: (

a) Disclosure under Rule 7-1(1) requires “all documents that are or have been in the party’s possession or control and thatcould, if available, be used by any party of record at trial to prove or disprove a material fact”. This standard of relevance is significantlynarrower than Peruvian Guano, and presents a necessary limitation to the application of the 19th century test to 21st centuryrecords: More Marine Ltd. v. Shearwater Marine Ltd., 2011 BCSC 166 at paras. 10-11. (

b) Disclosure under Rule 7-1(11)-(14) requires documents that “relate to any or all matters in question in the action”. This issubstantially the Peruvian Guano test, identifying any document that relates to a matter in question in the action which not only would beevidence upon any issue, but also which contains information which may, not which must, either directly or indirectly, enable the partyeither to advance his own case or to damage the case of his adversary: Kaladjian v. Jose, 2012 BCSC 357 at paras. 44-45, citing withapproval Przybysz v.

Crowe, 2011 BCSC 731 at paras. 27-29. [66] Furthermore, by applying the proportionality principle embodied in Rule 1-3(2), an attempt is made to balance the burden ofproducing the documents in terms of time, cost and effort against their materiality and probative value. Proportionality does not onlyrelate to monetary quantification, it also relates to the importance of the issue in question: Isman v. The City of New Westminster, 2011BCSC 1066 at para. 14. [67] The following principles also apply: (

a) Full and complete disclosure between or among litigants prior to trial is essential to the truth-seeking function of thelitigation process and the proper administration of justice: Nikolic v. Olson, 2011 BCSC 125 at para. 93. (

b) It is the pleadings that determine relevance: Burgess v. Buell Distribution Corporation, 2012 BCSC 1494 at paras. 16-17. (

c) The interests of justice may require production of relevant documents, notwithstanding the high interest of a party inkeeping it confidential: A.M. v. Ryan, (SCC), [1997] 1 S.C.R. 157 at para. 37. (

d) A party asserting that a document is privileged bears the onus of establishing the privilege: Hamalainen v. Sippola(1991), (BC CA), 62 B.C.L.R. (2d) 254 (C.A.) at para. 19. (

e) The removal of the Peruvian Guano “train of inquiry” test of relevance will generally require a party to provide someevidence to support an application for additional documents where a demand is made under Rule 7-1(11) or Rule 7-1(18): Kaladjian v.Jose at para. 62. [68] The plaintiff says that its demand for documentary disclosure relates to the first tier of disclosure in that what it now seeksshould have been produced at first instance. Be that as it may, I will consider both the plaintiff’s and defendants’ applications from thebroader second tier of the process referred to in para. 65(

b) above. [69] The principles that apply in respect of the balance between disclosure and confidentiality were summarized in Altec DesignGroup Ltd. v. Motion Works Inc., [1992] B.C.J. No. 2451 (S.C.): 1. The necessity for complete disclosure in litigation cases supersedes the fact that a party may lose a competitive advantagewhen disclosure is made. Forestral Automation Ltd. v. R.M.S. Industrial Controls Inc., Dunstan, Braun and Schroeder (1977),

(BC SC), 4 B.C.L.R. 219, 80 D.L.R. (3d) 341, 35 C.P.R. (2d) 114. 2. In maintaining a balance between disclosure and confidentiality, the governing principal is to lean in favour of opennessand disclosure. Deveron-Hercules Inc. v. Gill et al, 21 C.P.C. (2d) 455. 3. The party viewing the confidential materials shall give an undertaking to the court and the opposite party, the terms ofwhich may vary from case to case. GEAC Canada Ltd. et al v. Prologic Computer Corp., 24 C.P.C. (3d) 566. 4.

The party whose documents are being disclosed to be examined by an expert is entitled to have a representative presentduring the examination. GEAC Canada Ltd. 5. An order preventing counsel from showing relevant documents to his client should only be granted in exceptionalcircumstances. Deprenyl Research Ltd. et al v. Canguard Health Technologies Inc. et al, 41 C.P.R. (3d) 288. 6. The onus is on the party requesting the restriction to establish a legitimate reason for the restriction. Deprenyl Research Ltd. 7.

In matters that do not require technical expertise, the parties may be required to produce the documents to a third party forthe examination and report to the court. Webster v. Mastercraft Development Corporation, (1991) (BC CA), 55 B.C.L.R. (2d) 121. 8. In instances in which the probative value of the documents is not sufficiently great to outweigh the real and veryconsiderable averse affect of disclosing the trade secret, disclosure ought not to be ordered. G.W.L. Properties Ltd. v. W.R.

Grace & Co. of Canada Ltd. (1992), (BC SC), 70 B.C.L.R. (2d) 180. [16] Malcolm McLeod’s main argument for both applications is based on the line of authority that has developed after the SupremeCourt of Canada’s decision in Tataryn v. Tataryn Estate, (SCC), [1994] 2 S.C.R. 807.

Flowing from that case is therecognition that a testator has dual obligations – legal and moral – that must guide a court in deciding whether “adequate provision” hasbeen made for spouse or child, and, if not, what would be “adequate, just and equitable in the circumstances.” His counsel argues thatthis frames the issues by which relevance and materiality of documents must be gauged. [17] Courts have approached the legal obligation by considering what obligations the law would impose on a person in RossMcLeod’s position during his life, were the question of provision for the claimants (Malcolm and William McLeod) to have arisen: seeTataryn at 820; Erlichman v.

Erlichman Estate, 2002 BCCA 160 at para. 27. [18] The analysis of the legal obligation “need not be a detailed or exact one”, according to the Court of Appeal in Kish (LitigationGuardian of) v.

Sobchak Estate, 2016 BCCA 65 at para. 49, where the court continues in the same paragraph: “An action under theWVA should not normally become a proxy for divorce proceedings, complete with the elaborate features and special rules applicable toa family law trial.” [19] As William McLeod was 16 when his father died, Ross McLeod owed him a legal obligation of support and maintenancepursuant to the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.), Malcolm McLeod has pleaded that although he attained his majority, he was astudent, at least in 2016, and arguably remained a “child of the marriage” as being unable to withdraw from the charge of his parentsbecause of his studies, and would be owed a legal obligation as well. [20] The moral obligations recognized in Tataryn are somewhat more fluid.

It is clear, however, that the estate passing through RossMcLeod’s will – perhaps $16 million at his death, $19 million now – is more than sufficient to permit a judicious parent in RossMcLeod’s circumstances to fulfil a moral obligation to Malcolm as an adult dependent child, and more than sufficient to permitconsideration of some provision for the reasonably foreseeable circumstance that both William and Malcolm McLeod would becomeadult independent children with the “more tenuous” moral claims referred to in Tataryn at 822-823. [21] Malcolm argues that at trial the court will be required to determine if Ross McLeod had met his legal obligation to SheilaMcLeod outside the will. [22] But Sheila McLeod has expressly disclaimed any claim she might have to Ross McLeod’s estate based on need.

That isimportant because, while Tataryn rejected the suggestion that the approach to will variation be driven by a needs-based analysis, itapproached the analysis of what was “adequate, just and equitable” by starting with the obligations imposed by law, being the DivorceAct, family property legislation, and the law of constructive trust, where provision for a spouse is at issue: Tataryn at 821. [23] By disclaiming need, Sheila McLeod is attempting to remove from consideration in this action any notional claim she mighthave had to spousal support, or reapportionment of family property. [24] Sheila McLeod has listed documents pursuant to Rule 7-1(1), Marsh’s “first tier,” and asserts that what she has listed is what isin her possession or control “that could, if available, be used by any party of record at trial to prove or disprove a material fact.” (Marsh

Canada Limited at para. 65 .) [ 25 ] Malcolm now seeks additional documents within Sheila’s possession, power or control under Rule 7-1(11), Marsh’s “second” or “ Peruvian Guano” tier that “relate to any or all matters in question in the action,” a broader category than documents that could be used to prove or disprove a material fact. ( Marsh Canada Limited at para. 65 .) [ 26 ] What relates to a matter in question in the action is ordinarily determined by the pleadings. [ 27 ] The pleadings in this action are relatively spare: in his Notice of Civil Claim William McLeod identifies the parties and their relationship to Ross McLeod, pleads that after debt payment and distribution of personal effects, the entire residue of Ross McLeod’s estate is given by the will to Sheila McLeod, and that fails to make adequate provision for his proper maintenance and support. [ 28 ] In his Amended Response to Civil Claim Malcolm McLeod does not dispute any fact pleaded by William McLeod, adds that he is a university student, at least as of 2016 when his pleading was filed, and pleads that the will fails to make adequate, just or equitable provision for his proper maintenance and support. [ 29 ] In her Response to Civil Claim Sheila McLeod admits all the facts alleged by William except that the will failed to make adequate provision for his proper maintenance and support, and pleads as a fact that William had received gifts and benefits during his lifetime and has “considerable financial substance and means.” [ 30 ] These therefore are the pleadings by which “the matters in question” under Rule 7-1(11)(

b) are to be determined. [ 31 ] As Ross McLeod died in 2011, consideration of his legal obligations based on a notional separation immediately before his death would be based on the now repealed Family Relations Act , R.S.B.C. 1996, c. 128, particularly, with respect to property division, ss. 56 , 58 and reapportionment under s. 65 . [ 32 ] Bearing in mind that this is not a family law proceeding, documents relating to property owned and ordinarily used by either or both of Ross and Sheila McLeod, or by William McLeod for a family purpose, at the time of Ross McLeod’s death might arguably be material to Ross McLeod’s legal or moral obligations to his sons. [ 33 ] That could include the extended definition of family asset set out in s. 58(2) and (3) of the Family Relations Act . [ 34 ] With these principles in mind, the specific documents requested are: a.

Regarding Ms. McLeod’s assets and liabilities now and at the time of the Deceased’s death. Sheila McLeod’s assets at the time of Ross McLeod’s death are arguably material to Ross McLeod’s legal and moral obligations, and documents relating to the assets must be produced. Sheila McLeod need not produce documents relating to her current assets, as these have not been shown to be arguably material. The same result applies to Sheila McLeod’s liabilities: documents showing those in existence at the time of Ross McLeod’s death should be listed and produced; current documents need not be listed and produced. b.

Regarding Ms. McLeod’s expenses now and at the time of the Deceased’s death. The applicant has not made out a case for disclosure of these documents, even under a “train of inquiry” test applicable under the former document disclosure regime. This request is overly broad and intrusive on Ms. McLeod’s privacy, particularly given Ms. McLeod’s disclaimer of need. c. Regarding the assets Ms. McLeod brought into the marriage.

This request is denied as irrelevant and immaterial to any claims Malcolm or William McLeod have made, or to Ross McLeod’s legal or moral obligations to either or both of them, or to Sheila McLeod, at the time of Ross McLeod’s death. d. Financial statements and/or documents regarding the value of the family property and family debt aside from the Deceased’s estate. Counsel has not shown how there can be family property or debt outside the estate that could or should have influenced Ross McLeod immediately before his death.

I bear in mind here that it is the adequacy of the provisions made for William and Malcolm McLeod and Ross McLeod’s moral and legal obligations that are in issue. As well, I bear in mind the definition of family assets in s. 58 of the Family Law Act , S.B.C. 2011, c. 25 . e. Regarding benefits bestowed on Ms. McLeod or her children during the relationship with the Deceased, that is: i. Cash gifts Ms. McLeod or her children received from the Deceased: Counsel revised this request during argument by suggesting that it apply to gifts in excess of $50,000.

Because it is arguable that such gifts may have influenced Ross McLeod’s thinking when notionally considering his legal or moral obligations just before his death, Sheila McLeod shall provide documents relating to gifts to her in excess of $50,000, made during her relationship with Ross McLeod; documents relating to any cash gifts Ross McLeod may have made to Sheila McLeod’s children are irrelevant and need not be listed or disclosed. ii. Gifts or transfers of real property, shares, or other investments from the Deceased to Ms. McLeod or her children for less than full consideration:

This request is denied as it is not possible to define for Sheila McLeod how she would know whether any gift or transfer to her would be for less than full consideration, and as far as her children are concerned, any such requested document would be irrelevant to the issues raised in the pleadings. iii. Assets passing from the Deceased to Ms. McLeod through the right of survivorship or beneficiary designation: These documents are to be listed and produced by Sheila McLeod as they are material to Ross McLeod’s legal or moral obligations at the time of his death. iv. Particulars of any loans owing by Ms.

McLeod to the Deceased including outstanding balances or evidence of forgiveness of the loans, if applicable: This request is denied in part, allowed in part. If Sheila McLeod owed money to Ross McLeod at the time of his death, it is the executor’s responsibility to recover what was owing, so no documents relating to such loans need be produced; on the other hand, documents relating to loans forgiven may be relevant to Ross McLeod’s legal or moral obligation, so must be listed and produced. v. The status of mortgages for the benefit of Ms. McLeod’s children in respect of properties purchased by Ms.

McLeod or the Deceased for her children’s benefit using funds derived from the Deceased: This request is denied. It intrudes on the privacy of Ms. McLeod’s children. Whether Ms. McLeod purchased properties for the benefit of her children is a matter for Ms. McLeod and her children alone. It is not clear what is meant by mortgages for the benefit of Ms. McLeod’s children, but if it is meant to cover mortgages owed by Ms. McLeod’s children to Ross McLeod’s estate, that would be a matter for the executor.

Otherwise, it is difficult to understand what might be encompassed by a mortgage for the benefit of children in respect of properties purchased by a parent or deceased for the benefit of the children using money from the deceased. vi. Any trusts settled by the Deceased for the benefit of Ms. McLeod or her children, including particulars of the assets settled into the trusts and the current value of those assets: Ms. McLeod must disclose documents relating to any trust settled by Ross McLeod for her benefit, as that can bear on Ross McLeod’s legal or moral obligations at his death. Ms.

McLeod need not disclose documents relating to trusts settled by Ross McLeod for the benefit of her children, as this is irrelevant to those obligations. vii. Particulars of assets held by the Deceased, his estate or his corporate holdings which are used for the exclusive benefit of Ms. McLeod, such as their matrimonial home: This information is or ought to be in the hands of the executor and available to Malcolm and William, and Sheila McLeod need not disclose what is already available. f. Full tax returns from the date of death forward including notices of assessment.

Sheila McLeod has agreed to list and disclose tax returns for the first year after Ross McLeod’s death. Beyond that, her disclaimer of need renders her tax information irrelevant and its disclosure an unwarranted intrusion on her privacy. This is denied. g. Financial records and tax returns for all companies owned by Ms. McLeod, including Ms. McLeod’s interests in Blue Star Leisure Limited, Mistell, and any other corporate holdings. This request is denied, again on the basis that need is not asserted, and as an unwarranted intrusion on Ms. McLeod’s privacy and into the separate legal entities involved. h.

Account balances for all personal bank accounts as at the date of the Deceased’s death and presently. Ms. McLeod must disclose her personal bank account information as at the date of Ross McLeod’s death as material to his legal and moral obligations; thereafter, the account information becomes irrelevant and requests for it unduly intrusive. i. Property assessments as at the date of death and at present, for all real property owned by Ms. McLeod, wherever situated or which she is beneficially entitled to or is owned by a related individual, company or trust in which she is a beneficiary.

This request is granted as at the date of Ross McLeod’s death, as material to his legal and moral obligations; it is denied with respect to current assessments as immaterial and unduly intrusive. j. Records of any debts owed by the Deceased’s estate to Ms. McLeod, her companies, or trust in which she is a beneficiary. Although one would expect the executor to have any relevant documents evidencing such debts, as they would be material to the issues of Ross McLeod’s legal and moral duty at the time of his death, Ms.

McLeod should produce records relating to the debts she, her companies, or trusts in which she has a beneficial interest, had as at the date of death only. k. Records of any debts Ms. McLeod owes the Deceased or any of his affiliated companies. For similar reasons as above, these documents, also as at the date of Ross McLeod’s death, must be produced l. Copies of email or text correspondence with the Deceased, his children or other persons relating to his estate plans or that pertain to their relationship.

Ross McLeod’s correspondence relating to his estate plans is material, and Ms. McLeod must produce what she has, but limited to her correspondence with Ross McLeod. This includes Ross McLeod’s correspondence with his own children or others about his estate plans in Ms. McLeod’s possession, as material to his legal or moral obligations. I have not been shown that copies of email or text correspondence pertaining to the relationship between Ross and Sheila McLeod might be material, so it need not be produced. As to email or text correspondence in Ms.

McLeod’s possession or control that relates to the relationship between Ross McLeod and William or Malcolm McLeod, that should be produced as material. m. A copy of Ms. McLeod’s Will as at the date of the Deceased’s death and presently. A copy of Ms. McLeod’s will at the date of Ross McLeod’s death is material to Ross McLeod’s obligations at that time, and must be produced. Ms. McLeod’s current will is not material, and its production would be too intrusive. n. An inventory of personal effects belonging to the Deceased that Ms. McLeod is claiming belong to her or were their jointly held possessions.

It is unclear to me what this request seeks: if it is a list of personal effects listed by the executor as estate assets that Ms. McLeod asserts belong to her, that is a matter between Ms. McLeod and the executor, and if she has not yet objected to an inventory of the estate on the ground that it contains her separate property, that would appear to end the matter. The same reasoning applies if what is sought is a list of estate personal effects that Ms. McLeod claims were jointly owned. o. Pictures of the Deceased with Ms. McLeod and/or his children.

Nothing in the pleadings raises an issue as to the relationship between Ross McLeod and his children, or Ross and Sheila McLeod. This request appears unduly intrusive, and seeks irrelevant material. It is denied. [ 35 ] Turning to the second application arising out of the discovery requests, many of which Sheila McLeod, after considering the matters, consented to answer, what remains in issue are the following: 2. Provide the details of the amount of Ms. McLeod’s permanent disability pension. This is denied as unduly intrusive on Ms.

McLeod’s privacy, and the amount of any disability pension received is irrelevant, particularly in light of Ms. McLeod’s disclaimer of need. 5. Provide the 2002 financial statement for Mistell. 7. Provide Ms. McLeod’s 2002 tax return, when Ms. McLeod married Ross McLeod. Both of these requests seek information that has not been shown to be conceivably relevant to issues raised in the pleadings, particularly given the date of death of Ross McLeod. 8. Provide financial statements from Mistell for three years prior to Ross McLeod’s death as well as since his death. This is denied for the reasons given at (

g) above. 9. Advise how much money is in the Mistell trust. This is denied as no possible relevance or materiality has been shown. 24. Provide any wills or codicils that Ms. McLeod had during her marriage to Ross McLeod . Sheila McLeod’s will as at the death of Ross McLeod has already been ordered; no others have been shown to be material to the issues, including the legal and moral obligations Ross McLeod faced at the time of his death. 25. Provide any wills that Ms. McLeod has drawn up since the passing of Ross McLeod. This is denied as irrelevant, and unduly intrusive on Ms.

McLeod’s privacy. [ 36 ] Malcolm McLeod’s application for special costs in any event of the cause is denied given the mixed success on his applications. Costs will be in the cause. “R.T.C. Johnston, J.” The Honourable Mr. Justice Johnston