Mawdsley v. Meshen Estate et al., (2012) 317 B.C.A.C. 247 (CA)

• Judge: Newbury, Saunders and Bennett, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: February 28, 2012
• Jurisdiction: British Columbia
• Citations: (2012), 317 B.C.A.C. 247 (CA);2012 BCCA 91

Mawdsley v. Meshen Estate (2012), 317 B.C.A.C. 247 (CA);

    540 W.A.C. 247

MLB headnote and full text

Temp. Cite: [2012] B.C.A.C. TBEd. FE.042

Dennis Mawdsley (appellant/plaintiff) v. Michael Meshen, Damon Meshen, Shirley Meshen, William Meshen, Kevin Moore as Executor of the Will and Trustee of the Estate of Joan Meshen, Deceased, The Joan Meshen Trust, Western Garden & Lawn Supplies Ltd., Meadowland Peat Ltd. and Big Bend Manufacturing Ltd. (respondents/defendants) and Kevin Moore as Executor of the Will and Trustee of the Estate of Joan Meshen, Deceased (third party)

(CA038393; 2012 BCCA 91)

Indexed As: Mawdsley v. Meshen Estate et al.

British Columbia Court of Appeal

Newbury, Saunders and Bennett, JJ.A.

February 28, 2012.

Summary:

Shortly before her death in June 2006, Joan Meshen, a woman of considerable wealth, transferred certain assets into joint tenancy and divested herself of her remaining assets by way of outright gifts and an inter vivos trust, which effectively impoverished her estate. By those dispositions and under her will Meshen left nothing to her common-law spouse of 18 years (Mawdsley). Mawdsley pursued a claim under the Fraudulent Conveyance Act and sought a variation of Meshen's will under the Wills Variation Act.

The British Columbia Supreme Court, in a decision reported [2010] B.C.T.C. Uned. 1099, held that the transactions were not void under the Fraudulent Conveyance Act. The court varied the will to give the residue to Mawdsley. Mawdsley appealed.

The British Columbia Court of Appeal dismissed the appeal.

Family Law - Topic 6666

Dependent's relief legislation - Entitlement - Existence of moral duty - [See first Fraud and Misrepresentation - Topic 1458 ].

Family Law - Topic 6673

Dependent's relief legislation - Entitlement - Where adequate provision for dependent not made in will - [See first Fraud and Misrepresentation - Topic 1458 ].

Fraud and Misrepresentation - Topic 1458

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - Intention to "defeat, delay or prejudice" creditors - Shortly before her death in June 2006, Joan Meshen, a woman of considerable wealth, transferred certain assets into joint tenancy, made gifts and established an inter vivos trust, effectively impoverishing her estate - Neither by those dispositions, nor her will, did she leave anything to her common-law spouse of 18 years (Mawdsley) - Mawdsley pursued a Fraudulent Conveyance Act claim, arguing that the transactions were void - He also sought to vary Meshen's will under the Wills Variation Act (WVA) - The trial judge held that the threat of a WVA claim or any other claim did not inform or influence Meshen's decision to implement the trust or to dispose of her other assets as she did - She therefore did not possess the intention required under the FCA to void the impugned transactions - Mawdsley's claim under the FCA was dismissed - However, the court found that Meshen did not adequately provide for Mawdsley in her will and, therefore, varied the will to give Mawdsley the residue of the estate ($280,000) - Mawdsley appealed - The British Columbia Court of Appeal dismissed the appeal.

Fraud and Misrepresentation - Topic 1458

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - Intention to "defeat, delay or prejudice" creditors - The Fraudulent Conveyance Act (FCA), s. 1, provided that a conveyance made to "delay, hinder or defraud creditors and others" was void - At issue was whether an intention on the part of the transferor to "delay, hinder or defraud creditors and others" was a necessary element that had to be proven before the FCA would apply or if it was enough that the effect of the transfer was to delay or hinder creditors or others - The British Columbia Court of Appeal stated that while a claimant need no longer show a "subjectively dishonest or fraudulent state of mind" on the part of the transferor, the claimant had to prove an intention to defeat creditors or others as a matter of fact - Such an intention could be inferred from all the circumstances, including resort to the "badges of fraud", creating a presumption of fraudulent intent - That presumption was rebuttable, and merely proving that the effect of the transfer was to hinder or delay creditors or others was not, as a matter of law, sufficient - See paragraphs 5, 7 and 59 to 71.

Fraud and Misrepresentation - Topic 1458

Fraudulent conveyances and preferences - Impeachable conveyances and preferences under modern statutes - Intention to "defeat, delay or prejudice" creditors - At issue was the relationship between the Fraudulent Conveyance Act (FCA) and the Wills Variation Act, and in particular "Can the FCA be applied to invalidate a transfer of assets to an alter ego trust that defeats or hinders a claim by the settlor's (common law) spouse where the claim arises under the Wills Variation Act (WVA) only on the settlor's death and did not exist during his or her lifetime?" - The British Columbia Court of Appeal noted that the British Columbia courts had thus far answered this question in the negative - In Hossay v. Newman (BCSC 1998), the court ruled that unless a claimant under the WVA had a legal or equitable claim against the testator prior to the testator's death, the claim had to be regarded as "solely one arising on death under the [WVA]. Without any prior foundation, the claimant does not have the status of creditor or others within the meaning of s. 1 of the Fraudulent Conveyance Act" - The Court of Appeal stated that Hossay should not be disturbed and that given the broad and uncertain consequences such a change would involve, it would be for the Legislature rather than a court of law to do - See paragraphs 6, 7 and 72 to 91.

Cases Noticed:

Hossay v. Newman et al., [1998] B.C.T.C. Uned. J89 (S.C.), refd to. [para. 6].

Twyne's Case (1601), 3 Co. Rep. 80b; 76 E.R. 809, refd to. [para. 7].

Moge v. Moge, [1992] 3 S.C.R. 813; 145 N.R. 1; 81 Man.R.(2d) 161; 30 W.A.C. 161, refd to. [para. 9].

Botham Holdings Ltd. (Bankrupt), Re (2009), 283 B.C.A.C. 12; 480 W.A.C. 12; 2009 BCCA 521, refd to. [para. 41].

Abakhan & Associates Inc. v. Braydon Investments Ltd. - see Botham Holdings Ltd. (Bankrupt), Re.

Frimer v. Lurcher, [1984] B.C.J. No. 728 (S.C.), refd to. [para. 41].

Jack v. Parkinson et al. (1994), 44 B.C.A.C. 314; 71 W.A.C. 314; 91 B.C.L.R.(2d) 96 (C.A.), refd to. [para. 41].

Tataryn et al. v. Tataryn Estate, [1994] 2 S.C.R. 807; 169 N.R. 60; 46 B.C.A.C. 255; 75 W.A.C. 255, refd to. [para. 46].

Wagner v. Wagner Estate (1991), 5 B.C.A.C. 55; 11 W.A.C. 55; 62 B.C.L.R.(2d) 1 (C.A.), refd to. [para. 47].

Bridger v. Bridger Estate et al., [2005] B.C.T.C. Uned. 120; 2005 BCSC 269, affd. (2006), 225 B.C.A.C. 245; 371 W.A.C. 245; 2006 BCCA 230, refd to. [para. 47].

Sawchuk v. MacKenzie Estate et al. (2000), 132 B.C.A.C. 171; 215 W.A.C. 171; 2000 BCCA 10, refd to. [para. 49].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 51].

Swain v. Dennison, [1967] S.C.R. 7, refd to. [para. 51].

Graham v. Chalmers et al. (2010), 279 B.C.A.C. 277; 473 W.A.C. 277; 2010 BCCA 13, refd to. [para. 51].

Berger v. Clark et al. (2002), 171 B.C.A.C. 184; 280 W.A.C. 184; 2002 BCCA 316, refd to. [para. 51].

Freeman v. Pope (1870), L.R. 5 Ch. App. 538, refd to. [para. 60].

Irwin v. Freeman (1868), 13 Gr. 465, refd to. [para. 60].

Jeffrey v. Aagaard, [1922] 2 W.W.R. 1201 (Man. C.A.), refd to. [para. 60].

Sun Life Assurance Co. v. Elliott (1900), 31 S.C.R. 91, refd to. [para. 60].

Bank of Montreal v. Davis (1885), 9 O.R. 556 (H.C.), refd to. [para. 60].

Hansen, Re, [1977] O.J. No. 1649 (H.C.), refd to. [para. 60].

Wise, Re; Ex parte Mercer (1886), 17 Q.B.D. 290 (C.A.), refd to. [para. 61].

Mandryk v. Merko (1971), 19 D.L.R.(3d) 238 (Man. C.A.), refd to. [para. 62].

Canadian Imperial Bank of Commerce v. Cox (G.E.) Ltd., Cox and Cox (1985), 66 N.B.R.(2d) 374; 169 A.P.R. 374; 23 D.L.R.(4th) 613 (C.A.), leave to appeal denied (1986), 70 N.R. 82; 69 N.B.R.(2d) 270; 177 A.P.R. 270 (S.C.C.), refd to. [para. 62].

Newfoundland and Labrador Housing Corp. v. Ennis (1987), 64 Nfld. & P.E.I.R. 22; 197 A.P.R. 22 (Nfld. T.D.), refd to. [para. 62].

Mutual Trust Co. v. Stornelli (1995), 43 C.B.R.(3d) 221 (Ont. Gen. Div.), refd to. [para. 62].

Rogers Realty Ltd. v. Prysiazny (1996), 182 A.R. 118 (Q.B.), refd to. [para. 62].

CIT Financial Ltd. v. Zaidi, [2006] O.T.C. 266; 19 C.B.R.(5th) 204 (Sup. Ct.), refd to. [para. 62].

Bank of Montreal v. Cyr (1985), 61 N.B.R.(2d) 283; 158 A.P.R. 283 (C.A.), refd to. [para. 62].

Tropic Holdings Ltd. v. Mah et al., [2000] B.C.T.C. 43; 2000 BCSC 152, refd to. [para. 62].

Laurentian Bank of Canada v. Glover (1998), 73 O.T.C. 198 (Gen. Div.), refd to. [para. 62].

Chan v. Stanwood et al. (2002), 175 B.C.A.C. 86; 289 W.A.C. 86; 2002 BCCA 474, refd to. [para. 64].

Sutton v. Oshoway et al., [2011] B.C.A.C. Uned. 85; 2011 BCCA 245, refd to. [para. 64].

MacKay v. Douglas (1872), L.R. 14 Eq. 106, refd to. [para. 68].

Newlands Sawmills Ltd. v. Bateman (1922), 70 D.L.R. 165 (B.C.C.A.), refd to. [para. 68].

Maguire v. Ottawa Wine Vaults Co. (1913), 48 S.C.R. 44, refd to. [para. 68].

Gauthier v. Woollatt, [1940] 1 D.L.R. 275 (Ont. S.C.), refd to. [para. 68].

Royal Bank of Canada v. Clarke, [2009] B.C.T.C. Uned. 481; 2009 BCSC 481, refd to. [para. 69].

Bank of Nova Scotia v. Holland, [1979] O.J. No. 1190 (H.C.), refd to. [para. 73].

Penny v. Fulljames (1920), 50 D.L.R. 553 (Man. K.B.), refd to. [para. 75].

Murdoch v. Murdoch et al., [1977] 1 W.W.R. 16; 1 A.R. 378 (T.D.), refd to. [para. 75].

Krumm v. McKay et al. (2003), 342 A.R. 169; 2003 ABQB 437, refd to. [para. 75].

Stone v. Stone et al. (2001), 156 O.A.C. 345; 203 D.L.R.(4th) 257 (C.A.), refd to. [para. 78].

Dower v. Public Trustee (Alta.) (1962), 35 D.L.R.(2d) 29 (Alta. S.C.), refd to. [para. 78].

Chan v. Chan et al., [1993] B.C.T.C. Uned. 314 (S.C.), refd to. [para. 78].

Reicher v. Reicher (1983), 42 O.R.(2d) 570 (H.C.), affd. (1985), 51 O.R.(2d) 55 (C.A.), refd to. [para. 78].

Canadian Imperial Bank of Commerce v. Boukalis (1987), 11 B.C.L.R.(2d) 190 (C.A.), refd to. [para. 80].

Easingwood v. Easingwood Estate et al., [2011] B.C.T.C. Uned. 1154; 2011 BCSC 1154, refd to. [para. 83].

Easingwood v. Cockroft - see Easingwood v. Easingwood Estate et al.

Mordo v. Nitting et al., [2006] B.C.T.C. Uned. C43; 2006 BCSC 1761, refd to. [para. 83].

Bell v. Williamson et al., [1945] O.R. 844 (C.A.), refd to. [para. 84].

Thomson v. Thomson, [1933] N.Z.L.R. Supp. 59 (S.C.), refd to. [para. 85].

Dillon v. Public Trustee (New Zealand), [1941] A.C. 294 (P.C.), refd to. [para. 85].

McMaster, Re (1957), 10 D.L.R.(2d) 436 (Alta. S.C.), refd to. [para. 86].

Barker v. Westminster Trust Co., [1941] 4 D.L.R. 514 (B.C.C.A.), refd to. [para. 86].

Currie Estate v. Bowen (1989), 35 B.C.L.R.(2d) 46 (S.C.), refd to. [para. 86].

Picketts v. Hall et al. (2009), 273 B.C.A.C. 300; 461 W.A.C. 300; 2009 BCCA 329, refd to. [para. 92].

Statutes Noticed:

Fraudulent Conveyance Act, R.S.B.C. 1996, c. 163, sect. 1, sect. 2 [para. 4].

Authors and Works Noticed:

British Columbia, Law Reform Commission, Report on Fraudulent Conveyances and Preferences (1988), pp. 11 [paras. 3, 64]; 12, 17 [para. 64]; 29 [para. 75]; 606, 607 [para. 65].

Buckwold, Tamara, Reform of Fraudulent Conveyances and Preferences Law (2007), para. 28 [para. 76].

Dunlop, C.R.B., Creditor-Debtor Law in Canada (2nd Ed. 1994), pp. 594 [para. 3]; 606, 607 [para. 65]; 617 ff. [para. 76]; 618 [para. 75].

Hoffstein, M. Elena, Alter Ego Trusts/Joint Partner Trusts - Tips, Traps & Planning (2004), 12A Ont. Tax. Conf., Cdn. Tax Foundation 1-47, p. 3-4 [para. 2].

Springman, Melvin A., Stewart, George R., Morrison, J.J., Frauds on Creditors: Fraudulent Conveyances and Preferences, pp. 13-20.15 [para. 60]; 13-22, 13-23 [para. 62]; 13-30, 13-31 [para. 63].

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 236, 237 [para. 73].

Waters, Donald W.M., The Law of Trusts in Canada (3rd Ed. 2005), c. 13, generally [para. 2].

Counsel:

D.J. Manson and J.W. Zaitsoff, for the appellant;

M.V. Barnard, for the respondents;

H.S. McLellan, for the third party and the Joan Meshen Trust.

This appeal was heard at Vancouver, B.C., on January 23 and 24, 2012, by Newbury, Saunders and Bennett, JJ.A., of the British Columbia Court of Appeal. Newbury, J.A., delivered the following reasons for judgment for the court on February 28, 2012.