Protecting property from estranged wife prevents subsequent interest in acreage – Sorry, come to court with clean hands!

Davie v. Davie Estate, [2002] B.C.J. No. 511

The plaintiff, Kenneth Davie, sought an order declaring that his late mother held an undivided one-half interest in an 80 acre parcel of farmland in trust for him.  Kenneth’s brothers, Alex and James, also sought an order pursuant to the Wills Variation Act for variation such as the court thinks adequate, just, and equitable. 

The Davie family all grew up on the farm in question.  The family had been built on hard work and each child had a fair share of the chores.  Each child assisted with working the farm but Kenneth was the only one to remain and continue into adulthood.  Kenneth loved the farm work and eventually married and stayed with his family on the acreage.  He and his mother eventually arranged for the transfer of the 80 acre parcel into their names as joint tenants.  Kenneth claimed that he paid his mother $80,000 cash for the land after the transfer.  However, as Kenneth’s marriage began to deteriorate, he transferred his interest in the land back to his mother in order to protect it from his wife making any claims. 

His mother later executed a will in 1991 which provided Kenneth with a leasehold interest and right of first refusal on the parcel of land and also divided the residue of her estate among her children.  His mother knew of his love and livelihood which were connected to the farm. 

As Kenneth’s matrimonial proceedings progressed, crucially, Kenneth denied any interest in the land and claimed to simply be leasing the property from his mother. 

His mother later executed a codicil whereby bequeathing the land to Kenneth’s siblings, subject to Kenneth’s right to lease the parcel. 

After his mother’s death, Kenneth argued it was their mother’s intention to return the property to him.

On the other hand, his brothers, Alex and James, were also requesting an order that Kenneth’s lease terminate in 5 years.

HELD:  Actions dismissed.

The court found that their mother retained a beneficial interest in the acreage when she transferred the property into joint tenancy with Kenneth.  There was insufficient evidence to support Kenneth’s contention that he paid his mother for the joint interest in the property and the transfer simply appeared to be an estate planning tool.  Therefore, there was no such resulting trust that could have arisen from the re-transfer of the land back to his mother in contemplation of his matrimonial proceedings.  This intent behind the transfer was also important as Kenneth was not entitled to any equitable remedy as he did not come to court with clean hands.  Kenneth could not deny an interest in the land in divorce proceedings and then claim an equitable interest in them in later proceedings. 

As for Alex and James’ claims, there was no basis to support their position as their mother clearly intended that Kenneth be entitled to farm the land during his lifetime.  The fact that, due to his remaining life expectancy of 25+ years or so, and they being of similar age, they will not derive any benefit, was not the priority.  Their mother’s testamentary intent was clear and it was apparent she was aware that her other children had made their livings elsewhere than the farm and no one was in great need.  

58     The evidence, I find, establishes that the intention of Mr. Davie and his mother was to prevent Mr. Davie's estranged wife, Henrietta, from claiming an interest in the 80 acre parcel.

59     Of significance as well is that the cheques signed by Mr. Davie and filled in by his mother for the annual amount of $3,000 paid to Mrs. Davie from 1985 to the time of her death indicate that the payments were for "rent" and in one instance "rent on 80 acres". Mr. Davie acknowledged in his testimony that he "could have" printed the word "rent" on one of the cheques and that the $3,000 payments were for the "use" of the 80 acres and for the taxes.

60     In his statement of claim Mr. Davie alleges that his late mother ("the Deceased") held an undivided one-half interest in the 80 acre parcel of land in trust for him. He alleges in paragraph 10 of the statement of claim amongst other things that:

a)      The Lands had been owned by the Deceased since December of 1971;

b)      During or about July of 1987, at the Deceased's request, the Deceased and the Plaintiff discussed and negotiated a sale of an undivided one-half (1/2) interest in the Lands from the Deceased to the Plaintiff;

c)       The consideration requested was paid in full by the Plaintiff to the Deceased, and the Deceased executed a transfer of an undivided one-half (1/2) interest in the Lands to the Plaintiff, which was filed in the New Westminster Land Title Office on or about July 10, 1987;

61     The probabilities, I find, are that Mr. Davie did not pay his mother for the transfer to him in July, 1987 of an interest as joint tenant in the 80 acre parcel.

62     I do not accept Mr. Davie's evidence that he paid his mother $80,000 for the interest in the 80 acres. He told the Court that he and his mother did not discuss payment for the land until after the transfer of land was signed by her on July 9, 1987. Then, within two to three months of the transfer being signed and over the course of a month they discussed and agreed upon the sum of $80,000. The source of $60,000 of the payment was the cash in the syrup tins kept under the kitchen sink. That was, I find, money held by Mrs. Davie for the late Mr. Shaw. It did not belong to Mr. Davie to give to his mother. Mr. Davie claims that at some unspecified time prior to his death in 1984 Mr. Shaw had told him that if he, Mr. Shaw, died Mr. Davie was to look after things and keep the rest of the money. The evidence does not establish that the requirements for a valid donatio mortis causa are met because it has not been shown that the gift was made in contemplation of death: Slagboom Estate, supra. Nor has it been shown that Mr. Shaw made a valid testamentary disposition of the money in favour of Mr. Davie.

63     The plaintiff called as a witness Hewett MacLean Hayward, a neighbouring farmer who had known Mr. Davie Sr. and his wife for 30 years. Mr. Hayward related that in the late 1980's, close to 1989, he and Mrs. Davie were discussing the problem he was having with his sister regarding the farm. According to Mr. Hayward Mrs. Davie told him she wanted no difficulty with inheritances and that she had sold a half interest in the "Red Barn" (the name commonly used to refer to the 80 acres) to Ken and had put it in his name. He testified that he did not recall the exact words she used. She told him Ken was paying her for half of the 80 acres, he said.

64     Objection was taken to this evidence on the ground it is hearsay. It is not admissible as a declaration made by a deceased person because, at the time it is alleged the statements were made by Mrs. Davie, they were not "consciously against [her] pecuniary or proprietary interests": Re Myers; St. Hilaire v. Kravacek (1979), 5 E.T.R. 279 (Ont. C.A.), at p. 288. Nor does it meet the criterion of "reliability" required by cases such as R. v. Kahn, [1990] 2 S.C.R. 531 and R. v. Smith (1992), 94 D.L.R. (4th) 590 (S.C.C.) in my view. No evidence has been led to indicate Mrs. Davie made deposits to her account of the large sums claimed by Mr. Davie to have been paid to his mother for the land.

65     Apart from the question of the admissibility of this hearsay evidence, it is, I find, not in accordance with the probabilities. I do not accept that this secretive woman who was so prone to keep her business affairs private would disclose these matters to Mr. Hayward.

66     Moreover, neither she nor Mr. Davie at any time suggested to anyone else, including the family solicitor, Mr. May, that a payment was involved. The annual payments of $3,000 for "rent" for the use of the land and the taxes continued without reduction after the transfer. As well, according to Mr. Davie, his mother wanted the land back if something happened to him, a position which is inconsistent with a sale for value of a half interest in the land. If Mrs. Davie did tell Mr. Hayward that Kenneth was paying her money with respect to the 80 acres the probabilities are, I find, that she was referring to the annual payments of $3,000.

67     The conclusions I draw from the evidence, including the transfer of the 80 acres by Mrs. Davie to herself and Kenneth as joint tenants in July, 1987 and the terms of her will made on July 9, 1987, are: (1) The beneficial interest in the 80 acre parcel remained with Mrs. Davie after the July 9th transfer was signed. (2) There was no intention on the part of Mrs. Davie that the transfer have the immediate effect of vesting an interest in the 80 acre parcel in Mr. Davie's name; rather, it was an estate planning tool designed to avoid family disputes and actions under the Wills Variation Act. (3) Any presumption of gift or advancement by Mrs. Davie to Kenneth is rebutted.

68     The conclusions I have reached with respect to the 1987 transfer of the 80 acres mean that no resulting trust can arise as a result of the 1990 re-transfer of the land to Mrs. Davie. In essence Mrs. Davie's estate does not hold an undivided one-half interest in the 80 acre parcel in trust for Mr. Davie.

69     I go further. On the evidence before the Court it is, I find, clear that Mr. Davie, when he signed the transfer of land on January 10, 1990, had the intention to make an absolute transfer to his mother of any ownership interest, whether legal or beneficial, that he might have had in the 80 acre parcel. A resulting trust does not, therefore arise: Barrone v. Smith(1991), 43 E.T.R. 1 (S.C.B.C.).

70     I reach this conclusion on the basis of the documents signed by Mr. Davie which I have referred to above: the separation agreement between him and his former wife, Henrietta, dated June 14, 1990, Mr. Davie's petition for divorce, his property and financial statement and his affidavit sworn to May 20, 1998 in which he deposes in part:

... In consideration for the use of the eighty acres retained by my mother for farming purposes, I pay ... .

71     As well, Mr. May confirms the intention of Mr. Davie and his mother at the time they signed the transfer of land.

72     Moreover, the enforcement of a resulting trust is an equitable remedy and therefore the person seeking the Court's assistance must come to the Court with clean hands: Barrone v. Smith, supra; Werner v. Werner, [1987] B.C.J. No. 2546 (S.C.B.C.). Mr. Davie cannot approbate and reprobate by denying an interest in the 80 acres in his divorce proceeding and by claiming an equitable interest in this proceeding.

73     In the circumstances obtaining in this case I conclude that an order ought not to be made in favour of Mr. Davie under the Wills Variation Act, R.S.B.C. 1996, c. 490, for the purpose of achieving relief similar to that which he would have received if the Court had declared he was entitled to an undivided one-half interest in the 80 acre parcel. It would not, in my view, be "adequate, just and equitable in the circumstances". Mrs. Davie appears to me to have been a "wise and just parent": Kaetler v. Kaetler Estate (1990), 51 B.C.L.R. (2d) 238(B.C.C.A.), who was motivated by a desire to ensure that her son Kenneth would have the exclusive use of the 80 acres, rent free, for his life, and that upon his death or the cessation of his farming operations her three other children would benefit. She was also motivated by a desire to keep the farm in the family. The provisions made in her Will and Codicil regarding Kenneth are generous.

74     Nor do I think the claims of Alex Davie and James Davie under the Wills Variation Act are well founded. Their principal complaint is that if their brother carries on the farming operation for his life expectancy of about 25 years they, because they are nearly all similarly aged, will not live to derive any benefit. They propose a disposition of the 80 acres in 5 years.

75     In making her testamentary dispositions Mrs. Davie was well aware that her children, other than Kenneth, had made their livings elsewhere than Davie Farms, and that none is in a necessitous situation. She realized also the value of keeping the 160 acres and 80 acres as a single farm unit.

76     The actions of both Kenneth Davie and his two brothers, Alex Davie and James Davie, must be dismissed.