Financial Disclosure in Wills Variation Matters: Richter v Richter Estate

Articles

By Polly Storey and Cameron Fox

Parties to wills variation proceedings have, for some years, faced uncertainty regarding the financial disclosure they may be required to provide to other parties during the litigation process. Disclosure of financial information can give rise to concerns about privacy, and these concerns may be felt more acutely where, as is often the case, those other parties are family members with whom a litigant may have acrimonious relationships.

In Richter v. Richter Estate, 2023 BCSC 105, the British Columbia Supreme Court recently considered the scope of document disclosure obligations in wills variation matters. Justice Blake confirmed that while some financial disclosure will always be relevant, the extent of the disclosure required will vary based on the circumstances of each case.

Richter Estate

In Richter Estate, the plaintiff, Ms. Richter, applied to vary her mother’s Will pursuant to s. 60 of the Wills, Estates and Succession Act.[1] By her Will, the Deceased provided the majority of her Estate to two of her children, Mr. Richter and Ms. Chapman, and left a relatively small share of her Estate to the plaintiff. The Deceased acknowledged in her Will that she had left less to Ms. Richter, and listed out her reasons for doing so. These included the Deceased’s view that she had been estranged from Ms. Richter for many years and that Ms. Richter was financially independent.

The defendants were Ms. Richter’s siblings, Mr. Richter and Ms. Chapman.[2] At para. 3 of her reasons, Justice Blake observed that, “It is clear that there is a high degree of conflict and animosity between Ms. Richter and her siblings.”

The defendant, Mr. Richter, applied under Rule 7-1 of the Supreme Court Civil Rules[3] for extensive financial disclosure from Ms. Richter and from her spouse. The disclosure sought included financial documents relating to Ms. Richter personally, to her spouse, to any corporation controlled by Ms. Richter or her spouse, and to any trust of which Ms. Richter or her spouse was a named beneficiary, all as of the Deceased’s date of death.

Scope of Document Disclosure in Civil Litigation

Before dealing with the specific documents required to be disclosed in the case before her, Justice Blake reviewed the law regarding document disclosure in civil litigation more generally under the Supreme Court Civil Rules:

  1. Rule 7-1 requires parties to list documents in their possession or control (i.e. that they are able to obtain) which could be used by any party to prove or disprove a material fact. What would prove or disprove a material fact depends on the facts set out in the pleadings and an analysis of the parties’ claims/defences.
  2. Rule 7-1(10) allows a party to demand further documents that they say ought to have been listed under Rule 7-1.
  3. Rule 7-1(11) allows a party to demand a broader scope of disclosure, being documents relating to “any or all matters in question in the action”. The requesting party must identify the documents sought with reasonable specificity, and must explain why the disclosure is justified.
  4. Rule 7-1(18) provides for disclosure of documents in the possession of third parties. Such applications must be brought on notice to the person or entity from whom the documents are sought and all parties to the lawsuit. There must be evidence to support such an application.
  5. Rule 7-1(14) allows the Court to excuse a party from complying with document disclosure obligations in certain circumstances.

Wills Variation Claims

The leading case in wills variation matters remains the Supreme Court of Canada’s 1994 decision in Tataryn v. Tataryn Estate.[4] In that case, the Supreme Court of Canada rejected a line of authority stating that an applicant must establish financial need in order to claim a larger (or any) share of a will-maker’s estate. Instead, wills variation applications are based on whether the will-maker has left from their estate an amount which is “adequate, just and equitable in the circumstances” and that accords with the will-maker’s moral obligations to their spouse and children.[5]

Moral obligations are found in society’s expectations regarding what a judicious person would do in the circumstances, with reference to contemporary community standards. Where there are multiple competing claims, the Court must weigh the strength of each claim and assign to each its proper priority.

Document Disclosure in Wills Variation Claims

Since Tataryn, Courts have grappled with the scope of financial disclosure required in wills variation proceedings given that although financial need is not a prerequisite to a successful wills variation claim, the relative financial circumstances of the parties are relevant to whether or not the will-maker made “adequate, just and equitable” provision for the claimant and, if not, what would constitute “adequate, just and equitable” provision in the circumstances.

Richter Estate provided Justice Blake with an opportunity to review the relevant case law, and to articulate principles to guide the parties, as well as other litigants, lawyers, and courts.

Document Disclosure by a Party to a Wills Variation Proceeding: Rules 7-1(1) and (11)

Justice Blake’s analysis may be summarized as follows:

  1. “[S]ome disclosure of the financial circumstances of each of the parties is appropriate pursuant to the Rule 7-1(1) obligation to produce documents which may prove or disprove a material fact” (para. 74). The extent of that disclosure, however, depends on the circumstances of the case and will be informed by the wills variation factors identified in the case law.[6]
  2. Each party is required to disclose their income as of the will-maker’s date of death, their significant assets, and their significant liabilities, including all assets jointly held with their spouse (para. 79).
  3. A party is not obligated under Rule 7-1(1) “to produce a forensic accounting”:

[76]     … A wills variation claim is not akin to a family law dispute, which requires a detailed listing of the parties’ assets,                 liabilities, and annual financial obligations in the form of a sworn financial affidavit. As Justice Loo concluded in Mordo [v. Nitting, 2006 BCSC 765], I am not satisfied that the defendant requires all of Ms. Richter’s financial records to prepare for her examination for discovery, nor to advance his defence at trial. I echo her comments that “it is a bird’s eye view that should be considered at this stage if not at trial, not a microscopic view”: [citation omitted, emphasis added].

  1. Though it is often the case that parties will agree to use net worth statements to exchange their financial information, it is not appropriate to supplant a party’s document production obligations by ordering the production of a net worth statement instead (paras. 78-79).

Applying these principles, Justice Blake ordered that Ms. Richter produce the following documents as part of her “first tier” financial disclosure under Rule 7-1(1), meaning documents that could be used by any party to prove or disprove a material fact:

  1. Notices of assessment for each property owned Ms. Richter as of the will-maker’s date of death;
  2. Notices of assessment for each property owned by a corporation controlled by Ms. Richter as of the will-maker’s date of death;
  3. Richter’s income tax returns and notices of assessment for the year preceding and year of the will-maker’s date of death;
  4. Corporate tax returns and notices of assessment for each company controlled by Ms. Richter as of the will-maker’s date of death;
  5. Statements for each bank, financial and investment accounts held by Ms. Richter as of the will-maker’s date of death;
  6. Statements for each bank, financial and investment account owned by any company controlled by Ms. Richter as of the will-maker’s date of death;
  7. Statements for each liability owed by a company controlled by Ms. Richter as of the will-maker’s date of death;
  8. Central securities registers showing issued shares, classes of shares, and shareholders for all companies controlled by Ms. Richter as of the will-maker’s date of death; and
  9. The deed of settlement for any trust of which Ms. Richter was a beneficiary as of the will-maker’s date of death.

Justice Blake declined to order production of the financial statements for each company controlled by Ms. Richter as of the will-maker’s date of death, however. There was no evidence that these were necessary to appreciate her finances or to warrant such an intrusive investigation into her finances.

The judge also declined to order any further production by Ms. Richter based on the broader “second tier” document discovery created by Rule 7-1(11). Mr. Richter had not established that any additional documents related to the matter in question, and further disclosure would “unjustly and unnecessarily pry into Ms. Richter’s financial affairs” (para. 88).

Non-Party (Spouse) Document Disclosure in Wills Variation Proceedings: Rule 7-1(18)

As noted, Mr. Richter also sought extensive document disclosure from Ms. Richter’s spouse.

Justice Blake rejected the proposition that a party’s financial circumstances must include the circumstances of their spouse because, it was argued, “it is impossible to effectively disentangle the financial assets of spouses” (para. 94). Though a party must disclose their spouse’s income and their jointly held assets, further disclosure of a spouse’s separate assets is not automatic. While there may be cases where a spouse’s finances are relevant, that was not this case:

  1. Ms. Richter pleaded that she was financially independent. There was no evidence that she was not.
  2. The will-maker did not state, in her reasons explaining her gift to Ms. Richter, that she believed any of her children to be in financial need, nor did she refer to Ms. Richter’s spouse’s circumstances as the basis of her treatment of the plaintiff.

The judge also commented on changes to the law that meant automatic disclosure of a spouse’s finances is not appropriate:

[97]      It has been over 38 years since [Jones v. Jones Estate, [1984] B.C.J. No. 2018 Estate (C.A.)] was decided. In that time both our family law, wills and estates laws, and rules for document disclosure have been modernised. I do not accept Mr. Richter’s broad proposition at law that it is not possible to effectively disentangle the financial assets of spouses. Spouses are entitled to, and in fact do, arrange their finances in a myriad number of different ways. That includes holding assets in their separate names. Jones Estate does not stand for the proposition that it is necessary in all will variation cases that a party’s spouse must provide detailed financial disclosure. Rather, it stands for the proposition that a party’s spouse’s general financial circumstances are relevant to the determination of the second stage of the analysis, that is, the provision of adequate, just and equitable maintenance and support for Ms. Richter.

Ms. Richter’s spouse’s income and jointly owned assets were required to be disclosed. Further disclosure would not be relevant and would prejudice the spouse’s privacy interests.

Principles and Privacy in Wills Variation Proceedings

Since Tataryn was decided by the Supreme Court of Canada almost 30 years ago, it has been clear that a surviving spouse or child need not demonstrate financial need in order to a seek a variation of a will. Nonetheless, parties to wills variation proceedings cannot avoid document disclosure obligations by disclaiming such financial need. Instead, the Court will seek to balance the financial disclosure required by the Supreme Court Civil Rules and the case law interpreting will-makers’ obligations, and the privacy interests of parties and non-parties to ensure that litigants, and courts, have all financial disclosure necessary. Richter Estate provides a helpful analysis of the relevant principles and how they may be applied by parties, lawyers, and courts going forward.

If you are seeking to initiate or defend a wills variation matter, or have any other questions about estate litigation, please contact Polly Storey or another member of Clark Wilson LLP’s Estates & Trusts practice group.

References

[1] S.B.C. 2009, c. 13.

[2] The Executor of the Deceased’s Will was also named as a defendant, as required by Supreme Court Civil Rule 21-6(2).

[3] B.C. Reg. 168/2009.

[4] 1994 S.C.R. 807 [Tataryn].

[5] Wills variation proceedings also involve a consideration of any legal obligations owing by a will-maker to their surviving spouse and/or children, being the will-maker’s legal responsibilities during their lifetime. These include, for example, the legal obligations owing to spouses under family law legislation, legal obligations owing by parents to minor children, and legal claims that adult children may have against their parents in the parents’ lifetimes, such as in unjust enrichment. Justice Blake noted that because legal obligations were not claimed in the case before her, she would focus her analysis on the issue of moral obligations owing by the Deceased to her children.

[6] See Dunsdon v. Dunsdon, 2012 BCSC 1274 at para. 134, and McBride v. Voth, 2010 BCSC 443 at paras. 129-142.