Farrell v. Turner

2002BCSC0165 Citation: Farrell et al v. Turner et al Date: 20020131 2002 BCSC 165 Docket: C983840 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: RICKY WAYNE FARRELL, PENNY GAYLENE YUCHYM AND DARREN ROY FARRELL, EXECUTORS OF THE LAST WILL AND TESTAMENT OF JAMES ROY FARRELL, DECEASED PLAINTIFFS AND: HAZEL IRENE TURNER AND LAVERNE TURNER AND HEATHER GERTRUDE TURNER, EXECUTORS OF THE LAST WILL AND TESTAMENT OF HAZEL IRENE TURNER, DECEASED DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE T.M. McEWAN Counsel for the Plaintiffs: J.P. Scouten Counsel for the Defendants: D.K. Hori Date and Place of Hearing/Trial: May 22 - 25, 2001 Vancouver, BC [1] This action was originally brought by the executors of the estate of James "Roy" Farrell, against Hazel Turner, Roy Farrell's sister. Roy Farrell died on March 25, 1997. Hazel Turner has since died, coincidentally, on the same date three years later. The action continues against her executors. [2] The matter in dispute is a transfer of a mobile home and certain lands in an area called Sunnybrae near Salmon Arm, British Columbia, from Roy Farrell as sole owner, to himself and Hazel Turner as joint tenants. The land transfer was executed July 9, 1990 and registered September 18, 1990. The mobile home transfer was executed August 10, 1990 and registered August 28, 1990. On June 3, 1997 the lands and mobile home were transmitted to Hazel Turner as sole owner, as a consequence of Roy Farrell's death. [3] The parties (in effect, their respective executors, who are their children) are members of an extended family with roots that go back to the earliest days of European settlement in the Sunnybrae area. The property at issue was originally part of a large tract of land owned by Roy Farrell and Hazel Turner's parents. A part of this tract, which actually passed to Hazel Turner first, was subdivided into four lots. Hazel Turner got Lot 1; a sister, Laura Burkitt, got Lot 2; Roy Farrell got Lot 3; and their mother retained Lot 4 until 1960, at which time it was transferred to Roy. Hazel Turner had always had an interest in maintaining what had been the family farm. She lived at all material times on the larger tract from which the four lots had been subdivided. Together with Lot 1, Hazel Turner's property surrounded the other three lots on three sides. [4] Roy Farrell married Vera Farrell in 1949. She was then a widow with two small children. They lived and raised their family, including three more children of their own, on Lot 3. Hazel and her husband raised a family as well on the adjacent farm property. Their families were close, and the children grew up together. [5] In 1980 Roy and Vera Farrell were divorced. Their assets were divided as a result of proceedings in this Court. In those proceedings Vera Farrell accepted that "Lot 4" was not a family asset, but had come to Roy Farrell from his mother on the basis that their children would eventually receive it. Vera Farrell has since died, but her discovery evidence in that proceeding, given March 15, 1980, confirms that the property was, intended to "stay in the family" and that she made no claim to it. The statement was admitted into evidence as a sworn statement against Vera Farrell's interest made and acted upon well before she died. [6] Lot 4 was never used by the Farrell family as a unit, although in 1974 Penny Yuchym lived on it for a time. [7] After the divorce, Vera Farrell took title to Lot 3 and Roy Farrell retained Lot 4. Roy Farrell moved back into the home on Lot 3 shortly afterwards, however, because Vera Farrell wanted to move into Salmon Arm. [8] In 1981 Roy Farrell's son Ricky and his family moved into the trailer on Lot 4. At first they rented it, until June of 1983 when they purchased it from Roy Farrell for $14,000. In 1984 they moved into the house on Lot 3, and paid their mother rent. In 1987 they sold the Lot 4 trailer back to Roy Farrell because they needed to money for a down payment on a house in Salmon Arm. At that time Roy Farrell paid them $11,500 for it. Ricky Farrell testified that, even though he felt the trailer had appreciated, there were no recriminations over the price. He said his father was simply a "shrewd" business man from whom he did not expect any "breaks" owing to family sentiment. [9] Roy Farrell was by all accounts successful over the years in running a milling operation and, over time, engaging in other kinds of work involving heavy equipment. He acquired a number of large land holdings apart from those at issue in this proceeding. By the 1970's however, he had begun to drink heavily. One of the reasons Ricky and his family moved from the Lot 3 house to Salmon Arm was an incident that occurred in 1987 that involved Roy Farrell discharging a firearm in an unacceptably dangerous manner from their point of view. They abandoned an intention to buy Lot 3 from their mother when they moved to Salmon Arm. Vera Farrell later sold the property to Hazel Turner's son, Laverne, one of the defendants in this proceeding. [10] During the 1980's Roy Farrell periodically attended alcohol rehabilitation facilities. His physician, Dr. Lee Penner, testified that from 1988 until he died Roy Farrell abused alcohol, and that drinking had a detrimental effect on his over-all health. In 1989 Dr. Penner had described Roy Farrell's drinking as a "death warrant", and in 1990 he had had Roy Farrell admitted to Shuswap Lake General Hospital for treatment for his alcoholism. There are several references in the medical record after 1990 to similar effect, that is, that Roy Farrell was drinking to an unhealthy degree and would not take steps to modify his behaviour. Dr. Penner did say, however, that while Roy Farrell did not take care of himself very well, he never seemed incompetent or incapable of managing himself or his affairs. He allowed that Roy Farrell was often intoxicated when he came to see him. [11] In 1992 Roy Farrell executed a contract for the sale of one of his other parcels of land, "Eagle Bay", a tract of some 67 acres, for what appeared to be an improvident price on improvident terms. He was, for one thing, to be paid out of proceeds from logging as logging occurred. With the assistance of Ricky Turner this transaction was avoided by commencing litigation, followed by a settlement giving the would-be purchaser a right of first refusal. [12] In 1994 Ricky Turner was given power of attorney over his father's affairs. Wayne Letourneau, the notary public who witnessed the power of attorney documents, testified that he ensured that Roy Farrell was sober and fully understood the impact of granting the power of attorney to Ricky Farrell. He said he did so particularly in view of the issue which had arisen in 1992 over "Eagle Bay", with which he also had some involvement. He said he was satisfied that Roy Farrell understood what he was doing when he executed the power of attorney, but that he also seemed passive or uninterested. [13] Roy Farrell's daughter, Penny Yuchym, testified that in 1990 her father was in poor shape before he went to Shuswap Lake General Hospital in Salmon Arm. She said she got him to the doctor on that occasion, over considerable resistance, and that she visited him every day while he was in hospital. He was then released to an alcohol treatment centre in Kamloops. She said she was in daily contact with Roy Farrell while he was there and visited him on weekends. She said she was very concerned when, after he left the centre in Kamloops, he immediately began drinking and neglecting himself. She said that she and her brother Ricky attempted to discuss some options with him including living with Penny's family or going into a form of care facility. These suggestions were firmly refused. Roy Farrell at one point insisted, "I'm staying right here". Some homemaking assistance was arranged to help him about the house. [14] Ms. Yuchym acknowledged that the whole family was concerned about Roy Farrell and that they pitched in to help him out. She said Roy Farrell could remember events in the past but that his short-term memory was poor by the early-to-mid-1990s. She said the problem that arose over the "Eagle Bay" transaction was resolved as a result of a family effort, but that had he been left to himself her father would not have done anything to deal with it. She said he was just not motivated to help himself. [15] There is no question that subject to the limitations imposed by family and other commitments, Roy Farrell's children took an active interest in his well-being and were ready to assist him if he needed help. It is also abundantly clear that Hazel Turner was very close to Roy Farrell and took an active interest in his welfare. The overall impression left by the evidence is of a rather strong willed man who wanted to live independently and drink. This behaviour was predictably hard on his health, but for considerable periods of time in his later years he was in reasonable command of himself. In this respect the evidence of the homemaker, Patricia Juneau, was useful in suggesting what Roy Farrell could be like day to day. [16] As I have already outlined, the transfer of the land and mobile home took place in mid-1990, which was a few months following Roy Farrell's stay in hospital and his attendance at the Kamloops alcohol treatment centre. The transfers also apparently followed the discussions Penny and Ricky had had with him about alternative living arrangements following his return home. [17] The evidence is clear that Roy Farrell never told members of his immediate family what he had done, despite being encouraged to do so by at least Laura Burkitt. There is some evidence that he may, at the time he executed the transfers, have been concerned that his family wanted to put him in a home. This comes by way of two conversations, one between Heather Turner and Hazel Turner and one between Laura Burkitt and Hazel Turner. This is, on the face of it, hearsay as to Roy Farrell's actual intentions, coming from a deceased Hazel Turner through two other witnesses. I pause to say I am satisfied that, although going into a care facility was discussed with Roy Farrell by Penny and Ricky as one of his options, they had no particular intention to see him placed in care. None of their behaviour after that discussion suggests that they had such an intention. Roy Farrell's statements are of no value as to the truth of the assertion made, of course, but the statements of Lauren Burkitt and Heather Turner were not tendered for that purpose. [18] Heather Turner's evidence as to what her mother told her well after the transactions took place, is only admissible in my view if what was said constituted a statement by Hazel Turner against her interest. In the context of this case I think the statement she gave to Heather Turner can be so construed. Taken as a whole, the statement Hazel Turner gave included a number of elements: - that Roy Farrell was concerned about the prospect of being put in a home; - that he was concerned if the property was in his name alone it might be taken away from him; - that Hazel offered to purchase the property; - that Roy Farrell said he would give it to her; - that Hazel Turner was simply trying to help Roy Farrell; - that she was not motivated by personal gain; - that Roy Farrell wanted the property to remain in the family; - that Roy Farrell gave the property to Hazel Turner because he trusted her. [19] Laura Burkitt's conversation with Hazel Turner conforms to that of Heather Turner, as to Roy Farrell's concerns about the prospect of going into a home, and that he would lose the property. It also conforms to the extent that Hazel Turner said she offered to buy the property and Roy Farrell declined to sell it to her. [20] I should add at this point that there is no helpful evidence from the notary public who actually handled the transactions. Rosie Forbes had no specific recollection of the circumstances and made no notes. I can place no reliance on her evidence of invariable practice or of what she says she "would have done" in the circumstances. [21] The Hazel Turner conversations must, I think, be dealt with cautiously as evidence. They are not verbatim and I do not think much store can be put by the specific words reportedly used. What is evident, however, is that the transaction was not a single outright gift of a joint half-interest but was meant to achieve a specific purpose: Roy Farrell's continued residence on Lot 4. To the extent that Hazel Turner's reported assertions qualify the issue as to whether an outright gift was intended, they are statements against interest and admissible in this proceeding. [22] No money changed hands in the transaction which was represented in the documents to be for "$1.00 and natural love and affection". Following the transfer of the half-interest Roy Farrell continued to pay the taxes and to pay for the maintenance of the property as he had before. [23] The fact that Lot 4 had been put in joint-tenancy was not known to Roy Farrell's children, the plaintiffs, until about a month before he died, when they discovered it while going through some papers. Ricky Farrell says he had planned to address the matter but that Roy Farrell's death occurred before he had an opportunity to do so. [24] The 1994 property tax notice showed an assessed value of $58,900 for land and $20,600 for the improvements on Lot 4. Roy Farrell's estate amounted to some $448,000 which was divided into five equal shares among his children and his two step-children. I take account of these figures only as rough evidence of the order of relative value of Lot 4, as compared to Roy Farrell's probated estate. [25] The starting point in law is that these transactions, being gratuitous, give rise to a presumption that the properties were held by Hazel Turner on a "resulting trust" unless it can be shown that a gift was intended. Because equity presumes bargains, the onus of proving a gift falls upon the defendants. Where a person transfers his property into another's name, or into the names of himself and another, and does so gratuitously, the principle underlying Dyer v. Dyer would seem logically to apply to this situation also. Since Equity assumes bargains, and not gifts, he who has title gratuitously put into his name must prove that a gift was intended. In the case of purchase by one person taking title in the name of another, the resulting trust produces this effect, namely, of putting the onus of proof of a gift upon the transferee. It is not enough for the transferee to show that the transfer was "complete and perfect", in the sense that the transferee is fully vested with title to the property, he must also show that a gift was intended. Waters, Law of Trusts in Canada, Second Edition (Toronto: Carswell, 1984) at 308 [26] In determining whether a gift was intended, all the circumstances must be considered, taking account of intention at the time the transfer took place: Evidence introduced to support the resulting trust or to rebut it may only concern the intention of the parties at the date of the purchase or transfer. It is clearly not open to A to support his claim of a resulting trust by showing that at some later date he intended a resulting trust. Even the donor cannot retract from his gift, if he enabled the donee to acquire title and intend at that time to make a gift. As Viscount Simonds put it in Shepard v. Cartwright, quoting Snell's Principles of Equity: The acts and declarations of the parties before or at the time of the purchase [or of the voluntary transfer], or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration .... But subsequent declarations are admissible as evidence only against the party who made them, and not in his favour. Waters, Law of Trusts in Canada, Second Edition (Toronto: Carswell, 1984) at 311 [27] The evidence required to displace the presumption of a resulting trust may be slighter in cases where the relationship between the parties is close: The strength of the presumption in favour of a trust varies, first, with the relationship of the parties, and, secondly, with the circumstances which attends the transaction . . . The circumstances surrounding the transaction may tend to disprove the existence of the trust, and when the relationship of the parties tends in the same direction, the presumption of a trust will be rebutted by slighter indications from the surrounding circumstances than would be required where the relationship of the parties was such that a trust would normally be presumed. Thornley v. Royal Trust Co. (1932), 41 O.W.N. 470 at 470 at 473 quoted in Coverdale v. Griffiths et al (1977), 3 B.C.L.R. 291 at 297. [28] If, in the circumstances, the presumption of a resulting trust is rebutted by evidence that a gift was intended, the question of undue influence may arise. Where a person in a relationship of trust and confidence receives a gratuitous inter vivis transfer of valuable property, a presumption will arise that the transfer was induced by undue influence, which the transferee must rebut. The applicable principles were described in Geffen et al v. Goodman, 81 D.L.R. (4th) 211 (S.C.C.) at pp. 227-228 per Wilson, J: What then must a plaintiff establish in order to trigger presumption of undue influence? In my view, the inquiry should begin with an examination of the relationship between the parties. The first question to be addressed in all cases is whether the potential for domination inheres in the nature of the relationship itself. This test embraces those relationships which equity has already recognized as giving rise to the presumption, such as solicitor and client, parent and child, and guardian and ward, as well as other relationships of dependency which defy easy categorization. * * * . . . in situations where consideration is not an issue, e.g., gifts and bequests, it seems to me quite inappropriate to put a plaintiff to the proof of undue disadvantage or benefit in the result. In these situations the concern of the court is that such acts of beneficence not be tainted. It is enough, therefore, to establish the presence of a dominant relationship. Once the plaintiff has established that the circumstances are such as to trigger the application of the presumption, i.e., that apart from the details of the particular impugned transaction the nature of the relationship between the plaintiff and defendant was such that the potential for influence existed, the onus moves to the defendant to rebut it. As Lord Evershed M.R. stated in Zamet v. Hyman, supra, at p. 938, the plaintiff must be shown to have entered into the transaction as a result of his own "full, free and informed thought". Substantively, this may entail a showing that no actual influence was deployed in the particular transaction, that the plaintiff had independent advice, and so on. Additionally, I agree with those authors who suggest that the magnitude of the disadvantage or benefit is cogent evidence going to the issue of whether influence was exercised. [29] Influence need not be actual, it may be presumed. As a matter of policy courts will preserve public confidence in relationships of trust by shifting the onus to a transferee where a relationship of influence or domination is shown. [30] In this case there was obviously a close relationship between Roy Farrell and Hazel Turner and their families. Roy Farrell was successful in business, and demonstrated, when he dealt with Ricky Farrell and his wife over the trailer, an unsentimental approach to transactions within his own family. There is nothing in the evidence, and much against, the notion that there was any animus at all between Roy Farrell and his children. It is also clear that as the years went on Roy Farrell fell into the grip of a severe drinking problem. His behaviour became erratic at times, culminating in the "gun" incident. I accept, on the other hand, the evidence of the witnesses who testified that they had observed Roy Farrell to be in command of himself and to be capable of lucid and even entertaining conversation throughout the 1990s. [31] I do not think this is particularly inconsistent with the evidence of Dr. Penner, which I also accept, that Roy Farrell was "drinking himself to death", in colloquial terms. It is clear that he was not taking care of himself, but wanted no interference with what he had chosen to do. It is also clear that he had largely lost whatever acuity he had had as a businessman through a combination of apathy and alcoholism. The whole "Eagle Bay" episode, and the evidence of Mr. Letourneau as to Roy Farrell's general demeanour and attitude at the time the power of attorney was executed are telling examples of Roy Farrell's deterioration. [32] I am satisfied that as of the early part of 1990, when Roy Farrell was in hospital owing to his alcoholism, these processes were well underway. I am satisfied that the explanation given by Hazel Turner to both Heather Turner and Laura Burkitt for Roy Farrell's transfer in mid 1990 of a joint interest in Lot 4 and the trailer, in substance reflects what he said. I think it clear that he interpreted the concerns expressed by his son and daughter and the alternatives they outlined as a threat to his continual residence at Lot 4, and that he conceived of the transfer of a half interest as a way to prevent that from happening. [33] I have admitted Hazel Turner's repetition of these statements as statements by her against interest. The statements, taken as a whole and together, are certainly qualified - Roy Farrell is said to have wanted to "give" the property to Hazel Turner rather than sell her an interest - but it is clear that Roy Farrell wanted to continue in occupation and considered the transfers a way to ensure that that happened. [34] There is no question on the evidence that Hazel Turner was good to her brother and actively looked out for his welfare. I am quite unable to find, however, that the degree to which she did so, in any material sense, outweighed the dedication of Roy Farrell's own children. While they had families of their own, they were always available to assist Roy Farrell and did on numerous occasions. There include extracting him from the "Eagle Bay" deal and Ricky acting as his power of attorney, in the years after the transactions. It is therefore not possible to construe an obvious motive for a gift to Hazel Turner from her conduct toward Roy Farrell, as compared to that of his immediate family members. [35] I infer that the transactions were never revealed to Roy Farrell's children because he was aware of the understanding that had, for one thing, governed the status of Lot 4 in the matrimonial proceedings with Vera Farrell, to the effect that the property would be kept in the "Farrell family". I reject as implausible, in all the circumstances, the defendants' suggestion that this could be construed to mean the "extended" Farrell family, such that the transactions could be said to be consistent with that intention. [36] Having considered all of the evidence, I am of the view that Roy Farrell's strategic decision to place Lot 4 and the trailer in joint names with his sister was prompted by a mistaken view that he was vulnerable to his children forcing him off the property, and that he felt safer in placing his trust in Hazel Turner, who was, in his view, attentive but unthreatening in this regard. [37] Whether this transfer would have been particularly efficacious of Roy Farrell's purpose is, of course, debatable. It is, I think, quite clear that by this time Roy Farrell had lost much of the acuity and force of personality he had once had and any particular interest in his own physical or financial welfare beyond the ability to live out his life on Lot 4 without interference. As such his autonomy was also compromised. [38] There is nothing in the evidence to suggest Hazel Turner actively worked on Roy Farrell to transfer Lot 4 to her. I am nevertheless of the view, taking account of Roy Farrell's waning interest in his own general welfare, Hazel Tuner's active presence in his life, her evident desire to acquire Lot 4 (she was, after all, prepared to pay for it), Roy Farrell's stated reason for transferring a half-interest in the property, the fact that it was a peculiar way to protect himself, and the circumstances surrounding the execution of the transfer itself (there was no independent legal advice) that the circumstances strongly suggest that Hazel Turner was in a dominant position relative to Roy Farrell. [39] Accordingly, I find that the presumption that no gift was intended has not been rebutted, but that Roy Farrell transferred a half-interest in the lands and the mobile home to Hazel Farrell for the specific limited purpose of ensuring his continued residence on Lot 4. While I do not find that Hazel Turner actively promoted these transfers, I think there is no question that she was in a position to dominate the relationship, and that this may help to explain why Roy Farrell adopted this particular method of protecting himself, bearing in mind that, to begin with, he was mistaken about the intentions of his children. In other words, I also find that a presumption of undue influence arises on the facts of this case and that it has not been rebutted. [40] I therefore declare that the defendant estate holds the entire interest in: (i) the lands and premises registered in the Kamloops Land Title Office better known and described as: PID: 010-394-664 Lot 4, Section 11, Township 21 Range 10 West of the 6th Meridian Kamloops Division Yale District Plan 4998 (the "Lands") and (ii) a 1975 Bendix Leader 3CKR 64 foot Mobile Home, title to which was registered in the Manufactured Homes Registry on or about August 28, 1990 under Filing Nos. C77741 and C77742 (the "Mobile Home") in trust for the plaintiffs as executors of the last will and testament of James Roy Farrell and I direct that these interests be transferred to the plaintiffs as Roy Farrell's executors forthwith. [41] There shall be liberty to apply should issues arise as to the mechanics of this disposition, any further matters of accounting, or any issues that may arise as to costs. [42] The claim for punitive damages was not pressed or established and for the sake of certainty, is dismissed. "T.M. McEwan, J." The Honourable Mr. Justice T.M. McEwan