McDonald v. McDonald Estate

2012 BCSC 275 McDonald v. McDonald Estate

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: McDonald v. McDonald Estate, 2012 BCSC 275 Date: 20120223 Docket: S19882 Registry: Chilliwack Between: Brian Victor McDonald Plaintiff And The Estate of Samuel Alexander McDonald, Sylvia McDonald as Executor of the Estate of Samuel Alexander McDonald, Sylvia McDonald, Robert Samuel McDonald and McDonald Landing Farms Ltd. Defendants And Docket: S21532 Registry: Chilliwack Between: Brian Victor McDonald Plaintiff And Sylvia McDonald as Executor of the Estate of Samuel Alexander McDonald, Sylvia McDonald, Robert Samuel McDonald, Julie Madeline Rothenbausch, Dean William McDonald and McDonald Landing Farms Ltd. Defendants Before: The Honourable Mr. Justice Joyce Reasons for Judgment In Chambers Counsel for the Plaintiff: R.J. Meyer Counsel for the Defendants, other than Julie Madeline Rothenbausch and Dean William McDonald K.E. Ducey No one appearing for the Defendants, Julie Madeline Rothenbausch and Dean William McDonald Place and Date of Hearing: Chilliwack, B.C. January 30, 2012 Place and Date of Judgment: Chilliwack, B.C. February 23, 2012

NATURE OF THE APPLICATION [1] The plaintiff applies for production of various documents and information requested at the examinations for discovery of the defendants.

BACKGROUND [2] The plaintiff is the son of the late Samuel McDonald, who died on June 9, 2005. Sylvia McDonald is the plaintiff's mother. Robert McDonald, Julie Rothenbausch and Dean McDonald are the plaintiff's siblings. McDonald Landing Farms Ltd. (the "Company"), is a British Columbia company that owns and operates a dairy farm that has been in the McDonald Family for many years. For convenience, I will refer to Samuel McDonald and the individual parties by their first names. [3] Samuel incorporated McDonald Landing Farms Ltd. on February 14, 1983. Samuel held 51 common voting shares and Sylvia held 49 common voting shares in the Company. Over the years, Samuel and Sylvia were issued approximately 7000 preferred shares in the Company. [4] The children were raised on the farm. When they reached adulthood, both Robert, the eldest son, and Brian, the youngest son remained on the farm and operated the farm with their father. [5] In 1989, Brian suffered a serious injury while working on the farm. [6] On June 15, 2000, Samuel transferred his common voting shares in the Company to Robert, pursuant to an agreement, the material parts of which read as follows: IN CONSIDERATION OF his natural love and affection for Robert, Sam hereby grants, transfers and assigns to Robert, his successors and assigns, by way of gift for Robert's own use and benefit absolutely, 51 Class "A" voting

common shares with a par value of $1.00 per share each presently registered in the name of Sam. ... 2.00 ACCEPTANCE Robert hereby accepts the gift from Sam made by this Agreement. [7] On the same date, and pursuant to an identical agreement, Sylvia transferred her 49 Class "A" voting common shares to Robert. [8] Samuel and Sylvia also gave Robert a letter dated June 15, 2000, which read: We are transferring to you by gift all of our common shares in and loans to McDonald Landing Farms Ltd. at this time. We wish you to know that it is our wish that you will continue to provide a home on the farm for your brother, Brian, without any rent therefrom for the remainder of his life. [9] The transfers of shares were without the knowledge of Brian McDonald. [10] In 2004, Brian began to operate a small farm on a parcel of land owned by the Company. [11] Samuel died on June 9, 2005, leaving a will by which he left his entire estate to Sylvia. [12] On March 31, 2009, Brian commenced Action No. S19882 in Chilliwack. He asserts that he contributed both work and money to the farm over a period of over 30 years and claims remedies based on unjust enrichment. In particular, the plaintiff seeks: 1. An order be made in favour of the plaintiff as against all the defendants, under the principle of unjust enrichment, and a declaration of constructive trust, or resulting trust, that he is entitled to a share in the Farm, ...

5. In the alternative, an order that the plaintiff be compensated for his financial contributions and labour contributions to the operation of the Farm ... under the principle of unjust enrichment, constructive trust, and alternatively on a quantum meruit basis. [13] On August 28, 2009, Brian commenced Action No. S121970 in New Westminster seeking variation of the will of his late father under the Wills Variation Act, R.S.B.C. 1996, c. 490. [14] By order made on March 18, 2011, Action No. S121970 was transferred to the Chilliwack Registry under Chilliwack Registry No. S21532. [15] By order made on January 5, 2011, the two proceedings were ordered to be tried at the same time. [16] Brian now brings an application in both proceedings seeking various information and documents that were requested at the examination for discovery of Robert and Sylvia.

NATURE OF THE DOCUMENTS IN QUESTION [17] The documents and information that Brian seeks fall into three broad categories: (1) all documents of the solicitor who prepared the agreements and letter at the time Samuel and Sylvia transferred their shares to Robert; (2) documents that relate to the assets, and operation of the Company; and (3) documents that relate to money and goods provided to Brian by the Company.

DISCUSSION [18] Brian submits that the documents in the first category are relevant in the wills variation action because he seeks to establish that Robert holds the shares of the Company upon a resulting trust for Sylvia and the estate of Samuel, and that the estate of Samuel, in which he seeks to share, includes voting shares in the company. [19] The lawyer who has possession of these documents is a partner in the firm that represents Sylvia, Robert and the Company. He was not formally served with the application and the notice of application does not seek an order as against him directly. However, counsel for Sylvia, Robert, and the Company do not resist the application on that ground and was content to deal with the application on the merits. [20] Robert, Sylvia and the Company submit that these documents are not relevant, privileged and that, in any event, they have already provided copies of all documents relating to the transfer to Brian. [21] It appears to me that privilege has been waived by providing some of the documents relating to the transaction and because the lawyer who has possession of the documents has sworn an affidavit in which he disclosed matters concerning his instructions. [22] In the circumstances, I believe that the most expeditious way to determine whether there are any other documents that ought to be produced to Brian is for the court to review

them. I therefore order that any additional documents in the possession of the lawyer relating to the transfer of shares be provided to the Court for review within five business days. [23] Brian says the second category of documents is relevant in the unjust enrichment action because they relate to the value of the Company and are therefore relevant to the quantification of his claim. While I agree that some of the documents or classes of documents are relevant to that issue, it is my view that a number of them are unrelated to or unnecessary for a determination of the value of the Company. The Company has provided copies of its financial statements, which I would think are the primary documents in connection with establishing the value of the Company. Brian appears to be attempting to establish, through the documents that he seeks, that certain actions undertaken by Robert, including the use of funds obtained through a line of credit, have been harmful to the Company, although there is nothing in the pleadings to support such allegations. [24] With regard to what money and goods were provided to the plaintiff, the documents sought may relate to the question of whether the plaintiff suffered a deprivation and should be produced if they exist. [25] I therefore order that within 21 days the Company, Robert and Sylvia produce the following kinds of documents to the plaintiff: 1.

Documents that show the Company's current milk quota; 2. Documents relating to money that the defendants provided to the plaintiff in connection with the plaintiff's application for milk quota; 3. Documents relating to money and goods provided to or on behalf of the plaintiff by the defendants, including sawdust, insurance, property taxes, and feed. [26] Neither party was wholly successful on this application. Accordingly, I think the appropriate order is that each party bear their own costs. "B.M. Joyce J."