Canada: Understanding the Use of No Contest Clauses In Alberta: Anderson Estate, 2017 ABQB 422 And Mawhinney v Scobie, 2019 ABCA 76

Last Updated: March 14 2019
Article by Matt Trotta

Background

No contest clauses, or "in terrorem" clauses (latin for "in terror" or "by way of threat") are often used in wills to attempt to create a consequence or an ability to prevent a gift, if certain conditions are not met or certain actions are taken. Typically, no contest clauses intend to direct that if a beneficiary challenges a will, the bequest is forfeited and forms part of the residue of the estate. The goal of these clauses is to cause a beneficiary to think twice before commencing litigation that may result in their entire bequest being forfeited.

As a matter of public policy in Canada, a no contest clause is not allowed to oust statutory rights and benefits (such as maintenance and support under applicable dependants' relief legislation) or deprive the court of its jurisdiction to deal with requests for assistance in interpreting the will, which do not dispute the will.1

Generally, a valid no contest clause must also provide for an express gift over in the event that the beneficiary in question contests the will.2

Recent case law in Alberta has provided significant insight into how these clauses are to be interpreted:

Anderson Estate, 2017 ABQB 422

After a decline in health over the last months of his life, James Carl Anderson died on September 3, 2015 in Calgary at the age of 84. Mr. Anderson had three adult children. The respondent, Karen Mawhinney, claimed to have been in a relationship with Mr. Anderson for over twenty years and became his fiancée in March 2015. The appellants claimed that she was only a long-term friend.3

Ms. Mawhinney claimed that Mr. Anderson had made four wills prior to the two in question. Under all of the prior four wills, Ms. Mawhinney shared equally with the three adult children in the residue of the estate. The scheme of distribution was altered in an August 1, 2015 codicil and ultimately in a new will signed by Mr. Anderson on August 6, 2015 (the "August Will"), which altered the prior scheme of distributions (collectively, the "Testamentary Documents").4

The Testamentary Documents gave Ms. Mawhinney a parcel of property in Alberta, a house and its contents in Austin, Texas, a Bentley automobile, and $2.6 million dollars. However, the residue of the estate was to be distributed only among the three adult children. 5

The August Will also contained a no contest clause that stated the following:

"21.      If any beneficiary of this my Will challenges the validity of this my Will or any Codicil hereto or commences litigation in connection with any provision of my Will or any Codicil hereto, other than for:

(a) Any necessary judicial interpretation or for the assistance of the court in the course of administration of my estate; or

(b) Seeking to enforce or obtain any rights or benefits conferred by the laws of the Province of Alberta;

then, such beneficiary shall absolutely forfeit and lose all entitlement to benefits or to any gift to him or her hereunder, and every such benefit or gift so forfeited shall fall into the residue of my estate and the residue of my estate shall be distributed as if such beneficiary had predeceased me and left no issue surviving me."6

Ms. Mawhinney framed her application to the Alberta Court of Queen's Bench (the "QB Court") as a request for judicial interpretation of the August Will under Surrogate Rule 4. However, she also requested direction from the QB Court as to whether an application by her under Surrogate Rule 75 to ultimately require the Personal Representatives to formally prove the Testamentary Documents would:

  1. constitute a challenge to the validity of the Testamentary Documents;
  2. constitute litigation in connection with a provision of either of the Testamentary Documents; or
  3. trigger the application of the no contest clause.7

The QB Court in Anderson Estate was satisfied that the no contest clause was valid. However, it found, amongst other things, that the ability to make an application pursuant to Surrogate Rule 75 to obtain formal proof is a right conferred by the law of the Province of Alberta and was, therefore, excluded from the application of the no contest clause under exception (b) of the clause.

This holding was appealed.

Mawhinney v Scobie, 2019 ABCA 76

The Alberta Court of Appeal (the "Appeal Court") in Mawhinney considered the following two issues in the appeal of Anderson Estate:

  1. Does an application to request the personal representatives to obtain formal proof of the August Will under Surrogate Rule 75 constitute a challenge to its validity or litigation in connection with it, within the meaning of paragraph 21 of the August Will?8
  2. Is paragraph 21(b) of the August Will confined to applications for dependants' relief or is it broad enough to include an application raising suspicious circumstances?9

The Appeal Court held that while it is established in case law that a testator cannot extinguish rights conferred by statute dealing with maintenance and dependants' relief applications, the no contest clause is not sufficiently broad to exclude an application under Surrogate Rule 75 from being subject to its terms.

The Appeal Court noted that since the no contest clause specifically contemplated a challenge to the validity of the will, using Surrogate Rule 75 would ultimately serve as the first stage of a "two stage process" to effectively challenge the validity of the will, which is "exactly what the no contest clause prohibits."10

The Appeal Court took the position that "it must also be concerned about its obligation to give effect to the intentions of the [testator] who put the no contest clause in the will."11

The Appeal Court further disagreed with the position of the QB Court that the testator could have explicitly prohibited the use of Surrogate Rule 75, noting that such reasoning contained a "logical inconsistency." The Appeal Court noted that if it is true that the case law is clear that dependant's relief legislation cannot be avoided in a testamentary document, and if it is possible for rights under the Surrogate Rules to be avoided in a testamentary document, they cannot then be afforded the same treatment.12

The Appeal Court also considered the argument raised by Ms. Mawhinney that "if someone is aware of suspicious circumstances in a case of a will with a no contest clause, he or she is essentially precluded from bringing an application to put those suspicious circumstances before the court."13 The Appeal Court had two responses to this argument.

First, this appeal "was not a public policy challenge to the validity of the no contest clause per se on the basis that these types of clauses offend the conscience of the courts or society."14

Second, no contest clauses do not "prohibit an outright challenge to the validity of the will or litigation in connection with any provision of the will." The Appeal Court noted that if Ms. Mawhinney was successful in challenging the validity of the will, then it would no longer be valid and neither would the no contest clause. However, if the challenge was unsuccessful, it would mean the will would be valid, and that would include the no contest clause.15

Therefore, the Appeal Court held that the effect of the no contest clause is to "test the fortitude of a potential challenger to the validity of the will and how strongly they believe they can successfully challenge the will. The clause is designed to discourage litigation, not prohibit it."16

The appeal was granted 2 to 1, with a majority of the Appeal Court finding that an application under Surrogate Rule 75 would trigger the no contest clause.

Notably, O'Ferrall J.A. brought up two key points in the dissent to the majority decision.

First, the dissent took issue with the language in the no contest clause, as it did not suggest that the "right" specified under exception (b) should be narrowly construed so as to be limited to a purely substantive rights. The outcome of the application could result in "any number of substantive outcomes from intestacy to the proving of another will made by the deceased."17

Second, it was noted that "while there is little doubt that a testator who includes a no contest clause wants to limit the scope of challenges to his will, the moment he inserts exceptions to the triggering of the clause, those exceptions must be interpreted with an eye to determining the testator's intention in that regard."18

Key Takeaways

Prior to the holding in Mawhinney, the use of no contest clauses was becoming questionable as the types of litigation the clause could conceivably prevent was greatly diminished by the holding in Anderson Estate.

The holding in Mawhinney appears to confirm the belief that these clauses are designed to dissuade litigation and to cause a second thought, rather than to outright prohibit litigation. As the Appeal Court held in paragraph 45 of its decision, "that is exactly the type of dilemma the no contest clause is designed to create, and what was presumptively intended by [the Testator]."19

This holding also appears to illustrate a continuation of a growing trend in Alberta where applicants can expect consequences if their challenge to an estate ultimately lacks merit. This has been evident in cost awards in cases such as: Bukkems Estate (Re), 2014 ABQB 678, where a common law spouse was ordered to pay party and party costs to the Estate for an unjustified maintenance and support claim; or Nelson Estate (Re), 2014 ABQB 765, where the Court assessed a cost award approaching solicitor-client costs against an estate for conducting litigation on an unreasonable basis once evidence emerged to indicate that a challenge no longer had merit.

In this instance, the Appeal Court appears to be highlighting the potential application of a different remedy, the enforcement of a no contest clause.

The Appeal Court noted that if a challenge is a valid one, both a will and it's no contest clause would be invalidated; but if a challenge lacked merit, both would still be valid and the beneficiary can expect to be disinherited as a result. Put another way, if a beneficiary seeks to challenge a will and undo it in order to obtain the benefit of a more favourable prior version, they should be aware that they could end up with nothing from the estate if they are unsuccessful and that will contains a no contest clause.

That being said, both the holding in Anderson Estate and the dissent in Mawhinney illustrate the significant issues that still face the use, interpretation and enforcement of no contest clauses.

Both the QB Court and the Appeal Court noted that the beneficiary seeking guidance had effectively been partially disinherited, since she was no longer a residual beneficiary, and perhaps a right to be satisfied that the testamentary instrument in question is truly the last will and testament of the deceased is a true substantive right that should be contemplated when considering no contest clauses.

What does appear certain is that the law on no contest clauses is not yet settled, and a balance between allowing latitude in testator autonomy and discouraging valid litigation issues is still being struck.

Footnotes

1 Mawhinney v Scobie, 2019 ABCA 76 [Mawhinney] at para 27

2 Anderson Estate, 2017 ABQB 422 [Anderson Estate] at 18, citing Kent v McKay, (1982) 1982 CanLII 788 (BC SC), 139 DLR (3d) 318 at paras 9-10

3 Anderson Estate at para 5, Mawhinney at para 2

4 Anderson Estate at para 7

5 Mawhinney at para 3 7

6 Anderson Estate at para 12, Mawhinney at para 4

7 Anderson Estate at para 16

8 Mawhinney at para 13

9 Mawhinney at para 14

10 Mawhinney at para 44

11 Mawhinney at para 50

12 Mawhinney at para 46

13 Mawhinney at para 47

14 Mawhinney at para 48

15 Mawhinney at para 49

16 Ibid.

17 Mawhinney at para 75

18 Mawhinney at para 77

19 Mawhinney at para 45

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Matt Trotta
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions