In 2015, there was a case in the Saskatchewan court that dealt with the issue of a beneficiary’s right to claim her inheritance, and the executor attempt to withhold payment of the inheritance until the issue goes to trial. The court, in this case, looked to other courts in Canada, including Ontario, in its decision.
Daryl, the testator, the person whose will it was, appointed his two sons as his executors/trustees. In his Will, Daryl stated that he wanted the proceeds of his CIBC account to go to his wife. While Daryl was alive, he set up a joint with his wife, Desjardin Financial, and Edward Jones. When Daryl passed away, the executors believed that the wife shouldn’t have taken money from the joint account, as the money should have become part of Daryl’s residue. The executors argued that Daryl didn’t have the mental capacity to set up a joint account, and therefore, the executors refused to pay the gift of the CIBC proceeds to the wife, as per Daryl’s will. In this case, the wife wanted her gift and the executors claimed an equitable set-off – that is they wanted to withhold this gift until the claim about the joint account was heard.
The court looked at the criteria to establish equitable set-off noted in other Canadian cases:
- The party relying on a set-off must show some equitable ground for being protected against the other side’s demands;
- The equitable ground must go to the very root of the plaintiff’s claim before a set-off will be allowed;
- A cross-claim must be so clearly connected with the demand of the plaintiff that it would be unfair to allow the plaintiff to enforce payment without taking into consideration the cross-claim;
- The plaintiff’s claim and the cross-claim doesn’t have to arise out of the same contract;
- Unliquidated claims are on the same footing as liquidated claims.
In the case of Daryl’s will, taking the factors above into consideration, the court decided that the executors have a right to claim equitable set-off because the executor’s claim and the wife’s claim to the gift are closely connected that it would be unfair to give the wife the specific gift without considering the claim by the executors regarding the joint account. So, the executors were able to hold off on giving the wife her gift until the issue of the joint account was figured out.
At the end of the decision, it’s interesting to note that the judge stated, if the decision regarding the equitable set-off is found to be wrong at trial, then the CIBC funds to the wife is a specific gift, which is considered an exception, and the executors would have to pay the CIBC proceeds to the wife regardless of their claim against her.