If a person agrees to leave someone an inheritance in a will, then does not do so, is the agreement enforceable? Contracts to bequeath property on death are somewhat unusual—but they are enforceable in BC. In Munro v. James, 2020 BCSC 1348, the Court upheld a written agreement requiring a woman to name a BC couple as beneficiaries of the whole of the residue of her estate.
Facts giving rise to BC estate litigation in Munro
The dispute in Munro involved long-term acquaintances in the equestrian community on Vancouver Island, BC. Estate litigation was brought by Ms. Munro and Mr. Boughey, a married couple in their 60s, against Ms. James, who was 95 years old at trial. The couple sought to enforce a written contract which promised that they would inherit Ms. James’ estate on her death. Ms. James owned a 63-acre farm in Nanaimo, BC (the “Property”) where she lived and bred ponies. The parties entered into a contract in July 2007 in which it was agreed that Ms. Munro and Mr. Boughey would move onto Ms. James’ farm, build a home and reside there, and look after Ms. James’ ponies for the remainder of Ms. James’ life. In exchange, Ms. Munro and Mr. Boughey would inherit Ms. James’ entire estate when she died (the “Agreement”). When the Agreement was formed, Ms. James was living alone on the Property. She was 83 years old and looking for some help with managing her 35 ponies. After the Agreement was formed, Ms. James made a will naming the couple as the beneficiaries of her entire estate.
Attempt to terminate agreement to bequeath estate
Ms. Munro and Mr. Boughey spent more than ten years investing their time, money, and energy in reliance on the promise that they would inherit the Property on Ms. James’ death. At some point, tensions surfaced in the relationship between the parties. Without telling Ms. Munro and Mr. Boughey, Ms. James made a new will in December 2017, leaving her entire estate to another acquaintance, Ms. Brown. In January 2018, Ms. James sought to terminate the Agreement with Ms. Munro and Mr. Boughey on three months notice. The couple were completely taken by surprise when Ms. James served them with termination notices. They did not accept the purported termination and immediately sued to enforce the Agreement. Ms. James took the position that she was entitled to terminate the Agreement before her death, and she further argued that she was relieved of her obligations under the Agreement because Ms. Munro and Mr. Boughey failed to fulfill the Agreement in the manner in which they cared for the ponies and managed the Property.
No right to terminate contract prior to death
The evidence at trial was consistent: all parties intended the Agreement to provide for Ms. Munro and Mr. Boughey to inherit Ms. James’ estate on her death, and that was the only scenario for the termination of the Agreement that was in the parties’ minds at the time the Agreement was made. There was simply no evidence to support the proposition that the parties intended to include in the Agreement an implied term that the Agreement could be terminated prior to Ms. James’ death. As such, absent a fundamental breach of the Agreement, Ms. James had no right to terminate. Careful review of Ms. Munro and Mr. Boughey’s efforts over the decade demonstrated that they managed the Property well; in other words, they did in fact uphold their side of the Agreement.
Promisor committed “anticipatory breach”
Madam Justice Francis concluded that Ms. James committed an anticipatory breach of the Agreement when she changed her will to make Ms. Brown the sole beneficiary of her estate and delivered the Notice to Ms. Munro and Mr. Boughey. Anticipatory breach occurs when a party, by express language or conduct, or as a matter of implication from what he or she has said and done, repudiates a contractual obligation before it falls due. In attempting to terminate the Agreement and leave her estate to someone else, Ms. James totally rejected the obligations of the Agreement, and had no justification for such conduct.
Remedy for breach of contract to make a will
What made this case exceedingly difficult from a remedial perspective was the fact that Ms. James was still alive and the plaintiffs, under the terms of the Agreement, were not yet entitled to anything. However, in the face of an anticipatory breach, an innocent party may either accept the breach, treat the contract as being at an end and sue for damages; or decline to accept the breach, keep the contract open and sue for specific performance, or damages in lieu. In this BC estate litigation case, the plaintiffs never accepted the defendant’s repudiation of the Agreement. Their position throughout the litigation was that they wished for the Agreement to continue and they sought declaratory and equitable relief that would restore them to the position they would have been in had Ms. James never purported to terminate the Agreement. Madam Justice Francis ordered the entire residue of Ms. James’ estate on her death, after payment of taxes and reasonable funeral and testamentary expenses, payable to Ms. Munro and Mr. Boughey. Ms. James was further ordered to not dispose of or encumber the Property during her lifetime, without the consent of Ms. Munro and Mr. Boughey or a court order. Ms. Munro and Mr. Boughey were ordered to vacate the Property but also relieved of any further obligations to perform work at the Property under the Agreement.
Bottom line on anticipatory breach of contract promising inheritance
It is generally true that BC estate litigation claims do not arise until after a person’s death. However, as a matter of contract law, it is not necessary to wait until a person has died to enforce a valid agreement requiring that person to bequeath property or make a will benefitting someone else.