SCC decision reshapes the probate debate

By a 7-2 majority, the Supreme Court of Canada found in Eurig Estate (Re) (File No. 25866, October 22, 1998) that Ontario probate fees are a tax and that while the Ontario legislature has the authority to implement a direct tax, it must do so through the legislature and not by Lieutenant Governor in Council (i.e., by regulation). The declaration of invalidity was suspended for a period of six months to enable the Province of Ontario to deal with this problem. The Appellant, however, is to receive a full refund of the probate fees paid.

The Court indicated that not only must taxes be passed by legislatures, but that the amount levied must bear some relation to the service being provided. This decision may have implications for the status of other Government fees, and for the fee level and structure with respect to probate fees.

It is the relation to “service provided” that is particularly galling to many clients. In a recent Vancouver Sun article, Alfreda Howard, a 22-year-old Maple Ridge waitress spoke vehemently about the $3,300 cost to probate her late father’s estate. “I don’t understand how they can charge me $3,300 for just putting a stamp on a form. It’s an outrageous fee... I think the government gets enough of our money as it is,” she said. “They are taking advantage of people at a time when they are vulnerable.” Her lawyer, Ward Branch, has filed her case in the hopes of achieving satisfaction for his client and many other British Columbians by having probate fees struck down.

As in Ontario, probate fees in British Columbia are a product of regulation. Executors of wills in BC are levied $14 on every $1,000 in the value of estates, a charge that was more than doubled for estates over $50,000 in April 1997. It is estimated that an extra $11 million has been paid by British Columbians due to these “inflated” probate charges. Several class action suits have been filed in the BC Supreme Court, including one on behalf of two individuals, demanding the reimbursement of more than $76,000 paid for executing two estates worth between $2 and $3 million each.

The Attorney General of British Columbia was an intervenor in the Ontario Appeal. It is anticipated that the Government of BC will introduce legislation to re-institute the probate fee, and may make it retroactive. The Finance and Attorney General Ministries are “reviewing” the issue, but are not making any comment regarding potential action at this time.

The CBA’s Wills and Trusts Section - Vancouver, and the Law Society of BC, have both issued notices to the profession recommending that probate fees be paid “under protest”. Deidre J. Herbert, Chair of the Section says that paying under protest “should assist applicants in applying for refunds should the Government not pass retroactive legislation.”

Watch the news and further CBA Issues Alerts for updates on the status of the class action suits and Government response in the coming months.

This article was published in the December 1998 issue of BarTalk. © 1998 The Canadian Bar Association. All rights reserved.