The In Terrorem Doctrine and Litigation of No-Contest Clauses in Wills

There are certain situations in which one already knows that a Will is going to be challenged. It may be on the basis that there is some question about the testator’s capacity or his relationship with a new romantic partner who suddenly appeared or the bequests are unusual. Whatever the case might be, one might find yourself litigating in the face of a no-contest clause that appears within the Will that is having its validity challenged.

My senior colleague Charles Wagner co-authored a paper on this topic in 2015.¹ Since then a recent Alberta Court of Appeal decision concerning the litigation of a no-contest clause provides us with an opportunity to see what changes, if any, have taken place in the courts’ treatment of this topic.

I will provide the reader with a brief history of law surrounding no contest-clauses, its interplay with the in terrorem doctrine, and look at an example of recently litigated no contest-clause that was upheld by the Alberta Court of Appeal. Finally, I will canvass litigation strategies in the face of no-contest clauses.

Terminology

In terrorem literally means “in fear” or “as a warning”.² In law, it refers to a testamentary conditional gift where the condition is a threat without any consequence. If the condition in the testamentary gift is found to be in terrorem, it may be void and inoperative. Often an “in terrorem clause” is used interchangeably with “no-contest clause”.³

This doctrine often arises in the context of no-contest clauses in Wills – that is a clause which stipulates that a beneficiary will lose an entitlement if they challenge the Will. Not all no-contest clauses will be invalid due to the in terrorem doctrine, only clauses that a court determines to be a mere threat will be invalid due to the doctrine; that is, a threat unaccompanied by a consequence. Where there is, say, a gift-over in consequence of the condition being breached, the clause is enforceable. One should note that the concern is less about the condition itself, and more about certainty as to the disposition of the property given on condition.

Why the Doctrine Exists

The in terrorem doctrine is the result of a doctrinal bifurcation between canon law and equity.⁴ The ecclesiastical courts, following principles of canon law held that all testamentary clauses in restraint of marriage were abhorrent, whereas the courts of Chancery were not as sure.⁵ The difference of opinion centred upon the “partial” restraints on marriage, i.e. the clauses not forbidding an individual to marry, but forbidding an individual to marry a particular person or a member of a particular class In equity, these partial restraint clauses were not necessarily void.⁶ The other problem, which appears to have arisen later, was the proliferation of no contest clauses in wills. These were viewed as efforts to circumvent the authority of the courts.⁷

The solution to both problems was the development of the in terrorem doctrine. Under this doctrine, equity held that certain partial restraints on marriage and no-contest clauses were mere threats and therefore null and void. In arriving at this conclusion, the courts breathed life into a legal fiction which held that if a testator really meant to impose the impugned condition, as opposed to a mere threat of imposing the impugned condition, the testator would manifest this intention through the inclusion of an explicit gift-over clause.⁸ What has emerged from this fiction is the rule, which survives to this day, that for a no-contest clause to be valid, there must be a clear and explicit gift-over if the condition is breached.⁹ One should also note that conditions restraining marriage or promoting divorce are void on account of public policy, whether there is a consequence in the form of a gift-over or otherwise.¹⁰

No-Contest Clauses and the In Terrorem Doctrine

In Kent v. McKay,¹¹ the British Columbia Supreme Court held that for the in terrorem doctrine to apply to a no-contest clause, the following three criteria must be satisfied:

1. The legacy must comprise personal property or a mixture of real and personal property;
2. The condition must be in restraint of marriage or one which forbids challenges to the will; and,
3. The threat must be “idle”; that is to say that the condition must be imposed solely to prevent the beneficiary from undertaking that which the condition forbids. Therefore, a provision which provides only for a bare forfeiture of the gift on breach of the condition is null.¹²

The Kent case involved an application for an order under the British Columbia Wills Variation Act¹³ (“WVA”). The WVA, much like Ontario’s Succession Law Reform Act,¹⁴ empowers the court with the ability to make provision for a Will-maker’s spouse or children if the Will did not provide adequate provision for their reasonable support. The Will in Kent contained the following-no contest provision:

I HEREBY WILL AND DECLARE that if any person who may be entitled to any benefit under this my Will shall institute or cause to be commenced any litigation in connection with any of the provisions of this my Will other than for any necessary judicial interpretation thereof or for the direction of the Court in the course of administration all benefits to which such person would have been entitled shall thereupon cease and I hereby revoke all said benefits and I DIRECT that said benefits so revoked shall fall into and form part of the residue of my Estate to be distributed as directed in this my Will.¹⁵.

In applying the three-part test to the above no-contest clause, Justice Lander determined that the clause was not in terrorem as the clause included a gift-over provision to the residue, which was sufficient to satisfy the third element of the test. The Kent case has been followed by multiple levels of courts in various jurisdictions including in Ontario.¹⁶

The case of Bellinger v. Fayers¹⁷ offers an example of a no-contest clause that failed to satisfy the Kent test. In Bellinger, the no-contest clause in question read as follows:

IT IS MY FURTHER DESIRE, because of an expressed intention of one of the legatees to contest the terms of this my Will, that should any person do so then he or she shall forfeit any legacy he or she may otherwise be entitled to.¹⁸

Justice Hood held that the above no-contest clause was invalid due to violating the Kent test, in particular by failing to include a gift-over provision. In arriving at this conclusion, his Honour stated the following:

The gift must be accompanied by an effective gift over which vests in the recipient on the condition being breached. If there is no gift over, then the condition will be treated as merely in terrorem, that is a mere threat, and will be found to be void. And nothing short of a positive direction of a gift over, of vesting in another, even in the case where the forfeited legacy falls in the residue, will suffice. There must be an express disposition made of what is to be forfeited.¹⁹

Litigation Strategies to Avoid Triggering a No-Contest Clause

Simply because a Will contains a no-contest clause does not mean that any legal inquiry or action will de facto trigger the clause as it may not constitute “contesting the Will”. For example, an application for construction or interpretation of a Will will not “trigger” a no-contest clause.²⁰ As discussed below, clauses which broadly seek to prevent a beneficiary from making any legal inquiry to the Court or deny the beneficiary an ability to make a statutory claim are void on the basis of being contrary to public  policy.²¹

In Kent, the court noted that despite the no-contest clause surviving the in terrorem doctrine, the clause was nonetheless void as it was against public policy. Justice Lander observed that the no-contest clause purported to forbid “any litigation in connection with any of the provisions of this my Will.” It therefore would have prevented the statutory entitlement of a beneficiary to make a claim for dependant support.

The reasoning in Kent was followed in Bellinger as well as the case of Mawhinney v. Scobie, which is further discussed below. On the basis of these decisions it stands to reason that a no-contest clause forbidding applications for statutorily entitled benefits in other common-law jurisdictions would also be void as against public policy.

Additionally, if a no-contest clause forbids the challenging of the Will itself, one might still commence a claim on the basis of contract, unjust enrichment or proprietary estoppel.²² These claims seek relief as against the estate but do not call into question the validity of the Will itself. Further, and in particular to the doctrine of proprietary estoppel, if an equity arises, a court will have broad discretion to fashion an appropriate remedy.²³

The Latest Word on No-Contest Clauses; Mawhinney v. Scobie

In the recent decision of Mawhinney v. Scobie,²⁴ the Alberta Court of Appeal had the opportunity to explore the in terrorem doctrine and no-contest clauses in the face of a seemingly procedural application.

Facts

James Carl Anderson (“JC”) passed away on September 3, 2015, and left behind three adult children and his fiancée Karen Mawhinney (“Ms. Mawhinney”).²⁵ Ms. Mawhinney claimed that JC previously made four separate Wills.²⁶ Under each of the four Wills, she was a beneficiary, sharing equally with the adult children from the residue of the estate. However, JC subsequently prepared a codicil which altered the distribution scheme that was present through the previous four Wills. Eventually, a new and final Will was prepared (the “Last Will”), leaving Ms. Mawhinney a specific bequest of a parcel of property in Alberta. However, unlike previous iterations of the Will, Ms. Mawhinney was no longer a residual beneficiary under the Last Will.

The Last Will, which received a grant of probate, contained a no-contest clause, which reads as follows:

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 of 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.²⁷

Ms. Mawhinney alleged that prior to the execution of the Last Will, JC’s health had deteriorated such that there were “suspicious circumstances” surrounding the execution of the Last Will.²⁸ Under the Alberta Surrogate Rules,²⁹ an individual can make an application under rule 75(1)(a) to obtain formal proof of a Will. The Surrogate Rules involves a two-stage process.³⁰ Firstly, the applicant must adduce evidence of suspicious circumstances.³¹ If successful, the burden then shifts to the propounder of the Will to prove the Will in solemn form.³² However, due to the presence of the no-contest clause Ms. Mawhinney first made an application to the court for directions on whether an application under rule 75(1)(a) would trigger the no-contest clause and thereby disentitle her to her bequest.

The Lower Court Decision

The lower court was satisfied that the no-contest clause itself was a valid clause and would not fail due to the doctrine of in terrorem.³³  More importantly, the lower court found that an application under rule 75(1)(a) of the Surrogate Rules would not violate the no-contest clause because rule 75(a) would fall under the “rights or benefits conferred be the Province of Alberta” exception that was enumerated within the clause at paragraph 21(b).³⁴ The lower court also noted that if JC wished to preclude an application under the Surrogate Rules, he should have drafted such an exclusion within the no-contest clause.³⁵

The holding was appealed.

The Majority Decision

The two questions before the Alberta Court of Appeal (the “Appeal Court”) were as follows:

1. Does an application to obtain proof of the Last Will tantamount to a challenge of the validity of the Will and thereby trigger the no-contest clause?
2. Is paragraph 21(b) of the Last Will restricted to applications for dependants’ relief or is broad enough to encapsulate an application raising suspicious  circumstances?³⁶

The Appeal Court overturned the lower court’s decision, and held that the very essence of an application raising suspicious circumstances is to ultimately challenge the validity of the Last Will.³⁷ Consequently, the bringing of such an application would be the exact thing which the no-contest clause was intended to prohibit.

With respect to the second question, the Appeal Court answered it in the negative. In arriving to this answer, the Appeal Court rejected the argument that the exception found at 21(b) of the clause applied only to dependants’ relief applications, and interpreted the phrase “rights and benefits conferred by law” to refer only to a “substantive benefit or right created that the testator did not provide for, or provide for adequately”.³⁸ As a result, Ms. Mawhinney’s “procedural right to challenge the will” under rule 75 of the Surrogate Rules did not fall under the exception.

At the hearing of the appeal Ms. Mawhinney also raised a public policy argument. Ms. Mawhinney argued that if she was unable to bring her application without triggering the no-contest clause then it would result in other individuals who are aware of suspicious circumstances in a case of a Will with a no-contest clause in being precluded from bringing an application to put those suspicious circumstances before the court.³⁹Arguably, such an approach could lead to the unsavoury consequence of negating a court’s ability to ensure that only valid Wills were being probated and could result in invalid Wills being administered.⁴⁰

In rejecting the public policy argument, the Appeal Court emphatically held that no-contest clauses do not prohibit an outright challenge to the validity of the Will or in connection with any provision of the Will.⁴¹ Rather, the clause is designed to discourage such challenges, not prohibit them.⁴² Put another way, the effect of a no-contest clause is to test the fortitude of a potential litigant and force them to assess how strongly they believe in their case. Importantly, if the challenge is successful, then the entire Will, including the no-contest clause will be invalid as well.⁴³

The Appeal Court also confirmed that a no-contest clause which either ousts the general jurisdiction of the courts or thwarts a statutory benefit is invalid, but the two exceptions found within the clause at paragraphs 21(a) and (b) ensured the clause in the Mawhinney did not run afoul.⁴⁴ More specifically, paragraph 21(a) ensured that the clause would not oust the general jurisdiction of the courts for the administration of an estate, and paragraph 21(b) addressed potential statutory claims, such as dependants’ relief legislation.⁴⁵

The Dissent

Justice O’Ferrall disagreed with the majority and held that the no-contest clause did not apply to an application to have the Will proven in solemn form.⁴⁶ He noted that the application would be the necessary first step in a process that could have a range of substantive outcomes, such as the Will being deemed invalid.⁴⁷ He therefore found that the right to make the application had a “substantive aspect”, which would fall under the purview of “rights and benefits” under 21(b) of the no-contest clause.⁴⁸ In coming to this conclusion his Honour noted:

What right could be more fundamental than the right to be satisfied that the testamentary instrument in question is indeed the last will and testament of the deceased?⁴⁹

Additionally, his Honour held that in any event there was nothing to suggest that the “rights” specified under paragraph 21(b) should be narrowly construed as to be limited to a purely substantive right.⁵⁰

Further, O’Ferrall J.A., noted that the moment the testator includes exceptions to the triggering of a no-contest clause, those exceptions must be interpreted in a manner that aligns with the testator’s intentions. Finally, his Honour agreed with the lower court’s finding that had the testator intended to preclude a specific right conferred by the Surrogate Rules, he could have excluded that right from the exception noted in paragraph 21(b).

CONCLUSION

Mawhinney reaffirms, that a no-contest clause will be invalid on the grounds of public policy if that clause:

• seeks to oust statutory benefits (such as maintenance and support under dependant’s relief legislation); or,
• deprive the court of its jurisdiction to deal with requests for assistance in interpreting a Will, which do not impugn the Will.

Additionally, no-contest clauses which fail to comply with the Kent test will be voided due to the in terrorem doctrine.

Accordingly, drafters of no-contest clauses should ensure that any clause does not infringe a beneficiary’s entitlement to seek statutory or attempt to strip the court of its jurisdiction for such matters. As Mawhinney was denied leave to appeal to the Supreme Court of Canada, this area of law is unlikely to undergo any major developments in the foreseeable future.

Key Takeaways from Mawhinney for Will Drafters

Mawhinney provides an excellent example of a no-contest clause that has survived appellate litigation.

One of the largest takeaway is that drafters of no-contest clauses should be mindful to contain language that ensures that the clause does not restrict or oust the general jurisdiction of the courts for the administration of an estate or similarly prohibit a beneficiary’s entitlement to seek a statutory benefit such as a dependant’s relief claim.

Out of an abundance of caution, non-Albertan Will drafters may wish to pay particular attention to Justice O’Ferrall’s dissenting remarks. More specifically, if a testator intends to preclude a specific right conferred by the legislature, then the testator should manifest this intention through the inclusion of explicitly clear language in the no-contest clause.

Key Takeaways from Mawhinney for Beneficiary’s Who May Wish to Litigate a Will With a No-Contest Clause

The presence of a no-contest clause in a Will, does not mean that a litigant is prohibited from bringing an outright challenge to the validity of the Will or in connection with any provision of the Will. These clauses are only meant to discourage would-be litigants and force them to assess how strongly they believe in their case.

Importantly, if a litigant is successful in a Will challenge, the entire Will, including the no-contest clause will be invalid. However, prior to commencing a legal application related to the Will and thereby risk forfeiting any entitlements under the Will, potential litigants would be wise to follow Ms. Mawhinney’s approach to seek directions from the court to determine whether the no-contest is valid or even applies to the prospective legal application that is being considered. If it does apply, then a litigant can make an informed cost-benefit analysis on whether they wish to play a zero-sum game.

For counsel instructing potential litigants in such situations, it is prudent to ensure that one’s clients are fully informed of the pros and cons of litigation in the face of a no-contest clause. In the event that a litigant unsuccessfully rolls the dice against a no-contest clause and loses their designation as a beneficiary, it is possible that counsel may be exposed to a claim for solicitor negligence if they failed to properly explain the ramifications of litigating a no-contest clause.

Key Takeaways from Mawhinney for Executors of a Will that Contains a No-Contest Clause

One of the largest lessons from Mawhinney is even if a legal maneuver or application may only be the first step in a series of actions that might lead to a range of substantive outcomes, such as a Will’s validity being challenged, such a step may trigger a no-contest clause. As noted by the Great One, Wayne Gretzky, one should skate to where the puck is going to be, not where it has been. Equally, an executor should examine where a particular legal maneuver by a beneficiary may end up and more specifically, whether it is possible that it may lead to the crystallization of a Will challenge. In the event an eventual outcome of a beneficiary’s action may result in the imputation of a Will’s validity, an executor should seek to rely on the no-contest clause as early as possible.

Additional Information

For those interested in learning more about this topic I refer you to the following secondary sources for review:

• Donovan and C. Wagner, “Administration of wills with in terrorem no-contest clauses – validity, relevant case law, interpretation and analysis” (LSUC Practice Gems: Administration of Estates, 2015); and,
• Wagner, Can Lawyers Immunize Clients against Estate Litigation?, blog post, September 17, 2013.