Toronto Estate Law Blog : Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

• Print
• Comments
• Trackbacks
• Share Link

In Thiemer Estate, a decision of the B.C. Supreme Court, 2012 BCSC 629 (CanLII), the deceased left an estate having a value of $20m. He left a will that provided for various specific legacies. The will also included a clause that directed the payment of “the balance of any money which I may have at the time of my death” to a common-law spouse. The will went on to define “money” as including “the balance of any money which I may have in any savings and current accounts in my name, any savings certificates, shares and bonds but excluding” insurance proceeds and RRSPs.

At the time of his death, the deceased had bank accounts, GICs, a mortgage receivable, and most relevant to the proceeding, shares in private companies having a value of $14m.

At issue in the interpretation application was whether the definition of “money” in the will, which referred to “shares”, meant that the value of the private companies was to be paid to the common-law spouse.

The decision sets out the relevant guiding principles, and case law on the definition of “money”.

The court decided that the reference to “shares” in the definition of “money” was not intended to include the shares in the private corporations. Essentially, the items included in the meaning of “money” were items that were in the form of cash, or which could be readily converted into cash. This might, then, include shares in publicly traded corporations. It was held, however, that the definition did not extend to shares in a private corporation, which by their very nature could not be readily liquidated.

This conclusion was fortified by other terms of the will. For example, the will established a spousal trust. If the spouse’s position on the definition of “money” was accepted, there would be very little left in the spousal trust. Further, the will provided extensive administrative powers to the trustees with respect to the ongoing operation of the companies. The spouse’s interpretation of “money” would render these powers “superfluous”.

The case is very instructive in the interpretation of wills, generally, and the application of those principles of interpretation in a specific context. 

Thank you for reading,

Paul Trudelle - Click here for more information on Paul Trudelle. 

• Print
• Comments
• Trackbacks
• Share Link

Achieving a settlement is a major success in any estates dispute, but even the most comprehensive agreement cannot address every possible post-settlement wrinkle.  The recent case of Viau v. Kozicki et al, 2010 ONSC 1682 is an example of how a court will interpret Minutes of Settlement following court approval (required in this case because there were minors).   

The main issue in Viau was whether legal fees associated with administration of the estate after a judgment approving the settlement had been granted.  The judgment incorporating the settlement stated as follows:

"THIS COURT ORDERS AND ADJUDGES that [the estate trustee], be at liberty to pay all of the debts of the [Estate], which include:

(xiv)  Any legitimate debts of the [Estate], upon notification to [named Respondent], or approval of the court."

The court found that the wording of the order was not restrictive and did not establish caps on legal fees.  Further solicitor's work to complete the estate would have been anticipated.  Of course, the legitimacy of the work or amount claimed would be subject to approval by the named Respondent or the court.  In coming to this conclusion, the court did not look beyond the terms of the judgment.  The judgment was clear and unambiguous and there was no need to review pre-settlement correspondence.

The decision illustrates a second principle: litigants should avoid unnecessary (or less efficient) proceedings.  Specifically, when the named respondent challenged the legitimacy of the additional legal fees, the estate trustee commenced a passing of accounts proceeding.  The court found that the issue concerning the legal fees could have been addressed by motion to the court without a passing of accounts and therefore the costs associated with the passing of accounts were not payable from the estate. 

Thanks for reading,

Chris Graham

• Print
• Comments
• Trackbacks
• Share Link

Yesterday, I set out a fact situation giving rise to a certain interpretation issue.

The fact situation is based on the decision of Moore J. in Rudling Estate v. Rudling, 2007 CanLII 51794 (Ont. S.C.).

There, the court held that the word "debt" in relation to Property B could not include within its meaning all of the taxes, expenses and other charges that the estate trustee is directed by the will to satisfy in addition to "debts" of the estate. The court found that all reasonable charges against the estate arising from the death of the deceased were, by the terms of the will, intended to be paid from the estate before the specific bequests of the two properties are made. That is, both A and B are to share the burden of the testamentary expenses.

The court found that the will could be fairly construed upon the language contained within its four corners, and without the need to resort to extrinsic evidence in order to interpret the meaning.

However, in light of the Orders Giving Directions made in the case, and the issues is raised in the pleadings, and “because I am aware of the recent tendency of Canadian courts to apply the ‘armchair rule’”, the court also addressed the interpretation of the will in light of the surrounding circumstances. The court examined the surrounding circumstances, hearing from ten witnesses over the course of seven days. After considering this evidence, the court concluded that the evidence did not support a conclusion that the testamentary expenses be borne by A alone.

Did you make the right call?

Paul Trudelle

• Print
• Comments
• Trackbacks
• Share Link

Consider the following interpretation issue, which was recently considered by the Ontario Superior Court of Justice:

The deceased left a will kit-type will directing that all “just debts, funeral and testamentary expenses, all succession duties, inheritance and death taxes, and all expenses necessarily incidental thereto, to be paid and satisfied by” my executor as soon as convenient after her death. 

The will went on to provide that the following distributions were to be made:

To son A, Property A "with all loans, leins [sic], mortgages attached”.

To son B, Property B, “free and clear of all debt". 

The residue was to be divided between A and B. For the purposes of the trial, the only assets of significance were the real estate: Properties A and B.

At the time of her death, the deceased had no debt other than certain mortgages registered on title against Property A.

The issue in dispute was what assets were to be chargeable for paying the deceased's taxes, including estate administration tax and income taxes, and funeral and testamentary expenses.

A took the position that these expenses were paid out of the residue, and in the absence of any residue, were to be chargeable equally as against Property A and B. (Properties A and B were of equal value.)

B took the position that Property B was conveyed to him "free and clear of all debt", and thus, those expenses were payable out of Property A only.

What did the court do? Tune in tomorrow.

Until then, thank you for reading.

Paul Trudelle

• Print
• Comments
• Trackbacks
• Share Link

Every so often, a case comes before the Court which seems to clearly captivate the presiding judge, has historical resonance, and just makes for interesting reading.  Re Connolly Estate (2007) 31 E.T.R. (3d) 81, a decision of the Prince Edward Island Trial Division, is such a case.  Here, Justice D.H. Jenkins considered the interpretation of the Will of the late Owen Connolly who died on December 27, 1877 (yes, you read that correctly).  At issue were the terms of a Trust created by the last of four Codicils to the deceased's Last Will.  The Trust was created "for the purpose of educating...poor children resident in Prince Edward Island who are members of the Roman Catholic Church and who are Irish or the sons of Irish fathers." (The Court pointed out that the Trust was created prior to the coming into force of human rights legislation in P.E.I. which, it implies, may otherwise have had an impact on the terms of the Trust).  In each successive year, the Trustees would create as many bursaries as the income generated by the capital of the trust would allow, such that the Trust was now paying out approximately 120 bursaries of $500 each. The Trustees sought the assistance of the Court having regard to the fact that "a blending of bloodlines has occurred, so that Prince Edward Island society has become somewhat a melting pot."  In interpreting the terms of the Trust, the Court applied the usual rules of interpretation including consideration of the surrounding circumstances of the deceased.  Evidence in this regard consisted of a short biography of the deceased published shortly after his death and an article published in the Charlottetown newspaper reporting on his death (he was clearly a prominent figure at the time).  As such, the decision reads like a history lesson of the emigration of Irish to "the colonies." The Court concluded that the Trustees were appropriately exercising their discretion by paying out bursaries to a beneficiary or a beneficiary's father who had " a significant component (50%+) of Irish ancestry."  Because such a class of children continued to exist in Prince Edward Island (albeit "melting away"), there was no risk of the gift failing.  The Court therefore had no need to invoke the cy pres doctrine to preserve the general charitable intent of the testator.  Yet another example of the unique nature of estates and trusts law!

Until tomorrow,

David