Interpretation - Toronto Estate Law Blog

You Make The Call - continued

nonley@hullandhull.com (Hull & Hull LLP) — Tue, 18 Dec 2007 00:52:39 -0500

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

You Make The Call

nonley@hullandhull.com (Hull & Hull LLP) — Mon, 17 Dec 2007 00:46:36 -0500

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

Luck of the Irish?

nonley@hullandhull.com (Hull & Hull LLP) — Wed, 22 Aug 2007 05:00:00 -0500

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