Sabetti v. Jimenez: 2018 ONSC 3523 (CanLII), http://canlii.ca/t/hsfqk “Residue of a Residue” and a Reminder that Adjournments Are Not as of Right.
The case of Sabetti v. Jimenez 2018 ONSC 3523 provides some helpful guidance on the rules of Will interpretation, executor removal, and a stern reminder of a lawyer’s duty to treat the court with candor, fairness, courtesy and respect in the context of adjournment requests.
Background
At the time of her death, the testator was married to the applicant husband and had three adult children from a previous marriage. Her Will appointed her son and her daughter as executors. After certain specific bequests, the Will disposed of the residue of her estate into four shares, one to each of her children and one to her husband. The husband’s share was to be held in trust during his lifetime and pay an annual net income, in periodic payments, in the absolute discretion of the trustees. Upon the husband’s death, any amount remaining from his share was to fall back into the residue of the estate.
The estate included a 1/12th interest in the deceased’s mother’s rather sizeable estate, which was administered in Mexico under the supervision of the Mexican courts. The administration of the Mexican estate was lingering, due to a number of factors including its size and ongoing litigation. The executors of the Canadian estate had no direct or indirect control over the Mexican estate.
Husband’s Argument: No Residue of a Residue
The husband argued that the Will did not fully dispose of his share of the residue since there can be “no residue of a residue”. By providing that upon his death the remainder of his share of the residue falls back into the residue of his wife’s estate, the Will does not name the beneficiaries with sufficient certainty and a partial intestacy must result to that extent.
He relied upon the decision of the Court of Appeal in Re Martin, 24 O.R. (2d) 408 and Chan Estate v. Chan, 1996 CarswellOnt 3405 (Gen Div), wherein Justice Molloy found that “where a gift which forms all or part of the residue fails, it does not fall back into the residue but rather is distributed as an intestacy.” Justice Dunphy found that the authorities were not helpful to the husband as they both dealt with bequests that had failed for various reasons.
The husband’s main argument was that the Will required the remainder of the husband’s share of the residue to effectively travel in a circle to be re-allocated in equal amounts to each of the four shares of the residue created by the Will because the husband was alive at the time the Will came into effect. The Court found that the “argument was absurd and wrong”.
The testator’s intention was clear on the face of the Will. She clearly intended to dispose of the residue of the husband’s share after her husband’s death. Where two possible interpretations exist, one of which results in absurdity and the other produces a result which conforms to the apparent intention of the maker of the document, the latter will be preferred. Secondly, in the estate context, the “golden rule” of construction requires a Will to be read as to lead to testacy rather than intestacy, if this can be done without straining the language of the Will or violating the intention of the testator.
Justice Dunphy was of the view that the husband’s strained and technical interpretation of the Will would defeat the common-sense intention of the testator. The Will disposed entirely of the first share of the residue and, upon expiry of the life interest created, the remainder of the first share was to be divided equally among the other shares of the residue initially created.
Removal of the Executors
The husband alleged that the executors had failed in their duties and should be removed for: failure to maintain an even hand; failure to communicate; and failure to invest ¼ of the value of the estate residue in a manner which would produce a reasonable income for the husband.
Justice Dunphy found that nearly all of the husband’s complaints arose from his mistaken view of the executors’ duties concerning the value of the Mexican estate or from issues that had been previously resolved. The executors retained qualified professionals to assist them and they sought and received competent advice. The facts of the case did not approach the “clear case of necessity” required to interfere with the discretion of the testator in choosing her executors.
Justice Dunphy concluded that: “Notwithstanding the applicant’s self-centred view of what an even hand looks like, there is no evidence before me from which I might conclude that they have failed to be even handed as that duty is properly understood.”
The Court dismissed the application with costs.
Guidance for Lawyers on Adjournments and Professionalism
This decision also includes guidance for lawyers seeking adjournments and a reminder of a lawyer’s duty to the court.
This case had several prior adjournments. The hearing was last adjourned and rescheduled on a peremptory basis (i.e. final adjournment), to allow counsel, who had just been retained, to review the file. A week before the rescheduled hearing, counsel for the husband filed a confirmation form with the court office indicating “Adjournment Required”, and on the day before the rescheduled hearing filed an affidavit of the husband, a “Factum re Adjournment” and a case book, all three addressing the request for another adjournment. No factum was filed addressing the actual issues to be heard on the application. The executors did not consent to the adjournment and ensured all of their evidence was pulled from the file for the judge hearing the matter.
On the day of the hearing, Justice Dunphy heard the husband’s motion for another adjournment. Justice Dunphy found that the husband had not provided any evidence permitting him to evaluate his claim that the interests of justice required an adjournment of the hearing that had been scheduled on a preemptory basis. Justice Dunphy declined to grant the request for an adjournment: “. . .It was not open to [counsel] to choose unilaterally. . .to assume he is entitled as of right to yet another adjournment of a full day hearing booked months in advance – particularly when it is peremptory upon him – and fail to file evidence delivered months ago or his factum. . .” [emphasis in original]
After Justice Dunphy dismissed the request for an adjournment, he granted counsel 20 minutes to prepare to proceed with the hearing of his own application and advised that counsel could late file a factum and case book at any time until the close of business that day (which he did). Counsel for the husband began to make some of his arguments but shortly stopped and declined to proceed with the hearing, announcing that his client had instructed him to participate in the hearing no further and that they would be appealing the adjournment decision.
Justice Dunphy then heard from the respondent executors on the issues of the application. Counsel for the husband remained in court. Justice Dunphy concluded that he was “satisfied that both sides have had a full and fair opportunity to place before me the evidence and legal arguments they judged necessary to permit me fairly to decide the issues raised by the Application. . .”
Justice Dunphy’s final words on the adjournment matter should be reviewed by all lawyers:
It should be clear to all that the applicant claiming as he did here the right to dictate to the court whether it may proceed with a scheduled hearing was quite inappropriate and unacceptable. The lawyer’s duty to treat the tribunal with candour, fairness, courtesy and respect and in a way that promotes the parties’ right to a fair hearing requires, at a minimum, that counsel be ready to proceed with a scheduled hearing even if the lawyer is seeking an adjournment. This is particularly true where it is known that the adjournment request is opposed.
Counsel should be mindful that the ultimate discretion to award an adjournment rests with the Court. It is always best practice to be prepared to proceed should the Court deny such a request and bear in mind (even when faced with an unfavourable decision) the Principals of Civility for Advocates: “Judges are entitled to expect that counsel will treat the court with candour, fairness and courtesy”.
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Written by: Kimberly A. Whaley
Posted on: August 26, 2018
Categories: Commentary, WEL Newsletter
Sabetti v. Jimenez: 2018 ONSC 3523 (CanLII), http://canlii.ca/t/hsfqk “Residue of a Residue” and a Reminder that Adjournments Are Not as of Right.
The case of Sabetti v. Jimenez 2018 ONSC 3523 provides some helpful guidance on the rules of Will interpretation, executor removal, and a stern reminder of a lawyer’s duty to treat the court with candor, fairness, courtesy and respect in the context of adjournment requests.
Background
At the time of her death, the testator was married to the applicant husband and had three adult children from a previous marriage. Her Will appointed her son and her daughter as executors. After certain specific bequests, the Will disposed of the residue of her estate into four shares, one to each of her children and one to her husband. The husband’s share was to be held in trust during his lifetime and pay an annual net income, in periodic payments, in the absolute discretion of the trustees. Upon the husband’s death, any amount remaining from his share was to fall back into the residue of the estate.
The estate included a 1/12th interest in the deceased’s mother’s rather sizeable estate, which was administered in Mexico under the supervision of the Mexican courts. The administration of the Mexican estate was lingering, due to a number of factors including its size and ongoing litigation. The executors of the Canadian estate had no direct or indirect control over the Mexican estate.
Husband’s Argument: No Residue of a Residue
The husband argued that the Will did not fully dispose of his share of the residue since there can be “no residue of a residue”. By providing that upon his death the remainder of his share of the residue falls back into the residue of his wife’s estate, the Will does not name the beneficiaries with sufficient certainty and a partial intestacy must result to that extent.
He relied upon the decision of the Court of Appeal in Re Martin, 24 O.R. (2d) 408 and Chan Estate v. Chan, 1996 CarswellOnt 3405 (Gen Div), wherein Justice Molloy found that “where a gift which forms all or part of the residue fails, it does not fall back into the residue but rather is distributed as an intestacy.” Justice Dunphy found that the authorities were not helpful to the husband as they both dealt with bequests that had failed for various reasons.
The husband’s main argument was that the Will required the remainder of the husband’s share of the residue to effectively travel in a circle to be re-allocated in equal amounts to each of the four shares of the residue created by the Will because the husband was alive at the time the Will came into effect. The Court found that the “argument was absurd and wrong”.
The testator’s intention was clear on the face of the Will. She clearly intended to dispose of the residue of the husband’s share after her husband’s death. Where two possible interpretations exist, one of which results in absurdity and the other produces a result which conforms to the apparent intention of the maker of the document, the latter will be preferred. Secondly, in the estate context, the “golden rule” of construction requires a Will to be read as to lead to testacy rather than intestacy, if this can be done without straining the language of the Will or violating the intention of the testator.
Justice Dunphy was of the view that the husband’s strained and technical interpretation of the Will would defeat the common-sense intention of the testator. The Will disposed entirely of the first share of the residue and, upon expiry of the life interest created, the remainder of the first share was to be divided equally among the other shares of the residue initially created.
Removal of the Executors
The husband alleged that the executors had failed in their duties and should be removed for: failure to maintain an even hand; failure to communicate; and failure to invest ¼ of the value of the estate residue in a manner which would produce a reasonable income for the husband.
Justice Dunphy found that nearly all of the husband’s complaints arose from his mistaken view of the executors’ duties concerning the value of the Mexican estate or from issues that had been previously resolved. The executors retained qualified professionals to assist them and they sought and received competent advice. The facts of the case did not approach the “clear case of necessity” required to interfere with the discretion of the testator in choosing her executors.
Justice Dunphy concluded that: “Notwithstanding the applicant’s self-centred view of what an even hand looks like, there is no evidence before me from which I might conclude that they have failed to be even handed as that duty is properly understood.”
The Court dismissed the application with costs.
Guidance for Lawyers on Adjournments and Professionalism
This decision also includes guidance for lawyers seeking adjournments and a reminder of a lawyer’s duty to the court.
This case had several prior adjournments. The hearing was last adjourned and rescheduled on a peremptory basis (i.e. final adjournment), to allow counsel, who had just been retained, to review the file. A week before the rescheduled hearing, counsel for the husband filed a confirmation form with the court office indicating “Adjournment Required”, and on the day before the rescheduled hearing filed an affidavit of the husband, a “Factum re Adjournment” and a case book, all three addressing the request for another adjournment. No factum was filed addressing the actual issues to be heard on the application. The executors did not consent to the adjournment and ensured all of their evidence was pulled from the file for the judge hearing the matter.
On the day of the hearing, Justice Dunphy heard the husband’s motion for another adjournment. Justice Dunphy found that the husband had not provided any evidence permitting him to evaluate his claim that the interests of justice required an adjournment of the hearing that had been scheduled on a preemptory basis. Justice Dunphy declined to grant the request for an adjournment: “. . .It was not open to [counsel] to choose unilaterally. . .to assume he is entitled as of right to yet another adjournment of a full day hearing booked months in advance – particularly when it is peremptory upon him – and fail to file evidence delivered months ago or his factum. . .” [emphasis in original]
After Justice Dunphy dismissed the request for an adjournment, he granted counsel 20 minutes to prepare to proceed with the hearing of his own application and advised that counsel could late file a factum and case book at any time until the close of business that day (which he did). Counsel for the husband began to make some of his arguments but shortly stopped and declined to proceed with the hearing, announcing that his client had instructed him to participate in the hearing no further and that they would be appealing the adjournment decision.
Justice Dunphy then heard from the respondent executors on the issues of the application. Counsel for the husband remained in court. Justice Dunphy concluded that he was “satisfied that both sides have had a full and fair opportunity to place before me the evidence and legal arguments they judged necessary to permit me fairly to decide the issues raised by the Application. . .”
Justice Dunphy’s final words on the adjournment matter should be reviewed by all lawyers:
It should be clear to all that the applicant claiming as he did here the right to dictate to the court whether it may proceed with a scheduled hearing was quite inappropriate and unacceptable. The lawyer’s duty to treat the tribunal with candour, fairness, courtesy and respect and in a way that promotes the parties’ right to a fair hearing requires, at a minimum, that counsel be ready to proceed with a scheduled hearing even if the lawyer is seeking an adjournment. This is particularly true where it is known that the adjournment request is opposed.
Counsel should be mindful that the ultimate discretion to award an adjournment rests with the Court. It is always best practice to be prepared to proceed should the Court deny such a request and bear in mind (even when faced with an unfavourable decision) the Principals of Civility for Advocates: “Judges are entitled to expect that counsel will treat the court with candour, fairness and courtesy”.
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