On December 5, the Ontario Court of Appeal (“ONCA”) released its decision in the case of Jonas v. Jonas.[1] The appeal of the March 18, 2022 judgment of Justice Cory A. Gilmore of the Superior Court of Justice dealt with the interpretation of the last will and testament of a senior lawyer with experience in wills and estates who died on March 26, 2018 (the “date of death”). More importantly, the appeal centered around the proper interpretation of the clause in the Will which dealt with the residue of the estate. In dismissing the appeal, the ONCA panel of van Rensburg, Sossin and Copeland JJ.A. revisited the application of the “armchair rule” in interpreting the Will.
In May 2021, Albert Oosterhoff of WEL Partners wrote extensively on the origins and modern application of the “armchair rule”. His blog entitled ‘When Can a Judge Sit in the Testator’s Armchair?” is very informative and can be found here.
In Jonas, the deceased was survived by a common law spouse and four children, including the appellant. At the date of death, the deceased also had four grandchildren. The deceased’s common law spouse and two of his daughters were appointed Estate Trustees. The Office of the Children’s Lawyer (“OCL”) was also a party to the litigation, representing the grandchildren and unascertained beneficiaries of the estate. The appellant appealed the judgment of the application judge interpreting the last will and testament of the deceased, dated July 31, 2015 (the “Will”).
The relevant clause in the deceased’s Will reads as follows:
I DIRECT my trustees to divide the rest, residue and remainder of my estate as follows: forty per cent (40%) to be divided equally among my children who shall survive me and sixty per cent (60%) to be divided equally between my grandchildren and my great grandchildren (if any) who shall survive me or be born within ten years of my decease, in equal shares per stirpes. Provided that the share to my grandchildren shall be kept and invested by my trustee and used for the support of such grandchildren and for their education and then paid to each of them upon such grandchild attaining the age of 40.
The Court held that the distribution of the 40 percent of the residue was satisfied when the children received a partial distribution from the estate. All children except the appellant agreed that the distribution constituted their 40 percent share. However, at issue was the remaining 60 percent of the residue.
In particular, there was a dispute over the meaning of the term “in equal shares per stirpes” in the residue clause. In response, the Estate Trustees brought an application seeking the court’s opinion, advice, and direction regarding the distribution.[2]
The appellant held the view that all of the residue (including the 60 percent) should be equally divided amongst the children. According to the appellant, “if a child has no children on the vesting date (10 years after the date of death), the child will receive one-quarter of the total residue, being 10 percent of the 40 percent allocation and 15 percent of the 60 percent allocation. Any grandchildren alive on the vesting date will receive an equal share of their parent’s 15 percent share of the 60 percent.”[3]
The application judge did not share this interpretation and instead preferred the position taken by the OCL that the entire 60 percent shall be divided equally among all grandchildren alive on the date of death plus any grandchildren or great grandchildren born by the vesting date. The application judge also held that the rule in Saunders v. Vautier[4] applied and that the funds will be available to each beneficiary as of the vesting date and upon turning 18.
Standard of Review
The decision looked at the standard of review, holding that pursuant to Housen v. Nikolaisen,[5] the standard of review on a pure question of law is correctness. The Court also looked to Trezzi v. Trezzi,[6] holding that on questions of fact or mixed fact and law such as the interpretation of the Will, the standard of review is that of palpable and overriding error (unless there is an extricable point of law which is then subject to a correctness standard).
The application of the “armchair rule”
The Court looked to the “armchair rule” which was set out in Dice v. Dice Estate and reiterated that in applying this rule:
The court must determine the testator’s intention as ascertained from the language that was used and the will as a whole. Where the intention cannot be ascertained from the plain meaning of the language used, the court may consider the surrounding circumstances known to the testator when making the will. The court sits in place of the testator and assumes the same knowledge they had of the extent of their assets, the size and makeup of their family, and their relationship to the family members, based on the evidence presented.[7]
In Jonas, the Court determined that the application judge considered six different interpretations of the residue clause. Only two were argued before her, that being the appellant’s and the OCL’s. She preferred the OCL interpretation of per stirpes as a “gift over” and based this on the testator’s intention to create two classes of beneficiaries to ensure equal distribution within those classes. The application judge held that “accepting an interpretation that gives any Grandchild less or any Child more would be inconsistent with the Testator’s intentions…”[8]
The appellant attempted to introduce a new interpretation through her factum, proposing that the children hold the 60 percent in residue in trust for the benefit of any grandchildren or great-grandchildren during the vesting period, with the funds then reverting to the children only if they have no children or grandchildren after 10 years. The appellant relied on case law for her proposed interpretation of per stirpes, including Re Harrington[9], however, she was unable to point to case law which involved a similar situation as the Will in the case at bar where two separate classes of beneficiaries from two different generations were created.[10]
The Court did not accept the appellant’s case law as persuasive, holding that the application judge’s reliance on the analysis of the term in Dice Estate to be supportive of the understanding of per stirpes as a type of “gift-over” mechanism.
The application judge took the approach that where a testator fails to identify which generation forms the stirpes, the court must look at the language of the will for context. In this case, the application judge determined that per stirpes in the context of the Will in the case at bar reflected an intention to benefit the living grandchildren, and any other grandchildren or great grandchildren born within the vesting period, equally.
Disposition
The Court ruled that the application judge properly applied the armchair rule. There was an ambiguous clause at issue and a number of interpretations were proposed. In the end, the application judge chose the interpretation that most closely conformed to her assessment of the testator’s intention, reading the Will as a whole at the time it was made.
The Court declined to interfere with the application judge’s exercise of discretion in apportioning the costs as she did between the appellant and the estate. The respondent OCL was held to be entitled to its costs of the appeal in the amount of $17,771.78, payable by the appellant personally or out of her share of the Estate.
—
[1] 2022 ONCA 845 [Jonas].
[2] Jonas, supra note 1 at para. 8.
[3] Ibid, at para. 9.
[4] (1841), 41 E.R. 482 (Eng. Ch. Div.).
[5] 2002 SCC 33, [2002] 2 S.C.R. 235.
[6] 2019 ONCA 978, 150 O.R. (3d) 663, at para. 15.
[7] Ibid, at para. 13.
[8] Ibid, at para. 14.
[9] [1985] O.J. No. 1046 (H.C.) at para. 21, rev’d, (February 19, 1986), 239/85 (C.A.)
[10] Ibid, at paras. 18-19.
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Written by: Brett Book
Posted on: December 30, 2022
Categories: Commentary, WEL Newsletter
On December 5, the Ontario Court of Appeal (“ONCA”) released its decision in the case of Jonas v. Jonas.[1] The appeal of the March 18, 2022 judgment of Justice Cory A. Gilmore of the Superior Court of Justice dealt with the interpretation of the last will and testament of a senior lawyer with experience in wills and estates who died on March 26, 2018 (the “date of death”). More importantly, the appeal centered around the proper interpretation of the clause in the Will which dealt with the residue of the estate. In dismissing the appeal, the ONCA panel of van Rensburg, Sossin and Copeland JJ.A. revisited the application of the “armchair rule” in interpreting the Will.
In May 2021, Albert Oosterhoff of WEL Partners wrote extensively on the origins and modern application of the “armchair rule”. His blog entitled ‘When Can a Judge Sit in the Testator’s Armchair?” is very informative and can be found here.
In Jonas, the deceased was survived by a common law spouse and four children, including the appellant. At the date of death, the deceased also had four grandchildren. The deceased’s common law spouse and two of his daughters were appointed Estate Trustees. The Office of the Children’s Lawyer (“OCL”) was also a party to the litigation, representing the grandchildren and unascertained beneficiaries of the estate. The appellant appealed the judgment of the application judge interpreting the last will and testament of the deceased, dated July 31, 2015 (the “Will”).
The relevant clause in the deceased’s Will reads as follows:
I DIRECT my trustees to divide the rest, residue and remainder of my estate as follows: forty per cent (40%) to be divided equally among my children who shall survive me and sixty per cent (60%) to be divided equally between my grandchildren and my great grandchildren (if any) who shall survive me or be born within ten years of my decease, in equal shares per stirpes. Provided that the share to my grandchildren shall be kept and invested by my trustee and used for the support of such grandchildren and for their education and then paid to each of them upon such grandchild attaining the age of 40.
The Court held that the distribution of the 40 percent of the residue was satisfied when the children received a partial distribution from the estate. All children except the appellant agreed that the distribution constituted their 40 percent share. However, at issue was the remaining 60 percent of the residue.
In particular, there was a dispute over the meaning of the term “in equal shares per stirpes” in the residue clause. In response, the Estate Trustees brought an application seeking the court’s opinion, advice, and direction regarding the distribution.[2]
The appellant held the view that all of the residue (including the 60 percent) should be equally divided amongst the children. According to the appellant, “if a child has no children on the vesting date (10 years after the date of death), the child will receive one-quarter of the total residue, being 10 percent of the 40 percent allocation and 15 percent of the 60 percent allocation. Any grandchildren alive on the vesting date will receive an equal share of their parent’s 15 percent share of the 60 percent.”[3]
The application judge did not share this interpretation and instead preferred the position taken by the OCL that the entire 60 percent shall be divided equally among all grandchildren alive on the date of death plus any grandchildren or great grandchildren born by the vesting date. The application judge also held that the rule in Saunders v. Vautier[4] applied and that the funds will be available to each beneficiary as of the vesting date and upon turning 18.
Standard of Review
The decision looked at the standard of review, holding that pursuant to Housen v. Nikolaisen,[5] the standard of review on a pure question of law is correctness. The Court also looked to Trezzi v. Trezzi,[6] holding that on questions of fact or mixed fact and law such as the interpretation of the Will, the standard of review is that of palpable and overriding error (unless there is an extricable point of law which is then subject to a correctness standard).
The application of the “armchair rule”
The Court looked to the “armchair rule” which was set out in Dice v. Dice Estate and reiterated that in applying this rule:
The court must determine the testator’s intention as ascertained from the language that was used and the will as a whole. Where the intention cannot be ascertained from the plain meaning of the language used, the court may consider the surrounding circumstances known to the testator when making the will. The court sits in place of the testator and assumes the same knowledge they had of the extent of their assets, the size and makeup of their family, and their relationship to the family members, based on the evidence presented.[7]
In Jonas, the Court determined that the application judge considered six different interpretations of the residue clause. Only two were argued before her, that being the appellant’s and the OCL’s. She preferred the OCL interpretation of per stirpes as a “gift over” and based this on the testator’s intention to create two classes of beneficiaries to ensure equal distribution within those classes. The application judge held that “accepting an interpretation that gives any Grandchild less or any Child more would be inconsistent with the Testator’s intentions…”[8]
The appellant attempted to introduce a new interpretation through her factum, proposing that the children hold the 60 percent in residue in trust for the benefit of any grandchildren or great-grandchildren during the vesting period, with the funds then reverting to the children only if they have no children or grandchildren after 10 years. The appellant relied on case law for her proposed interpretation of per stirpes, including Re Harrington[9], however, she was unable to point to case law which involved a similar situation as the Will in the case at bar where two separate classes of beneficiaries from two different generations were created.[10]
The Court did not accept the appellant’s case law as persuasive, holding that the application judge’s reliance on the analysis of the term in Dice Estate to be supportive of the understanding of per stirpes as a type of “gift-over” mechanism.
The application judge took the approach that where a testator fails to identify which generation forms the stirpes, the court must look at the language of the will for context. In this case, the application judge determined that per stirpes in the context of the Will in the case at bar reflected an intention to benefit the living grandchildren, and any other grandchildren or great grandchildren born within the vesting period, equally.
Disposition
The Court ruled that the application judge properly applied the armchair rule. There was an ambiguous clause at issue and a number of interpretations were proposed. In the end, the application judge chose the interpretation that most closely conformed to her assessment of the testator’s intention, reading the Will as a whole at the time it was made.
The Court declined to interfere with the application judge’s exercise of discretion in apportioning the costs as she did between the appellant and the estate. The respondent OCL was held to be entitled to its costs of the appeal in the amount of $17,771.78, payable by the appellant personally or out of her share of the Estate.
—
[1] 2022 ONCA 845 [Jonas].
[2] Jonas, supra note 1 at para. 8.
[3] Ibid, at para. 9.
[4] (1841), 41 E.R. 482 (Eng. Ch. Div.).
[5] 2002 SCC 33, [2002] 2 S.C.R. 235.
[6] 2019 ONCA 978, 150 O.R. (3d) 663, at para. 15.
[7] Ibid, at para. 13.
[8] Ibid, at para. 14.
[9] [1985] O.J. No. 1046 (H.C.) at para. 21, rev’d, (February 19, 1986), 239/85 (C.A.)
[10] Ibid, at paras. 18-19.
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