1. Introduction
By now the right of judges to apply the armchair rule in interpreting wills is well established. However, various comments in the cases suggest that there remain differences about when to apply the rule: from the outset or after first considering just the will. There are such allusions also in Re: Estate of Constance Evelyn Stevenson,[1] and I shall discuss them in this blog. The main issue in the case is whether a gift lapsed when the named beneficiary predeceased the testator, and the testator did not name a substitute beneficiary. And the ancillary issue is whether, in determining the main issue, the court can sit in the testator’s armchair.
2. Facts
The testator, Connie, died in 2016. She had made her Will in 1983. She had been twice married, first to Hugh, who predeceased her, and second to Bruce. She had no children, but Bruce had two children, Gary and Cynthia. Hugh was survived by several nephews and nieces. Connie named her husband Bruce and her sister Mildred her executors, but both predeceased her and Canada Trust was appointed her Administrator.
Paragraph III(g) of the Will divided the residue into two equal shares, ‘Share One’ and ‘Share Two’.
Subparagraph III(g)(i) left all of Share One to Bruce if he survived Connie. If he did not, she left one half of Share One to Mildred (‘Mildred’s First Share’). She left the other one half of Share One by giving legacies to each of High’s nieces and nephews and the balance to her stepchildren, Gary and Cynthia. The subparagraph did not contain a gift over in the event Mildred should predecease Connie, which is what happened.
Subparagraph III(g)(ii) made certain legacies to the stepchildren and nieces and nephews, with the balance to Mildred (‘Mildred’s Second Share’). But this subparagraph contained a gift over to the class composed of the stepchildren and the nephews and nieces if Mildred should predecease Connie.
The Administrator brought an application for the advice and directions of the court about the distribution of Mildred’s First Share. The lawyer who drafted the will had died, and his law firm could not find any instructions or notes about the Will.
The Administrator determined that Mildred’s next of kin were six second cousins. Six were served with notice of the application, but only two made an appearance. The Administrator was unable to find the seventh second cousin. The evidence showed that Connie was very close Cynthia and also to Gary and his children. In contrast, although Connie had some contact with one of the second cousins, it was not close or enduring, and the contact with the other second cousin who made an appearance was very limited.
3. Analysis and Judgment
If the gifts to Mildred were specific gifts, Mildred’s lapsed First Share would have been subject to section 23 of the Succession Law Reform Act.[2] It provides that except when a contrary intention appears by the will, a specific gift falls into residue if the beneficiary predeceases the testator. The section does not apply to residuary gifts. However, the common law takes a similar approach. It provides that if the beneficiary of a residuary gift predeceases the testator, the gift lapses and passes on intestacy unless there is a contrary intention in the will. The court cited a couple of cases on point.[3]
The question therefore became whether there was a contrary intention in the will. There did not appear to be. However, the court applied the modern approach to interpreting wills. It concluded, relying on Mladen Estate v McGuire,[4] that it could sit in the ‘testator’s armchair’ and interpret the will in light of the surrounding circumstances when the testator made the will. There continues to be some dispute about when the court should consider the surrounding circumstances. Should it first try the interpret the will and only then consider the surrounding circumstances? Some cases still suggest that this is right approach. In my view that is incorrect. A will can be interpreted correctly under the modern approach only if the court considers the surrounding circumstances at the same time as it considers the contents of the will. This is clear from Re Burke,[5] a leading Ontario case, cited in Stevenson, and other recent cases.[6]
The court then took into account that Connie had a special and close relationship with the residuary beneficiaries she named in her will: Bruce, Mildred, Gary, Cynthia, and her first husband’s nephews and nieces. Justice Broad inferred from this that Connie wanted to benefit only them. That is why she named the individually, rather than as a class. Further, his Honour inferred, applying the ‘golden rule’ which favours testacy, that Connie did not intend to create a partial intestacy. Moreover, there was no evidence that Connie knew all of her second cousins. She had only limited contact with two. Hence, there was no evidence that she contemplated leaving anything to her next-of-kin. If she had wanted to benefit any of them, she would have named them.
Consequently, using the ‘armchair rule’ his Honour found a contrary intention in the will that avoided the default rule of lapse of Mildred’s First Share. That share should therefore be paid to Cynthia as the surviving residuary beneficiary under clause III(g)(i) of the Will.
I have no quarrel with this decision. I am convinced that it best represents Connie’s intention. Indeed, it seems reasonably certain that the failure to include a gift over was a drafting omission that could have been cured by a rectification of the will.[7] It is true that in Ontario the power of the court to rectify a will is limited. A broad power to rectify, as contained in some statutes,[8] is urgently needed.
However, I wonder whether the approach the court used in Stevenson can be used it when it is faced with a statutory provision that says, ‘Except when a contrary intention appears by the will’. There are several sections in the SLRA that contain such language.[9] Can a court get round such a provision by using the armchair rule? It is one thing to get round a similar common law concept, as in Stevenson, but quite another to evade a statutory provision.
The sections in question were, of course, drafted before the modern approach to will interpretation, at a time when courts, in interpreting a will, were generally restricted to its language. But can a court today, applying modern rules of interpretation, avoid the language of the statute? Or is a statutory amendment necessary? One could argue I suppose that the provision should be interpreted as speaking of a contrary intention appearing by the will ‘as interpreted in accordance with modern principles’. But seems rather sophistic.
If nothing else, this provides another reason why we need a complete revision of the SLRA in which this question can be considered.
—
[1]2022 ONSC 6416. In passing, I wonder why more and more cases are now released under the name of the estate. That is convenient shorthand, of course, but I wonder if it is correct. It suggests that the estate is a legal entity. It is not and we should avoid giving the impression that it is. The personal representative is a legal entity and so are any living parties contesting the will.
[2]RSO 1990 c. S.26 (‘SLRA’).
[3]Kossak Estate v Kossak, 1990 CarswellOnt 483 (HC); and Mladen Estate v McGuire, 2007 CarswellOnt 1976 (SCJ).
[4]Ibid.
[5] [1960] OR 26 (CA), p 30.
[6] See, e.g., Hicklin Estate v Hicklin, 2019 ABCA 136, 46 ETR 4th 1; Trezzi v Trezzi, 2019 ONCA 978; Ross v Canada Trust Company, 2021 ONCA 161.
[7]See, e.g., Re Freeman Estate, 1975 CarswellNS 264. (SCTD).
[8]See, e.g., Wills and Succession Act, SA 2010, c W-12.2, s 39; Wills, Estates and Succession Act, SBC 2009, c 13, s 59.
[9]See SLRA ss. 20(2), 22, 23, 24, 25(1) and (2) 26, 27, and 31. And see also s. 19, which uses similar language.
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Written by: Albert Oosterhoff
Posted on: February 16, 2023
Categories: Commentary, WEL Newsletter
1. Introduction
By now the right of judges to apply the armchair rule in interpreting wills is well established. However, various comments in the cases suggest that there remain differences about when to apply the rule: from the outset or after first considering just the will. There are such allusions also in Re: Estate of Constance Evelyn Stevenson,[1] and I shall discuss them in this blog. The main issue in the case is whether a gift lapsed when the named beneficiary predeceased the testator, and the testator did not name a substitute beneficiary. And the ancillary issue is whether, in determining the main issue, the court can sit in the testator’s armchair.
2. Facts
The testator, Connie, died in 2016. She had made her Will in 1983. She had been twice married, first to Hugh, who predeceased her, and second to Bruce. She had no children, but Bruce had two children, Gary and Cynthia. Hugh was survived by several nephews and nieces. Connie named her husband Bruce and her sister Mildred her executors, but both predeceased her and Canada Trust was appointed her Administrator.
Paragraph III(g) of the Will divided the residue into two equal shares, ‘Share One’ and ‘Share Two’.
Subparagraph III(g)(i) left all of Share One to Bruce if he survived Connie. If he did not, she left one half of Share One to Mildred (‘Mildred’s First Share’). She left the other one half of Share One by giving legacies to each of High’s nieces and nephews and the balance to her stepchildren, Gary and Cynthia. The subparagraph did not contain a gift over in the event Mildred should predecease Connie, which is what happened.
Subparagraph III(g)(ii) made certain legacies to the stepchildren and nieces and nephews, with the balance to Mildred (‘Mildred’s Second Share’). But this subparagraph contained a gift over to the class composed of the stepchildren and the nephews and nieces if Mildred should predecease Connie.
The Administrator brought an application for the advice and directions of the court about the distribution of Mildred’s First Share. The lawyer who drafted the will had died, and his law firm could not find any instructions or notes about the Will.
The Administrator determined that Mildred’s next of kin were six second cousins. Six were served with notice of the application, but only two made an appearance. The Administrator was unable to find the seventh second cousin. The evidence showed that Connie was very close Cynthia and also to Gary and his children. In contrast, although Connie had some contact with one of the second cousins, it was not close or enduring, and the contact with the other second cousin who made an appearance was very limited.
3. Analysis and Judgment
If the gifts to Mildred were specific gifts, Mildred’s lapsed First Share would have been subject to section 23 of the Succession Law Reform Act.[2] It provides that except when a contrary intention appears by the will, a specific gift falls into residue if the beneficiary predeceases the testator. The section does not apply to residuary gifts. However, the common law takes a similar approach. It provides that if the beneficiary of a residuary gift predeceases the testator, the gift lapses and passes on intestacy unless there is a contrary intention in the will. The court cited a couple of cases on point.[3]
The question therefore became whether there was a contrary intention in the will. There did not appear to be. However, the court applied the modern approach to interpreting wills. It concluded, relying on Mladen Estate v McGuire,[4] that it could sit in the ‘testator’s armchair’ and interpret the will in light of the surrounding circumstances when the testator made the will. There continues to be some dispute about when the court should consider the surrounding circumstances. Should it first try the interpret the will and only then consider the surrounding circumstances? Some cases still suggest that this is right approach. In my view that is incorrect. A will can be interpreted correctly under the modern approach only if the court considers the surrounding circumstances at the same time as it considers the contents of the will. This is clear from Re Burke,[5] a leading Ontario case, cited in Stevenson, and other recent cases.[6]
The court then took into account that Connie had a special and close relationship with the residuary beneficiaries she named in her will: Bruce, Mildred, Gary, Cynthia, and her first husband’s nephews and nieces. Justice Broad inferred from this that Connie wanted to benefit only them. That is why she named the individually, rather than as a class. Further, his Honour inferred, applying the ‘golden rule’ which favours testacy, that Connie did not intend to create a partial intestacy. Moreover, there was no evidence that Connie knew all of her second cousins. She had only limited contact with two. Hence, there was no evidence that she contemplated leaving anything to her next-of-kin. If she had wanted to benefit any of them, she would have named them.
Consequently, using the ‘armchair rule’ his Honour found a contrary intention in the will that avoided the default rule of lapse of Mildred’s First Share. That share should therefore be paid to Cynthia as the surviving residuary beneficiary under clause III(g)(i) of the Will.
I have no quarrel with this decision. I am convinced that it best represents Connie’s intention. Indeed, it seems reasonably certain that the failure to include a gift over was a drafting omission that could have been cured by a rectification of the will.[7] It is true that in Ontario the power of the court to rectify a will is limited. A broad power to rectify, as contained in some statutes,[8] is urgently needed.
However, I wonder whether the approach the court used in Stevenson can be used it when it is faced with a statutory provision that says, ‘Except when a contrary intention appears by the will’. There are several sections in the SLRA that contain such language.[9] Can a court get round such a provision by using the armchair rule? It is one thing to get round a similar common law concept, as in Stevenson, but quite another to evade a statutory provision.
The sections in question were, of course, drafted before the modern approach to will interpretation, at a time when courts, in interpreting a will, were generally restricted to its language. But can a court today, applying modern rules of interpretation, avoid the language of the statute? Or is a statutory amendment necessary? One could argue I suppose that the provision should be interpreted as speaking of a contrary intention appearing by the will ‘as interpreted in accordance with modern principles’. But seems rather sophistic.
If nothing else, this provides another reason why we need a complete revision of the SLRA in which this question can be considered.
—
[1]2022 ONSC 6416. In passing, I wonder why more and more cases are now released under the name of the estate. That is convenient shorthand, of course, but I wonder if it is correct. It suggests that the estate is a legal entity. It is not and we should avoid giving the impression that it is. The personal representative is a legal entity and so are any living parties contesting the will.
[2]RSO 1990 c. S.26 (‘SLRA’).
[3]Kossak Estate v Kossak, 1990 CarswellOnt 483 (HC); and Mladen Estate v McGuire, 2007 CarswellOnt 1976 (SCJ).
[4]Ibid.
[5] [1960] OR 26 (CA), p 30.
[6] See, e.g., Hicklin Estate v Hicklin, 2019 ABCA 136, 46 ETR 4th 1; Trezzi v Trezzi, 2019 ONCA 978; Ross v Canada Trust Company, 2021 ONCA 161.
[7]See, e.g., Re Freeman Estate, 1975 CarswellNS 264. (SCTD).
[8]See, e.g., Wills and Succession Act, SA 2010, c W-12.2, s 39; Wills, Estates and Succession Act, SBC 2009, c 13, s 59.
[9]See SLRA ss. 20(2), 22, 23, 24, 25(1) and (2) 26, 27, and 31. And see also s. 19, which uses similar language.
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