1. Introduction
It is now well-established that a court asked to interpret a will may and indeed should have regard to extrinsic evidence that enables it to ascertain the testator’s subjective intention. The rule has been recognized in Canadian jurisprudence for several decades, and it was confirmed in what has become the leading modern case on point, Hicklin Estate v Hicklin.[1] The Alberta Court of Appeal has recently re-confirmed that case in Re Strafford Estate,[2] in which it dismissed an appeal from a decision of Madam Justice Kirker.[3] The appeal decision is brief. The court agreed with the decision of Justice Kirker, held that she properly considered extrinsic evidence to give effect to the testator’s subjective intention, as required by Hicklin, and concluded that she did not commit any palpable or overriding errors. In the circumstances the appellate decision would not normally warrant a blog. But the facts are particularly interesting because they involve a testamentary direction to the executor to purchase an annuity for one beneficiary who survived the testator but who died before the executor could obtain probate or purchase the annuity. This is not an issue that is much discussed in modern cases and therefore it deserves closer examination, particularly because cases have reached divergent views on the question whether the estate of the intended annuitant is entitled to the capital sum to be used to purchase the annuity. To examine this issue, I shall focus principally on the judgment at first instance.
2. Facts
The testator, Dr Barrie Strafford died on 25 April 2016. He named his daughter Roxanne his executor. The Will directed that the executor should divide one-half of the residue of his estate ‘into four equal shares and to pay or transfer one such share to each of my children’, Roxanne, Sheree,[4] Lisa, and Miles. But he immediately followed this with the following: ‘I direct that the Share that is to be transferred to my daughter [Sheree] to be used to purchase an annuity giving her a monthly income of at least $3,500, said amount to be indexed to and increase with the rate of inflation as reported by the Bank of Canada. The Will directed that the other half of the residue be paid to the Brenda Strafford Foundation. Brenda was the testator’s late wife, and he established the foundation in her honour. The Will also provided that beneficiaries had to survive the testator by 20 days. Sheree survived her father by 20 days but died of a drug overdose on 31 August 2016, before Roxanne was able to obtain probate or purchase the annuity.
Sheree’s death raised the question whether the capital sum intended to be used to purchase an annuity now belonged to testator’s estate, or whether Sheree’s estate was entitled to it. Roxanne brought an application to interpret the will and took the view that the amount belonged to the testator’s estate. The personal representative of Sheree’s estate, who was the mother of Sheree’s late husband, argued that it had vested in Sheree and therefore belonged to her estate.
Justice Kirker considered affidavits and heard oral evidence from Roxanne, Lisa, Norma Jackson, a long-time friend and business associate of the testator, and the personal representative of Sheree’s estate. She also considered two affidavits from Robert Schuett, the lawyer who drafted the Will but who died before the trial. And she heard evidence from Alison Jenner, an expert witness on the issue of how annuities are used and purchased for estate planning purposes.
3. Analysis and Judgment
Justice Kirker began her analysis by referring to section 26 of the Wills and Succession Act,[5] which states, ‘[a] will must be interpreted in a manner that gives effect to the intention of the testator’, noted that this is the cardinal principle, of which the Alberta Court of Appeal stated in Hicklin, ‘[n]o other principle is more important than this one’. She focused particularly on the court’s right to consider extrinsic evidence of the testator’s intention.
Justice Kirker accepted the evidence of Roxanne and Lisa that their father was a loving and supportive father. He was supportive of Sheree, but his relationship with her was strained because of her use of drugs, her failure to maintain employment, and her tendency to spend more money than she made. She also accepted Mr Shuett’s affidavit evidence that supported the evidence of Roxanne and Lisa. She accepted Mr Shuett’s evidence that the testator did not want to give Sheree a lump sum because she would dissipate her inheritance. That is why he decided to make provision for an annuity for her instead. Justice Kirker also accepted the evidence of Ms Jackson who confirmed the testator’s concerns and wishes. The personal representative of Sheree’s estate never met the testator and therefore could not give any evidence of his circumstances or testamentary intentions.
Justice Kirker accepted that the testator had concerns about Sheree that led to his testamentary decision about her. Therefore, although the will provided that if any beneficiary should predecease him, the share given to that beneficiary should be paid to the beneficiary’s estate, this could not be interpreted as showing that the testator intended Sheree to have a one-eighth share of the residue when he died. To reach such a conclusion would be at odds with his intention to provide an annuity for Sheree. Thus, in the context of the Will as a whole, Justice Kirker found that the testator intended that the executor purchase a ‘non-commutable, non-assignable annuity’ for Sheree that would provide her a monthly income for her life.
Justice Kirker then considered the general principle of the law that when a testator bequeaths a sum of money to purchase an annuity, the annuitant is entitled to have the capital sum, since the annuity can be sold immediately by the annuitant.[6] A number of cases have held therefore that if the intended annuitant dies before the annuity can be purchased, the annuitant or her estate is entitled to take the value of the annuity in cash: Robbins v Legge,[7] Lotzkar v McLean,[8] and Ker Estate v Stevenson[9] and others. In Lotzkar the court quoted a passage from Jarman on Wills,[10] which states the general principle. However, Justice Kirker noted that the quote omitted a footnote, which states, ‘A direction to set aside a fund to secure an annuity does not give the annuitant the right to have the value of the annuity paid to him.[11] [In contrast, a] discretionary power to invest in the purchase of an annuity authorizes the trustees to pay the sum to the annuitant’.[12] She distinguished Lotzkar and Ker on the ground that while the testators in those cases evinced an intention that the proposed annuitant be prohibited from taking the value of annuity in lieu of income payments, the wills also gave the executors broad discretion to purchase annuities as they thought fit. However, other cases have held that if the testator’s intention is that the annuitant is entitled only to an income for life, rather than a lump sum, the general principle stated above does not apply. See, e.g., Jensen v Wutzky.[13]
Justice Kirker held that since Sheree died before the testator’s will could be probated and the annuity purchased, it would be inconsistent with the testator’s intentions to hold that Sheree’s estate became entitled to the capital sum. However, it was entitled to retain the $7,000 paid to Sheree by the executor to meet her immediate needs and to honour the testator’s intentions.
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[1] 2019 ABCA 136, 46 ETR 4th 1. See also my blog on this case, http://welpartners.com/blog/2019/05/admissible-evidence-in-construing-wills/, posted 7 May 2019.
[2] 2023 ABCA 99.
[3] Re Strafford Estate, 2021 ABQB 417.
[4] The name was misspelt in the Will but nothing turned on that.
[5] SA 2010, c W-12.2
[6] Justice Kirker noted that in Canada this principle is subject to the rule that if the direction is to purchase a Government of Canada annuity, the annuitant cannot claim the money because the Government Annuities Act, RSC 1970, c G-6, s 10(1) makes the property in the annuity or the benefits under it inalienable.
[7] [1907] 2 Ch 8 (CA).
[8] (1979), 15 BCLR 259.
[9] 2009 ONCA 345
[10] 8th ed, vol 2 (London: Sweet and Maxwell, 1951), p 1109.
[11] Wright v Callender, 2 DM&G 652.
[12] Messeena v Carr, LR 9 Eq 260.
[13] [1947] 1 DLR 66 (Sask CA). And see similar cases mentioned in paragraph 64 of the Strafford judgment at first instance.
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Written by: Albert Oosterhoff
Posted on: November 2, 2023
Categories: Commentary, WEL Newsletter
1. Introduction
It is now well-established that a court asked to interpret a will may and indeed should have regard to extrinsic evidence that enables it to ascertain the testator’s subjective intention. The rule has been recognized in Canadian jurisprudence for several decades, and it was confirmed in what has become the leading modern case on point, Hicklin Estate v Hicklin.[1] The Alberta Court of Appeal has recently re-confirmed that case in Re Strafford Estate,[2] in which it dismissed an appeal from a decision of Madam Justice Kirker.[3] The appeal decision is brief. The court agreed with the decision of Justice Kirker, held that she properly considered extrinsic evidence to give effect to the testator’s subjective intention, as required by Hicklin, and concluded that she did not commit any palpable or overriding errors. In the circumstances the appellate decision would not normally warrant a blog. But the facts are particularly interesting because they involve a testamentary direction to the executor to purchase an annuity for one beneficiary who survived the testator but who died before the executor could obtain probate or purchase the annuity. This is not an issue that is much discussed in modern cases and therefore it deserves closer examination, particularly because cases have reached divergent views on the question whether the estate of the intended annuitant is entitled to the capital sum to be used to purchase the annuity. To examine this issue, I shall focus principally on the judgment at first instance.
2. Facts
The testator, Dr Barrie Strafford died on 25 April 2016. He named his daughter Roxanne his executor. The Will directed that the executor should divide one-half of the residue of his estate ‘into four equal shares and to pay or transfer one such share to each of my children’, Roxanne, Sheree,[4] Lisa, and Miles. But he immediately followed this with the following: ‘I direct that the Share that is to be transferred to my daughter [Sheree] to be used to purchase an annuity giving her a monthly income of at least $3,500, said amount to be indexed to and increase with the rate of inflation as reported by the Bank of Canada. The Will directed that the other half of the residue be paid to the Brenda Strafford Foundation. Brenda was the testator’s late wife, and he established the foundation in her honour. The Will also provided that beneficiaries had to survive the testator by 20 days. Sheree survived her father by 20 days but died of a drug overdose on 31 August 2016, before Roxanne was able to obtain probate or purchase the annuity.
Sheree’s death raised the question whether the capital sum intended to be used to purchase an annuity now belonged to testator’s estate, or whether Sheree’s estate was entitled to it. Roxanne brought an application to interpret the will and took the view that the amount belonged to the testator’s estate. The personal representative of Sheree’s estate, who was the mother of Sheree’s late husband, argued that it had vested in Sheree and therefore belonged to her estate.
Justice Kirker considered affidavits and heard oral evidence from Roxanne, Lisa, Norma Jackson, a long-time friend and business associate of the testator, and the personal representative of Sheree’s estate. She also considered two affidavits from Robert Schuett, the lawyer who drafted the Will but who died before the trial. And she heard evidence from Alison Jenner, an expert witness on the issue of how annuities are used and purchased for estate planning purposes.
3. Analysis and Judgment
Justice Kirker began her analysis by referring to section 26 of the Wills and Succession Act,[5] which states, ‘[a] will must be interpreted in a manner that gives effect to the intention of the testator’, noted that this is the cardinal principle, of which the Alberta Court of Appeal stated in Hicklin, ‘[n]o other principle is more important than this one’. She focused particularly on the court’s right to consider extrinsic evidence of the testator’s intention.
Justice Kirker accepted the evidence of Roxanne and Lisa that their father was a loving and supportive father. He was supportive of Sheree, but his relationship with her was strained because of her use of drugs, her failure to maintain employment, and her tendency to spend more money than she made. She also accepted Mr Shuett’s affidavit evidence that supported the evidence of Roxanne and Lisa. She accepted Mr Shuett’s evidence that the testator did not want to give Sheree a lump sum because she would dissipate her inheritance. That is why he decided to make provision for an annuity for her instead. Justice Kirker also accepted the evidence of Ms Jackson who confirmed the testator’s concerns and wishes. The personal representative of Sheree’s estate never met the testator and therefore could not give any evidence of his circumstances or testamentary intentions.
Justice Kirker accepted that the testator had concerns about Sheree that led to his testamentary decision about her. Therefore, although the will provided that if any beneficiary should predecease him, the share given to that beneficiary should be paid to the beneficiary’s estate, this could not be interpreted as showing that the testator intended Sheree to have a one-eighth share of the residue when he died. To reach such a conclusion would be at odds with his intention to provide an annuity for Sheree. Thus, in the context of the Will as a whole, Justice Kirker found that the testator intended that the executor purchase a ‘non-commutable, non-assignable annuity’ for Sheree that would provide her a monthly income for her life.
Justice Kirker then considered the general principle of the law that when a testator bequeaths a sum of money to purchase an annuity, the annuitant is entitled to have the capital sum, since the annuity can be sold immediately by the annuitant.[6] A number of cases have held therefore that if the intended annuitant dies before the annuity can be purchased, the annuitant or her estate is entitled to take the value of the annuity in cash: Robbins v Legge,[7] Lotzkar v McLean,[8] and Ker Estate v Stevenson[9] and others. In Lotzkar the court quoted a passage from Jarman on Wills,[10] which states the general principle. However, Justice Kirker noted that the quote omitted a footnote, which states, ‘A direction to set aside a fund to secure an annuity does not give the annuitant the right to have the value of the annuity paid to him.[11] [In contrast, a] discretionary power to invest in the purchase of an annuity authorizes the trustees to pay the sum to the annuitant’.[12] She distinguished Lotzkar and Ker on the ground that while the testators in those cases evinced an intention that the proposed annuitant be prohibited from taking the value of annuity in lieu of income payments, the wills also gave the executors broad discretion to purchase annuities as they thought fit. However, other cases have held that if the testator’s intention is that the annuitant is entitled only to an income for life, rather than a lump sum, the general principle stated above does not apply. See, e.g., Jensen v Wutzky.[13]
Justice Kirker held that since Sheree died before the testator’s will could be probated and the annuity purchased, it would be inconsistent with the testator’s intentions to hold that Sheree’s estate became entitled to the capital sum. However, it was entitled to retain the $7,000 paid to Sheree by the executor to meet her immediate needs and to honour the testator’s intentions.
—
[1] 2019 ABCA 136, 46 ETR 4th 1. See also my blog on this case, http://welpartners.com/blog/2019/05/admissible-evidence-in-construing-wills/, posted 7 May 2019.
[2] 2023 ABCA 99.
[3] Re Strafford Estate, 2021 ABQB 417.
[4] The name was misspelt in the Will but nothing turned on that.
[5] SA 2010, c W-12.2
[6] Justice Kirker noted that in Canada this principle is subject to the rule that if the direction is to purchase a Government of Canada annuity, the annuitant cannot claim the money because the Government Annuities Act, RSC 1970, c G-6, s 10(1) makes the property in the annuity or the benefits under it inalienable.
[7] [1907] 2 Ch 8 (CA).
[8] (1979), 15 BCLR 259.
[9] 2009 ONCA 345
[10] 8th ed, vol 2 (London: Sweet and Maxwell, 1951), p 1109.
[11] Wright v Callender, 2 DM&G 652.
[12] Messeena v Carr, LR 9 Eq 260.
[13] [1947] 1 DLR 66 (Sask CA). And see similar cases mentioned in paragraph 64 of the Strafford judgment at first instance.
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