1. Introduction
The question whether a testator intended that a gift in his will to more than one person should go to the beneficiaries per capita or per stirpes arises regularly in the case law. The Latin terms seem to befuddle counsel and others. They have also been variously interpreted by the courts. Perhaps we were wise to avoid the terms and state precisely in English what should happen to the estate. Per capita literally means ‘by the head’. The term indicates that an estate or a portion of the estate should be divided in equal shares among a number of persons who typically stand in equal degree to the deceased. In contrast, and it is indeed a contrast, per stirpes means ‘by the stocks or families’ and a division per stirpes thus gives each stock or family an equal amount and that amount is then distributed within that stirps or family. The prima facie rule is that beneficiaries take per capita unless the context directs otherwise.[1]
The drafter often uses the term per stirpes incorrectly by failing to make clear which generation should form the families or stirpes. For example, if the will gives a life estate to one child and then divides the estate between two other children, B and C, per stirpes, and all three children survive, the phrase lacks meaning. Justice Cullity therefore held in, Lau v Mak Estate[2] that the term should be disregarded and that the remainder vested in B and C on the testator’s death. However, in a more recent case, Dice v Dice Estate,[3] the Court of Appeal held that the rule in Lau was not a rigid one and that the court could and should give meaning to the term in order to give effect to the intention of the testator.[4] The issue arose again in Mujanovic v Bigovic.[5]
2. Facts
The testator died in 2022 and had no spouse, children, or dependants when he died. The applicant, Lily, was his only surviving sibling and, having been appointed executor, brought an application for directions concerning the interpretation of a clause in the testator’s will.
Paragraph 2 of the will directed the trustee to pay or transfer 20% of the residue of the estate to five named persons per capita, namely, a sister-in-law of the testator’s wife, a brother-in-law, Lily, the testator’s (and Lily’s) sister, Marija, and Marija’s son, Dragon. Marija predeceased the testator.
Paragraph 2 concluded with the following definition:
“Per capita” means by the heads or polls; according to the number of individuals; share and share alike. This term, derived from the civil law, is used here, in the law of descent and distribution, and denotes that method of dividing an estate by which an equal share is given to each of a number of persons, all of whom stand in equal degree to the decent [sic, decedent?]. It is the antithesis of “per stirpes.”
The question arose whether Marija’s share went to her son, Dragan, or whether it should go out on intestacy to the testator’s next of kin. The testator had several intestate heirs, but one of them could not be located.
3. Analysis and Judgment
Justice Gibson began his analysis by reviewing the meaning of the per capita and per stirpes terms. He noted that, absent a contrary intention in the Will, the court may find that the testator intended a per stirpes rather than a per capita distribution. However, he found that there was a contrary intention in the Will based on its definition of the two terms and the emphasis on per capita over per stirpes.
The question then arose whether the gift is a class gift or a gift nominatim,[6] that is ‘by name’. If the gift is to a class, the deceased beneficiary’s share accrues to the surviving members of the class. But if the testator gives aliquot portions of money or property to named individuals, the prima facie conclusion is that the gift is not a class gift but that the named persons will take as personae designatae, that is, by name, and then the gift to the deceased beneficiary lapses. His Honour concluded that since the named persons did not belong to a readily defined group, it could not be a class gift. This is a legitimate conclusion. However, there are situations in which the court has found that the testator intended to create an artificial class and has given effect to that intention.[7]
However, his Honour then states, ‘A lapsed residuary gift passes as if the testator had died intestate’ and he cites section 31 of the Succession Law Reform Act[8] as authority. But with great respect, this is incorrect. The relevant provincial statutes, including section 23 of the Ontario Act, state that when a specific gift lapses because the beneficiary predeceases the testator, the gift to her lapses and falls into residue. These provisions do not say anything about when a residuary gift lapses. However, the case law does. It holds that if the gift is residuary and it lapses, it must pass on an intestacy.[9]
Section 31, an anti-lapse provision, may nonetheless be relevant. It provides, so far as relevant:
Except when a contrary intention appears by the will, where a … bequest is made to a … sister of the testator who dies before the testator … and leaves … issue surviving the testator, the … bequest does not lapse but takes effect as if it had been made directly to the persons among whom and in the shares in which the estate of that person would have been divisible.
(a) if that person had died immediately after the death of the testator;
(b) if that person had died intestate;
….I believe that section 31 applies, there being no contrary intention. Section 31 trumps section 23 and the case law referred to above regarding failed residuary gifts supports this. Indeed, this follows from the language of section 31. Section 23 and the case law say that the failed gift lapses. But section 31 says that in the circumstances it describes the gift does not lapse. Thus, since the testator’s sister, Marija, predeceased him and left issue surviving the testator (Dragon), the gift to Marija does not lapse but passes directly to Dragon as if Marija died intestate. It should therefore not pass to the testator’s siblings, including Lily, as his Honour held. That would have been the result if section 31 did not apply but the case law regarding failed residuary gifts did. That is what happened in Ksianzyna Estate v Pastuzok,[10] cited by his Honour as authority for his conclusion. But that case was distinguishable since section 31 did not apply on its facts. For an Ontario case with facts similar to those in the Mujanovic case, which held that section 31 applied, see Slattery v Irwin.[11]
—
[1] Re McNeil (1959), 43 MPR 357 at 359 (Nfld SC) per Winter J.
[2] (2004), 10 ETR 3d 152 (Ont SCJ).
[3] 2012 ONCA 468.
[4] See further Oosterhoff on Wills, 9th ed by Albert H Oosterhoff, C David Freedman, Mitchell McInnes, and Adam Parachin (Toronto: Thomson Reuters, 2021, §13.3.2(h).
[5] 2024 ONSC 1093.
[6] The word is misspelt in the reasons as nominatum.
[7] See Oosterhoff, supra, §16.3.2.
[8] RSO 1990, c S.26.
[9] See Re Stuart, 1964 CarswellBC 60 (SC). And see Oosterhoff, supra, §15.3.1. Although the issue did not arise in this case, it is worth noting that section 23 of the Ontario Act, along with similar provisions in some other provinces, does not apply to class gifts. However the equivalent legislation in other provinces does apply to class gifts. See Oosterhoff, ibid., Notes and Questions 5.
[10]2008 CarswellOnt 6793 (SCJ).
[11] 2000 CarswellOnt 3912 (SCJ). There are similar cases in other provinces.
Menu
Written by: Albert Oosterhoff
Posted on: June 26, 2024
Categories: Commentary, WEL Newsletter
1. Introduction
The question whether a testator intended that a gift in his will to more than one person should go to the beneficiaries per capita or per stirpes arises regularly in the case law. The Latin terms seem to befuddle counsel and others. They have also been variously interpreted by the courts. Perhaps we were wise to avoid the terms and state precisely in English what should happen to the estate. Per capita literally means ‘by the head’. The term indicates that an estate or a portion of the estate should be divided in equal shares among a number of persons who typically stand in equal degree to the deceased. In contrast, and it is indeed a contrast, per stirpes means ‘by the stocks or families’ and a division per stirpes thus gives each stock or family an equal amount and that amount is then distributed within that stirps or family. The prima facie rule is that beneficiaries take per capita unless the context directs otherwise.[1]
The drafter often uses the term per stirpes incorrectly by failing to make clear which generation should form the families or stirpes. For example, if the will gives a life estate to one child and then divides the estate between two other children, B and C, per stirpes, and all three children survive, the phrase lacks meaning. Justice Cullity therefore held in, Lau v Mak Estate[2] that the term should be disregarded and that the remainder vested in B and C on the testator’s death. However, in a more recent case, Dice v Dice Estate,[3] the Court of Appeal held that the rule in Lau was not a rigid one and that the court could and should give meaning to the term in order to give effect to the intention of the testator.[4] The issue arose again in Mujanovic v Bigovic.[5]
2. Facts
The testator died in 2022 and had no spouse, children, or dependants when he died. The applicant, Lily, was his only surviving sibling and, having been appointed executor, brought an application for directions concerning the interpretation of a clause in the testator’s will.
Paragraph 2 of the will directed the trustee to pay or transfer 20% of the residue of the estate to five named persons per capita, namely, a sister-in-law of the testator’s wife, a brother-in-law, Lily, the testator’s (and Lily’s) sister, Marija, and Marija’s son, Dragon. Marija predeceased the testator.
Paragraph 2 concluded with the following definition:
“Per capita” means by the heads or polls; according to the number of individuals; share and share alike. This term, derived from the civil law, is used here, in the law of descent and distribution, and denotes that method of dividing an estate by which an equal share is given to each of a number of persons, all of whom stand in equal degree to the decent [sic, decedent?]. It is the antithesis of “per stirpes.”
The question arose whether Marija’s share went to her son, Dragan, or whether it should go out on intestacy to the testator’s next of kin. The testator had several intestate heirs, but one of them could not be located.
3. Analysis and Judgment
Justice Gibson began his analysis by reviewing the meaning of the per capita and per stirpes terms. He noted that, absent a contrary intention in the Will, the court may find that the testator intended a per stirpes rather than a per capita distribution. However, he found that there was a contrary intention in the Will based on its definition of the two terms and the emphasis on per capita over per stirpes.
The question then arose whether the gift is a class gift or a gift nominatim,[6] that is ‘by name’. If the gift is to a class, the deceased beneficiary’s share accrues to the surviving members of the class. But if the testator gives aliquot portions of money or property to named individuals, the prima facie conclusion is that the gift is not a class gift but that the named persons will take as personae designatae, that is, by name, and then the gift to the deceased beneficiary lapses. His Honour concluded that since the named persons did not belong to a readily defined group, it could not be a class gift. This is a legitimate conclusion. However, there are situations in which the court has found that the testator intended to create an artificial class and has given effect to that intention.[7]
However, his Honour then states, ‘A lapsed residuary gift passes as if the testator had died intestate’ and he cites section 31 of the Succession Law Reform Act[8] as authority. But with great respect, this is incorrect. The relevant provincial statutes, including section 23 of the Ontario Act, state that when a specific gift lapses because the beneficiary predeceases the testator, the gift to her lapses and falls into residue. These provisions do not say anything about when a residuary gift lapses. However, the case law does. It holds that if the gift is residuary and it lapses, it must pass on an intestacy.[9]
Section 31, an anti-lapse provision, may nonetheless be relevant. It provides, so far as relevant:
Except when a contrary intention appears by the will, where a … bequest is made to a … sister of the testator who dies before the testator … and leaves … issue surviving the testator, the … bequest does not lapse but takes effect as if it had been made directly to the persons among whom and in the shares in which the estate of that person would have been divisible.
(a) if that person had died immediately after the death of the testator;
(b) if that person had died intestate;
….I believe that section 31 applies, there being no contrary intention. Section 31 trumps section 23 and the case law referred to above regarding failed residuary gifts supports this. Indeed, this follows from the language of section 31. Section 23 and the case law say that the failed gift lapses. But section 31 says that in the circumstances it describes the gift does not lapse. Thus, since the testator’s sister, Marija, predeceased him and left issue surviving the testator (Dragon), the gift to Marija does not lapse but passes directly to Dragon as if Marija died intestate. It should therefore not pass to the testator’s siblings, including Lily, as his Honour held. That would have been the result if section 31 did not apply but the case law regarding failed residuary gifts did. That is what happened in Ksianzyna Estate v Pastuzok,[10] cited by his Honour as authority for his conclusion. But that case was distinguishable since section 31 did not apply on its facts. For an Ontario case with facts similar to those in the Mujanovic case, which held that section 31 applied, see Slattery v Irwin.[11]
—
[1] Re McNeil (1959), 43 MPR 357 at 359 (Nfld SC) per Winter J.
[2] (2004), 10 ETR 3d 152 (Ont SCJ).
[3] 2012 ONCA 468.
[4] See further Oosterhoff on Wills, 9th ed by Albert H Oosterhoff, C David Freedman, Mitchell McInnes, and Adam Parachin (Toronto: Thomson Reuters, 2021, §13.3.2(h).
[5] 2024 ONSC 1093.
[6] The word is misspelt in the reasons as nominatum.
[7] See Oosterhoff, supra, §16.3.2.
[8] RSO 1990, c S.26.
[9] See Re Stuart, 1964 CarswellBC 60 (SC). And see Oosterhoff, supra, §15.3.1. Although the issue did not arise in this case, it is worth noting that section 23 of the Ontario Act, along with similar provisions in some other provinces, does not apply to class gifts. However the equivalent legislation in other provinces does apply to class gifts. See Oosterhoff, ibid., Notes and Questions 5.
[10]2008 CarswellOnt 6793 (SCJ).
[11] 2000 CarswellOnt 3912 (SCJ). There are similar cases in other provinces.
Author
View all posts