A beneficiary under a Will has standing to bring various claims against an estate. This includes the ability to challenge the validity of a Will or to apply to the court for an Estate Trustee to pass their accounts. A question that has been considered several times in the past few years is whether a residuary beneficiary has standing to seek the partition or sale of a property which forms part of an estate.
The Law
Partition or sale of land is where the court will order that the interests in a piece of land are divided and/or sold following an action or application.[1] Under section 3(1) of the Partition Act,[2] any person with an interest in land may make an application for its partition or sale:
Who may bring action or make application for partition
3 (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.[3]
In Di Michele v. Di Michele (“Di Michele”),[4] the Ontario Court of Appeal confirmed that ‘any person interested in land’ should be interpreted to permit “only those entitled to immediate possession of the property to apply for partition”.[5]
A beneficiary who is entitled to the residue of an estate is not entitled to “immediate possession” of any property that forms part of that estate. As such, a residuary beneficiary does not have standing to bring an application for partition or sale of an estate property. In contrast, where there is a specific bequest of property in a Will, the named beneficiary will have sufficient standing to bring an application.
In Di Michele, the Ontario Court of Appeal summarized as follows:
Second, the beneficiaries’ entitlement under the Will did not amount to a property interest in the Property. The Will does not give the beneficiaries a specific bequest of the Property. Rather, it gives them a contingent interest in the residue of the estate. In this regard it will be recalled that the Will provided that the residue of the estate was to go to Mrs. Di Michele’s “issue alive at the date of distribution”. Accordingly, to become entitled, a beneficiary had to be alive on the date of distribution. Until distribution, the beneficiaries had only a contingent beneficial interest in the residue of the estate, as well as the personal right to compel the estate trustee to duly administer the estate.
A contingent beneficial interest in an estate does not give rise to a property interest in any specific asset of the estate, prior to or absent an appropriation of such asset to the beneficiary by the trustee.[6]
Case Example – Addante v. Ruscica
This issue was considered by the Ontario Superior Court in Addante v. Ruscica (“Addante”).[7] In Addante, a residuary beneficiary of an estate brought an application for the partition and sale of an estate property. The deceased executed a Will in 1994 which appointed her daughter Phyllis as Estate Trustee and directed for her estate to be divided equally between Phyllis and her four other children, including Joanne. Prior to her passing, the deceased conveyed title to a property (the “Property”) to Joanne and Phyllis, reserving a life interest for herself.[8]
Section 4 of the deceased’s Will provides that Phyllis is entitled to a 2-year enjoyment of the Property after the deceased’s passing. Following this 2-year period, the Estate Trustee is to sell the Property, and the proceeds are to fall into the residue of the Estate. Section 3 of the Will vests broad discretion in the Estate Trustee in how to deal with the assets of the Estate, including when to sell real property. Importantly, this broad discretion is explicitly subject to section 4 of the Will.[9]
Over 6 years passed since the deceased’s death and the Property was not sold, with Phyllis continuing to live there rent-free. Joanna brought an application for the partition and sale of the Property in her capacity as a residuary beneficiary.[10]
In support of her application, Joanne relied on section 9 of the Estates Administration Act (“ECA”),[11] which provides that estate property that has not been disposed of, conveyed, divided or distributed amongst those beneficially entitled to it three years after the deceased’s passing shall vest in them. The court noted that section 9 of the ECA is tempered by section 10, which provides that:
Ordinary rights of executors, etc., preserved
Nothing in section 9 derogates from any right possessed by an executor or administrator with the will annexed under a will or under the Trustee Act or from any right possessed by a trustee under a will.[12]
In Di Michele, the Court of Appeal confirmed that section 9 of the ECA serves to give Estate Trustees additional powers, which can be exercised only to the extent they do not conflict with the provisions of the Will:
Where a will gives the estate trustee a power to sell property at such time and in such manner as the estate trustee sees fit, s.9 of the Estates Administration Act will not limit the scope of that power by requiring that the property vest after a specific period of time.[13]
In Addante, the court noted that the Property does not form part of the residue of the Estate, the proceeds of sale do. Accordingly, section 4 of the Will does not provide Joanne with an entitlement to immediate possession of the Property. Moreover, the deceased’s Will does not provide a specific bequest of the Property to Joanne. Therefore, section 9 of the ECA does not operate to vest ownership of the Property in the residuary beneficiaries.[14]
The court dismissed Joanne’s application, without prejudice to her, or any other residuary beneficiary, from bringing an application for Phyllis’ removal as Estate Trustee pursuant to section 37(1) of the Trustee Act,[15] given her non-compliance with section 4 of the Will.[16]
Concluding Comments
A residuary beneficiary has an interest in the residue of an estate, not an interest in any specific property that forms part of it. However, if a Will provides a direct bequest of an estate property, then that named beneficiary is entitled to ‘immediate possession’ of the property and has standing for the purposes of bringing an application for partition or sale.
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[1] For more information on this topic see “Partition or Sale of Land in Ontario” (WEL Partners, Oliver O’Brien, April 25, 2024), accessible at: <https://welpartners.com/blog/2024/04/partition-or-sale-of-land-in-ontario/>.
[2] Partition Act, RSO 1990, c P.4.
[3] Ibid, s.3.
[4] Di Michele v. Di Michele, 2014 ONCA 261 (CanLII) (“Di Michele”).
[5] Di Michele at para 79 (emphasis added).
[6] Di Michele at paras 103 and 104 (emphasis added).
[7] Addante v. Ruscica, 2022 ONSC 2148 (CanLII) (“Addante”). Also see the more recent decision in Rizzo v. Farruggia, 2024 ONSC 4615 (CanLII).
[8] Addante at paras 4 and 5.
[9] Addante at paras 21 and 22.
[10] Addante at para 7.
[11] Estates Administration Act, RSO 1990, c E.22.
[12] Ibid, at s.10.
[13] Di Michele at para 100.
[14] Addante at para 24.
[15] Trustee Act, RSO 1990, c T.23.
[16] Addante at para 31.
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Written by: Oliver O'Brien
Posted on: September 9, 2024
Categories: Beneficiaries, Commentary, Wills
A beneficiary under a Will has standing to bring various claims against an estate. This includes the ability to challenge the validity of a Will or to apply to the court for an Estate Trustee to pass their accounts. A question that has been considered several times in the past few years is whether a residuary beneficiary has standing to seek the partition or sale of a property which forms part of an estate.
The Law
Partition or sale of land is where the court will order that the interests in a piece of land are divided and/or sold following an action or application.[1] Under section 3(1) of the Partition Act,[2] any person with an interest in land may make an application for its partition or sale:
Who may bring action or make application for partition
3 (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.[3]
In Di Michele v. Di Michele (“Di Michele”),[4] the Ontario Court of Appeal confirmed that ‘any person interested in land’ should be interpreted to permit “only those entitled to immediate possession of the property to apply for partition”.[5]
A beneficiary who is entitled to the residue of an estate is not entitled to “immediate possession” of any property that forms part of that estate. As such, a residuary beneficiary does not have standing to bring an application for partition or sale of an estate property. In contrast, where there is a specific bequest of property in a Will, the named beneficiary will have sufficient standing to bring an application.
In Di Michele, the Ontario Court of Appeal summarized as follows:
Second, the beneficiaries’ entitlement under the Will did not amount to a property interest in the Property. The Will does not give the beneficiaries a specific bequest of the Property. Rather, it gives them a contingent interest in the residue of the estate. In this regard it will be recalled that the Will provided that the residue of the estate was to go to Mrs. Di Michele’s “issue alive at the date of distribution”. Accordingly, to become entitled, a beneficiary had to be alive on the date of distribution. Until distribution, the beneficiaries had only a contingent beneficial interest in the residue of the estate, as well as the personal right to compel the estate trustee to duly administer the estate.
A contingent beneficial interest in an estate does not give rise to a property interest in any specific asset of the estate, prior to or absent an appropriation of such asset to the beneficiary by the trustee.[6]
Case Example – Addante v. Ruscica
This issue was considered by the Ontario Superior Court in Addante v. Ruscica (“Addante”).[7] In Addante, a residuary beneficiary of an estate brought an application for the partition and sale of an estate property. The deceased executed a Will in 1994 which appointed her daughter Phyllis as Estate Trustee and directed for her estate to be divided equally between Phyllis and her four other children, including Joanne. Prior to her passing, the deceased conveyed title to a property (the “Property”) to Joanne and Phyllis, reserving a life interest for herself.[8]
Section 4 of the deceased’s Will provides that Phyllis is entitled to a 2-year enjoyment of the Property after the deceased’s passing. Following this 2-year period, the Estate Trustee is to sell the Property, and the proceeds are to fall into the residue of the Estate. Section 3 of the Will vests broad discretion in the Estate Trustee in how to deal with the assets of the Estate, including when to sell real property. Importantly, this broad discretion is explicitly subject to section 4 of the Will.[9]
Over 6 years passed since the deceased’s death and the Property was not sold, with Phyllis continuing to live there rent-free. Joanna brought an application for the partition and sale of the Property in her capacity as a residuary beneficiary.[10]
In support of her application, Joanne relied on section 9 of the Estates Administration Act (“ECA”),[11] which provides that estate property that has not been disposed of, conveyed, divided or distributed amongst those beneficially entitled to it three years after the deceased’s passing shall vest in them. The court noted that section 9 of the ECA is tempered by section 10, which provides that:
Ordinary rights of executors, etc., preserved
Nothing in section 9 derogates from any right possessed by an executor or administrator with the will annexed under a will or under the Trustee Act or from any right possessed by a trustee under a will.[12]
In Di Michele, the Court of Appeal confirmed that section 9 of the ECA serves to give Estate Trustees additional powers, which can be exercised only to the extent they do not conflict with the provisions of the Will:
Where a will gives the estate trustee a power to sell property at such time and in such manner as the estate trustee sees fit, s.9 of the Estates Administration Act will not limit the scope of that power by requiring that the property vest after a specific period of time.[13]
In Addante, the court noted that the Property does not form part of the residue of the Estate, the proceeds of sale do. Accordingly, section 4 of the Will does not provide Joanne with an entitlement to immediate possession of the Property. Moreover, the deceased’s Will does not provide a specific bequest of the Property to Joanne. Therefore, section 9 of the ECA does not operate to vest ownership of the Property in the residuary beneficiaries.[14]
The court dismissed Joanne’s application, without prejudice to her, or any other residuary beneficiary, from bringing an application for Phyllis’ removal as Estate Trustee pursuant to section 37(1) of the Trustee Act,[15] given her non-compliance with section 4 of the Will.[16]
Concluding Comments
A residuary beneficiary has an interest in the residue of an estate, not an interest in any specific property that forms part of it. However, if a Will provides a direct bequest of an estate property, then that named beneficiary is entitled to ‘immediate possession’ of the property and has standing for the purposes of bringing an application for partition or sale.
—
[1] For more information on this topic see “Partition or Sale of Land in Ontario” (WEL Partners, Oliver O’Brien, April 25, 2024), accessible at: <https://welpartners.com/blog/2024/04/partition-or-sale-of-land-in-ontario/>.
[2] Partition Act, RSO 1990, c P.4.
[3] Ibid, s.3.
[4] Di Michele v. Di Michele, 2014 ONCA 261 (CanLII) (“Di Michele”).
[5] Di Michele at para 79 (emphasis added).
[6] Di Michele at paras 103 and 104 (emphasis added).
[7] Addante v. Ruscica, 2022 ONSC 2148 (CanLII) (“Addante”). Also see the more recent decision in Rizzo v. Farruggia, 2024 ONSC 4615 (CanLII).
[8] Addante at paras 4 and 5.
[9] Addante at paras 21 and 22.
[10] Addante at para 7.
[11] Estates Administration Act, RSO 1990, c E.22.
[12] Ibid, at s.10.
[13] Di Michele at para 100.
[14] Addante at para 24.
[15] Trustee Act, RSO 1990, c T.23.
[16] Addante at para 31.
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