COURT OF APPEAL FOR ONTARIO
DOHERTY, ROSENBERG and FELDMAN JJ.A.
B E T W E E N :
IN THE MATTER OF THE ESTATE OF GERTRUDE ARMGARDT, who died on the 10th of January, 1999
JOSEPH JAMES McDONALD, Estate trustee of the Estate of Gertrude Armgardt
Hugh Pattison For the appellants
Applicant (Respondent in appeal)
Charles C. Mark, Q.C.
- and -
For the respondent Joseph James McDonald
RESI SCHONWALD, URSULA THOMANN, EWALD SCHONWALD, LIESELOTTE SCHMITZ, RITA NORING, RENATE D’HAVHANESSIAN, EVA-MARIE STARKE, ANNALIESE NION, WINFRIED SCHOLTEN, ESTATE OF ELISABETH (ELSE) SKUBALLA-SCHONWALD
Romeo D’Ambrosio For the respondent Ursula Thomann
Respondents (Appellants in appeal) (Respondent in appeal)
- and -
SYLVIA MARIA SCHONWALD, JOSEF NEITSCH, ELKE STUHLFAUTH, INGO BOKERMANN and BARBARA BLANEK
Appellants
Heard: February 13, 2003
On appeal from the judgment of Justice Donald MacKenzie of the Superior Court of Justice dated June 21, 2002, reported at [2002] O.J. No. 3122.
1This appeal from a judgment of MacKenzie J. concerns the interpretation of a will and in particular the meaning of the clause in which the testatrix dealt with the residue of her estate in these terms:
I GIVE DEVISE AND BEQUEATH ALL THE REST AND RESIDUE OF MY ESTATE IN CANADA to my next of kin in equal shares.
2The application judge interpreted that clause as if it read as follows:
I GIVE DEVISE AND BEQUEATH ALL THE REST AND RESIDUE OF MY ESTATE IN CANADA to my Canadian relatives in equal shares.
3The effect of this interpretation was that the residue did not go to the testatrix’s next of kin or solely to her next of kin in Canada. In my view, the application judge erred in interpreting the will in that fashion and the appeal must be allowed.
THE FACTS
4The testatrix, Gertrude Armgardt, made the will in question in October 1996. A solicitor prepared the will. The testatrix was a widow and had no children. She had several brothers and sisters. At the time she made the will only the sister, Elisabeth Skuballa-Schonwald, was still living. Ms. Skuballa-Schonwald lived in Germany, as did most of the testatrix’s relatives.
5The testatrix divided her time between Canada and Germany. She had a house and some other assets in Canada and an apartment and some other assets in Germany. In May 1997, she made a will in Germany that disposed of her German assets. In the German will the testatrix gives the German apartment and its furnishings to one of her nieces, the daughter of her brother Viktor Scholten. She also gives DM 20,000.00 to a nephew, the son of her brother Anton. Under the heading “Exclusion”, the testatrix states that she excludes all of the rest of her relatives from “the legal succession”, including her sister Ms. Skuballa-Schonwald and her descendants.
6George Thomann is the son of the respondent Ursula Thomann, Ms. Skuballa-Schonwald’s daughter. The Canadian will gives him a life interest in the testatrix’s Canadian home and provides that the estate shall pay all the carrying costs of the premises. Upon George’s death or if he no longer wishes to have the use of the premises, the premises are to be sold and the proceeds form part of the residue of the estate. The only other bequest is the clause dealing with the residue set out above.
7The testatrix died in January 1999. Ms. Skuballa-Schonwald was still alive at that time, but has since passed away. George Thomann has given up his life interest in the residence. Ms. Skuballa-Schonwald had another daughter, Resi, and a son Ewald. George has a sister Anne. Ursula, George and Anne are the only relatives of the testatrix living in Canada. Her other relatives live either in Germany or in other parts of Europe.
REASONS OF THE APPLICATION JUDGE
8The application judge found that the phrase “next of kin” was ambiguous. He acknowledged that the usual meaning of “next of kin” is the closest surviving blood relations, which in this case would mean the sister Elisabeth. However, he considered the meaning of the phrase used in conjunction with the phrase “in equal shares”, and found that the term “next of kin” suggested a plurality of beneficiaries in the Canadian estate. He thus concluded that the phrase “next of kin” was susceptible to two meanings in the context of this will. One meaning would include not only her surviving sister but all of her various nieces and nephews.
9Because the will was ambiguous, the application judge looked to the surrounding circumstances to clarify the meaning of the words “next of kin”. The surrounding circumstances included:
(a) The testatrix’s split residence;
(b) The evidence of Ursula and George that they had a very close relationship with the testatrix;
(c) Certain hearsay statements which I will set out below; and
(d) The German will.
10The two hearsay statements that the application judge admitted come from the paragraphs 21 and 22 of Ursula’s affidavit:
On several occasions, my late aunt would indicate to my family and me that our German relatives would be upset once they became aware of the distribution of her Canadian estate.
On several other occasions in response to our insistence that my late aunt spend more of her money, she would respond humourously that, “there would be more for you if I spent less”.
11Taking into account these various circumstances, the application judge concluded that the testatrix intended to give her assets in each of Canada and Germany to relatives resident or domiciled in each of the two countries respectively. He therefore held that the persons entitled to the residue of the Canadian estate are the Canadian relatives, namely Ursula and her two children George and Anne in equal shares.
THE FRESH EVIDENCE APPLICATION
12This appeal is brought by the German nieces and nephews. The appellants, although properly served with the original application, did not file an appearance and did not participate in the application. The appellants now seek to tender the affidavit of Winfried Scholten. Winfried received DM 20,000.00 under the German will. In his affidavit, he states that he had frequent contact with his aunt. He says she told him that she was not on good terms with Ursula and that he along with others would share in her Canadian “fortune”.
13In my view, this evidence should not be admitted as fresh evidence. This evidence could have been adduced with reasonable diligence had the appellants chosen to participate in the application. More importantly, counsel for the appellants submitted that the evidence is adduced to attack the credibility of the hearsay statements in Ursula’s affidavit. Since, in my view, the application judge erred in attaching any weight to those statements, the proposed fresh evidence could not have affected the result.
THE INTERPRETATION OF THE WILL
14The first step in interpreting a will is usually to take the words that the testatrix has used in their ordinary or common meaning. However, the court is not to stop there but must attempt to ascertain the testatrix’s intention. See A.H. Oosterhoff, Oosterhoff on Wills and Succession, Fifth Edition at pp. 435-36. Where the language is ambiguous, the court is entitled to consider “not only the provisions of the will, but also the circumstances surrounding and known to the testator at the time when he made the will, and adopt the meaning most intelligible and reasonable as being his intention”: Re Tyhurst Estate, [1932] S.C.R. 713 at 719.
15The ordinary or common meaning of the phrase “next of kin” is the person or persons who are the testatrix’s nearest blood relations. See Oosterhoff at p. 426. In this case, this could only refer to the testatrix’s sister Elisabeth who was the nearest blood relation at the time of the death. As I have said, the application judge was of the view that this phrase was ambiguous in the context because of its conjunction with the phrase “in equal shares”. This suggested to the application judge that the testatrix intended a plurality of beneficiaries. I do not agree with that interpretation.
16When she made the will, Elisabeth was the testatrix’s only surviving sibling, but she would have no way of knowing whether or not Elisabeth would survive her. In my view, a crucial circumstance is that Elisabeth was quite elderly. Having been born in 1905, she was 91 when the testatrix made the will. In my view, the reasonable interpretation of the phrase “to my next of kin in equal shares” in those circumstances, was that the testatrix intended that the residue go to her next of kin and, if her sister did not survive her, the residue would be divided in equal shares among the class of persons that would then fall within the definition of next of kin, being all of her nieces and nephews. Understood this way, the phrase “in equal shares” uses the common device that words in the singular include the plural and words in the plural include the singular.
17Even if it could be said that the will was ambiguous, the extrinsic evidence relied upon by the application judge sheds no light on the testatrix’s intention. The German will, for example, gives the bulk of the estate to a particular niece, a specific devise to her nephew, and otherwise gives nothing to any of the other German or Canadian relatives. I do not see how this shows an intention that only the Canadian relatives should share in the Canadian estate. It could just as easily manifest an intention that all of the various relatives would be taken care of in the Canadian will. I find the German will of no assistance in resolving this issue, even assuming that it was properly taken into account in interpreting the Canadian will.
18As to the hearsay statements, they are self-serving and ambiguous. The fact that the German relatives would be upset could simply refer to the fact that the testatrix had given a life estate in her major Canadian asset to her great nephew George. The statement allegedly made “humourously” that “there would be more for you if I spent less” is equivocal. It hardly manifests an intention that only the Canadian relatives would inherit under the Canadian will.
19Perhaps the most serious problem with the application judge’s interpretation of the will is that it gives no meaning to the principal phrase in the residue clause, “next of kin”. By interpreting the phrase as limited to the Canadian relatives, the testatrix’s next of kin, her surviving sister Elisabeth, takes nothing under the will, since she was living in Germany at the time of the death.
20On the other hand, I also reject the interpretation sought by the appellants. They submitted that “next of kin” should be interpreted to include not only Elisabeth but also all of the testatrix’s deceased brothers and sisters. This is not a sensible interpretation of the phrase. It would result in the creation of a wholly artificial class of beneficiaries and lead to immense complications for the estate in trying to determine who should share in the residue depending on the wills of the various deceased brothers and sisters. It hardly seems likely that the testatrix could have contemplated such a peculiar disposition of her estate. I think the excerpt from the Canadian Encyclopaedic Digest, Ontario, Third Edition, referred to by Greer J. in Doyle v. Doyle Estate, [1995] O.J. No. 3498, (1995) 9 E.T.R. (2d) 162 at para. 31 is of assistance:
In balancing conflicting constructions, both open upon the language of the will, the court leans towards the construction that recognizes the reasonable expectations of persons having claims upon the testator’s bounty and makes a rational and convenient disposition of his property [emphasis added].
21To avoid this inconvenient disposition, the appellants argue that “to my next of kin in equal shares” should mean that the share of any deceased sibling is to be divided between his or her issue per stirpes. They provide no reasonable basis for such a distribution, which ignores the fact that Elisabeth, the testatrix’s actual next of kin, was alive at the time of the testatrix’s death.
COST OF THE APPLICATION
22The application judge ordered that the estate trustee, Mr. McDonald, and the respondent Ursula Thomann should have their costs on a substantial indemnity scale out of the Estate. He also declared, “that the award of costs is without prejudice to the position of any person having an interest in the Estate from making any claims against Joseph J. McDonald in solicitor’s negligence or Joseph J. McDonald in defending such claims.” The respondent Ursula Thomann submits that the respondent Mr. McDonald should have been denied his costs of the application and be liable for Ms. Thomann’s costs because his drafting of the will led to the litigation and because he did not adopt a neutral stand before the judge but argued for a particular interpretation of the will, the interpretation pressed by the appellant on this appeal.
23I would not interfere with the application judge’s discretion with respect to costs, even assuming it is open to the court to do so in the absence of an application by the respondent for leave to appeal the costs award. While I have found that the position advocated by the estate trustee before the application judge is not the correct one, the application judge no doubt found counsel’s submissions helpful in the absence of anyone representing the interests of the other potential beneficiaries. The application judge has addressed the question of negligence in that part of the judgment set out in the previous paragraph.
DISPOSITION
24Accordingly, I would allow the appeal, set aside paragraph 1 of the judgment of the application judge and order that the residue of the estate of Gertrude Armgardt be paid to or delivered to the estate of Elisabeth Skuballa-Schonwald.
25With respect to costs, neither the respondent Ursula Thomann, nor the appellants, the testatrix’s nieces and nephews, was successful. The wording of the will brought about this litigation and I think it proper that the costs come out of the estate on a substantial indemnity basis.
26The respondent Ursula Thomann sought costs totalling over $21,000. In my view, even on a substantial indemnity basis, those costs are excessive given the narrow issues involved and that counsel for the respondent had also been counsel before the application judge. I will briefly deal with certain submissions made by counsel for Ms. Thomann concerning costs of the other parties.
27Counsel for Ms. Thomann argues that the estate trustee should not have his costs of the appeal. He notes that the estate trustee submitted his rights to the court and therefore argues that Rule 75.07.1 applies. In my view, that rule does not apply to an appeal and on an appeal the court has the discretion to grant costs although the respondent submits his rights to the court. As it turned out, in view of the respondent’s submission that the estate trustee should be liable for her costs of the application, it was important that counsel for the estate trustee be present.
28Finally, counsel for the respondent argues that the appellants should not have their costs out of the estate because they should have realized the appeal would not succeed and because they did not appear on the original application. I do not agree with this position. The position advocated by the appellants was not unreasonable. Moreover, I have also rejected Ms. Thomann’s position. It is not at all clear to me why the appellants and not the respondent should have known they would not succeed. Yet counsel for Ms. Thomann submitted that she should have her costs paid out of the estate, even if the appeal were allowed. As to the failure to appear on the application, it is apparent that the appellants did not think it necessary to incur the costs of hiring a Canadian lawyer when the estate trustee’s counsel was taking the position that they advocated.
29I would fix the costs as follows. To the appellants, costs in the amount of $10,628.47 inclusive of disbursements and GST. To the respondent Ursula Thomann, costs in the amount of $12,000 inclusive of disbursements and GST. To the estate trustee, costs in the amount of $2,795.00. All costs are payable out of the Estate forthwith.
Signed: “M. Rosenberg J.A.”
“I agree Doherty J.A.”
“I agree K. Feldman J.A.”
RELEASED: “DD” MARCH 21, 2003