Court and Parties
COURT OF APPEAL FOR ONTARIO DATE: 2023-03-24 DOCKET: C69930
Feldman, Zarnett and Copeland JJ.A.
BETWEEN: Sherri Ann Alger and Teresa Darlene Smith Applicants (Respondents)
AND: Robert Crumb and Karen Black, as Estate Trustees for the Estate of Theresa Lorraine Crumb Respondents (Appellants)
Counsel: Jonathan M. Friedman, for the appellants Shawn McNamara, for the respondents
Heard: September 8, 2022
On appeal from the judgment of Justice Catriona Verner of the Superior Court of Justice, dated September 13, 2021, with reasons reported at 2021 ONSC 6076.
1The parties’ mother, Theresa Lorraine Crumb, referred to in these reasons as the testator, left a will that contained the following general revocation clause in paragraph 1:
I HEREBY REVOKE all Wills and Testamentary dispositions of every nature and kind whatsoever made by me heretofore made.
2The issue on the appeal is whether that clause was effective under s. 52(1) of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (“SLRA”) to revoke the testator’s existing designations by instrument(s) of beneficiaries for her Registered Retirement Income Fund (“RRIF”) and Tax-Free Savings Account (“TFSA”) plans.
3Section 52(1) of the SLRA provides:
A revocation in a will is effective to revoke a designation made by instrument only if the revocation relates expressly to the designation, either generally or specifically.
4The application judge found that because the general revocation clause did not relate expressly to the testator’s existing designations by instrument(s) of her RRIF and TFSA plans, it was not effective to revoke those designations and they remained in effect.
5I agree and would dismiss the appeal.
Background Facts
6The testator, who passed away on June 18, 2020, had four children, the appellants and the respondents. By her will dated May 9, 2019, she named the appellants, Robert Crumb and Karen Black, as her Estate Trustees. The estimated value of the estate (not including the RRIF and TFSA plans) was $164,000.00.
7At her death the testator possessed RRIF plans at Scotiabank in the amount of $34,136.65, as well as a TFSA plan at the same bank in the amount of $65,674.72. By instrument(s) that do not form part of the record of the application, but which were executed before the will, the testator designated all four of her children, the appellants and the respondents, as equal beneficiaries of the plans.
8The will leaves a $20,000 bequest to each of the respondents, some smaller bequests, and the residue to only two of her children, the appellants, Robert Crumb and Karen Black. There is no list of assets in the will. In their affidavit on the application, the appellants state that the respondents were estranged from their mother during her final years and that was why she made her will to favour the appellants.
9The appellants, as estate trustees, took the position that the general revocation clause was effective to revoke the designations by instrument(s) of the four children as equal beneficiaries of the plans, and that those plans therefore formed part of the estate to be distributed in accordance with the terms of the will. The respondents then brought the application that is under appeal to have the issue determined by the court.
Findings by the Application Judge
10The application judge made the following findings: 1) the beneficiary designations by instrument(s) of the RRIF and TFSA plans are testamentary dispositions at law; 2) therefore, without s. 52(1) of the SLRA, the general revocation clause would be effective to revoke those designations; 3) following this court’s decision in Laczova Estate v. Madonna House (2001), 207 D.L.R. (4th) 341 (Ont. C.A.), because the general revocation clause in this will does not relate expressly to the designations, it does not comply with s. 52(1) of the SLRA; 4) the Superior Court of Justice decision in Ashton Estate v. South Muskoka Memorial Hospital Foundation, which held that a general revocation clause did comply with s. 52(1) is “plainly wrong” in law and fails to apply the analysis in Laczova; 5) because the decision is plainly wrong in law, the judge was not obliged to follow that decision; 6) the general revocation clause in the testator’s will did not revoke her beneficiary designations by instrument(s) of her four children in equal shares for her RRIF and TFSA plans.
Issue on Appeal
11There are two issues on this appeal: 1) whether the application judge was correct in law by finding that the general revocation clause in the testator’s will failed to expressly refer to the prior designations of beneficiaries by instrument(s) and therefore was not effective under s. 52(1) of the SLRA to revoke those designations; 2) whether the decision in Ashton Estate regarding the effectiveness of a general revocation clause in a will is correct.
Analysis
Issue 1: Was the application judge correct in law by finding that the general revocation clause in the testator’s will failed to expressly refer to the prior designations of beneficiaries by instrument(s) and therefore was not effective under s. 52(1) of the SLRA to revoke those designations?
12The SLRA was enacted in 1977 and replaced four statutes. Part I “Testate Succession” replaced the Wills Act, S.O. 1966, c. 433; Part II “Intestate Succession” replaced parts of the Devolution of Estates Act, R.S.O. 1970, c. 129; Part IV “Survivorship” replaced the Survivorship Act, R.S.O. 1970, c. 454; and Part V “Support of Dependents” replaced the Dependents’ Relief Act, R.S.O. 1970, c. 126.
13Part III “Designation of Beneficiaries of Interest in Funds or Plans” contains new provisions that specify how a person who owns certain defined plans or funds can designate a beneficiary to receive the plan or fund on the person’s death. [1] Section 50 defines a “plan” to include an RRIF and a TFSA as defined under the Income Tax Act, R.S.C. 1985, c. 1 (5th Supp). [2]
14Sections 51 and 52 of the SLRA govern a participant’s designation and revocation of a designation of beneficiaries of a benefit payable under a plan on the death of the participant. Section 53 deals with payment of the benefit under the plan to the designated beneficiary and enforcement. The definition of “participant” in s. 50, as well as ss. 51, 52 and 53 provide:
50 In this Part, “participant” means a person who is entitled to designate another person to receive a benefit payable under a plan on the participant’s death;
51(1) A participant may designate a person to receive a benefit payable under a plan on the participant’s death,
(a) by an instrument signed by him or her or signed on his or her behalf by another person in his or her presence and by his or her direction; or (b) by will,
and may revoke the designation by either of those methods.
(2) A designation in a will is effective only if it relates expressly to a plan, either generally or specifically.
52(1) A revocation in a will is effective to revoke a designation made by instrument only if the revocation relates expressly to the designation, either generally or specifically.
(2) Despite section 15, a later designation revokes an earlier designation, to the extent of any inconsistency.
(3) Revocation of a will revokes a designation in the will.
(4) A designation or revocation contained in an instrument purporting to be a will is not invalid by reason only of the fact that the instrument is invalid as a will.
(5) A designation in an instrument that purports to be but is not a valid will is revoked by an event that would have the effect of revoking the instrument if it had been a valid will.
(6) Revocation of a designation does not revive an earlier designation.
(7) Despite section 22, a designation or revocation in a will is effective from the time when the will is signed.
53 Where a participant in a plan has designated a person to receive a benefit under the plan on the death of the participant,
(a) the person administering the plan is discharged on paying the benefit to the person designated under the latest designation made in accordance with the terms of the plan, in the absence of actual notice of a subsequent designation or revocation made under section 51 but not in accordance with the terms of the plan; and (b) the person designated may enforce payment of the benefit payable to him under the plan but the person administering the plan may set up any defence that he could have set up against the participant or his or her personal representative. [Emphasis added.]
15Section 51 of the SLRA sets out the approach to designations in Ontario. Under s. 51(1), a participant is able to designate a beneficiary of a benefit payable under a plan on the participant’s death through two mechanisms: (a) a signed instrument, or (b) by will. Where a party elects to designate a beneficiary by will, the designation is only effective “if it relates expressly to a plan, either generally or specifically”: SLRA, at s. 51(2). A later designation will revoke an earlier designation where there is inconsistency: SLRA, at s. 52(2).
16Section 52 of the SLRA sets out the approach to revocations in Ontario. Participants may revoke a designation of a beneficiary through the two mechanisms set out above for designations: SLRA, at s. 51(1). However, a revocation in a will is only effective to revoke a designation made by instrument where it relates “expressly to the designation, either generally or specifically.” Whereas s. 51(2) requires that a designation by will relate expressly to a plan, s. 52(1) requires that a revocation in a will relate expressly to the designation.
17The designation and revocation provisions in the SLRA were considered by this court in Laczova Estate v. Madonna House. In that case, the testator had purchased retirement savings plans at two banks and had designated by instrument four members of her family as beneficiaries on her death. However, less than one month before she died, the testator executed a holograph will, where she listed all her assets, including the retirement savings plans, and made bequests to the four family members as well as to 18 other legatees including a number of charities. The will did not contain a revocation clause, a designation of beneficiaries of the plans, or a granting clause by which the testator gave all of her property to her executor and trustee to carry out the will’s instructions. The will did not vest the plans, or any of the listed assets, in anyone. Upon her death, the testator’s estate trustee took the position that the will revoked the earlier designations and applied to the court for directions.
18The estate trustee made two submissions. The first was that the references in the will to the plans constituted designations relating expressly to the plans either generally or specifically under s. 51(2), and therefore the earlier designations were revoked in accordance with s. 52(2).
19In considering that argument, Catzman J.A. assumed, without deciding, that listing the plans in the will was sufficient to constitute the express relation to a plan required by s. 51(2). However, the argument failed because there was no “designation” of anyone as a beneficiary contained in the terms of the will as required by both s. 51(2) and s. 52(2). Catzman J.A. rejected the argument that the listing of the plans constituted an implicit designation, pointing out that payment under s. 53 requires the plan administrator to be able to ascertain who is designated to receive it. In the case of the holograph will, it would continue to be unclear who would be the implicit designees.
20Catzman J.A. distinguished the case of Burgess v. Burgess Estate (2000), 52 O.R. (3d) 61 (C.A.), where the contest was between two beneficiary designations, both by instruments, and where this court observed that the SLRA does not set out any requirements for a revocation by instrument. In distinguishing the decision, Catzman J.A. relied on the fact that designation and revocation by will and by instrument are treated differently in the statute: designation and revocation by will “carry with them certain statutory prerequisites”, whereas designation and revocation by instrument do not: Laczova, at para. 25.
21The estate trustee’s alternative argument in Laczova was that the scheme of the will impliedly revoked the original designations by instrument under s. 52(1) of the SLRA. Catzman J.A. rejected this submission as well. He explained at para. 29:
A careful reading of s. 52(1) is sufficient to dispose of this alternative argument. Whereas s. 51(2) requires that a designation by will must relate “expressly to a plan, either generally or specifically”, s. 52(1) requires that a revocation in a will must relate “expressly to the designation, either generally or specifically”. But, as Ms. Carnevale acknowledged, nowhere in the deceased’s will is there any expression that relates to either of the previous designations in favour of her family members. By its very language, s. 52(1) renders a revocation in a will that fails to relate expressly to the designation made by instrument ineffective to accomplish that purpose. That language is fatal to Ms. Carnevale’s alternative argument. [Emphasis in original.]
22To summarize, the following propositions of interpretation have been established in the Laczova case: 1) The SLRA sets out statutory requirements for the designation of a beneficiary by will and for the revocation of a beneficiary designation by will, that are not required for such a designation or revocation when done by instrument; 2) Specifically, a designation of a beneficiary by will must relate expressly, whether generally or specifically, to the plan (s. 51(2)), while a revocation by will of a beneficiary designation that was made by instrument must relate expressly, whether generally or specifically, to the designation (s. 52(1)).
23The issue on this appeal arises under s. 52(1) because it relates to the effectiveness of the general revocation clause to revoke the beneficiary designations made by instrument in favour of all four of the testator’s children.
24The first question in interpreting the clause is whether the term “testamentary dispositions” includes the designations of beneficiaries by instrument of the RRIF and TFSA plans. In MacInnes v. MacInnes, [1935] S.C.R. 200, the Supreme Court held that the designation of a beneficiary under an employee benefit plan to receive the proceeds of the plan on death is a testamentary disposition, the test being whether the intent of the maker was that the gift be dependent on the maker’s death: at para. 14. That case has been interpreted and relied on subsequently to apply to an RRSP beneficiary designation: see Amherst Crane Rentals Ltd. v. Perring (2001), 241 D.L.R. (4th) 176 (Ont. C.A.), leave to appeal to S.C.C. refused, [2004] S.C.C.A. No. 430. I therefore agree with the application judge that the designations of beneficiaries by instrument(s) of the RRIF and TFSA plans are testamentary dispositions and therefore are included within the meaning of that term as used in the general revocation clause of the will. [3]
25The remaining question is whether the revocation of “all…Testamentary dispositions of every nature and kind whatsoever” relates “expressly to the designation, either generally or specifically.” This statutory requirement has two components for the revocation to be effective: 1) it must relate to the designation, as opposed to the plan; and 2) it must relate to the designation “expressly…, either generally or specifically”.
(1) The clause relates to the designation
26As a beneficiary designation by instrument is a testamentary disposition at law, by referring to all testamentary dispositions, the general revocation clause in this case does relate to the designation and therefore the first criterion is satisfied.
(2) The clause does not relate to the designation “expressly”
27In Laczova, as I noted above, Catzman J.A. was prepared to assume for the purposes of the decision that listing the plans at issue in the will was sufficient to satisfy the requirement in s. 51(2) for designation of a beneficiary in a will, that the designation must relate “expressly” to a plan, although he queried that conclusion: Laczova, at para. 18. He did not need to decide the issue because the decision turned on the fact that even if the “expressly” requirement was satisfied, there was no designation of a beneficiary in the will.
28To be clear, in Laczova, Catzman J.A. was considering whether listing the plans satisfied the “expressly” requirement for a valid designation of beneficiary in the will, not for a valid revocation of a designation, when he was discussing s. 51(2): see Laczova, at paras. 16-27. Therefore, whether a list of RRIF or TFSA plans would be considered to relate expressly to a designation, as required by s. 52(1) for a valid revocation, as opposed to expressly to a plan under s. 51(2), did not arise. Nor does the issue arise directly in this revocation case, as there is no list of the RRIF or TFSA plans in the will.
29The only reference to any beneficiary designations is the reference to testamentary dispositions. The question is whether that reference satisfies the requirement of relating “expressly…, either generally or specifically”, to the designations by instrument, sufficiently to revoke them pursuant to s. 52(1).
30Although the phrase “testamentary dispositions” is a category of instruments that include designations of beneficiaries for an RRIF or TFSA plan, it cannot be said to be an express reference to them. To give the term “expressly” any effect, it must mean something beyond a general category. I note that the thesaurus feature of Microsoft Word gives the following synonyms for the word “expressly”: specifically, particularly, explicitly, clearly, definitely, deliberately, and unambiguously. [4] All of these synonyms support the conclusion that reference to a general category that includes the thing to be referred to is not an express reference to that thing.
31Nor does the addition of the words “either generally or specifically” add any weight to the argument. An express reference to a beneficiary designation, that refers to it “generally” as opposed to “specifically”, must still refer expressly to the beneficiary designation that is intended to be referenced, not just to a category that includes it.
32While it is not necessary to decide what forms of wording may comply with that requirement, an example of wording that would have been sufficiently express and general is:
I hereby revoke any and all beneficiary designations by instrument that I have heretofore made on any fund or plan as defined in the Succession Law Reform Act.
33And an example of wording that would have been sufficiently express and specific is:
I hereby revoke the beneficiary designations on my RRIF and TFSA accounts at Scotiabank.
34As the general revocation clause in the testator’s will does not relate expressly to the beneficiary designations made by the testator for her RRIF and TFSA plans, it does not comply with s. 52(1) of the SLRA, and it is therefore not effective to revoke the designations of beneficiaries by instrument(s) of the RRIF and TFSA plans. The application judge was correct in so concluding.
Issue 2: Is the decision in Ashton Estate regarding the effectiveness of a general revocation clause in a will correct?
35The application judge was obliged to address the issue whether she was bound to follow the decision of another Superior Court judge in Ashton Estate. She found that she was not on the basis that that decision is “plainly wrong”: R. v. Scarlett, 2013 ONSC 562, at para. 43.
36In Ashton Estate, the testator executed a beneficiary designation by instrument for his RRIF account with TD Evergreen Investment Services in favour of his eight children in 1998, then executed a will in 2001 wherein he conveyed 95% of the residue of his estate to his eight children in unequal shares and appointed each of them as beneficiaries of any registered retirement savings plans that he may own. The will contained a general revocation clause using similar wording to the revocation clause in the case at bar. When he died in 2007, his RRIF was valued at $370,000.
37In brief reasons, the application judge referred to s. 52(1) of the SLRA, then concluded:
I am satisfied that the designation in 1998 was a “testamentary disposition” for the purposes of this sub-section and this clause in the will effectively cancelled it: see Laczova Estate v. Madonna House, [2001] O.J. No. 4992 (C.A.) at paragraph 9.
38Paragraph 9 of Laczova is the last paragraph of the part of the judgment where Catzman J.A. describes the holograph will, noting that it contained no revocation clause.
39The application judge in Ashton Estate did not, however, refer to the section of the decision where Catzman J.A. analyzes and interprets the statutory provisions, as discussed above in these reasons. In particular, the Ashton Estate application judge did not discuss the requirement that the revocation clause must relate expressly to the designation, whether generally or specifically.
40As the revocation clause in that case, as in the case at bar, did not relate to the designation expressly, it was an error to find that the clause constituted an effective revocation of the earlier designation by instrument.
41As a result, the application judge in the case at bar was correct to find that the interpretation of the general revocation clause in Ashton Estate should not be followed.
42However, I note that the result in Ashton Estate appears nevertheless to be correct under s. 52(2) of the SLRA, because the court gave effect to the terms of the will where the eight children were designated as beneficiaries of any registered retirement savings plans that the testator owned at the date of death. Although there was no specific finding of a sufficient designation under s. 51(2), arguably that would have followed.
Result
43I would dismiss the appeal with costs to the respondents. If the parties have not agreed on the amount of costs, brief written submissions can be made, maximum three pages each, with the respondents’ submission to be received within two weeks of release of these reasons, and the appellants’ submission within one week thereafter.
Released: March 24, 2023 “K.F.” “K. Feldman J.A.” “I agree. B. Zarnett J.A.” “I agree. J. Copeland J.A.”
Footnotes:
1Part III of the SLRA does not apply to a contract or to a designation of a beneficiary to which the Insurance Act, R.S.O. 1990, c. I.8 applies: SLRA, at s. 54(2). The designation of beneficiaries for life insurance and accident and sickness insurance contracts or policies, and corresponding revocations, are governed by the Insurance Act: see e.g., ss. 190-192, 313-314. The Pension Benefits Act, R.S.O. 1990, c. P.8 also contains several provisions relevant to beneficiary designations in the pension context: see e.g., ss. 39.1.1(5), 48(6).
2RRIFs are captured because the definition of “plan” includes a “retirement income fund” as defined in the Income Tax Act, which defines an RRIF as a “retirement income fund” at s. 146.3(1). Section 54.1 of the SLRA also states that Part III applies to beneficiary designations of a “retirement income fund”. TFSAs are captured by the definition of “plan” under s. 50 through a regulation. Section 2 of SLRA, O. Reg. 54/95 states that TFSAs “within the meaning of the Income Tax Act (Canada) are prescribed as plans for the purposes of Part III…regardless of when the designation of a beneficiary was made.”
3There is some academic discussion regarding whether all beneficiary designations are testamentary dispositions, for example, depending on whether the amount to which the plan participant is entitled and the amount the beneficiary will receive on the participant’s death are identical: see e.g., Albert Oosterhoff, “Are Beneficiary Designations Testamentary?” Ontario Bar Association, Elder Law Program, Rights and Limitations on an Attorney Under a Power of Attorney, February 5, 2020; Ralph E. Scane, “Non-Insurance Beneficiary Designations” (1993) 72 Can. Bar Rev. 178. For the purposes of this decision, if the beneficiary designations of the RRIF and TFSA accounts were not testamentary dispositions, then the general revocation clause would have no application to them.
4A similar list of synonyms is provided by the Oxford Thesaurus of English, 2nd ed. (Oxford: Oxford University Press, 2004), including: explicitly, clearly, distinctly, unambiguously, unequivocally, unmistakably, obviously, precisely, and specifically.