Ontario Superior Court of Justice, Divisional Court
Court File No. 55858/00 Newmarket Date: 2001-05-31 Carnwath, Jennings and Epstein JJ.
Counsel: Lois Cromarty, for appellant, Gwendolyn Guy. Maureen Farson, for respondent, Ontario Works. Rebecca J. Givens, for respondent, Minister of Social Services.
The judgment of the court was delivered by
1Carnwath J.:—In 1998, Gwendolyn Guy applied for social assistance on behalf of herself and her two minor sons. She failed to disclose the existence of trust funds of $8,588.12, of which the two sons were the beneficial owners. The Northumberland County Department of Social Services later discovered the trust funds, cancelled her benefits, and demanded repayment of alleged overpayments. The Social Benefits Tribunal dismissed Ms. Guy's appeal; she now appeals the Tribunal's decision to this Court.
2The issue to be decided is whether the trust funds are "assets" within the meaning of the Ontario Works Act, 1997, S.O. 1997, c. 25, Sch. A.
Background
3The trust funds were left to the sons by their great-grandmother, whose will provided as follows:
- b) To pay my just debts, funeral and testamentary expenses and to transfer the residue of my estate as follows:
ii) the residue of my estate is to be divided into two equal parts with one part to be transferred to my grandson, Wayne Bright and the other part to be divided into five equal parts. One of each of the five equal parts is to be transferred to my granddaughter, Gwen Guy and her four children, Jeremy, Casey, Buddy and Galen, provided that if my granddaughter, Gwen Guy, should predecease me then the share that would have gone to her is to be divided equally among her sons and if any of her sons should predecease me the share that would have gone to that son is to be divided equally among his brothers.
- If Any Person should become entitled to any share in my estate before reaching the age of twenty-four years, the share of such person shall be held and kept invested by my Trustee and the income and capital or so much thereof as my Trustee in his absolute discretion considers necessary or advisable shall be used for the benefit of such person until he or she attains the age of twenty-four.
4I note the absence of a gift over; the bequests vested in the sons subject to the terms of the trust. The trustees of the will are Ms. Guy and her brother, Wayne Bright.
5Ms. Guy told Northumberland she was prepared to exercise her discretion to access the funds for the benefit of her two sons. Mr. Bright, however, refused to exercise his discretion and explained why in a fax dated June 1, 1999:
This fax will confirm that I will not give signing authority to collapse the GIC's we hold in trust for my nephews Buddy and Galen Guy. They were placed in trust until the boys reach age 24 by my grandmother. My grandmother's written will which I understand Gwen has shown you and her intention when she wrote the will were very clear to me and I plan to honor this.
6Northumberland sent two letters to Ms. Guy dated May 25, 1999. The first cancelled her benefits "because your assets are in excess of your budgetary requirements". The second demanded repayment of payments "you are not entitled to because your assets were in excess of your budgetary requirements".
7Both letters told Ms. Guy she could appeal the decision, provided she asked for an internal review. She did so ask and was told in a letter dated June 10, 1998, that the original decisions were confirmed. The reasons given were:
This means that we believe that the intention of the terms of the will is to have funds released at such times as the minor children have needs that are unmet. We are directed to look at trust funds associated with inheritances where capital can be accessed as liquid assets. This is the case with your grandmother's will.
Ms. Guy then appealed the confirmation to the Social Benefits Tribunal.
The Statutory Scheme
8The Family Benefits Act and the General Welfare Assistance Act were the two statutes in Ontario that provided for social assistance in this province until May and June 1998. The Family Benefits Act was and continues to be administered by the Ministry of Community and Social Services. Both statutes provided for payments to persons who were found to be a "person in need" as defined by detailed regulations, but the Family Benefits Act and Regulation provided for allowances to specific categories of "persons in need", the main categories of which were: "disabled persons" and "permanently unemployable persons", single parents and the aged. The General Welfare Assistance Act, on the other hand, provided payments referred to as "assistance" to most other persons who qualified financially. Family Benefits Act, R.S.O. 1990, c. F.2; General Welfare Assistance Act, R.S.O. 1990, c. G.6.
9The Ontario Works Act, 1997 came into force on May 1st 1998. It replaced the General Welfare Assistance Act, which was repealed. Under the Ontario Works Act, 1997, social assistance is delivered by delivery agents, most of which are municipalities. It provides for social assistance for most persons who are in need, but who have not qualified for income support as a "person with a disability" within the meaning of the Ontario Disability Support Program Act. The Ontario Disability Support Program Act came into force on June 1st, 1998. It replaced the Family Benefits Act for persons with disabilities. Ontario Works Act, 1997, S.O. 1997, c. 25, Sch. A; Ontario Disability Support Program Act, 1997, S.O. 1997, c. 25, Sch. B.
10"Assistance" under the General Welfare Assistance Act, or "income assistance" under the Ontario Works Act, 1997, is calculated by determining "budgetary requirements" and deducting income. There are two basic components of "budgetary requirements". The first is "shelter" and the other is "basic needs". The "basic needs" component generally covers needs other than shelter. The shelter component covers actual shelter costs incurred, up to specific maximums. Regulation 537, ss. 12(1), 13(1), and (4), para. 8; O. Reg. 134/98, ss. 40-54.
11On an appeal to the Social Assistance Review Board, the predecessor of the Tribunal, the onus of proof of eligibility was on the appellant. The Board could only review the decision made by the Administrator, and could not review eligibility after the time period in issue. Also, under the Ontario Works Act, 1997, the onus before the Social Benefits Tribunal is on the appellant to prove that the decision of the Administrator was wrong. General Welfare Assistance Act, s. 11(2) and (4); Family Benefits Act, s. 14(6); Ontario Works Act, 1997, s. 28(11).
12The Ontario Works Act, 1997 does not contain a definition of "assets". However, a policy directive issued to those responsible for determining eligibility under the Act contains the following:
Definition of Assets
Liquid assets are cash, bonds, debentures, stocks, certificates, the cash surrender value of a life insurance policy, equity in property, a beneficial interest in assets held in trust and available to the beneficiary and other property which can be readily converted into cash, but does not include exempt assets set out in Regulation 39.
The Tribunal's Decision
13The Tribunal first found Ms. Guy failed to declare the funds held in trust for her sons. It did not accept Ms. Guy's explanation that she thought she did not have to declare the funds because they did not belong to her and were not accessible without her brother's consent.
14The Tribunal next found Ms. Guy to have "assets in excess". While "assets" are not defined, the Tribunal looked at s. 39 of O. Reg. 134/98, which sets out assets to be excluded from consideration. Since a GIC held in trust was not exempt under the section, the Tribunal attributed the trust funds of $8,588.12 to the family unit.
15The Tribunal next found the trust funds to be "liquid" and "accessible". It apparently did so because, on a prior occasion, Ms. Guy and her brother agreed to advance $1,000 for dental work for one of the boys. The Tribunal appears to have concluded that because the trustees exercised their discretion earlier, that exercise made the balance of the funds liquid and accessible.
16The Tribunal then referred to the terms of the trust, noting the funds were to be used "for the benefit" of the sons, until they reached twenty-four years of age. The Tribunal then found "the appellant failed to pursue financial resources by not redeeming these funds available to the benefit unit". This implies Ms. Guy could have obtained the funds without her brother's consent. The decisions to cancel Ms. Guy's benefits and demand repayment were confirmed.
Analysis
17The standard of review for decisions of the Social Benefits Tribunal and its predecessor, the Social Assistance Review Board, is one of correctness. Director of the Ontario Disability Support Program v. Gallier, 2000 49294 (ON SCDC), [2000] O.J. No. 4541 (QL) (Ont. Div. Ct.) [summarized 101 A.C.W.S. (3d) 642]; Wedekind v. Ontario (Ministry of Community & Social Services) (1994), 1994 1659 (ON CA), 21 O.R. (3d) 289, 121 D.L.R. (4th) 1 (Ont. C.A.). (Application for leave to appeal to the Supreme Court of Canada dismissed June 15, 1995,123 D.L.R. (4th) viii.)
18The current legislation does not define "assets". It does set out a list of assets that are to be excluded from any calculation, such as a person's interest in the principal residence of a benefit unit. See s. 39 of O. Reg. 134/98 made pursuant to Ontario Works Act, 1997.
19The prior legislation provided (see O. Reg. 321/93, s. 1(1)):
"liquid assets" means cash, bonds, stocks, the cash surrender value of a life insurance policy, debentures, an interest in real property, a beneficial interest in assets held in trust and available to be used for maintenance, and any other assets that can be readily converted into cash, but does not include ...
20It is clear from the decision of the Tribunal reviewed above that the concepts of liquidity and accessibility continue to play an important role in the Tribunal's attempt to define assets. In my view, the Tribunal's approach is correct. To do otherwise would make a mockery of the legislation. If the assets are not liquid, or not accessible, or both, they should not be included as assets in any calculation of eligibility. If a testator were to leave income from a parcel of land and a savings account to A for life, then to B for life if living at A's death and then to C outright, it can be said that C has two assets. The real property is neither liquid nor accessible; the savings account, although liquid, is not accessible. To include either in C's assets for the purpose of calculating C's entitlement to social assistance would simply be wrong.
21The trust funds in this case are liquid; the Tribunal found them to be accessible. The question for the Court is whether the Tribunal was correct in so finding.
22A number of cases have dealt with the idea of "accessibility" under the old legislation.
23A useful point of departure is the decision of the Divisional Court in Ontario (Ministry of Community & Social Services, Income Maintenance Branch, Director) v. Powell, [1989] O.J. No. 2310 (QL) [reported 38 E.T.R. 205]. A testator left the residue of his estate to pay the net income to his son "for his support, maintenance, medical attention and assistance" with power to the trustee "to pay to or for the benefit of my son such part or parts or the whole of the said capital of the said residue of my estate as he in his uncontrolled discretion considers advisable until my son dies". Austin J., writing for the Court, is reported, as follows [at p. 207 E.T.R.]:
In my view it is not particularly helpful to consider whether the present case more closely resembles one or other decided cases. What is required is to look at the precise language used in the will in the case then before the tribunal.
24Austin J. went on to find the trustee was required to apply the net income of the estate for the support, maintenance, medical attention and assistance of the son of the estate, but that the capital of the fund was beyond the reach of the son. The case is significant for two reasons — it highlights the difference between a direction to use funds for "support" and "maintenance" on the one hand, and "for the benefit of" on the other and it directs the Court to look at the precise language used in the will rather than comparing the case in question with one or more decided cases.
25Without intending to ignore Austin J.'s direction in Powell, I find it helpful to refer briefly to some earlier decisions dealing with trust funds and their availability.
26In a decision dated June 12, 1978, the Social Assistance Review Board dealt with the matter of Wayne H. Goodwin, who was thirty-six years old. The decision as reported sets out that certain sums left to him in trust to be used at the absolute and uncontrolled discretion of the trustees "for the benefit of Mr. Wayne Goodwin". However, the language in the will itself directs the trustees "to use the income and such portion of the principal as they in their absolute and uncontrolled discretion shall deem advisable for the maintenance and support of my son Wayne Goodwin". The decision of the Social Assistance Review Board that the funds should be included in the assets of Mr. Goodwin was upheld by the Divisional Court in an endorsement made March 4, 1980 (decision of Social Assistance Review Board, Notice of Decision #267054, F.B.A. No. 23-032458).
27In Ozad v. Director of Income Maintenance Branch (unreported decision of the Divisional Court), December 21, 1998 (Court File No. 785/D London, Ont.), the Divisional Court reviewed a number of cases in considering the circumstances of Mr. Ozad. He was forty years old, single and developmentally disabled. His father left a fund of $25,000 to trustees who were to use their absolute discretion in advancing such part of the income or capital during Mr. Ozad's lifetime as the trustees deemed adequate for his support, maintenance and education. After reviewing the applicable cases, the Divisional Court concluded, as follows (p. 4):
In summary, a trust fund will become a "liquid asset" of its beneficiary if the words creating the fund oblige its trustees to consider the needs of the beneficiary for funds for maintenance unless there is a provision in the document creating the trust that in some manner removes the fund in whole or in part from the reach of the beneficiary.
28I turn to the terms of the trust and the intention of the testator. The two great-grandsons in question are not yet eighteen years old as of the date of this judgment. The will directs that each great-grandson's share should be held and kept invested by the trustees and the income and capital or so much thereof as the trustees in their absolute discretion consider necessary or advisable shall be used for the benefit of such great-grandson until he attains the age of twenty-four. As noted above, there is no gift over. It is trite law that each of the great-grandsons could call for their share of the capital remaining when they reach the age of eighteen years, the age of majority. Could they compel the trustees, through the agency of the Children's Lawyer, to advance to them moneys for their maintenance and support before they reach eighteen? I find they could not. The boys' uncle takes the position it was the intention of the testatrix that their share in the estate be retained until they reached the age of twenty-four. It is significant that both the income and the capital were to be accumulated subject to any advances made in the absolute and unfettered discretion of the trustees. This supports the construction placed on the terms of the will by the uncle. There is no suggestion that the uncle's understanding of the intention of the testatrix is improperly or capriciously held, nor is there any evidence of bad faith. In the words of Ozad, the fund is removed from the reach of the beneficiaries. The funds, though liquid, are not accessible or available to the boys, nor would a court order them to be made available for their maintenance and support.
29In the result, the trust funds held by the appellant as a co-trustee in the testamentary discretionary trust for the appellant's children shall be excluded as assets for the purposes of determining the eligibility of the appellant's benefit unit for assistance.
30As all parties have agreed, there shall be no order as to costs.
31Appeal allowed.