COURT OF APPEAL FOR ONTARIO

DATE: 20041130

DOCKET: C41489

IN THE MATTER OF THE ESTATE OF SYDNEY G. JACKSON deceased, late of the City of Toronto

RE:

MARGARET IRENE JACKSON, ESTATE TRUSTEE OF THE ESTATE OF SYDNEY G. JACKSON AND IN HER PERSONAL CAPACITY (Applicant/Respondent) – and – DONALD SYDNEY JACKSON, SUZANNE ARLENE LOBLAW, ESTATE TRUSTEES OF THE ESTATE OF SYDNEY G. JACKSON (Respondents/Appellants)

BEFORE: SHARPE, GILLESE and ARMSTRONG JJ.A.

COUNSEL:

Michael K. Housley for the appellants

Heidi Suter for the respondent

HEARD & RELEASED ORALLY: November 25, 2004

On appeal from order of Justice Susan E. Greer of the Superior Court of Justice dated February 6, 2004.

E N D O R S E M E N T

[1] In our view, the application judge correctly interpreted the provisions of Dr. Jackson’s will. In the words of the will, “the primary responsibility of the estate is to maintain my said wife [Margaret Jackson] in the manner to which she has become accustomed during our marriage”.

[2] We agree that pursuant to para. III (d)(vi) Margaret Jackson could have required the estate trustees to replace the matrimonial home, when it was sold, with another residence (owned by the estate) and that all costs associated with maintaining the residence would have had to have been borne by the estate.

[3] Paragraph. III (d)(vii) makes Margaret Jackson the income beneficiary and gives the estate trustees the power to encroach on capital to the extent that the trustees felt was “necessary or “advisable”.

[4] In light of these provisions, we see no merit in the appellants’ position that Ms. Jackson must exhaust her own modest income in order to meet her equally modest expenses before resorting to capital. This is especially so in the face of the appellants’ candid admission that Ms. Jackson was entitled to all of the annual income coupled with the finding of the application judge that the estate investments were not made in even-handed manner but instead in a way that favoured the capital beneficiaries.

[5] In any event, the application judge did not require the estate to pay all of Ms. Jackson’s actual living expenses. She found that Ms. Jackson’s living expenses were between $43,000 and $44,000 annually but held that the estate only ought to have paid her $32,000 per year. Having said that, the application judge correctly notes that Ms. Jackson is not precluded from asking the estate trustees for further encroachments on capital.

[6] The order is properly retroactive because Ms. Jackson’s entitlement arose as at the date of death, not as at the date of application.

[7] There was no obligation on the application judge to include the income tax paid when determining the amount that the estate paid to Ms. Jackson as the application judge was looking at the amounts available to pay Ms. Jackson’s living expenses. As a consequence, we see no error in the calculation of the income paid to Ms. Jackson in para. 28 of the reasons.

[8] The record amply supports the application judge’s finding that the estate trustees failed to keep an even hand between the income and capital beneficiaries and fell below the standard of care required by trustees in investment matters. Thus, there is no reason to interfere with the order removing Donald Sydney Jackson and Suzanne Arlene Loblaw as estate trustees. Indeed, in light of those findings, the applicant judge was obliged to order that they be replaced.

[9] Accordingly, the appeal is dismissed with costs to the respondent fixed in the amount of $15,000, inclusive of GST and disbursements, payable from the capital of the estate. We award no costs to the appellants. We are cognisant that costs in estate litigation are generally payable by the estate to both parties. However, in this case the appellant did not adopt the neutral stance associated with the role of counsel to the estate trustees. Rather, he advocated forcefully on behalf of two trustees as against the third trustee. Moreover, his position was in favour of the capital beneficiaries and in opposition to that of the income beneficiary. In these circumstances, in our view the usual rule of awarding costs on appeal that follow the event are more appropriate.

“Robert J. Sharpe J.A.”

“E. E. Gillese J.A.”

“Robert P. Armstrong J.A.”