DIVISIONAL COURT FILE NO.: DC-95-00006969-000
DC-95-00006660-000
DATE: 20080221
ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
CUNNINGHAM A.C.J.S.C., FERRIER and CUMMING JJ.
IN THE ESTATE OF RUBY MAY REID, Deceased
B E T W E E N:
DONNA MARIE REID, ROBERT GEORGE REID, a minor by his litigation guardian John Doe No. 1, and RUBY MARIE REID, a minor by her litigation guardian John Doe No. 2
Julian W. Lipkowski, for the Respondent Donna Marie Reid
Susan J. Stamm, Litigation Guardian for Robert George Reid
Ronald Henry, for the Respondent Ruby Marie Reid
Applicants (Respondents on Appeal)
- and -
ROBERT JAMES REID
William C. Kort, for the Respondent Robert James Reid
Respondent(Appellant)
- and -
STEWART MOFFATT, in his capacity as Estate Trustee of the Estate of RUBY MAY REID, Deceased
Allan W. Kogon, for the Respondent Stewart Moffatt
Respondents(Appellants)
- and -
DONNA MARIE REID, in her capacity as Estate Trustee of the Estate of RUBY MAY REID, Deceased
Respondent
HEARD: Thursday, January 17, 2008
CUNNINGHAM, ACJSC.
[1] This is an appeal brought by the estate trustee, Stewart Moffatt, and the respondent Robert James Reid from the judgment of the Honourable Madam Justice Snowie, dated June 3, 2005.
[2] In her judgment, Snowie J. found that certain beneficiaries were "dependants" of the testatrix Ruby May Reid as defined in Part V of the Succession Law Reform Act. Snowie J. concluded that the testatrix had not adequately provided for these "dependants" in her will. Snowie J. directed the estate to administer the assets differently from the scheme set out in the will in order to provide the "dependant" beneficiaries additional benefits at the expense of the non-dependant beneficiary Robert James Reid.
[3] The appellant Robert James Reid and the respondent Donna Marie Reid are the two children of the deceased Ruby May Reid who died April 8, 2001 at 67 years of age.
[4] In her will made September 26, 1997, Ruby May Reid designated her husband Melvin Donald Reid to be her sole executor, but that in the event he should pre-decease her, her brother Stewart Moffatt and her daughter Donna Marie Reid were to be executors in his place. In fact, Melvyn Donald Reid did pre-decease Ruby May Reid, leaving Donna Marie Reid and Stewart Moffatt (a brother of the deceased) as estate trustees. In March 2002 Donna Reid was removed as estate trustee by order of the Superior Court of Justice.
[5] The will further provided that on the death of the survivor of Ruby May Reid and Melvyn Donald Reid the estate was to be divided equally between the two children, Donna Marie Reid and Robert James Reid. The only significant asset of the deceased's estate is her home located in Georgetown, Ontario, which at the time of trial had an appraised value of approximately $240,000.
[6] By the time of trial, Donna Marie Reid, aged 42, had two children, the other respondents in this appeal, namely Robert George Reid and Ruby Marie Reid, aged 16 and 21 years respectively. Donna Marie Reid and her two children commenced an application under the Succession Law Reform Act in March 2002.
[7] Snowie J. concluded that both Donna Marie Reid and her daughter Ruby Marie Reid were mentally challenged and that Robert George Reid, although a gifted child, had suffered behavioural difficulties. The learned trial judge concluded that a relationship of dependency had been created by the deceased Ruby May Reid who provided shelter and substantial financial support to Donna Marie Reid and her two children throughout their lives. The trial judge also found that despite their disabilities, Donna Marie Reid has been able to live independently in the community and raise her two children, in part because she had been able to remain in her mother's home and in a neighbourhood with which she was familiar.
[8] As early as 2000, Donna Marie Reid had begun receiving personal assistance from Community Living North Halton. In a letter to Donna Marie Reid and the late Ruby May Reid dated November 21, 2000, Community Living North Halton provided advice as to possible action which Donna Marie Reid might take or which might be taken on her behalf in the event of her mother pre-deceasing her. This letter set out a number of alternatives for Donna Marie Reid's consideration, the ultimate goal being to provide shelter for Donna Marie Reid and her children in such a way that her eligibility for ODSP (Ontario Disability Support Program) benefits would not be compromised. Despite efforts by her support worker, Donna Marie Reid essentially took no initiative in considering the alternatives presented by Community Living North Halton, except to stay in her mother's home.
[9] One of the choices open to Donna Marie Reid was to move to another house, but that was a choice she did not want to make. Concluding that "the very lives of the three applicants rotate around this house", the learned trial judge not only found the applicants (respondents on appeal) to be dependants but ordered that they could remain indefinitely in the home. In order to permit this situation to continue, the trial judge ordered the estate to remain open and that the estate should retain title to the subject property.
[10] Further, the trial judge ordered the estate trustee to "forthwith place a standard term mortgage of up to 50% of (the home's) fair market value," i.e., a mortgage of $120,000. She also ordered that from the proceeds of this mortgage, a number of the estate's liabilities should be paid, including tax arrears and penalties, executor fees, estate litigation fees, estate debts, Donna Marie Reid's credit card debt, the legal aid lien of Donna Marie Reid, legal fees for the administration of the estate, and any brokerage legal and normal fees and disbursements required to obtain the mortgage. The trial judge also ordered that the sum of $25,000 be paid to the appellant Robert James Reid, "in full and final settlement of his inheritance". The total of the estate's liabilities at that time approximated $80,000.
[11] On the death of Donna Marie Reid, the trial judge ordered that the house was to be sold at fair market value, and after the payment of any estate debts and other expenses, the residue of the proceeds of the sale was to be divided equally between Donna Marie Reid's children, Ruby Marie Reid and Robert George Reid.
[12] The estate trustee, in his appeal, takes the position that the instructions provided in the judgment of Snowie J. to the estate trustee as to how the estate was to be administered were not only imprudent, but impossible to implement. First, the judgment requires that the estate be kept in operation for an indefinite period of time and does not provide for the administration of the estate in a timely fashion. Despite the estate's obligation to keep estate costs to a minimum, this judgment, argues the estate trustee, requires that the estate incur costs for an indefinite period of time which will lessen the amount of assets available to the residual beneficiaries. The trustee argues that there was evidence at trial that Donna Marie Reid had indeed inquired in 2003 about securing a mortgage and that there was evidence she would qualify.
[13] Most importantly, there was no evidence presented at trial that the estate was capable of putting a mortgage on the subject property. Indeed the estate is unable to obtain a mortgage from any bank because it is not an owner occupant. Moreover, the estate does not have sufficient income to permit it to make mortgage payments. To be more precise, the estate trustee argues, the income of the estate is $395 per month. The cost of the required mortgage for $120,000 at 6% amortized over 25 years results in a monthly payment of $766. In addition to that, there would be $400 per month for taxes and insurance and approximately $200 per month for utilities. The estate simply cannot fulfill the requirements of the trial judge.
[14] At the beginning of the hearing before us, counsel for Robert James Reid conceded the issue of dependency as found by the trial judge within the meaning of the Succession Law Reform Act, s. 57. Accordingly, that leaves essentially two issues to be determined on this appeal: given the dependency of Donna Marie Reid and her two children, did the will make adequate provision for them? Secondly, did the trial judge err in the manner in which she ordered the estate of the deceased Ruby May Reid to be administered? For the reasons that follow, we conclude that the will did not adequately provide for the three dependants and that the manner in which Snowie J. ordered the estate to be administered was in error.
[15] To begin with, the estate trustee Stewart Moffatt is now 71 years of age. Donna Marie Reid in all likelihood will survive the estate trustee which in and of itself has the potential of making the implementation of the trial judge's order rather problematic. Given the onerous requirements placed upon the trustee by the judgment, we perceive considerable difficulty in finding a replacement trustee.
[16] We agree with the trial judge that given the circumstances in which Donna Marie Reid and her two children have found themselves, greater provision ought to have been made for them by the testatrix. As previously stated, both Donna Marie Reid and her daughter Ruby May Reid are significantly intellectually challenged. As the trial judge found, there was evidence upon which she correctly concluded that the deceased would have cared for her daughter and her two children for all of their lives had she lived, as the trial judge noted in her reasons at para. 20,
I find that the testator demonstrated a subtle intention to treat each of the two grandchildren as a child of the family and that the testator was providing support directly and indirectly for the three applicants throughout their lives and, more particularly, immediately before her death. The following facts are undisputed:
The only home the two grandchildren have ever known is that of the testator.
The testator shared her home and all that she had in order to support her daughter and grandchildren throughout their lives. The testator provided housing, transportation, food, nurturing, clothing, heat, hydro, moral and physical support to the three applicants throughout their lives and until her death.
The testator had a very active daily role with her two grandchildren… from the time of their birth until her death. The testator was directly involved in the education, health, welfare, upbringing and discipline of her two grandchildren…
[17] At para. 21, the trial judge stated,
The actual support provided by the testator need not be direct financial support. By providing the most basic of human needs, for example, "shelter", this testator provided substantial financial support to the three applicants all of their lives. The relationship of dependency created due to the above course of conduct by the testator has established to my satisfaction a subtle intention by the testator to provide support for all three applicants.
[18] Given these findings by the trial judge with which we would not interfere, we cannot come to any other conclusion but that the equal distribution of the estate proceeds between Donna Marie Reid and her brother was insufficient to provide for the needs of these dependants. Accordingly, the trial judge was correct not only in her finding of dependency (which is now conceded for the purposes of the appeal), but also in attempting to fashion an alternative scheme.
[19] Where the learned trial judge fell into error was the manner in which she ordered the estate to be administered. We also agree with the appellant Robert James Reid that the trial judge fell into error by ordering that the residue of the estate pass to Ruby May Reid and Robert James Reid without having any evidence before her as to what their needs might be at some undefined time in the future. Nor was there any evidence before the trial judge that either of these two applicants would still be dependant within the meaning of the Succession Law Reform Act at this undefined future date, the date of Donna Marie Reid's death.
[20] Because the judge at first instance was not only making findings of fact but also dealing with questions of mixed fact and law, the standard of review is one of palpable and overriding error. Accordingly, the decision should not be overturned unless we so find (see Housen v. Nikolaisen 2002 SCC 33, [2002] 2 S.C.R. 235 S.C.C.). The learned trial judge, in making her decision, was exercising discretion, and we take no issue with her conclusion that because of the finding of dependency the will did not make adequate provision for Donna Marie Reid and her two children.
[21] It is entirely with respect to the remedy fashioned that we take issue. Simply put, the learned trial judge's remedy was impossible to achieve and accordingly we must for a number of reasons, not the least of which is the expense of this litigation, replace her scheme with one that is workable. We agree with the estate trustee that the mortgage requirement placed upon him is not only unrealistic, it is impossible to achieve. Accordingly, we order the following:
That title to the subject property be transferred forthwith to Donna Marie Reid;
That Donna Marie Reid immediately apply for and obtain a mortgage on the subject property, in an amount sufficient to cover the amounts referred to in #3 below (i.e. a mortgage of about $85,000);
That from the proceeds of this mortgage, the following debts are to be paid, payments which we fix to reimburse in full any amounts claimed:
a) tax arrears (estimated to be $7,500);
b) executor's fees, fixed at $7,500, inclusive of GST and all disbursements;
c) estate litigation fees and estate administration fees, fixed at $20,000, inclusive of GST and all disbursements;
d) estate debts, estimated to be $12,000;
e) legal aid lien, estimated at $10,000, inclusive of GST and all disbursements;
f) any associated mortgage costs, approximately $2,500.
In addition, Robert James Reid will be paid $25,000.
TOTAL: $84,500
Donna Marie Reid will be responsible for all costs in maintaining the subject property, including mortgage payments and shall not encumber the property further without leave of the court.
The estate shall be wound up forthwith at which time the trusteeship shall terminate upon stipulations #1, #2 and #3 being done. If all parties consent, passing of accounts is dispensed with.
Donna Marie Reid, and her children if necessary, will be permitted to reside in the subject premises until June 1, 2018, at which time the property will be sold and the proceeds distributed equally between Donna Marie Reid and her brother Robert James Reid, provided however, the share of Robert James Reid will be reduced by the $25,000 which he is receiving pursuant to #3(f) above..
If the parties need further directions arising out of this order, they are referred to Snowie J.
[22] As to the matter of costs of the appeal, we will require each party to provide written submissions of no longer than two pages each and which will be submitted by no later than 10 days after the release of this decision.
Cunningham A.C.J.S.C.
Ferrier J.
Cumming J.
Released: February 21, 2008
DIVISIONAL COURT FILE NO.: DC-95-00006969-000
DC-95-00006660-000
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
IN THE ESTATE OF RUBY MAY REID, Deceased
CUNNINGHAM A.C.J.S.C., FERRIER and CUMMING JJ.
B E T W E E N:
DONNA MARIE REID, et al.
Applicants
- and –
ROBERT JAMES REID
Respondent
REASONS FOR JUDGMENT
Released: February 21, 2008