Court File and Parties
COURT FILE NO.: 18-65143 DATE: 2018-10-29 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
VERNA REID, Estate Trustee of the ESTATE OF STANLEY MOORE Applicant
– and –
KENNETH MOORE, KEVIN MOORE, STEVEN REID, SHAWN REID and NANCY McDONAGH Respondents
Counsel: Brad Wiseman, for the Applicant Romesh Hettiarachchi, for the Respondents Kenneth Moore and Kevin Moore
HEARD: August 16, 2018
The Honourable Mr. Justice D.A. Broad
REASONS FOR JUDGMENT
Background
[1] Stanley Moore (the “testator”) died on June 15, 2017 with a Will dated October 17, 1979 (the “Will”). The applicant Verna Reid is the testator’s sister and also the Estate Trustee of his Estate (the “Estate”). The testator’s Estate comprises approximately $1,560,000.
[2] The testator never married and left no surviving issue.
[3] The beneficiaries of the Estate are as follows:
(a) Verna Reid (“Verna”), the testator’s sister;
(b) Steven Reid, Shawn Reid and Nancy McDonagh, nephews and niece of the testator, being the children of Verna Reid; and
(c) Kenneth Moore and Kevin Moore, nephews of the testator, being the children of the testator’s late brother John Moore (“John”), who predeceased the testator on January 25, 2014.
[4] Verna, as Estate Trustee of the Estate, has brought an Application pursuant to, inter alia, rule 14.05(3)(d) seeking a determination of the rights of the beneficiaries which depend upon an interpretation of the residual clauses in the Will. All of the beneficiaries were named as respondents to the Application. Steven Reid, Shawn Reid and Nancy McDonagh did not enter appearances to the Application and did not participate in the hearing. Kenneth Moore and Kevin Moore have responded to the Application and they will be hereafter referred to as “the respondents” in these Reasons.
[5] The need for an interpretation of the residual clauses of the Will flows from the fact that John predeceased the testator. The interpretation by the court will determine the manner in which John’s “share” of the residue of the Estate, consisting of approximately $390,000, should be distributed. Counsel for the Estate Trustee, and for the responding beneficiaries, agree that the residual clauses in the Will appear to contain contradictions and inconsistencies and are capable of differing interpretations.
[6] The Will was prepared by the law office of Hinton & Johnson in Dundas, Ontario, a law firm which has since dissolved. Mr. Hinton’s Will files devolved initially to Mr. Johnson and upon Mr. Johnson’s retirement, files were divided between two other lawyers in Dundas, and upon the retirement of one of them, the files in that lawyer’s possession were divided between two other lawyers.
[7] The Estate Trustee has consulted with three of the lawyers who received files of Mr. Hinton and who remain in practice and it appears there is no will file in relation to the Will. Indications are that any files of Hinton & Johnson prior to 1993 have been destroyed. Accordingly, no admissible extrinsic evidence currently exists which may assist the court with the interpretation of the Will and/or the testator’s intentions.
Residual Clauses of the Will
[8] The residual clauses in question are at paragraphs 5 and 6 of the Will and read as follows:
“5. TO DIVIDE the rest and residue of my estate, which shall include the proceeds obtained from the sale of my Home Property, being Part of the South half of the North Half of Lot 5, and Part of the North half of Lot 6, Concession 6, in the Township of Flamborough, in the Regional Municipality of Hamilton-Wentworth, in two equal shares and to distribute said shares as follows:
(a) TO GIVE ONE such share to my Sister, VERNA REID, and my Brother, JOHN FREDERICK REID, for their own use absolutely.
(b) TO DISTRIBUTE the remaining share among my surviving nieces and nephews, per stirpes.
- IN THE EVENT if my aforementioned Sister or Brother, VERNA REID and JOHN FREDERICK REID, or any of my Nieces or Nephews shall predecease me, the share to which his, her or they would have been entitled, shall go to enlarge the shares of those surviving, per stirpes.”
[9] The Estate Trustee has identified certain questions which arise from a reading of the residual clauses in the context of John having predeceased the testator, including the following:
(a) What import is given to the division of the Estate, at first instance, in “two shares”?
(b) What import is given to the gift to Verna and John being “absolute”?
(c) What is meant by the phrase “enlarge the shares of those surviving” and who are “those surviving”?
(i) All of those beneficiaries surviving the testator (i.e. Verna and all five nephews/niece)?
(ii) Only those surviving the predeceased beneficiary, in this case John (i.e. Kenneth and Kevin)?
(iii) Only those “shareholders” surviving the predeceased beneficiary’s “share” (i.e. Verna)?
(d) What meaning, if any, does “per stirpes” have in paragraph 6 of the Will?
Guiding Principles Governing the Interpretation of Wills
[10] The parties do not disagree with respect to the proper approach to be taken by the court to the interpretation of a Will. These principles were usefully summarized by the Court of Appeal in Dice v. Dice Estate, 2012 ONCA 468 at paras. 36-38:
(i) the court must determine the intention of the testator when he/she made his/her will;
(ii) the court is to give effect to the testator’s intention as ascertained from the language that was used, having regard to the Will as a whole;
(iii) where the testator’s intention cannot be ascertained from the plain meaning of the language that was used, the court may consider the surrounding circumstances known to the testator when he/she made his/her will - the so-called “arm-chair rule”;
(iv) under the “arm-chair” rule, the court sits in the place of the testator, assumes the same knowledge the testator had of the extent of his/her assets, the size and makeup of his/her family, and his/her relationship to its members, so long as these things can be ascertained from the evidence presented. The purpose of this exercise is to put the court in, as close as possible to, the same position of the testator when making his/her last will and testament.
[11] Simmons, J.A., writing for the Court in Dice at para. 59, relying on Re: Burke, [1959] O.J. No. 706 (C.A.), confirmed that the construction by the court of other documents and decisions in other cases respecting the intention of other testators provides no assistance to the Court in forming an opinion as to the intention of the testator in the particular case under consideration. Other cases are helpful only in so far as they set forth or explain any applicable rule of construction or principle of law.
Estate Trustee’s Position
[12] The Estate Trustee posits four possible interpretations of the residual clauses of the testator’s Will to deal with the disposition of John’s “share” of the Estate, as follows:
A. the phrase “per stirpes” is given its traditional meaning to pass down through the generations by the “stirps” and the words “enlarge the shares of those surviving” are attributed only to those surviving the deceased beneficiary (John), not to those surviving the testator, such that John’s absolute entitlement to 25% of the residue is distributed to his children, Kevin and Kenneth;
B. the words “enlarge the share of those surviving” are given effect and attributed to the survivors of the testator, not the survivors of the predeceased beneficiary (John), and the phrase “per stirpes” is effectively ignored, such that John’s entitlement to 25% of the residue is distributed to all surviving beneficiaries, being Verna and the five nephews and niece, in equal shares;
C. the words “enlarge the share of those surviving” are given effect and the phrase “per stirpes” is effectively ignored, such that John’s entitlement to 25% of the residue is distributed among all surviving beneficiaries (being Verna and the nephews and niece) in proportion to their “shares” of the residue stipulated in the Will. This has the effect of an unequal distribution of John’s 25% interest in the residue. On this basis, as Verna’s interest is 25% and nephews and niece each have a 10% interest in the residue of the Estate (50% being divided between 5 nephews/niece), in dividing John’s 25% interest of the residue, Verna would receive 2.5 times what each of the niece and nephews receive; or
D. the words “enlarge the share of those surviving” are given effect, the phrase “per stirpes” is not necessarily ignored (but does not come to fruition), and the word “share” is considered of import, such that, as the surviving beneficiary of the “share” to which the testator’s siblings are entitled (the 50% “share” being divided between John and Verna absolutely), Verna, as the sole surviving sibling, is solely entitled to John’s share.
[13] The result of the implementation of each of the four interpretations to the beneficiaries, expressed as percentages of the residue of the Estate, would be as follows:
| Beneficiary | Interpretation A | Interpretation B | Interpretation C | Interpretation D |
|---|---|---|---|---|
| Verna Reid | 25% | 29.166% | 33.35% | 50% |
| Steven Reid | 10% | 14.166% | 13.33% | 10% |
| Shawn Reid | 10% | 14.166% | 13.33% | 10% |
| Nancy McDonagh | 10% | 14.166% | 13.33% | 10% |
| Total “Reid Branch” | 55% | 71.664% | 73.34% | 80% |
| Kevin Moore | 22.5% | 14.166% | 13.33% | 10% |
| Kenneth Moore | 22.5% | 14.166% | 13.33% | 10% |
| Total “Moore Branch” | 45% | 28.33% | 26.66% | 20% |
[14] The Estate Trustee did not, in her Factum, advance one interpretation over the others, however, in oral submissions, her counsel advocated in favour of interpretation D on the basis that the testator divided the residue of his estate in two equal shares, one to his siblings and one to his nephews and niece, clearly distinguishing between those two classes, and stipulated that the share to his siblings would go to them “absolutely.” This interpretation attributes the phrase “those surviving” to mean Verna as “surviving” John with reference to gift of 50% of the residue given to the two of them “absolutely.”
[15] The Estate Trustee submits that interpretation D does not offend any other language in the Will and the term “per stirpes” does not come into play. Moreover, she argues, on the authority of Lau v. Mak Estate, [2004] O.J. No. 3354 (S.C.J.), the testator’s use of the phrase “per stirpes” may be ignored, as it was used by him in a different sense than the established meaning to be attributed to it. She argues that the gift to the testator’s “surviving nieces and nephews, per stirpes” is inherently contradictory as the class “nieces and nephews” implies a gift only to descendants of the first degree whereas “per stirpes” implies that a gift will not necessarily be restricted to descendants of the first degree.
[16] The Estate Trustee submits that interpretations B and C each distribute John’s interest in the residue to all of the beneficiaries surviving the testator, under interpretation B equally, and under interpretation C in proportion to each of their interest in the residue. Under each interpretation, the phrase “per stirpes” is effectively ignored for the reason stated above. Interpretation C emphasises the word “shares” in the phrase “to enlarge the shares of those surviving” by maintaining the relative percentages of the “shares” of each of the beneficiaries on the distribution of John’s “share” among them.
[17] The Estate Trustee submits that interpretation A attributes the phrase “those surviving’ to John rather than to the testator. Although interpretation A gives traditional effect to the term “per stirpes”, she argues that it ascribes little or no importance to the fact that the Will divides the residue into two shares and that the gift of the share to his siblings is “absolute.”
Respondents’ Position
[18] The respondents submit that the provision of four interpretations of the residual clauses for the court to consider and choose from is inconsistent with the proper approach to interpreting a will, as it amounts to a request to engage in “speculation about the nature, and extent, of the misconception and then to speculate further as to what the Testator’s intention may have been” (citing Lau v. Mak at para. 11).
[19] The respondents argue that interpretations C and D are not reasonable constructions of the residual clauses as they are grounded on arguments based on Lau v. Mak that, where the drafter employs a legal term such as “per stirpes” in a manner inconsistent with its established meaning, the court should hold that the words were inserted by inadvertence or a misunderstanding of their meaning and effect, and that no intelligible meaning should be attributed to the term. The respondents point out that the Court of Appeal in Dice highlighted the dangers of relying on Lau v. Mak as laying down a rigid rule on the meaning of the words “per stirpes”, but rather confirmed that the rules of construction require the court to strive to ascertain the intention of the testator in each particular case (see Dice at para. 59).
[20] The respondents submit that the testator’s intentions are discernible from a plain reading of the Will as a whole. The testator divided the residue of his Estate into equal shares, one share to his siblings and one share to his surviving nieces and nephews. Respondents point out that the inclusion by the testator of paragraph 6 was intentional, to apply in the event that a beneficiary predeceased him. Pursuant to paragraph 6, the share of the residue to which the deceased beneficiary would have been entitled would go to enlarge the shares of “those surviving” per stirpes.
[21] The respondents say that interpretation D, favoured by the Estate Trustee, emphasises the use of the word “absolutely” in paragraph 5(a) but ignores the import of paragraph 6. The submission of the Estate Trustee that paragraph 6 should be read, such that, if one of the testator’s siblings predeceases, his or her share should go to the other sibling, is inconsistent with the balance of paragraph 6.
[22] The respondents submit that paragraph 6 must be given some import, a position which is consistent with the principles set forth in R. v. Lachowski (1976), 15 O.R. (2d) 281 (H.C.J.) at paras. 13 and 14, that firstly, an absolute gift may be cut down by a later provision in a will, provided a clear intention to do so is shown, and secondly, that if two parts of a will are inconsistent, the latter prima facie prevails.
[23] Alternatively, the respondents submit that if the court determines that the intention of the testator is not clear on a reading of the words used in his Will, utilization of the “arm-chair” rule would favour interpretation A, as posited by the Estate Trustee. It is evident that there were two roots in the testator’s family that he wished to treat equally. He gave one half share to be shared equally by each “root”, being his two siblings, and one half share to be divided equally among the sub-branches, being the children of his two siblings. In the event that one of the “roots” (siblings) should predecease him, an intention can be ascribed to the testator that the share of the residue of the deceased “root” would go to the deceased sibling’s children, in order to treat the two families equally.
Analysis
[24] At the heart of the interpretation issue is the meaning to be given to the words “those surviving”, in paragraph 6 of the Will. The following possible meanings of this phrase were identified in submissions:
- those beneficiaries surviving the testator;
- those beneficiaries surviving the deceased beneficiary;
- the surviving issue of the deceased beneficiary; and
- the survivors of the two classes referenced in paragraph 5 (i.e. if Verna or John should die, then to the other and if a nephew or niece should die, to the surviving nephews and nieces).
[25] In my view it is not possible to ascertain the testator’s intentions with respect to the distribution of John’s “share” in the residue, in the event of him predeceasing the testator, from the language he used in his Will. It is therefore necessary to consider the surrounding circumstances known to the testator when he made his Will under the “arm-chair rule” as described in the jurisprudence.
[26] To recap, the testator never married and had no issue. His Will demonstrated that, leaving no spouse or issue of his own, he had an intention to benefit the remaining two branches of his immediate family, that of his sister Verna and his brother John. In my view, the wording of the residual clauses shows that the testator had the following intentions:
(a) he wished to benefit his siblings equally with one half of the residue of his estate;
(b) he wished to benefit the second generation of the two branches of the family (his niece and nephews) immediately, with the other one half of the residue of his estate, rather than have them await receipt of a possible future indirect benefit through their parents’ estates or by inter vivos gifts from them;
(c) he did not wish to directly benefit subsequent generations of the two branches, in the event of one or more of his nephews and niece predeceasing him;
(d) he wished to immediately benefit the individual members of the second generation of the two branches in equal shares, notwithstanding the fact that Verna had three children and John had two; and
(e) allowing for the difference in the number of nieces and nephews in the two branches of the family, he wished the total benefit to be given to each of the two branches to be roughly equal.
[27] In my view, had the testator wished, in the event of one of his siblings predeceasing him, to have the share of the predeceased sibling go to the survivor sibling he could have easily done so in paragraph 5(a). Instead of doing this, he reserved the distribution of the share of any predeceased beneficiary or beneficiaries to be dealt with in paragraph 6. Thus, if both Verna and John predeceased him, the gift of one half of the residue to them would not lapse entirely, but the share of each would be given to “those surviving, per stirpes.”
[28] In my view, in keeping with the Court of Appeal’s observation in Dice at para. 86, I find that the testator intended that the words “per stirpes” should have some meaning, and if that were not the case, he would have omitted them. Although the phrase “per stirpes” may not have been utilized in the Will in the strictly correct legal sense, the testator clearly intended the phrase “per stirpes” to qualify the immediately preceding phrase “those surviving” to make it clear that he did not intend “those surviving” to include all of the surviving beneficiaries, but rather the surviving beneficiaries belonging to the branch of the family to which the deceased beneficiary belonged. Although the testator utilized the phrase “for their own use absolutely” in paragraph 5(a), I find that the “absolute” nature of the gift to Verna and John was cut down by the clear intention expressed by the testator in paragraph 6 to distribute the share of a predeceased sibling to “those surviving, per stirpes”. In my view, it would be an error to give prominence to the word “absolutely” in paragraph 5(a), while giving no import to the phrase “per stirpes” in paragraph 6.
[29] Acceptance of interpretation A, providing for John’s share to pass to his children, Kevin and Kenneth, permits the testator’s intention that the total benefit to each branch of the family remain roughly equivalent to be fulfilled. This would also be the case if one or more of the testator’s niece or nephews should have predeceased him.
Disposition
[30] For the foregoing reasons, it is ordered and declared that paragraphs 5 and 6 of the Last Will and Testament of Stanley Edgar Moore shall be interpreted such that the share of John Frederick Moore, who predeceased the testator, shall pass to the two children of John Frederick Moore, namely Kenneth Moore and Kevin Moore, in equal shares.
[31] In accordance with the agreement of counsel, the costs of the application to each of the applicant Estate Trustee and the respondents Kenneth Moore and Kevin Moore shall be paid by the Estate of Stanley Edgar Moore. If the parties are unable to agree on the amount of costs to be paid from the Estate, they may request an appointment to settle the quantum of costs, through the Trial Coordinator at Hamilton.
D.A. Broad