COURT FILE NO.: CV-19-0184-000 DATE: 2019-06-20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANNE WINKWORTH Applicant
D. Shanks, for the Applicant
- and -
ROBERT MURRAY, JAMES MURRAY and the ESTATE OF EVELYN ROSE MURRAY Respondents
M. Holervich, for the Respondent Robert Murray D. Humphreys, for the Respondent James Murray
HEARD: June 13, 2019, at Thunder Bay, Ontario
Mr. Justice D.C. Shaw
Decision On Motion
1This is a motion for directions.
2Evelyn Murray executed a will that names her children, the applicant, Anne Winkworth, and the respondent, Robert Murray as estate trustees. Anne, Robert and their brother, James Murray, are the beneficiaries under the will.
3Evelyn died on August 27, 2014.
4The value of the estate for probate was approximately $834,000. The last significant asset of the estate that has not been dealt with is a home at 269 Ray Court in Thunder Bay.
5The only other remaining estate asset appears to be an account at the Royal Bank, which as of March 19, 2019 had a balance of $2,674.50.
6Evelyn’s will made certain provisions for the home, including the following:
After the period of two years from the date of my death, or sooner, if any of my said children shall have survived me and if he or she wishes, he or she shall have the right to purchase from my estate my said property at fair market value, less ten (10%) per cent of the fair market value.
7Robert and James, together, wish to buy the home. There has been disagreement between them and Anne as to the terms of sale.
8On May 16, 2019, Smith J. made the following order:
On Consent, Order to issue as follows:
- Fair market value of the subject property for the purpose of any sale to the children of Evelyn be established at $493,000.00 in accordance with the June 15, 2017 valuation.
- Any one of the children of Evelyn can make an offer to purchase the property for Fair Market Value, less 10%, within twenty-one (21) days of the Court’s Order, and the Trustees shall respond within 7 days of receipt of any offer and thereafter any child of Evelyn may, if no offer has been accepted, then any of the parties may within 14 days return before the Court for further direction, on any of these applications. (CV-18-0546-00 and the cross application brought by James Murray, the Respondent in CV-19-0184-00) failing which the property shall be listed for sale with Andrew Lawrence of Royal Lepage Realty in Thunder Bay for a price as recommended by Andrew Lawrence or as otherwise directed by the Court.
- Any offers to purchase the property will be forwarded to Robert and James by Anne.
- The estate trustees will have the authority to accept or reject any offer which is received.
- All sale proceeds, less reasonable expenses, will be deposited into the estate bank account, namely account number 03444-54021076 at the Royal Bank of Canada 290 Memorial Avenue branch in Thunder Bay, unless otherwise ordered by the Court.
- Costs of today reserved to the Justice hearing any of the applications.
9After the order was made, Robert and James submitted an offer in the amount of $147,900, which represented one third of the price established by the order, namely, $493,000, less 10 per cent. That offer was rejected by Anne.
10Robert and James submitted a second offer, in the amount of $493,000, less 10 per cent, with a deposit of $25,000, and a balance payable of $122,900, for a total of $147,900. The figure of $147,900, again, represents one third of the established price of $493,000, less 10 per cent. This offer was rejected by Anne.
11Robert and James take the position that on the purchase of the home they should get credit for each of their one third beneficial interests in the home.
12They do not want to pay the estate the full $493,000, less 10 per cent, and then receive their one third shares on the final distribution of the estate.
13Anne takes the position that if the sale of the home was carried out in accordance with either of the two offers made by Robert and James, and she received her one third share of the sale proceeds of $147,900, there would be no monies left in the estate to pay estate expenses.
14Anne submits that if Robert and James want to buy the home, they should pay the price established by the order of Smith J., namely $493,000, less 10 per cent. That money would be paid to the estate and used to pay the estate’s expenses, following which the balance remaining would be distributed, with each of the three beneficiaries to receive one third.
15Anne cites the following as examples of costs that the estate will incur:
- Executor’s fees of five per cent on an estate valued for probate at $834,000, namely $41,700;
- fees for acting under Evelyn’s power of attorney at three per cent;
- Capital gains on the sale of the home, which at the date of death was valued at $316,500, resulting in a gain of $176,500, half of which would be taxed at 50 per cent, namely $44,125.;
- Legal fees to complete the sale of the home;
- Accounting fees;
- Costs of applications brought by Robert for an accounting and for removal of Anne as an estate trustee.
16Anne estimates that the estate may have future costs of approximately $128,000.
17Anne submits that it is not reasonable to distribute the last asset of the estate and then require the estate to go back to the beneficiaries to recover costs that the estate has incurred after distribution.
18Robert and James submit that it is common practice when a beneficiary wishes to purchase property of a deceased to utilize that beneficiary’s share of the estate toward the purchase price so that the beneficiary is not required to pay the full purchase price on closing and then wait for his beneficial share to be paid back.
19They submit that there is an absence of details from Anne to back up her claim that the estate will have future costs.
20They submit that Anne has failed to carry out her duties as an estate trustee on a timely basis and that her delay is responsible for any capital gains tax.
21They submit that no weight should be given to Anne’s assertions that there may be costs to the estate in the proceeding to remove her as estate trustee.
22They submit that there is no money in the estate because of Anne’s own actions.
Discussion
23In my view, if Robert and James want to purchase the home, they must pay the fair market value of $493,000, less 10 per cent, namely, $443,700, in full, to the estate. On the final distribution of the estate, after all proper estate costs have been paid, each of Anne, Robert and James will be entitled to one third of the residue in accordance with the terms of the will.
24Evelyn’s will provides that any one of her three children “…shall have the right to purchase from my estate my said property at fair market value less ten (10%) per cent of the fair market value.”
25A direction that Robert and James must pay this purchase price, as established by the order of May 16, 2019, in full, to the estate, is consistent with the wording of the will.
26The fact that other estates, in other situations, may have made other arrangements is of no consequence in deciding this case.
27I do not need to agree with Anne’s estimate of $128,000, as future costs to the estate, to reasonably conclude that there are potential costs that the estate may incur.
28Anne may be entitled to fees for administering the estate. She may be entitled to fees for acting as an attorney under Evelyn’s power of attorney. She may be entitled to costs arising out of the applications which have been brought for an accounting and to remove her as an estate trustee. There may be capital gains tax payable on the sale of the home. There may be legal fees and accounting fees to complete the administration of the estate. None of these potential costs can be dismissed out of hand at this stage. They are not so remote as to be merely speculative.
29In my opinion, it would be wrong to order the estate to deplete its only asset and then be faced with trying to recover monies from the beneficiaries to meet costs that the estate was legally obligated to pay.
30Accordingly, I direct that if Robert and James want to purchase the home, they shall pay the purchase price of $443,700, in full, to the estate. They shall not be entitled to apply their nominal one third interest in the home towards the purchase price.
31If the parties are unable to agree on costs, the parties shall deliver written submissions, not to exceed three pages, within 20 days.
“original signed by”
The Honourable Justice D. C. Shaw
Released: June 20, 2019