Court File and Parties

COURT FILE NO.: CV-22-00683572-00ES DATE: 20230616 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: THE BANK OF NOVA SCOTIA TRUST COMPANY, in its capacity as ESTATE TRUSTEE OF THE ESTATE OF HAROLD MCGILL JACKSON, Applicant

AND:

KATHRYN BAKER, BETTY BURNETT, ROBERT ALAN JACKSON, ROSALIE ANITA GRIMES, and THE PUBLIC GUARDIAN AND TRUSTEE, Respondents

BEFORE: Dietrich J.

COUNSEL: Adam Giancola, for the Applicant, The Bank of Nova Scotia Trust Company Heather Hogan, for the Respondent, The Public Guardian and Trustee Rosalie Anita Jackson (Grimes), Self-represented

HEARD: June 1, 2023

Endorsement

Overview

[1] Col. Harold McGill Jackson (the “Testator”) died on January 22, 1961. During his lifetime he had taken a keen interest in Canadian history, especially military history. In his Last Will and Testament, executed on February 10, 1957 (the “Will”), he included certain life interests, followed by a charitable remainder trust (the “Trust”) of the residue of his estate (the “Estate”). The capital of the charitable remainder trust would be invested in perpetuity and the income used for charitable purposes. The Testator directed that the Trust would fund the publication of his own unpublished manuscripts, if any, as well as Canadian history books with a bias toward military history. This charitable purpose would be carried out following the deaths of the Testator’s spouse, his children, and certain of his grandchildren, who, in succession, would become entitled to the income generated from the Trust during their respective lifetimes, except for his spouse whose income entitlement would end on the earlier of her death or remarriage.

[2] Unfortunately, the language of the Will is not clear and requires this court to interpret it. The lack of clarity has led to a disagreement among the Testator’s grandchildren as to the identity of the current income beneficiaries, the manner in which the Trust is to be distributed, and whether the Trust may be wound up.

[3] The Trustee of the Trust, The Bank of Nova Scotia Trust Company (“Scotiatrust”), brings this application for the advice and direction of the court.

[4] For the reasons that follow, I find that the grandchildren, who are entitled to the income earned in the Trust following the death of the last of the Testator’s children to die, are Betty Burnett (“Betty Jr.”) [1] and Kathryn Baker (“Kathryn”), and not Robert Alan Jackson (“Robert Jr.”) or Rosalie Anita Jackson (Grimes) (“Rosalie”). Following the death of Betty Jr. and Kathryn, the Trust shall be administered in accordance with the terms of the Will. The Public Guardian and Trustee (the “PGT”) does not consent to a wind up or variation of the Trust. Absent such consent of the PGT, neither is possible.

Pertinent Terms of the Will

[5] Paragraph 3(d) of the Will provides for the investment of the residue of the Estate and the payment of all of the net income to the Testator’s spouse, Eleonor Lillian Crone, until her death or remarriage, whichever first occurs. Upon the death or remarriage of Ms. Crone, the net income is to be paid to the Testator’s children Robert Jackson (“Robert”) and Betty Eleanor Jackson (“Betty”) during their respective lifetimes, and to certain of his grandchildren on the death of one or both of the Testator’s children.

[6] The scheme of distribution following the death of the Testator’s children, Robert or Betty, or both, is set out at paragraph 3(e) of the Will. Clauses (i) and (ii) of paragraph 3(e) read as follows:

(i) Upon the death of either of my said children, to pay his or her share of the said net income to the children of my said daughter in equal shares, share and share alike; PROVIDED that if my son die [ sic ], leaving one grandchild only living at the time of my death, to pay my son’s share of the said net income to all my grandchildren in equal shares, and upon the death of my other child, BETTY ELEANOR, to pay the said net income to all my grandchildren in equal shares.

(ii) Upon the death of any of my grandchildren, to pay his or her share to my remaining grandchildren in equal shares; Upon the death of all my grandchildren, to pay the said net income into a fund to be used annually to publish any of my manuscripts remaining unpublished and after such manuscripts have been published, to pay the said net income to publish Canadian historical books with a strong bias towards the military history of Canada, the choice of such books to be at the discretion of the Dominion Archivist.

Background Facts

[7] Ms. Crone died on July 16, 1977. The Testator’s daughter, Betty, died on June 6, 2008. She was survived by two daughters, Kathryn and Betty Jr. Both Kathryn and Betty Jr. were alive at the time of the Testator’s death.

[8] The Testator’s son, Robert, died on January 25, 2020. He was survived by two children: Rosalie, who was born on October 19, 1951, and Robert Jr., who was born on October 13, 1952. Robert and his first wife adopted Rosalie in 1962 and Robert Jr. in 1964. Both Rosalie and Robert Jr. were alive at the time of the Testator’s death, but they had not yet been adopted by Robert and his wife. Robert Jr. disappeared in 1970, and despite reasonable efforts, the Trustee has been unable to locate him. On November 2, 2022, Gilmore J. ordered that Robert Jr. is not entitled to further notice of these proceedings.

[9] In accordance with the Trust terms, following Betty’s death in 2008, Kathryn and Betty Jr. have each been receiving a share of the net income from the Trust.

[10] As of June 20, 2022, the market value of the Trust capital was approximately $257,335.93.

[11] On September 13, 2022, Rosalie swore an affidavit in which she took the position that, following her father Robert’s death on January 25, 2020, she is entitled to share in the income earned in the Trust. At that time, Rosalie also requested a winding up of the Trust for the benefit of Kathryn, Betty Jr. and her.

Issues

[12] The issues to be determined are:

1. Are Rosalie and Robert Jr. entitled to share in the net income of the Trust following the death of their father, Robert?
2. Following the death of the grandchildren of the Testator, or certain of them, how is the Trust to be administered?
3. Can the Trust be wound up or varied and the net income and capital paid to the Testator’s grandchildren?

Positions of the Parties

[13] Scotiatrust takes no position on the issues raised in the application, however it brings to the court the relevant legal principles and seeks the court’s direction. Scotiatrust submits that it is prepared to continue to administer the Trust should the court decline to grant an order that the Trust be wound up or varied.

[14] Rosalie submits that as a grandchild of the Testator, she is entitled to share in the net income of the Trust now that her father, Robert, is deceased. Rosalie is no longer seeking a winding up or variation of the Trust.

[15] Kathryn and Betty Jr. submit that Rosalie is not an income beneficiary of the Trust. They confirm that they are not seeking a winding up or variation of the Trust.

[16] The PGT submits that the capital of the Trust forms a perpetual charitable trust with education as its object. It also submits that the charitable purpose is subject only to the interests of the income beneficiaries designated in the Will and the direction to publish the Testator’s manuscripts. The PGT further submits that it cannot agree to wind up the Trust because the PGT is precluded from agreeing to wind up the Trust for the benefit of the Testator’s descendants, as opposed to permitting the Testator’s charitable purpose to be fulfilled.

[17] The PGT takes no position regarding which grandchildren of the Testator are entitled to income under the Will.

Law

[18] The court’s task in interpreting a will is to determine the testator’s actual or subjective intention as to the disposition of his or her property: Ross v. Canada Trust Company, 2021 ONCA 161, 458 D.L.R. (4th) 39.

[19] This task requires the judge to place him or herself in the position of the testator at the time the will was made. This involves construing the will in light of all the surrounding circumstances and studying the whole of the contents of the will. After giving full consideration to all the provisions and language used in the will, the judge should attempt to determine what intention was in the mind of the testator: Ross, at para. 37, citing Burke (Re), [1960] OR 26 (C.A.), at p. 30; Trezzi v. Trezzi, 2019 ONCA 978, 150 O.R. (3d) 663, at para. 13.

[20] This approach is known as the “armchair rule”, and is the overarching framework within which a judge applies the various tools for will construction at his or her disposal: Ross, at para. 41.

[21] However, the armchair rule has specific limitations. While the court may consider extrinsic evidence of the testator’s circumstances and those surrounding the construction of the will, evidence by third parties which purports to directly address what a testator intended to include in the will is inadmissible.

Analysis

Are Rosalie and Robert Jr. entitled to a share of the net income of the Trust?

[22] Based on the terms of the Will, it is clear that while the Testator’s children Betty and Robert are alive, they are equally entitled to the income, share and share alike. Upon Betty’s death, the Will provides that her children will receive the income to which she was entitled, share and share alike.

[23] On Robert’s death, the Will provides that Betty’s children will also be entitled to share in the income that Robert was receiving during his lifetime. However, the eligibility of Robert’s own children to share in that income is conditional. A surviving child of Robert (i.e., the Testator’s grandchild, Rosalie and the Testator’s grandchild Robert Jr.) is entitled to share in the income Robert was receiving subject to two conditions: a) such grandchild must be a “grandchild only living at the time of [the Testator’s] death”; and b) Robert may only have one child living at the time of the Testator’s death.

[24] Regarding the first condition, it is undisputed that Robert and his first wife adopted Rosalie and Robert Jr., and they became his children. [2] Both Rosalie and Robert Jr. were alive at the time of the Testator’s death.

[25] Robert’s adoption of Rosalie and Robert Jr. determines the relationship to one another of all persons, including the adopted child, the adoptive parent, the kindred of the adoptive parent, the parent before the adoption order was made, and the kindred of that former parent: Child, Youth, and Family Services Act, 2017, S.O. 2017, c. 14, Sched. 1, s. 217(2-3) (the “CYFSA”).

[26] Subsection 217(4) of the CYFSA provides that a reference in a will, made at any time, to a person or group or class of persons described in terms of relationship by blood or marriage to another person is deemed to refer to or include, as the case may be, a person who comes within the description as a result of an adoption, unless the contrary is expressed. In this case, the Will does not exclude adopted grandchildren.

[27] Robert adopted Rosalie in 1962 and Robert Jr. in 1964, and the Testator died in 1961. Because each of Rosalie and Robert Jr. were born prior to 1961, each was a grandchild of the Testator, living at the time of the Testator’s death. This is so, despite the fact that they were not yet adopted by Robert and his wife. In Barnes Estate (1992), 91 D.L.R. (4th) 22 (N.L. S.C.), at para. 21, the court found that a grandchild born before but adopted after the death of the testatrix was entitled to share in the residue of the estate because the individual “became the ‘grandchild’ of the [testatrix] in that he became on adoption the ‘child of her child.’”

[28] In Re Fulton Estate (1978), 19 O.R. (2d) 458 (C.A.), the Court of Appeal for Ontario concluded, in dealing with facts similar to the facts in this case, that in circumstances where a testator made a will prior to the 1970 amendments to the former Child Welfare Act [now the CYFSA], and where a child is adopted after the testator’s death, the adopted child was to be included in the term “issue” appearing in the will.

[29] Because the Will specifically states that a grandchild of the Testator must be a “grandchild only living at the time of [the testator’s] death”, it is reasonable to conclude that the Testator intended to close the class of beneficiaries as of the date of his death. The grandchildren alive on the death of the Testator were, therefore, Kathryn, Betty Jr., Rosalie and Robert Jr. This is so notwithstanding that Rosalie and Robert Jr. were adopted after the Testator’s death. These four grandchildren were alive at the death of the Testator, and as such, they were all potential members of the class of grandchildren who could benefit under the Will.

[30] However, under the Will, the eligibility of Robert’s children is subject to a second condition. For a child of Robert to share in the income of the Trust to which Robert was entitled during his lifetime, there could only be one child of Robert.

[31] On the Testator’s death, he had two children, Betty and Robert Jr. They were entitled to the income earned in the Trust, share and share alike. Clause 3(e)(i) of the Will provides that on the death of either of them, his or her share of the income is to be paid to the children of Betty in equal shares, share and share alike.

[32] Given that at the time the Testator made the Will, and at the time of his death, only Betty had children, and Robert had none, this distribution scheme for the net income is understandable.

[33] But the Testator goes on in the Will to provide for the eventuality that Robert could have children. However, the Will leaves unexplained why the Testator limits any entitlement to income from the Trust to a single child of Robert, who is Robert’s only child. If there is one such child, then he or she would share, together with Betty’s children then alive Robert’s share of the income, share and share alike.

[34] Therefore, in accordance with clause 3(e)(i) of the Will, on Betty’s death, her share of the income is directed to be divided in equal shares among her children (Kathryn and Betty Jr.). On Robert’s death, if he left only one child, who was living at the time of the Testator’s death, then Robert’s share of the income would be shared among all of the Testator’s grandchildren, which would have been Kathryn, Betty Jr. and Robert’s one child, share and share alike.

[35] Inexplicably, based on the language chosen by the Testator, and giving it its ordinary meaning, if Robert left more than one child surviving him, who was alive at the time of the Testator’s death, then none of Robert’s children would share in the income otherwise payable to Robert. Instead, that income would be divided among Betty’s surviving children, being Kathryn and Betty Jr. Unfortunately for Rosalie and Robert Jr., the second condition, which would have entitled one of them only to share in the income to which their father was entitled during his lifetime has not been met, and it cannot be met.

[36] In the result, on Robert’s death, his share of the income must be divided equally among Betty’s children, Kathryn and Betty Jr. Giving the words used by the Testator their ordinary meaning, there can be no other result. Scotiatrust submits that it was not able to locate the files of the solicitor who drafted the Will. Therefore, there is no evidence of surrounding circumstances from that source, which could assist the court in determining the intention of the Testator when he made the Will, and why he might have chosen to limit the participation of Robert’s children in a share of the income of the Trust to one child only, being the only child of Robert alive at the time of the Testator’s death.

[37] The Will goes on to provide, at clause 3(e)(ii) of the Will: “Upon the death of any of my grandchildren, to pay his or her share to my remaining grandchildren in equal shares.”

[38] In theory, “any of my grandchildren”, which are described generally here, could include Rosalie and Robert Jr., both of whom meet the definition of a grandchild of the Testator. However, given the preconditions to becoming an income beneficiary of the Trust, Rosalie and Robert Jr. are not grandchildren who are entitled to income on the death of their father, Robert. They cannot, therefore, be a grandchild who has a share of Trust income to be divided on his or her death. Neither is entitled to a share of the Trust on Robert’s death.

[39] Accordingly, it is only on the death of Kathryn or Betty Jr., that a share of the Trust income can be divided among the Testator’s “remaining grandchildren”. “Remaining grandchildren”, could, in theory, be interpreted to mean all of the Testator’s grandchildren then remaining, which would include those of Rosalie and Robert Jr. who are alive on death of the first to die of Kathryn or Betty Jr. However, the Testator does not use the word “all”. Instead, he uses the phrase “remaining grandchildren”. The use of the word “remaining”, in this context, suggests that he intended that only the grandchildren already identified as members of the class of grandchildren, who were receiving income at the time of the death of Kathryn or Betty Jr., would benefit on the death of either of Betty’s children (his grandchildren), such that the share of the income that that grandchild or those grandchildren would be increased. Accordingly, I find that it is more likely than not that the Testator did not intend to include Robert’s children (also his grandchildren) among the “remaining grandchildren” referred to in clause 3(e)(ii).

How is the Trust to be administered following the death of the Testator’s Grandchildren?

[40] Paragraph 3(e)(ii) of the Will provides that on the death of all of the grandchildren, being the death of Kathryn and Betty Jr., the net income shall be paid into a fund to be used annually to publish any of the Testator’s manuscripts remaining unpublished and, after the manuscripts have been published, “to pay the said net income to publish Canadian historical books with a strong bias towards the military history of Canada, the choice of such books to be at the discretion of the Dominion Archivist.”

[41] Following the death of the last of Kathryn and Betty Jr. to die, the Trustee is required to use the net income from the Trust to publish the Testator’s manuscripts, if any. Thereafter, based on the ordinary meaning of the words used in the Will, the Trustee is obligated to pay the net income from the Trust to publish Canadian historical books as directed by the Testator.

Can the Trust be wound up and the net income and capital paid to the Testator’s grandchildren?

[42] The terms of the Will do not give the Trustee an option to wind up the Trust and to distribute net income or capital of the Trust to the grandchildren of the Testator.

[43] As noted, none of Kathryn, Betty Jr. or Rosalie is pursuing an order for the wind up or variation of the Trust. The counsel to the PGT submits that such relief would not be available in any event.

[44] The PGT submits that the court has broad inherent jurisdiction in matters relating to charities, as well as the inherent jurisdiction exercised by the courts of equity with respect to trusts. I agree.

[45] The court has exercised its jurisdiction to ensure charitable trust property is applied to the intended charitable objects or purposes set out in a trust instrument or will. See, for example: Toronto Aged Men’s and Women’s Homes v. Loyal True Blue and Orange Home (2003), 68 O.R. (3d) 777 (S.C), at paras. 3-5; OSPCA v. Toronto Humane Society, 2010 ONSC 608, 100 O.R. (3d) 340, at paras. 37-39; and Dors et al. v. The Public Guardian and Trustee, 2023 ONSC 1503, at paras. 3 and 13.

[46] I accept the submission of the PGT that a trust for the advancement of education, such as the Trust, is a valid charitable purpose trust: Tillsonburg Scout Association v. Scouts Canada, 2020 ONSC 747, 54 E.T.R. (4th) 221, at para. 35.

[47] I also accept the submission of the PGT that gifts of substantial amounts of income to individual life tenants of a charitable purpose trust during the life tenants’ lifetimes do not render the trust non-charitable in nature, nor does the non-charitable gift of income contaminate the testator’s overall charitable intent of a perpetual gift to charity: Re Doering, [1948] O.R. 923 (S.C.), at p. 13; and Canada Trust Co. v. Shaver, 2007 BCSC 54, 29 E.T.R. (3d) 75, at para. 44, 46, and 47.

[48] While the court has inherent jurisdiction to vary charitable trusts in certain circumstances, that jurisdiction must be applied sparingly, and not indiscriminately. For example, where it is necessary to further the charitable purposes of a trust, the court may draw on equitable scheme-making or cy-pres doctrines to vary a charitable trust. However, such jurisdiction is not available unless the Crown (as represented by the PGT) consents or does not object to the proposed variation: Re Baker (1984), 47 O.R. (2d) 415 (S.C.), citing Attorney General v. Bishop of Worcester (1851), 68 E.R. 530, 9 Hare 328 (Eng. Q.B.), the House of Lords in Chapman v. Chapman, [1954] A.C. 429, Royal Society's Charitable Trusts, Re, [1956] 1 Ch. 87, 3 All E.R. 14 (Eng. Ch. Div.) and Attorney-General v. Sherborne Grammar School (1854) 18 Beav. 256, at p. 280, 52 E.R. 101.

[49] Considering this jurisprudence, I find that winding up or varying the Trust for the benefit of any descendant of the Testator would not be in furtherance of the charitable purposes of the Trust. Further, the PGT does not consent to such a wind up or variation for this purpose. In these circumstances, the jurisdiction to wind up or vary the Trust is not available to me.

[50] Accordingly, if any party were pursuing an order winding up or varying the Trust, I would decline to grant such an order.

Disposition

[51] An order shall issue including the following:

1. a declaration that neither Rosalie Anita Jackson (Grimes) nor Robert Alan Jackson is entitled to share in the net income of the Trust on the death of any child or other grandchild of the late Col. Harold McGill Jackson pursuant to paragraph 3(e) of his Last Will and Testament dated February 10, 1957; and
2. a declaration that on the death of the survivor of Kathryn Baker and Betty Burnett, the Bank of Nova Scotia Trust Company shall continue to administer the Estate of Col. Harold McGill Jackson pursuant to his said Last Will and Testament.

Costs

[52] Having reviewed the costs outline of the applicant, Scotiatrust, and hearing its submissions on costs, I am satisfied that, as the sole Trustee of the Trust, it is entitled to be fully indemnified for its costs in bringing this application. I fix those costs at $40,000, inclusive of disbursements and HST, which I find to be fair and reasonable in the circumstances of this case.

[53] While the PGT would normally seek costs for appearing on an application, the PGT does not seek its costs on this application. Accordingly, I make no award of costs to the PGT. The court is grateful to the PGT for its helpful submissions.

Dietrich J.

Date: June 16, 2023

[1] For clarity, and because several of the Testator’s relatives bear the same surname, I will refer to some by their first names. In doing so, I intend no disrespect.

[2] Though Robert married a second time, and his wife had a child from another relationship, Robert never adopted that child.