Landry v. Christiansen-Hassett et al, 2024 ONSC 2509
COURT FILE NO.: CV-23-0384-00 DATE: 2024-04-29
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
Janice Ann Landry, as the Estate Trustee of the Estate of Gary Joseph Landry Applicant
Robin Lepere, for the Applicant
- and -
Kelly Christiansen-Hassett, Brenda Ruth Landry, Karina Janice Mason-Landry and Richard Gary Landry Respondent
Karen Hagman, for the Respondent
HEARD: April 15, 2024, at Thunder Bay, Ontario Regional Senior Justice W. D. Newton
Decision On Motion
Overview
[1] The estate trustee brings this application seeking directions with respect to the administration of the estate and for a direction that property bequeathed to a respondent be sold.
At issue in this application is whether an expression of “wish” in a Will is simply that, a wish, or whether the expression of a wish created a trust on one beneficiary for the benefit of other residual beneficiaries.
The Facts
The Will
[2] Gary Landry executed a Will on March 20, 2022.
[3] The Will provision in contention reads as follows:
I DIRECT my Trustees to transfer any interest I may own at the time of my death in my home and its contents known municipally as 6548 Mapleward Road, Thunder Bay, Ontario, P7G 2J9 (hereinafter referred to as the "Home"), to my common-law spouse, KELLY CHRISTIANSEN HASSETT, for her sole and only use absolutely. It is my wishes that when KELLY CHRISTIANSEN HASSETT sells/otherwise dispose of the Home, twenty (20%) percent of the proceeds shall form part of the residue of my estate and distributed to the beneficiaries in accordance with clause c) herein. [Emphasis added.]
[4] The residual beneficiaries are the deceased’s parents, his daughter, and his sister, the estate trustee.
The Solicitor’s Notes
[5] Following the Will instruction meeting, the solicitor prepared a memorandum. Relevant portions are set out below:
We discussed Gary's assets. Other than various bank accounts and investments (Karina named as beneficiary), Gary's main asset was his home. He wanted his common-law spouse, Kelly, to receive the home (6548 Mapleward Road, Thunder Bay, ON) when he passed. The value of the home is approximately $450,000.00. Gary also indicated that when/if Kelly sold the home during her lifetime, that 20% of the proceeds would be equally divided amongst his residual beneficiaries (Karina, Brenda, Richard and Janice). Gary did not want a life interest created, but wanted to account for his parents, daughter, and sister when the property was sold, to ensure they received some value of the home. His primary concern was that Kelly had a place to live. Gary was adamant that the family understood his position, and that this clause would be honoured should the home be sold. [Emphasis added.]
Janice Landry
[6] Janice is Gary’s sister and the estate trustee. She deposed that Gary became ill in December 2021. He knew that his illness was terminal, and he took steps to arrange his affairs including executing his Will on March 20, 2022.
[7] Gary’s family consisted of his sister and his parents. His parents lived across the street from him and had assisted Gary financially through the years. Gary resided with his common-law partner, Kelly. He had a daughter, Karina, from a prior relationship. Karina turned 19 years old in October 2023.
[8] Gary advised Janice that Karina would receive monies directly as the beneficiary of his pensions and life insurance (approximately $664,000 before taxes). Gary told Janice that he was leaving the Home to Kelly and that he had made a provision in his Will that Karina, Janice, and his parents would receive a portion of the value of that property (20%) when the property was sold. Gary anticipated that Kelly would not be able to afford to keep the property and would have to sell it, “sooner rather than later”. 80% of the sale proceeds would allow her to purchase a “more suitable” home. The property is valued at $400,000.
[9] Other than his pension, life insurance, and home, Gary had no other significant assets. The debts of the estate, even after excluding legal fees and executor’s compensation, exceed the value of the other estate assets, excluding the house left to Kelly.
[10] Janice deposed that Kelly commenced a dependent support application against the estate in July 2023. Janice states that it is Kelly’s intention to “claw back the amounts paid to Karina as a beneficiary into the estate and to advance a claim against those funds.” She further deposed that Karina’s mother has told her that, if Kelly attempts to take the monies left to Karina, then she will advance a claim for child support against the estate.
[11] As estate trustee, Janice cannot pay the expenses and debts of the estate unless the property is sold, and she states that Kelly does not agree to sell the property. Accordingly, the estate administration cannot be completed. Janice is concerned about ongoing estate administration costs which will continue until the property is sold. Gary died over two years ago.
Kelly Christiansen-Hassett
[12] Kelly was Gary’s common-law spouse. She is 58 years old. She deposed that she and Gary were in a relationship for 18 years. Gary died of pancreatic cancer, and she cared for Gary in the months leading to his death.
[13] Prior to his death, Gary advised her that he wanted to have an estate plan in place that provided for her and his daughter, Karina. Kelly deposed that, initially, Gary had designated her as the beneficiary for his pension. However, she agreed to waive her entitlement so that Gary could designate Karina as a beneficiary. This was on the understanding that Gary was going to gift her the Home upon his death. She also deposed that she and Gary had discussed making her a joint tenant of the Home, but he did not do so because he believed there would be negative tax consequences.
[14] The Home is subject to a mortgage which will be discharged as it was life insured.
[15] She states that the estate is paying the property taxes and insurance for the property while she is paying all other costs.
[16] She states that Janice received approximately $8,400 by right of survivorship on joint accounts she held with Gary.
[17] Kelly is prepared to contribute up to $30,000 to pay estate expenses and states that she will be homeless if the Home is sold.
Position of the Parties
The Estate
[18] The Estate argues that I should apply the “armchair rule” to determine the testator’s actual intentions regarding the disposition of his property.
[19] The “armchair rule” is described in D’Onofrio v. Riley, 2023 ONSC 4764:
[43] In interpreting a will, the court’s task is to determine the testator’s actual or subjective intention regarding the disposition of his property. The will must be construed in light of all the surrounding circumstances to determine the testator’s true intention. This exercise requires the court to place itself in the position of the testator when he made the will: Trezzi v. Trezzi, 2019 ONCA 978, 150 O.R. (3d) 663, at para. 13.
[44] Recently, in Ross v. Canada Trust Company, 2021 ONCA 161, 458 D.L.R. (4th) 39, at paras. 37-39, the Court of Appeal for Ontario provided a summary of this approach to the construction of a will, which is commonly referred to as the “armchair rule”. In essence, the judge must concentrate on the circumstances which existed at the time the will was made, and which might reasonably be expected to influence the testator in the disposition of his property. The judge must give due weight to those circumstances insofar as they bear on the testator’s intention, review the whole contents of the will, and after full consideration of all the provisions and the language used, try to find what intention was in the mind of the testator. When that opinion has been formed, the court should give effect to it unless there is a rule or principle of law that prohibits the court from doing so. However, having studied the entire will, the court may remain unconvinced that the testator’s intention may be discerned from it alone. In this case, evidence of surrounding circumstances known to him when he made the will is necessarily admissible insofar as it corresponds to the facts and circumstances referred to in the will. Here, the court puts itself in the position of the testator at the time he made the will and reads and construes the will in light of the surrounding facts and circumstances. Sitting in the “armchair” of the testator, the court assumes the same knowledge the testator had at the time of making the will, with regard to the nature and extent of the testator’s assets, the makeup of his family, and his relationship to its members. [Emphasis added.]
[20] The Estate submits that these surrounding circumstances lead to the conclusion that Gary’s intention was to create a legally binding trust in favour of the residual beneficiaries:
(a) Gary did not want to create simply a moral obligation on Kelly to provide 20% of the sale proceeds of the Home when sold to the residual beneficiaries;
(b) Gary clearly wanted to benefit the residual beneficiaries after his death;
(c) Gary knew that he had limited assets to do so with and that he could only do so by assigning them some value of the Home;
(d) he had to find a way to leave them a portion of the value of the Home without forcing the sale of the Home immediately after his death to ensure that Kelly had a place to live for a period after his death;
(e) Gary did not believe that Kelly could financially afford to remain in the Home on her own and that she would be forced to sell same sooner rather than later thereby giving effect to the Disputed Provision; and
(f) without the Disputed Provision the Will does not make sense as there is no residue available to be divided between the residual beneficiaries and Gary would have known this at the time the Will was drafted.
Kelly
[21] Kelly submits that the disputed paragraph expresses an unenforceable wish and does not create a condition or a trust. Kelly adopts the “fundamental and oft-cited principles that govern the interpretation of wills” as set out in Barsoski Estate v. Wesley, 2022 ONCA 399, at para. 21:
(i) a will must be interpreted to give effect to the intention of the testator. No other principle is more important than this one;
(ii) a court must read the entire will, as a whole. The words used in the will should be considered in light of the surrounding circumstances (also known as the “armchair rule”);
(iii) a court must assume that the testator intended the words in the will to have their ordinary meaning; and
(iv) a court may canvas extrinsic evidence to ascertain the testator’s intention.
[22] Kelly submits that Gary’s intentions can be ascertained from reading the Will as a whole, and notes the unambiguous use of both directive and precatory wording. Kelly argues that had Gary intended to impose an obligation on Kelly or the estate trustee, he would have used the same directive language used throughout the Will.
[23] Further, examination of the solicitors’ memorandum following the Will preparation meeting reveals that Gary’s primary concern was that Kelly had a place to live and that Gary was “adamant” that the family understood his position and that the clause would be honoured should the Home be sold.
Analysis and Disposition
[24] Although an unfortunate outcome for the Estate, I am satisfied that it was Gary’s intention to express what was to happen with the proceeds of the sale of the Home as a wish and not as a direction.
[25] The Will clearly, by express language, directs the trustee to transfer Gary’s interest in the Home and contents to Kelly for her “sole and only use absolutely”. With respect to the “wish” for the sale proceeds, as the solicitor’s memorandum records, Gary was adamant “that this clause would be honoured should the home be sold”.
[26] For a legally binding trust to be created, the language of the settlor must be imperative. Here, it is not. What is created, in this case, is a moral obligation.
[27] The “moral obligation” upon Kelly to give over 20% of the proceeds of the sale does not arise until the sale of the home. A sale of the Home will not leave her homeless as she states. It will leave her with about $300,000 with which to acquire accommodations if she honours Gary’s wishes.
[28] This situation cannot continue. The Estate has no assets to continue to pay taxes and insurance and cannot be administered until the debts are cleared. In the circumstances of this case, the wishes of the testator, as recorded in his Will, have made it impossible for the Estate trustee to administer the estate promptly.
[29] Should the parties be unable to reach an agreement as to resolution, they could seek a case conference with a judge of this court.
Costs
[30] Both parties addressed costs. The Estate Trustee submitted that, if the Estate Trustee was not successful, the costs of both parties should be borne by the estate.
[31] Kelly argues that the Estate Trustee should be responsible for the costs of this application arguing that she acted unreasonably and for her own benefit as a residual beneficiary.
[32] I find that the Estate Trustee was not acting for her own benefit and was placed in this difficult situation because the Estate had insufficient assets to cover its debts, even excluding legal fees and executor’s compensation.
[33] As there was no agreement that allowed for the Estate to be finally administered, the Estate Trustee was required to bring this application for directions. As such, the costs of both parties are to be borne by the Estate given that Gary’s wishes, as expressed in the Will, resulted in this issue requiring resolution.
“originally signed”
The Hon. Mr. Justice W. D. Newton, R.S.J. Released: April 29, 2024