Dear Kenneth,

September always feels like a time for new beginnings to me. For some, it is in fact the beginning of a New Year. To those celebrating, a warm Shanah Tovah! Autumn is my favourite season-maybe it’s because of the fresh air, maybe it’s the colours, the walks, the runs, fun with the dog, or maybe it’s because the autumn months comprise the last savoured days of a summer just past and before the cold arrives. Whatever the reason-I hope you are enjoying some time outdoors to escape the many stresses of our current world.

I travelled to London to attend the STEP Private Client Awards since our firm was shortlisted among others.  We are so very honoured and grateful to have been recognized in the category of Vulnerable Clients:  https://pca.step.org/finalists2022. The celebration was cancelled by the sudden passing of Her Majesty, our Queen Elizabeth II. London put on its finest celebration. It was a sad, yet joyful and reflective time to be in London. So many people experienced her wisdom, her commitment, her loyalty to service, and her calming influence in times of struggle. The thousands of people that paid tribute to her was overwhelming. I was happy to have been there to experience the emotion and frenzy of so many people being brought together to honour and respect Queen Elizabeth. Humanity at one of its finest moments!

John Poyser also joined me for the would-be STEP celebration and instead, on the evening intended for the recognitions, we went to the Salzburg-Chelsea football match which was an absolute blast. I lived in England for 10 years, yet, never went to a football game. I am not sure that the prequel to the sequel wasn’t equally fascinating, for before the football match we visited the Brompton Cemetery: https://www.royalparks.org.uk/parks/brompton-cemetery?utm_source=google&utm_medium=organic&utm_campaign=google-my-business&utm_content=brompton-cemetery. Brompton Cemetery is one of Britain's oldest and most distinguished garden cemeteries designed in 1838. We walked around picking interesting centuries’ old graves and googling stories about the life and death history of various deceased laid to rest. The history was spectacular and an oddly fun thing to do, hence the newsletter picture taken from this 1800’s cemetery. John, when he retires wants to become the grounds keeper because it is overgrown and unkempt and because it’s just a fun history lesson at every turn. Maybe estate lawyers are just morbid creatures-visiting graveyards and all!

Meanwhile, at WEL we will be welcoming 2 new lawyers who are joining us shortly, Evan Pernica, and Oliver O’Brien. More to come next month on Evan and Oliver.

As ever, we appreciate your continued support of our team and hope you enjoy the read,

Kim

AWARD OF EXCELLENCE IN THE PROMOTION OF WOMEN’S EQUALITY 

WEL congratulates May Cheng, Osler Hoskin & Harcourt LLP, on being the recipient of the 2022 OBA Award for Excellence in the Promotion of Women's Equality. The Award is a Lady Justice statuette. It symbolizes the role of the recipient in navigating Canadian law and society toward full recognition of women’s equality.

By Albert H. Oosterhoff

1. Introduction

Re Assaly^[1] is an interesting case because it addresses the need for an assent before property that is the subject matter of a testamentary gift, or of an interest in an intestate estate, vests in the beneficiary. This is not a topic that is discussed very much in our law, but it is important, and so the case is worth discussing.

2. Facts

Thomas C Assaly (‘Tom Sr’) died intestate om 2007, survived by his wife Gloria and three children, including Thomas G Assaly (‘Tom’), and Robert, Tom Sr’s estate trustee without a will (i.e., administrator). Tom was an undischarged bankrupt and Baker Tilly Ottawa Ltd was the trustee in bankruptcy. In 2007 and 2008 Tom brought proceedings against his father’s estate. They were settled and Tom executed minutes of settlement that required him to sign a deed of indemnity to indemnify Robert for all debts, liabilities, and obligations of the estate and of Robert’s action as administrator. The deed also required Tom to provide Robert with security. He failed to do so, so the parties entered into another settlement under which the estate would pay two sums of money to Tom immediately. The settlement also required the estate to pay a further $380,000 to Tom, but only if Tom provided an irrevocable letter of credit in favour of the estate. The estate made the first two payments, but not the third. The estate paid it Tom’s law firm in trust on condition that the firm and the partner involved held it in escrow and would not release the funds unless the letter of credit was delivered within three days. Tom failed to provide the letter of credit. His law firm brought an interpleader application and paid the moneys into court.

Tom then brought several proceedings against the estate, all of which were dismissed with costs. In 2015 Robert and Gloria brought an action against Tom for damages resulting from those proceedings. Tom attempted to evade the consequences of the action by: (a) making a Chapter 11 bankruptcy filing in Florida; (b) making a consumer proposal; and (c) filing for bankruptcy. Robert and Gloria sought and obtained a partial automatic stay of proceedings resulting from Tom’s bankruptcy.

In 2021 the court refused Tom’s application to discharge him from bankruptcy for his failure to disclose various matters in the bankruptcy, including the US bankruptcy proceedings and all his creditors in the consumer proposal. Meanwhile, Tom alleged that he had assigned the funds in court to ‘the Thomas C Assaly Charitable Foundation’, which had been set up for his children.^[2]

Robert and the Trustee in Bankruptcy for Tom brought motions for payment of the moneys held in court. The motions were served on Tom and the Charitable Foundation. They sought an adjournment that was granted on condition that the Foundation pay $15,000 as security for costs. It failed to pay the moneys.

The proceedings raised three issues:

1. Whether the Charitable Foundation or Tom had any standing on the motion?
2. Whether the funds should be paid to Robert as administrator because he never assented to the transfer of the funds to Tom?
3. Whether Tom’s purported assignment of the funds to the Charitable Foundation was a reviewable transaction?

3. Analysis

3.1 Standing

The court held that, as an undischarged bankrupt, Tom lacked standing on the motion and the moneys he purported to assign to the Foundation vested in the Trustee in Bankruptcy. The Foundation did not appear on the motion and thus had no standing, although Tom moved for leave to appeal the decision to grant the adjournment on conditions.

This meant that the legal issues raised by the Charitable Foundation with regard to the funds did not have to be dealt with. However, the court nonetheless did so and its discussion on the matter is welcome since the law of assent is not raised very often.

3.2 Should the funds be paid to the Estate or to the Foundation?

The Foundation argued that the funds should be paid to it because on 23 January 2013 Tom sent an email to his lawyer in which he said that he intended to assign his right, title, and interest in the funds to an entity that was yet to be established. Further, on 31 January 2014 Tom executed an assignment agreement personally and on behalf of the Foundation in which he assigned his interest in the funds to the Foundation.

However, Robert Smith J agreed with the estate that Tom had no interest in the Funds because the administrator had never assented to the transfer of the funds to him. His Honour quoted from my article,^[3] and from Dushinsky Estate v Minister of National Revenue,^[4] in which the court cited and relied on Halsbury’s Laws of England,^[5] to hold that an executor’s assent is necessary to render a bequest or a legacy complete.

As mentioned above, the administrator transferred the remainder of Tom’s interest in his father’s estate on the condition that Tom provide a letter of credit within three days as security for a potential claim against the estate and undertook to release the funds on receipt of the letter of credit. Tom never provided the letter of credit. It followed that the administrator never assented to the transfer of the funds to Tom and they remained the property of the estate. That meant that Tom was unable to assign the funds to the Foundation.

3.3 Was Tom’s Purported Assignment of His Interest in the Funds to the Foundation a Reviewable Transaction?

The court held that assignment was void as against the Trustee in Bankruptcy. It was made on 31 January 2014, whereas the bankruptcy occurred on 20 June 2018. Thus it was made within five years of the bankruptcy. Moreover, the transfer was grossly undervalued, and it was a non-arms-length transaction. Hence, it was made with the intent to defraud, defeat, or delay a creditor.^[6]

Further Tom’s earlier email in which he stated that he intended to transfer his interest in the funds did not constitute a valid assignment to the Foundation because the Foundation had not yet been formed. Although Tom intended to make a gift to the Foundation, there was no evidence of delivery or acceptance when the email was sent. That only happened when the assignment agreement was executed in 2014 and the purported assignment was then a reviewable transaction by the Trustee in Bankruptcy.

4. Order

Accordingly, the court ordered the Accountant of the Superior Court of Justice to pay $50,000 to the Trustee in Bankruptcy, and to pay the remainder to the administrator of the estate of the father, for the benefit of the estate’s creditors.

5. Can an Administrator Give an Assent?

The court did not ask this question but perhaps it should have. Authors who have written on the law of assent have stated that at common law only an executor could give an assent, an administrator could not.^[7] There are two things to note about these statements. First, at common law an executor could only give an assent of personal property, not of real property unless it was the subject of a devise. If it was not, the property descended to the heir-at-law. Second, the authors give no reason why administrators cannot give an assent. Is it because a testator has carefully chosen her executor and trusts him to administer her estate carefully, whereas an administrator is appointed by the court? That may have been a valid reason years ago when testators chose their executors with care but today, as estate lawyers readily acknowledge, the choice of an executor tends to be a last minute and hasty decision. So even if this was formerly a valid reason to entrust the granting of an assent only to an executor, it is no longer a valid one. Or is the distinction made because the executor gains title to the testator’s property from the will at the moment of the testator’s death, whereas an administrator only gains title when appointed by the court, so that there is a gap in title? Actually, in the case of administration, it is likely that until the grant in made, the title vests in the court, which then transfers it to the administrator.^[8] In any event the administrator’s title then relates back to the intestate’s death.

In The Law and Practice of Intestate Succession, the authors do not mention the distinction, but point out that an assent in relation to personalty does not, apart from certain forms of personalty, such as shares, require a formal assent but it can often be implied.^[9] Thus, they seem to assume that administrators could grant an assent in the past and can still do so today.

On the other hand, a written assent for real property by both executors and administrators has been required in England since 1926. Section 36(1) of the Administration of Estates Act 1925^[10] provides:

A personal representative^[11] may assent to the vesting, in any person who (whether be devise, bequest, devolution, appropriation or otherwise) who may be entitled thereto … of any estate or interest in real estate to which the testator or intestate was entitled or over which he exercised a general power of appointment … and which devolved upon the personal representative.

Subsection (4) requires that the assent of a legal estate be in writing, signed by the personal representative. And subsection (10) enables the personal representative to require security as a condition for giving an assent.

When we then turn to Canadian law we do not have legislation that speaks specifically about assents.^[12] However, we do have devolution legislation that I submit has a similar effect. Section 2(1) of the Estates Administration Act^[13] provides:

   2. (1) All real and personal property that is vested in a person without a right in any other person to take by survivorship, on the person’s death, whether testate or intestate and despite any testamentary disposition, devolves to and becomes vested in his or her personal representative from time to time as trustee for the persons by law beneficially entitled thereto, and, subject to the payment of the person’s debts and so far as such property is not disposed of by deed, will, contract or other effectual disposition, it shall be administered, dealt with and distributed as if it were personal property not so disposed of.^[14]

Thus, the property (real and personal) of a deceased person (who dies testate or intestate) in Canada is also vested in the personal representative (executor or administrator). Therefore, in my opinion, both an executor and an administrator can grant an assent of personal and real property in Canadian common law jurisdictions. And an assent is required in many cases, as the court in Assaly assumed, and as I argued in the article mentioned above.^[15]

I note, however, that in Ontario the requirement of an assent of real property is probably superseded by a quaint provision in the Estates Administration Act.^[16] Section 9 provides that real estate not disposed of or distributed to the persons entitled by the personal representative within three years after the death of the deceased vests in the persons beneficially entitled to it, unless the personal representative has registered a caution in the land registry office. However, s. 17(8) provides that if the property does vest in the beneficiaries, they take subject to the debts of the deceased.

---

[1] 2022 ONSC 2219.

[2] I assume, without more, that such a foundation can be created as a charity in Florida. In my view it would be impossible to do so in common law Canada because of the personal relationship between the settlor and the beneficiaries. See, e.g., Re Compton, Power v Compton, [1945] Ch 123 (CA); Oppenheim v Tobacco Securities Trust Co, [1951] AC 297.

[3] Albert H Oosterhoff, ‘Locus of Title in an Unadministered Estate and the Law of Assent’ (2018), 49 Adv Q 41, pp 42 and 64.

[4] 1990 CarswellNat 387, para 9.

[5] 4th ed, vol 17, paras 1345 and 1347.

[6] Bankruptcy and Insolvency Act, RSC 1985, c B-3, s 96.

[7] See, e.g., Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 20th ed. by John Ross Martyn and Nicholas Caddick, general eds. (London: Thomson Reuters/Sweet & Maxwell, 2013), §81-12; W.J. Williams, The Law Relating to Assent (London: Butterworth & Co (Publishers), Ltd., 1947), pp 95-96. Indeed, in the latter text, the author doubted whether an administrator with will annexed could grant an assent, even though such an administrator in effect exercises the power of an executor, ibid, p. 96. See also Halsbury’s Laws of England, 5th ed, vol 103 (London: REL X (UK) Ltd, trading as LexisNexis, 2021), §1142. The court quoted this source in Reznick v Matty, 2013 BCSC 1346, para 38. However, the section number given there is incorrect, and it also incorrectly gives the location of the publisher as Markham. The court seems to have confused the English publication with Halsbury’s Laws of Canada, 5th ed, which was published in Markham in 2010, but it does not contain anything on assents.

[8] See Macdonell, Sheard and Hull on Probate Practice, 5th ed by Ian M Hull and Suzana Popovic-Montag (Toronto: Thomson Reuters, 2016). p 314-318; Oosterhoff on Wills, 9th ed. by Albert H. Oosterhoff, C. David Freedman, Mitchell McInnes, and Adam Parachin (Toronto: Thomson Reuters, 2021), §2.4.2. Legislation in British Columbia and Yukon provides that the deceased’s estate vests in the court until the administrator is appointed: Wills, Estates and Succession Act, SBC 2009, c. 13, s 102; Estate Administration Act, RSY 2002, c 77, s 3.

[9] 3rd ed by CH Sherrin and RC Bonehill (London: Thomson/Sweet & Maxwell), §§8-012, 8-013.

[10] 15 & 16 Geo 5, c 23.

[11] Which of course includes both an executor and an administrator.

[12] The former British Columbia Estates Administration Act, RSBC 1996, c 122, s 79 did contain legislation similar to the English legislation. However, it was not carried forward into the Wills, Estates and Succession Act, SBC 2009, c 13.

[13] RSO 1990, c E.22.

[14] For similar legislation see Administration of Estates Act, S.S. 1998, c. A-4.1, Part XI, s. 50.3; Chattels Real Act, R.S.N.L. 1990, c. C-11, s. 2; Devolution of Estates Act, R.S.N.B. 1973, c. D-9, s. 3; Devolution of Real Property Act, R.S.A. 2000, c. D-12, ss. 2, 3; R.S.N.W.T. 1988, c. D-5, ss. 3-4; R.S.N.W.T. (Nu.) 1988, c. D-5, ss. 3-4; R.S.Y. 2002, c. 57, ss. 2-3; Law of Property Act, C.C.S.M., c. L90, s. 17.3(1)-(5); Probate Act, S.N.S. 2000, c. 31, ss. 44-47; R.S.P.E.I. 1988, c. P-21, ss. 103-4; Wills, Estates and Succession Act, S.B.C. 2009, c. 13, s. 162.

[15] See footnote 3, supra.

[16] Footnote 13, supra.

By Albert Oosterhoff

1. Introduction

Testators are notoriously imprecise when they give real property in their wills for a limited period. If they were to say, ‘I devise Blackacre to A for life’ full stop, the devise is clear and is unlikely to be questioned. It undoubtedly creates a life interest. But often they will say something like, ‘I give Blackacre to A for her use and occupation during her lifetime but when she ceases to live on the property, it will pass to B’. Does this gift create a life estate or a licence? And do the terms create an interest that is determinable or one that is given upon a condition subsequent? What if, in either case, the determining event or condition subsequent is uncertain? These kinds of questions can be difficult to resolve.

2. Facts

Such problems arose in Barsoski Estate v Wesley.^[1] The testator, Ms Barsoski, was a close friend for many years of the appellant, Mr Wesley, but they were never romantic partners. He frequently visited her in her house in London. She died in 2017. She wanted to make provision for him and so her will granted her house and contents to the respondent, her executor (and trustee?), to hold it in trust ‘as a home for [the appellant] during his lifetime or for such shorter period as [he] desires’. The will went on the provide:

Upon the earlier of [the appellant] advising my Trustees that he no longer wishes to live in the House, [the appellant] no longer living in the house, and [the appellant’s] death, the House shall be sold and the proceeds shall be delivered to St. Stephen’s Community House to be used by the highest priority needs as determined by the board of directors.

The will also provided that the executor would hold $500,000 in trust for the maintenance of the house and, if the appellant ‘is no longer able’ or no longer wishes to live in the house, the money is to be used for his living expenses, nursing or retirement home expenses, or all funeral expenses. Any amount left over after his death was to be paid to St Stephen’s Community House.

The evidence showed that the appellant intended to live in the house after his retirement, anticipated in 2021, but to the testator’s knowledge he needed to continue to work for the time being to maintain an income. He worked in Toronto at the time of the testator’s death and began a full-time job in Sault Ste Marie in 2019. However, he regarded the home as his primary residence for his driver’s licence and income tax and spent weekends there once or twice a month. St Stephens conducted a private inquiry into the matter and uncovered these facts. It took the view that the appellant was not living in the house and that therefore it should be sold and the proceeds paid to it. The executor then brought an application to determine the interest in the property held by the appellant and whether it was valid.

3. Reasons of the Application Judge

The application judge held: (a) that the appellant’s interest was a licence and not a life estate; and (b) that the ‘condition’ that the appellant live in the house was uncertain. That meant that the licence was uncertain and therefore the entire gift failed. Her Honour rightly defined a licence as a privilege to enter premises for a specific purpose but does not give the licencee any title or estate in the property. On the other hand, a life tenant does hold title to the property for his life (or such shorter period as prescribed in the gift). She recognized that the cases that seek to distinguish between the two rights go both ways and are irreconcilable. She also held that the court must interpret the will in light of surrounding circumstances. After construing the will, she concluded that the gift created a licence, not a life estate, mainly on the ground that the gift was to a friend. This distinguished the case from others which made gifts to a spouse or common law partner and interpreted the gift as a life estate. She also held that the fact that the property vested in the trustee rather than in the appellant favoured the interpretation of the gift as a licence. For this purpose she relied on Moore v Royal Trust Co,^[2] which is the only Supreme Court of Canada case that distinguishes between a life estate and a licence on this ground. Her Honour then went on to find that the condition imposed on the gift (no longer living in the home) was void for uncertainty, because it was ‘impossible to define … what it means to “live” in the house’. She acknowledged that if the estate were a life estate, it would be an estate upon condition subsequent and the condition, being void, would be struck and the life estate would become absolute. However, since she had held that Mr Wesley’s interest was a licence, the licence failed along with the void condition. Mr Wesley appealed.

4. Appeal Decision

The judgment was written by A Harvison Young JA. Janet Simmons and B Zarnett JJA concurred. Justice Harvison Young acknowledged that the case law is of limited assistance in cases such as this one because in each case the court must pay attention to the testator’s intentions and the surrounding circumstances at the time she made her will. Her Honour discounted Moore v Royal Trust Co that was relied on by the application judge. In my opinion she was right to do so, for other cases which she cites reached the opposite conclusion. Moreover, in my view and with great respect, the distinction lacks a sound basis. It seems to imply that only a common law grant to a beneficiary can support a life estate and a beneficial interest under a trust cannot. Our law does not support such a conclusion, for it regularly recognizes beneficial life interests. Harvison Young JA also disagreed, rightly in my view, with the application judge’s view that the $500,000 fund for the maintenance of the house supported the interpretation of a licence rather than a life estate. Her Honour also disagreed with the application judge’s view that since the grant was to a friend rather than to a spouse or common law spouse the construction favoured a licence. I think this correct too. The evidence was clear that the testator and the appellant enjoyed a close relationship and suggested that she regarded the appellant as family.

That left the question whether the terms of the gift conferred a determinable life estate or a life estate upon condition subsequent. Her Honour adverts to the distinction in paragraphs 51-54, which outline the parties’ views on the issue. But it is unfortunate that she does not discuss the differences in greater detail. The respondent rightly, although somewhat superficially, outlines the differences. A determinable interest arises when the terminating evening is part of the words of limitation of the grant itself so that it is an integral part of the gift. It gives the testator’s estate a possibility of reverter. Further, words of duration, such as ‘during’, ‘while’, until, and ‘so long as’, suggest a determinable interest. In contrast, a gift upon condition subsequent involves a gift that can come to an end if what amounts to a superadded condition comes to pass. It cuts the estate short. In other words, the condition is not part of the limitation of the gift. It gives the testator’s estate a right of re-entry. Further, words of condition, such as, ‘but if’, ‘on condition that’, ‘provided that’, and ‘if it should happen that’, suggest a condition subsequent.^[3]

Moreover, if the determining event happens in the case of a determinable interest, the interest ends automatically. In contrast, in the case of an interest on condition subsequent, the interest ends only when the grantor or the testator’s estate exercises the right of re-entry.

What kind of interest was created by this will? At first blush it looks like a determinable interest since the will speaks of holding the house in trust for the appellant during his lifetime. Moreover, the clause that follows does not contain words of condition. The clause does not say, for example, ‘but if Mr Wesley no longer lives in the house … the house shall be sold’.

Unfortunately, the problem is that if the determining event of a determinable interest is uncertain (or otherwise void), the entire gift is void because as we saw, the determining event is part of the words of limitation. In that respect a determinable interest is as vulnerable as a licence. But if the gift is of an estate upon condition subsequent and the condition is void, the condition is struck, and the gift becomes absolute. The drastic consequence of calling a determinable interest void may motivate courts to treat the determining event as a condition subsequent instead. Thus, Ziff suggests^[4] that this may have motivated the Privy Council in Sifton v Sifton,^[5] to hold that a gift of payments to the testator’s daughter should continue ‘only so long as she shall continue to reside in Canada’, created a condition subsequent that was void for uncertainty. And frankly that is not untoward, since the language used is often capable of being interpreted as either. It is unfortunate that Justice Harvison Young does not discuss these differences but simply agrees with the application judge that the words in question were ‘external to the gift’ and that this interpretation was supported by contextual considerations. She agreed with the application judge that the condition was void for uncertainty and should be struck. Thus, she allowed the appeal in part.

The determinable interest finds its origin in feudal law and we have no sound reason for retaining it today. Indeed, an Irish judge once called the distinction between determinable interests and interests upon conditions subsequent as ‘little short of disgraceful in our jurisprudence’,^[6] and others have also excoriated the distinction.

In its Report on the Basic Principles of Land Law the Ontario Law Reform Commission recommended^[7] ‘that the continuing distinction between a determinable interest and an interest subject to a condition subsequent should be abrogated … by providing that language that at common law would create a determinable interest will instead create an interest subject to a condition subsequent’. Sadly, that recommendation along with many other useful suggestions for reform was never acted upon. On the other hand, in the Commission’s earlier Report on Perpetuities^[8] it also addressed the distinction which, in the case of perpetuities meant that a possibility of reverter was not subject to the rule, whereas a condition subsequent was. The Commission recommended that a possibility of reverter should be treated in the same way as condition subsequent. And that recommendation was implemented in s. 15(1) of the Perpetuities Act,^[9] which however reduced the perpetuity period for such interests to 40 years.^[10]

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[1] 2022 ONCA 399, 76 ETR 4th 1, reversing in part Barsoski v Wesley, 2020 ONSC 7407.

[2] 1954 CarswellBC 85, [1955] 4 DLR 313 (CA).

[3] For a clear description of the differences between determinable interests and estates upon conditions subsequent and what happens if the determining event in either case is void, I refer the reader to Bruce Ziff, Principles of the Law of Property, 7th ed (Thomson Reuters, 2018), pp. 280-285 and 289-291.

[4] Ibid, p 282.

[5] 1938 CarswellOnt 99, [1938] AC 656 (PC).

[6] Re King’s Trusts (1892), 29 LR Ir 401 at 410.

[7] Ontario Law Reform Commission, Report on the Basic Principles of Land Law (1996), p 64.

[8] Ontario Law Reform Commission, Report on the Rule Against Perpetuities, Report No 1 (1965), p 33.

[9] RSO 1990, c P-9 (first enacted 1966, c 113, s 15(1).

[10] Other jurisdictions adopted this approach, although their perpetuities periods for these interests vary. See Perpetuities Act, RSA 2000, c P-5, s 19; RSNWT 1988, c P-3, s 16; RSNWT (Nu) 1988, c P-3, s 16; RSY 2002, c 168, s 19; Perpetuity Act, RSBC 1996, c 385, s 23.

By Nima Hojjati

VanSickle Estate v. VanSickle, 2022 ONCA 643, https://canlii.ca/t/jrxz2

    In VanSickle Estate v. VanSickle, the Court of Appeal reviewed an application for directions in the interpretation of a will and granted the appeal due to an extricable error of law in applying the presumption that a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to the property of the testator, as set out in s. 22 of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (“SLRA”).^[1]

Background

The testator and her late husband owned and operated a 66.54 acre hobby farm as a secondary source of income.^[2] The testator passed away at the age of 95 and she was survived by 6 children.^[3] The testator had prepared a will in 1985 which provided the eldest son with an option to purchase “the farming business carried on by me” for $85,300.^[4] Four of the other children argued that the testator had ceased carrying on the farming business therefore the option to purchase the farm had lapsed, and the farm should fall into the residue of the estate.^[5]

The relevant clause of the will provided:

If my [eldest son], shall be living at the time of my death, my Trustees shall sell the farming business carried on by me at [Brantford, Ontario], to my [eldest son], as soon as convenient for the price of $85,300.00 or such lower price to be agreed upon by my Trustees and my son, having regard to the assessed value of the lands included hereby at the time of my death and the assistance given me by my son in the conduct of the farming business … And I desire that for the purpose of this clause the expression of my farming business shall include all assets, stock, plant, liabilities, in connection therewith on the other and it shall include the estate in fee simple of the farm…^[6]

Although all the children had helped with the farm growing up, the four youngest had moved away and were not involved with the farm.^[7] The testator intended to benefit the eldest son differently because of his lifelong commitment to the operation of the farm.^[8] However, it was not known whether the testator had considered the increased value of the farm since 1985, which resulted in a much bigger gap between her provision for the eldest son and “the rest of the children than would have been the case in 1985”.^[9] In other words, the farm was now more valuable.

Application Judge’s Decision 

At first instance, the application judge agreed with the four children that the “farming business” had ceased.^[10] The application judge concluded that the “business” referred to an active farming business carried on before the making of the will, and to construe “business” to mean the bare rental of farmland would be inconsistent with the qualifying phrase “carried on by me”.^[11]

Standard of Review

The standard of review of an application judge’s interpretation of a will is the same as that of a contract.^[12] The “findings of an application judge in interpreting the will in light of all the surrounding circumstances to determine the subjective intentions of the testator that it conveys, are findings of mixed fact and law entitled to appellate deference, absent an extricable error of law or palpable and overriding error”.^[13]

Extricable Error of Law

The Court of Appeal held that the application judge made an extricable error of law in failing to apply the presumption set out in s. 22 of the SLRA which states:

Will to speak from death

22 Except when a contrary intention appears by the will, a will speaks and takes effect as if it had been made immediately before the death of the testator with respect to,

(a) the property of the testator; and

(b) the right, chose in action, equitable estate or interest, right to insurance proceeds or compensation, or mortgage, charge or other security interest of the testator under subsection 20 (2). R.S.O. 1990, c. S.26, s. 22.^[14]

Pursuant to s. 22 of the SLRA, the starting point for the interpretation of the will was to ask whether the testator was carrying on a farm business at the time of her death.^[15] The Court of Appeal considered the evidence that the testator owned the farmland, did not leave it unproductive, leased it out to be farmed on a commercial basis, received income, and declared that income on her taxes as farm income.^[16] On a reading of these facts, the testator was found to be carrying on a farm business at the time of her death.^[17]

The next question was whether anything in the will displaced the presumption that the will speaks at the time of death, and instead supported the proposition that the testator only intended for the option to purchase be exercisable if she had a direct role in the farm business – “either tending the fields herself or directly managing the labour of others”.^[18]

The Court of Appeal held that there was nothing in the phrase “the farming business carried on by me” that pointed unambiguously to the business carried on in 1985 over the business carried on in 2019.^[19] There was also no evidence in the surrounding circumstances to suggest that the testator’s intention was to provide the eldest son with an option to purchase the farm “so that he could continue farming it, but only if she was still involved in the day-to-day operations”.^[20] The Court of Appeal further noted that the will contained a clause that defined the term “farming business” as including “all assets, stock, plant, liabilities, in connection there with on the other (sic) and it shall include the estate in fee simple of the farm.”^[21]

Although it could be wondered whether the testator intended to benefit the eldest son quite as much as she did, the testator did intend to benefit the eldest son differently.^[22] The Court of Appeal held:

“…despite the passage of 34 years, the testator never chose to amend her will. The task of this court is simply to determine whether the option to purchase is valid and was validly exercised. It is and it was.”^[23]

--

[1] VanSickle Estate v. VanSickle, 2022 ONCA 643 at paras 1, 2, and 9 (“VanSickle Estate”).

[2] VanSickle Estate at para 3.

[3] VanSickle Estate at para 3.

[4] VanSickle Estate at paras 1, 4, and 6.

[5] VanSickle Estate at para 1.

[6] VanSickle Estate at para 6.

[7] VanSickle Estate at para 4.

[8] VanSickle Estate at para 13.

[9] VanSickle Estate at para 13.

[10] VanSickle Estate at para 2.

[11] VanSickle Estate at para 7.

[12] VanSickle Estate at para 8; citing Trezzi v. Trezzi, 2019 ONCA 978, 150 O.R. (3d) 663, at para 15.

[13] VanSickle Estate at para 8.

[14] VanSickle Estate at para 9; Succession Law Reform Act, R.S.O. 1990, c. S.26, section 22: https://canlii.ca/t/2ql#sec22.

[15] VanSickle Estate at para 10.

[16] VanSickle Estate at para 10.

[17] VanSickle Estate at para 11.

[18] VanSickle Estate at para 11.

[19] VanSickle Estate at para 12.

[20] VanSickle Estate at para 12.

[21] VanSickle Estate at para 12.

[22] VanSickle Estate at para 13.

[23] VanSickle Estate at para 13.

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