Lecky Estate, Re, 2011 ABQB 802

• Judge: Kent, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: December 19, 2011
• Citations: 2011 ABQB 802;(2011), 530 A.R. 286 (QB)

Lecky Estate, Re (2011), 530 A.R. 286 (QB)

MLB headnote and full text

Temp. Cite: [2012] A.R. TBEd. JA.012

The Personal Representatives The Lecky Foundation, Caroline Frances Lecky, Jonathan Robert Stirling Lecky, Christopher Hartpole Lecky, Edward Alexander Macmillan Lecky and William Anton Hardinge Lecky (plaintiffs) v. Euphemia Sarah Ann Lecky (respondent)

(ES01 096832; 2011 ABQB 802)

Indexed As: Lecky Estate, Re

Alberta Court of Queen's Bench

Judicial District of Calgary

Kent, J.

December 19, 2011.

Summary:

Lecky's will created three trusts: the Ven House Trust, the Spousal Trust and the Residual Trust. The Ven House Trust provided that the Lecky residence (the Ven House) and the personal effects from the residence were to be held in trust (the Ven House Trust) for the wife until her death and then the remaining assets in the trust were to be paid or transferred to the Lecky Foundation. If the wife sold the residence or personal effects, the proceeds from the sale were to be applied to purchase a new residence and personal effects for her, which was not to exceed after tax proceeds of the sale. Any excess funds from the sale were to be transferred to the Foundation. The Spousal Trust held shares. The income generated by the shares was to be paid to the wife so that she could continue to enjoy at least the standard of living to which she had become accustomed during Lecky's lifetime. After Lecky's death in 2003, the Foundation agreed to defer the disbursement of the excess funds in the Ven House Trust to enable the trustees to buy residences in England for the wife. In 2008, the Foundation further agreed to defer disbursement to enable the trustees to purchase a second and third British residence for the wife using the proceeds from the sale of a prior residence. The third residence was not purchased. In 2011, the Foundation withdrew its consent to any further deferrals and asked the trustees to transfer the excess proceeds in the Ven House Trust and all personal effects not being used by the wife to the Foundation. The majority of the trustees (not the wife) applied for advice and direction on the will's interpretation and to pass accounts. The Foundation applied for declarations and other relief relating to the proceeds from the sale of the Ven House and the Ven House personal effects. The issues raised included whether the trustees had the discretion to pay any, some or all of the annual income of the Residual Trust to the wife or whether they had to pay all of the annual income to the wife and only had discretion respecting the timing, manner and amount of each payment; the trustees' power and obligation to request financial information and documentation from the wife; the nature of the wife's interest in the Ven House assets; whether the Ven House assets had become part of the Spousal Trust or the Residual Trust; how testamentary expenses were to be treated; and entitlement to the proceeds of sale from the Ven House properties.

The Alberta Court of Queen's Bench held that the whole of the income from the Residual Trust was to be paid to the wife each year and the trustees' discretion related only to timing, manner and amount of each payment; the trustees had a discretion to seek an accounting from the wife only to the extent necessary to satisfy themselves that encroachments on capital were being made for the intent and purpose of lifestyle; the will granted the wife a life estate in the Ven House properties and the right to the income from the Ven House proceeds; the Ven House proceeds formed a trust which was separate from the Residual Trust and Spousal Trust; the costs of estate administration, the debts and liabilities were to be first paid from the Residual Trust, followed by specific legacies, and thereafter specific devises; and the trustees were not presently required to pay out funds currently held in the Ven House Trust to the Foundation; and the wife had one year to purchase a third residence. The court also made several orders respecting the trustees' application for the passing of accounts.

Contracts - Topic 1505

Formation of contract - Consensus or agreement - Essential terms - What constitutes - A will provided that the testator's residence and the personal effects from the residence were to be held in trust for his wife until her death and upon her death, the remaining assets in the trust were to be paid or transferred to the testator's charitable foundation - If the wife sold the residence or personal effects, the proceeds from the sale were to be applied to purchase a new residence and personal effects for the wife, which was not to exceed after tax proceeds of the sale - Any excess funds from the sale were to be transferred to the foundation - After the testator's death in 2003, the charitable foundation agreed to defer the disbursement of the excess funds in the trust to enable the trustees to buy residences in England for the wife - In 2008, the foundation further agreed to defer distribution to enable the trustees to purchase a second and third British residence for the wife using the proceeds from the sale of a prior residence - The third residence was not purchased - In 2011, the foundation withdrew its consent to any further deferrals and asked the trustees to transfer the excess proceeds in the trust and all personal effects not being used by the wife to the foundation - The Alberta Court of Queen's Bench rejected the wife's assertion that a binding contract was reached respecting the deferral of distribution - There was no certainty of terms - The so-called agreement was a gratuitous promise, a temporary indulgence respecting distribution - The terms of an agreement were not specified - The most notable deficiency was the complete silence as to a deadline on the deferral - What occurred was a variation of a trust - No trust arising by a will could be varied without the court's approval and only then with the consent of all persons who were beneficially interested in the trust - See paragraphs 170 to 172.

Contracts - Topic 2861

Consideration - What constitutes consideration - General - [See Contracts - Topic 1505 ].

Estoppel - Topic 3

General principles - When available - A will provided that the testator's residence and the personal effects from the residence were to be held in trust for his wife until her death and upon her death, the remaining assets in the trust were to be paid or transferred to the testator's charitable foundation - If the wife sold the residence or personal effects, the proceeds from the sale were to be applied to purchase a new residence and personal effects for the wife, which was not to exceed after tax proceeds of the sale - Any excess funds from the sale were to be transferred to the foundation - After the testator's death in 2003, the charitable foundation agreed to defer the disbursement of the excess funds in the trust to enable the trustees to buy residences in England for the wife - In 2008, the foundation agreed to further defer distribution to enable the trustees to purchase a second and third British residence for the wife using the proceeds from the sale of a prior residence - The third residence was not purchased - In 2011, the foundation withdrew its consent to any further deferrals and asked the trustees to transfer the excess proceeds in the trust and all personal effects not being used by the wife to the foundation - The Alberta Court of Queen's Bench held that the foundation was estopped from requesting the payment of the sale proceeds - Being mutual beneficiaries under a will constituted a legal basis for an estoppel claim - The foundation's 2008 promise clearly represented that it would defer payment to itself, contrary to the wording of the will, and allow the wife to purchase replacement homes - The wife relied on the promise to her detriment - She gave up her opportunity to purchase two larger replacement homes and was now being denied the opportunity to purchase the third replacement home as contemplated under the promise - She acted equitably - She was not given any advance notice that the foundation had a time frame within which it desired the third replacement home to be purchased - However, the effects of estoppel were limited - The estoppel would end when the third home was purchased - The wife was to have the trustees purchase a third home for her use within one year - If no suitable home was found within that time, the foundation could exert its strict rights under the will, in which case the funds to which it were entitled were to be disbursed to the foundation forthwith - See paragraphs 168 to 185.

Estoppel - Topic 8

General principles - Conditions precedent - [See Estoppel - Topic 3 ].

Estoppel - Topic 12

General principles - Notice of termination of estoppel - [See Estoppel - Topic 3 ].

Estoppel - Topic 1103

Estoppel in pais - Representation - By statement - Representations which found estoppel - [See Estoppel - Topic 3 ].

Evidence - Topic 1527

Hearsay rule - hearsay rule exceptions and exclusions - General - Where admission of hearsay necessary and evidence reliable - In interpreting a will, the Alberta Court of Queen's Bench stated that the direct evidence of the lawyer who drafted the will was considered hearsay and was only admissible if the requirements of necessity and reliability were met - That evidence had two forms: (1) a draft copy of the will and a letter from the lawyer to the testator and (2) the questioning of the lawyer - The court agreed that questioning was not about the testator's intention but rather the lawyer's intention - It was what the lawyer believed, not what the testator intended - The lawyer was asked about the inclusion of the word "shall" in a clause - That evidence was interpreting the will - That task belongs to the court - Therefore, the court refused to admit the questioning of the lawyer - The documentary evidence was necessary as it was both relevant and unavailable from the testator himself - The evidence related to the reasons why the testator chose to structure his will in a certain way, and his intentions in doing so - Further, the testator was deceased and therefore unavailable to testify as to his intentions - The evidence was also reliable in the sense that both were documents prepared by a lawyer whose reputation and veracity were not challenged - However, both documents added to uncertainty about the testator's intention - See paragraphs 114 to 121.

Evidence - Topic 7153

Opinion evidence - Prohibited opinions - Re legal conclusions - [See Evidence - Topic 1527 ].

Evidence - Topic 7154

Opinion evidence - Prohibited opinions - Re basic or ultimate issue to be decided - [See Evidence - Topic 1527 ].

Executors and Administrators - Topic 6404

Accounts and passing of accounts - Particular accounts - Administration costs - At issue included the allocation of debts, expenses and costs associated with administration of a testator's estate - The parties agreed that the order in which debts and liabilities were paid was that the residue of the estate was exhausted first, then specific legacies (personalty) and then specific devises (realty) - However, the testator's wife asserted that the administration expenses were to be treated differently from the estate's debts and liabilities and should not be borne in that sequential order - She requested that the administration costs be paid out of the capital on a pro-rata basis - The Alberta Court of Queen's Bench referred to clause 4(b) of the will which provided that "To pay out of and charge to the capital of my estate, my just debts, funeral and testamentary expenses ..." - That indicated that testamentary expenses were to be treated the same as debts - Testamentary expenses included the expenses of administering the estate - Accordingly, the administrative expenses were to be paid in the same sequential order as debts - See paragraphs 163 to 167.

Trusts - Topic 8000

Variation of trusts - General - [See Contracts - Topic 1505 ].

Wills - Topic 5000

Construction - General - General principles - Ascertainment of intention of testator - Clause 5(c) of a will stated that the personal representatives and trustees of the estate (the trustees) " ... shall pay and apply on an annual basis the whole income of the [Residual] Trust ..." to the testator's wife - The phrase was followed by discretionary language - At issue was the amount of the income to be paid to the wife and whether the trustees had a discretion as to the timing, manner and amount of each payment - Central to the parties' arguments was whether "shall" was imperative or directive - The Alberta Court of Queen's Bench stated that within the context of the will as a whole, there was support for both arguments - "Shall" appeared four times in clause 5(c) - The three other usages appeared to mean "may" or "entitled to" - Given the presumption that a word had the same meaning in a document regardless of how many times it was used, it was reasonable to conclude that the "shall" in question also meant "may" or "entitled to" - That construction was supported, inter alia, by the language that followed the phrase in question - However, given the uncertainty, the court had to consider the surrounding circumstances and any admissible direct evidence - Documents from the lawyer who drafted the will added to confusion - However, the absence of a provision to do deal with unpaid income in the Residual Trust along with the surrounding circumstances cleared up the confusion - The will had only two beneficiaries: the wife and the testator's charitable foundation - The foundation was only to be a residual beneficiary - The testator knew that the lifestyle that he and his wife had was expensive and he wanted that to continue for her after his death - The testator's intention was to have the whole of the income paid to the wife each year - See paragraphs 86 to 123.

Wills - Topic 5003

Construction - General - General principles - Repeated words interpreted in same sense - [See Wills - Topic 5000 ].

Wills - Topic 5004

Construction - General - General principles - Construction of words in context of whole will - [See Wills - Topic 5000 ].

Wills - Topic 5183

Construction - General - Evidence and proof - Intention of testator - [See Evidence - Topic 1527 and Wills - Topic 5000 ].

Wills - Topic 5183

Construction - General - Evidence and proof - Intention of testator - The Alberta Court of Queen's Bench reviewed the legal principles applicable to the interpretation of a will, including the use of indirect evidence of the surrounding circumstances (the armchair rule) and the use of direct evidence of intent in light of the evolution of hearsay rules - The court concluded that the law had evolved to the point where armchair or context evidence was always admissible when construing a will and that extrinsic evidence of intent which was potentially probative, necessary and might reasonably be true was also admissible - See paragraphs 49 to 85.

Wills - Topic 5184

Construction - General - Evidence and proof - Armchair rule - [See Wills - Topic 5000 and second Wills - Topic 5183 ].

Wills - Topic 7013

Construction - Persons entitled to take - Interpretation of particular words or phrases - Shall - [See Wills - Topic 5000 ].

Wills - Topic 7350

Construction - Quantity of interest taken - Trusts - Beneficiaries - Rights of - [See Contracts - Topic 1505 and Estoppel - Topic 3 ].

Wills - Topic 7400

Construction - Quantity of interest taken - Life interest - General - Clause 4(c) of a will provided that the testator's residence and the personal effects from the residence were to be held in trust for his wife "until her death" and upon her death, the remaining assets in the trust were to be paid or transferred to the testator's charitable foundation - If the wife sold the residence or personal effects, the proceeds from the sale were to be applied to purchase a new residence and personal effects for the wife, which was not to exceed after tax proceeds of the sale - Any excess funds from the sale were to be transferred to the foundation - After the testator's death in 2003, the charitable foundation agreed to defer the disbursement of the excess funds in the trust to enable the trustees to buy residences in England for the wife - In 2008, the foundation further agreed to defer distribution to enable the trustees to purchase a second and third British residence for the wife using the proceeds from the sale of a prior residence - The third residence was not purchased - In 2011, the foundation withdrew its consent to any further deferrals and asked the trustees to transfer the excess proceeds in the trust and all personal effects not being used by the wife to the foundation - The Alberta Court of Queen's Bench held that clause 4(c) created a life estate in favour of the wife as opposed to a mere license to use the residence during her lifetime - The words used were a classic description of a life estate - Contextual factors that supported that conclusion included the fact that the testator and the wife lived together, they were husband and wife and that she was given the personal effects - Pursuant to the will and the foundation's agreement to allow the purchase of successive residences, the wife's life estate continued in the successive residences purchased using the proceeds of the trusts - See paragraphs 145 to 159.

Wills - Topic 7525

Construction - Quantity of interest taken - Real property - License to use - [See Wills - Topic 7400 ].

Wills - Topic 7533

Construction - Quantity of interest taken - Real property - After acquired property - [See Wills - Topic 7400 ].

Wills - Topic 8544

Evidence and proof - Extrinsic evidence - Of surrounding circumstances to resolve ambiguity in will - [See Wills - Topic 5000 ].

Wills - Topic 8546

Evidence and proof - Extrinsic evidence - Of intention of testator - [See Wills - Topic 5000 ].

Words and Phrases

Shall - The Alberta Court of Queen's Bench interpreted the meaning of this word as used in a will - See paragraphs 86 to 123.

Cases Noticed:

McNeil v. McNeil Estate (2006), 408 A.R. 144; 2006 ABQB 636, refd to. [para. 50].

Daniels v. Daniels Estate et al. (1991), 120 A.R. 17; 8 W.A.C. 17; 85 D.L.R.(4th) 116 (C.A.), leave to appeal denied [1992] 4 W.W.R. LXIX; 139 N.R. 391 (S.C.C.), refd to. [para. 51].

Haidl et al. v. Sacher et al., [1980] 1 W.W.R. 293; 2 Sask.R. 93; 106 D.L.R.(3d) 360 (C.A.), refd to. [para. 53].

Doe d. Gwillim v. Gwillim, 2 L.J.K.B. 194, refd to. [para. 56].

Grey v. Pearson (1857), 6 H.L. Cas. 61 (H.L.), refd to. [para. 56].

Simpson v. Foxon, [1907] P. 54, refd to. [para. 56].

Augur v. Beaudry, [1919] 3 W.W.R. 559; [1920] A.C. 1010; 48 D.L.R. 356 (P.C.), refd to. [para. 57].

Re Warren (1922), 52 O.L.R. 127, refd to. [para. 57].

Re McIntosh Estate, [1923] 2 W.W.R. 605, refd to. [para. 57].

Tottrup v. Patterson, [1970] S.C.R. 318; 71 W.W.R.(N.S.) 338; 9 D.L.R.(3d) 314, refd to. [para. 57].

Otterwell, Re - see Tottrup v. Patterson.

Grover v. Burningham (1850), 5 Exch. 184, refd to. [para. 58].

Rowland, Re, [1963] 1 Ch. 1; [1962] 2 All E.R. 837; 3 W.L.R. 137 (C.A.), refd to. [para. 58].

Davis Estate, Re (1983), 51 A.R. 377; 15 E.T.R. 296 (Q.B.), refd to. [para. 62].

Decore Estate, Re, [2009] A.R. Uned. 507; 179 A.C.W.S.(3d) 237; 2009 ABQB 440, refd to. [para. 62].

National Trust Company v. Fleury, [1965] S.C.R. 817; 53 D.L.R.(2d) 700, refd to. [para. 65].

Coughlin, Re (1982), 12 E.T.R. 59; 36 O.R.(2d) 446 (H.C.), refd to. [para. 66].

Bruce Estate, Re (1998), 24 E.T.R.(2d) 44; 80 A.C.W.S.(3d) 1278 (Y.T.S.C.), refd to. [para. 71].

Bank of Nova Scotia Trust Co. v. Forbes et al. (2007), 216 Man.R.(2d) 156; 33 E.T.R.(3d) 123 (Q.B.), refd to. [para. 71].

Johnson Estate v. Forbes et al. - see Bank of Nova Scotia Trust Co. v. Forbes et al.

R. v. Abbey, [1982] 2 S.C.R. 24; 43 N.R. 30; 138 D.L.R.(3d) 202, refd to. [para. 72].

Beaton v. McNaughton et al. (2009), 241 Man.R.(2d) 58; 2009 MBQB 140, refd to. [para. 76].

Wittick Estate v. Williams Estate - see Beaton v. McNaughton et al.

Bullivant et al. v. Victoria (Attorney General), [1901] A.C. 196 (H.L.), refd to. [para. 79].

Stewart v. Walker (1903), 6 O.L.R. 495 (C.A.), refd to. [para. 79].

Goodman Estate v. Geffen (1987), 80 A.R. 47 (Q.B.), revd. (1989), 98 A.R. 321; 61 D.L.R.(4th) 431 (C.A.), affd. [1991] 2 S.C.R. 353; 127 N.R. 241; 125 A.R. 81; 14 W.A.C. 81, refd to. [para. 80].

Langworthy v. McVicar (1913), 25 O.W.R. 297; 5 O.W.N. 345, refd to. [para. 81].

Ott, Re, [1972] 2 O.R. 5; 7 R.F.L. 196; 24 D.L.R.(3d) 517 (Surr. Ct.), refd to. [para. 81].

Marchuk v. Marchuk (1965), 52 W.W.R.(N.S.) 652 (Sask. Q.B.), refd to. [para. 83].

Anderson Estate, Re (1979), 1 Man.R.(2d) 143 (Q.B.), refd to. [para. 83].

R. v. J.H. (2002), 155 O.A.C. 146; 161 C.C.C.(3d) 392 (C.A.), refd to. [para. 81, footnote 88].

Lavallee v. Alberta Securities Commission (2009), 467 A.R. 152; 2009 ABQB 17, refd to. [para. 88].

R. v. Khelawon (R.), [2006] 2 S.C.R. 787; 355 N.R. 267; 220 O.A.C. 338; 2006 SCC 57, refd to. [para. 115].

R. v. Starr (R.D.), [2000] 2 S.C.R. 144; 258 N.R. 250; 148 Man.R.(2d) 161; 224 W.A.C. 161; 190 D.L.R.(4th) 591; 2000 SCC 40, refd to. [para. 115].

R. v. Khan, [1990] 2 S.C.R. 531; 113 N.R. 53; 41 O.A.C. 353; 59 C.C.C.(3d) 92, affing. (1988), 27 O.A.C. 142; 42 C.C.C.(3d) 197 (C.A.), refd to. [para. 115].

D.B.S. v. S.R.G., [2006] 2 S.C.R. 231; 351 N.R. 201; 391 A.R. 297; 377 W.A.C. 297; 2006 SCC 37, refd to. [para. 126].

Carver v. Duncan, [1985] 2 All E.R. 645 (H.L.), refd to. [para. 134].

Moore v. Royal Trust Co., [1956] S.C.R. 880; 5 D.L.R.(2d) 152, dist. [para. 148].

Powell v. Powell (1988), 90 A.R. 291; 62 Alta. L.R.(2d) 384, dist. [para. 148].

McColgan, Re, [1969] 2 O.R. 152; 4 D.L.R.(3d) 572, refd to. [para. 152].

McKay v. Henderson Estate (1991), 113 N.B.R.(2d) 308; 285 A.P.R. 308; 25 A.C.W.S.(3d) 196 (T.D.), refd to. [para. 152].

Christensen and Nadon v. Martini (1999), 232 A.R. 339; 195 W.A.C. 339; 1999 ABCA 111, refd to. [para. 153].

Hurst v. Soucoup (2010), 361 N.B.R.(2d) 329; 931 A.P.R. 329; 2010 NBQB 216, refd to. [para. 159].

MacRae Estate, Re, [2011] A.R. Uned. 327; [2011] A.W.L.D. 2848; 67 E.T.R.(3d) 326; 2011 ABQB 277, refd to. [para. 164].

Jorden v. Money (1852), 5 H.L.C. 185, refd to. [para. 173].

Hext v. Wilson, [1976] A.J. No. 165 (C.A.), refd to. [para. 175].

Martinez v. Hogeweide et al. (1998), 209 A.R. 388; 160 W.A.C. 388; 156 D.L.R.(4th) 757 (C.A.), refd to. [para. 176].

Hughes v. Metropolitan Railway Co. (1877), 2 App. Cas. 439 (H.L.), refd to. [para. 179].

Central London Property Trust Ltd. v. High Trees House Ltd., [1947] 1 K.B. 130, refd to. [para. 179].

Ajayi v. R.T. Briscoe (Nigeria) Ltd., [1964] 3 All E.R. 556; [1964] 1 W.L.R. 1326 (P.C.), refd to. [para. 179].

Tudale Explorations Ltd. v. Bruce (1978), 88 D.L.R.(3d) 584 (Ont. Div. Ct.), refd to. [para. 180].

Authors and Works Noticed:

Alberta Law Reform Institute, Wills and the Legal Effects of Changed Circumstances: Final Report No. 98 (2010), para. 98 et seq. [para. 77].

Anger and Honsberger, The Law of Real Property (3rd Ed. 2010), pp. 6, 7 [para. 159].

Feeney, Thomas G., The Canadian Law of Wills (4th Ed. 2000), paras. 1.74 [para. 68]; 10.25 [para. 52]; 10.54, 11.76, 11.79 [para. 68.]; 11.86 to 11.102 [para. 70].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (5th Ed. 2006), p. 136 [para. 180].

Waddams, S.M., The Law of Contracts (5th Ed. 2005), pp. 140 to 142 [para. 174]; 143 [paras. 174, 179]; 144 to 147 [para. 174]; 148, 149 [paras. 174, 180].

Widdifield on Executors and Trustees (6th Ed. 2002) (Looseleaf), paras. 4-23 [para. 165]; 7-32 [para. 159].

Counsel:

Bradley G. Nemetz, Q.C. (Bennett Jones LLP), for the Lecky children and Caroline Lecky;

Blair R. Carbert and David Cumming (Stones Carbert Waite Wells LLP), for the Lecky Foundation;

D. J. McDonald, Q.C. (Burnet Duckworth & Palmer LLP), for the Personal Representatives;

Alex Kotkas and Karen Wyke (Fasken Martineau Dumoulin LLP), for Euphemia Sarah Ann Lecky.

These applications were heard on October 7-9, 2011, by Kent, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following reasons for judgment on December 19, 2011.