Rudderham (Joseph W.) Estate, Re, (1971) 2 N.S.R.(2d) 729 (CA)

• Judge: McKinnon, C.J.N.S., Coffin and Cooper, JJ.A.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: September 13, 1971
• Jurisdiction: Nova Scotia
• Citations: (1971), 2 N.S.R.(2d) 729 (CA)

Rudderham Estate, Re (1971), 2 N.S.R.(2d) 729 (CA)

MLB headnote and full text

Re Estate of Joseph W. Rudderham

Indexed As: Rudderham (Joseph W.) Estate, Re

Nova Scotia Supreme Court

Appeal Division

McKinnon, C.J.N.S., Coffin and Cooper, JJ.A.

September 13, 1971.

Summary:

On a reference under Section 25(2) of the Judicature Act, the Appeal Court construed a will granting an option to purchase certain company shares to the testator's sons at fair market value. The Appeal Court held that the shares are to be valued at the date of distribution to sons and not as of the date of the testator's death. The Appeal Court stated that in a rising market for the shares that valuation as of the date of the testator's death would result in unequal treatment as between the residuary legatees and the purchasers of the company shares. In addition, the Appeal Court stated that is the duty of the trustee to obtain the best possible price on the sale of trust property.

With respect to the question of the valuation of the company shares the Appeal Court held that in determining fair market value of the shares of the company that a factor to be considered is the continuation of the present management of the company. Three sons of the testator provided excellent management of the company subsequent to the testator's death. The 3 sons stated in evidence that they would not continue in the management of the company unless they acquired `control' of the company. The Appeal Court directed the trustee to retain an auditor to determine fair market value for the shares taking into account the loss of the present management of the company and its affect on goodwill and the valuation of the shares generally.

Wills - Topic 7284

Construction - Quantity of interest taken - Personal property - Company shares - Option to purchase company shares granted by testator to his son at fair market value - Date of valuation - The Nova Scotia Court of Appeal held that the shares are to be valued at the date of distribution and not as of the date of the testator's death.

Wills - Topic 7284

Valuation - Company shares - Sale by an estate to sons of testator at fair market value - The Nova Scotia Court of Appeal held that "going concern value" which assumes continuation of present management is not the proper method of valuation of company shares at fair market value where the present management would probably leave if outsiders controlled the company.

Wills - Topic 7284

Sale of company shares by estate to the sons of a testator - Purchase price of shares exceeded $250,000. - The Nova Scotia Court of Appeal gave directions to trustee with respect to sale and terms.

Cases Noticed:

Royal Trust Co. et al. v. Norrie et al. (1951), 3 W.W.R.(N.S.) 503, folld.

Re Gunther's Will Trusts, [1939] 3 All E.R. 291, not folld.

Re Oram, [1940] 4 All E.R. 161, not folld.

Re Hillas-Drake, National Provincial Bank v. Liddell, [1944] 1 All E.R. 375, folld.

Edwards v. Edwards (1837), 1 Jur. 654, folld.

Untermeyer v. A.-G. V.C., [1929] 1 D.L.R. 315, folld.

Statutes Noticed:

Judicature Act, 1950, S.N.S. 1962, c. 18, sect. 25(2).

Counsel:

T.J.K. Gillis, Q.C., for the Nova Scotia Trust Company;

Ronald N. Pugsley, for Steward R. Rudderham, Edward Rudderham and Mrs. Selma Doucet;

D.C. MacNeil, Q.C., for Emerson D. Rudderham, James R.F. Rudderham and Wilson V. Rudderham.

The judgment of the Court was delivered by Cooper, J.A.: