Re Panda: Reconsidering Re Milne

November 20, 2018 Sayuri Kagami Estate & Trust, Estate Planning, Executors and Trustees, Trustees, Wills Tags: , , 0 Comments

The recent decision of Re Milne, 2018 ONSC 4174, has caused a lot of discussion among estate planners and litigators. As a recap, in that decision, Justice Dunphy of the Superior Court found that multiple Wills were invalid where so-called “basket clauses” in the Wills provided the Estate Trustees with the discretion to determine which estate assets fell under which Will. The Court found the Wills to be invalid on the basis that Wills are a form of trust and therefore must meet the requisite three certainties of a valid trust (see our blog on the decision here). The decision is now under appeal and many are eagerly awaiting the outcome.

In the interim, estate planners and litigators should be aware of the recent decision of Re Panda, 2018 ONSC 6734, which directly addresses and declines to follow Re Milne.

Like in Re Milne, probate was sought for a Primary Will where a Secondary Will was executed which contained a different, but substantively similar, basket clause allowing the Estate Trustee of the Will to essentially determine which assets fell under the Primary Will and which assets fell under the Secondary Will. The application for probate came before Justice Dunphy who refused to grant probate. A motion for directions was then heard by Justice Penny who carefully analyzed the decision of Re Milne before granting probate.

The Issues in Re Panda

Justice Penny analyzed one procedural issue and two substantive issues, being:

  1. whether, on an unopposed application for a certificate of appointment as estate trustee, it is appropriate to inquire into substantive questions of construction of the will or whether the inquiry is limited to “formal” validity of the will for purposes of probate [the procedural issue];
  2. whether the validity of a will depends upon the testamentary instrument satisfying the “three certainties” which govern the test for the valid creation of a trust; and
  3. whether, apart from the questions of the validity of the will itself, a testator can confer on his or her personal representatives the ability to decide those assets in respect of which they will seek probate and those in respect of which they will not.

Probate vs. Construction

Unlike Justice Dunphy in Re Milne, Justice Penny found that at the stage of determining whether to grant or deny probate, a Court must determine only whether the document presented is a Last Will and Testament. The formal requirements under the SLRA must be met and it must be determined whether the document is testamentary in nature (i.e. disclosing an intention to make a disposition of the testator’s assets on death). Beyond that, Justice Penny found that broader questions of interpretation, including the validity of the conferral of authority to decide under which Will property will fall, should be addressed separately as matters of construction, not on probate applications.

A Will is Not a Trust

Justice Penny also disagreed that a Will was a form of trust such that a Will requires certainty of intention, object, and subject-matter. As stated by Justice Penny, “A will is a unique instrument. A will shares some of the attributes of a contract and some of the attributes of a trust but it is neither; a will is its own, unique creature of law.”

Validity of Estate Trustees’ Authority to Determine Which Assets Fall Under Which Will

With respect to the final issue, Justice Penny found that such a question involves the issue of the construction of a particular instruction to or power conferred in the Wills to the estate trustees. Justice Penny therefore found that it would be inappropriate to make any determination as to the scope and validity of the basket clause found in the Wills as such issues were not before him on the Application for Probate; however, in obiter, Justice Penny went on to note that it was not clear how the basket clauses in issue were “any more extreme or ‘uncertain’ than other, well-established discretionary choices frequently conferred on and exercised by estate trustees.”

Until the determination of the appeal of Re Milne is in, the decision in Re Panda may provide some comfort to practitioners worried about the implication of Re Milne.

Thanks for reading!

Sayuri Kagami

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