Tag: execution

20 Jun

Looking for a Resulting Trust in Aid of Execution

David M Smith Estate & Trust, Litigation, Trustees, Uncategorized Tags: , , 0 Comments

Leave to Appeal to the Supreme Court of Canada was recently denied in the case of Belokon et al. v. The Kyrgyz Republic, a decision of the Ontario Court of Appeal.  The Court of Appeal upheld the finding of Justice Conway in an interesting example of a commercial case considering resulting trust, well suited to the Commercial List which is now combined in Toronto with the Estates List.

The facts were somewhat complex but, in essence, the applicants sought to enforce arbitral awards in their favour against the Kyrgyz Republic by bringing proceedings in Ontario under s. 18 of the Execution Act The Applicants sought to collect against shares in a Company called Centerra Gold Inc., which shares, the Applicants alleged in alternative argument, were held on a purchase money resulting trust for the Kyrgyz Republic.

As we have noted in a previous blog, the Supreme Court of Canada decision in Rascal Trucking stated that a purchase money resulting trust arises when a person advances funds to contribute to the purchase price of property, but does not take legal title to that property. Where the person advancing the funds is unrelated to the person taking title, the law presumes that the parties intended for the person who advanced the funds to hold a beneficial interest in the property in proportion to that person’s contribution.

The presumption can be rebutted by evidence that at the time of the contribution, the person making the contribution intended to make a gift to the person taking title. While rebutting the presumption requires evidence of the intention of the person who advanced the funds at the time of the advance, after the fact evidence can be admitted so long as the trier of fact is careful to consider the possibility of self-serving changes in intention over time.

In Belokon, Justice Conway noted that the cases relied on by the Applicants failed to support their argument that, where a shareholder pays for an asset, the corporation holds the asset in trust for the shareholder (in this case, the Kyrgyz Republic).  Rascal Trucking was distinguished in that the entity advancing the funds was not an unrelated party; rather, it was the sole shareholder.  Moreover, Justice Conway found that even if a presumption of purchase money resulting trust had applied, it would have been rebutted by the terms of the Agreement governing the ownership terms.

The Court of Appeal, while consistently upholding the decision, did make an interesting observation:

Different considerations may well apply to the relationships of parent-subsidiary or corporation and sole shareholder.  In such contexts, it may well be that while a presumption of gift may not be sensible, a presumption of loan might be….It is not necessary to resolve that issue here.

Thanks for reading,

David Morgan Smith

 

 

 

10 Feb

Holograph Wills and Alterations

Hull & Hull LLP Estate & Trust, Estate Planning, Wills Tags: , , , , , , , , , , 0 Comments

As many people are aware, the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the “SLRA”) governs the formalities with which Wills, both formal and holograph, must be executed. The SLRA also governs the necessary formalities for making alterations to a Will after it has been executed. Section 18 states as follows:

18. (1) Subject to subsection (2), unless an alteration that is made in a will after the will has been made is made in accordance with the provisions of this Part governing making of the will, the alteration has no effect except to invalidate words or the effect of the will that it renders no longer apparent.

(2) An alteration that is made in a will after the will has been made is validly made when the signature of the testator and subscription of witnesses to the signature of the testator to the alteration, or, in the case of a will that was made under section 5 or 6, the signature of the testator, are or is made,

(a) in the margin or in some other part of the will opposite or near to the alteration; or

(b) at the end of or opposite to a memorandum referring to the alteration and written in some part of the will.

The rules for alterations essentially parallel the rules for execution of the Will itself. If the original Will was a formally executed Will, any alterations also require the signature of the testator along with attestation by two witnesses, while an alteration to a holograph Will, need only include the testator’s signature. Section 18 also includes an exception if the alteration renders the words “no longer apparent”. Case law has held that this term means that the words have been completely obliterated such that they can no longer be read using natural means.

With respect to alterations to holograph Wills, it can often be difficult to determine when an alteration was made, as the entire document consists of the testator’s handwriting. For example, if a holograph Will contains a clause that reads as follows:

To my daughter Mary Jane, I leave my pearl necklace.

There are a number of possible scenarios whereby this clause may have come to be, as follows:

  1. The testator inadvertently wrote “Mary” when they meant to write “Jane” and immediately corrected it;
  2. The testator initially wanted to leave the necklace to Mary, but upon further consideration, and prior to execution of the Will, decided to leave it to Jane instead. At that point they crossed out “Mary”, wrote “Jane”, and subsequently signed the holograph Will; or
  3. The testator fully wrote out and signed the holograph will and later decided to change the bequest to Jane.

While the first two scenarios would theoretically be valid as the revisions were made prior to execution, the third would not be valid as it does not include the testator’s signature, and accordingly does not comply with the requirements in s. 18 of the SLRA. However, the issue in this situation is that the testator will most likely not be around to assist with the interpretation when it becomes necessary to determine whether Mary or Jane are entitled to the necklace. Even if one of the first two scenarios is true, there is no way to tell when the alteration was made. Based on the SLRA, the alteration would likely be found invalid, and Mary would be entitled to the necklace.

Unfortunately, in Ontario, strict compliance with the provisions of the SLRA does not leave much flexibility for the Court to uphold what it views as the testator’s true intention, unless the Will, or alteration to the Will, has been executed according to the rules in the SLRA. There are many arguments in favour of, and against maintaining the strict compliance regime, and you can read more about the issue in our previous blog here.

This can be problematic, as many testators who make holograph Wills are doing so without the assistance or advice of a lawyer. Accordingly, they are likely not familiar with the formalities required for alterations, leading to circumstances that can easily result in an interpretation of the holograph Will that may not necessarily be as the testator intended.

Thanks for reading and have a great weekend!

Rebecca Rauws

Other blog posts you may enjoy:

Due Execution of Wills

Holographic Wills – Carving Your Will into the Bumper of Your Car

Handwritten Alterations to an Executed Will

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