Yesterday, I set out a fact situation giving rise to a certain interpretation issue.
The fact situation is based on the decision of Moore J. in Rudling Estate v. Rudling, 2007 CanLII 51794 (Ont. S.C.).
There, the court held that the word "debt" in relation to Property B could not include within its meaning all of the taxes, expenses and other charges that the estate trustee is directed by the will to satisfy in addition to "debts" of the estate. The court found that all reasonable charges against the estate arising from the death of the deceased were, by the terms of the will, intended to be paid from the estate before the specific bequests of the two properties are made. That is, both A and B are to share the burden of the testamentary expenses.
The court found that the will could be fairly construed upon the language contained within its four corners, and without the need to resort to extrinsic evidence in order to interpret the meaning.
However, in light of the Orders Giving Directions made in the case, and the issues is raised in the pleadings, and “because I am aware of the recent tendency of Canadian courts to apply the ‘armchair rule’”, the court also addressed the interpretation of the will in light of the surrounding circumstances. The court examined the surrounding circumstances, hearing from ten witnesses over the course of seven days. After considering this evidence, the court concluded that the evidence did not support a conclusion that the testamentary expenses be borne by A alone.
Did you make the right call?
Consider the following interpretation issue, which was recently considered by the Ontario Superior Court of Justice:
The deceased left a will kit-type will directing that all “just debts, funeral and testamentary expenses, all succession duties, inheritance and death taxes, and all expenses necessarily incidental thereto, to be paid and satisfied by” my executor as soon as convenient after her death.
The will went on to provide that the following distributions were to be made:
To son A, Property A "with all loans, leins [sic], mortgages attached”.
To son B, Property B, “free and clear of all debt".
The residue was to be divided between A and B. For the purposes of the trial, the only assets of significance were the real estate: Properties A and B.
At the time of her death, the deceased had no debt other than certain mortgages registered on title against Property A.
The issue in dispute was what assets were to be chargeable for paying the deceased’s taxes, including estate administration tax and income taxes, and funeral and testamentary expenses.
A took the position that these expenses were paid out of the residue, and in the absence of any residue, were to be chargeable equally as against Property A and B. (Properties A and B were of equal value.)
B took the position that Property B was conveyed to him "free and clear of all debt", and thus, those expenses were payable out of Property A only.
What did the court do? Tune in tomorrow.
Until then, thank you for reading.