Tag: Will Interpretation

30 Jul

Interpretation of Settlement Agreements

Nick Esterbauer Estate Litigation, Litigation, Mediators, Wills Tags: , , , , , , 0 Comments

A recent decision of the Alberta Court of Queen’s Bench highlights the importance of carefully reviewing settlement agreements prior to their execution.

In Anderson Estate (Re), 2020 ABQB 428, the Alberta Court of Queen’s Bench revisited a settlement that had been negotiated during a judicial mediation.

Mr. Anderson had left a Last Will and Testament executed roughly one month prior to his death that directed that the residue of his estate be distributed to his three children, who were the parties to the litigation.  The Will addressed certain advances made to his children during his lifetime, the disposition of real property, and declared the testator’s intent that the parties be treated equally.

One son, who later brought the motion with respect to the interpretation of the agreement, had previously disclaimed real property gifted to him under the Will because the value assigned to the property in the Will itself was significantly higher than the appraised value of the property (with a discrepancy of $2 million), such that he would take a correspondingly lower distribution from the residue of the estate to reflect his acceptance of the gifted property.  The judicial mediation process had been initiated with the intention of resolving interpretation issues in respect of the Will arising from the son’s disclaimer of the property.  The terms of the Will and the settlement agreement were not straightforward, but the settlement provided in part that the son would receive at a value of $4 million a different property than that bequeathed to him under the Will that he had disclaimed.

Pursuant to the terms of the settlement agreement, the matter returned to the case management judge for the determination of its proper interpretation.  The son sought an interpretation of the agreement that provided that he had substituted his receipt of one property for the other at a notional cost corresponding to advances tied to the first property.

Justice Jones reviewed the law in general relating to ambiguities appearing in contracts, such as the settlement agreement that the parties had executed (at paragraphs 35 through 40, briefly summarized below):

  • true legal ambiguity arises where a phrase is reasonably susceptible on its face to more than one meaning;
  • courts can consider surrounding circumstances that include everything that affected the language of the document from the perspective of a reasonable person;
  • extrinsic evidence, however, is intended to serve “as an objective interpretative aid to determine the meaning of the words the parties used”, with limitations set out by the Alberta Court of Appeal in Hole v Hole, 2016 ABCA 34;
  • the goal of the courts is to give effect to the objective intentions of the parties, rather than to “second-guess the contract”;
  • even in the absence of ambiguity, a judge is to consider relevant surrounding circumstances in interpreting the contract.

The judge found that the settlement agreement was not susceptible to more than one meaning, stating as follows (at para 84):

A retrospective determination that one entered into an agreement on terms less commercially favourable that one now thinks should have prevailed does not evidence ambiguity.

This decision may serve as a reminder to take care in ensuring that the meaning of a settlement agreement is properly understood by all parties and clearly set out without room for ambiguity.  Remaining silent on certain points that should properly be addressed during the dispute resolution process may limit the rights of the parties to pursue them, even where the settlement agreement will otherwise lead to the distribution of an estate that may be perceived as unfair.

Thank you for reading.

Nick Esterbauer

27 Feb

“Jointly or the Survivor of Them” – What Does That Mean?

Kira Domratchev Estate Litigation, Wills Tags: , , , , 0 Comments

In a recent Ontario Superior Court of Justice decision, the Court considered certain extrinsic circumstances surrounding the making of the Will, as well as the reading of the Will as a whole, in reaching a decision regarding its interpretation.

In Love v Wheeler 2019 ONSC 4427, a spouse of a deceased beneficiary sought a declaration that a beneficiary’s estate was entitled under a testator’s Will to an undivided half-interest in property and that the other beneficiary wrongfully appropriated it.

Some Facts

Frances Irene Wheeler died in 2012. She bequeathed a parcel of land to her two sons, Harold William Wheeler and Martin Douglas Wheeler. Her Will stated that this property was to go to Harold and Martin “jointly or the survivor of them”.

The Court grappled with the question of whether Frances meant to leave the property to Harold and Martin as joint tenants or as tenants in common. Certainly, in a joint tenancy, there would be a significant benefit to the survivor of the two brothers, as the other half interest would pass on a right of survivorship, rather than form a part of the deceased brother’s estate.

This is exactly what happened in this case. Martin died in 2015 and in April, 2017, Harold had the title to the property transferred into his own name, on the argument that it was owned by him and Martin, as joint tenants.

Deborah Love, Martin’s common-law spouse of 16 years, commenced an application before the Court, as against Harold. One of the grounds for Deborah’s position was that the extrinsic evidence surrounding the making of the Will, including a prior Will of February, 2009, supports a finding that Frances intended her sons to inherit the property as tenants in common.

The Court’s Decision

In reaching its decision, the Court emphasized its role in giving effect to the testamentary intention of the testator, as expressed in a Will. Justice Chozik gave consideration to the “armchair” rule, which requires a judge to place him or herself in the position of the testator at the time when the last Will was made, and to consider and weigh the circumstances which then existed and which might reasonably be expected to influence the testator in the disposition of her property.

Justice Chozik found that Frances intended to leave the property in question to her sons, as tenants in common. This intention was held to be clear from the Will when it is read as a whole, taking into account some of the extrinsic circumstances surrounding the making of the Will.

This decision certainly emphasizes how important it is that the Will clearly stipulates the terms of each bequest, particularly when it comes to large assets, such as real property.

Thanks for reading!

Kira Domratchev

Find this blog interesting? Please consider these other related posts:

The Risks of Joint Tenancy

Joint Tenancy Trap

Severance of Joint Tenancy by Course of Dealing

 

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