Part 2: Principles of will interpretation

As we noted in our first post, in La Calamita v. La Calamita, three children, John, Nadine, and Diane La Calamita, were involved in litigation regarding the Estate of their father, Leonard La Calamita.
A key issue before the Court was the interpretation of clauses in Leonard’s Will, and how they would be applied to real estate in the Estate. When he died, Leonard owned a commercial property on Yonge Street in Toronto (“Yonge Street”). Two of the three children, John and Nadine, wanted to retain Yonge Street, which meant they would have to “buy out” Diane’s interest in it, as the three children were equal residuary beneficiaries of the Estate. In essence, this would be the purchase of an Estate asset by two beneficiaries from the third.
John, as Estate Trustee, sought an order declaring that it was fair to pay Diane $485,000 to extinguish her claims under the Estate, on the basis that the amount was about one-third of the Estate’s net value of $1.45M. Diane disagreed.
John relied on provisions in Leonard’s Will that granted the Estate Trustee broad powers to partition, appropriate, and determine the value of the Estate and any part or parts thereof in a manner that was binding on the beneficiaries. Diane argued that John was also bound by a provision in the Will stating a beneficiary could purchase any part of part of the Estate, provided that the purchase was managed by a disinterested trustee under terms that are fair and reasonable.
Although Justice Sanfilippo found that the Will was clear about what was required if there was a beneficiary purchase of an Estate asset, he does discuss principles of will interpretation. In particular, the case discusses the long-established “armchair rule” used by Courts to interpret a testator’s intent, which requires the Court to “construe the will in the context of all surrounding circumstances present at the time the will was made”.
The surrounding circumstances can include any indirect evidence that might have “reasonably be expected to influence the testator in the disposition of his property” such as “the nature and extent of her assets, the makeup of her family, and her relationship to its members” (at paragraph 57). Surrounding circumstances can be considered by the Court even when there is no ambiguity or lack of clarity in the will’s language.
Direct evidence of a testator’s intent is typically only admitted by Courts when there is an equivocation in a will’s wording (such as two equally reasonable interpretations of a word or the identity of a beneficiary), a gift is made in a will to someone the testator’s knew was not alive when they wrote the will, or there is an admitted drafting error.
The Court undertakes an extensive review of what surrounding circumstances may have influenced Leonard when he wrote his Will, including the circumstances of his wife and three children at the time he signed the Will, the fact that he had just gone through a “bitter legal battle” with his own siblings over his father’s estate, the fact that he wanted to benefit his wife and then upon her death his three children equally, and the fact that he wanted to spare his children “the debilitating and detrimental impact of protracted estate litigation”.
Even though both Diane and John submitted evidence to the Court about what their father told them about his testamentary intentions, the Court confirmed that this type of “direct evidence” is inadmissible when interpreting a will. It also ruled other evidence as inadmissible for other reasons, including that there were references to what Leonard said after his Will was executed. Much of this evidence from both John and Diane was rejected as lacking reliability or plausibility or because it was inadmissible hearsay.
In its final analysis, the Court found that when reading the Will as a whole and in light of surrounding circumstances, the Will was clear. While John could as Estate Trustee hold or sell Yonge Street, and while any of the beneficiaries could purchase Yonge Street, if the Estate did sell to a beneficiary, the sale had to be conducted by a disinterested trustee. John would not qualify as such, as he wanted to purchase Yonge Street along with his sister, Nadine. The Court found that Leonard put this term in the Will to ensure his children were treated fairly, and to give them a mechanism to avoid a bitter dispute similar to what he himself had experienced.
The Court stated that a disinterested trustee must be appointed to facilitate any private sale of Yonge Street. It also rejected the valuation evidence proffered by both John and Diane. Diane’s was not submitted on the basis of truth, so could not be used to determine value. John’s was not a valuation “as of the date of distribution,” having been obtained by him prior to his application to the Court regarding distribution of the Estate.
The Court did not grant the declaration John sought regarding what was a fair payment to Diane, and the parties will necessarily have to make further efforts to resolve the issue of the disposition of Yonge Street in light of the Court’s decision.
In its final analysis, the Court found that the Will’s terms were clear. It was a dispute over the proposed application of or departure from those clear terms that prompted the litigation.
Would you like to know more? Call us at 416-927-0891 or via email at: hello@dicksonappell.com