All About Estates

Best Gets The Rest: Doctrine of Ademption Alive and Well

In Canada estates and trusts law aims to give effect to a testator’s intentions. This principle is paramount and part of the rationale for the common law doctrine of ademption: if property which is gifted in a will no longer exists at the time of the testator’s death, the gift “adeems” or fails. In part, the doctrine assumes that a testator may have disposed of the property before his death with the intention of revoking the gift. The doctrine also recognizes testamentary freedom because it assumes the testator can make a new will providing the beneficiary with a different gift, or that the testator could provide for a substitute gift in the will in the event that the subject matter of the gift no longer exists at the time of death.

In Ontario the law recognizes that property may have been disposed of by someone other than the testator and the testator may not have the requisite capacity to make a new will after the disposition of the asset.[1] In order not to frustrate the testator’s intention to make the specific gift, s. 36(1) of the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the “SDA“)[2] acts as the anti-ademption provision when property is disposed of by a guardian or attorney for property.

But what about where there is no statute providing an anti-ademption provision? Are there exceptions when the doctrine may not apply? The Newfoundland and Labrador Court of Appeal dealt with this issue in the case of Best v Hendry, 2021 NLCA 43 (CanLII) (rev’g 2018 NLSC 214 (CanLII)), (“Best“). In Best, two nieces, Kathy Best and Marie Hendry (“Kathy” and “Marie” respectively), were beneficiaries of their aunt’s estate. Marie was gifted her aunt’s house and Kathy was gifted the residue. Many years after the will was made, the aunt moved to an assisted-living facility and Kathy, as her aunt’s guardian, sold the house. Marie had knowledge of and participated in the sale. Neither Kathy nor Marie knew how the sale of the house may affect Marie’s gift under the will.

Following their aunt’s death, a proposal was made to Kathy and Marie by the Executor of the Estate (a lawyer who was also the solicitor who drafted the will). The Executor proposed that because the aunt intended for Marie to receive the bulk of the Estate but the house had been sold, Marie should receive the exact amount of the sale proceeds (a tracing of the disposition of the specific property) and Kathy should receive the residue. They were advised to get independent legal advice but not advised of the doctrine of ademption which, in Newfoundland and Labrador, has no statutory exceptions.  Kathy and Marie agreed to the Executor’s proposal. Unbeknownst to the Executor, they made a side deal that Marie would give Kathy some additional money from Marie’s share of the Estate. Some time later, and after Marie did not give Kathy any additional money, Kathy brought a claim against Marie and the Executor. Kathy claimed that the gift of the house to Marie adeemed and Kathy ought to have received the entire Estate. The hearing judge disagreed and found that the doctrine of ademption did not apply in the circumstances of Best. The hearing judge also found that Kathy made an agreement to receive something other than her entitlement under the will and signed a release in favour of the Executor which was binding.

On appeal, the court reversed the decision of the lower court and found that the doctrine of ademption applied. With no anti-ademption provision in the province Marie should not have received any part of the Estate. As part of the court’s Reasons, Hoegg J.A. cited Cowper-Smith v. Morgan, 2017 SCC 61 (CanLII) that ademption “provides certainty in the law of wills. It goes hand in hand with the principle of interpreting a will within its four corners, and is in accordance with the “golden rule [of giving] effect to the testator’s intention as ascertained from the language which the testator has used”.[3]

In her Concurring Reasons, Butler J.A. agreed with the disposition of the appeal but not how to get there. Instead, she agreed with the conclusion of the hearing judge that the unique circumstances in Best made it appropriate to “carve out a narrow exception to the strict application to the doctrine”, otherwise the application of the doctrine “would result in the thwarting of the testator’s intention.”[4]  The hearing judge was concerned that the house was not sold by the testator prior to her death. Rather, it was sold by Kathy while acting as guardian of her aunt. Moreover, the aunt was incapable at the time of the sale, had no knowledge of it and did not consent. The aunt could not execute a new will and provide a different gift to Marie.

Butler J.A. concluded that the doctrine of ademption by conversion “has no application where the asset which is the subject matter of the specific bequest is disposed of by a third party without the testator’s knowledge and at a time when the testator lacks capacity to amend her will to make a substitute gift.”[5] If the exception were to apply in Best, then the extrinsic evidence of the aunt’s intentions from the will drafting lawyer would have been admissible.

The view of Butler J.A. to modify the law of ademption in Newfoundland and Labrador did not carry the day in Best. However, giving effect to the testator’s intentions was of central importance to the lower court and the appeal court. On the facts of another case the court may conclude that, in the absence of anti-ademption legislation, a modification of the law of ademption is necessary and just in order to give effect to the testator’s intentions.

[1] Anti-ademption provisions apply in British Columbia as well. See ss. 48(2) and (3) of the Wills and Estates Succession Act, SBC 2009, c 13.

[2] Note that s. 38(1) of the SDA provides that sections 33 to 37 of the SDA applies, with necessary modifications, to attorneys acting under a continuing power of attorney for property.

[3] Best, para 53.

[4] Best, para 157.

[5] Best, para 172.

About Karen Watters
Karen is a senior estates litigator who represents clients in a variety of proceedings including will challenges, dependant’s relief claims, guardianship applications, and powers of attorney disputes. Karen obtained her law degree from Queen’s University and was called to the Ontario Bar in 2011.

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