All About Estates

Milne Estate (Re)visited

Today’s blog was co-authored by Joanna Lindenberg and Ronald Neal

The decision of Milne Estate (Re) (“Milne”) caused a stir among the members of the estates bar and solicitors who draft wills, going so far as to illicit an alert from LawPRO. While the Milne decision (which is under appeal) has garnered a great deal of attention and commentary from lawyers (including Justin de Vries’ blog, which you can read here) and the public, a companion decision of the Superior Court of Ontario adds a new dimension to the discussion. The Court in Re Panda Estate (“Panda”) directly addresses Milne and deserves its own review, analysis and attention.

As a reminder, the central issue in Milne was the validity of primary and secondary wills that granted the estate trustee the power to decide whether an asset owned by the deceased would form part of the primary or secondary estate based on whether that asset could be transferred or disposed of with or without probate. Part of Justice Dunphy’s decision was premised upon the finding that “a will is a form of trust” and as such, it must satisfy the “three certainties”: certainty of intent to create a trust, certainty as to the subject matter/property of the trust, and certainty as to the objects of the trust (i.e. beneficiaries). Justice Dunphy ultimately held that the requirement for certainty of subject matter was not satisfied in that case (as it failed to describe with certainty any property that would be not be subject to probate) and, as a result, the primary will was found invalid. However, His Honour concluded that the secondary will was valid.

As mentioned above, the response to Milne was immediate and considerable. However, even before the appeal of Milne has been heard, the Panda decision directly contradicts the findings in Milne.

The facts in Panda are straightforward and similar to Milne. In Panda, Ratnalabh Panda (the “Deceased”) executed a primary and secondary will (collectively, the “Wills”). The Wills defined the Deceased’s secondary estate to include, among other things, “any other assets for which my Trustees determine a grant of authority by a court of competent jurisdiction in [sic] not required for the transfer, disposition or realization thereof.” The secondary will also authorized the estate trustees to disclaim any property which would otherwise form part of the secondary estate within 90 days following the death of the testator – any disclaimed property would then fall into the primary estate and be dealt with in accordance with the terms of the primary will.

Following the Deceased’s death, the named estate trustees applied for a Certificate of Appointment of Estate Trustee with a Will (i.e. they submitted the primary will for probate). Although the application was uncontested, the application was flagged for further review. In his written endorsement, Justice Dunphy held: “I am not satisfied that the Primary Estate constituted a valid trust in the absence of the Secondary Estate due to a lack of certainty of subject-matter. The executor/trustee cannot retroactively exclude assets from the estate and certainty as to what is in the estate ab initio is lacking. If this is to be proceeded with, a motion and argument is needed.” The motion came before Justice Penny on October 11, 2018.

Spoiler alert: Justice Penny declined to follow Justice Dunphy’s decision in Milne.

Justice Penny first noted that the probate and construction functions of the court ought to remain separate and distinct from one another. In particular, whether the term of the will giving the estate trustees the authority to decide what assets fall into which estate (the primary or secondary estate) is a matter of construction/interpretation. This type of question should not be dealt with in the context of an application for probate.[1]

With respect to the finding in Milne that a will is a type of trust (and must therefore satisfy the “three certainties” in order to be valid), Justice Penny stated that there was no authority for this proposition. Rather, in order for a will to be valid for the purposes of probate, a will need only satisfy the requirements set out at sections 3 and 4 of the Succession Law Reform Act, RSO 1990, c S.26, and to provide for distribution or administration of property upon death.

Finally, Justice Penny held that it would be inappropriate to make any determination regarding the validity of any powers conferred upon the estate trustees as the scope, exercise, and validity of such powers was not an issue before His Honour.

Based on the foregoing analysis, Justice Penny granted the estate trustee’s application for a Certificate of Appointment of Estate Trustee with a Will.

Given these directly competing decisions, it will be interesting to see whether the Court of Appeal will address Panda when the appeal of Milne is heard. Until that time, expect more discussion and commentary from the peanut gallery.

[1] Conversely in Milne, Justice Dunphy found that His Honour was required to examine the validity of the impugned wills at the probate stage.

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About Joanna Lindenberg
Joanna is an experienced estates, trusts, and capacity litigator at de VRIES LITIGATION LLP. Joanna obtained her law degree from the Shulich School of Law at Dalhousie University after completing a Bachelor of Arts degree at McGill University. Following her call to the Ontario Bar in June 2011, Joanna obtained a Masters of Law at the University of California Los Angeles (UCLA), specializing in international and comparative law. Joanna's current practice focuses on, in part, will challenges, dependant’s support, capacity, and power of attorney disputes.

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