MacRae (Estate), 2011 ABQB 277

Court of Queen ’ s Bench of Alberta Citation: MacRae (Estate), 2011 ABQB 277 Date: 20110420 Docket: ES01 106577 Registry: Calgary Court File Number ES01 106577 Court Court of Queen’s Bench of Alberta (Surrogate Matter) Judicial District Calgary Estate Name Roy Allan MacRae Applicant (Applicant) Hugh Allan MacRae Respondents (Respondents) Deanne Ellen MacRae Syryda Susan Kathleen MacRae Editorial Notice: On behalf of the Government of Alberta personal data identifiers have been removed from this unofficial electronic version of the judgment. _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice M.C.

Erb _______________________________________________________ [ 1 ] The executor of the Estate of Roy Allan MacRae brings this special application to permit him to deal with estate assets despite the fact that more than a year ago a consent order was granted limiting his ability to do so.

[ 2 ] The deceased, Roy Allan MacRae, was a dentist who passed away in Calgary, Alberta on January 10, 2009. He was predeceased by his wife and was survived by three adult children: the Applicant, Hugh Allan MacRae, and the Respondents, Deanne Ellen MacRae Syryda and Susan Kathleen MacRae. Mr. MacRae is the executor and trustee of the Estate and all three adult children are beneficiaries. Mr. MacRae (“the Executor”) and Ms. Syryda reside in Calgary while Ms. MacRae is resident in Ontario. [ 3 ] Dr.

MacRae left a Will dated July 9, 1998 (the “Will”) which, sadly, has become the subject of litigation presently under case management by Stevens J. of this Court. A Grant of Probate for the Will was issued on March 21, 2010.

However, the application for that Grant, having been halted by the filing of a Caveat, was allowed to proceed only by virtue of the Consent Order dated January 12, 2010 (the “Consent Order”) limiting the Executor’s ability to deal with the estate assets without the consent of the beneficiaries or further order of the Court. [ 4 ] Consent of the beneficiaries has not been forthcoming so the Executor now seeks a further Order permitting him to take three specific steps in the administration of the estate: I.

To sell or to divide and distribute among the beneficiaries the deceased’s extensive personal articles and collections; ii. To apply for a subdivision of 80 acres of land out of the Ranch; and iii. To transfer the Farrel Road House to the Respondent, Deanne Ellen MacRae Syryda, at Mr. MacRae’s discretion. [ 5 ] In addition, the Executor seeks judicial

interpretation of the following phrase in the Will: “all articles of domestic or household use or ornament and my house and property at [...]Farrel Road S.E., Calgary, Alberta.” Nature of the Property [ 6 ] At the time of his death, Dr. MacRae had two residences: a house located on Farrel Road in southeast Calgary (the “Calgary House”) and a ranch property located about 70 km north of Calgary consisting of a house on 880 acres (the “Ranch”). The Ranch, however, was owned not by Dr. MacRae personally, but by his professional corporation, “400050 Alberta Ltd.”. All of its shares were owned by Dr.

MacRae. [ 7 ] During his life, Dr. MacRae had also amassed huge collections of items - some valuable, some less so.

The Executor has identified the following collections: - a stamp collection comprising about 1,200 binders contained in 145 banker’s boxes (the “Stamp Collection”); - a coin collection comprising in excess of 1,000 coins (excluding Canadian mint sets) contained in 14 banker’s boxes (the “Coin Collection”); - a comic book collection comprising approximately 15,000 comic books contained in 60 banker’s boxes (the “Comic Book Collection”); - a hockey card collection contained in six banker’s boxes (the “Hockey Card Collection”); - a ceramic plate collection consisting of approximately 1,200 ceramic plates (the “Plate Collection”); - a figurine collection comprising approximately 1,700 figurines contained in approximately 66 banker’s boxes (the “Figurine Collection”); and - a collection of approximately 5,000 event or advertising pins contained in approximately 27 frames and two banker’s boxes (the “Pin Collection”).

[ 8 ] Most of the collections were kept at the Ranch house, although Dr. MacRae from time to time took some items to his Calgary home. [ 9 ] In addition to the collections, Dr. MacRae also accumulated what the Executor has referred to as “massive amounts of old articles” including tools; oil cans; irons; toys; power pole insulators; liquor bottles; signage; model boats, parts, supplies and manuals; salt and pepper shakers; Christmas ornaments; pewter cars; model cars; dolls; thimbles; beer cans; and spoons.

Some of those collections were housed at both the Calgary House and the Ranch house. [ 10 ] Both homes in Calgary and at the Ranch were fully furnished. There were two automobiles parked at the house in Calgary. The Will [ 11 ] The portions of the Will relevant to this application are the following: B. Residue ... (ii) if my said WIFE, KATHLEEN AUDNA MACRAE, does not survive me for a period of Thirty (30) days following my death, I DIRECT my Trustee as follows: (

a) TO DELIVER to my DAUGHTER, SUSAN KATHLEEN MACRAE, my piano located at the ranch property; (

b) TO DIVIDE all of my personal articles among my three children, HUGH ALLAN MACRAE, DEANNE ELLEN MACRAE SYRYDA AND SUSAN KATHLEEN MACRAE, or the survivors of them, as they shall agree or in the discretion of my Trustee; (

c) TO DELIVER AND TRANSFER all articles of domestic or household use or ornament and my house and property at [...] Farrel Road S.E., Calgary, Alberta, to my DAUGHTER, DEANNE ELLEN MACRAE SYRYDA, should she survive me, for her own use absolutely; (

d) In the event that I am the owner or beneficial owner of the ranch lands at this date registered in the name of 400050 Alberta Ltd., an Alberta Corporation, I DIRECT that said ranch lands and ranch property be dealt with as follows: THAT an Eighty (80) acre parcel of land, being THE WEST PASTURE OF THE NORTH END OF N ½ of NE [...]-31-5-W5M be subdivided out of the ranch lands and transferred into the name of my DAUGHTER, SUSAN KATHLEEN MACRAE, for her absolute use and benefit; THAT all the remainder of the ranch lands, together with all buildings and equipment pertaining thereto be transferred to my SON, HUGH ALLAN MACRAE, for his absolute use and benefit; (

e) I DIRECT that all the rest and residue of my Estate be divided equally among my children HUGH ALLAN MACRAE, DEANNE ELLEN MACRAE SYRYDA AND SUSAN KATHLEEN MACRAE, or the survivor of them.

ADMINISTRATION OF ESTATE 8. TO CARRY OUT the terms of this my Will, I give my Trustee the following powers: A. Realization TO CALL IN and convert into money any part of my Estate not consisting of money, at such time or times, in such manner and uponsuch terms, and either for cash or credit or for

part cash and

part credit as my Trustee in his uncontrolled discretion thinks best, and, inorder solely that the residue of my Estate shall be converted in advantageous manner, I give my trustee power to postpone the conversionof any part thereof with power to retain any part thereof in the form in which it may be at my death (even though it may not be in a formwhich would constitute an investment authorized for trustees and whether or not any liability attaches to such part of my Estate) until anadvantageous conversion is obtainable and I DECLARE that my Trustee shall not be responsible for any loss which may be occasionedto my Estate resulting frm a properly considered postponement and retention.

B. Distribution in Kind TO MAKE any division of my Estate or set aside or pay any share or interest in it, either in whole or in part of the assets of my Estate andmy Trustee shall determine the value of my Estate or any part of it for the purpose of making such division, setting aside or payment, andhis determination shall be binding upon all persons concerned notwithstanding that my Trustee may be personally interested in suchdivision.

The Proposed Ranch Subdivision [12] The 80 acre parcel which the Will directs to be subdivided from the balance of the Ranch and transferred to Susan KathleenMacRae is land which forms part of the assets of the 400050 Alberta Ltd. [13] This raises the question of whether the deceased was entitled to dispose of the Ranch under his Will in this manner or at all.That issue is at present the subject of separate litigation and the question is not directly part of this Application.

However, this makes itawkward for this Court to deal with the issue of subdivision since the land sought to be carved away from the Ranch is not personallyowned by the Testator. [14] If a testator does not own the real property he purports to gift in his will, but instead owns shares of a corporation which inturn owns the real property, then the case law in this province seems to indicate that this gift fails. This was the situation in Re MeierEstate, 2004 ABQB 352, 366 A.R. 299, a decision of Sulatycky A.C.J. (as he then was).

In that case, the claimant argued that the testatorwas the beneficial owner of the farmlands in question. Justice Sulatycky, however, rejected that argument, making these findings atparas. 16, 19 and 21-2: Few principles of law are better established than the proposition that corporate assets belong to the corporation, not the shareholder. Theclaimant points to a pattern of behaviour on the part of the testator that suggests that he frequently treated corporate property as his own,but the testator’s cavalier approach to the distinction between corporate and personal assets is not sufficient to establish a trust.

A soleshareholder has an interest in corporate assets, but that interest does not operate so as to vest beneficial ownership of those assets in him:Kosmopoulos v. Constitution Insurance Co. of Canada, (SCC), [1987] 1 S.C.R. 2. As Hollinrake J.A. points out inBritish Columbia (Assessor of Area No. 25 - Northwest/Prince Rupert) v. N & V Johnson Services Ltd., [1990] B.C. J. No. 1964 (C.A.):“A company does not hold its assets in trust for its shareholders or any one of them.” ... It remains necessary to determine whether there are other means by which effect can be given to the provisions of the Will.

This is not acase in which the testator’s intentions are in any way ambiguous. On the face of the Will, it is clear that [the] testator intended to disposeof the farmlands, and he intended to give them to the claimant. Legal title to the lands was held by the corporation at the time of thetestator’s death. It is not clear, on the evidence before me, if title was ever held by the testator himself.

... In the present circumstances, the question of whether the gift can be said to have adeemed is largely academic. I am satisfied that the testator intended to give the farmlands to the claimant. But he did not own them; he owned shares in the corporation that owned them. The testator could not give what he did not own, and the attempt to determine what he would have done had he been aware of the nature of the ownership of the land is an entirely speculative undertaking.

As the testator did not own the lands at the time of his death, the gift fails. [ 15 ] Re Meier Estate was distinguished by the Ontario Superior Court of Justice in Kaptyn Estate v. Kaptyn Estate , 2010 ONSC 4293 , 102 O.R. (3d) 1. However, the Ontario Court in giving effect to that gift, relied on certain very specific language contained in the will, language which is not found in Dr. MacRae’s Will. [ 16 ] It remains to be seen whether the approach taken by the Court in Kaptyn would be adopted in this province. I suspect not. I note that the Wills and Succession Act , S.A. 2010, c.

W-12.2, which is not yet proclaimed, addresses this situation in the following manner: Dispositions respecting unowned property 111(1) Where a testator purports, by will, to give a gift of property that the testator does not own, (

a) the gift is void, and (

b) any rights that the owner of the property has as a beneficiary under the will are not affected by the purported gift. [ 17 ] In any event, the question of the validity of the Testator’s disposition of the Ranch property is not before this Court in this Application and I need not address it directly. However, this Court will not grant an order respecting property that may or may not be an estate asset. To grant an order allowing the application for subdivision to proceed would, at least in practical terms, prejudge the central issue.

If the Ranch is an estate asset, it would be reasonable to permit the Executor to take the steps necessary to give effect to the deceased’s wishes. If, however, the estate asset is not the Ranch, but the shares of 400050 Alberta Ltd., that changes not only the nature of the asset but the identities of the persons potentially entitled. [ 18 ] I conclude that it would be premature to grant an order permitting the application for subdivision to proceed. Devolution of the Calgary House [ 19 ] Dr. MacRae bequeathed his Calgary House to his daughter, Deanne Ellen MacRae Syryda.

The Executor has taken the position that he is “not prepared to transfer the Farrel Road House to [Ms. Syryda] until the Estate’s liquidity and liabilities have been better determined.” The Executor submits that he is concerned about potential outstanding liabilities, primarily legal fees associated with the ongoing litigation over the Ranch property. [ 20 ] While I appreciate the Executor’s cautious approach, I note as indicated in the brief filed on behalf of the Estate that there is approximately $650,000 cash in the Estate accounts and there is no evidence of any current liabilities.

I see nothing in the materials presented indicating that the Calgary house would be required to satisfy estate liabilities. [ 21 ] Further, it is important here to note that estate liabilities are to be satisfied by estate assets in a specified order. That order was established in Mickler v. Larson Estate , 2000 SKQB 46 , 198 Sask. R. 146 at para. 10 :

When an estate is unable to satisfy the gifts under a will because the estate is insufficient, abatement applies. The order of abatement is contingent upon the determination of the nature of the bequests under the will. Feeney’s, supra, at §8.53 addresses the principles of abatement as follows: §8.53 In the payment of debts the residuary estate must first be exhausted and residuary personalty and realty are liable rateably for the debts. After the residuary estate has been exhausted, general legacies abate pro rata, then demonstrative and specific legacies rateably and after that, and finally devises.

Devises abate last because of the general rule that personalty is primarily liable for the payment of debts. [ 22 ] This principle is more clearly referenced in Re Legge Estate , 2001 NSSC 156 , 203 N.S.R. (2d) 1 at para. 21 : Absent instructions to the contrary in a will, the payment of debts and expenses are to be paid as follows: first, out of the residuary personalty; second, out of the residuary (not specifically devised) real property; third, out of general bequests; fourth, out of demonstrative bequests; fifth, out of specific bequests; and finally, out of specific devises of real property. [ 23 ] The Calgary House is a specific devise of real property.

If the Estate incurs expenses which exceed its current cash position thereby requiring liquidation of assets to satisfy those debts, the Calgary House would be a last resort. Given the extent of the property at issue in the separate litigation, it is excessively speculative to hold up disposition of the Calgary house for that purpose. [ 24 ] I note that s.8(1) of the Devolution of Real Property Act , R.S.A. 2000, c. D-12 permits a personal representative to make a conveyance of real property to a beneficiary “subject to a charge for the payment of money that the personal representative is liable to pay”.

I see no need to consider that Act given the adequacy of the Estate assets in this particular case. Contents of the Calgary House [ 25 ] Ms. Syryda was bequeathed personal property along with the Calgary House which has raised issues, in particular, the meaning of the phrase in the Will: “all articles of domestic or household use or ornament and my house and property at [...] Farrel Road S.E., Calgary, Alberta”. [ 26 ] Ms. Syryda takes the position that this provision of the Will gifts to her all articles of domestic or household use or ornament in both the Calgary House and the Ranch house.

The two remaining beneficiaries, the Executor and Susan MacRae, say that the gift is restricted to such items contained in the Calgary House only. [ 27 ] Counsel rely on this Court’s decision in Conner v. Bruketa Estate , ( per Clark J.) 2010 ABQB 517 ., at para. 63: A Court interpreting a Will must strive to give effect to the intentions of the testator: In interpreting a Will, the objective of the court of construction should be to determine the precise disposition of the property intended by the testator.

The court should attempt to ascertain, if possible, the testatrix’s actual or subjective intent as opposed to an objective intent presumed by law. The court should be concerned with the meaning that the particular testator attached to the words used in his or her Will rather than with a hypothetical standard that might be that of an average or reasonable person.

This approach requires the court to consider the testatrix’s peculiar and unique use of language, all the circumstances surrounding his or her life and all the things known to him or her at the time he or she made his or her Will which might bear on the type of dispositions he or she actually intended to make by the Will. (Feeney at 10.1)

[ 28 ] In considering the material before me on this Application, it is clear that Dr. MacRae’s intention was to gift to his daughter, Ms. Syryda, the Calgary House along with the domestic and household articles in it. I note that the Will gives a portion of Dr. MacRae’s residential property to each of his three children: the Calgary House to Ms. Syryda, the 80 acre parcel to Ms. MacRae and the remainder of the Ranch to the executor. Although the latter two gifts may or may not be effective given the corporate ownership of the Ranch, I am satisfied that this was Dr. MacRae’s intention.

Accordingly, I agree with the Counsel’s submission that to expand the gift to Ms. Syryda of domestic and household articles beyond the Calgary House to include the Ranch house contents would defeat his intention and be out of harmony with the rest of the Will. While Dr. MacRae could have expressly excluded articles at the Ranch house, Dr. MacRae’s intention remains clear. [ 29 ] There is a further question as to what is included in “domestic or household use or ornament.” In particular, Ms. Syryda asserts that it includes:

a) two automobiles;

b) cameras and camera equipment;

c) piano;

d) tools;

e) model ships; and

f) a laptop computer. [ 30 ] Both Ms. Syryda and Mr. MacRae cited a number of cases dealing with the

interpretation of clauses similar to this. However, given that the task of this Court is to find the deceased’s subjective intent, not some hypothetical objective intent, prior cases are of little assistance. [ 31 ] Throughout his Will, Dr. MacRae evinced an intention to divide his estate among his three children in an equitable, though not necessarily equal, fashion, with a mind to their individual interests and needs. His attempt, whether or not successful, to leave 80 acres of land to Ms. MacRae, with the rest of the Ranch to her brother, the executor and the Calgary House to Ms. Syryda, demonstrates this.

One child was meant to receive the land she wished to have, another the Ranch on which he worked and the third a home in the city in which she lives. This intention on Dr. MacRae’s part persuades me that he would not have wanted the phrase “domestic or household use or ornament” to be interpreted in a way that would give a disproportionate share of valuable items to Ms. Syryda. [ 32 ] I find that the articles Dr. MacRae meant to include are the household furnishings, dishes, linens, and the general contents of the house which made it a home. I am not satisfied that the items enumerated (

a) to (

f) above were meant to be included. Rather, those items are to be distributed equally among Dr. MacRae’s three children pursuant to clauses 7.B.(ii)(

b) and/or (

e) of the Will. The Collections [ 33 ] The Executor also seeks an order permitting him to sell and/or to divide and distribute his father’s numerous and vast collections among the three beneficiaries. Ms. MacRae opposes that application and asks that the restrictions set out in the Consent Order remain in place. [ 34 ] Ms. MacRae notes, and the Executor agrees, that the parties have been unable to agree on a distribution of the personal items. Ms. MacRae points out that clause 7.B.(ii)(

b) of the Will provides that the personal articles are to be divided among the three children “as they shall agree.” All attempts to date to achieve more than agreement on minor aspects of the issue have failed. However, in a somewhat obvious omission, Ms. MacRae neglects to acknowledge that the clause goes on to say “or in the discretion of my Trustee,” being her brother who has been named in the Will as Executor (and Trustee). [ 35 ] Ms. MacRae also asserts that the appraisals of the collections which the Executor obtained are not adequate.

Further, she objects to the Executor’s desire to distribute some of the personal articles in kind. Because the items “would likely fill a truck that would have to be shipped/sent to Susan MacRae at a significant cost as she lives in Ontario,” she sees division as impractical.

[ 36 ] The Will gives the Executor considerable discretion with respect to the distribution of the personal articles, with respect to the conversion of Estate assets and with respect to the distribution of Estate assets in kind. Counsel for the Executor submitted that it is firmly established in law that, absent bad faith or unfairness, courts will neither interfere with a trustee’s exercise of discretion nor exercise it for him. [ 37 ] I am satisfied that the Executor has acted fairly and in good faith in his dealings with the personal articles. Although Ms.

MacRae takes issue with the appraisals he has commissioned, I am satisfied that he has made reasonable and good faith efforts to obtain accurate values for the numerous collections. The Executor has consistently proposed that his sisters choose first what they wish to have while he takes his choice last. He has been more than generous in what he proposes. [ 38 ] Regarding Ms. MacRae’s objection about the expense of transporting her share of the articles to Ontario, the Will clearly gives the Executor the discretion to distribute the personal articles in kind. There is nothing to suggest that Dr.

MacRae was not aware of the possibility of articles being distributed in an alternative manner. To the contrary, clause 7.B.(ii)(

b) discloses that this is precisely what he contemplated. The potential expense of transporting articles does not negate the Executor’s discretion under the Will. If Ms. MacRae does not wish to incur the transport expense, she is free to store her share of the items; sell them from here or forgo those items she does not wish to receive. She would not be the first beneficiary to decline a bequest she found inconvenient. [ 39 ] Accordingly, I make the following determination of the issues raised in this Application. The Consent Order dated January 12, 2010, is varied to allow the Executor: I.

To transfer the Calgary House to the beneficiary Deanne Ellen MacRae Syryda pursuant to the terms of the Will. The provision of the Will granting Ms.Syryda articles of domestic or household use or ornament is limited to the Calgary House and does not extend to such items located at the Ranch house and to the items referenced in these reasons. ii.

To exercise the discretion granted to him under the Will to sell and/or to divide and distribute the deceased’s personal property with the exception of any shares of corporations owned by the deceased. [ 40 ] The Application to subdivide 80 acres of land from the Ranch property which forms part of the assets of 400050 Alberta Ltd., is dismissed. [ 41 ] If the parties are unable to agree, costs may be spoken to. Heard on the 10 th day of February, 2011. Dated at the City of Calgary, Alberta this 20 th day of April, 2011. M.C. Erb J.C.Q.B.A.

Appearances: Leonard M. Zenith Rogers & Company for the Applicant, Hugh Allan MacRae James K. Lawson Lawson Glod Mahoney for the Respondent, Deanne Ellen MacRae Syryda Melanie A. McDonald Borden Ladner Gervais LLP for the Respondent, Susan Kathleen MacRae