Yurkiw Estate, 2011 ABQB 97

Court of Queen ’ s Bench of Alberta Citation: Yurkiw Estate, 2011 ABQB 97 Date: 20110222 Docket: ES03 129680 Registry: Edmonton Court File Number ES03 129680 Court Court of Queen’s Bench of Alberta (Surrogate Matter) Judicial District Edmonton Estate Name Steve Yurkiw also known as Stefan Yurkiw, Steve F.

Yurkiw Applicant Rose Yurkiw Respondents Gerald Yurkiw, Andrew Yurkiw, Kenny Yurkiw, Morris Yurkiw, Lorne Yurkiw, Marvin Yurkiw, Michael Yurkiw, Linda Dombowski, Carol Kee, Larry Yurkiw, Connie Bencharsky, Karan Prockiw, described in the will as Karen Prockiw, Olga Kapach, Audrey Kapach, Sylvia Dmytruk, Eugene Kiriak, Lawrence Kiriak, Rose Marie Homik, Russel Czaban, Iris Plamondon, Gladys Wachowich, Fedyna Water Hauling Ltd. _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] The personal representative named in the will of her deceased spouse, Steve Yurkiw, applies for advice and direction about the

interpretation of Mr. Yurkiw’s will which states, in part that Mr. Yurkiw’s nephew Gerald Yurkiw was to have “the first right of

refusal to purchase my farm, legally described as . . . . ., including all farm equipment and related items, at its appraised market value”. [2] Using the “armchair rule” of testamentary

interpretation, the court concludes that Steve Yurkiw intended to give his nephewGerald Yurkiw an option to buy the farm land at appraised market value rather than a right of first refusal. Cases and authority cited [3] By the personal representative: Re Estate of Joseph W. Rudderham [1971] N.S.J. No. 115 (C.A.); Martin v MartinEstate [1981] O.J. No. 610 (H.C.J.) [4] By the court: Eremko Estate v St. Peter’s Hospital Foundation 2010 SKQB 226, [2010 S.J. No. 344; Smith v Smith Estate2010 BCCA 106, [2010] B.C.J. No. 370; Kadyschuk v Sawchuk 2006 MBCA 18, [2006] M.J.

No. 39; Irving Industries (Irving WireProducts Division) Ltd. v Canadian Long Island Petroleums Ltd. (SCC), [1975] 2 S.C.R. 715 Appendix A: Offers to purchase land and farm equipment 1. Background [5] Steve Yurkiw died January 10, 2008, leaving a will dated April 17, 2003. The will was written by a lawyer. [6] In his will, Steve Yurkiw appointed his wife, Rose (Penny) Yurkiw as executor and gave the residue of his estate to bedivided equally among 21 of his relatives, namely three siblings and 18 nieces and nephews. Steve Yurkiw and his wife were married in1959; they did not have any children together.

They kept their finances separate. Rose and Steve Yurkiw owned the matrimonial homejointly; that home was therefore transferred by operation of law to Rose Yurkiw on Steve Yurkiw’s death. It may be that Rose Yurkiwhas, in possession, property of more value than the value of the farm property referred to herein.

Steve Yurkiw made little provision forhis wife in his will; he gave her the matrimonial home, which - as indicated above - she owned independently from the will because ofsurvivorship, together with any “benefits, including any refund or premiums under any Registered Retirement Savings Plans, CanadaPension Plans, or any other Pensions”.

Steve Yurkiw owned the farm land which is the subject of this application prior to his marriage.Rose Yurkiw is 85 years old and had been employed outside the home during the course of the marriage. [7] In addition to the residue clause mentioned above, the will stated that a nephew, Gerald Yurkiw, was given “the first right ofrefusal to purchase my farm, legally described as ......... including all farm equipment and related items, at its appraised market value”.

The will went on to state that, unless Steve Yurkiw sold the farm during his lifetime, in which case the net sale proceeds would bedivided amongst the 21 named beneficiaries, and unless Gerald Yurkiw purchased the farm, then the title to the farm would be dividedequally amongst the 21 named beneficiaries. [8] Gerald Yurkiw, and his father - Steve Yurkiw’s brother - Morris Yurkiw, currently rent the land. [9] The farm land was valued in the probate as $230,000.00.

The value used in the probate was based on an appraisal of theland, as at February 8, 2008, at $230,000.00. [10] An appraisal dated February 24, 2008 valued farm equipment items and chattels at $35,000.00. [11] The date of death value for the land and all farm equipment and related items as shown in the personal representative’sapplication for probate totals $259,575.00.

[ 12 ] On July 8, 2010, the estate’s lawyers sent a letter to Gerald Yurkiw imposing a 45 day deadline to indicate whether the would be making an offer to buy the land. Gerald Yurkiw responded by letter; the letter was received by the estate’s lawyers seven days after the August 24 deadline. In his letter, Gerald Yurkiw indicated an intention to buy the land. [ 13 ] Although the farm and equipment have not been listed for sale, to date, many offers have been received for purchase of the land plus all twenty farm equipment items and chattels.

An outline of those offers is contained in Appendix A. [ 14 ] On February 5, 2011, Gerald Yurkiw amended his original offer to buy the land. He attached to his amended offer an appraisal of the farm land as of February 1, 2011; that appraisal is in the amount of $220,000.00. He also attached an appraisal of the farm equipment which gives the equipment a value of between $22,450.00 and $36,430.00.

Gerald Yurkiw’s amended offer is to buy the land only for $220,000.00 and to buy the equipment for $22,450.00. [ 15 ] There have been no appraisals of the land and equipment other than the estate’s appraisals in 2008 and Gerald Yurkiw’s appraisals in 2011. In other words, neither the estate nor any person making an offer for the property, other than Gerald Yurkiw, has provided a current appraisal of the property.

Indeed, Rose Yurkiw filed an affidavit on November 26, 2010 in which she stated: My solicitors recently contacted Knight & Company Appraisals Ltd. to inquire whether the appraised value for the land has increased or decreased since the date of death. I am advised that Steve Healy, appraiser at Knight & Company Appraisals Ltd. indicated that the general trend for agricultural land values in this area of central Alberta is less than 2008 values, and especially so in areas where there had been speculative pricing around the “Industrial Heartland” projects that have now been cancelled or postponed.

Because of this information, I have decided not to incur the cost to the estate of an update to the appraisal. [ 16 ] The court takes judicial notice of the fact that, even though the value of land may go up and down in response to a variety of factors, the value of equipment generally tends to go down over time as is reflected, for example, in the CRA rules relating to depreciation. [ 17 ] Rose (Penny) Yurkiw claims a dower right in the property; in addition, she has filed a claim under the Dependants Relief Act for a share of the estate. 2.

Gerald Yurkiw received an option to buy the farm land and equipment at appraised market value rather than a right of first refusal [ 18 ] The court concludes that Steve Yurkiw intended to give Gerald Yurkiw an option to buy the farm land and equipment at appraised market value rather than a right of first refusal. [ 19 ] In coming to that conclusion, the court has first determined that it should be guided by the “armchair rule” of testamentary

interpretation.

a) Armchair rule [ 20 ] An overview of what is meant by the “armchair rule” of

interpretation is found in Eremko Estate : 16 In the case at bar, the court is primarily concerned with Anne Eremko's intentions at the time she made her will when she decided to employ the phrase "within two years of my death". In Lenz v. Lenz Estate 2005 SKQB 5 , 259 Sask.R. 301 (Sask. Q.B.) , the court was concerned with the testator's use in his will of the phrase "rent-free". In the will, the testator left his condominium to his wife "rent-free". An issue arose whether the term "rent-free" included an obligation by the estate to pay the condominium occupancy fee each month.

Barclay J. agreed with the wife that the word "rent", as used by the testator, included the occupancy fee. In making his decision, Barclay J. relied upon a principle of construction known as the "armchair rule" (at para. 17):

[17] It is the role of the court to interpret and carry out the subjective intentions of the testator (See: Hammond, Re, (SCC), [1934] S.C.R. 403). In doing so, this Court must choose the most appropriate meaning in the circumstances for the word "rent".This entails two steps. First, the court must determine the ordinary dictionary meaning of the word "rent" (See: Crawford v. Broddy(1906), 1896 CanLII 14 (SCC), 26 S.C.R. 345). Second, the court must determine whether a modified or different meaning will berequired to give effect to the word in a way that honours the testator's intentions.

This is done by employment of the "armchair rule",which requires the court to place itself in the position of the Testator at the time he wrote his will, then read the will and interpret it byutilizing admissible aids of construction, such as the surrounding circumstances and context. [21] Another aspect of the rule was emphasized by the British Columbia Court of Appeal in Smith: 18 The judge then recited the relevant facts and stated the questions for which Royal Trust sought answers. After reciting the positionsof Ms.

Armstrong and Kissandra, the judge turned to the applicable legal principles, stating in paras. 30 and 31: [30] The guiding principle is that to interpret a will the court must first look to its language. Only if the court cannot ascertain theintention of the testator should it look beyond the will itself, in which case the "armchair rule" applies. This principle is clearlyarticulated in Thomas G.

Feeney, The Canadian Law of Wills, 3rd ed., vol. 2 (Toronto: Butterworths, 1987) at 13, as follows: If, in the first instance, the testator's intention cannot be discerned from the will itself, then, since the testator must be taken to have usedthe language of the will in view of the surrounding circumstances known to him at the time when [the testator] made his will, evidenceof such circumstances is necessarily admissible, at least insofar as it corresponds to the facts and circumstances referred to in the will. [31] The "armchair rule" of construction to determine the true intentions of the testator was applied and approved by the SaskatchewanCourt of Appeal in Haidl v.

Sacher (1979), (SK CA), 7 E.T.R. 1 (Sask. C.A.). In that decision, at pp. 8-9, Bayda J.A.applied Re Burke (1959), (ON CA), 20 D.L.R. (2d) 396 (Ont. C.A.) and quoted Laidlaw J.A. at p. 398: ... Each Judge must endeavour to place himself in the position of the testator at the time when the last will and testament was made. Heshould concentrate his thoughts on the circumstances which then existed and which might reasonably be expected to influence thetestator in the disposition of his property. He must give due weight to those circumstances in so far as they bear on the intention of thetestator.

He should then study the whole contents of the will and, after full consideration of all the provisions and language used therein,try to find what intention was in the mind of the testator. When an opinion has been formed as to that intention, the Court should strive togive effect to it and should do so unless there is some rule or principle of law that prohibits it from doing so.

b) Is the gift to Gerald Yurkiw an option or a right of first refusal? [22] In the first step of the armchair rule, the court must determine whether Steve Yurkiw’s intention can be discerned from thewill itself. [23] In coming to the conclusion that the will itself is contradictory, the court notes that a right of first refusal and an option to buyare two different things.

Although a lawyer drafted the will, the court notes that even the decisions of some courts fail to distinguishbetween an option and a right of first refusal; perhaps the lawyer who prepared Steve Yurkiw’s will was guided by one of those outlierdecisions.

Nonetheless, in the court’s view, the weight of the jurisprudence is clearly to the effect that there is a difference, indeed animportant difference, between a right of first refusal and an option to buy at appraised market value.. [24] As to the nature of that difference, the following comments in Kadyschuk are instructive: 19 Canadian Long Island, and other cases on this subject, were fully analyzed by Paul M. Perell (now Mr. Justice Perell), "Options,Rights of Repurchase and Rights of First Refusal as Contracts and as Interests in Land" (1991) 70 Can. Bar Rev. 1.

He summarizes theessence (for these purposes) first, of an option, and then, of a right of first refusal, this way (at pp. 2, 8-9): An option to purchase land is a contract that immediately creates an interest in land. The courts have held that a right of repurchase alsoimmediately creates an interest in land. In contrast, a right of first refusal, although in many ways similar to an option or a right ofrepurchase, does not immediately create an interest in land. Rather, a right of first refusal is classified as a contractual right that may onlysubsequently create an interest in land. ...

. . . . . ... The principal ingredient of a right of first refusal is a commitment by the grantor to give the grantee the first chance to purchase should the grantor decide to sell. This commitment may be structured in a variety of ways. For example, the right may stipulate that where the grantor is prepared to accept an offer from a third party, then the grantor must provide the grantee with the opportunity to match the offer and complete the sale.

As an alternative, the right may stipulate that when and if the grantor decides to sell the land, the grantee has the first chance to purchase at a fixed price or at a price to be agreed upon or fixed by arbitration. ....

It should be noted that all these variations of rights of first refusal are analytically similar to complex rights of repurchase inasmuch as to become operational, these rights depend upon the decision, conduct or status of the owner of the land. 20 The promise not to convey the land without giving the holder of the right of refusal the opportunity to buy it does not create in favour of the holder an immediate interest in land.

This is so, as Perell explains, because: "(1) specific performance is not immediately available; and (2) although negative, rights of first refusal are personal covenants between the parties; that is, they are not restrictive covenants running with the land" (at p. 22). [ 25 ] The cases point out that there are difficulties where a purported right of first refusal includes no triggering event: see, for example, Irving Industries .

c) In light of the difference between an option to buy and a right of first refusal, the court concludes that Steve Yurkiw intended to give Gerald Yurkiw an option to buy the farm and equipment at appraised market value [ 26 ] In coming to the conclusion that Steve Yurkiw intended to give Gerald Yurkiw an option to buy the farm and equipment at appraised market value, the court takes the following into account: - the most important factor in the court’s decision is that Steve Yurkiw did not give to his personal representative the right to sell the farm; all the personal representative was entitled to do was to sell the farm to Gerald Yurkiw or to divide the title amongst the 21 beneficiaries.

Therefore, the only possible triggering event would be a decision on the personal representative’s part to transfer the title to the 21 beneficiaries; however, it is clear that the personal representative is making a substantial claim against the land and has never indicated an intention to transfer the land to the 21 beneficiaries.

Therefore, there could never be, as the personal representative argues, a situation in which Gerald Yurkiw had to “match an acceptable offer before the Farm is sold to him”; Steve Yurkiw’s wish was that the only person who could buy the farm, after Steve himself died, was Gerald Yurkiw. The notion of a “usual commercial

interpretation of the ‘first right of refusal’”- as contended by the personal representative - has no possible application here; - it is clear from the wording of the will that Steve Yurkiw intended to keep the farm in the Yurkiw family; - in this context, the court notes that appraised market value and offer are not the same thing.

It is not unknown for persons to be willing to buy property at much in excess of market value because the particular property has sentimental or other value known only to the offeror. [ 27 ] Sitting in Steve Yurkiw’s armchair, the court concludes that what Steve Yurkiw intended to do in his will was to give Gerald Yurkiw the right to buy the farm at appraised market value, and, if Gerald decided not to buy it, to divide the title to the farm amongst all the Yurkiw family members identified in his will. [ 28 ] Gerald Yurkiw’s offer to buy is conditional on financing. That is not a reason to reject his offer.

If this were a first right of refusal situation, then Gerald would have to match the best offer that was the triggering event, and, if there was an offer that was unconditional, Gerald would have had to make an unconditional offer. But, as explained above, this is not a first right of refusal situation; therefore, Gerald Yurkiw’s offer does not have to be unconditional.

Reasonable conditions are part of a reasonable offer. [ 29 ] In light of the evidence concerning the value of the land and equipment, the court directs the personal representative to sell the Steve Yurkiw’s farm land and equipment to Gerald Yurkiw at the amounts set out in Gerald Yurkiw’s last offer, i.e. $220,000.00 for the land and $22,450.00 for the equipment.

d) Has Gerald Yurkiw lost his right under the will because of delay? [ 30 ] Gerald Yurkiw has not lost his right under the will because of delay. [ 31 ] An option to buy land is an interest in land that runs with the land. It is not a mere contractual right which can be interpreted according to contract law, which may include a provision that a right expires through the passage of time nor one on which unilateral conditions can be imposed. [ 32 ] In any event, as can be seen the difference in the value of the property between the date of Steve Yurkiw’s death and the date of the most current appraisal is minimal.

No one has lost anything material because of the delay in carrying out Steve Yurkiw’s wishes.

Indeed, Rose Yurkiew’s own evidence is that the value of the farm has probably decreased since Steve’s death; in the circumstances here, her evidence as to the value of the land is weighty not only because of her responsibility as the personal representative but also because, as a person who is making a double claim against the farm, she has as much interest as anyone in maximizing the value of the farm. [ 33 ] Moreover, Rose Yurkiw only applied for a grant of probate 1 ½ years after the death of Stgeve Yurkiw, i.e. towards the end of June, 2010.

Although a will speaks from the date of death, it is not unreasonable for a person who has been granted an option to buy land under the will to wait until probate has been granted so that there can be no question about the right itself, about possible competing rights, and about the identity of the person who purports to act as the personal representative.

As to the last factor, it is to be noted that there is an application from some of the residual beneficiaries to replace Rose Yurkiw as the personal representative of Steve Yurkiw because of the conflict she has as executor on the one hand and her claim to have the will overturned on the other. In that context, it would not have been surprising or objectionable for Gerald Yurkiw to have waited until a determination of the challenge to Rose Yurkiw before exercising the option which he had..

e) Can the personal representative liquidate the farm at the best price offered? [ 34 ] The personal representative cannot liquidate the farm at the best price offered. [ 35 ] In coming to this conclusion, the court notes, first, that the personal representative’s obligation to get the best sale price possible for the testator’s property ( Rudderham , Martin ) arises only where the personal representative has been instructed by the testator to sell hte property. The personal representative’s main obligation is first and foremost to carry out the testator’s will.

The personal representative cannot change the testator’s clear instructions in favour of what the personal representative describes as a “practical solution”; the property is not the property of either the personal representative or of the residual beneficiaries, but of the testator himself who has testamentary autonomy.

That autonomy must, unless and until the court reverses it on a Dependant Relief Act application, be respected. [ 36 ] Therefore, if the land were not to go to Gerald Yurkiw, subject to the outcome of the widow’s relief claim and barring agreement amongst all of the beneficiaries, the title to the farm must be transferred as to a 1/21st interest to each of the 21 named beneficiaries. 3. Costs [ 37 ] If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision.

Heard on the 8 th day of February, 2011. Dated at the City of Edmonton, Alberta this 18 th day of February, 2011. J.B. Veit J.C.Q.B.A. Appearances: Douglas G. Gorman, The Estate House by Gorman & Koski LLP for the Executor Ms. Helen R. Ward, Duncan & Craig LLP for Rose Yurkiw a.k.a. Penny Yurkiw Jerry D.

Kiriak, Kiriak Law Office for Larry Yurkiw, Connie Bencharsky, Carol Kee, Russel Czaban, Karan Prockiw, Kenny Yurkiw, Linda Dombowski, Lorne Yurkiw, Lawrence Kiriak, Nestor Makuch, Wheatley Sadownik Gerald Yurkiw Gladys Wachowich on her own behalf, and as representative of Andrew Yurkiw, Michael Yurkiw, Iris Plamondon, Eugene Kiriak, Olga Kapach, Marvin Yurkiw, Sylvia Dmytruk, Morris Yurkiw, Audrey Kapach