Hoover (Estate), 2012 ABQB 241

Court of Queen ’ s Bench of Alberta Citation: Hoover (Estate), 2012 ABQB 241 Date: 20120412 Docket: ES01 102109 Registry: Calgary Court File Number ES01 102109 Court Court of Queen ’ s Bench of Alberta (Surrogate Matter) Judicial District Calgary Estate Name Grace Rebecca Hoover (also known as Grace Rebecca Huston) Applicant (Applicant) Rebecca Ann Sadlemyer Respondent (Respondent) Royal Trust Corporation of Canada (in its capacity as Personal Representative and Trustee of the Estate of Grace Rebecca Hoover (also known as Grace Rebecca Huston) _______________________________________________________ Reasons for Judgment of the Honourable Mr.

Justice A.B. Sulatycky _______________________________________________________ I. Introduction [ 1 ] This is an application for advice and directions with the intent to vary a Will by terminating a testamentary trust and distributing the capital of the trust. In broad terms, I am asked to interpret a clause in the Will and to determine whether to interfere with the terms of a trust established by the deceased testatrix.

II. Background [ 2 ] The application concerns the Estate of Grace Rebecca Hoover (the “Deceased” or “Testatrix”), who died on February 5, 2007. She made her last will on September 15, 2000 (the “Will”), and a codicil to the Will on September 25, 2002. [ 3 ] The Deceased was resident in Alberta prior to her death, and made her Will pursuant to the laws of Alberta.

A grant of probate for the Will was issued on June 5, 2007 by Madam Justice Nation, whereby the Royal Trust Corporation of Canada, located in Calgary, Alberta (“Royal Trust”) was named as the Personal Representative of the Estate, and Trustee of the trusts set forth in the Will. [ 4 ] The Applicant in this case, Rebecca Ann Sadlemyer (“Ann” or the “Applicant”) is the daughter of the Deceased, and was her sole child.

She is presently 72 years old and lives in Pangman, Saskatchewan. [ 5 ] The Deceased established a life interest in the entire income of the residue of her Estate, invested by the Trustee, for the benefit of her daughter, Ann, under Clause 3(E)(i). The Will does not reserve any power to vary or terminate the trust established in Clause 3(E)(

i) prior to its natural duration, being the death of the Applicant. [ 6 ] The Applicant wishes to have the Trust terminated, its assets liquidated, and the proceeds transferred to her, in order to administer them in Saskatchewan, and to dispose of them appropriately upon her own death in her own estate planning process, on the advice of professionals of her choosing. However, the Applicant has three children of her own, who are contingent beneficiaries under the Will: 1. Michael Edward Van Beek (“Michael”); 2. Patricia Ann Klippenstine (“Patricia”); and 3.

Rebecca Jane Anderson (“Jane”), (collectively, the “Grandchildren” under the Will). [ 7 ] All three Grandchildren have survived the Deceased and the Applicant and are presently alive. The Applicant is beyond child-bearing age and has deposed that she has no intention of adopting any children therefore Michael, Patricia and Jane will be the only Grandchildren relevant to the Will. [ 8 ] Clause 3(E)(ii) of the Will is the clause at issue in this Application.

Pursuant to that Clause, upon the death of the Applicant, the Deceased purports to leave a gift over of her Estate in three (3) equal shares to each of her Grandchildren, Michael, Patricia, and Jane, with a further gift over to Great-Grandchildren. Two of the Deceased’s Grandchildren, Patricia and Jane, have children of their own (Great-grandchildren under the Will): 1. Ann’s son, Micheal, has no children. 2. Ann’s daughter, Patricia, has two children:

a) a daughter, Terri Klippenstein (“Terri”), who is 27 years old; and

b) a son, Cameron Klippenstein (“Cameron”), who is 25 years old; 3. Ann’s daughter, Jane, also has two children:

a) a son, Zachary Anderson (“Zachary”), who is 19 years old; and

b) a son, Alex Anderson (“Alex”), who is 16 years old, (collectively, the “Great-Grandchildren” under the Will). [ 9 ] Clause 3(

F) of the Will provides for certain Trusts for the Great-Grandchildren upon operation of the second part of Clause 3(E)(ii).The trust provisions in Clause 3(

F) provide for a delayed capital distribution until age 25, with a discretion to the Trustee to apply income or capital for the education, maintenance or benefit of a Great-Grandchild in the interim.

[ 10 ] Clauses 3(

E) and 3(

F) of the Deceased’s Will provide as follows: 3(

E) Distribution of Residue To distribute the residue of my estate in the following manner: (

i) Trust for Daughter To invest and keep invested the residue of my estate for the lifetime of my daughter, and to pay all the net income to her. My Trustee shall have the power, during my daughter’s lifetime, to pay or transfer from the capital of the residue of my estate such amounts as my Trustee may from time to time, in its absolute discretion, consider advisable for the maintenance or benefit of my daughter.

I may leave a memorandum regarding the exercise of my Trustee’s discretion to encroach upon the capital of my estate, and it is my wish that my Trustee follow such memorandum as though it had formed part of my Will. (ii) Bequest to Grandchildren In the event my daughter fails to survive me, or upon her death, to divide the residue of my estate into three equal shares and to pay or transfer one such share to each of my grandchildren, if they respectively survive myself and my daughter.

In the event any of my grandchildren predecease myself and my daughter, the share which he or she would have received if alive shall be divided equally amongst his or her children then alive (my great-grandchildren), subject to the Trust set out in clause 3(

F) below, but failing such children shall be divided equally between my surviving grandchildren, or their children as above provided subject to the same Trust as their original share. 3(

F) Trust for Great-grandchildren In the event a great-grandchild of mine becomes entitled to receive a share of my estate before attaining the age of 25 years, the share of each such great-grandchild shall be invested on his or her behalf by my Trustee, subject to the following Trust: (

i) Capital Distribution Each great-grandchild is entitled to receive the capital of his or her share, subject to encroachments, when they respectively attain the age of 25 years. (ii) Trustee ’s Power to Encroach While my Trustee holds any share of my estate on behalf of a great-grandchild of mine it shall have the power to pay or transfer from that great-grandchild’s share, either to or on behalf of that great-grandchild, the income of capital or as much of either or both, including the authority to distribute the entire capital, as my Trustee may at any time, in its absolute discretion, consider advisable for the education, maintenance or benefit of the great-grandchild.

I may leave a memorandum regarding the exercise of my Trustee’s discretion to encroach upon the capital of my estate, and it is my wish that my Trustee follow such memorandum as though it had formed part of my Will. (iii) Lapse of Trust In the event any great-grandchild of mine otherwise entitled to a share of my estate predeceases me or dies before attaining the age of 25 years, the funds remain in that great-grandchild’s Trust, if any, shall be divided equally amongst his or her living brothers and sisters, subject to the same Trust as their original share, but failing such brothers and sisters shall be divided equally between my surviving grandchildren, or their children as above provided subject to the same Trust as their original share. [ 11 ] Each of the Grandchildren and Great-grandchildren, with the exception of Alex, have formally and irrevocably renounced their interests in the Estate.

The Grandchildren each delivered Renunciations of Inheritance in September, 2008 (the “Renunciations”) to Royal Trust. The adult Great-grandchildren, Terri, Cameron, and Zachary, also each signed renunciations/disclaimers in August 2010.

[ 12 ] The Renunciations direct that their interests in the residue set out in Clause 3(E)(ii) be paid by Royal Trust to the Applicant. The Great-grandchild, Alex, is incapable of disclaiming an interest in the Estate due to his minority, and is represented by the Public Trustee in these proceedings. [ 13 ] The Applicant wishes to have the Trust established by her mother in the Will terminated, and have its assets transferred to her. Her reasons for this are several. Firstly, she believes that the benefit of terminating it outweigh the cost (high fees) of continuing it.

Further, she lives in Saskatchewan and conducts her banking there. All of her Grandchildren and adult Great-grandchildren (the contingent beneficiaries) support her decision. [ 14 ] In September 2008, the Applicant contacted Royal Trust and requested that the Trust be terminated and its assets paid to her. Royal Trust Responded in October 2008, indicating that it would determine whether the class in respect of Clause 3(E)(ii) had closed. [ 15 ] Solicitors retained by Royal Trust were of the opinion that:

a) although the Applicant must apply to the Court to vary the Trust, it is a reasonable

interpretation of the Will to determine that, because all of the Grandchildren have survived the Deceased, Clause 3(E)(ii) does not provide for any gift over to the Great-grandchildren; and

b) the renunciations by the Grandchildren are valid and effective. [ 16 ] Royal Trust has advised counsel for the Applicant that it does not wish to oppose this Application, but rather it relies upon the Court to review the matter and provide directions. The Public Trustee however, on behalf of the minor remote contingent beneficiary, Alex Anderson, opposes this Application, on the basis that the minor would have a contingent interest that was not addressed. [ 17 ] As at June 30, 2010, the “market value” of capital in the residue invested by Royal Trust was $767,813.20. III.

Issues [ 18 ] The issues are as follows: 1. Does the Public Trustee for the Province of Alberta have standing in the proceedings relating this Application? 2. What are the benefits conferred by Clause 3(E)(ii) on the Grandchildren and the Great-grandchildren? 3. Does the Applicant have a form of “proposed arrangement” for the Court’s consideration pursuant to s. 42 of the Trustee Act? 4. If a Proposed Arrangement is found to exist, can the Court approve the Arrangement as proposed by the Applicant? 5.

If the Arrangement cannot be approved, can the Applicant be appointed as a Trustee under the Will, in the place of the Personal Representative, Royal Trust?

IV. Analysis [19] This matter comes before the Court as an Application for Directions pursuant to the Surrogate Rules, AR 130/95, ss. 4, 55,57-58 and 64. As a person interested in the Estate, the Applicant seeks the Court’s directions in respect of the

interpretation to be givento Clause 3(E)(ii) of the Will, and the effect of that

interpretation on the Trust established by Clause 3(E)(

i) of the Will. [20] The Public Trustee is acting on behalf of the remote contingent beneficiary, Alex Anderson, pursuant to s. 5(

c) of the PublicTrustee Act, SA 2004, C P-44.1 and s. 15 of the Minor’s Property Act, SA 2004, c M-18.1. 1. Standing. [21] Counsel for the Applicant submits that proving a beneficial interest in respect of the minor remote contingent beneficiary,Alex Anderson, is a pre-condition to the Public Trustee having standing to object to the termination of this Trust pursuant to s. 42 of theTrustee Act. [22] According to the Applicant, the Alberta Court of Appeal has held in Zeidler v Campbell, 1988 ABCA 369 , [1988] 91 AR 394, 53 DLR (4th) 350 (ABCA) at paras 10-15 that where no beneficial interest exists in a person, the Court need not consider thatperson in an Application under

section 42.

The British Columbia Court of Appeal took a similar position in respect of a provision in thatprovince’s legislation, and specifically rejected the Public Trustee’s argument that a disclaimer of an interest cannot override the legislation: McGavin v National Trust Co., (BC CA), [1998] 158 DLR (4th) 364, 22 ETR (2d) 36 (BCCA) at paras 9-10 and 22-36. [23] The Applicant has referred me to the cases of Turnbull v Hagman, 2011 NBQB 23, 368 NBR (2d) 272, 65 ETR (3d) 245(NBQB) at paras 26-31, McGavin v National Trust Co., supra, Re Van Platten, 2003 SKQB 187, [2003] 2 ETR (3d) 129, 235 Sask R 46 (QB) at paras 17-23, Brannan v British Columbia (Public Trustee), (BC CA), [1991] 83 DLR (4th) 106, 41 ETR 210(BCCA) at paras 11-15, 16, and 20-30 in support of the proposition that unless Clause 3(E)(ii) is found to bestow a beneficial interestupon the minor remote contingent beneficiary, then, by operation of the renunciations of the Grandchildren and the disclaimers by theGreat-grandchildren in favour of the Applicant, the interests of the Grandchildren and Great-grandchildren accelerate and vest in theApplicant.

In her view, given that Alex Anderson has no beneficial interest, it necessarily follows that the Public Trustee does not havestanding and the sole remaining person with any interest in the trust would then be the Applicant. [24] However, as a minor Alex Anderson is considered a person who may be interested in a particular estate pursuant to Rule 57(h)of the Surrogate Rules. Further, pursuant to

section 5(

c) of the Public Trustee Act, the Public Trustee may act to protect the property orinterest of minors and unborn persons. Finally, s. 15 the Minors’ Property Act sets out the role of the Public Trustee in relation to minors’property. Specifically, the Public Trustee has indicated that she will be represented on the Application pursuant to s. 15(2), and furtherpursuant to s. 15(3) is authorized to make representations. [25] I consider the Public Trustee as being authorized to act under the aforementioned sections of the Minors’ Property Act and thePublic Trustee Act.

The Applicant has requested advice and direction that directly affect the interests of the Minor in the Deceased’sEstate.

Because the class at issue in the Application makes reference to a class of potential beneficiaries of which the Minor, AlexAnderson, is a member, the “existence, extent, nature, or disposition”, to borrow the language of s. 15 of the Minors’ Property Act, of theminor’s interest is in issue, and will be affected by the outcome of this Application. [26] In addition, once it is clarified what is the minor’s interest, the minor’s potential interests would be affected in the case wherethe Court grants the relief sought by the Application in the form of a termination of a trust. 2.

Benefits conferred on the Grandchildren and Great-Grandchildren under Clause 3(E)(ii) of the Will. [27] The Applicant takes the position that she is the sole remaining beneficiary to the Trust established under Clause 3(

E) of theWill, given that the Grandchildren have irrevocably renounced their entitlement under Clause 3(E)(ii) in favour of the Applicant.

[28] According to the Applicant, the distribution in favour the Great-grandchildren under the Will is now a legal impossibility. Inher view, Clause 3(E)(ii) could give rise to an interest in favour of the Great-Grandchildren only if the relevant Grandchild predeceasedboth the Testatrix and the Applicant. [29] The Public Trustee takes the opposite view, that is, that the Great-grandchildren have a contingent interest in the remainder,where the vesting of the interest is conditional on the death of the Great-grandchild’s parent prior to the Applicant.

It is still a possibilitythat any of the Grandchildren may not survive the Applicant. In such a case, it is the view of the Public Trustee that the interests of theGreat-grandchildren who are children of the deceased Grandchild vest. [30] The parties are in agreement that the proper

interpretation of Clause 3(E)(ii) will depend upon the established legal principlesof Wills

interpretation.

I) Clause 3(E)(ii) in light of the whole Will [31] In order to correctly construe Clause 3(E)(ii), and in particular the second sentence of this clause, the Court must first consideras a whole all the provisions that relate to the distribution of the residue. This specific clause must be interpreted with a view to theoverall construction of the Will, as established by the Alberta Court of Appeal in Martini (Estate) v Christensen, 1999 ABCA 111 , [1999] 10 WWR 417, 172 DLR (4th) 367 at para 12. [32] The provisions that refer to the distribution of the residue are stated in clauses 3(

E) and 3(F) (together as “Residue Clauses”).These Residue Clauses were drafted as a complete blueprint to address all possible situations in regards to the distribution of the residue,under a framework which includes: an initial trust, rights to the residue when the trust lapses, a regime for beneficiaries who may beentitled prior to the age of 25, and even a lapse provision. [33] The overall framework of the Residue Clauses functions as follows: Clause 3(E)(i) - Under this clause, the Testatrix created a life estate for the Applicant such that the net annual income would bepaid to her.

This reflects an intention of the Testatrix not to create an inheritance for the Applicant, but to ensure that she would benefitby way of this life estate. Clause 3(E)(ii) - This clause, analysed in greater detail below, addresses entitlements to the residue where either the Applicantpredeceases the Testatrix or the Applicant benefits from the life estate and thereafter dies. Clause 3(F) - This clause requires that trusts be established for any Great-grandchild who is under 25 when he or she becomesentitled.

As a “lapse clause”, 3(F)(iii) addresses the possibility that the Great-grandchild might predecease the testatrix, or does not reach the ageof 25. This Clause provides that the entitlement is either redistributed among the Great-grandchild’s siblings, or where that possibility isfrustrated, the rights pass back up to the Grandchildren, and finally to the children of those Grandchildren. [34] There is no general clause, such that in the case of a lapsed provision the residue would be nevertheless distributed accordingto the Will.

Instead, 3(F)(iii) introduces a provision in the case where a trust lapses in relation to a Great-grandchild’s entitlement.

[35] Bearing this framework in mind, I turn now to the

interpretation of Clause 3(E)(ii). II) Ordinary Meaning Rule and

interpretation of Clause 3(E)(ii) [36] In Starosielski v Starosielski Estate, 1998 ABQB 651, 24 ETR (2d) 105 (QB), the Alberta Court of Queen’s Bench indicated: [49] It is trite law that in construing a Will, the court is at liberty to construe the words used by the testator in their ordinary sense. (T.G.Feeney, The Canadian Law of Wills, vol. 2 Construction, pg. 12, Butterworths, 1982.) [37] In the

interpretation of Clause 3(E)(ii), a reading pursuant to the Ordinary Meaning Rule would mean that within theframework described above, this Clause was drafted to address the different eventualities that might be possible depending on whether ornot the Applicant predeceased the Testatrix. [38] I will begin by turning to the first sentence of Clause 3(E)(ii). It sets out the relationship between the Testatrix’s death, thesurvival of the Applicant and the survival of the Grandchildren vis-à-vis the first two.

The sentence reads as follows: In the event my daughter fails to survive me, or upon her death, to divide the residue of my estate into three equal shares and to pay ortransfer one such share to each of my grandchildren, if they respectively survive myself and my daughter. [39] Based on a plain reading of this sentence, it seems reasonably clear that as long as the Grandchildren survived the Deceasedand the Applicant, they would each take their share of the residue. [40] In regards to this first sentence, the Public Trustee submits that two possibilities are entertained.

Either the Applicant does notsurvive the Testatrix or the Applicant thereafter dies. The phrase “or upon her death” highlights that the Testatrix had explicitly turnedher mind to the possibility that either the Applicant predeceases her, or that the Applicant survived her, but later died. Where theApplicant had not survived the Testatrix, the residue would have had to be distributed in accordance with Clause 3(E)(ii).

Likewise,where the applicant survived the Testatrix, the remainder would have had to be distributed according to this first sentence of Clause 3(E)(ii). [41] According to the Public Trustee, their interests vested, as it was only a matter of either the divestment of a life estate, or theimmediate distribution in the case that the Applicant pre-deceased the Testatrix.

It did not matter who died first, the Testatrix or theApplicant. [42] In the view of the Applicant, the relevant language, upon a plain reading of Clause 3(E)(ii) is “in the event of”, a phrasewhich has been judicially considered to be words expressing a condition, fulfilled upon the occurrence of the event expressed, as opposedto a disposition of property: Words and Phrases Judicially Defined in Canadian Courts and Tribunals, vol. 4 F-1 (ann. suppl) (Toronto:Carswell, 2009) at 4-212 (vol. 4) and 8-116 (ann. supp.): “in the event of”; or “upon”; Re Green Estate, 2011 NLTD(G) 39, 2011 NLTD39 , [2011] 311 Nfld & PEIR 189, 67 ETR (3d) 128 (Nfld TD). [43] In this case, the Applicant contends that the pre-condition to the Great-grandchildren having any interest in the Trust appearsto be two-fold: a Grandchild must predecease both the Testatrix and predecease the Applicant.

This, she submits, can not occur in thiscase. She refers me to the cases of Re Green Estate, supra, Howell v Howell Estate, [1999] 30 CELR (NS) 35, 1999 CarswellBC 1413,Mandin Estate v Willey, (AB KB), [1996]194 AR 22, 15 ETR (2d) 100 (Alta Surr Ct), and Ray v Gould (1857),[1857-1866] OJ No 48, 1 Chy Chrs 186 (UCCQB en banc), which are cases considering similar clauses employing similar language, insupport of her position. [44] I agree that the words “in the event of” operate to express a contingency; yet that does not clarify whether the contingency is

met on the happening of a Grandchild predeceasing both the Testatrix and the Applicant, or either of the Testatrix and the Applicant.That subtle, but fundamental difference is the crux of this matter.

The former is a legal impossibility, and extinguishes the interest of theGreat-grandchildren, while the latter remains a plausible scenario whereby the Great-grandchildren continue to have an interest in theEstate. [45] The Public Trustee takes the position that the key word in Clause 3(E)(ii) is “respectively” in the last phrase of the clause: “...and to pay or transfer one such share to each of my grandchildren, if they respectively survive myself and my daughter.” [46] It is not logical that “respectively” implies a chronological requirement to first survive the testatrix and then the Applicant,given how the sentence begins, with two possibilities (one where the Applicant does not survive the Testatrix).

The Public Trusteesubmits that the intention was simply to require the grandchildren to survive both, regardless of when their deaths occur chronologically. [47] According to the Public Trustee, given this

interpretation of the first sentence of Clause 3(E)(ii), the second sentence ofClause 3(E)(ii) should be construed in a manner consistent with the first sentence, and even as a further clarification of the first sentence.This means that the words “[i]n the event any of my grandchildren predecease myself and my daughter,...” is a reference back to theevent where the Grandchild does not survive both the Testatrix and the Applicant. [48] Finally, the Public Trustee submits that it is illogical that once the Applicant has survived the Testatrix, effectively Clause3(E)(ii) is no longer operative.

It would establish that the complete regime would nevertheless also be inoperative and instead wouldresult in an intestacy in the case that the Grandchildren survived the Testatrix but not the Applicant. This would be contrary to thepresumption against intestacy. The Court is to prefer a construction that would result in the disposal of the whole estate: Feeney’s Canadian Law of Wills (4th Ed.) (Toronto: LexisNexis Canada Inc., 2000) at s. 10.74. III) Vested and Contingent Interests [49]

Section 22 of the Wills Act provides that “except when a contrary intention appears by the will, a will speaks and takes effectas if it had been made immediately before the death of the testator...”. Accordingly, the

interpretation to be applied to Clause 3(E)(ii) isassessed as at the moment of the Testatrix’s death. [50] As previously stated, the Applicant affirms that as a condition precedent to any benefit being provided in respect of any one ofthe several Great-grandchildren, the respective Grandchild (such Great-grandchild’s parent) predecease both the Testatrix and theApplicant.

None of the children having predeceased the Testatrix, this contingency has not occurred nor is it now or ever possible for itto occur. [51] She further takes the position that the contingent benefit of the Great-grandchildren in the Will was likely only drafted intothe Will to apply in the potential situation where neither the Applicant nor the respective Great-grandchild's parent (Grandchild) had anability to make their own testamentary dispositions in favour of the Great-grandchildren in respect of the Applicant or Grandchild's ownbenefit under the Will. [52] The Public Trustee submits that at the time of the Testatrix’s death, Clause 3(E)(ii) conferred on the Grandchildren a vestedinterest subject to divestment of the life estate trust upon the Applicant’s death.

At the time of the Testatrix’s death, the Great-grandchildren had a contingent interest in the remainder. [53] The Grandchildren, should they survive the Applicant, will be entitled to their share in the remainder. They have a future interest. In Re Jacques, (ON SC), [1985] 49 OR (2d) 623, 18 ETR 65, 16 DLR (4th) 472, the Court determined that afuture interest will vest “subject to divestment” where it is delayed simply in allowance of a prior interest: at p 474, referring to Browne vMoody et al., (UK JCPC), [1936] OR 422, 4 DLR 1.

In the case at hand, the Applicant has a prior interest over theGrandchildren, but otherwise, by operation of the first sentence of Clause 3(E)(ii), the Grandchildren’s future interest will vest.

[54] I share the view of the Public Trustee that based on the ordinary meaning of the Residue Clauses, the Great-grandchildren hada contingent interest in the remainder, where the vesting of the interest is conditional on the death of the Great-grandchild’s parent priorto the Applicant. [55] To date, this remains the situation. The three grandchildren have thus far survived the Applicant. The Applicant is 72 andmay possibly live many more years. It is still a possibility that any of the Grandchildren may not survive the Applicant.

In such a case,by operation of the second sentence of Clause 3(E)(ii) the interests of the Great-grandchildren who are the children of the deceasedGrandchild vest. For other Great-grandchildren whose parents as Grandchildren continue to survive, their interest would remaincontingent so long as their parent was alive.

Where the parent survives the Applicant, the interests of the Great-grandchildren would beextinguished and the parent would take absolutely. [56] Though not the subject of this Application, it bears consideration that the Clause 3(F)(iii) anticipates a situation where both aGrandchild and his or her children do not take their entitlement. Two eventualities were anticipated. The first is that the Great-grandchild(and therefore the Grandchild) would have predeceased the Testatrix.

The second is that a Grandchild had died and by operation ofClause 3(E)(ii) the Great-grandchild is entitled to take, but dies before attaining the age of 25 years. [57] Had the Testatrix intended on Clause 3(E)(ii) applying as argued by the Applicant, Clause 3(F)(iii) would have beensuperfluous. The ordinary reading of Clause 3(F)(iii) supports the contention that Clause 3(E)(iii) must be read as proposed by the PublicTrustee. 3.

Does the Applicant have a form of “proposed arrangement” for the Court’s consideration pursuant to s. 42 of the Trustee Act? [58] The Applicant has argued that there is no form of Proposed Arrangement pursuant to s. 42 of the Trustee Act. She submits thatsub-sections 42(5)-(7) are applicable to negotiated compromises of uncertain or contested terms and that no such proposal exists in thiscase.

Accordingly, she submits that these subsections of the Trustee Act are inapplicable to the present matter. [59] Conversely, the Public Trustee suggests that the language of subs. 42(4) of the Trustee Act is sufficiently broad to encompassa variety of modalities, including the proposal by the Applicant of what the Public Trustee considers to be a particular approach orarrangement for the termination of a trust in which she has a life interest and the immediate distribution of the remainder.

This type ofarrangement is consistent with the definition given to “arrangement” by the Manitoba Court of Appeal in Pozniak Estate v Pozniak, (MB CA), [1993] 7 WWR 500, 88 Man R (2d) 36, at para 21. [60] The structure by which this is to be accomplished is through irrevocable disclaimers by the Grandchildren and adult Great-grandchildren to any part of the remainder.

As the Applicant has not renounced her life estate, this remains in existence, but the trustwould be terminated. [61] This, the Public Trustee contends, is similar in its purpose to the proposed arrangement placed before the Court of Queen’sBench in Samoil v Samoil, 1999 ABQB 526, [1999] 29 ETR (2d) 93.

In that case, a trust that provided for a life estate was to beterminated to and paid to the beneficiary of a life estate, with an arrangement providing benefits for the contingent beneficiaries: para 20. [62] The arrangement in the case at bar seeks to achieve the same result as in Samoil, only differing in the terms proposed. I find inthis case that a form of arrangement has been proposed for the Court’s consideration. 4. Can the Court approve the Arrangement as proposed by the Applicant? [63] The Applicant has placed a Proposed Arrangement before the Court.

For the reasons I will set out below, the failure to includethe minor, Alex Anderson, in the arrangement is fatal to the Applicant’s Proposed Arrangement under the terms of the Trustee Act at the

present time. [64] Section 42(2) of the Trustee Act provides that a trust shall not be varied or terminated before the expiration of its naturalduration as determined by the terms of the trust, except with the approval of the Court of Queen’s Bench. Therefore, prior to determiningwhether to terminate the Trust established under Clause 3(

E) of the Will, I must first consider whether I am able to approve thearrangement proposed by the Applicant. The Public Trustee contends that I am not able to approve the Arrangement in its present form. [65] It appears to me that the relief requested by the Applicant for an Order terminating the Trust is premature, as pursuant tosection 42(7) of the Trustee Act, I must first be satisfied that the arrangement is of benefit to a person on whose behalf the Court mayconsent.

According to the Court in Samoil, the two tests which must be satisfied before the Court can approve a proposed arrangementare those set out in s. 42(7). Firstly, the arrangement must appear to be for the benefit of each person on behalf of whom the Court mayconsent.

Secondly, in all of the circumstances the arrangement must otherwise appear to be of a justifiable character: Samoil at para 29. [66] In the case at bar, the minor Alex Anderson is a person on behalf of whom the Court may consent vis-à-vis the arrangement. [67] In Salt v Alberta (Public Trustee), (AB KB), [1986] 71 AR 161, 23 ETR 225, 45 Alta LR (2d) 331, theCourt considered an Application to vary a Will by terminating the testamentary trusts and distributing the capital of the trust.

HutchinsonJ. commented on the protection by the Court of certain beneficiaries and concluded the following: [25] Whereas the potential interest of the infants and unborn beneficiaries is very likely remote, it is nonetheless real, and deserves someprotection. The actuarially calculated value of the infants’ share of the trust estate is insignificant having regard to the present total valueof the estate and totally ignores the potential interest of unborn children, where such possibility exists as with the son. [26] Is the arrangement otherwise of a justifiable character?

What is the meaning or purpose of those words? In his article, “The Rule inSaunders v. Vautier and Its Proposed Repeal”, Estates and Trusts Quarterly, vol. 7, March 1986, William S.

Bernstein is quoted at p. 277as follows where he discusses the reasons that the arrangement must appear “otherwise to be of justifiable character”: It would seem that the additional requirement beyond satisfying the court that the arrangement is for the benefit of the incapacitatedbeneficiaries should be justified on the basis of allowing the court to balance the intentions of the settlor with the wishes of thebeneficiaries... [68] Despite the fact that minor beneficiaries with contingent interests were to receive a distribution of capital of the trust,Hutchinson J. was unwilling to approve the arrangement. [69] In the present case, the Public Trustee opposes the proposed arrangement on the basis that it does not give effect to the intentof the Testatrix.

I agree. By referring to the Great-grandchildren in Clause 3(E)(ii) of her Will, the Testatrix clearly had in hercontemplation that her Estate could pass to three generations of descendants.

As stated by Anderson J. in Re Jacques, where he statedthat it is the basic obligation of the Court to ascertain, and give effect to, the intent of the Testatrix as expressed by the terms of the will:at 476. [70] For this reason, I cannot approve the arrangement at this time, given that, as in the case of Samoil, the Applicant’s ProposedArrangement to terminate the Trust fails to include at least one beneficiary, the minor Alex Anderson. I cannot, therefore, undertake thenecessary analysis to determine whether I am satisfied with the proposed arrangement pursuant to s. 42(7) of the Trustee Act. 5.

Can the Applicant be appointed as a Trustee under the Will, in the Place of the Personal Representative, Royal Trust? [71] Having concluded that I cannot approve the Proposed Arrangement to terminate the Trust, I must address the alternativeargument of the Applicant, which is, whether the Applicant should be appointed as Trustee under the Will, in place of the PersonalRepresentative, Royal Trust.

[ 72 ] The intentions of the Testatrix are clear with respect to establishing a trust for the Applicant. Clause 3(E)(

i) directs that a trust be established for the testatrix's daughter, who would, during her lifetime, have a beneficial right to the net annual income that arises from the invested residue. Further, this clause sets out that the Trustee has the power, but is not obligated to pay or transfer any part of the capital of the residue for the maintenance or benefit of the Applicant. [ 73 ] To appoint the Applicant as Trustee under the Will, in a case where the only trust established is to provide for her own life interest would be contrary to the Testatrix's intentions.

As previously mentioned, a Will is to be construed so as not to be contrary to the clear intentions of the testatrix. [ 74 ] The proposal that the Court simply substitute the Applicant as Trustee, in the place of Royal Trust may be seen as requesting that the Court do indirectly that which it cannot do directly. The Applicant seeks to gain control over the Trust that is her life estate. I have determined that the Court cannot, at present, approve of the Arrangement proposed by the Applicant.

This was due to the operation of s. 42(7) of the Trustee Act in relation to the minor who cannot consent to the Arrangement. [ 75 ] The purpose of s. 42 of the Trustee Act requires that I consider the overall effects of a new arrangement or termination. Having considered the effects of the Applicant's proposal that the Court simply substitute the Applicant as Trustee, in the place of Royal Trust, I am of the view that the proposed termination or variation of the trust would affect the interests of the minor, which I have previously clarified as being contingent interests.

As determined above, the Court does not currently have the ability to approve the Applicant's proposed arrangement. V. Conclusion [ 76 ] I conclude that the Trust established by Clause 3(E)(ii) the Will of Grace Rebecca Hoover continues to be operative. The failure of the Proposed Arrangement placed before the Court to include the minor, Alex Anderson, is at the present time fatal to the Applicant’s proposed arrangement given s. 42(7) of the Trustee Act . [ 77 ] The costs in this Application shall be payable out of the Trust capital of the Estate on a solicitor-client basis.

Heard on the 18 th day of October, 2011. Dated at the City of Calgary, Alberta this 12th day of April, 2012. A.B. Sulatycky J.C.Q.B.A. Appearances:

Benjamin J. Kormos For the Applicant Victoria Coffin for the Public Trustee