2014 QCCA 1991, 2014 QCCA 1991

Abbott c. Agence du revenu du Québec 2014 QCCA 1991 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-023348-139 ( 500-17-073541-123 ) MINUTES OF THE HEARING DATE: October 31, 2014 CORAM: THE HONOURABLES YVES-MARIE MORISSETTE , J.A. MARIE-FRANCE BICH , J.A. NICHOLAS KASIRER , J.A. APPELLANTS / INCIDENTAL RESPONDENTS COUNSEL DEREK ABBOTT KEITH ABBOTT M tre Ian FRéDéRICK Wong RESPONDENT / INCIDENTAL APPELLANT COUNSEL L’AGENCE DU REVENU DU QUÉBEC Mtre christian boutin ( Larivière Meunier – Revenu Québec ) In appeal from a judgment rendered on January 15, 2013 by the Honourable Mr. Justice Kevin Downs, of the Superior Court, District of Montreal.

NATURE OF THE APPEAL : Liberalities – Fiduciary substitution – Stipulation of inalineability Clerk: Marcelle Desmarais Courtroom: Antonio-Lamer HEARING 9 : 30 Continuation of the hearing of October 28, 2014. Judgment - see page 3. Marcelle Desmarais Clerk BY THE COURT JUDGMENT [ 1 ] What rights do Keith and Derek Abbott have under the will of their grandfather Stevan Yovanov? [ 2 ] Mr. Yovanov died in 1985; pursuant to

section 37 of the Act respecting the implementation of the Civil Code , [1] the Civil Code of Lower Canada governs the succession because it opened before the coming into force of the Civil Code of Québec . The effects of the substitution after 1994 are, according to

section 67 of the same Act, subject to the rules in 1218 et seq . C.C.Q. [ 3 ] Under the former law as it would be today, the meaning to be attributed to Articles 5 and 6 of the will is based on the true intention of the testator. [2] This intention is to be discerned by reference to the ordinary meaning of the words Mr. Yovanov used to express his last wishes, in the absence of admissible evidence to the contrary. [3] [ 4 ] It may be noted that the parties advanced no external evidence of Mr.

Yovanov’s testamentary intention beyond his spouse’s reciprocal will and the declaration of transmission of the immovable in 1985. [ 5 ] The appellants argue that Mr. Yovanov’s true intention cannot have been to have the substitution open upon fulfilment of a condition requiring the sale of the immovable by his wife, Eudokia (Donia) Mocherniuk. They prefer to interpret the will as bequeathing the one-half share of the proceeds of the sale of the immovable on any sale thereof, including an eventual sale of the immovable after her

death. They see this as consistent with the will read as a whole, and confirmed by terms of the declaration of transmission of the immovable which referred to the condition of sale, but made no reference to sale by Ms. Mocherniuk during her lifetime. [ 6 ] The liberal intention Mr. Yovanov had in respect of his grandchildren is manifest in the will, they say, and this

interpretation is consonant with the view that both spouses, by their reciprocal wills, ultimately wished to benefit members of their own family line with the half-share of the immovable. They contend that the condition of sale plays no meaningful purpose other than allowing the amount of the proceeds to be established; denying the Abbotts the second liberality because the immovable was not sold by Ms.

Mocherniuk defies her late husband’s true intention. [ 7 ] The respondent answers that there is no reason to stray from the plain meaning of the terms employed by the testator in Articles 5 and 6 of the will: the opening of the substitution was conditional on the sale of the immovable by Ms. Mocherniuk, not by her estate. There is no need, they say, to have recourse to extrinsic evidence to interpret the will but, in any event, the declaration of transmission does not emanate from the testator and cannot take precedence over the plain meaning of the will.

Moreover, the respondent points to the same language used in Ms. Mocherniuk’s reciprocal will as extrinsic evidence of their common intention to make the opening of the substitution conditional on the sale of the immovable by the surviving spouse. [ 8 ] What meaning should be given to Articles 5 and 6 in Mr. Yovanov’s will? [ 9 ] It is best to acknowledge that the notarial wills executed in 1977 suffer from imperfections. There is no apparent reason, for example, why

Article 5 and 6 of Mr. Yovanov’s will, which both speak to the same condition upon which the substitution opens in ostensibly the same terms, are both included in the deed. There are spelling mistakes and typographical errors in Mr. Yovanov’s will (“granchildren” in

Article 4, for example, and “deathm” in

Article 6). [ 10 ] That said, the words in the disputed legacy suffer from no ambiguity: “In the event that the property […] be sold by my wife, then it is my will that one half of the proceeds derived from said sale be paid to my grandchildren KEITH AND DEREK ABBOTT in equal shares”. [ 11 ] The judge’s

interpretation of Mr. Yovanov’s will as creating a fiduciary substitution under the Civil Code of Lower Canada that is conditional on the sale by Ms. Mocherniuk during her lifetime is not inconsistent with the language of the will. [ 12 ] The plain language used by Mr. Yovanov in the will is consonant with the creation of a fiduciary substitution as understood under the former Civil Code . [4] The will contemplates two distinct liberalities, separated by a period of time, bearing on the same the one-half share in the immovable. [5] The terms of the will are also consistent with an understanding of Mr.

Yovanov’s intention to render the second liberality to his grandchildren conditional upon his wife’s sale of the immovable. The former law contemplated conditional fiduciary substitutions and the current law does not prohibit them. [6] [ 13 ] The first liberality is the testamentary gift by which Mr. Yovanov gave to his wife, in absolute ownership, all of his property, including his one-half share in the immovable. She is the institute ( grevé

e) in the substitution in respect of the share in the immovable. The will plainly states that she had, as of the death of her husband, absolute ownership of the property. This included the right to dispose of the property – inter vivos or mortis causa , by onerous or gratuitous title – subject only to the restriction contemplated by the testator. The will does not create a general prohibition against alienating the property but only a restriction on her powers to dispose of the property as owner.

Not only could she alienate the immovable otherwise than by sale during her lifetime, she was not even precluded from selling it under the will. The testator simply required her to pay over one half of the proceeds of the sale, should it take place, to the appellants as co-substitutes. [ 14 ] The second liberality depended for its realization on the sale of the immovable by Ms. Mocherniuk according to the ordinary meaning of the will.

The appellants were thus designated in the will to receive the second liberality, conditionally, and as such were co- substitutes ( co-appelés ). [ 15 ] The substitution was designated to open not at the death of Ms. Mocherniuk but rather at the date of the sale of the immovable by her, if that sale took place. [ 16 ] The appellants say that the substitution is not solely conditional upon the sale of the property by Ms. Mocherniuk during her lifetime and that even if the sale is undertaken after her death, the share of the proceeds should be made over to them. They cite

article 1240 C.C.Q. in support of this view and argue that there is no explanation for Mr. Yovanov to have done otherwise. [ 17 ] The

interpretation they give to the will conflicts with the ordinary meaning of Articles 5 and 6 of the will such that it cannot be said to reflect the testamentary intention of Mr. Yovanov. Indeed the former law, like

article 1240 C.C.Q., allows for the possibility that the opening of a succession occur at a moment other than the institute’s death, as in the case here. [ 18 ] The appellants’ preferred

interpretation is also incompatible with the economy of the will read as a whole, including the codicil executed in 1981. Mr. Yovanov was precise in defining the bequests made to the appellants who were not part of his second wife’s family: they were particular legatees for the bank account; they were alternative universal legatees of the whole of the estate had Ms. Mocherniuk predeceased Mr. Yovanov or not survived him by 30 days. Even at the time of the execution of the codicil, he did not alter his direction in respect of the immovable: their rights as co-substitutes remained conditional upon its sale by Ms.

Mocherniuk. It appears by the unambiguous terms of the will that, except in these circumstances, he intended to leave the immovable to her, unencumbered by the condition that would have advantaged his family members. [ 19 ] At the hearing on appeal, neither of the parties was in a position to give a convincing explanation of the purpose of the condition to the substitution as drafted. The appellants argue that because the condition of a sale by Ms.

Mocherniuk during her lifetime has no apparent explanation, the Court should interpret Articles 5 and 6 as an ordinary substitution that opens on the death of the institute or that it otherwise binds her estate when the property is eventually sold. [ 20 ] Here again, the appellants are mistaken. They have brought no evidence, intrinsic or extrinsic to the will, to suggest that Mr.

Yovanov had another purpose in mind than that suggested by the plain language of the will. Speculating as to the testator’s intention in the absence of admissible evidence of his or her wishes is a perilous venture. The evidence before the trial judge as to Mr.

Yovanov’s purpose in making his bequests was not robust – we know little of the particular bequest to the Abbotts; we have no evidence of the common purpose of the spouses in making their reciprocal wills beyond the terms of the deeds; and one can well imagine that the testator might have had the tax consequences of substitutions in mind when he made his notarial will in 1977. But in the end, there is no need to speculate given that the ordinary meaning of the will presents no ambiguity. [ 21 ] In keeping with the terms of the will, when Ms. Mocherniuk died, the immovable was still in her patrimony.

Because she had not sold it during her lifetime, the substitution established by her late husband’s will did not open. The condition on which the second liberality to the appellants depended was never fulfilled. In the result the lapse of the second liberality benefitted Ms. Mocherniuk, as institute, pursuant to

article 1252, para. 2 C.C.Q. [ 22 ] On her death, ownership of the immovable passed, unconditionally, to her heirs. [ 23 ] In the result, the intestate heirs take all of her property, including the immovable. The appellants have no claim and the principal appeal should be dismissed. [ 24 ] We take note that counsel for the respondent announced at the hearing that he would not seek costs. The Incidental Appeal [ 25 ] Are Keith Abbott and Derek Abbott intestate heirs of Ms. Mocherniuk? [ 26 ] The respondent has brought an incidental appeal, seeking a declaration that the appellants are not intestate heirs of Ms.

Mocherniuk. It plainly does so in order to pave the way for the Crown to take the property of the estate by operation of law. [ 27 ] The respondent says the trial judge erred, at paragraphs [8] and [9] of his reasons: [8] La requérante demande également de déclarer que les défendeurs ne sont pas les successibles de Mme Mocherniuk, la deuxième épouse du testateur, M.

Yovanov, puisque les défendeurs sont les petits-enfants d’une union précédente du testateur d’où l’absence de liens entre les défendeurs et Mme Mocherniuk. [9] Le Tribunal ne retient pas cette prétention vu la liberté illimitée de tester du testateur suivant les articles 703 du Code civil du Québec et 831 du Code civil du Bas-Canada […]. [ 28 ] The respondent is correct. With respect for the judge, he appears to have decided the matter of the entitlement of Keith and Derek Abbott to the property other than the one-half share in the immovable left by Ms.

Mocherniuk at her death on the basis of her late husband’s will. While the Abbotts are mentioned in Mr. Yovanov’s will as alternative residual testamentary heirs, they are not designated as such in the will of Ms. Mocherniuk who, it may be recalled, was not their grandmother. [ 29 ] The universal legatee under Ms. Mocherniuk’s will was her husband who predeceased her. She did not provide for an alternate residual universal legacy, so the property devolved to her intestate heirs pursuant to articles 613 et seq. C.C.Q. [ 30 ] The appellants, who are not related to Ms.

Mocherniuk, are not among her intestate heirs recognized by law. It may be noted that they make no such claim in the incidental appeal. [ 31 ] In the circumstances, the incidental appeal should be allowed, but without costs given the absence of contestation of the incidental appeal. [ 32 ] As a final note, it bears recalling that under

article 701 C.C.Q., persons who establish their status as heirs of Ms. Mocherniuk may, within ten years from the opening of the succession, recover their share of the estate from the Minister of Revenue. The Unclaimed Property Act [7] has, among its announced purposes, the facilitating of the recovery of unclaimed property by those who have title. The Act also sets out the circumstances in which the property be delivered to the Crown because the proper right-holders are unknown. We note that the government authorities responsible have taken prescribed measures, in Quebec, to make known the fact that Ms.

Mocheniuk’s estate is unclaimed. We observe, however, that her will is precise in designating family members in the former Soviet Union who might well be intestate heirs with a better claim to the property than the Crown.

It seems appropriate to expect that authorities with a statutory duty to administer such property take reasonable steps to seek out these intestate heirs. [ 33 ] FOR THE AFOREMENTIONED REASONS , the Court: [ 34 ] DISMISSES the appeal; [ 35 ] ALLOWS the incidental appeal for the sole purpose of striking paragraph [9] from the judgment of the Superior Court and adding the following conclusion to the said judgment: DECLARES that Keith Abbott and Derek Abbott are not intestate heirs of the late Eudokia (Donia) Mocherniuk. [ 36 ] CONFIRMS the judgment of the Superior Court in other respects; [ 37 ] The whole, without costs on appeal.

YVES-MARIE MORISSETTE, J.A. MARIE-FRANCE BICH, J.A. NICHOLAS KASIRER, J.A.