MIKE ELLINGSON v. CYNTHIA ELLINGSON, 2017 SKQB 14

QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2017 SKQB 14 Date: 2017 01 13 Docket: QBG 928 of 2011 Judicial Centre: Regina BETWEEN: MIKE ELLINGSON and CYNTHIA ELLINGSON Executors and beneficiaries of the estate of Paul Ellingson APPLICANTS (PLAINTIFFS) - and - THE ESTATE OF PAUL ELLINGSON and KAYE EVANS, Executrix of the estate of Paul Ellingson RESPONDENTS (DEFENDANTS) Counsel: Paul H.A. Korpan, Q.C. for the applicant, Kaye Evans Kevin C. Mellor for the respondents, Mike Ellingson and Cynthia Ellingson Mervin C. Phillips for the Estate of Paul Ellingson JUDGMENT BALL J.

JANUARY 13, 2017 [ 1 ] Paul Ellingson [Paul] was 60 years old when he died on March 14, 2009. He had no spouse and no children. He was

[ 1 ] Paul Ellingson [Paul] was 60 years old when he died on March 14, 2009. He had no spouse and no children. He was survived by his then 95 year old mother, Helen Ellingson [Helen], by his only brother, Mike Ellingson [Mike], by Mike’s wife, Cynthia Ellingson [Cynthia] and by his only sister, Kaye Evans [Kaye]. His father, Bruce Ellingson [Bruce], had died in 1988. [ 2 ] Paul died in an accident on his farm near Carievale, Saskatchewan. After his death, the family discovered that he had made a holograph will dated March 22, 1992.

The will read as follows: March 22, 1992 Last Will and Testament of Paul Ellingson I leave all my farming assets to Mike and Cynthia Ellingson. I leave 50% of my personal assets to Mike and Cynthia E. I leave 50% of my personal assets to my sister Kaye Evans. All household personal assets (those that Mom can use) I leave to her. “Paul Ellingson” [ 3 ] Because Paul’s holograph will did not appoint an executor to administer his estate, it was necessary to apply for Letters of Administration with Will Annexed. Paul’s mother, Helen, who was then residing in a nursing home, renounced her right to apply.

On June 29, 2009, Letters of Administration with Will Annexed were granted to Mike, Cynthia and Kaye with a bond. [ 4 ] The material filed in support of the application for Letters of Administration included a list of the assets of the estate valued at $1,748,995.00 and a list of debts totaling $871,776.00. Later, an Affidavit Verifying Accounts dated August 24, 2010 was sworn by all three of Mike, Cynthia and Kaye and filed with the court. Attached to the affidavit was an adjusted list of assets valued at $1,766,555.00.

The assets could be grouped into categories as follows: Asset Value Farmland $506,600.00 Farm equipment (including trucks, tools, grain bins and buildings) $859,075.00 Grain and fuel inventory $306,625.00 Organic fertilizer inventory $ 57,316.00 Bank accounts, cash on hand $ 323.00 Government of Canada AgriInvest Program $ 10,066.00 Personal office equipment $ 953.00 Unidentified personal effects $ 5,000.00 Canada Pension Plan Death Benefit $ 2,500.00 [ 5 ] While it would serve no useful purpose to list all of the debts owing by the estate, it is notable that they included: 2008 Income tax payable $ 14,828.00 2009 income tax (estimated) $330,000.00 Bank of Montreal mortgage on land $173,150.00 Conex of Minot re tractor loan $100,037.57 Bank of Montreal air seeder cart loan $ 28,280.00 Canadian Agriculture Income Stabilization (CAIS) $ 54,038.00 Debt owing to Helen Ellingson $ 97,600.00 [ 6 ] From the outset Helen made it clear that all she wanted from the estate was to be paid the $97,600.00 debt that was owing to her.

Mike and Cynthia took the position that virtually all of Paul’s estate consisted of farm assets that had been bequeathed to them by Paul’s holograph will. Kaye took the position that Paul’s will, properly interpreted, left her a greater portion of his estate than Mike and Cynthia claimed. [ 7 ] Later, Kaye’s concerns expanded.

She believed that Mike was refusing to allow Helen to have access to the $97,600.00 payable to her by the estate, that Mike and Cynthia were improperly intermingling their personal financial affairs with those of the estate, and that there were personal assets that had not been accounted for in the list of assets filed for probate purposes. [ 8 ] It became apparent to the solicitor representing the estate, Mr. Phillips, that it would be necessary for Mike and Cynthia, on the one hand, and Kaye, on the other, to retain their own counsel to pursue their personal interests as beneficiaries.

Accordingly, Mike and Cynthia retained Mr. Mellor to represent them, while Kaye retained Mr. Korpan to act on her behalf. Shortly thereafter, the litigation started in earnest. [ 9 ] It has now been almost eight years since Paul died. Throughout that time, his siblings have been engaged in acrimonious disputes about the administration of his estate and their entitlement to his assets. Helen did not live to see the end of the dispute. Substantial costs have been incurred. Hopefully, this decision will do something to bring an end to the litigation.

THE ISSUES [ 10 ] In May 2011, Mike and Cynthia, represented by Mr. Mellor, applied by originating notice for “an order of opinion, advice and/or direction” pursuant to s. 46.4(1) of The Administration of Estates Act , SS 1998, c A-4.1 regarding the meaning of the words “all my farming assets”. Their application sought a declaration that Paul had bequeathed virtually all his property to them alone. [ 11 ] On July 11, 2011, Chicoine J. directed that a trial be held to identify the assets and liabilities of the estate and to interpret the holograph will.

The first portion of his order, which I will refer to as the July 11, 2011 order, identified the first set of issues to be addressed in this decision. It stated: 1. A trial is directed to determine the following issues: (

a) those assets under the ownership or control of Mike Ellingson and/or Cynthia Ellingson, or any entity they control, which properly form part of the estate of Paul Ellingson, for the purposes of probate and a determination of the

interpretation issues directed below. (

b) the

interpretation of the holograph Will made the 22nd of March, 1992 including: (

i) an

interpretation of the terms “farming assets”, “personal assets” and “household personal assets” (the “Terms”) (ii) whether any of the Terms include any of the assets forming the estate of Paul Ellingson, including, but without limitation, the assets identified in the Affidavit Verifying Accounts dated August 24, 2010 and the following additional assets: (

A) farm subsidies and other payments from government and/or crop insurers (including AgriInvest and AgriStability) owed to Paul Ellingson; (

B) any entitlement to surface lease payments on any of the lands of the Estate; and (

C) any household effects, furniture, vehicles and jewellery. (iii) those debts of Paul Ellingson or the Estate, including any debt to Canada Revenue Agency, which should be properly paid from Estate assets; (iv) those debts of Paul Ellingson or the Estate, including any debt to Canada Revenue Agency, which is related to the ownership, use or disposition of particular assets and which should be properly paid or assumed by the beneficiary of a special or general bequest of such assets.

For these purposes, such determination will include, but without limitation, any determination of liability contemplated by s. 35 of The Wills Act . 2. The Applicants, Mike Ellingson and Cynthia Ellingson, shall be Plaintiffs and the Respondent, Kaye Evans, and the Estate, shall be Defendants. 3. The onus of proof on each issue shall be determined by the trial judge. [ 12 ] The second set of issues to be addressed in this decision arises from the need to deal with the substantial costs incurred by the parties on their way to trial.

That there would be some costs incurred was contemplated by the remaining portion of the July 11, 2011 order, which stated: 4. The parties shall be entitled to production and discovery of documents and discovery of witnesses according to The Rules of Court . 5. The parties are required to comply with s. 42(1.1) of The Queen’s Bench Act and will attend at the convenience of the Director of Dispute Resolution after discovery of documents is complete. 6.

Mike Ellingson, Cynthia Ellingson and Kaye Evans will each prepare and exchange an accounting of assets of the Estate that have been sold, disposed or intermingled with their assets or that they otherwise hold in trust for the Estate, including the production of such documents as may be required to identify or confirm that they have not intermingled the Estate assets with theirs or otherwise hold the Estate assets in trust for the estate. Such accounting is to be provided by September 15, 2011. 7. After the said accounting has been provided, any party may apply to Mr.

Justice Chicoine for a decision on the issue of an advance for legal fees incurred prior to the trial, which issue is adjourned sine die to be brought back on seven (7) days notice. 8. Leave is given to either party to apply to the court for such further directions as may be required. [ 13 ] Unfortunately, the parties did not confine their litigation to the issues or the process contemplated by the July 11, 2011 order. Both sides filed a variety of additional applications seeking orders that were either unrelated to the trial of the issues, or only peripherally related to them.

Those applications gave rise to additional costs. When matters finally proceeded to trial in May 2016, the

parties spent significant time debating the extent to which their costs should be borne by the estate. [14] Following the trial, written submissions were filed and oral arguments were presented by the parties. Again, much ofthe argument focused on costs. [15] Accordingly, the issues to be addressed in this decision will be: (1) the issues identified in the July 11, 2011 order; and(2) the costs of the litigation. I. Preliminary Issue [16] At the trial of this matter, both parties read into evidence questions and answers given by the other party during pre-trial questioning.

Both parties then responded to that evidence by seeking to read into evidence “explanatory” answers which they hadgiven during questioning. Counsel for Kaye then filed a detailed brief objecting to Mike’s proposed explanatory readings. [17] I will not add to the volume of paper already expended in this litigation by parsing and analyzing each question andanswer that was objected to.

Having reviewed all of the material, I am satisfied that nothing will turn on whether the proposed read-insand/or the explanatory answers are admitted into evidence. [18] That said, I find that the following portions of the oral questioning of Mike by Mr. Korpan are not admissible inevidence: Transcript Reason1. Page 74: Line 25 Page 75: Lines 1-2 Contains question (which is not evidence) but noanswer 2. Page 91: Lines 15-25 Page 92: Lines 1-10 Consists of debate between counsel of no probativevalue [19] I also find that the following questions and answers from the oral questioning of Mike proffered by Mr.

Mellor as“explanatory” evidence are not admissible in evidence: Transcript Reason1. Proposed excerpts from pages 70– 77 Not properly explanatory – evidence for trial II. Principles of

Interpretation of a Will [20] The court’s only objective in interpreting a will is to ascertain and give effect to the intention of the testator, asexpressed by the language of the will, at the time the will was executed. In Markowsky v Markowsky, 2014 SKQB 261, 453 Sask R 220,Tholl J. summarized the principles as follows: 11 [4] The primary principle of

interpretation of a will requires a court interpreting the will to determine the meaning of any impugnedor ambiguous terms by identifying the intentions of the testator. This principle is set out by the Saskatchewan Court of Appeal in Haidl v.Sacher (1979), (SK CA), 2 Sask. R. 93, 106 D.L.R. (3d) 360 (C.A.), at para. 17, … 12 [5] This principle was expanded upon by the Saskatchewan Court of Appeal in Jessop Estate, Re (1987), (SKCA), 55 Sask. R. 18, [1987] S.J. No. 57 (QL) (C.A.) at para. 8, as follows: 8.Before embarking on his

interpretation the learned trial judge correctly referred himself to the principles to be applied in interpreting awill: The duty of the Court in construing a will was set out by Lamont, J., in Smith v. Chatham Home of the Friendless, (SCC), [1932] S.C.R. 713, [1932] 4 D.L.R. 173, where at p. 716 he stated: In construing a will the duty of the court is to ascertain the intention of the testator, which intention is to be collected from the whole willtaken together.

Every word is to be given its natural and ordinary meaning and, if technical words are used, they are to be construed intheir technical sense, unless from a consideration of the whole will it is evident that the testator intended otherwise. And at p. 719 Lamont, J., stated: In construing the language of the testator where it is ambiguous, we are entitled to consider not only the provisions of the will, but alsothe circumstances surrounding and known to the testator at the time when he made the will, and adopt the meaning most intelligible andreasonable as being his intention.

Dealing with the principles to be applied in construing a will, Buckley, L.J., in In re Freeman; Hope v. Freeman, [1910] 1 Ch. 681, stated

at p. 691 : There are only two principles to be applied. The first principle is that which every Court of construction has to apply in every will case which comes before it. That is that it is the duty of the Court of construction to read the language of the testator and to ascertain his intention from the words he has used. On the one hand the Court must not vary his language, on the other hand it must not tie itself so strictly down to the literal meaning of the words as to give the go-by to the intention which is to be found expressed in the words.

The second principle is that a clear gift in a will is not to be cut down by anything subsequent which does not with reasonable certainty indicate the intention of the testator to cut it down. In Perrin v. Morgan , [1943] 112 L.J. Ch. 81 , at p. 83 ; [1943] A.C. 399 , at p. 406 ; [1943] All E.R. 187, at p. 190, the Lord Chancellor, Viscount Simon, stated: The fundamental rule in construing the language of a will is to put upon the words used the meaning which, having regard to the terms of the will, the testator intended.

The question is not, of course, what the testator meant to do when he made his will, but what the written words he uses mean in the particular case - what are the "expressed intentions" of the testator. At pp. 91-92 of the Perrin v. Morgan decision, supra , Lord Romer said: I take it to be a cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made.

In order to understand the language employed the Court is entitled, to use a familiar expression, to sit in the testator's armchair. When seated there, however, the Court is not entitled to make a fresh will for the testator merely because it strongly suspects that the testator did not mean what he has plainly said. 13 [6] The will is to be read as a whole and each clause is to be read within the context of the entire will.

Taking into account the will as a whole, the specific words used are to be given their prima facie or ordinary meaning, unless the testator's intention cannot be determined, in which case the rules of construction must be relied upon. ( Andrews v. Steele , 2006 SKQB 250 , [2006] S.J. No. 385 (QL) , at para. 21 ; Stevenson Estate v. Armstrong , 2012 SKQB 342 , [2012] S.J. No. 538 (QL) at paras. 7 to 8 and 13 ; Eremko Estate v. St. Peter's Hospital Foundation , 2010 SKQB 226 , 357 Sask.R. 146 , at para. 14 ) [ 21 ]

Section 24 of The Wills Act, 1996 , SS 1996, c W-14.1 states: 24 Unless a contrary intention appears in the will, every will is to be construed, respecting the real and personal property comprised in it, to speak and take effect as if it had been executed immediately before the death of the testator. The presumption set out in s. 24 is not displaced unless the testator’s contrary intention is clearly expressed in the will. Therres v Therres , 2006 SKCA 15 , paras 10 and 11 , 275 Sask R 47 .

In determining whether a contrary intention appears in the will, the court must consider the entire will in light of the surrounding circumstances known to the testator at the time when he made his will. Ratzlaff Estate v Ratzlaff , 2002 SKCA 53 , 217 Sask R 284 . [ 22 ] If the testator’s intentions are clear from the words used in the will, there will be no need to apply rules of construction. If the testator’s intentions cannot be determined from the will, rules of construction will apply if they are compatible with what is expressed in the will.

In addition to the rules already identified, those rules include a presumption against intestacy ( Bank of Nova Scotia Trust Company v Armstrong , 2012 SKQB 342 , 403 Sask R 253 per McLellan J.), and a presumption that every word or phrase used by the testator was intended to have meaning. [ 23 ] With respect to the debts owing by an estate, in the absence of evidence to the contrary there is a common law presumption that a testator who bequeaths a specific chattel encumbered by a debt intends the debt to be paid out of the general assets of the estate ( Patry Estate v Robinson , 2003 ABQB 707 , 336 AR 194 ).

That presumption does not apply to land encumbered by a mortgage. Section 35(1) of The Wills Act, 1996 , states: 35(1) Where a person dies possessed of, or entitled to, or under a general power of appointment by his or her will disposes of, an interest in freehold or leasehold property that, at the time of his or her death, is subject to a mortgage, and the deceased has not, by will, deed or other document, signified a contrary intention: (

a) the interest, as between the different persons claiming through the deceased, is primarily liable for the payment or satisfaction of the mortgage debt; and (

b) every part of the interest, according to its value, bears a proportionate part of the mortgage debt on the whole interest. III. Circumstances Known to the Testator [ 24 ] The circumstances known to Paul when he made his will begin in 1951, when his parents, Bruce and Helen, moved from the United States to the Carievale district with their three children – Mike (born in 1944), Kaye (born in 1947) and Paul (born in 1948). Their purpose was to manage the farming operations on 30 quarter sections of farmland owned by six residents of the United States. [ 25 ] The Ellingson family resided in a house located on one of those quarter sections, the NE 10-1-32 WPM [the home

quarter]. Granaries and other grain storage facilities were located on the NW 11-1-22, which is adjacent to, and immediately to the east of, the home quarter. The American land owners retained ownership of, and access to, those buildings and grain storage facilities. [ 26 ] Although there are gaps in the evidence, at some point Bruce acquired a 50% ownership interest in the farm implements and other farming assets from the American owners (excluding the land) and began receiving 50% of the income produced by the land. [ 27 ] During their grade school years, Mike, Kaye and Paul assisted their parents on the farm.

In due course all three children left home to further their educations. [ 28 ] Kaye attended teacher’s college in Regina and then, after graduating, taught school for a short time. In 1969, she married Ross Evans [Ross], who farmed with his father and an uncle near Carnduff, Saskatchewan, approximately 20 miles from the Ellingson farm. Kaye and Ross have resided at the Evans farm ever since. That is where they raised their family of three children and where they earned their livelihood.

During the 23 years from 1969 until 1992 when Paul made his will, Kaye did not play any active role or have any ownership interest in the Ellingson farm. [ 29 ] Mike left the farm to complete high school in Regina. He then obtained a Bachelor of Science degree at the University of Saskatchewan and, in 1971, a Master’s Degree at the University of Colorado. In 1971, he returned from Colorado to the Ellingson farm in Carievale. [ 30 ] Paul also completed high school in Regina. He then attended the University of Saskatchewan, graduating with a degree in agriculture in 1970, and returned to the Ellingson farm in 1970.

For the rest of his life, he resided on the home quarter. [ 31 ] After returning to the farm, Mike and Paul worked for their father on the 30 quarter sections of land owned by the Americans. Again there are gaps in the evidence, but it would appear that in approximately 1977, Mike and Paul purchased the American landowner’s remaining 50% interest in the farming assets (excluding land).

The result was that their parents, Bruce and Helen, held a 50% interest, while Mike and Paul each owned a 25% interest. [ 32 ] The evidence does not disclose whether, and to what extent, the Ellingson family’s share of the income from the land was adjusted to reflect the fact that they now owned all of the farm assets, excluding the land. [ 33 ] In the early 1980s, Bruce sold one-half of his 50% ownership in the farming assets to sons Mike and Paul. This left Bruce with 25%, Mike with 37½%, and Paul with 37½%. The terms of the sale and purchase agreement (if there was one) are not in evidence.

It is unknown whether the assets sold by Bruce included, for example, a share of his unsold grain on hand. [ 34 ] In 1987, Bruce died in an accident at the age of 75. Helen inherited Bruce’s 25% interest in the farming assets and carried on as a partner of Mike and Paul. By 1991, Mike and Paul had worked on the farm together for some 20 years – initially as employees and then in partnership with their parents and each other. [ 35 ] In addition to farming the land owned by the Americans, Paul leased one-quarter

section of farmland, while Mike and Cynthia purchased one-quarter

section of farmland. Paul farmed his rented quarter, and Mike farmed his purchased quarter, separately from their farm partnership. [ 36 ] Mike and Cynthia had two sons who were also employed on the farm. As their sons got older, Mike believed they too should become part owners of the farming operation. Paul was not in favour of that because he did not think they would be compatible with each other. He believed it would be better to dissolve the partnership.

After considerable discussion, it was agreed that Paul would purchase Mike’s 37½% share of the farming assets as at December 31, 1991. [ 37 ] In anticipation of that arrangement, Helen wrote out a document in her own handwriting on December 11, 1991. The document stated: Codicil I, Helen Ellingson, because of the new arrangement with Paul Ellingson buying out Michael Ellingson’s farming interest, I do assign my farming interest assets (machinery, tools, etc.) today Dec 11, 1991 to Paul. Helen A.

Ellingson Beneath Helen’s signature the document was endorsed by a notary public in Arizona, where Helen had been vacationing for the winter. [ 38 ] Shortly thereafter, Helen prepared and signed another document in her own handwriting which stated: Dec. 31, ‘91 I, Helen Ellingson, agree to sell my share of the Dec. 31, ’91 grain inventory (barley, hard wheat, durum) for $44,000 to my son, Paul Ellingson, as follows: Dec 31 ’93 - $6300 " " ’94 6300 " " ’95 6300 " " ’96 6300

" " ’97 6300 " " ’98 6300 " " ’99 6200 Helen Ellingson Issue a receipt each year [ 39 ] The dissolution of the partnership between Mike and Paul took effect on December 31, 1991. Mike and Cynthia moved to nearby Sherwood, North Dakota, where they started a business selling combine parts and fertilizer under the name Precision Farm Parts. [ 40 ] If there was a formal agreement between Mike and Paul identifying and placing a value on the assets Mike had agreed to sell to Paul, it was not in evidence.

However, it is common ground that Paul paid for Mike’s share of each and every asset, including Mike’s interest in all farm machinery, unsold grain on hand, and inventories of fertilizer, chemicals, seed and fuel. All of the farm machinery was valued by a third party appraiser in the summer of 1992 to ensure that Mike received full value for his share. [ 41 ] It would appear that Paul’s first payments to Mike were made on December 31, 1992. Copies of a series of cancelled cheques written by Paul to Mike between December 31, 1992 and December 31, 1994 were filed in evidence.

It is unclear whether those cheques represented all of the payments made by Paul to Mike, and no further accounting was provided. Based on those cheques, however, Paul paid Mike approximately $173,000.00, of which $105,000.00 was for grain on hand and deferred Canadian Wheat Board payments and $67,500.00 was for machinery. [ 42 ] The entire debt was owing to Mike when Paul executed his holograph will on March 22, 1992. Except for their quarter

section of farmland, there is no evidence that Mike and Cynthia owned anything else of substance at that time. [ 43 ] Kaye did not provide much evidence about her financial circumstances as they existed in 1992 when Paul made his will. She stated only that Ross inherited some farmland from his father, that he farmed with his uncle, and that he and his uncle shared farm machinery. [ 44 ] The evidence adduced at trial does not allow me to reliably assess the financial circumstances of either Kaye or Mike when Paul made his will in 1992.

However, it is reasonable to infer that Paul had a pretty good understanding of their circumstances, and that he took them into account when he prepared his will. [ 45 ] Kaye asks the court to infer that the dissolution of the partnership between Paul and Mike was the product of a serious conflict between the two brothers. While it is true that their partnership had become unworkable, I do not believe that the evidence supports that view.

Instead, the evidence supports the inference that when Paul made his will, he and his brother Mike trusted each other to the extent that Mike had left the partnership without any formal agreement and without any payment for his share. Paul in turn accounted to Mike for each and every farm asset, paying full fair market value as soon as he was able to do so. [ 46 ] When Paul executed his holograph will on March 22, 1992, he would understandably have been concerned about how he was going to pay his debt to Mike.

Payment for Mike’s share of the grain on hand could be made when the grain was sold on the open market, but that did not solve the problem of paying for the machinery and other assets. To facilitate his payments, Paul sold his largest and newest farm implement (a Versatile 1155 tractor) using the proceeds to pay Mike. It was a subject he had discussed with Ross during one of their family visits. [ 47 ] Both Kaye and Ross testified that throughout his lifetime Paul maintained a cordial social relationship with them and with their children.

There is no reason to doubt the evidence that Paul and Ross frequently discussed farming matters during family occasions. Indeed, Paul had sought out Ross’ advice about whether Paul and Mike’s partnership should be dissolved and, if so, how that might best be done.

The evidence supports the inference that Paul recognized and respected Ross’ knowledge, experience and acumen as a successful farmer. [ 48 ] It is apparent that before he made his will Paul knew Helen intended to gift him her 25% share of the Ellingson farm assets (excluding grain), and to sell him her share of grain on hand on very favourable terms. (As a reminder, on December 11, 1991, Helen had executed the document, set out at para. 37 above with respect to her “farming interest assets”, and on December 31, 1991, she had signed the document set out at para. 38 above with respect to the sale of her grain). [ 49 ] If there had been any doubt about Helen’s intention to make an immediate gift to Paul in the December 11, 1991 document, it was resolved on April 11, 1992 – i.e. just three weeks after Paul executed his will - when Helen signed a document prepared by Paul which stated: I, Helen Ellingson, agree to sell all my farming interest assets (machinery, tools, storage facilities, etc) to my son, Paul Ellingson for the sum of one dollar. [ 50 ] It is common ground that throughout his life, Paul devoted virtually all of his time and attention to farming.

He kept meticulous financial records accompanied by detailed handwritten notes. Any personal expenditures were duly noted for accounting and tax purposes. There is no evidence that he engaged in recreational activities or had any personal hobbies. There is no evidence that he ever owned any significant “personal assets” such as recreational or vacation property, at any time in his life. I will take these circumstances into account in determining Paul’s intentions in preparing his will as he did.

IV. Analysis: Identification of Assets and

Interpretation of Will [ 51 ] I return to the issues to be tried as set out in the July 11, 2011 order. The first issue to determine is whether there are any assets under the ownership or control of Mike and/or Cynthia, or any entity they control, which properly form part of the estate of Paul Ellingson. That issue can be dealt with succinctly.

During the course of this litigation, Kaye asked for and received complete disclosure from Mike and Cynthia of all documentation that might assist her in identifying any asset under their ownership or control, or any entity they control, which might properly form part of the estate. There is no evidence of any such property.

Any potential adjustments to the list of assets (such as, for example, the value of the house located on the home quarter) relate to assets that have been under the ownership and control of Kaye, Mike and Cynthia in their capacities as administrators of the estate of Paul Ellingson. [ 52 ] The July 11, 2011 order also directed the court to (1) identify the assets of the estate of Paul Ellingson as set out in, but not limited to, the assets listed in the Affidavit Verifying Accounts dated August 24, 2010; (2) determine what Paul intended by his use of the terms “all my farming assets”, “my personal assets”, and “all household personal assets” in his holograph will; (3) allocate the assets of the estate to the appropriate category; and (4) identify and allocate responsibility for payment of debts to the estate or to the beneficiaries.

I will consider each type of asset. A. Farmland [ 53 ] Almost immediately after Paul had paid his debt to Mike, he started buying farm land from his American landlords. On January 12, 1995, he purchased the NW 4-1-32 WPM along with the right to receive surface lease rentals payable for two oil wells on that land. On January 6, 2001, he purchased the NW 11-1-32 WPM (which was the quarter

section adjacent to, and immediately to the west of, the home quarter). That purchase was subject to an agreement permitting the American land owners and their other tenants to have continued access to the grain storage facilities located on that land. [ 54 ] On January 31, 2005, Paul acquired the title to an additional five quarter sections of farmland: the NE 4-1-32 W1, the SE and SW 12-1-32 W1, and the NE and SE 10-1-32 W1. (As a reminder, the NE 10-1-32 W1 was the home quarter). The total purchase price for the five quarters was $246,250.00.

It was financed by way of an unsecured personal loan to him from Helen (without interest) in the amount of $97,600.00. Based on the title documents filed in evidence, it was also financed by way of a first mortgage loan from the Bank of Montreal in Carnduff. [ 55 ] The $97,600.00 loan from Helen to Paul remained unpaid at the time of Paul’s death in 2009. After his death, all Helen asked for from the estate was that she be repaid that debt. The debt remained unpaid until the trial was almost over. My assessment is that it was the most contentious issue impelling the litigation.

More will be said about that later in dealing with the issue of costs. For now, it is enough to state that Mike steadfastly refused to pay Helen the amount owing to her by the estate in a manner that would give her unfettered access to the money. This became a major bone of contention between Kaye and Mike. [ 56 ] The title documents state that Paul paid $54,000.00 for the home quarter. The Affidavit Verifying Accounts dated August 24, 2010 valued the home quarter at $45,900.00. Kaye states that the value for probate purposes did not include the value of the home.

She states that the structure should be treated as a personal asset. No estimate of the home’s value has been provided by either party. It is not known whether anyone has lived in the home since Paul died almost eight years ago, or whether it remains habitable. It is not known if the structure could be moved off the home quarter or if a separate title could issue for the area on which it is located. [ 57 ] In 2008, Paul acquired another five quarter sections of farmland from the American land owners: the SE and SW 4-1-32 W1, the NW and NE 12-1-32 S1, and the NW 10-1-32 W1.

Based on the title documents in evidence, the total purchase price of that land was $262,000.00, with a portion of the purchase price being financed by a mortgage loan from the Bank of Montreal. The amount owing on that mortgage at the date of Paul’s death was $173,150.00. [ 58 ] Counsel for Kaye urges the court to find that Paul did not intend to have his farmland treated as a “farming asset” for the purposes of his will.

He submits (1) that Paul could not have intended to leave all of his farmland to Mike because Paul “was a fair man, and would want to be fair to his beneficiaries”; (2) that because Paul did not own farmland when he executed his will, he could not reasonably have intended to leave farmland to a beneficiary in his will; (3) that because Paul had a history of renting land, the court should infer that he “could not have contemplated owing land”; and (4) that there is at least enough uncertainty about Paul’s intentions that his farmland should not be treated as a “farming asset” but rather should fall into residue and be dealt with as on an intestacy. [ 59 ] I am not persuaded by those arguments.

The evidence establishes that when Paul made his will he (and his father before him) had been farming the land owned by the American landowners since 1951. His first priority was to pay for Mike’s share of the dissolved farming partnership. His second was to begin purchasing the land he had been farming. In all probability Paul regarded the land he farmed as a fundamental component of his farming operation. That would be so whether the land he farmed was rented or owned. [ 60 ] The arguments advanced by Kaye’s counsel are inconsistent with accepted rules of construction in the

interpretation of wills. If Paul did not intend his bequest of “farming assets” to include farmland, it would mean that the farmland would fall into residue. Since there was no residuary clause in the will, it would mean that the farmland would devolve to beneficiaries as on an intestacy. That

interpretation would offend the rule against intestacy. [ 61 ] The law dictates that when a will is prepared by a layperson the court is to interpret it in a manner consistent with the “plain and ordinary meaning” of its terms. The “plain and ordinary meaning” of farming assets includes “farmland”. [ 62 ] Finally, the

interpretation proposed by Kaye would also be incompatible with s. 24 of The Wills Act, 1996 , which declares that unless a contrary intention appears in the will, every will is to be construed to speak and take effect as if it had been executed immediately before the death of the testator. No contrary intention appears in Paul’s holograph will. [ 63 ] I find that Paul bequeathed his farmland to Mike and Cynthia, with one exception: the residential structure on the home quarter was, at the time of his death, a “personal asset”. Whether it has any value today, and whether it is even habitable, is unknown. I

leave it to the parties to sort that out in whatever manner they think fit. [ 64 ] Pursuant to ss. 35(1) of The Wills Act, 1996 , Mike and Cynthia will be primarily responsible for payment of any mortgage registered against the land they inherit. B. Farm Implements, Equipment, Trucks, Tools, Buildings, Fuel [ 65 ] An inventory of the machinery, equipment, trucks, tools and farm buildings (including grain bins) was included in the Affidavit Verifying Accounts. The total value was estimated to be $859,075.00.

Fuel and oil was valued at $9,800.00. [ 66 ] Applying the plain and ordinary meaning of the expression “all my farming assets” and taking into account the surrounding circumstances, I am satisfied that the expression “all my farming assets” in Paul’s will was intended to include his farm implements, farm trucks, tools, farm buildings and fuel inputs. Counsel for Kaye does not argue against that proposition. What he does suggest is that if Paul intended Mike and Cynthia to receive those assets then he would also have expected them to be responsible for any debt secured by that equipment.

As far as I can determine, there are only two such loans, both of which were included in the list of debts filed for probate purposes. They are a tractor loan in the amount of $100,037.57 advanced by “Conex of Minot” and an air seeder cart loan in the amount of $228,280.00 owing to the Bank of Montreal. [ 67 ] Counsel for Mike and Cynthia argues that at common law a bequest of a specific chattel does not impose an obligation on the beneficiary to pay a debt associated with that chattel, and that nothing in the will directs otherwise. Here, there was no bequest of a specific chattel.

In any event, the surrounding circumstances permit only one conclusion, which is that Paul intended those two debts to be paid from Mike and Cynthia’s distributive share of the estate. C. Unsold Grain On Hand [ 68 ] The Affidavit Verifying Accounts dated August 24, 2010 valued the inventory of unsold grain in storage at approximately $296,800.00. Counsel for Kaye submits that there is some doubt about whether the expression “all my farming assets” was intended to include inventories of unsold grain on hand as at the date of Paul’s death.

He asks the court to infer that Paul’s use of the expression “all my farming assets” was intended to mean the same thing as the expression “my farming interest assets” as used by Helen in the document entitled “Codicil” dated December 1, 1991 (see para. 39 above) and in the document dated April 10, 1992 (see para. 50 above).

His argument is that because Helen’s gift of her “farming interest assets” to Paul did not include her grain on hand (the grain was in fact sold to him separately), the court should infer that Paul, in using the expression “all my farming assets” also intended to exclude his grain on hand. [ 69 ] Again, I am not persuaded. First, what Helen may have intended by her use of one expression cannot determine what Paul intended by his use of a similar but different expression. Second, all of the words in the will must be considered and given meaning.

Paul’s bequest of his farming assets included the modifier “all”, whereas Helen’s gift of her “farming interest assets” did not. [ 70 ] The evidence of circumstances known to Paul when he made his will support that conclusion. As at December 31, 1991, Paul had agreed to purchase all of Mike’s interest in the farming assets they owned together. It is clear that he considered Mike’s share of the grain on hand to be a farming asset for which Mike was entitled to be paid. As we have already seen, the majority of what Paul actually paid Mike related to Mike’s portion of the grain on hand.

He also paid Mike for his share of the inventory of farm fuel. [ 71 ] I find that the plain and ordinary meaning of the expression “all my farming assets” was intended to include Paul’s unsold grain on hand. They will be entitled to the net after the proceeds realized from the sale of grain after March 14, 2009. Any estate liability for income tax on the deemed disposition of the grain on hand must be indemnified by Mike and Cynthia as the beneficiary of that asset. D. Twin N Fertilizer [ 72 ] Prior to his death, Paul had become engaged in organic farming.

As part of that venture, he applied a product on his land with the brand name “Twin N Fertilizer”. In due course he became a dealer for the product. He also began to create specialized machinery for applying the product in the field. At the time of his death, Paul had an inventory of organic fertilizers, including Twin N Fertilizer, valued on the list of assets for probate purposes at $57,316.00. This was off-set by liabilities to customers who had prepaid for fertilizer totalling US $49,953.00. Those payments were being held in a bank account in Minot, North Dakota.

The “Twin N Fertilizer” has become stale-dated and is no longer marketable. [ 73 ] Prior to the trial, Kaye asserted that the Twin N Fertilizer is a personal asset. At trial, the parties agreed that the assets of the organic farming business do not have any appreciable value. Be that as it may, I would categorize “Twin N Fertilizer” as a business asset that was not a “farming asset”. As such, it fell into residue and, since the will made no bequest of residue, dealt with as on an intestacy. E.

Bank Accounts And Farm Subsidy Programs [ 74 ] The Affidavit Verifying Accounts disclosed that the total balance in Paul’s two bank accounts in Canada was only $323.00. It also listed “Government of Canada AgriInvest Kickstart Program” as an asset valued at $10,066.00, and “Canadian Agriculture Income Stabilization” [CAIS] as a liability of $54,038.00. Paragraph 1(b)(ii)(

A) of the July 11, 2011 order directed the court to determine whether the estate included the following: (

a) Farm subsidies and other payments from government and/or crop insurers (including AgriInvest and AgriStability) owed to Paul

Ellingson; [ 75 ] Although the parties filed a large volume of documents in evidence for the purposes of the trial, I have been unable to identify any evidence relating to this issue.

As well, although both parties filed extensive written briefs in support of their respective positions, neither identified any “farm subsidies” of the kind referenced in the July 11, 2011 order, or explained the purpose of such programs, or advanced any argument with respect to whether such subsidies should be categorized as “farming assets”, “personal assets”, or some other type of asset. [ 76 ] Based on the evidence presented, I cannot determine whether there were any farm subsidies or other payments owed to Paul and, if there were, how those payments ought to be categorized for the purpose of his will.

If the parties continue to believe that it is an issue requiring determination, either party may apply to me within 14 days for leave to file affidavit evidence and a supplementary written submission. F. Payments For Surface Leases [ 77 ] Again, although the July 11, 2011 order identified this as an issue to be determined at trial, the parties provided little, if any, evidence about the specific location of the oilfield installations covered by the surface leases, the name of the current payor of annual rents, and the current rent being paid.

The only evidence is that when Paul purchased the NW 4-1-32 WPM in 1995 he also acquired the right to receive surface lease rentals payable for two oil wells located on that land. An entry in the Affidavit Verifying Accounts dated August 24, 2010 lists a receipt of $2,450.00 paid by an oil company on September 21, 2009. Presumably the deposit represented annual rent payable for a surface lease. Perhaps there are two surface leases as counsel advised. Perhaps the annual rental payable for both leases in 2009 was twice the amount payable for one lease. However, I cannot speculate.

Evidence is required. [ 78 ] Kaye contends that the annual rents payable for the surface leases should be treated as a personal asset under Paul’s will. Her counsel submits that if Paul could not have contemplated owning farmland when he made his will, he could not have known his farmland would bring with it an entitlement to income from a surface lease. Therefore, he says, Paul could not have intended to treat the right to receive annual rentals under surface leases as a “farming asset”.

That argument with respect to the farmland has been rejected. [ 79 ] Counsel for Mike and Cynthia submits that annual rentals under a surface lease are intended to compensate for loss of crop, and therefore the court should find that Paul intended the annual rentals to be treated as a farm asset in his holograph will. [ 80 ] The argument is interesting, but unsupported by evidence or legal analysis. The actual surface leases are not in evidence. The basis on which annual rentals have been calculated (and whether any portion relates to crop loss) is unknown. Legal questions have not been considered.

Is there a practical and enforceable way to sever the right to receive payments under a surface lease from the ownership of the underlying land? Are annual rentals payable only for loss of crop, or are they payable as well for installations that occupy an area that has never (and likely will never) produce any income? If yes, are they intended to compensate for purposes integral to the ownership of the land? If and the lease requires the lessee to pay compensation related to the restoration of the land on abandonment, to whom would the compensation be paid?

To whom would the lessee look to obtain approval and a release? Have any judicial authorities categorized the right to receive annual rentals under a surface lease as “personal”, or at least something other than realty? [ 81 ] None of these issues were addressed by the parties. Having been left in what amounts to a factual and legal vacuum, I am unable to decide whether the annual rents payable under the two surface leases are a “farming asset” or a “personal asset”. Again, if so inclined, either party may apply within 14 days for leave to file affidavit evidence and written submissions on the issue. G.

Household Effects, Furniture, Vehicles And Jewelry [ 82 ] The July 11, 2011 order directed a trial to determine, in part, whether the estate included any household effects, furniture, vehicles and jewellery. The parties completed an inventory of all items in Paul Ellingson’s home after his death in 2009. There is no evidence indicating that any “personal” assets were discovered after that inventory was taken. Paul’s personal motor vehicles appear to have included a 1995 three-quarter ton Dodge and a 1975 Blue Ford Van.

All personal items were intended to be included in the category “personal assets” in the will. [ 83 ] The expression “household personal assets” referred to all items in the house that Helen might have wished to receive. In my view, the purpose and intent of the expression “all household personal assets (those that Mom can use)” was to provide Helen with a first right to receive any items in the residence that she believed would be useful to her. COSTS Litigation History [ 84 ] I have stated that many court applications were filed by the parties before this matter finally came to trial.

I am tasked with the responsibility of awarding costs with respect to the pre-trial proceedings. To that end, I will review the history of the litigation subsequent to the July 11, 2011 order. [ 85 ] On February 27, 2013, Mike and Cynthia applied for an order requiring Kaye to commit to proceed to mediation in March or April 2013. Although it had no apparent connection to the order they sought, Mike’s affidavit in support of the application raised what had become the very contentious issue of the $97,600.00 debt owing by the estate to Helen. His affidavit stated that rather

than paying the money to Helen, he had arranged to have it placed in a joint account at the Bank of Montreal in Carnduff in the names of Helen and himself. In part, Mike’s affidavit purported to justify what he had done by stating: 5. … I am a joint owner on this account with my mother for security purposes because she has been previously tricked into making unscrupulous investments in the past with people she does not even know, due to her age. My sister (Kaye Evans) and I have Power of Attorney over my mother’s affairs. Mr. Korpan is of the view that it is an estate issue because of my joint ownership. 6.

My sister Kaye Evans is also a joint owner of my mother’s investment account (Nesbit Burns) that has a greater amount in it (approximately $130,000). Mr. Korpan does not take issue with her having joint ownership over this account. Both my sister and I were to be joint owners of this account but Kaye Evans put her name on this account as a joint owner without my knowledge through the use of the Power of Attorney. [ 86 ] On March 7, 2013, Chicoine J. directed Mediation Services to assign a mediation date or dates in May 2013, with the proviso that either party could apply for further directions.

Mediation was then set for May 15, 2013. [ 87 ] On April 5, 2013, Kaye applied for the following orders: 1. An Order that Mike Ellingson forthwith transfer to Helen Ellingson all right, title, interest and control he may have in or of the Bank of Montreal joint account, account number 8999-601 (the “Joint Account”); 2. An Order that the money in this account be paid to Helen Ellingson for her sole use absolutely; 3. An Order directing that Kaye Evans’ accounting of Estate assets and debts be determined to be true and accurate for the purpose of administering and distributing the Estate; 4.

An Order removing the Respondent, Mike Ellingson, as Executor of the Estate of Paul Ellingson; 5. An Order that Mike Ellingson and Cynthia Ellingson forthwith produce, at their expense, copies of all records regarding any bank account in which they have had any interest, or control of since the death of Paul Ellingson; or March 14, 2009 to present; 6. Such records shall include all monthly statements, cancelled cheques and other records of any transaction involving such accounts; and 7.

An Order granting the Applicant her solicitor and client costs, fixed and payable forthwith by Mike Ellingson personally, all to date, or on a full indemnity basis from the Estate. [ 88 ] Kaye’s application was heard by Chicoine J. on May 7, 2013.

By then, Mike and Cynthia had provided extensive disclosure and Kaye was no longer pursuing her request for the orders described in paragraphs 3 and 5 of her application. [ 89 ] On May 14, 2013 Justice Chicoine issued a detailed fiat (unreported) which began by summarizing the circumstances and commenting on the delay in bringing the issues on for trial as directed in his order of July 11, 2011. Briefly, he stated: 11. It is somewhat disconcerting that two years after making the order for trial of an issue the parties have made so little progress in getting this matter on for trial.

It appears that the parties have been bogged down by accounting and discovery issues. … 12.

In the circumstances, it is imperative that the parties complete the various pre-trial procedures without delay so that, barring agreement between the parties at mediation or at pre-trial, a final determination can be made by a trial judge as to the meaning and effect of the holograph will. [ 90 ] Justice Chicoine’s decision then dealt with the $97,600.00 debt owing by the estate to Helen by stating: THE BANK OF MONTREAL JOINT ACCOUNT [14] … On July 9, 2010, Mike Ellingson set up a joint account with his mother as account no. 2654 8999 601 purportedly for the payment to his mother of the amount owed to her by Paul Ellingson.

The initial deposit was $42,333.24. Further deposits were made to this joint account over the course of the next six months such that the total amount of $97,600 has been paid into the joint account. [15] Particulars of the joint account obtained by Kaye Evans from the Bank of Montreal are that the account owners are Helen Ellingson and Mike Ellingson, the account is in joint ownership with right of survivorship, and that both Helen Ellingson and Mike Ellingson must sign cheques or withdrawals.

Helen Ellingson is presently 99 years of age. [16] Kaye Evans has been administering her mother’s investments pursuant to a Power of Attorney. In the Fall of 2010, she had transferred $10,000 into a tax-free savings account and $50,000 into a GIC from the joint account.

A few weeks later Mike Ellingson had the Bank of Montreal reverse these transfers and all monies were put back into the joint account. [17] Kaye Evans has also testified in her affidavit filed on this application that on August 7, 2013, she provided Mike Ellingson with written instructions from her mother to withdraw $10,000 from the joint account. Mike Ellingson did not respond to that request. A few days later Kaye Evans informed her brother that she had to use monies from another of her mother’s investments to pay a doctor’s bill.

Mike Ellingson sent back a note stating: “Since you said it doesn’t make any difference, take it out of the account you have control over.

Besides since this estate is not settled yet, this account will remain untouched.” [18] As I stated at the hearing, I share Kaye Evan’s concern that Mike Ellingson has placed these funds, ostensibly in payment of his brother’s debt to their mother, into an account where he exercises sole control, is inaccessible to his mother, and in which right of survivorship is a term of ownership. [ 91 ] Chicoine J. noted the decision of the Supreme Court of Canada in Pecore v Pecore , 2007 SCC 17 , [2007] 1 SCR 795 , which held that the presumption of advancement does not apply in respect of joint accounts by parents and their independent adult children.

Having done so, he made an order akin to a preservation order under

Part II of The Enforcement of Money Judgments Act , SS 2010, c E-9.22 prohibiting Mike from withdrawing, disposing or dealing with any of the funds in the joint account at Bank of Montreal under any circumstances without court the approval. [ 92 ] However, he did not remove Mike as one of the administrators of the estate, stating: [24] In this case, I am not satisfied that grounds exist for the removal of Mike Ellingson as one of the three administrators.

As I have mentioned above, there is a possibility that the trial judge may determine that a large portion of the property owned by Paul Ellingson at his death will devolve upon Mike Ellingson and Cynthia Ellingson. Kaye Evans has complained that there has been some intermingling of funds in the way that Mike Ellingson handled the inventories of grain and fertilizer, with cheques written to him personally. However, the material filed on this application appears to indicate that Mike Ellingson has accounted for the sale of grain and other assets.

I would not dismiss Mike Ellingson at this juncture for failing to account as it appears that the parties are close to coming to agreement on the accounting issue, with any unresolved matters being properly a subject to discuss in mediation or at pre-trial. [25] I am also prepared to take into consideration that Mike Ellingson is the person who was in the best position to carry on the farm operation after the death of his brother. There is no suggestion that he failed to farm the land or mishandled the liquidation of inventories.

If the trial judge should find that “farming assets” includes the lands, buildings, equipment and inventories of grain and fertilizer, then there will have been no reason for a strict accounting of the farm income since the date of death.

The valuation of these assets as of the date of death will be important, but all parties will have an opportunity to lead evidence at the trial as to what the values should be. [ 93 ] Finally, Justice Chicoine ordered the estate to pay $20,000.00 to Kaye from estate funds “… with the determination of the characterization of this payment as an advance of a portion of her beneficial interest or as costs payable from the Estate or any other party being left to the trial judge.” [ 94 ] One might have hoped that Justice Chicoine’s decision would have, at a minimum, (1) prompted Mike to reconsider his refusal to provide Helen with access to the $97,600.00 that rightfully belonged to her, and (2) encouraged Kaye to leave aside her demands for ever more information and proceed to trial on the issues that had been identified in the July 11, 2011 order.

Unfortunately, neither party changed course. Mike proceeded to trial maintaining his hold over the $97,600.00 owing to Helen, while Kaye, for purposes that are unclear, continued to seek disclosure from Mike and Cynthia. [ 95 ] Mediation sessions were held on May 15, 2013 and again on July 11, 2013. No settlement was achieved. [ 96 ] On March 20, 2014, Mike and Cynthia applied for orders requiring Kaye to disclose copies of Helen’s former and current will believed to be in Kaye’s possession or control.

Their application was ostensibly based on the proposition that disclosure might assist the parties in determining Paul’s intentions when he made his holograph will. In support of the application Mike deposed that he had come to believe his mother had made a will in 1985 which left her farm assets to Mike and Paul equally.

He asserted that Helen had later made a new will which, if disclosed to him, would somehow assist him in carrying out the administration of Paul’s estate. [ 97 ] On May 16, 2014 Elson J. decided that all of the testamentary documents in question should be provided to him in a sealed envelope so that he could determine whether any of them were relevant to the administration of Paul’s estate.

Upon reviewing the documents, he decided that a will made by Helen in 1985, the “codicil” to that will made on December 11, 1991, (see para. 37 above) and a 1995 will which had revoked the 1985 will, might at least arguably have influenced Paul’s characterization of “farm assets”, although the weight of any such evidence would be “quite a different matter”. Elson J. also decided that none of Helen’s other testamentary documents would assist in resolving any of the issues for which a trial had been ordered.

He ordered that the costs of the application, to be taxed on a party and party basis under Column 4 of the Tariff of Costs, would be paid from the estate. This was the first order as to costs made by the court on any application to that point. [ 98 ] Based on the evidence adduced at trial, I am satisfied that Mike and Cynthia’s application for an order requiring disclosure of Helen’s wills had nothing to do with the

interpretation of Paul’s will and everything to do with their belief that Kaye had influenced Helen to remove them from her will and name her as the sole beneficiary. It was a belief Mike seemed fixated on his testimony at the trial and it was one of the reasons he repeatedly advanced to justify his refusal to provide Helen with access to her own money. He seemed determined to prevent Kaye from inheriting the money under Helen’s will.

In the result, the dispute became as much about who the ultimate recipient of Helen’s money would be as it was about the competing claims to Paul’s estate. [ 99 ] On July 2, 2014, Mike and Cynthia applied for (1) an order requiring Kaye to attend at questioning on the matters at issue, and (2) authorizing the estate to pay a number of estate expenses that they had personally paid in carrying out the administration of the estate.

That application was discontinued on July 7, 2014 with the consent of both parties. [ 100 ] On September 5, 2014, Mike and Cynthia filed another application requiring Kaye to attend at questioning and for orders authorizing the estate to pay expenses incurred by them in carrying out the administration of the estate. On September 23, 2014 that application was adjourned sine die returnable on 14 days’ notice by either party.

[ 101 ] On February 20, 2015, Kaye applied for orders (1) directing the estate to pay her $92,000.00 towards her approximate solicitor and client costs to that date of $112,000.00; (2) directing the estate to pay her an additional $30,000.00 for her future solicitor and client costs; and (3) granting her leave to apply for further orders as to costs. A lengthy affidavit sworn by Kaye was filed in support of her application. In opposing the application, Mike and Cynthia filed a detailed affidavit and brief of law. Mr.

Phillips, on behalf of the estate, filed an updated and detailed accounting with respect to all financial transactions made by and on behalf of the estate to that point.

The application was adjourned. [ 102 ] On May 25, 2015, the parties filed a consent order which stated: Further to the Order of May 14, 2013, the administrators of the Estate of Paul Ellingson shall pay forthwith to Kaye Evans, estate funds in the amount of $20,000, with the determination of the characterization of this payment as an advance of her portion of her beneficiarial interest or costs payable to the estate or any other party being left to the trial judge.

The amount of $40,000 shall be paid forthwith to Mike & Cynthia Ellingson, the characterization of which shall be determined after the trial of the issues, to know whether it shall be applied against expenses accrued by them as maintenance of the estate assets or whether it shall be part of their distributed share of personal property. The questioning shall be completed by July 31, 2015 and the undertakings given at the questioning shall be completed by August 31, 2015.

Counsel for the parties shall immediately attend at the Local Registrar’s Office to obtain a date for a per-trial conference as soon as possible, with the date being no earlier than September 1, 2015. Costs of this application shall be costs in the cause. [ 103 ] On August 19, 2015, Mike was questioned by Mr. Korpan and Kaye was questioned by Mr. Mellor. Mr. Korpan asked for and received a number of undertakings from Mike which resulted in the production of a large volume of documents over and above the hundreds of pages of documents that had already been produced.

The additional disclosure appears to have had little effect on the outcome of this dispute. [ 104 ] The parties proceeded to a pre-trial conference on November 6, 2015. They were unable to reach a settlement. Finally, they then proceeded to a three-day trial held May 16, 17 and 18, 2016. Evidence at Trial Relevant to Costs [ 105 ] The July 11, 2011 order had stated that one of the issues to be tried was whether specific debts of Paul Ellingson were to be paid by the estate or by the beneficiary of an asset. The loan from Helen to Paul had been made to finance his purchase of farmland in 1995.

The question was whether the estate or Mike and Cynthia, as beneficiaries claiming an entitlement to the land, should be responsible for the debt. However, it was not approached at trial from that perspective: it was accepted that the debt was an estate responsibility. The issue was whether the debt had been paid. [ 106 ] At trial, Mike was asked why he was continuing to refuse to place the money owing to his then 102 year old mother in an account to which she would have unfettered access.

His reasons included: (1) his belief that Kaye had influenced his mother to change her will to exclude him as a beneficiary; (2) that he was holding onto Helen’s money “to keep her from being scammed”; (3) that he wanted the joint account to remain in place “until the estate gets settled”; (4) that he believed Kaye was a joint owner of his mother’s account at an investment broker in Regina and “Kaye had more money in her account that I had in mine”; (5) that “the Estate has paid its debt to Helen”; and (6) that he would pay the money owing to Helen only “if Kaye renounces”. [ 107 ] Mike acknowledged in his evidence that his mother had asked him to provide her with some of the money because she needed it for dental work.

He refused because he believed that Kaye had influenced his mother to make that request. He acknowledged that he had continued to refuse to provide his mother with any of the money.

Notwithstanding Chicoine J.’s decision dated May 14, 2013 explaining that the Supreme Court in Pecore had decided there would be no presumption of advancement to him as the surviving joint holder of the Bank of Montreal account, he continued to express his belief that the money in the joint account would not form part of his mother’s estate and that it would go to him on her death. [ 108 ] Kaye’s evidence was that she had never exerted any influence on Helen to change her will.

Moreover, she testified that although she held a Power of Attorney granted to her by her mother, she was not, and never had been, a joint owner of her mother’s investment brokerage account. Her evidence is that the funds in that account were used for Helen’s benefit as and when they were required. I believe that evidence. [ 109 ] My assessment of Mike’s evidence is that he was not truthful about his motives, which were nothing more or less than to further his own financial interests by preventing his mother from bequeathing her money to Kaye.

It appeared to constitute an egregious breach of his fiduciary responsibilities as an administrator of the estate. [ 110 ] Apparently I was not alone in that view: at the beginning of the third day of the trial, Mr. Mellor rose to inform the court that Mike had instructed the Bank of Montreal to transfer the $97,600.00 from the joint account into an account in Helen’s name alone. [ 111 ] That was on May 18, 2016. Helen died in August 2016.

It is unknown whether she ever received any benefit from the repayment of the $97,600.00 she had loaned Paul in 2005. [ 112 ] Following the completion of the evidence, counsel for both parties informed the court that there remained some prospect of a settlement. They asked for time to pursue that option before filing written submissions.

[ 113 ] Again, there was no settlement. The parties filed lengthy written submissions along with a large volume of case authorities. Much of the written argument focused on the extent to which the parties would be entitled to recover their costs of the litigation from the estate. After filing their written submissions, both counsel presented oral submissions on December 13, 2016. The Queen’s Bench Rules [ 114 ]

Part I of The Queen’s Bench Rules establishes the basic principles by which the parties must conduct litigation in Saskatchewan. Rule 1-3 declares in part: 1-3(1) The purpose of these rules is to provide a means by which claims can be justly resolved in or by a court process in a timely and cost effective way.

(2) In particular, these rules are intended to be used: (

a) to identify the real issues in dispute; (

b) to facilitate the quickest means of resolving a claim at the least expense; …

(3) To achieve the purpose and intention of these rules, the parties shall, jointly and individually during an action: (

a) identify or make an application to identify the real issues in dispute and facilitate the quickest means of resolving the claim at the least expense; (

b) periodically evaluate dispute resolution process alternatives to a full trial, with or without assistance from the Court; … [ 115 ] The awarding and fixing of costs by the court is governed by

Part XI of The Queen’s Bench Rules . Rule 11-1 states: 11-1(1) Subject to the express provisions of any enactment and notwithstanding any other rule, the Court has discretion respecting the costs of and incidental to a proceeding or a step in a proceeding, and may make any direction or order respecting costs that it considers appropriate.

(2) In exercising its discretion as to costs, the Court may determine: (

a) by whom costs are to be paid, which may include a successful party; (

b) to whom costs are to be paid; (

c) the amount of costs; (

d) the date by which costs are to be paid; and (

e) the fund or estate or portion of the fund or estate out of which costs are to be paid.

(3) In awarding costs the Court may: (

a) fix all or part of the costs with or without reference to the Tariff; (

b) award a lump sum instead of or in addition to any assessed costs; (

c) award or refuse costs with respect to a particular issue or step in a proceeding; (

d) award assessed costs up to or from a particular step in a proceeding; (

e) award all or part of the costs to be assessed as a multiple or a proportion of any column of the Tariff; … (

h) make any other order it considers appropriate.

(4) In exercising its discretion as to costs, the Court may consider: (

a) the result of the proceeding; (

b) the amounts claimed and the amounts recovered; (

c) the importance of the issues; (

d) the complexity of the proceedings; … (

l) any other matter it considers relevant.

[116] Rule 11-6 provides: 11-6 Any express provision in these rules respecting costs, including rules 11-7 to 11-9, is to apply unless the Court orders otherwise inthe exercise of its discretion mentioned in subrule 11-1(1). [117] Rule 11-7(1) states: 11-7(1) Subject to subrule (2), the costs of a proceeding must follow the event.

(2) Trustees, personal representatives or mortgagees who have acted reasonably in instituting, carrying on or resisting any proceedingsretain their entitlement to costs out of a particular fund or estate. [118] For cost purposes, The Queen’s Bench Rules do not necessarily require the court to sort out whether any particularapplication was brought by a party acting as a beneficiary or as an administrator of the estate. That is so, because Rule 11-6 declares thatthe express direction in Rule 11-7 remains subject to the court’s overriding discretion set out in subrule 11-1(1). Costs in Estate Litigation: Case Law [119] The general rule of costs in estate litigation involving the

interpretation of wills is that the parties’ costs are to be paidout of the estate. This approach ensures that the will is interpreted in a manner that accurately reflects the intention of the testator. It wasarticulated and applied by Matheson J. in Landsall v Lysyshyn (1998), (SK KB), 170 Sask R 273 at para 38 (SaskQB): 38 It is the rule, rather than the exception, to permit legal costs incurred in resolving disputes regarding the administration of estates tobe recovered from the estate, particularly when a dispute arises from an

interpretation of the testator's intention. But that is not the basisof the dispute in this instance. Nevertheless, a significant item involved in the dispute related to the amount of the executors' fee. [120] The question of whether the legal costs of litigation should be paid out of an estate must be decided on a case by casebasis. The first question is whether the parties were forced into litigation by the fault of the testator. The second question is whether theproceedings had merit. The assets of an estate will not be used to pay the costs of proceedings which have no substantial purpose.

InOrleski and Kruger v Reid (1985), (SK KB), 38 Sask R 38 (Sask QB), Matheson J. stated at para 5: 5 There is no law or rule which provides that persons who take proceedings against estates may anticipate that their costs will be paid outof the estate: in Re Godard; Bessette v. Godard, (MB CA), 6 W.W.R. 83, [1952] 3 D.L.R. 828 (Man. C.A.). Further,the Court should not permit the costs occasioned by improper litigation to be paid out of the estate: Brown v. Burdett (1888) 40 Ch.

D.244. [121] In Re Olson Estate (1988), (SK SU), 67 Sask R 103 (Sask QB), the executors applied for a judicialinterpretation of a handwritten will based on ambiguities that arose from deciphering the deceased’s handwriting and interpreting certainclauses. The court resolved some of the issues but held that a residuary clause failed for uncertainty and that the residue of the estatepassed as on an intestacy.

The court also ordered that all counsel appearing on the application would have their costs paid out of theestate, taxed on a solicitor and client basis. [122] The Court of Appeal dismissed the executor’s appeal but set aside the order for payment of costs out of the estate((1988), (SK CA), 70 Sask R 240 (Sask CA)). The court stated that the executors had not brought the matter to courtin their capacity as executors, but rather in their personal capacities, and that they were therefore in a potential conflict.

The court statedat para. 3: Because the executors commenced this appeal in their personal capacities and as executors of the estate, placing them in a position ofpotential conflict, and later chose to continue this matter only in their personal capacities, we are of the view that, in all circumstances ofthis case, the costs ought not to come from the estate.

Rather, the appellants in their personal capacities will be liable for the costs ondouble Column V of the respondents and of the solicitor for the estate. [123] In Siemens v Bawolin, 2002 SKCA 84, 219 Sask R 282, Jackson J.A. summarized the law with respect to an award ofsolicitor and client costs as follows: 118 These are the principles, relevant to this appeal, which I take from my review of the above authorities: 1.solicitor and client costs are awarded in rare and exceptional cases only;

2.solicitor and client costs are awarded in cases where the conduct of the party against whom they are sought is described variously asscandalous, outrageous or reprehensible; 3.solicitor and client costs are not generally awarded as a reaction to the conduct giving rise to the litigation, but are intended to censurebehaviour related to the litigation alone; 4.notwithstanding point 3, solicitor and client costs may be awarded in exceptional cases to provide the other party completeindemnification for costs reasonably incurred. [124] In Kozicki Estate v Kozicki Farms Ltd., 2004 SKQB 125, 246 Sask R 124, Wilkinson J. stated: 7 The law is clear with respect to solicitor-client costs.

As stated by McLachlin J. (as she then was) in the Supreme Court of Canada'sdecision in Young v. Young, (SCC), [1993] 4 S.C.R. 3 at page 134: ...Solicitor-client costs are generally awarded only where there has been reprehensible, scandalous or outrageous conduct on the part ofone of the parties.

Accordingly, the fact that an application has little merit is no basis for awarding solicitor/client costs... 8 Such an award is confined to rare and exceptional cases involving deliberate attempts to frustrate the proceedings by fraud ordeception, where there is conduct calculated to harm the other party, or unreasonable conduct which compounds the complexity of theproceedings. See also: Siemens v. Bawolin, [2002] S.J. No. 398, 2002 SKCA 84, [2002] 11 W.W.R. 246 (Sask. C.A.).

ANALYSIS [125] The dispute between the parties that resulted in the trial was, to a very considerable extent, one in which each partyadvanced an

interpretation of Paul’s holograph will that would be advantageous to them personally as beneficiaries. Neither partyapproached the trial with the objectivity and neutrality of a trustee seeking direction to assist in carrying out their fiduciaryresponsibilities. [126] The issues to be tried were clearly defined in the July 11, 2011 order. At the same time, the order provided directionsintended to expedite the trial of those issues. The issues were not particularly complicated.

If the parties had confined themselves to thoseissues and had made an effort to resolve them expeditiously, many of the costs could have been avoided. [127] The animosity between the parties fueled a series of applications prior to trial which in the result served no practicalpurpose. Kaye’s effort to have Mike removed as one of the administrators of the estate was unsuccessful.

Her demands for disclosurecontinued throughout the proceedings even though, in his decision dated May 14, 2013, Chicoine J. indicated (at paras. 24 and 25) thather complaints with regard to intermingling of funds had not served any practical purpose. There would have been significant costsavings if Kaye had focused on the issues to be tried as set out in the July 11, 2011 order including whether the $97,600.00 owing toHelen remained a liability of the estate. [128] Mike’s continuing refusal to pay that debt was another matter. Helen’s entitlement to that money justified taking theissues to trial.

Even so, the issue was not particularly complex. The facts were not in dispute – on the contrary, the essential facts hadbeen set out by Chicoine J. in his fiat dated May 14, 2013. [129] Any cost award must take into account the result of the proceeding. The original application brought by Mike andCynthia has been almost entirely successful in that their

interpretation of Paul’s will has, for the most part, been confirmed. On the otherhand, Kaye’s pursuit of a decision with respect to the debt owing by the estate to Helen succeeded in ensuring that the debt was paid.Until the debt was paid, Mike’s conduct caused costs to be incurred for which he alone should bear responsibility. [130] A final consideration. Since Mike and Cynthia will receive the bulk of the assets of the estate, it may make littlefinancial difference to them whether their recoverable costs are to be paid by the estate. One way or the other, they will bear the ultimatecost. CONCLUSION 1.

Issues To Be Tried [131] For the reasons set forth in this decision, I find 1. There are no assets under the ownership or control of Mike and Cynthia Ellingson, or any entity they control, which properly formpart of the estate of Paul Ellingson. 2. The terms used by Paul Ellingson in his holograph will dated March 22, 1992 were intended to refer to assets as follows: a. “All my farming assets” includes i. all farmland; ii. farm implements, equipment, trucks, tools, buildings, fuel; iii. unsold grain on hand at date of death.

b. “Personal assets”- includes all household effects located in Paul Ellingson’s home, personal motor vehicles and the balance in personal bank accounts. c. “Household personal assets (those that Mom can use)” provides Helen Ellingson with a first right to receive any of the household assets she might choose. 3. No determination can be made with respect how assets described as “farm subsidies and other payments from government and/or crop insurers” or “surface lease annual rentals” should be categorized.

Either party may apply within 14 days for leave to file affidavit evidence and supplementary submissions with respect to those assets. 4. Pursuant to s. 35(1) of The Wills Act, 1996 , Mike and Cynthia Ellingson, as the beneficiaries of the farmland, are primarily responsible for payment of any mortgage registered against the farmland. 5. Mike and Cynthia Ellingson, as the beneficiaries of the farm implements, were intended to be primarily responsible for payment of a tractor loan in the amount of $100,037.57 and an air seeder cart loan in the amount of $228,280.00. 6.

As the beneficiaries of the unsold grain on hand, Mike and Cynthia Ellingson were intended to be primarily responsible for income tax arising on the sale or deemed disposition of grain on hand, and shall indemnify the estate for any such liability. 2. Cost Awards 1. The sum of $20,000.00 ordered to be paid to Kaye Evans from estate funds by Chicoin

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