MacNeil Estate (Re), 2015 NSSC 326

SUPREME COURT OF Nova Scotia Citation: MacNeil Estate (Re) , 2015 NSSC 326 Date: 20151119 Docket: SN 441787 Registry: Sydney IN THE MATTER OF: THE VARIATION OF TRUSTS ACT , being

Chapter 486, R.S.N.S., 1989, as amended - and - IN THE MATTER OF: An Application of Hunter Bettens, as beneficiary, for a variation of the testamentary trust created under the Will of Donald Pius MacNeil Library Heading Judge: The Honourable Justice Arthur J. LeBlanc Heard: August 26, 2015, in Sydney, Nova Scotia Decision: November 16, 2015 Subject: Trusts; application for variation

Summary: The applicant brought an application pursuant to s. 3 of the Variation of Trusts Act to vary a testamentary trust. The trust provided that the applicant would receive the trust funds on reaching age 23. The trust also provided for a contingent beneficiary in the event the applicant died before attaining 23. The applicant wanted to attend private school in Ontario, and brought this application for an early distribution of the funds for the payment of tuition. Issues: Should the application to vary the trust under s. 3 of the Variation of Trusts Act be allowed?

(1) Result:

(2) Application allowed. The proposed variation was somewhat inconsistent with the settlor's intentions, but this did not weigh heavily against the applicant. The proposed variation would have a great benefit to the applicant. Neither the trustee nor the contingent beneficiary opposed the application, but they also did not expressly consent to it. However, the arrangement would not be detrimental to their interests, or to the administration of the trust. On the other hand, refusing the variation would be detrimental to the applicant's interests.

A prudent adult motivated by intelligent self-interest and sustained consideration of the expectancies and risks would be likely to accept the proposal made. The order was one that was fit and just for the Court to approve. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.

SUPREME COURT OF Nova Scotia Citation: MacNeil Estate (Re) , 2015 NSSC 326 Date: 20151119 Docket: SN 441787 Registry: Sydney IN THE MATTER OF: THE VARIATION OF TRUSTS ACT , being

Chapter 486, R.S.N.S., 1989, as amended - and - IN THE MATTER OF: An Application of Hunter Bettens, as beneficiary, for a variation of the testamentary trust created under the Will of Donald Pius MacNeil

DECISION Judge: The Honourable Justice Arthur J. LeBlanc Heard: Written Decision: August 26, 2015, in Sydney, Nova Scotia November 19, 2015 Counsel: Sean D. MacDonald, for the Applicant Frank Gillis, Q.C. for the Estate of Donald Pius MacNeil By the Court: [ 1 ] This is an application pursuant to the Variation of Trusts Act , R.S.N.S. 1989, c. 486, as amended (the " Act "), to vary a testamentary trust created under the last will and testament of Donald Pius MacNeil (the "Trust"). The Applicant, Hunter Bettens, is a beneficiary of the Trust. Background [ 2 ] Mr.

MacNeil executed his last will and testament on January 21, 2013 (the "Will"). He died three months later on April 30, 2013. [ 3 ] Mr. MacNeil appointed his cousin, Frank Bettens, as executor and trustee of the Will. [ 4 ] Clause 4(

c) of the Will provides that the rest and residue of Mr. MacNeil's estate shall be divided equally between his godchildren, the Applicant and Ashley Timmerman, but if the Applicant has not yet attained the age of 23-years-old, his share of the estate shall be held in trust and distributed to the Applicant on his attaining age 23. The Will further provides that if the Applicant dies before the age of 23-years-old, Ms. Timmerman shall receive the Applicant's share in addition to her share of the residue of the estate. Thus, Ms.

Timmerman has a contingent interest in the Trust. [ 5 ] The Applicant's date of birth is January 5, 1999. At the time of Mr. MacNeil's death, the Applicant was 14-years-old. Accordingly, his share of the residue of Mr. MacNeil's estate went into the Trust. The Applicant is now 16-years-old. He has, through his father as litigation guardian, brought this application to vary the Trust so that he may receive funds from the Trust for the purpose of paying part of his tuition at Ridley College, a private boarding school in St. Catharines, Ontario.

The Applicant has been awarded a scholarship which will cover a portion but not all of the total amount of yearly tuition. Law [ 6 ] The relevant provisions of the Act are as follows: 2 In this Act , (a) "arrangement" means a variation, resettlement or revocation of a trust in relation to property or a variation, deletion or termination of, or an addition to, the powers of a trustee in relation to the management or administration of the property subject to the trust; (b) "court" means the Supreme Court of Nova Scotia. 3

(1) Where property is held on a trust arising before or after the coming into force of this

Section under any will, settlement or other disposition, a person may apply to the court for an order confirming an arrangement with respect to the property.

(2) The court may issue an order confirming the arrangement if

(

a) all the beneficiaries of the trust having vested or contingent interests are of full age and capacity and consent to the arrangement; and (

b) the court determines it is appropriate to do so. …

(4) Where one or more beneficiaries who are of full age and capacity refuse their consent to the arrangement, the court may (

a) approve the arrangement on behalf of those beneficiaries on any terms that the court considers appropriate if (

i) the arrangement is not detrimental to the pecuniary interest of any person who has withheld consent, and (ii) it would be detrimental to the administration of the trust or to the interests of the other beneficiaries to not approve the arrangement;and (

b) issue an order confirming the arrangement if the court determines it is appropriate to do so.

(5) In determining whether it is appropriate to confirm the arrangement, the court shall have regard to (

a) the intention of the settlor of the trust, if the settlor's intention is objectively discernible; (

b) the positions of the trustees; (

c) the positions of the beneficiaries; and (

d) the position of any person appearing before the court on the application. [7] In S.D. (Re), 2007 NSSC 288, [2007] N.S.J. No. 406, Smith A.C.J. considered the earlier version of the Act and set out thefollowing helpful

summary of principles: 12 There are a number of cases that have considered this or similar legislation. In the leading case of Re Irving (1975), (ON SC), 66 D.L.R. (3d) 387 (Ont. H.C.) Pennell J. stated at p. 393: From the foregoing the conclusion is inevitable, that in giving or withholding its consent to a proposed arrangement the function of theCourt is to protect the interest of those who cannot protect themselves; and so long as they are adequately protected, the Court will as arule give its consent.

It becomes a matter of the Court exercising the same degree of care and prudence that men prompted by self-interest generally exercise in their own affairs .... 13 At p. 394 of the same decision it is stated: The Court is concerned whether the arrangement as a whole, in all the circumstances, is such that it is proper to approve it. By way of abrief prefatory summation then, and further to the powers conferred under s. 1 of the Variation of Trusts Act, approval is to bemeasured, inter alia, by reference to these considerations: First, does it keep alive the basic intention of the testator?

Second, is there abenefit to be obtained on behalf of infants and of all persons who are or may become interested under the trusts of the will? And, third, isthe benefit to be obtained on behalf of those for whom the Court is acting such that a prudent adult motivated by intelligent self-interestand sustained consideration of the expectancies and risks and the proposal made, would be likely to accept? [Emphasis added] [8] Smith A.C.J. went on to consider the meaning of "benefit": 17 Courts, over the years, have taken a broad view of the term "benefit".

In Re: Estate of William P.Spencer (1969), (NS SC), 1 N.S.R. (2d) 282 (N.S.S.C. T.D.) Dubinsky J. at p. 297 referred to the decision of Lord Denning M.R. in Re Weston'sSettlements, [1968] 3 All E.R. 338 where it was stated at p. 342: Two propositions are clear: -- (

i) in exercising its discretion, the function of the court is to protect those who cannot protectthemselves. It must do what is truly for their benefit; (ii) it can give its consent to a scheme to avoid death duties or other taxes ....

I thinkit necessary, however, to add this third proposition: (iii) the court should not consider merely the financial benefit to the infants or unbornchildren, but also their educational and social benefit … 18 In Re Remnant's Settlement Trusts, [1970] 2 All E.R. 554 Pennycuick J. stated at p. 559 that the court is "entitled and bound toconsider not merely financial benefit but benefit of any other kind." 19 In Re Zekelman, (1971), (ON SC), 19 D.L.R. (3d) 652 (Ont. H.C.) Osler J. noted that the term "benefit" is to beliberally interpreted and is not confined to financial benefit.

See also Westminster and Sullivan v. The Royal Trust Company (1972), (NS SC), 7 N.S.R. (2d) 664 (N.S.S.C. T.D.) and Re Charlesworth Estate, (MB KB), [1996] 5 W.W.R.578 (Man. Q.B.). [9] In Drescher v. Drescher Estate, 2007 NSSC 352, [2007] N.S.J. No. 524, Wright J. emphasized that the requirement of a"benefit" to the beneficiary is to be liberally construed: 30 In the leading text by D.W.M. Waters on Law of Trusts in Canada (Third Edition), the author comments on the dilution of thisrequirement as well.

He writes (at p. 1292): As we shall see, the scope of the "arrangements", varying or revoking trusts, to which the courts have power to give their consent, is for

almost all practical purposes without limit. The essential basis of the court's consent is the benefit of the beneficiaries on behalf of whom the court gives its consent.

Only as a matter of practice, not as a requirement of the legislation, is the intention of the settlor or testator taken into account. 31 Waters adds the comment (at p. 1330) that the view of the British Columbia Court of Appeal in Russ is gaining ground in other Canadian appellate courts, footnoting other decisions from Ontario and Manitoba. 32 Waters adds the further comment that it is generally safe to say that the courts have wanted to know what purpose the settlor had in mind. That will always be so.

In my view, the consideration of keeping alive the testator's intention will always be taken into account, but it is not a conclusive consideration which will necessarily dictate the final outcome.

There are a number of situations that regularly come before the courts where the courts will order or sanction a departure from the testator's stated or apparent intentions, e.g., classic Saunders Vautier situations, TFMA situations, matrimonial property situations and certain variation of trusts situations. 33 According to Waters on Law of Trusts in Canada (at p. 1078), in order to be approved by the court, the proposed arrangement must satisfy two criteria:

(1) It must be to the benefit of the beneficiary on behalf of whom the court has been requested to consent, and

(2) The court must be satisfied that overall, the arrangement is one which is fit to approve. 34 These criteria so framed generally align with the second and third considerations articulated in Re Irving. 35 The case law clearly establishes that the requirement of a "benefit" to the beneficiary is to be liberally construed. The benefit to the beneficiary arising from the proposal may be financial, social or moral, or an enhancement of family well-being. [ 10 ] For a more recent statement that compliance or non-compliance with a testator's intentions is but one factor to consider, see Bethel Estate v.

Bethel Estate , 2015 NSSC 216 , [2015] N.S.J. No. 315 at paras. 51-55 . [ 11 ] To summarize, I must first consider whether the proposed variation is consistent with the settlor's intentions. If it is not, I may nonetheless grant the requested relief so long as the remaining two factors are fulfilled, i.e. the proposed variation would in some way benefit the applicant, and it would achieve a fit and just result in all the circumstances. I must also consider the position of the trustee, the position of all of the beneficiaries, and the position of any other person appearing before the Court on the application.

Analysis [ 12 ] I have no evidence of the settlor's intentions except for the Will. The Will shows that Mr. MacNeil intended for the Applicant to receive half of the rest and residue of his estate, but not until he reached age 23. I have no evidence of Mr. MacNeil's reasons for choosing 23 years as the benchmark. I could only guess, which I am not prepared to do. I find that the requested variation is somewhat inconsistent with the intentions of the testator as expressed in the Will, because it would result in the Applicant receiving his share of the estate before he reaches age 23. That said, Mr.

MacNeil clearly intended to benefit the Applicant, and that intention will be fulfilled. This is not a situation where, as in Forsythe Estate (Re) , 2001 NSSC 37 , [2001] N.S.J. No. 98, the proposed variation would result in the trust funds going to an entirely different person or category of people than the settlor intended.

I conclude that this factor does not weigh heavily against the proposed variation. [ 13 ] Regarding whether the proposed variation would benefit the Applicant, the Applicant seeks, through an early distribution of a portion of the Trust funds, to be able to attend Ridley College, a private school in Ontario. The Applicant has been awarded a scholarship which will cover a portion but not all of his yearly tuition, and he would like to use funds from the Trust to make up the difference.

Attending Ridley College will undoubtedly have a great educational benefit to the Applicant, and I admire his desire to pursue this opportunity. [ 14 ] I am satisfied that Ms. Timmerman was served, and made an informed choice to decline obtaining independent legal advice and to decline participating in the hearing of this matter. [ 15 ] I also am satisfied that the executor and trustee, Frank Bettens, was served. He is represented by counsel, Frank Gillis, Q.C., who appeared before me at the hearing. [ 16 ] Neither Frank Bettens nor Ms.

Timmerman oppose this application, although Frank Bettens did request some changes to the draft order, which have been implemented. That said, although they have raised no objections, Frank Betterns and Ms. Timmerman also have not expressly consented to the proposed variation. Accordingly, s. 3(4) of the Act requires me to ensure that the proposal is not detrimental to their interests, and is not detrimental to the administration of the Trust. [ 17 ] Although the proposed variation gives no direct benefit to Ms. Timmerman, I find that she would not be prejudiced by the granting of this application.

The litigation guardian has agreed to maintain life insurance against the life of the Applicant, in the amount of $100,000, with Mr. MacNeil's estate as beneficiary, until the Applicant reaches 23-years-old. The litigation guardian has provided proof that such a policy has been obtained. This eliminates any risk that Ms.

Timmerman's interest would be prejudiced should the application be granted and the Applicant does not reach the age of 23. [ 18 ] Frank Bettens' pecuniary interest and the Trust itself will be protected by provisions in the order requiring the litigation guardian and his wife to provide personal written guarantees for any potential shortfall suffered by Mr. MacNeil's estate arising out of the granting of this application, and precluding anyone calling upon Frank Bettens or Mr.

MacNeil's estate to account for funds paid pursuant to the granting of this application. [ 19 ] I find that it would be detrimental to the Applicant's academic or financial interests if I were to refuse the proposed variation.

[ 20 ] These same considerations support the conclusion that the benefit to be obtained by the Applicant is such that a prudent adult, motivated by intelligent self-interest and sustained consideration of the expectancies and risks, would be likely to accept the proposal made. [ 21 ] Overall, I am satisfied that the arrangement set out in the draft order is one that is fit and just for the Court to approve. Conclusion [ 22 ] All the necessary conditions being fulfilled, I exercise my discretion to grant the application, and I order the following: 1.

The Trust is varied and the trustee, Frank Bettens, is directed to distribute funds in the amount of $35,910.00 in advance of each of the 2015-2016 and 2016-2017 academic years, so long as the Applicant maintains a $30,000 bursary for each of those academic years; 2. If the Applicant does not maintain a $30,000 bursary for the 2016-2017 academic year but continues to attend Ridley College, the trustee, Frank Bettens, is directed to distribute the funds required to pay tuition for that academic year, in an amount not to exceed an additional $30,000 ($65,910 in total); 3.

Such funds are to be distributed to the litigation guardian, Mark Bettens, in trust for the Applicant; 4. The litigation guardian, Mark Bettens, shall, until the Applicant attains age 23, prepay the premiums on Great West Life Assurance Company Policy No. 70006446-8, being a life insurance policy obtained against the life of the Applicant, with Mr. MacNeil's estate as beneficiary (the "Policy"), and furnish proof of such prepayment to the trustee, Frank Bettens; 5.

Neither the Applicant nor his parents, Mark Bettens and Michelle Bettens, shall take any steps to void the Policy prior to the Applicant attaining age 23; 6. The Applicant's parents shall provide personal written guarantees for any potential shortfall suffered by Mr. MacNeil's estate arising out of the distribution of funds to the Applicant pursuant to the granting of this application, and the Trust has waived any requirement for the litigation guardian or his wife to file an affidavit of justification; 7. Neither the trustee nor Mr.

MacNeil's estate shall be called upon in any manner to account for funds paid pursuant to the granting of this application; and 8. The order shall remain in effect until varied by the Court. LeBlanc, J.