2013 MBCA 91, 2013 MBCA 91

Citation: Thomas v. Director, Employment and Income Date: 20131015 Assistance Programs, 2013 MBCA 91 Docket: AI 12-30-07834 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Michel A. Monnin Madam Justice Freda M. Steel Mr. Justice William J. Burnett BETWEEN : ) A. F. Hacault and JAMES BLAKE THOMAS ) B. R. Field ) for the Appellant (Appellant) Appellant ) ) A. J. Ladyka - and - ) for the Respondent ) DIRECTOR, EMPLOYMENT AND ) INCOME ASSISTANCE PROGRAMS, ) Appeal heard: ST. JAMES/ASSINIBOINE SOUTH ) September 16, 2013 ) (Respondent) Respondent ) Judgment delivered: ) October 15, 2013 BURNETT J.A.

The Issue [ 1 ] This is an appeal from an order of the Social Services Appeal Board (the Board). The central issue for the Board was whether a trust fund created in the will (the Will) of the deceased, William James Thomas, is a “financial resource” of the appellant as defined in The Employment and Income Assistance Act , C.C.S.M., c. E98 (the Act ).

The Board concluded that the trust fund fell within the definition and should be considered a financial resource of the appellant. [ 2 ] The term “financial resources” is defined in s. 1 of the Act as follows: “financial resources” means, with the exception of the exemptions specified in the regulations, any one or more of the following things: (

a) all the real and personal property of an applicant, a recipient or a dependant of the applicant or recipient, including the net income from any such property, (

b) allowances, pensions, insurance benefits, and income from business farming or any other source received by an applicant, recipient or a dependant of the applicant or recipient,

(

c) gifts and gratuities whether in cash or in kind received by an applicant, recipient or a dependent of the applicant or recipient on a one time basis or otherwise, and (

d) the value attributed by the director to free shelter, free board or free lodging, received by an applicant, recipient or a dependant of the applicant or recipient; [ 3 ] The appellant was granted leave to appeal the Board’s order on the following question of law: Did the Board err in law when it concluded that the trust set out in para. 4(

E) of the Will does not constitute an absolute discretionary trust? Standard of Review [ 4 ] The appellant says that the standard of review applicable to this question is correctness. The respondent, on the other hand, submits that the question should be divided into two issues, namely:

a) whether the Board erred in the legal principles it applied to interpret the Will; and

b) whether the Board erred in its

interpretation of the particular provisions contained in the Will. The respondent says that the two issues attract standards of correctness and reasonableness, respectively. [ 5 ] For the reasons which follow, it is not necessary to decide whether the question should be so divided because I do not accept that the Board’s decision is correct or that it falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and the law. The Facts [ 6 ] The factual background to this appeal is fully described in the leave decision.

Briefly stated, the appellant is the adopted son of the deceased, is 43 years old, has a cognitive disability, drug addictions, and is unable to work. He received income assistance from 2002 until 2011, when the assistance was terminated because of the Board’s finding. [ 7 ] The Will provides that the residue of the deceased’s estate is to be placed in a trust fund during the appellant’s lifetime, and upon his death, the balance of the fund is to be divided equally among the testator’s brother, his sister and a friend. The precise wording of para. 4(

E) is set out below: I DIRECT my Trustee to set aside and hold the rest and residue of my Estate for the benefit of my son, JAMES BLAKE THOMAS , during his lifetime. My Trustee shall invest and keep invested such fund and shall pay such part or parts of the income and capital as my Trustee shall in my Trustee’s sole discretion, deem necessary or advisable and any time from time to time, to or for the benefit, care, support, maintenance, health and welfare of my said son during his lifetime. Any encroachment on capital for the benefit of my said son shall be at the sole and uncontrolled discretion of my Trustee.

Upon the death of my son, the said fund or the amount thereof remaining shall form part of the residue of my Estate. Any income not so paid in any year shall be added to the capital of such fund and be dealt with as a part thereof. Although para. 4(

E) refers to “my Trustee,” there are in fact three trustees named in the Will. [ 8 ] In its decision, the Board determined that:

a) the entirety of para. 4(

E) must be read as a whole in order to understand its meaning;

b) the trustees are directed by the Will to provide for the appellant’s care and maintenance, and they are obligated under the terms of the Will to provide for his needs if there is no other feasible alternative for his support;

c) it is not reasonable that the testator intended for no money to be paid for the appellant’s support so that he would have to live at a standard that is below the poverty line; and

d) the trust fund was not intended as an absolute trust, to be unavailable to the appellant under any circumstances, except through the generosity of the trustees. Analysis and Decision [ 9 ] The respondent says, and I agree, that the correct approach is to first attempt to determine the testator’s intent based on the ordinary meaning of the words used in the Will. [ 10 ] The respondent argues that:

a) the first and second sentences in para. 4(

E) impose an obligation on the trustees to consider the appellant’s needs and to pay suchpart of the fund as they find “necessary or advisable … to or for the benefit, care, support, maintenance, health and welfare of my saidson during his lifetime”; and

b) the phrase “in my Trustee’s sole discretion” in the second sentence should be read in context and has a different meaning then thephrase “sole and uncontrolled discretion” found later in the paragraph. This argument is premised, in part, on the decision in Ozad v. Ontario (Ministry of Community and Social Services, Director of IncomeMaintenance), [1998] O.J. No. 6498 (QL) (C.A.). [11] In Ozad the Ontario Court of Appeal considered whether a trust fund was a “liquid asset” under the relevant provinciallegislation, thereby disentitling the trust beneficiary from public assistance.

The definition of “liquid assets” included “a beneficialinterest in assets held in trust and available to be used for maintenance” (at para. 4). The will in question directed the trustees, in theirabsolute discretion, to use such part of the income and/or principle of the fund as they deemed adequate for the beneficiary’s support,maintenance and education.

The will also provided that nothing contained therein would operate to prevent the trustees from payingmonies from the fund or income directly to the beneficiary. [12] Kent J., speaking for the Court, concluded that the specific wording of the will obliged the trustees to determine whatamount was adequate to meet the needs of the beneficiary, that the wording did not place the trust fund beyond the beneficiary’s reach,and that the trustees could be compelled to exercise their discretion to make payments for the beneficiary’s maintenance. The trust fundwas, therefore, found to be a liquid asset. [13] In Quinn v.

Director of Social Services (Westman Region) (1981), (MB CA), 9 Man.R. (2d) 161(C.A.), this court addressed a similar issue. The issue in Quinn was whether the appellant’s interest in the estate of her deceased motherwas a “financial resource” as defined by The Social Allowances Act, C.C.S.M., c. S160, so as to make her ineligible for social assistanceunder that statute. The definition of “financial resources” considered by the court was very similar to the definition of that term in s. 1 ofthe present Act. [14] The relevant provisions of the will in Quinn provided (at para. 3): …. 2.

To invest and keep invested my estate and to pay such sums, firstly out of income and secondly out of capital as my trustee in her solediscretion deems advisable for the education, care and maintenance of my daughter, OF MY daughter SHELAGH QUINN for herlifetime. 3. Upon the death of my daughter SHELAGH QUINN to divide the balance of my estate, if any, equally between my children …. ….

After reviewing various authorities, Hall J.A. concluded that “the contingent beneficial rights of the applicant in the discretionary trustare not a financial resource adversely affecting her eligibility to receive social allowance” (at para. 13). [15] I am of the same opinion in the present case. [16] In my view, para. 4(

E) is clear and unambiguous, and the phrase “in my Trustee’s sole discretion” should be given itsordinary meaning. The words “sole discretion” are defined in Black’s Law Dictionary, 9th ed., as “[a]n individual’s power to makedecisions without anyone else’s advice or consent.” Paragraph 4(

E) gives the trustees sole discretion to pay such part of the income andcapital as they deem necessary or advisable for the appellant’s benefit, and any encroachment on capital is at their sole and uncontrolleddiscretion. Unlike the will in the Ozad decision, para. 4(

E) does not oblige the trustees to pay any amount to or for the benefit of theappellant, nor does it place the trust fund within the appellant’s reach. [17] To be clear, given the specific wording of para. 4(E), I do not accept that the appellant has a vested interest in the trustfunds such that he can compel the trustees to make a payment to him or for his benefit. [18] The present controversy results largely from the use of the phrase “in my Trustee’s sole discretion” in the secondsentence of para. 4(

E) and the use of the phrase “at the sole and uncontrolled discretion of my Trustee” in the next sentence. Therespondent argues each phrase must have a different meaning. While it is unfortunate that the author of the Will chose to use differentwording, I am not persuaded that the meaning of these phrases is different. Having said that, each case turns on the precise language ofthe will in question, and will drafters would be well advised to use consistent wording where no difference in meaning is intended. [19] For the foregoing reasons, I am of the view that the Board erred when it concluded that the trust set out in para. 4(

E) ofthe Will does not constitute an absolute discretionary trust. I would therefore allow the appeal with costs.

J.A. I agree: J.A. I agree: J.A.