40 E.T.R. 89, 1990 CarswellBC 558
Barna Estate, Re
RE BARNA ESTATE
British Columbia Supreme Court
Millward J.
Heard: October 30, 1990
Judgment: November 22, 1990
Docket: Doc. Victoria 90/0781
Counsel: John L. Finlay, for applicant.
Subject: Estates and Trusts; International
Conflict of Laws --- Succession Wills Construction.
Conflict of laws Succession Construction Testator making two wills
Testator domiciled in France at time of making both wills Terms of one
of wills indicating testator's intention that that will to be
interpreted in accordance with laws of British Columbia.
Wills Construction Payment of taxes Foreign taxes French will dealing
with property in France and Monaco, and British Columbia will dealing
with other property Provision of British Columbia will for payment of
debts and succession duties applying only to such duties in Canada for
property passing under British Columbia will to beneficiaries named
therein.
The testator died in 1987 in France. She had two validly executed
wills: a holograph will made in 1979 (the "French will"), which dealt
with real property in France and Monaco, and a formal will made in
1984 in accordance with the laws of British Columbia (the "Canadian
will"), which dealt with various items of personal property.
The only clause dealing with the payment of expenses, debts or
succession duty was in clause 12(b) of the Canadian will. It directed
the trustee:
[T]o pay out and charge to the Capital of my general estate (in
exoneration of all beneficiaries) my DEBTS AND FUNERAL AND
TESTAMENTARY EXPENSES including all estate and inheritance and
succession and probate and other death taxes, duties and fees (whether
payable in respect of estates or interests which fall into possession
at my death or at any subsequent time and wherever leviable or
payable).
Several provisions of the Canadian will showed the deceased's
intention to dispose of her French and Monaco property separately from
that not situated in France or Monaco. In particular, by clause 5 she
defined "estate" for the purpose of the Canadian will as meaning "only
such of the same respectively as are situate elsewhere than in France
or Monaco."
Under the laws of France, if the deceased was domiciled in France at
the date of her death, beneficiaries who were not related to the
deceased might be liable to a tax at the rate of 60 per cent of the
value of the assets of the deceased's worldwide estate. None of the
beneficiaries under either will was in fact related to the deceased.
From 1947 until her death the deceased lived in France, where it
appeared that she was domiciled.
The executor of the Canadian will sought the direction of the Court on
(1) whether the Canadian will should be interpreted according to the
laws of British Columbia, France or some other jurisdiction, (2) the
correct interpretation to be applied to clause 12(b) of the Canadian
will.
Held:
(1) The Canadian will should be interpreted according to the laws of
British Columbia.
The general rule is that a will is to be interpreted in accordance
with the law intended by the testator. There is a presumption that the
testator's intention is that the governing law should be the law of
the jurisdiction of the testator's domicile at the date of the
execution of the will. However, the terms of the Canadian will
indicated a contrary intention: that it should be interpreted in
accordance with the laws of British Columbia.
(2) The deceased limited the scope of clause 12(b) of the Canadian
will dealing with the payment of duties. She did this by defining
"estate" as "not including property situate in France or Monaco."
Clause 12(b) must therefore be interpreted to apply only to paying
death and succession duties in Canada for property passing under the
Canadian will to beneficiaries named therein.
Cases considered:
Fudger, Re (1984), 18 E.T.R. 12 (Ont. H.C.) applied
Gibbins, Re; Royal Trust Co. v. Christ Church Cathedral Buildings
Ltd., 17 W.W.R. 137, [1955] D.L.R. 553, 56 D.T.C. 1001 (B.C. S.C.)
referred to
Wilkison, Re (1933), [1934] O.R. 6 (H.C.) applied
Statutes considered:
Income Tax Act, S.C. 1970-71-72, c. 63.
Trustee Act, R.S.B.C. 1979, c. 414.
APPLICATION for interpretation of a will.
Millward J.:
1 This is an application pursuant to the Trustee Act, R.S.B.C. 1979,
c. 414 brought by the Canada Trust Company in its capacity as the
named executor in the will of Gertrude Craik Barna (the deceased),
dated November 22, 1984.
2 The deceased died on March 6, 1987 in France. The deceased was born
in the United States to American parents, on May 26, 1906. In 1932 the
deceased married a Hungarian national and resided in Budapest,
Hungary, from 1932 to 1940. From 1940 to 1946 the deceased and her
husband lived in the United States. In 1947 the deceased and her
husband moved to France where the deceased resided continuously until
the time of her death. The deceased's husband predeceased her, and she
had no children. The deceased does not appear to have retained any
real property in the United States.
3 At the date of her death the deceased had two validly executed
wills: a holograph will dated March 26, 1979 ("the French will") and a
formal will executed in accordance with the laws of British Columbia,
dated November 22, 1984 ("the Canadian will").
4 The French will deals with real property situated in France and
Monaco. The assets dealt with by the Canadian will are cash, bonds,
debentures and stocks. None of the beneficiaries under either of the
wills are related to the deceased. The only clause dealing with the
payment of expenses, or death or succession duty is found in clause
12(b) of the Canadian will.
5 Under the laws of France, if the deceased was domiciled in France at
the date of her death, as appears to be the case, then the
beneficiaries, who are not related to the deceased, may be liable to a
tax at the rate of 60 per cent of the value of the assets of the
deceased's worldwide estate.
6 The applicant seeks the direction of this Court upon two questions:
1. Whether the Canadian will should be interpreted according to the
laws of British Columbia, France, or some other jurisdiction?
2. The correct interpretation to be applied to clause 12(b) of the
Canadian will?
7 It is necessary to interpret clause 12(b) of the Canadian will to
determine whether the petitioner is to pay all debt and succession
duty with respect to property passing under both the Canadian and
French wills or whether the instruction applies only to payment of
death and succession duties in Canada on property passing under the
Canadian will to the beneficiaries named therein.
The Applicable Jurisdiction
8 The general rule is that a will is to be interpreted in accordance
with the law intended by the testator. Further, there is a presumption
that the testator's intention, with regard to the governing law, is
that the law of the jurisdiction of the testator's domicile at the
date of the execution of the will applies. (A.V. Dicey and J.H.C.
Morris, eds., Conflict of Laws, 10th ed. (London: Stevens Sons, 1980)
p. 626; J.G. Castel, Conflict of Laws, 2d ed. (Toronto: Butterworths,
1986), pp. 468-469.) In this case, the testator was domiciled in
France in 1984 on the date of the execution of the Canadian will, and
therefore, according to the presumption, the will should be
interpreted according to the laws of France, However, this is a
rebuttable presumption and only stands in the absence of indications
to the contrary. (Dicey and Morris, The Conflict of Law, supra, p.
626; Castel, Canadian Conflict of Laws, supra, p. 469.) Here, there
are indications to the contrary. The Canadian will clearly
demonstrates that the deceased intended that her will be interpreted
according to the law of Canada and in particular the law of British
Columbia. This can be seen in a number of the clauses. First, in
clause 2(ii) of the 1984 will the deceased declared that this was her
"Canadian will". Second, she states: "It relates only to all my
property, both real and personal, situate elsewhere than in France or
Monaco." There is no evidence of the deceased ever owning any real
property outside of France or Monaco. Nearly all of the property
passing under the Canadian will is situated in Canada, and therefore
it is logical to assume that the deceased intended Canadian law to be
applicable. Third, the executor named in the will is a branch of the
Canada Trust Company located in British Columbia. Fourth, the will
creates a number of trusts, a concept well known to the laws of
British Columbia, but foreign to the laws of France. Further, the
Canadian will gives a wide discretion to the executor, whereas at
French law an executor has limited powers. The wording of the Canadian
will is, therefore, more consistent with the application and
interpretation of the law of British Columbia than it is of France.
Fifth, the testator made specific reference to the laws of British
Columbia in clause 6(c)(iii) and clause 8, and to the Income Tax Act,
S.C. 1970-71-72, c. 63, of Canada in clause 11(i).
9 I find sup****t for the above finding, in the case of Re Wilkison
(1933), [1934] O.R. 6 (H.C.). In Re Wilkison the testatrix was a
British subject who, at the date of her death, was domiciled in
Switzerland. She had a will drawn in Ontario disposing of property in
Ontario. In the course of his reasons Hope J. states:
[W]hile in general a will is to be construed according to the law of
the domicile of the testator, this is a mere canon of interpretation
and should not be adhered to when there is any reason, from the nature
of the will, or otherwise, to suppose that the testator wrote it with
reference to the law of some other country.
There is in the will of Mrs. Wilkison and from the fact that it was
drawn in Ontario, relative to Ontario property and during a visit by
her to Ontario, an indication in my opinion that the testatrix wrote
it with reference to the law of Ontario and I am, therefore, of the
opinion that I am entitled to apply the rules of construction which by
Ontario law would be applicable.
In the case at Bar, I am satisfied that the deceased wrote the
Canadian will with reference to the law of British Columbia, and I
therefore apply the law of British Columbia in the interpretation of
the Canadian will.
Interpretation of Clause 12(b) of the Canadian Will
10 Having found that the Canadian will should be interpreted according
to the laws of British Columbia, the next issue to address concerns a
proper interpretation of clause 12(b) of the Canadian will. Clause
12(b) provides:
12. The following are the 'Administration Trusts' herein before
referred to in this will as to which I direct my Trustee (with equal
power to retain or convert) as follows:
(b) To pay out and charge to the Capital of my general estate (in
exoneration of all beneficiaries) my DEBTS AND FUNERAL AND
TESTAMENTARY EXPENSES including all estate and inheritance and
succession and probate and other death taxes, duties and fees (whether
payable in respect of estates or interests which fall into possession
at my death or at any subsequent time and wherever leviable or
payable).
My Trustee may Commute or Prepay any such taxes, duties or fees.
11 The fundamental concern in all cases concerning the interpretation
of wills is to determine the intent of the author of the will. The
issue to be addressed in interpreting clause 12(b) is whether the
deceased intended that all "DEBTS AND FUNERAL AND TESTAMENTARY
EXPENSES including all estate and inheritance and succession and
probate and other death taxes, duties and fees" be paid with respect
to property passing under both the French will and and Canadian will,
or whether these payments are to be made only in regards to property
passing under the Canadian will?
12 In Re Gibbins; Royal Trust Co. v. Christ Church Cathedral Buildings
Ltd. , 17 W.W.R. 137, [1955] D.L.R. 553, 56 D.T.C. 1001 (B.C. S.C.)
Whittaker J. held that where the testator's words were clear and are
broad enough to include the payment of foreign duties out of the
domestic estate, then that should be done. In the case at Bar,
however, the deceased's words are not broad enough to include the
payment of foreign duties out of the domestic estate. Rather than
indicating a broad application, the deceased limited the applicability
of the payment of taxes, duties, etc., to those that arose on the
passing of property under the Canadian will. She did this by
specifically excluding her real property situate in France or Monaco
from the Canadian will.
13 It is clear from a number of the provisions in the Canadian will
that the deceased intended separately to dispose of her property
situate within France or Monaco from that not situate in France or
Monaco. Clause 3 of the Canadian will states:
I REVOKE all wills codicils and testamentary dispositions previously
made by me but only those disposing of assets (other than those
situate in France or Monaco).
[Emphasis added.] Further, clause 6 of the Canadian will states:
I GIVE DEVISE AND BEQUEATH all my Property whatever and wherever (that
is to say as hereinbefore defined situate elsewhere than in France or
Monaco).
14 In clause 5 of the Canadian will the deceased defines "estate", for
the purpose of the Canadian will, as meaning "only such of the same
respectively as are situate elsewhere than in France or
Monaco" (underlining is mine). The word "estate" in clause 12(b) then,
clearly refers to all property of the deceased except for that situate
in France or Monaco. The word "estate" is used three times in clause
12(b). First, it is stated, "To pay out and to charge to the capital
of my general estate." [Emphasis added.] The payment then must be made
out of the assets referred to in the Canadian will, being all assets
not situate in France or Monaco. Second, with regard to what shall be
paid out, clause 12(b) states, "my DEBTS AND FUNERAL AND TESTAMENTARY
EXPENSES including all estate and inheritance and succession and
probate and other death taxes duties and fees." [Emphasis added.] It
is clear that all expenses with regard to the assets of the Canadian
will must be paid out. At this point, it is unclear whether this would
include taxes or duties under the French will. The answer is found in
the next part of clause 12(b) where it states "whether payable in
respect of estates or interests." [Emphasis added.] The "all ...
inheritance and succession and probate and other death taxes duties
and fees" only applies to the property disposed of in respect of
"estates", and, as "estate" is defined as excluding property in France
and Monaco, the payments need only be made in respect of property
passing under the Canadian will.
15 This interpretation is in line with the decision of White J. in Re
Fudger (1984), 18 E.T.R. 12 (Ont. H.C.), a case very similar on the
facts. The headnote in Re Fudger accurately summarizes the facts of
that case as follows:
The testatrix died in Scotland in 1980. She left property in Canada,
valued at $817,821, and property in Scotland valued at approximately
$160,000. Her Canadian property was disposed of by a Canadian will and
codicil to various friends and relatives residing in North America,
and these testamentary do***ents expressed the fact that they were
disposing of property in Canada. Her Scottish property was disposed of
by Scottish instruments to a United Kingdom charity, and these
do***ents expressed the fact that they were disposing of property in
the United Kingdom and that their terms were not to affect any
property outside of the United Kingdom. Paragraph 2(b) of the Canadian
will directed the executor:
To pay out of and charge to the capital of my general estate my just
debts, funeral and testamentary expenses and all estate, inheritance
and succession duties or taxes which may be payable in connection with
any property passing under this my will or any codicil thereto or in
connection with any insurance on my life ...
The United Kingdom Inland Revenue claimed capital transfer tax in
respect of all of the assets Canadian as well as Scottish of the
testatrix's estate. Under the United Kingdom tax law, both the
Canadian and the Scottish executors would be liable to pay the
*****sed capital transfer tax. The claim for the tax far exceeded the
value of the Scottish property so that if full payment was not made by
the executors the United Kingdom Inland Revenue could take the entire
Scottish property in partial satisfaction of its claim.
16The Canadian executor sought the Court's direction as to the effect
of paragraph 2(b) of the Canadian will. It was conceded by all parties
to the application that Ontario law governed the construction of that
provision. White J. held that the executor of the Canadian will was
not required to pay out of the capital of the Canadian estate any
United Kingdom capital transfer tax. In the course of his judgment
White J. states, at p. 18:
All parties to this application concede that Ontario law should govern
the construction of para. 2(b) of the Canadian will which contains the
direction under review.
It is a general rule of construction that where a will contains a
direction for payment of taxes, duties or similar levies such
direction is to be construed as referring only to taxes and duties
payable in the domestic jurisdiction unless the attendant
cir***stances are sufficiently compelling to warrant the extension of
the primary meaning of that direction so as to include taxes and
duties imposed by the laws of a foreign jurisdiction; in Re Norbury;
Norbury v. Fahland [1939] Ch. 528; Butler v. Southam, [1908] 2 Ch.
365, 99 L.T. 517; in Re Cunliffe-Owen; Mountain v. Comber, [1951] Ch.
964; in Re Goetze, [1953] Ch. 96 (C.A.)
Further, on p. 20, he states:
I interpret the decision of Whittaker J. in Re Gibbins, supra, to be
restricted to the specific words in the direction that he had to
consider. The key words of that direction, in my opinion, are 'and all
duties payable in respect of my death'. These words do not limit the
scope of that duty to any specific assets.
By way of contrast to the will considered by Whittaker J., the words
of the direction contained in the Canadian will of the late Hannah
Lake Fudger use the limiting words 'in connection with any property
passing under this my will'. When these words are considered together
with the opening paragraph of the Canadian will, which limits the
scope of that will 'to all my real and personal estate in the Dominion
of Canada', it can be seen clearly, I hope, that the testatrix did not
expressly intend to impose upon her Canadian executor the duty of
paying duties other than the duties in connection with any property
passing under the Canadian will.
17 In the case at hand, the deceased, as in the Re Fudger case,
limited the scope of the application of payment of the duties. She did
this by defining "estate" as "not including property situate in France
or Monaco." This being the case, clause 12(b) of the Canadian will
must be interpreted to apply only to paying death and succession
duties in Canada for property passing under the Canadian will to
beneficiaries named therein.
18 The applicant is entitled to its costs and special costs
considering that a novel question of law was raised.
Order accordingly.
|
