Supreme Court of Canada
Baker v. Dumaresq, [1934] S.C.R. 665
Date: 1934-06-06
Eva Wallace Baker,
Executrix of the Estate of Elizabeth M. Weeks (Defendant) Appellant;
and
Carrie Dumaresq (Plaintiff)
Respondent.
1934: March 13; 1934: June 6.
Present: Rinfret, Lamont, Cannon, Crocket
and Hughes JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR
ONTARIO.
Will—Trust—Accounts—Testator’s widow
appointed executrix and given “the right to use such part of the income and
principal of my estate as may reasonably be necessary for her support and
maintenance”—Action by residuary legatee for accounting as to widow’s use of
estate—Extent of widow’s right to encroach upon corpus—Reference to Master to
take an account—Widow’s dealing with the property—Method of fixing income of
estate and of fixing allowance for support and maintenance—Authority of Master—Whether
right on appeal to object to method adopted by Master in view of conduct at
hearing—Right of appeal to Supreme Court of Canada from dismissal by Court of
Appeal of appeal from judgment dismissing appeal from Master’s report.
[Page 666]
By his will W. appointed his widow to be
executrix and left her “the right to use such part of the income and principal
of my estate as may reasonably be necessary for her support and maintenance.”
W. died in 1919 and his widow died in 1931. W.’s residuary legatee sued the
widow’s executrix for an accounting of W.’s estate. The trial judge held that
it was for the court to determine what was reasonably necessary for the widow’s
support and maintenance and her right to encroach upon the corpus of the estate
was limited in amount to what the court deemed reasonably necessary; and he
made a reference to the Master to take an account and to ascertain what amount
of W.’s estate remained or ought to be in the hands of the widow’s executrix.
Accounts were filed before the Master but vouchers were lacking; also the
Master was of opinion that the widow had brought herself within the law as to
liability and onus for mixing trust property with one’s own (Lupton v. White,
15 Ves. 432); and he did not go through the accounts, though he referred to
them on occasions during the hearing. He held that a certain passing of
accounts by the widow on February 16, 1922, was binding upon the parties, found
the amount in her hands when she came to Toronto in September, 1922, and, in
view of the investments at the latter date, fixed 6% as a fair rate at which to
fix her income from the property, and, on evidence, fixed amounts per year
(with certain items added) to be allowed her for reasonable support and
maintenance, and made his report on that basis. The widow’s executrix appealed
from his report to a Judge, and then to the Court of Appeal for Ontario, the
appeals being dismissed, and she then appealed to this Court.
Held that,
while it is not for the Master, as a rule, without further direction, to apply
the principle as to liability and onus for mixing trust property with one’s own
(Lupton v. White, supra, at 436), appellant must, on the record
of the hearing, be taken, to the extent stated infra, to have agreed on
the method of procedure adopted by the Master, and, to such extent, could not
now object thereto (In re Pratt, 12 Q.B.D. 334, at 341); but this
agreement applied only to the period after the widow came to Toronto in
September, 1922, and only to the method in calculating a reasonable allowance
for support and maintenance; the receipts, therefore, should be taken from the
accounts (not by fixing a percentage as aforesaid); and the widow should have
received credit for all sums shown by the accounts to have been expended for
her reasonable support and maintenance from February 16, 1922, aforesaid, until
she arrived in Toronto in September, 1922; from that time appellant was bound
by the method adopted by the Master of ascertaining reasonable annual amounts
for support and maintenance regardless of the accounts.
Held, further,
that it was proper for the widow to purchase and maintain a property in Toronto
as a home, and it was not necessary for her to live alone in it or to live in
an apartment; but this real property (purchased in the widow’s name), and
certain furniture, were purchased with funds of W.’s estate and were assets of
that estate passing to W.’s residuary legatee.
Held, further,
that there was jurisdiction to entertain this appeal. Hendrickson v. Kallio,
[1932] O.R. 675; Supreme Court Act (R.S.C. 1927, c. 36; s. 2 (b),
defining “final judgment”); and Ontario Cons. Rule 506, referred to.
[Page 667]
In the result, the appeal was allowed and the
matter referred back to the Master to take the accounts in accordance with the
judgment of this Court.
APPEAL by the defendant from the judgment of
the Court of Appeal for Ontario dismissing her appeal from the judgment of
Garrow J. dismissing her appeal from the report of the Master.
The plaintiff is a sister of, and the sole
surviving residuary legatee under the will of, John W. Weeks, late of Sydney,
Nova Scotia, where he died on January 25, 1919. The defendant is the executrix
of the will of Elizabeth M. Weeks, who was the widow of the said John W. Weeks
and executrix of his estate and who died at Toronto, Ontario, on February 24,
1931.
The will of the said John W. Weeks provided as
follows:
I appoint my wife, Elizabeth M. Weeks, sole
Executrix of this my last Will.
I give, devise and bequeath all my property
real and personal of every kind and description and wheresoever situate unto my
said wife during her life.
I authorize and empower my said Executrix
to sell and dispose of any part of the real or personal property of my estate
in her discretion, and to execute the necessary conveyance and assignments of
the same.
My said Executrix shall have the right to
invest the moneys of my estate in first mortgages of real estate, bank stock,
Government and Municipal bonds or such other safe and sufficient security as
may deem advisable. My said Executrix shall have the use of all my property
real and personal during her lifetime. She shall have the right to use such
part of the income and principal of my estate as may reasonably be necessary
for her support and maintenance wherever she may choose to reside. My Executrix
shall also have the right to use such part of the moneys of my estate as may be
necessary for the upkeep and other purposes of my estate. After her death I direct
that the balance of my estate remaining in her hands shall be divided between
my brother, the Rev. William W. Weeks, and my sister, Carrie Dumaresque. Should
my brother, William W., predecease my said sister, the whole of said balance
shall go to my said sister and her heirs. In the event of the death of my said
sister, her heirs shall take her share of my estate.
In the action the plaintiff complained of the
use made by the said Elizabeth M. Weeks of the capital and income of the estate
of the said John W. Weeks, and claimed from defendant an accounting of said
estate.
The action was tried before Wright J., who held
that, under the will of John W. Weeks, his widow had only the right to encroach
upon the corpus or capital of his estate for her reasonable support and
maintenance in excess of
[Page 668]
what the income of the estate might furnish her
with; that it was for the court to determine what was reasonably necessary for
her support and maintenance, and her right to deal with or encroach upon the
corpus of the estate was limited in amount to what the court deemed reasonably
necessary for that purpose; that the object of the will was to provide for her
support and maintenance out of the estate without regard to any private means
that she might have of her own. He made a reference to the Master of the Court
at Toronto to take an account of the estate of John W. Weeks and to ascertain
what amount of said estate remained or ought to be in the hands of the
executrix of the widow’s estate.
The Master found that the accounts of the estate
of John W. Weeks were passed by his widow (executrix) in the province of Nova
Scotia on February 16, 1922, and that that audit should be treated as binding
on the parties; that the assets then amounted to $13,415.08, and that the widow
afterwards received and got in certain proceeds which brought the total to
$20,494.03, which was the amount she had when she came to Toronto, Ontario, in
September, 1922. In the course of his reasons he said:
In September, 1922, $8,500 was invested in
mortgages bearing 7%; $4,000 invested at 8%; $1,250 in bonds at 5½%. Balance
owing on Reside sale $5,525 at 7%. The foregoing investments were good trustee
investments. The said Elizabeth M. Weeks was a trustee as well as executrix and
she should have continued the investments in trustee investments. During the
period from 1922 to the time of her death such investments would have brought
here easily on an average of 6%. * * * I am, therefore, of
opinion, and so hold, that the said Executrix could have kept this money out on
good trustee investments at 6%. The executrix, not having kept the Estate in
her hands, after coming to Toronto, properly employed there is no fixed rate of
interest chargeable under all the circumstances against her, Toronto General
Trusts Co. v. Hogg. But,
as I say, looking at the rate of interest on the investments she then had and
what she could have obtained, 6% is a just and fair rate by which to fix her
income. I think allowing the deceased Elizabeth M. Weeks say $294.03 moving
from Sydney to Toronto and to settle in any apartment house, there would be in
capital account $20,200 on her arrival in Toronto. This, I hold, is my starting
point.
I cannot concede to the argument of
Mr. Tansey that Elizabeth M. Weeks had a right under the terms of the Will
of the late John W. Weeks to buy real property if in her discretion she found
it necessary, etc. The will of the late John W.
Weeks * * * gives his executrix ample authority to sell any
part of the real or personal property of his Estate in her dis-
[Page 669]
cretion. But nowhere is there any authority
to purchase real estate. Here authority to invest the moneys of his Estate
(that means proceeds of real estate sold) in first mortgages of real estate,
bank stock, government municipal bonds, or such other safe and sufficient
security as she may deem advisable. These latter words would follow the ejusdem
generis rule and be interpreted similar securities. Buying land in her own name
was not investing money in first mortgages in real estate. First mortgages are
usually only 50% to 60% of the value of the lands. Also, as I have stated, she
was a trustee and bound to invest in trustee securities.
There was no evidence tendered to show it
would be more costly to live in one of the many beautiful comfortable well
heated single woman’s apartments than to buy a large house such as 73 Dewson
street, so I cannot accede to Mr. Tansey’s argument as to the purchase of
this property. I see no authority for her to do so and I hold that by the will
and the Trustee Act she should not have done so.
The income on the principal of the Estate
of $20,200 would have yielded say $1,200 a year. Now, then, in the words of the
judgment and the said Will would that sum be an amount reasonably necessary for
her support and maintenance. If so, then she had no right to encroach on the
corpus. If not sufficient what would be the yearly encroachment? Having found
Mrs. Weeks’ income on $20,200 would be in round numbers $1,200, what
should she be allowed for reasonable necessary support and maintenance?
He discussed the evidence at length and found
that from October, 1922, to October, 1926, the sum of $1,300 a year was ample
for the widow’s reasonably necessary support and maintenance, and $2,000 a year
for the remaining years of her life, in addition to certain allowances for
doctors, hospitals and nurses. He found that the amount that should be in the
estate of John W. Weeks (and therefore in the hands of defendant as executrix
of his widow’s estate) at the date of his widow’s death was $13,363.38 less the
funeral expenses and reasonable expenses for monument.
The reasons of the Master are further stated and
quoted from in the judgment now reported.
An appeal by the defendant from the Master’s
report was dismissed by Garrow J. and an appeal by the defendant from the
judgment of Garrow J. was dismissed by the Court of Appeal for Ontario. The
defendant appealed to the Supreme Court of Canada. The questions for
determination on the appeal are sufficiently stated in the judgment now
reported.
H.F. Parkinson K.C for the appellant.
H.J. McLaughlin K.C. for the respondent.
[Page 670]
The judgment of the court was delivered by
HUGHES J.—This action was tried before the late
Mr. Justice Wright, who held that according to the true construction of
the will of John W. Weeks, Clergyman, deceased, the widow, the late Elizabeth
M. Weeks, was entitled to encroach upon the corpus of the estate for the amount
reasonably necessary for her support and maintenance, and the learned trial
judge further directed a reference to the Master of the Supreme Court of
Ontario to take an account of the said estate, and to ascertain what amount
remained or ought to be in the hands of the executrix of the estate of the late
Elizabeth M. Weeks, and reserved the question of costs and further directions
until the Master should have made his report.
The late Reverend John W. Weeks died at the City
of Sydney, in the Province of Nova Scotia, on or about the 25th day of January,
1919. The widow moved to the City of Toronto in September, 1922, and died
there, on or about the 24th day of February, 1931.
The Master found that the accounts of the estate
had been passed by the widow before the Registrar of the Court of Probate of
the County of Cape Breton on or about the 16th day of February, 1922. The
respondent contended that the receipts in the hands of the widow when she came
to Toronto were $20,925.64, while the appellant contended that the amount was
only $19,450.64. The Master held that the audit of the accounts in Cape Breton
was binding upon the parties and that the total receipts in the hands of the
widow when she came to Toronto were $20,494.03. From this sum, the Master
deducted $294.03 for moving expenses, leaving a balance in September, 1922, of
$20,200, and this, the Master said, was his starting point. Accounts were
prepared and filed before the Master, although vouchers were lacking. The
Master said in his reasons that in September, 1922, $8,500 was invested in
mortgages bearing 7% interest, $4,000 invested at 8%, $1,250 in bonds at 5½%,
and a balance owing on a real estate sale carried interest at 7%. These, the
Master held, were trustee investments and it was the duty of the widow to
continue them in trustee investments. He considered that in view
[Page 671]
of the investments the widow had in September,
1922, 6% was a just and fair rate at which to fix her income, although it was
not established that she actually received that amount. The Master then
proceeded to inquire whether $1,200 per year would be reasonably sufficient for
the support and maintenance of the widow, and said that, if so, she had no
right to encroach on the corpus; and, if not sufficient, he should ascertain
what the amount of the yearly encroachment should be. The appellant called two
witnesses to prove a reasonable amount for support and maintenance and the
respondent called three witnesses. These witnesses testified mostly as to the
cost of their own support and maintenance. From an analysis of the evidence of
these witnesses, with some references to the accounts, the Master found that
from October, 1922, to October, 1926, $1,300 per annum was a fair and
reasonable amount to allow the widow for her support and maintenance. In the
same way, the Master found that $2,000 a year was a reasonable sum for the
remaining years. The Master then proceeded to summarize the accounting as
follows:
|
Shortage on income.....................................................................................................
|
$3,866 67
|
|
Shortage on interest on income as it
depreciated....................................................
|
700 00
|
|
Additional allowances for doctors, nurses
and hospital...........................................
|
1,534 95
|
|
Nurses for last illness...................................................................................................
|
735 00
|
|
|
|
The Master, therefore, found that the corpus
should have been encroached upon only by the above total, and that the amount
that should be in the hands of the appellant was $20,200 less $6,836.62,
namely, $13,363.38. In his reasons, the Master said:
I have not dealt with the accounts as
filed; they were not proved before me. No vouchers were presented for payment
and I do not think that anything can be gained in an endeavour to reconcile the
accounts kept by the deceased, Elizabeth M. Weeks, and her niece,
Mrs. Baker. The moment Mrs. Weeks departed from her duty as trustee
to keep the estate invested in trustee investments and followed that up by
dealing with the bonds, buying and selling them as her own; that is, buying
bonds from the estate and putting them in her own name, she quite fully brought
herself within the law as laid down in Halsbury, volume 28, page 208, and Lupton
v. White; Cook
v. Addison. Even
apart from these cases, the purchases of the Dewson street property prevented
[Page 672]
one from determining how much of the estate
of John W. Weeks was in existence at the death of his executrix, so that I have
not audited the accounts that were filed with me. Neither counsel made any
attempt to prove them before me and the whole matter was tried before me by
showing what the estate was and what would be a proper amount reasonably
necessary for the support and maintenance of Elizabeth M. Weeks, and I have
determined the matter on that basis. * * * I, therefore,
find that the amount that should be in the estate of the late John W. Weeks is
$13,363.38 less the funeral expenses and reasonable expenses for monument.
Counsel for the appellant contended before us
that the Master did not carry out the judgment of the learned trial judge, and
that he did not take an account of the estate, and that the Master had no
authority to fix the income of the widow at so much per annum, or to fix a sum
for support and maintenance at so much per annum, but that the Master should have
gone over the accounts, item by item, and made his report; or, if it was not
possible to make a report from the accounts, he should have so stated.
In Lupton v. White, supra, the Lord Chancellor said,
page 436:
If the result is, that the Master cannot
take the account, it is clearly not for him, without a farther direction, to
apply the great principle, familiar both at law and in equity, that, if a man,
having undertaken to keep the property of another distinct, mixes it with his
own, the whole must both at law and in equity be taken to be the property of
the other, until the former puts the subject under such circumstances, that it
may be distinguished as satisfactorily, as it might have been before that
unauthorized mixture upon his part. There may be cases, in which the Master may
charge parties upon that principle; but it must be under the direction of the
Court; who will judge whether the case is proper. I agree entirely with the
Master, that under these circumstances he cannot take such an account as this
Decree calls for. The consequence is, that upon farther directions it must
either be referred back to the Master, with a direction to guide him as the
mode of charging the defendants, where he cannot take the account
satisfactorily; or an issue must be directed; taking care not to overlook the
principle I have mentioned, which throws the proof upon the defendants.
Counsel for the respondent, however, urged
before us that the parties proceeded before the Master and expressly or
impliedly consented to the method of procedure. Before any evidence was taken,
the Master said:
It is agreed between counsel that, I fix
the amount of property she had when she came to Toronto, decide on the
contentions of both parties as submitted to me to-day, and then proceed to find
out what the reasonable support and maintenance of the deceased was in Toronto;
subject, however, to my disposing of the contention of Mr. McLaughlin that
certain expenditures made by the deceased, Mrs. Weeks, were not proper
expenditures for her support and maintenance.
[Page 673]
A little later, counsel for the appellant said:
I understand, sir, that the method on which
your Lordship wants us to approach this subject is not so much in regard to the
accounts which have been kept, as to ascertain what would be reasonable and
necessary under the circumstances for her support and maintenance?
To this the Master replied:
Yes. For instance, Mr. Tansey, I
suppose you could find in Toronto fifty widows of clergymen who would know
definitely what it cost them to live in as respectable a condition as the widow
of such a clergyman should keep up. I know several myself, but I do not know
anything about what it costs them. It is up to you to prove that.
Counsel for the appellant then called the
appellant and among other questions asked her: “Now, Mrs. Baker, getting
to the question of expenses. Taking the ordinary expenses over a term of years,
that is, from 1922 until the time of her death, just ordinary expenses, what
would you say was a fair average a year for Mrs. Weeks herself?” To this,
the appellant answered: “I should say about $2,000. I did not make it up at
all.”
A little later the Master asked the appellant
concerning some question of income. “Do your accounts shew that? Do you know
that?” To which the appellant answered, “Yes.” In fact the accounts were
referred to on many occasions. The appellant then called Frances Lorway and
among many questions, stated to her as follows: “I want you to give the Court,
as nearly as possible, first, what is your ordinary and average rate of
expenses in living in Toronto.” The respondent then called three witnesses who
testified, among other things, as to living costs in Toronto.
In In re Prat, Bowen, L.J., said:
There is a good old-fashioned rule that no
one has a right so to conduct himself before a tribunal as if he accepted its
jurisdiction, and then afterwards, when he finds that it has decided against
him, to turn round and say, “You have no jurisdiction.” You ought not to lead a
tribunal to exercise jurisdiction wrongfully.
It will be observed, however, that the statement
of the Master as to the agreement between the parties on the method of
procedure referred only to the period after the late Elizabeth M. Weeks came to
Toronto, namely, in the month of September, 1922, and, secondly, that it
referred to the method to be pursued in calculating a reasonable allowance for
support and maintenance only.
[Page 674]
As indicated in the foregoing, the accounts were
passed on or about February 16, 1922. The receipts to that date were $16,500
and the disbursements were $3,084.08, leaving a balance on hand of $13,415.08.
To this sum the Master added the following sums as receipts between February
16, 1922, and the arrival of the widow at Toronto:
|
Proceeds of sale 46 Rigby Road......................................................
|
$5,825 00
|
|
“ “ “ Victory Bond.......................................................
|
300 00
|
|
“ “ “ Automobile..........................................................
|
600 00
|
|
“ “ “ Furniture..............................................................
|
328 95
|
|
“ “ “ Acousticon..........................................................
|
25 00
|
These sums made a total of $20,494.03, and the
Master found that the widow had these receipts belonging to the estate when she
arrived in Toronto in September, 1922. As before stated, the Master said in his
reasons: “I have not dealt with the accounts as filed; they were not proved
before me.” It is clear, however, that the receipts should be taken from the
accounts; and it is also clear that the late Elizabeth M. Weeks should have
received credit for all sums shewn by the accounts to have been expended for
her reasonable support and maintenance from February 16, 1922, until she
arrived in Toronto. From that time, the appellant was bound by the method of
procedure adopted by the Master of ascertaining reasonable annual amounts for
her support and maintenance regardless of the accounts. So far as income was
concerned, however, this should have been ascertained from the accounts for the
whole period after February 16, 1922, that is, both before and after the widow
arrived in Toronto.
We are further of opinion that it was proper for
the late Elizabeth M. Weeks to purchase and maintain the property known as 73
Dewson street as a home, and that it was not necessary for her to live alone in
it or to live in an apartment unless she so desired. This real property,
however, and certain furniture, were purchased with funds of the estate of the
late John W. Weeks, and these are assets of that estate passing to the
respondent under his will.
[Page 675]
On the question of jurisdiction to entertain
this appeal, we were referred to Consolidated Rule 506, which provides as
follows:
Every report or certificate of a Master
shall be filed and shall be deemed to be confirmed at the expiration of
fourteen days from the date of service of notice of filing the same, unless
notice of appeal is served within that time.
In Hendrickson v. Kallio, it was held by the Court of Appeal of
Ontario that an order made by a single judge of the Supreme Court dismissing an
appeal from the report of a special referee to whom the trial of an action for
an accounting had been referred, pursuant to sections 66-71 of the Judicature
Act, was a final order, because it determined the merits of the action and
the real rights of the parties. In his judgment, at page 679, Mr. Justice
Middleton distinguished the cases of Clarke v. Goodall, Dunn v. Eaton and Hesseltine v. Nelles. The latter cases were, however, before the
1920 Amendment to the Supreme Court Act which defines “final judgment”
as any judgment, rule, order or decision which determines in whole or in part
any substantive right of any of the parties in controversy in any judicial
proceeding.
We are of opinion, therefore, that there is
jurisdiction to entertain this appeal.
The appeal will, therefore, be allowed; but,
under all the circumstances, without costs here and before the Court of Appeal
and before the late Mr. Justice Garrow, and the matter will be referred
back to the Master to take the accounts in accordance with the above judgment
Appeal allowed, without costs.
Solicitors for the appellant: Lamport,
Ferguson & Co.
Solicitors for the respondent: McLaughlin,
Johnston, Moorhead & Macaulay.