Supreme Court of Canada
Sturn v. The Last Will of Lettner, [1979] 2 S.C.R. 910
Date: 1979-06-14
Pat Sturn (Plaintiff) Appellant;
and
The last Will and Testament of Pearce Leyland Snowdon Lettner (Defendant) Respondent.
1979: May 28; 1979: June 14.
Present: Laskin C.J. and Ritchie, Dickson, Estey and McIntyre JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Wills—Construction—Direction to pay legacy to friend in compensation for assistance in the event of sale of shares by trustee—Wide powers given to trustee to convert and sell assets—Proposal to sell assets and wind up company—Whether legacy defeated.
The issue was the proper construction of a clause in a professionally drawn will which gave power to the trustee to realize and convert the estate in such parts, upon such terms and in such manner as the trustee might decide and in its discretion to postpone the sale or conversion of any of the assets of the estate for such length of time as the trustee might deem advisable. The main asset of the estate was a jewellery business, an Ontario corporation in which the testator held 2001 of the 2003 voting shares. The remaining two shares were held by the appellant and by the testator’s mother.
The clause in question provided, in the event that the trustee should sell the shares of the capital stock of the corporation, for the payment of a legacy to a friend (the appellant) to compensate for assistance, including monetary assistance, rendered in the acquisition and development of the business. There followed a disposition of the residue. The trustee decided to sell the assets of the business rather than the shares in the corporation. On application to construe the will to determine whether the legacy became payable, it was held at first instance and confirmed on appeal (Dubin J.A. dissenting) that it did not.
Held: The appeal should be allowed.
As Dubin J.A. concluded in his dissenting reasons, the testator’s expressed intention was to give the appellant the legacy on the disposition of the business, its payment being postponed until the business was sold and the testator contemplating that this would be done by sale of the shares. The overriding intention of the testator as expressed in the clause was against the narrow construction placed on it in the Court below. The testator had in
[Page 911]
mind paying the appellant the specified legacy out of the sale of the business with which she had helped him however that disposition was made.
APPEAL from a judgment of the Court of Appeal for Ontario dismissing an appeal from a judgment of Osler J. construing a will. Appeal allowed.
Earl A. Cherniak, Q.C. and M.A. Sanderson, for the appellant.
R.E. Barnes, Q.C., for Guaranty Trust, respondent.
R. Hull, Q.C., for Anne Lettner et al., respondents.
E.H. Levenspil, for the Official Guardian.
The judgment of the Court was delivered by
THE CHIEF JUSTICE—The issue in this case, which is here by leave of this Court, concerns the proper construction of a clause in the will of the late Pearce Leyland Snowdon Lettner. The main asset of his estate was a jewellery business operated in the name of an Ontario corporation in which the testator held 2001 of the 2003 voting shares. Of the remaining two shares, one was held by the appellant and the other by the mother of the testator.
The will appointed the Guaranty Trust Company of Canada to be executor and trustee, and after providing for payment of debts, funeral, testamentary expenses and succession duties and other taxes in respect of inter vivos gifts and testamentary benefits, the testator in clause 4 left his estate to his trustee upon trust “except as hereinafter provided, to sell, call in and convert into money such part or parts [of the estate] upon such terms and in such manner as my Trustee may decide, with power in Its discretion to postpone the sale or conversion of any of the assets of my estate for such length of time as my Trustee shall deem advisable, and to retain any of the said assets, real or personal, as investments of my estate and to hold my said estate, or the proceeds thereof in
[Page 912]
trust as follows:” There followed gifts of specific legacies, including one of $10,000 to the appellant. Nothing in this case turns on the specific legacies, all of which could be satisfied out of the estate apart from the disposition made in clause 4(i).It is this clause which is involved here, and it reads as follows:
4...
(i) In the event that my Trustee shall sell the shares of capital stock of Pearce Lettner Limited, owned by me, I will and direct that the sum of Ten Thousand Dollars ($10,000.00) shall be paid out of the proceeds of such sale to my friend Pat Sturn, to and for her own use absolutely; the said payment is intended by me to compensate my said friend for the assistance, including monetary assistance, which she rendered to me in the acquisition and development of the business conducted by the said corporation.
There followed a disposition of the residue by way of the income for life to the testator’s mother, with power to encroach on capital for her benefit, a specific legacy to his father if he should survive the mother and then a division of the residuary capital among named beneficiaries.
On August 2, 1977, the trustee entered into an agreement with one Henderson to sell to him the “business” carried on by the testator’s company, that is, the assets, for approximately $100,000 and completed the agreement. Being concerned as to the effect of this completed agreement upon the provision made in clause 4(i), the trustee propounded the following Question for determination by the Court:
In the event of the sale by Pearce Lettner Limited of its assets and undertaking as a going concern and the subsequent dissolution of that Corporation upon its winding up, is Pat Sturn, in addition to a bequest payable to her under clause 4(c) of the said Will entitled to be paid an additional bequest of $10,000.00 pursuant to the provisions of clause 4(i) of the said will...
At the time the question was put, namely, in September 1977 and at the present time, the trustee held and still holds the testator’s shares in the jewellery company, which now has a cash position
[Page 913]
in substitution for the assets sold to Henderson. Despite the formulation of the question, no steps are on foot to dissolve the company by winding it up.
Osler J., noting that the will was carefully drawn by a solicitor, concluded, on this ground and on the fact that there were certain administrative clauses in the will which pointed to a distinction between a sale of shares and a sale of assets, that the testator intended to limit or condition the additional legacy to the appellant only upon the sale of the shares. Hence, he answered the question in the negative. (He was not quite correct in saying that the company was “a mere shell” after sale of its assets. Its business had been disposed of, but it had a substantial cash position.) The majority of the Court of Appeal, speaking through Arnup J.A., took the same view, holding that the words “the shares of capital stock of Pearce Lettner Limited owned by me” are words of precision. Arnup J.A. added that the event upon which the appellant was to receive the $10,000 did not happen “and will never happen, as appears from the affidavit of the trust officer”. That affidavit asserted that the trustee did not intend to sell the shares but intended to wind up the company and distribute its assets among the shareholders. Whether that would be a proper course, in the circumstances, resulting as it would in defeating the legacy to the appellant, need not be determined here because, in my view, different considerations govern this case.
Arnup J.A., like Osler J., referred to certain “boiler plate” provisions which constituted clause 5 of the will and were introduced “for the purpose of facilitating the administration of my estate in accordance with my intentions”. Briefly, clause 5(c) authorized the trustee to take up or purchase additional shares in any company in which the testator might hold shares or other interests, or join in any plan of reorganization or for the sale of assets of any such company. Clause 5(d) directed the trustee to give effect to any existing agreement respecting the sale of any or all interests of the
[Page 914]
testator in any company and, if there were no such agreements, the trustee was to liquidate any such interests in such manner and on such terms as in its absolute discretion it should decide to be in the best interests of the estate. Both these provisions and others in clause 5, with one exception, were not specifically directed to the jewellery company controlled and, indeed, owned by the testator, as was clause 4(i), but clauses 5(c) and (d) could be interpreted to embrace it. The exception was appended to clause 5(c) and expressed the testator’s desire that one Jeffery Wyatt (whose sons were specific legatees and who was described by the testator as “my friend” in clause 4(f)) should be continued as the manager of the business of Pearce Lettner Limited.
In his dissenting reasons, Dubin J.A. concluded that the testator’s expressed intention was to give the appellant the legacy under clause 4(i) on the disposition of the business, its payment being postponed until the business was sold and the testator contemplating that this would be done by sale of the shares. In the view of the dissenting judge it was unreal to say that the legacy fell in if the shares were sold but not if the assets, the business, was sold. He felt, and I hold the same view, that the administrative clauses could not be used to defeat an intention clearly expressed in clause 4(i). Nor should the benefit clearly intended for the appellant depend on what course the trustee took in disposing of the business. Alternatively, Dubin J.A. was prepared to find that a demonstrative legacy has been given, a view that Arnup J.A. rejected.
I am of the opinion that there is no need here to consider whether a demonstrative legacy was provided in clause 4(i), although in the view of counsel for the executor and trustee that could be a basis for finding in favour of the appellant. He put the matter in the following way: if clause 4(i) referred to the time of payment of the legacy, that being upon disposition of the business, resort could be had to the general assets of the residue in the absence of any fund from the sale of shares. As I have said, it is unnecessary to consider this route.
[Page 915]
A fair reading of clause 4(i) persuades me that the testator clearly had in mind paying the appellant the specified legacy out of the sale of the business which she had helped him to acquire and develop, however that disposition was made. He wished Jeffery Wyatt to continue to manage the business pending the sale of its assets as provided for in clause 5(c). However, and here again I agree with Dubin J.A., the provision for sale of assets in clause 5(c) did not so gloss the terms of clause 4(i) as to make the legacy payable only on a sale of the shares. The overriding intention of the testator, expressed in clause 4(i), is against so narrow a construction.
Counsel for the trustee indicated that it would gladly accept an offer from the appellant to buy the shares to enable her to realize the legacy but I see no need for her to consider such a step, with the burden of raising the necessary money to do so. This returns the case to the technical position taken below, a position asserted by counsel for the respondents in relying on the opening words of clause 4(i) as expressing a condition in what were said to be terms of art.
For the reasons I have given which are substantially those of Dubin J.A., I would allow the appeal, set aside the judgments below and direct that the question put to the Court be answered in the affirmative. The parties should have their costs out of the estate, those of the executor and trustee on a solicitor and client basis.
Appeal allowed; costs to be costs out of the estate.
Solicitors for the appellant: Lerner & Associates, London.
Solicitors for Guaranty Trust, respondent: Wilson, Barnes & Co., Windsor.
Solicitors for Anne Lettner et al., respondents: Woolley, Dale & Dingwall, Toronto.
Solicitor for the Official Guardian: E.H. Levenspil, Toronto.
Email this Content