Gilles v. Althouse et al., [1976] 1 SCR 353

Supreme Court of Canada

Gilles v. Althouse et al., [1976] 1 S.C.R. 353

Date: 1975-02-13

Carrie O. Gilles Appellant;

and

Myrtle Althouse and Phyllis Martin, executrices of the last will and testament of Michael Gilles, deceased Respondents.

1974: December 12; 1975: February 13.

Present: Martland, Ritchie, Spence, Dickson and Beetz JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR SASKATCHEWAN

Executors and administrators—Assets of estate distributed—Subsequent application by widow for relief made within limitation period—Court entitled to make order for maintenance—The Dependants’ Relief Act, R.S.S. 1965, c. 128, ss. 14, 15, 16.

The deceased died on July 31, 1971, leaving surviving a widow, from whom he had been separated since 1952, and two daughters. By his last will and testament he devised and bequeathed the whole of his estate to his daughters in equal shares and appointed them executrices of his will. Letters probate were granted on August 18, 1971. On August 24, 1971, the executrices distributed all of the assets of the estate to themselves in accordance with the terms of the will. On September 3, 1971, the widow, pursuant to the provisions of The Dependants’ Relief Act, R.S.S. 1965, c. 128, brought a motion in the Court of Queen’s Bench for an order making reasonable provision for her maintenance out of the estate of her late husband. Johnson J. exercised his discretion in favour of the widow and directed that she receive the entire estate after payment of expenses and costs. An appeal brought by the executrices was allowed by the Court of Appeal for Saskatchewan. The Court of Appeal concluded that an order for maintenance could not be made as the estate had been fully administered and, therefore, there was no estate against which to charge an order for maintenance. The widow appealed to this Court.

Held: The appeal should be allowed.

The meaning and effect of s. 15 of The Dependants’ Relief Act is to afford an applicant a period of six months after probate within which to obtain an order as to the entire estate, but if he or she delays and makes application after expiry of the six-month period the claim can only be against the portion of the estate then remaining undistributed. Such a construction is consonant with the provisions of s. 14. The effect of that section is to amend the will retroactively. When the

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order was made by Johnson J., then for all purposes the testator’s will took effect from his death as if it had been executed in such manner as to leave the entire estate to the appellant.

The submission that the effect of s. 16 of the Act is such that executors are free to proceed with distribution of the estate until such time as they have notice of an application for an allowance under the Act was not accepted. The combined effect of ss. 15 and 16 is to inhibit an executor for a period of six months from distributing the assets of an estate if there is the possibility of an application under the Act; after six months the executor is free to distribute the estate unless and until he receives notice of an application under the Act.

Re Brill, [1967] 2 O.R. 586; Re Lerwill (Deceased), Lankshear v. Public Trustee and Others, [1955] N.Z.L.R. 858; Re Donohue, Donohue v. Public Trustee, [1933] N.Z.L.R. 477; Re Simson, Simson v. National Provincial Bank, Ltd. and Others, [1950] 1 Ch. 38; Swain v. Dennison, [1967] S.C.R. 7, referred to.

APPEAL from a judgment of the Court of Appeal for Saskatchewan[1], allowing an appeal from a judgment of Johnson J. Appeal allowed.

D.W. Baubier, for the appellant.

F. Lemieux and M.L. Phelan, for the respondents.

The judgment of the Court was delivered by

DICKSON J.—The appeal of Mrs. Carrie O. Gilles to this Court from a judgment of the Court of Appeal for Saskatchewan is limited to a single issue: whether a valid order can be made under The Dependants’ Relief Act, R.S.S. 1965, c. 128, and amendments thereto, within six months from the date of probate or letters of administration or from the date of death, notwithstanding the prior distribution of the estate. The question arises upon these facts: Michael Gilles, late of the Town of Biggar and the Village of Handel, in the Province of Saskatchewan, died on July 31, 1971, leaving surviving a widow, the appellant in these proceedings, from whom he had been separated since 1952, and two daughters, Myrtle Althouse and

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Phyllis Martin, the respondents in these proceedings. By his last will and testament, Mr. Gilles devised and bequeathed the whole of his estate to his daughters in equal shares and appointed them executrices of his will. The value of the estate was $18,014. Letters probate were granted by the Surrogate Court at the Judicial Centre of Battleford on August 18, 1971. On August 24, 1971, less than one month after the death of Mr. Gilles, the executrices distributed all of the assets of the estate to themselves in accordance with the terms of the will. On September 3, 1971, Mrs. Gilles, pursuant to the provisions of The Dependants’ Relief Act, brought a motion in the Court of Queen’s Bench for an order making reasonable provision for her maintenance out of the estate of her late husband. Johnson J. exercised his discretion in favour of Mrs. Gilles and directed she receive the entire estate after payment of proper expenses and costs. The Court of Appeal for Saskatchewan allowed an appeal brought by the executrices. The Court of Appeal concluded that an order for maintenance could not be made as the estate had been fully administered and, therefore, there was no estate against which to charge an order for maintenance. The judgment of the Court was delivered by Culliton C.J.S. who, in support of the conclusion reached by the Court, said:

While the Act provides that, except with leave of the Court, an application for allowance thereunder must be made within six (6) months from the grant of probate or administration, there is no restriction on the right of the executor or administrator to distribute the estate during this period. The only limitation is a prohibition to make any distribution after service of notice of an application for allowance under the Act until the disposition of the application.

In the present case, the estate was fully distributed on August 24, 1971. Notice of the application was not served on the executrices until after that date. At that time, therefore, there was no estate against which to charge an order, and, in my respectful view, for this reason no order should have been made.

Section 9(1) of the Act provides generally that if upon an application the Court is of opinion that

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the testator has by will so disposed of real or personal property that reasonable provision has not been made for the maintenance of the dependant to whom the application relates, then the Court may, in its discretion, make an order charging the whole or any portion of the estate with payment of an allowance sufficient to provide such maintenance as the Court thinks reasonable in the circumstances. The argument of the respondents is simply this—if there is no estate there can be no order. It is, of course, apparent that if this submission is valid a testator could readily defeat dependants’ relief legislation merely by converting his property to liquid assets and naming as executors and beneficiaries of his estate those whom he favours, to the exclusion of all others. One must look with some misgiving upon a construction which would lead to such result. Dependants’ relief legislation properly recognizes that the financial responsibilities of marriage and parenthood do not always terminate at death. The legislation is intended to curb unlimited testamentary disposition to the extent of assuring reasonable provision for the maintenance of those who, in necessitous or other circumstances, have a meritorious claim on the estate of the testator or intestate. Is recovery to depend on the outcome of a race between executors on the one hand, distributing the assets of the estate, and dependants on the other hand, making application to the Court for relief? The answer to this question must of course depend upon the true construction of the Act. Sections 14(1), 15 and 16(1) are of particular application:

14. (1) Where an order is made under this Act, then for all purposes, including the purposes of enactments relating to succession duties, the will shall have effect, and shall be deemed to have had effect from the testator’s death, as if it had been executed, with such variations as are specified in the order, for the purpose of giving effect to the provision for maintenance made by the order.

15. No order shall be made unless on an application made within six months from the grant of probate of the will or of administration, but the court may, if it deems

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it just, allow an application to be made at any time as to any portion of the estate remaining undistributed at the date of the application.

16. (1) After service of notice of an application for an allowance under this Act the executor or trustee or the administrator shall not proceed with the distribution of the estate until the application is disposed of.

It is true, as Chief Justice Culliton observed, there is nothing in s. 15 which restricts the right of an executor or administrator to distribute an estate during the period of six months following grant of probate of the will or of administration. It is also true there is nothing in the section which expressly or impliedly authorizes him to do so. The construction which the Court of Appeal adopted, in my opinion, renders meaningless, as mere surplusage, the six‑month period mentioned in s. 15; on that construction an application for relief, irrespective of the date upon which it is lodged, could only affect the portion of the estate remaining undistributed. In my view the true meaning and effect of the section is to afford an applicant a period of six months after probate within which to obtain an order as to the entire estate, but if he or she delays and makes application after expiry of the six-month period the claim can only be against the portion of the estate then remaining undistributed. Such a construction is consonant with the provisions of s. 14. The effect of that section is to amend the will retroactively. When the order was made by Johnson J., then for all purposes Mr. Gilles’ will took effect from his death as if it had been executed in such manner as to leave the entire estate to the appellant, Mrs. Gilles. If, as they appear to have done, the executrices have distributed the estate in a manner contrary to the terms of the will as so varied, they will be under a duty to account.

Some further support for the construction which I would adopt is, I think, to be found in The Infants’ Act, R.S.S. 1965, c. 342, s. 42 of which reads as follows:

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When a certificate that no infants are interested in an estate is required under The Land Titles Act, the right of an infant to make application for relief under The Dependants’ Relief Act shall not be deemed an interest in an estate, for the purposes of such certificate, after six months from the grant of probate or administration, unless a judge’s order has been made extending the time for such application, or the Official Guardian has reason to believe that an application is contemplated.

This section recognizes a possible dependant’s relief application by an infant within six months from the date of the grant of probate and does not contemplate abbreviation of that period by earlier distribution of the estate.

Counsel for the respondents placed reliance on s. 16 of The Dependants’ Relief Act, supra. Counsel submitted that the effect of this section is such that executors are free to proceed with distribution of the estate until such time as they have notice of an application for an allowance under the Act. I find it difficult to accept that submission. Section 16 must be read with s. 15, the combined effect of which in my opinion is to inhibit an executor for a period of six months from distributing the assets of an estate if there is the possibility of an application under the Act; after six months the executor is free to distribute the estate unless and until he receives notice of an application under the Act.

Chief Justice Culliton referred in his judgment to Re Brill[2]. This case considered The Dependants’ Relief Act, R.S.O. 1960, c. 104, and concerned a testator who died on August 29, 1964. Probate of his estate was granted on November 23 of the same year. All debts having been paid, the estate was distributed and closed on June 1, 1965. There had been no advertisement for creditors. In 1966, more than a year after the closing of the estate and two years after the death of the testator, the widow made an application under The Dependants’ Relief Act. The Surrogate Court, following Re

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Hull Estate[3], held that an order could only attach to undistributed assets of an estate, and since in this case there were no such assets, the application must be dismissed. The Court relied on the fact that, despite the executrix’s failure to advertise for creditors, there had been no undue haste in closing out the estate and there was, (p. 588) “nothing unusual in the way in which Elizabeth Nims dealt with this estate”. This case is authority for the proposition that an order brought outside the limitation period does not attach to distributed assets of an estate but it is not authority for the proposition that an order made within the limitation period attaches only undistributed assets.

Counsel for the respondents also cited Re Lerwill (Deceased), Lankshear v. Public Trustee and Others[4], a decision of Barrowclough C.J. of the Supreme Court of New Zealand. The circumstances of that case were that the public trustee, as executor, had completed his duties as such executor by distribution of the estate 11 months after grant of probate and before expiry of the one-year period within which an application could be made under the Family Protection Act, 1908. The learned Chief Justice considered himself bound by an earlier decision of the Full Court in Re Donohue, Donohue v. Public Trustee[5], in which it was held that whenever there has been a final distribution of the estate of the testator there is no “estate of the testator” left and therefore no fund or property on which such an order could operate. In the Donohue case, however, the application for relief was first made more than 12 months after the grant of probate and the Full Court was considering an extension of time. In the Lerwill case, as I have said, the application was made before expiry of the 12-month period and at first glance that case would seem to give substantial support to the argument of counsel for the

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respondents in the present case. There are, however, points of difference, the most important of which is a significant difference in the wording of the respective enactments. The New Zealand Act, for example, did not contain s. 14(1) of the Saskatchewan Act or anything analogous thereto. It will also be observed that in Lerwill, Barrowclough C.J. had this to say:

In the present case, all counsel were agreed that the action of the Public Trustee, in disposing of the assets of his testator as and when he did was perfectly justifiable. I do not know what circumstances led counsel to that unanimity of opinion; but I accept their view of the matter, and I apprehend that the action of the two applicants, in accepting their respective half-shares of the residue without reservation or notification of their possible claims under the Act, had no small influence in convincing counsel that that view was correct.

There is no agreement in the present case that the executrices were justified in disposing of the assets of the estate with such alacrity; quite the contrary. Lastly, with respect to Lerwill, it is worthy of note that the learned Chief Justice concluded with these words:

I think it is generally accepted that an executor ought not to distribute before the expiration of one year from the grant of probate, unless he is satisfied that there are no potential applicants, or, if there are, that they have effectively disclaimed any rights they might have under the Act.

In his factum counsel for the respondents submitted that the respondents had acted precisely within the scope of their duties as so expressed by Chief Justice Barrowclough. I do not agree. At least until expiry of the six-month period Mrs. Gilles was a potential applicant under The Dependants’ Relief Act. She did not effectively disclaim any rights which she might have under that Act. Executors or administrators have a duty not to distribute before the expiry of the limitation period if the possibility of an application for relief is hanging over the estate; if they do so, they do so at their peril: see Re Simson (deceased), Simson v.

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National Provincial Bank, Ltd. and Others[6]. On the question of disclaimer, it should be stated that on August 14, 1971, the appellant wrote the following letter to her daughter, Phyllis Martin:

Saturday. (14 Aug 1971)

My dear Phil

Just a line to let you know I dont want to do anything with that Will I wouldent hurt you for love or money so please dont worrey about it Iv done enough worring about it it wasent my idea in the first place so Please Phill dont feel bad at me I give every thing I had instead of having you mad at me Iv cried a lot and dont know what to do so plase Phil lets forget it all. I can liv with out it but maby myrtle & Ray cant so let them help them selves I dont see why Sharon should be mad at me look what I done for her when her mother dident want her. Does she ever stop to think about me at all. Well enough of that but just wanted you to know I dont want aney Part of it at all

With Love Mom

This letter may have had some bearing on the decision of the executrices to proceed with immediate distribution to themselves of the assets constituting the estate and may tend to negate any allegation of bad faith. It may also be relevant on the question of costs but the letter does not in my opinion amount to an estoppel or disclaimer by the appellant. I understood counsel for the respondents to concede as much during argument.

Finally it might be noted that counsel for the respondents sought in this Court to attack the order of the judge of first instance on the merits but it is plain that in the absence of leave no appeal from a discretionary order will normally lie to this Court: see the Supreme Court Act, s. 44 as interpreted in Swain v. Dennison[7]. As prior leave had not been granted, the Court refused to hear counsel on the point.

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I would allow the appeal, set aside the order of the Court of Appeal, and reinstate the order of Johnson J. I would not award costs in this Court or in the Court of Appeal for Saskatchewan.

Appeal allowed.

Solicitors for the appellant: Cuelenaere & Beaubier, Saskatoon.

Solicitor for the respondents: Walter Bieber, Wilkie.