



COURT OF APPEAL FOR ONTARIO

CITATION: Holgate v. Sheehan Estate, 2015 ONCA 717

DATE: 20151027

DOCKET: C59988

Cronk, Hourigan and Benotto JJ.A.

BETWEEN

Stephen Craven Holgate and John Edward Holgate

Plaintiffs (Appellants)

and

The Estate of May Sheehan, the Estate of John
    Holgate, and Jo-Ellen Victoria Buss

Defendants (Respondents)

Ronald Petersen, for the appellants

Paul A. Dancause, for the respondents

Heard: September 21, 2015

On appeal from the orders of Justice Robert Beaudoin of
    the Superior Court of Justice, dated January 6, 2015 and February 26, 2015,
    with reasons reported at 2015 ONSC 259, 248 A.C.W.S. (3d) 733 and 2015 ONSC
    1213, 250 A.C.W.S. (3d) 180.

Benotto J.A.:

Overview

[1]

This appeal concerns the interpretation of the will and codicil of the
    late John Holgate.

[2]

When John Holgate and May Sheehan married, they each had children from
    previous marriages.
[1]

[3]

Mr. Holgate, a lawyer and magistrate, made a will and a codicil that provided
    for Mrs. Holgate to have a life interest in two trusts. After his death, Mrs.
    Holgate used money from the trusts for her expenses. It is alleged that she
    also saved money.

[4]

When she died in 2012, Mrs. Holgate left the bulk of her estate to her
    biological children. Mr. Holgates sons alleged that Mrs. Holgate violated the
    terms of the trusts by accumulating wealth. They took the position that the
    life interest she received from their father allowed her to
use
money
    but not
save
it.

[5]

Mr. Holgates sons brought an action against their fathers estate, Mrs.
    Holgates estate and Mrs. Holgates daughter personally. They sought an
    accounting, a freezing of funds and general damages of $5,000,000. They also sought
    a declaration that they are entitled to a resulting or constructive trust
    interest in both estates.

[6]

The action proceeded to trial. After three days of evidence, the trial
    judge indicated that a critical issue had to be determined with respect to
    the interpretation of Mr. Holgates will and codicil. He invited counsel to
    bring a mid-trial motion either for determination of an issue under r. 21.01(1)(a)
    or for directions under r. 75.06(3), both under the
Rules of Civil Procedure
,
    R.R.O. 1990, Reg. 194.

[7]

Counsel agreed to bring a r. 21 motion before the trial judge to
    determine whether the provisions of either trust precluded Mrs. Holgate from
    accumulating wealth. The question of law (set out below) was drafted and agreed
    to by counsel.

[8]

The trial judge heard the motion and concluded that nothing in the will
    or codicil prevented Mrs. Holgate from accumulating wealth.

[9]

Mr. Holgates sons appeal on two grounds:

1.
        The trial judge erred in his interpretation of the trusts; and

2.     The trial judge had no jurisdiction to hear a r. 21
    motion during the trial and further, by doing so, erred in considering evidence
    from the trial.

[10]

Mr.
    Holgates sons also seek leave to appeal the trial judges award of costs. They
    submit that costs should have been paid by the estate and in the alternative,
    that the costs award is excessive.

[11]

I
    agree with the trial judges interpretation of the provisions of the will and
    codicil. I do not accept that he lacked jurisdiction to conduct the r. 21
    motion. Further, I see no reason to interfere with the costs order.

Interpretation of the Trusts

[12]

The
    will and codicil established two trusts: the Holgate Trust and the U.K.
    Trust. Mrs. Holgate and Robert Joseph Irving (Mr. Holgates solicitor) were
    appointed trustees.

[13]

The
    Holgate Trust provided as follows:

To hold and keep invested the residue of my estate or the
    amount thereof remaining for the sole
use
and
    benefit of my wife, MAY HOLGATE, during her lifetime, with power and authority
    to my Trustee to draw on both the income and the capital of my estate for the
    care and support of my said wife, as my Trustee in their discretion considers
    advisable. In availing themselves of this discretionary power to encroach on
    the capital of my estate for my wifes benefit, it is my strong wish and desire
    that at all times my Trustees first consideration shall be my wifes
    well-being and comfort and that all her needs and requirements of every kind
    shall be provided for adequately in all respects out of my estate, as I do not
    feel that my estate need be largely conserved for the future use of my children
    and step-children. I therefore authorize and empower my Trustee to be generous
    in the exercise of this discretionary authority, even though there may be a
    considerable, or if necessary, total depletion of the capital of my estate by
    reason of such encroachments. [Emphasis added.]

[14]

The
    U.K. Trust provided as follows:

To hold all my interest in real and personal property situated
    in the United Kingdom for the sole
use
and benefit
    of my wife MAY HOLGATE, during her lifetime, with power and authority to my
    Trustee to draw on the income, (but not the capital) of the said real and
    personal property for the use and benefit of my said wife, and on her death to
    pay or transfer to such of my sons, JOHN EDWARD HOLGATE and STEPHEN CRAVEN
    HOLGATE, who shall survive me, and if more than one (1) in equal shares between
    them, whatever interest I may have in the said real and personal property, both
    income remaining and capital. [Emphasis added.]

[15]

The
    foundation of the appellants submission is based on the word use. They
    submit that, with respect to both trusts, Mrs. Holgate was entitled to use
    the money. In that regard, they acknowledge there were no limitations. However,
    they argue that, by saving money, Mrs. Holgate was not using it. They submit
    that the purpose of the life interest was to preserve capital for the remainder
    beneficiaries. Otherwise, there would be an absolute gift.

[16]

Dealing
    first with the Holgate Trust, the trial judge concluded that Mr. Holgates
    intention was clear  there was no restriction on Mrs. Holgates ability to
    save money. The will stipulated that she have all her needs and requirements
    of every kind provided for adequately and in all respects out of the
    estate. It also stipulated that the estate did not need to be conserved for Mr.
    Holgates children and step-children.  A considerable or total depletion of the
    capital of the estate was contemplated.

[17]

The
    will contained no limitations on the use of income, no requirement to
    recapitalize unused income, and no requirement for Mrs. Holgate to look to her
    own resources before accessing trust income. The language of the will,
    according to the trial judge, came as close as possible to conferring an
    absolute gift on Mrs. Holgate of the entire residue.

[18]

Turning
    to the U.K. Trust, the trial judge concluded that there were no limitations
    placed on the use of the assets. He determined that the codicil demonstrated
    Mr. Holgates wish to provide his widow with enough funds for her lifetime.
    Significantly, the codicil revoked a prior provision of the will that made a
    gift of the U.K. assets to his sons.

[19]

I
    agree with the interpretation of the trial judge. It has long been the case
    that [t]he golden rule in interpreting wills is to give effect to the
    testators intention as ascertained from the language that was used: see
Dice
    v. Dice Estate
, 2012 ONCA 468, 111 O.R. (3d) 407, at para. 36. Both trusts
    indicate an intention that there be no limitation on the discretion of the
    trustees to draw on income or (in the case of the Holgate Trust) to encroach on
    capital, and that there be no prohibition on accumulating funds.

[20]

In
    the Holgate Trust, the words care and support and well-being and comfort appear
    in the context of the following phrases used by Mr. Holgate:

·

for the sole use and benefit of my wife;

·

power and authority to my Trustee
    to draw on both the income and the capital of my estate for the care and
    support of my said wife, as my Trustee in their
(sic)
discretion
    considers advisable;

·

it is my strong wish and desire
    that at all times my Trustees first consideration shall be my wifes
    well-being and comfort and that all her needs and requirements of every kind
    shall be provided for adequately in all respects out of my estate;

·

I do not feel that my estate need
    be largely conserved for the future use of my children and step-children; and

·

I therefore authorize and empower
    my Trustee to be generous in the exercise of this discretionary authority, even
    though there may be a considerable, or if necessary, total depletion of the
    capital of my estate by reason of such encroachments.

[21]

These
    words and phrases indicate a clear intention on Mr. Holgates part to allow his
    wife unrestricted access to the funds. Likewise in the U.K. Trust, there are no
    words of limitation regarding access to and use of income; the trustees are empowered
    to draw on the income of the estate for the use and benefit of Mrs. Holgate.

[22]

The
    appellants submit the trial judge failed to distinguish between Mrs. Holgates
    roles as beneficiary and trustee. This matter was not an interpretive issue
    before the court in accordance with the agreed upon question of law, which read:

Having regard to the totality of the wording of the last Will
    and Testament of John Holgate, dated November 20, 1991 and the codicil of John
    Holgate dated July 24, 1992; and in particular, paragraph 3(c)(iii) of the Will
    as prescribed in the codicil and paragraph 3(d) of the Will, do the words of
    the Will of John Holgate preclude his widow the late May Holgate (Sheehan) from
    accumulating wealth in her own name from the two trusts created by the Will?

[23]

The
    only issue before the trial judge was the interpretation of the will and
    codicil. The accounting issues, if any, are matters for trial, which  regrettably
     has not yet taken place.

Jurisdiction: The Rule 21 Motion

[24]

The
    appellants submit that the trial judge had no jurisdiction to hear the mid-trial
    motion because r. 21 provides that the motion is to be brought before trial
    and because no evidence was admissible on the motion.

[25]

I
    deal first with the timing of the motion. The trial judge appears to have
    raised the possibility of a mid-trial motion on his own initiative. He referred
    to the provisions of r. 1.04(1), which direct the court to secure the most
    expeditious and least expensive determination of the issues in the case.

[26]

The
    appellants consented to the process without objection about the timing. They also
    participated in the drafting of the question to be answered. Insofar as the
    result was not what they hoped for, they cannot now claim lack of jurisdiction:
    see
Harris v. Leikin Group Inc
., 2014 ONCA 479, 120 O.R. (3d) 508, at
    para. 53. Given the consent of all counsel and the provisions of r. 1, there
    was no lack of jurisdiction.

[27]

The
    appellants also submit that the trial judge improperly relied on assertions
    made by the respondents when interpreting the will. I do not agree. The trial
    judge made it clear that he attributed the information to the parties but grounded
    his decision on the wording of the will and codicil, not on the evidence at
    trial.

[28]

The
    issues raised by the appellants  albeit unsuccessfully  demonstrate the
    challenges and potential pitfalls involved when a r. 21 motion is entertained
    by a trial judge.

[29]

In
    this case, the trial judges initiative in inviting a mid-trial r. 21 motion
    was clearly designed to narrow the issues and streamline the trial.  These
    objectives are commendable. Unfortunately, however, the initiative produced the
    opposite result. The mid-trial motion resulted in a bifurcated trial, created
    the possibility for two appeals to this court arising from the same proceeding,
    and caused the completion of the trial to be delayed pending the outcome of
    this appeal.

[30]

There
    is an additional concern.  A r. 21 motion concerning a question of law is based
    on the pleadings.  Evidence is not admissible except on consent or with leave
    of the court.  When a r. 21 motion is conducted by a trial judge after the
    evidentiary phase of the trial has commenced, there is a risk that incomplete
    or untested evidence can inadvertently seep  or be seen to seep  into the
    consideration of the motion on its merits.  While I am  satisfied that this did
    not occur in this case, the danger is nonetheless real.

[31]

For
    these reasons, the preferable procedure for the trial judge would have been to
    determine the question of law at the conclusion of the trial, based on all the
    evidence and submissions, and address the issue in the reasons for judgment for
    the trial as a whole.

Costs of the Motion

[32]

I
    would grant leave to appeal costs, but dismiss the appeal as to costs. I  see
    no reason to interfere with the motion judges discretionary decision that the
    appellants pay the costs of the motion as opposed to the estate. Nor do I see a
    reason to interfere with the quantum of costs ordered.  The trial judges costs
    ruling is neither plainly wrong nor tainted by an error in principle.

Disposition

[33]

For
    the reasons given, I would dismiss the appeal.  I would award the costs of the
    appeal to the respondents, fixed in the amount of $8,500, inclusive of
    disbursements and HST.

Released: October 27, 2015

M.L. Benotto J.A.

I agree  E.A. Cronk
    J.A.

I agree C.W.
    Hourigan J.A.





[1]
May Sheehan is referred to as May Holgate or Mrs. Holgate in this decision.


