2009 BCSC 24 Zalopsky Estate (Re)

Before: The Honourable Madam Justice Ross

Reasons for Judgment

Counsel for the Petitioner	Deidre J. Herbert
Counsel for the Respondent Rose Zalopsky	Helen H. Low
Counsel for the Representative of the Estate of Mary Latva-Lusa	Carlos Brito
Date and Place of Trial/Hearing:	December 17, 2008
	Vancouver, B.C.

Introduction

[1] This is an application for directions with respect to the construction of a will brought by the Public Guardian and Trustee as Administrator with Will Annexed De Bonis Non of the estate of Mary Zalopsky. Orders were granted at the hearing of the application appointing Veikko Latva-Lusa the Representative ad Litem for the estate of Mary Latva-Lusa; Kenneth Cronk and Neil Cronk the Representatives ad Litem for the estate of Nettie Cronk, and granting the Public Guardian and Trustee liberty to sell the property of the estate of Mary Zalopsky.

[2] Directions are sought with respect to the following questions:

1. Does the Will provide a life interest in the sale proceeds of the property for Rose Zalopsky and if so, what are the terms of the trust?

2. If the trust is extinguished on the sale of the property, to whom are the sale proceeds paid?

(a) Are the sale proceeds paid equally to the surviving children of Mary as at the date of her death? or

(b) Are the sale proceeds paid equally to the surviving children alive as of the sale of the property?

3. If Rose disclaims her life interest in the property, is she entitled to an equal share in the sale proceeds of the property?

Facts

[3] The deceased, Mary Zalopsky, died testate on November 7, 1971 at Vancouver, British Columbia, leaving a Will dated September 30, 1970 (the “Will”).

[4] A Grant of Letters Probate was issued by the Supreme Court of British Columbia on September 25, 1989 to Rose Zalopsky, Victoria Zalopsky and Mary Latva-Lusa, reserving the right of Nettie Cronk to apply for Probate at a later date.

[5] On April 7, 2008, Letters of Administration with Will Annexed De Bonis Non, of all the estate which by law devolves to and vests in the personal representative of Mary Zalopsky was granted by the Supreme Court of British Columbia to the Public Guardian and Trustee of British Columbia.

[6] At the time of her death Mary Zalopsky left eight surviving children: Rose Zalopsky, Victoria Zalopsky, Mary Latva-Lusa, Ann Engen, Joseph Zalopsky (also known as Joseph Harry Summers), Lena Zalopsky (also known as Lenore Zalapsky), Nettie Cronk, and Steve Zalopsky.

[7] Of Mary Zalopsky’s eight surviving children, only Rose Zalopsky and Ann Engen are still surviving.

(a) Rose Zalopsky was found to be incapable of managing her financial and legal affairs by reason of dementia and the Public Guardian and Trustee was appointed Committee of the estate on November 26, 2007.

(b) Karen Menhinick is Ann Engen’s daughter and Litigation Guardian. Ms. Menhinick was appointed Committee for the estate of Ann Engen as of July 24, 2003.

(c) Victoria Zalopsky died intestate on October 7, 2007, leaving no children. Her siblings are her heirs at law. The Public Guardian and Trustee is the administrator of her estate.

(d) Mary Latva-Lusa died intestate on February 22, 2000 leaving no children. She was married to the time of her death. Her husband, Aarne Latva-Lusa, was the heir of her estate. Aarne Latva-Lusa died on March 27, 2001. The executor and sole beneficiary of the estate is Veikko Latva-Lusa, Aarne Latva-Lusa’s brother.

(e) Joseph Zalopsky died intestate on June 14, 1979. Rose Zalopsky was the administrator of his estate, granted August 16, 1979. This role has been assumed by the Public Guardian and Trustee as Committee for Rose Zalopsky. Joseph Zalopsky’s siblings were his heirs at law.

(f) Lena Zalopsky died intestate on September 26, 1988, leaving no children. Her siblings are her heirs at law.

(g) Nettie Cronk died testate on November 7, 2002. She left two surviving children, Kenneth and Neil Cronk who are her heirs. No probate has been granted.

(h) Steve Zalopsky died intestate on December 24, 1978. There is no personal representative of his estate. His siblings are his heirs at law.

[8] The Will provided:

I GIVE, DEVISE AND BEQUEATH the whole of my estate, which consists of my house at 5955 McKinnon Street, in the City of Vancouver, in the Province of British Columbia, to my Executors and Trustees upon the following trusts: namely,

(a) To pay all just debts, funeral and testamentary expenses as soon as conveniently may be after my demise.

(b) the said house at 5955 McKinnon Street, in the City of Vancouver, Province of British Columbia is not to be sold but is to be used, for the sole use and benefit, by my single, unmarried children which are living in it now namely, LENA ZALOPSKY, VICTORIA ZALOPSKY and ROSE ZALOPSKY. After the last of the said unmarried children would die, then it is my wish that the house be sold and the proceeds of the sale be distributed among my surviving children in equal shares.

[9] At the time of Mary Zalopsky’s death her daughters Lena, Victoria and Rose were living in the McKinnon Street house (the “Property”). Rose Zalopsky continued to live in the Property until January 8, 2008 when she was admitted for medical reasons to Broadway Pentecostal Lodge, which is a licensed intermediate care facility.

[10] Rose Zalopsky has minimal assets and a total monthly income of $976.33. Her current monthly living costs are $1,151.35. There is a monthly shortfall between her expenses and income. Ms. Zalopsky’s case manager deposed that her future needs might include medication, medical equipment, special clothing, dental hygiene maintenance and companion services. Ms. Zalopsky does not at present have sufficient financial resources to acquire these items and services.

[11] The Property is the sole asset of the estate of Mary Zalopsky. It was appraised at $585,000 as of May 21, 2008. The Property is not presently inhabitable and is in need of substantial repairs. The estate has a debit balance of $11,789.63 representing estate and property expenses incurred by the Public Guardian and Trustee.

[12] It is apparent that the Property must be sold. Rose Zalopsky is no longer able to live in the Property and there are no funds to maintain it or to restore it to a habitable condition. At the conclusion of the hearing, and with the consent of those who made submissions, an order granting the Public Guardian and Trustee liberty to sell the Property was granted.

Analysis

[13] The primary purpose of the court in the construction of a will is to determine the intention of the testator having regard to the language used, and the circumstances in which the will was made. The general principles to be applied by the court were set out in Re Campbell Estate, 2005 BCSC 1561, 49 B.C.L.R. (4th) 148 as follows at para. 10 and 11:

The construction process has been described in Re Burke, [1960] O.R. 26, 20 D.L.R. (2d) 396 at 398 (C.A.) (cited with approval in Davis Estate v. Thomas, (1990), 40 E.T.R. 107 (C.A.):

The Court is now called upon to construe a particular document and at the outset I emphasize what has been said before so frequently. The construction by the Court of other documents and decisions in other cases respecting the intention of other testators affords no assistance whatsoever to the Court in forming an opinion as to the intention of the testator in the particular case now under consideration. Other cases are helpful only insofar as they set forth or explain any applicable rule of construction or principle of law. Each judge must endeavour to place himself in the position of the testator at the time when the last will and testament was made. He should concentrate his thoughts on the circumstances which then existed and which might reasonably be expected to influence the testator in the disposition of his property. He must give weight to those circumstances in so far as they bear on the intention of the testator. He should then study the whole contents of the will and, after full consideration of all the provisions and language used therein, try to find what intention was in the mind of the testator. When an opinion has been formed as to that intention, the Court should strive to give effect to it and should do so unless there is some rule or principle of law that prohibits it from doing so.

In the construction of wills the primary purpose of the court is to determine the intention of the testator. The court will only resort to rules of construction or presumptions when it cannot determine the testator's intention with certainty by giving his or her words their natural and ordinary meaning: Fleury Estate v. Fleury Estate, [1965] S.C.R. 817, 53 D.L.R. (2d) 700. In construing the will, the courts should give effect to the probable intent of the testator, taking into account the general scope and purpose of the will: Cullen Estate v. Patricia L. Cullen Composers' Trust (1997), 17 E.T.R. (2d) 197 (Ont. Gen. Div.). Where the testator's language is ambiguous, the court is entitled to consider not only the will itself but also the circumstances surrounding the making of the will at the time it was made: Re Kline (1980), 21 B.C.L.R. 273, 7 E.T.R. 176 (C.A.).

Does the Will Provide a Life Interest in the Property to Rose Zalopsky and if so, on What Terms?

[14] It was the position of each of the respondents with respect to the first question that the Will created a life estate in the Property. In my view, this is the correct construction. While no particular words are required to create a life estate, the term a grant of the “use” of a property has been found to confer a life estate; see Christensen v. Martini Estate, [1999] 10 W.W.R. 417, 232 A.R. 339 (C.A.), Re Waters (1978), 21 O.R. (2d) 124, 89 D.L.R. (3d) 742 (S.C.).

[15] In addition, the Will confers not only the "use" but also the “benefit” of the Property to the three daughters. Sale of the Property is not contemplated under the terms of the Will until after the death of the last of the three single unmarried daughters. These daughters made the Property their home at the time the Will was drafted. This is all consistent with the granting of a life estate as opposed to a mere licence to occupy.

[16] It is clear that the Will does not contemplate a sale of the Property during the life of any of the three unmarried daughters on whom the life interest was conferred. The next question is therefore what is the consequence of a sale during Rose’s lifetime? The Public Guardian and Trustee did not take any position with respect to these questions. However, counsel did raise as one possibility the extinction of the trust created by the Will, citing Aho Estate v. Kelly (1988), 25 B.C.L.R. (2d) 373, 29 E.T.R. 144 (S.C.). Counsel also noted that, since the Will does not contemplate a sale during the lifetimes of the unmarried children and since the Will does not contain a residual clause, the proceeds of sale may fall on an intestacy, citing, Re Campbell.

[17] I did not find Aho v. Kelly to be of assistance in resolving these questions. Aho deals with the construction of a statutory scheme of distribution on an intestacy. The decision turns upon the language of the section at issue and the intention of the legislature in enacting the provisions, neither of which are at issue in the circumstances of the present case.

[18] It is clear that the law recognises that a beneficiary has a right to disclaim a testamentary gift: see Re Grund Estate, [1998] B.C.J. No. 160 (S.C.). This right has been acknowledged even where the beneficiary takes a greater benefit from an estate as a result of the disclaimer: see Dunkley v. Sullivan (1929), [1930] 1 Ch. 84, [1929] All E.R. Rep. 564 (Eng. Ch. D.). Accordingly, Rose Zalopsky has the right to disclaim her life estate in the Property. In my view, in that event an intestacy is not created. Rather, once the life interest of the last of the three single daughters is determined, the Property is to be distributed pursuant to the provisions of the Will to “my surviving children in equal shares”: see Brannan v. British Columbia (Public Trustee) (1990), 37 E.T.R. 209 (B.C.S.C.).

To Whom are the Sale Proceeds to be Distributed?

[19] Counsel submits on behalf of Rose Zalopsky that upon the trust being extinguished, the Will provides that the sale proceeds are to be distributed in equal shares to any of the Deceased’s children who are surviving at the date the Property is available to be sold. It was counsel’s submission that the deceased directs in her Will that after the last of the three unmarried children dies, then the house is to be sold and the proceeds distributed among “my surviving children”. There is no additional language that clarifies the date at which the surviving children are to be determined. However, the reference to the distribution of the sale proceeds amongst the Deceased’s surviving children is contained in the same sentence that starts “After the last of the said unmarried children would die”. It was counsel’s submission that without any other contrary language, the rules of construction suggest that given the placement of the phrase “my surviving children” in the sentence dealing with the sale of the Property, it is more likely that “surviving children” refers to the children surviving at the time of the last of the unmarried children to die, which is the point in time that the Property is to be sold and the proceeds of sale realized. Otherwise, arguably, the Deceased ought to have used language such as “proceeds of the sale be distributed among my children surviving me in equal shares”. Finally, it was counsel’s submission that the intention of the testator was to provide for her three unmarried daughters and then to provide for the children who are left. It was not the testator’s intention, counsel submits, to benefit the estates of her children. Counsel advised that Ann Engen’s representative concurred with this position.

[20] Counsel submits on behalf of the estate of Mary Latva-Lusa that the Will provides that the sale proceeds are to be distributed in equal shares to the children surviving at the date of the testator’s death. Counsel submits that in respect to a plain reading of the words: “Surviving children” is commonly used in wills in British Columbia as a phrase that is effective at the time of the death of the testator. The ordinary definition of “surviving children” is children who survive the testator, not children who survive someone else and if the testator intended “survival” to be in relation to someone (or something) else the Will would not need to be explicit in terms like “children then alive”. Thus counsel submits that a plain reading of the Will would suggest that the estate was to be divided among all the children alive at the testator’s death. In respect to the intention of the testator, counsel submits that the intention of the testator was not to displace her children living in her house on McKinnon Street at the time of her death. To this effect, she provides these children with a life estate in her house on McKinnon Street. Counsel submits that to interpret “surviving children” as “my children who survive my children Lena, Victoria, and Rose” is not what the Will intends. It is inconsistent with what appears to be an intention on the part of the testator to treat all her children equally. Counsel submits it is unlikely that the testator intended distribution to be determined by a “last man standing” principle such that one sibling’s issue benefits, but another sibling’s issue does not simply by the happenstance of how long the siblings survive in relation to each other.

[21] In my view, the answer to this question turns upon the date at which the recipients of the interest are determined. It is necessary to consider whether the gift was vested or contingent. Vested and contingent interests were defined by Mr. Justice Kelleher in Re Campbell as follows at para. 13:

In order to determine the date at which the recipients of the interest are determined, it is necessary to determine whether the gift was vested or contingent. A contingent interest is one that is subject to the happening of an event that may never occur. A vested interest, on the other hand, is one the enjoyment of which is merely postponed, though it may be subject to subsequent divestment: see James MacKenzie, Feeney's Canadian Law of Wills, 4th ed, looseleaf (Markham, Ontario: Butterworths, 2000-) at para. 17.2. In other words, if the gift is subject to a condition precedent, then it is contingent; if it is subject to a condition subsequent (which will cause the interest to be divested if the condition is met), then it is vested subject to divestment.

[22] There is a presumption of early vesting – that is, whenever the words used in a will permit a construction that results in early vesting, the gift will be vested rather than contingent: see Re Campbell and cases cited therein. The presumption will be displaced by clear language in the will expressing a contrary intention.

[23] In Latta v. Lowry (1886), 11 O.R. 517, [1886] O.J. No. 196 at para. 8 (O.H.C.J. Ch. D.) the court concluded:

The rule laid down in Hawkins on Wills, at p. 72, appears to be substantiated by the authorities and is in these words: "If real or personal estate be given to A for life, and after his decease to the children of B, all the children in existence at the testator's death take vested interest subject to be partially divested in favour of children subsequently coming into existence during the life of A." See Browne v. Hammond, 1 Johns. 212a; Middleton v. Messenger, 5 Ves. 136. The Court has arrived at this rule of construction impelled by the operation of two principles, one in favour of the early vesting of estates, and the other in favour of including all who come into being before the period of division: Hutcheson v. Jones, 2 Madd. 129. By the terms of the will in this case the estate in remainder vested forthwith upon the testator's death in the six children of his daughter then living and from time to time in the two subsequently born. The death of any child before the period of distribution does not affect the right of that child's representatives to claim the share of the one deceased. My opinion is therefore in favour of the estate being divided into eight parts and going to the living children and the representatives of the deceased children on that footing, and I so answer the case submitted.

[24] I have concluded that the gift to the surviving children was vested. The gift was not subject to an event that might never occur, since it was inevitable that the life interests granted to the three single daughters would come to an end. I find that there is no contrary intention expressed in the Will to displace the presumption of vesting. There are, for example, no words of contingency such is “if” or “then surviving” used. Accordingly, I find that the proceeds of sale of the Property are to be distributed in equal shares to the children surviving at the date of the testator’s death.

If Rose Disclaims Her Life Interest in the Property, is She Entitled to an Equal Share in the Sale Proceeds?

[25] There was no issue between the parties represented at the hearing with respect to this issue. All agreed that Rose Zalopsky would be entitled to an equal share in the proceeds of sale.

[26] In my view, this is the correct conclusion. As discussed earlier in these reasons, Rose Zalopsky was entitled to disclaim her life interest in the Property. In such an event she, as one of the “surviving children”, would be entitled to an equal share of the proceeds of sale of the Property.

Answers

[27] In summary, with respect to the questions posed to the court:

1. Does the Will provide a life interest in the sale pf the Property for Rose Zalopsky and if so, what are the terms of the trust?

The Will provides Rose Zalopsky a life estate in the Property. Rose Zalopsky has the right to disclaim her life interest in which case the Property falls to be sold and the proceeds distributed pursuant to the Will.

2. If the trust is extinguished on the sale of the Property to whom are the sale proceeds paid?

If Rose Zalopsky disclaims her life interest in the Property, the Will provides that the Property is to be sold and the proceeds of sale distributed “among my surviving children in equal shares”. The surviving children are the children surviving as at the date of the testator’s death. The death of any of the surviving children before the period of distribution does not affect the right of that child’s representatives to claim the share of the deceased child.

3. If Rose Zalopsky disclaims her life interest in the Property, is she entitled to an equal share in the sale proceeds of the Property?

Yes

[28] I award reasonable costs, on an indemnity basis as agreed or assessed, to be paid from the estate to the Public Guardian and Trustee, the estate of Rose Zalopsky and the estate of Mary Latva-Lusa.

“Ross J.”

Citation:	*Zalopsky Estate (Re),*
	2009 BCSC 24