It is a hallmark of common law jurisdictions that testators have freedom of testamentary disposition , subject only to three exceptions. In other words, an individual may dispose of his or her property as he or she wishes, even if the manner of disposition is whimsical.
Inadequate Provision for Dependants
Most jurisdictions have legislation that provide a remedy when a testator has not provided for dependants in an adequate fashion. So, for example, if an individual disinherits a spouse or children whom he or she was obliged to support, that dependant may make an application to Court for an allowance to be made out of the estate.
The second exception relates to the concept of an “unworthy heir”. Typically, the unworthy heir would be a beneficiary who had murdered a testator or a terrorist group who would benefit from the testator’s assets contrary to the Criminal Code.
Conditions that Violate Public Policy
Courts have also intervened where a testator attaches conditions to a gift that are void as a matter of public policy. These include:
- Conditions in restraint of marriage;
- Conditions that undermine the parent-child relationship by disinheriting the child who resides with a parent;
- Conditions that disinherit a beneficiary based on religious faith; and
- Conditions that require or encourage a beneficiary to commit a crime or perform an act prohibited by law.
A number of recent cases have cast doubt as to whether or not testamentary freedom has been further curtailed and the extent to which the public policy exception should extend. However, the Ontario Court of Appeal has now clarified the position in Ontario.
Public Policy Decisions in Canada
The leading authority on the doctrine of public policy is Canada Trust Co. v. Ontario Human Rights Commission also known as Re Leonard. In that case, the Ontario Court of Appeal considered that the terms of a Trust established by Reuben Wells Leonard was void by reason of public policy as declared in the Human Rights Code. The trust required that the recipient of a scholarship must be white,Christian, of British nationality or parentage and that only 25% of the recipients of the scholarships could be women. It contained inflammatory language regarding racial superiority.
The Court of Appeal held that the trust was premised on notions of racism and religious superiority, which contravenes public policy. The Court upheld the scholarship trust but removed all restrictions with respect to race, colour, creed, religion, ethnic origin and sex.
Racial Discrimination – Spence v. BMO Trust Company
The concept of racial discrimination was also raised in Spence v. BMO Trust Company. Verolin Spence and her minor son applied for a declaration that the Will of her late father, Rector Emmanuel Spence (“Eric”), was void, relying on Re Leonard. Eric’s Will left all his property to his other daughter Donna and her sons and stated:
I specifically bequeath nothing to my daughter [Verolin] as she has had no communication with me for several years and has shown no interest in me as her father.
Verolin requested that the Court set aside Eric’s Will. If that occurred, Eric would have died intestate resulting in the two sisters sharing the estate equally.
Eric had lived in the UK but separated from Verolin and Donna’s mother and immigrated to Canada in 1999. Both sisters remained in the UK, but Verolin immigrated to Canada to live with her father after completing school. Donna and Eric did not communicate after Eric immigrated to Canada. Verolin lived with Eric through her university education in Canada and he supported her when she returned to the UK to complete postgraduate work.
In September 2002, Verolin became pregnant. She told Eric that the father of her child was Caucasian. She claimed that Eric made it clear that he would not allow a white man’s child in his house. According to Verolin’s affidavit, Eric would not return her calls and would have nothing to do with his grandson. A friend of Eric’s second wife deposed that Eric had disinherited Verolin and her son because the father of her son was white. Neither Verolin nor the friend were cross-examined on their affidavits.
Verolin also relied on the case of McCorkill v. McCorkill Estate. In that case, the Court struck down a transfer of the residue of the estate to National Alliance, a white supremacist organization. The Canadian branch of the organization had been dissolved as the purpose of the organization was to finance hate crimes, contrary to s. 319 of the Criminal Code of Canada and human rights legislation. The bequest to National Alliance was found to be void, as the dissemination of hate propaganda by the proposed beneficiary violated public policy.
Justice Gilmore set aside Eric’s Will on the basis that it offended public policy, as she found that the reason for disinheriting Verolin was based on a racist principle. Justice Gilmore acknowledged that the McCorkill decision had been criticized as, in the past, public policy considerations related only to a circumstance where the document itself contains impugned terms or where the trustee is required to do something that offends public policy or requires a beneficiary to perform an action that offends public policy.
In Spence, there was nothing on the face of the Will that impugned public policy. Eric did not state that the reason for such disentitlement was because Verolin fathered a child with a white man and neither the Estate Trustee nor any beneficiary was required to act contrary to law.
Practitioners were also concerned by the fact that extrinsic evidence (the affidavits) was introduced in a proceeding where the Will was not being interpreted. Generally, evidence as to the testator’s intention is only introduced where there is an ambiguity on the face of the Will. There was nothing on the face of Eric’s Will that was ambiguous. The affidavits of Verolin and the friend were introduced to establish that Eric’s motive for disinheriting Verolin was racist.
Justice Gilmore concluded that there could be no explanation for the sudden “cessation of communication with his daughter” and her subsequent disinheritance, other than the attitude of the deceased toward the father of his grandson.
The Spence decision was received with some degree of skepticism by practitioners and an appeal was anticipated. BMO Trust Company did appeal.
The Ontario Court of Appeal overturned the application and determined that Eric’s Will was valid. In a solidly reasoned decision, Justice Cronk addressed the issues of whether the extrinsic evidence was admissible and if the application judge erred by improperly interfering with Eric’s testamentary freedom.
Justice Cronk had no difficulty in finding that the affidavit evidence was not admissible, as it did not fall within the well-established exceptions relating to evidence of a testator’s intentions. As a general rule, extrinsic evidence of a testator’s intentions is not admissible when the testator’s will is clear and unambiguous on its face.
Justice Cronk also noted that such evidence should relate to intent and not motive, dismissing the evidence as follows:
In this case, the Will expressly discloses Eric’s motive, at clause 5(h). That clause provides an explanation, from the testator himself, for his decision to exclude Verolin from the Will, namely, that “she has had no communication with me for several years and has shown no interest in me as her father”.
Viewed in this fashion, the purpose of the extrinsic evidence was not to establish Eric’s motive for the residual bequest in his Will but, rather, to contradict the lawful motive for the bequest disclosed by the plain language of the Will and to substitute, in its stead, a different and allegedly unlawful motive. I see no basis at law for the admission of wholly contradictory, extrinsic evidence of motive for this purpose. In my view, the courts should be loath to sanction such an indirect attack, which the deceased cannot challenge, on a testator’s expressed motive and testamentary choices.
As to the public policy issues, Justice Cronk reviewed all the cases dealing with public policy and concluded that there were no conditions in Eric’s Will that would engage the jurisdiction of the court:
The pivotal feature of these cases is that the conditions at issue required a beneficiary to act in a manner contrary to law or public policy in order to inherit under the Will, or obliged the executors or trustees of the Will to act in a manner contrary to law or public policy in order to implement the testator’s intentions.
The Court noted that no such condition appeared in Mr. Spence’s Will. The residual beneficiaries were not required to act in a manner contrary to law or public policy to inherit. Similarly, BMO Trust was not required to act in such a manner to implement his intentions.
Justice Cronk concluded:
Absent valid legislative provision to the contrary, the common law principle of testamentary freedom thus protects a testator’s right to unconditionally dispose of her property and to choose her beneficiaries as she wishes, even on discriminatory grounds. To conclude otherwise would undermine the vitality of testamentary freedom and run contrary to established judicial restraint in setting aside private testamentary gifts on public policy grounds
Justice Lawers concurred but added that the respondents were requesting the Court to expand the public policy exception to testamentary freedom, “by subjecting Mr. Spence’s will to the test of whether it is discriminatory in its motivation or intention. He noted that although this case dealt expressly with racist motivations and intentions, “there is no logical reason to limit the… new exception to racial discrimination alone…it would increase uncertainty in estates law and open the litigation floodgates. The respondent’s proposal would greatly extend both the court’s jurisdiction and its burden, and would disrupt estates law, which now functions smoothly to pass property from one generation to the next.”
He also noted that neither the Canadian Charter of Rights and Freedoms nor the Humans Rights Code has a basis in a Wills case; the Charter exists to control the activities of government and not the private conduct of individuals. Similarly, the Human Rights Code is limited to regulating the actions of individuals only if they are providing services goods, facilities or accommodation. He stated:
…individuals are otherwise free to hold and to act on their prejudices however un-savoury, so long as they do not breach the criminal law. The Code obliges them to act rightly only in the market, whatever their private thoughts might be. Putting it differently, it is not the Code’s purpose to force people to think and act rightly everywhere and at all times.
Practitioners who are advising clients should demonstrate caution in drafting Wills. Often, a testator wishes to include a statement explaining the reason for excluding a potential beneficiary. Although the Ontario Court of Appeal has clarified that it will not interfere with the motivation for a testamentary disposition no matter how unsavory, it is never advisable to include details that would alert a beneficiary to a possible Will challenge or that would form a basis for a challenge that the exclusion was made based on incorrect information.
A number of cases in other jurisdictions have relied on the first decision in Spence. Now that the Court of Appeal has reversed the application judge, it will be interesting to see if other jurisdictions follow suit.