Baker v. Dumaresq

Baker v. Dumaresq
Collection
Supreme Court Judgments
Date
1934-06-06
Report
[1934] SCR 665
Judges
Rinfret, Thibaudeau; Lamont, John Henderson; Cannon, Lawrence Arthur Dumoulin; Crocket, Oswald Smith; Hughes, Frank Joseph
On appeal from
Ontario
Subjects
Estates
Decision Content
Supreme Court of Canada
Baker v. Dumaresq, [1934] S.C.R. 665
Date: 1934-06-06
Eva Wallace Baker, Executrix of the Estate of Elizabeth M. Weeks (Defendant) Appellant;
and
Carrie Dumaresq (Plaintiff) Respondent.
1934: March 13; 1934: June 6.
Present: Rinfret, Lamont, Cannon, Crocket and Hughes JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Will—Trust—Accounts—Testator’s widow appointed executrix and given “the right to use such part of the income and principal of my estate as may reasonably be necessary for her support and maintenance”—Action by residuary legatee for accounting as to widow’s use of estate—Extent of widow’s right to encroach upon corpus—Reference to Master to take an account—Widow’s dealing with the property—Method of fixing income of estate and of fixing allowance for support and maintenance—Authority of Master—Whether right on appeal to object to method adopted by Master in view of conduct at hearing—Right of appeal to Supreme Court of Canada from dismissal by Court of Appeal of appeal from judgment dismissing appeal from Master’s report. By his will W. appointed his widow to be executrix and left her “the right to use such part of the income and principal of my estate as may reasonably be necessary for her support and maintenance.” W. died in 1919 and his widow died in 1931. W.’s residuary legatee sued the widow’s executrix for an accounting of W.’s estate. The trial judge held that it was for the court to determine what was reasonably necessary for the widow’s support and maintenance and her right to encroach upon the corpus of the estate was limited in amount to what the court deemed reasonably necessary; and he made a reference to the Master to take an account and to ascertain what amount of W.’s estate remained or ought to be in the hands of the widow’s executrix. Accounts were filed before the Master but vouchers were lacking; also the Master was of opinion that the widow had brought herself within the law as to liability and onus for mixing trust property with one’s own (Lupton v. White, 15 Ves. 432); and he did not go through the accounts, though he referred to them on occasions during the hearing. He held that a certain passing of accounts by the widow on February 16, 1922, was binding upon the parties, found the amount in her hands when she came to Toronto in September, 1922, and, in view of the investments at the latter date, fixed 6% as a fair rate at which to fix her income from the property, and, on evidence, fixed amounts per year (with certain items added) to be allowed her for reasonable support and maintenance, and made his report on that basis. The widow’s executrix appealed from his report to a Judge, and then to the Court of Appeal for Ontario, the appeals being dismissed, and she then appealed to this Court.
Held that, while it is not for the Master, as a rule, without further direction, to apply the principle as to liability and onus for mixing trust property with one’s own (Lupton v. White, supra, at 436), appellant must, on the record of the hearing, be taken, to the extent stated infra, to have agreed on the method of procedure adopted by the Master, and, to such extent, could not now object thereto (In re Pratt, 12 Q.B.D. 334, at 341); but this agreement applied only to the period after the widow came to Toronto in September, 1922, and only to the method in calculating a reasonable allowance for support and maintenance; the receipts, therefore, should be taken from the accounts (not by fixing a percentage as aforesaid); and the widow should have received credit for all sums shown by the accounts to have been expended for her reasonable support and maintenance from February 16, 1922, aforesaid, until she arrived in Toronto in September, 1922; from that time appellant was bound by the method adopted by the Master of ascertaining reasonable annual amounts for support and maintenance regardless of the accounts.
Held, further, that it was proper for the widow to purchase and maintain a property in Toronto as a home, and it was not necessary for her to live alone in it or to live in an apartment; but this real property (purchased in the widow’s name), and certain furniture, were purchased with funds of W.’s estate and were assets of that estate passing to W.’s residuary legatee.
Held, further, that there was jurisdiction to entertain this appeal. Hendrickson v. Kallio, [1932] O.R. 675; Supreme Court Act (R.S.C. 1927, c. 36; s. 2 (b), defining “final judgment”); and Ontario Cons. Rule 506, referred to. In the result, the appeal was allowed and the matter referred back to the Master to take the accounts in accordance with the judgment of this Court.
APPEAL by the defendant from the judgment of the Court of Appeal for Ontario dismissing her appeal from the judgment of Garrow J. dismissing her appeal from the report of the Master.
The plaintiff is a sister of, and the sole surviving residuary legatee under the will of, John W. Weeks, late of Sydney, Nova Scotia, where he died on January 25, 1919. The defendant is the executrix of the will of Elizabeth M. Weeks, who was the widow of the said John W. Weeks and executrix of his estate and who died at Toronto, Ontario, on February 24, 1931.
The will of the said John W. Weeks provided as follows:
I appoint my wife, Elizabeth M. Weeks, sole Executrix of this my last Will.
I give, devise and bequeath all my property real and personal of every kind and description and wheresoever situate unto my said wife during her life.
I authorize and empower my said Executrix to sell and dispose of any part of the real or personal property of my estate in her discretion, and to execute the necessary conveyance and assignments of the same.
My said Executrix shall have the right to invest the moneys of my estate in first mortgages of real estate, bank stock, Government and Municipal bonds or such other safe and sufficient security as may deem advisable. My said Executrix shall have the use of all my property real and personal during her lifetime. She shall have the right to use such part of the income and principal of my estate as may reasonably be necessary for her support and maintenance wherever she may choose to reside. My Executrix shall also have the right to use such part of the moneys of my estate as may be necessary for the upkeep and other purposes of my estate. After her death I direct that the balance of my estate remaining in her hands shall be divided between my brother, the Rev. William W. Weeks, and my sister, Carrie Dumaresque. Should my brother, William W., predecease my said sister, the whole of said balance shall go to my said sister and her heirs. In the event of the death of my said sister, her heirs shall take her share of my estate.
In the action the plaintiff complained of the use made by the said Elizabeth M. Weeks of the capital and income of the estate of the said John W. Weeks, and claimed from defendant an accounting of said estate.
The action was tried before Wright J., who held that, under the will of John W. Weeks, his widow had only the right to encroach upon the corpus or capital of his estate for her reasonable support and maintenance in excess of what the income of the estate might furnish her with; that it was for the court to determine what was reasonably necessary for her support and maintenance, and her right to deal with or encroach upon the corpus of the estate was limited in amount to what the court deemed reasonably necessary for that purpose; that the object of the will was to provide for her support and maintenance out of the estate without regard to any private means that she might have of her own. He made a reference to the Master of the Court at Toronto to take an account of the estate of John W. Weeks and to ascertain what amount of said estate remained or ought to be in the hands of the executrix of the widow’s estate.
The Master found that the accounts of the estate of John W. Weeks were passed by his widow (executrix) in the province of Nova Scotia on February 16, 1922, and that that audit should be treated as binding on the parties; that the assets then amounted to $13,415.08, and that the widow afterwards received and got in certain proceeds which brought the total to $20,494.03, which was the amount she had when she came to Toronto, Ontario, in September, 1922. In the course of his reasons he said:
In September, 1922, $8,500 was invested in mortgages bearing 7%; $4,000 invested at 8%; $1,250 in bonds at 5½%. Balance owing on Reside sale $5,525 at 7%. The foregoing investments were good trustee investments. The said Elizabeth M. Weeks was a trustee as well as executrix and she should have continued the investments in trustee investments. During the period from 1922 to the time of her death such investments would have brought here easily on an average of 6%. * * * I am, therefore, of opinion, and so hold, that the said Executrix could have kept this money out on good trustee investments at 6%. The executrix, not having kept the Estate in her hands, after coming to Toronto, properly employed there is no fixed rate of interest chargeable under all the circumstances against her, Toronto General Trusts Co. v. Hogg[1]. But, as I say, looking at the rate of interest on the investments she then had and what she could have obtained, 6% is a just and fair rate by which to fix her income. I think allowing the deceased Elizabeth M. Weeks say $294.03 moving from Sydney to Toronto and to settle in any apartment house, there would be in capital account $20,200 on her arrival in Toronto. This, I hold, is my starting point.
I cannot concede to the argument of Mr. Tansey that Elizabeth M. Weeks had a right under the terms of the Will of the late John W. Weeks to buy real property if in her discretion she found it necessary, etc. The will of the late John W. Weeks * * * gives his executrix ample authority to sell any part of the real or personal property of his Estate in her dis- cretion. But nowhere is there any authority to purchase real estate. Here authority to invest the moneys of his Estate (that means proceeds of real estate sold) in first mortgages of real estate, bank stock, government municipal bonds, or such other safe and sufficient security as she may deem advisable. These latter words would follow the ejusdem generis rule and be interpreted similar securities. Buying land in her own name was not investing money in first mortgages in real estate. First mortgages are usually only 50% to 60% of the value of the lands. Also, as I have stated, she was a trustee and bound to invest in trustee securities.
There was no evidence tendered to show it would be more costly to live in one of the many beautiful comfortable well heated single woman’s apartments than to buy a large house such as 73 Dewson street, so I cannot accede to Mr. Tansey’s argument as to the purchase of this property. I see no authority for her to do so and I hold that by the will and the Trustee Act she should not have done so.
The income on the principal of the Estate of $20,200 would have yielded say $1,200 a year. Now, then, in the words of the judgment and the said Will would that sum be an amount reasonably necessary for her support and maintenance. If so, then she had no right to encroach on the corpus. If not sufficient what would be the yearly encroachment? Having found Mrs. Weeks’ income on $20,200 would be in round numbers $1,200, what should she be allowed for reasonable necessary support and maintenance?
He discussed the evidence at length and found that from October, 1922, to October, 1926, the sum of $1,300 a year was ample for the widow’s reasonably necessary support and maintenance, and $2,000 a year for the remaining years of her life, in addition to certain allowances for doctors, hospitals and nurses. He found that the amount that should be in the estate of John W. Weeks (and therefore in the hands of defendant as executrix of his widow’s estate) at the date of his widow’s death was $13,363.38 less the funeral expenses and reasonable expenses for monument.
The reasons of the Master are further stated and quoted from in the judgment now reported.
An appeal by the defendant from the Master’s report was dismissed by Garrow J. and an appeal by the defendant from the judgment of Garrow J. was dismissed by the Court of Appeal for Ontario. The defendant appealed to the Supreme Court of Canada. The questions for determination on the appeal are sufficiently stated in the judgment now reported.
H.F. Parkinson K.C for the appellant.
H.J. McLaughlin K.C. for the respondent. The judgment of the court was delivered by
HUGHES J.—This action was tried before the late Mr. Justice Wright, who held that according to the true construction of the will of John W. Weeks, Clergyman, deceased, the widow, the late Elizabeth M. Weeks, was entitled to encroach upon the corpus of the estate for the amount reasonably necessary for her support and maintenance, and the learned trial judge further directed a reference to the Master of the Supreme Court of Ontario to take an account of the said estate, and to ascertain what amount remained or ought to be in the hands of the executrix of the estate of the late Elizabeth M. Weeks, and reserved the question of costs and further directions until the Master should have made his report.
The late Reverend John W. Weeks died at the City of Sydney, in the Province of Nova Scotia, on or about the 25th day of January, 1919. The widow moved to the City of Toronto in September, 1922, and died there, on or about the 24th day of February, 1931.
The Master found that the accounts of the estate had been passed by the widow before the Registrar of the Court of Probate of the County of Cape Breton on or about the 16th day of February, 1922. The respondent contended that the receipts in the hands of the widow when she came to Toronto were $20,925.64, while the appellant contended that the amount was only $19,450.64. The Master held that the audit of the accounts in Cape Breton was binding upon the parties and that the total receipts in the hands of the widow when she came to Toronto were $20,494.03. From this sum, the Master deducted $294.03 for moving expenses, leaving a balance in September, 1922, of $20,200, and this, the Master said, was his starting point. Accounts were prepared and filed before the Master, although vouchers were lacking. The Master said in his reasons that in September, 1922, $8,500 was invested in mortgages bearing 7% interest, $4,000 invested at 8%, $1,250 in bonds at 5½%, and a balance owing on a real estate sale carried interest at 7%. These, the Master held, were trustee investments and it was the duty of the widow to continue them in trustee investments. He considered that in view of the investments the widow had in September, 1922, 6% was a just and fair rate at which to fix her income, although it was not established that she actually received that amount. The Master then proceeded to inquire whether $1,200 per year would be reasonably sufficient for the support and maintenance of the widow, and said that, if so, she had no right to encroach on the corpus; and, if not sufficient, he should ascertain what the amount of the yearly encroachment should be. The appellant called two witnesses to prove a reasonable amount for support and maintenance and the respondent called three witnesses. These witnesses testified mostly as to the cost of their own support and maintenance. From an analysis of the evidence of these witnesses, with some references to the accounts, the Master found that from October, 1922, to October, 1926, $1,300 per annum was a fair and reasonable amount to allow the widow for her support and maintenance. In the same way, the Master found that $2,000 a year was a reasonable sum for the remaining years. The Master then proceeded to summarize the accounting as follows:
Shortage on income.....................................................................................................
$3,866 67
Shortage on interest on income as it depreciated....................................................
700 00
Additional allowances for doctors, nurses and hospital...........................................
1,534 95
Nurses for last illness...................................................................................................
735 00
$6,836 62
The Master, therefore, found that the corpus should have been encroached upon only by the above total, and that the amount that should be in the hands of the appellant was $20,200 less $6,836.62, namely, $13,363.38. In his reasons, the Master said:
I have not dealt with the accounts as filed; they were not proved before me. No vouchers were presented for payment and I do not think that anything can be gained in an endeavour to reconcile the accounts kept by the deceased, Elizabeth M. Weeks, and her niece, Mrs. Baker. The moment Mrs. Weeks departed from her duty as trustee to keep the estate invested in trustee investments and followed that up by dealing with the bonds, buying and selling them as her own; that is, buying bonds from the estate and putting them in her own name, she quite fully brought herself within the law as laid down in Halsbury, volume 28, page 208, and Lupton v. White[2]; Cook v. Addison[3]. Even apart from these cases, the purchases of the Dewson street property prevented one from determining how much of the estate of John W. Weeks was in existence at the death of his executrix, so that I have not audited the accounts that were filed with me. Neither counsel made any attempt to prove them before me and the whole matter was tried before me by showing what the estate was and what would be a proper amount reasonably necessary for the support and maintenance of Elizabeth M. Weeks, and I have determined the matter on that basis. * * * I, therefore, find that the amount that should be in the estate of the late John W. Weeks is $13,363.38 less the funeral expenses and reasonable expenses for monument.
Counsel for the appellant contended before us that the Master did not carry out the judgment of the learned trial judge, and that he did not take an account of the estate, and that the Master had no authority to fix the income of the widow at so much per annum, or to fix a sum for support and maintenance at so much per annum, but that the Master should have gone over the accounts, item by item, and made his report; or, if it was not possible to make a report from the accounts, he should have so stated.
In Lupton v. White[4], supra, the Lord Chancellor said, page 436:
If the result is, that the Master cannot take the account, it is clearly not for him, without a farther direction, to apply the great principle, familiar both at law and in equity, that, if a man, having undertaken to keep the property of another distinct, mixes it with his own, the whole must both at law and in equity be taken to be the property of the other, until the former puts the subject under such circumstances, that it may be distinguished as satisfactorily, as it might have been before that unauthorized mixture upon his part. There may be cases, in which the Master may charge parties upon that principle; but it must be under the direction of the Court; who will judge whether the case is proper. I agree entirely with the Master, that under these circumstances he cannot take such an account as this Decree calls for. The consequence is, that upon farther directions it must either be referred back to the Master, with a direction to guide him as the mode of charging the defendants, where he cannot take the account satisfactorily; or an issue must be directed; taking care not to overlook the principle I have mentioned, which throws the proof upon the defendants.
Counsel for the respondent, however, urged before us that the parties proceeded before the Master and expressly or impliedly consented to the method of procedure. Before any evidence was taken, the Master said:
It is agreed between counsel that, I fix the amount of property she had when she came to Toronto, decide on the contentions of both parties as submitted to me to-day, and then proceed to find out what the reasonable support and maintenance of the deceased was in Toronto; subject, however, to my disposing of the contention of Mr. McLaughlin that certain expenditures made by the deceased, Mrs. Weeks, were not proper expenditures for her support and maintenance. A little later, counsel for the appellant said:
I understand, sir, that the method on which your Lordship wants us to approach this subject is not so much in regard to the accounts which have been kept, as to ascertain what would be reasonable and necessary under the circumstances for her support and maintenance?
To this the Master replied:
Yes. For instance, Mr. Tansey, I suppose you could find in Toronto fifty widows of clergymen who would know definitely what it cost them to live in as respectable a condition as the widow of such a clergyman should keep up. I know several myself, but I do not know anything about what it costs them. It is up to you to prove that.
Counsel for the appellant then called the appellant and among other questions asked her: “Now, Mrs. Baker, getting to the question of expenses. Taking the ordinary expenses over a term of years, that is, from 1922 until the time of her death, just ordinary expenses, what would you say was a fair average a year for Mrs. Weeks herself?” To this, the appellant answered: “I should say about $2,000. I did not make it up at all.”
A little later the Master asked the appellant concerning some question of income. “Do your accounts shew that? Do you know that?” To which the appellant answered, “Yes.” In fact the accounts were referred to on many occasions. The appellant then called Frances Lorway and among many questions, stated to her as follows: “I want you to give the Court, as nearly as possible, first, what is your ordinary and average rate of expenses in living in Toronto.” The respondent then called three witnesses who testified, among other things, as to living costs in Toronto.
In In re Prat[5], Bowen, L.J., said:
There is a good old-fashioned rule that no one has a right so to conduct himself before a tribunal as if he accepted its jurisdiction, and then afterwards, when he finds that it has decided against him, to turn round and say, “You have no jurisdiction.” You ought not to lead a tribunal to exercise jurisdiction wrongfully.
It will be observed, however, that the statement of the Master as to the agreement between the parties on the method of procedure referred only to the period after the late Elizabeth M. Weeks came to Toronto, namely, in the month of September, 1922, and, secondly, that it referred to the method to be pursued in calculating a reasonable allowance for support and maintenance only. As indicated in the foregoing, the accounts were passed on or about February 16, 1922. The receipts to that date were $16,500 and the disbursements were $3,084.08, leaving a balance on hand of $13,415.08. To this sum the Master added the following sums as receipts between February 16, 1922, and the arrival of the widow at Toronto:
Proceeds of sale 46 Rigby Road......................................................
$5,825 00
“ “ “ Victory Bond.......................................................
300 00
“ “ “ Automobile..........................................................
600 00
“ “ “ Furniture..............................................................
328 95
“ “ “ Acousticon..........................................................
25 00
These sums made a total of $20,494.03, and the Master found that the widow had these receipts belonging to the estate when she arrived in Toronto in September, 1922. As before stated, the Master said in his reasons: “I have not dealt with the accounts as filed; they were not proved before me.” It is clear, however, that the receipts should be taken from the accounts; and it is also clear that the late Elizabeth M. Weeks should have received credit for all sums shewn by the accounts to have been expended for her reasonable support and maintenance from February 16, 1922, until she arrived in Toronto. From that time, the appellant was bound by the method of procedure adopted by the Master of ascertaining reasonable annual amounts for her support and maintenance regardless of the accounts. So far as income was concerned, however, this should have been ascertained from the accounts for the whole period after February 16, 1922, that is, both before and after the widow arrived in Toronto.
We are further of opinion that it was proper for the late Elizabeth M. Weeks to purchase and maintain the property known as 73 Dewson street as a home, and that it was not necessary for her to live alone in it or to live in an apartment unless she so desired. This real property, however, and certain furniture, were purchased with funds of the estate of the late John W. Weeks, and these are assets of that estate passing to the respondent under his will. On the question of jurisdiction to entertain this appeal, we were referred to Consolidated Rule 506, which provides as follows:
Every report or certificate of a Master shall be filed and shall be deemed to be confirmed at the expiration of fourteen days from the date of service of notice of filing the same, unless notice of appeal is served within that time.
In Hendrickson v. Kallio[6], it was held by the Court of Appeal of Ontario that an order made by a single judge of the Supreme Court dismissing an appeal from the report of a special referee to whom the trial of an action for an accounting had been referred, pursuant to sections 66-71 of the Judicature Act, was a final order, because it determined the merits of the action and the real rights of the parties. In his judgment, at page 679, Mr. Justice Middleton distinguished the cases of Clarke v. Goodall[7], Dunn v. Eaton[8] and Hesseltine v. Nelles[9]. The latter cases were, however, before the 1920 Amendment to the Supreme Court Act which defines “final judgment” as any judgment, rule, order or decision which determines in whole or in part any substantive right of any of the parties in controversy in any judicial proceeding.
We are of opinion, therefore, that there is jurisdiction to entertain this appeal.
The appeal will, therefore, be allowed; but, under all the circumstances, without costs here and before the Court of Appeal and before the late Mr. Justice Garrow, and the matter will be referred back to the Master to take the accounts in accordance with the above judgment
Appeal allowed, without costs.
Solicitors for the appellant: Lamport, Ferguson & Co.
Solicitors for the respondent: McLaughlin, Johnston, Moorhead & Macaulay.
[1] [1932] Ont. R. 641, at 645.
[2] (1808) 15 Ves. 432.
[3] (1869) L.R. 7 Eq. 466 at 470.
[4] (1808) 15 Ves. 432.
[5] (1884) 12 Q.B. Div. 334, at 341.
[6] [1932] O.R. 675.
[7] (1911) 44 Can. S.C.R. 284.
[8] (1912) 47 Can. S.C.R. 205.
[9] (1912) 47 Can. SCR. 230.