Court of Appeal Decision of the Week

Where there’s no will, the answer is ‘no way’: Secret Trusts, Step Children & the Law of Intestacy

Case: Peters v Peters Estate, 2015 ABCA 301 (CanLII)

Keywords: Intestacy; Wills and Succession Act, SA 201, c W-12.2; Fresh Evidence Application; Secret Trust; Descendents; Lineal Descendents; Step Children

Synopsis:

In 2013, Ms. Ileen Peters dies intestate. Her spouse, Mr. Lester Peters predeceases her in 2009. Together, they have one biological child. From a previous marriage, Mr. Lester Peters has four additional children.

The appellant, Ms. Marette Peters seeks an equal division of the net proceeds of the estate of Ileen Peters between the four daughters (the stepdaughters of Ileen Peters) and their step-brother, Mr. Gordon Peters (the son of Ileen and Lester Peters).

Marette Peters appeals from a decision of Jerke J. of the Court of Queen’s Bench which held an intestate’s stepchildren were not the beneficiaries of their stepmother’s estate – a stepchild is not a ‘descendent’ for the purpose of s. 65 and 66 of the Alberta Wills and Succession Act, SA 201, c W-12.2. The appellant also applies for the admission of fresh evidence.

Both the application and the appeal itself are dismissed by the Court of Appeal.

Importance:

Fresh Evidence Application:

The Appellant – who was not represented by counsel on appeal – provided evidence intended to provide a ‘clear and true representation’ of the Peters family including family photographs, communications to and from the deceased (including a wedding invitation and Mother’s Day card), an award from Manyberries Public School, and an affidavit – none of which was ultimately admitted by the Court of Appeal.

The Court applied the following four part test from Palmer v. The Queen, [1980] 1 SCR 759:

1) the evidence should not generally be admitted if, by due diligence, it could have been adduced at trial;

2) the evidence must bear upon a decisive or potentially decisive issue in the trial;

3) the evidence must be credible in the sense that it is reasonably capable of belief; and

4) the evidence, if believed, could reasonably, when taken with other evidence, be expected to have affected the result.

The Court did not consider the proposed fresh evidence (which sought to establish the character of the relationship between Ileen Peters and her stepdaughters) relevant to the issues on appeal – the most important of which, for the Court, was whether the legislation includes stepchildren as beneficiaries of an intestate.

The Status of Descendents

Ss. 65 and 66 of the Wills and Succession Act, provide as follows:

65. If an individual dies leaving no surviving spouse or adult interdependent partner, the intestate estate shall be distributed

(a) to the descendants of the intestate in accordance with section 66…

66. (1) When a distribution is to be made under this Part to the descendants of any individual, the intestate estate or the portion of it being distributed shall be divided into as many shares as there are

(a) children of that individual who survived the intestate…

‘Descendants’ is defined by the Act – at s. 1(1) – to mean ‘all lineal descendants of an individual through all generations’; and yet ‘lineal descendents’ is not defined. Therefore, the Court of Appeal turned to Black’s Law Dictionary, 10th ed., which defines the term as ‘a blood relative in the direct line of descent’.

Despite the Appellant’s eloquent submission that the Act failed to recognize the needs of blended families, the Court of Appeal preferred the more traditional interpretation of ‘lineal descendents’. The reason is as follows: citing recent studies by the Alberta Law Reform Institute (ALRI), relationships between stepchildren and their stepparents are too variable to support a presumption of intention that stepchildren inherit from their stepparents.

Caselaw provided by the Appellant referred to circumstances unlike those in the present case – in all of the decisions mentioned, there had been a will. As such, the Court found these decisions to be of little value.

Was There a Secret Trust?

A secret trust is a form of an express trust whereby the deceased’s intentions are supplemented by instructions (oral or in writing) that property is to be held on trust for certain persons or purposes.

To form a secret trust, additional conditions precedent must be satisfied (over and above the three certainties or requirements of an express trust: the language of intention, subject of trust property, and trust objects or beneficiaries).

For the Court of Appeal these additional requirements are as follows (as discussed in Ottaway v Norman (1971), 3 All ER 1325 at 1332 (Eng Ch) cited in Jankowski v Pelek Estate, [1995] MJ No 663 at para 107, 131 DLR (4th) 717 (CA)):

  1. The deceased intended to impose a trust obligation;
  2. The intestate communicated the intention that the property should be held in trust for others and communicated the intended beneficiaries of the trust to the trustee; and
  3. The trustee acquiesced to hold the property on trust for the specified beneficiaries.

Unfortunately for Marette Peters et al., the Court found no evidence to demonstrate communication of Ileen’s intention (if such an intention to communicate ever existed) to the trustee that she intended some of the property be held in trust or who the intended beneficiaries were.

The Court found the elements of communication and acquiescence were not satisfied. Consequently the respondent, Gordon Peters is the sole beneficiary of the estate.

Concluding Thoughts:

While the Court of Appeal could do no better than to stress the fundamental importance of obtaining a will particularly where stepchildren are involved, on the other hand, it should be noted the Court of Appeal justified its decision with reference to a report by the Alberta Law Reform Institute which raises an important, if not equally unfortunate reality: the relationship between stepparents and stepchildren is distinct in law from that of parents and their children. If there’s any concern, a will is the best way to avoid like outcomes in the future.

Counsel for the Applicant/Appellant: Marette Peters (unrepresented)

Counsel for the Respondent (not appearing): Wilton Thorsteinson (Standard Law Office, Medicine Hat)

Discuss on CanLii Connects

Posted: Wednesday, October 07, 2015