Trial court made 'extricable error of law' in failing to apply Succession Law Reform Act
The Ontario Court of Appeal has allowed a beneficiary to exercise a testamentary option to purchase the “farming business carried on” by his deceased mother even though she had ceased operating the business many years before her death.
The decision reversed the ruling of Justice David Broad of the Ontario Superior Court, who found that the will’s reference to “farming business” referred to “the active farming business involving cultivation of crops and/or raising of livestock for commercial sale and profit that the testator, and her husband had carried on for many years prior to the making of their wills.”
In Broad’s view, the business referred to in the will had ceased, and the option to purchase was no longer available to Howard VanSickle of Brantford, the testator’s eldest son.
But, the Court of Appeal noted Broad had made “an extricable error of law” in failing to apply s. 22 of Ontario’s Succession Law Reform Act. The provision creates a presumption that a will “takes effect as if it had been made immediately before the death of the testator with respect to . . . the property of the testator.”
Indeed, Broad did not even mention s. 22 in his reasons.
“The application judge did not refer to s. 22 although it had been cited orally in argument,” says Derek Sinko, the litigator at Waterous Holden Amey Hitchon LLP in Brantford, who represented Howard.
The testator, Dorothy VanSickle, a school custodian, continued to own and operate a 66.54-acre farm as a secondary source of income following the death of her husband in 1994. The farm operations had included raising livestock and growing crops, but the livestock operations ceased in 1992.
Although the four youngest children had helped with the farm while growing up, their involvement ended in their teens. Howard, however, continued working the farm. When Dorothy made the will in 1985, she provided an option for Howard to purchase “the farming business carried on by me” for $85,300.
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The will also contained a clause that defined “farming business” as including “all assets, stock, plant, liability, in connection there with on the other (sic) and it shall include the estate in fee simple of the farm.”
Howard continued to work the farm until his father died in 1994, at which point Howard was 49. After that, Dorothy rented the farmland to Howard under a series of two-year lease agreements. Howard tended to the cash crop for about three or four years, then subleased the fields to others.
Dorothy lived at the farm until 2017, when she moved into a retirement home, remaining there until she died in 2019. She claimed farming income on her tax returns for the last three years.
When Dorothy died, Howard and the other children disagreed as to the interpretation of the will. The trustees brought an application for directions.
“The trustees took a neutral approach,” says Joe Figliomeni, the Toronto-based partner practising estates and business litigation with Cambridge LLP, representing the trustees in the OCA. “Although my clients were named as respondents, we took a neutral position because they didn’t want to be seen as favouring one group or the other.”
As the OCA saw it, Dorothy still owned the land and ran it productively: she leased it commercially, received the income and declared it on her tax return.
“On each tax return in evidence, she indicated that it would not be the final year of farming,” the court noted. “On any reading of these facts, the testator was carrying on a farm business [on the subject property] at the time of her death.”
The remaining question, then, was whether anything in the will displaced the presumption that the will spoke to the time of death and supported an intent on the testator’s part that the option to Howard be exercisable only if the farm business Dorothy was carrying on was “one in which she had a direct role – either tending the fields herself or directly managing the labour of others.”
In the court’s view, there was “nothing” in the phrase “the farming business carried on by me” or in the surrounding circumstances that “pointed unambiguously” to the business carried on in 1985 as opposed to the business carried on in 2019.
“Had the application judge engaged with the presumption,” the court concluded, “he would not have been able to find that the phrase ‘the farming business carried on by me’ was sufficient to defeat it.”