A Strong Endorsement of Testamentary Freedom: Spence v BMO Trust

When should courts invoke public policy to interfere with testamentary freedom? The Ontario Court of Appeal (“ONCA”) recently revisited this question in Spence v BMO Trust Company, 2016 ONCA 196 [Spence]. In Spence, Mr. Spence (the testator) excluded his daughter, Verolin, and grandson, A.S., from his Will. Instead, he bequeathed his assets to his second daughter, Donna, and her children. Mr. Spence’s reason for disinheriting Verolin appears to be racially motivated. The application judge, Justice Gilmore, held that the Will violated public policy and set aside the Will in its entirety. The ONCA, issuing a strong defence for testamentary freedom, unanimously allowed the appeal.

Family History

Rector Emanuel Spence was pre-deceased by his second wife, Norma. At the time of his death, Mr. Spence had two adult daughters: Verolin Spence and Donna Spence. At the dissolution of his first marriage, Verolin lived with Mr. Spence, while Donna lived with her mother. In 2002, Verolin told her father that she was pregnant and that the father of the child was white. Mr. Spence and Verolin’s relationship soured. Mr. Spence, a proud Jamaican, allegedly disapproved of Verolin’s decisions to have a child with who was white. Verolin’s child, A.S., was nine when his grandfather died. A.S. and Mr. Spence had never met.

Clause 5(h) of the Will

The allegedly racially motivated clause of the Will that caused the litigation was Clause 5(h). Clause 5(h) reads, “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” (Spence, para 10).

Lower Court

Justice Gilmore found that Mr. Spence’s reason for disinheriting Verolin was “based on a clearly stated racist principle” (para 19). As a result, Justice Gilmore set aside the Will in its entirety. The effect of setting aside the Will was to treat Mr. Spence as if he died intestate. This had two significant implications for the division of his property. First, it meant that both Verolin and Donna were beneficiaries in the estate. Second, Donna’s sons were disinherited, per the rules of intestacy. This was clearly contrary to the testator’s intentions.

ONCA: There is No Reason to Interfere

The ONCA overturned Justice Gilmore’s decision and allowed the appeal for three reasons. First, Verolin had no statutory entitlement to her father’s estate. She had applied to the Superior Court under sections 58 and 60 of the Succession Law Reform Act [SLRA]. These sections protect dependents’ right to support when dependents have been inadequately provided for in the Will. However, adult children do not meet the definition of dependents under the SRLA (Verch Estate v Weckwerth, 2014 ONCA 338, 5-6, leave to appeal to SCC refused, [2014] SCCA No 288). Since Verolin was not a dependent, she did not have a claim to her father’s estate. Therefore, the SLRA did not prevent Mr. Spence from disinheriting his daughter.

Second, this was not a case of will construction. A will construction case is when there is an interpretive question concerning the meaning of a clause in the will. When a clause of a will is ambiguous, the courts can consider extrinsic evidence in order to try to determine what the testator was attempting to achieve. To determine the testator’s intent, it is necessary to consider his or her motives for including the ambiguous clause. Extrinsic evidence is used to promote testamentary freedom; the courts are using the extrinsic evidence to determine the testator’s intent in order to enforce the testator’s objective. In Spence, Justice Gilmore admitted affidavits (extrinsic evidence in estate litigation) to contradict Mr. Spence’s motive that he stated intent in the will. Further, the ONCA held that since Mr. Spence’s Will was unambiguous, the application judge erred in inquiring into his motives.

Third, the Will was not facially discriminatory and therefore did not offend public policy. The allegedly racially motivated aspect of the Will was an omission—Mr. Spence refused to provide for Verolin or her son. The wording of Clause 5(h) was not overtly racist; it stated, “[S]he has had no communication with me for several years and has shown no interest in me as her father” (Spence, para 10). The Will makes no mention of race, of A.S. having a white father, or any other textual indications that Mr. Spence was acting in a racially motivated manner.

Public Trusts & Private Beneficiaries

At the ONCA, Justice Cronk grounded his decision on the distinction between wills that create a public trust and a private beneficiary. A public trust can be struck down in part or in whole if the provisions of the trust are contrary to public policy. The seminal case on this point is Canada Trust Co v Ontario (Human Rights Commission), (1990) 74 OR (2d) 481 [Canada Trust]). In Canada Trust, the ONCA eliminated terms in educational trusts that included racist and religious qualifications. The ONCA held that terms of a trust that discriminate on the “grounds of race, colour, ethnic origin, creed or religion and sex are void as contravening public policy” (Canada Trust, 40).

The courts have been more cautious in interfering with testamentary freedom when the testator is devising for a private beneficiary. In Canada Trust, the ONCA held that it was the “public nature of charitable trusts which attracts the requirement that they conform to the public policy against discrimination” (Canada Trust, 515). While Justice Cronk acknowledged that the courts limit conditional testamentary gifts, he staunchly defended a testator’s right to disinherit a family member, irrespective of the testator’s motivation: “[A]ssuming that Eric’s testamentary bequest had been facially repugnant in the sense that it disinherited Verolin for expressly stated discriminatory reasons, the bequest would nonetheless be valid as reflecting a testator’s intentional, private disposition of his property – the core aspect of testamentary freedom” (Spence, para 73). This bold pronunciation of testamentary freedom is a strong signal to lawyers practicing in estate planning that the courts are unlikely to interfere.

Future Discrimination and Past Discrimination

The actual dividing line on whether a court will strike a clause of a will for violating public policy seems to be whether there is a future discriminatory act. Specifically, if the testator creates a conditional testamentary gift with a discriminatory vein, the courts are willing to invoke public policy to find either the entire gift or the discriminatory provision void. Canadian courts have invoked public policy to void conditional testamentary gifts. In Murley Estate v Murley, (1995) 130 Nfld & PEIR 271, the Newfoundland Supreme Court Trial Division struck down a discriminatory clause that held that the beneficiary of the life estate could enjoy the life estate if she remained single.

However, if the testator omits an individual based on a discriminatory belief, the courts will not interfere. This is unsatisfactory, however. It means that if Mr. Spence had included a life interest in his house for Verolin on the condition that she does not have a child with a white father, the clause could be stuck. However, Mr. Spence is at liberty to disinherit Verolin for having a child with a white father.

There seems to be two distinct reasons for this peculiar and unprincipled distinction. First, the courts have been willing to prevent testators from controlling beneficiaries from the grave. The rationale for the rule of perpetuities aligns with the public policy rationale for limiting the conditions a testator can place on a conditional gift. Second, the courts will interfere with conditional gifts if it requires the executor or trustee to carry out discriminatory acts.

Conclusion

In Spence, the ONCA firmly supported testamentary freedom. This freedom now explicitly includes the ability to disinherit an adult child based on discriminatory grounds. While the ONCA correctly applied the law, the result was disappointing. What is clear is that, barring a successful appeal to the Supreme Court of Canada, the most likely means for achieving a more just result is through legislative reform.