|
|
|
Granot v Hersen HALEY J.:-- This is an application for the opinion, advice or direction of the court on a question affecting the administration of the Estate of Henry Hersen brought pursuant to Rule 14.05(3)(a) of the Rules of Civil Procedure. Henry Hersen died February 3, 1996 having made his last will dated January 20, 1996. At the time of both the making of the will and his death he was domiciled and resident in the Province of Ontario. He was a citizen of both Canada and Switzerland at the time of his death. There were no facts deposed as to what connection, if any, the testator had with Switzerland other than through ownership of certain land in Switzerland. Under the will his daughter, Lillian Granot, the Applicant, was named as sole Executrix and sole residuary beneficiary. The deceased was survived by his daughter, his son Roland Hersen, the Respondent, and two children of his deceased son Norbert. The children have submitted their rights to the court on this application. Under paragraphs 3(c)(i) and (ii) of the will Roland was to receive a cash legacy of $600,000 and transfer of lands in the Town of Powassan, Ontario, which had a value of some $28,000, before determination of the residue. Norbert's children took no benefit under the will. The residue of the estate was left to the daughter in the following terms: I direct my Trustee to transfer and deliver the residue of my estate to my daughter, Lillian Granot, for her own use absolutely, however, if my daughter, Lillian Granot should predecease me or die within thirty (30) days of my death, to transfer and deliver the residue of my estate to her issue in equal shares per stirpes. The Ontario estate had a value at the date of death in excess of $3 million. In addition, at the time of his death the deceased was the owner of a condominium property in Geneva, Switzerland which had an approximate value at death of $600,000 Canadian. It is the entitlement to this property which necessitates the bringing of this application. The questions to be answered are as follows: (a) having regard to the provisions of the Will as a whole and the fact that one of the assets of the estate is a condominium in Geneva, Switzerland valued at the date of death at approximately $600,000 (Canadian) does Ontario law or the Swiss law of forced heirship govern beneficial entitlement to the condominium? (b) if the answer to question 1(a) is "Ontario law" then does Roland Hersen have any entitlement to the estate beyond that set out in paragraph 3(c)(i) and (ii) of the Will? (c) If the answer to question 1(a) is "Swiss law of forced inheritance" then does Roland Hersen have any entitlement to the estate beyond that set out in paragraph 3(c)(i) and (ii)? (d) if the answer to question 1(b) or (c) is "yes", then is Roland's entitlement reduced to any extent by his entitlement pursuant to the Will, and if so, to what extent? Swiss law, as deposed to by two experts in Swiss law, by section 471 of the Swiss Civil Code provides for a system of forced-heirship rights, which, where there is a recognized will, allows the testator to dispose of one-quarter of his estate but the other three-quarters is disposed of by that law. If the forced-heirship rights apply the disposition would be as follows:
The Succession Law Reform Act, R.S.O. 1990, c. S. 26 which applies to wills made on or after March 31, 1978 contains the Conflict of Laws provisions applicable to estates in sections 34 to 41 both inclusive. These sections have not been amended since their coming into force. Of concern in this case are the following sections: S. 36(1) The manner and formalities of making a will, and its essential validity and effect, so far as it relates to an interest in land, are governed by the internal law of the place where the land is situated. S. 34(c) "internal law" in relation to any place excludes the choice of law rules of that place. S. 39 Nothing in sections 34 to 42 precludes resort to the law of the place where the testator was domiciled at the time of making a will in aid of its construction as regards an interest in land or an interest in movables. There is no issue that the condominium is land or an immovable for the purposes of both Ontario and Swiss law. It is said that the distinction between land and personalty in conflicts of law principles arose, inter alia, out of the fact that land devolved differently from personalty in England until the reforms of 1926 and that the conflicts of law principles reflected that distinction. It is also suggested that the distinction should now be abolished and that the law of the domicile should be the governing law for land as well as personalty instead of the now out-dated "lex situs". However that may be, the legislators in enacting the Succession Law Reform Act in the late 1970s chose to continue that distinction and it remains the law in this province. In submitting that I should find the answer to question 1(a) is the law of Ontario. Mr. Schnurr suggests that I should consider carefully the policy argument referred to above in deciding whether s. 36(1) or s. 39 of the Succession Law Reform Act should apply to determine the appropriate law in this case. He argues that this is a matter of the construction of the will to decide whether the condominium was to pass under the residuary clause and that accordingly s. 39 and not s. 36(1) applies. If s. 39 is the appropriate section then the law of the domicile would apply and not the law of the place where the land is situated. This he argues would support the intention of the testator which is to be drawn from the wording of the will. I do not think that the policy argument is helpful in this case. If a change is to be made it is for the legislature to make it. But, in any case, I cannot agree with Mr. Schnurr that what the court is doing here is construing the will of Henry Hersen to bring it under s. 39 and thereby exclude the operation of s. 36.1 of the Act. The will itself is crystal clear. The intention of the testator is also crystal clear as expressed in the will. The difficulty arises not from its construction but from the fact that one asset of the estate is in another jurisdiction. No doubt the intention of the testator was to pass the title of the condominium to his daughter under the residuary clause but legal principles may have intervened to prevent that intention from being fulfilled. As Mr. Youdan has pointed out a testator by the words of his will may intend to create a trust in perpetuity but the Perpetuities Act may intervene to defeat the intention of the testator. This interference does not arise from an issue of construction but rather from the force of a law applying to the operation of the will itself, i.e., it is a question of the essential validity and effect of the will. This is not changed in any way by the fact that the intention of the testator as to the choice of law to be applied is Set out in the will here by references to the Income Tax Act of Canada and the Family Law Act of Ontario. Those references to law indicate a general intention to apply the law of the testator's domicile for specific aspects of the administration of the estate but there is nothing dealing specifically with land. The paramountcy of the testator's intention and the construction of wills of immovables is discussed in Cheshire and North's Private International Law, 12th edition at p. 853 and following. After a detailed discussion of the point the learned authors make their statement as to the law at p. 855: A will of immovables must be construed according to the system of law intended by the testator. This is presumed to be the law of his domicile at the time when the will is made, but the presumption will be rebutted if evidence is adduced from the language of the will proving that he made his dispositions with reference to some other legal system. If, however the interest that arises from such construction is not permitted or not recognized by the law of the situs the latter law must prevail. There is nothing in this case which would rebut a presumption of the law of the testator's domicile for construing the will but section 36(1) operates to prohibit such a construction here and one has to return to the essential validity and effect of the will. The learned authors deal with essential validity at p. 853: There is no doubt that the law of situs, including its choice of law rules, (i.e., the doctrine of renvoi is applicable) governs matters of essential validity. This rule has been applied to such issues as whether the bequest contravenes the rule against perpetuities or against accumulations, whether gifts to charities are valid, whether a proportion of the estate has to be left to the children or to a surviving spouse, whether a power to assign part of the estate is valid, and, indeed, whether the land can be devised at all. I am satisfied: that the issue in this case is one of essential validity and effect coming within the example given of "whether a proportion of the estate has to be left to the children or to a surviving spouse"; that it is not a case where the intention of the testator can be given predominance; and that section 36(1) of the Succession Law Reform Act applies. That section requires that the essential validity of a will relating to an interest in land be determined by the internal law of the place where the land is situated. What is "the internal law"? Section 34 (c) says that "internal law" in relation to any place excludes the choice of law rules of that place. There is no definition of "choice of law rules". Mr. Schnurr argues that the internal law of Switzerland is the domestic law of Switzerland, including case law, minus the "choice of law rules" which are the Code or statutes dealing with the choice of law. Mr. Youdan would interpret section 34 more broadly and says that "choice of law rules" excludes all foreign elements whether by statute, Code or case law, on the basis that the definition in section 34(c) was designed to avoid "renvoi", i.e. any reversion to the law of Ontario through the operation of the "choice of law rules". I refer to the affidavits of the Swiss legal experts in considering what is the "internal law" of Switzerland without the "choice of law rules". Mr. Elliott Geisinger, who appears to me to be well-qualified to give an opinion on Swiss private international law, made an affidavit setting out his opinion for the Applicant. He opines at paragraphs 6 and 7 of his affidavit: 6.The Swiss Rules on Private International Law as set out in the Swiss Private International Law Act of 1987 apply only if a Swiss Court has jurisdiction over the matter. 7.... Under section 88 of the Act, Swiss courts have jurisdiction for the part of the estate located in Switzerland, if no other foreign authority handles the estate for legal or factual reasons. In such circumstances Swiss authorities would then apply the law designated by the Swiss Conflicts of Law Rules. He then states his conclusion based on the application of the Swiss law to the facts in this case: 8.In the facts of the Hersen case, if the authorities in Ontario have jurisdiction over the estate under the laws of Ontario and the estate is being administered by Ontario law, then Switzerland has no jurisdiction over any assets including the condominium, and the Swiss Conflicts of Law Rules do not apply. The documents which have been submitted to me, in particular those in relation to the present proceedings, would almost certainly be considered sufficient evidence that the part of the estate situate in Switzerland is being administered in Ontario. In my opinion, therefore, Swiss courts and/or administrative authorities in non-contentious proceedings would not accept jurisdiction in the present case. He also notes that Swiss rules on forced-heirship are not considered to be part of Swiss public policy when the estate is governed by foreign law. He confirmed that the Certificate of Appointment of Estate Trustee with a Will issued to the Applicant is recognized in Switzerland and would be sufficient to transfer land in Switzerland when accompanied by a death certificate and an authenticated copy of the will. Accordingly he was of the opinion that "under Swiss law it is neither illegal nor impossible, nor is there any impediment, to give effect to the will of Mr. Henry Hersen as construed under the laws of the Province of Ontario". The opinion of Martin Karrer, who also appears to be well qualified to give an opinion on Swiss law, for the Respondent is given by way of answers to certain scenarios in his affidavit. The relevant one, based on the agreed-upon facts, is as follows: (f) On the basis of the assumptions of fact, ... would Roland Hersen and the children of the late Norbert Hersen be recognized by a court in Switzerland as having rights to the Condominium? His answer was: In such a case as this, a Swiss court would apply its rules of private international law. Under those rules, succession to immovables would be governed by the laws of the last domicile, including its rules of private international law. If the laws of Ontario refer back to the internal or domestic laws of Switzerland with respect to the effect of the Will of Henry Hersen on the condominium, Roland Hersen and the children of the late Norbert Hersen would be entitled to the forced-heirship shares in the value of the Condominium referred to above. He goes on to say: I understand that the Province of Ontario has the general jurisdiction over the estate but refers to Swiss law regarding the immovables situated in Switzerland. Therefore, it is my belief that Ontario law creates a kind of second, separate estate limited to the immovables in Switzerland (so-called scission of the estate) and that Swiss law, including the Swiss forced-heirship rules, would fully apply to such separate Swiss estate without having regard to any other assets and/or legacies outside of Switzerland. I find that the opinion expressed by Dr. Karrer does not take into account the definition of "internal law" in section 34 and its exclusion of choice of law rules in Switzerland. His opinion expressed above specifically refers to the Swiss court applying its rules of private international law at the outset and he bases his conclusion on the application of those rules to refer the matter back to the law of the domicile. If Ontario law should then refer back to the internal laws of Switzerland on this return he says forced-heirship would apply. This interposes the operation of renvoi to get back to the internal law of Switzerland. Unfortunately he does not give any details of the application of the Swiss private international law in the first instance nor any details of the domestic law after renvoi. He makes no comment on Mr. Geisinger's reference to section 88 of the Act giving the Swiss court jurisdiction and thus the ability to apply Swiss Private International law only where no foreign authority "handles the estate for legal or factual reasons". J.-G. Castel in Conflicts of Laws, Cases, Notes & Materials, 6th edition, 1987 in Chapter I-3 E states: Conflicts of laws deals with: (4) The choice of the system of law to be applied to cases or disputes that come before the courts for decision when they contain one or more legally relevant foreign elements. This is called choice of law. The principles and rules of choice of law enable the court to choose the law of one of the legal units, foreign or domestic, connected with the case and apply it to the relevant issues. In other words, choice of law rules determines the extent of the application of different laws, be it the law of the court where the case is pending or some other. In my opinion the correct interpretation of "choice of law rules" in section 34 of the Succession Law Reform Act refers to the whole body of Swiss law containing "choice of law" rules, whether by the Swiss Code, statutes or case law. These govern what principles the Swiss Court would apply in circumstances of conflicts of laws. The question then to be addressed is what is the "internal law" of Switzerland and in particular whether section 88 of the Swiss Private International Law Act of 1987 forms part of that "internal law"? It is to be noted that according to the affidavit of Mr. Geisinger that Act contains the Swiss Rules of Private International Law. It cannot be said however that the whole of that Act necessarily relates only to "choice of law" just as one cannot say the Succession Law Reform Act contains only conflicts of laws provisions when in the main it is concerned with the internal law of Ontario. It may be argued that section 88 is part of the internal law of Switzerland dealing with the jurisdiction of the court. If, as Mr. Geisinger opines, the Swiss court has no jurisdiction over the part of the estate located in Switzerland if a foreign authority is "handling the estate for legal or factual reasons" then one never reaches the position where the Swiss court could apply "choice of law rules". Section 88 of the Swiss Private International Act could then be recognized by Ontario as an internal law of Switzerland under section 36(1) of the Succession Law Reform Act. In Mr. Geisinger's opinion Ontario has assumed jurisdiction by the issuing of the Certificate of Appointment of Estate Trustee with a Will to the Applicant and the Swiss court would decline jurisdiction under section 88 with the result that the law of Ontario applies to the administration of the estate, including the land in Switzerland, which then passes under the will of the deceased without regard to the forced-heirship laws of Switzerland. What constitutes the "internal law" of Switzerland in the context of section 34 of the Succession Law Reform Act has not been adjudicated upon as far as I am aware. That section merely excludes the choice of law rules of Switzerland. There is a discussion of renvoi in J.-G. Castel's Canadian Conflict of Laws, 4th Edition, Chapter 5, page 115 and following. At the start of the discussion the learned author makes the following statement: When by virtue of a conflict of laws rule of the forum the question or issue that requires adjudication is governed by the law of a foreign country or legal unit, the reference may be either to the corresponding conflict of laws rule of that foreign country or legal unit orexclusively to the appropriate "internal or domestic"substantive (as opposed to procedural) law of that foreign country or legal unit excluding its conflict of laws rules. There is no authority or explanation for the exclusion of procedural law of the foreign jurisdiction but it seems reasonable that procedural law should be excluded on the theory that in applying foreign law in circumstances like those in this case the Ontario court is interested only in what substantive rights are created by the foreign internal law as a fact so that the Ontario court itself, as the lex fori, can then enforce those rights. The Ontario court would not concern itself with any procedural matters of the foreign court which might affect those rights in the foreign jurisdiction. Once rights of succession are determined by the lex situs the law of the domicile administers the estate in accordance with those rights. Section 34 expressly excludes the choice of law rules, i.e., the conflict of laws rules referred to in the passage quoted and therefore the Ontario court would give effect to the Swiss law without those rules. Both of the Swiss legal experts have deposed that the forced-heirship rights would apply under Swiss law in this case. Mr. Geisinger, however, says that on the facts of this case the Swiss court would not assume jurisdiction. Is this part of the Swiss substantive domestic law or is it a procedural matter only? I am inclined to view it is procedural but, even if it is substantive, I find a more serious difficulty with Mr. Geisinger's position. He resorts to section 88 of the Swiss Private International Law Act of 1987 to raise this jurisdictional matter. In doing so I am convinced that he is having resort to a "choice of law" rule whereby the Swiss court under section 88 is looking to foreign elements as affecting the jurisdiction of the court and in that sense is applying a private international law principle and not a domestic substantive one. For these reasons accept the opinion of Dr. Karrer and find that the forced-heirship of the Swiss domestic law does apply to that part of the estate which is in Switzerland, namely the condominium. The answer to Question 1(a) is that the Swiss law of forced-heirship applies. Question 1(b) need not be answered. The answer to Question 1(c) is yes. Having decided that the Swiss forced inheritance law applies to the condominium it is then necessary to look to the law of domicile (Ontario) to see if there are other principles which affect the right of Roland to a one-quarter share in the condominium. I believe the parties to be agreed that the children of the deceased son Norbert are entitled to a one-eighth interest each in the condominium and are not subject to any Ontario law which might reduce that interest. The applicant now argues that as a matter of equitable principle Roland should take only his legacy under the will or his interest in the condominium but not both. She rests her argument on two Canadian cases in which equitable principles were applied. The first of these is Thom Estate v. Thom (1987), 27 E.T.R. 185, a judgment of the Manitoba Court of Queen's Bench. The deceased died intestate domiciled in Saskatchewan and owning land in Manitoba. Under the law of each province the widow was entitled to a preferential share in the estate, that of Saskatchewan being $40,000 and that of Manitoba being $50,000. The judge in that case chose not to enforce the traditional result of applying the law of the lex situs to the Manitoba land and decided that it would be inequitable to the children of the deceased if the widow were to receive two preferential shares. He held, therefore, that she was entitled to a maximum of $50,000 by way of the two preferences. A similar situation arose in Public Trustee of Manitoba v. Dukelow (1994), 4 E.T.R. (2d) 1 where the deceased died intestate domiciled in Manitoba owning land located in Ontario. The widow applied for the preference share to which she would have been entitled under the law of each of these provinces. Kinsman J. locked at the purpose of the two acts providing the preferential shares and decided that the widow was entitled only to the greater of the preferential shares. He said at p. 12: The assets, irrespective of whether they are movables or immovables, should be assembled under the administrator's umbrella, and after setting aside the highest preferential share permitted under the respective jurisdictions where the assets are located, the residue of the estate be divided by the applicable law of the deceased's usual or habitual place of residence. He also noted at p. 13: It will also avoid inequitable "double dipping" on the part of the surviving spouse, which in smaller estates could well result in the children being disentitled to any share of their deceased parent's estate. He then found it unnecessary to decide whether the laws of Ontario or of Manitoba governed the disposition of the Ontario land. These two cases avoided the perhaps harsh result of the application of the conflict of laws rules between provinces but they are to be distinguished from the case before me. This is not a case of preferential shares where children may be affected adversely, nor a case of "double dipping" in the sense of what the court in Dukelow was anxious to avoid. It is not a case where equity requires a different result from that achieved by the application of section 36(1) of the Succession Law Reform Act. An important fact in the distinction is the existence of the will which removes the case from the public policy considerations inherent in the intestacy cases. I find no reason to apply an equitable principle in the circumstances of this case to require a set-off of Roland's Swiss entitlement against his entitlements under the will. [Haley J. decided that the doctrine of election did apply to the facts of this case. The Court of Appeal decided that it did not.] |