Courts have guidelines for interpreting ambiguous provisions in contracts, Wills, and other documents. With respect to Wills, where the will-maker’s Will contains clauses that can either be interpreted as:
- giving an interest that is vested (owned by the beneficiary at the will-maker’s death); or
- giving an interest that is contingent (ownership is conditional on another event after the will-maker’s death),
the Court prefers to find a vested interest, which in some circumstances avoids an intestacy. However, the Court’s preference is subordinate to the will-maker’s intentions. The will-maker’s freedom to distribute his/her estate according to his/her wishes is paramount.
In Fargey v. Fargey, 2015 BCSC 721 [“Fargey”], the Court considered this issue. The Will provided that, in the event that Bruce Fargey (Matthew and Joseph Fargey’s father) predeceased the will-maker (which he did), his share would be divided among his children. The will-maker’s grandsons, Matthew and Joseph, sought orders terminating a trust and encroaching on a trust, respectively. Matthew, relying on the rule in Saunders v. Vautier (1841) 41 ER 482 [“Saunders”], argued that because he was an adult of sound mind and entitled to the beneficial interest of the trust, the trust ought to be terminated. Joseph’s litigation guardian petitioned for permission to encroach on Joseph’s interest, arguing that it was in his best interests. For either petition to be successful, the grandson’s beneficial interests had to be categorized as vested rather than contingent. Therefore, the issue for the Court was whether the interests conferred to the grandson’s had vested upon the will-maker’s death or whether the interests remained contingent on the grandson’s attaining the age of twenty-five.
According to the terms of the trust, the trustees were not to distribute the capital until the grandsons reached the age of twenty-five. The relevant clause of the Will read that the trustee was to:
invest and keep invested each such sub-share and to pay the income therefrom or so much thereof as may be necessary or advisable in my Trustee’s discretion for the grandchild’s maintenance, education or benefit during his or her minority, (any income not so paid in any year to be added to the capital of the share) and upon my grandchild attaining the age of twenty-five (25) years to distribute the capital of the sub-share to him or her
Based on the language of the clause, the Court held that the will-maker intended that the grandsons’ interests would vest at the time of the will-maker’s death, but that the distribution would be postponed until they reached the age of twenty-five. The use of the word “distribution” implies that the interest vested, but would be distributed at the later date. Accordingly, the grandsons’ interests were vested interests rather than contingent interests.
The Court then considered the specific petitions of each grandson. Matthew’s request for early termination of the trust was successful under the rule in Saunders as he is an adult and of sound mind, and there was no opposition from those in charge of Joseph’s affairs.
Joseph’s petition was also successful. The Court held there was no controversy as to whether an encroachment was in his best interests, focusing on educational purposes, which were expressly considered in the Will. Further, the Court held that encroachment was permitted under the Trust and Settlement Variation Act.
Ultimately, the Court endorsed the longstanding preference of holding that an interest has vested, if the language of the Will can support such an interpretation.