Laing Estate v. Nova Scotia (Finance)

Laing Estate v. Nova Scotia (Finance) Court Supreme Court Date 2010-08-10 Citation 2010 NSSC 306 Docket Hfx 320623 Judge/Registrar/Adjudicator McDougall, Glen G. (Honourable Justice) Document Type Decision Relations Library Sheet - Laing Estate v. Nova Scotia (Finance) - 2010 NSSC 306 - 2010-08-10 - Library Sheet Decision Content SUPREME COURT OF NOVA SCOTIA Citation: Laing Estate v. Nova Scotia (Finance), 2010 NSSC 306 Date: 20100810 Docket: Hfx No. 320623 Registry: Halifax Between: Barbara Palmer, Administrator, as Personal Representative of the Estate of Allan P. Laing, deceased Applicant v. The Honourable Minister of Finance, Government of Nova Scotia Respondent Judge: The Honourable Justice Glen G. McDougall Heard: February 16, 2010, in Halifax, Nova Scotia Counsel: Allen C. Fownes, for the applicant Michael T. Pugsley, for the respondent By the Court: [1] The applicant, Barbara Palmer, is the administrator of the Estate of the late Allan P. Laing. She has been duly appointed by the Superior Court of California, San Francisco County, United States of America. [2] On behalf of the heirs-at-law of the late Allan P. Laing, Ms. Palmer applies for an order requiring the Minister of Finance for the Province of Nova Scotia to pay to the Estate an amount of money representing the principal sum, together with accrued interest, which formed the residual assets left to Allan P. Laing (now deceased) from the Estate of his deceased mother, the late Christina Dobie Laing. [3] Christina Dobie Laing died at Halifax, Nova Scotia on or about the 20th day of February, 1943. By her Last Will and Testament, dated the 26th day of November, 1940, she appointed The Royal Trust Company and Joseph W. Weldon, K.C., to be the Executors and Trustees of her estate. Probate of her Last Will and Testament was granted to her named Executors and Trustees by the Court of Probate for the County of Halifax on the 5th day of April, 1943. [4] The Will of the late Mrs. Laing left a specific bequest of $200.00 to her son, Allan Pollok Laing. These funds were forwarded to her son who, at the time, was traced to an address in San Francisco. A Release, acknowledging receipt of the money, was signed by the beneficiary, Mr. Laing. [5] The Last Will and Testament of Christina Dobie Laing also established a life estate for Jessie Croil Laing. Upon her death on the 10th day of December, 1949 a legacy of $6,000.00 was paid to Elizabeth Catherine Walsh with the residue of the Estate going to Allan P. Laing. The Executors and Trustees attempted, once again, to track down the whereabouts of the residual beneficiary but despite their best efforts they were unable to locate him. [6] Eventually, on the 4th day of February, 1960, one of the co-Trustees, Mr. Weldon, for personal reasons, withdrew as personal representative of the Estate. [7] The Royal Trust Company (later Royal Trust Corporation of Canada) continued to hold the residue of the Estate in trust and kept it invested. Further attempts were made to locate Mr. Laing but none were successful. Finally, in 1994, Royal Trust Corporation of Canada applied in the Supreme Court of Nova Scotia for authorization to pay the trust funds, less fees and costs, to the Public Trustee in accordance with the Public Trustee Act, R.S.N.S. 1989, c. 379. By order of the Honourable Justice Jamie W.S. Saunders (now of the Nova Scotia Court of Appeal), the application was granted and Royal Trust Corporation was then “...discharged from its duties as Trustee of the estate of Christina D. Laing on behalf of Alan [sic] Pollock Laing. [8] The Public Trustee, pursuant to sub-section 28(1) of the Public Trustee Act, supra, (henceforth the “Act”) is authorized to receive the assets of an Estate or trust, but must, pursuant to sub-section (2), convert any such assets into cash and pay it immediately to the Minister of Finance whereupon the provision of sections 35 and 35A apply. [9] Section 35 and section 35A of the Act state the following: Limitation period for money held by Minister 35 (1) Any person claiming to be entitled to any money held by the Minister of Finance under this Act or to any interest therein may make application to the Supreme Court or a judge thereof for a judgment or order declaring his rights in respect thereto (a) if a claim thereto is made within ten years next after the same has been paid over to the Minister of Finance; or (b) where the person entitled to such money is under the age of nineteen years or of unsound mind or out of the Province, a claim thereto is made by such person within ten years next after his coming to or being of full age, of sound mind or returning to the Province, and in any event within forty years next after the same has been paid to the Minister of Finance, and the Court may direct such inquiries as may be necessary to determine the same and may finally adjudicate thereon but no such application shall be entertained unless security for costs is given by the applicant if the Public Trustee demands the same. (2) Where the Supreme Court or a judge thereof has determined that a person is entitled to money held by the Minister of Finance or any part thereof, he shall pay the same to that person with such interest as the Governor in Council shall direct. (3) Where the Governor in Council is satisfied that any person should receive any money referred to in subsection (1), the Governor in Council may authorize the Minister of Finance to pay such money to such person with such interest as he shall deem fit. R.S., c. 379, s. 35; R.S., c. 240, s. 10. Authority of Minister to distribute 35A (1) Where, on application under subsection (1) of Section 35, the Supreme Court or a judge thereof is satisfied that (a) a person who, if living, would be entitled to any money held by the Minister of Finance, is absent from the Province and has not been heard of or from by the applicant, or to the knowledge of the applicant by any other person, since a day named; (b) the applicant has no reason to believe the person is living; and (c) reasonable grounds exist for believing the person is dead, the Supreme Court or a judge thereof may authorize the Minister to distribute the money among such persons who would be entitled to the money if the death of the absent person had taken place immediately before the time at which the application was made in accordance with subsections (2) and (3) of Section 35. (2) Before the money is distributed pursuant to subsection (1), there shall be given to the Minister of Finance security in such amount and in such form as is prescribed for the payment or re‑delivery of the money to the absent person if the absent person returns, or in case of the death of the absent person being proved to have taken place at a time other than that immediately before the application, then to the persons entitled to the same by reason of the death having taken place at such other time. (3) Nothing in this Section limits or abridges the remedies to which the absent person, or any other person entitled thereto, may resort to for recovering the money from the persons among whom the Minister of Finance has distributed the same, but the Minister is relieved from all further liability in respect to such money. 2002, c. 38, s. 2. [10] Assets valued at $392,591.93 were received by the Public Trustee who, in turn, transferred the cash equivalent to the Minister of Finance on May 30, 1994. It is the policy of the Department of Finance to require a person or persons claiming to be the beneficiary or heir-at-law to make application to the Court for a distribution of the funds where the amount exceeds $10,000.00. Provided the Court is satisfied, the money or any part thereof along with accrued interest may be ordered paid to the rightful heirs-at-law. Issues: [11] The issue involves not so much the legitimacy of the claim being made on behalf of the heirs-at-law of the late Allan P. Laing but rather the determination of “...the adequacy, correctness and propriety of the interest.... as calculated by the Governor in Council pursuant to the Public Trustee Act, R.S.N.S. 1989, c. 379 as amended, s. 35(2)”. [Reference: applicant’s Notice of Application in Chambers] [12] This is not to imply that the propriety of the claim itself is not important. It is of fundamental importance. [13] The Court is satisfied based on the submissions of counsel for the applicant and the materials filed in support of the claim that the funds held in trust by the Minister of Finance should be paid over to the duly appointed Administrator of the Estate and distributed in accordance with intestate succession laws of the State of California, United States of America. [14] The second issue, as framed by the applicant in her counsel’s brief, is: Since the Governor in Council is obliged to account for and pay interest on the said sum in such amount as it may determine, is the payment of such interest wholly within the prerogative and discretion of the Governor in Council, or, to ensure justice and fairness, is the Crown subject to the ordinary rules pertaining to other trustees in the management of the estate assets of individuals, or to the specific requirements of the Provincial Finance Act? Discussion: [15] Upon receipt of the undistributed assets of the Estate of Christina Dobie Laing pursuant to sub-section (1) of section 28 of the Act, the Public Trustee, pursuant to sub-section (2) of the same section was required to convert the assets into cash and to pay the proceeds immediately to the Minister of Finance. [16] The funds so received were deposited to the Consolidated Revenue Fund for the Province. A record of the funds appears as a liability on the Province’s books of account. [17] Any person claiming to be entitled to any money held by the Minister of Finance or to any interest therein may make application to the Supreme Court under sub-section (1) of section 35 of the Act. [18] Sub-section (2) of section 35 provides that where the Court has determined that a person is entitled to the money (or any part thereof) held by the Minister then he “shall pay the same to that person with such interest as the Governor in Council shall direct.” [Emphasis added] [19] Sub-section (3) of section 35 also provides for a determination of entitlement to any such funds by the Governor in Council without the requirement of a Court application. Presumably this procedure is open to the Governor in Council but utilized for amounts less than $10,000.00 by virtue of policy. Under this sub-section the rate of interest payable is determined by the Minister, not by Cabinet. [20] There is no other legislation nor any regulations pertaining to this nor are there any regulations stipulating the applicable rate of interest or any means of determining it. It is left to Cabinet (or, in certain instances, the Minister personally) to set the applicable rate. [21] Counsel for the applicant has argued that the rate should not be that which the Province’s bank pays on funds deposited to the Consolidated Revenue Fund. He argues that Prime less 3.5% would produce a less than adequate result and that the Province should have been required to hold the funds in a “special fund” as defined in sub-section 2(n) of the Provincial Finance Act, R.S.N.S. 1989, c. 365. He also argues that the provisions of the Trustee Act, R.S.N.S. 1989, c. 479 (as amended) should apply to the Province. If it did then the Crown or, in this case, one of it’s Ministers should be expected to invest the funds like any other trustee by exercising the care, skill, diligence and judgment that a prudent investor would exercise in making investments. [See Section 3A of the Trustee Act, supra). [22] If the Court was inclined to accept this argument, the parties agreed that the amount of interest owed to the Estate would be calculated by staff working in the Provincial Department of Finance. [23] Continuing with the applicant’s argument, it is their contention that the funds ought to have been placed where they would have attracted some measure of protection from the negative effects of inflation while keeping up the purchasing power of the fund by earning interest at market rates and not at the chequing account rate negotiated by the Province with its principal bank. [24] Neither counsel was able to find any decided cases on point. Counsel for the applicant referred to a decision of the Ontario Court of Appeal in Ontario (Public Trustee) v. Movesian Estate, [1994] O.J. No. 1323; 19 O.R. (3d) 358; 116 D.L.R. (4th) 147. That case deals with specific legislation in Ontario that makes a clear distinction between the administration of “Crown Estate” and other than Crown Estates. [See Crown Administration of Estates Act, R.S.O. 1990, c. C-47). Such a distinction does not arise in the Nova Scotia legislation and consequently the Movesian Estate case, supra, has no application in the case that is before me. Decision: [25] The only requirement for the payment of interest on the funds that were paid first to the Public Trustee under section 28 of the Act and immediately passed on to the Minister of Finance is at a rate to be determined by the Governor in Council. For the Court to impose a rate higher than the rate paid by the Province’s Bank on funds deposited to the Consolidated Revenue Fund, it would require a specific legislative provision authorizing it to do so. Furthermore, the Minister did not profit from the investment of the funds at the expense of the Estate by earning more interest than the Governor in Council is prepared to pay out. [26] In the circumstances of this case, the provisions of the Trustee Act, supra, have no application. As such, the applicant is only entitled to the original value of the assets turned over to the Public Trustee pursuant to section 28 of the Act plus interest at a rate negotiated by the Province of Nova Scotia with its bankers on all funds deposited to the Consolidated Revenue Fund – that being Prime less 3.5%. The exact amount of accrued interest will be left to the appropriate people in the Department of Finance to calculate. [27] The costs of both parties shall be taxed, on a solicitor and client basis, and paid from the fund with the balance less fees made payable to the “Estate of Allan P. Laing” c/o Barbara Palmer, Adminstratrix, and sent to the Estate’s local counsel – Crowe Dillon Robinson. [28] The distribution of the remaining funds to the heirs-at-law of the late Allan P. Laing will be in accordance with the laws on intestacy in and for the State of California, United States of America. Justice Glen G. McDougall