Introduction

Generally, legatees by particular title are not liable for the debts of a succession. However, since the general rule set out in article 739 of the Civil Code of Québec (the "CCQ") is not of public order,1 a testator may depart from it and provide that legatees by particular title are liable for some of the succession's debts.

In Succession de Gardère c. Gardère2 handed down in August 2023, the Superior Court provides an interesting reminder with regard to who is liable for certain expenses related to rights and property bequeathed as legacies by particular title. First, the Court confirmed that where the right to occupy a house has been temporarily bequeathed, the legatees by particular title will assume all house expenses as long as they exercise their right to use, but only where this is clearly provided for in the will. It also stated that legatees by particular title do not become liable for condominium expenses until the liquidator's seisin ends, that is, when the property is delivered to the legatees by particular title. Relying on the same principles of law, the Court also concluded that in the absence of a testamentary provision to the contrary, only the succession is liable for the taxable capital gains resulting from the deemed disposition of a condominium.

Facts

The plaintiff is the spouse of the late Patricia Benodin Gardère (the "deceased"), who passed away from cancer in September 2021. He was acting in his capacity as liquidator of the succession of the deceased (the "succession"), in respect of which the universal legatees were the deceased's two minor daughters (the "heirs"). On behalf of the succession, the plaintiff claimed from the defendants, the parents of the deceased, reimbursement of certain expenses related to two legacies by particular title of which they were the beneficiaries, as well as damages. The plaintiff also asked that certain orders be issued against the defendants.

On September 8, 2021, while hospitalized and gravely ill, the deceased had signed a notarial will (the "will") just hours before her death. Despite the circumstances relating to its execution, the will was not contested. However, two legacies by particular titled bequeathed to the defendants gave rise to a dispute between the parties. The first related to a two-year right to occupy a house (the "house"), and the second to a legacy by particular title of a condominium (the "condo").

The condo was originally owned by the defendants and was the defendants' and the deceased's family residence. In February 2014 , the condo was transferred to the deceased by gift. When the deceased purchased the house in August 2014, the family moved in and the condo was rented to third parties or used to house visitors. It had been vacant since July 2021. The deceased lived in the house with the defendants until she went to live with the plaintiff in his apartment.

First, the parties disagreed as to who was liable for the costs incurred by the succession for the house during the period that the defendants' exercise their right to occupy. They also disagreed on who was liable for costs incurred by the succession to keep the condo as well as the capital gains tax resulting from the deemed disposition of the property at the time of the deceased's passing.

Decision

A. Claim Regarding House Expenses

After the deceased's passing, the defendants exercised their right to occupy the house without paying the expenses, including the monthly mortgage payments, school and municipal taxes and home insurance.

However, according to the Court, the will was clear and not open to interpretation. The defendants did have the right to occupy the house for a period not exceeding two years, but they had to pay the expenses thereof for as long as they exercised that right to use. This is a clear departure from the principle set out in the second paragraph of article 739 CCQ, which is permitted under article 737 CCQ.

The second paragraph of article 739 CCQ provides that a legatee by particular title who accepts a legacy "is not liable for the debts of the deceased on the property of the legacy unless the other property of the succession is insufficient to pay the debts, in which case he is liable only up to the value of the property he takes." However, article 737 CCQ states that this is not a rule of public order. Consequently, a testator may depart from this rule in their will, provided they do so clearly, which was done in this case.

The Court confirmed that the defendants were indeed liable for the house expenses for the period that they exercised their right to use, as stipulated in the will.

B. Claim Regarding Condo

As for the condo, the parties acknowledged the deceased's intention to give it back to the defendants, but they disagreed on who was liable for the condo expenses, property appraisal fees and capital gains tax owed by the succession.

The plaintiff claimed that the defendants were liable for these expenses and asked that they be ordered to pay the sum of $11,712.92, representing the costs incurred by the succession since the deceased's passing, and the sum of $574.88 incurred by the succession to have the condo appraised.

The plaintiff also sought an order from the Court against the defendants that would require them to pay the capital gains tax owed by the succession on the condo and the professional fees of the notary that would have to be incurred to transfer the property to them.

In this regard, although the Court acknowledged that the heirs were very young and that the costs incurred by the succession was reducing their inheritance even though the condo was not part of their inheritance, it pointed out that this was not a basis to set aside the legal principles that applied in this case.

The Court first noted that the transfer of the deceased's rights in the condo to the defendants took place when the succession was opened, namely at the time of the deceased's passing. However, the possession and administration of the condo was temporarily under the plaintiff's seisin as liquidator until the property was delivered to the legatees by particular title.

With respect to the condo expenses, the Court applied the same principles as those applied to the house expenses. The Court reiterated that, in principle, the expenses incurred to keep the condo and the capital gains tax were debts of the succession in accordance with article 739 CCQ, unless the will provided otherwise. In this case, the Deceased had made no provision for the condo expenses in her will, even though she had made such provisions with respect to the house.

The Court therefore concluded that the condo expenses incurred during the seisin of the liquidator were debts of the succession. It dismissed the application to order the defendants to pay $11,712.92 for the costs incurred to keep the condo and $574.88 for the property appraisal. The Court also pointed out that as long as the plaintiff refused to end the seisin and deliver the property, the succession would remain liable for the debts relating to the property.

The Court reached the same conclusion regarding the capital gains tax on the condo. In principle, the tax consequences resulting from the deemed disposition of the condo must be assumed by the succession, unless the will provides otherwise. Because the deceased had not departed from this rule in her will, the capital gains tax remained a debt of the succession in accordance with article 739 CCQ.

Authors' Comments

In this decision, despite the Superior Court's sympathy for the young heirs and the fact that its decision would have the effect of reducing their inheritance, it stated that it could not set aside applicable legal principles and render a decision based on sympathy.

A will must contain provisions on the transfer of expenses related to legacies by particular title, failing which the succession will have to assume such expenses in accordance with the Civil Code of Québec. Nothing in the law allows a liquidator to change the terms of a will and contravene the deceased's last wishes.

Moreover, the Court made it clear that nothing in the law allows a liquidator to make the payment of a legacy by particular title conditional on the legatees' renunciation of another legacy. The liquidator's role is limited to overseeing the liquidation of the succession and exercising, from the opening of the succession and for the time necessary for liquidation, the seisin of the heirs and legatees by particular title.

The Court also noted that when a liquidator unnecessarily prolongs such a seisin, they only impoverish the succession by keeping it liable for the costs related to legacies by particular title.

Conclusion

In conclusion, this decision provides an interesting reminder of who is liable for the expenses and debts related to the rights and property bequeathed as legacies by particular title. Given the above principles of law, the liquidator of a succession should limit the duration of their seisin to only the time necessary for such purpose, so as to avoid having the succession incur unnecessary expenses and debts as a result of a prolonged seisin.

This text was originally published in La référence, under reference number EYB2024REP3714.

Footnotes

1. Art. 737 CCQ

2. 2023 QCCS 3095, EYB 2023-530066. Filed on: February 27, 2024

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