Ontario Court of Appeal affirms will’s interpretation in dispute involving trust’s annuity payments

In a case where a trust made monthly annuity payments to a beneficiary, the Ontario Court of Appeal upheld a judgment interpreting a will to preclude collecting excess payments before Jan. 1, 2024, and adjust the amounts paid downward thereafter. 

The testator had three sons: Edward, John, and Robert. Upon her death on Oct. 6, 2018, she left primary and secondary wills. 

The wills contained two trusts: John’s testamentary trust, with CIBC Trust Corporation as trustee, and the grandchildren’s trust, with Edward as trustee. The wills equally divided the estate residue between Edward and Robert via a complex trust structure. 

Under the terms of John’s trust, CIBC purchased a home for him and used the trust funds to pay the property’s maintenance and upkeep expenses. CIBC retained the discretion to use the trust’s capital for emergencies. 

John’s trust entitled him to monthly annuity payments, net of tax. Upon his death, his trust’s residue would flow to the other trust or directly to the grandchildren if that trust no longer existed. 

Disputes arose regarding the funding of John’s trust. The parties eventually settled the disputes. In the present case, the issue was whether: 

• to increase the annuity John’s trust paid to him by $5,000 every five years, or 
• to index the annuity to inflation annually and increase it by $5,000 every five years 

CIBC had originally indexed the annuity annually and increased it by $5,000 every five years, then later asserted that it had done so in error. 

On behalf of the grandchildren’s trust, Edward argued that John had to refund the overpayments, given that CIBC’s indexing had always been erroneous. 

John countered that CIBC had properly done the annual indexing plus the five-year increases. Alternatively, he alleged that he did not need to give back any overpaid amounts. 

Will interpreted

On June 6, 2025, in CIBC Trust Corporation, as Trustee of the John Szewczyk Testamentary Trust v. Szewczyk, et al, 2025 ONSC 3382, Justice William LeMay of the Ontario Superior Court of Justice: 

• interpreted paragraphs 18(c) and (d) in the primary will and paragraphs 21(c) and (d) in the secondary will to apply the indexing factor between Jan. 1, 2018, and the date of the testator’s death, then limit the annuity increases to the $5,000 increases in paragraph 21(d) afterward 
• prevented the collection of any overpayments to John before Jan. 1, 2024, with the amounts paid adjusted downward after that date 
• ordered the recovery of the excess payments made between Jan. 1, 2024, and July 1, 2025, by postponing the next $5,000 increase to an appropriate date, without interest 
• directed the parties to calculate the overpayment amount and the date the next increase would take effect 

Upon reviewing the plain meaning of the words and the surrounding circumstances, the application judge determined that Edward and CIBC had correctly interpreted the will. 

Appeal dismissed

Last Feb. 27, in John Szewczyk Testamentary Trust v. Szewczyk, 2026 ONCA 153, the Court of Appeal for Ontario dismissed the appeal. 

The appeal court saw no merit in the appeal, no error of law or principle, and no palpable and overriding error in the application judge’s interpretation of the will. 

As the will’s arguable ambiguity had led to the dispute, the appeal court found it appropriate to require John’s trust to cover CIBC’s costs and John’s personal costs on a full indemnity basis.