Dependant Relief and the Succession Law Reform Act – Hull on Estates #117
Listen to Dependant Relief.
This week on Hull on Estates, Natalia Angelini and Craig Vander Zee discuss dependant relief and reference a variety of cases that utilized the Succession Law Reform Act.
Dependant Relief and The Succession Law Reform Act – Hull on Estates Podcast #117
Posted on July 1st, 2008 by Hull & Hull LLP
Natalia Angelini: Hello and welcome to Hull on Estates. You’re listening to Episode 117 on Tuesday, July 1st, 2008.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.
Natalia Angelini: Hi and welcome to another episode of Hull on Estates. I’m Natalia Angelini.
Craig Vander Zee: And I’m Craig Vander Zee.
Natalia Angelini: If you want to be heard on Hull on Estates you can participate in our discussion by leaving a comment, give us a call at 206-350-6636. The number is in the show notes along with our e-mail address, email@example.com or you can visit our blog page at estatelaw.hullandhull.com. So welcome everyone, it’s Canada Day.
Craig Vander Zee: Happy Canada Day to you, Natalia.
Natalia Angelini: Thank you. I’m thrilled to be at work on Canada Day and podcasting with you, Craig.
Craig Vander Zee: It’s certainly my pleasure as well.
Natalia Angelini: Great. So why don’t we get started. Today we’re talking about dependants relief and in particular, we’re going to be discussing the case of Cummings and Cummings and some of the subsequent cases that have applied it.
Craig Vander Zee: Well starting off, Natalia, as we know, the Succession Law Reform Act governs the rights of beneficiaries to receive support and other benefits upon the death of an individual. And more specifically, without getting into the wording of Section 58, it’s Section 58 which enables one to make this application to the Court for dependant support.
Natalia Angelini: That’s right and that’s what happened in Cummings and Cummings and perhaps, Craig, you can tell our listeners what the decision was in that case.
Craig Vander Zee: Well I think before heading into the decisions on Cummings and Cummings, it’s really important to really understand what we’re talking about today, that whether moral and ethical considerations find their way into the consideration of a judge in the Court when a dependant support claim is being considered. And what is certainly, Cummings is well recent in jurisprudence, it’s certainly not recent in the sense of it just coming out. But what was interesting in Cummings is that the Court of Appeal said that prior to 1978, while moral and ethical considerations were important in dependant support claims, or at least that they were thought of as considerations, the Ontario Court of Appeal had not considered to what extent they’re taking into consideration given the new legislation. Because prior to 1978, and prior to the Succession Law Reform Act, Ontario had a prior Act which was called the Dependant’s Relief Act. And in 1978, when the Succession Law Reform Act came into being, Section 58 was then the enabling Section in the legislation and what the Court of Appeal was saying is, that this particular aspect, moral and ethical consideration, had not been specifically considered by that Court and how it would affect the actual Section. And that’s why Cummings is important, because it’s really the first time in excess of 20 years that the Court took a look and actually focused on how and in what manner moral and ethical considerations are to be regarded when a dependant’s support claim is brought.
Natalia Angelini: Exactly, great point, Craig. And what the Court of Appeal did find in Cummings was that when examining all of the circumstances of a dependant support application, the Court has to consider two things. Firstly, what legal obligations would have been imposed on the deceased had the question of provision arisen during his or her lifetime. And secondly, what moral obligations arise between the deceased and his or her dependants as a result of society’s expectations of what a judicious person would do in the circumstances.
Craig Vander Zee: And the Court found its way to that reasoning, in part, based on the Supreme Court of Canada’s decision in Tatteron and Tatteron which was a 1994 decision by the Supreme Court of Canada. And what distinguishes Tatteron is it was a decision that arose out of B.C. and was a decision that was considered in the context of British Columbia’s Wills Variations Act. And the Court, at that point in time the Court being the Supreme Court of Canada, found that a deceased’s moral duty towards his or her dependants is a relevant consideration in a dependant’s relief application and that judges are not limited by simply conducting a needs based economic analysis in determining what disposition to make.
So, while the thought might have been prior to Cummings, at least in Ontario, that it’s a needs based decision, the Court said in Cummings, no, we’re going to rely on what the Supreme Court of Canada said in Tatteron that takes it one step beyond a needs based analysis. And while there were differences perhaps, obviously between the British Columbia Wills Variation Act and the Succession Law Reform Act, the Ontario Court of Appeal just essentially came to the conclusion that those disparities weren’t important and certainly not important enough to have this not being a consideration. And so clearly then, the Court of Appeal enunciated that a needs based analysis is not the end test. The end test is to consider moral and ethical considerations. And with that, I think we then turn to the Cummings decision and the facts to see why the Court might have come to that decision.
Natalia Angelini: Okay, great. Why don’t I turn to the facts of the case? So, I’ll just succinctly set them out. Essentially Mr. Cummings died leaving a widow, a former spouse and two children, Paul and Elizabeth. And they were children from his marriage to his former spouse. So, his children were dependants under the SLRA, there was no dispute about that. And one of the children, Paul, even though he was an adult, he suffered from Muscular Dystrophy, so it was also not in dispute that his future care would far exceed the value of the deceased’s estate.
Craig Vander Zee: I think what’s important in Cummings to point out is that the two children, the daughter was 18, she was attending university, and the son, who you’ve just mentioned who was unfortunately suffering from Muscular Dystrophy, was 24 years old. And it wasn’t argued as between the parties that the son’s future care wouldn’t exceed the assets in the estate. And what happened was that the widow and the first wife both did not make dependant support claims. It was essentially clear, my understanding that they didn’t need support and had agreed, or at least weren’t making dependant support claims. So that it was really the claims being advanced on behalf of the children. And the actual claims themselves were for payment of arrears of child support ordered in the judgment for divorce. I guess the deceased had arrears outstanding. And then also to provide for a trust as set out in the Will for both of the children, and then also seeking additional payments for support. Now the twist on this is that there was only $135,000 in the estate, unless you clawed back assets under Section 72 of the Succession Law Reform Act that would allow for the estate to be of an increased value. And when the assets, being a cottage property and the matrimonial home and the deceased’s RRSPs, all of which the widow had interest in or was a designated beneficiary of, were clawed back in, at least his portion, the estate had a value of $637,000. And so that’s what the Court was left with in deciding how to deal with that amount.
Natalia Angelini: Right, and the Court concluded that in all of the circumstances, that the support should be set at $250,000 and that was to be payable by way of a lump sum with a maximum of $10,000 for the daughter to complete her Master’s degree and the balance of it to go to care for the adult son. In addition, the Court also ordered that support arrears, in just over $50,000 should be paid to the former spouse.
Craig Vander Zee: And really, one of the important things, what the Court tried to do, was to balance the varied interests of the parties before the Court. And the Court of Appeal held that moral considerations are not something to be contemplated in addition to or in isolation from the factors that are listed in the Succession Law Reform Act when considering an application. And so it is something that, in the context of a dependant support claim, that needs to be at the forefront of the parties. And while there have been a number of decisions about Cummings since Cummings came out and again, it’s a 2004 decision, really the aftermath of Cummings is yet to completely unfold. There have been a number of cases, but in many of these cases as might be anticipated, you have situations where you would think that dependant support would be given in the context. And so it’s difficult to actually, perhaps, isolate the exact amount that’s factored or that’s being included because of a moral based decision versus an economic needs based analysis. But a couple of those decisions we can talk about briefly right now, Natalia.
Natalia Angelini: Great, so why don’t we start with an interesting case by the name of Simpson and Leardi. It’s a 2005 decision of the Ontario Superior Court of Justice. And in that case, the deceased had left a substantial estate of about $10 million and the plaintiff, herself, had about $3 million. But she was seeking support under the SLRA and she had already been awarded interim support of about $2700 a month.
Craig Vander Zee: Yeah, I think the important thing there is that the Will left her $1,000 per month and that she had already brought an interim support proceeding where the Court granted her $2750 per month. And at this point, that is, the point in time where it was before the Court, the estate trustees were bringing on a motion to cease, terminate that increased support on the basis that she no longer had a need for it.
Natalia Angelini: Right and the plaintiff was defending that motion and cited Cummings to support her argument that when the moral duty of the deceased is to take her into account, that she should get her fair share of the wealth. And she did concede, however, that on a needs based analysis, she would not likely obtain a support order. However, she still maintained that the interim order should continue.
Craig Vander Zee: And the judge here took a look at the situation and said, well no, what you’re really trying to do is to expand upon Cummings here. The plaintiff was making the argument that really what should be done is you’re taking into account the respective wealth of the parties and reapportion that wealth in a fair manner because the estates were $10 and $3 million respectively. And the Court said, no, no, no, we’re not going that far on this. We’re going to terminate the interim support. The application for support is still ongoing so it’s important to remember here that the judge wasn’t making a decision in a final way as to the support. But the judge just said on an interim basis, no, you’re not going to make an argument here based on equalization of wealth. That’s not what Cummings stood for. And as a result, the interim support was cancelled but the application for support continued and that might be pursued by the plaintiff.
Natalia Angelini: Right and one of the things that the Court might have taken into account when making that decision was that the plaintiff’s personal financial circumstances had improved since the interim order. So that might have just been one nuance that assisted in that determination being made.
Craig Vander Zee: One other case to consider, Natalia, is the case of Broderick I’m going to have problems here pronouncing this one, so thank you for letting me be the one to pronounce the name, Papathousiou. Anyways…
Natalia Angelini: No, no, no, Papathanasiou.
Craig Vander Zee: Okay, well…
Natalia Angelini: for all the Greek people out there, I hope haven’t offended.
Craig Vander Zee: What I can say is it’s a 2006 case, the Ontario Superior Court of Justice. And in this case, Miss Broderick contended that she had lived with the deceased in a common-law relationship for eight years prior to his death, and the deceased had not provided for her in his Will, or even during her lifetime. Miss Broderick had earned even in some years more money than the deceased, but they lived in residences owned by the deceased. I guess they had moved a couple of times but on each occasion, the funds for the residence and the ownership of the residence was in and had been provided by the deceased. And she brought a dependant support claim asking the Court for an order that support be provided to her under the Succession Law Reform Act.
Natalia Angelini: So the Court essentially found in favour of Miss Broderick in this matter and it found that contributions by her to the deceased, both to his personal and financial well-being to the detriment of her own finances, should be recognized by an award from the estate. And the Court, in making this decision, cited Cummings. However, making that determination, the Court also found that there weren’t enough assets in the estate to provide for Miss Broderick so it ordered that the deceased’s condominium be sold and that she get one-half of the net proceeds in recognition of her contributions.
Craig Vander Zee: And it’s, you know, in these kinds of cases, sometimes it’s difficult to know if Cummings had not been a case that had come around in recent years what she would have received. But, you know, clearly the Court found that she had contributed to both the personal and financial well-being of the individual. And also, what is intriguing about these types of cases is that they appear to be situations where there would have been a possibility of dependant support. In this particular one, they had found that she had contributed to the finances and to his personal well-being and had not been compensated, although that was clearly to her detriment. So the Court, in making that finding, as you said, Natalia, relied on Cummings and the deceased’s moral duty towards her as a dependant and that being a relevant decision.
Given our time today, I don’t think we’re going to get into the other cases. But there are some others to consider which are: Reid v Reid, it’s a 2005 Ontario Superior Court of Justice case. And then also the case of Pirelli and Foley Estate, which is a 2006 decision of the Ontario Superior Court of Justice. And what’s interesting, just quickly about Pirelli is that it appears to expand on the reasoning in Cummings where the judge, in this particular case, said after you look and identify all the dependants who make a claim on an estate, then the Court must tentatively value those claims of those dependants by considering the factors set out in the legislation and the legal and moral obligations of the estate to the dependants. But, and here is what seems to be the addition to it, is that the Court must identify those non-dependant persons who may have a legal or moral claim to a share of the estate. And then the Court must attempt to balance the competing claims to the estate by taking into account the size of the estate, the strength of the claims and the intentions of the deceased amongst other things. And so while it is unclear, for sure, where Pirelli leaves us, and whether that would be followed in another case, it does give us some view into a crystal ball as to where these types of claims may be going in the future. And so, again, the aftermath of Cummings is not yet known, but certainly and without a doubt, it’s being applied by Courts in Ontario.
Natalia Angelini: Absolutely. Thanks, Craig.
Craig Vander Zee: And with that, I bid you a good Canada Day and I hope you enjoy the fireworks tonight.
Natalia Angelini: It was a pleasure podcasting with you and we look forward to hearing from our listeners. So you can send us an e-mail at firstname.lastname@example.org or just pick up the phone and leave us a message on our comment line at 206-350-6636. Be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law. We hope you enjoyed the show. I’m Natalia Angelini.
Craig Vander Zee: And I’m Craig Vander Zee. Until next week, so long.
Natalia Angelini: So long.
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