A common misconception is that there is no priority of claims when it comes to the creditors of an estate. This is perhaps because of the opening language of Section 2 of the Creditors’ Relief Act, 2010, S.O. 2010, c. 16 , Sched. 4, which states that there is no priority among creditors by execution or garnishment issued by the Superior Court of Justice, the Family Court of the Superior Court of Justice and the Ontario Court of Justice.
However, a closer read of the Act will note the exception carved out for support or maintenance orders at subsection 2(3). Stuart Clark has previously written a blog on this topic, confirming that dependants who are awarded support under Part V of the Succession Law Reform Act, R.S.O. 1990, c. S.26 have priority over other judgment debts, other than debts owing to the Crown in right of Canada:
2(3) A support or maintenance order has the following priority over other judgment debts, other than debts owing to the Crown in right of Canada, regardless of when an enforcement process is issued or served:
- If the maintenance or support order requires periodic payments, the order has priority to the extent of all arrears owing under the order at the time of seizure or attachment.
- If the support or maintenance order requires the payment of a lump sum, the order has priority to the extent of any portion of the lump sum that has not been paid.
In short, where the support or maintenance order requires ongoing payments, the aggregate of the remaining future payments, as well as any outstanding lump sum(s) are to be given priority as a debt of the Estate.
Are All Support Claims Really Given Equal Priority?
Subsection 2(4) then provides that “support and maintenance orders rank equally with one another.” However, this statutory language in the Creditors’ Relief Act is perhaps misleadingly simple. The hierarchy question is further complicated by a provision of the Family Law Act, R.S.O. 1990, c F.3 (the “FLA”) which provides that a spouse’s entitlement to support under the FLA has priority over:
6(12)(c) an order made against the estate under Part V (Support of Dependants) of the Succession Law Reform Act, except an order in favour of a child of the deceased spouse.
The practical impact of this is that a spouse’s entitlement to an equalization payment from a deceased person’s estate will ordinarily take priority over all other dependant support claims.
The only exception to this is where the dependant making a claim for support is the deceased’s child, in which case their claim has highest priority, as was noted first at paragraph 18 of the 1995 Gaudet (Litigation Guardian of) v. Young Estate decision, and at paragraph 26 of the trial decision of Justice Cullity in Cummings v. Cummings Estate, later upheld by the Ontario Court of Appeal.
For parties and their counsel involved in matters concerning an order for dependant support, understanding the statutory hierarchy at play here is critically important, as it may ultimately determine a dependant’s entitlement to support where financial resources are limited. This is especially the case where there are intersecting interests of spouses and children with other potential creditors of an estate. So as is often the case, take great care when approaching situations where overlapping legislation applies.
Thanks for reading!