Omiciuolo, Estate Trustee for the Estate of Omiciuolo v. Pasco [Indexed as: Omiciuolo (Estate Trustee of) v. Pasco]

90 O.R. (3d) 175

Court of Appeal for Ontario,

Lang, MacFarland and LaForme JJ.A.

April 4, 2008

Wills and estates -- Estate administration -- Claim for relief under Succession Law Reform Act and claim for declaration that claimant was constructive trustee of deceased's property as his common law wife not constituting "claim or demand" made against estate within meaning of ss. 44 and 45 of Estates Act -- Limitation period in s. 61(2) of Succession Law Reform Act governing dependant's claim for relief and not limitation period set out under ss. 44(2) and 45(2) of Estates Act -- Estates Act, R.S.O. 1990, c. E.21, ss. 44, 45 -- Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 61(2).

The deceased died intestate. The appellant applied for and received a Certificate of Appointment of Estate Trustee Without a Will in Toronto. The respondent alleged that she had been living with the deceased as his common law wife at the time of his death. The appellant served the respondent with an application, returnable in Newmarket, claiming vacant possession of the deceased's Toronto home and other relief. At the same time, she served the respondent with a notice of contestation issued under ss. 44 or 45 of the Estates Act, styled under the Newmarket action, contesting the respondent's claim and providing that if the respondent did not apply for an order allowing her claim and determining its amount within the time set out in the Act, she would be deemed to have abandoned her claim. On the return of the application, the parties reached an "interim settlement", and an adjournment was granted on consent. The settlement did not explicitly address the notice of contestation. The respondent subsequently delivered a notice of cross-application in Newmarket, seeking a declaration of dependency and support under the Succession Law Reform Act ("SLRA") and other relief. The appellant applied in Newmarket for a declaration that the respondent be deemed to have abandoned any claim against the estate. The application judge found that the notice of contestation was a nullity and that, in any event, the consent adjournment effectively operated as a standstill order. The appellant appealed.

Held, appeal dismissed.

The application judge erred in finding that the notice of contestation was a nullity because it was issued in Newmarket rather than in Toronto. Even if the proceedings should have been commenced in Toronto and not Newmarket, the failure to do so rendered them only an irregularity that could have been remedied by a transfer of the proceedings from Newmarket to Toronto.

Sections 44 and 45 of the Estates Act address claims against the estate by creditors. The respondent's claim under the SLRA and her other claims arising from her relationship as a spouse were claims for declaratory relief and did not fall within the meaning of a "claim or demand" under ss. 44 and 45 of the Estates Act. The limitation period in s. 61(2) of the SLRA governs a dependant's claim for relief, and not the limitation period set out under ss. 44(2) and 45(2) of the Estates Act.

In any event, the consent order adjourning the proceedings operated at a minimum as a standstill agreement with respect to the notice of contestation. Moreover, the notice of contestation lapsed by the time the respondent filed her notice of cross-application. [page176]

APPEAL from the decision of MacDougall J. of the Superior Court of Justice, dated December 6, 2006, dismissing an application for an order that the respondent was deemed to have abandoned her claims against the deceased's estate.

Cases referred to Dunn v. McNeil Estate, 1995 CanLII 3898 (NB QB), [1995] N.B.J. No. 347, 167 N.B.R. (2d) 9, 8 E.T.R. (2d) 313, 56 A.C.W.S. (3d) 935 (Q.B.); Ethier v. Raspberry, [1997] O.J. No. 666, 8 O.T.C. 57, 16 E.T.R. (2d) 197, 69 A.C.W.S. (3d) 539 (Gen. Div.); Graham (Re) (1911), 25 O.L.R. 5, [1911] O.J. No. 3 (H.C.J.); Lawrence (Re), [1950] O.W.N. 571 (H.C.J.); London & Western Trust Co. v. Sale, 1936 CanLII 101 (ON SC), [1936] O.R. 244, [1936] O.J. No. 198, [1936] 2 D.L.R. 297, [1936] O.W.N. 187 (H.C.J.), consd Other cases referred to Brill (Re), 1967 CanLII 259 (ON SC), [1967] 2 O.R. 586, [1967] O.J. No. 1056, 64 D.L.R. (2d) 478 (Surr. Ct.); Casselman (Re) (1974), 1974 CanLII 656 (ON CA), 6 O.R. (2d) 742, [1974] O.J. No. 2223, 54 D.L.R. (3d) 37 (C.A.), varg (1974), 1974 CanLII 783 (ON SC), 4 O.R. (2d) 166, [1974] O.J. No. 1935, 47 D.L.R. (3d) 354, 17 R.F.L. 233 (H.C.J.); Dowsley (Re), [1935] O.J. No. 89, [1935] O.W.N. 545 (H.C.J.); Grant v. West, [1896] O.J. No. 47, 23 O.A.R. 533 (C.A.); Greisman (Re), 1954 CanLII 364 (ON SC), [1954] O.W.N. 793 (Surr. Ct.); McIntrye v. Gibson (1908), 1908 CanLII 283 (MB CA), 17 Man. R. 423, 8 W.L.R. 202 (C.A.) Statutes referred to Dependant's Relief Act, R.S.O. 1960, c. 104 Estates Act, R.S.O. 1990, c. E.21, ss. 7 [as am.], 44 [as am.], 45 [as am.] Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 61(2) Surrogate Courts Act (U.K.), 10 Edw. VII., c. 31, s. 69(1) Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rules 2.01, 2.02, 3.02(2), 13.1.01(1) [as am.], 13.1.02 [as am.] 38.03(1) [as am.], 39.01(2) [as am.], 75 [as am.], 75.04, 75.08(1), 75.1.02 Authorities referred to Armstrong, A.E.P., Estate Administration: A Solicitor's Reference Manual, looseleaf (Toronto: Carswell, 1984) Hull, R., and I.M. Hull, MacDonnell, Sheard and Hull on Probate Practice, 4th ed. (Toronto: Carswell, 1996) Ontario Law Reform Commission, Report on Administration of Estates of Deceased Persons (Toronto: Ontario Law Reform Commission, 1991) Schnurr, B.A., Estate Litigation, 2nd ed., looseleaf (Toronto: Carswell, 1994) Theriault, C.S., Widdifield on Executors and Trustees, 6th ed., looseleaf (Toronto: Carswell, 2002) Sullivan, R., Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths Canada Ltd., 2002)

Marco Drudi, for appellant. John Lo Faso and Richard Hammond, for respondent.

The judgment of the court was delivered by

[1] LANG J.A.: -- This is an appeal from the decision of MacDougall J., which found that a notice of contestation that [page177] was delivered pursuant to ss. 44 and 45 of the Estates Act, R.S.O. 1990, c. E.21 was a nullity. The application judge consequently dismissed the appellant's application, amongst other relief, for an order that the respondent be deemed to have abandoned any claims she has against the deceased's estate and that any claim she has is forever barred.

Background

[2] Angelo Omiciuolo died intestate on November 15, 2005. At the time of his death he was separated from the appellant, Giovanna Omiciuolo. Although Angelo and Giovanna had signed a separation agreement in 1998 in which the appellant released all her rights in his estate, including her right to act as administrator, the appellant applied for and received a Certificate of Appointment of Estate Trustee Without a Will in Toronto, where Angelo lived at his death. [^1]

[3] The respondent, Luciana Pasco, alleges that she met the deceased in 1998, began a relationship with him in early 1999, and lived with him as his common law wife from 2000 until his death. The appellant takes the position that the respondent was not the deceased's spouse but his housekeeper and that she never resided in the deceased's home.

[4] On February 7, 2006, the appellant served the respondent with an application returnable in Newmarket. The appellant, amongst other relief, claimed vacant possession of the deceased's Toronto home or, alternatively, sought occupation rent from the respondent and the sale of the property. At the same time, the appellant served the respondent with a notice of contestation, styled under the Newmarket action, contesting the respondent's claim on the basis that the respondent was neither a spouse nor a dependant of the deceased and that the Toronto property was not a matrimonial home. The notice, issued pursuant to ss. 44 or 45 of the Estates Act, provided that if the respondent did not apply for an order allowing her "claim and determining its amount . . . within 30 days . . . or within 3 months after that date if the judge on application so allows", she would be deemed to have abandoned her claim and it would be forever barred.

[5] On the return of the application in Newmarket on February 23, 2006, the parties reached what the appellant terms an [page178] "interim settlement" in which they agreed in writing to terms of a consent order, including an adjournment, document disclosure, a settlement meeting, a sale of the property with the proceeds of sale being held in trust and a term that the parties reserved "all their rights with respect to remaining claims". In addition, the terms of adjournment provided for both parties to maintain various belongings of the deceased pending settlement or an order of the court. The settlement did not explicitly address the notice of contestation, which -- if it remained outstanding and operative -- would have required the respondent to apply to the court by May 7, 2006 at the latest.

[6] On May 24, 2006, the respondent delivered a notice of cross-application in Newmarket. In addition to other relief, and directions as to whether the appellant should be the estate trustee, the respondent sought a declaration of dependency and support under the Succession Law Reform Act, R.S.O. 1990, c. S.26 ("SLRA"). She also sought declarations that she was the constructive trustee of the deceased's property, that the deceased's estate was unjustly enriched, and that she is entitled to compensation for her relationship with the deceased. Despite the requirements of ss. 44(2) and 45(2) of the Estates Act, as well as of rule 39.01(2) of the Rules of Civil Procedure, the respondent apparently did not file a supporting affidavit until September 25, 2006.

[7] In the meantime, the parties continued their efforts to negotiate a resolution of their dispute concluding with a final unsuccessful settlement meeting on August 3, 2006.

[8] On August 14, 2006, the appellant delivered a notice of return of application in Newmarket in which she purported to seek new relief -- a declaration that the respondent "be deemed to have abandoned any claim she has against the estate and that any claim she has is forever barred".

The application judge's reasons

[9] The matters were heard on September 28, 2006 in Newmarket. The respondent brought a preliminary objection on the basis that the relief being sought by the appellant was a nullity because it was made in Newmarket rather than in Toronto.

[10] The application judge considered rule 75.1.02(1)(a)(i) of the Rules, which states that Rule 75 applies to all proceedings commenced in Toronto. Rule 75.08(1) requires a notice of contestation under ss. 44 or 45 of the Estates Act to be in Form 75.13. The application judge concluded that the proper court address specified on the form "should have been the address of the Toronto Estates Office, rather than the address for the Newmarket courthouse". [page179] On this basis, he agreed with the respondent that the notice of contestation was a nullity and held that, because it was "incorrect", "the time has not commenced under s. 44(2) of the Estates Act".

[11] The application judge also observed that, in any event, the consent adjournment effectively operated as a standstill order and that, if necessary, he would have extended the time for the respondent to file her claim under rule 3.02(2) of the Rules. [^2] Finally, the application judge observed that the appellant could seek relief in Toronto and the respondent could seek an extension of the limitation period pursuant to s. 61(2) of the SLRA regarding her claim for support as a dependant.

Statutory provisions

[12] Sections 44 and 45 of the Estates Act set out a code of summary procedure for determining claims or demands against the estate of a deceased person. Section 44 deals with liquidated claims, while s. 45, which was added in 1946, deals with unliquidated claims. These sections provide that where a personal representative has notice of a "claim or demand" against the estate of a deceased person, he or she may serve the claimant with a notice of contestation in writing. In response, the claimant may, "[w]ithin thirty days after the receipt of such notice of contestation or within three months thereafter . . . upon filing . . . a statement of their claim verified by affidavit and a copy of the notice of contestation, apply to the judge of the Superior Court of Justice for an order allowing the claim and determining the amount of it". If the claimant fails to make such an application, the claimant is "deemed to have abandoned the claim and it is forever barred".

Analysis

[13] I agree with the result reached by the application judge that the appellant's application for a declaration to bar the respondent's claim must be dismissed. However, I do so for the reasons that follow.

(a) Irregularity rather than a nullity

[14] I disagree with the application judge's characterization of the notice of contestation as a nullity because it was issued in Newmarket rather than in Toronto.

[15] The appellant applied to be the administrator in Toronto, where the deceased had a "fixed place of abode" at death, because [page180] she was required to do so under s. 7 of the Estates Act. However, she issued the notice of contestation in Newmarket. It is reasonable to infer that she likely did so to avoid the rule 75.1.02 mandatory mediation requirement for estates matters in Toronto.

[16] Even if the appellant was entitled to choose Newmarket as her place of commencement under rules 38.03(1) and 13.1.01(1), the respondent unquestionably attorned to the Newmarket jurisdiction. She did so when she issued a notice of appearance in that court, when she attended on the return of the appellant's initial application and agreed to the interim settlement, and when she filed her own cross-application with the Newmarket court. Moreover, even if the proceedings should have been commenced in Toronto and not Newmarket, the failure to do so renders them only an irregularity that could have been remedied by a transfer of the proceedings from Newmarket to Toronto. See rules 2.01 and 2.02 as well as rule 13.1.02 of the Rules. Accordingly, I cannot agree with the application judge that the appellant's proceedings were a nullity.

(b) Claim or demand

[17] Since the notice of contestation could not be dismissed as a nullity, the question remains whether the respondent's claims are deemed to have been abandoned. This depends on the interpretation to be given to ss. 44 and 45 of the Estates Act, which applies to a "claim or demand" made against an estate.

[18] The interpretation of "claim or demand" must be determined in the context of the legislation and consistent with its purpose. See Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths Canada Ltd., 2002), at p. 1.

[19] The purpose of the provisions, as described in Rodney Hull and Ian M. Hull, MacDonnell, Sheard and Hull on Probate Practice, 4th ed. (Toronto: Carswell, 1996), at p. 329, is "to expedite the winding up of the estates of deceased persons by affording to personal representatives a means of determining within a reasonable time the legal validity of claims which they think should be contested". Noting that the procedure is seldom used, the authors conclude that the claims or demands captured by the provisions are those brought by creditors. At p. 331, they also list other types of claims that have been found to fall outside the parameters of the provisions, such as legacies, mortgage enforcement claims, a donatio mortis causa, and dower claims:

The "claim or demand" referred to in subs. (1) is clearly a claim or demand against an estate by a creditor for payment of a money demand. Where a [page181] claimant sought to establish a donatio mortis causa in respect of moneys deposited in a savings bank to the credit of the estate, it was held this did not come within the section because the Judge was not asked to establish a debt against the estate by a creditor, but something in the nature of a decree or declaration that would make the administration a trustee of the moneys for the donee. [^3] The words "claim or demand" do not extend to a claim for tort for unascertained damages before judgment recovered therefor. [^4] Nor to a claim for a legacy. [^5] Nor to a claim for foreclosure; [^6] nor to a claim for dower after the widow's death. [^7] But apparently it would cover a claim that a promissory note given by the claimant to the deceased had been paid off by services rendered to him during his lifetime. [^8] (Emphasis added)

[20] The nature of ss. 44 and 45 claims as third party claims is also discussed in Brian A. Schnurr, Estate Litigation, 2nd ed., looseleaf (Toronto: Carswell, 1994), at 8.3:

The sections clearly anticipate claims by third parties as opposed to beneficiaries or legatees of the estate. It would appear that the type of claims which the sections address are money claims -- the sections do not relate to any claims arising from tort. See also Anne E.P. Armstrong, Estate Administration: A Solicitor's Reference Manual, looseleaf (Toronto: Carswell, 1984), at 3-44. To the same effect, Carmen S. Theriault, Widdifield on Executors and Trustees, 6th ed., looseleaf (Toronto: Carswell, 2002), at 3.4.4 says that a claim or demand is "clearly a claim or demand against an estate by a creditor for payment of a money demand".

[21] The language "claim or demand" was considered in Re Graham, supra, which was decided under the predecessor provision of s. 69(1) of the Surrogate Courts Act (U.K.), 10 Edw. VII. c. 31. In that case, Teetzel J., sitting on appeal from the Surrogate Court, held that "claim or demand", when read in light of the section as a whole, referred to a claim or demand against the estate by a "creditor" for payment of a money demand. On this basis, a claim of a donatio mortis causa was held to be neither a [page182] claim nor a demand. The court observed that such a claim was in the nature of a declaration that the moneys ceased being part of the estate.

[22] This interpretation was adopted in London & Western Trust Co. v. Sale, supra, a case concerning a claim to enforce a mortgage. In that case, Hogg J. concluded that a claim or demand "must be held to be claims or demands for the payment of money, and not claims or demands of any other nature or character". Accordingly, like a claim for declaratory relief, a claim for a judicial sale or for foreclosure and possession of land in the mortgage context was held not to fit within the meaning of a claim for money.

[23] Although s. 45 was added to predecessor legislation in 1946 to address unliquidated claims, I do not see this addition as changing the intent of the legislature. While s. 45 sets out a modified summary procedure, there is nothing in that section to suggest that the language "claim or demand" should be given a different interpretation when it is unliquidated than when it is liquidated. Moreover, the intent to restrict the summary procedure to claims of creditors remained in s. 44, with s. 44(6) requiring a judge to "direct the creditor to bring an action for the recovery or establishment of the creditor's claim".

[24] Accordingly, in my view, the respondent's claims for declaratory relief, which is the nature of her claim under the SLRA as well as her other claims arising from her relationship as a spouse, do not fall within the meaning of a "claim or demand" under ss. 44 and 45 of the Estates Act.

[25] I find support for this conclusion in s. 61(2) of the SLRA, which provides for a six-month limitation period that can be extended in proper circumstances. This provides a relatively brief limitation period in recognition of the benefits of an expeditious administration of an estate, while also providing a reasonable time frame after the death of a deceased for his or her dependant to advance a claim. In my view, this limitation period, which appropriately permits an extension of time in proper circumstances, governs a dependant's claim for relief, and not the limitation period set out under ss. 44(2) and 45(2) of the Estates Act. Moreover, I observe that the Estates Act does not permit a judge to grant an extension of time for creditors' claims, while the SLRA allows for an extension of time for a dependant claiming relief. In these circumstances, in my view the limitation provisions for dependants under the SLRA do not conflict with the provisions of the Estates Act dealing with creditors' claims.

[26] I also find two other decisions helpful. In Lawrence (Re), supra, Kelly J., sitting on appeal from the Surrogate Court, rejected the argument that the amendment adding unliquidated [page183] claims expanded the scope of what are presently ss. 44 and 45 of the Estates Act to include any claim made against an estate. In his opinion, those provisions relate only to creditors' claims. In Brill (Re), 1967 CanLII 259 (ON SC), [1967] 2 O.R. 586, [1967] O.J. No. 1056 (Surr. Ct.), Clunis Surr. Ct. J. explained why he rejected the argument that a claimant under the then Dependants' Relief Act, R.S.O. 1960, c. 104, fit within the definition of a creditor [at para. 8]: "I conceive that an applicant under the Dependants' Relief Act is not a creditor of the estate. He is a claimant under a statute passed to empower the Court to alter the terms of a deceased's will so as to ensure adequate provision for the maintenance of such an applicant."

[27] In my view, the interpretation I have reached is consistent with the findings of the Ontario Law Reform Commission's Report on Administration of Estates of Deceased Persons (Toronto: Ontario Law Reform Commission, 1991). In that report, the OLRC acknowledged the interpretation in the case law of the language "claim or demand" as referencing creditors' claims and not third party claims. The Report concluded at p. 196 that "there appears to be no reason to restrict the proposed notification and contestation procedures to aeclaims and demands', as currently interpreted". The OLRC was of the opinion, in view of the purpose of the regime, that "claims and demands" should include all third party claims whether arising in contract, tort, property interest or any other cause. However, the OLRC's recommendations have not been adopted by the Ontario legislature.

[28] I am not persuaded to a contrary view by the two recent authorities relied upon by the appellant. In Ethier v. Raspberry, [1997] O.J. No. 666, 16 E.T.R. (2d) 197 (Gen. Div.), Huneault J. held a claim based on quantum meruit, amongst other grounds, to be barred because the plaintiff failed to comply with the time limitations of ss. 44 and 45 of the Estates Act. He based his conclusion on the New Brunswick Queen's Bench decision in Dunn v. McNeil Estate, 1995 CanLII 3898 (NB QB), [1995] N.B.J. No. 347, 8 E.T.R. (2d) 313 (Q.B.). However, it appears that neither court was provided with the long-standing line of authorities regarding the nature of the "claim[s] and demand[s]" encompassed under the summary procedure for notification and contestation and neither decision undertakes an analysis of the applicable provisions. In those circumstances, I do not find the conclusions reached in these cases to be helpful.

(c) Notice of claim lapsed

[29] In any event, I agree with the motion judge that the consent order adjourning the proceedings operated at a minimum as a standstill agreement with respect to the notice of contestation. [page184] Moreover, in my view, the notice of contestation lapsed by the time the respondent filed her notice of cross-application.

[30] When the parties reached their interim settlement, they clearly intended to embark on a course of document disclosure and settlement discussions. It was implicit in the wording of the adjournment terms that the running of time under the notice of contestation was suspended. It would be absurd to suggest that the respondent agreed to an adjournment to negotiate claims that would be barred if she took no court action within 30 days, or at most three months. Further, the continuation of the suspension is evident from the parties' conduct over the ensuing five or six months as they continued their negotiations. At no time during this period did the appellant attempt to revive the notice of contestation, deliver a new notice of contestation, or return the matter to court. It was not until August 14, 2006, six months after the notice of contestation was first issued, and almost three months after the respondent delivered her notice of cross-application, that the appellant purported to seek a declaration that the respondent had abandoned her claim. In doing so, the appellant did not take the position that she was reviving the February 7 notice of contestation, but instead argued that it had already expired.

[31] However, it was patently obvious throughout that the respondent had not abandoned her claim. Not only had she engaged in months of negotiations with the appellant, but she had issued a claim against the estate seeking relief, including relief under the SLRA. In my view, at that time, whether by acquiescence, waiver or estoppel, the notice of contestation had lapsed.

Conclusion

[32] In summary, I conclude, first, that the issuance of the notice of contestation in Newmarket was an irregularity and not a nullity. Second, the respondent's claims do not fall within the meaning of a "claim or demand" under ss. 44 and 45 of the Estates Act. In any event, the consent order operated to suspend the notice of contestation, which thereafter lapsed. Accordingly, the respondent's claims are not statute barred pursuant to ss. 44(2) and 45(2) of the Estates Act. I would dismiss the appeal and return the outstanding matters, including any relief requested to extend the time under s. 61(2) of the SLRA, to the court in Newmarket for transfer or appropriate disposition.

[33] As the respondent has been successful, she is entitled to costs of the appeal, which I would fix in the amount of $7,000, inclusive of disbursements and Goods and Services Tax.

Appeal dismissed.

Notes

[^1]: The respondent challenged this appointment in a notice of cross-application but apparently did not argue the point before the application judge, nor did she apply under rule 75.04 [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] to revoke the appellant's appointment.

[^2]: However, that application was not before him and he did not grant that relief in the formal judgment.

[^3]: Graham (Re) (1911), 25 O.L.R. 5, [1911] O.J. No. 3 (H.C.J.).

[^4]: McIntrye v. Gibson (1908), 1908 CanLII 283 (MB CA), 17 Man. R. 423, 8 W.L.R. 202 (C.A.) and Grant v. Weat, [1986] O.J. No. 47, 23 O.A.R. 533 (C.A.).

[^5]: Lawrence (Re), [1950] O.J. No. 172, [1950] O.W.N. 571 (H.C.J.).

[^6]: London & Western Trust Co. v. Sale, 1936 CanLII 101 (ON SC), [1936] O.R. 244, [1936] O.J. No. 198 (H.C.J.).

[^7]: Greisman (Re), 1954 CanLII 364 (ON SC), [1954] O.J. No. 628, [1954] O.W.N. 793, [1955] 1 D.L.R. 741 (Surr. Ct.). See also Casselman (Re) (1974), 1974 CanLII 783 (ON SC), 4 O.R. (2d) 166, [1974] O.J. No. 1935 (H.C.J.), vard (1974), 1974 CanLII 656 (ON CA), 6 O.R. (2d) 742, [1974] O.J. No. 2223 (C.A.).

[^8]: Dowsley (Re), [1935] O.J. No. 89, [1935] O.W.N. 545 (H.C.J.).