COURT FILE NO.: 05-107/14
DATE: 20151203
SUPERIOR COURT OF JUSTICE - ONTARIO
IN THE MATTER OF THE ESTATE OF ELIAS GEFEN, deceased
RE: YEHUDA GEFEN, Applicant
A N D:
HENIA GEFEN, personally and as estate trustee of the Estate of ELIAS GEFEN, HARVEY GEFEN and HARRY GEFEN, Respondents
Application under Part V of the Succession Law Reform Act, Ontario
BEFORE: MESBUR J.
COUNSEL: Chris Graham for the Applicant
R.B. Moldaver Q.C. for the Respondent Henia Gefen
Aaron Blumenfeld for the Respondent Harry Gefen
Robin Spurr for Ronald Rutman, Estate Trustee During Litigation (ETDL) of the Estate of Elias Gefen
HEARD: November 23, 2015
E N D O R S E M E N T
[1] Harvey Gefen, Yehuda (Ed) Gefen and Harry Gefen are brothers. Their father, Elias Gefen died October 28, 2011 at the age of 89. Their elderly mother, Henia Gefen survives him. She is now 93.
[2] Elias died testate, leaving both a primary and secondary will. Under both wills he named his spouse Henia as estate trustee and left his entire estate to her. The assets covered by the primary will exclude shares and loan receivables which he may own at the time of his death in private corporations. The secondary Will is made for the limited purpose of disposing of any and all interests he may have in:
1393522 Ontario Limited, 1585708 Ontario Ltd. and Dundas-Thickson Properties Ltd., including the shares, other interests and indebtedness owed by me in or from any corporation that is, within the meaning of the Income Tax Act of Canada, R.S.C. 1985, c.1 (5th Supp.) a private corporation that is controlled by me immediately before my death, including but not limited to any shares or indebtedness of 1393522 Ontario Limited and 1585798 Ontario Ltd. or any successor corporation thereto, or any shares or securities received in exchange or substitution for such shares or indebtedness of any successor corporation.
[3] In both the Primary and Secondary Wills, the three sons are named as Estate Trustees in their mother’s stead if she predeceases their father, or is unable or unwilling to act as Estate Trustee.
[4] Although named as Estate Trustee under both wills, Henia has never applied for probate or for a certificate of appointment as Estate Trustee.
[5] On this motion, the middle son Yehuda (who goes by the name Ed, or Eddie) seeks an order for temporary dependant’s support, both by way of periodic support and a lump sum. His motion is framed as seeking payment out of his mother’s assets, since he alleges his mother now has all the late father’s assets under her control.
[6] Ed is now 64 years old. From about 1973 to 1997, to the best of his ability, Ed helped his father running a carpet store in Brampton. The store closed in 1997. Ed says he has not worked since then. Ed has suffered from polio since contracting the disease at the age of 2. He has little or no use of one of his arms, and the other dominant arm troubles him with tendonitis, tendonosis and a torn rotator cuff. He had a stroke in 2012, a heart attack in 2013 and has high blood pressure. He was recently diagnosed with sleep apnea and requires a CPAP machine to control the condition. He says he has not had the necessary funds to buy it. Ed says he also needs urgent dental work and new orthotics. He claims he requires immediate financial assistance to pay for these medical needs.
[7] Ed takes the position he has never worked outside the home for wages, other than in what might be called “benevolent” employment by his late father. As far as I can tell, he has never worked for an arms’ length employer at any time during his 64 years. His last active employment was in the family carpet store, and was 18 years ago.
[8] Ed says since then, if not before, his father provided him with whatever money he needed to meet his day to day expenses. Ed has produced all his banking records. They show that in the year before the father died, Ed deposited just under $325,000 into his Bank of Nova Scotia chequing account. Ed’s uncontradicted evidence is that the money came from the father.
[9] Although Henia suggests the money Ed received from his late father was employment income, Ed’s tax returns do not bear this out. He has produced his returns or Notices of Assessment from 2007 onward. They show no employment income at all. Instead, for taxation years 2007 to 2011 the notices of assessment reflect modest “business income”, which is netted out at a lower figure after deducting business expenses. Since I do not have the actual returns for the years in which Ed had this business income, I do not know either the nature of the “business” or the type or types of expenses that Ed wrote off against that income. His returns, however, were always prepared by an accountant. I note as well that Ed’s “business income” ceased after his father’s death.
[10] Apart from this “business income”, Ed’s returns show virtually no other income. Since December of 2012 Ed has received CPP. As of 2015, that gives him about $551 per month. Ed’s banking records also show he occasionally receives a GST rebate. Neither his banking records nor his tax returns show any other income since the father died.
[11] When father died, Ed had several hundred thousand dollars in his bank account. As I have said, in the year before his death, father had given large sums of money to Ed. He has lived on that money since then. Initially, after father died, Henia provided Ed with some monthly support voluntarily. After she stopped payments, the parties entered into a without prejudice arrangement for Ed’s support. That arrangement has now ended. As of April of this year Ed had only $2,000 in the bank. This lack of funds and termination of the without prejudice support payments have prompted this motion for dependant’s support.
The general legal framework:
[12] The legal framework for support of dependants is found in Part V of the Succession Law Reform Act. (SLRA). That part sets out the basis for and the criteria to consider in deciding issues of dependant support. Dependency is the foundation for any successful claim.
[13] Section 58(1) of the SLRA says:
Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate for the proper support of the dependants or any of them.
[14] A “dependant” is defined in s. 57 as:
“dependant” means,
(a) the spouse of the deceased,
(b) a parent of the deceased,
(c) a child of the deceased, or
(d) a brother or sister of the deceased,
to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death;
[15] If a person is found to be a dependant, the court must consider a number of enumerated criteria in sections 62 and 63 of the SLRA in deciding the appropriate level of support. These criteria include, but are not limited to, the dependant’s means and needs and capacity to contribute to his or her own support, and the circumstances of the deceased at the date of death. The court may make periodic or lump sum orders, and may require the payments to be made out of either income or capital.
[16] Section 64 permits the court to make an interim order in circumstances where all the matters in sections 62 and 63 have not yet been ascertained.
[17] On this motion for temporary or interim dependant’s support, I must answer five questions:
a) First, is Ed a dependant of the deceased within the meaning of the SLRA?
b) Second, if he is, does the will make adequate provision for his support?
c) Third, if he is a dependant and there is inadequate provision for his support, what is the appropriate level of temporary support to which he is entitled pending final resolution of this case?
d) Fourth, is Ed’s claim time barred? and,
e) Fifth, if the ETDL has no estate assets under his control at this time, should Henia be required to make the payments to Ed?
Discussion:
[18] I will answer each of the questions in turn.
Is Ed a dependant?
[19] Since Ed is clearly a child of the deceased, he falls into the first part of the definition of dependant. However, he must also satisfy the second part of the definition, and show that the deceased was providing support to him immediately before his death.
[20] Ed argues that all the money in his bank accounts (except for CPP) came from his father, who always provided him with the money he needed to pay his expenses. I have set out Ed’s evidence in some detail, above.
[21] In Perkovic v Marion Estate[^1] D.M. Brown J (as he then was) helpfully summarized the principles arising from the applicable case law on motions for interim dependant’s support. He enunciated them as follows at paragraph 9 of his reasons:
On a motion for interim support the onus is on the applicant to establish some degree of entitlement to, and the need for, interim support. On an interim motion a court can weigh and assess the evidence, to the extent permitted by the nature of the evidence and any pre-hearing testing of it. If, after such assessment, the motions court concludes that the record contains credible evidence from which one could rationally conclude that the applicant could establish his claim for support, then an order for interim support may issue.
[22] As I see it, the record before me contains credible evidence from which one could rationally conclude that Ed could establish his father was providing support immediately before his death. I therefore conclude that Ed has established his he is dependant, for the purposes of this motion for temporary support.
[23] The next part of the test for dependant’s support is to determine whether the testator made adequate provision for the dependant.
Does the will make adequate provision for Ed as a dependant?
[24] There is no question the will does not make adequate provision for Ed: it makes none at all for him.
[25] This leads me to a discussion of Ed’s means and needs, and what level of support, if any, Ed needs.
Appropriate level of temporary support
[26] I will deal with Ed’s means first. He has little money in his bank account. He is 64 years old, and suffers from childhood polio and its significant sequelae in post- polio syndrome.
[27] Ed has produced Notices of Assessment for taxation years 2007 to 2011, inclusive. He has also produced copies of his income tax returns for 2012, 2013 and 2014. His total income, as shown on line 150 is as follows:
2007 $15,783
2008 $16,872
2009 $36,199
2010 $13,528
2011 $ 9,406
2012 $ 2,118
2013 $ 7,659
2014 $ 7,188
[28] Ed now receives CPP/OAS benefits. These are included in the total income figures shown above for 2012, 2013 and 2014. In the prior years, Ed shows gross “business income” ranging from a high of $50,000 in 2009 to a gross of somewhere between $25,000 and $32,000. It is unclear what this “business income’ represents, although Ed’s affidavit says these sums represent some of the money his late father gave him. He swears he reported these cheques as income. He goes on to say his father provided additional support to him as well, to cover his other expenses. I find this credible on the record before me. Since Ed’s rent alone costs him $19,740 per year and is more than his total income has ever been in any year other than 2009, the shortfall must have come from his father’s support.
[29] Ed’s only ability to contribute to his own support is about $551 per month from CPP. His savings have been exhausted, and he has no other means to support himself.
[30] In response, Henia’s lawyer suggests that Ed can and should work. For the purposes of this motion, I disagree. Ed is a 64-year old man with some significant health issues, including polio/post-polio issues, a heart attack and stroke, and no evidence of his ever working for an arms’ length employer. According to his evidence, he has not worked since 1997 when the family carpet store closed. As I see it, Ed’s ability to work and the extent to which, if any he is able to contribute to his own support are questions for trial. For the purposes of this motion, I have no hesitation in finding Ed is in need. On this record, I cannot see he has any ability to contribute to his own support in excess of the CPP/OAS benefits he currently receives.
[31] Those benefits would not cover even one third of his rent. I am persuaded, on the record before me, that Ed is unable to meet his own reasonable expenses out of his own resources.
[32] What, then, is the appropriate amount of dependant support Ed should receive? Ed suggests he needs support payments of about $7,200 per month to meet his basic living expenses, and an additional lump sum of $12,776 plus HST to meet what he characterizes as some extraordinary and pressing medical and dental expenses.
[33] Henia’s lawyer argues that if Ed is found to be dependant, his stated expenses are far too high. At best, they should be reduced to no more than $4,500 per month. He argues that if Ed is as disabled as he says he is, there is no reason for him to operate a vehicle. He asks for a significant reduction on that account.
[34] There is no suggestion that Ed’s car is a recent acquisition, or that he only recently has begun to drive. I see no reason to deprive Ed of his customary means of transportation.
[35] Ed’s stated fixed expenses include his rent, parking, cable, telephone and internet which together come to $2,160 per month. Ed also claims a total of $1,148 to cover his car lease, gas, oil and associated vehicle expenses. I do not find these costs unreasonable.
[36] In addition, Ed claims to need $240 per month for housekeeping, $583.71 for prescription medication, $120 per month for dry cleaning, $200 per month for dental, $1,500 per month for food, restaurants and takeout, $800 per month for clothing, sheets and alterations, $60 for orthotics, $400 for vacation and $300 for miscellaneous expenses. These items come to an additional $4,203 per month.
[37] Dental expenses and orthotics are part of the lump sum Ed claims. Given my comments below on Ed’s claim for a lump sum, I do not include these expenses as part of Ed’s monthly needs in the interim.
[38] The food/restaurant/takeout expense is nearly $350 per week for a single individual, a figure that strikes me as inordinately high. I have no evidence of grocery bills or restaurant receipts. Ed does not suggest he has any particular dietary needs or requirements that would make these expenses so high.
[39] I also have no evidence of any planned vacation, or what “miscellaneous” expenses are not covered by the other listed expenses. I have no evidence of any particular clothing/alteration needs Ed has in the short term. I would reduce (but not entirely eliminate) his expenses on all these accounts.
[40] Ed claims $583 per month for prescription medications. I note that Ed is covered by Trillium drug benefits. His pharmacy records show that he has paid only $28 per month out of pocket for medication since August. His expenses must be reduced accordingly.
[41] Overall, it seems to me Ed’s reasonable needs on a temporary basis are more in the range of $5,500 per month. Since he receives CPP of just over $500 per month, his shortfall is about $5,000 per month. This is the appropriate level of temporary monthly dependant’s support.
[42] As to the pressing medical and dental expenses, Ed says he needs to replace his orthotics, which are now 7 years old and should be replaced every two years. He says new orthotics will be about $700. Since he has been diagnosed with sleep apnea, he says he needs $560 to pay for a CPAP machine. Finally, he claims to need just over $10,000 to address urgent dental needs, including paying for dental surgery he underwent at the end of October.
[43] I accept that Ed’s medical and dental expenses are somewhat pressing. The amount he claims, however, is significant. As I see it, a lump sum of $5,000 would go a long way toward Ed’s meeting some of these costs. He can allocate it as he sees fit toward those expenses.
[44] In all, and without prejudice to the position of any party, I find the sum of $5,000 per month is an appropriate amount of temporary support for Ed, taking into account his own limited ability to contribute to his own needs. I also find that a lump sum payment of $5,000 can meet Ed’s most pressing medical and dental needs.
[45] In coming to my conclusion about the appropriate amount of support, I have also considered, as I must, the various relevant factors under s.62(1) of the SLRA. I have commented on Ed’s current assets and means. In the future, his likelihood of acquiring additional assets will arise only if he succeeds in his claims in the other litigation.
[46] As a child of the deceased, Ed’s relationship with him was close, and lasted all of Ed’s life, until the father’s death. The financial provision the father made prior to his death has been exhausted.
[47] The overall value of the estate has not yet been determined. What is clear, however, is that the father was a man of some wealth, owning interests in various plazas, and having joint or sole bank accounts at the date of his death with some $3 million. Ed puts the value of the estate at close to $30 million. Whatever the figure is, I have no doubt the father’s estate had sufficient means to provide the level of support I have found appropriate.
[48] Although Ed makes a retroactive claim, I am not inclined to grant it.[^2] The application judge will be in a far better position than I am to determine that issue. Also, I am mindful of the risk that the trial judge may decide Ed is not a dependant. If that is the outcome, then Ed would be faced with a very significant repayment obligation. In order to balance the interests of all the parties, I defer the issue of retroactive support to trial. Temporary support payments will therefore begin effective December 1, 2015, unless I determine Ed’s claim is time barred.
Is Ed’s claim time barred?
[49] Henia suggests that Ed’s claim for dependant’s support is time barred. She relies on s.61(1) of the SLRA which requires a claim for dependant’s support under s. 58 to be made within 6 months of the grant of probate.[^3] Henia never applied for probate. She takes the position that since she was the sole beneficiary of the estate, there was no need for her to do so, and she simply distributed the estate to herself.
[50] Ed argues that since Henia has never applied for probate, the limitation period has not yet begun to run. I agree. Although Henia suggested that to come to this conclusion would be an “absurdity”, and thus cannot be the law, her counsel failed to provide me with any reported case to support his position. There is no provision in the SLRA that creates any other limitation period for the dependant’s claim, other than from the grant of probate. It would have been an easy matter for the statute to have created another or additional limitation period where probate was not granted. For example, the statute might have said the limitation period is twelve months from the date of death, or six months from the grant of probate, whichever is earlier. It did not. Henia had the option to take the necessary steps to start the limitation period running. She did not.
[51] Accordingly, I reject the argument that Ed’s claim is time barred.
Who should pay the temporary support?
[52] Section 61(2) of the SLRA permits the court to allow a dependant to apply at any time for dependant support, even after the six month limitation period. In those circumstances, however, the claim is limited to the estate remaining undistributed at the date of the application. Since I have determined Ed’s claim is not time barred under s. 61(1) it follows that his claim is not limited in this fashion and can be made against the entire estate, whether distributed or not.
[53] Accordingly, the claim is not limited to the estate remaining undistributed. If that were the case, there would be nothing to pay the claim, since Henia has distributed the entire estate to herself. As I see it, she did so at her peril. It would have been a simple matter for Henia to apply for probate. That would have set the limitation clock in motion. Once six months had passed from the grant of probate, Ed’s claim would have depended first, on the court’s exercising its discretion in his favour under s. 61(2), and second, would have been limited to the undistributed portion of the estate.
[54] The Supreme Court of Canada addressed the policy behind these provisions in Gilles v. Althouse et al[^4] when it considered Saskatchewan’s mirror legislation to the SLRA. The court noted there is nothing in the section that restricts an executor from distributing the estate during the six months following the grant of probate. Nothing explicitly authorizes the executor to do so either. The court said, however:
In my view the true meaning and effect of the section is to afford an applicant a period of six months after probate within which to obtain an order as to the entire estate, but if he or she delays and makes application after expiry of the six-month period the claim can only be against the portion of the estate then remaining undistributed … If, as they appear to have done, the executrices have distributed the estate in a manner contrary to the terms of the will as so varied, they will be under a duty to account.
[55] What I take from this is that the SLRA creates a temporal window within which the dependant must apply, failing which the estate trustee is free to distribute the estate. The assets distributed after the temporal window has closed will no longer be subject to the dependant’s claim. That is not the case here, since the temporal window never opened. There has been no grant of probate. I therefore accept Ed’s position that his application is made against the whole of his father’s estate, distributed or not.
[56] This application is not the only piece of ongoing litigation among these parties. Henia has commenced an action against her former lawyer, and her sons Ed and Harry.[^5] It is in that action the court appointed the ETDL and ordered, among other things, the following:[^6]
1(d) The ETDL shall be entitled to take custody and control of the estate assets and recover on any debts if deemed appropriate, regardless whether the assets have since been transferred into the names of others, or title is held in the names of other parties, or the present estate trustee has purported to release debts. The foregoing is without prejudice to the ETDL’s right to identify and take steps, if deemed appropriate, to recover any material assets which belonged to Elisa during the three year period prior to his passing …
1(m) An order that Henia refrain from dissipating, conveying, transferring or otherwise disposing of any of the assets of the estate of Elias and her own estate, including making gifts to any party in the aggregate of over $10,000, and an order that Harvey refrain from dissipating, conveying, transferring or otherwise disposing of any of the assets which originated in the estate of Elias;
1(n) That all parties to the Estate referenced in this order, including Henia Gefen and Harvey Gefen, cooperate in ensuring that it is implemented both in letter and spirit, including turning over to the ETDL the assets of the Estate of Elias, as defined in paragraph 1(d) hereof, and all documents and information in regard thereto.
[57] No assets have been transferred to the ETDL, notwithstanding this order. From Harry’s evidence, it would appear the Estate had significant assets and funds at the time of the father’s death.
[58] As to the joint accounts or assets held jointly by Henia and the father, s. 72(1) of the SLRA deems the value of those accounts part of the estate for the purposes of dependant support. Henia has failed, however, to transfer any of those joint accounts to the ETDL, notwithstanding Newbould J’s order.
[59] Ordinarily, the estate would be required to make any necessary dependant’s support payments. Here, however, the ETDL has no funds in hand, notwithstanding the orders made by Newbould J requiring the ETDL to take over management and control of the estate’s assets, even those already distributed.
[60] Since the estate has been distributed in its entirety to Henia, and since Ed’s claim attaches to the whole of the estate, whether distributed or not, Henia is the only person who has access to the entirety of the estate assets to satisfy the dependant support order. Therefore, Henia shall be responsible for paying the temporary monthly support to Ed. She distributed the estate to herself at her peril, and now must bear the responsibility of making the payments that otherwise would have been payable out of the estate itself, had she not made those distributions.
How can potential prejudice be avoided
[61] Because this is an order for temporary support, there is always the risk that the application judge, who will have a full evidentiary record, may come to a different conclusion than I have about whether Ed is a dependant. Henia raises the issue of how the estate will be made whole if the trial judge ultimately determines that Ed is not dependant, or orders lower support than what I have ordered on a temporary basis.
[62] On any motion for temporary support, the court is generally dealing with an imperfect evidentiary record. As is the case in family law matters, it seems appropriate that any temporary order be made without prejudice to the ultimate positions of the parties. The application judge will be in a far better position than I am to determine entitlement (if any), quantum, commencement date and the appropriate payor. If my temporary order is in error, the question arises as to how the estate or Henia could be repaid the sums paid out in temporary support.
[63] There is a simple answer to this question. Ed holds a 1/3 interest in the home in which Henia lives. It is municipally known as Unit 605, 11 Townsgate Drive, Vaughan, Ontario. Title was formerly held 1/3 by each of Ed, his mother and his father. On his father’s death, the father’s 1/3 interest passed to Henia.[^7] Ed’s 1/3 interest can be charged with the repayment obligation if the application judge ultimately decides Ed is not dependant. I authorize this order to be registered against Ed’s 1/3 interest in the property, in order to secure any potential repayment.
[64] The other protection is one which Ed himself proposes. Ed and Harry are contesting their father’s will in yet another proceeding. They assert to be entitled to outright shares in the estate. Ed consents to an order that any interim support paid to him will be set off against any entitlement he may ultimately be found to have in the estate.
Disposition:
[65] For all these reasons, and without prejudice to the rights of any party to argue otherwise on the return of the application, I make the following order:
a) Declaring Ed a dependant under the provisions of the SLRA;
b) Requiring Henia to pay or cause to be paid the sum of $5,000 per month to Ed for his temporary support pending final resolution of this application, with effect December 1, 2015, together with a lump sum payment of $5,000. The issue of retroactive support, if any, is reserved to the application judge;
c) If Ed is ultimately determined not to be dependant, any amounts paid to him pursuant to this order will be repaid to the payor forthwith. Ed’s interest in the property known municipally as Unit 605, 11 Townsgate Drive, Vaughan, Ontario may be charged with repayment. This order may be registered against Ed’s interest in the property in order to secure any ultimate repayment to the payor, if Ed is required to make a repayment;
e) If Ed is ultimately determined to be dependant, and no repayment of interim support is ordered, any registration of this order as set out in (c), above, shall be forthwith discharged; and
f) any interim support paid to Ed will be set off against any entitlement he may ultimately be found to have in the estate.
[66] On consent, the costs of this motion are reserved to the return of the application.
MESBUR J.
Released: 20151203
[^1]: 2008 CarswellOnt 5931 (S.C.J.) [^2]: Ed did not actively pursue a retroactive claim. The draft proposed order appended to his factum reserves the issue of any retroactivity to the applications judge. [^3]: Her counsel, in his factum, incorrectly suggests the limitation period runs from the date of death. [^4]: 1975 CanLII 206 (SCC), [1976] 1 SCR 353 [^5]: Court file No. CV-13-486451. Although the Jewish Home for the Aged, Baycrest Hospital, and Baycrest Centre for Geriatric Care were also named as defendants in that action, the action has been discontinued against them. [^6]: Order of Newbould J in CV-13-486451 dated January 27, 2015 at paragraph 1 [^7]: It is unclear on the record whether this occurred by right of survivorship or under the terms of the primary will.