Court File and Parties
Court File No.: ES-1057-16 Date: 2018/06/28 Ontario Superior Court of Justice
Between: Anna Lehmann, Applicant – and – Estate of William Lehmann, Respondent
Counsel: Ken Nathens, for the Applicant Irwin Duncan, for the Respondent
Heard: April 23 – 27, 2018
Before: The Honourable Mr. Justice G.E. Taylor
Reasons for Judgment
Introduction
[1] Anna Lehman and William (Bill) Lehmann met in 1992 and began cohabiting in 1993. Bill was 15 years older than Anna. Anna and Bill married in 1996. It was a second marriage for Bill and a first marriage for Anna. They entered into a Marriage Contract. The Marriage Contract contained a mutual release of spousal support. Bill died on November 1, 2015 at age 74.
[2] Anna commenced this proceeding by way of Notice of Application seeking payment of spousal support from the estate as well as a declaration that she is the sole beneficial owner of the home in which she and Bill were living at the date of the latter’s death.
[3] The Application was converted into an action and the matter proceeded to trial.
The Marriage Contract and Amendments
[4] When the parties began cohabiting they executed a Cohabitation Agreement dated July 19, 1993. The Cohabitation Agreement contained a release which provided that neither party had the right to receive support from the other party or the other party’s estate. The Cohabitation Agreement also dealt with the purchase and ownership of a common residence located at 370 Stoneheight Place, Waterloo. Title to the Stoneheight property was taken as tenants in common with Anna being a one third owner and Bill being a two thirds owner. Anna contributed one third of the down payment and paid one third of the household expenses including the mortgage payments. Bill paid two thirds of the down payment and two thirds of the expenses. The Cohabitation Agreement provided that it would terminate upon the marriage of the parties.
[5] The parties married on September 6, 1996 and signed a Marriage Contract which is dated December 6, 1997, effective as of the date of the marriage. Prior to the execution of the Marriage Contract, title to the Stoneheight property was converted to joint tenancy. The Marriage Contract provided that the Stoneheight property became the matrimonial home.
[6] The Marriage Contract contained a spousal support release in which each party acknowledged that they were financially independent and, despite any future changes in financial circumstances, neither would seek financial support from the other. The spousal support release was premised on Bill designating Anna as the beneficiary of his Registered Retirement Savings Plan and group life insurance policy through his place of employment, and by maintaining a life insurance policy in a sufficient amount to pay off the mortgage on the Stoneheight property upon his death. The Marriage Contract stated that the parties intended to share equally in the net sale proceeds from the sale of the Stoneheight property or any property substituted for it and to own the property outright upon the death of the first to die. The Marriage Contract contemplated that it could be amended by written agreement.
[7] Before executing the Marriage Contract, Anna obtained legal advice and her lawyer signed a certificate stating that Anna understood the Marriage Contract and was signing it voluntarily.
[8] By way of an agreement dated November 15, 2002, the parties amended the Marriage Contract (“the First Amending Agreement”). The First Amending Agreement identified property located on Lobsinger Line in the Township of Wellesley as the matrimonial home and stated that the parties owned that property, and any property into which any sale proceeds could be traced, as tenants in common. The First Amending Agreement also provided that the survivor was entitled to retain possession of the matrimonial home until the earliest of the death of the survivor, the decision of the survivor to cease residing in the home and the sale of the home. Upon the sale of the matrimonial home, the proceeds were to be divided equally between the survivor and the estate of the deceased spouse. Before executing the First Amending Agreement, Anna obtained legal advice from the same lawyer who had provided her with advice regarding the Marriage Contract.
[9] By way of an agreement dated August 18, 2011, the parties further amended the Marriage contract (“the Second Amending Agreement”). The Second Amending Agreement stated that the parties had acquired a new matrimonial home and “other properties”. The Second Amending Agreement generically identified the new matrimonial home as the property occupied by the parties as their principal place of residence in the Province of Ontario and the “other properties” as 5905 Jessup Drive in Zephyr Hills, Florida (“the Florida property”) and a share in Forest Lakes Estates Co-op Inc. (“the Co-op Share”).
[10] The Second Amending Agreement provided that the survivor was entitled to retain possession of the matrimonial home and the Florida Property subject to the same triggering events as in the First Amending Agreement with the addition of the remarriage or cohabitation in a spousal relationship. Upon the death or remarriage of the survivor both the matrimonial home and the Florida Property were to be sold and the proceeds divided equally between the survivor and the estate of the deceased spouse. If the survivor no longer wished to reside in one of the properties, that property was to be sold and the proceeds divided equally between the survivor and the estate of the deceased spouse. Lastly, the Second Amending Agreement stated that the surviving spouse would become the owner of the Co-op Share free of any claims by the estate of the deceased.
Evidence at Trial and Findings of Fact
[11] Anna met Bill in 1992. He was 15 years her senior. Bill was born on March 23, 1941 and Anna was born on November 3, 1956. Bill was just finalizing his divorce. There were two children from that marriage, Lisa Cvar and Robert Lehmann. Anna and Bill began cohabitation in July 1993 when they completed the purchase of the Stoneheight property. Bill contributed two thirds of the down payment and Anna contributed the balance. The parties took title to the property as tenants in common with Bill having a two thirds interest and Anna having a one third interest.
[12] In 1993 Bill had an ownership interest in Lehmann Bookbinding Limited, through his ownership of shares in 563930 Ontario Limited and an ownership interest in the land where Lehmann Bookbinding carried on business through the ownership of shares in 861543 Ontario Limited. In 1993 Anna worked part time as a Customer Service Representative at the Liquor Control Board of Ontario and part time in the office at Leon’s Furniture. She earned approximately $20,000 in income in 1993.
[13] At the beginning of the cohabitation, the parties entered into a Cohabitation Agreement. The Cohabitation Agreement was prepared by Paul Hagarty who was Bill’s lawyer. According to Anna she was presented with the Cohabitation Agreement and she signed it without any negotiation. Although there was a Certificate and Affidavit of Solicitor executed by Lyn Turner which stated that she was the solicitor for Anna, Anna denied seeing a lawyer, other than Hagarty, prior to signing the Cohabitation Agreement.
[14] Anna testified that throughout the period of cohabitation, all expenses in relation to the Stoneheight property were shared on a two thirds/one third basis with Bill paying the larger share.
[15] The parties married on September 6, 1996. Anna was 39 years of age and Bill was 55 years old. On the Monday following the marriage, Anna began working full time at the LCBO. As a full time employee, Anna earned approximately $38,000 per year. Once she began working full time, both spouses began to contribute equally to the household expenses including the mortgage payments.
[16] Anna testified that it took almost a year to negotiate and finalize the terms of the Marriage Contract. The initial draft of the Marriage Contract was prepared by Hagarty. Anna took the draft agreement to a lawyer by the name of Mary Anne Haney who reviewed the agreement and advised her not to sign it. Haney then referred her to Brent Salmon, a lawyer whose practice focused on family law.
[17] The initial draft of the Marriage Contract was not made an exhibit. However, based on a letter from Haney to Anna dated October 7, 1996 it would appear that the initial draft did not provide for Anna to be designated as beneficiary of Bill’s RRSP nor was there a term that Bill designated Anna as beneficiary of his life insurance.
[18] Anna testified that she was reluctant to relinquish her claim for spousal support but Bill said he would divorce her if she did not. Anna said she was forced to sign the Marriage Contract. She also testified that Salmon was aware that she was not signing the Marriage Contract voluntarily.
[19] Salmon testified that he first met Anna on April 28, 1997 for the purpose of reviewing a draft marriage contract. He had some concerns about the draft contract and in particular that there was no contemplated exchange of financial information. Accordingly he drafted a completely new contract and prepared financial disclosure on behalf of Anna. In a letter to Hagarty dated May 30, 1997 he advised that Anna was not prepared to release her entitlement to claim spousal support. He also addressed the issue of transferring title to the Stoneheight property into a joint tenancy. Salmon said he never received a response to his letter of May 30, 1997.
[20] Anna sent Salmon a note dated July 2, 1997 which read in part:
Unless he [Bill] pays me the $1,404.38 which I have paid you, I am signing nothing. This he does not know yet.
I will contact you at a later date, because trust me, this is not over yet.
Bill does want me to sign a contract, but it will be according to my terms.
[21] Salmon testified that he met with Anna on August 29, 1997 at which time she had a completely new draft agreement with her. It was very different from the draft agreement he had sent to Hagarty. He discussed with Anna the spousal support release contained in the draft agreement. He testified that Anna instructed him she would be agreeable to releasing her right to claim spousal support provided title to the Stoneheight property was transferred into joint tenancy. Bill agreed to there being a first charge against his estate in the event he died without having the agreed upon amount of life insurance and/or mortgage insurance in place, or without having designated Anna as beneficiary of his RRSP. Salmon made amendments to the draft agreement in accordance with these instructions. The draft agreement, as amended, was signed and initialed by Anna and returned to Hagarty by way of a letter dated August 29, 1997.
[22] There were three significant changes proposed by Anna and Salmon which were ultimately included in the executed Marriage Contract but which were not included in the initial draft. Those changes were the conveyance of title to the Stoneheight property into joint tenancy, the mortgage insurance being a first charge against Bill’s estate if he died without that insurance in place, and the designation of Anna as beneficiary of Bill’s life insurance policy through employment and his RRSP. The provision regarding life insurance specified that the death benefit was to be $50,000 but if the insurance was no longer provided by Lehmann Bookbinding, Bill would “use his best efforts to replace the same, provided that the cost to do so is reasonable”.
[23] Attached to the Marriage Contract were schedules of financial disclosure which showed that Bill’s net assets totalled $1,112,500 and Anna’s net assets totalled $69,500. Anna testified that Bill did not disclose his income prior to signing the Marriage Contract. Salmon testified that he asked Anna how much Bill earned in a year and she told him $100,000. There was no evidence that Salmon requested any more specific information about Bill’s annual income. There was no other evidence regarding Bill’s annual income at the time of the execution of the Marriage Contract. I therefore find that the Marriage Contract was signed on the basis of Anna’s knowledge that Bill’s annual income was $100,000.
[24] In a letter to Salmon dated October 2, 1997, Hagarty advised that the $50,000 life insurance policy on Bill’s life was a term policy to age 65. He stated that Bill could not commit to obtaining a replacement policy because he might not qualify for such insurance or the cost could be prohibitive.
[25] Anna signed the Marriage Contract on November 4, 1997. Salmon sent a letter to Hagarty dated November 10, 1997 in which he advised that Anna had executed the Marriage Contract but that he was instructed not to release it until he had received a copy of the deed transferring title to the Stoneheight property into joint tenancy. On November 21, 1997 title to the Stoneheight property was transferred into the names of Anna and Bill as joint tenants. Bill signed the Marriage Contract on December 12, 1997. I therefore conclude that Hagarty sent a copy of the deed to Salmon who then released the Marriage Contract which had been executed by Anna and which was then executed by Bill on December 12, 1997.
[26] The Marriage Contract as executed by Anna stated that she understood her rights and obligations under the agreement and that she was signing the agreement voluntarily. Salmon signed a Certificate and Affidavit of Solicitor in which he deposed that he had advised Anna with respect to the Marriage Contract, that he believed she understood the nature and effect of the contract and was signing it voluntarily. Accordingly I reject the evidence of Anna that she was forced to sign the marriage contract. The note sent by Anna to Salmon stating that the contract would be “according to my terms” shows that Anna was capable of resisting any pressure which Bill might have asserted and that she had clear objectives which she was going to make sure were attained before she signed any agreement. I find that Anna voluntarily signed the Marriage Contract after negotiating changes to the initial draft agreement which were most important to her.
[27] On July 7, 1999, Bill purchased a lottery ticket which resulted in a prize of $1,000,000. The lottery winnings were deposited into a joint bank account with Anna. A portion of the lottery prize was used to pay off the outstanding mortgage on the Stoneheight property. Some of the lottery winnings were used to purchase a home located at 2 Mair Court in St. Clements. The balance of the lottery prize was split equally between Anna and Bill which they each invested separately.
[28] On September 29, 2000, Anna and Bill purchased the Mair property, title to which was taken in joint tenancy. On May 31, 2002, Anna and Bill signed an agreement to purchase a building lot at 3343 Lobsinger Line in St. Clements subject to a severance being granted. They planned to construct a large home on the lot. The purchase of the Lobsinger property was completed on November 19, 2002.
[29] According to Anna, it was Bill’s wish to hold title to the Lobsinger property as tenants in common. Anna testified that she only agreed to hold title to the Lobsinger property as tenants in common on the condition that she have a two thirds interest and Bill have a one third interest. She said this was the basis on which the agreement to purchase was signed but Bill changed his mind after the agreement was signed. Anna testified that she signed the First Amending Agreement as a result of pressure from Bill but she was unable to recall what form the pressure took. In cross-examination, Anna testified that Bill forced her to sign the First Amending Agreement.
[30] Salmon testified that he met with Anna on June 17, 2002 regarding the purchase of the Lobsinger property. He said Anna told him that on May 26, 2002 Bill agreed that she would be a two thirds tenant in common of the Lobsinger property. Following his meeting with Anna, Salmon telephoned Hagarty. He then followed up his telephone call by sending a letter to Hagarty which is dated July 8, 2002. In the letter, Salmon stated that he had been told by Anna that she agreed to the purchase of the Lobsinger property on the basis of Bill’s representation that she would be a two thirds owner of the property as a tenant in common. The letter also made mention of Bill subsequently asserting that he wished title to the Lobsinger property to be taken as equal tenants in common in order that he would have more money to bequeath to his grandchildren. In the letter Salmon stated: “… she [Anna] is not prepared to agree to be a tenant in common of the Lobsinger property with anything less than a two-thirds interest therein.” Salmon requested that Hagarty provide a “revised Marriage Contract” which provided for the two third/one third ownership of Lobsinger Line. Hagarty did not respond to the letter.
[31] On December 3, 2002 Anna attended at Salmon’s office with a letter from Hagarty dated November 19, 2002 addressed to both Anna and Bill enclosing a draft of an agreement to amend the Marriage Contract. At the meeting, Anna advised Salmon that on November 19, 2002 the purchase of the Lobsinger property had been completed with title being taken in the names of Anna and Bill as equal tenants in common. Anna told Salmon and that she had been pressured by Bill to agree to her being a fifty percent tenant in common. Salmon advised Anna that she was not required to sign an agreement to amend the Marriage Contract but she responded that if she did not, there might be an impact on the marriage. Salmon testified that by the time he met with Anna she had already made up her mind that she was going to sign the amending agreement. He suggested an amendment to the agreement to provide that the agreement not take effect until after the completion of the sale of the Mair property in order to ensure that the amendment did not sever the joint tenancy of the Mair property.
[32] By way of a letter dated January 24, 2003, Salmon suggested to Hagarty that the agreement to amend the Marriage Contract contain a recital stating that the agreement will take effect one day after the completion of the sale of the Mair property. The First Amending Agreement contains as a recital the wording proposed by Salmon.
[33] Salmon testified that he explained to Anna the difference between a joint tenancy and a tenancy in common when he was advising her with respect to the Marriage Contract and the First Amending Agreement. Accordingly I find that Anna appreciated the difference between the two forms of ownership.
[34] Anna testified that the reason why title to the Lobsinger property was taken as tenants in common was because Bill wanted to set aside money for his grandchildren. Salmon understood that Bill wanted to assure that his equity in the Lobsinger property would eventually go to his grandchildren to fund their education.
[35] I do not accept Anna’s evidence that she was forced to sign the First Amending Agreement. I accept that she may have been unhappy that she did not achieve her goal of a two thirds ownership of the Lobsinger property but as Salmon testified, by the time she met with him on December 3, 2002, she had made up her mind to agree to the ownership of the Lobsinger property being as equal tenants in common. Anna was advised by Salmon she was not required to sign the agreement. Salmon was successful in negotiating a change to the draft agreement which was incorporated into the First Amending Agreement to preserve the joint tenancy of the Mair court property until it was sold. In cross-examination, Salmon agreed that Anna Lehmann signed the First Amending Agreement voluntarily.
[36] On September 8, 2006, Anna and Bill purchased a modular home located at the Florida property and the Co-op Share for a total purchase price of $105,304 (US). They contributed equally to the purchase price. The cost of the Co-op Share was $29,000 with the balance of the purchase price being allocated to the Florida property. Title or ownership to the Florida property and the Co-op Share was taken in the names of both Anna and Bill.
[37] In November 2009, Anna resigned from her employment at the LCBO. Her salary at the time was $52,000 annually. She said that she and Bill discussed her terminating her full-time employment and the negative impact that it would have on her pension. She said Bill suggested she quit working so that they could spend more time together at the Florida property and travelling. Anna testified that if she had continued working at the LCBO she would be earning an annual salary in excess of $60,000 by 2018.
[38] On July 21, 2010, Anna and Bill purchased a home located at 115 Foxboro Drive in Baden. The purchase price was $385,000. Title to the Foxboro property was taken in the names of Anna and Bill as joint tenants.
[39] On August 3, 2010 the Lobsinger property was sold for $620,000. The sale proceeds were used to purchase the Foxboro property and Anna and Bill each received approximately $100,000 of the excess proceeds. They both invested these funds separately.
[40] In 2011, Bill presented to Anna the suggestion that the Marriage Contract required a further amendment to deal with the Florida property and the Co-op Share. Anna agreed to a further amendment to the Marriage Contract to address the Florida property and the Co-op Share. Anna also agreed to not include a specific address for the matrimonial home but rather to refer to it generically. Anna acknowledged in examination in chief that approximately one year after purchasing the Foxboro property she signed an agreement which had the effect of converting the title from a joint tenancy to a tenancy in common. She said she signed the agreement because Bill was persistent. They did not discuss changing the title to the Foxboro property to a tenancy in common.
[41] In cross-examination, Anna testified that she was not happy with the terms of the Second Amending Agreement although she also said she thought it only dealt with the Florida property and the Co-op Share. She agreed that she is content with the provision in the Second Amending Agreement which provides that the Co-op Share is transferred to the survivor free of any claims from the estate of the deceased spouse. Anna also testified that the Florida property is now in her name alone even though the Second Amending Agreement only gives her a life interest.
[42] Anna received legal advice from Salmon before signing the Second Amending Agreement. She said he wanted to make some changes but she could not recall what they were.
[43] Salmon testified that he met with Anna on June 22, 2011 regarding the Second Amending Agreement. She brought with her a draft agreement. She also brought with her a copy of the purchase agreement for the Florida property and the Co-op Share. It was a short meeting. Anna was prepared to sign the agreement. He assumed that Anna and Bill had taken title to the Foxboro property as tenants in common. Anna did not tell him that the Foxboro property was held in a joint tenancy. Salmon’s notes of that meeting indicate that the new amending agreement “picks up” the Foxboro property and any future property so as to avoid the necessity of future amending agreements. His notes indicate that the new agreement also deals with the Florida property.
[44] Anna attended at Salmon’s office on September 14, 2011 at which time she executed the Second Amending Agreement.
[45] In cross-examination, Salmon said that Anna did not have any concerns about the Second Amending Agreement. There was no attempt to negotiate any changes to the draft agreement which became the Second Amending Agreement.
[46] I find that Anna was aware of the content of the Second Amending Agreement. She knew that the purpose of the agreement was to provide to the survivor of she and Bill a life interest in both the Florida property and the Foxboro property. I also find that Anna was quite content to have the Co-op Share become the sole property of the survivor.
[47] Steve Kidd Employee Benefits Consulting Inc. was and is the group benefits provider to Lehmann Bookbinding. Steve Kidd testified that when Bill turned 65 years of age the group life insurance benefit to which he was entitled reduced from $50,000 to $25,000. He was aware that Bill had heart issues and diabetes. He said that Bill would have difficulty finding an insurer that would provide life insurance in the amount of $50,000 after age 65. I accept the evidence of Steve Kidd.
[48] Terry Kratz testified that he has been the accountant for Lehmann Bookbinding since 2002. He testified that the value of Lehmann Bookbinding is declining. Revenue of the business decreased every year since he became the company accountant. Kratz testified that he is concerned about the long-term viability of Lehmann Bookbinding due to the nature of the business, the declining sales and the significant losses in the business.
[49] Darrell Hawreliak, a lawyer, who was called to the bar in 1981, purchased Hagarty’s law practice in 2013. Accordingly, Bill became a client. On May 6, 2014 Hawreliak met with Bill to review his wills, the Marriage Contract and the amendments to the Marriage Contract. Bill wanted to know if the Foxboro property would pass to his children on his death. Hawreliak searched title to the Foxboro property and concluded that the joint tenancy had been severed and that Bill’s interest in the property would pass by way of his will to his children.
[50] Bill died in Florida on November 1, 2015. Upon Bill’s death Anna received the proceeds of the life insurance policy in the amount of $25,000, Bill’s RRIF in the amount of $210,000 and the Co-op Share which was sold for approximately $125,000 net of tax. After the transfers received as a result of Bill’s death, Anna’s total assets amounted to in excess of $1,250,000. This includes the value of the Florida property which Anna arranged to be transferred into her sole name even though, according to the terms of the Second Amending Agreement, she was to receive a life interest in the Florida property, subject to certain terms.
Analysis
[51] Anna asserts that she is the sole beneficial owner of the Foxboro property by right of survivorship and that she is entitled to be paid support by Bill’s estate in the amount of $2,500 per month for life. She then asks that the periodic support be converted into a lump sum in the amount of $300,000 payable by the estate. In support of this position, Anna submits that joint tenancy of the Foxboro property was not severed by the Second Amending Agreement and that the spousal support release contained in the Marriage Contract is invalid.
[52] In the alternative, Anna asserts that if the joint tenancy in the Foxboro property was severed by the Second Amending Agreement, that invalidates the support release in the Marriage Contract because it was premised on the expectation that Anna would receive title to the Foxboro property by right of survivorship upon Bill’s death. Because she is not the sole beneficial owner of the Foxboro property she ought to be entitled to support. Anna then submits that the lump sum support in the amount of $300,000 be satisfied by the transfer to her of the estate’s interest in the Foxboro property.
[53] In the further alternative, Anna asserts that if the spousal support release in the Marriage Contract is found to be valid it can be found that the joint tenancy in the Foxboro property was not severed by the Second Amending Agreement which results in the same outcome as her second alternative position.
[54] I propose to deal initially with Anna’s claim that the support release contained in the Marriage Contract is invalid or is unenforceable.
[55] The Supreme Court of Canada in Miglin v. Miglin, 2003 SCC 24, [2003] 1 S.C.R. 303 explained the approach to be taken when dealing with an application for spousal support in the face of a pre-existing agreement containing a spousal support release. At para. 64 the Court stated:
An initial application for spousal support inconsistent with a pre-existing agreement requires an investigation into all the circumstances surrounding that agreement, first, at the time of its formation, and second, at the time of the application.
[56] The Court went on to hold that when considering the circumstances at the time of the agreement, the conditions of the parties in the period leading up to the execution of the agreement are to be examined. The circumstances that ought to be considered include oppression, pressure, or other vulnerabilities of one or both of the parties and the conditions under which the negotiations were held, such as their duration and whether there was professional assistance (para. 81). The Court also recognized that the degree of professional assistance received by the parties will often overcome any systemic imbalances between the parties (para. 82).
[57] In Hartshorne v. Hartshorne, 2004 SCC 22, [2004] 1 S.C.R. 550, the Supreme Court held that the approach set out in Miglin in relation to setting aside the terms of a separation agreement was equally applicable to an application to set aside the terms of a marriage contract. The Court however added a qualification to the second stage analysis of the Miglin approach to which reference will be made subsequently.
[58] In this case, the Marriage Contract was negotiated over an extended period of time. The final agreement was considerably different than the first draft agreement prepared by Hagarty. Anna was represented by knowledgeable and experienced counsel who successfully negotiated significant changes to the original agreement which were favourable to Anna. Those changes, as previously noted, were the transfer of title to the matrimonial home into joint tenancy, putting in place mortgage insurance and including a term that if Bill died without such insurance in place the amount owing on the mortgage would be a first charge against Bill’s estate and the designation of Anna as beneficiary of Bill’s life insurance policy and his RRSPs.
[59] In my view, there is nothing in the circumstances pertaining to the negotiating and execution of the Marriage Contract which calls into question its validity or fairness. Anna agreed to the spousal support release in return for concessions favourable to her. She made it clear to her lawyer that she would only sign an agreement on her terms. She did not achieve all of her goals but she obtained, through negotiation, changes and additions to the initial drafts of the agreement which were important to her.
[60] Anna complains that there was a failure to disclose Bill’s income at the time of the entering into of the Marriage Contract. A general awareness of the assets of a party to a marriage contract can be sufficient. Parties are expected to use due diligence in ascertaining the facts underlying their agreements and a party ought not to be permitted to fail to make proper inquiries and then rely on a lack of financial disclosure (Quinn v. Epstein Cole LLP, 87 O.R. (3d) 184 at para. 48).
[61] Both parties disclosed their significant assets and debts at the time of the agreement as required by the Family Law Act. I also conclude that Anna was aware of Bill’s income at the time the Marriage Contract was signed. Salmon said he inquired of Anna about Bill’s annual income and was told he earned $100,000. Salmon made no other requests for income disclosure. I therefore conclude either that he was satisfied with the information provided by Anna or did not consider income disclosure to be a significant matter. Anna should not now be permitted to claim that the spousal support release in the Marriage Contract is invalid because Bill did not provide more specific particulars about his income when such information was not requested.
[62] At the second stage of the Miglin analysis the Court directed that the agreement should be analysed to determine the extent to which the agreement takes into account the factors and objectives of a spousal support order as listed in the Divorce Act. Only a significant departure from the general objectives of the Act will warrant intervention. Spousal support arrangements, however, should not be considered in a vacuum but rather the agreement should be considered in its totality (para. 84).
[63] In Hartshorne, the Court qualified the second stage of the Miglin analysis in the context of a marriage contract by stating that an important consideration is whether the parties’ lives unfolded as they had anticipated at the time of entering into the marriage contract.
[64] Therefore, I will firstly examine whether the spousal support release in the Marriage Contract substantially complies with the factors set out in Part V of the Succession Law Reform Act, the relevant sections of which are as follows:
57 (1) In this Part,
“dependant” means,
(a) the spouse of the deceased.
58 (1) 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 of the deceased for the proper support of the dependants or any of them.
62 (1) In determining the amount and duration, if any, of support, the court shall consider all the circumstances of the application, including,
(a) the dependant’s current assets and means; (b) the assets and means that the dependant is likely to have in the future; (c) the dependant’s capacity to contribute to his or her own support; (d) the dependant’s age and physical and mental health; (e) the dependant’s needs, in determining which the court shall have regard to the dependant’s accustomed standard of living; (f) the measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures; (g) the proximity and duration of the dependant’s relationship with the deceased; (h) the contributions made by the dependant to the deceased’s welfare, including indirect and non-financial contributions; (i) the contributions made by the dependant to the acquisition, maintenance and improvement of the deceased’s property or business; (j) a contribution by the dependant to the realization of the deceased’s career potential; (k) whether the dependant has a legal obligation to provide support for another person; (l) the circumstances of the deceased at the time of death; (m) any agreement between the deceased and the dependant; (n) any previous distribution or division of property made by the deceased in favour of the dependant by gift or agreement or under court order; (o) the claims that any other person may have as a dependant; (r) if the dependant is a spouse, (i) a course of conduct by the spouse during the deceased’s lifetime that is so unconscionable as to constitute an obvious and gross repudiation of the relationship, (ii) the length of time the spouses cohabited, (iii) the effect on the spouse’s earning capacity of the responsibilities assumed during cohabitation, (iv) whether the spouse has undertaken the care of a child who is of the age of eighteen years or over and unable by reason of illness, disability or other cause to withdraw from the charge of his or her parents, (v) whether the spouse has undertaken to assist in the continuation of a program of education for a child eighteen years of age or over who is unable for that reason to withdraw from the charge of his or her parents, (vi) any housekeeping, child care or other domestic service performed by the spouse for the family, as if the spouse had devoted the time spent in performing that service in remunerative employment and had contributed the earnings to the family’s support, (vii) the effect on the spouse’s earnings and career development of the responsibility of caring for a child, (viii) the desirability of the spouse remaining at home to care for a child; and (s) any other legal right of the dependant to support, other than out of public money.
[65] Not all of the circumstances set out in section 62 (1) of the Succession Law Reform Act are applicable but I will address those which, in my view, are relevant.
[66] Subsequent to Bill’s death, Anna had assets totaling in excess of $1,250,000 (a, b). That amount is based on Anna being entitled to only a 50% interest in the Foxboro property but being the sole beneficial owner of the Florida property. This was a marriage of approximately 19 years and a period of cohabitation of approximately 22 years (g, r (ii)). Anna was just shy of her 59th birthday when Bill died. She is now 61 years old. Anna had not been employed outside of the home for approximately six years before Bill’s death (c, d, f). I am satisfied that if Anna is able to obtain employment her income will be at or close to the minimum wage.
[67] I find that Anna made no significant contribution to Bill’s welfare over and above that which would normally be made by a spouse (h). I find that Anna made no significant contribution to the acquisition maintenance or improvement of any of Bill’s assets nor did she make a significant contribution to Bill’s career potential (i, j).
[68] I find that Anna and Bill enjoyed a comfortable but not an opulent standard of living (e).
[69] As a result of Bill’s death, Anna has received $210,000 by way of transfer to her of the RRIF, the $25,000 life insurance proceeds and $125,000 from the sale of the Co-Op Share (n).
[70] Anna resigned her full-time employment at the LCBO in November 2009. I find this to be a joint decision made by Anna and Bill. It was not a decision which Anna was forced to make.
[71] Perhaps the most significant event during the course of Anna and Bill’s relationship was winning the $1 million lottery prize. This contributed significantly to the financial position of both. The other significant development that occurred over the course of the marriage was that Lehmann Bookbinding did not prosper financially.
[72] The qualification to the second stage of the Miglin analysis was articulated in Hartshorne as follows at para. 47:
Where the current circumstances were within the contemplation of the parties at the time the Agreement was formed, and where their Agreement and circumstances surrounding it reflect consideration and response to these circumstances, then the plaintiff's burden to establish unfairness is heavier.
[73] I am satisfied that the provisions of the Marriage Contract operated fairly towards Anna at the time of Bill’s death. It would have been in the contemplation of the parties that Bill would likely predecease Anna. Anna’s assets increased in value by more than $1 million over the course of the marriage. Anna was at all times aware of Bill’s objective to not be burdened with a spousal support obligation in the event of a separation or his death. The parties of course did not anticipate winning the lottery but that, in my view, was a significant factor in allowing the parties to enjoy the lifestyle and acquire the assets that they did. When Anna terminated her employment it must have been within her contemplation that Bill would likely predecease her and that she would have difficulty replacing the income that she had been earning by working full time.
[74] In both Miglin and Hartshorne, the Supreme Court of Canada recognized the importance of honouring agreements which were fairly negotiated and which do not operate unfairly even though the terms of the particular agreement might not result in exactly the same outcome if the case were left to be decided by a judge. In my view the Marriage Contract was fairly negotiated and its application upon Bill’s death does not result in unfairness to Anna. The result of the operation of the Marriage Contract would have been within the reasonable contemplation of Anna and Bill at the time it was executed and throughout the period of the marriage.
[75] Anna’s application to set aside the spousal support release in the Marriage Contract is therefore dismissed.
[76] Anna’s first alternative argument is that if the joint tenancy in the Foxboro property is severed then the spousal support release in the Marriage Contract cannot stand. The Marriage Contract was entered into on the basis that title to the Stoneheight property had been converted from a tenancy in common to a joint tenancy. But the Marriage Contract was also entered into on the basis that there was mortgage insurance which would pay off the outstanding mortgage in the event of Bill’s death. The mortgage insurance was no longer required after the mortgage was eliminated by way of the lottery winnings.
[77] It was contemplated that amendments would or could be made to the Marriage Contract. The First Amending Agreement provided that the Lobsinger property was to be held as tenants in common. The First Amending Agreement made no change to the spousal support release although it must have been obvious that title to the Lobsinger property was being taken as tenants in common.
[78] I therefore reject the submission that the spousal support release would only be operative in the event that the matrimonial home in which Anna and Bill were living at the time of the death of one of them was owned as joint tenants.
[79] In Hansen Estate v. Hansen, 2012 ONCA 112, [2012] O.J. No. 780, the Ontario Court of Appeal held that one of the ways in which a joint tenancy can be severed is by a course of conduct on the part of the co-owners which is sufficient to intimate that the interests of both were mutually treated as constituting a tenancy in common. In this case, Anna and Bill executed the Second Amending Agreement which provided for the survivor to have a life interest in the Foxboro property. This is inconsistent with the intention that the survivor would become sole owner of the Foxboro property by right of survivorship. Anna testified that she signed the Second Amending Agreement which had the effect of converting the title to the Foxboro property from a tenancy in common into a joint tenancy. She said she signed the agreement because Bill was persistent. She was aware that Bill wanted to provide for his children and grandchildren through his will. In my view, the execution of the Second Amending Agreement which provided for a life interest in the Foxboro property in favour of the survivor is sufficient evidence of a course of dealing to support a conclusion that the joint tenancy was severed.
[80] I therefore conclude that title to the Foxboro property is held by Anna and Bill’s estate as tenants in common, each with a 50% interest.
Conclusion
[81] For the foregoing reasons, Anna’s application to set aside the spousal support release contained in the Marriage Contract and for a support order in her favour is dismissed. Anna’s application for a declaration that she is the sole owner of the Foxboro property by right of survivorship is also dismissed.
[82] If the parties are unable to agree on the appropriate disposition as to costs, they may make written submissions. Cost submissions on behalf of Bill’s estate are to be delivered to my office at 85 Frederick St., Kitchener, Ontario, no later than July 16, 2018. Responding submissions are to be delivered to my office no later than July 30, 2018. The written cost submissions are not to exceed three pages in length exclusive of Bills of Costs and Costs Outlines. Electronic copies of the cost submissions should be forwarded to Kitchener.superior.court@ontario.ca.