Court File and Parties
COURT FILE NO.: CV-16-0484 DATE: 2018-09-13
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
MARILYN ELLEN (SALLY) MIHALCIN Plaintiff (Applicant)
R. Clinker, for the Plaintiff (Applicant)
- and -
NORM TEMPLEMAN AS THE NAMED ESTATE TRUSTEE OF THE WILL OF FRANK MIHALCIN, DECEASED Defendant (Respondent)
W. Wieckowski, for the Defendant (Respondent) Mary Julie Dejay Lo D. Zulianello, for the Defendant (Respondent) Norm Templeman as the named Estate Trustee of the Will of Frank Mihalcin, Deceased
HEARD: July 27, 2018, at Thunder Bay, Ontario
Mr. Justice F. Bruce Fitzpatrick
Judgment on Motion
1This motion concerns a request to amend a pleading which would, in effect, extend the time for filling an equalization claim pursuant to s. 2(8) of the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”). The equalization claim arises from s. 6(1) of the FLA, which deals with a surviving spouse’s right to elect equalization as an alternative to the distribution outlined in a deceased spouse’s will. This motion is part of a contentious estate file with an interesting procedural history.
Preliminary Matters
2At the commencement of the motion heard on July 27, 2018, I asked counsel some pointed questions about how we were going to proceed. After frank and direct responses from counsel (which the court appreciated), it was agreed that any aspects of the motion related to the disposition of application CV-18-0110 would be adjourned to a future date to be set by the trial coordinator in consultation with all counsel. This adjournment is without prejudice to the rights of any party to raise arguments they were prepared to make on July 27, 2018, concerning the validity of the claims raised in application CV-18-0110 and on what basis, if any, these claims should or should not be allowed to proceed. Counsel also agreed there should be a consolidation order with respect to the claims contained in the pleadings for files CV-16-0484 and CV-16-0485, save and except for Ms. Mihalcin’s claim for equalization. Whether or not that claim for equalization of net family properties pursuant to the FLA on behalf of Ms. Mihalcin can be included in the consolidated claim was agreed to be argued on July 27, 2018. Argument proceeded. I reserved my decision. Here are my reasons for judgment.
Background
3The facts in this matter are not in dispute.
4The Plaintiff/Applicant, Marilyn Ellen Mihalcin, also known as Sally Mihalcin (“Sally”), was married to Frank Mihalcin (“Frank”) for 53 years at the time of his death on April 19, 2016. They have two sons, Allan and Todd Mihalcin, now adults. Sally was diagnosed with multiple sclerosis (“MS”) over 20 years ago. Sally has been residing in long term care since November 2004.
5The Defendant/Respondent, Mary Julie Dajay Lo (“Julie”), was a live-in caregiver for Sally prior to Sally’s admission to long term care. After Sally was admitted to long-term care, Julie continued to reside with Frank, save and except for a brief period of time up to and until his death.
6On May 24, 2002, Sally and Frank purchased a condominium located at 50 Water Street, Unit 301, Thunder Bay, Ontario. It was their matrimonial home. In order for Sally to live at home, she required additional care due to her medical condition. Frank and Sally hired Julie to care for Sally. She lived with them at the condominium.
7After Sally was admitted to long term care, but before Frank’s death, Frank took some significant steps with respect to organizing his financial affairs. In 2013, Frank changed the beneficiary designation on his life insurance policy to Julie. In December 2015, Frank transferred his interest in his and Sally’s matrimonial home to Julie for no consideration. Frank maintained a life interest in the condominium. Sally did not consent to this transaction.
8In January 2016, Frank gifted Julie $140,000.00 from a bank account Frank held jointly with Sally. On February 19, 2016, Frank made a will in which Sally was not named a beneficiary.
9At the time of Frank’s death, he left Sally a RIF valued at $116,979.68 and a balance of $27,793.01 in their joint bank account.
10After Frank’s death, Sally retained a local Thunder Bay law firm to commence litigation against Julie and the Estate to set aside the inter vivos transfers/gifts and beneficiary designation changes, to contest the will, and to commence other claims for entitlements she has against the Estate, including a claim for dependant support and an equalization of net family properties.
11On July 4, 2016, Transamerica Life Canada, now known as Ivari, issued a Notice of Application wherein an order was sought to pay the sum of $275,511.33 into court. These funds represented the proceeds of the life insurance policy bearing Policy No. L00776888 owned by Frank (the “Life Insurance Policy”) at the time of his death. An Order directing payment of the Life Insurance Policy proceeds into court was issued on July 18, 2016. The funds remain in court at this time.
12In July 2016, Sally’s counsel served and filed a motion for directions on the Defendants/Respondents. In that motion for directions, Sally sought directions with respect to several claims she was pursuing against the Defendants/Respondents, including her spousal rights under ss. 5, 6, and 7 of the FLA.
13The motion for directions was heard on September 22, 2016, with the parties agreeing to an order for directions which was made by Shaw J. In that order, it stated that all claims must be commenced within six months of Frank’s date of death.
14The two statements of claim, which counsel have agreed to consolidate, did not contain an express claim for equalization of net family properties pursuant to the FLA on behalf of Sally.
Positions of the Parties
Position of Sally
15Sally’s claim arises from s. 6(1) of the FLA. That section reads as follows:
Election Spouse’s Will
6 (1) When a spouse dies leaving a will, the surviving spouse shall elect to take under the will or to receive the entitlement under section 5.
16Sally recognizes that the most significant issue with respect to the s. 6(1) election she seeks as relief on this motion is the six month limitation period mandated by s. 6(10) of the FLA. Section 6(10) provides:
Manner of making election
6 (10) The surviving spouse’s election shall be in the form prescribed by the regulations and shall be filed in the office of the Estate Registrar for Ontario within six months after the first spouse’s death.
17Subsections 7(1) and 7(3) also have some bearing on the determination of this particular relief. Those subsections provide:
Application to court
7 (1) The court may, on the application of a spouse, former spouse or deceased spouse’s personal representative, determine any matter respecting the spouses’ entitlement under section 5.
Limitation
(3) An application based on subsection 5 (1) or (2) shall not be brought after the earliest of,
(a) two years after the day the marriage is terminated by divorce or judgment of nullity;
(b) six years after the day the spouses separate and there is no reasonable prospect that they will resume cohabitation;
(c) six months after the first spouse’s death.
18Sally acknowledges that the form of election provided for in the regulations pursuant to s. 6(10) has never been filed. However, she argues that actual notice was given in the motion for directions which was originally returnable August 4, 2016, well within the six month limitation period. Sally submits that the purpose of the six month limitation period is to prevent estate administrations from being unduly delayed by uncertainty as to whether or not a surviving spouse elects to take under a will or claim an equalization. As this particular estate is already “frozen” by the order of Shaw J. arising from the motion for directions, the statutory intention of the limitation period is less relevant in this matter.
19Sally also relies on s. 2(8) of the FLA which states:
Extension of times
2 (8) The court may, on motion, extend a time prescribed by this Act if it is satisfied that,
(a) there are apparent grounds for relief;
(b) relief is unavailable because of delay that has been incurred in good faith; and
(c) no person will suffer substantial prejudice by reason of the delay.
20Sally argues she satisfies the test for apparent grounds for relief as she was married to Frank and therefore has a statutory claim to an equalization. She submits there was no delay, but in the event that the notice given in the motion for directions was insufficient, she submits that the delay was occasioned in good faith. She argues there is no evidence before the court that she or her previous lawyer acted with dishonesty or with any ulterior motives in delaying the claim for equalization.
21As the disposition of the assets of the Estate were put on hold by the motion for directions, Sally argues there will be no prejudice to any other person if she is permitted to assert her claim to an equalization in the fresh as amended consolidated action. Sally relies on the assertion that her equalization claim cannot be calculated until it is determined whether any of the inter vivos transfers and gifts are to be set aside as this will increase the amount of assets owned by Frank on the date of his death.
22Sally relied on the well-established principle that the FLA is remedial legislation. She furnished the court with the decision of MacDougall J. in Mischuk v. Mischuk, 2013 ONSC 4128, [2013] W.D.F.L. 3366 where an extension was granted. Sally also referred the court to the decision of the Surrogate Court in Re Van der Wyngaard (1987), 59 O.R. (2d) 195. In that decision, McDermid J. determined that, in circumstances where a will is contested, an extension of time to make an election should be granted to a surviving spouse until after matters relating to the will’s validity are resolved. This reasoning was adopted by Czutrin J. in Butt v. O’Reardon Estate, [2008] W.D.F.L. 1857 (Ont. S.C.), at para. 57.
Position of Julie and the Estate
23Julie and the Estate Trustee, Norm Tempelman, were represented at this motion by different counsel. However, they adopted essentially the same positions in opposition to Sally’s motion. I will refer to the Defendants/Respondents collectively in respect of their position on this motion.
24The Defendants/Respondents argue that Sally has not provided a persuasive evidentiary basis to extend the six month deadline provided under s. 6(10) of the FLA. They argue Sally’s evidence is not satisfactory to engage an exercise of judicial discretion to extend the deadline provided in s. 2(8) of the FLA. Although Sally suffers from MS, she is acknowledged to be perfectly capable, and the defence therefore questions why the evidence on this motion was given by one of her sons, instead of her. The Defendants/Respondents object to the assertion that Sally has put forth any evidence as to good faith in regard to the delay in asserting the claim for equalization. Also, the affidavit as tendered does not represent the best evidence available, which would be an affidavit from Sally herself.
25The Defendants/Respondents also argue that Sally has never actually made the appropriate election. She has not filed the proper form with the court as is required by s. 6(10) of the FLA. Reliance is placed on the decision of Kurisko J. in Paola v. Paola Estate (1997), 69 A.C.W.S. (3d) 416 (Ont. Ct. J. (Gen. Div.)) where he stated, at para. 42:
42 Filing an election, giving notice that an election has been filed, giving notice of an intention to file an election, or giving notice of an intention to commence an application does not constitute notice of an application required by subsection 6(15). An application must actually have been commenced before notice of the application can be given.
26The Defendants/Respondents submit that Sally bears the onus of explaining to the court why the election was not filed. There is simply no evidence about this issue in the record before the court. While the notice of motion for directions requested “directions” as to Sally’s spousal rights, the record contained no such election. However, this does reveal that Sally was aware of her ability to make the claim, which at the time was not yet time barred. As such, Sally has an obligation to explain why the election was not actually filed.
27Further, to the extent the court is considering extending the time for filing the actual election, the Defendants/Respondents argue that Sally has not put forward an evidentiary basis to satisfy the test for extending any time limit under the FLA, which is set out in s. 2(8). Sally has not filed a financial statement so there is no basis for the court to determine one way or the other if Sally is in fact owed an equalization payment by Frank.
Disposition
28Section 2(8) of the FLA permits the court discretion to extend any time limit in the Act. As mentioned, the section sets out a threefold test:
Extension of times
2 (8) The court may, on motion, extend a time prescribed by this Act if it is satisfied that,
(a) there are apparent grounds for relief;
(b) relief is unavailable because of delay that has been incurred in good faith; and
(c) no person will suffer substantial prejudice by reason of the delay.
29In my view, the evidence filed by Sally on this motion was not satisfactory to engage an exercise of judicial discretion under s. 2(8). In my view, all three aspects of the test must be satisfied in order for discretion to be exercised.
Section 2(8)(a): Apparent Grounds for Relief
30Sally must show there are apparent grounds for the relief requested. She argues that, as she is a spouse, de facto she has a statutory claim for an equalization and therefore satisfies the first branch of the test. In support of this argument she relies on the decision of Robertson J. in Webster v. Webster Estate (2006), 25 E.T.R. (3d) 141 (Ont. S.C.).
31With respect, I do not find the decision of Robertson J. in Webster helpful to Sally’s position. In that matter, there was evidence of the respective net worth of each spouse. The husband’s estate was worth between $22 and $24 million dollars (at para. 4), and the wife’s estate was worth $1.65 million dollars (at para. 7). Also at issue was the content of a marriage contract executed by the parties when they lived in Quebec, which has a very different regime with respect to the division of matrimonial property. My review of Webster does not reveal any support for the simple proposition that merely being a spouse and having the potential to assert a claim for equalization satisfies the “apparent grounds for relief” test. In fact, Sally relies upon para. 18 where Robertson J. states:
18 Before an extension of time may be granted under s. 2(8) of the FLA, Mrs. Webster must establish she has “apparent grounds for relief.” Essentially, under this heading, the issue is: “But for the limitation that acts as a bar, are there apparent grounds to support the claim?” [8] The word “relief” in the phrase “apparent grounds for relief’” does not refer to the extension of time claimed, but instead refers to the entitlement to an equalization payment under s. 5(2) of the FLA. [9] I find that Mrs. Webster has shown that she has apparent grounds for relief.
32In my view, this quote emphasizes that a party must be apparently entitled to an equalization payment, as opposed to being required to pay one. In my experience, when parties separate, on paper, one party is always required to pay something to the other unless both are so indebted that their respective net family properties are zero. It seems logical that the legislature would require a party seeking to extend a time period to show they actually can assert a claim that will result in a real remedy; in this case, the expected remedy is to be the recipient, as opposed to the payor, of an equalization claim. Otherwise, it would be a waste of time to seek relief.
33Sally did not file an FLA Financial Statement or a Net Family Property Statement (an “NFP”) on this application. Counsel for Sally argues it was impossible to do so because the will is being challenged and Sally’s NFP cannot be determined until the validity of the will and certain transactions made before it have been determined. I note that in many family law matters the contents of values in parties’ Financial Statements and NFPs are hotly contested. NFPs are regularly changed and then ultimately determined by negotiation or at trial. It is quite usual that the values listed on financial filings change throughout the litigation process. It is a rare file where the Financial Statement and the corresponding NFP filed at the commencement of the action remain completely consistent with the ones filed on the eve of trial. How this impacts on the credibility of the party making the financial statement and the NFP is another matter and has no bearing on the decision I am making here.
34However, in this case, it would have been helpful for the court to have had something from Sally, even showing her financial position on a “best case for her” basis. This would have provided some evidence of how she would be entitled to claim an equalization payment from Frank if I granted the extension to allow the amendment. Having no such evidence, I cannot speculate. I therefore find that Sally has not demonstrated apparent grounds for relief under s. 2(8)(a).
Section 2(8)(b): Delay in Good Faith
35I now consider the second aspect of the test, s. 2(8)(b), which is whether relief is unavailable because of delay that has been incurred in good faith. There is no question there was a delay in filing the necessary election. The issue is whether or not that delay was incurred in good faith.
36I am persuaded by the decision of Kurisko J. in Paola that actually filing the election is important in these matters. The legislature expressly provided for such an evidentiary record in a prescribed form to be filed with the court in a formal way. The legislature set a clear six month timetable for a party to do something specific. In my view, this time limit cannot be ignored. While remedy to the courts can always be sought to relieve against any injustice caused by a missed timeline, such relief is not given simply because counsel asks. The authorities are clear that an evidentiary basis must be present or the timelines become effectively meaningless.
37I am persuaded by the defence’s arguments concerning the lack of an evidentiary basis to make a determination about whether Sally’s actions or inaction were a matter of good faith. It seems to me incumbent on Sally to explain why the election was not filed when clearly it was a live issue some two months before the six month time period ran out. Sally’s factum refers to her former solicitor as being “inadvertent.” From my review of the material before me, this assertion is not supported by any affidavit evidence. The affidavit filed by Sally’s son Todd refers to a solicitor being retained to “pursue any additional claims she (Sally) may have had against the Estate” (at para. 14). The affidavit goes on to state that the solicitor advised Todd and his brother of the steps he was taking, but that, after the fall of 2016, very little seemed to be happening (at para. 15). That is all the evidence I have.
38I am not prepared to find “inadvertence” on the part of a solicitor simply based on this very vague and nonspecific evidence. In addition, this evidence is far too vague for me to say that Sally has satisfied the test that the delay in filing the election was made in good faith. I am unable to decide this issue on a balance of probabilities because there is nothing substantive in the affidavit about what exactly happened, why the filing was not made, and even if express instructions to make the election were given. I appreciate these matters touch upon matters of solicitor and client privilege. However, Sally does have an onus on this motion, and certainly, Sally could have provided evidence that did not require a breach of solicitor/client privilege. There is evidence before the court about instructions given to the solicitor which are described in very broad terms. However, it is not sufficient to convince me that Sally was or was not acting in good faith. I therefore find Sally has not satisfied the evidentiary burden to persuade me that the delay was incurred in good faith.
Section 2(8)(c): Prejudice
39In respect of the third branch of the test, s. 2(8)(c), there is the issue of prejudice. On this issue, I agree with Sally’s submissions that, because the matter is at a relatively early stage, no prejudice would arise to the opposing parties if the amendment was granted.
Residual Judicial Discretion
40Overall, in my view, Sally has failed to meet the statutory test under s. 2(8)(a) and (b) to extend the time for filing her claim for an equalization. Therefore, by operation of s. 2(8), she is not entitled to amend her pleadings to include an equalization claim in the consolidated action. However, as noted in Webster, at para. 51, there remains a residual judicial discretion to extend the timeline even if some or all of the criteria in s. 2(8) are not met.
41In Webster, at para. 58, Robertson J. stressed the importance of certainty in the pursuit of a just result in matters such as these. Also, at para. 61, Robertson J. stated:
61 In applying the law, the court must consider the purpose or objectives of the FLA. The intent of this legislation is to encourage and strengthen the role of the family. It recognizes marriage as a form of partnership and provides for the orderly and equitable settlement of affairs through predictable law. It specifically directs the court to consider the mutual obligations in family relationships, including the equitable sharing of responsibility for their children.
42However, at para. 64, Robertson J. went on to state, “the FLA should not to be used as a scheme to rewrite a will and redistribute wealth contrary to a Testator’s intention.”
43In this matter, the essence of Sally’s position arises from her belief that there was undue influence upon her deceased husband in making certain transfers of property and later drafting a will which left a good deal of his estate to a caregiver who, but for Sally’s illness, never would have entered the couple’s lives. She has the right to assert this claim. It has been asserted in a timely manner. However, it seems to me that her claim for equalization is distinct and separate from her undue influence claims against Frank. If I allow Sally to amend the pleadings so that the equalization claim can be raised now, this will no doubt add some complexity to the litigation. This is important, but not determinative of the issue for me.
44In this case, I agree with the defence assertions that the nature of the evidence filed by Sally makes it difficult for me to actually assess what she is thinking or asserting personally about her claim for an equalization. The affidavits were given by her son. To that extent, all the evidence about her is hearsay. It can be accepted, but it really goes to weight. From the record I have before me, I cannot say how justice may be served by allowing or not allowing the amendment to permit the equalization claim to proceed. I cannot tell if she actually will have an equalization claim even if she is successful in setting aside the will and the various transactions at issue. I have no real explanation why she did not file her claim in time. I appreciate these concerns arise directly from the requirements of s. 2(8), but the record gives me no other basis upon which to assess the equities of the situation and determine if this is an appropriate case to exercise my discretion. The proceedings are at such a stage that I am reluctant to make any other further comments about the merits. I am just not convinced that this is one of those cases where I can say that an extension would benefit the marital partnership as intended by the FLA, which was also a significant factor to Robertson J. in her decision not to extend the limitation in Webster, at para. 65.
45I have also considered the law as set out in the Re Van der Wyngaard decision. In Re Van der Wyngaard, the surviving spouse had actually made the statutory election within the time permitted by the statute. The issue in the case revolved around what effect the election had on the operation of two different wills that were under consideration in the matter. Sally urges that Re Van der Wyngaard stands for the proposition that, where a will is contested, an extension of time to make an election should be granted to the surviving spouse until after matters relating to the will’s validity are resolved. This is exactly what was stated by Czutrin J. in Butt v. O’Reardon Estate, at para. 57, when he was commenting on the ruling in Re Van der Wyngaard.
46However, a careful reading of Re Van der Wyngaard shows that no such express statement was made by McDermid J. in the decision. In fact, at p. 198, he stated:
An alternative suggestion, for future reference, might be to apply for an extension of the time within which to file the election pursuant to s. 6(10) of the Act until the issue as to the validity of the second will has been disposed of.
47The statement of McDermid J. was made in the context of a case where an election had been made in a timely way. This is not the case here. In this case, the lack of a clear and cogent explanation as to why the election was not made, and whether or not an equalization claim has a reasonable prospect for success, has influenced me to not exercise my discretion in favour of allowing the amendment or to grant an extension to file the election.
Conclusion
48No doubt there are serious competing interests at issue in this matter. The facts speak for themselves, yet I am reluctant to comment on the merits because of the status of the proceeding. I am mindful of the general importance of limitation periods for the conduct of litigation. There is an obligation on parties to put forward all known legitimate claims within certain time limits. In this case, the time limit was relatively short. I think it cannot be readily ignored. The evidentiary record is not sufficient for me to say that justice requires me to exercise my discretion in favour of allowing Sally to amend her claim so as to include a claim for equalization in all of the circumstances. Accordingly, this aspect of the motion before me is dismissed.
49If costs cannot be agreed, the parties may make written submissions of no more than three pages double spaced which are to be received by the court no later than fifteen days following release of these reasons.
50Following the completion of costs submissions, if any, the parties are to schedule a case conference before Fitzpatrick J. to sort out the next steps in this matter and finalize a timetable for completion of these steps.
“original signed by” The Hon. Mr. Justice F.B. Fitzpatrick
Released: September 13, 2018