COURT FILE NO.: CV-17-4794-00 DATE: 2018 12 07
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
CARLENE CHARLES J. Schmidt for the Applicant
- and -
LENNARD CHARLES JUNIOR G. Pribytkova for the Respondents
- and - THE ESTATE OF THE LATE LENNARD CHARLES, DECEASED, BY HIS ESTATE TRUSTEE, LENNARD CHARLES JUNIOR
HEARD: November 13, 2018
REASONS FOR DECISION
Emery J.
[1] Mr. Lennard Charles was diagnosed with stage 4 pancreatic cancer in August 2017. That diagnosis was terminal. He died approximately five weeks later, on October 8, 2017.
[2] At the time of his death, Mr. Charles had been married to the applicant, Carlene Charles, for 22 years.
[3] The marriage to Ms. Charles was a second marriage for Mr. Charles. In addition to Ms. Charles, Mr. Charles is survived by his two adult children from a first marriage, namely his son Lennard Charles Junior, and his daughter Ruth-Ann Charles.
[4] In the 15 days leading up to his death, Mr. Charles executed a new will. In that new will, Mr. Charles changed the bequests that Ms. Charles would have received under a previous will. Mr. Charles also severed a joint tenancy with Ms. Charles on one or more properties, liquidated certain RRSP’s to the tune of $500,000 and drew down $130,000 on a line of credit secured against the matrimonial home. He deposited those funds into an account in his name alone.
[5] Mr. Charles also made certain transfers of title to properties having an estimated value of $2.5 million to his son, Lennard Charles Junior.
[6] These transactions had the net effect of reducing a possible value of the assets in the estate of Mr. Charles upon his death from approximately $3.3 million, to approximately $460,000. Of that estate, Ms. Charles would receive one half of the one half interest Mr. Charles held in the matrimonial home, for a value of approximately $87,500 under the new will. The residue of the estate would then go to his two children in equal shares.
[7] There is some evidence that Ms. Charles and Mr. Charles had separated prior to his death. There is evidence that Mr. Charles resided with his son for the last days of his life. Lennard Charles Junior is now, or will become the estate trustee for his father’s estate.
[8] Ms. Charles has elected under section 6 of the Family Law Act to make an equalization claim against the estate of her late husband. She has commenced an application to make that claim and, among other things, to review or set aside the transfer of certain properties made prior to her husband’s death.
[9] Ms. Charles has also made a claim for support as a dependant under Part V of the Succession Law Reform Act (SLRA). Within that application, Ms. Charles now brings this motion seeking an order for interim support from the Estate as a dependant.
[10] The Estate takes the position that Ms. Charles would be entitled to an equalization payment of $94,119.83, after the determination of net family properties.
Position of the parties
[11] Carlene Charles is asking this Court for an order granting her interim support from the Estate of her late husband in the amount of $1,225 per month, retroactive to October 8, 2017. She makes this claim for interim relief based on her claim under s.58 of the SLRA that she is entitled to relief as a dependant of the Estate. She makes this claim based on reasons related to the transactions Mr. Charles made prior to his death. Those transactions effectively removed assets from his Estate.
[12] The Court heard no evidence, and received no submissions from either party on what support Ms. Chambers was to receive from the Estate under the previous will, or if she was to receive income from any trust or capital asset.
[13] The Estate, represented by Lennard Charles Junior, opposes the motion for interim support on two primary grounds. First, the Estate argues that Ms. Charles consistently earned approximately $70,000 a year from her own employment prior to the death of her husband, and continues to do so. In contrast, Mr. Charles earned a lesser income since his retirement in 2014. The Estate takes the position that Ms. Charles has no need for interim support from the Estate.
[14] Second, the Estate and Lennard Charles Junior submit that the transfer of the two properties from Mr. Charles to Lennard Charles Junior were actually transfers from Mr. Charles as a bare trustee to his son as the beneficial owner. The transfer of those properties, the severance of Mr. Charles’ interest in the matrimonial home from Carlene Charles as joint tenants, and the changing of the will were all acts of Mr. Charles to organize his personal affairs in view of his separation from Carlene Charles. These acts were all carried out after his physician had advised him of the little time he had left to live.
[15] The Estate therefore takes the position that what steps Mr. Charles took before his death were within his rights, and were reasonable under all of the prevailing circumstances. The Estate takes the position these steps did not deprive Carlene Charles of any entitlement as to support or income.
Analysis
[16] Ms. Charles is asking the Court to award her interim support as an advance on her claim for dependant’s relief pending a hearing of her claim on a full evidentiary record. The entitlement to interim support is therefore related to a large extent on how her entitlement at trial might be determined on the facts in this case.
Legal basis to claim interim support
[17] A claimant who seeks dependant’s relief in any form must bring an application under s. 58 of the SLRA. Section 58(1) reads as follows:
Order for support
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. R.S.O. 1990, c. S.26, s. 58 (1).
[18] Section 58 provides the basis for the court to determine entitlement to the relief claimed by an applicant. This claim is statutory in nature.
[19] The key elements to establish dependant’s relief claim for relief must be satisfied by the applicant. An applicant therefore has the burden of proof to establish that he or she is a dependant within the meaning of part V of the SLRA, and that the deceased has not made adequate provision for the proper support of that dependant. In circumstances where entitlement is established, the Court has the power to grant such interim support as it considers adequate.
[20] The court is mandated to take into account a variety of factors set out in s. 62(1) SLRA when considering an application for dependant’s relief. Section 62(1)(r) also provides particular factors for the court to determine if the dependant is a spouse.
[21] The court is given the discretion to impose such conditions and restrictions as it considers appropriate when making any order or provision for the support of a dependant.
[22] Principles for awarding dependant’s relief have evolved over time. The Supreme Court of Canada in Tataryn v. Tataryn Estate, [1994] 2 S.C.R. 807 set out the steps for the court to follow when considering an application for support by a dependant:
a) For the applicant to demonstrate that he or she was a dependant of the deceased;
b) For the applicant to show that the deceased did not make adequate provision of proper support for the applicant; and
c) For the court to determine the amount of support the applicant should receive.
[23] On the motion before this court, the Estate concedes that Ms. Charles is a dependant as she was the spouse of Mr. Charles immediately preceding his death. She therefore qualifies as a dependant as that term is defined under s. 57(1) of the SLRA.
[24] In Tataryn, the Supreme Court held that the legal grounds and any moral grounds for a dependant’s claim to support must be considered. The Court found that the testator in that case owed a lesser moral obligation to his grown adult children than to his spouse. The balancing of legal claims and moral obligations were examined by the court in each Cummings v. Cummings, [2004] O.J. No. 90 (Ont. C.A.) and Perilli v. Foley Estate (2006), 23 E.T.R. (3rd) 245. See also Morassut v. Jaczynski Estate, (2013) O.J. No. 2515.
[25] In Quinn v. Carrigan, 2014 ONSC 5682, the Divisional Court recognized that the legal entitlement of an applicant to support immediately prior to the testator’s death is a relevant consideration. The court in Quinn further held that the guidance provided by the Spousal Support Advisory Guidelines was an acceptable way to determine the amount of any legal entitlement to support for this purpose. The court explained that the obligation to pay spousal support follows a determination of the parties respective incomes, with the higher earning spouse having the obligation to pay support to the spouse earning a lesser amount (at para. 129).
[26] The parties before this court agree that the decision of Justice D. M. Brown (as he then was) in Perkovic v. Marion Estate sets out the proper test to apply on a motion for interim support under s. 64 of the SLRA. Section 64 states that an interim order is available where:
64 Where an application is made under this Part and the applicant is in need of and entitled to support but any or all of the matters referred to in section 62 or 63 have not been ascertained by the court, the court may make such interim order under section 63 as it considers appropriate. R.S.O. 1990, c. S.26, s. 64.
[27] In Marion Estate, Justice Brown set out the following test the applicant must satisfy to establish that she “is in need of and entitled to support”:
a) She falls within a qualifying relationship set out in s. 57 of the SLRA;
b) She is a dependant of the deceased in that the deceased was providing support to her, or was under a legal obligation to provide support to her, immediately before his death; and
c) That the deceased did not make adequate provision for her support in the sense that the applicant is in need of support.
[28] Just as it is in an application for dependant’s relief, the onus is on the applicant to establish some degree of entitlement to, and the need for, interim support. The test for interim support for a dependant under the SLRA is not the same needs and means test for the parties under the Divorce Act. The considerations are not identical, by virtue of the statutory provisions that enable the applicant to bring an application for dependant’s relief on a motion for interim support. The applicant has a basis to seek interim support where the court is not yet in a position to apply those factors set out under sections 62 and 63 of the SLRA.
[29] Marion Estate also discusses the burden of proof on the applicant to satisfy each of the three elements necessary to obtain an order for interim support. This burden is described variously as making “a good arguable case”; “a prima facia case”, “apparent creditable evidence sufficient to entitle the applicant to support”; “substantial evidence to support a prima facia case”, and the existence of a “triable issue”. The applicant must not be “a frivolous applicant.” On a motion for interim relief, the Court may weigh and assess the evidence, to the extent that it may do so having regard to the nature of the evidence and how it may have been tested as to its the veracity.
[30] Of critical importance, the court in Marion Estate held that an applicant must make full and frank disclosure of her financial situation. This is necessary to enable the court to determine whether the deceased was providing support to the applicant spouse immediately preceding the testator’s death.
Application of the law to the facts
[31] The second part of the test in Marion Estate requires the applicant to satisfy the court that the deceased has not made adequate provision for the proper support of that person as a dependant. It is an element that requires the applicant to establish entitlement on an arguable or a prima facie basis.
[32] Ms. Charles has given evidence that she and Mr. Charles had a 28 year relationship, 22 years of which they were married. During those years of marriage, Mr. Charles earned a significantly greater income than herself. Ms. Charles states they enjoyed a lifestyle that she can no longer maintain because of those transactions that took place before his death.
[33] The following are the respective incomes earned by the applicant and the deceased for the three years after Mr. Charles retired:
| Years | Carlene Charles T4 Income | Lennard Charles Senior T4a and T5 Income |
|---|---|---|
| 2015 | $74,290 | $48,585 |
| 2016 | $73,10 | $21,848.99 (plus $79,128.57 withdrawn from an RRSP) |
| 2017 | $69,836 | $18,315.32 |
[34] It has been held that a one-time RRSP withdrawal from an RRSP should not be considered as income for the purpose of calculating spousal support under the Spousal Support Advisory Guidelines: Warsh v. Warsh, [2012] O.J. No. 6246, and Spizzico v. Spizzico, [2011] O.J. No. 3955. I am not inclined to consider the withdrawal of funds from Mr. Charles RRSP in 2016 as income for this reason.
[35] The evidence given on this motion clearly shows that Ms. Charles earned a greater income than her husband for the last three years of his life. However, Ms. Charles submits that her husband made contributions towards the household expenses during those years that created a dependency on him that has continued after his death. Mr. Charles would pay the property taxes, as well as a significant portion of the household expenses. Ms. Charles relies on evidence from these two sources to establish need, and the basis to seek interim support from the Estate.
[36] Ms. Charles describes how she has paid the interest on the line of credit that the parties had taken out and secured against the matrimonial home. Title to the matrimonial home is encumbrance free except for this collateral mortgage. Mr. and Ms. Charles would use this line of credit to invest or to make down payments for the purchase of investment property. Ms. Charles has deposed that since Mr. Charles’ death, she has paid the interest on the outstanding amount that increased from $266,000 to $396,000 after Mr. Charles drew down a further $130,000 to deposit in a separate account. This required Ms. Charles to make increased interest payments in the amount of $1,300 each month.
[37] Ms. Charles has provided bank statements showing $24,417 was paid out of her account between December 2016 and December 2017 for household expenses. In the course of bringing this application for dependant’s relief, Ms. Charles has also filed a financial statement showing that her current expenses for living in the matrimonial home exceed her net income by approximately $20,000.
[38] The bank statements to which Ms. Charles points for the cost of household expenses do not clearly define or describe those expenses. I prefer to rely on the evidence given by Ms. Charles in her financial statement. That evidence has been challenged under cross-examination to determine her need and any obligation of the Estate to pay interim support at this time.
[39] Ms. Charles submits that Mr. Charles would pay the property taxes on the matrimonial home. The financial statement of Ms. Charles shows $960 a month payable for property taxes. She conceded in cross-examination that this amount was a misstatement. Half that amount, or $460 a month, should be shown for property tax instead.
[40] I was informed by counsel for the parties that the interest Ms. Charles had paid each month on the line of credit, including the increased amount owing because of the $130,000 advance taken by Mr. Charles, has now been addressed by the parties on a without prejudice basis. By agreement, the Estate has agreed to pay all interest on the full amount owing on the line of credit directly to the bank. Ms. Charles shall reimburse the Estate $460 each month for one half the interest payable on the original $266,000 owing.
[41] This court also heard evidence that Ms. Charles conceded on cross-examination that she purchased the groceries and household items for herself and Mr. Charles before his death.
[42] The case of Hockley v. McKillop Estate, [2013] O.J. No. 4964 is instructive. While the facts are somewhat different, the guiding principles are the same. Justice Morgan wrote at para 12:
[12] In order to evaluate a claim for interim support, the court must look to all the circumstances of the claimant and the estate. Most importantly, in order to be successful the claimant must demonstrate that the deceased “has not made adequate provision for the proper support of his dependents”. Modopoulos v. Breen Estate, 1996 CarswellOnt 2863, at para 21 (Ont Gen Div).
[43] After discussing the principles in Marion Estate, the court in Hockley had this to say on the claim of the plaintiff in that case for interim support to cover general living expenses:
[14] At this stage the Plaintiff is not required to provide the court with definitive proof of the inadequacy of the provisions made for him in the will. Indeed, the case law itself contains a debate as to whether he must show a “good, arguable case”, Sturgess v Shaw, [2002] O.J. No. 3759, at para 9 (SCJ), or a “prima facie case”, Burke v Poste, [1996] O.J. No. 2725 (Ont Gen Div), or a “triable issue”, Kraus v Valentini Estate, [1993] O.J. No. 3276, at para 4 (Ont Gen Div). What is clear, however, is that some evidence must be put forward to address this issue. Here, the Plaintiff has failed to put forward any such evidence at all.
[18] It appears from the Plaintiff’s evidence that his financial state is somewhat precarious and that he leads a rather meager life. He does, however, have a comfortable property in which to live. As indicated above, he has had, and will continue on an interim basis to have, a farm and a cottage entirely free of charge. Unless circumstances change prior to trial, the Order of Conway J. will remain in place and the Plaintiff can continue to enjoy these properties until trial.
[44] I find on the evidence that Ms. Charles was not in need of support at the time Mr. Charles died. She earned more income than he did at the time of his death. It would seem from the evidence that she was the primary provider for the household, except for the payment of property tax and various sundry’s that Mr. Charles would pay. An assessment of the proper allocation of responsibilities to pay household expenses is better left for trial.
[45] With these adjustments made, there is no evidence that the economic circumstances for Ms. Charles has worsened to any significant extent since the date of her husband’s death with respect to income and expenses. However, in view of the agreement for the payment of interest on the line of credit, I consider it just to order that the Estate reimburse Ms. Charles for the interest she paid on the line of credit since October 8, 2017, less $460 each month that she would have paid for her share.
[46] As difficult as it may be for Ms. Charles to hear, her perception of entitlement to interim support has been conflated with her property based claims. Those claims are based primarily on claims relating to property owned by Mr. Charles or in which he had an interest, and the amounts and value of such property. The drawdown of $130,000 from the joint line of credit, and collapsing $500,000 worth of RRSP’s by Mr. Charles are examples of those claims that understandably resemble income based grounds, but are not. I conclude that there is an insufficient basis to award interim support on the grounds advanced by Ms. Charles as a result.
Final orders made
[47] There shall be an order that the Estate shall repay Ms. Charles for the excess interest she has paid to the bank on the line of credit since October 8, 2017.
[48] The balance of the motion is dismissed, without prejudice to the ability of Carlene Charles to bring a motion for an advance on that amount of her claim for equalization that is not in dispute.
[49] If the Estate of Lennard Charles Senior seeks costs, written submissions shall be filed by December 13, 2018 consisting of no more than two pages, not including time dockets or disbursement receipts. Carlene Charles shall then have until December 20, 2018 to file responding submissions limited to the same extent. No reply submissions are permitted without leave. All written submissions may be sent to my judicial assistant, Ms. Melanie Powers by email at melanie.powers@ontario.ca or fax at 905-456-4834 in Brampton.
Emery J. Released: December 7, 2018