Gabourie v. Gabourie, 2019 ONSC 6282
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: EVA GABOURIE, Applicant/Moving Party
AND:
LAURA GABOURIE, in her capacity as the Estate Trustee for the Estate of Raymond Michael Gabourie and in her personal capacity, Respondent/Responding Party
BEFORE: Dietrich J.
COUNSEL: Krystyne Rusek and Ori Rubin, for the Applicant/Moving Party
Dorota Irena Hagel, for the Respondent/Responding Party
HEARD: October 25, 2019
ENDORSEMENT
1The applicant Eva Gabourie and the late Raymond Michael Gabourie (the “Deceased”) were married for 29 years. They had been separated for about two years and were in the process of negotiating the terms of their separation and divorce when the Deceased passed away on March 28, 2018.
2The Deceased left a last will and testament, dated June 1, 2016, in which he left his entire estate to his sister, the respondent, Laura Gabourie. He also appointed the respondent as the Executrix and Trustee of his estate.
3The applicant has brought an application for dependant’s relief and now brings this motion for production of documents, repayment to the Deceased’s estate of amounts disbursed to the respondent to pay legal fees, and interim support.
4For the reasons that follow, I find that the applicant is entitled to the production she seeks, the respondent is required to reimburse the estate for the legal fees incurred by her in defending the claim for dependant’s relief, and the applicant is entitled to interim support pending the disposition of her application.
Production of Documents
5The parties consented to an Order Giving Directions dated March 25, 2019 and issued on April 1, 2019 (the “Order”). The Order requires, among other things, that the respondent provide a responding affidavit within 45 days as well as certain records specifically referred to in the Order.
6Despite indulgences granted by the applicant to the respondent, the respondent has failed to comply with the Order. When the respondent served a deficient responding affidavit, the applicant brought the deficiencies to the respondent’s attention, at the latest, by mid-August 2019. It was not until October 18, 2019, after this motion was scheduled, and the mediation that had been scheduled in accordance with the Order had to be cancelled, that the respondent delivered her responding affidavit. This second affidavit was not admitted into evidence because it failed to include accurate references to the exhibits attached to it, and some exhibits were incomplete. Further, the affidavit provided to counsel for the applicant was not the same affidavit as the one provided to the court.
7The respondent has not provided any compelling reason for her failure to comply with the Order, though her counsel takes responsibility for the clerical errors. The applicant is entitled to the production she seeks on this motion, including a sworn statement, as required by the Order, setting out: a) a statement of all assets and liabilities of the Deceased’s estate; b) a statement of all assets of the Deceased’s estate passing outside of the estate; and c) a statement of all transactions from April 1, 2016 to the date of death, effected by the Deceased, as described in s. 72 of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (“SLRA”). The respondent shall serve her responding affidavit, as required by the Order, within seven (7) days of this endorsement. The respondent shall also serve any additional responding material within seven (7) days of this endorsement. Should any documents be missing from the affidavit, the respondent shall produce those documents, at the written request of the applicant, within twenty (20) days of such request.
8The respondent shall obtain and produce within seven (7) days of this endorsement all records referred to in paragraphs 3(d), (e), (f) and (g) of the Order to the extent that they have not been produced. Should any documents be missing from this production, the respondent shall produce such missing documents within twenty (20) days of the applicant’s written request.
9The applicant shall also be entitled to production of all financial and tax records and files of the Deceased and his estate referred to in paragraph 3 of the Order. These documents shall be obtained by the respondent, qua Estate Trustee, at the expense of the Deceased’s estate. The respondent shall request these documents within seven (7) days of this endorsement and upon receipt of the documents shall deliver them to the applicant within five (5) days.
10The applicant also seeks an order that any claim of privilege or confidentiality reposing in the Deceased or his estate, including solicitor/client privilege, financial advisor/client privilege, inclusive of any privacy regulations and legislation which may prohibit the obtaining of such information, be waived. Because the respondent has been ordered to request and provide the financial and tax records, an order providing the requested waiver is not required.
Repayment by the Respondent of Amounts Disbursed from the Estate
11Paragraph 2 of the Order provides that the assets of the Deceased and of the Estate, including all assets and records of the transactions described in s. 72 of the SLRA, be preserved on an interim basis. The respondent concedes that she made disbursements from the Deceased’s estate of $1,039.92, $3,960.08 and $66,563.30 notwithstanding this preservation order. Of this amount, $61,563.39 was paid to the Canada Revenue Agency for taxes owing by the Deceased’s estate. The balance removed ($1,039.92 + $3,960.08 + $4,999.91) was used to pay the respondent’s legal fees. The applicant does not object to the payment to the Canada Revenue Agency for the Deceased’s taxes. The applicant does object to the $9,999.91 paid to the respondent’s counsel for legal fees incurred by the respondent and seeks an order requiring her to repay this amount to the Deceased’s estate.
12The respondent argues that the payment of her legal fees from the Deceased’s estate is appropriate. She asserts that, as Estate Trustee, she is entitled to charge reasonable legal fees incurred in her administration of the estate to the Deceased’s estate. She further argues that she is entitled to defend the applicant’s claim against the Deceased’s estate for dependant’s relief, the costs of which should be borne by the Deceased’s estate.
13The applicant does not disagree that reasonable legal fees relating to the estate administration are a proper charge against the Deceased’s estate for which the Estate Trustee may be reimbursed. However, the applicant argues that the $9,999.91 in fees was not paid for advice regarding general estate administration, but, rather, for advice regarding the respondent’s defence against the claim for dependant’s relief in her personal capacity.
14The respondent has not submitted any invoice in support of the services provided and the fees paid. There is only a copy of the receipts from the respondent’s counsel for the fees paid. I cannot, therefore, determine whether the fees were incurred in the ordinary course of administering the estate or for the respondent’s personal benefit as the sole beneficiary thereof. The respondent is in a conflict of interest in funding the defence of the claim for dependant's relief from the Deceased’s estate. Generally, an estate trustee is entitled to defend such a claim in the interests of the beneficiaries of the estate. However, in this case, the respondent is the only beneficiary of the estate. Accordingly, she, as Estate Trustee, authorized the payment of legal fees from the Deceased’s estate incurred to protect her own interest as the sole beneficiary of the estate. In the face of the conflict of interest, and the preservation language contained in paragraph 2 of the Order, the respondent ought to have sought approval of the payment of her legal fees from the applicant or the court. Accordingly, the respondent shall reimburse the Deceased’s estate the $9,999.91 paid to the respondent’s counsel within seven (7) days of this endorsement. This reimbursement shall be made without prejudice to the respondent should she seek payment from the Deceased’s estate for such legal fees, if she is ultimately successful in defending the applicant’s claim for dependant’s relief.
Interim Support
15The applicant and the Deceased entered into an Interim Separation Agreement, dated November 20, 2017, in which they agreed to the sale of their matrimonial home and the distribution of the net proceeds. That agreement was reached without prejudice to further negotiations regarding the equalization of net family property and spousal support.
16Following the Deceased’s death, the applicant and the respondent resolved the equalization of the net family property between the applicant and the Deceased. The respondent, on behalf of the Deceased’s estate, made an equalization payment to the applicant of $36,981.11, the very amount she had been seeking from the Deceased while he was alive.
17The applicant seeks interim spousal support in a lump sum amount of $50,000. She asserts that she is entitled to interim spousal support and that the threshold for entitlement to interim support is low. She submits that she needs only to establish some degree of entitlement to, and the need for, interim support. She further submits that this is not a case in which the Deceased made inadequate provision for his spouse, but a case in which he made no provision for her at all. The Deceased named the respondent, his sister, as the sole beneficiary under his will and designated her as the beneficiary of his life insurance policy and his RRSP. He made no provision for his spouse or his two adult children.
18The respondent asserts that the applicant has no entitlement to interim support because she has not adduced credible evidence from which one could rationally conclude that she can establish her entitlement to support. She further asserts that the Deceased was not providing support to the applicant and was not under a legal obligation to provide support to the applicant immediately prior to his death. The respondent submits that the applicant’s rights to spousal support did not change as a consequence of her husband’s death, and that she is not entitled to a windfall simply because her husband passed away.
Legal Principles
19Part V of the SLRA provides for the support of the dependants of a deceased person. A claimant seeking dependant’s relief must bring an application under s. 58 of the SLRA, which provides as follows:
58 (1) Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his or her 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.
20The onus is on the applicant to establish that she is a dependant within the meaning of Part V of the SLRA and that the Deceased has not made adequate provision for her support. If the applicant can establish this entitlement, the court has the power to grant such interim support as it considers adequate. The test is not the same needs and means test for the parties under the Divorce Act, R.S.C. 1985, c. 3 (2nd Supp.).
21The Ontario Court of Appeal confirmed in Cummings v. Cummings, (2004) O.R. (3d) 398, at para. 29, that to successfully claim support as a dependant spouse, the spouse must meet a two-pronged test: a) meet the definition of spouse (e.g., legally married); and b) be someone to whom the deceased was providing support or was under a legal obligation to provide support immediately before his death. This entitlement must be established on an arguable or prima facie basis.
22In Perkovic v. Marion Estate, 2008 CanLII 52315 (Ont. S.C.), at para. 6, Justice D.M. Brown, as he then was, set out the following test to be satisfied by an applicant to establish that she is in need of and entitled to support on a motion for interim 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.
23In Quinn v. Carrigan, 2014 ONSC 5682, at para. 129, the Divisional Court recognized that the legal entitlement of an applicant immediately prior to the testator’s death is a relevant consideration.
24Section 64 of the SLRA provides that where an application is made under Part V 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 (i.e. the amount and duration of support, if any, based on prescribed criteria, and the court’s powers to order provision for support from the estate) have not been ascertained by the court, the court may make such interim order under section 63 as it considers appropriate.
25Spouses have an obligation to support one another. Section 30 of the Family Law Act, R.S.O. 1990, c. F.3 provides as follows:
(30) Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.
Application of the Law to the Facts
Is the applicant a “dependant”?
26It is not disputed that the applicant falls within a qualifying relationship set out in s. 57 of the SLRA. She was the legally married spouse of the Deceased at the time of his death.
27As the Deceased’s spouse, the applicant must then satisfy the court that the Deceased was providing support to her or was under a legal obligation to provide support to her, immediately before his death.
28The applicant has not adduced any evidence from which one could conclude that the Deceased was providing support to her immediately before his death. The Deceased had several health issues arising out of his alcohol addiction, and he had lost his job prior to his separation from the applicant in April 2016. Between the time of separation and the Deceased’s death, the Deceased had no employment income and was not supporting the applicant. The applicant and the Deceased were living separate and apart in the matrimonial home until he was admitted to a rehabilitation facility in August 2016. On discharge, he went to live with his sister, the respondent. When the matrimonial home was sold and he received his share of the net proceeds, he purchased a condominium property, where he resided until his death. The applicant was employed following the separation. At the time of the Deceased’s death, she was not relying on him for support.
29Between their separation and the Deceased’s death, the applicant and the Deceased were in the process of negotiating the terms of their separation and divorce. Spousal support remained an issue to be resolved as set out in the Interim Separation Agreement. There is no evidence that the applicant waived any entitlement she may have had to spousal support from the Deceased.
30Under the Family Law Act, every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so. Section 29 of that Act defines “spouse” to include two persons who are married to each other.
31Accordingly, for the purposes of this motion, I find that the Deceased, as a married spouse, had a legal obligation to provide support to the applicant, in accordance with need, to the extent he was capable of doing so. I find that the applicant has established, on a prima facie basis, that she falls into the category of “dependant” within the meaning of section 57 of the SLRA. Therefore, she has standing to assert a claim for interim support under sections 58 and 64 of the SLRA.
Did the Deceased make adequate provision or proper support for the applicant?
32The applicant submits that she is in need of support and that the Deceased is capable of providing support. Despite his obligation to provide support to her as his married spouse, to the extent he is capable of doing so, the applicant submits that the Deceased did not make adequate provision for her support. She submits that he made no provision for her at all.
33Though the respondent has not yet made full disclosure of the Deceased’s assets and liabilities, she submits that the Deceased has estate assets worth approximately $650,000, and his life insurance policy has a death benefit of $75,000. There is no evidence to suggest that the Deceased had any dependants other than the applicant.
34The applicant’s evidence includes a copy of a Form 13: Financial Statement sworn by her on January 31, 2019. It shows that, as of that date, she had assets worth approximately $611,000 comprised of residential real estate with a value of approximately $508,000, chattels of approximately $12,000, a bank account with a balance of $1,785 and registered plans of approximately $88,500. At that time, her debts amounted to $390,891 including mortgage debt, a line of credit, credit card debt (on seven credit cards), a loan from her mother and a loan from her daughter. The Financial Statement shows her net worth to be $220,473.
35The record also shows that the applicant owes legal fees in this proceeding in excess of $60,000. She submits that, out of necessity, the line of credit and credit card debt were incurred by her because she had no spousal support from the Deceased, and she could not and cannot meet her expenses based on her modest part-time income. Her annual income for 2018, as shown on the Financial Statement, was $20,136.02. This income is derived from her work in 2018 as a contract employee doing shift work with Infield Marketing Group and as a bookkeeper for her son’s company. Based on her Financial Statement, her monthly income is approximately $1,678 and her monthly expenses are $6,035.12.
36The applicant further submits that she is 59 years of age and her employment marketability is likely to decrease. She deposes that her son has advised her that he will not be able to continue to employ her indefinitely. Accordingly, she submits that her ability to contribute to her own support is limited.
37In addition to her age, the applicant submits that her health could reduce her chances of finding gainful employment. She submits that she has an arthritic knee that will require replacement. She further submits that she suffers from stress and anxiety.
38The applicant argues that her needs are not extravagant. She submits that, even though the Deceased’s income, while he was working, afforded them a very comfortable lifestyle, she is content to live in a smaller home, but she needs to pay off her debts. She submits that, currently, her monthly income does not even cover the monthly minimum payments on her numerous credit cards.
39The court must assess the evidence on the motion and if it concludes that the record contains credible evidence from which one could rationally conclude that the applicant could establish her claim for support, then an order for interim support may issue: Perkovic, at para. 9. Definitive proof of the inadequacy of the provision made is not required, however, some evidence must be put forward to address the issue: Hockley v. Moy, 2013 ONSC 6195, at para. 14.
40Based on the evidence adduced by the applicant, I am satisfied that she has raised a prima facie case to show that the Deceased did not make adequate provision for her support, and that he is capable of doing so. Notwithstanding that the Deceased was not providing support to the applicant immediately before his death, the applicant did not waive her entitlement to support on the breakdown of their marriage. The Deceased’s death did not extinguish his legal obligation to provide for the applicant’s support, in accordance with need, to the extent that he is able. As stated by Corbett J., speaking for the Divisional Court in Quinn, at para. 127: “Mr. Carrigan is dead and does not, himself, “need” any money to support himself.” This factor contributed to a higher award of spousal support in that case.
41I reject the respondent’s assertion that an interim support payment to the applicant from the Deceased’s estate would be a “windfall” to her to which she would not be entitled if the Deceased were still alive. The respondent posits the view that if the Deceased were alive, the applicant may have had to support him owing to his ill health. What spousal support, if any, that the applicant would have been entitled to if the Deceased were alive is a highly speculative exercise and does not usefully add to the analysis. I find that the applicant has raised credible evidence from which one could rationally conclude that she can establish her entitlement to interim support. She has met her burden.
What amount of interim support should the applicant receive?
42The applicant seeks interim support in a lump sum amount of $50,000. She seeks this lump sum amount for legal fees she has incurred in pursuing her claim for dependant’s relief.
43Section 63(2) of the SLRA states that provision may be made out of income or capital or both and an order may provide for one or more of the following, as the court considers appropriate,
(a) an amount payable annually or otherwise whether for an indefinite or limited period or until the happening of a specified event;
(b) a lump sum to be paid or held in trust; …
(g) the payment of a lump sum or of increased periodic payments to enable a dependant spouse or child to meet debts reasonably incurred for his or her own support prior to an application under this Part; …
44Section 63(1) of the SLRA provides that in any order making provision for support of a dependant, the court may impose such conditions and restrictions as the court considers appropriate.
45The applicant submits that she has incurred over $61,000 in legal fees relating to her claim for dependant’s relief. The evidence of these fees is provided through affidavit evidence of a law clerk at the law firm of counsel for the applicant. The clerk’s affidavit does not include copies of any invoices rendered in respect of the legal services provided, any description of the type of services provided, or the rates charged. It is, therefore, not possible for the court to assess the fairness and reasonableness of these fees.
46On an interim basis, at this point in the proceeding, and based on the evidence before me, I am disinclined to award the applicant a lump sum amount for legal fees incurred in pursuing her claim for support that is nearly seven percent (7%) of the reported value of the Deceased’s estate. It is apparent from the applicant’s application and motion materials that a considerable amount of legal work has been put into advancing her claim. However, it is not yet known whether the applicant will succeed on her application. Under the circumstances, I am prepared to award a lump sum amount of $30,000 as an interim payment, which I find to be fair and proportionate under the circumstances.
Disposition
47The applicant is successful on her motion for production and for the repayment to the Deceased’s estate for the respondent's legal fees incurred in defence of the applicant’s claim for dependant’s relief. The applicant is also successful in her claim for interim support, though she was awarded less than she claimed.
48An order shall issue requiring: a) the production of documents as set out in paragraphs 7, 8 and 9 of this endorsement; b) the repayment of $9,999.91 by the respondent to the estate of the Deceased as set out in paragraph 14 of this endorsement; and c) the payment to the applicant of a lump sum amount of $30,000 as interim support so she may pay debts reasonably incurred by her for her own support. The lump sum shall be payable within ten (10) days of this endorsement.
Costs
49The applicant submits that she was forced to bring this motion because the respondent was in breach of the Order having failed to file responding materials and breaching the terms of the Order relating to the preservation of assets. The responding application materials, which were ultimately served late, were inadmissible owing to several deficiencies. The applicant submitted a Bill of Costs and Costs Outline at the hearing of the motion and seeks full indemnity costs of $17,122.25 for her efforts in bringing the motion to compel compliance with the Order.
50The respondent did not then submit a Bill of Costs or Costs Outline but submits that she does not object to the hourly rates charged or the number of hours spent by the applicant’s counsel on this motion. The respondent submits that her failure to comply with the Order was not out of blatant disregard of a court order but, rather, clerical errors made by her counsel. I do not find the respondent’s explanation to be a full answer for her failure to comply with the Order. The Order is dated March 25, 2019, the respondent was given three extensions of time, and the respondent has yet to file proper responding materials to the application. Her delay caused the mediation to be cancelled. The case involves a relatively modest estate and a straightforward application for dependant’s relief. The case would benefit from mediation sooner rather than later.
51The applicant made an offer to settle the issues on the motion, to which the respondent did not respond. An award of substantial indemnity costs is appropriate in this case. Accordingly, I fix the costs relating to the breaches of the Order at $12,841 plus HST. Counsel for the respondent submits that the respondent should not be required to pay for the clerical errors made by her counsel. I agree. These substantial indemnity costs shall be divided between the respondent and her counsel, as they can agree, and shall be payable to the applicant forthwith.
52I encouraged the parties to agree on the costs of the motion relating to interim support. They were unable to do so, and each provided written submissions on costs on November 4, 2019. I have reviewed these written costs submissions, including the offer to settle made by the applicant to the respondent on October 18, 2019. The interim support ordered on this motion is less than the amount set out in the settlement offer, but the applicant nonetheless succeeded on the motion. Accordingly, costs on a partial indemnity basis are appropriate. I fix the costs of relating to the interim support portion of the motion at $3,184.95 plus $564 for disbursements, as sought by the applicant, together with HST on both amounts. Taking into account the principles set out in Boucher v. Public Accountants Council for the Province of Ontario, (2004) 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (Ont. C.A.), I find these costs to be fair and reasonable. They shall be payable from the Deceased’s estate forthwith.
Dietrich J.
Date: November 15, 2019