Toronto Estate Law Blog : Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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Further to yesterday’s blog, in the case of McDougall Estate, the beneficiary complained about the trustee’s compensation on the passing of her accounts. In issue was whether the trustee’s compensation should be reduced because she:

1. Made an improper distribution to a charity that was not authorized by the Will.
2. Failed to make an inventory of the contents of the deceased’s house and failed to offer the beneficiary any of the deceased’s personal effects.
3. Pre-took compensation.
4. Paid too much in legal fees out of the estate.

The court found that even though the charitable gift failed because it was not a specified amount or share, the trustee’s interpretation of the Will was not unreasonable and the trustee was not liable for an innocent mistake, made in good faith. She was therefore not required to reimburse the estate and should not have her compensation reduced.

The contents of the house were of little value and had to be cleaned out for sale. The trustee never received any indication from the beneficiary that there was anything of sentimental value that she wished to receive. In the circumstances, the Court found that the compensation should not be reduced for the manner in which the trustee dealt with the personal effects.

The trustee pre-took compensation of 5% of the value of the estate as originally calculated but, after adjustments, she admittedly overpaid herself by $1,163.24. Estate trustees ought not to pre-take compensation unless authorized in the trust document or by approval of the executor’s accounts by the beneficiaries. The proper remedy was payment of interest on the amount pre-taken. Accordingly, the trustee was ordered to repay $1,163.24 plus interest of $360 to the estate.

It was not unreasonable for the trustee to seek legal advice to respond to the inquiries from the beneficiary’s lawyer. While amounts paid to respond to questions about the administration of the estate were not at first instance a proper charge to the estate, such costs were allowed because they were properly incurred by her to respond to the beneficiary’s challenges to her administration of the estate.

The payment of legal fees from the estate that ought to have been paid by the estate trustee is a form of pre-taking of compensation and so the estate trustee was liable for interest on that amount, which was fixed at $70.00.

Sharon Davis - Click here for more information on Sharon Davis. 

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In the recent case of McDougall Estate, 2011 ONSC 4189 (CanLII) the deceased passed away leaving a handwritten will and codicil that together constituted a valid holograph will. The deceased had one surviving relative, his 83-year-old sister who lived in Florida.  

The will did not name an estate trustee and so the deceased’s close friend applied for and obtained a Certificate of Appointment of Estate Trustee with a Will. 

The will left the deceased’s estate to his sister, with a gift-over to “Eye Care research in Glaucoma and Catarach (sic) research”. The codicil said “this shall be expanded after all expenses and encumberances including burial, and the portion to [illegible – the Court determined it was either “expand” or “eye and”] glaucoma … At my death the remainder of my possession shall be bequathed (sic) to my sister Pearl McDougall, now residing in Florida.”

The estate trustee flew to Jamaica at a cost of $859 to deliver a cheque for $9,000 to a clinic for which the deceased had a passion. She delivered the donation herself because she wanted to make sure the charity was legitimate. 

In interpreting a will, the court commented that its function was to determine the true intentions of the testator in light of all the surrounding circumstances. On a reading of the will as a whole, the testator intended to make a charitable gift for eye and glaucoma research and that the bequest to charity was to be paid before the residue would fall to his sister.  This interpretation gave effect to the evidence concerning the deceased’s intentions including his history of making charitable gifts and his desire to benefit eye research because of his own cataract surgery.

However, the charitable bequest failed because no specific amount or share was stated by the testator.

The McDougall decision also dealt with the passing of accounts and contained some instructive discussion regarding trustee compensation, which I will cover in tomorrow’s blog, so stay tuned!

Sharon Davis - Click here for more information on Sharon Davis. 

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When applying for a Certificate of Appointment of Estate Trustee with a Will, the applicant must be certain that the Will annexed is the Last Will and Testament of the Deceased. Ideally, the testator will have discussed the location of their Last Will with a trusted family member, friend or professional and it will be easily located at the appropriate time. 

If this is not the case, there are a number of places to begin your search for a Last Will, as discussed by Sean Lawler in his article “Wills Kept by the Law Society of Upper Canada” in the most recent issue of Deadbeat, a publication of the Trusts and Estates Law Section of the Ontario Bar Association.

Some of the places Wills are often kept include the following:

1. The drafting lawyer's Wills vault.
2. Among the Deceased's possessions.
3. In a safety deposit box.
4. With the Executor.
5. With an attorney for property or for personal care.
6. On file with the Superior Court of Justice pursuant to Section 2 of the Estates Act, which establishes a Wills depository administered by local Court offices.

If you are unsuccessful locating a Will as above, you can place an ad with the Ontario Reports or other publication to determine if another lawyer who acted for the Deceased, or any other person, is in possession of a Last Will.

One other place to look is the Law Society of Upper Canada (“LSUC”). The files of many lawyers who die, retire, or are disbarred are transferred to LSUC’s Trustee Services Department. Most files are now stored electronically.

LSUC keeps over 45,000 Wills, a number that increases by approximately 3,000 per year. The Wills register can be searched by the name of the lawyer or by the name of the Testator.

The key takeaway here is that estate planning should not be a secret. Discuss your Will with your family (contents and location) and make it easy on loved ones when the time comes to probate your Will.

Sharon Davis - Click here for more information on Sharon Davis. 

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Listen to: Hull on Estates #255 - Digital Assets and Estate Planning

This week on Hull on Estates, David Smith and Valerie Yap discuss digital assets and estate planning.  More specifically, they discuss what "digital assets" are and how individuals should deal with the death of their digital legacy.

If you have any comments or questions, send us an email at hull.lawyers@gmail.com or leave a comment on our blog.

Click here for more information on David Smith. 

Click here for more information on Valerie Yap. 

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Lawyers frequently take funds into their trust accounts on behalf of clients and others. Usually, it is not difficult to determine to whom those funds belong. However, what happens when the beneficial owner of funds held in trust cannot be identified or located?  

In Ontario, section 59.6 of the Law Society Act permits a lawyer (or licensed paralegal) who has held money in trust for or on account of a person for at least two years to apply for permission to transfer the money to the Law Society of Upper Canada (“LSUC”) if,

1. The lawyer has been unable to locate the person entitled to the money despite having made reasonable efforts throughout a period of at least two years; or
2. The lawyer is unable to determine who is entitled to the money.

The application procedure for transferring the money to LSUC is set out in By-Law 10.

You must complete and file the licensee application form, which will be reviewed by LSUC. Upon completion of the review, LSUC will notify you whether permission to transfer the money to it has or has not been granted.

If permission is granted, you must,

1. Send a trust cheque, made payable to "The Law Society of Upper Canada, in Trust", in an amount equal to the amount of money for which you have received permission to transfer; and
2. Send copies of your financial records relating to the money which you have been permitted to transfer.

Permission to transfer money will typically be subject to the condition that you inform LSUC immediately if you obtain any new information relating to any person entitled to the money that was transferred.

Once the money has been transferred, your liability as trustee or fiduciary with respect to the amount transferred is extinguished.

See the LSUC website for more information.

Sharon Davis - Click here for more information on Sharon Davis. 

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Being a trustee is serious business. A trustee, by law, owes a fiduciary duty to the beneficiaries for whom he or she holds property and must keep this in mind and act in the best interest of those beneficiaries at all times. 

The Court does not take the breach of fiduciary duties lightly and will Order trustees to fulfil their obligations. If a trustee doesn’t heed such Orders, they may find themselves in contempt of court, as was the case in a recent Ontario Superior Court of Justice decision, Re Penna Estate. 

In Re Penna Estate, the defendant was found in breach of the following four Court Orders during the course of litigation that had been ongoing for five years:     

1.     A Mareva Injunction.

2.     A Passing of Accounts Order.

3.     An Order to provide the Court with an up-dated Affidavit respecting the values of assets listed in the Mareva Injunction.

4.     An Order of to attend at an Examination in-aid-of execution and to bring all documentation. The Defendant was also ordered to provide an Affidavit respecting the status of his assets, which were frozen under the Mareva Injunction, since it was discovered that he had liquidated all such assets.

Justice Greer found that the Defendant had made no attempt to comply with the Orders and had committed fraud in the administration of the estate.  The Court discussed the possible sanctions for contempt, which include:

1.     Imprisonment for such a period and on such terms as are just.

2.     Imprisonment if the person fails to comply with the term of the Order.

3.     A fine to be paid to the Provincial Treasurer.

4.     A Order to do or refrain from doing an act.

5.     An Order to pay such costs as are just.

6.     An Order to comply with any other order that the Judge considers necessary.

In Re Penna Estate, the Court considered the applicable sentencing principles and found that the appropriate sanction in the circumstances was a term of imprisonment. The Defendant was sentenced to 14 months. Furthermore, because this was a civil contempt, there was no method of parole as there is in criminal matters. 

A sobering lesson for all who are the subject of civil Court Orders, indeed.

Sharon Davis - Click here for more information on Sharon Davis. 

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In Ontario, a testamentary document that is entirely made in the handwriting of a deceased and signed by him or her may be considered a valid will without the necessity of witnesses. But where such a document has two lines with the word “witness” under each line at its end, and where no one has signed as a witness, does the document still meet the requirements of a valid will?

This was the fact situation which presented itself in Re Atherton Estate. The Court concluded that, while there was no question that the document met the formal validity requirements of a holograph will, the surrounding circumstances suggested that the deceased intended the document to be a draft that would not take effect until it had been typed out and re-executed by the deceased in the presence of two witnesses.

The wrinkle was that, when the relative to whom the deceased had given the handwritten documents returned to visit him in hospital the next day with the typewritten copies, the deceased exhibited no intention to execute the will in its typewritten form. 

Keep cool!

 

David M. Smith - Click here for more information on David Smith. 

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Occasionally, an estate of a deceased person may be unadministered yet it is nonetheless in the interest of justice that such estate have representation in proceedings before the Court.  For example, one estate may claim an entitlement in another estate. However, if the estate claiming such an entitlement is otherwise insolvent, it may be that no one is prepared to administer the estate and, as executor, actually advance the claim.  It may then be left to a beneficiary to seek a Representation Order from the Court (under Rule 10.02 of the Rules of Civil Procedure) authorizing him or her to either: (i) represent the interests of the estate under which he or she takes or (ii) allow his or her application to proceed in the absence of an appointed executor.

Such was the fact situation in the decision of Justice Hoy of the Ontario Superior Court of Justice in Sloan v. Witkin released June 15, 2011.  In finding that the application advanced by Ms. Sloan should be allowed to proceed, Her Honour stated, in part, as follows:

" I accept...that the court should be cautious in granting authority to carry out litigation without the burden of administering the entire estate. On the very particular facts of this case, however, I am persuaded that an order should issue pursuant to Rule 10.02 permitting Ms. Sloan to do so in the absence of a person representing the Moldaver Estate.  In addition to being a beneficiary of the Moldaver Estate, Ms. Sloan is, allegedly, a creditor.  If her application prevailed, she would not be an appropriate executor. Additional steps would be required at that time to name a different executor. This is an unnecessary expense. The Moldaver Estate is – absent entitlement from the Fox Estate ‑ insolvent; not surprisingly, no one has volunteered for this task....Moreover...the proceeding at issue is an application for the determination of rights depending on the interpretation of a will, not an action where facts are in dispute.

David M. Smith - Click here for more information on David Smith. 

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Listen to: Equalization Payments - Hull on Estates # 254

This week on Hull on Estates, Paul Trudelle and Nadia Harasymowycz discuss equalization payments and the effects of bankruptcy on equalization payments with particular reference to the the case Schreyer v. Schreyer 2011 SCC 35 (CanLII). 

If you have any questions or comments, send us an email at hull.lawyers@gmail.com or leave a comment on our blog.

Click here for more information on Paul Trudelle.

Click here for more information on Nadia Harasymowycz. 

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Estate planning goes hand in hand with retirement planning.  For many, their RRSP may be their largest asset. Apart from the estate planning considerations associated with this asset such as who bears the tax on the deemed disposition and the merits of designating a named beneficiary rather then one's estate, it is important to consider the more encouraging prospect that you actually get to enjoy all your money before you die.  

In a recent article in the Globe and Mail, the following were considered as the key objectives to consider when planning one's retirement: 

Money -- Will you be able to afford life and live your dreams after employment?  State Farm estimates that the average person will need 70-80 per cent of his or her income to maintain their present lifestyle. 

Health -- Will you be physically able to enjoy your time in retirement? While the answer to this question is often entirely out of our control, the author notes that "developing and maintaining a healthy diet and eating habits, making regular visits to your physician or healthcare professional, and adopting an active regimen"  increase your prospects for good health in retirement.  

Housing -- If and when you do sell and downsize to, say, a condo, there will be an "emotional transition to a smaller space after living in a large home."  

Your Time -- The author notes that there is a big transition to having free time after a life of labour.  Her observation? "Experts say one of the best moves is to stay involved somehow - volunteer, do some consulting, take up a hobby, join a club, take classes at a community school or college, even get a part-time job." 

David M. Smith - Click here for more information on David Smith. 

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Arguably the biggest societal change triggered by the advent of the Internet has been the availability of free information.  One big upside is that everyone can gain access to legal authorities without having to enter the Great Library at Osgoode Hall.

In Canada,  we have the benefit of CanLII (operated by the Canadian Legal Information Institute) which is available free to everyone and provides access to current statutes and up to date case law.

On the other side of the pond there is a new service called Judgmental (website currently under repair/construction), the content of which includes case law  from the UK, ECJ, ECHR, and Ireland.  Judgmental differs from CanLII's sister service BAILII (British and Irish Legal Information Institute) database as was noted recently in the Legal Informatics Blog, an excerpt of which reads as follows:

"The service distinguishes itself from BAILII on the ground that while BAILII seems to let Internet search engines (including Google) index only its metadata and full-text from only selected cases, Judgmental lets Google index the full text of all of its case law; Judgmental therefore enables the use of Google and other Internet search engines for full-text retrieval of much UK case law Judgmental cases appear to be available only in HTML format, and only individually; no bulk access seems to be available. For each case, some citation (noter-up) information — i.e., citations and links to citing and cited cases — is provided. Also, Judgmental appears not to provide any on-site search tool, so users must either browse to find the case they seek, or search using Internet search engines."

David M. Smith - Click here for more information on David Smith. 

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Ontario's Attorney General brings in new regulations on divorce that take effect today.  The new regulations include provisions for couples seeking a divorce to attend a mandatory information session as well as being offered mediation which some reports indicate is, in certain circumstances, paid for by the Province.  In addition, "information referral co-ordinators" will assist people to where they need to be in the family courts. The last "pillar" of the reforms is to make adversarial court fights less painful.

The announcement is an expansion of a process initiated in part by improvements in accessing court forms online through the Ontario Court Forms Assistant (formsassistant.ontariocourtforms.on.ca).

Attorney General Chris Bentley is quoted as saying "Going to court and having a court battle and family proceedings can be enormously costly, take a lot of time, and probably most significant, can be very emotionally damaging to children, and to the two individuals."

Reducing the costs and complexity of Court proceedings in Ontario has been a priority since the release of the Report of the Honourable Coulter Osborne (Civil Justice Reform Project) in 2007.

David M. Smith - Click here for more information on David Smith. 

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 Yesterday, the Supreme Court of Canada released its decision in Schreyer v. Schreyer (2011 SCC 35). The decision dealt with the issue of whether an equalization payment due to a spouse survived the bankruptcy of the owing spouse.

In determining the issue, the Court noted the perceived clash between family law and bankruptcy law.

In Schreyer, the parties separated in 1999 and filed for divorce in 2000. The husband was the owner of the family farm. The parties consented to an equalization of their assets. Before the equalization could be judicially considered, the husband filed for bankruptcy. The wife was not listed as a creditor, and the husband was discharged from bankruptcy in 2002. An equalization order was then made in favour of the wife, but the Manitoba Court of Appeal held that the wife’s claim was extinguished by the discharge of the husband’s bankruptcy. The wife appealed to the Supreme Court of Canada.

The Supreme Court of Canada agreed with the Manitoba Court of Appeal, and dismissed the appeal. Manitoba was said to be an “equalization jurisdiction”, and not a “division of property jurisdiction”. (Ontario is also an “equalization jurisdiction”.) The wife did not have any proprietary right in the husband’s property, and was therefore only a creditor of the husband. 

As to the effect of bankruptcy, the wife’s claim was provable in the husband’s bankruptcy. It was neither proprietary, nor was it exempt from the effect of a discharge as a claim for support or maintenance. Upon the discharge of the husband, the husband was released from all claims provable in bankruptcy, including the equalization claim.

As to the fact that the wife was not notified of the husband’s bankruptcy or discharge, the Court noted that she could bring a claim in bankruptcy to remedy this. However, she would only be entitled to seek the dividend she would have otherwise received. In the case before the Court, there was not dividend paid to creditors, and thus, such a claim would prove fruitless.

Under Manitoba’s Judgments Act, the family farm was exempt from execution. The wife, however, could apply to the bankruptcy judge for leave to pursue her claim against the exempt property. Alternatively, the wife could pursue a remedy such as spousal support.

Although the appeal was dismissed, the Court did not award costs to the husband, “in light of the particular circumstances of this case”. The Court appeared to lament the fact that “In its current form, therefore, the [Bankruptcy and Insolvency Act] offers limited remedies to spouses in the appellant’s position”, and stated that “It seems to me that this matter is ripe for legislative attention so as to ensure that the principles of bankruptcy law and family law are compatible rather than being at cross-purposes.” 

Have a great weekend.

Paul E. Trudelle - Click here for more information on Paul Trudelle. 

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I spent every weekday afternoon of my childhood sitting on the forest green shag carpet, a foot from our tiny T.V., sure as sure could be that today, yes, today, was the day that Gilligan et al. would finally make it off the island. My brother and I would race home from school, turn the dial to Channel ‘U’, then sub-channel 29, and the spirited negotiations regarding who would jockey the rabbit ears would commence. The only piece of television that would rival my time with Little Buddy, of course, was my time with Marcia, Jan, Cindy, Greg, Peter, Bobby, Mike, Carol and Alice. Incredibly, both Gilligan’s Island and The Brady Bunch were created and produced by veteran comedy writer Sherwood Schwartz, who died earlier this week at the age of 94.

Gilligan’s Island Fast Facts:

• Gilligan’s Island aired 98 episodes over three seasons on the CBS network, from September 1964 to September 1967.
• The first season (36 episodes) was filmed in black and white and was later colorized for syndication. Seasons two and three were filmed in colour.
• The theme song for Gilligan’s Island was composed by Schwartz himself.
• Bob Denver was not first choice to play Gilligan; Jerry Van Dyke (younger brother of Dick) was offered first dibs, but turned down the role for the lead in My Mother the Car.
• Creative geography translated into caves, a volcano, a gold mine and even a snow-capped mountain on the uncharted island, which was somewhere in the Pacific, close enough to Hawaii to allow the castaways to pick up Hawaiian a.m. radio transmissions. Just as bizarre were the appearances of a chimpanzee and a gorilla (both are native to Africa).
• Rumour has it that the United States Coast Guard occasionally received telegrams from concerned citizens who did not realize it was a scripted show, pleading for someone to go rescue Gilligan and the other survivors.  No, it wasn't me.

Schwartz, who was also ninth owner in the history of the Toronto Argonauts, is survived by his wife Mildred, his three sons, a daughter, eight grandchildren and four great-grandchildren.

Jennifer Hartman, guest blogger
 

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Benjamin Franklin said that only two things in life are certain: death and taxes. A third item could be added to the list: Major League Baseball’s All-Star Break. 

Yesterday, the 82^nd Major League Baseball All-Star Game was played: the National League beat the American League, 5-1

I am taking the occasion of the All-Star Break to take a break from our usual blog topics. However, I will refer to the issue of taxes (and baseball).

On Saturday July 9, the New York Yankees’ Derek Jeter hit his 3,000^th career hit. The milestone hit was a home run, caught by Christian Lopez. Some estimate that the souvenir ball may be worth $250,000. However, rather than keep the keepsake, Lopez returned the ball to Jeter!

His good deed did not go unrewarded. Apparently, the New York Yankees gave Lopez luxury box tickets for the rest of the season, including post-season; signed baseballs, bats and jerseys from Jeter, and four premium front row seats to last Sunday’s game.

However, as no good deed goes unpunished, the downside is that the IRS will likely treat the benefits to Lopez as income, and he may be liable for taxes estimated between $5,000 and $14,000.

Enjoy the dog days of summer.

Paul E. Trudelle - Click here for more information on Paul Trudelle. 

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Pursuant to dependant support legislation, courts have significant jurisdiction to provide support for those who qualify as dependants, and who have not been adequately provided for by the deceased. The remedies available to a dependant are broad, and the court has the jurisdiction to, essentially, rewrite the will so as to make adequate provision for the dependant.

The recent case of Soule v. Johansen Estate, 2011 ABQB 403 (CanLII) is a good illustration of such a rewriting of a will. There, the deceased died leaving a will that gave all of her estate, approximately $116,000, to the SPCA in Calgary, Alberta. The deceased intentionally disinherited her adult son. The son brought a proceeding against his mother’s estate, claiming that he was a dependant of the deceased and that he was not adequately provided for by the deceased.

In making its decision, the court referred to the common law recognition of a testator’s right to choose how to dispose of his or her property by will. However, the common law is changed by dependant relief legislation that seeks to balance testamentary autonomy with legal and moral obligations owed to dependant individuals in need.   Under the legislation, a form of which is in effect across the country, a testator has a duty to make adequate provision for the proper maintenance and support of a surviving spouse and children. (In Ontario, the definition of “dependant” includes an even broader group.) If the testator fails to discharge this duty, the court may order provision from the estate that is “adequate, just and equitable”. Testamentary autonomy must yield, to the extent necessary, to provide such support to dependants.

In Soule, the court found that the son was a “dependant” under the legislation because he was unable by reason of mental or physical disability to earn a livelihood. (Note that the Ontario legislation does not contain the same definition of “dependant”.)

In the end, the court awarded $10,000 to the SPCA, and the remainder of the estate to the son.

Thank you for reading,

Paul E. Trudelle - Click here for more information on Paul Trudelle. 

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We have blogged repeatedly on preparing your affairs for the inevitable, and steps that can be taken to make your estate trustee’s difficult job an easier one.

Recently, the Wall Street Journal published an article on this very topic: “The 25 Documents You Need Before You Die”. The article’s premise is that it is not enough to simply prepare an estate plan, and end-of life instructions: you must also make your heirs aware of them, and leave the documents where they can be found.

The article notes that many insurers are not paying out on unclaimed insurance contracts. In addition, billions of dollars in bank accounts remains unclaimed. In many cases, the estate trustee simply does not know of the existence of a life insurance policy or a bank account.

This, and other potential problems, can be avoided or minimized by simply organizing your relevant documents, and telling your estate trustee where they can be found.

The informative article suggests preparing a “Death Dossier”, consisting of the following:

The Essentials:

Will;
Letter of instruction to estate trustee;
Trust documents:

 Proof of Ownership

Proof of ownership of real property, cemetery plot, vehicles;
Stock certificates, savings bonds and brokerage accounts;
Proof of loans made or debts owed;
Partnership and corporate operating agreements:
Tax returns

 Medical/Health Care

Personal and family medical history;
Power of Attorney for Personal Care

 Marriage/Divorce

Marriage licence;
Divorce documents

Bank Accounts

List of bank accounts, user names, passwords;      
List of safety deposit boxes

Life Insurance and Retirement

Life insurance policies;
Details of RRSPs;
Pension documents;
Annuity contracts
 

The contents will obviously be modified to meet the individual’s situation. The contents will also have to be reviewed and updated regularly, as circumstances change.

Having such documents together in one place, and in a location known by the estate trustee, will go a long way to facilitating the job of the estate trustee.

Thank you for reading.

Paul E. Trudelle - Click here for more information on Paul Trudelle. 

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As has been my mantra all week, Justice Cromwell, who delivered the reasons for the Court in Kerr v. Baranow & Vanasse v. Seguin, commented that for unmarried persons in domestic relationships in most common law provinces, judge made law is the only option for addressing the property consequences of the breakdown of those relationships. 

A property interest by resulting trust arises where 1) there is a gratuitous transfer of property from one partner to the other, or 2) there is joint contribution by two partners to the acquisition of property, title to which is in the name of only one of them.

Added to this has been the “purely Canadian invention” of the “common intention” resulting trust, whereby a resulting trust could arise based solely on both partners having a common intention that one holds property for the beneficial interest of both. However, the Court declared that this concept was doctrinally unsound and should have no continuing role in the resolution of domestic property disputes. 

A far better approach was to apply the law of unjust enrichment and the remedial constructive trust, which provide a much less artificial, more comprehensive and more principled basis to address property claims on the breakdown of domestic relationships. To be successful, a plaintiff had to establish 1) an enrichment of the defendant by the plaintiff 2) a corresponding deprivation of the plaintiff, and 3) the absence of a juristic reason for the enrichment.

The appropriate remedy for unjust enrichment will most often be monetary though there may be some circumstances in which a monetary remedy will be inadequate and a proprietary remedy is required.  

When quantifying a monetary remedy, a quantum meruit approach should be applied and value assessed on a “value survived” basis, which is preferable to imposing a remedial constructive trust. To be entitled to a monetary remedy on a value survived basis, the claimant must show both that there was a joint family venture and that there was a link between his or her contributions and the accumulation of wealth.

This decision provides much guidance to courts in determining the property rights of unmarried partners and will no doubt prove instructive in cases where individuals die without having provided properly with respect to the property accumulated during their lifetime with a common law spouse.

Sharon Davis - Click here for more information on Sharon Davis. 

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In of Vanasse v. Seguin (the companion case to Kerr v. Baranow, heard at the same time) the common law couple was together for 12 years, from 1993 to 2005. For the first four years both parties pursued their careers. The common law wife (“wife”) then left her job to move to Halifax so the common law husband (“husband”) could pursue a business opportunity. Over the next three and a half years, their two children were born and the wife stayed at home to care for the family. The husband stepped down as CEO of the business he started and they returned to Ottawa in 1998, where they bought a home in both their names as joint tenants. In 2000, the husband received approximately $11 million for his shares in the business and from that time, until their separation in 2005, he participated more with the domestic chores.  

The trial judge found that there was no unjust enrichment for the first and last periods of the couple’s cohabitation, but held that the husband had been unjustly enriched at the wife’s expense during the period in which the children were born and was entitled to half of the value of the wealth the husband accumulated during the period of unjust enrichment, less her interest in the home and RRSPs in her name. 

The Ontario Court of Appeal set aside this award and directed that the proper approach to valuation was a quantum meruit calculation in which the value each party received from the other was assessed and set off, essentially treating the wife as an unpaid employee.

In the Vanasse appeal, the central problem was how to quantify a monetary award for unjust enrichment. The Supreme Court of Canada found that a monetary award for unjust enrichment need not, as a matter of principle, always be calculated on a fee-for-services basis, allowed the appeal, and restored the order of the trial judge.

Sharon Davis - Click here for more information on Sharon Davis. 

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The Supreme Court of Canada recently considered the property rights of common law spouses in the companion cases of Kerr v. Baranow & Vanasse v. Seguin. These cases required consideration of the following legal issues:

1. The role of the “common intention” resulting trust in claims by domestic partners. 
2. Whether the monetary remedy for a successful unjust enrichment claim must always be assessed on a quantum meruit basis.
3. Mutual benefit conferral in the context of an unjust enrichment claim and when this should be taken into account. 
4. The role the parties’ reasonable expectations play in the unjust enrichment analysis. 

In Kerr v. Baranow, a common law couple in their late 60’s split after 25 years, during which time both partners worked and contributed to their mutual welfare. The common law wife (“wife”) claimed property on the basis of resulting trust and unjust enrichment.   The common law husband (husband”) counterclaimed that the wife had been unjustly enriched by his housekeeping and personal assistance after she suffered a debilitating stroke.

The trial judge awarded the wife $315,000, (1/3 of the value of the home the couple shared, but which was in the husband’s name) by way of resulting trust and unjust enrichment, because the wife had provided $60,000 worth of equity and assets at the beginning of their relationship. 

 The B.C. Court of Appeal allowed the husband’s appeal because it found the wife did not make a financial contribution to the acquisition or improvement of the property, and ordered a new trial for the husband’s counterclaim.

The Supreme Court of Canada allowed the wife’s appeal from the dismissal of her unjust enrichment claim and ordered a new trial.  Her appeal from the order dismissing her claim in resulting trust was dismissed.  The order for a new hearing of the husband’s counterclaim was affirmed.

Tomorrow’s blog will cover the facts in Vanasse v. Seguin and in our last blog of the week we will explore the main issues discussed in relation to property rights of common law spouses in the context of these two cases.

Sharon Davis - Click here for more information on Sharon Davis. 

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Yesterday’s blog considered the fact that a common law spouse has no beneficial entitlement to his or her deceased spouse's estate on an intestacy.  There are, however, remedies available to the disappointed spouse. 

The first of these is a claim for dependant support found in Part V of the Succession Law Reform Act, whereby a common law spouse (or any other “dependant” of the deceased)  can ask for support where no adequate provision has been made for the dependant by the deceased.  

The Court has broad discretion to grant relief that, according to section 62(3) of the Act, can take a variety of forms, including the transfer, use or occupation of specified property in satisfaction of the dependant’s need for support.  

In many situations involving long-term common law relationships, there may also be an argument for equitable (as opposed to legal) ownership of property by the surviving common law spouse. These rights will be founded on the principles of unjust enrichment and include, for example, resulting or constructive trust, and proprietary estoppel.

The Supreme Court of Canada has recently considered two cases that provide guidance on unjust enrichment in the context of common law relationships. The Court released one decision in the matters of Kerr v. Baranow, and Vanasse v. Seguin, which I will be discussing in the next couple of blogs.    

Sharon Davis - Click here for more information on Sharon Davis. 

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In our modern society more and more people choose to remain in common law relationships rather than to marry. Certainly many think that few differences distinguish a common law relationship from a married one as society has responded to practical reality by making common law spouses eligible for pension benefits, family insurance benefits and spousal support. No wonder some people think it is all the same whether they are married or not. However, what many fail to realize is that it makes a very big difference with respect to property rights - both in life and after death.

A common law spouse of a deceased who has died intestate (without a Will) has no entitlement as a beneficiary of the deceased partner’s estate.   It is not uncommon that a dedicated common law spouse of 20 or 30 years is faced with the prospect of the estate of their loved one, which they helped to build over the years, going to the blood relatives, who are the legal heirs according to legislation; and often being people who never had any social relationship with the deceased whatsoever.  

If a person dies intestate, Part II of the Succession Law Reform Act  governs who is entitled to their estate. In the Act, a spouse is defined as a married spouse only. Here is the order in which family of a deceased is entitled to take:

1.      If there is spouse and no children the spouse takes all.

2.      If there is a spouse and children, the spouse gets the first $200,000.00. 

3.      If there is one child, the residue goes to the spouse and the child equally.

4.      If more than one child, the spouse gets one-third of the residue and the children share the other two-thirds equally.

5.      If there is no spouse, the estate goes to the children equally.

6.      If no children, the estate goes to the deceased’s parents equally.

7.      If no parents, the estate goes to the deceased’s siblings; if a sibling pre-deceased, that sibling’s share goes to the deceased sibling’s children.

8.      If no siblings, the estate goes to the nephews and nieces.

9.      If no nephews and nieces it goes to the next of kin of equal degree of consanguinity - that’s where it gets complicated and complete strangers end up inheriting. 

10.   If no next of kin, the estate escheats to the crown.

Lesson? Make sure you have a Will!  

Sharon Davis - Click here for more information on Sharon Davis.