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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Family law issues often make an appearance in estate litigation matters, as illustrated in a recent Ontario case, Yamada v. Zolad [2007] O.J. No. 607 (Ont. S.C.).

In Yamada Estate, a woman suffering from Alzheimer’s was allowed to elect to take her share of net family property under the Family Law Act, rather than take a life interest in the residue of her husband’s estate under his will.

The husband and wife had married in 1982. In 1997, when the couple was living in London, the wife began showing signs of Alzheimer’s and was moved to a medical centre in 2001, when her condition became more severe. The husband visited the wife almost every day until 2003, when the wife was moved to a Toronto facility. By this time, the husband’s mobility was impaired and it became difficult for him to visit his wife in Toronto.

The husband had won a million dollars in 2002. He died in 2005, leaving a Will. Further to the terms of the Will, he left his wife a life interest in the residue of his estate, with power given to his estate trustees to encroach on the capital to ensure his wife’s comfort and welfare. On the death of the wife, the two estate trustees were to receive $10,000.00 each in lieu of compensation, with the balance to be divided equally between two charities.

The wife, through her litigation guardian, brought an application to elect to take her entitlement under the Family Law Act, rather than keep her life interest in the residue of the husband’s estate. The estate trustees opposed the application, claiming that the parties had separated in 2001. They claimed that the husband had a fixed intention to separate from the wife in 2001.

Justice Greer granted the wife’s application. She found that the couple had never made any legal or emotional efforts to separate during their marriage and/or destroy the marriage. There was no Separation Agreement and no divorce petition. The couple simply became physically separated due to the wife’s advancing Alzheimer’s disease. This physical separation was not sufficient to establish legal separation in the circumstances.

Justice Greer also found that the husband’s 2002 lottery win was the motivating factor behind the estate trustees’ opposition to the wife’s equalization claim. She noted that they chose a separation date that pre-dated the lottery win, notwithstanding that the husband had been frequently visiting the wife at this time. She further noted that there was no evidence that either of the charities (as capital beneficiaries of the Estate), were opposing the wife’s equalization claim. Justice Greer appeared to reprimand the estate trustees for their position on the application, stating that as estate trustees and beneficiaries, they should have taken a neutral position on the application. Interestingly, the estate trustees were still awarded their costs to be paid out of the estate.

Have a great day!

Bianca La Neve

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While the Judgment in Webster v. Webster Estate [2006], 25 E.T.R. (3d) 141 (Ont. S.C.J.) was rendered in July 2006, Justice Robertson’s Endorsement regarding the costs award in the matter was released in February 2007 (see [2007] O.J. No. 371).

In Webster, the Applicant, Mrs. Webster, was seeking an Order extending the time in which she may file an election to make an equalization claim under s.5(2) of the Family Law Act, R.S.O. 1990, c. F.3 (the “FLA”) from the Estate of her deceased husband, Mr. Webster. The six month limitation period in s. 7(3)(c) of the FLA prevented the claim from succeeding unless an extension order was granted.

According to the Decision on the motion, Mr. and Mrs. Webster were married for 29 years; it was a second marriage for both parties. During their married life, Mr. and Mrs. Webster gave generously to the community. They lived happily ever after until the death of Mr. Webster on October 11, 2003. Mrs. Webster was a devoted wife. Mr. Webster was 87 years old when he died. Mrs. Webster was then 81 years old. Mrs. Webster developed Alzheimer’s disease, which progressed to the point where she was unable to testify as a witness in the proceeding.

Mr. Webster’s Estate was valued between $22 and $24 million. The bulk of the Estate was left to charity. The named executors of the Estate were Mrs. Webster, Mrs. Webster’s son by her first marriage, Mark Armitage (who was also her legal representative), Mr. Webster’s son by his first marriage, Norman Webster and the long-time trusted financial advisor to the testator, Mr. Ferguson. On consent, Mrs. Webster and Mr. Armitage were removed as executors of the Estate by Court Order dated January 12, 2006.

Mr. Webster’s Will provided Mrs. Webster with use of Ottawa and Florida residences (both owned by a company of which Mr. Webster was the sole shareholder), as well as $250,000.00 per year, net of tax income, for her life from a spousal trust. Subject to Mrs. Webster’s life interest, the Will required that the remainder of the Estate be paid out, within five years of the death of Mrs. Webster, to Mr. Webster’s Foundation and such other charities as the Executors might select. The designated charities were mostly schools and hospitals.

Justice Robertson dismissed the motion finding, among other things, that the case did not meet the criteria set out in s. 2(8)(b) and (c) of the FLA and that it would be unjust and contrary to the objectives of the FLA to use the extension provision in the manner pursued in this case.

The Respondents sought costs on a full recovery basis in the sum of $176,006.89 arising from the proceeding. Mrs. Webster, by her representative, was opposed to an Order granting costs to the Respondents.

Justice Robertson found that the Respondents’ legal costs and disbursements in the amount of $176,006.89 were reasonable and ordered that they be paid by the residue of the Estate of Mr. Webster. Mrs. Webster was responsible for paying her own legal costs.

In his Endorsement, the Judge noted that cost rules are designed for three fundamental purposes: (i) to indemnify successful litigations for the cost of litigation; (ii) to encourage settlements; and (iii) to discourage and sanction inappropriate behaviour by litigants. When success is divided, he noted that costs are apportioned. His Honour also noted that Rule 24 of the Family Law Rules is the primary rule dealing with costs. Although Rule 24(1) presumes that the successful party is entitled to costs, His Honour added that while the emphasis on the outcome is a significant factor, consideration of other factors must be carefully weighed.

His Honour also noted the following, among other things: (i) the nature of the relief sought could result in an Order with only two options: to extend or not to extend; (ii) the legal test was more complex and in that regard the success on individual points was more divided; (iii) the ability to pay a cost order was not an enumerated factor in determining liability or quantum pursuant to the cost rules (here, both parties had the means to satisfy any order made); (iv) the parties had acted in good faith; (v) neither party should be sanctioned for behaviour reasons; and (vi) both lawyers were well prepared and learned.

In addition, apparently, paragraph 19 of the Will specifically discouraged litigation and encouraged alternative dispute resolution. Despite this direction, there were no formal offers of settlement and the parties chose to waive a case conference. Given the experience and cooperation of the counsel, however, the Judge found that waiving the case conference in the face of a defined legal problem may have been practical and saved money.

In exercising discretion, Justice Robertson stated that after having balanced the amount claimed with the necessary considerations, including the complexity and importance of the legal issue, it was not appropriate to award costs against Mrs. Webster.

Have a great day.
Craig

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LISTEN HERE

READ THE TRANSCRIBED PODCAST

During Hull on Estates Episode #42, Justin and Megan discussed the case of Godwin c. Bolcso [1993] O.P.J. No. 297 and Section 32 of the Family Law Act.

This case concerns the application by a 58-year-old mother for support from four adult children. The issues covered included the definitions of "reasonable care" and "support", and insight into when support will be ordered for parents.

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If a Will is made, or if there is an intestacy, a husband or wife receives the benefit provided under the deceased spouse's Will or the intestacy provisions of the Successioin Law Reform Act, respectively, or is entitled to elect to instead receive his or her benefit under the Family Law Act.

Such election will be made if the husband or wife will receive a more favourable benefit by receiving one half of the difference between the net family properties of the deceased spouse and the survivor respectively.

Note that the right to elect is restricted to married spouses.

If an election under the Family Law Act will not benefit the surviving spouse, the option remains for the surviving spouse to claim against the estate under the provisions of Part V of the Succession Law Reform Act. The position asserted by the surviving spouse on such a claim is that the deceased spouse, by the provisions of his or her Will or on a distribution on an intestacy, did not satisfactorily provide for the needs of his or her spouse.

As noted above, an unmarried spouse as defined in Part V of the Succession Law Reform Act, may similarly asset a claim for support against the estate. A spouse is defined for the purposes of Part V of the Succession Law Reform Act to include persons who have "cohabited for a period of not less than three years or in a relationship of some permanence if they are the natural or adoptive parents of a child."

It is a common characteristic of spousal relationships for the two to jointly own property. The predominant characteristic of jointly held property is that each joint owner has a right to ownership on the death of the other joint holder, also known as a right of survivorship. This right is severable, with each joint owner having an entitlement to one-half of the property.

Have a great day, David. --------