In MacDonald v. Estate of James Pouliot, 2017 ONSC 3629, the court considered a constructive trust and dependant support claim against an intestate estate. While the court granted a constructive trust, it dismissed the dependant support claim as the property at issue had already automatically vested in the beneficiary pursuant to section 9 of the Estates Administration Act.
Mary and James lived together as common law spouses for 22 years, since beginning cohabiting in 1994 in a rental property. In 1999, they decided to buy a house in Hamilton. The uncontested evidence was that Mary and James each contributed half of the deposit. Mary had a recent bankruptcy and decided not to put her name on title as it could impact their ability to get a mortgage. Mary explained that they never had the house transferred into their joint names and they could not afford the expense.
Mary contributed half of the mortgage payments and property taxes throughout their cohabitation. Both Mary and James had modest incomes and lived modestly. James died intestate on September 10, 2013. Since his death, Mary has lived in the house and paid all the mortgage payments.
Enter James’ son, Kyle. Mary and Kyle did not get along; the court also found that Kyle and James were estranged. Kyle became James’ estate trustee without a will and took the position that he was entitled to the entirety of James’ estate (which consisted of the house).
The court had no trouble concluding that Mary had an equal interest in the house to James. As such, the court declared that Mary had a half interest in the house as owner via a constructive trust.
On the other hand, Mary’s claim for dependant support was not so simple. Mary’s claim was commenced in November 10, 2016: 17 months after the grant of letters of administration (i.e. when Kyle was appointed estate trustee without a will). This was 11 months too late to commence a dependant support claim under the Succession Law Reform Act. However, a court has the discretion to allow an dependant support application to be made at any time as to any portion of the estate remaining undistributed at the date of the application.
However, Kyle successfully argued there were no assets left to be distributed. Section 9 of the Estates Administration Act states that real property which has not been distributed to those beneficially entitled to it within 3 years of the date of death will be automatically vested in such beneficiaries. As such, on September 10, 2016, Kyle (as the only intestate beneficiary) received the entirety of James’ interest in the house. Given that there were no undistributed assets in James’ estate remaining at the time Mary’s claim was commenced, the court declined to extend the limitation period to bring a dependant support claim (as it would be a “pointless and academic exercise).
This case illustrates the old adage – an ounce of prevention is worth a pound of cure. While Mary and James believed they did not have the money to put the house in their joint names, how much would have been saved (in legal fees and only receiving a half interest in the house) by going to a real estate lawyer to engage in a simple transaction. Likewise, James could have made a will leaving the house to Mary. The money “saved” by not going to an estates lawyer bore grimly high interest.
This case also highlights the importance of considering section 9 of the Estates Administration Act. This section is often a dead letter in testate estates, as it will not apply where a will gives the estate trustee a power to sell property at such times and in such manner as the estate trustee sees fit (and wills generally contain boilerplate clauses to this effect). However, section 9 will apply in intestate estates. As such, when lawyers are dealing with an intestate estate that includes real property, three years after date of death should be diarized and the effects of this section considered.