In 2012 Justice Tausendfreund found a deceased had made a promise to bequeath his farm and cottage to his grandsons provided they worked on the properties for him which the grandfather did not do. After trial Justice Tausendfreund ordered the properties be conveyed to the grandsons in fulfilment of that promise (with a quantum meruit claim in the alternative; see Angela Casey’s September 18, 2012 blog).
At the same time as the grandsons’ claim, the deceased’s second wife, Rena, made a claim against the estate for dependent support. The two actions were not consolidated but rather ordered to be tried one after the other as the trial judge viewed the grandsons as business creditors of the estate and the SLRA claim was to be made against the net estate after the payment of creditors.
The trial judge found she was a dependant and made an order for dependant relief out of the net estate after the properties were conveyed to the grandsons (as the court had classified them as creditors).
All parties appealed.
On appeal fresh evidence was adduced and the court examined 3 issues:
1. Did the trial judge’s refusal to consolidate the Cowderoy action and Rena’s application for dependant’s relief under the SLRA lead to errors of law?
2. Did the Trial judge err in ordering the Estate Trustee to convey the farm and cottage properties to the Cowderoys?
3. Are the farm and cottage properties available to satisfy an Order for dependant’s relief under the SLRA?
The Appeal Court found the failure to consolidate the proceedings was an error in law given the interrelationship between the two matters.
Further, the Court found the grandsons were in fact not creditors of the estate. Rather, the deceased had made a promise to bequeath the properties (rather than a promise to convey) and upon finding the promise to bequeath valid the court should have enforced the promise and the bequests deemed to be in the Will (rather than order the properties to be conveyed to the grandsons as the remedy).
Once the properties were brought back into the estate as bequests they in turn become part of the net estate after payment of debts and therefore became subject to the dependant support application, and particular attention was to be paid to s. 71 of the SLRA.1 The court analyzed whether there was excess value in the farm or cottage in comparison to the consideration provided by the grandsons in exchange for the promise to bequeath. After doing the math usingon the grandsons’ alternative quantum meriut claim, the Court of Appeal found the grandsons were entitled to $500,000.00 of the $1.3 million dollars in value of the properties and accordingly, $800,000.00 of value in the properties could be available for the SLRA claim if the residue was now insufficient to satisfy the SLRA entitlement.
The Court of Appeal ordered a fresh trial on the narrow issues of Rena’s entitlement to dependant’s relief, taking into account the value of the estate which now included the farm and cottage properties, and determining the extent, if any, to which the properties were to be attached to secure any dependant’s relief order.
Lesson Learned: Watch out for promises to bequeath vs. promises to convey and section 71 of the SLRA.
Until next time,
Jasmine Sweatman/Leigh Sands
1 s. 71.Where a deceased, (a) has, in his or her lifetime, in good faith and for valuable consideration, entered into a contract to devise or bequeath any property; and (b) has by his or her will devised or bequeathed that property in accordance with the provisions of the contract,the property is not liable to the provisions of an order made under this Part except to the extent that the value of the property in the opinion of the court exceeds the consideration therefor.