In the recent Ontario Court of Appeal case of Leith v. Leith Estate, 2024 ONCA 863 (CanLII), the Court heard two motions before it.  The appellant is the spouse of the deceased.  In the lower court the spouse argued that she was entitled to an equalization payment as the deceased did not adequately provide for her in his will.  The spouse’s right to an equalization payment was not disputed.  For those not familiar, in Ontario when a spouse dies the surviving spouse may elect to either take under the deceased’s spouse’s will (or under an intestacy if the deceased died without a will), or to receive an equalization payment (Family Law Act, R.S.O. 1990, c. F.3 (“FLA”), s.6).  The calculation for the equalization payment is based upon each spouse’s net family property which is calculated as of the “valuation date”.  When a spouse dies, if the net family property of the deceased spouse exceeds the net family property of the surviving spouse, the surviving spouse is entitled to one-half the difference between them (s. 5(2)).

The trial judge determined that the surviving spouse is entitled to an equalization payment.  The trial judge then ordered the sale of all properties and equipment owned by the estate so that the equalization payment could be calculated and the proceeds distributed.  In so doing, the trial judge ordered that the “valuation date” would be the date the properties and equipment were sold.

The main issue on appeal is the appellant’s submission that the trial judge erred in determining the valuation date.  The appellant contends that the valuation date is defined in the FLA as the day before the death of the spouse (s. 4(1)), and that the Court has no jurisdiction to change the valuation date.

First, however, the appellant required an extension of time to file her notice of appeal, which was one business day late.  The Court allowed her motion finding that there was evidence that the appellant had the requisite intention to appeal within the deadline, there were arguable issues on appeal, and no prejudice would result to anyone other than the appellant if the extension was not granted.

The Court then turned to the respondent’s motion.  The respondent brought his motion seeking an order “lifting the automatic stay of the sale of the real properties and equipment together with any other assets of the Estate of William Gordon Alexander Leith, Deceased, in the event leave is granted to permit the late filing of the Notice of Appeal.”  However, at the motion, the respondent submitted that there was no automatic stay and reframed his motion as seeking an order for directions on the sale of the properties and equipment.  This prompted the appellant to request a stay of the sale, though she had not filed any materials or brought a motion to do so.

The Court responded to the respondent’s change of tack by stating it is a “well-settled principle that a legal proceeding is framed by its pleadings. One of the main reasons for this principle is fairness to the court and the other parties. The court can only adjudicate on what is joined in issue between the parties and the opposing party is entitled to know the case to be met. This principle applies to motions as well as actions and other proceedings.”  (para 7).  The appellant did not have notice that the respondent was no longer taking the position that there was an automatic stay.  Importantly, the appellant did not know that she would need to argue that a stay was justified.

The respondent argued that whether a stay should be granted should form part of his motion for directions. The Court disagreed. The Court reviewed the test for a stay pending appeal:

• There is a serious issue to be tried. (That the trial judge may have erred in determining the valuation date for the equalization payment);
• The moving party would suffer irreparable harm if the stay is not granted. (The appellant would suffer irreparable harm if forced to move out of the family home: the appellant is 81 years old; lives at the family home with her daughter and daughter’s family; there is no evidence that the appellant can move to another property; and the appellant has no assets other than those she will receive from her husband’s estate); and
• The balance of convenience favours the granting of the stay. (The balance of convenience favours the appellant as a result of the irreparable harm she will experience if a stay is not granted, and the Court noted there was no evidence of prejudice to the respondent or the estate if certain assets (as agreed between the parties) were not sold immediately).

The appellant met the test to impose a stay pending appeal and the Court found that it was in the interests of justice to do so. Leith v. Leith Estate confirms that notice provided by pleadings is paramount.  Pleadings do not just commence a legal proceeding, but provide all parties with notice of the case to be met and allow them to respond as necessary.  Pleadings provide the Court with the issues to be adjudicated.  A hearing by ambush will not be permitted.  Where notice is not provided the moving party risks losing the relief he seeks.  Moreover, the Court may allow the responding party flexibility in her response and even grant the relief the responding party seeks.