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What is Proper and Adequate Interim Support and How is it Measured?

Zavet v. Herzog, 2018 ONSC 3398 (CanLII), http://canlii.ca/t/hskb3

The ruling in Zavet v Herzog,[1] involved a preliminary motion brought by the Applicant regarding her common-law partner’s Estate. The Estate is still in the early stages of untangling the Deceased’s personal and business affairs, which are estimated to be worth in the hundreds of millions of dollars. The litigation will likely be quite lengthy, given the complexity of the Estate.

In the ruling from June 15, 2018, the Court decided on a motion the Applicant was making for interim relief as a dependant. The Applicant and Deceased had been living together for at least 12 years, prior to his death. The Deceased had made no provision for the Applicant in his Wills.

The Estate did not contest whether the Applicant met the test of qualifying as a dependant under Part V of the Succession Law Reform Act (“SLRA”), nor was it disputed that the Applicant should receive interim support pending the adjudication of her application. The sole issue in respect of the motion for interim support was the quantum of that support. The Court had to determine what amount was necessary to ensure that the Applicant’s needs were met, pending the final determination of the support claim. The Applicant, who had enjoyed a lavish lifestyle with the Deceased, sought $122,000 per month. The Court ordered that the Applicant receive $30,000 per month, net taxes, in interim dependant’s support.

The Court, in making its decision, acknowledged that the quantum ordered was “somewhat arbitrary” but based on documented monies received by the Applicant from the Deceased during his lifetime. The Court agreed with the Estate Trustee that the amount requested by the Applicant was “unrealistic and unreliable,” even though the Estate Trustee admitted, on cross-examination, that she knew nothing about the Applicant’s lifestyle with the Deceased; admitting, however, that they did live lavishly.

Although such an amount may be outside the scope of “reality” for most individuals reviewing this case, consideration must be granted to the lavish lifestyle that the Deceased and the Applicant enjoyed prior to his death. It also provides insight into the Applicant’s current situation.

While living, the Deceased funded every aspect of the Applicant’s life with the Deceased lives, including paying for living expenses, vacations, and the Applicant’s clothing and personal needs. At the Deceased’s insistence, the Applicant stopped working as a real estate agent, as well as stopped renewing her real estate license. She was entirely financially dependent on the Deceased in the years leading up to his death.

As a result of the Deceased paying for every aspect of the Applicant’s life, the Applicant now has significant liabilities, including outstanding legal fees incurred in pursuing support as a dependant of the Deceased. The Applicant has limited liquid assets, which could prejudice her ability to prosecute this case.

The Court took issue with the amount of interim support requested by the Applicant, noting that her budget was “…inaccurate, overstated, and unsubstantiated.”[2] However, when considering the Applicant’s evidence, and the fact that the Deceased paid for everything prior to his death, this statement by the Court is troubling. As the Deceased paid for every aspect of their lives, the reality was that he was the one who had access to details of the receipts, books, and records (most of which the Applicant does not have access to, given that they belong to the Estate). The Applicant did not separately maintain financial records during her long-term relationship with the Deceased.

From an evidentiary perspective, it can be quite difficult for an individual like the Applicant to produce sufficient and accurate records when she, herself, does not have access to these documents. The budget the Applicant provided “…may not be an accurate estimation of her needs…,”[3] but it also may not be a poor reflection of the lifestyle that the Applicant has become accustomed to.

With most of the records or documents being under the care of the Estate, the focus must shift to the role of the Estate, and its correlated obligation, to provide evidence to assist the Applicant in proving her case. It could be inferred that if the Estate had done so in this case, the evidence may have supported the Applicant’s position that the Applicant and Deceased lived a lavish lifestyle with no limit on spending, and therefore, the amount requested by the Applicant could have been considered reasonable from the perspective of the Court.

The Court contemplated the Applicant’s budget as being an accurate reflection of her “actual” monthly expenses. It could be argued, however, that for individuals like the Applicant, a determination of “actual” monthly expenses may not need to be considered, nor required, given the extent of the Deceased’s wealth.

It has been well established in the jurisprudence “…that interim support motions are not intended to involve a detailed examination of the merits of the case…. These tasks are for the trial judge…. An order for interim support is the nature of a “holding order” for the purpose of maintaining the accustomed lifestyle pending trial.”[4]

The Court must consider “…the dependant’s means – current and future income, assets, and the capacity to generate them – and needs, the latter measured in light of the dependant’s accustomed standard of living.”[5] The Court has held, previously, that “proper support” means “…more than comfortable maintenance, and it means more than proper financial maintenance.”[6] The support should allow the applicant to live a comfortable lifestyle, which, at minimum, frees her from anxiety for the future. It should not be based strictly on need. It could be argued that the Court’s decision, in this case, does not exclude the Applicant from this anxiety.

Following a 19-year common-law relationship, the Applicant is now having to cope simultaneously with the pain and grief of losing her spouse after an extended illness; the shock of being excluded from his Estate; and the immense stress and pressure from the continuing litigation, which includes the risk that she may ultimately be forced out of her home and rendered unable to continue to live the lifestyle she shared with the Deceased for almost two decades. The Applicant should be able to enjoy the same lifestyle she was accustomed to during the relationship, at least on an interim basis, and should not be impeded or prejudiced by the Estate’s delay in producing disclosure.

Given the Estate Trustee’s position and the minimal financial disclosure that has been provided by the Estate Trustee to date, it may, unfortunately, be years before the Applicant’s claims for support against the Estate can be meaningfully resolved.

Equitable claims such as these are inherently difficult for courts to adjudicate for so many reasons. In particular, the lack of guidance afforded to determining quantum is a problem for both court and counsel.  On the relevant grounds stated under s. 63 of the SLRA[7], along with the decisions of Cummings[8] and Tataryn[9], it is clear that the court is afforded broad discretion in determining quantum. Given the outcome here and arguably the disproportionate interim award, assessing what tools a court requires to determine such claims is worthy of ongoing, continued analysis. It will be interesting from an evidentiary perspective to see what further interim awards and funding orders will be made in this estate so as to facilitate the common law spouse’s interim relief. Often life style valuations addressing the factors set out under the SLRA[10] are of assistance to the court in determining quantum as was discussed by the Court in Batchelor v Radawez [11].

[1] Zavet v Herzog, 2018 ONSC 3398, [2018] OJ No 3203 (“Zavet v Herzog”).

[2] Zavet v Herzog at para 33.

[3] Zavet v Herzog at para 33.

[4] Smeets v Seip, 2015 ONSC 3970 at paras 14, 17 and 18 (emphasis added).

[5] Perkovic v Marion Estate (2008), 57 RFL (6th) 57, 43 ETR (3d) 124 (Ont SCJ) at para 57.

[6] Kipp v Buck Estate, [1993] OJ No 790 at paras 14 and 16, 39 ACWS (3d) 906 (Ont Ct J).

[7] Succession Law Reform Act, R.S.O. 1990, c.S.26, Sec 62(1)

[8] Cummings v. Cummings, 2004 CanLII 9339 (ON CA), http://canlii.ca/t/1g6mf

[9] Tataryn v. Tataryn Estate, [1994] 2 SCR 807, 1994 CanLII 51 (SCC), <http://canlii.ca/t/1frqk

[10] Succession Law Reform Act, R.S.O. 1990, c.S.26, Sec 62(1)

[11] Batchelor v Radawez, 2015 ONSC 6764 (CanLII), <http://canlii.ca/t/gmzgc

[47] Ms. Harvey is a wealth manager and investment advisor at Richardson GMP and she is a managing consultant at Touchpointe Strategies Inc. Essentially she manages clients’ financial affairs which includes lifestyle analysis and financial modelling for estate and family law related issues. She was qualified as an expert in the area of financial management and strategies.

[69] Determining the proper amount of support is not an easy exercise; it is, admittedly, an imperfect one which by necessity carries with it a certain imprecision. The opinion evidence of Ms. Harvey was of assistance to the court when attempting to determine the appropriate quantum of support in the circumstances, a figure that is fair and reasonable and is not mere subsistence level. She calculated Nancy’s annual expenses at the present time until 2021 to be $42,287; from 2022-2030 they will be $58,214; and from 2031 onwards they will be $53,443 on a yearly basis.

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