March 9, 2015 By: Alice Weatherston
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Nelligan O'Brien Payne gratefully acknowledges the contribution of Paula Lester, Student-at-Law to this article.

In 2014, the Ontario Court of Appeal (‘ONCA’) released a number of important decisions which have advanced or changed the area of family law. Below are our top five picks.

1.    Sawdon Estate v Sawdon, 2014 ONCA 101

In this case, the deceased, Arthur Swandon, had transferred his seven bank accounts into joint accounts, with a right of survivorship, to himself and two of his five children. However, he made it clear to these two children that they were to distribute the money evenly among all five children. Swandon also had a will, in which he bequeathed the residue of his estate to a registered charity. When Swandon passed away, a dispute arose between the Charity and the children as to whether the funds in the bank accounts formed part of the Estate by way of resulting trust.

At trial, the judge found that these funds were not part of the Estate, as the estate trustee had successfully rebutted the presumption of a resulting trust. In dealing with the Charity’s appeal, the ONCA turned first to the Supreme Court of Canada’s decision in Pecore v. Pecore, which stated that a presumption of resulting trust applies to gratuitous transfers made from a parent to an adult child, whereas the presumption of advancement is the starting point when the gratuitous transfer is from a parent to a minor child. However, these presumptions can be rebutted by evidence of the transferor’s contrary intention on a balance of probabilities.

The Court of Appeal held that the trial judge was correct in his ultimate conclusion that the bank funds did not form a resulting trust, but disagreed with his reasoning. The Court of Appeal found that when the joint bank accounts were opened, Swandon made an immediate inter vivos gift of the beneficial right of survivorship to all of his children. Those holding legal title to the bank accounts held this beneficial right of survivorship in trust for the children in equal shares.

The Court of Appeal held that costs could be awarded against both the unsuccessful litigant (i.e. the Charity) and the estate. The estate trustee was entitled to be indemnified from the estate for his trial costs not recovered from the Charity. Recovering costs from the Charity did not bar him from recovering against the estate as well. In this circumstance the deceased had caused the problems giving rise to the litigation and it was appropriate that the estate bear the additional costs of the litigation.

2.    Senos v Karcz, 2014 ONCA 459

The parties in this case had an adult son who was disabled and lived with the mother. The parties agreed that, due to his disabilities, the son remained a child of the marriage. The child received Ontario Disability Support Program (ODSP) benefits. The specific issue between the parties was the appropriate amount of child support payable to the mother by the father.

Upon learning that the son was receiving ODSP benefits, the father brought a motion to vary child support. The trial judge dismissed the motion on the basis that the ODSP benefits were akin to ‘spending money’ and did not make child support based on the Child Support Guidelines table amount inappropriate. The father’s appeal to the Divisional Court was dismissed and he appealed further to the ONCA.

The Court of Appeal noted that section 3 of the Guidelines established a presumption in favour of the Table amount. Even in the case of an adult child, the party seeking to deviate from the Table amount bears the onus of rebutting that presumption. The closer the circumstances of the child are to those upon which the usual Guidelines approach is based, the less likely it is that the usual Guidelines calculation will be inappropriate, and vice versa.

The Court of Appeal addressed issues of public policy, the purpose of ODSP, and how such support amounts are calculated and determined that the trial judge committed an error in principle by stating that the Table approach was not inappropriate. The son’s receipt of almost $10,000 in the form of ODSP was, in itself, sufficient to rebut the presumption of using a Table approach. The ODSP payments were not “spending money” – the money was paid to the mother as the son’s trustee and she was required to report on how the money was being spent.

The Table amount is predicated on the parents alone sharing responsibility for the financial support of their child. In the case of adult children with disabilities, the ODSPA commits society to sharing some responsibility for support. This makes the Table approach inappropriate and an alternative calculation must be applied to achieve an equitable balancing of responsibility between the child, his parents, and society.

3.    Virc v Blair, 2014 ONCA 392

In this case, a husband and wife entered into a settlement agreement. Upon learning that the husband had significantly misrepresented some of his assets as of the date of marriage, the wife brought an application to set aside the settlement agreement. The husband successfully moved for summary dismissal of the application.

The motion judge found that, even if the husband deliberately provided false financial information, and even though the equalization payment that the wife received may have been substantially less than her entitlement, there was no genuine issue for trial. The onus was on the wife to make reasonable inquiries as to the value of the husband’s assets at the relevant times, and the settlement agreement should not be set aside on the basis of her failure to do so.

On appeal to the ONCA, the wife argued that the motion judge had improperly shifted the husband’s disclosure obligations from the husband to her. The Court of Appeal agreed with this submission. It held that, in the face of a deliberate material misrepresentation, the onus is not appropriately placed on the recipient spouse. The Court of Appeal also held that there remained relevant factors that required a determination at trial. In particular, the court ought to have determined whether the wife had knowledge of the husband’s misrepresentations. The husband would have to show that the wife had clear knowledge of his misrepresentations before he could be absolved of responsibility.

On the issue of spousal support, the Court held that spousal support provisions in a separation agreement must be read in light of the agreement as a whole to see if they comply with the objectives of the Divorce Act. Therefore, assessing whether the agreement with respect to spousal support should be upheld was a genuine issue for trial. For more information, see our blog post about the impact of this case on the requirement to comply with witnessing formalities.

4.    McConnell v Huxtable, 2014 ONCA 86

This case concerns the relationship between the Limitations Act, 2002 and the Real Property Limitations Act in the context of a family law property dispute. In this case, a former common law spouse brought an action for unjust enrichment seeking a remedial constructive trust in a property owned by her former partner. While the claimant became aware of her potential claim in June 2007, she did not commence her action until February 2012.

The issue was which limitation period applied. If the general two-year limitation period under the Limitations Act, 2002 applied, then the spouse was out of time to bring her action. By contrast, if the ten-year limitation period in the Real Property Limitations Act applied, the action had been brought in time. The ONCA upheld the motion judge’s finding that the ten-year limitation period under the Real Property Limitations Act properly applied in this case because a claim for constructive trust dealt with a claim to recover land in accordance with the Real Property Limitations Act.

Most importantly, the ONCA held that if the ten year limitation period did not apply, the two year limitation period for the Limitations Act, 2002 would apply. This ends the dispute as to whether claims for unjust enrichment are subject to the Limitations Act, 2002 in the affirmative.

The spouse’s claim constituted “an action for the recovery of land”. The court stressed that although this was a family law case, the determination of the limitation period issue would have ramifications beyond family law.

5.    Gray v Gray, 2014 ONCA 659

This case concerns the appropriate method for calculating spousal support. Mr. Gray brought a motion to eliminate child support for his children as they had become adults. At the same time, he sought to terminate his obligation to pay spousal support. Ms. Gray, in turn, sought an increase in spousal support from $800 per month to $4,302 per month. The motion judge terminated child support and ordered spousal support to continue at $800 per month. Ms. Gray appealed the spousal support award.

The Ontario Court of Appeal found that the amount of spousal support ordered was clearly wrong, due to a number of errors in principle and a significant misapprehension of some of the evidence. The ONCA overturned the motion judge’s finding that the support was needs based and not compensatory. Most importantly, the Court of Appeal held that the motion judge erred by not consulting the Spousal Support Advisory Guidelines, notwithstanding that this was a motion for variation of spousal support, rather than an initial application. The original support order of $800 was deliberately lower than it ought to have been in recognition of Ms. Gray’s receipt of child support, and child support obligations were now terminated.

The court also noted that, in some variation motions there are complicating factors that must be considered before a court applies the SSAG, such as post-separation increased in income and second families. In the circumstances of this specific case, the Ontario Court of Appeal awarded spousal support at the lowest end of the SSAG range.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.

Service: Family Law