COURT DISMISSES DEPENDANT’S RELIEF CLAIM IN CASE WHERE DEPENDANT WAS NOT DESTITUTE, HAD SUFFICIENT RESOURCES TO SUPPORT HERSELF AND HAS SIGNED A COHABITATON AGREEMEN

COURT DISMISSES DEPENDANT’S RELIEF CLAIM IN CASE WHERE DEPENDANT WAS NOT DESTITUTE, HAD SUFFICIENT RESOURCES TO SUPPORT HERSELF AND HAS SIGNED A COHABITATON AGREEMENT

CASE:  Scharfenberg v. Scharfenberg, 2024 ONSC 6563

In this case, the Plaintiff, Liebgard Scharfenberg (“Lee”), sought relief under Part V of the Succession Law Reform Act (SLRA) for a lump sum payment of $300,000 from the estate of her late husband, August Karl-Heinz Scharfenberg, to cover her future needs. Lee and the Deceased had been in a relationship for 30 years, with 23 years of marriage. Despite their long-term marriage, the Deceased’s will did not provide for Lee, citing a domestic agreement they had in place, which included a cohabitation agreement where both parties waived claims to each other’s estate. The Defendants were the Deceased’s three adult children, who were named as beneficiaries in the will. The case raised the issue of dependant’s relief in the context of a second marriage with a cohabitation agreement.

The issues to be dealt with in this case, as outlined by the Order Giving Directions made on July 19, 2021, were as follows:

1. Enforceability of the Cohabitation Agreement: Whether Lee has a claim for the relief she seeks, given the cohabitation agreement executed in 1991, where the parties had full financial disclosure and independent legal advice, and had adhered to its terms throughout their relationship.
2. Separation from the Deceased: Whether Lee had separated from the Deceased before his death.
3. Dependancy and Legal Obligation for Support: Whether Lee qualifies as a dependant of the Deceased, and whether the Deceased was legally obligated to provide her with adequate and proper support immediately before his death, or if he was actually providing support to her at that time.
4. Adequacy of Provisions in the Will: If Lee was a dependant, whether the Deceased’s Last Will (and its codicils) made adequate and proper provision for her support.
5. Clawback of Assets: If the provisions in the Last Will were not adequate, what assets, if any, should be clawed back pursuant to Section 72 of the Succession Law Reform Act to ensure adequate support for Lee.

The Succession Law Reform Act (SLRA) provides a legal framework for dependants seeking relief from a deceased’s estate if adequate provision has not been made for their support. The main points of the SLRA framework are:

1. Definition of Dependant: A “dependant” under s. 57(1) includes the spouse, parent, child, or sibling of the deceased, to whom the deceased was providing support or had a legal obligation to support before their death.
2. Court’s Jurisdiction for Support: Under s. 58(1), if the deceased has not made adequate provision for a dependant, the court may order that provision be made from the estate. The adequacy of support is determined based on the circumstances at the time of the hearing (s. 58(4)).
3. Factors in Assessing Support: When determining the adequacy of support, s. 62(1) sets out factors to be considered, including the dependant’s current and future assets, their capacity to support themselves, age and health, needs, and contributions to the deceased’s welfare. The length of the relationship and any agreement between the deceased and the dependant are also relevant factors.
4. Effect of Cohabitation Agreements: The SLRA allows for the possibility of relief even if a cohabitation agreement exists, as agreements between spouses are just one factor among many considered by the court (s. 62(1)(m), s. 63(4)).
5. Moral and Legal Obligations: The court considers both the legal and moral obligations of the deceased to provide for dependants, as guided by societal expectations and what a reasonable person would do (Tataryn v. Tataryn Estate, 1994 SCC). The case law highlights that long-term spouses may have a higher moral claim over adult children in the estate.
6. Interpretation of SLRA: The SLRA is remedial in nature and should be interpreted broadly to ensure that dependants are adequately supported (Re Mannion, 1984). Courts are also empowered to consider the deceased’s reasons for their estate dispositions (s. 62(3)).
7. Adequate Provision Standard: The standard for determining whether adequate provision has been made is based on ensuring the dependant can live “decently and comfortably according to his or her station in life,” without excessive luxury or misery (Re Duranceau, 1952; Anderson).
8. Spouse’s Claims Over Adult Children: Courts have indicated that it is not appropriate to prioritize the moral claims of independent adult children over a long-term spouse who has made significant contributions to the deceased’s life (Picketts v. Hall Estate, 2009).

This framework ensures that dependents, particularly spouses, are fairly provided for, reflecting both legal obligations and societal expectations.

In the case, Lee’s credibility was critically examined, as she bore the burden of proof.

1. Affidavit and Allegations: Lee initially claimed that her relationship with the Deceased had been abusive, citing psychological and emotional mistreatment, and that she had been coerced into signing a Cohabitation Agreement. She alleged that the Deceased had been controlling and that he had isolated her from her children and his family.
2. Contradictions: During the trial, Lee’s testimony contradicted her affidavit. She admitted that many of the abusive claims were false and had never been made during the Deceased’s lifetime. She acknowledged that the Deceased’s family had been kind to her and that she had signed the Cohabitation Agreement because she had been happy with it, contrary to her earlier claim of coercion. She also conceded that she had understood the legal implications of the agreement and that there had been no actual abuse before signing it.
3. Inconsistent Testimony: Lee’s statements had varied significantly between her affidavit and her trial testimony, especially on key issues like the coercion to sign the agreement and the nature of the relationship. The court found these inconsistencies troubling and concluded that Lee had lied under oath to strengthen her position in the litigation.
4. Diary Evidence: Lee’s diary entries did not support her claim that signing the Cohabitation Agreement had been a traumatic event. Instead, they depicted a normal life and relationship with the Deceased, further casting doubt on her testimony.
5. Assistance from Shirley: Lee’s daughter, Shirley, had played a significant role in helping Lee with the case. The court questioned Shirley’s motivations, especially given that she was the sole beneficiary and executor of Lee’s current will, which had replaced one that had benefited all of Lee’s children equally.
6. Conclusion: The court found Lee’s testimony unreliable due to significant contradictions and falsehoods. It decided to accept the evidence of other witnesses over Lee’s testimony, as her credibility had been severely undermined by her actions and inconsistencies.

Lee was considered a dependent of the Deceased at the time of his death, despite the lack of a legal obligation for him to provide support, as no agreement or order had been made for such support. The Cohabitation Agreement between them explicitly removed any legal obligation for support.

The court examined whether the Deceased had been providing support, and it concluded that, until January 2021, Lee had indeed been in a relationship of dependency on the Deceased. The couple had lived together for 30 years, with Lee contributing a fixed amount each month to the household expenses, including shelter and food. However, their contributions were not equal, especially after Lee stopped working. The Deceased played a significant role in maintaining the home, managing repairs, and covering many living expenses, while Lee contributed less over time. The court also noted that Lee had a caregiver role for the Deceased, but was overwhelmed by this responsibility in the final years of his life.

In the context of the Cohabitation Agreement, Lee’s financial contributions were limited to what she could afford, and the Deceased’s support allowed her a better standard of living than she could have achieved on her own. Even though there were signs of conflict and tension in the relationship, the court found that they shared an emotional, physical, and financial interdependency.

Regarding Lee’s intentions to separate, the court did not find convincing evidence that Lee intended to permanently leave the Deceased at the time of his hospitalization in late 2020. It was more likely that her decision to vacate the home was a result of caregiver burnout, as she recognized she could no longer care for him.

The Deceased had not made any provision for Lee in his Will, and while she received a survivor benefit from a pension, the court agreed that he had failed to make adequate provision for her current and future needs. Therefore, Lee met the burden of establishing that she was a dependent of the Deceased at his death.

The court noted that the Succession Law Reform Act (SLRA) restricts a testator’s testamentary freedom by allowing correction when a dependant is not adequately provided for. However, the court found that this was not such a case. Despite Lee being a dependant at the time of the Deceased’s death, the court concluded that no financial provision should be made.

Lee had been self-sufficient prior to her relationship with the Deceased, as evidenced by her Separation Agreement and personal assets, including $220,000 in investments. She had moved in with the Deceased mainly to reduce her living expenses, driven by financial self-interest. Over the 30 years of cohabitation, Lee did not contribute equally to the household expenses, even though the Deceased had to rely on credit to cover costs. The Cohabitation Agreement required Lee to share in these expenses, which she did not do.

The court further noted that in 2011, Lee sold her interest in a significant asset, a condo, for $38,000 without determining its value, which the court found was a reckless decision. This action raised questions about her financial prudence, casting doubt on her need for support from the Deceased’s estate.

The court considered moral obligations and concluded that, given Lee’s failure to account for her financial decisions, it would be unreasonable to provide her with support from the Deceased’s estate. Lee was not destitute and had sufficient resources to support herself. Therefore, the court upheld the Cohabitation Agreement, and Lee’s application for support was dismissed.

The court ordered that, after the appeal period expired, the funds in the trust account were to be paid to the Estate Trustee, subject to any legal fees being settled first.