Sunday, May 03, 2009

Differences Between Moral Obligations To Married and Common Law Spouses Under the Wills Variation Act

Now that common law spouses are allowed to make claims under the British Columbia Wills Variation Act, should a common law spouse be treated differently in a Wills Variation Act claim from a married spouse?

The first case that I am aware of where the court dealt with this issue was Picketts v. Hall, 2007 BCSC 133. In that case, Mr. Justice Bauman held that the deceased common law spouse did not have the same legal or moral obligations to the surviving spouse as would a legally married spouse. [Since I wrote this post, the Court of Appeal has overruled the trial judge's decision in Picketts. See my discussion of the Court of Appeal decision here.]

In my comment on the Picketts case, I wrote:

This decision provides authority in support of the view that a common-law spouse does not have identical obligations as a married spouse under the Wills Variation Act. On the other hand, I think one should keep in mind that this case dealt with a very large estate. In a smaller estate, the courts may impose similar obligations on common-law spouses in long-term relationships as they do on married spouses who do not make adequate provision for each other in their wills.
In a more recent case, Lamoureaux v. Kalyk, 2009 BCSC 584, Mr. Justice Slade considered this issue further.

Kathryn Lamoureaux dated Nick Kalyk from 1992 to 1998. They then lived together in a marriage-like relationship from 2000 until June 1, 2006, when Mr. Kalyk died at the age of 69. They had planned to marry, but he died before their wedding.

In his last will, made in 2002, Mr. Kalyk gave Ms. Lamoureaux the right to live in his house for 10 years, and $50,000. He left the rest to his three daughters.

The day before he died, Mr. Kalyk signed a transfer of his house into a joint tenancy. He was also changing his will, and planned to increase the gift to Ms. Lamoureaux to $100,000, but died before he completed a new will.

Ms. Lamoureaux applied to vary the will on the basis that Mr. Kalyk’s will did not make adequate provision for her.

Ms. Lamoureaux worked as a clerk for the City of Kamloops. Apart from the house she received from Mr. Kalyk as the surviving joint tenant, her main asset was another house worth approximately $280,000 which she rented out. She was also the beneficiary of Mr. Kalyk’s Registered Retirement Savings Plan, which held about $105,000. She had two adult children. She was 19 years younger than Mr. Kalyk.

Mr. Kalyk had an interest in a company he had established to develop land in Kamloops. He had reorganized the company in 2000 to transfer shares to a trust settled for his daughters in an estate freeze. He still owned redemption shares worth $672,000 (before tax) in the company, which comprised most of his estate at death. The net after-tax value of Mr. Kalyk’s estate was $480,000 (this does not include the house he held in a joint tenancy with Ms. Lamoureaux).

Mr. Kalyk’s three daughters were in their forties, and were all financially well off.

Mr. Justice Slade considered the competing legal and moral claims of Ms. Lamoureaux and Mr. Kalyk’s daughters. He found that Mr. Kalyk’s legal obligation to Ms. Lamoureaux (that is what she would be entitled to on a breakdown of the relationship) was limited to spousal support, which would be satisfied by the $50,000 left to her in the will. Mr. Kalyk had no legal obligations to his daughters. Mr. Justice Slade also found that Mr. Kalyk’s moral obligations to his daughters were met by the family trust he set up for his daughters.

What about Mr. Kalyk’s moral obligations to Ms. Lamoureaux? Mr. Justice Slade found that in this case he did have moral obligations that were similar to those he would have if they had been married. He distinguished the decision in Picketts as follows:

[108] In Picketts v. Hall Estate, Bauman J. rejected the argument that Ms. Picketts should be treated as though she were the wife of Mr. Hall and entitled presumptively, to a one half interest in the family assets. He said:

"This is simply an effort to attain morally, what Ms. Picketts could not have achieved legally. It is not a proper approach and it does not honour the decision by this couple not to marry, even if Ms. Picketts found that decision disappointing."

This finding, however, was in a case in which the value of the estate was, at a minimum $18,000,000. Hence, the size of the estate was irrelevant to the task of ascertaining the proper division for an adequate, just and equitable award under the Tataryn moral obligations standard (para 61).

[109] In the present case, as the estate was not sizeable, a determination that Ms. Lamoureaux is entitled to an amount equal to her legal entitlement if married, would not be contrary to principle, if such is warranted to establish an adequate, just and equitable award.

Mr. Justice Slade awarded $220,000 to Ms. Lamoureaux, which represents half the net value of the estate.

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