skip to Main Content

Print Friendly, PDF & Email

Entitlement to Support Despite Prenuptial Agreement – The Butts Case

Challenging a prenuptial agreement in the context of estate litigation happens more often than you think. When wealthy people marry, their lawyers often advise them to ensure that their fiancé signs a prenuptial agreement. The goal is to protect the wealthy person’s family in case, God forbid, the marriage breaks up and/or the wealthy spouse dies. So, if the couple each hire good lawyers and the prenuptial contract clearly spells out their agreement, is that ‘pre-nup’ still open to challenge1? Maybe. There is some question as to whether a surviving spouse can still sue for support even when she signed a valid prenuptial agreement. Let’s look at the law.

Prenuptial agreements that are not drafted carefully may not be enforceable. In Caron v. Rowe2 P.E.I.J. No. 40 refers to Caron v. Rowe. Motion by an administratrix for a direction to determine entitlement to an estate, and an order providing for partial distribution. The administratrix was the widow of the deceased. Prior to their marriage, the administratrix and deceased had entered into a domestic contract, which expressly provided the parties waived their rights under Part I of the Family Law Act to “family property”. The motion was allowed. For a surrender of a spouse’s rights on intestacy, clear, direct and cogent words are required. The agreement was interpreted to be a release against the estate for future claims for maintenance, alimony or separation allowance only and not a bar to her claim against the deceased’s estate on his intestacy. The Court relied on Re. Saylor (1983), 3 D.L.R. (4th) 434 and Stern v. Stern Estate, [1968] S.C.J.No. 64, in finding that before it is concluded that a right as substantial as that [claim in intestacy] has been surrendered one must find “direct and cogent” words to that effect.

For those researching Caron v. Rowe, the following sources are also of interest: Philip Epstein in Epstein’s “This Week in Family Law”, Family Law Newsletters, Thomson Reuters Canada Limited: 2013, at p. 2. Also of note are: Martha McCarthy and Heather Hansen, “Family Issues in Estate Litigation”, in Key Developments in Estates and Trusts Law in Ontario, 2010 Edition, Melanie A. Yach ed. (Aurora: Canada Law Book, 2010), at p. 65; Kimberly Whaley, “The Intersection of Family Law and Estates Law: Post-Mortem Claims Made by Modern Day ‘Spouses’” in The Advocates Quarterly, Vol. 40., Number 1 (June, 2012), at p. 22; Ian Hull, “Dependants’ Relief Claims and Spousal Property on Death”; and Archie Rabinowitz, “Dependant’s Support Applications – the Statue that Continues to “Speak””, at p. 11.], the husband died without a will. When that happens in Ontario, by virtue of the laws of intestacy, she is entitled to a large portion of his estate.3 The wife went to court for her rights under the laws of intestacy. However, other family members argued that the couple signed a pre-marital agreement in which the wife waived entitlement to make a claim against her husband’s home. The Court found for the wife because there was no mention in the pre-marital agreement of her relinquishing her rights under the laws of intestacy. By implication, had the prenuptial agreement specifically addressed the wife relinquishing those rights, then the wife would not have been successful in her claim. Interestingly, the wife’s right to support under Part V of the Succession Law Reform Act (the “SLRA” or the “Act”) was not mentioned.

Sometimes even a carefully drafted prenuptial agreement will not be enforced by the court. Under the SLRA, people like a spouse are a “dependant”4 if the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.5 Dependants may obtain an order for support from the estate if the will has not made adequate provision for their proper support. When a couple sign a prenuptial agreement and the surviving spouse feels she wants to sue the estate, lawyers ask a lot of questions6 which include: (1) does the prenuptial agreement provide adequate support; (2) if not, does the obligation to support your spouse under the Family Law Act and common law get cancelled by the domestic contract?7 One case that dealt with this issue was the Butts Estate v. Butts case (“Butts”).8 To me, s. 63(4) gives the court a broad judicial discretion to award support to a dependant, as defined in s. 57, notwithstanding the existence of any prior agreement or waiver. The language of s. 63(4) could not be broader or clearer in its purpose and is obviously aimed at achieving justice and equity at the date of the hearing, notwithstanding what the parties might have agreed to earlier on. [43] In this case, Mrs. Butts has been living below the poverty line in straightened circumstances for at least the past several years and there is no reason why she should be denied a support order under the SLRA which would bring her out of such circumstances and enable her to live out her remaining years in some dignity and comfort. In other words, the support which has been paid under the separation agreement is now patently inadequate and must be corrected on any objective approach to the facts of this case.”

The Alberta case of Stayko v. Stayko Estate [2003] 3 W.W.R. 649 also considered Butts. In this case (outside of Ontario), the wife sued her husband’s estate for support. They were estranged at the time of the application and living separate lives for close to 30 years. There was a divorce agreement which the Court took into account in its analysis. Let’s take a look at the principles set out in Butts.

With respect to Butts, the Court commented: “Another case of interest is Butts Estate v. Butts (1999), 27 E.T.R. (2d) 81 (Ont. G.D.). In this case the parties were married in 1952 and divorced in 1972. At that time a divorce judgment provided that the wife would receive support of $500.00 per month. The parties divided their property on the basis that the arrangement was final. The deceased was subsequently married two more times. When he died in 1997 the parties had been divorced for 25 years, although the support of $500.00 per month had been paid throughout. At the time of death, the Applicant was able to show need, and the Court held that there was still some residual moral obligation of the testator. The Court appears to have found that a divorced spouse was still a “spouse” under the relevant legislation, and awarded her $50,000.00 of lump sum support… This case has some parallels to the decision in Tatlock that I have previously discussed, as in both cases the claimant had actually been receiving support up to the time when the application was made…”

The Court in Stayko v. Stayko Estate [2003] 3 W.W.R. 649 went on to state: “It is difficult to draw any general conclusions from these cases…Whatever the present Applicant’s legal rights may be, I am satisfied that she has no moral claim to a share of this estate. The parties had essentially been strangers for over thirty years. They had lived separate lives both personally, socially, and economically. During this time the deceased had entered into two other common-law relationships. The lack of connection between the Applicant and the deceased is demonstrated by the fact that she did not find it appropriate to attend his funeral. In the result, I am satisfied that the Applicant has no moral claim to a share of this estate, and she certainly has no greater moral claim than those actually named in the will…In all of the circumstances of this case, I cannot find that the testator has failed to make adequate provision in his will for the Applicant. While the Applicant can probably establish some need… her connection to this estate is too remote to find that the deceased should have provided for her in his will.”

Key to all of these cases is the proposition that a Court has the authority to still award support to a dependant even when a domestic contract suggests otherwise.]

A court has the discretion to order that an estate pay support even if the spouses signed an agreement waiving that right. In Butts, the former wife applied for support notwithstanding the fact that she signed a separation agreement which already provided for modest support. Everyone’s intention was that the agreement would be final, but the wife’s financial situation had changed for the worse. The court looked to the section 63(4) of the SLRA which allowed it to make an order for support despite any agreement or waiver to the contrary. Does that mean that domestic contracts are not relevant? No – they are very relevant – but not fool-proof.

The SLRA states that a domestic contract is one of many factors in determining the amount and duration, if any, of support.9 If it is only one factor, then arguably the statute contemplates that a judge still has jurisdiction to make a support award notwithstanding the existence of a prenuptial agreement. In Butts the Court stated:

Mrs. Butts has been living below the poverty line in straightened circumstances for at least the past several years and there is no reason why she should be denied a support order under the SLRA which would bring her out of such circumstances and enable her to live out her remaining years in some dignity and comfort. In other words, the support which has been paid under the separation agreement is now patently inadequate and must be corrected on any objective approach to the facts of this case.

 

 

Footnotes
  1.   In a previous article for the Bnai Brith Tribune which can be found on line at  http://bit.ly/rts2dwife   and on his blog http://bit.ly/setasideprenup Charles Wagner addressed how the courts have jurisdiction to set aside prenuptial agreements if there is not full and frank disclosure.
     
  2.   (2013) O.J. No. 523. This case can be found online at: http://bit.ly/caronvrowe . The Court held that Ms. Caron, who was making a claim under the laws of intestacy – Part II of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the “SLRA”), had a right to contract out of her entitlement under the Act. While the Court was satisfied that Ms. Caron did in fact have that right, Justice Miller found there were no direct and cogent words in the contract relinquishing Ms. Caron’s rights as a spouse under the Act. The Court in Caron also noted that there was no dispute that the parties were entitled, as recognized by the Supreme Court of Canada in Stern v. Stern Estate (1968) S.C.J. No. 64, to contract themselves out of the benefits of otherwise governing legislation as long as they were clearly aware of their respective rights.

    Turner Estate (Re) [2013
     

  3.   It is beyond the scope of this blog to provide a full treatment of Ontario’s law of intestacy.  We refer the reader to an article found at http://bit.ly/lawsofintestacy
     
  4.   Please see Part V, sections 57 and 58(1) of Succession Law Reform Act, R.S.O. 1990, c. S.26. Section 57 defines a dependant as (a) the spouse of the deceased, (b) a parent of the deceased, (c) a child of the deceased, or (d) a brother or sister of the deceased. Section 58(1) provides: Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them.
     
  5.   Please see section 30 of the Family Law Act, R.S.O. 1990, CHAPTER F.3 (the “FLA”), which states: Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.
     
  6.   I refer the reader to McLeod & Mamo’s Annual Review of Family Law, 5 which analyzes Domestic Contracts and Kimberly Whaley, “The Intersection of Family Law and Estates Law: Post-Mortem Claims Made by Modern Day ‘Spouses’” in The Advocates Quarterly, Vol. 40., Number 1 (June, 2012) and her article Spousal Claims against Estates and Other Claims Arising out of Remarriages in Canada” found at http://bit.ly/whaleyspousalclaims  .But the issues addressed by these authors include: (i) the general rules of construction apply in interpreting domestic contracts; (ii) the standard review of contract issues like consent, consideration, repudiation, coercion, and fundamental breach; and (iii) impact of the Divorce Act, FLA and SLRA.

    This blog is too short to substantively deal with the analysis how a domestic contract impacts on a Part V application, but it is worth exploring.  I canvassed this issue with Jordan Atin recently and the discussion raised some interesting questions.    Arguably, the legal obligation to support a spouse is rooted in the FLA  and common law.  That same statute permits parties to contract out of that obligation.  If so, is a surviving spouse who waived that legal obligation and who was not receiving support still a dependant under the SLRA?  Does that waiver disentitle the surviving spouse to make a Part V SLRA application for support because the Act defines a dependant as someone to whom there is a legal obligation to support? Is there a parallel common law duty for one spouse to support another so that any agreement  to be effective has to waive both the statutory rights to support under the FLA and SLRA as well as the common law right to support?  Is the surviving spouse still a dependant if the court exercises the power under section 63(4) to order support despite any agreement or waiver signed by the parties?  Arguably, the 63(4) order retroactively cancels the agreement and the deceased thereby still had the legal obligation to support the surviving spouse.
     

  7.   Under the SLRA, in order to be a dependant, there must be a legal obligation to support or the actual provision of support. Under the Part IV of the FLA, which deals with domestic contracts, the parties to such agreement may agree about the division of property and spousal support other than provided under the FLA. If the domestic contract states there is no legal obligation for the spouses to support one another, that may impact upon whether the spouse is a dependant. Once there is no legal obligation to provide support under the FLA, is the surviving spouse a dependant? When one makes this argument, it must be kept in mind that 63(4) of the SLRA allows the court to make an order for support despite any agreement or waiver to the contrary.
     
  8.   (1999) O.J. No. 1672 (“Butts”). This case is addressed in several secondary sources cited in this article, also including Archie Rabinowitz, “Dependant’s Support Applications – the Statue that Continues to “Speak””, at p. 11.

    Phillips-Renwick considered Butts. A copy of Phillips-Renwick is available online at: http://bit.ly/phillipsrenwick . In this case, the wife sought support from her husband’s estate notwithstanding that there was a domestic contract which said that she was not entitled to seek support. The Court did not award her support. However, it was clear from the Court’s analysis of Butts that there is no doubt that the Court has the discretion to award support notwithstanding a domestic contract. In coming to its decision, the Court said the following about the principles articulated in Butts: The applicant relied upon paragraphs 42 and 43 of Butts which read as follows: “[42
     

  9.   Please refer to section 62(1) of the SLRA. Some of the other factors which the court takes into account in determining the amount and duration, if any, of support, are: (a) the dependant’s current assets and means; (b) the assets and means that the dependant is likely to have in the future; (c) the dependant’s capacity to contribute to his or her own support; (d) the dependant’s age and physical and mental health; (e) the dependant’s needs, in determining which the court shall have regard to the dependant’s accustomed standard of living; (f) the measures available for the dependant to become able to provide for his or her own support and the length of time and cost involved to enable the dependant to take those measures; and (g) the proximity and duration of the dependant’s relationship with the deceased.
     

Charles Wagner and Joanna Lindenberg

The authors of this blog are Charles B. Wagner and Joanna Lindenberg. Charles is a Certified Specialist in Estates and Trusts and partner at Wagner Sidlofsky LLP and Joanna was an associate. This Toronto office is a boutique litigation law firm whose practice is focused on estate and commercial litigation.

This blog is not intended to serve as a comprehensive treatment of the topic. It is not meant to be legal advice. Every case turns on its specific facts and it would be a mistake for the reader of this blog to conclude how it might impact on the reader’s case. Nothing replaces retaining a qualified, competent lawyer, well versed in this niche area of practice and getting some good legal advice.

Back To Top