Second Wife of 34 Years Awarded 30% of Husband's Estate

Unger v. Unger Estate, 2017 BCSC 1946

The wife of the deceased sought variation of his will under the WVA asserting it did not make adequate, just and equitable provision for her.  The will had been drafted September 24, 2003 and the testator died September 7, 2013 (pre-WESA).  The plaintiff was the second wife of the deceased, but their relationship had lasted approximately 34 years.  The plaintiff had two children from her first marriage.  The deceased had four children from his first marriage. 

The will provided the residue of the estate was to be divided equally among the four children of the deceased and there were two specific financial bequests of $20,000 each to his two daughters.  The will specifically detailed that he had not provided for his wife because during his lifetime he caused to be transferred to her 50% of the title to the family property (Maple Ridge) without any contribution from her to the acquisition of the property.  The plaintiff took the position that variation was warranted due to their 34 year relationship and the promise made by him to take care of her.  The defendants opposed the application saying the will provided adequate provision to the plaintiff and that any variation would be unfair given the value of the plaintiff’s assets and the value of the estate.  The main asset of the estate was 50% of the net sale proceeds of the matrimonial home and various chattels located in the home.  The plaintiff sought a specific bequest to her of $375,000.00. 

HELD:  The will should be varied in favour of the plaintiff.

The court reviewed the law and the moral duty of a testator in a second marriage.  An important consideration in determining the moral obligation owed to a second spouse is that spouse’s contribution to the estate as set out in Saugestad

The court found the deceased owed the plaintiff substantial legal and moral obligations.  The two had been partners for 34 years, married for 32, and she remained with him despite his abusive conduct toward her.  The plaintiff had looked after him to the best of her abilities and remained with him until his death.  The court found the plaintiff failed to discharge his legal and moral obligations to her when he failed to provide for her in his will.  The court varied the will providing 30% of the residue to her and 70% to be equally divided between the defendants.  Given the circumstances of the joint bank account and the additional sums provided to the defendants, along with the residue, the deceased’s duties to his adult children had been satisfied. 

Discussion

Legal Duty

[88]        The applicable family law legislation, the FLA, came into force on March 18, 2013.

[89]        Under s. 81 (b) of the FLA, each spouse is entitled to an undivided half interest in all family property which includes all property owned by at least one spouse as well as beneficial interests of at least one spouse: see. s. 84(1). However, excluded from the family property is, among other things, any property acquired by a spouse before the relationship began, and any property derived from such property or disposition of such property: s. 85(1).

[90]        The evidence supports that the plaintiff would have had a claim to any monies in the bank account of Mr. Unger at the time of his death.

[91]        With respect to the Matrimonial Home, the defendants contend that the plaintiff would not have had a claim under the FLA, as it was purchased using proceeds of excluded property, namely the Surrey Property and the fishing boat and licence.

[92]        The evidence supports that the plaintiff did not provide any initial consideration in exchange for being put on title. Under the common law, a husband’s transfer of property into the joint names of he and his wife was traditionally presumed to be a gift: see Waters et al., Waters’ Law of Trusts in Canada, 4th ed (Toronto: Thomson Carswell, 2005) at 413. Although the continued existence of this presumption has been weakened or cast into doubt in recent jurisprudence, the BC Court of Appeal, in V.J.F. v. S.K.W., 2016 BCCA 186 (CanLII) [V.J.F.] at para. 50, stated that:

[50]      … Where the evidence is insufficient or equivocal and the transfer was made by husband to wife, the law normally provides an evidentiary presumption that a gift was intended and the burden of persuasion shifts to the opposite party to rebut on the balance of probabilities …

[93]        The evidence in the case at hand supports that Mr. Unger intended the transfer of property to be a gift. In the Will, Mr. Unger explicitly states that he transferred 50% of the property to the plaintiff without any contribution, and in my view no other evidence rebuts this.

[94]        The BC Court of Appeal in V.J.F. noted, however, that s. 85 of the FLA complicates the gifting of property between spouses when the property is derived from “excluded property”. To reconcile potential inconsistencies between the law of gifts and the FLA, the Court provided clarification in V.J.F. at paras. 74-75:

[74]            With all due respect to the contrary view, I conclude that the new FLA scheme does not constitute a “complete code” that “descends as between the spouses” and eliminates common law and equitable principles relating to property. Rather, the scheme builds on those principles, preserving concepts such as gifts and trusts, and evidentiary presumptions such as the presumption of advancement between spouses. …

[75]            I do not interpret the FLA as reversing the gift or requiring that it be ignored because of the spouses’ separation. Nor do I agree that the FLAeffectively ‘prohibits’ gifts between spouses, as Mr. F. suggested. (See para. 56.) Gifts between spouses can continue as they have through the ages. It would take much clearer wording to render them suddenly revocable or null or illegal. (See the comments of Chief Justice Farris in a slightly different context in Duncan v. Duncan (No. 2) [1950] B.C.J. No. 50 at para. 13 (S.C.), aff’d [1950] B.C.J. No. 41. (C.A.).)

[Emphasis in original.]

[95]        Applying V.J.F., I am of the view that for the purpose of this analysis the plaintiff’s 50% would have been presumed a gift under the common law. Further, the evidence supports that this presumption would have likely stood, as the Will is consistent with the finding of a gift, and no other evidence has rebutted it. As a result, the plaintiff’s 50% stake would not have been “excluded property” under the FLA – only the 50% held by Mr. Unger himself would have been “excluded property”. The plaintiff’s 50% stake would have instead fallen back into the communal pool as “family property”: see V.J.F. at para. 76. Therefore, the plaintiff’s family law claim to the Matrimonial Home would have been for at least 25% of its total value.

[96]        It is also of some significance that but for the order of Master Tokarek made in 1993 arising from the family law action the plaintiff brought, it is highly likely that the Matrimonial Home would have remained in joint tenancy and would have passed to the plaintiff. Furthermore, prior to Mr. Unger’s death, the plaintiff could have applied under s. 95 of the FLA for an unequal division of family property, or under s. 96 for a division of excluded property, in the event that an equal division was significantly unfair, considering the duration of their relationship and other related factors. As the spouses’ relationship spanned many years, and the plaintiff contributed to the maintenance and preservation of the Matrimonial Home, her potential claim could have been for much more than 25%.

[97]        In addition to property division, the FLA also states that a spouse is entitled to spousal support. Part 4, Division 7 provides that spouses have a duty to provide support in consideration of the conditions, means, needs, and other circumstances of the other spouse, including the length of time they lived together, the functions performed by each during this time, and any agreements between them: see ss. 160‑162. Based on the needs of the plaintiff, the length of her relationship with Mr. Unger, and the nature of their relationship, the plaintiff would have had a potential claim for support against Mr. Unger.

[98]        Based on the preceding analysis, I am of the view that the plaintiff would have had a strong claim for both the division of property and spousal support per Mr. Unger’s uncrystallised legal obligations.

Moral Duty

[99]        In J.R. v. J.D.M., 2016 BCSC 2265 (CanLII), the Court set out the factors to consider in assessing the moral claim in a second marriage at para. 92:

In assessing the strength of the legal and moral obligations owed by a testator to a second spouse, the court will consider factors such as:

(a)               The length of the marriage;

(b)               When and how the testator’s assets were acquired;

(c)               The contribution of the second spouse;

(d)               How family assets would be divided under the applicable family legislation upon marriage breakdown;

(e)               Competing obligations with the children from the first marriage;

(f)                 Financial circumstances of the spouse;

(g)               The size of the estate; and

(h)               The magnitude of assets passing to the spouse outside of the estate in consequence of other pre-death transactions undertaken by the testator.

[See Wong v. Soo, 2015 BCSC 1741 (CanLII) at paras. 73-82; Saugestad v. Saugestad, 2006 BCSC 1839 (CanLII), varied on different grounds 2008 BCCA 38 (CanLII); Mawdsley v. Meshen, 2010 BCSC 1099 (CanLII), affirmed 2012 BCCA 91 (CanLII); Ciarniello v. James2016 BCSC 1699 (CanLII)]

[100]     The moral duty of a testator in a second marriage was also considered by Russell J. in Saugestad v. Saugestad, 2006 BCSC 1839 (CanLII)[Saugestad] at paras. 121-130, varied on a different ground 2008 BCCA 38 (CanLII). An important consideration in determining the moral obligation owed to a second spouse is that spouse’s contribution to the estate as set out in Saugestad at para. 126:

[126]   The more limited moral claim of a second wife where the bulk of the testator’s estate was acquired during a first marriage was also considered as a relevant factor in Howard v. Howard Estate (1997), 1997 CanLII 3553 (BC CA), 32 B.C.L.R. (3d) 1, 16 E.T.R. (2d) 161 (C.A.) at para. 5 (although there was also a prenuptial agreement in that case). Along a similar line of reasoning, in Price v. Lypchuk Estate(1987), 1987 CanLII 165 (BC CA), 11 B.C.L.R. (2d) 371, 26 E.T.R. 259 (C.A.), the fact that the testator’s estate had been built up by the joint efforts of the testator and his second wife was a factor considered by Lambert J.A. in the majority’s decision not to vary the will in favour of the children of the testator’s first marriage (at 382 B.C.L.R.). Thus, the contribution of a spouse to the estate is an important factor in determining the moral entitlement of that spouse.

[101]     Mr. Unger’s purported rationale for excluding the plaintiff from the Will was not valid. Clause 6 of the Will suggests that Mr. Unger caused 50% of the Matrimonial Home to be transferred to the plaintiff without any contribution by her to the acquisition or preservation of the property. The Matrimonial Home was initially registered in joint tenancy at the time of its purchase in 1981. It was only as a result of the order of Master Tokarek in the family law action that the joint tenancy was severed. Furthermore although the plaintiff did not financially assist in the payment of the purchase price she did make contributions to the preservation and enhancement of the Matrimonial Home in the 30 plus years of ownership.