Morassut v Jaczynski: Property Division for Common Law Spouses by Stealth?

One of the criticisms laid against Ontario’s family law and succession law statutes is that they do not make allowance for people living in non-traditional relationships. The law provides a comprehensive formula for property division for married people when they divorce or one of them dies, but there is no similar entitlement for “common law” spouses who cohabit without being married. However, judicial decisions show more flexibility, particularly as Ontario courts are influenced by jurisprudence from British Columbia (where the statutes are also more liberal).

One provision that does exist in Ontario’s statutes is dependant’s relief, under which a common law spouse who was financially dependant on the other is entitled to make a claim for support. This was originally conceived of as a last resort for hardship cases, but court decisions have greatly increased the range of entitlement. The latest high profile decision is a case in which a common law husband who received nothing under the will of his wealthy wife received a multi-million dollar award. The original decision was Morassut v Jaczynski et al, 2013 ONSC 2856. One commentator described it as signalling that testamentary freedom is a “dying legal principle” in Ontario. It has now been affirmed on appeal by the Divisional Court, Morassut v Jaczynski, 2015 ONSC 502 [Morassut].

Facts and Legal Principles

In this case, the deceased was Bonnie Jaczynski, the owner of an auto dealership that she had inherited from her first husband. Sadly, she succumbed to cancer at the age of 54. Her estate was worth $17 million. She had been in a 12 year common law relationship with Danny Morassut, aged 55, who had originally been an employee of her business. On her passing, the only thing he received was a former family home (now rented to tenants) that was held in joint tenancy. There was no provision for him in her will, and the entire estate was left to her daughter.

To their credit, the estate trustees recognized a moral claim, and voluntarily gave him $1 million out of the estate. Apparently, this was not a formal settlement, as he was able to proceed to court with further claims. At trial, Morassut established that he had become financially dependent on Bonnie. While he continued to draw a substantial salary from her business, he did not actually work there. He spent all his time in domestic duties, and caring for Bonnie during her final illness. He argued that he had become accustomed to a high standard of living, and that he was unlikely to find a new job at his age.

Justice Greer accepted the principle that dependant’s relief can apply even for a luxurious lifestyle, citing earlier BC decisions. She awarded Morassut the large custom home that Bonnie had built and in which he was living, and a substantial income for life to be paid out of the estate: $100,000 per year (tax free) and an additional $50,000 every fifth year to buy a new car. It is likely that the actuarial present value of what Mr. Morassut ended up with is close to $5 million.

Until now, the unjust enrichment or constructive trust principle had been the primary mechanism by which the courts have gotten around the limited legal entitlement of common law spouses. There was no claim by Morassut that Bonnie’s estate had been unjustly enriched at his expense. It is unlikely that such a claim could have been made out, given that he was being paid a substantial salary during the period of cohabitation.

This unjust enrichment principle was reinforced in the Supreme Court’s decision in Vanasse v Seguin, [2011] 1 SCR 269, with the concept of a “joint family venture.” There, a couple had been in a common law relationship for 12 years. The woman took care of the children, and gave up her job to move to another city and allow the man to take up a business opportunity, in which he made $11 million. The woman was entitled to half of his income during the relevant period. Nothing like this was claimed here.

Unlike a typical family law claim, there was no calculation of the increase in the value of Bonnie’s property. It is only the increase that is shared in a property division after a marriage breaks down. From the court record in this case, all we know is the value of the estate at Bonnie’s death. There is no indication as to whether, or how much, the value of her assets had increased during the years of their relationship.

Instead, Justice Greer’s award was based entirely on the principles of the dependant’s relief provisions of the Succession Law Reform Act, RSO 1990, c S.26 [SLRA]. Section 62(1) of the SLRA lays out the considerations that a judge may take into account. The range of factors, in paragraphs (a) through (s), is very long and detailed, and includes factors such as “(e) the dependant’s accustomed standard of living” and “(m) any agreement between the deceased and the dependant.” The latter was relevant, because the court accepted Morassut’s testimony that Bonnie had promised to give him the home they lived in. Paragraph (m) apparently does not require any writing, even with regard to real property, as one might ordinarily expect based on the Statute of Frauds, RSO 1990, c S.19, s 1.

The estate appealed, but the trial decision was upheld by the Divisional Court, which found no error in Justice Greer’s application of the law. The Divisional Court made it clear that the trial judge had been correct in applying an expansive interpretation:

As it was admitted that Danny was a dependant for the purposes of the SLRA, the trial judge had to consider both whether Bonnie made adequate provision for Danny and the factors laid out in s. 62(1) of the SLRA when determining the amount and duration of support. Proper support can include luxuries.

The trial judge found that, at her death, Bonnie was legally obligated to support only Danny. Her only child, Aneta, had a gross estate whose value exceeded Bonnie’s assets. The trial judge concluded that Bonnie also had a moral obligation to continue to support Danny after her death…. The court found that the size of the estate made it possible to fully address the moral obligations of the testator towards all beneficiaries. (paras 40-41)

Implications for Future Common Law Claims

This decision resulted in a very large award for the common law spouse. However, it would be dangerous to infer from this that the distinction between married and common law spouses has effectively been eliminated. The facts in Morassut were very unusual. The estate was extremely large, and the only beneficiary under the will that was overturned was already wealthy in her own right.

The principle affirmed in this case is that, where the estate is a large one and there is plenty of money to go around,  the common law spouse can get an award far beyond the level of basic sustenance. The plaintiff had to go to court, and then he had to defend his initial winnings on appeal. Where the estate is small, the common law spouse would be much less likely to be able to undertake the expenditure for legal fees. In a more modest estate valued at perhaps $200,000, legal fees for litigation could easily eat up most of the estate. Moreover, the plaintiff would face the risk of paying an adverse costs award if the suit was unsuccessful. Ironically, a truly needy common law spouse is the one who is least likely to be able to avail herself of the dependant’s relief provisions of the Act.

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