COURT FILE NO.:
06-DV-1194
DATE: 20061121
ONTARIO
SUPERIOR COURT OF JUSTICE
(DIVISIONAL COURT)
CUNNINGHAM A.C.J.S.C, McCARTNEY AND
WHITTEN JJ.
|
B E T W E E N:
|
)
|
|
|
MALACHI MADORE-OGILVIE By his Litigation Guardian,
STEPHANIE MADORE and ACKIL OGILVIE by his Litigation Guardian, DENISE
CHAMBERS
|
))))
|
|
|
Respondents
(Applicants)
|
)
)
))))
|
Marc-Nicholas Quinn, for the Applicant Malachi
Madore-Ogilvie
Howard Yegendorf for the Applicant Ackil Ogilvie, for the
|
|
|
)
|
|
|
|
)
|
|
|
|
)
|
|
|
- and -
|
)
|
|
|
|
)
|
|
|
MARY KULWARTIAN (also known as MARY OGILVIE) In her
capacity as ESTATE TRUSTEE For THE ESETATE OF LLOYD OGILVIE, deceased
Appellants
(Respondents)
|
))))))
|
Bruce F. Simpson, for the Appellant Mary Ogilvie
|
|
-and-
|
)
)
))))))
|
|
|
Respondents
|
)
|
|
|
|
)
)
|
|
|
|
)
|
|
|
|
)
|
HEARD: October 19, 2006.
|
D E C I S I O N
I Introduction
[1] This is an
appeal from the decision of Justice A de Lotbinière Panet of December 9, 2005.
The primary basis of the appeal is that the justice erred by including a joint
flex term policy issued by Royal Life Insurance Company of Canada January 26,
1998 (referred to as the second policy) as part of the estate of the deceased
by virtue of s. 72(1) of the Succession Law Reform Act. The effect of
this inclusion was that the sum of approximately $109,000 would then be
available to satisfy the needs of acknowledged dependant children and the
spouse of the deceased. His Honour, although he acknowledged the spouse as a
dependant, proceeded to divide the estate into three portions to provide
annuities for the dependant children alone. A secondary basis of the appeal is
that the dependency of the spouse was not addressed in the distribution. In our
opinion that appeal point would become academic if the second policy was not
included within the estate.
II Standard of Review
[2] The
Supreme Court of Canada addressed the standard of review of an appeal from a
judge’s decision in Housen v. Nikolaisen 2002 SCC 33 (CanLII), (2002), 211 D.L.R. (4th)
577 (S.C.C.), [2002] S.C.J. No. 31 (Cited to QL). In Summary:
On a pure question of
law, the basic rule with respect to the review of a trial judge’s findings is
that an appellate court is free to replace the opinion of the trial judge with
its own. Thus the standard of review on a question of law is that of
correctness. (at ¶8)
The standard of review
for findings of fact is that such findings are not to be reversed unless it can
be established that the trial judge made a “palpable and overriding error”: Stein
v. The Ship “Kathy K” 1975 CanLII 146 (S.C.C.), [1976] 2 S.C.R. 802 (at ¶10).
Where the trier of fact
has considered all the evidence that the law requires him or her to consider
and still comes to the wrong conclusion, then this amounts to an error of mixed
law and fact and is subject to a more stringent standard of review [than for
findings of fact]. (at ¶28)
III Background
[3] The policy
as indicated above was issued January 26, 1998 to both the deceased and his
spouse. They were both owners and beneficiaries. Basically, the policy
provided that the survivor of the two would receive the face amount of the
policy. The policy, if the owners decided, could be split into two separate
policies each with respect to the life of one of the original owners. That was
not done. The unrefuted evidence is that the spouse made the majority, if not
all, of the payments. The policy was in a way “mortgage insurance”. The
intent was that the survivor would be able to pay down the mortgage on the
matrimonial home. Obviously, the inception of the insurance policy precedes
the conception of the child Malachi Jamieson Madore-Ogilvie.
IV Issues
[4] The
principal issue is whether the proceeds of the policy are to be included into
the estate for distribution by virtue of s. 72(1)(f) which states “any amount
payable under a policy of insurance effected on the life of the deceased and owned
by him or her” (underlining mine). There is no doubt that the section
would trap for an insurance policy owned entirely by a deceased. What is
referred to as policy #1 in this appeal is such a policy. Although there has
been debate in the past as to whether this section would include a group life
policy, for example Juarez (Litigation Guardian of) v. Juarez, [1996]
O.J. No. 400, that debate is now academic given the inclusion of section
(f.1). As indicated by counsel for the appellant, with such policies there
are no other policy owners who are adversely affected. There is a range of
ownership between sole ownership of a policy and a group life policy.
V Analysis
[5] The
applicable sections of the Succession Law Reform Act are designed to
trap for intentional depletion of the value of an estate at the expense of
dependants. Having said that, there are transactions within the lifetime of a
testator which would be considered the normal personal commerce of an
individual. For example, the purchasing of a home by a couple and the
registration of the home in joint tenancy. These are not necessarily
transactions contemplated to disenfranchise a dependant. Justice Ferrier in Modopoulos
v. Breen Estate, [1996] O.J. No. 2738 had the opportunity to review such a
transaction in the context of the dependant relief provisions of the Succession
Law Reform Act. His Honour considered the import of s. 72(1)(d) “any
disposition of property made by a deceased whereby property is held at the date
of his or her death by the deceased and another as joint tenants.” His Honour
concluded that this section contemplated the inclusion of property that was
originally owned by the testator and then subsequently transferred by the
testator to himself or herself and another as joint tenants. The section did
not trap for property which from its purchase was held in joint tenancy. Such
an interpretation recognizes the contractual rights of individuals which are
exercised absent the intentional actions contemplated by the Succession Law
Reform Act.
[6] “Owner” is
neither defined in the Succession Law Reform Act nor the Insurance
Act. The application judge noted as had Meredith C.J.O. in Wynne v.
Dalby (1913) 30 O.L.R. 67 at p. 72 (referred to as well by Brockenshire J.
in Juarez v. Juarez, [1996] O.J. No. 400 at p. 3). “The word “owner” is
an elastic term and the meaning which must be given to it in a statutory
enactment depends very much upon the object the enactment is designed to
serve.”
[7] The
application judge noted that the deceased was named as the owner of the second
policy with all the attendant rights and privileges. He concluded that
consequently that policy then came within the ambit of s. 72(1)f. He stated
“(t)he only basis for finding that the second policy did not come within
subsection (f) would be to read into the subsection the intent of the
legislature that the subject policy of insurance must be “solely” owned by the
deceased. In my view, given the purpose of the legislation that interpretation
would not be correct.” What the application jurist states would have to be
read into the section, namely “sole ownership” is in a way correct. It can not
be ignored that there is another owner of the policy, the appellant, who paid
the premium and who was subject to the terms of the policy. Under the policy,
the testator could very well have ended up as the beneficiary of the policy
proceeds if the appellant had predeceased him. Are the contractual rights of
the appellant sacrificed as a result of the testator inadequately providing for
his dependants?
[8] The
application jurist noted that the appellant had asserted that s. 196 of the Insurance
Act provided that the proceeds of an insurance policy were immune to the
demands of creditors. It was mistakenly stated that the initial phraseology of
s. 196 commenced with the words “Despite the Succession Law Reform Act”.
It is acknowledged it is s. 199(1) that so commences. This latter section was
discussed at the hearing of the application, but the import was not
appreciated. The possibility that the Insurance Act might prevail in
this situation was met in the opinion of the application jurist by Dunn v.
Estate of Dunn 
reflex, (1993) 12 O.R. (3d) 601 (Div. Ct.) Dunn v. Dunn is
factually distinct from the matter at hand. In Dunn, the testator had
purchased term life policies, in which his current spouse was the beneficiary.
It was noted by the trial judge “that all indicia point to the deceased as
“owner”… on the evidence…there is nothing in the application or in the books of
Carpet Van Go or RMD Carpet that would stamp their policy as “key-man”
insurance and thus the property of one or more of those corporations.”
[9] In Dunn
v. Dunn the Divisional Court panel focused on the import of s. 196 of the Insurance
Act which speaks in terms of insurance proceeds being immune to the claims
of creditors. The court stated that “(a) dependant of an insured entitled to
“support” pursuant to the SLRA is entitled by statute as a “dependant” and is
not a “creditor of the insured.”
[10] Dunn v. Dunn does not
interpret the significance of s. 199(1) of the Insurance Act. The
section states:
199.(1) Despite
the Succession Law Reform Act, where in a contract or in an agreement in
writing between an insurer and an insured it is provided that a person named in
the contract or in the agreement has, upon the death of the insured, the rights
and interests of the insured in the contract,
(a) the rights and interests of the insured in the contract
do not, upon the death of the insured, form part of his or her estate; and
(b) upon the death of the insured, the person named in the
contract or in the agreement has the rights and interests given to the insured
by the contract and by this Part and shall be deemed to be the insured.
Successive owners
(2)Where
the contract or agreement provides that two or more persons named in the
contract or in the agreement shall, upon the death of the insured, have
successively, on the death of each of them, the rights and interests of the
insured in the contract, this section applies successively, with necessary
modifications, to each of such persons and to his or her rights and interests
in the contract.
Saving
(3)Despite
any nomination made pursuant to this section, the insured may, prior to
his or her death, assign, exercise rights under or in respect of, surrender or
otherwise deal with the contract as if the nomination had not been made, and
may alter or revoke the nomination by agreement in writing with the insurer.
R.S.O. 1990, c. I.8, s. 199.
[11] This section appears to envisage
the situation in a jointly owned survivor insurance policy. Is the import of
this section eclipsed by principles of interpretation such as contained in R.
v. Greenshield, [1958] S.C.R. 216? Justice Locke had stated (at p. 6
LexisNexis) “Special Acts are not repealed by general Acts unless there be some
express reference to the previous legislation or a necessary inconsistency in
the two Acts standing together which prevents the maxim generalia specialibus
non derogant being applied. In Greenshield the apparent contradiction
was within the same statute, the Quebec Succession Duties Act (1943) c.
18 as amended. In the matter at hand both the Insurance Act and the Succession
Law Reform Act can be considered specialized statutes dealing with distinct
subjects. Section 199(1) has a specific exemption clause which given its
context must be with respect to the sections of the Succession Law Reform
Act which encroach upon the type of insurance policy contemplated by s.
199(1).
[12] Section 199(1) phraseology to the
effect “that a person named in the contract…has…the rights and interests of the
insured in the contract” is compatible with the recognition of ownership of
another in an insurance policy. The discussion of ownership under the Succession
Law Reform Act can not end with a testator being one of many owners. In Goodis
(Litigation Guardian of) v. Goodis Estate, [2003] O.J. No. 3364 (Divisional
Court), the testator and his current spouse each owned 50% of a corporation.
That corporation purchased two life insurance policies on the life of the
testator, initially to secure loans advanced by the spouse to the testator.
The corporation or another corporation paid the premiums. The spouse was the sole
beneficiary of the policy. It was advanced by dependants that s. 72(1)(f)
applied to the policy in question.
[13] Justice McRae speaking on behalf
of the panel stated:
15. With respect, I am
unable to agree. The policies were owned by Gerlyn Enterprises Ltd. The
deceased had only a 50% ownership interest in that corporation. To say that he
owned the polices ignores the interest of the Corporation and of the co-owner
of the Corporation – Lynn Goodis.
16. This
is not a case of a sole shareholder using their company as a vehicle to effect
estate planning. While 686171 made the premium payments, they were funded at
the relevant time by Gerlyn in which both Gerald and Lynn had a 50% shareholder
interest. It is difficult to see how her 50% shareholder interest in Gerlyn
could be deemed to be owned by Gerald’s Estate under any circumstances.
Although there may have been an element of estate planning as described by the
Motion’s Judge, the policies were also in place as security for the
approximately $606,000 still owing from Gerlyn to Lynn Goodis for advances made
by her to that corporation. In the circumstances of this case, it cannot be
said that the connection Gerald Goodis had to the policies amounted to
ownership within the meaning of s. 72(1)(f) of the Succession Law Reform Act.
[14] The ownership and terms of an
insurance policy can not be ignored. In a way, this policy is analogous to the
joint tenancy of real property contemplated by s. 72(1)(d) of the Succession
Law Reform Act. Similar to what Justice Ferrier identified in Modopoulos
v. Breen Estate, supra, property (in this case the policy) was
purchased at its inception by both parties, for reasons ostensibly for
management of a mortgage debt, as opposed to defeating the claims of dependants
(one of whom was not even conceived). To paraphrase Justice Ferrier, the mere
fact of joint ownership of the policy is not enough to trigger the provisions
of s. 72(1)(f).
[15] Therefore for all of the above
reasons, the inclusion of the second policy, simply on the strength of the
deceased being one of two owners, into the estate is not correct. The
exclusion of the second policy from the estate available for distribution to
the dependants, it is agreed, would eclipse any further claim by the
appellant/spouse to the remainder of the estate. Therefore the appeal is
granted to the extent that the second insurance policy is excluded from the
estate.
[16] Counsel have agreed that the
applicable amount of costs payable to the successful party is that of $3,500
inclusive of disbursements. Notwithstanding this agreement, given the novelty
of this appeal, there shall be no order as to costs.
_____________________
McCartney J.
_____________________
Whitten J.
CUNNINGHAM A.C.J.S.C. (Dissenting):
[17] I have, with interest, read the
reasons of my colleagues McCartney R.S.J. and Whitten J. Unfortunately, I
cannot agree with them as I take a different view of the impact of s. 72 of the
Succession Law Reform Act (“SLRA”) in the present case.
[18] This appeal comes before us
pursuant to s. 19 of the Courts of Justice Act and the principal issue
for us to consider is whether the application judge erred in including the
jointly owned policy in the net value of the subject estate. This
determination by the application judge involved statutory interpretation and
accordingly the standard of review is correctness. For the reasons that
follow, I have concluded the application judge correctly decided the matter.
[19] The application judge, relying
upon various cases which support the view that the purpose of s. 72(1)(f) of
the SLRA is to remedy, in situations of dependency, the non-inclusion of
certain assets in a deceased’s estate, ruled that the jointly owned policy
should become part of the estate. He then ordered the net value of the estate
to be divided into three equal shares to be used for the purchase of annuities
for each of three children, including Malachi.
[20] The appellant says that s.
72(1)(d) ought to be interpreted to apply only in situations where the deceased
initially owned the property in question entirely, but, without consideration,
placed it in the name of himself and another as joint tenants. Here, the
appellant says, the jointly owned policy was owned jointly from the beginning
and as such is not caught by s. 72(1)(d) and as a result should not be included
as part of the estate. The jointly owned policy, the appellant says, became
her sole property on the death of the deceased and that the SLRA does
not provide that the property interest of a third party can be affected in
order to support the deceased’s dependants.
[21] I have concluded that s. 72(1)(d)
of the SLRA does not apply to the insurance policy in issue because it
is apparent this subsection only deals with property held in joint tenancy.
This implies real property, not property such as an insurance policy.
[22] Moreover, the SLRA
specifically deals with insurance policies in subs. 72(1)(f) and 72(1)(f.1).
[23] Subsection 72(1)(f) reads as
follows:
Subject to section 71, for the purpose of this Part, the
capital value of the following transactions effected by a deceased before his
or her death, whether benefitting his or her dependant or any other person,
shall be included as testamentary dispositions as of the date of the death of
the deceased and shall be deemed to be part of his or her net estate for
purposes of ascertaining the value of his or her estate, and being available to
be charged for payment by an order under clause 63(2)(f),
(f) any amount payable under a policy of insurance
effected on the life of the deceased and owned by him or her;
[24] Because the Act has a specific
subsection dealing with insurance policies, the paramountcy rule of statutory
interpretation (that the general does not derogate from the specific), directs
us to apply this specific subsection rather than any other (see Sullivan, Statutory
Interpretation (Toronto: Irwin Law, 1997) page 5; Mills v. Star Quality
Homes Ltd. (1978), 21 O.R. (2d) 39 (C.A.). Importantly, I think, while s.
72(2) specifically refers to s. 72(1)(d), it makes no reference to s. 72(1)(f).
Furthermore, s. 72(1)(f.1) which specifically deals with group insurance, seems
to make it clear that any insurance policy contemplated by s. 72(1) (f) or
(f.1) may be owned by more than one person.
[25] Counsel for the appellant and
indeed my colleagues refer to Modopoulos v. Breen Estate [1996] O.J. No.
2738. That case involved the proceeds from the sale of a house which had been
held by Breen (the deceased) and his mother at the time of his death. Ferrier
J. concluded that although the house at the time of death was held in joint
tenancy, that tenancy was not the result of a disposition by Breen and indeed
it was his mother who had initially purchased the house. Moreover, in that
case, unlike the one before us, there was no evidence that Breen had not adequately
provided for the support of Modopoulos or indeed that Modopoulos was in need of
support. This clearly was a case that engaged subs. 72(1)(d) of the SLRA
which, as I have stated, was obviously intended to deal with real property, and
the disposition of real property. In my view, it has no application to the
case at bar.
[26] The application judge in the
present case, I think quite correctly, concluded in his consideration of subs.
72(1)(f) that the deceased “…has all the incidents of ownership available to
the owner of an insurance policy” referring to the elasticity of the word
“owner” as noted by Meredith C.J.O. in Wynne v. Dalby (1913), 30 O.L.R.
67 at p. 72. The learned application judge had this to say,
The only basis for finding that the Second Policy (the
one at issue) did not come within subsection (f) would be to read into the
subsection the intent of the legislature that the subject policy of insurance
must be “solely” owned by the deceased. In my view, given the purpose of this
legislation that interpretation would not be correct.
[27] I have noted, with some interest,
that this policy was issued in 1998 and that in May of 2004, at a time when he
was seriously ill, the late Lloyd Ogilvie changed the beneficiary to his wife
Mary Ogilvie by completing a change of beneficiary form with Maritime Life. In
other words, the late Lloyd Ogilvie was making estate plans that did not
include any benefit to his other children.
[28] The spectre of the Insurance
Act has been raised on this appeal. As I understand the appellant’s
position, because s. 199 commences with the words, “Despite the Succession
Law Reform Act”, this section should effectively override the provisions of
s. 72 of the SLRA. Quite correctly, the learned application judge noted
the decision in Dunn v. Dunn Estate reflex, (1993) 12 O.R. (3d) 601, which
considered this issue and indeed the legislative history leading to the
enactment of s. 72(1) of the SLRA. While my colleagues correctly note
that the facts in Dunn (supra) are different from those in the
present case, nevertheless the principles enunciated in Dunn remain. I
am of the view that the very specific provisions of s. 72(1)(f) of the SLRA
prevail over the general provisions of s. 199(1) of the Insurance Act
given the clear remedial legislative intent of the SLRA. As Robins J.
(as he then was) stated in Moores v. Hughes (1981), 37 O.R. (2d) 785 at
787 when speaking of s. 72(1) of the SLRA stated,
Manifestly, the section was intended to ensure that the
maintenance of a dependant is not jeopardized by arrangements made,
intentionally or otherwise, by a person obligated to provide support in the
eventuality of his death. It is designed to alleviate the hardship that can be
visited upon a dependant by causing money or property to pass directly to a beneficiary
(donee or joint tenant) and not as part of the estate.
[29] For the above reasons, I am
satisfied that the application judge was correct in his statutory
interpretation. With respect to the other grounds of appeal, in my view, these
all relate to issues over which the application judge exercised his discretion
appropriately and it cannot be said he made a palpable or overriding error in
coming to the conclusion he did. The application judge carefully considered
all of the evidence before him.
[30] I would dismiss the appeal.
____________________
Cunningham A.C.J.
Released: November
21, 2006
PDF Format
