Source: http://ctdj.ca/en/jurisprudence/richardson-succession-v-mew/
Timestamp: 2019-04-18 10:17:54+00:00

Document:
Ferguson Estate Trustee v. Mew et al.
Feldman, Gillese and Rouleau JJ.A.
— Husband granting appellant powers of attorney [page66 ]over his person and property — Husband never revoking designation of respondent as beneficiary — Appellant continuing to pay life insurance premiums after husband diagnosed with Alzheimer’s disease — Respondent entitled to death benefit after husband’s death — General release in separation agreement not depriving respondent of rights under policy as it did not amount to declaration within meaning of ss. 171 and 190 of Insurance Act — Insurance Act, R.S.O. 1990, c. I.8, ss. 171, 190.
Trusts and trustees — Constructive trust — Separation agreement imposing requirement on husband to maintain life insurance policy designating respondent as beneficiary until March 1995 — Husband marrying appellant after divorcing respondent — Husband granting appellant powers of attorney over his person and property — Husband never revoking designation of respondent as beneficiary — Appellant continuing to pay life insurance premiums after husband diagnosed with Alzheimer’s disease — Respondent entitled to death benefit after husband’s death — Respondent’s designation as beneficiary under policy constituting juristic reason for her enrichment — Enrichment not unjust.
The deceased and M were divorced in 1992 after a 26-year marriage, and the deceased married F. Under the terms of a separation agreement entered into by the deceased and M, the deceased was required to designate M as the named beneficiary of a $100,000 life insurance policy up to March 1, 1995. He did so, and never revoked the designation. He executed a will in which he appointed F as his trustee and left her his estate. He also signed continuing powers of attorney in F’s favour over his property and his person. In 1999, the deceased was diagnosed with Alzheimer’s disease. After that date, F paid the life insurance premiums from a joint bank account that she held with the deceased. She claimed that the deceased’s assets were exhausted in 2006 and that she paid the 2007 premium from her own funds, believing that the deceased had designated her as the beneficiary after his obligation under the separation agreement ended. After the deceased’s death, F brought a motion claiming entitlement to the proceeds of the policy. She claimed that had she known that M was the named beneficiary, she would have used her power of attorney to change the designation or stop making the premium payments. She asked that a constructive trust be imposed on the death benefit to prevent M from receiving a windfall. The motion was dismissed. F appealed.
The motion judge did not err in finding that M’s designation as beneficiary under the policy was a juristic reason for her enrichment. It would not be unjust for M to receive the death benefit, given F’s contention that she could have used the power of attorney to designate herself the beneficiary, cancel the policy or stop making the premium payments. It was doubtful that she had the right to take those actions as they would constitute breaches of her fiduciary obligations as attorney.
applied to vary the provisions of the separation agreement dealing with the policy. It could not be said that M gave up any right to the death benefit by means of the general release in the separation agreement when that agreement contemplated that the issue of life insurance benefits remained open.
Moreover, general expressions of the sort contained in releases do not deprive a beneficiary of rights under an insurance policy because loss of status is accomplished only by compliance with the applicable legislation. The general language used in waivers [page67 ]and releases does not amount to a declaration within the meaning of ss. 171 and 190 of the Insurance Act.
The motion judge did not err in refusing to rectify the beneficiary designation in the policy. The evidence amply supported his finding that the best evidence of the deceased’s intention was that he did not change the beneficiary designation after February 28, 1995 and continued to pay the premiums on the policy after that date.
Roberts v. Martindale,  B.C.J. No. 1509, 162 D.L.R.
S.C.C. refused  S.C.C.A. No. 92, 241 O.A.C. 394n]; British Columbia (Public Guardian and Trustee of) v. Elgi,  B.C.J. No. 2741, 2005 BCCA 627, 262 D.L.R. (4th) 208, 220 B.C.A.C. 148, 48 B.C.L.R. (4th) 90, 20 E.T.R. (3d) 159, 146 A.C.W.S. (3d) 160 (C.A.), affg  B.C.J. No.
130 A.C.W.S. (3d) 395; Cockell v. Cockell,  S.J. No.
A.C.W.S. (3d) 763 (C.A.); McLean v. Guillet (1978), 22 O.R. (2d) 175,  O.J. No. 3637, 92 D.L.R. (3d) 398, 3 E.T.R. 51p,  I.L.R. 1-1041 at 1315,  3 A.C.W.S.
Alan L. Rachlin, for appellant. Anna-Marie Musson, for respondent.
 GILLESE J.A.: — When is a person, other than the named beneficiary, entitled to the proceeds of a life insurance policy? That question lies at the heart of this appeal.
 In the reasons for decision of the motion judge, he fully and fairly sets out the factual background. I will repeat that portion of his decision here, with minor alterations.
 Michael Richardson married Stephenie Mary Mew in July 1965. At that time, he was 25 and she was 19. Over the following 26 years, they raised two children, a boy and a girl. Mr. Richardson was a rising star in a major Canadian publishing company and his work required frequent family moves, including one to South Africa and one to the United States.
 Ms. Mew, who had been working at the time of her marriage, gave up her job to concentrate on raising the children and managing the household. After the children started school, she took a part-time job in sales. When the children reached high school age, Ms. Mew opened a home decorating business which she ran for two years before she had to close it down when Mr. Richardson’s job required relocation to New York.
 Throughout this period, Mr. Richardson rose in the corporate ranks, ultimately becoming president of the company in 1990.
 Around that time, Mr. Richardson became involved in a relationship with Anne Kathleen Ferguson, who was 24 years his junior. This resulted in his separation from Ms. Mew in 1991 and their divorce in 1992. At the time the motion below was heard, Ms. Ferguson was 44 years of age.
 Mr. Richardson and Ms. Ferguson were married in May 1992, immediately after his divorce from Ms. Mew. In the years that followed, they had three children, a boy and two girls. The eldest child was 14 when the motion below was heard.
 In March 1994, Mr. Richardson and Ms. Mew entered into a comprehensive separation agreement (the “Separation Agreement”). Under the terms of the Separation Agreement, Mr. Richardson was required to designate Ms. Mew as the named beneficiary of a $100,000 Canada Life Insurance Company policy (the “Policy”) up to February 28, 1995.
 At the time of entering into the Separation Agreement, Mr. Richardson owned the Policy. He had purchased it in 1990, [page69 ]while still married to Ms. Mew. He misplaced the Policy in 1993 and, when Canada Life issued a replacement, he named Ms. Ferguson as the beneficiary. The annual premiums for the Policy were $1,191 for the first five years and $1,116 thereafter.
 On March 14, 1994, in fulfillment of his obligations under the Separation Agreement, Mr. Richardson signed a beneficiary designation in which he appointed Ms. Mew as the designated beneficiary, subject to revocation. Ms. Ferguson’s evidence was that Mr. Richardson told her this was a temporary measure and that he would redesignate her as the beneficiary at a later date.
 In 1998, Mr. Richardson signed a will in which he appointed Ms. Ferguson as his trustee and left her his estate. He also signed continuing powers of attorney in her favour over his property and his person. The continuing power of attorney for property is relevant to the resolution of this appeal and shall be referred to as the “Power”.
 In 1999, at the age of 59, Mr. Richardson was diagnosed with Alzheimer’s disease. Initially, he was cared for at home. Ms. Ferguson continued her employment but hired domestic help to assist with Mr. Richardson and the children. In 2003, it became necessary to move Mr. Richardson into a retirement home and, in 2004, he was transferred to a long-term care facility where he remained until his death in November 2007.
 After the onset of Mr. Richardson’s illness, Ms. Ferguson arranged for his pension to be converted into a registered retirement income fund, which was paid out between 1999 and 2007. The total payments, including CPP, were in excess of $800,000. Ms. Ferguson said that this income stream had been exhausted by the summer of 2006 and that after that time, she paid all expenses, including the cost of Mr. Richardson’s care, out of her own income.
 On Mr. Richardson’s death, Ms. Ferguson received the benefit of two insurance policies, with a combined value of $400,000. She also discovered that Ms. Mew remained as the named beneficiary of the Policy. The premiums on the Policy had been consistently paid by Mr. Richardson during the time he was capable of managing his affairs. After about 1999, Ms. Ferguson paid the premiums from the joint bank account that she held with Mr. Richardson. Ms. Ferguson said that because Mr. Richardson’s assets were exhausted in 2006, she paid the 2007 premium from her own funds, believing that she was the beneficiary.
 Ms. Ferguson continues to live with her three children in a house in Forest Hill, an upscale residential area in Toronto.
 Ms. Mew says that she was devastated by the divorce and that she continued to love Mr. Richardson. She says that she and [page70 ]Mr. Richardson treated each other civilly after the divorce and that she encouraged their children to have a relationship with their father and his new family. However, she had no personal communication with Mr. Richardson between 1995 and his death in 2007.
in 2006, at age 60, because she found it too demanding. She is currently living in a modest one-bedroom apartment in Toronto. As she never had a consistent job during her life with Mr. Richardson, her pension income is very modest. She is currently 62 years old.
 Ms. Ferguson brought a motion in which she claimed entitlement to the proceeds of the Policy (the “death benefit”). She acknowledged that the Separation Agreement required Mr. Richardson to maintain Ms. Mew as the named beneficiary of the Policy until February 28, 1995. However, she contended that Mr. Richardson intended to change the beneficiary designation after February 28, 1995 so that she would be the named beneficiary and it was only as a result of inadvertence that the change was not made. She maintained that had she known that Ms. Mew was the named beneficiary, she would have used the Power to change the designation or stop making the premium payments. She asked that a constructive trust be imposed on the death benefit to prevent Ms. Mew from receiving a windfall.
 Ms. Mew refused to release her claim to the death benefit.
 The motion judge found in favour of Ms. Mew and ordered that the death benefit, together with accrued interest, be paid to her. Ms. Ferguson appeals.
 The Separation Agreement dealt with the usual matters, including spousal support, equalization of net family property, medical coverage, pension plan rights and life insurance. It included mutual general releases and specific releases in respect of property and estates.
12. Michael will irrevocably designate Stephenie as the sole beneficiary under this policy and file the designation with Canada Life Insurance Company as provided by the Insurance Act. Michael will give Stephenie a true copy of the designation within fourteen days from the execution of this Agreement.
13. Michael will maintain Stephenie as beneficiary under the policy until February 28, 1995.
14. If Michael dies prior to February 28, 1995, without this insurance in effect, his personal representatives will pay to Stephenie the sum of $100,000.00 and this obligation will be a first charge on his estate.
15. The amount (if any) of life insurance which Michael shall be required to provide for Stephenie’s benefit from and after March 1, 1995, shall be an issue to be determined in the variation proceeding contemplated by paragraph 8, above.
 The Separation Agreement provided for monthly support payments of $4,150 for the months of January and February 1995, with the proviso that either party could apply for a determination of the appropriate quantum and duration of support after March 1, 1995. If there were no application for variation, spousal support would remain at $4,150 per month.
 Mr. Richardson and Ms. Mew entered into two subsequent amending agreements, both of which dealt only with support. The first amending agreement was dated May 3, 1995. Under its terms, Mr. Richardson was to pay spousal support of $4,150 per month up to and including April 1, 1995, and thereafter, $2,500 per month, pending the outcome of Mr. Richardson’s application to vary spousal support or other further written agreement. In November of 1996, they entered into the second amending agreement. Under its terms, Mr. Richardson agreed to pay spousal support of $2,500 per month for the three-month period of July 15 to October 15, 1996, and thereafter, $1 per year, pending further variation.
 Paragraph 11 of the Separation Agreement indicated that the Policy was to expire on February 28, 1995. This was an error that the parties were unable to explain. The Policy remained in effect after February 28, 1995 and Ms. Mew’s designation as beneficiary was never revoked. Despite the two amendments to the Separation Agreement dealing with support, the subject of alternative life insurance arrangements after March 1, 1995 was never discussed between Mr. Richardson and Ms. Mew, and the variation proceedings contemplated under the Separation Agreement either never occurred or were superseded by the amending agreements.
 The motion judge began his analysis by noting that a beneficiary designation in a life insurance policy is “normally unassailable”. He referred to ss. 171 [See Note 1 below] and 190 [See Note 2 below] of the Insurance Act, R.S.O. 1990, c. I.8, which permit an insured to make and change a beneficiary designation by contract or declaration. He noted that these provisions changed the law in Ontario as prior legislation provided that divorce had the effect of revoking the designation of a spouse as the beneficiary of a life insurance policy. Now, nothing occurs automatically on divorce. An insurer is free to change the designated beneficiary so long as the initial designation is not irrevocable.
a matter of whether the former wife or the widow is more deserving, in the court’s view. They both enjoyed long relationships with [Mr. Richardson] and were undoubtedly loving and caring wives, making substantial contributions to his happiness and well-being. I cannot say that the circumstances cry out for relief.
 In relation to unjust enrichment, the motion judge held that Ms. Mew’s designation as beneficiary under the Policy was a juristic reason for the enrichment.
whether it would be a breach of the attorney’s fiduciary duty to change the designation in her favour, or to stop making premium payments, when the grantor himself had made no change to the designation for many years and had faithfully made the premium payments.
 Accordingly, the motion judge refused to order rectification of the Policy.
 Ms. Ferguson’s principal argument on appeal is that the motion judge erred in failing to find that Ms. Mew would be unjustly enriched by receipt of the death benefit. The claim for rectification was raised in the notice of appeal and factum but was not pursued in oral argument.
 The appellant argues that the motion judge misapplied the doctrine of unjust enrichment. Specifically, the appellant contends that the motion judge erred both in failing to find that she suffered a “corresponding deprivation” and in finding that there was a juristic reason for Ms. Mew’s enrichment.
Was there a corresponding deprivation?
 The motion judge made no finding as to whether Ms. Ferguson suffered a corresponding deprivation. There was no need for such a determination given his finding that the beneficiary designation on the Policy amounted to a juristic reason for Ms. Mew’s enrichment. As I explain below, I reach the same conclusion. Accordingly, it is unnecessary to determine whether Ms. Ferguson paid the insurance premiums out of her own funds in 2007 and thereby suffered a “corresponding deprivation”.
 I turn to whether it would be unjust for Ms. Mew to receive the death benefit, given Ms. Ferguson’s contention that she could have used the Power to designate herself the beneficiary, cancel the Policy or cease making the premium payments.
 In this regard, it will be recalled, the motion judge doubted that Ms. Ferguson had the right to take these actions because he was of the view that they would constitute breaches of her fiduciary obligations as attorney. I agree.
I APPOINT ANNE KATHLEEN FERGUSON to be my attorney(s) for property, and I authorize my attorney(s) to do, on my behalf, any and all acts, which I could do if capable, except make a will, subject to any conditions and restrictions herein.
 No conditions or restrictions are imposed in the Power.
 While the Power purports to give Ms. Ferguson the authority, as attorney, to do anything she wishes with Mr. Richardson’s property (except make a will), it must be understood in [page76 ]light of the common law that governs the exercise of powers by an attorney and ss. 32(1) and 38(1) of the Act.
 Section 32(1) did not change the common law. Rather, it codified the obligations and the standard of care of an attorney at common law: Banton v. Banton,  O.J. No. 3528, 164 D.L.R. (4th) 176 (Gen. Div.), at p. 241 D.L.R.
An attorney for a donor who has mental capacity to deal with property is merely an agent and, notwithstanding the fact that the power may be conferred in general terms, the attorney’s primary responsibility in such a case is to carry out the instructions of the donor as principal. As an agent, such an attorney owes fiduciary duties to the donor but these are pale in comparison with those of an attorney holding a continuing power when the donor has lost capacity to manage property. . . . The attorney [for an incapacitated donor] must make decisions on behalf of the donor and, pursuant to sections 32 and 38 of the Substitute Decisions Act, 1992, he or she is a “. . . fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person’s benefit”. The status of such an attorney is much closer to that of a trustee than an agent of the donor.
 I do not understand Ms. Ferguson to suggest that she was entitled to change the beneficiary designation, cancel the Policy or cease paying the premiums during the time that Mr. Richardson was still capable of managing his property. To the extent that she makes such an argument, I would reject it. Given that there is no evidence that Mr. Richardson instructed her to do any of those things, if she had so acted, she would have been in breach of her duty to carry out the donor’s instructions. Furthermore, changing the beneficiary designation to herself would have contravened the prohibition against using the Power for her own benefit, as Mr. Richardson had not expressly consented to such a change.
 After Mr. Richardson became incapable, as has been noted, Ms. Ferguson owed him an even higher duty of loyalty when exercising the Power. As a fiduciary in a role rising to that of a trustee, she was bound to use the Power only for Mr. Richardson’s benefit and any exercise of the Power had to be done with honesty, integrity and in good faith. There is nothing in the record to suggest that a change in the beneficiary designation, cancellation of the Policy or a cessation of the premium payments would have been for Mr.
 In any event, as the motion judge noted, the matter is moot because Ms. Ferguson took none of these actions and Ms. Mew remained the designated beneficiary. Accordingly, the Power provides no basis for a determination that it would be unjust for Ms. Mew to receive the death benefit.
Of what effect, if any, is the general release?
 Neither the facts of this case, nor the law, support a determination that the general release in the Separation Agreement makes it unjust for Ms. Mew to take the death benefit.
 I begin with the facts. According to para. 15 of the Separation Agreement, the amount of life insurance that Mr. Richardson was to provide for Ms. Mew’s benefit after March 1, 1995 was to be determined in a variation proceeding. Neither party applied to vary the provisions of the Separation Agreement dealing with the Policy. It cannot be said that Ms. Mew gave up any right to [page78 ]the death benefit by means of the general release in the Separation Agreement when that agreement contemplated, in para. 15, that the issue of life insurance benefits remained open.
policy because loss of status as a beneficiary is accomplished only by compliance with the legislation. The general language used in waivers and releases does not amount to a declaration within the meaning of the Insurance Act.
E.T.R. (2d) 272 (Gen. Div.) as examples of cases in which constructive trusts have been imposed on beneficiaries of life insurance proceeds. Both cases are distinguishable on their facts.
 In Roberts, the trial judge made a clear finding of the deceased’s intention to change the beneficiary designation and her belief that she had, in fact, done so. The British Columbia Court of Appeal was of the view that the parties had dealt with the insurance proceeds by means of the separation agreement that they entered into. In the circumstances, it would have been a breach of the bargain made between the parties to permit the named beneficiary to take the proceeds.
 Around the closing of the sale of the business, the deceased asked his insurance agent for help in transferring the policy from the company’s name into his own. The agent was to prepare the documents to include a change in the beneficiary of the policy from the company to the plaintiff. However, this was not done before his death. Upon discovering the existence of the policy, the purchasers took the position that it was an asset of the business, relying on the provisions of the Insurance Act. The court found for the plaintiff and ordered the proceeds of the policy to be paid to the deceased’s estate.
 As the motion judge suggested, the main basis for the decision in Newport was that the defendants were not entitled to the insurance policy under the agreement of purchase and sale. Accordingly, the court found that the purchasers had an implied contractual obligation to consent to a transfer of the policy and the change of beneficiary and held that the proceeds were impressed with a constructive trust. In the alternative, the plaintiff was entitled to rectification of the contract of sale to provide for the policy’s transfer to the deceased and the removal of the company as beneficiary. In the further alternative, the court held that the purchasers would be unjustly enriched if the proceeds were payable to the company. The court was satisfied that there was a certainty, equivalent to a declaration under the Insurance Act by the deceased, that the company would no longer be the owner and beneficiary of the policy. As the motion judge found, the same cannot be said in this case.
 In conclusion, I see no basis on which to find that it would be an injustice for Ms. Mew to take the death benefit. Further, there is a juristic reason for Ms. Mew’s enrichment — she was the named beneficiary of the Policy. That designation was never changed and the evidence did not satisfy the motion judge that there were exceptional circumstances justifying a change in the beneficiary designation. Consequently, there is no basis on which to impose a constructive trust on the death benefit.
Separation Agreement twice thereafter) and he continued to pay the premiums on the Policy after that date. The premium payments made after February 28, 1995 included a period of time before Mr. Richardson was [page80 ]diagnosed with Alzheimer’s disease. The record amply supports the motion judge’s finding on this matter. The motion judge also correctly articulated and applied the legal principles that govern rectification.
 Accordingly, I see no basis on which to interfere with the decision below on this issue.
 The motion judge awarded the respondent costs of approximately $25,000, all inclusive. The appellant seeks leave to appeal the costs award and, if leave is given, will argue that the costs award is unfair and unreasonable.
 A court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong: see Hamilton v. Open Window Bakery Ltd.,  1 S.C.R. 303,  S.C.J. No. 72, at para. 27. [See Note 7 below] Accordingly, leave to appeal a costs order should be granted only in obvious cases where the party seeking leave convinces the court that there are strong grounds on which the appellate court could find that the judge erred in exercising his or her discretion: Brad-Jay Investments Ltd. v. Szijjarto,  O.J. No. 5078, 218 O.A.C. 315 (C.A.), at para. 21, leave to appeal to S.C.C. refused  S.C.C.A. No. 92, 241 O.A.C. 394n.
 Accordingly, I would dismiss the appeal, with costs to the respondent fixed at $7,500, inclusive of disbursements and GST.
190(1) An insured may in a contract or by a declaration designate the insured’s personal representative or a beneficiary to receive insurance money.
(2) Subject to section 191, the insured may from time to time alter or revoke the designation by a declaration.
Note 3: Both of these latter statements appear to refer to para. 15 of the Settlement Agreement, set out above.
Note 4: See, for example, Pettkus v. Becker,  2 S.C.R. 834,  S.C.J. No. 103, at p. 848 S.C.R.
Note 5: In Peter v. Beblow,  1 S.C.R. 980,  S.C.J.
No. 36, at p. 997 S.C.R., a minor or indirect contribution was said to be insufficient to give rise to a contructive trust.
Note 7: This presupposes that the appeal was dismissed. In this court, if an appeal is allowed, the general principle is that the costs order below is set aside and the successful appellant is awarded costs below and of the appeal: see Kopij v. Toronto (Metropolitan),  O.J. No. 239, 85 A.C.W.S. (3d) 763 (C.A.).

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