Burgess v. Mendonca, Estate Trustee of the Estate of Desmond Errol Burgess [Indexed as: Burgess v. Burgess Estate]

52 O.R. (3d) 61

[2000] O.J. No. 4846

Docket No. C33966

Court of Appeal for Ontario

McMurtry C.J.O., Catzman and Feldman JJ.A.

December 22, 2000

Family law--Property--Pensions--Before his separation and divorce from applicant, deceased signing beneficiary designation form naming applicant as beneficiary of his interest in deferred profit sharing plan--Deceased and applicant signing separation agreement containing mutual releases of claims to company pension plans subject to proviso that applicant entitled to one-half share of proceeds under deceased's deferred profit sharing plan--Separation agreement operating to revoke deceased's earlier designation in favour of applicant in accordance with s. 51(1) of Succession Law Reform Act--Applicant entitled to one-half of proceeds of deferred profit sharing plan and not to entire proceeds--Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 51(1).

In 1987, the deceased signed a beneficiary designation form designating the applicant, who was then his wife, as the beneficiary, upon his death, of his interest in his employer's Deferred Profit Sharing Plan ("DPSP"). The deceased and the applicant separated and, in 1994, signed a separation agreement containing mutual releases of all claims and, in particular, claims to a share in company pension plans, subject to the proviso that the applicant was entitled to one-half of the proceeds under the deceased's DPSP. The deceased and the applicant were divorced and the deceased married the respondent. He never revoked or amended the beneficiary designation in respect of the DPSP. His will, drawn in 1997, left his estate in equal shares to the respondent and to his three children. After the deceased's death, the applicant initially asserted a claim to one-half of the proceeds of the DPSP. When she became aware of the beneficiary designation, she amended her application and sought payment of the entire proceeds.

The respondent took the position that the applicant should be limited to the one-half of the proceeds of the DPSP to which she was entitled under the separation agreement.

The application judge was satisfied that the deceased intended the applicant to have the voluntary additional benefit conferred on her by the beneficiary designation for the DPSP. She held that the applicant was entitled to the entire proceeds of the DPSP. The respondent appealed.

Held, the appeal should be allowed.

The Succession Law Reform Act does not require that revocation of a prior designation by instrument follow any particular form or formality. In this case, Art. 19.01 of the separation agreement stated that "neither the Husband nor the Wife will make a claim to a share in any pension of the other, including but not limited to any company pension plans, . . . provided that the Wife shall be entitled to one-half of the benefits under the Husband's deferred profit sharing plan." The application judge's finding that the deceased intended the applicant to have the voluntary additional benefit to which she referred was not supported by the evidence. The only evidence of the deceased's intention was that which could appropriately be gleaned from the beneficiary designation, the separation agreement and his last will and testament. The inescapable inference from these documents was that the deceased intended the applicant's entitlement to be limited to one-half of the benefits under the DPSP and that he in tended the respondent and his children to share equally in the assets of his estate, including the other half of the benefits under the DPSP. A reading of the separation agreement in its entirety confirmed an intention by both parties to achieve a final resolution of all claims, rights and entitlements each of them might have against the other and against the other's property, other than those--such as the benefits under the DPSP--for which the separation agreement made specific provision. Article 19.01 of the separation agreement operated to revoke the deceased's earlier beneficiary designation in favour of the applicant. Just as the 1987 beneficiary declaration evidenced the deceased's intention that all of the proceeds under the DPSP be made payable to the applicant, the 1994 separation agreement evidenced his subsequent intention to revoke that designation and to limit the applicant's entitlement to one-half of the benefits under that plan. Article 19.01 of the separation agreement effectively operate d to implement that subsequent intention, in accordance with s. 51(1) of the Succession Law Reform Act.

APPEAL from a judgment of Haley J. (2000), 2000 22559 (ON SC), 5 R.F.L. (5th) 30, 32 E.T.R. (2d) 45 (S.C.J.) allowing an application for declaration of entitlement to the entire proceeds of a deferred profit sharing plan.

Dimma v. Algoma Steel Corp. (1979), 1979 1721 (ON SC), 24 O.R. (2d) 406, 98 D.L.R. (3d) 160, 4 E.T.R. 186 (S.C.); Goldfield v. Koslovsky (1975), 1975 1583 (MB QB), 22 R.F.L. 133, [1976] 2 W.W.R. 553 (Man. Q.B.); Kindl (Re) (1982), 1982 2049 (ON SC), 39 O.R. (2d) 219, 140 D.L.R. (3d) 92, 31 R.F.L. (2d) 11, 13 E.T.R. 101 (H.C.J.); Pearson v. Pearson Estate (1980), 1980 3110 (MB CA), 3 Man. R. (2d) 404, 7 E.T.R. 12 (C.A.), consd Statutes referred to Succession Law Reform Act, R.S.O. 1990, c. S.26, Part III, ss. 50, 51, as am.

Arleen Huggins, for respondent. Sandra R. Schnurr, for applicant.

The judgment of the court was delivered by

CATZMAN J.A.:--

The Appeal

[1] Desmond and June Burgess were married in 1971.

[2] Desmond worked for Canadian Tire. Canadian Tire had a Deferred [Profit] Sharing Plan ("DPSP"). In 1987, Desmond signed a "beneficiary designation" form, addressed to Canadian Tire. It designated June as the beneficiary, upon his death, of his interest in the DPSP.

[3] In 1990, Desmond and June separated. In 1994, they signed a separation agreement in which they agreed to settle all issues between them. It contained mutual releases of all claims and, in particular, claims to a share in company pension plans, registered retirement savings plans and registered home ownership savings plans, subject to the proviso that June was to be entitled to one-half of the benefits under Desmond's DPSP.

[4] In 1995, Desmond and June were divorced. Desmond married Bernadette in the following year. He died in 1999. His will, drawn in 1997, left his estate in equal shares to Bernadette and to his three children by his first wife, June.

[5] Desmond continued to work for Canadian Tire to the date of his death. He never notified Canadian Tire of the provision in his separation agreement with June, and never sent to it any revocation or amendment of the beneficiary designation he had signed in 1987.

[6] After Desmond died, June asserted a claim, initially, to one-half of the proceeds of the DPSP. Later, when Canadian Tire produced the beneficiary declaration, she amended her application and sought payment of the entire proceeds. Bernadette opposed June's claim, saying that June should be limited to the one-half of the proceeds to which she was entitled under the separation agreement.

[7] In reasons reported at (2000), 2000 22559 (ON SC), 32 E.T.R. (2d) 45, 5 R.F.L. (5th) 30, Haley J. held that June was entitled to the entire proceeds of the DPSP. Bernadette now appeals.

The Material Before the Court

[8] The material before Haley J. consisted of two affidavits sworn by June and one sworn by Bernadette, and the exhibits to those affidavits. Neither of June's affidavits touched upon the parties' intention when the separation agreement was negotiated and executed. The court was advised that the solicitor who drew the separation agreement, witnessed Desmond's signature and certified that he had advised Desmond with respect to its nature and effect, died before this litigation was commenced. Accordingly, the disposition of June's application, and of this appeal, must turn on the written documents appearing in the record.

[9] The beneficiary designation given to Canadian Tire in 1987 was on a form headed "The Canadian Tire Corporation Limited Staff Retirement Fund Through Profit Sharing". It read as follows:

I, Desmond E. Burgess Employee # 14972, hereby revoke any previous designation of beneficiary or apportionment of benefits in respect of the above profit sharing plan and I declare that the monies payable in the event of my death before my retirement age and while I am associated with Canadian Tire Corporation, Limited shall be payable to

June A. Burgess

105 Ashridge Dr. Scarboro (wife) [See Note 1 at end of document]

(name, address, relationship (if any))

or if such designated beneficiary(ies) shall predecease me, then to me or my estate.

Dated at Willowdale this 17th day of August, 1987.

[10] The separation agreement contained the following provisions:

WHEREAS:

(d) The parties have agreed to settle all issues between them.

Article 10.00--BINDING UPON ESTATE

10.01 The terms of this Agreement will enure to the benefit of and be binding upon each party and/or his or her respective heirs, executors, administrators and assigns.

Article 11.00--RELEASE AGAINST THE ESTATE OF THE OTHER

11.01 Except as provided in this Agreement, without restricting the other waivers and releases in this contract, and subject to transfers or bequests which may be made, by either party to the other in his or her last Will and Testament each party waives all rights and releases and discharges the other from all claims that he or she has or may in the future acquire under the laws of any jurisdiction, and particularly under the Family Law Act, 1986, and the Succession Law Reform Act and their successors, entitling him or her upon the death of the other:

(a) to a division of property owned by the other or to one-half the difference between their net family properties or to any other share of this difference, or to any share of the property of the other;

(b) if the other party dies testate (leaving a Will), to elect against taking under the Will in favour of receiving an entitlement equalizing their net family properties, or in favour of any other benefit;

(c) if the other party dies intestate (without a Will), to elect to receive an entitlement in intestacy or to receive an entitlement equalizing their net family property;

(d) if the other party dies testate as to some property and intestate as to other property, to elect to take under the Will and to receive an entitlement in intestacy, or to receive an entitlement equalizing their net family properties;

(e) to share in the estate of the other under a distribution in intestacy in any manner whatsoever;

(f) to receive support as a dependant from the estate of the other in any manner whatsoever; and

(g) to act as executor, administrator or trustee of the Will or estate of the other.

Article 12.00--AGREEMENT TO SURVIVE DEATH

12.00 This Agreement is intended to survive the death of a party or both of the parties. The provisions of this Agreement are for the benefit of, and will be binding upon the parties, and their respective heirs, administrators, executors and assigns.

Article 13.00--GENERAL RELEASE

13.01 Each of the parties accepts the provisions of this Agreement in full satisfaction of all claims and causes of action each now has or may acquire including, but not limited to, spousal support, or alimony, possession of or title to, or an interest in property, equalization of net family properties, division of the net family property of the other, any claims for interim relief, or any other claim arising out of the marriage of the Husband and the Wife, except for causes of action in tort, causes of action arising under this Agreement, and a cause of action for a Certificate of Divorce. Nothing in this Agreement bars any action or proceeding by either party to enforce any of the provisions of this Agreement.

Article 18.00--CANADA PENSION PLAN CREDITS

18.01 Neither the Husband nor the Wife will apply under the Canada Pension Plan for a division of pension credits after the dissolution of their marriage.

Article 19.00--OTHER PENSIONS

19.01 Except as specifically provided, neither the Husband nor the Wife will make a claim to a share in any pension of the other, including but not limited to any company pension plans, registered retirement savings plans and registered home ownership saving plans, provided that the Wife shall be entitled to one-half of the benefits under the Husband's deferred profit sharing plan.

The Reasons of Haley J.

[11] After setting out the facts, the provisions of the separation agreement and the positions of the parties, Haley J. referred to four cases [See Note 2 at end of document] and said, at p. 50 E.T.R., p. 35 R.F.L.:

It is clear from all of these cases I have referred to that the key issue is whether the wording of the release is sufficient to catch the kind of benefit which the spouse becomes entitled to. Here, on the facts, the husband failed to change the beneficiary designation on the DPSP after the separation agreement was entered into. He can be said to have voluntarily chosen to benefit the wife and waived or ignored the terms of the separation agreement to that end. However, I think that is not sufficient to make a determination in this case. One must look particularly at Article 19.01 which makes reference to the one-half interest in the DPSP in conjunction with the other release provisions and the intention of the parties insofar as that can be ascertained from the agreement itself and from their subsequent conduct, if applicable.

[12] She then considered Articles 11, 13, 18 and 19 of the separation agreement [See Note 3 at end of document] and concluded, at p. 51 E.T.R., p. 36 R.F.L.:

It is clear that the existence of the DPSP was in the minds of both parties when they entered into the separation agreement. It is also clear that the parties were accepting provisions of the separation agreement in full satisfaction of all claims and causes of action arising out of the marriage but the wording of Article 11 is such that the release does not go beyond those claims and causes of action. The DPSP is not an entitlement which relies on marriage. The applicant was aware that she would be entitled to one-half of the proceeds of the DPSP on her husband's death. She may or may not have been aware of the beneficiary designation. The husband may have simply forgotten about the designation or he may have been content to let it ride as an additional benefit to the applicant--a voluntary additional benefit. There is nothing in the separation agreement that links the DPSP with any marital claims or shows the one-half as consideration for any of the specific arrangements made in the separation agreement. The conduct of the applicant in first seeking only a one-half of the proceeds is consistent with her understanding of the facts up to the time Canadian Tire disclosed the beneficiary designation in her favour.

For these reasons I am satisfied that the husband intended the applicant to have the voluntary additional benefit conferred on her by the beneficiary designation for the DPSP and that she is therefore entitled to the entire proceeds. Canadian Tire is ordered to make payment forthwith of the proceeds with interest if any is payable under the contract to the applicant.

Sections 50 and 51 of the Succession Law Reform Act

[13] The statutory provisions relating to the designation of beneficiaries of interests in funds and plans are found in Part III of the Succession Law Reform Act, R.S.O. 1990, c. S.26, as amended ("the SLRA"). Sections 50 and 51 of the SLRA provide as follows:

50. In this Part,

"participant" means a person who is entitled to designate another person to receive a benefit payable under a plan on the participant's death;

"plan" means,

(a) a pension, retirement, welfare or profit-sharing fund, trust, scheme, contract or arrangement or a fund, trust, scheme, contract or arrangement for other benefits for employees, former employees, directors, former directors, agents or former agents of an employer or their dependants or beneficiaries,

(b) a fund, trust, scheme, contract, or arrangement for the payment of a periodic sum for life or for a fixed or variable term, or

(c) a fund, trust, scheme, contract, or arrangement of a class that is prescribed for the purposes of this Part by a regulation made under section 53.1,

and includes a retirement savings plan, a retirement income fund and a home ownership savings plan as defined in the Income Tax Act (Canada) and an Ontario home ownership savings plan under the Ontario Home Ownership Savings Plan Act.

51(1) A participant may designate a person to receive a benefit payable under a plan on the participant's death,

(a) by an instrument signed by him or her or signed on his or her behalf by another person in his or her presence and by his or her direction; or

(b) by will,

and may revoke the designation by either of those methods.

(2) A designation in a will is effective only if it relates expressly to a plan, either generally or specifically.

[14] It was not in dispute that the DPSP is a "plan" and Desmond a "participant" within the definitions of those terms in s. 50, and that, although "instrument" is not defined in the SLRA, the separation agreement is an "instrument" within the contemplation of s. 51(1)(a). [See Note 4 at end of document]

Analysis

[15] As noted, Haley J. referred in her reasons to four cases [See Note 5 at end of document] in support of her analysis. All arose in circumstances where the wife of the deceased, who was designated as beneficiary under a will (in three cases) or a pension agreement (in the fourth), subsequently separated from him and signed a document in which she relinquished various rights and claims. In all four cases, the wife was held to be entitled to take the benefits notwithstanding the document she had subsequently signed.

[16] I do not find these cases helpful in the disposition of this appeal. All of them turned on the scope of the release given in the subsequent document and concluded that the wording of the subsequent document did not extend to the benefits in issue. [See Note 6 at end of document] None of them engaged consideration, as does the present case, of the provisions of the SLRA set out above or of any other corresponding statutory provisions outside Ontario, and none of them described the benefits in issue with the specificity that appears in Art. 19.01.

[17] The beneficiary designation Desmond gave to Canadian Tire in 1987 was not expressed to be irrevocable. Indeed, its wording contemplated that it could be revoked. [See Note 7 at end of document]

[18] The SLRA does not require that revocation of a prior designation by instrument follow any particular form or formality. In the present case, Art. 19.01 of the separation agreement referred specifically to "the benefits under the Husband's deferred profit sharing plan". That plan was the DPSP in respect of which Desmond had given the beneficiary designation in 1987. There is no suggestion that Desmond had more than one deferred profit sharing plan with Canadian Tire or that he had any such plan with anyone other than Canadian Tire.

[19] While I agree with much of what Haley J. said, I do not agree with the result that she reached.

[20] I agree with her that the existence of the DPSP was in the minds of both Desmond and June when they entered into the separation agreement, and that June was aware that she would be entitled to one-half of the proceeds of the DPSP on Desmond's death. [See Note 8 at end of document]

[21] I respectfully do not agree that June may or may not have been aware of the beneficiary designation. [See Note 9 at end of document] If she had been aware of it, I do not believe she would have limited the claim she first asserted, after Desmond's death, to one-half of the proceeds of the DPSP.

[22] Finally, I do not agree with Haley J.'s ultimate conclusion. Having said in para. 20 of her reasons that Desmond "may have simply forgotten about the [beneficiary] designation or he may have been content to let it ride as an additional benefit" for June--and, on the material before the court, there is no way of knowing for certain--she then expressed herself in para. 21 of her reasons as "satisfied that [Desmond] intended [June] to have the voluntary additional benefit conferred on her by the beneficiary designation for the DPSP and that she [was] therefore entitled to the entire proceeds". With deference, this conclusion is inconsistent with the comment in the paragraph that precedes it.

[23] The material before the court falls far short of indicating that Desmond intended June to have the "voluntary additional benefit" to which para. 21 refers. As noted, no affiant deposed to the intention either of Desmond or of June at or at any time after the separation agreement was executed. The affidavits of June, the only survivor, cast no light on the subject of intention or on the discussions that surrounded the negotiation and execution of that document. The only evidence we have of Desmond's intention is what we can appropriately glean from the beneficiary designation in 1987, the separation agreement in 1994 and his last will and testament in 1997.

[24] In my view, the inescapable inference from these documents is that Desmond intended June's entitlement to be limited to one-half of the benefits under the DPSP and that he intended Bernadette and his children to share equally in the assets of his estate, including the other half of the benefits under that plan. A reading of the separation agreement in its entirety confirms an intention by both parties, Desmond and June, to achieve a final resolution of all claims, rights and entitlements each of them might have against the other and against the other's property, other than those -- such as the benefits under the DPSP -- for which the separation agreement makes specific provision. I find compelling the conclusion that the provisions of Art. 19.01 of the separation agreement operated to revoke Desmond's earlier beneficiary designation in favour of June. Just as the 1987 beneficiary declaration evidenced Desmond's intention that all of the proceeds under the DPSP be made payable to June, the 1994 separation agreement evidenced his subsequent intention to revoke that designation and to limit June's entitlement to one-half of the benefits under that plan. Article 19.01 effectively operated to implement that subsequent intention, in accordance with s. 51(1) of the SLRA.

Disposition

[25] I would allow the appeal, set aside the judgment of Haley J. and, in its place, grant judgment declaring that June is entitled to one-half of the proceeds of the DPSP and that the balance of the proceeds of the DPSP should be paid to Desmond's estate, to be distributed in accordance with his last will and testament. I would award the appellant her costs, on a party and party basis, of the proceedings before Haley J. and of this appeal, payable by the respondent forthwith after their assessment.

Appeal allowed.

Notes

Note 1: The beneficiary designation was a printed form. The italicized portions were added in handwriting. No reliance was placed on the argument of the appeal on the expression "(wife)". Although June was no longer Desmond's wife at the date of his death, the law appears clear that her entitlement would not be forfeited by the loss of that status.

Note 2: Goldfield v. Koslovsky (1975), 1975 1583 (MB QB), 22 R.F.L. 133, [1976] 2 W.W.R. 553 (Man. Q.B.); Pearson v. Pearson Estate (1980), 1980 3110 (MB CA), 7 E.T.R. 12, 3 Man. R. (2d) 404 (C.A.), Re Kindl (1982), 1982 2049 (ON SC), 39 O.R. (2d) 219, 13 E.T.R. 101 (H.C.J.); and Dimma v. Algoma Steel Corp. (1979), 1979 1721 (ON SC), 24 O.R. (2d) 406, 4 E.T.R. 186 (S.C.J.).

Note 3: These provisions are set out above.

Note 4: This is confirmed by reference to dictionary definitions of "instrument": see Black's Law Dictionary, 7th ed. (1999), p. 801; Stroud's Judicial Dictionary of Words and Phrases, 5th ed. (1986), p. 1315; The Oxford English Dictionary, 2nd ed. (1989), p. 1051.

Note 5: See footnote 2.

Note 6: See Goldfield, 1975 1583 (MB QB), 22 R.F.L. 133, at pp. 138-39; Pearson, 1980 3110 (MB CA), 7 E.T.R. 12, at p. 16; Kindl, 1982 2049 (ON SC), 13 E.T.R. 101, at p. 109 [pp. 226-27 O.R.]; and Dimma, 1979 1721 (ON SC), 4 E.T.R. 186, at p. 188 [p. 408 O.R.].

Note 7: "I ... hereby revoke any previous designation of beneficiary or apportionment of benefits in respect of the above profit sharing plan."

Note 8: See para. 20 of the reasons of Haley J., set out in para. 12, above.

Note 9: Ibid.