Ferguson Estate Trustee v. Mew et al. [Indexed as: Richardson (Estate Trustee of) v. Mew]

96 O.R. (3d) 65

Court of Appeal for Ontario,

Feldman, Gillese and Rouleau JJ.A.

May 14, 2009

Insurance -- Life insurance -- 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 [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.

Held, the appeal should be dismissed.

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. The general release in the separation agreement did not make it unjust for M to take the death benefit. According to the separation agreement, the amount of life insurance that the deceased was to provide for M'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 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.

APPEAL from the order of Strathy J. (2008), 2008 CanLII 63218 (ON SC), 93 O.R. (3d) 537, [2008] O.J. No. 4892 (S.C.J.) dismissing a motion claiming entitlement to the proceeds of a life insurance policy. [page68 ]

Cases referred to Newport v. Mountainside Medical Pharmacy Ltd., [1995] O.J. No. 2892, 9 E.T.R. (2d) 272, 58 A.C.W.S. (3d) 306 (Gen. Div.); Roberts v. Martindale, 1998 CanLII 4561 (BC CA), [1998] B.C.J. No. 1509, 162 D.L.R. (4th) 475, [1999] 1 W.W.R. 778, 109 B.C.A.C. 97, 55 B.C.L.R. (3d) 63, 21 E.T.R. (2d) 259, [1999] I.L.R. I-3621, 80 A.C.W.S. (3d) 900 (C.A.), distd Other cases referred to Banton v. Banton, 1998 CanLII 14926 (ON SC), [1998] O.J. No. 3528, 164 D.L.R. (4th) 176, 66 O.T.C. 161, 82 A.C.W.S. (3d) 400 (Gen. Div.); Brad-Jay Investments Ltd. v. Szijjarto, 2006 CanLII 42636 (ON CA), [2006] O.J. No. 5078, 218 O.A.C. 315, 154 A.C.W.S. (3d) 226 (C.A.) [Leave to appeal to S.C.C. refused 2007 CanLII 67861 (SCC), [2007] S.C.C.A. No. 92, 241 O.A.C. 394n]; British Columbia (Public Guardian and Trustee of) v. Elgi, [2005] 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 [2004] B.C.J. No. 796, 2004 BCSC 529, 28 B.C.L.R. (4th) 375, 7 E.T.R. (3d) 308, 130 A.C.W.S. (3d) 395; Cockell v. Cockell, 1944 CanLII 184 (SK CA), [1944] S.J. No. 62, [1944] 4 D.L.R. 373, [1944] 3 W.W.R. 328, 11 I.L.R. 287 (C.A.); Conway v. Conway Estate, 2006 CanLII 1448 (ON SC), [2006] O.J. No. 234, [2006] O.T.C. 44, 25 R.F.L. (6th) 106, 145 A.C.W.S. (3d) 106 (S.C.J.); Cornwall v. Halifax Banking Co. (1902), 1902 CanLII 66 (SCC), 32 S.C.R. 442, [1902] S.C.J. No. 39; Ermineskin Indian Band and Nation v. Canada, [2009] 1 S.C.R. 222, [2009] S.C.J. No. 9, 2009 SCC 9, 384 N.R. 203, J.E. 2009-348, EYB 2009-154400, 302 D.L.R. (4th) 577, [2009] 2 C.N.L.R. 102; Gaudio Estate v. Gaudio, 2005 CanLII 14574 (ON SC), [2005] O.J. No. 1773, [2005] O.T.C. 341, 16 R.F.L. (6th) 72, 138 A.C.W.S. (3d) 1208 (S.C.J.); Hall Estate v. Hall, 1985 ABCA 31, [1985] A.J. No. 763, 36 Alta. L.R. (2d) 345, 59 A.R. 272, 10 C.C.L.I. 25, 44 R.F.L. (2d) 275, 31 A.C.W.S. (2d) 5 (C.A.); Hamilton v. Open Window Bakery Ltd., [2004] 1 S.C.R. 303, [2003] S.C.J. No. 72, 2004 SCC 9, 235 D.L.R. (4th) 193, 316 N.R. 265, J.E. 2004-470, 184 O.A.C. 209, 40 B.L.R. (3d) 1, [2004] CLLC Â210-025, 128 A.C.W.S. (3d) 1111; Kopij v. Toronto (Metropolitan), [1999] O.J. No. 239, 85 A.C.W.S. (3d) 763 (C.A.); McLean v. Guillet (1978), 1978 CanLII 1496 (ON SC), 22 O.R. (2d) 175, [1978] O.J. No. 3637, 92 D.L.R. (3d) 398, 3 E.T.R. 51p, [1978] I.L.R. Â1-1041 at 1315, [1978] 3 A.C.W.S. 170 (Dist. Ct.); Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980, [1993] S.C.J. No. 36, 101 D.L.R. (4th) 621, 150 N.R. 1, [1993] 3 W.W.R. 337, J.E. 93-660, 23 B.C.A.C. 81, 77 B.C.L.R. (2d) 1, [1993] R.D.F. 369, 48 E.T.R. 1, 44 R.F.L. (3d) 329, 39 A.C.W.S. (3d) 646, EYB 1993-67100; Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980] 2 S.C.R. 834, [1980] S.C.J. No. 103, 117 D.L.R. (3d) 257, 34 N.R. 384, 8 E.T.R. 143, 19 R.F.L. (2d) 165, 6 A.C.W.S. (2d) 263; Sharom v. Sharom Estate, 1992 CanLII 15555 (ON CJ), [1992] O.J. No. 285, 8 C.C.L.I. (2d) 14, 45 E.T.R. 16, [1992] I.L.R. Â1-2884 at 2041, 31 A.C.W.S. (3d) 808 (Gen. Div.); Vail v. Vail Estate, 1988 CanLII 10374 (ON SC), [1988] O.J. No. 1875, 34 C.C.L.I. 261, 31 E.T.R. 110, [1989] I.L.R. Â1-2410 at 9297, 12 A.C.W.S. (3d) 330 (H.C.J.) Statutes referred to Insurance Act, R.S.O. 1990, c. I.8, ss. 171 [as am.], 190 Substitute Decisions Act, 1992, S.O. 1992, c. 30, ss. 32, (1), 38(1) [as am.]

Alan L. Rachlin, for appellant. Anna-Marie Musson, for respondent.

The judgment of the court was delivered by

[1] 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.

Background

[2] 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.

[3] 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.

[4] 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.

[5] Throughout this period, Mr. Richardson rose in the corporate ranks, ultimately becoming president of the company in 1990.

[6] 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.

[7] 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.

[8] 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.

[9] 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.

[10] 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.

[11] 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".

[12] 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.

[13] 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.

[14] 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.

[15] Ms. Ferguson continues to live with her three children in a house in Forest Hill, an upscale residential area in Toronto.

[16] 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.

[17] After the divorce, Ms. Mew returned to school and obtained part-time work as a teacher. She remarried in 1999 and separated from her husband in 2001. She retired from teaching 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.

[18] 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.

[19] Ms. Mew refused to release her claim to the death benefit.

[20] 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.

[21] For the reasons that follow, I would dismiss the appeal.

The Separation Agreement and Amending Agreements

[22] 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.

[23] The relevant provisions of the Separation Agreement for the purposes of this appeal are as follows:

LIFE INSURANCE

11. Michael owns a policy of insurance in the face amount of $100,000.00 through Canada Life Insurance Company bearing policy number 2994363, which policy will expire on February 28, 1995. [page71 ]

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.

[24] 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.

[25] 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.

[26] 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.

[27] Ms. Mew acknowledged that Mr. Richardson fulfilled all of his obligations to her pursuant to the Separation Agreement and the amending agreements. [page72 ]

The Decision Below

[28] 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.

[29] The motion judge then carefully considered the case law of this province and elsewhere. He found that it supported a strict interpretation of the Insurance Act requirements for the change of a beneficiary, except in exceptional circumstances. He concluded that there were no such circumstances in the present case. At para. 57 of the reasons, he explained:

In view of the line of cases in this Court, reaching back to McLean v. Guillet [(1978), 1978 CanLII 1496 (ON SC), 22 O.R. (2d) 175 (Dist. Ct.)] and including, most recently, Conway v. Conway Estate [(2006), 2006 CanLII 1448 (ON SC), 25 R.F.L. (6th) 106 (Ont. S.C.J.)], there are no circumstances that would cause me to conclude that the provisions of the Insurance Act should be over-ridden, based on unjust enrichment, to prevent an injustice in this case. Counsel for [Ms. Ferguson] suggested that [Ms. Mew] had essentially rejected [Mr. Richardson] by not visiting him during his illness and not attending his funeral. She may have had perfectly legitimate reasons for this, including grief, embarrassment and resentment, none of which affect the issues. Counsel also suggested that [Ms. Ferguson] had [page73 ]been left with three children to raise. It is not 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.

[30] 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.

[31] The motion judge rejected the submission that Ms. Ferguson could have used the Power to change the beneficiary designation or stop making the premium payments. At para. 66 of the reasons, he stated:

I agree with the submission of counsel for [Ms. Mew] that the designation of a beneficiary under a life insurance policy is akin to a testamentary disposition. Counsel for [Ms. Ferguson] could point to no authority to the effect that an attorney can change the designation. I also query 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.

[32] The motion judge recognized that he had the power to rectify the Policy, including rectification of the beneficiary designation: see Sharom v. Sharom Estate, 1992 CanLII 15555 (ON CJ), [1992] O.J. No. 285, 8 C.C.L.I. (2d) 14 (Gen. Div.); Cockell v. Cockell, 1944 CanLII 184 (SK CA), [1944] S.J. No. 62, [1944] 4 D.L.R. 373 (C.A.); and Cornwall v. Halifax Banking Co. (1902), 1902 CanLII 66 (SCC), 32 S.C.R. 442, [1902] S.C.J. No. 39. However, he was not satisfied that the evidence established that it was as a result of a mistake that Ms. Mew remained the named beneficiary or that Mr. Richardson's true intent was to name Ms. Ferguson as beneficiary. He noted that while the Separation Agreement contemplated that Ms. Mew's designation was to be a temporary measure, it also contemplated that further life insurance arrangements might be put in place following the assumed expiry of the policy. Further, the Settlement Agreement anticipated that variation proceedings might be commenced to determine the amount of life insurance, if any, that Mr. Richardson would be required to provide. [See Note 3 below]

[33] At para. 62 of the reasons, the motion judge concluded:

The best evidence of Michael's intention is that he did not change the beneficiary designation after February 28, 1995 and he continued to pay the premiums on the policy. There is no evidence at all that this was a mistake. It was faintly argued by Mr. Rachlin [counsel for Ms. Ferguson] that perhaps Michael was forgetful as a result of his incipient Alzheimer's, but there is no evidence of this and the diagnosis was apparently not made until 1999. [page74 ]

[34] Accordingly, the motion judge refused to order rectification of the Policy.

The Issue

[35] 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.

Unjust Enrichment

[36] The courts will intervene to prevent unjust enrichment when (a) there has been an enrichment; (b) a corresponding deprivation; and (c) there is an absence of any juristic reason for the enrichment. [See Note 4 below]

[37] 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.

[38] The appellant's argument can be summarized as follows. If Ms. Mew is permitted to receive the death benefit, she will be enriched. Ms. Ferguson will suffer a corresponding deprivation because she paid the 2007 premium for the Policy from her personal earnings. Further, Ms. Ferguson contends that had she known that she was not the named beneficiary, she would have used the Power to designate herself as beneficiary, ceased paying the premiums or cancelled the Policy. In light of these considerations and the long estranged relationship between the deceased and Ms. Mew, it is argued, there is no juristic reason for Ms. Mew's enrichment. As further support for this position, the appellant points to the general release in the Separation Agreement and asserts that because Ms. Mew agreed to relinquish all rights to Mr. Richardson's assets, it would be against good conscience to allow her to breach that agreement and claim the death benefit. [page75 ]

Was there a corresponding deprivation?

[39] 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".

[40] I would note, however, assuming that Ms. Ferguson paid the 2007 premium with her own money, the amount she paid was $1,161, a very minor contribution to the cost of the Policy which had been paid for over the course of 17 years. I question whether deprivation of such a minor sum -- in comparison both to the total cost of the Policy and the amount of the death benefit of $100,000 -- in the circumstances of this case, would warrant the imposition of a constructive trust. [See Note 5 below]

Is the enrichment unjust?

[41] 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.

[42] 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.

[43] The Power is a continuing power of attorney and appears to have been made pursuant to the Substitute Decisions Act, 1992, S.O. 1992, c. 30 (the "Act"). Paragraph 1 of the Power provides, in part:

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.

[44] No conditions or restrictions are imposed in the Power.

[45] 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.

[46] Section 32(1) sets out the duties and standard of care of a guardian of property. It provides that:

32(1) A guardian of property 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. [See Note 6 below]

[47] 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, 1998 CanLII 14926 (ON SC), [1998] O.J. No. 3528, 164 D.L.R. (4th) 176 (Gen. Div.), at p. 241 D.L.R.

[48] In Banton, Cullity J. held that while an attorney acting under a continuing power of attorney is always a fiduciary, the scope of the attorney's fiduciary duties depends on whether the donor of the power is incapable at the time of the transaction. If the donor is mentally incapable, the attorney's position approaches that of a trustee. If not, the relationship between donor and attorney is similar to one of agency. At p. 239 D.L.R. of Banton, Cullity J. explains:

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.

[49] As a fiduciary, Ms. Ferguson was obliged to act only for the benefit of Mr. Richardson, putting her own interests aside: see Ermineskin Indian Band and Nation v. Canada, [2009] 1 S.C.R. 222, [2009] S.C.J. No. 9, 2009 SCC 9, at para. 125. In British Columbia (Public Guardian and Trustee of) v. Elgi, 2004 BCSC 529, [2004] B.C.J. No. 796, 28 B.C.LR. (4th) 375 (S.C.), affd 2005 BCCA 627, [2005] B.C.J. No. 2741, 262 D.L.R. (4th) 208 (C.A.), Garson J. described [page77 ]the prohibition against using a power for the attorney's profit, benefit or advantage, at para. 82, in the following way:

It is the attorney's duty to use the power only for the benefit of the donor and not for the attorney's own profit, benefit or advantage. The attorney can only use the power for his or her own benefit when it is done with the full knowledge and consent of the donor. I am not aware of any authority that detracts from this principle in circumstances where the benefit is conferred on family members. (Citations omitted)

[50] 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.

[51] 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. Richardson's benefit.

[52] 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?

[53] 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.

[54] 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.

[55] The jurisprudence drives one to the same conclusion. Cases such as McLean v. Guillet (1978), 1978 CanLII 1496 (ON SC), 22 O.R. (2d) 175, [1978] O.J. No. 3637 (Dist. Ct.); Hall Estate v. Hall, 1985 ABCA 31, [1985] A.J. No. 763, 59 A.R. 272 (C.A.); Vail v. Vail Estate, 1988 CanLII 10374 (ON SC), [1988] O.J. No. 1875, 34 C.C.L.I. 261 (H.C.J.); Gaudio Estate v. Gaudio, 2005 CanLII 14574 (ON SC), [2005] O.J. No. 1773, 16 R.F.L. (6th) 72 (S.C.J.); and Conway v. Conway Estate, 2006 CanLII 1448 (ON SC), [2006] O.J. No. 234, 25 R.F.L. (6th) 106 (S.C.J.) establish the following principles. A former spouse is entitled to proceeds of a life insurance policy if his or her designation as beneficiary has not changed. This result follows even where there is a separation agreement in which the parties exchange mutual releases and renounce all rights and claims in the other's estate. General expressions of the sort contained in releases do not deprive a beneficiary of rights under an insurance 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.

[56] The appellant points to Roberts v. Martindale, 1998 CanLII 4561 (BC CA), [1998] B.C.J. No. 1509, 162 D.L.R. (4th) 475 (C.A.) and Newport v. Mountainside Medical Pharmacy Ltd., [1995] O.J. No. 2892, 9 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.

[57] 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.

[58] Newport involved a contest between the plaintiff wife and the purchasers of her late husband's business over the proceeds of an insurance policy. The deceased took out a life insurance policy in the name of the company and designated the company as the sole beneficiary. Later, he contracted HIV, developed AIDS and committed suicide, leaving behind the plaintiff, from whom he had been separated for some time. While he was separated from his wife, the deceased continued to support her and his children financially and named her estate trustee and sole beneficiary in his will. She was also the beneficiary of a number of policies of life insurance. [page79 ]

[59] 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.

[60] 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.

Conclusion

[61] 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.

Rectification

[62] In respect of the beneficiary designation, the motion judge found that the best evidence of Mr. Richardson's intention was that he did not change the beneficiary designation after February 28, 1995 (despite having amended the 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.

[63] Accordingly, I see no basis on which to interfere with the decision below on this issue.

Costs

[64] 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.

[65] 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., 2004 SCC 9, [2004] 1 S.C.R. 303, [2003] 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, 2006 CanLII 42636 (ON CA), [2006] O.J. No. 5078, 218 O.A.C. 315 (C.A.), at para. 21, leave to appeal to S.C.C. refused 2007 CanLII 67861 (SCC), [2007] S.C.C.A. No. 92, 241 O.A.C. 394n.

[66] In the circumstances, I see no basis on which to grant leave. The appellant has not shown any apparent error in principle in the exercise of discretion by the motion judge nor is the costs award "plainly wrong". While the appellant sees the respondent as having achieved a windfall, that does not disentitle the respondent to costs below. Furthermore, that view does not make the costs award unfair or unreasonable. Particularly in light of the respondent's offer to settle, no injustice was occasioned by the motion judge's costs award.

Disposition

[67] Accordingly, I would dismiss the appeal, with costs to the respondent fixed at $7,500, inclusive of disbursements and GST.

Appeal dismissed.

Notes

Note 1: Section 171 define a "declaration" as follows:

"declaration" means an instrument signed by the insured,

(a) with respect to which an endorsement is made on the policy,

(b) that identifies the contract, or

(c) that describes the insurance or insurance fund or a part thereof,

In which the insured designates, or alters or revokes the designation of, the the insured's personal representative or a beneficiary as one to whom or for whose benefit insurance money is to be payable;

Note 2: The relevant portions of s. 190 read as follows:

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, [1080] 1980 CanLII 22 (SCC), 2 S.C.R. 834, [1980] S.C.J. No. 103, at p. 848 S.C.R.

Note 5: In Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] 1 S.C.R. 980, [1993] 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 6: Section 38(1) provides that, subject to certain exceptions that do not apply here, s. 32 applies with necessary modifications to an attorney acting under a continuing power of attorney "of the grantor is uncapable of managing property or the attorney has reasonable grounds to believe that the grantor is incapable of managing property."

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), [1999] O.J. No. 239, 85 A.C.W.S. (3d) 763 (C.A.).