Court and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20220124 DOCKET: C68134

Strathy C.J.O., Harvison Young and Zarnett JJ.A.

BETWEEN

Richard Froud Plaintiff (Appellant)

and

Susan Mary Froud and the Estate of Mollie Froud Defendants (Respondents)

Counsel: Jerry W. Switzer, for the appellant David Harris-Lowe, for the respondent, Susan Mary Froud No one appearing for the respondent, the Estate of Mollie Froud

Heard: January 20, 2022 by video conference

On appeal from the order of Justice Annette Casullo of the Superior Court of Justice, dated February 3, 2020.

Reasons for Decision

[1] At the conclusion of oral submissions, we dismissed the appeal with reasons to follow. These are our reasons.

[2] The appellant Richard Froud (“Richard”) [1] claimed at trial that he was entitled to one-half of the proceeds of a life insurance policy in the amount of $1 million (the “Policy”) on the life of his late mother, Mollie Froud (“Mollie”). The Policy was owned by Mollie and initially named as beneficiaries the appellant and his sister, the respondent Susan Froud (“Susan”).

[3] As a result of estate planning arrangements made by Mollie after discussions with her two children, the Policy was amended to name Susan as the sole beneficiary. At the same time, Mollie gifted a house worth approximately $450,000 to Richard, in exchange for a payment of $155,000.

[4] The sole issue at trial was a factual one: what were the terms of the agreement made between Mollie and her two children concerning the apportionment of her assets between Richard and Susan prior to her death?

[5] Richard’s position at trial was that the parties agreed that the benefit under the Policy would be reduced to $500,000 and that his payment of $155,000 would go towards pre-paying the remaining premiums on the policy. Richard argued that it had always been Mollie’s intention to treat her children equally and that by maintaining the policy at $1 million, Susan had obtained a benefit to which she was not entitled and she was required to disgorge an equal share to Richard.

[6] The trial judge rejected Richard’s argument. She found as a fact that the agreement was contained in a document entitled “Preliminary Inheritance” and that other documents exchanged between the parties supported that conclusion. She found that the family dynamics had changed by the time the agreement was made, and equal treatment of her children was no longer a priority for Mollie. Richard had received significant advantages by living for 13 years, rent-free, in a house owned by Mollie, Mollie was in financial difficulty and had serious health challenges and Susan had been helping her out with transportation and other needs.

[7] The trial judge also found that Susan did not breach the tripartite agreement. There was no agreement that the Policy was to be reduced to $500,000. In coming to these conclusions, the trial judge rejected Richard’s evidence that he did not receive the document in which the structure of the agreement had been set out. Even if she had accepted Richard’s evidence, the trial judge found that Richard, Mollie and Susan had signed an acknowledgment that Mollie would execute a Change in Beneficiary Designation Form naming Susan as the sole beneficiary of the Policy and said nothing about reducing the amount of the Policy.

[8] While there had been discussions about reducing the Policy to $500,000 and using Richard’s $155,000 payment to pre-pay the remaining premiums, the trial judge did not find a binding agreement to do so. It was one option, among several, that had been discussed.

[9] The trial judge found that under the terms of the agreement, Richard got a “bird in the hand” – he paid $155,000 in order to obtain title to a house worth $455,000, thereby receiving his “inheritance” before Mollie’s death. He subsequently sold the house for $678,000, making a profit of $523,000. Mollie was expected to live for many years and even after applying the $155,000 received from Richard to pre-pay the premiums on the Policy for several years, it was quite possible that Susan would have to continue paying premiums in order to maintain the policy in force. Unlike Richard, Susan would have to wait for her “inheritance” and if she wished to maintain the Policy at $1 million she might be responsible for paying substantial annual premiums in order to do so.

[10] In sum, the trial judge not only rejected Richard’s argument that there had been a breach of the agreement, she found that there was nothing inequitable about the outcome, which was consistent with Mollie’s wishes.

[11] Appellant’s counsel acknowledged that the standard of review is palpable and overriding error. He submitted that the trial judge made a palpable and overriding error in finding that Richard was a party to the “Preliminary Inheritance” agreement when he denied receiving the document and there was no evidence that Susan had sent it to him by email.

[12] We do not accept this submission. The trial judge referred to Susan’s evidence that she had given a copy of the document to Mollie and Richard. She noted Richard’s claim that he had not received the document, but she also noted that in cross-examination, Richard was unable to say whether he had received and reviewed the document during the financial discussions. We agree with the respondent that the trial judge was entitled to accept Susan’s evidence, as she obviously did.

[13] We also reject the submission that, even accepting the agreement was as the trial judge found, Susan had a duty to inform Richard of her decision to exercise an “option” to keep the policy in force at $1 million. No such duty is expressed in the agreement and there is no basis to imply it. Richard had no responsibility for payment of premiums under the policy and Susan was its sole beneficiary. It was for her and Mollie to decide whether to keep paying the premiums and maintain the policy at $1 million or reduce it to $500,000.

[14] The trial judge’s findings of fact were based on her assessment of the evidence as a whole and are entitled to deference. The appellant has identified no palpable and overriding error in those findings and the appeal is dismissed, with costs payable to the respondent in the amount of $30,000, inclusive of disbursements and all applicable taxes, as agreed between the parties.

“G.R. Strathy C.J.O.”

“A. Harvison Young J.A.”

“B. Zarnett J.A.”

Footnotes

[1] The parties’ first names have been used in these reasons, as they were in the trial judge’s reasons and in the factums of both parties.