Lalonde v. Sun Life Assurance Co. of Canada, [1992] 3 S.C.R. 261
Sun Life Assurance Company of Canada Appellant
v.
Dame Yvette Lalonde Respondent
and
Dame Yvette Lion Mis en cause
and
Domtar Inc. Mis en cause
Indexed as: Lalonde v. Sun Life Assurance Co. of Canada
File No.: 22221.
1992: May 27; 1992: October 29.
Present: Lamer C.J. and La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, Cory and Iacobucci JJ.
on appeal from the court of appeal for quebec
Insurance ‑‑ Group life insurance ‑‑ Validity of revocation of wife as beneficiary -- Intention of parties to life insurance contract -- Whether Husbands and Parents Life Insurance Act or art. 1029 C.C.L.C. applicable ‑‑ Statutory interpretation -- Generalia specialibus non derogant -- Husbands and Parents Life Insurance Act, R.S.Q. 1964, c. 296, ss. 1, 2, 3, 4, 12 ‑‑ Civil Code of Lower Canada, arts. 1029, 1265 ‑‑ Insurance Act, S.Q. 1974, c. 70, s. 479.
Civil law ‑‑ Obligations ‑‑ Novation ‑‑ Group life insurance contract ‑‑ Successive policies -- Unicity of contract despite changes between various policies -- Changes in terms and conditions -- No intention by parties to novate ‑‑ Civil Code of Lower Canada, arts. 1169, 1171.
In December 1967, the insured subscribed to his employer's group life insurance policy and named his wife as beneficiary. At that time the Husbands and Parents Life Insurance Act ("H.P.L.I.A.") permitted a husband to insure his life for the benefit of his wife or children, and provided that this benefit could be revoked only in favour of another beneficiary provided for in s. 2 of the Act. In 1970, art. 1265 C.C.L.C. was amended and the prohibition of spouses conferring benefits on each other inter vivos was removed. The insurance policy was renewed in 1974 and the insured maintained the designation of his wife as beneficiary. This policy provided that beneficiary nominations were revocable but acknowledged that the insurance contract was subject to provincial law. The H.P.L.I.A. was repealed in 1976 when the new Insurance Act came into effect. This new Act contained two transitional provisions respecting beneficiaries, one of which, s. 479, gave husbands the right to revoke a beneficiary governed by the H.P.L.I.A. on certain conditions. The 1974 policy was replaced in 1977 by two new policies covering active and retired employees respectively. The insured named a new beneficiary in 1984. This beneficiary was not a person provided for in s. 2 H.P.L.I.A. After the insured died in 1985, his wife who was separated from bed and board asked the Superior Court to declare that she was entitled to the money payable under the group life insurance policy in effect at the time of death because the 1984 revocation was invalid. The court held that in the present case, despite the terms of the life insurance policy, the insured did not have the right to refer to the provisions concerning the stipulation for a third person contained in art. 1029 C.C.L.C. to name a new beneficiary since the provisions of the H.P.L.I.A. exclude revoking a beneficiary covered by that Act in any manner other than that specified therein. A majority of the Court of Appeal upheld this judgment but for different reasons. It concluded that the clause in the 1974 policy providing that the appointment of a beneficiary is always revocable unless otherwise stipulated cannot be applied. Despite the amendment to art. 1265 in 1970, this clause does not indicate the insured's intention to refer to the general law, and the H.P.L.I.A. must therefore be applied.
Held: The appeal should be dismissed.
The wording of the clause on beneficiary revocation in the 1974 group life insurance policy, in effect after art. 1265 C.C.L.C. was amended, does not indicate an intention on the part of the parties to the contract to make art. 1029 C.C.L.C. applicable rather than the H.P.L.I.A. While the clause includes a stipulation reserving the insured's right to change the beneficiary, the policy also provides that the insurance contract is subject to the applicable provincial law. The H.P.L.I.A. was still in effect in 1974. By amending art. 1265, the legislature did not intend to make any new designation of a wife subject to the general law, when a special Act still in effect purported to provide for such designations. In view of s. 479 of the Insurance Act, there is no need to discuss the parties' intention regarding the policies which came into effect in 1977 since this section preserves the effects of the H.P.L.I.A. with respect to beneficiary designations made before it was repealed. The designation of the new beneficiary in 1984 is null and void not only because it was not made within the time limit specified in s. 479, but also because the new beneficiary was not a member of the beneficiaries provided for in s. 2 H.P.L.I.A.
Even had the parties expressed an intention to make the life insurance contract subject to arts. 1029 et seq. C.C.L.C., it is the H.P.L.I.A. which would govern because of its peremptory nature. When, as here, the conditions for the Act to apply are met, the parties cannot avoid its application. Section 1 H.P.L.I.A. does not make application of that Act optional. That section is concerned only with rights acquired before 1865 and with continuance of the law applicable to situations not covered by the special Act.
It is erroneous to argue that the effect of the amendment to art. 1265 C.C.L.C. in 1970 was to deprive the H.P.L.I.A. of its binding force. The new wording of this section contains no indication of this and the fact that the H.P.L.I.A. remained in effect until 1976 despite the amendment supports the opposite conclusion. Giving an insured a choice between the provisions of the special Act and stipulations in favour of third parties would deprive the special Act of its meaning and make the protection of wives and children it contains illusory. Since the new art. 1265 does not deal specifically with life insurance, one must therefore presume that the rights conferred on wives and children by the special Act remained in effect. This is an appropriate case in which to apply the maxim generalia specialibus non derogant and give precedence to the special Act.
Finally, the transitional provisions of the Insurance Act, ss. 478 and 479, show quite clearly an intention to preserve the effects of the H.P.L.I.A. on beneficiaries designated before it came into effect. These provisions, and the new art. 2547 C.C.L.C., confirm the irrevocability of the designation by the insured of his wife as beneficiary.
The policies to which the insured subscribed between 1967 and 1984 are not separate contracts but represent a single life insurance coverage in respect of the insured. The changes in terms and conditions between the various policies do not have the effect of extinguishing the original insurance contract. For changes in terms to bring about a novation, there must be a tacit or express intention to that effect and a change in the purpose of or consideration for the contract. That is not the case here.
Cases Cited
Referred to: Assurance‑vie Desjardins v. Bolduc, [1977] C.S. 964; Morris‑Lamoureux v. Boileau, J.E. 82‑399; Leduc v. Monette, [1987] R.R.A. 201; Ménard v. Aetna Casualty du Canada, [1981] C.S. 669; City of Ottawa v. Town of Eastview, 1941 CanLII 9 (SCC), [1941] S.C.R. 448; Seward v. The "Vera Cruz" (1884), 10 App. Cas. 59; Grobstein v. Kouri, 1936 CanLII 40 (SCC), [1936] S.C.R. 264; Peters v. Stoneview Corp., C.A. Montréal, No. 500‑09‑00961‑763, November 14, 1978; Vilbon v. Marsouin (1874), 18 L.C.J. 249.
Statutes and Regulations Cited
Act to consolidate and amend the law to secure to wives and children the benefit of assurances on the lives of their husbands and parents, S.Q. 1878, 41 & 42 Vict., c. 13, s. 29.
Act to secure to Wives and Children the benefit of Assurances on the lives of their Husbands and Parents, S. Prov. C. 1865, 29 Vict., c. 17, s. 6.
Civil Code of Lower Canada, arts. 1029, 1169, 1171, 1265 [repl. 1888, art. 5809; repl. 1969, c. 77, s. 27; rep. 1980, c. 39, s. 45], 2547 [ad. 1974, c. 70, s. 2].
Husbands and Parents Life Insurance Act, R.S.Q. 1964, c. 296 [repl. 1974, c. 70], ss. 1, 2, 3, 4, 12, 13.
Insurance Act, S.Q. 1974, c. 70, ss. 478, 479.
Authors Cited
Bellefeuille, Édouard Lefebvre de. Le Code civil annoté. Montréal: Beauchemin & Valois, 1879.
Halsbury's Laws of England, vol. 31, 2nd ed. London: Butterworths, 1938.
Langelier, sir François. Cours de droit civil de la Province de Québec, t. IV. Montréal: Wilson & Lafleur, 1908.
McVitty, Edmund Hugh. A Commentary on the Life Insurance Laws of Canada. Toronto: Institute of Chartered Life Underwriters of Canada, 1962 (loose‑leaf).
Traité de droit civil du Québec, t. 8 bis par Léon Faribault. Montréal: Wilson & Lafleur, 1959.
APPEAL from a judgment of the Quebec Court of Appeal, [1990] R.R.A. 915, affirming a judgment of the Superior Court. Appeal dismissed.
Luc Plamondon, Marcel Cinq‑Mars, Q.C., and André Durocher, for the appellant.
Claude Lamarre, for the respondent.
Jérôme Carrier, for the mis en cause Lion.
//Gonthier J.//
English version of the judgment of the Court delivered by
Gonthier J. ‑‑ This appeal concerns the right to revoke a beneficiary under a group life insurance policy. In particular, the issue here is whether the parties to a group life insurance contract intended to make the designation of the wife as beneficiary revocable. The question also arises as to whether the legislation applicable at the time allowed revocation of the wife in this regard.
I ‑ Facts and Applicable Legislation
On June 24, 1950, André Baillargeon married Yvette Lalonde. In December 1967 he became an employee of Domtar Inc. One of the conditions of his employment was that he subscribe to a group life insurance policy obtained by the company. Policy No. 11175‑G, in effect at that time, contains a stipulation regarding beneficiary changes, the relevant portion of which reads as follows:
Change of beneficiary. The right is reserved to each employee to change his beneficiary from time to time by written request, subject to any legal restriction which may affect such a right.
On December 20, 1967, André Baillargeon signed an insurance application in which he named his wife Yvette Lalonde as beneficiary. The group life insurance policy came into effect on January 1, 1968. At that time, art. 1265 of the Civil Code of Lower Canada ("C.C.L.C.") provided:
- After marriage, the marriage covenants contained in the contract cannot be altered, (even by the donation of usufruct, which is abolished); nor can the consorts in any other manner confer benefits inter vivos upon each other, except in conformity with the provisions of the law, under which a husband may, subject to certain conditions and restrictions, insure his life for his wife and children. 1866, s. 1265; R.S. 1888, s. 5809.
It is worth noting certain provisions of the Husbands and Parents Life Insurance Act, R.S.Q. 1964, c. 296 (hereinafter referred to from time to time as the "special Act"), which were also in effect at that time:
Nothing contained in this act shall be held or construed to restrict or interfere with any right otherwise allowed by law to any person to affect or transfer a policy for the benefit of a wife or children, nor shall it apply to insurance made in favor of or transferred to any wife under her marriage contract. R.S. 1941, c. 301, s. 2.
A husband may insure his life, or appropriate any policy of insurance held by himself on his life, for the benefit and advantage of, ‑-
His wife; or
His wife and their children generally; or
His wife and his, her and their children generally; or
His wife and his or her children generally; or
His wife and one or more of his, her or their children. R.S. 1941, c. 301, s. 3, subs. 1.
[Note: The beneficiaries listed in this article are commonly referred to as "preferred beneficiaries".]
A father or mother may insure his or her life or appropriate any policy of insurance held by himself on his life, or by herself on her life, for the benefit and advantage of his or of her children, or of one or more of them. R.S. 1941, c. 301, s. 3, subs. 2.
The insurance mentioned in sections 2 or 3 may be effected, either for the whole life of the person whose life is insured, or for any definite period; and the sum insured may be made payable upon the death of such person or upon his or her surviving a specified period of not less than ten years.
Any person who has effected an insurance or who has appropriated a policy of insurance, for the benefit of a wife or of a wife and child or children, or of a child or children, at any time and from time to time thereafter, may revoke the benefit conferred by such insurance or appropriation, either as to one or more or as to all of the persons intended to be benefitted, and may declare in the revocation that the policy shall be for the benefit only of the persons not excluded by the revocation, or for the benefit of such persons not excluded, jointly with another or others, or entirely for the benefit of another or others, not originally named or benefited.
Such other or others must be a person or persons for whose benefit an insurance may be effected or appropriated under these provisions. R.S. 1941, c. 301, s. 12.
- Such revocation may be made either by an instrument to be attached to the policy (of which a duplicate must be filed with the company which issued the policy, and a note of the filing of such duplicate must be endorsed by the company on the policy, or on the instrument retained) or by will, of which, after the party's death, an authentic copy must be signified upon the company.
In default of such duplicate being filed or of such copy being signified, the company shall be validly discharged by paying the insurance money according to the terms and directions of the policy or of the declaration, or of a previous revocation. R.S. 1941, c. 301, s. 13.
On July 1, 1970, art. 1265 C.C.L.C. was amended and the prohibition of spouses conferring benefits on each other inter vivos was removed:
- The consorts may during the marriage modify their matrimonial regime and their contract of marriage provided that, by any modification so made, they do not prejudice the interests of the family or the rights of their creditors.
The gifts contained in contracts of marriage may not, however, be modified without the consent of all interested parties. 1866, s. 1265; R.S. 1888, s. 5809; 1969, c. 77, s. 27; rep. 1980, c. 39, s. 45.
On March 26, 1975, Domtar Inc. signed group life insurance policy No. 13966‑G, retroactive to April 1, 1974. The provision as to change of beneficiary was among those altered:
Irrespective of the relationship, if any, between the employee and the beneficiary, the right is reserved to each employee to change his beneficiary under the group term insurance from time to time by written request. All beneficiary nominations are revocable unless otherwise stipulated.
The policy contained a provision which acknowledged that the insurance contract was subject to provincial law:
Any provision of the policy which on the Effective Date is in conflict with the statutes of the province in which the policy is delivered is hereby amended to conform to the minimum requirements.
On February 28, 1974, André Baillargeon signed a membership card for policy No. 13966‑G, on which he still showed his wife as beneficiary under the group life insurance policy.
On October 20, 1976, the Insurance Act, S.Q. 1974, c. 70, came into effect. It replaced inter alia the Husbands and Parents Life Insurance Act, which was repealed on the same date. The Insurance Act contained two transitional provisions:
- The beneficiary governed by article 1029 of the Civil Code and designated before the date of the coming into force of this act is a revocable beneficiary within the meaning of this act, except
(a) the person designated irrevocably by a stipulation to that effect in the policy or in the document effecting the appointment;
(b) the person designated under a contract in which the policyholder or participant has not reserved for himself the right of revocation if this beneficiary has served in writing upon the insurer, before the date of the coming into force of this act or within twelve months after that date but before his revocation, notice of his intention to accept the stipulation in his favour.
- The beneficiary in whose favour insurance contemplated by the Husbands and Parents Life Insurance Act has been effected becomes a beneficiary irrevocably designated according to the prescriptions of this act.
However, the policyholder or participant may, within twelve months of the coming into force of this act, only once change the designation in accordance with sections 12 and 13 of the said Husbands and Parents Life Insurance Act. The designation arising from the change provided for in this paragraph is irrevocable.
André Baillargeon did not take advantage of these provisions.
Article 1029 C.C.L.C., referred to in s. 478, reads as follows:
- A party in like manner may stipulate for the benefit of a third person, when such is the condition of a contract which he makes for himself, or of a gift which he makes to another; and he who makes the stipulation cannot revoke it, if the third person have signified his assent to it. 1866, s. 1029.
Additionally, the Insurance Act replaces certain articles of Title Fifth of Book Fourth of the C.C.L.C. dealing with insurance. Article 2547 C.C.L.C. provides that when a spouse is designated as beneficiary, the designation is presumed to be made irrevocably:
- The irrevocable designation of a beneficiary cannot be made except in the policy or in a separate writing other than a will.
The designation, by the policyholder or participant, of his consort as beneficiary is irrevocable unless otherwise stipulated. 1974, c. 70, s. 2.
On January 1, 1977, policy No. 13966‑G was replaced by policies Nos. 15301‑G and 15303‑G, covering active and retired employees respectively. An endorsement in the following terms was attached to this policy:
For all purposes of this policy, the enrolment card signed under Policy Nos. 11175‑G. or 13966‑G. shall be the enrolment card for this policy at the effective date, unless a new enrolment card has been signed by the employee under this policy. The beneficiary referred to herein shall be understood, at the effective date, to refer to the beneficiary last legally designated in writing by the employee under Policy Nos. 11175‑G. or 13966‑G., unless a new enrolment card has been signed by the employee under this policy, but such beneficiary may be changed at any subsequent time in accordance with the terms of this policy.
On July 6, 1984, André Baillargeon signed a document entitled [translation] "Change or designation of beneficiary", in which he named the mis en cause Yvette Lion as beneficiary. The day after his retirement, on November 1, 1984, it was insurance policy No. 15303‑G which became applicable.
André Baillargeon died on August 19, 1985. On March 3, 1986, his wife who was separated from bed and board, Yvette Lalonde, filed a motion for a declaratory judgment in the Superior Court. She asked the court to declare that she was entitled to the money payable under the group life insurance policy in effect at the time André Baillargeon died.
II ‑ Judgments
Superior Court (Montréal, No. 500-05-001916-863, March 26, 1987)
By a judgment rendered on March 26, 1987, Nolin J. of the Superior Court rejected the appellant's theory that the various life insurance policies were separate contracts (at p. 10):
[translation] . . . the continuing nature of the Domtar group life insurance plan in this case, and the continuity of the insured's enrolment and the attribution of benefits, inter alia, indicated in the various successive Sun Life policies, represent a single life insurance coverage in respect of the insured Baillargeon and the beneficiary Lalonde;
He noted that at the time of the first beneficiary designation in 1967 the Husbands and Parents Life Insurance Act was in effect and that there were two lines of authority on this point. According to the first (see Assurance‑vie Desjardins v. Bolduc, [1977] C.S. 964; Morris‑Lamoureux v. Boileau, Sup. Ct. Hull, No. 550‑05‑000889‑81, March 18, 1982, J.E. 82-399; and Leduc v. Monette, Sup. Ct. Terrebonne, No. 700‑05‑000965‑859, January 13, 1987, [1987] R.R.A. 201), a designation made after the amendment to art. 1265 C.C.L.C. which has not been irrevocably made can be made either under the special Act or under the provisions of art. 1029 C.C.L.C.
According to the second line of authority (see Ménard v. Aetna Casualty du Canada, [1981] C.S. 669), adopted by the trial judge, the provisions of the special Act exclude revoking a preferred beneficiary in any manner other than that specified in the Act. Nolin J. held that in the present case, despite the terms of the life insurance policy, André Baillargeon did not have the right to refer to the provisions concerning the stipulation for a third person contained in the C.C.L.C.
Court of Appeal, [1990] R.R.A. 915
In a judgment rendered on October 9, 1990, a majority of the Court of Appeal ruled neither on the unicity of the group life insurance contract nor on whether the effect of the repeal of art. 1265 C.C.L.C. was to allow a husband to insure his life for the benefit of his wife under art. 1029 C.C.L.C. The majority held, however, that the clause in contract No. 13966‑G providing that the appointment of a beneficiary is always revocable unless otherwise stipulated cannot be applied. Rousseau‑Houle J.A. wrote, at p. 920:
[translation] I am not convinced that, in view of the removal of art. 1265 C.C., this clause indicates the insured's intention to refer to the general law and that the Husbands and Parents Life Insurance Act no longer applies in the instant case.
Beauregard J.A., dissenting, thought that since the stipulations on revocation in the insurance policies in effect after July 1, 1970 did not refer to the special Act and since in 1984 André Baillargeon in fact revoked his wife as beneficiary, it follows that he must have intended to refer to the general law.
III ‑ Issues
The three issues are as follows:
Does the wording of the stipulations on beneficiary revocation in the group life insurance policies applicable after art. 1265 C.C.L.C. was amended indicate an intention to make art. 1029 C.C.L.C. applicable rather than the Husbands and Parents Life Insurance Act?
Was André Baillargeon entitled to insure his life in accordance with art. 1029 C.C.L.C.?
Were the obligations between the parties extinguished by the novation of contractual obligations?
IV ‑ Analysis
1. Intention as to Applicable Provisions
It is important to distinguish the insured's intention to make someone a beneficiary from the intention to make certain legal provisions applicable. In the present case, the Court must first determine whether the insured intended to place himself outside the special Act, which provides that any revocation must be made in favour of a preferred beneficiary, listed in s. 2.
When the insured signed the first enrolment card in 1967, he indicated his wish to make his wife beneficiary. At that time, it was the special Act which applied. In 1970, art. 1265 C.C.L.C. was amended. Policy No. 11175‑G and the first designation were still in effect. I concur in the opinion of the Court of Appeal as to the effect of the amendment to art. 1265 C.C.L.C. (at p. 922):
[translation] By repealing art. 1265 C.C., the legislature did not intend to make any new designation of a wife subject to the general law, when a special Act still in effect purported to provide for such designations.
In the present case the parties to the contract, namely the appellant (insurer), Domtar Inc. (policyholder) and André Baillargeon (insured/subscriber), made no change to policy No. 11175‑G or the designation of a beneficiary. Accordingly, in 1970 the parties did not intend either to change the beneficiary or to change the applicable law.
Policy No. 13966‑G came into effect retroactive to April 1, 1974. The parties to the contract were still the same. The appellant maintains that the beneficiary designation under contract No. 13966‑G reflects an intention on the part of André Baillargeon to make the general law provisions applicable, allowing for revocation of the beneficiary so long as the benefit has not been accepted. I cannot subscribe to that argument. In group insurance, the insured has no ability to negotiate the life insurance contract. For the insured, it is simply a standard form contract. André Baillargeon was not a party to the negotiations leading to the master policy. It is wrong to say that he had any intention whatever as to the law applicable to the life insurance contract. Nor is the fact that he renewed the designation of his wife sufficient evidence of an intention to change the applicable law.
It is true that policy No. 13966‑G includes a stipulation reserving the employee's right to change the beneficiary, whereas the beneficiary change clause in policy No. 11175‑G expressly provides that revocation of the beneficiary is "subject to any legal restriction which may affect such a right", a provision which is not found in policy No. 13966‑G. The latter provides, however, that the insurance contract is subject to the applicable provincial law.
I concur in the view of the Court of Appeal that the amendment to the change of beneficiary clause does not indicate that the parties intended to make the general law provisions applicable. As the Court of Appeal says at p. 922 of its judgment:
[translation] The clause contained in policy 11366 G [sic] allowing the revocation of any beneficiary unless "otherwise stipulated", to the extent that it meant that the wife Yvette Lalonde had been designated beneficiary under a stipulation for a third party pursuant to art. 1029 of the Civil Code, did not in my opinion suffice, in view of the nature of the policy, to exclude the application of the Husbands and Parents Life Insurance Act. That Act was still in effect in 1974 and provided a "stipulation otherwise", since it only allowed the revocation of a beneficiary wife within the limits contained in s. 12 of the Act. The clause contained in the 1974 Sun Life contract could then have no effect in the province of Quebec when the policyholder [sic] designated his wife as beneficiary.
On October 20, 1976 the special Act was repealed and the Insurance Act came into effect. Section 479 of the latter Act, which I shall discuss later, preserves the effects of the Husbands and Parents Life Insurance Act with respect to beneficiary designations made before it was repealed. In view of this provision, there is no need to discuss the parties' intentions regarding policies Nos. 15301‑G and 15303‑G which came into effect after October 20, 1976. The designation of the mis en cause as beneficiary in 1984 is null and void not only because it was not made within the time limits specified in s. 479, but because Yvette Lion was not a member of the preferred beneficiary class.
The lack of evidence of an intention to exclude the Husbands and Parents Life Insurance Act and to adopt the C.C.L.C. provisions regarding stipulations in favour of a third party is a sufficient basis for dismissing this appeal. There is also a second reason: even had the parties expressed an intention to make the life insurance contract subject to arts. 1029 et seq. C.C.L.C., it is the special Act which would govern because of its peremptory nature.
At page 922 of the judgment, the Court of Appeal suggests that the Husbands and Parents Life Insurance Act creates a [translation] "presumption that the insured intended to assign the proceeds of his insurance to his family and wished to make them unavailable to pay the claims of his creditors". In my opinion, the special Act creates more than a mere presumption of attribution. It is an Act of public order and when the conditions for it to apply are met, the parties cannot avoid its application.
2. Binding Force of Husbands and Parents Life Insurance Act
(a) Background and Purpose of the Life Insurance Legislation
(i) Special Act
The first life insurance legislation promulgated in Canada was the Act to secure to Wives and Children the benefit of Assurances on the lives of their Husbands and Parents, S. Prov. C. 1865, 29 Vict., c. 17. The new legal provisions contained in that statute were quite different from those of the stipulation in favour of a third party in French law. In the case of a stipulation for a third party, revocation of the beneficiary is permitted unless the latter has accepted. The benefit does not leave the insured's estate once the attribution is made. Under the special Act, applicable when a husband insures his life for the benefit of his wife or children, revocation is permitted only if the right to the proceeds is reattributed to a preferred beneficiary. Upon the benefit being conferred, it ceases to be part of the estate entirely under the insured's control. He can only dispose of it to the extent specified in the special Act, and a defeasible right accordingly arises in favour of the person designated.
As the title indicates, the purpose of the special Act is to protect the wife and the children of a man who dies. In his Code civil annoté of 1879 at p. 324, de Bellefeuille quotes the summary of Vilbon v. Marsouin (1874), 18 L.C.J. 249:
The provisions contained in the act 29 Vict., c. 17, whereby insurances upon the lives of husbands may be effected or indorsed in favor of their wives and children are in the nature of aliments, and the insurance money due under policies made under said act is free from the claims of creditors of both the husband and wife.
In his Commentary on the Life Insurance Laws of Canada (1962), at p. 1, McVitty notes that ". . . even in these early days it was recognized that life insurance proceeds should be for the benefit of the family and should be immune from attack by creditors".
The Act was amended several times and in 1925 (R.S.Q. 1925, c. 244) it became known as the Husbands and Parents Life Insurance Act. The Court of Appeal properly pointed out, at p. 920, that the three main purposes of the Act are:
[translation]
(a) to give the wife and children, as beneficiaries, a direct right to recover the proceeds of the insurance;
(b) to protect the wife and the children by preventing creditors from seizing the insured capital;
(c) to give the husband the right to confer the benefit of insurance on his wife as an exception to the civil law in effect in the province of Lower Canada.
I do not find anywhere in the various amendments to the wording of the Act any intention by the legislature to depart from these purposes.
(ii) Promulgation of the C.C.L.C.
In 1866 Quebec civil law was codified. Articles 1029 et seq. C.C.L.C. set forth the principle of a stipulation for a third person, applicable to life insurance contracts not governed by special statute. As in Roman law, art. 1265 prohibits spouses from making gifts inter vivos to each other and creates an exception for life insurance under the special Act.
In his Cours de droit civil, vol. IV, 1908, at p. 284, Langelier J. states that the prohibition against gifts inter vivos between spouses was kept because of [translation] "the fear that a household would be disrupted by the greed of one of the spouses or the other divested by him". He justified the exception as follows:
[translation] It is a true gift which he [the husband] then makes, but it was thought advisable to allow it because of the importance of a husband providing for his wife's support when he is no longer.
With a few minor changes, art. 1265 C.C.L.C. remained much the same until 1970.
In 1970 art. 1265 was amended and spouses could thereafter make gifts inter vivos. The amended article no longer mentioned the special Act, though the latter remained in effect. The appellant submitted to this Court that the amendment indicated that the legislature intended to make application of the special Act optional. However, the fact that the wording of the article itself contains no indication of this and that the special Act remained in effect despite the amendment of art. 1265 supports the opposite conclusion.
(iii) Insurance Act
The appellant properly argued that in 1976, when the Insurance Act was adopted, the legislature favoured freedom to revoke the beneficiary of a life insurance policy. Such a freedom of revocation applied equally to the husband and the beneficiary wife, except in cases where there was a stipulation regarding irrevocability. Although it retains a presumption of irrevocability in favour of the spouse, art. 2547 C.C.L.C., promulgated in the Insurance Act, reflects an intention on the part of the legislature to make protection of the family property less strict. That intention is confirmed by the repeal of the special Act. However, the transitional provisions of the Insurance Act, which I shall discuss later, show quite clearly an intention to preserve the effects of the special Act on beneficiaries designated before it came into effect.
(b) Effect of the Special Act
(i) Amendment to Art. 1265 C.C.L.C. Subsequent to that Act
According to the appellant's theory, the new art. 1265 C.C.L.C. takes precedence over the special Act as it is subsequent legislation. It argues that the effect of the amendment to art. 1265 C.C.L.C. was to deprive the Husbands and Parents Life Insurance Act of its binding force and that the legislature opted in favour of freedom in the appointment of beneficiaries.
This argument disregards the fact that the Husbands and Parents Life Insurance Act remained in force unchanged up to 1976. In the absence of any indication to the contrary, I must assume that the legislature did not intend to repeal that Act or attenuate its effects.
In my opinion, the appellant's interpretation cannot be accepted. The lifting of the prohibition against gifts inter vivos between spouses does not imply even the limited repeal of the Husbands and Parents Life Insurance Act, which itself created an exception to that prohibition.
I also reject its argument that, in amending art. 1265, the legislature intended to give an insured a choice between the provisions of the special Act and stipulations in favour of third parties. Such an interpretation would deprive the Act of its meaning and make the protection of wives and children it contains illusory. I find no indication that the legislature intended to alter the public order nature of this legislation.
In City of Ottawa v. Town of Eastview, 1941 CanLII 9 (SCC), [1941] S.C.R. 448, this Court considered the interpretation of a general statute which a priori appeared to derogate from a special statute. This Court concluded that the two statutes were not inconsistent. At page 461 of the judgment, Rinfret J. cited the following passage from Halsbury's Laws of England (2nd ed. 1938), vol. 31, p. 549, at para. 732:
Rights given by a special statute are not taken away because they cause difficulties in the permissive working of general statutes not directed to the special point . . . .
In the case at bar, the new art. 1265 C.C.L.C. does not deal specifically with life insurance. One must therefore presume that the rights conferred on wives and children by the special Act remained in effect. This is an appropriate case in which to apply the maxim generalia specialibus non derogant and give precedence to the special Act. The explanation given by Rinfret J. at p. 462 of the judgment applies here:
The principle is, therefore, that where there are provisions in a special Act and in a general Act on the same subject which are inconsistent, if the special Act gives a complete rule on the subject, the expression of the rule acts as an exception to the subject‑matter of the rule from the general Act. . . .
In the case at bar, there is no express or implied indication that the legislature intended to repeal the Husbands and Parents Life Insurance Act or to make it optional. As the House of Lords noted in the following passage from Seward v. The "Vera Cruz" (1884), 10 App. Cas. 59, at p. 68 (cited by Rinfret J. at p. 461):
. . . where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered or derogated from merely by force of such general words, without any indication of a particular intention to do so.
Accordingly, there is no basis here for giving precedence to the later statute.
(ii) Interpretive or Declaratory Provision
In the opinion of the Court of Appeal, s. 1 of the special Act has the effect of creating an option. The majority held that this section creates merely a presumption of attribution. I do not agree with this interpretation of s. 1. The provision contains no suggestion of freedom to choose. The Act would be deprived of its meaning and utility if individuals could opt out of it. It is mandatory legislation which authorizes the life insurance to which it applies on certain conditions, and once the conditions for its application are met the proceeds of the insurance policy are part of the family property. The husband must of necessity attribute the proceeds to a preferred beneficiary.
In Grobstein v. Kouri, 1936 CanLII 40 (SCC), [1936] S.C.R. 264, this Court ruled on the applicability of the special Act to a life insurance policy which a father and son had taken out to protect a business which they managed together. In that case the life insurance policy included a revocation clause exercised in the sole discretion of the insured. The son signed a document in which he waived his status as beneficiary in favour of his mother. The father bequeathed the proceeds of the life insurance policy to his wife by will, and also signed a designation to this effect by a notarial deed.
This Court did not have to rule on whether a person could avoid the application of the special Act in a commercial situation. The steps taken by the father and son clearly indicated that they no longer wished to protect the business but sought to change the very nature of the protection. The parties' unequivocal intention was to benefit the mother, a preferred beneficiary under the Act. As the conditions of the special Act were met, it necessarily applied. Since the proceeds were part of the family property, the claims of the son's creditors were dismissed. That case does not in any way support the theory of an optional application of the special Act.
Section 1 of the special Act has undergone changes over the years. Originally, when the Act was known as the Act to secure to Wives and Children the benefit of Assurances on the lives of their Husbands and Parents, the provision read as follows:
- Nothing contained in this Act shall be held or construed to restrict or interfere with the right of any person to effect or assign a policy for the benefit of his wife or children as at present allowed by law, nor shall it affect any assignment of any existing policy made before the passing of this Act, nor any action or proceeding pending, at the time of the passing of this Act, in any Court of law or equity.
In 1878, the special Act altered the provision. The amendments are indicated below in bold type:
- Nothing contained in this act shall be held or construed to restrict or interfere with any right otherwise allowed by law to any person to effect or transfer a policy for the benefit of a wife or children; nor shall apply to insurance made in favor of or transferred to any wife under her marriage contract.
(S.Q. 1878, 41 & 42 Vict., c. 13.)
In 1888 (R.S.Q. 1888, s. 5580) the provision was changed slightly, and apart from a few minor alterations its purport remained the same until it was repealed in 1976.
In the last part of the first version of s. 1, the legislature simply made it clear that rights acquired before the special Act came into effect were continued in force. Although subsequent versions did not repeat this part of the provision, the amendment had no consequences in this respect as the continuance of rights acquired under earlier law is a well‑established principle.
In 1878 the legislature stated that the special Act did not apply to a life insurance policy in which the wife was designated beneficiary in her marriage contract. This rule only confirmed the principle in art. 1265 C.C.L.C. that a gift made by a marriage contract is irrevocable. In my opinion, the change to art. 1265 in 1970 allowing husbands and wives to alter their marriage contracts did not vary the meaning of s. 1. Until it was repealed in 1980, art. 1265 maintained the principle that such gifts were irrevocable and revocation was only allowed in cases where all concerned agreed to it.
All versions of the interpretive provision state that the right to effect or transfer a life insurance policy for the benefit of a wife or children otherwise allowed by law is continued. Does this mean that even where the conditions for the special Act to apply are met it is possible to avoid its application? I do not think so. The interpretive provision only makes it clear that it is still possible to benefit a wife or children by means other than those mentioned in the special Act. For example, a husband may insure his wife's life for the benefit of their children pursuant to art. 1029 C.C.L.C.; but when he insures his own life for the benefit of a preferred beneficiary, the special Act applies with peremptory force and the benefit passes out of the estate under his control.
I consequently agree with the respondent that s. 1 is concerned only with rights acquired before 1865 and with continuance of the law applicable to situations not covered by the special Act. I reject the argument that s. 1 makes application of the Husbands and Parents Life Insurance Act optional.
(iii) Insurance Act
First, art. 2547 C.C.L.C., introduced by s. 2 of the Insurance Act, states the general rule that designations of a spouse as beneficiary are irrevocable. Both art. 2547 C.C.L.C. and s. 479 are inconsistent with an intention to introduce complete freedom to revoke a beneficiary.
Second, the transitional provisions of the Insurance Act provide guidance regarding the application of earlier law to this life insurance legislation. Section 478 of the Act deals with cases in which art. 1029 C.C.L.C. applies to an insurance contract. As we have just seen, these are all the situations in which ss. 2 and 3 of the special Act do not apply. That section does not in any way suggest a choice of applicable law.
Section 479 expressly covers insurance under the Husbands and Parents Life Insurance Act and indicates a clear intention on the part of the legislature to ensure continuity of the rights and protection provided by the Act.
The second paragraph of s. 479 gives husbands a period of one year from the date on which the Act came into force to revoke a beneficiary designation. In my view, this exception to the rule of irrevocability set out in the first paragraph confirms the legislature's intention to abide by the provisions of the special Act. Rather than allowing complete freedom to revoke a designation, the legislature limits the choice to preferred beneficiaries mentioned in the special Act so as to ensure that the benefit will remain in the family property. In my view, it is quite inconceivable that the legislature could have created an incoherent arrangement whereby, on the one hand, protection for rights under the special Act was maintained, and on the other, the insured could avoid its effect by application of art. 1029 C.C.L.C. I conclude from this that art. 2547 C.C.L.C. and the transitional provisions confirm the irrevocability of the designation by André Baillargeon of his wife as beneficiary.
3. Novation
As an alternative argument the appellant suggests to the Court that the Husbands and Parents Life Insurance Act could not apply to policies Nos. 15301‑G and 15303‑G, which came into effect after it was repealed in 1976. It argues that each life insurance policy is a separate contract and that there was a novation in 1977 when policy No. 15301‑G came into effect and in 1984 when policy No. 15303‑G became applicable following André Baillargeon's retirement.
(a) Unicity of Employer's Plan
I concur in the opinion of the Superior Court judge that a distinction should be made between the life insurance plan offered by the employer and the life insurance contract. As to the former, I adopt the following comments of Nolin J., at p. 6:
[translation] For an employer who requires an employee to join and contribute to a group insurance plan which it sets up and the terms of which it is solely responsible for prescribing, its obligation to provide insurance coverage does not depend on whether or not it gets a third party insurer to underwrite such insurance coverage.
Articles 1169 and 1171 C.C.L.C. lay down the conditions for novation:
Novation is effected:
When the debtor contracts toward his creditor a new debt which is substituted for the ancient one, and the latter is extinguished;
When a new debtor is substituted for a former one who is discharged by the creditor;
When by the effect of a new contract, a new creditor is substituted for a former one toward whom the debtor is discharged. 1866, s. 1169.
Novation is not presumed. The intention to effect it must be evident. 1866, s. 1171.
In his Traité de droit civil du Québec, vol. 8, 1959, No. 677, at p. 507, Faribault states that:
[translation] For there to be novation five conditions must be met:
- there must be a prior obligation, 2. a new obligation must be created, 3. these two obligations must be different from each other, 4. the parties must have indicated their intention to novate, and 5. they must have the capacity to enter into a contract.
So far as Domtar Inc. and André Baillargeon were concerned, the principal obligations, namely the maintaining of life insurance and the paying of premiums, remained the same from the time the first life insurance policy came into effect in 1968 until his death in 1985. The parties to the contract remained the same. The changes to the terms and conditions of the group life insurance contract did not in any way affect the legal relationship between the insured and his employer. Even a change of insurer would not have brought about a novation between the parties, unless they clearly expressed an intention to the contrary.
(b) Unicity of Life Insurance Contract
The appellant drew the Court's attention to the fact that several clauses in policies Nos. 15301‑G and 15303‑G which came into effect in January 1977 differ from those in policy No. 13966‑G. It argues that the trial judge erred in holding that there was a unicity of contract despite these alterations. I reject this argument. As the Court of Appeal noted in Peters v. Stoneview Corp., C.A. Montréal, No. 500‑09‑00961‑763, November 14, 1978, unreported, a mere change of a term does not have the effect of extinguishing an original contract.
For a change of a term to bring about a novation, there must be a tacit or express intention to that effect and a change in the purpose of or consideration for the contract. In the case at bar the insurer's obligation to pay a benefit in the event of death remained the same, as did the corresponding obligation to pay the life insurance premiums. In short, it was still the same life insurance contract. Further, no intention by the parties to novate can be found as there was no evidence to that effect.
In 1984 André Baillargeon signed a change of beneficiary declaration which, for the reasons given in this judgment, is null and void. Some months later, following his retirement, policy No. 15303‑G, which came into effect in 1977, became applicable.
As regards the life insurance contract, the change of beneficiary is not a change of creditor or debtor within the meaning of art. 1169 C.C.L.C.
I reject the appellant's argument that the insurance contract contained in policy No. 15301‑G was extinguished when André Baillargeon retired. The trial judge concluded that the evidence did not indicate an intention to novate (at p. 9):
[translation] No special rider indicates how policy No. 15301‑G differs from policy No. 15303‑G, and except for the entries of "Domtar Active" in the former case and "Domtar Retired" in the latter, all the terms and conditions of these policies are oftentimes identical.
The appellant did not show in what way the trial judge erred in arriving at this conclusion. There is accordingly no need to intervene on this point.
V ‑ Conclusion
For these reasons I am of the view that the appeal should be dismissed with costs.
Appeal dismissed with costs.
Solicitors for the appellant: Luc Plamondon, Montréal; Martineau Walker, Montréal.
Solicitor for the respondent: Claude Lamarre, Montréal.
Solicitors for the mis en cause Lion: Rochon, Belzile, Carrier, Auger & Associés, Québec.