Dagg et al. v. Felker, 2015 ONSC 2597

Dagg et al. v. Felker, in his capacity as Litigation Administrator for the Estate of Cameron et al.

[Indexed as: Dagg v. Cameron Estate]

Ontario Reports

Ontario Superior Court of Justice,

Bale J.

April 20, 2015

125 O.R. (3d) 511 | 2015 ONSC 2597

Case Summary

Wills and estates — Dependants' relief — Deceased and applicant cohabiting — Applicant giving birth to their child after deceased's death — Applicant "dependant" as defined in s. 57 of Succession Law Reform Act ("SLRA") — Proceeds of deceased's life insurance policy available to satisfy applicant's claim for support under Part V of SLRA despite fact that respondent was irrevocable beneficiary under policy — Deceased not giving up ownership of policy for purposes of s. 72(1)(f) of SLRA by designating beneficiary irrevocably pursuant to consent temporary order under Family Law Act — Succession Law Reform Act, R.S.O. 1990, c. S.26, ss. 57, 72(1)(f).

The deceased and the applicant started cohabiting after the deceased separated from his wife, the respondent. They intended to marry, and the applicant became pregnant. She gave birth after the deceased's sudden death. The applicant brought an application for support under Part V of the Succession Law Reform Act ("SLRA") on behalf of herself and the child. She moved for interim support.

Held, the motion should be granted.

The applicant was a "dependant" as defined in s. 57 of the SLRA. There was nothing absurd in interpreting the Act to attach a support obligation to a common law relationship based upon the birth of a child following the death of one of the common law spouses.

The proceeds of the deceased's life insurance policy were available to satisfy the applicant's support claim despite the fact that the deceased had irrevocably designated the respondent as his beneficiary in accordance with a consent temporary order under the Family Law Act. In doing so, the deceased did not give up ownership of the policy for the purposes of s. 72(1)(f) of the Act.

The respondent was not a creditor of the deceased for the purposes of s. 72(7) of the SLRA by virtue of the irrevocable life insurance designation. [page512]

Madore-Ogilvie (Litigation guardian of) v. Ogilvie Estate (2008), 88 O.R. (3d) 481, [2008] O.J. No. 170, 2008 ONCA 39, 232 O.A.C. 152, [2008] I.L.R. I-4672, 57 C.C.L.I. (4th) 168, 289 D.L.R. (4th) 210, 48 R.F.L. (6th) 237, 38 E.T.R. (3d) 13, 163 A.C.W.S. (3d) 501, consd

Other cases referred to

Matthews v. Matthews Estate, [2012] O.J. No. 729, 2012 ONSC 933 (S.C.J.)

Statutes referred to

Family Law Act, R.S.O. 1990, c. F.3, s. 34 [as am.], (1) (i) [as am.], (k)

Insurance Act, R.S.O. 1990, c. I.8, ss. 194, 196(1), 198, 200

Succession Law Reform Act, R.S.O. 1990, c. S.26, ss. 1(1) [as am.], Part V [as am.], ss. 57 [as am.], 62 [as am.], 64, 72 [as am.], (1)(f), (7)

MOTION for interim support.

David Freedman, for applicants.

Michael Tweyman, for respondents.

BALE J.

Overview

[1]

Overview

Stephen Cameron died on November 23, 2013. He was 48 years old. At the time of his death, he was living with Evangeline Dagg, who was eight months pregnant with their son, to be, James. Although named as the sole beneficiary under Stephen's will, Evangeline commenced an application for support under Part V of the Succession Law Reform Act, R.S.O. 1990, c. S.26 (the "Act"), upon behalf of James and herself.

2The application is opposed by Stephen's ex-wife, Anastasia Cameron. Anastasia argues, first, that Evangeline is not a "dependant", as that term is defined in s. 57 of the Act; and second, that the insurance money paid by Canada Life, on a policy of insurance on Stephen's life, is not available under s. 72 of the Act for satisfaction of Evangeline's claims.

3Evangeline now moves for interim support under s. 64 of the Act. Anastasia opposes the motion upon the same grounds as she opposes the underlying application.

4Andrew Felker has been appointed as litigation administrator of the deceased's estate, and holds the insurance money in trust, pending the disposition of this application.

Background Facts

[5]

Background Facts

In January of 2012, Stephen Cameron and Anastasia Cameron separated. They had been married for eight years and had two children, Derek and Meaghan. [page513]

6Following the separation, Stephen re-established a relationship with Evangeline Dagg (whom he had known prior to his marriage to Anastasia). Evangeline is a U.S. citizen and was living in Bellingham, Washington at the time.

7In February of 2012, Stephen and Evangeline decided to marry, and to start a new family in Canada. In furtherance of this plan, Stephen moved from Ontario to British Columbia in July of 2012. He obtained work, and his schedule was two weeks on, and two weeks off. He and Evangeline cohabited in the State of Washington during his time off.

8In February of 2013, Anastasia obtained a consent temporary order which included child and spousal support provisions, and which provided that "Stephen shall maintain Anastasia as irrevocable beneficiary on any life insurance policy". Pursuant to a subsequent temporary order, the amount of spousal and child support was varied, but all other terms of the first temporary order were to remain in effect.

9In March of 2013, Stephen and Evangeline decided to have a child, and in April of 2013, Evangeline became pregnant. In July of 2013, Evangeline gave up her job in Washington and moved to British Columbia, where the two began to cohabit on a full-time basis.

10In November of 2013, Stephen was diagnosed with pancreatic cancer, and on November 15, he changed his life insurance designation. Pursuant to the new designation, Evangeline would be entitled to 53.6 per cent of the insurance money in the event of his death; while Anastasia, Derek and Meaghan would be entitled to a combined total of the remaining 46.3 per cent.

11Anastasia became aware of the change in the beneficiary designation and on November 20, 2013, she obtained an order requiring Canada Life to restore the previous designation pursuant to which she was the sole beneficiary.

12Stephen died on November 23, 2013.

Analysis

Whether Evangeline is a "dependant" as defined in s. 57 of the Succession Law Reform Act

13In Part V, s. 57 of the Act, "spouse" includes either of two persons who "are not married to each other and have cohabited, . . . in a relationship of some permanence, if they are the natural or adoptive parents of a child". In the present case, Anastasia's position is that Evangeline and Stephen were never spouses, and that consequently, Evangeline is not a "dependant" [page514] as that term is defined in s. 57 of the Act. For the following reasons, I disagree.

14Because Stephen and she were still legally married at the time of his death, Anastasia argues that she, and not Evangeline, was his spouse on the date of his death. There is no reason, however, why a deceased person cannot have two "spouses" to whom he or she has support obligations.

15Anastasia argues that the definition of spouse requires the "relationship of some permanence", and the parenthood, to have coexisted at some point in time, and that because Stephen died before James was born, Evangeline and he were never spouses. She says that, otherwise, a person could become a spouse of a deceased person after the deceased's death, which would be "an absurd result". However, although they were not statutory spouses under the Act, they were common law spouses, in the commonly understood sense of that term. The effect of becoming a statutory spouse, under s. 57 of the Act, is to attach a legal (as opposed to moral) support obligation to a relationship between two persons, in circumstances where such an obligation would not otherwise have existed. There is nothing absurd in interpreting the Act to attach a support obligation to a common law relationship, based upon the birth of a child following the death of one of the common law spouses. Rather, to interpret the Act in the way that Anastasia suggests would mean that if a child was born, for example, the day before the death of one parent, the surviving parent would be a spouse, but not if the child was born two days later -- clearly an inequitable result. I also note that under s. 62 of the Act, the circumstances to be considered by the court in determining the amount and duration of support include "the effect on the spouse's earnings and career development of the responsibility of caring for a child", and "the desirability of the spouse remaining at home to care for a child". In this case, the effect on Evangeline of the responsibility of caring for James is no different from what it would have been had he been born on the day before Stephen's death.

16Under s. 57 of the Act, in order for a spouse to qualify as a "dependant", the deceased must have been providing support to the spouse, or have been under an obligation to provide support, immediately before his or her death. Based upon this definition, Anastasia argues that "the operative time for a person to be considered a dependant is the date of the deceased's death, not after". She says that even if Evangeline did become Stephen's spouse upon the birth of James, she was not, as of the date of death, a spouse to whom the deceased was providing [page515] support. Rather, she was merely a "person" to whom he was providing support.

17However, there is nothing in the Act requiring a person applying for support to have been a "dependant", within the definition in s. 57, on the date of death. If, on the date the application was made, the person was a spouse, then he or she will also have been a dependant on that date, and entitled to support, if the deceased was, in fact, providing support to him or her, immediately before the date of death.

18Under s. 1(1) of the Act, "child" includes a child conceived before, and born alive after, the parent's death. As of the date of death, the child's status as a dependant, and his or her right to support, is conditional upon a live birth. Similarly, where the survivor's status as a spouse depends upon being a parent of the deceased's child, the survivor's entitlement to support is conditional upon the same live birth. To put it another way, and on the facts of the present case, Stephen and Evangeline were, on the date of death, the parents of a child who was conceived before, and born after, Stephen's death.

19In the result, I conclude that the applicant is a dependant of the deceased.

Whether the insurance money paid by Canada Life is available to satisfy Evangeline's claim

20Under s. 72(1)(f) of the Act, "any amount payable under a policy of insurance effected on the life of the deceased, and owned by him or her", is available for satisfaction of dependant support claims. In the present case, Anastasia argues that Stephen did not own the Canada Life insurance policy, on the date of his death, because he had designated her as the irrevocable beneficiary under the policy. For the following reasons, I disagree.

21If the legislature had intended to except life insurance policies which are subject to an irrevocable designation under s. 72, one would have expected the exception to be made explicit.

22Anastasia's argument is contrary to established precedent. As stated by O'Flynn J. in Matthews v. Matthews Estate, [2012] O.J. No. 729, 2012 ONSC 933 (S.C.J.) (a case not cited by counsel) [at para. 29]:

The law is clear that, under the Succession Law Reform Act, life insurance policies owned by a spouse as in the case of this Respondent, even where another beneficiary is irrevocably designated, can be treated as part of the deceased spouse's estate and available for the payment of support to a dependant. [page516]

23Anastasia cites Madore-Ogilvie (Litigation guardian of) v. Ogilvie Estate (2008), 88 O.R. (3d) 481, [2008] O.J. No. 170, 2008 ONCA 39 in support of her position, and says that in Ogilvie, the court found that the policy was not owned by the deceased for the purposes of s. 72 of the Succession Law Reform Act, even though "the deceased's name was explicitly on the title to the policy". However, on a proper reading of the case, Ogilvie does not support her position.

24In Ogilvie, both the deceased and his spouse were named insureds under the policy in question, and the policy provided that upon the death of one, the other was entitled to a lump sum payment. It had been taken out to secure payment of the first mortgage on the jointly owned matrimonial home. In upholding the decision of the Divisional Court which had ruled that the policy was not caught by s. 72 of the Act, Gillese J. noted [at para. 29] that the surviving spouse did not become entitled to the insurance money because she was named as a beneficiary, but rather, her entitlement flowed from her status as an owner of the policy. At the instant of her deceased husband's death, "her joint ownership swelled to become an absolute entitlement to the proceeds of the second policy". The distinction made by Gillese J. between the status of a beneficiary and the status of a joint owner, is crucial to the result in the case. The case cannot, therefore, be used to support an argument that an insured gives up ownership of a policy by designating a beneficiary irrevocably. I also note that Gillese J. equates being the insured under the policy with being the owner of the policy (at para. 46).

25In making her argument, Anastasia ignores or confuses the distinction between the rights and interests of an insured in a policy, and the rights of a beneficiary. For example, under s. 194 of the Insurance Act, R.S.O. 1990, c. I.8, if a beneficiary predeceases the insured and there is no surviving beneficiary, the insurance money is payable to the insured's personal representative. Under s. 198 of the Insurance Act, despite the designation of a beneficiary irrevocably, the insured is entitled while living to the dividends or bonuses declared on a contract of life insurance. Under s. 200 of the Insurance Act, the insured may assign the contract, either as security or unconditionally, subject to the rights of the irrevocable beneficiary.

26In the present case, the irrevocable designation was made pursuant to a consent temporary order. Notwithstanding the designation, Stephen retained the right to argue, on the final hearing of the family law application that the designation was not required, and need not be continued; or that only a portion of [page517] the insurance money need be subject to the designation; or that the designation should be continued only for so long as the children of his relationship with Anastasia remained entitled to support; or that the support payable to Anastasia be time-limited, and that the designation be similarly time-limited; or that the amount of the insurance money subject to the designation should decline over time to reflect the lower capital value, from time to time, of the balance of the support payments required.

27Anastasia argues that an order under s. 34(1)(i) of the Family Law Act, R.S.O. 1990, c. F.3 ("FLA") "charges the asset for a particular spouse's support", and that "if the same policy could then be used for another dependant's support, s. 34 of the FLA would be rendered irrelevant". However, this argument misconceives the nature of an order under s. 34(1)(i). Unlike an order under s. 34(1)(k) which gives the support recipient security on a particular asset which may be realized upon in the event of default, an order under s. 34(1)(i) does not give the support recipient realizable security on a life insurance policy. Rather, it provides an alternate source for the payment of support, but only in the event of the support payor's death. All of a person's dependants, both before and after his or her death, are entitled to support, with children having priority over spouses. I therefore don't see how the fact that life insurance money is subject to the claims of all dependants of the deceased "renders irrelevant" s. 34 of the FLA.

28Anastasia argues that "to accept Evangeline's interpretation of the effect of s. 34 would be to create disarray, panic and uncertainty for any litigant with an Order under the Family Law Act securing support with the maintenance of an insurance policy". However, as previously mentioned, an order under s. 34(l)(i) of the FLA does not secure support payments in the sense that Anastasia argues, and anyone who panics at the thought of life insurance money being shared among all of a deceased's dependants is either ill advised, or has been lulled into a false sense of security.

29Section 72(7) of the Succession Law Reform Act provides that s. 72 "does not affect the rights of creditors of the deceased in any transaction with respect to which a creditor has rights". Based upon this section, her FLA support order, and the irrevocable life insurance designation, Anastasia argues that she is a creditor, and that Stephen's life insurance policy is excluded from the operation of s. 72. However, this argument ignores s. 196(1) of the Insurance Act, which provides that where a beneficiary is designated, the insurance money, from the date of [page518] death, is not subject to the claims of the creditors of the insured. Anastasia's interest in the insurance money is not as a creditor, but rather as a dependant, along with her children, and Evangeline and James.

30In the result, I conclude that the insurance money paid by Canada Trust is caught by s. 72 of the Succession Law Reform Act, and is available for satisfaction of the claims of all of the dependants of the deceased.

Disposition

[31]

Disposition

Canada Life paid $1 million to the litigation administrator, under the policy on Stephen's life. The other assets of the estate are comparatively insignificant.

32Although he attempted to make adequate provision for the proper support of all of his dependants, as a result of the order requiring Canada Life to restore Anastasia as the sole beneficiary of his life insurance policy, Stephen failed to make adequate provision for the support of Evangeline and James.

33Evangeline requests interim support of $2,557.25 per month, commencing in March of 2014, based upon a shortfall between her income and expenses, and a lump sum payment of $30,000 "to maintain the litigation".

34I am advised that the application may be heard at the trial sittings commencing May 18, 2015, with an estimated hearing time of one day.

35In these circumstances, the applicant shall be paid the sum of $20,000 from the insurance money paid to the litigation administrator by Canada Life, on account of interim support. This payment will be without prejudice to a final disposition of her claims for support commencing in March of 2014.

36In the event that the application is not reached at the May 2015 sittings, the applicant shall be paid ongoing interim support of $2,000 per month, commencing June 1, 2015, until the application is heard.

37The costs of this motion are reserved to the application judge.