CITATION: Dagg v. Cameron (Estate), 2015 ONSC 6134

OSHAWA COURT FILE NO.: CV-14-87563-ES

DATE: 20151002

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF THE ESTATE OF STEPHEN DOUGLAS CAMERON

BETWEEN:

Laquita K. Evangeline Dagg, James Stephen Cameron, by his litigation guardian Laquita K. Evangeline Dagg

Applicants

– and –

Andrew Felker, in his Capacity as Litigation Administrator for the Estate of Stephen Douglas Cameron, Kimberley Anastasia Cameron, Derek Alexander Hollinger Cameron, by his litigation Guardian Kimberley Anastasia Cameron, and Meaghan Elizabeth Hollinger Cameron, by her Litigation Guardian Kimberly Anastasia Cameron

Respondents

David Freedman, for the Applicants

Michael H. Tweyman, for the Respondent Kimberley Anastasia Cameron

HEARD: August 6, 2015

REASONS FOR JUDGMENT

DOUGLAS J.

OVERVIEW

[1] This application comes before me by way of trial on agreed issues and facts.

[2] The issues pertain to the claims of the Applicants as alleged dependants of Stephen Douglas Cameron, deceased (hereinafter “the deceased” or “Stephen”). Central to the issues is disposition of the proceeds of Canada Life Insurance Policy #14981390 (the “Policy”).

[3] The parties have agreed that Mr. Andrew Felker, Litigation Administrator of the Estate of Stephen Douglas Cameron, shall not be required to attend or participate in these proceedings.

[4] The parties have further agreed that in the event I determine that the proceeds of the Policy are not available to James Stephen Cameron (hereinafter “James”) or Laquita K. Evangeline Dagg (hereinafter “Evangeline”) pursuant to s.72 of the Succession Law Reform Act, or for any other reason advanced by Kimberley Anastasia Cameron (hereinafter “Anastasia”), the proceeds of the Policy are to be directed paid to the Anastasia. The parties further agree that Evangeline is prima facia entitled to the entirety of the after tax proceeds of the TEIBAS Survivor Benefit in the amount of $103,049.78, subject to any deduction for costs as decided by this court exercising its discretion.

[5] The parties are agreed that the legal issues to be tried are as follows:

(a) Are the proceeds of the Policy available for the support of all dependants of the Estate pursuant to s.72(1)(f) of the Succession Law Reform Act (the “SLRA”) or are they excluded:

i. As, by virtue of the orders of Rowsell J. (dated February 27, 2013), McCarthy J. (dated July 5, 2013) and/or Nelson J. (dated November 20, 2013), the Policy was not “owned” by the deceased at the time of his death within the meaning of s.72(1)(f);

ii. As, by virtue of the same orders listed above, Anastasia had creditor’s rights within the meaning of s.72(7); or

iii. As, by virtue of the consents underlying the orders made by McCarthy J. and Rowsell J., Anastasia would be entitled to judgment in the sum of the proceeds of the Policy under the law of contract on the basis of Turner v. DiDonato 2009 ONCA 235, 2009 95 O.R. (3d) 147; 2009 ONCA 235 (ONCA).

(b) Is Evangeline a “dependant” of the Estate of Stephen Douglas Cameron (hereinafter the “Estate”) within the meaning of the s.57 of the SLRA?

BACKGROUND

[6] The following facts are agreed:

(a) Stephen died on November 23, 2013 at age 48 years.

(b) Anastasia and Stephen are the biological parents of Derek (born March 28, 2005) and Meaghan (born March 7, 2007).

(c) Anastasia has custody of Derek and Meaghan and they reside with her.

(d) Evangeline was cohabiting with Stephen at the time of his death.

(e) Evangeline cohabited with Stephen for fewer than three years at the time of his death. The exact period of cohabitation is in dispute.

(f) Evangeline and Stephen are the biological parents of James (born February 14, 2014).

(g) James resides fulltime with Evangeline.

(h) Anastasia and Stephen married on September 19, 2003 and separated on January 13, 2012.

(i) In 2010, the Policy was taken out on Stephen’s life with a face value of $1 million.

(j) Stephen had been friends with Evangeline in the past but they had not been in contact since before Stephen’s marriage to Anastasia. Stephen and Evangeline resumed contact in January 2012.

(k) The deceased moved to British Columbia in July 2012. At that time, Evangeline was living with her first child, Stuart Brendan Angelo Willoughby (born August 6, 2006) in Bellingham, Washington. Stephen frequently travelled to Bellingham on his time off work and they continued their relationship.

(l) Anastasia commenced an application against Stephen, Oshawa Court file number FC-12-1753-00, on September 7, 2012.

(m) At the time of her separation from Stephen, Anastasia was listed as beneficiary on the Policy and Stephen was listed as the owner.

(n) As part of the case management process, Stephen and Anastasia, with counsel, attended a conference before the Honourable Justice Rowsell on February 27, 2013.

(o) A temporary consent order (“the Rowsell Order”) was made at that conference.

(p) The Rowsell Order provided that “Stephen shall maintain Anastasia as irrevocable beneficiary on any life insurance policy”.

(q) Stephen and Anastasia, with counsel, attended a conference before the Honourable Justice McCarthy on July 5, 2013.

(r) A further temporary consent order was made at that conference (the “McCarthy Order”).

(s) The McCarthy Order specifically provided, in relation to the Rowsell Order, that all the other terms, aside from varying support, were to remain in full force and effect.

(t) By the time of the McCarthy Order, Evangeline had told Stephen that she was pregnant.

(u) Stephen started experiencing pain which lead to his hospitalization in early November 2013.

(v) Stephen was subsequently diagnosed with cancer.

(w) On November 11, 2013 Stephen executed a Last Will and Testament and a Canada Life Title form each amending the beneficiary designations on the Policy as follows:

a) Anastasia, 10 percent

b) Derek Cameron, 17 percent

c) Meaghan Cameron, 19.4 percent

d) Evangeline, 53.6 percent.

(x) While Stephen was in hospital, Anastasia brought a motion in relation to the Change of Beneficiary Designation made by Stephen. The Motion was heard by The Honourable Justice Nelson on November 20, 2013 and an order granted (the “Nelson Order”).

(y) The matrimonial litigation remains outstanding between the Estate and Anastasia.

(z) Stephen was in the process of sponsoring Evangeline’s immigration to Canada when he died (as she is an American citizen). She has returned to the United States and lives in Monmouth, Oregon.

(aa) Stephen and Evangeline were unable to marry prior to Stephen’s passing due to the delays in the matrimonial proceedings.

(bb) James is a dependant of the Estate.

(cc) Anastasia is a dependant of the Estate.

(dd) Anastasia’s children, Derek Cameron (hereinafter “Derek”) and Meaghan Cameron (hereinafter “Meaghan”) are dependants of the Estate.

(ee) Adequate provision was not made by the deceased for the proper support of James, Anastasia, Derek and Meaghan at his death.

[7] In addition to the foregoing facts, the parties have agreed that should this court hold that the proceeds of the policy are available for the support of all dependants of the Estate and not excluded from the Estate for that purpose, determination of the nature and quantum of adequate provision for the proper support of all dependants shall be determined in separate proceedings.

[8] The parties also submitted a Joint Compendium of Documents including all of the documentary evidence upon which they intended to rely in this proceeding.

First issue: Are the proceeds of the Policy available for the support of all dependants of the Estate pursuant to s.72(1)(f) of the SLRA, or are they excluded as the Policy was not “owned” by the deceased at the time of his death within the meaning of s.72(1)(f) by virtue of the Rowsell Order, the McCarthy Order and/or the Nelson Order?

[9] The Applicant’s position on this issue may be summarized in part as follows:

(a) Part 5 of the SLRA creates a limitation on testamentary freedom and a code mandating the post-mortem support of dependants. These provisions are to be interpreted liberally to give effect to the public policy in favour of ensuring the proper support of dependants within the means available for their support.

(b) Public policy supports a wide reading of the statute. It is remedial and “it should be given a broad and liberal interpretation” [see Re Mannion 1984 CanLII 2007 (ON CA), 1984 45 O.R. (2d) 339 (Ont. C.A.)].

(c) Section 72(1)(f) of the SLRA captures in the estate for distribution amongst dependants: “… any amount payable under a policy of insurance effected on the life of the deceased and owned by him or her ...”

(d) The comments of Professor Ziff as to the four key elements of ownership are intended as descriptive rather than prescriptive. The terms “property” and “ownership” are terms of art that must be understood within the legal context in which the concept features.

(e) The term “ownership” was purposely left undefined in the SLRA so that it might be understood and applied expansively, subject to the restrictions imposed by the general law of property.

(f) In this case the deceased was the conventional owner of the policy and the single incident of being able to name a beneficiary was constrained by the operation of a court order. The Policy remained “owned” by him and, as such, is open to be charged under s.72(1) of the SLRA.

[10] The Respondent’s position on this issue is summarized in part as follows:

(a) Stephen did not own the Policy within the meaning of s.72(1)(f) of the SLRA. Stephen consented to two court orders requiring him to designate and maintain Anastasia as irrevocable beneficiary, thereby transferring incidents of ownership.

(b) The fact that the Court reversed Stephen’s beneficiary change conclusively demonstrates that he did not have the legal protection normally found with incidents of ownership.

(c) If Evangeline’s position is accepted, and a third party could then claim against a policy secured for the support of Anastasia and her children, both the statutory provision of the Family Law Act and the significant body of jurisprudence on the court’s ability to secure support, would be rendered meaningless.

ANALYSIS – ISSUE #1

[11] Section 72(1)(f) of the SLRA provides as follows:

72(1) Subject to section 71, for the purpose of this Part, the capital value of the following transactions effected by a deceased before his or her death, whether benefitting his or her dependant or any other person, shall be included as testamentary dispositions as of the date of the death of the deceased and shall be deemed to be part of his or her net estate for purposes of ascertaining the value of his or her estate, and being available to be charged for payment by an order under clause 63 (2) (f),

(f) Any amount payable under a policy of insurance effected on the life of the deceased and owned by him or her.

[12] In this regard it is argued by the Respondents that the deceased did not own the Policy because Anastasia is the irrevocably designated beneficiary of the Policy pursuant to the Orders above; as a consequence, Anastasia essentially became the beneficial owner of the Policy and the deceased trustee.

[13] The Applicants argue that “ownership” within the meaning of s.72(1)(f) SLRA is not defined by the Act and, given the remedial purpose of the Dependants Relief provisions of the Act, the concept must be interpreted liberally to ensure the public policy objective of ensuring the proper support of all dependants from the Estate.

[14] In support of their position the Respondents rely upon Principles of Property Law, 5^th ed. (Toronto: Carswell, 2010) in which Professor Bruce Ziff identifies the following four key elements of ownership:

(i) possession, management and control;

(ii) income and capital;

(iii) transfer inter vivos and on death; and

(iv) protection under law.

[15] Specifically, it is argued by the Respondents that the Orders referenced above have the effect of having stripped Stephen of management and control of the Policy and thus of ownership. In support of this contention the Respondents rely upon Madore-Ogilvie, 2008 ONCA 39.

[16] The SLRA does not include a definition of “ownership” and thus resort must be had to jurisprudential and other authorities.

[17] I agree with the submission of the Applicants that Professor Ziff’s “key elements” of ownership are “only descriptive of what is regarded as property, not prescriptive, naming those rights that should (or should not) be placed within its scope” [See Bruce Ziff, Principles of Property Law, (6^th ed.) at p. 7 (Carswell, 2014)]; therefore, the four key elements of ownership represent only part of the analysis.

[18] In my view, the concepts of “property” and “ownership” must be understood within the context in which the concepts are being considered. To put it into the words of the Supreme Court of Canada:

There is only one rule in modern interpretation, namely, courts are obliged to determine the meaning of legislation in its total context, having regard to the purpose of the legislation, the consequences of proposed interpretations, the presumptions and special rules of interpretation, as well as admissible external aids. In other words, the courts must consider and take into account all relevant and admissible indicators of legislative meaning.

(See Verdun v. Toronto Dominion Bank, 1996 CanLII 186 (SCC), 1996 3 SCR 550)

[19] In Pallister v. Pallister, Misener J. held as follows:

Property in law is simply a right or a collection of rights, and so property may exist even though there is no identifiable thing in which the right or the rights inhere. There is no single criterion or even a discrete number of criteria that will invariably distinguish such a right or collection of rights from something that is not property. It seems to me therefore that when the word appears in legislation defined in the broadest possible way, the limits are to be found through a consideration of the scope of that legislation, and the objects it seeks to accomplish. If the definition of the right or rights as property is consistent with the scheme of the legislation and advances its objects, then it should be so defined. [Pallister v. Palliser 1990 CanLII 12272 (ON SC), 1990 29 R.F.L. (3d) 395, (Ont. Gen. Div.), see also Lowe v. Lowe 2006 CanLII 804 (ON CA), 2006 78 O.R. (3d) 760 (Ont. C.A.)].

[20] What then is the purpose of the Dependants Relief provisions of the SLRA? The leading authority is Cummings v. Cummings (2004) 69 O.R. (3d) 397 (Ont. C.A.). In Cummings the testator left two children, aged 24 and 18 years. The 24 year old suffered from a degenerative illness which would probably confine him to a wheelchair by age 40. The 18 year old was in fulltime education. The Court of Appeal held that Tataryn v. Tataryn Estate 1994 CanLII 51 (SCC), [1994] 2 SCR 807 was good law in Ontario:

[40] In my view these questions have been resolved by the decision of the Supreme Court of Canada in Tataryn v. Tataryn Estate, 1994 CanLII 51 (SCC), [1994] 2 S.C.R. 807, 116 D.L.R. (4th) 193. There, the court held that a deceased's moral duty towards his or her dependants is a relevant consideration on a dependants' relief application, and that judges are not limited to conducting a needs-based economic analysis in determining what disposition to make. In doing so, it rejected the argument that the "judicious father and husband" test should be replaced with a needs-based analysis: see para. 23. I see no reason why the principles of Tataryn should not apply equally in Ontario, even though they were enunciated in the context of the British Columbia Wills Variation Act, R.S.B.C. 1979, c. 435, in which the language is somewhat different from that of the Succession Law Reform Act.

[43] I do not think the difference in phraseology between the two statutes is significant. The language of ss. 58(1) and 62 of the Succession Law Reform Act is broad enough itself. It provides the court with a discretion that is to be exercised upon a consideration of all the circumstances of the application. Nor am I persuaded that the disparity in language between "adequate" and "adequate, just and equitable in the circumstances" is important. As I have already noted, an Ontario court is mandated by the opening wording of subsection 62(1) to "consider all the circumstances of the application". Moreover, as McLachlin J. observed in Tataryn, at para. 13, the making of "adequate" provision and the ordering of what is "adequate, just and equitable" are "two sides of the same coin".

[48] There is another reason why the Tataryn approach fits in Ontario as well. The view of dependants' relief legislation as a vehicle to provide not only for the needs of dependants (thus preventing them from becoming a charge on the state) but also to ensure that spouses and children receive a fair share of family wealth, was also important to the court's analysis in that case. Society's values and expectations change. In earlier times, the prevailing view was that on termination of a marriage the husband was obliged to maintain the wife, and nothing more. At present, however, the provisions of the Divorce Act,4 family property and family support legislation, and the law relating to constructive trusts, all reflect society's expectations that children will be properly supported and that spouses are entitled not only to proper support but also to a share in each other's estate when a marriage is over. These expectations are not confined to British Columbia. They are mirrored in Ontario as well through the provisions of the Divorce Act and the Family Law Act.

[49] As Justice McLachlin remarked in Tataryn, the Act must be interpreted through the prism of modern values. At paras. 15 and 28 she said:

The language of the Act confers a broad discretion on the court. The generosity of the language suggests that the legislature was attempting to craft a formula which would permit the courts to make orders which are just in the specific circumstances and in light of contemporary standards. This, combined with the rule that a statute is always speaking (Interpretation Act, R.S.B.C. 1979, c. 206, s. 7), means that the Act must be read in light of modern values and expectations. What was thought to be adequate, just and equitable in the 1920s may be quite different from what is considered adequate, just and equitable in the 1990s.

If the phrase "adequate, just and equitable" is viewed in light of current societal norms, much of the uncertainty [about the lack of clear legal standards by which to judge moral duties] disappears. Furthermore, two sorts of norms are available and both must be addressed. The first are the obligations which the law would impose on a person during his or her life were the question of provision for the claimant to arise. These might be described as legal obligations. The second type of norms are found in society's reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards. These might be called moral obligations, following the language traditionally used by the courts. Together, these two norms provide a guide to what is "adequate, just and equitable" in the circumstances.

[21] It is within the context enunciated in Cummings that the concept of “ownership” must be considered.

[22] In Madore-Ogilvie the Court of Appeal indicated that the word “owned” is “an elastic term and that the meaning to be given to it depends on the purposes to be served by s. 72(1)”.

[23] A review of the Madore-Ogilvie decision confirms that the dispute there was whether the insurance policy that was jointly owned since acquisition and which passed by survivorship to the surviving spouse could be brought back into the Estate for support purposes. The Court of Appeal concluded that while conventional ownership is important and, where necessary and allowed, it can be disturbed to bring an asset into the Estate for support purposes, such was not allowed in that case due to the joint ownership and the right of survivorship. In the circumstances before me in this case a policy was not held jointly but rather by the deceased alone. To put it into the words of the Applicants in their factum, “Anastasia had no ownership interest that swelled by operation of the doctrine of survivorship. She never held title to the policy.” Thus the facts of Madore-Ogilvie are distinguishable from those before me.

[24] I also reject the Respondents’ argument that the Orders mentioned above conferred ownership of the policy upon Anastasia. There is no explicit jurisdiction under s. 34 of the Family Law Act to change ownership of a policy of insurance. Had it been the intention of the legislature to so provide one would expect to see clear language in the statute but such is not present.

[25] The fact that the court, in the Orders of Rowsell J., McCarthy J. and Nelson J., relieved Stephen of control of designation of beneficiary of his insurance policy does not mean that he was no longer the owner of the policy. Control of this component of ownership was but one element. It is clear that the insurer continued to view Stephen as the owner of the Policy and indeed he is defined as such in accordance with the terms of the Policy. Further, we are all aware of examples of ownership residing in a person who does not have complete control over the item owned. For example, Mr. A might own his house but his ownership is subject to land use controls that restrict the use to which he can put his property and yet we do not conclude that Mr. A does not own his house in such circumstances. Further, Stephen continued to bear the obligation, as owner, to maintain premium payments; thus, another element of asset management continued to reside in Stephen in relation to the policy.

[26] Neither of the Orders of Rowsell J., or McCarthy J. can be considered to have been made while meaningfully, if at all, considering the rights and entitlements of the Applicants in this proceeding. Evangeline was not a party to the proceedings which produced these prior orders. James Cameron had not been conceived at the time that the Rowsell and McCarthy Orders were made. While at the time the Nelson Order was made the court was aware that Evangeline was pregnant with Stephen’s child, Evangeline was not a party to the proceedings and James was not yet born; accordingly there was no jurisdiction at that time to consider any support issues relating to Evangeline and James.

[27] In my view, Part 5 of the SLRA creates a limitation on testamentary freedom for the purpose of ensuring the support of dependants of the deceased. In this regard the statute is remedial and thus it should be given a broad and liberal interpretation [see Re Mannion 1984 CanLII 2007 (ON CA), 1984 45 O.R. (2d) 339 (Ont. C.A.)]

[28] The leading Canadian case on dependants’ relief is Tataryn v. Tataryn Estate, supra. Before the court was the British Columbia equivalent of s.58 of the SLRA. Although the language is not precisely replicated our Court of Appeal concluded in Cummings v. Cummings 2004 69 O.R. (3d) 397 that there was no reason why the principles of Tataryn should not apply equally in Ontario.

[29] Tataryn addressed the interests protected by the statute in question:

The two interests protected by the Act are apparent. The main aim of the Act is adequate, just and equitable provision for the spouses and children of testators. The desire of the legislators who conceived and passed it was to “ameliorate … social conditions within the province”. At a minimum this meant preventing those left behind from becoming a charge on the state. But the debates may also be seen as foreshadowing more modern concepts of equality. The Act was passed at a time when men held most property. It was passed, we are told, as “the direct result of lobbying by women’s organizations with the final power given to them through women’s enfranchisement in 1916”. There is no reason to suppose that the concerns of the women’s groups who fought for this reform were confined to keeping people off the state dole. It is equally reasonable to suppose that they were concerned that women and children receive an “adequate, just and equitable” share of the family wealth on the death of a person who held it, even in the absence of demonstrated need.

The other interest protected by the Act is testamentary autonomy. The Act did not remove the right of the legal owner of property to dispose of it upon death. Rather, it limited that right. The absolute testamentary autonomy of the 19^th century was required to yield to the interest of spouses and children to the extent, and only to the extent that this was necessary to provide the latter with what was “adequate, just and equitable in the circumstances.” And if that testamentary autonomy must yield to what is “adequate, just and equitable”, then the ultimate question is, what is “adequate, just and equitable” in the circumstances judged by contemporary standards. Once that is established, it cannot be cut down on the ground that the testator did not want to provide what is “adequate, just and equitable”. (Tataryn v. Tataryn Estate 1994 CanLII 51 (SCC), 1994 2 S.C.R. 807).

[30] The court in Tataryn continued:

If the phrase “adequate, just and equitable” is viewed in light of current societal norms, much of the uncertainty disappears. Further, two sorts of norms are available and both must be addressed. The first are the obligations which the law would impose on a person during his or her life were the question of provision for the claimant to arise. These might be described as legal obligations. The second type of norms are found in society’s reasonable expectations of what a judicious person would do in the circumstances, by reference to contemporary community standards. These might be called moral obligations, following the language traditionally used by the courts. Together, these two norms provide a guide to what is “adequate, just and equitable” in the circumstances of the case (see Tataryn v. Tataryn Estate).

For further guidance in determining what is “adequate, just and equitable”, the court should next turn to the testators moral duties toward spouse and children. It is to the determination of these moral duties that the concerns about uncertainty are usually addressed. There being no clear legal standard by which to judge moral duties, these obligations admittedly more susceptible of being viewed differently by different people. Nevertheless, the uncertainty, even in this area, may not be so great as has been sometimes thought…

[31] Moral claims such as those addressed in Tataryn and Cummings, are thus vital to dependants’ support issues but do not arise outside of the SLRA (see Verch Estate v. Weckwerth 2014 95 E.T.R. (3d) 194 ONCA).

[32] The Respondents argue that the Rowsell, McCarthy and Nelson Orders have the effect that Stephen could not allow the policy to lapse, could not change the face value of the Policy, or change the beneficiaries; in essence, he had no rights left with respect to the Policy. I do not accept this argument. Stephen continued to be the owner of the Policy as far as the insurer was concerned and thus he was able to change the beneficiary designation notwithstanding the Orders of Rowsell J. and McCarthy J. and prior to the Nelson J. Order. He would have been able to increase the face value of the Policy and thus exercise that degree of control. In other words, some elements of control remained with Stephen.

[33] In this regard I also consider the provisions of the Insurance Act including s. 194 which provides that if a beneficiary predeceases the insured and there is no surviving beneficiary, the insurance money is payable to the personal representative of the insured, s. 198 of the Act which entitles an insured to the dividends or bonuses declared on a contract of life insurance notwithstanding the designation of an irrevocable beneficiary and s. 200 which permits an insured to assign the contract of insurance, either as security or unconditionally subject to the rights of an irrevocable beneficiary. Thus, notwithstanding such designation, the insured continues to enjoy statutorily defined elements of control over the policy.

[34] For the foregoing reasons I respond to the question posed in Issue #1: no; thus, the proceeds of the Policy are not unavailable for the support of the Applicants by virtue of the operation of s. 72(1)(f) of the SLRA and the orders of Rowsell J., McCarthy J. and Nelson J.

Issue #2: Are the proceeds of the Policy unavailable for the support of the Applicants by virtue of the operation of s.72(1)(f) SLRA as a result of the same Orders conferring creditor’s rights upon Anastasia within the meaning of s. 72(7)?

[35] In this regard s. 72(7) provides as follows:

This section does not affect the rights of creditors of the deceased in any transaction with respect to which a creditor has rights.

[36] Anastasia argues that she was a creditor with respect to the Policy by virtue of the Orders made in this case. She further argues that the Divorce Act and Family Law Act create a debtor/creditor relationship when one spouse is obliged to make a payment, either as to property or for support, to the other spouse. It is further argued that requiring a spouse to maintain a dependant as irrevocable beneficiary on a life insurance policy is for the purpose of securing support and once a security interest in a particular life insurance policy is created, by law, that same asset cannot be secured again by a later order under a different statute. Security means priority. Therefore, Anastasia submits, the language of the Family Law Act provides that when a spouse is ordered to maintain another spouse as an irrevocable beneficiary on a life insurance policy, this creates a security interest in the policy and s. 72(7) operates to exclude the proceeds of that policy from being a deemed testamentary disposition for support purposes even when it otherwise would be pursuant to s. 72 of the SLRA.

[37] The Applicants argue that s. 72(7) is a protection for creditors who are party to a transaction with the deceased in respect of a s. 72(1) asset and such creditors retain their pre-existing rights against the asset, and may vindicate those rights before the asset subject of the transaction is used for the support of a dependant. Further it is argued that the Applicants that in this case there was no pre-existing proprietary interest in the insured’s proceeds enjoyed by Anastasia and even payment of premiums of a life insurance policy by a third party provides no interest in the proceeds; rather, a simple debt may arise in favour of the payor.

ANALYSIS – ISSUE #2

[38] Section 34(1)(i) of the Family Law Act entitles the court making a support order to require that “a spouse who has a policy of life insurance as defined under the Insurance Act designate the other spouse or a child as a beneficiary irrevocably.” The court is also entitled, pursuant to s.34(1)(k) to require “the securing of payment under the Order, by a charge on property or otherwise.” None of the Orders of Rowsell J., McCarthy J. or Nelson J. speaks of securing payment within the meaning of s. 34(1)(k) of the Family Law Act; rather, all of the Orders appear to be pursuant to s. 34(1)(i) simply requiring the insured to designate an irrevocable beneficiary. Sub-sections (i) and (k) are distinct from one another and achieve different objectives. The Orders do not specify that they were designed to provide for “security” (although that may have been an intention).

[39] Section 196(1) of the Insurance Act provides that where a beneficiary is designated, the insurance money, from the date of death, is not subject to the claims of the creditors of the insured. If Anastasia is a creditor within the meaning of section 72(7) of the SLRA, then she would arguably qualify as a creditor within the meaning of the Insurance Act; however, this would lead to the incongruous result of Anastasia’s disentitlement to receipt of the insurance proceeds, as Stephen’s creditor.

[40] In this regard I agree with the reasoning of Bale J. in his interim ruling in this proceeding (see Dagg v. Cameron 2015 ONSC 2597 at paras. 27 and 28). Further, given the legislative intention behind the Dependants Relief provisions of the SLRA, discussed above, it appears that “creditor” within the meaning of s.72(7) of the Act is not meant to include claimants for dependants relief or persons to whom a support obligation may have been owing at the time the payor died.

[41] Further, having concluded that Anastasia had no security interest in the life insurance policy she cannot be characterized as a “creditor” within the meaning of section 72(7) of the SLRA.

[42] Also, in my view, given the legislative intent and remedial nature of the dependents relief provisions of the SLRA as referred to earlier in these reasons, it would be incorrect to treat Anastasia as a “creditor” within the meaning of s. 72(7) of the SLRA if the effect of such would be to restrict access by one or more dependents of an estate to an asset for support in favour of another one or more dependants of the Estate. Such a result would be contrary to the legislative intent and should therefore be rejected.

[43] I therefore answer the question posed by Issue #2: no; thus the policy proceeds are not unavailable for the support of the Applicants by virtue of the operation of s.72(1)(f) of the SLRA as a result of the Orders conferring creditors’ rights upon Anastasia within the meaning of s.72(7).

Issue #3: Are the proceeds of the Policy unavailable for the support of the Applicants by virtue of the operation of s. 72(1)(f) of the SLRA and by virtue of the consents underlying the Orders made by Rowsell J. and McCarthy J. thus entitling Anastasia to judgment in the sum of the proceeds of the Policy under the law of contract on the basis of [Turner v. DiDonato 2009 ONCA 235](https://www.canlii.org/en/on/onca/doc/2009/2009onca235/2009onca235.html), 2009 95 O.R. (3d) 147 (Ont. C.A.)?

ANALYSIS – ISSUE #3

[44] In Turner the deceased had signed a separation agreement which obliged him to maintain a life insurance policy in the amount of $100,000 for the benefit of his first wife. When the deceased died the amount designated for his first wife was less than half of that amount. The first wife brought an application against both the Estate and the deceased’s second wife to recover the shortfall.

[45] In considering the interpretation and effect of the separation agreement Epstein J.A. said:

[28] It is clear from her reasons that the trial judge’s ultimate interpretation of the agreement was based on the language of the agreement and not any factual findings about the surrounding circumstances. If there was an error in her decision, therefore, the error was one of law. Consequently, the applicable standard of review is one of correctness…

[35] I further note that the language of paragraph 12 is inconsistent with Ms. Turner’s contention that the life insurance policy was merely intended to be security for Mr. DiDonato’s diminishing spousal support obligations at the time of his death. As is apparent from the various components of paragraph 12, the agreement specifically precludes Mr. DiDonato from adjusting the amount of insurance designated in the favour of Ms. DiDonato to account for diminishing the future support obligations or for any other reason. If the parties intended the insurance policy merely as security for the support payments, and nothing more, it would be unreasonable to preclude Mr. DiDonato from adjusting the face value of the policy as the total value of his outstanding support obligations declined.

[36] Moreover, the interpretation advanced by Ms. Turner would lead to a result in conflict with the overall intention of the agreement. Before this court, counsel for Ms. Turner agreed that, had Mr. DiDonato been in compliance with his insurance obligation under the agreement at the time of his death, Ms. DiDonato would have been entitled to receive the full $100,000 from the insurance company.

[37] This significant concession undercuts Ms. Turner’s suggested interpretation of the agreement …

[38] It is possible, indeed commonplace, for separation agreements to link the obligation to maintain life insurance to the obligation to pay support. This agreement did not do so.

[39] I therefore agree with the trial judge’s conclusion that Ms. DiDonato was entitled to receive the full $100,000 if Mr. DiDonato died before she reached the age of 65 years, even if that amount exceeded the present value of the outstanding support obligations.

[46] Turner was about an agreement that explicitly provided for a payment by one party to the other on the death of the payor. The court ordered the deceased’s estate to pay the difference between the amount due under the contract and the amount paid under the policy. Therefore, the ex-wife had no proprietary interest in the proceeds of the policy; rather, the deceased’s estate owed a liquidated debt to the ex-wife which was ordered paid out of the estate assets as damages for breach of contract.

[47] It is a fundamental principle of the construction of contracts that each provision must be interpreted in the context of the intention of the parties as evident from the contract as a whole (see Turner v. DiDonato, citing D.G. Checo International Ltd. v. British Columbia Hydro and Power Authority 1993 CanLII 145 (SCC), 1993 1 S.C.R. 12). In this regard the Applicants submit that the proposition that the consent of the deceased to “boilerplate” language in the Rowsell Order was intended to provide the proceeds of the Policy to Anastasia to the prejudice of other dependants is unsupportable on the available evidence. I agree. Indeed, James was not born until after the Rowsell Order. Stephen did not become aware that Evangeline was pregnant until the time of the McCarthy order in July 2013.

[48] In any event, it was not open to Stephen to contract out of his obligations to any dependants within the meaning of the SLRA. Section 63(4) of the SLRA provides that an order for support of a dependant “may be made despite any agreement or wavier to the contrary.”

[49] Section 72(1)(f) pulls back into the net estate the amount payable under a policy of insurance on the life of the deceased and owned by him in determining the value of the estate in relation to support of dependants of the estate. Such orders are made under s. 63 and thus s. 63(4) permits the court to make an order for dependant’s relief despite any agreement to the contrary. This is a statutory entitlement that cannot be overtaken by an order of the court absent explicit jurisdiction to do so.

[50] For the foregoing reasons, I would respond “no” to issue #3; thus, the policy proceeds are not unavailable for the support of the Applicants by virtue of the consents underlying the Rowsell and McCarthy orders, or the law of contract as enunciated in Turner v. DiDonato.

Issue #4: Is Evangeline a “dependant” of the Estate within the meaning of s. 57 of the Act?

[51] Sub-section 1(1) of the SLRA defines a spouse as follows:

“Spouse” means either of two persons who,

(a) Are married to each other, or

(b) Have together entered into a marriage that is voidable or void, in good faith on the part of the person asserting a right under this Act.

[52] In s. 57 a “spouse” means a spouse as defined in 1(1) and in addition includes either of two persons who,

(a) Were married to each other by a marriage that was terminated or declared a nullity or

(b) Are not married to each other and have co-habited,

(i) continuously for a period of not less than three years, or

(ii) in a relationship of some permanence, if they are the natural or adoptive parents of a child.

[53] Section 57 further provides the definition of “dependant” as follows:

“Dependant” means,

(a) the spouse of the deceased,

(b) a parent of the deceased,

(c) a child of the deceased, or

(d) a brother or a sister of the deceased, to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death.

[54] Section 1(1) defines “child” to “include a child conceived before and born alive after the parent’s death”.

[55] Section 58(1) of the SLRA provides as follows:

Where a deceased, whether testate or intestate, has not made adequate provision for the proper support of his dependants or any of them, the court, on application, may order that such provision as it considers adequate be made out of the estate of the deceased for the proper support of the dependants or any of them.

[56] The Respondents argue:

(a) Evangeline was never married to Stephen and, although a divorce order was made on November 12, 2013, it was only to take effect 31 days thereafter and Stephen passed away 11 days after the order was made. Thus Stephen died as Anastasia’s legal spouse.

(b) Evangeline admits that she did not cohabit with Stephen for three years and in fact cohabitation was of a few months’ duration.

(c) Evangeline’s child was born after Stephen’s death.

(d) The definition of “spouse” is not clear about whether the relationship of permanence is required to occur at the same time the deceased the Applicant are parents of a child.

ANALYSIS – ISSUE #4

[57] The Respondents argue in essence that as Anastasia was Stephen’s spouse by virtue of marriage, at the time of his passing, Evangeline cannot also be a “spouse” within the meaning of the Act; however, there is nothing in the SLRA or authorities cited that preclude the possibility of having more than one “spouse” for dependants relief purposes.

[58] Dealing next with the question of whether Evangeline was in a “relationship of some permanence” with Stephen prior to his death, I note that the Agreed Statement of Facts provides the following evidentiary context to this issue:

(a) Evangeline was cohabiting with the deceased at the time of his death.

(b) Evangeline cohabited with the deceased for fewer than three years at the time of his death. The exact period of cohabitation is in dispute.

(c) Evangeline and the deceased are the biological parents of James (born February 14, 2014).

(d) The deceased had been friends with Evangeline in the past but they had not been in contact since before the deceased’s marriage to Anastasia. The deceased and Evangeline resumed contact in January 2012.

(e) The deceased moved to British Columbia in July 2012. At that time, Evangeline was living with her first child, Stuart Brendan Angelo Willoughby (born August 6, 2006) in Bellingham, Washington. The deceased frequently travelled to Bellingham on his time off work and they continued their relationship.

(f) On November 11, 2013 the deceased executed a Last Will and Testament and a Canada Life Title Form each amending the beneficiary designations on the Policy as follows:

i. To Anastasia, 10 percent

ii. To Derek Cameron, 17 percent

iii. To Meaghan Cameron, 19.4 percent

iv. To Evangeline, 53.6 percent.

(g) The deceased was in the process of sponsoring Evangeline’s immigration to Canada when he died as she is an American citizen. She has returned to the United States and lives in Monmouth, Oregon.

(h) The deceased and Evangeline were unable to marry prior to the deceased’s passing due to the delays in the matrimonial proceedings.

[59] The SLRA does not define a “relationship of some permanence”; however, on the evidence before me I am satisfied that Evangeline was in a relationship of some permanence, particularly given their cohabitation (although relatively brief the intention appears to have been to cohabit on a long-term basis), their intention to marry, Stephen’s decision to designate Evangeline as majority beneficiary of his life insurance, and Stephen’s sponsorship of Evangeline’s immigration to Canada.

[60] Regarding the timing of James’ birth, I note that under the SLRA “child” “includes a child conceived before and born alive after the parent’s death.” James clearly falls within this definition. In s. 57, “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.” “Parent” “means the mother or father of a child” [see s.1(1) of the Act)].

[61] The fact that Stephen is deceased does not change the fact that he is James’ father and he is therefore a “parent” within the meaning of the Act. James being a “child”, and Evangeline and Stephen both being James’ parents, and having concluded that “have cohabitated … in a relationship of some permanence…” it follows that Evangeline is a “spouse” as defined in s.57 of the Act.

[62] This, however, does not end the matter as the definition of “dependant” requires that the “spouse of the deceased” be someone “to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death”. I have no evidence as to whether any support was being paid to Evangeline nor as to whether Stephen was under a legal obligation to support her immediately before his death. Therefore, I shall not determine this issue at this time. It shall remain to be determined at trial or as the parties agree in writing.

CONCLUSION

[63] According to their pretrial agreement, the parties agreed that should the court hold that the proceeds of the Policy are available for the support of all dependants of the Estate and not excluded from the Estate for that purpose, determination of the nature and quantum of adequate provision for the proper support of all dependants shall be determined in separate proceedings.

[64] Therefore for all the foregoing reasons, judgment to issue as follows:

(1) This court declares the Applicant James Stephen Cameron, by his litigation guardian, is a dependant of the Estate of Stephen Douglas Cameron for whom inadequate provision was made for his support by the late Stephen Douglas Cameron.

(2) This court declares that the proceeds of Canada Life Insurance Policy No. 14981390 form part of the Estate of Stephen Douglas Cameron for the provision of support to dependants of the Estate of Stephen Douglas Cameron for whom inadequate provision was made for their support by the late Stephen Douglas Cameron.

(3) This court declares that the Applicant Laquita K. Evangeline Dagg is a “spouse” within the meaning of s.57 of the Succession Law Reform Act.

(4) This court orders that a hearing is to be scheduled to determine

a. Whether the Applicant Laquita K. Evangeline Dagg is a “dependant” within the meaning of s.57 of the Succession Law Reform Act, and

b. the nature and the quantum of support to be paid to the dependants of the Estate of Stephen Douglas Cameron.

(5) The parties shall provide written submissions as to costs restricted to three pages each, excluding Offers to Settle and Bills of Costs, within 30 days of the release of these Reasons for Judgment to my Judicial Assistant at Barrie.

DOUGLAS J.

Released: October 2, 2015