Court File and Parties

Court File No.: CV-156-535646 Date: 2016-05-02 Superior Court of Justice - Ontario

Re: The Manufacturers Life Insurance Company, Applicant And: The Estate of Edward E. Sorozan, Respondent

Before: S. F. Dunphy, J.

Counsel: Nathan M. Ross, for the Moving Party Edward Sorozan Jr. Marie G. Michaels, for the Responding Party Lise Partanen

Heard: April 20, 2016

Endorsement

[1] This case involves two rival claims to one-half of the proceeds of an $80,000 group life insurance policy insuring the life of the deceased Mr. Edward E. Sorozan Sr. The disputed funds have been paid into court by the insurer. The competing claimants are his spouse, Ms. Lise Partanen and his son by his previous marriage, Mr. Edward Sorozan Jr. Mr. Sorozan Sr. passed away on January 26, 2015.

[2] There are no material facts in dispute.

Factual Background

[3] Mr. Sorozan Sr. was a retired employee of Allstate Insurance Company of Canada Ltd. (“Allstate”). Among his employee benefits was a group life insurance policy (number 30475) issued to Allstate as plan sponsor by the applicant The Manufacturers Life Insurance Company (“Manulife”). The policy carried a death benefit of $80,000 at the time of Mr. Sorozan Sr.’s death. When Mr. Sorozan Sr. passed away, his spouse filed the necessary proof of death forms with Allstate. Allstate maintained the relevant employee benefit records and assembled them to be provided to its insurer, Manulife.

[4] The most recent Beneficiary Designation form that Allstate had on file was dated May 2, 1986 and designated both Ms. Partanen and Mr. Edward Sorozan Jr. as equal primary beneficiaries. However, a long vertical slash had been struck through the face of the form and the words “Term 9/30/91” written by hand beside the slash. September 30, 1991 is the date that Mr. Sorozan retired from Allstate.

[5] Allstate produced another document entitled “Retiree Group Life Insurance Record” dated August 1, 1996. This letter, addressed to Mr. Sorozan Sr., provides that “[y]our service and membership with us entitles you to the amount of life insurance below under our Group Life Insurance plan” with the amount of $80,000 indicated in the space below. The form also provides:

“According to our records your designated beneficiary is:

Name: Lise Partanen Relationship: Common Law Wife”

[6] The document had been sent to Mr. Sorozan Sr. under cover of a letter dated August 1, 1996 from the Benefits Administrator of Allstate, Ms. Marg MacIntyre. The text of the cover letter read:

“Please find enclosed your Group Life Certificate indicating your reduced Group Life amount of $80,000. Please keep your Certificate with your records.

For your information, you will receive a T4A starting next year, as the premium paid by Allstate for this benefit is now a taxable benefit”.

[7] Neither Manulife nor Allstate have any more recent signed beneficiary designation forms on file. The most recent one on file is the one dated May 2, 1986 with the stroke through it.

[8] Mr. Sorozan Sr. did not revoke previous beneficiary designations in his will dated July 3, 2014 or make any new ones. His will left all of his estate to Ms. Partanen providing she survived him by 30 days. It also directed proceeds of all RRSPs, RIFs and Pension Funds to her but made no specific mention of life insurance.

[9] Ms. Partanen’s evidence is that she and her spouse both attended their lawyer’s office to make their wills in June 2014. The name of the lawyer they met with is Ms. Marie Michaels – the same lawyer representing Ms. Partanen in these proceedings. Mr. Sorozan Sr. had provided handwritten instructions to her instructing that he wanted to share all of his assets with Ms. Partanen. When Ms. Michaels asked Mr. Sorozan about life insurance, Ms. Partanen produced the August 1, 1996 correspondence from Allstate that she had brought with her along with other important papers. Mr. Sorozan Sr. explained that he had already made various gifts of money to his son and that is why Ms. Partanen had been designated sole beneficiary of the life insurance policy. Ms. Partanen says that if it had been known that there was an issue about the insurance documents on file, her husband would have instructed his lawyer to effect a change of beneficiary in the will.

[10] Ms. Partanen and Mr. Sorozan Jr. have made competing claims to the proceeds of the group life insurance policy. Ms. Partanen asserts that 100% of the proceeds belong to her on the strength of the unsigned Retiree Group Life Insurance Record; Mr. Sorozan Jr. asserts that he is entitled to 50% of the proceeds in accordance with the only signed Beneficiary Designation Form on record.

[11] In light of the competing claims to the same funds, Manulife sought and obtained an order from this court on September 30, 2015 allowing it to pay the disputed amount ($40,000) into court. It has thus paid $40,000 to Ms. Partanen directly (representing the undisputed 50% of the insurance proceeds) and paid the disputed $40,000 into court.

[12] Mr. Sorozan Jr. filed a motion seeking to have the funds paid out of court to him. Ms. Partanen opposes that motion and filed (late) a cross-motion asking for the funds to be paid to her instead. There can be no serious objection to my dealing with the late-filed cross-motion. If Mr. Sorozan Jr. is unsuccessful in his motion it will be because Ms. Partanen has asserted a better claim. There is no reason to require a second motion in those circumstances. These two parties are the only claimants.

[13] In support of its original interpleader motion, Manulife filed an affidavit of Ms. Tracey Boulay. Ms. Boulay had no personal knowledge of any of the matters in dispute beyond describing the contents of the files that came into her possession. Her affidavit speculated that the August 1, 1996 Record upon which Ms. Partanen bases her claim “may have been based on the annuity application naming Lise Partanen as primary beneficiary”. In making this suggestion she was referencing a further document found in the file, being an “Application for Single Premium Annuity” dated 21 August 1991.

[14] Ms. Boulay’s speculation about the source of the Record appears entirely without foundation and may have been premised on a too-rapid review of the Single Premium Annuity form. The Application for Single Premium Annuity form predates the Record by five years. The Single Premium Annuity names both Mr. Partanen and Mr. Sorozan Jr. as equal beneficiaries. The Record on the other hand refers quite specifically to the precise amount of the Group Life Insurance Policy ($80,000) and to a single beneficiary, Ms. Partanen. The suggestion of the two documents being confused is highly implausible. The Record quite unambiguously references the only the Group Life Insurance Policy and refers to a single beneficiary (Ms. Partanen) whereas the Application for Single Premium Annuity form had two joint contingent beneficiaries.

Issues to be Determined

[15] Who is the designated beneficiary of Mr. Sorozan Jr.’s group life insurance policy?

Analysis and Discussion

[16] There is little prospect of the evidence regarding these documents and Allstate’s files getting any better with time. The parties are both aware that the amount at issue would likely not bear the cost of a more in-depth review. Allstate and Manulife have both performed searches of their records. There is no reason to believe that any person will have actual memory of something as routine as the filing of forms in a group life policy from 20 years or more in the past. There is no reason to believe that lost or misplaced forms will be found by a more diligent search than has already been conducted. The evidence I have before me is the evidence the parties have been able to marshal and neither suggests that more would be available with more time.

[17] Both parties have acted in perfect good faith in this case. The credibility of neither is at issue nor is either at fault. It is unfortunate that a settlement could not be worked out. However, absent a settlement, it is incumbent upon me to make the reasonable inferences that I can based on the evidence I have before me.

[18] I find that it is likely on the balance of probabilities that Mr. Sorazan Sr. signed and delivered to Allstate a designation of beneficiary form after 1986 and prior to August 1, 1996 naming Ms. Partanen as the sole beneficiary of his group life insurance policy benefit but that the form has been misplaced or lost. In my view, this is the only reasonable inference that can be drawn based on the following:

a. The fact that the 1986 designation of beneficiary form has been manually struck with a vertical slash, apparently on Mr. Partanen’s retirement day in 1991, suggests that the document had been superceded and was no longer considered current or valid; b. The Record dated August 1, 1996 unequivocally certifies that Ms. Partanen is the sole beneficiary of the life insurance benefit and the cover letter that accompanied it describes the Record as a “Certificate” that Mr. Sorozan was urged to (and did) keep in his records; c. Ms. Partanen’s affidavit evidence supports this inference in that Mr. Sorozan Sr. confirmed to his lawyer at the time he made his will in 2014 that he knew Ms. Partanen to be the beneficiary in circumstances where it would have been very simple for the lawyer to change the beneficiary by will had there been any doubt.

[19] It is simply not reasonable to assume that Allstate made a mistake in sending the 1996 letter attaching the Record to its retired employee. Ms. Boulay’s suggestion that Allstate might have confused this with an annuity makes no sense given that the annuity in question was entirely different and contained joint contingent beneficiaries. I conclude that Allstate had in hand at that time a designation of beneficiary form from Mr. Sorozan Sr. (dated after the 1986 form) naming Ms. Partanen as sole beneficiary and that it has since misplaced that form.

[20] Mr. Sorozan Sr.’s handwritten instructions to his lawyer in regards to the will corroborates his general intention to make Ms. Partanen his universal beneficiary and corroborates in part Ms, Partanen’s affidavit evidence that Mr. Sorozan Sr. felt that he had sufficiently provided for his son with cash payments over the years. I accept that Mr. Sorozan Sr. would have effected a change of beneficiary by will but for the confirmation the Record provided him with confirmation that this was simply not necessary.

[21] Mr. Ross on behalf of Mr. Sorozan Jr. urged me to review the decision of Strathy J. (as he then was) in the case of Richardson (Estate Trustee of) v. Mew, (2008), 93 O.R. (3d) 537 and that of the Court of Appeal upholding his decision (at (2009) 2009 ONCA 403, 96 O.R. (3d) 65). I was thankful for the reference as Strathy J. (as he then was) engaged in a very thorough and instructive review of the relevant statute and case law.

[22] In Richardson, Strathy J. (as he then was) found that he had jurisdiction to order rectification of the policy and was upheld in that conclusion by the Court of Appeal. On the facts, he was not satisfied that mistake had been proved. Ms. Partanen has not sought to argue this case on the basis of rectification. While I am of the view that rectification is not necessary in this case due to my finding regarding the lost or misplaced designation of beneficiary form, I am quite satisfied on the evidence before me that Mr. Sorozan believed on the strength of the 1996 Record that he had already designated Ms. Partanen as his sole beneficiary and took no steps to designate her by will because of the Record. In such circumstances, rectification would be available and appropriate. I would order rectification but for the fact that I find that Mr. Sorozan Sr.’s belief was not mistaken – he had in fact so designated Ms. Partanen.

[23] Ms. Partanen was in fact the designated beneficiary. The fact that a written document cannot be located does not lead to the conclusion that it has no effect if its existence and content can be inferred from other evidence. The 1996 Record provides that evidence. There is no doubt as to Mr. Sorozan Sr.’s intentions – he had the letter from Allstate from 1996 in his possession at all material times including when he approached his lawyer to give instructions to draft his will. Had the Record not conformed to his intentions, there were steps that he could have taken when he met his lawyer.

Disposition

[24] Ms. Partanen shall be declared to be the sole designated beneficiary of the policy at the time of Mr. Sorozan Sr.’s death and an order shall go directing the payment out to her of the funds paid into court by the applicant pursuant to the order of Hood J. dated September 30, 2015.

[25] I am reserving the matter of costs. If the parties are not able to reach agreement – and I strongly urge them to do so in light of the quite unique circumstances here – I shall receive brief written submissions (limited to five pages, excluding outline of costs). I would direct the submissions to be sent to me within 30 days.

S. F. Dunphy, J. Date: May 02, 2016