Klim v. Klim, 2020 ONSC 906

COURT FILE NO.: CV-19-12631

DATE: 2020-02-10

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Dominica Klim, Andrew Klim and Julia Klim, Applicants

AND: Johny Andrew Klim and Jeffrey Michael MacDonald, Respondents

BEFORE: Mr Justice Ramsay

COUNSEL: Ronald N. Brady for the Applicants; Richard C. Corbett for the Respondents

HEARD: February 10, 2020

ENDORSEMENT

[1] The Applicants are the estranged wife of Michael Klim, who died on May 8, 2017, and their two children. The Respondents, one of whom is the brother of the deceased, are the executors of his will. They were also his attorneys during his last days.

[2] The deceased and his wife separated in 2011. They agreed in a written separation agreement that the deceased would pay spousal support until 2022 and child support for the two children as long as they were children of the marriage. The deceased agreed to maintain life insurance to guarantee these obligations. The children have achieved their majority, but they are still in post-secondary education.

[3] The deceased was diagnosed with an aggressive form of cancer in early 2017. In February of 2017 he asked his benefits advisor for information about his pension.

[4] On February 12, 2017 the deceased executed a will naming the Respondents as executors, leaving certain a gift of $25,000 to two cousins jointly and the residue in trust for his children, to be paid to them upon them achieving the age of 30.

[5] On February 13, 2017 he was advised that on proof of a shortened life expectancy, he could receive a lump-sum payment of $600,000, of which $260,000 need not be locked in.

[6] On February 17, 2017 the deceased applied to withdraw from the pension plan. The plan withheld $102,748.38 for tax. The deceased received $263,714.53, which went to a locked in RRSP/RRIF that ended up in the estate. He received $239,746.22 which he put into an RRSP. The Respondent Johny Klim was named as the surviving beneficiary. The designation was made by Jeffrey MacDonald acting as attorney for the testator.

[7] On April 21, 2017 the testator revoked the designation of beneficiary on his life insurance policy and named the Respondents as beneficiaries. This policy eventually paid $250,000, which the trustees have kept invested and have used to pay support.

[8] The Respondents have not yet passed their accounts. The validity of the will and the powers of attorney are not contested. The Applicant Dominica Klim says that the change of beneficiary in the life insurance policy is a breach of the terms of the separation agreement. She also questions the propriety of the transfer of the RRSP to the brother, which was not accomplished by the personal signature of the deceased, and the disposition of the deceased person’s residence and brand new pickup truck, bought shortly before his death.

[9] The Applicant was notified of the change in the life insurance in October 2017. Her claim on that head may be statute barred. It is not before me in this Application in any event.

[10] This Application has been before the court since July of last year. The estate has been distributed, except for the proceeds of the life insurance.

[11] On behalf of the Applicants Mr Brady asks that I order the payment of the proceeds of the life insurance to Dominica Klim forthwith and that the Respondent Johny Klim pay into court the proceeds of the RRSP of which he was the beneficiary.

[12] I doubt the correctness of ordering the life insurance proceeds to be paid to Dominica Klim. Apart from the limitation issue, as long as she is receiving support, she has not necessarily suffered damages equal to the amount of the policy. The excess capital in the life insurance policy was not necessarily intended for her by the terms of the separation agreement. I note in passing that the interest of the testator’s children is not the same as the interest of their mother. I question whether they should be represented by the same lawyer on this issue.

[13] I am also asked to order Johny Klim to pay into court the amount he received from the RRSP of which he was designated surviving beneficiary. In the absence of any evidence with respect to the competence of the deceased, I do not think that this is a case for collection before judgment.

[14] I think it sufficient at this point to order the trustees to pass their accounts within 90 days and to keep the proceeds of the insurance invested, except to make support payments.

[15] Either party may ask for costs within 10 days, by way of written submissions not exceeding three pages, to which a bill of costs and any offers to settle may be appended.

J.A. Ramsay J.

Date: 2020-02-10