Court File and Parties
COURT FILE NO.: CV-21-00671932 DATE: 2022-05-20 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MATTHEW MICHAEL HEADLAND, AIMEE JENNIFER HEADLAND, and CHLOE ANNABELLE HEADLAND, Plaintiffs – and – FRANCIS JOSEPH PATRICK MORRIS also known as FRANCIS PATRICK JOSEPH MORRIS, also known as FRANK MORRIS in his capacity as Executor and Trustee of the Estate of Michelle Jennifer Morris and in his capacity as Trustee of the Ageas Protect Limited Life Insurance Policy issued on the life of Michelle Headland, and in his personal capacity, and TRACY BANKEY, Defendants
BEFORE: Justice E.M. Morgan
COUNSEL: Gordon Meiklejohn, for the Plaintiffs Bradley Phillips and Adin Wagner, for the Defendants
HEARD: May 20, 2022
ENDORSEMENT – ORDER PENDING TRIAL
[1]
Background and Analysis
The Plaintiffs are beneficiaries of the estate of their mother, Michelle Jennifer Morris, and are the sole beneficiaries of a life insurance policy in the U.K. that in March 2018 paid out a total of £335,023.91, or C$607,000. The proceeds of the life insurance policy were paid to their mother’s husband, the Defendant, Frank Morris, as trustee until the children reached the age of 18.
2At the time of Michelle Morris’ death, one of her children, the Plaintiff, Matthew Michael Headland, was already 19 years old. The other two children, the Plaintiffs, Aimee Jennifer Headland and Chloe Annabelle Headland, are now both over 18 years old.
3None of the three Plaintiffs has ever received a payout or an accounting of the insurance proceeds from Mr. Morris. The evidence establishes that for the past number of years, the children have been living on their own and have not been supported by Mr. Morris.
4That said, Mr. Morris has sworn an affidavit stating that he did spend a considerable amount of money on the Plaintiff’s needs after their mother’s death. He has indicated that an accounting of the proceeds still needs to be done and he acknowledges that as trustee he must provide that accounting. It is unclear, however, when the accounting will be provided to the Plaintiffs. In the roughly 5 years since the payout of the life insurance proceeds, no accounting or even a rough approximation of an accounting has been provided by Mr. Morris.
5The record indicates that Mr. Morris did purchase a property in Smith Falls, Ontario with the insurance money. He explains that he purchased the house which the family had been renting. His counsel at the hearing added that Mr. Morris did so in order to put a roof over the children’s head. His counsel also conceded that Mr. Morris did make one error in making this purchase, but that this was the result of a lack of knowledge, and not malintent. As Defendants’ counsel put it: “The only thing that Frank was mistaken about is that he thought he was a beneficiary.”
6Mr. Morris now says that he has come to understand that he is not a beneficiary of the insurance funds. As a result of what he seems to characterize as a little mistake, Mr. Morris purchased a property in his own name with the Plaintiffs’ money.
7The property that Mr. Morris purchased has apparently since been sold, and the proceeds invested in two more properties. Those are located in Alexandria, Ontario, and are held in the name of Mr. Morris and/or his new spouse, the Defendant, Tracy Bankley (the “Alexandria Properties”). The Alexandria Properties are legally described as:
a) Property Identifier - PIN 67105-0141 (LT) – PT LT 18 CON 4 KENYON PT 1, 14R1786; NORTH GLENGARRY
b) Property Identifier 67105-0138 (LT) – PT LT 18 CON 4 KENYON AS IN AR23897 & PT 6, 14R4260; NORTH GLENGARRY
8Although no formal appraisals are in the record, the properties appear to have escalated in value over the past few years. One of them was purchased with all cash and then subsequently mortgaged out. It is unclear what has become of the mortgage funds received by Mr. Morris. I am advised by counsel for the Plaintiffs that there is something in the range of $221,000 of equity in the two properties. This figure is not precise, but the approximate range does not appear to be disputed by the Defendants.
9Mr. Morris deposes in his affidavit that $389,559.39 of the life insurance proceeds remains in a Bank of Montreal account in his name. He has not paid any of these funds to the Plaintiffs, even though he says that he understands that they are the sole beneficiaries of these funds and that he is the trustee. His explanation is that he still has to prepare the outstanding accounting of expenditures he has incurred over the years, and he does not know if some or any of this money is owing to him.
10In my view, that is not acceptable. The $389,559.39 that Mr. Morris is holding should have been part of what was to be paid to each of the Plaintiffs as they turned 18. It is not for the trustee to hold onto for as long as he wishes until he has the time to get his own accounts in order.
11That leaves the remaining $217,440.61 of the original insurance proceeds plus any interest or profits made with those funds to be accounted for. If any money was expended for the Plaintiffs’ benefit by Mr. Morris, that amount likely will cover it. In fact, the record suggests – although no one can know for sure until a proper accounting is done – that this will more than cover any outlay of funds by Mr. Morris and that a portion of it is also owing to the Plaintiffs.
12In order to secure the amount (or part thereof) of insurance proceeds and accumulated profits claimed by the Plaintiffs, they seek a certificate of pending litigation over the two Alexandria Properties. The affidavit evidence establishes that the have a prima facie claim to those properties, as they appear to have been purchased with the profits from the Smith Falls property that Mr. Morris acquired with the Plaintiffs’ insurance proceeds.
[13]
Order
The Defendants shall forthwith pay to the Plaintiffs $389,559.39. These funds are to be delivered to Plaintiffs’ counsel, in trust, to be disbursed in accordance with the Plaintiffs’ directions. If the accounting to be provided by Mr. Morris establishes that some portion of these funds are owed back to him, he shall be at liberty to make such a claim at that time.
14The Plaintiffs shall have a certificate of pending litigation over the Alexandria Properties.
15An accounting of the life insurance proceeds received by Mr. Morris is to be provided by Mr. Morris, and he is to make himself available for any cross-examination on that accounting, within 60 days of the date hereof.
16There shall be an Order to go as submitted by Plaintiffs’ counsel, with the exception of paragraph 6 thereof – i.e. the request for a worldwide accounting of assets by the Defendants, which is to be deleted.
17Costs of this motion are reserved to the trial judge.
Date: May 20, 2022 Morgan J.