MacArthur (Re)

MacArthur (Re)

Although the change of beneficiary met several elements (MacArthur was insolvent, the designation was in favour of a creditor and there was an apparent intent to prefer), the critical statutory requirement that the conveyance have the effect of delaying or defeating creditors was not satisfied because at the time of designation the policy proceeds were effectively exempt (the mother was the prior beneficiary) and creditors therefore lost no enforceable rights; accordingly the designation could not be set aside and the beneficiary is entitled to the proceeds.

Citation
2013 NSSC 157
Parties
Applicant / Named Beneficiary: Rita Christian; Respondent / Trustee: BDO Canada Limited, Trustee in Bankruptcy for the Estate of the Late Glenn MacArthur
Court
Supreme Court of Nova Scotia
Jurisdiction
Canada
Judgment Date
23 May 2013
Procedural Posture
Bankruptcy and Insolvency / Application to Determine Entitlement to Life Insurance Proceeds (hearing March 18, 2013; Decision May 23, 2013)
Outcome
Application denied in favour of the Applicant; designation of Rita Christian as beneficiary upheld and she is entitled to the insurance proceeds.
Legal Topics
Beneficiary Designation, Statute of Elizabeth, Assignments and Preferences Act, Insurance Act Exemptions, Ponzi Scheme Insolvency, Preferential Transfer
Source Language
English
Bankruptcy Insolvency Law Insurance Law Fraudulent Conveyance Law Beneficiary Designation Statute of Elizabeth Assignments and Preferences Act Insurance Act Exemptions +2 more

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Parties

Rita Christian

Applicant / Named Beneficiary

BDO Canada Limited, Trustee in Bankruptcy for the Estate of the Late Glenn MacArthur

Respondent / Trustee

Procedural Posture

Bankruptcy and Insolvency / Application to Determine Entitlement to Life Insurance Proceeds (hearing March 18, 2013; Decision May 23, 2013)

Legal Issues

  1. 1 Was the change of beneficiary a transfer/disposition of property?
  2. 2 Was MacArthur insolvent at the time of the designation?
  3. 3 Was the designation made with intent to delay, hinder or defeat creditors or to give an unjust preference?

Ratio Decidendi

Although the change of beneficiary met several elements (MacArthur was insolvent, the designation was in favour of a creditor and there was an apparent intent to prefer), the critical statutory requirement that the conveyance have the effect of delaying or defeating creditors was not satisfied because at the time of designation the policy proceeds were effectively exempt (the mother was the prior beneficiary) and creditors therefore lost no enforceable rights; accordingly the designation could not be set aside and the beneficiary is entitled to the proceeds.

Court Disposition

Application denied in favour of the Applicant; designation of Rita Christian as beneficiary upheld and she is entitled to the insurance proceeds.

Orders

  • The Trustee shall pay the $300,000 insurance proceeds to Rita Christian.
  • Funds of $300,000 held by the Trustee in trust are to be released to Rita Christian.