McMasters Estate (Re)

McMasters Estate (Re) Court Supreme Court Date 2010-11-09 Citation 2010 NSSC 414 Docket Hfx 317247 Judge/Registrar/Adjudicator Coady, Kevin (Honourable Justice) (SC) Document Type Decision Decision Content SUPREME COURT OF NOVA SCOTIA Citation: McMasters Estate (Re), 2010 NSSC 414 Date: November 9, 2010 Docket: Hfx No. 317247 Registry: Halifax Between: An Application of THE MANUFACTURERS LIFE INSURANCE COMPANY, in relation to the Estate of the late HUGH McMASTERS - and - Insurance Act, R.S.N.S. 1989, c. 231 - and - Charlene Robichaud and Jaimie Robinson Applicants __________________________________________________________________ DECISION __________________________________________________________________ Judge: The Honourable Justice Kevin Coady Heard: September 23, 2010, in Amherst, Nova Scotia Decision: November 9, 2010 Counsel: Douglas B. Shatford, QC, for the applicant, Ms. Robichaud Robert E. Moores, for the applicant, Ms. Robinson By the Court: [1] The late Hugh McMasters was 59 years old when he succumbed to cancer on May 28, 2009. He had been a long term employee of Oxford Frozen Foods. He was survived by one daughter, Jaimie Robinson, and a common-law spouse/girlfriend, Charlene Robichaud. At the time of his death Mr. McMasters held a group life insurance policy with Manulife Financial through his employer. The value of that policy was $50,000. [2] On January 23, 2003, Mr. McMasters completed an application for group benefits designating his daughter, Jaimie Robinson, as the sole beneficiary of the life insurance proceeds. The following is that designation: I make the following beneficiary designation and I reserve the right to change this designation at a later date as may be indicated in the change(s) of beneficiary section on the reverse. Jaimie Robinson - daughter - 20/10/76 Revocable/irrevocable - Irrevocable (the term revocable/irrevocable must be handwritten). [3] The word “irrevocable” was handwritten by Mr. McMasters. The reverse side of this document has gone missing and is not available to the parties or the Court. [4] On December 8 (year unknown) Mr. McMasters completed a beneficiary designation form designating his daughter, Jaimie Robinson, as the sole beneficiary of the life insurance proceeds. In response to the question “list all beneficiaries for basic coverage” Mr. McMasters wrote: Robinson, Jaimie - daughter - 100% Under the heading “Irrevocability” is the note: If beneficiary is shown as irrevocable, his/her consent is required to change it. [5] It appears as if this designation was required as a result of Manulife Financial’s assumption of Maritime Life’s business. [6] On April 15, 2009, Mr. McMasters completed a beneficiary designation form designating Charlene Robichaud as the sole beneficiary of the life insurance proceeds. This designation form is in most respects the same as the December 8th form save for the beneficiary designation which stated: Robichaud, Charlene - common-law wife - 100% And save for the following declaration at part four of the document which states: I hereby revoke any previous beneficiary designations in relation to my foregoing coverage(s) and designate the person(s) named above. [7] Mr. McMasters dies 5–6 weeks later. [8] On June 12, 2009, the employer forwarded to Manulife a plan member claim which effectively advanced a claim from Ms. Robichaud. Ms. Robichaud’s signature was attached to that document. Manulife received a note contesting the payment from Ms. Robinson. That note stated “this is my application to contest” and the application was attached. This left Manulife acknowledging the obligation but uncertain as to the beneficiary. [9] On September 28, 2009, this court issued an order permitting the insurer to pay the proceeds into court. The order also discharged Manulife from any further liability. Copies of that order were forwarded to Ms. Robichaud and Ms. Robinson. [10] On January 13, 2010, Ms. Robichaud filed a Notice of Motion requesting that the monies paid into court be paid to her. Ms. Robinson has not filed a formal motion but counsel have agreed that both claims will be heard together without a written motion. [11] The affidavits filed in support of these claims address the circumstances surrounding the preparation of the April 15, 2009 designation and the purported wishes of Mr. McMasters prior to that document. Counsel, however, have agreed that this motion should be decided on the interpretation of the designation documents and not on the basis of undue influence, competence or any other factual basis. In light of this approach, I see no purpose in reviewing those affidavits. [12] Ms. Robichaud succinctly sets forth the issues in her brief at page 3: 1. Is the January 2003 document a valid irrevocable designation under the Manulife Policy. 2. If it is, the designated beneficiary is Jaimie Robinson. 3. If it is not, the designation is revocable and the designation of Charlene Robichaud is the beneficiary under the policy. [13] The issue as stated by Ms. Robinson is whether “the irrevocable beneficiary designation of January 23, 2003 is valid.” [14] Ms. Robichaud advances three arguments in support of her claim. The first relates to Section 193(3) of the Insurance Act R.S.N.S. c 231 which states: “(3) No insurer shall issue a policy containing an irrevocable designation of a beneficiary or accept for filing a declaration containing an irrevocable designation of a beneficiary unless they are attached to the policy or to the declaration statements signed by (a) the insured in the following form: I understand that the effect of my designating a beneficiary irrevocably is that, under the provisions of the Insurance Act, while the beneficiary is living, I may not alter or revoke the designation without the consent of the beneficiary and I may not assign, exercise rights under or in respect of, surrender or otherwise deal with the contract without the consent of the beneficiary; and (b) an agent of the insurer in the following form: I certify that I have fully explained to the insured the nature and effect of making an irrevocable designation of beneficiary and such explanation was given to the insured not in the presence of the beneficiary and that the insured indicated that he was aware of the irrevocable nature of the designation so made by him.” [15] Ms. Robichaud points out that the January 23, 2003 application/designation is not accompanied by these statements. It is her submission that this failure to comply with Sections 193(3)(a) and 193(3)(b) do not allow for the appointment of an irrevocable beneficiary and the effect is that the designation is revocable. [16] The second argument of Ms. Robichaud relates to the following clause in the January 23, 2003 application: I make the following beneficiary designation and I reserve the right to change this designation at a later date as may be indicated in the change(s) of beneficiary section on the reverse. [17] Ms. Robichaud argues that this paragraph, and the writing of the word “”irrevocable,” creates ambiguity as to Mr. McMasters intentions. She states that the 2009 designation supports an inference that Mr. McMaster’s 2003 document was revocable. [18] Ms. Robichaud’s third argument relates to the opening sentence of the 2009 designation which states: Complete this form if the plan member wishes to designate a beneficiary(s) or change a previously designated beneficiary(s). [19] It is her position that this language allowed Mr. McMasters to change the designation without the consent of the existing beneficiary. [20] Ms. Robinson relies on Section 193(1) of the Insurance Act R.S.N.S. c.261 in support of her position that the January 23 2003 designation was irrevocable. Section 193(1) is as follows: An insured may, in a contract or by a declaration, other than a declaration that is part of a will, filed with the insurer at its head or principal office in Canada during the lifetime of the person whose life is insured, designate a beneficiary irrevocably and in that event the insured, while the beneficiary is living, may not alter or revoke the designation without the consent of the beneficiary and the insurance money is not subject to the control of the insured or of his creditors and does not form part of his estate. [21] She therefore argues that the two subsequent designations are of no force and effect because she did not consent to the change in designation. [22] There was no evidence before this court relating to Mr. McMasters completion of the first two designations. The only evidence about the completion of the third designation is found in Ms. Robichaud’s affidavit. She stated that prior to April 15, 2009 Mr. McMasters told her that he wished to change the beneficiary clause in her favour. She stated that Mr. McMasters called his employer to obtain the appropriate documents. Ms. Robichaud collected the form, returned it to Mr. McMasters, observed him fill it out and she then delivered it back to the employer. I am satisfied that Mr. McMasters completed the 2009 designation. There is nothing inherently wrong with the 2009 designation. The only challenge to it is found in the 2003 designation. [23] There is no dispute that Mr. McMasters completed the 2003 designation in his own handwriting. The top portion of that document states “to be completed by the plan administrator.” The handwriting in that section is clearly different than Mr. McMasters. There is absolutely no evidence of compliance with section 193(3) of the Insurance Act. [24] The critical question is whether Mr. McMasters “irrevocable” designation survives the failure to comply with section 193(3) of the Insurance Act and whether this omission changes the 2003 designation to revocable. [25] Section 193(3) makes it clear that a designation of someone as an irrevocable beneficiary is only valid if the designation, or the related policy, has attached statements signed by both the insured and an agent of the insured. The statements must indicate that the agent has informed the insured of the effect of making a designation irrevocable, and that the insured understands these effects but nonetheless wishes to make the beneficiary irrevocable. [26] If the requirements in section 193(3) are not met, the designation of beneficiary will not be irrevocable, and section 193(2) indicates that the designation will be deemed a regular revocable designation of beneficiary. Further, section 192(2) makes it clear that the insured may alter or revoke a declaration of beneficiary by subsequent designation, so long as the initial designation was not irrevocable. Therefore, if Mr. McMasters’ initial designation of his daughter as beneficiary was not irrevocable, then it is deemed a revocable designation which was validly altered by his designation of Ms. Robichaud as sole beneficiary in 2009. [27] There is no evidence that the requirements in section 193(3) were met in this case. The required statements could not be found, and there is no evidence that they ever existed. Therefore, it appears that Ms. Robinson was never a valid irrevocable beneficiary, and that Ms. Robichaud replaced her as sole beneficiary of the policy with Mr. McMasters’ 2009 re-designation. [28] I should point out that other than Nova Scotia, no province has requirements in its Insurance Act similar to those found in section 193(3). This was referenced in David Norwood, Life Insurance in Canada, 3rd Ed (Toronto: Carswell, 2002 at page 279): Every designation of beneficiary in the Uniform Act provinces is revocable unless the insured makes it irrevocable by the express terms of the declaration. In Nova Scotia, the insured must also perfect an irrevocable designation by affidavits. [29] Given that there is no judicial interpretation of section193(3) in Nova Scotia, and that there are no similar provisions found in other provinces’ insurance legislation, section 193(3) must be interpreted solely using principles of statutory interpretation. The wording of the section is clear; if its requirements are not met, then a beneficiary designation cannot be irrevocable. [30] There is no evidence that the section 193(3) requirements were met in this case; therefore, it appears that Ms. Robinson was never an irrevocable beneficiary of Mr. McMasters’ insurance policy. This means that Ms. Robinson was a revocable beneficiary, and that Ms. Robichaud replaced her as sole beneficiary of the policy upon Mr. McMasters’ valid re-designation of April 15, 2009. Therefore, it appears that Ms. Robichaud is indeed the sole beneficiary of the policy, and thus entitled to the $50,000. J.