Trustee to the Estate of R. N. v. Minister of Employment and Social Development

Trustee to the Estate of R. N. v. Minister of Employment and Social Development Collection Other Canada Pension Plan (CPP) Decision date 2018-04-11 Neutral citation 2018 SST 475 Reference number GP-17-1426 Member Carol Wilton Division General Division Decision Appeal dismissed Decision Content On this page Decision Preliminary matter Overview Issue Analysis Conclusion Reasons and decision Decision [1] The Appellant, Rusinek & Associates Inc., Licensed Insolvency Trustee to the estate of R. N. (the contributor), is not entitled to payment of the Canada Pension Plan (CPP) death benefit. Preliminary matter [2] Section 10(1) of the Social Security Tribunal (Tribunal) Regulations states: “The Tribunal may, on its own initiative or if a request is filed, add any person as a party to a proceeding if the person has a direct interest in the decision.” [3] After correspondence from the Tribunal to the Appellant and the Respondent, neither of whom objected, S. N., daughter of the contributor was added as a party to the proceeding; she had paid the funeral expenses of the contributor. She was given until March 23, 2018, to make any submissions she might have, but the Tribunal received no correspondence from her. Overview [4] On May 10, 2016, the contributor passed away without a will. There is no evidence that anyone applied to be the estate trustee or the administrator of the estate. [5] On July 26, 2016, the Appellant applied for the CPP death benefit, stating that the existence of a will was unknown to the Trustee, and signing the application as “asset administrator.” The Appellant stated that they were applying for the death benefit, not as an administrator appointed by the court, but as insolvency trustee.Footnote 1 The Respondent denied the application at the initial level and on reconsideration. The Appellant appealed the reconsideration decision to the Tribunal. [6] The Added Party paid the funeral home $8,195.00 for funeral expenses.Footnote 2 On May 4, 2017, she applied for the CPP death benefit, and in July 2017 the death benefit was paid to her.Footnote 3 Issue Is the Appellant entitled to the CPP death benefit? Analysis The test for payment of the death benefit [7] The payment of the death benefit is dealt with in section 71 of the CPP and section 64 of the CPP Regulations (Regulations). Taken together, these state that the death benefit should be paid to the estate of the contributor. If there is no estate, or if the estate did not apply for the death benefit within 60 days of the deceased contributor`s death, the death benefit may be paid to the individual or institution that paid the funeral expenses. If there is no such person, it may be paid to the survivor of the deceased contributor, and failing that, to the next of kin of the deceased contributor. Where there is no estate of the contributor, and a payment has already been made to one of the individuals or institutions listed in section 64 of the Regulations, “the [Respondent] is not liable to make that payment to any subsequent applicant.” The Appellant is not entitled to receive the CPP death benefit [8] The Appellant submits that when the contributor filed an assignment in bankruptcy in May 2013, the company was appointed Trustee for the estate of the debtor (emphasis added by the Appellant). The Appellant further submits that section 71 of the CPP stipulates that the death benefit shall be directed to the estate in priority over any other individuals, and that the Respondent has no discretion in the matter. The argument is that the trustee in bankruptcy appointed prior to the death of a contributor becomes “the trustee of the [contributor’s] estate” after death for the purpose of collecting the CPP death benefit.Footnote 4 [9] I do not accept the Appellant’s argument. The estate of a bankrupt is not synonymous with the estate of a deceased person. In a case such as this, where a bankrupt dies without a will, and no one applies to the court to become the estate trustee(s) or administrator(s), there is no estate to which a CPP death benefit can be paid. Under section 64 of the Regulations, the CPP death benefit was properly paid to the Added Party, the individual who paid the funeral expenses. i. Definitions [10] The term testator is definedin the Dictionary of Canadian LawFootnote 5 as the person making the will (…) or a person who has died leaving a will.Footnote 6 An intestate is a person owning property who dies without a will.Footnote 7 [11] The Dictionary of Canadian Law provides several definitions of the term estate. The following definition refers to the disposition of property that occurs after the death of someone, which is also the only time after which a CPP death benefit can be disbursed. It is consistent with the contextual, grammatical and ordinary sense of the word estate and in conformity with the scheme of the CPP: All the property of which the testator or any intestate has power to dispose by will otherwise than by virtue of a special power of appointment, less the amount of funeral, testamentary and administration expenses, debts and liabilities and succession duties payable out of the estate on death (…) includes both real and personal property.Footnote 8 ii. There was no estate to which the death benefit could be distributed [12] In May 2013, the Appellant was appointed trustee for the estate of the contributor (debtor) by way of a certificate of appointment (certificate) from the Office of the Superintendent of Bankruptcy Canada.Footnote 9 The contributor was alive at this time. Therefore the estate that is being referred to in the certificate is the definition of estate that refers to real and personal property generally. This is the estate in bankruptcy (Estate A) over which the Appellant had authority. [13] When the deceased contributor died, an intestate estate was created. This estate is the property that a testator or any intestate has power to dispose of by will (Estate B). This Estate B is the estate that is consistent with the spirit of the CPP and the estate to which a CPP death benefit can be disbursed. The contributor died in 2016 at which time, if there had been a will, the executor of the estate would have administered this Estate B. The facts do not indicate that Estate B was assigned into bankruptcy by administrators or executors of the estate. [14] The Bertram decision,Footnote 10 cited by the Appellant, provides insight into how the concept of the two estates functions. It points out that once the Estate B administrators recognized that the deceased’s estate was insolvent, they filed an assignment into bankruptcy. The Bertram facts are not consistent with those found in this appeal because here there were no estate trustees or administrators, so there was no one to contact the Appellant and file an assignment of Estate B into bankruptcy. [15] Although the Appellant was assigned to administer the estate that existed while the contributor was alive, that does not mean that they automatically became a bankruptcy trustee to the estate that could have been established after the death of the contributor, had there been a will or a court-appointed executor. In order for that to happen, the administrators or executors of his Estate B would have had to decide to file an assignment into bankruptcy. The Appellant only had authority over Estate A. After the contributor died, only the executors or administrators of the estate would have had authority over Estate B, unless they themselves had assigned Estate B into bankruptcy. Since the deceased died intestate, and no one applied to be a court-appointed executor or administrator, Estate B was never established. Therefore there was never any estate to which to disburse the death benefit. iii. Pension benefits are exempt from seizure by the Trustee in Bankruptcy [16] In Miles Estate (Trustee in Bankruptcy of) v. MilesFootnote 11 the Ontario Court (General Division) held that if a bankrupt dies, pension benefits payable to his or her estate (Estate B) are exempt from seizure and are payable to the estate trustee for the benefit of the beneficiaries of the estate of the deceased. Arguably, a death benefit is a pension benefit and as such exempt from seizure. This position is supported by provisions of the Bankruptcy and Insolvency ActFootnote 12 (BIA) and the CPP. [17] Pursuant to section 67 (1) b) of the BIA: 67 (1) The property of a bankrupt divisible among his creditors shall not comprise (…) (b) any property that as against the bankrupt is exempt from execution or seizure under any laws applicable in the province within which the property is situated and within which the bankrupt resides (…) Pursuant to section 65 (1) and (1.1) of the CPP: 65 (1) A benefit shall not be assigned, charged, attached, anticipated or given as security, and any transaction purporting to assign, charge, attach, anticipate or give as security a benefit is void. (1.1) A benefit is exempt from seizure and execution, either at law or in equity. [18] The CPP death benefit is not “the property of the bankrupt” and the Regulations are clear as to the hierarchy of those entitled to the death benefit. Since the CPP death benefit is not the property of the bankrupt, it follows that it is not “divisible among his creditors” either. The facts indicate that the deceased Appellant died intestate and no executor or administrator has come forward or been appointed by the Court. Thus there was no Estate B to which the death benefit could have been paid. Moreover, the provisions of the BIA and the CPP indicate that the Trustee in bankruptcy for Estate A cannot seize property that is exempt from execution, namely the death benefit. iv. Legislation cited by the Appellant does not support their position [19] The Appellant cites section 15.1 of the BIA and section 2 of the Criminal Code of Canada to support their argument that the meaning of “bankruptcy trustee” under the BIA is deemed to include the trustee on a deceased’s bankrupt estate created by will or provincial law (court appointed-administrator).Footnote 13 Section 15.1 of the BIA stipulates: A trustee is deemed to be a trustee for the purposes of the definition trustee in section 2 of the Criminal Code. Section 2 of the Criminal Code stipulates: trustee means a person who is declared by any Act to be a trustee or is, by the law of a province, a trustee, and, without restricting the generality of the foregoing, includes a trustee on an express trust created by deed, will or instrument in writing, or by parole. (emphasis added by Appellant). [20] In the present case, there was no court-appointed estate trustee or administrator, and there was no will. I fail to see how these provisions assist the Appellant because, as stated, the deceased did not have an Estate B: he had no estate created either by will (died intestate) or by provincial law (no court appointed-administrator). v. Case law does not support the Appellant’s position Re Mutch [21] The Appellant has presented Mutch, ReFootnote 14 in support of his argument, stating that the Minister previously paid the death benefit to the bankruptcy trustee in Alberta. The Appellant submitted that the CPP is federal legislation, and the practice should not differ from one province to another.Footnote 15 [22] I do not find the Mutch case persuasive. The key issue was not relevant to this appeal: whether a deceased person’s insurance and RRSP funds, which were exempt from bankruptcy proceedings while he was alive, were also exempt after his death, when they came into the hands of his bankrupt widow. It was only in passing that the judge referred to funeral expenses and advised the Trustees that the widow was entitled to the funeral expenses in priority to the claims of other creditors. The judge held that the estate was entitled to the death benefit payment and that the benefit was correctly forwarded to the deceased’s bankruptcy estate. The decision, which in any case is not binding on me, did not fully address the issue in this appeal. There is no discussion of whether there was an administrator of the deceased’s estate, or whether the administrator or executor filed the deceased’s estate into bankruptcy. Re Bertram [23] The Appellant also cited the Bertram decision in support of its position. Again, this case is not on point. It concerned an Estate B, because after the death of Mr. Bertram, letters of “administration with will annexed” were issued. When it became apparent that there were insufficient funds in the estate to satisfy the claims of all the creditors, the administrators of the estate filed an assignment in bankruptcy. The issue before the court was how claims made by the administrators with will annexed, the law firm and the solicitor should be ranked in priority to the claims of other creditors, when there was an Estate B that had been assigned into bankruptcy. This case supports the proposition that an application to the Court, by the administrator of the deceased’s estate, to file an assignment into bankruptcy is a prerequisite to empowering a bankruptcy trustee to act for the estate that is established after death (Estate B). It does not support the Appellant’s argument that, because the deceased was bankrupt before dying, the Appellant, as the trustee in bankruptcy, automatically became the administrator of the estate. CormierFootnote 16 [24] In the Cormier case, the Federal Court of Appeal held that the Respondent was obliged to pay a death benefit to the estate of the contributor, even if the estate failed to apply for the benefit within 60 days. In the present case, the Appellant did not apply for the death benefit until after the 60-day period had expired. However, as I have found that the Appellant is not the estate trustee or court-appointed administrator for the contributor’s estate, this case does not assist the Appellant. Estate of B. T.Footnote 17 [25] B.T. died intestate in 2008. In 2009, the Public Guardian and Trustee of Saskatchewan (PGT) applied for and received the CPP death benefit as a court-appointed administrator of B. T.'s estate. The deceased’s sister, who was a court-appointed administrator of the deceased’s estate,Footnote 18 then appealed to this Tribunal in 2015, stating that her mother should have received the death benefit because she was the next of kin and because she paid the funeral expenses. The Tribunal member overturned the Minister’s decision to pay the benefit to the PGT and instead found that it should be paid to the deceased’s sister (the deceased’s mother having died in the meantime). This General Division decision was appealed to the Appeal Division. Leave was granted, but no decision has been rendered as yet. [26] The B.T. case is distinguishable from the current appeal in that both applicants for the death benefit in B.T. were evidently court-appointed administrators of the deceased’s estate. The Appellant has not provided any evidence that they are the representative of the deceased’s estate (Estate B). The Appellant has only provided evidence that they were the Trustee in bankruptcy for the estate of the contributor while he was alive (Estate A). There is no will, no executor or administrator, and there is no evidence that an application was made to the court by any administrators or executors of the Estate B requesting leave to file an assignment in bankruptcy, with a follow-up order to this effect from the court. vi. The Added Party’s consent to the Appellant’s applying for the death benefit is not determinative of the issue on this appeal [27] The Appellant submitted that the Added Party consented in writing in June 2016 to the Appellant’s applying for the CPP death benefit. However, as the Respondent submitted, although this implied that the Appellant had been given the right to apply on her behalf, this was not a consent to assign the death benefit, nor was it a forfeiture of her right to claim the death benefit. vii. The timing of the payment to the Added Party is irrelevant [28] The Appellant further submitted that there is no evidence that the Respondent paid the CPP death benefit to the Added Party prior to the application by the Appellant. They state that they communicated with the Minister for over a year after the death of the contributor, and that they were not advised of the payment of the benefit to any other applicant. [29] It may be that there was some confusion at the Respondent’s end when dealing with the Appellant on this matter; if so, this is unfortunate. However, given that the Appellant was never entitled to payment of the CPP death benefit, the issue is moot. Conclusion [30] The appeal is dismissed. Footnotes Footnote 1 GD1-22-23 Footnote 2 GD2-14 Footnote 3 GD9-4-6, 11 Footnote 4 GD1-3; GD3-2 Footnote 5 Dukelow, D., The Dictionary of Canadian Law, 3rd ed. (Toronto: Thomson Canada Ltd.), 2004 Footnote 6 Ibid., at p. 1301 Footnote 7 Ibid., at p. 600 Footnote 8 Ibid., at p. 423 Footnote 9 GD1-8 Footnote 10 Re Bertram, 1972 CarswellOnt 88, [1972] Footnote 11 35 O.R. (3d) 312; 1997 O.J. No. 3607. Footnote 12 R.S.C., 1985, c. B-3 Footnote 13 GD6-4 Footnote 14 2014 ABQB 648 Footnote 15 GD6-5 Footnote 16 2002 FCA 514 Footnote 17 2016 CanLII 96180 (SST), a case that is not binding on me. Footnote 18 The General Division decision in B.T. did not explain how it was that there were two court-appointed administrators of the estate.