Day v. Day, 2009 NSSC 98

• Judge: Moir, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: June 08, 2009
• Jurisdiction: Nova Scotia
• Citations: 2009 NSSC 98;(2009), 279 N.S.R.(2d) 225 (SC)

Day v. Day (2009), 279 N.S.R.(2d) 225 (SC);

    887 A.P.R. 225

MLB headnote and full text

Temp. Cite: [2009] N.S.R.(2d) TBEd. JN.038

Courtney Nicole Day and Joshua James Day (plaintiffs) v. Marilyn Day (defendant) and Troy Day and Betty Laverne Day (third parties)

(Hfx No. 225867; 2009 NSSC 98)

Indexed As: Day v. Day

Nova Scotia Supreme Court

Moir, J.

June 8, 2009.

Summary:

Frank and Laverne were divorced in 1998. Frank was obligated under the corollary relief judgment to maintain life insurance for the two minor children. His son, Troy, was an adult in 1998 and not a child of Laverne. Frank died in 2001, and Troy became his administrator. However, Frank's sister, Marilyn, had control of the life insurance proceeds, as the named beneficiary. The insurers paid $261,656.88 to Marilyn. She distributed the proceeds mainly for the benefit of the minor children, but, with Laverne's consent, she also paid $30,000 to Troy and $30,000 to herself, and paid expenses for the estate. The minor children claimed an accounting. Marilyn defended the claim, and alternatively, claimed reimbursement from Troy and Laverne.

The Nova Scotia Supreme Court granted judgment against Marilyn for $41,722 ($30,000 payment to herself, plus unaccounted balance for the benefit of the estate), less adjustments. The corollary relief provision created a trust of the insurance proceeds. As the surviving parent, Laverne was the automatic guardian under s. 5 of the (1989) Guardianship Act. The powers in s. 8 (over the children's property) applied to her. However, Laverne owed the same trust obligation as Marilyn and could not consent on behalf of the children to a breach of trust by Marilyn. In the exercise of its discretion under s. 64 of the Trustee Act, the court relieved Marilyn from liability for the payment to Troy and the payments made for the benefit of the estate. The court dismissed the third party claims.

Estoppel - Topic 1389

Estoppel in pais (by conduct) - Circumstances where doctrine not applicable - Lack of prejudice or detrimental reliance by person raising estoppel - Life insurance proceeds were received by the defendant, the named beneficiary, in favour of the deceased's two minor children, pursuant to a corollary relief judgment - Out of the proceeds, and with the consent of the children's mother, the defendant paid $30,000 to the children's half-brother and $30,000 to herself - The defendant argued that promissory estoppel prevented the children from making claims against her - The Nova Scotia Supreme Court held that the $30,000 payment by the defendant to herself was not within the detrimental reliance required for promissory estoppel - However, the mother's consent was an unambiguous representation that caused the defendant to act to her detriment by making the payment to the children's half-brother - Therefore, that payment was protected as between the defendant and the mother - See paragraphs 73 to 77.

Family Law - Topic 4094

Divorce - Corollary relief - Incidental matters - Insurance policies, pension plans or health plans naming spouse or children beneficiaries - [See second and third Trusts - Topic 4150 ].

Guardian and Ward - Topic 204

Appointment and qualifications of guardian - General - Effect of - [See Statutes - Topic 2407 ].

Guardian and Ward - Topic 1042

Duties and powers of guardian - Respecting ward's estate - Distribution of estate - The Nova Scotia Supreme Court stated that, although there was no source for express terms of a trust imposed on a surviving parent who became guardian of her two minor children by operation of s. 5 of the Guardianship Act (1989), the parent was as much a trustee as a person appointed guardian by order - Both received the same fundamental power under s. 8 to "have the charge and management of his [ward's] property" - See paragraphs 69 to 72.

Infants - Topic 4203

Property - Particular funds - Insurance proceeds - [See second and third Trusts - Topic 4150 ].

Insurance - Topic 7151

Life insurance - Beneficiaries - Designation of - Alteration or revocation - [See second and third Trusts - Topic 4150 ].

Statutes - Topic 1450

Interpretation - Construction where meaning is not plain - Aids or methods to determine meaning - Legislative history - Reference to prior versions or amendments - The Nova Scotia Supreme Court observed that s. 5 of the Guardianship Act (1989) was a "curious" provision - "It seems that a child whose parents are alive has no guardian automatically under the statute, but a child who loses one parent automatically has a guardian" - In interpreting s. 5, the court considered the Act's legislative history that began in 1758 against a complex of common law on various kinds of guardianship - At no turn in its history did the Act suggest an assumption that a parent was automatically guardian of a child's property - The origin of s. 5 provided that when the likely guardian (the father) died, the mother became the guardian, or a joint guardian - That basic scheme was not changed; i.e., a parent was assumed to be the likely guardian, and when the likely guardian was dead, the surviving parent was automatically the guardian - "This leads to the anomaly that children with two parents have no automatic guardian of their property but a child who loses a parent automatically gets one. However, one sees how this came about and we are not left with misconceptions about guardianship at common law" - See paragraphs 44 to 59.

Statutes - Topic 2407

Interpretation - Interpretation of words and phrases - By context - The powers in s. 8 of the Nova Scotia Guardianship Act (1989) (guardianship of a child's property, person, education) applied to "every guardian appointed under this Act" - However, the surviving parent referred to in s. 5 of the Act was not "appointed" by anyone, but became guardian by operation of law - This led to the question of whether the surviving parent had s. 8 powers, or only became guardian of the child's person - There was a conflict in case law - The Nova Scotia Supreme Court stated that "To interpret 'appointed under this Act' in s. 8 to exclude a person who becomes a guardian by operation of s. 5 does not allow for the context supplied by the surrounding text. Section 5 emerged as a substitute for an appointment by a parent or the court. If s. 8 does not apply to a guardian under s. 5, then a s. 5 guardian is almost meaningless in light of the laws of custody and access. It becomes disconnected from the text of s. 3 and s. 4, as well as from the scheme and purpose of the Act" - See paragraphs 67 and 68.

Trusts - Topic 2730

The beneficiary - Rights of beneficiaries - Compensation for breach of trust - [See second and third Trusts - Topic 4150 ].

Trusts - Topic 4150

Administration - Liability of trustee - Statutory relief from liability - The Nova Scotia Supreme Court observed the factors to be considered before exercising its discretion to excuse a trustee's breach of trust under s. 64 of the Trustee Act, and provided references to authorities - The factors included whether the trustee sought or relied upon professional advice before the breach; whether the professional opinion was correct; the relationship between the trustee and the beneficiaries, and particularly the presence or absence of communications; the significance of the breach; whether the trustee was a professional; whether the trustee received remuneration; and the loss caused by the breach - However, "one must not put greater limits on the discretion than those the Legislature itself has chosen: reasonableness and honesty" - See paragraphs 81 and 82.

Trusts - Topic 4150

Administration - Liability of trustee - Statutory relief from liability - Life insurance proceeds were received by the defendant, the named beneficiary, in favour of the deceased's two minor children, pursuant to a corollary relief judgment - Out of the proceeds, and with the consent of the children's mother, the defendant paid $30,000 to herself - She argued that she should receive the benefit of the court's discretion under s. 64 of the (Nova Scotia) Trustee Act; i.e., that she acted honestly and reasonably, and ought to be excused for the breach of trust - The Nova Scotia Supreme Court held that the defendant's paying $30,000 to herself did not justify an exercise of the court's discretion - The court was satisfied of her honesty in making the payment - Wrongly but reasonably, she believed there were good reasons to question the existence or extent of the trust - However, preventing the defendant from gaining from her own default "overshadows, even eclipses" all of the considerations that were in her favour - The court granted the children judgment for $41,722 ($30,000 plus unaccounted balance in covering estate expenses), less adjustments - See paragraphs 83 and 84.

Trusts - Topic 4150

Administration - Liability of trustee - Statutory relief from liability - The defendant's brother was obligated under a corollary relief judgment to maintain life insurance for his two minor children - His son, Troy, was an adult - The brother died and the defendant had control of the life insurance proceeds, as the named beneficiary - The insurers paid $261,656.88 to the defendant - With the consent of the minor children's mother (not Troy's mother), the defendant paid a substantial sum to Troy - The two minor children claimed an accounting - The Nova Scotia Supreme Court exercised its discretion under s. 64 of the Trustee Act; and excused the defendant for the breach of trust - The breach met the threshold of honesty and reasonableness - The defendant believed that her brother would want to benefit Troy - All parties and their counsel took the mother to speak for the two minor children - Troy signed a release in exchange for the payment - The court did not believe that the defendant could recover the payment from Troy - Finally, the defendant was under professional advice; through the mother, she was in communication with the children; she was not a professional; she did not receive remuneration; and the loss to the children only represented a fraction of the funds - See paragraphs 85 to 91.

Trusts - Topic 6103

The trustee - Compensation - Right to - [See second Trusts - Topic 4150 ].

Cases Noticed:

Nakauchi Estate, Re, [1927] 3 D.L.R. 1087 (Sask. K.B.), refd to. [para. 61].

Sherrer, Re, [1930] 4 D.L.R. 1011 (Sask. K.B.), refd to. [para. 61].

Ryan v. Sleigh et al. (2007), 259 N.S.R.(2d) 206; 828 A.P.R. 206 (S.C.), refd to. [para. 70].

Central London Property Trust Ltd. v. High Trees House Ltd., [1947] K.B. 130 (C.A.), refd to. [para. 74].

Combe v. Combe, [1951] 2 K.B. 215 (C.A.), refd to. [para. 74].

Robertson v. McCarron (1985), 71 N.S.R.(2d) 34; 171 A.P.R. 34 (T.D.), refd to. [para. 76].

Legge Estate, Re (2007), 252 N.S.R.(2d) 78; 804 A.P.R. 78 (S.C.), refd to. [para. 79].

Fales et al. v. Canada Permanent Trust Co. (1976), 11 N.R. 487 (S.C.C.), refd to. [para. 79].

Fales v. Wohllenben Estate - see Fales et al. v. Canada Permanent Trust Co.

Scott Estate, Re (2005), 237 N.S.R.(2d) 390; 754 A.P.R. 390 (C.A.), refd to. [para. 80].

Langley v. Brownjohn, [2007] B.C.J. No. 2776 (S.C.), consd. [para. 81].

Lamport v. Thompson, [1940] O.J. No. 374 (S.C.), refd to. [para. 82].

Nepean Hydro Electric Commission v. Ontario Hydro (1982), 41 N.R. 1 (S.C.C.), refd to. [para. 90].

Air Canada and Pacific Western Airlines Ltd. v. British Columbia (1989), 95 N.R. 1 (S.C.C.), refd to. [para. 90].

Statutes Noticed:

Guardianship Act, R.S.N.S. 1989, c. 189, sect. 5, sect. 8 [para. 42].

Trustee Act, R.S.N.S. 1989, c. 479, sect. 64 [para. 78].

Authors and Works Noticed:

Murdock, Beamish, Epitome of the Laws of Nova Scotia (1832), vol. 2, pp. 37 to 39 [para. 45].

Counsel:

Brian P. Casey, for the plaintiffs, Courtney Nicole Day and Joshua James Day;

John Di Costanzo, for the defendant, Marilyn Day;

William L. MacInnes, Q.C., for the third party, Troy Day;

Betty Laverne Day, third party, acting on her own behalf.

This action was heard at Halifax, N.S., on November 17 and 18, 2008, by Moir, J., of the Nova Scotia Supreme Court, who delivered the following decision on June 8, 2009.