Ferguson Estate v. Mew et al., (2009) 250 O.A.C. 146 (CA)

• Judge: Feldman, Gillese and Rouleau, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 25, 2009
• Jurisdiction: Ontario
• Citations: (2009), 250 O.A.C. 146 (CA);2009 ONCA 403

Ferguson Estate v. Mew (2009), 250 O.A.C. 146 (CA)

MLB headnote and full text

Temp. Cite: [2009] O.A.C. TBEd. MY.060

Anne Kathleen Ferguson, Estate Trustee (moving party/appellant) v. Stephenie Mary Mew and the Canada Life Assurance Company (respondents/respondent)

(C49538; 2009 ONCA 403)

Indexed As: Ferguson Estate v. Mew et al.

Ontario Court of Appeal

Feldman, Gillese and Rouleau, JJ.A.

May 14, 2009.

Summary:

This was a dispute over the proceeds of an insurance policy on the life of Richardson, who died in 2007 after an eight-year battle with Alzheimer's disease. The dispute was between his first wife, Mew, who was the designated beneficiary, and his second wife, Ferguson, whom he married in 1992. A separation agreement required Richardson to maintain Mew as the named beneficiary of the policy until February 28, 1995. Ferguson brought a motion claiming entitlement to the proceeds, contending that Richardson intended to name her as the beneficiary, after February 28, 1995. She maintained that had she known that Mew was the named beneficiary, she would have used the continuing power of attorney in her favour to change the designation or stop making the premium payments. Ferguson asked that a constructive trust be imposed on the proceeds to prevent Mew from receiving a windfall. The insurer took no position.

The Ontario Superior Court, in a decision reported at 300 D.L.R.(4th) 503, found in favour of Mew. Ferguson appealed on the principal ground that the motion judge erred in failing to find that Mew would be unjustly enriched.

The Ontario Court of Appeal dismissed the appeal.

Agency - Topic 1065

Authority of agent - Express authority - Power of attorney - Scope of authority - [See Agency - Topic 1080 and third Trusts - Topic 2346 ].

Agency - Topic 1078

Authority of agent - Express authority - Power of attorney - Fiduciary duty - [See Agency - Topic 1080 and third Trusts - Topic 2346 ].

Agency - Topic 1080

Authority of agent - Express authority - Power of attorney - Enduring power of attorney (incl. termination) - The Ontario Court of Appeal stated that a continuing power of attorney, pursuant to the Substitute Decisions Act, 1992, must be understood in light of the common law that governed the exercise of powers by an attorney and ss. 32(1) and 38(1) of the Act, setting out the duties and standard of care of a guardian of property - Section 32(1), providing that "A guardian of property is a fiduciary whose powers and duties shall be exercised and performed diligently, with honesty and integrity and in good faith, for the incapable person's benefit", codified the obligations and the standard of care of an attorney at common law - The court confirmed that while an attorney acting under a continuing power of attorney was always a fiduciary, the scope of the fiduciary duties depended on whether the donor was incapable at the time of the transaction - If the donor was mentally incapable, the attorney's position approached that of a trustee - If not, the relationship between donor and attorney was similar to one of agency - See paragraphs 45 to 48.

Agency - Topic 3084

Relations between principal and agent - Agent's duty - General - Fiduciary duty - [See Agency - Topic 1080 ].

Family Law - Topic 4094

Divorce - Corollary relief - Incidental matters - Insurance policies, pension plans or health plans naming spouse or children beneficiaries - [See Insurance - Topic 7152 , Insurance - Topic 7153 and first Trusts - Topic 2346 ].

Insurance - Topic 7151

Life insurance - Beneficiaries - Designation of - Alteration or revocation - [See Insurance - Topic 7152 ].

Insurance - Topic 7152

Life insurance - Beneficiaries - Designation of - Intention of settlor - A separation agreement required Richardson to maintain his first wife, Mew, as the named beneficiary of his life insurance policy, until February 28, 1995 - On his death, Richardson's second wife, Ferguson, whom he married in 1992, claimed entitlement to the death benefit, contending that Richardson intended to change the beneficiary designation after February 28, 1995, so that she would be the named beneficiary - The motion judge found that the best evidence of Richardson's intention was that he did not change the beneficiary designation after February 28, 1995 (despite having amended the separation agreement twice thereafter), and he continued to pay the premiums after that date - The premium payments made after February 28, 1995, included a period of time before Richardson was diagnosed with Alzheimer's - The Ontario Court of Appeal saw no basis on which to interfere with the decision - The record amply supported the motion judge's finding - The motion judge also correctly articulated and applied the legal principles governing rectification - See paragraphs 62 and 63.

Insurance - Topic 7153

Life insurance - Beneficiaries - Designation of - Judicial variation - This was a dispute over the proceeds of an insurance policy on the life of Richardson, between his first wife, Mew, who was the designated beneficiary of the policy, and his second wife, Ferguson, whom he married in 1992 - A separation agreement required Richardson to maintain Mew as the named beneficiary until February 28, 1995 - Ferguson claimed entitlement to the proceeds, contending that Richardson intended to change the beneficiary designation after February 28, 1995, so that she would be the named beneficiary - She asked that a constructive trust be imposed to prevent Mew from receiving a windfall - Her principal argument on appeal was that the motion judge erred in failing to find that Mew would be unjustly enriched - The Ontario Court of Appeal began its analysis by stating that "the courts will intervene to prevent unjust enrichment when: (a) there has been an enrichment; (b) a corresponding deprivation; and (c) there is an absence of any juristic reason for the enrichment" - In conclusion, the court saw no basis on which to find that it would be an injustice for Mew to take the death benefit - Further, there was a juristic reason for Mew's enrichment; namely, she was the named beneficiary of the policy - That designation was never changed and the evidence did not satisfy the motion judge that there were exceptional circumstances justifying a change in the designation - Consequently, there was no basis on which to impose a constructive trust on the death benefit - See paragraphs 36, 61.

Insurance - Topic 7202

Life insurance - Claims - By estate of deceased - [See Insurance - Topic 7153 ].

Practice - Topic 8296

Costs - Appeals - Appeals from order granting or denying costs - General - A motion judge awarded the respondent costs of approximately $25,000, all inclusive - The moving party sought leave to appeal the costs award and, if leave was given, would argue that the costs award was unfair and unreasonable - The Ontario Court of Appeal stated that "a court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainly wrong ... . Accordingly, leave to appeal a costs order should be granted only in obvious cases where the party seeking leave convinces the court that there are strong grounds on which the appellate court could find that the judge erred in exercising his or her discretion" - In this case, there was no basis on which to grant leave - The moving party had not shown any apparent error in principle in the exercise of discretion by the motion judge nor was the costs award "plainly wrong" - While the moving party saw the respondent as having achieved a windfall, that did not disentitle the respondent to costs - Furthermore, that view did not make the costs award unfair or unreasonable - Particularly in light of the respondent's offer to settle, no injustice was occasioned by the costs award - See paragraphs 64 to 66.

Practice - Topic 9430

Appeals - Grounds of appeal - Costs - [See Practice - Topic 8296 ].

Trusts - Topic 626

Creation of trust - Transactions creating trusts - Proceeds of life insurance - [See Insurance - Topic 7153 ].

Trusts - Topic 2346

Constructive trusts - Basis for imposition - Unjust enrichment - This was a dispute over the proceeds of an insurance policy on the life of Richardson (now deceased), between his first wife, Mew, who was the designated beneficiary, and his second wife, Ferguson - Ferguson argued on appeal that the motion judge erred in failing to find that Mew would be unjustly enriched by receipt of the proceeds - She pointed to the general release in the separation agreement between Richardson and Mew and asserted that because Mew agreed to relinquish all rights to Richardson's assets, it would be against good conscience to allow her to breach that agreement - The Ontario Court of Appeal held that neither the facts of the case, nor the law, supported a determination that the general release in the separation agreement made it unjust for Mew to take the death benefit - The agreement contemplated that the issue of life insurance benefits remained open - A former spouse was entitled to the proceeds if the designation as beneficiary had not changed, even where there was a separation agreement in which the parties exchanged mutual releases - Loss of status as a beneficiary was accomplished only by compliance with the legislation - The general language used in waivers and releases did not amount to a declaration within the meaning of the Insurance Act - See paragraphs 53 to 55.

Trusts - Topic 2346

Constructive trusts - Basis for imposition - Unjust enrichment - An insurance policy on the life of Richardson (now deceased), designated his first wife, Mew, as the beneficiary - His second wife, Ferguson, brought a motion claiming entitlement to the proceeds - She contended that Richardson intended to change the beneficiary designation, so that she would be the named beneficiary - Her principal argument on appeal was that the motion judge erred in failing to find that Mew would be unjustly enriched - The motion judge made no finding as to whether Ferguson suffered a corresponding deprivation (she paid the 2007 premium for the policy from her personal earnings) - The Ontario Court of Appeal stated that there was no need for such a determination given the motion judge's finding that the beneficiary designation amounted to a juristic reason for Mew's enrichment - The court reached the same conclusion - In any event, the amount Ferguson paid was $1,161, "a very minor contribution" to the cost of the policy - The court questioned whether deprivation of such a sum, in comparison both to the total cost and the proceeds of $100,000, would warrant imposing a constructive trust - See paragraphs 39 and 40.

Trusts - Topic 2346

Constructive trusts - Basis for imposition - Unjust enrichment - Richardson signed a will in which he appointed his second wife, Ferguson, as his trustee and left her his estate - He also signed a continuing power of attorney (Power) in her favour over his property and his person - An insurance policy on the life of Richardson (now deceased), designated his first wife, Mew, as the beneficiary - Ferguson brought a motion claiming entitlement to the proceeds - Ferguson argued that the motion judge erred in failing to find that Mew would be unjustly enriched - Specifically, Ferguson contended that had she known that she was not the named beneficiary, she would have used the Power to designate herself as beneficiary, ceased paying the premiums or cancelled the policy - The motion judge doubted that Ferguson had the right to take those actions because they would constitute breaches of her fiduciary obligations as attorney - The Ontario Court of Appeal agreed - As a fiduciary, Ferguson was obliged to act only for Richardson's benefit, putting her own interests aside - After Richardson became incapable (Alzheimer's), Ferguson owed him an even higher duty of loyalty when exercising the Power - As a fiduciary in a role rising to that of a trustee, she was bound to use the Power only for Richardson's benefit and any exercise of the Power had to be done with honesty, integrity and in good faith - There was nothing in the record to suggest that a change in the beneficiary designation, cancellation of the Policy or a cessation of the premium payments would have been for Richardson's benefit - Accordingly, the Power provided no basis for a determination that it would be unjust for Mew to receive the death benefit - See paragraphs 49 to 52.

Cases Noticed:

Sharom v. Sharom Estate (1992), 8 C.C.L.I.(2d) 14 (Ont. Gen. Div.), refd to. [para. 32].

Cockell v. Cockell and Mutual Life Assurance, [1944] 4 D.L.R. 373 (Sask. C.A.), refd to. [para. 32].

Cornwall v. Halifax Banking Co. (1902), 32 S.C.R. 442, refd to. [para. 32].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, refd to. [para. 36, footnote 4].

Peter v. Beblow, [1993] 1 S.C.R. 980; 150 N.R. 1; 23 B.C.A.C. 81; 39 W.A.C. 81, refd to. [para. 40, footnote 5].

Banton v. Banton et al., [1998] 66 O.T.C. 161; 164 D.L.R.(4th) 176 (Gen. Div.), refd to. [para. 47].

Ermineskin Indian Band and Samson Indian Band v. Canada (Minister of Indian Affairs and Northern Development) et al. (2009), 384 N.R. 203; 2009 SCC 9, refd to. [para. 49].

Egli v. Egli, [2004] B.C.T.C. 529; 28 B.C.L.R.(4th) 375; 2004 BCSC 529, affd. (2005), 220 B.C.A.C. 148; 362 W.A.C. 148; 262 D.L.R.(4th) 208; 2005 BCCA 627, refd to. [para. 49].

McLean v. Guillet et al. (1978), 22 O.R.(2d) 175 (Dist. Ct.), refd to. [para. 55].

Hall Estate v. Hall and Sun Life Canada (1985), 59 A.R. 272 (C.A.), refd to. [para. 55].

Vail v. Vail Estate (1988), 34 C.C.L.I. 261 (Ont. H.C.), refd to. [para. 55].

Gaudio Estate, Re, [2005] O.T.C. 341; 16 R.F.L.(6th) 72 (Sup. Ct.), refd to. [para. 55].

Conway Estate, Re, [2006] O.T.C. 44; 25 R.F.L.(6th) 106 (Sup. Ct.), refd to. [para. 55].

Martindale Estate v. Martindale et al. (1998), 109 B.C.A.C. 97; 177 W.A.C. 97; 162 D.L.R.(4th) 475 (C.A.), dist. [para. 56].

Newport v. Mountainside Medical Pharmacy Ltd. (1995), 9 E.T.R.(2d) 272 (Ont. Gen. Div.), dist. [para. 56].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, refd to. [para. 65].

Kopij v. Metropolitan Toronto (Municipality) (1998), 123 O.A.C. 106, additional reasons [1999] O.J. No. 239 (C.A.), refd to. [para. 65, footnote 7].

Brad-Jay Investments Ltd. v. Village Developments Ltd. et al. (2006), 218 O.A.C. 315 (C.A.), leave to appeal refused (2007), 374 N.R. 390; 241 O.A.C. 394 (S.C.C.), refd to. [para. 65].

Brad-Jay Investments Ltd. v. Szijjarto - see Brad-Jay Investments Ltd. v. Village Developments Ltd. et al.

Statutes Noticed:

Substitute Decisions Act, S.O. 1992, c. 30, sect. 32(1) [para. 46].

Counsel:

Alan L. Rachlin, for the appellant;

Anna-Marie Musson, for the respondent.

This appeal was heard on March 25, 2009, by Feldman, Gillese and Rouleau, JJ.A., of the Ontario Court of Appeal. Gillese, J.A.,delivered the following judgement of the court, released on May 14, 2009.