Re Moss (Bankrupt), 2010 MBCA 39 Link to case on CanLii
In the April 29, 2010 decision of the Court of Appeal of Manitoba, the Appeal Court addressed the appeals with respect to the question of the validity of the execution of six (6) Notice of Change of Beneficiary Forms to life insurance policies.
The issue raised: whether the Life Insurance Policy Designation Forms were validly executed by the insured, Eliza Moscovici, the mother of the Respondent, Danny Moss, pursuant to The Insurance Act, C.C.S.M., c. 140. The Respondent Danny Moss, a bankrupt, and former beneficiary of the six policies, contented that his daughter Carrie Moss was the beneficiary, the forms having been validly executed either under Power of Attorney, or by Eliza Moscovici, with the assistance of Danny Moss.
The Appellants, Keith G. Collins Ltd., the trustee in bankruptcy for Danny Moss' estate and BMO Nesbitt Burns Inc. (BMO), who alleged that the forms purportedly executed by Eliza and forwarded to and acted upon by the insurers following Eliza's death were void ab initio as they were not signed by Eliza as required by law.
The Appellants alleged that the trial judge erred in concluding that the forms were validly executed by Danny alone, notwithstanding that Danny and his wife testified to the contrary and had withdrawn defenses that could allow the trial judge to reach such a conclusion.
The appellants sought a declaration that the monies paid to Carrie were the property of Danny pursuant to The Bankruptcy and Insolvency Act.
"In his initial reasons, the judge set out the issues as he understood them (2009 MBQB 21, 235 Man.R. (2d) 286 at paras. 21-23): Based on the pleadings, evidence, and submissions of counsel, the central factual issues to be determined in these actions are:
1. Did Eliza personally sign all (or any) of the six "Notice of Change of Beneficiary" forms dated April 26, 1996, either without assistance or guided/assisted by Mr. Moss as testified to by Mr. and Mrs. Moss at trial?
In answering this question, there is absolutely no evidence (testimony or documents) to suggest that Eliza personally signed any of these forms without any assistance from anyone.
2. If, as the Trustee and BMO assert, Mr. Moss did not guide or assist Eliza's hand in affixing the signatures to each of these forms, did Mr. Moss sign Eliza's name to these forms?
The Trustee and BMO assert and have the onus of proving, on the civil standard of proof, that Eliza did not sign any of these forms and that Mr. Moss either forged (in the criminal sense) or, alternatively, having regard to the plea in para. 8 of the statement of defense filed in Docket No. BK 97-01-49147, was unauthorized to sign Eliza's name to these forms and did so in furtherance of his plan to defeat his legitimate creditors. ....
As I understand the position of the Trustee and BMO, whether the evidence establishes "forgery" (in the criminal sense) of Eliza's signature on these forms by Mr. Moss, or Eliza, either expressly or implicitly, authorized Mr. Moss to sign her name on her behalf to these forms (either in her presence or otherwise), any such signing by Mr. Moss (even if it was authorized by Eliza) is insufficient in law to validly change the name of a beneficiary in a life insurance policy having regard to the provisions of the Insurance Act, C.C.S.M., c. I-40 (the "Insurance Act"). ...."
The judge then came to the following conclusions (at paras. 60-61)
I would repeat my conclusions and references to the evidence as set out in paras. 56 and 57, supra. I am satisfied by a totality of the evidence and on a civil standard of proof that when Mr. Moss signed Eliza's name to the six Change of Beneficiary forms in question, he was authorized by her to do so, impliedly, if not expressly, by virtue of the general power of attorney that he held from her at that time (Ex. 1, Vol. 1, Tab. 19), dated September 1, 1995. Moreover, as concluded by the opinions of Ms. Ibrahim and Mr. Purdy, which I accept, it is clear that Mr. Moss had been signing Eliza's name on numerous documents over the years. Most, if not all, of these signatures had legal significance and legal consequences. ....
I am satisfied that in applying for the insurance and in subsequently executing and delivering the Change of Beneficiary forms to the insurers, Mr. Moss was acting as Eliza's agent (even if I were to disregard the specific power of attorney which he held from and after September 21, 1995, supra). ....
He then went on to find that the signing by Danny of the forms was not in breach of the Act and commented as follows on the case of Prudential Ins. Co. of America v. Johnson,176 So. 625 (U.S. La. Ct. App. 1937), which the appellants were relying on to advance their position (at para. 68):
On appeal, the Appellants reiterated the position that they took before the judge on a reconsideration motion. They alleged that the judge erred in law in finding that the forms were valid in light of the findings that Eliza did not sign them, which was a finding that was contrary to the evidence of Danny Moss and his wife and gave effect to the defences that they had withdrawn before trial. The Appellants also argued the decision was contrary to the provisions of The Insurance Act, and that the judge erred by taking the position that it was incumbent on the appellants to prove that the forms had been executed fraudulently.
The Appeal Court found that the trial judge failed to recognize the fact that specific and key aspects of the respondent's defence had been withdrawn. The material misapprehension of the evidence was found to be an error considered to be palpable and over-riding.
Given this error, the Appeal Court concluded that the judge erred in his conclusions and disposition of the matter. Moreover, the trial judge's findings that "Danny and Eliza's authority to sign the forms was flawed, firstly because of the withdrawn defences, and secondly because a general Power of Attorney as conceded by the Respondents themselves during the course of oral argument, is insufficient to vest the requisite authority to do so under the provisions of The Insurance Act. None of the Powers of Attorney that Danny was granted, permitted the designation or the alteration of beneficiaries in a policy of insurance. See Desharnais v. Toronto Dominion Bank, 2001 BCSC 1695 (CanLII), 2001 BCSC 1695, 42 E.T.R. (2d) 192." Link to case on CanLii
The power granted must have been a specific one, and that was not the case.
The Appeal Court came to the conclusion that the Appellants discharged the onus of proving their case as there was no evidence accepted by the trial judge that the forms were signed by Eliza with Danny's assistance and, in fact, the trial judge strongly rejected such evidence.
Accordingly, the appeal was allowed and the Court of Appeal granted the declaration and relief sought by the Appellants. The Appellants were awarded costs of the appeal and the trial, but not on a solicitor-client basis.
The Ontario Substitute Decisions Act, 1992, S.O. 1992, c.30, does not authorize attorneys acting pursuant to a Continuing Power of Attorney for Property to make a Will, which for the purposes of such legislation and the Ontario Succession Law Reform Act, R.S.O. 1990, c. S.26, is defined to include any testamentary disposition, and it is not statutorily within the scope of an attorney's power to change a beneficiary designation which constitutes a testamentary disposition.
An analysis of the relevant Manitoba legislation has not been undertaken in a review of this case.
There is an implication, however, from this case and the authority relied upon, as referenced in the case, that a Power of Attorney document providing for a specific power to designate can validly make such a designation, but how does this obiter comment accord with our Ontario legislation - the Substitute Decisions Act and the companion provisions of the Succession Law Reform Act? How can a power granted by Power of Attorney document do something to alter that which the Attorney itself cannot do under the governing legislation?
This case arguably only adds to the ongoing confusion in this complex area of law.
Moreover, in 2009, our Ontario Court of Appeal in the Richardson Estate v. Mew, addressed the issue of a designation of a beneficiary under a life insurance policy as being akin to a testamentary disposition and the court concluded as follows:
I do not understand Ms. Ferguson to suggest that she was entitled to change the beneficiary designation, cancel the Policy or cease paying the premiums during the time that Mr. Richardson was still capable of managing his property. To the extent that she makes such an argument, I would reject it. Given that there is no evidence that Mr. Richardson instructed her to do any of those things, if she had so acted, she would have been in breach of her duty to carry out the donor's instructions. Furthermore, changing the beneficiary designation to herself would have contravened the prohibition against using the Power for her own benefit, as Mr. Richardson had not expressly consented to such a change.
After Mr. Richardson became incapable, as has been noted, Ms. 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 Mr. Richardson's benefit and any exercise of the Power had to be done with honesty, integrity and in good faith. There is 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 Mr. Richardson's benefit.
In conclusion, I see no basis on which to find that it would be an injustice for Ms. Mew to take the death benefit. Further, there is a juristic reason for Ms. Mew's enrichment - 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 beneficiary designation. Consequently, there is no basis on which to impose a constructive trust on the death benefit.
In respect of the beneficiary designation, the motion judge found that the best evidence of Mr. 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 on the Policy after that date. The premium payments made after February 28, 1995, included a period of time before Mr. Richardson was diagnosed with Alzheimer's disease. The record amply supports the motion judge's finding on this matter. The motion judge also correctly articulated and applied the legal principles that govern rectification.
Richardson Estate v. Mew 2009 ONCA 403 (CanLII)
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Richardson Estate (Re), 2008 CanLII 63218 (ON S.C.)
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