615078 Saskatchewan Ltd. v. Jodine, 2010 ABQB 827

Court of Queen ’ s Bench of Alberta Citation: 615078 Saskatchewan Ltd. v. London Life Insurance Company, 2010 ABQB 827 Date: 20101229 Docket: 0501 11941 Registry: Calgary Between: 615078 Saskatchewan Ltd. and Jodine Williams as Administratrix of the Estate of John Edward Williams (Deceased) and Jason Williams Plaintiffs - and - London Life Insurance Company Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice C.S. Brooker _______________________________________________________ INTRODUCTION [ 1 ] This is an appeal of the Master’s order dismissing the Plaintiffs’ application for

summary judgment against the Defendant.

[ 2 ] The application is brought pursuant to Rules 159(1) and (3) of the Rules of Court . [1] [ 3 ] The appeal is brought by way of an application de novo . Both parties were entitled to put forward new or additional evidence. They have not done so. Thus the evidence pertaining to this application is the same as was before the Master.

There, both sides filed affidavit evidence. [ 4 ] The evidence in this application consists of the affidavits of Jason Williams [“Jason”] dated April 6 th , 2009 and May 4 th , 2009 and the affidavit of Joan Elston [“Elston”]of London Life Insurance Company [“London Life”] dated June 1 st , 2009 together with the transcript of her cross-examination on that affidavit. I am satisfied that all of these affidavits and their attachments are properly before the court on this application/appeal.

FACTS [ 5 ] In 1996 John Edward Williams [“John”] purchased a life insurance policy on his life from London Life in the sum of $500,000. The policy was then assigned to a company called C.&L. and to 615078 Saskatchewan Ltd. [“615"] each as to 50 %. Those two companies then assigned their interest in the policy to a credit union to secure a mortgage which they had obtained to purchase a property. At the time, John owned all the voting shares of 615 of which he was the sole officer and director. C.&L. was a separate company at arms length to 615.

Jason was John’s son and was a non-voting shareholder of 615. [ 6 ] In March 2002, the credit union no longer required the policy as security and released it back to 615 and C.&L. [ 7 ] In June 2002 there was apparently a conversation between John and a London Life representative named Gord Anderson concerning John taking over ownership of the policy personally in the future. [ 8 ] In May 2003 Gord Anderson prepared and forwarded to C.&L. and 615 a transfer of the policy from them to John personally.

There is evidence of some further correspondence with respect to placing corporate seals on the transfer documents. [ 9 ] There is no authorized signature of anyone from 615 on the transfer document. There is an embossed corporate seal of 615 on the top right corner of the transfer document over the handwritten name of 615. There is some evidence that that seal was not the “authorized” seal of 615. A copy of the transfer was found in 615's files following John’s death.

There is also evidence that John completed a banking document to permit the policy premiums that were formerly paid out of 615's bank account, to be paid out of his personal account. There is also evidence that on three separate occasions John had received written notice that 615's policy interest had been or was in the process of being transferred to him personally. Specifically, the annual policy statement [2] prepared May 2 nd , 2004 sent to John at his Calgary address shows John as the sole owner of the policy. Yet, he never objected or challenged this.

Further, he executed a Designation of Beneficiary Form [3] as sole owner of the policy on September 2, 2004 designating his girlfriend Janice Jackson as his beneficiary of this policy. [ 10 ] John died in November 2004. [ 11 ] There is no dispute that C.&L. had transferred its 50% interest in the policy to John. [ 12 ] The dispute in this case is as to the 50% interest of 615. London Life refuses to pay that interest to 615 on the basis that 615's interest in the policy had been transferred to John personally.

The Plaintiffs dispute that, arguing that there is no evidence that 615 ever transferred the policy to John. ISSUE

[ 13 ] The issue in this application is whether or not there is a genuine issue for trial. If there is, the application must be denied and the case must be allowed to proceed to trial. If not, the application must be allowed and

summary judgment granted in favour of the Plaintiffs. [ 14 ] The burden of proof is on the Plaintiffs to show that there is no genuine issue for trial: Murphy Oil Co. V. Predator Corp. [2004] ABQB 688; aff’d (2006), 2006 ABCA 69 (CanLII) , 55 Alta. L.R.(4th) 1 (C.A.) . POSITIONS OF THE PARTIES [ 15 ] In

summary, the Plaintiffs’ position is that this is a case where the facts are clear and undisputed and the result depends upon the legal

interpretation of a document. They argue, in effect, that whatever the intention of John may have been, the Transfer document in question did not and could not effect a transfer of 615's interest in the policy to John personally. This is so because no one knows who placed the embossed seal on the upper right corner of the Transfer document or when that was done. Further, the Transfer document was never signed by anyone on behalf of 615 despite the fact that London Life requires that signature in order to transfer ownership.

In addition, the embossed seal found on the top right corner of the Transfer is not the corporate seal of 615 adopted by corporate resolution and in any event is not signed by an authorized officer or person authorized to sign on behalf of the company. Finally, the Plaintiffs suggest that the transfer document does not comply with the provisions of the Business Corporations Acts of Saskatchewan nor Alberta, nor the Insurance Acts of those provinces, nor London Life Insurance’s own procedures for the transfer of policies. [ 16 ] In

summary, the Defendant’s position is that the Plaintiffs have not and cannot meet the onerous test of no genuine issue for trial. It says that there is some evidence from which a trial judge might conclude that the Transfer was effectively executed by 615. Specifically, a trial is required to determine whether the affixing of the seal in the upper right corner was all that was required to bind 615.

Further, although it disputes its failure to follow its own guidelines for policy transfer, it argues that if it did so, the guidelines are for its benefit and it is entitled to enforce or not enforce them as it sees fit. As to whether the Alberta or Saskatchewan legislation applies, the Defendant argues that this question itself shows the necessity for a trial to determine which law is applicable to the facts of this case. In any event, neither legislation under the respective Insurance Acts establishes mandatory statutory requirements for transferring a policy such as in these circumstances.

Also, it refers to the provisions of

section 106 of the Saskatchewan Insurance Act (found in s.527 of the Alberta act) which provides that

an act or omission of the insurer which results in imperfect compliance with the Act does not invalidate an insurance contract as against an insured. Another issue which it argues raises a triable is that of the fact that the “old” policy under which the applicants maintain 615 held a 50% interest survived the conversion into a ‘new” policy in September 2004 upon which the “old” policy ceased to exist.

Finally, it argues that the intention of John, the operating mind of 615, is critical to the resolution of this claim and that such intention can only be determined by a trial judge after a proper trial of this matter involving viva voce evidence as well as the documentary evidence. ANALYSIS [ 17 ] The purpose of

summary judgment procedures was discussed by the Supreme Court of Canada in Canada v. Lameman 2008 SCC 14 at paras. 10 and 11 : [10] ...The

summary judgment rule serves an important purpose in the civil litigation system. It prevents claims or defences that have no chance of success from proceeding to trial. Trying unmeritorious claims imposes a heavy price in terms of time and cost on the parties to the litigation and on the justice system. It is essential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weeded out at an early stage. Conversely, it is essential to justice that claims disclosing real issues that may be successful proceed to trial. [11] For this reason, the bar on a motion for

summary judgment is high. ... [ 18 ] The test to be applied in a

summary judgement application is whether or not there is a genuine issue for trial. The court must be satisfied beyond reasonable doubt that no such issue or point of law exists in order to grant

summary judgement: Allied Signal Inc. v. Dome Petroleum Ltd. (1991), 1991 CanLII 2722 (AB KB) , 122 A.R. 321 (Q.B.) reversed on other grounds (1992), 1992 ABCA 174 (CanLII) , 131 A.R. 134 (C.A.) . Similar wording was used by the Supreme Court of Canada in Papachase Indian Band No. 136 v. Canada (Attorney General) , 2008 SCC 14 , 292 D.L.R. (4th) 49 , where it held that an applicant must demonstrate that there is "no

genuine issue of material fact requiring trial". There is no onus on the respondent to prove a genuine issue for trial: Murphy Oil. Co. v. Predator Corp. , 2004 ABQB 688 , 365 A.R. 326 . [ 19 ] The bar for an applicant seeking

summary judgment is high. As our Court of Appeal in Diegel v. Diegel , 2008 ABCA 389 has written, at para. 2: "a motion for

summary judgment has a rigorous test to justify for excluding a trial of issues of fact". The Court continued, at para. 18 to state: ...

Summary judgment has a high standard of proof because to succeed an applicant must show that it is "plain and obvious" or "beyond doubt" that the action will succeed or not succeed as the case may be. [ 20 ] Similar wording was used by the Court of Appeal in Steele (Next Friend of) v. Burgos , 2008 ABCA 321 , 437 A.R. 295 , at para. 11 : The test on a r. 159(2) application for

summary judgment is a high standard as an applicant to succeed must show it is "plain and obvious" or "beyond doubt" that the action will not succeed. If a chambers judge must assess and weigh the evidence to arrive at

summary judgment, the test has not been met. ... [ 21 ] In the case at bar the Plaintiffs argue that they should have

summary judgment against the Defendant for $250,000 plus interest and costs because their action is bound to succeed. This is based on their contention that the transfer of 615's interest in the policy to John personally was not and could not be effective. [ 22 ] I do not agree. I cannot, on the evidence before me, conclude that it is plain and obvious or beyond doubt that the Plaintiffs will succeed at trial. Or to put it another way, I cannot conclude on the evidence before me that the Defendant is bound to fail.

I reach this conclusion for the following reasons. [ 23 ] First, I do not agree with the Plaintiffs’ contention that a court could not conclude that 615 transferred its interest in the policy to John. I do not interpret the legislation referred to me by counsel as mandating a requirement that the policy holder, if a corporation, sign and affix the corporate seal to the transfer document. Under s.25 of Alberta’s Business Corporation Act, R.S.A. 2000, c. B-9 , the wording is permissive, not mandatory. Moreover, a corporation may adopt a facsimile of its corporate seal.

As well, it provides that a document executed on behalf of a corporation is not invalid because the corporate seal has not been affixed. Saskatchewan’s Business Corporations Act, R.S.S. 1978, c.b-10 has a similar provision re: validity. Similarly, neither the Insurance Act of Alberta, R.S.A. 2000, c. I-3 nor that of Saskatchewan R.S.S. 1978, c.

S-26 require both a signature and corporate seal to transfer a corporate interest in a policy. [ 24 ] In this case, the existence of the Transfer document with 615's embossed seal in the upper right corner over top of its name creates an ambiguity on the face of the Transfer as to what was intended by it. Parol evidence is therefore admissible to try and resolve that ambiguity as to what was intended.

A court will have to decide, after a trial and a weighing of all the evidence, whether it can infer an intention by 615, through the controlling mind of its principle, John, to transfer 615's interest in the policy to him personally.

In arriving at its conclusion, the trial judge will no doubt take into consideration the various facts including the presence of a type of embossed seal of 615 on the transfer document, its location, the lack of a specific signature on behalf of 615, the discussions and correspondence between the London Life representative and John concerning the transfer, the fact that John arranged to have the policy premium for the entire policy paid out of his personal bank account rather than 615's, the fact that London Life sent John an annual policy statement dated May 2004 showing him as the sole owner of the policy, and the fact that subsequently on September 2 nd , 2004 John signed as sole policy owner, a change of beneficiary form and submitted it to London Life. [ 25 ] John was the sole officer and director of 615 at the material time.

He was the operating mind of the company. His intentions therefore become the intentions of 615. In the circumstances of this case, what he actually intended is a genuine issue for trial. [ 26 ] Second, a trial is in my view necessary to consider all the circumstances surrounding the embossed seal of 615 and the circumstances surrounding its being affixed to the transfer document.

While the evidence before me suggests that no one knows who placed it there, the evidence surrounding where the seal was kept, where it was found, why it was created or when it was used may raise a reasonable inference from which a court could conclude that it was likely affixed by John on behalf of 615. Or it may not. It is a triable issue.

[ 27 ] Furthermore, the legal effect of the embossed seal on the transfer is a triable issue. It will depend on the circumstances found by the trial judge. Clearly, as noted in Re Lawton , 1944 CanLII 302 (MB KB) , [1944] 3 D.L.R. 51 (Man. Q.B.) , aff’d 1945 CanLII 291 (MB CA) , [1945] 4 D.L.R. 8 (Man.

C.A.) the seal of a company, standing alone, is its signature, equivalent to the signature of a natural person and thereby places the corporation in the same position. [ 28 ] Third, whether or not the transfer was executed in accordance with London Life’s internal policies or guidelines is not determinative of the issue of the validity of the transfer: see Bank of Montreal v. Duguid 2000 CanLII 5710 (ON CA) , [2000] O.J.

No. 1356 (C.A.) . [ 29 ] Fourth, to the extent that the Plaintiffs cite and purport to rely on provisions of corporate and insurance legislation in both Saskatchewan and Alberta, an issue of conflict law is raised which should be determined at trial. [ 30 ] Fifth, there appears to be a conflict in the evidence between the assertions made by Jason in his first affidavit as to his opinion or speculation about the affixing of the embossed seal to the transfer, and the opinion, speculation or inference relied upon by London Life, including the presumption of regularity of affixing the corporate seal.

This is another genuine issue that requires a trial. CONCLUSION [ 31 ] The Plaintiffs have failed to meet the test for

summary judgment. They have failed show that there is no genuine issue for trial. Therefore, their application and appeal must fail. [ 32 ] The appeal is dismissed with costs. Dated at the City of Calgary, Alberta this 27 th day of December, 2010. C.S. Brooker J.C.Q.B.A. Appearances: Jeffrey D. Poole, Esq. For the Plaintiffs Timothy P. Chick, Esq.

For the Defendant [1] The application was brought and heard before the new Rules of Court came into effect and therefore the new Rules of Court are not applicable to this application and judgment. [2] Affidavit of Joan Elston exhibit Q. [3] Affidavit of Joan Elston exhibit R