Manufacturers Life Insurance Company v Senesouma, 2016 ABQB 495

Court of Queen’s Bench of Alberta Citation: Manufacturers Life Insurance Company v Senesouma, 2016 ABQB 495 Date: 20160902 Docket: 1501 03353 Registry: Calgary Between: The Manufacturers Life Insurance Company Applicant - and - Oulay Senesouma and Michelle Dupuis-Siagris on behalf of Carson Richard Lewis and Ryan Trevor Lewis Respondents _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice S.L.

Hunt McDonald _______________________________________________________ Introduction [ 1 ] This is a claim relating to a life insurance application that Manufacturers Life Insurance Company (“Manufacturers”) filed in respect of the death of an insured named Trevor Lewis (“Mr. Lewis”). [ 2 ] Both of the Respondents claim to be entitled to the life insurance benefits. Accordingly, Manufacturers paid $409,505.20 into Court by order of McCarthy, J, dated June 23, 2015.

Counsel advised the Court that Manufacturers takes no position in this Application. [ 3 ] The funds are being held in Court until a determination is made as to the rightful beneficiary. Accordingly, each Respondent has filed an application or cross-application claiming to be the rightful beneficiary. [ 4 ] The named Respondents in the matter are Oulay Senesouma (“Ms. Senesouma”) and Michelle Dupuis-Siagris (“Ms. Dupuis-

Siagris”) on behalf of Carson Richard Lewis (“Carson”) and Ryan Trevor Lewis (“Ryan”). [ 5 ] Ms. Senesouma is the widow of Mr. Lewis and Ms. Dupuis-Siagris is Mr. Lewis’s former wife. Carson and Ryan are the biological sons of Mr. Lewis and Ms. Dupuis-Siagris. Ryan is autistic and it is anticipated that he will never be able to support himself. [ 6 ] Mr. Lewis passed away on October 6, 2014. [ 7 ] After Mr. Lewis and Ms. Dupuis-Siagris separated in 2005, they signed a Separation Agreement dated June 12, 2006 (the “Separation Agreement”).

The operative clauses in the Separation Agreement relating to this matter are clauses 10.1 and 10.2 which provide as follows: Life Insurance 10.1 As long as Trevor is obligated to pay child support to Michelle, and as long as the life insurance is available to him through his employment at a reasonable cost, he will maintain Michelle, in trust for the children, as beneficiary of the life insurance. 10.2 When Trevor’s obligation to pay child support for the children ends, Trevor shall be free to change the beneficiary designation on this policy. [ 8 ] Ms. Dupuis-Siagris and Mr.

Lewis were divorced by judgment of the Superior Court Justice Family Court branch in Ontario on April 17, 2008. The Court carried the provisions of the Separation Agreement into the Divorce Judgment in clause 5(c)(ix) which provides: 5. This Court orders that the following additional child support clauses shall apply as follows: ... (

c) Child support ends for each child when: (ix) a party dies provided that the security in the

section of the Separation Agreement executed on the 12 th of June, 2006 entitled “Life Insurance” is in place at the time of death. [ 9 ] When Mr. Lewis died on October 6, 2014, he was still obligated to pay child support for both Carson and Ryan. Therefore, the life insurance provisions in the Separation Agreement executed on June 12, 2006 were still applicable. [ 10 ] Subsequent to the Separation Agreement executed in 2006, Mr. Lewis took out regular force option group term insurance in the amount of $400,000.00 from Manufacturers (the “Manufacturers Policy”).

The Manufacturers Policy was effective July 8, 2008. In his initial application he designated Ms. Senesouma as the 100% beneficiary. [ 11 ] On July 13, 2010, Mr. Lewis changed the beneficiary designation to 62.5% payable to Ms. Senesouma and 18.75% payable to each of Carson and Ryan. [ 12 ] Mr. Lewis was released by the military on December 4, 2013. At this time, Mr. Lewis changed the beneficiary designation back to 100% payable to Ms. Senesouma. [ 13 ] At some point after Mr. Lewis was released from the military, he got a job at NewAlta. Mr.

Lewis obtained additional life insurance through NewAlta from Manulife at a value of $100,000.00 (the “Manulife Policy”). On November 17, 2014 Ms. Senesouma was paid the benefits by Manulife. The proceeds from the Manulife Policy are not at issue in this case. [ 14 ] There is no question that the Separation Agreement and the divorce order are enforceable. Likewise, there is no question that Mr. Lewis named Ms. Senesouma as the beneficiary of the Manufacturer’s Policy. Applications [ 15 ] Ms.

Dupuis-Siagris requests that this Court declare that the Manufacturers Policy’s life insurance benefits presently held by this Court are trust properties to be paid to her for her to hold in trust for the benefit of Carson and Ryan. To accomplish such a task, it is requested that the Court pay the benefits, plus any interest earned to Ms. Dupuis-Siagris as trustee, to be held in trust for Carson and Ryan. [ 16 ] Ms. Senesouma requests that the Court order the payment of all the Manufacturers Policy’s life insurance benefits and any accrued interest to her. Secondly, she seeks a declaration that Ms.

Dupuis-Siagris has no claim or interest in the monies from the insurance policy, and thirdly, she makes a claim for costs. Issues [ 17 ] The issues as I see them are:

a) Did the Separation Agreement create an express trust over the life insurance benefits?

b) If not, is there a constructive trust claim to the life insurance benefits?

c) If there is neither an express trust nor a constructive trust, is Ms. Senesouma entitled to the life insurance benefits as the soledesignated beneficiary of the Manufacturers Policy? A. Is there an express trust over the life insurance benefits? [18] An express trust has three requirements: (

a) certainty of intention, (

b) certainty of subject matter, and (

c) certainty of object.See Knight v Knight, (1840), 49 ER 58 at p 68 (Ch); Donovan Waters, Law of Trusts in Canada, 3rd ed (Toronto: Carswell, 2005) atpage 132. [19] Ms. Dupuis-Siagris argues that all three certainties are met on the facts. Certainty of intention is satisfied in the execution ofthe Separation Agreement and by both parties agreeing to have its terms ratified by Court order. Certainty of subject matter is metbecause the specific insurance policy contemplated by the Separation Agreement was ascertainable as the Manufacturers Policy. Lastly,certainty of object was satisfied because Mr. Lewis’s children were referenced as beneficiaries of the trust in

section 10 of the SeparationAgreement. [20] Counsel for Ms. Senesouma assert that the Settlement Agreement lacks certainty, and that the language used therein is vagueand uncertain. On this basis, she argues that the certainty of subject matter is not met. [21] I am satisfied that the certainty of intention and object are met by the language in

section 10.1 of the Separation Agreement.However, the certainty of subject matter is more difficult to establish on the facts. [22] For the purposes of a trust, the certainty of subject matter is satisfied when it is ascertained or ascertainable. With respect toascertainable subject matter, Waters wrote in Law of Trusts in Canada, supra, at page 153: When the Courts say that there must be certainty of subject matter, they mean that the property must either be described in the trustinstrument, or there must be “a formula or method given for identifying it”.

This form of certainty more often occurs with fixing thequantum of beneficiaries' interest but it can occur with the whole trust property. [emphasis added] [23] The issue arising in this case is whether the Separation Agreement provides a formula or method for identifying the subjectmatter of the trust.

Consider the language of the Separation Agreement: 10.1 As long as Trevor is obligated to pay child support to Michelle, and as long as the life insurance is available to him through hisemployment at a reasonable cost, he will maintain Michelle, in trust for the children, as beneficiary of the life insurance. [emphasisadded] [24] The only identifiable characteristic of the life insurance referenced in the Separation Agreement is that it is “available to himthrough his employment at a reasonable cost”. At the time of the execution of the Separation Agreement, Mr.

Lewis had not acquired theManufacturers Policy, so in that sense it was not directly described in the provision. [25] Ms. Dupuis-Siagris argues that the Manufacturers Policy is the only life insurance held by Mr. Lewis that could satisfy theSeparation Agreement and that the life insurance referenced in

section 10.1 is ascertainable on that basis. It is true that the ManufacturersPolicy was obtained through Mr. Lewis’s employment during his time at the military, and I do not dispute that the insurance wasavailable at a reasonable cost, however the Manufacturers Policy was not the only life insurance held by Mr. Lewis at the time of hisdeath. Mr. Lewis also had the Manulife Policy obtained through his employment at NewAlta. [26] At the time of Mr. Lewis’s death both the Manulife Policy and the Manufacturers Policy were in place and both policies couldhave equally satisfied the broad language in

section 10.1 of the Separation Agreement. There is no formula or method to determine whichbenefits from which policy is contemplated in the Separation Agreement. Consequently, I find that there is no certainty of subject matterand accordingly no express trust arising from provision 10.1 of the Separation Agreement. B. Is there a constructive trust over the life insurance benefits? [27] The Supreme Court in Soulos v Korkontzilas, (SCC), [1997] 2 SCR 217, [Soulos] recognized that someconstructive trusts arise to take away wrongful gains, even in the absence of an unjust enrichment claim.

McLachlin J (as she was then)wrote at para 43: I conclude that in Canada, under the broad umbrella of good conscience, constructive trusts are recognized both for wrongful acts likefraud and breach of duty of loyalty, as well as to remedy unjust enrichment and corresponding deprivation. While cases often involveboth a wrongful act and unjust enrichment, constructive trusts may be imposed on either ground: where there is a wrongful act but nounjust enrichment and corresponding deprivation; or where there is an unconscionable unjust enrichment in the absence of a wrongfulact, as in Pettkus v.

Becker, supra. [28] Ms. Senesouma cites Kerr v Baranow, 2011 SCC 10, as authority that Ms. Dupuis-Siagris is not entitled to make a claim ofunjust enrichment against Ms. Senesouma as the requisite three elements are not met in this case. The elements are: (

a) A benefit or an enrichment by one party of the other party; (

b) There is a corresponding detriment to the party providing the enrichment; and (

c) The absence of a juristic reason for the enrichment.

[29] I agree with Ms. Senesouma: not all of the elements of unjust enrichment are met in this case. Most notably, there is clearly ajuristic reason for any enrichment by Ms. Senesouma in the form of the Manufacturers Policy. Ms. Senesouma is the sole designatedbeneficiary under the Manufactures Policy and would have received the benefits in the absence of the Separation Agreement provisions.The Manufacturers Policy represents a juristic reason for enrichment, and consequently, the elements of unjust enrichment are not met inthis case.

See Love v Love, 2013 SKCA 31 at para 42. [30] The lack of an unjust enrichment claim is not dispositive of the issue, however, as Soulos confirms that not every constructivetrust is based on unjust enrichment. Soulos set out four conditions for establishing a constructive trust based on wrongful conduct at para45. They are:

a) The defendant must have been under an equitable obligation, that is, an obligation of the type that courts of equity have enforced, inrelation to the activities giving rise to the assets in his hands;

b) The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant inbreach of his equitable obligation to the plaintiff;

c) The plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure thatothers like the defendant remain faithful to their duties and;

d) There must be no factors which would render imposition of a constructive trust unjust in all the circumstances of the case; eg. theinterests of intervening creditors must be protected. Position of Ms. Senesouma [31] Ms. Senesouma submits that following the principles enunciated by the Supreme Court in Soulos that this Honourable Courtshould not impose any trust given that Ms. Dupuis-Siagris has not met the four conditions for establishing a constructive trust for thefollowing four reasons: • Firstly, Ms. Senesouma does not have any obligations or fiduciary duty to Ms.

Dupuis-Siagris pursuant to the SeparationAgreement or otherwise. Ms. Senesouma is not an agent for Ms. Dupuis-Siagris. • Secondly, the onus is on Ms. Dupuis-Siagris to show that any alleged agency duty of Ms. Senesouma was not fulfilled.However, Ms. Senesouma argues that she is not an agent of the respondent, and most importantly, Ms. Senesouma has not committedany wrongful activities. Ms. Senesouma claims she is rightfully and legally entitled to the monies from the Manufacturers Policy as thesole beneficiary of the policies in accordance with the express declarations naming Ms.

Senesouma as the beneficiary. • Thirdly, Ms. Senesouma has also not breached any terms of the Separation Agreement, and there is no causal connection orproprietary link between Ms. Senesouma and Ms. Dupuis-Siagris since the life insurance monies are not part of the estate. Although theestate is insolvent, Ms. Senesouma is also the sole beneficiary of the estate of her late husband. Further, Ms.

Dupuis-Siagris has notbrought any claims against the estate. • Finally, the Saskatchewan Court of Appeal in Love v Love, supra confirmed that the designation of a beneficiary is ajuristic reason for any enrichment (at paras 40-42), following the principles of unjust enrichment established by the Supreme Court ofCanada. Ms. Senesouma submits that, as the sole beneficiary of the Manufacturers Policy, she has not been unjustly enriched. [32] Ms. Senesouma submits that Ms.

Dupuis-Siagris’ claims in the present case should be denied because she cannot establish thefour conditions set out in Soulos for imposing a good conscience constructive trust, or any unjust enrichment. The Applicant, Ms.Senesouma is not a party to the Separation Agreement and she has no legal obligations or responsibilities to Ms. Dupuis-Siagris pursuantto the Agreement. Any alleged enrichment of Ms. Senesouma is not unjust because she was designated as the beneficiary of both lifeinsurance policies initiated by her late husband. [33] Most significantly, Ms.

Senesouma argues that under the fourth condition of imposing a good conscience constructive trust,there must be no factors which would render the imposition of a constructive trust unjust in all the circumstances. The fact is that Ms.Senesouma is the sole beneficiary of both policies; she is a widow with two children from her previous marriage to support and shesubmits it would be unjust to impose any trust in favour of Ms. Dupuis-Siagris for the insurance monies. Position of Ms. Dupuis-Siagris [34] Ms.

Dupuis-Siagris submits that the Court has previously found that the terms of a matrimonial settlement agreementsupersede an incompatible life insurance designation. She cites the case of Roberts v Martindale, (BC CA), [1998]BCJ No 1509 (BCCA) at paras 23-26. The Court heard a matter involving competing claims by an ex-husband and sister over the lateex-wife’s life insurance benefits. In that case, the ex-spouses entered into a settlement agreement that was intended to cover all currentand future assets and benefits.

However, the ex-wife mistakenly failed to change the designation of beneficiary for her life insurancebenefits from her ex-husband to the sister after her divorce. It was held that due to the bargain made by the ex-husband in the settlementagreement, a constructive trust over the life insurance benefits was found in favour of the sister by the Court. [35] Ms. Dupuis-Siagris submits that the same principles should apply in this case and that Mr. Lewis should be held to thebargain he made in the Separation Agreement. [36] Ms. Dupuis-Siagris argues that the principles set out in the Soulos case do not apply to Ms.

Senesouma. For the purposes ofthis application, Ms. Dupuis-Siagris says that the real issue is whether they apply to Mr. Lewis, not to Ms. Senesouma. On that basis,Ms. Dupuis-Siagris claims that the principles in Soulos have been met and, as a result, there is a constructive trust over theManufacturers Policy’s proceeds.

Analysis [ 37 ] I find that the principles set out in Soulos are to be applied to Mr. Lewis, not Ms. Senesouma. Mr. Lewis was under a contractual obligation to ensure life insurance benefits were payable to Ms. Dupuis-Siagris, in trust for his children, Carson and Ryan. [ 38 ] Soulos says that the four conditions should “generally” be met, which allows for further discretion. [ 39 ] In accordance with the conditions in Soulos : (

a) Mr. Lewis had an express contractual obligation. Since paragraph 10 of the Separation Agreement contemplated a future action in which Mr. Lewis retained some discretion, it also created an equitable obligation or duty.

In the case of Ladner v Wolfson , 2011 BCCA 370 at para 41 , Garson, J states that “an equitable relationship is based on a ‘duty of loyalty’, an obligation not to act in conflict with that duty of loyalty, and some degree of vulnerability on the part of the claimant.” Fulfilment of his long-standing and pre-existing duties as a father - which was solidified not only in an agreement but by court order - to provide support for his two biological children, one of whom has a disability, is such an equitable obligation or duty. (

b) Mr. Lewis was under a legal obligation to execute a life insurance policy with a designation of beneficiary in favour of Ms. Dupuis- Siagris in trust for Ryan and Carson. If Mr. Lewis had fulfilled this obligation, Ms. Senesouma would not have been in line to receive the Manufacturers Policy benefits. Further, although no assets will return to Mr. Lewis’s hands, they will end up in the hands of the person he (last) wanted them to belong to rather than Ms. Dupuis-Siagris or the children. Again, the main issue is whether he was entitled to do that. (

c) Ms. Dupuis-Siagris has a legitimate reason to expect that Mr. Lewis would have remained faithful to the provisions of the 2006 Separation Agreement. (

d) There are no factors which would render the imposition of a constructive trust unjust in all the circumstances. It is noted that Ms. Senesouma was the recipient of the proceeds of the Manulife policy. [ 40 ] In the case of Hemmerling Estate v Hemmerling , 2000 ABQB 808 , at paras 16 , 17, 25 and 26, Nash, J dealt with an issue involving an ex-wife seeking payment of life insurance benefits which she agreed to give up in a matrimonial property settlement.

The Court found that, in making a request of the insurer for payment of the benefits, the ex-wife was breaching the terms of the bargain she made with her ex-husband. The Court also found that there was a constructive trust over the disputed funds. [ 41 ] In my view, the factors for a constructive trust outlined in Soulos have been met in this case. Furthermore, the facts of this case are analogous to the Hemmerling Estate case, in which a constructive trust was declared over the disputed funds. [ 42 ] Having come to this conclusion, I need not address the third issue of whether Ms.

Senosouma is entitled to the life insurance benefits. By operation of the constructive trust, the life insurance benefits are to be held in trust by Ms. Dupuis-Siagris for the benefit of Carson and Ryan. This constructive trust takes precedence over the Manulife Policy’s designation of Ms. Senosouma as sole beneficiary. Decision [ 43 ] Based on the satisfaction of the test for constructive trusts, I declare that the insurance funds paid into Court are impressed by a constructive trust in favour of Ms.

Dupuis-Siagris who is to hold the funds in trust for Carson and Ryan. [ 44 ] Accordingly, I order that the Manufacturers Policy’s life insurance benefits currently being held in trust by this Court, plus interest, if any, earned thereon, be paid to Ms. Dupuis-Siagris, in trust for Carson Richard Lewis and Ryan Trevor Lewis. [ 45 ] Ms. Dupuis-Siagris is entitled to costs. If the parties cannot reach agreement on costs, they may arrange to speak to the matter. Such arrangements are to be made within the next 45 days. Heard on the 10 th day of May, 2016.

Dated at the City of Calgary, Alberta this 2 nd day of September, 2016 S.L. Hunt McDonald J.C.Q.B.A.

Appearances: Gabriel Stephen Panunto for the Respondent, Michelle Dupuis Siagris Chad R. Johnson for the Respondent, Oulay Senesouma