Stanley Mutual Insurance Company, Applicant, - v. –, 2011 NBQB 57

IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK FAMILY DIVISION JUDICIAL DISTRICT OF MIRAMICHI Citation: 2011 NBQB 057 Docket: N/M/67/2010 Between: Stanley Mutual Insurance Company, Applicant, - and – June Yvonne Shepherd, Respondent Before: Justice Thomas Riordon Date of hearing: February 7, 2011 Date of decision: February 21, 2011 Appearances: Amanda J. Evans - for the Applicant Janice E. Smith - for the Respondent RIORDON J. Introduction and Issues [ 1 ] The present Application arises as a result of a fire loss involving a dwelling insured by the Applicant, Stanley Mutual Insurance Company (Stanley Mutual).

That building was owned by the Respondent and her common-law spouse Vernon Pell, who died a day after the fire. Stanley Mutual now asks for directions in regard to insurance benefits payable under the Homeowners fire insurance policy. [ 2 ] Stanley Mutual is asking for Court approval of the payment of the remaining insurance proceeds payable under the terms of the policy to the Respondent. Upon payment it is asking that they be released and discharged from any further liability or obligations arising as a result of the fire loss in question.

In the alternative, Stanley Mutual wishes to pay the remaining proceeds of the policy payable as a result of the loss into Court. Upon payment it asks to be released from any further obligations under the Homeowners Policy of insurance. Background Facts [ 3 ] Stanley Mutual carries on business in the Province of New Brunswick and issued a Homeowners Insurance policy to Vernon Pell and June Shepherd insuring their dwelling at 9222 Route 11, St.

Margarets, New Brunswick. [ 4 ] Vernon Pell and the Respondent, June Yvonne Shepherd owned the property in question and on which the dwelling home was located as joint tenants. On September the 18 th , 2009, a fire occurred at the residence of Mr. Pell and Ms. Shepherd resulting in substantial damage to the building as well as to the personal property of the Respondent and Mr. Pell. The loss was covered by the Homeowner’s Insurance Policy with Stanley Mutual.

[ 5 ] Unfortunately and tragically, Mr. Vernon Pell died on September 19 th , 2009. He suffered serious burns to his body in the fire. At the time of his death Mr. Pell was 75 years of age, he died intestate. Vernon Pell and June Shepherd were not married but had lived in a long-term, common-law relationship of approximately 28 to 30 years. [ 6 ] Mr. Pell was previously divorced prior to his relationship with the Respondent, Ms. Shepherd, and has children of that prior relationship.

Vernon Pell and Janet Pell were divorced by Divorce Decree Absolute dated the 22 nd of April, 1980, issued out of the Superior Court of Justice of the Province of Ontario. [ 7 ] The Respondent believes that Mr. Pell did have children from his previous relationship and marriage but says that he had no contact with his children for many years. Their whereabouts and that of his former spouse are not at this time known. In her Affidavit, Ms. Shepherd believes that Mr. Pell had five children from his previous marriage, one of whom died in infancy and another at the age of 35.

She does not know their names, where they live, whether they are still living and whether the child, who died at around 35 years of age, had any children. [ 8 ] Since the tragic and unexpected death of Mr. Pell in September of 2009, the Respondent has not had any contact with the children of Mr. Pell. She does not think that they even are aware that he died. She does not know where to begin to try and track them down but believes he did have a daughter living in Western Canada. She says that Mr.

Pell never discussed his children with her in all the years that they were together and that he never so much as had a Christmas or Birthday card from his children in the last 30 years. She also says that he never tried to contact his children and to the best of her knowledge his children never tried to contact him. She also mentions that he never put pictures or keepsakes of his children around the house and that certainly she would not have objected to that if he had done it. [ 9 ] The Respondent, Ms. Shepherd was also divorced prior to her relationship with Mr. Pell.

She has a daughter, Lori Seyffert, who lives in Mississauga, Ontario. After the fire loss and the death of Mr. Pell the Respondent had no reason to remain living in New Brunswick and moved to Mississauga, Ontario, to live with her daughter. [ 10 ] June Yvonne Shepherd is now 72 years of age and has a number of health issues. She struggles with the cost of medical supplies and medication and is barely getting by financially. [ 11 ] In or around 2001, Mr. Pell and Ms. Shepherd moved to New Brunswick from Ontario and purchased the house in St. Margarets.

They held the property as joint tenants and they insured the dwelling with Stanley Mutual Insurance Company in both names. Loss, if any, under the policy was payable to the Royal Bank of Canada as holder of the Mortgage on the property as their interest might be. On acquiring the property they made a down payment out of savings that had been accumulated and the balance was financed with a mortgage loan from the Royal Bank of Canada. Because of their advanced age at the time, they did not qualify for life insurance on the mortgage loan. Prior to moving to New Brunswick both Mr. Pell and Ms.

Shepherd worked in Ontario. He retired in 1999 and Ms. Shepherd became disabled around 1987. As a result of her condition she qualified for a CPP Disability Pension. [ 12 ] The Respondent and Mr. Pell did not have any life insurance policies. They always had joint bank accounts and identified each other as common-law spouses on their tax returns. [ 13 ] Mr. Pell died the day after the fire from a massive heart attack, he suffered extensive burns to 45% of his body in the fire. So very quickly their life together was over. Ms.

Shepherd was devastated by the death of her common-law spouse and her health has deteriorated steadily since the fire. She says she is unable to look after herself without help from her daughter. Finances are a struggle and medical supplies are costly. [ 14 ] By Proof of Loss dated November 6, 2009, Ms. Shepherd and Stanley Mutual agreed to the following amounts payable under the policy: Building: $ 81,124.45 Personal Property: $ 38,000.00 Additional Living Expenses: $ 6,699.95 Total $125,824.40 [ 15 ] Because of the uncertainties caused by the situation, including the fact that Mr.

Pell did not have a Will and that he and the Respondent were not married, resolution of the claim for the loss has been difficult. The situation being as it is and as above described, Stanley Mutual is not able to complete the agreed payouts in full. [ 16 ] At the request of the Respondent, June Shepherd and under the terms of the policy the Applicant, Stanley Mutual paid out the mortgage to the Royal Bank in full in January 2010, in the amount of $25,105.48.

A Discharge of the Mortgage was obtained. [ 17 ] In addition, the Applicant, Stanley Mutual paid June Shepherd additional living expenses of $6,699.95 and advanced to her payments on the Personal Property loss and the building loss. One-half of these amounts have been paid. [ 18 ] A

summary of the total insurance proceeds and payments made to date and remaining insurance proceeds as a result of the fire are as follows: Building – Total: $81,124.45:

Less debris removal: $ 3,124.45 Less Mortgage Discharge: $25,105.48 SUBTOTAL: $52,894.52 Less ½ paid to Ms. Shepherd: $26,447.26 Remaining Insurance Proceeds: $26,447.26 Personal Property Loss: Total $38,000.00 Less ½ paid to Ms. Shepherd: $19,000.00 Remaining Insurance Proceeds: $19,000.00 Total Balance Remaining to be Paid: $45,447.26 [ 19 ] The Applicant, Stanley Mutual wants to honour its obligations under the contract of insurance by paying to the surviving person named as the insured person on the insurance policy the remaining insurance proceeds.

It requests that this Court approve payment of the remaining insurance proceeds to the Respondent, Ms. Shepherd. Stanley Mutual does not wish to become involved in any possible or potential dispute of estate matters or leave itself open for claims from potential heirs of Mr. Pell. As an alternative remedy it asks that the proceeds of the insurance moneys be paid into Court and that they be discharged with respect to any further liability under the policy of insurance. In this regard it relies on provisions of the Insurance Act , R.S.N.B. 1973, c.1-12 , and in particular s. 106 of that Act.

Decision on the Application [ 20 ] The issue that must eventually be addressed is whether June Shepherd is the sole person entitled to the proceeds payable under the Homeowner’s Policy arising from the fire loss or whether these proceeds should be shared with or paid to others. That determination, as I see it, will have to be made at another time. [ 21 ] It is argued on behalf of June Shepherd that she is entitled to the remaining proceeds as the surviving named insured, long-time common-law spouse and because the insured real property, including the dwelling, was owned by her and Mr. Pell as joint tenants.

It is maintained on her behalf that as the property was held as joint tenants, title to the house and land by operation of law vested in her on the death of Mr. Pell. After the fire loss if the house had been rebuilt the insurance proceeds would have had to used to rebuild it and she would have been the sole owner. In the circumstances it is said that she is entitled to the insurance proceeds which compensate her for the loss and that the children of Mr.

Pell have no interest in the insurance proceeds which essentially replaces the property that was lost. [ 22 ] It is submitted on behalf of Stanley Mutual that given the law of joint tenancy and the right of survivorship that potential heirs of Vernon Pell have no claim to the remaining one-half of the building portion of the insurance proceeds, that is the amount of $26,447.26. [ 23 ] With respect to the remaining one-half of the personal property loss of $19,000.00, Stanley Mutual submits that the evidence available supports that the co-insured, June Shepherd and not the unknown heirs of Vernon Pell, who he had no contact with for some 30 years, is entitled to the remaining proceeds of this insurance.

Mention is made of the following: “- The insured persons lived together since 1981; -On 2001, they bought the insured property (which insured property included “personal property”) using joint savings; - They did everything together jointly, and Ms. Shepherd was the sole beneficiary of Mr. Pell’s CPP pension; - Although not married, they lived together as husband and wife for many years and accumulated property together; and - Mr. Pell had no contact with his children or family.”

[ 24 ] Alternatively, if payment of the remaining balance cannot be paid to Ms. Shepherd then Stanley Mutual requests an Order that the remainder of the insurance proceeds be paid into Court. On payment Stanley Mutual wants to be discharged of any further obligations. [ 25 ] This matter is indeed complicated by the intestacy of Mr. Pell and the fact that he and Ms. Shepherd, although they lived as common-law spouses for many years, never married. [ 26 ] On the evidence before me it is evident that the real property including the dwelling at St. Margarets were owned by Mr. Pell and Ms. Shepherd as joint tenants.

There is no question that as Ms. Shepherd and Mr. Pell held title to this property as joint tenants, on the death of Mr. Pell she became the owner of this property. There was without question the right of survivorship. As was said by Justice Glennie in Winchester v. McCullough,

(2000) N.B.J. no. 26 the defining essential of joint tenancy is the right of survivorship.: 12. “ A joint tenancy arises by the act of the person who creates the estate. It is distinguished by what are known as the four unities: unity of title, unity of interest, unity of possession and unity of time. The defining essential of a joint tenancy is the right of survivorship.

As stated in Anger & Honsberger Law of Real Property (2d) at page 793: The most important incident of a joint tenancy is the right of survivorship, called since ancient times, the jus accrescendi - the right of surviving joint tenants to have their undivided interests progressively increased by the deaths of other joint tenants, although the survivors continue as joint tenants with the last survivor taking the entirety.” [ 27 ]

Section 3 of the Devolution of Estates Act , R.S.N.B. 1973, c. D-9 , provides: 3

(1) All real and personal property that is vested in any person, without a right in another person to take by survivorship, shall on his death, notwithstanding any testamentary disposition, devolve upon and become vested in his personal representative from time to time as trustee for the persons entitled thereto, and subject to the payment of his debts and so far as such property is not disposed of by deed, will, contract or other effectual disposition, shall be administered, dealt with and distributed as if it were personal property not so disposed of. 3

(2) This

section applies to property over which a person executes by will a general power of appointment, as if it were property vested in him. [ 28 ] Personal representative under the Act is defined as: ““personal representative” means the executor and includes an administrator and an administrator with the will annexed.” [ 29 ] In the present matter before me there is no executor and no administrator of the Estate of Mr. Pell has been appointed. [ 30 ] The applicable provisions of the Devolution of Estates Act , which arise on an intestacy are as follows: 22

(1) In this

section “marital property” means marital property as defined in the Marital Property Act . 22

(2) If an intestate dies leaving a widow and one child, the following shall go to the widow: (

a) any interest of the intestate in property that is marital property of the intestate and the widow; and (

b) one-half of the residue of the intestate’s estate. 22

(2.1) If an intestate dies leaving a widow and children, the following shall go to the widow: (

a) any interest of the intestate in property that is marital property of the intestate and the widow; and (

b) one-third of the residue of the intestate’s estate.

(3) If a child dies leaving issue and such issue is alive at the date of the intestate’s death, the widow shall take the same share of the estate as if the child had been living at that date. R.S., c.62, s.21; 1963, c.6, s.2; 1991, c.62, s.1 . 23 If an intestate dies leaving issue, his estate shall be distributed, subject to the rights of the widow, if any, per stirpes among such issue. R.S., c.62, s.22. 24 If an intestate dies leaving a widow but no issue his estate shall go to his widow.

R.S., c.62, s.23; 1956, c.33, s.1 ; 1963, c.6, s.3; 1973, c.30, s.1. [ 31 ] I can understand and appreciate the arguments advanced on behalf of the Respondent, Ms. Shepherd. However, considering that Mr. Pell died intestate, that he and Ms. Shepherd were not married and that he had children and the provisions of the Devolution of Estates Act , I am not prepared at this time to approve payment of the remaining insurance proceeds to Ms. Shepherd. Particularly so when the children and/or heirs at law of Mr. Pell have no notice of this Application.

It is only proper and fair that they be given the opportunity to be heard. They should have that opportunity before this issue is finally determined. [ 32 ] Although it is said that it is difficult to ascertain the identity of the children and heirs at law of Mr. Pell and locate where they might be, it should be possible to find some of them. The Divorce Judgment of Joan Janet Pell and Mr. Pell was completed on April 22, 1980. It should be possible to locate this file in the Records of the Superior Court of Justice in Ontario.

A copy of the Divorce Judgement was obtained and is one of the documents filed in this Application. Some information concerning the children should most likely be found in that file. If one of Mr. Pell’s children are located or the mother of these children is found the others could likely be found and notified of the present matter. [ 33 ] It is therefore my decision to not approve, at this time, payment of the remaining insurance proceeds arising from this loss under the policy to the Respondent, Ms. Shepherd.

The issue or issues as to who should be paid this money and related matters can be addressed at a later time. It should only be determined after interested parties are notified and have an opportunity to be heard. [ 34 ] I am prepared to approve payment of the remaining insurance proceeds into Court and discharge Stanley Mutual of its obligations under the insurance policy for the loss insured. [ 35 ]

Section 106 of the Insurance Act makes provision for payment of insurance money into Court when a Discharge cannot be obtained.

It reads: “ 106(1) Where an insurer cannot obtain a sufficient discharge for insurance money for which it admits liability, the insurer may apply to the court ex parte for an order for the payment thereof into court, and the court may order the payment into court to be made upon such terms as to costs and otherwise as the court directs, and may provide to what fund or name the amount shall be credited. 106(2) The receipt of the registrar or other proper officer of the court is sufficient discharge to the insurer for the insurance money so paid into court, and the insurance money shall be dealt with according to the orders of the court. 1968, c.6, s.106. [ 36 ] The purpose of

Section 106 of the Insurance Act was commented on in a case of Lloyds of London Re

(1991) N.B.J. No. 409 : “The statutory authority for payment of insurance into court is set out in

section 106 of the Insurance Act, R.S.N.B. 1973, c.1-12 … This remedy is available to an insurer faced with competing claims to the insurance money for which it admits liability in addition to the general remedy of an application for relief by way of interpleader under Rule 43.01. The advantage to an insurer in proceeding under

Section 106 of the Insurance Act is obvious in that by a simple ex parte application it can pay proceeds into court and obtain a discharge and avoid the nuisance and concurrent costs involved with

sorting out the legal interests of competing claimants. The disadvantage to those who claim entitlement to the proceeds is that they must initiate and bear the concurrent cost of applying to have the money paid out to those entitled at law. The fact remains that the legislature has provided the remedy which has been well established in insurance law. See MacGillivray & Parkington, Insurance Law , 7 th Ed., 1981 (Sweet & Maxwell), pp. 545-549. However, since the remedy is statutory it should be strictly construed.

For the Applicant to succeed it must meet the onus of satisfying the court that it cannot obtain a sufficient discharge of the insurance money.” [ 37 ] In that case the insurer’s application was dismissed as the required onus of satisfying the Court that it could not obtain a sufficient discharge was not met. [ 38 ] In the case of Royal Insurance Co. of Canada v. Gallant

(1990) N.B.J. No. 40 , I allowed a similar Application. The insurer in that matter admitted liability to pay

Section B Accident Benefits. There was an unresolved dispute between two children of the deceased and his estranged spouse. The deceased and his spouse had separated before his death. [ 39 ] Stanley Mutual has met the onus of establishing that it is not able to obtain a discharge of the remaining insurance money payable under the policy issued to Ms. Shepherd and Mr. Vernon Pell. I therefore approve payment of the remaining funds payable for the loss by Stanley Mutual in the amount of $45,447.26 into Court.

This sum is broken down as follows: Building Insurance proceeds: $26,447.26 Personal Property Loss: $19,000.00 TOTAL: $45,447.26 [ 40 ] Upon payment into Court by Stanley Mutual a proper receipt shall be given by the Clerk or other officer of the Court. Payment of the sum into Court shall discharge Stanley Mutual of all liability for monies payable under the provisions of the Homeowners Policy of insurance that is the subject of this Application.

A claim that is payable as a result of the fire loss that occurred on September the 18 th , 2009. [ 41 ] I think some provisions should be made so as to minimize cost and expense to eventually determine if the funds paid into Court should be paid to the Respondent, June Shepherd or shared with others.

In so doing and making these provisions the question can hopefully be determined expeditiously at reduced cost and hopefully this can avoid expense and the necessity of another Application to have the funds paid out of Court. [ 42 ] I therefore direct that this matter and the issue as to how the funds should be paid out of the Court be adjourned to a future date. The file will be reviewed by the Court on Motion’s Day, June 6, 2011 at 1:30.

At that time, after review and consideration by the Court, if matters are not resolved by that time directions can be given to establish some timelines and procedures to address payment of the funds to the persons entitled to them. A date for hearing of issues if necessary and feasible can be set. Legal Counsel for Stanley Mutual are not required to take

part in any further proceedings on this issue. [ 43 ] In the meantime, the solicitor for the Respondent, Ms. Shepherd will endeavour to determine and locate the heirs at law of Mr. Vernon Pell. Assuming all or some of them can be located they will be served with a copy of the Record on this Application along with a copy of this decision. [ 44 ] Assuming that all or some of the heirs are located prior to June 6, 2011, they will have the opportunity to be heard at that time as to their intentions, they may either appear personally or have a solicitor represent them at that time.

If they oppose payment of the funds to Ms. Shepherd they should advise her solicitor prior to June 6, 2011, as to their intentions. [ 45 ] If the heirs at law are served with a copy of the Record and this Decision prior to the scheduled review date and either oppose payment of the funds to Ms. Shepherd or wish to be heard, the Court can give directions and

schedule a Hearing date to address all issues. If they are served with all documents and do not appear to contest the Application on June 6 or fail to give notice of their intention by that time the matter can be addressed in their absence. Those issues being in regard to payment of the remaining proceeds of the insurance monies that I anticipate will be paid into Court by Stanley Mutual. [ 46 ] In the circumstances, I make no Order as to costs of the present Application. DATED at Miramichi, New Brunswick, this day of February, 2011. __________________________________________ The Honourable Mr. Justice Thomas Riordon Judge of the Court of Queen's Bench of New Brunswick

Judicial District of Miramichi