The Supreme Court of British Columbia (SCBC) has ruled that a woman intended to drop her former common-law spouse from her life insurance policy after they separated, and that even though that didn’t happen, the proceeds of the policy should be awarded to her sister.
According to the court’s decision, Dorothy Schiller purchased life insurance from Manufacturer’s Life Insurance Co. (Manulife) in 2008, naming her then common-law spouse, John Gregory Proudman, as the beneficiary. However, their relationship subsequently broke down, and Schiller removed Proudman as beneficiary of her will, pension, RRSP, and other benefits, but not the insurance policy.
After she died in 2013, both Proudman and Schiller’s sister, Caroline Louise Schiller-Arsenault, filed claims for the proceeds of the policy. Given the dispute, Manulife paid the proceeds of the policy into the court. Schiller-Arsenault then sought an order that the proceeds be paid to her, which was opposed by Proudman.
According to the SCBC decision, Schiller-Arsenault argued it was clearly Schiller’s intention that the proceeds of the policy not go to Proudman, and the evidence indicates that Schiller believed she had taken the necessary steps to change the beneficiary under the policy. As well, Proudman is barred from claiming the proceeds under the terms of their separation agreement, Schiller-Arsenault argued.
Proudman argued that he was the named beneficiary of the policy at the time of Schiller’s death, according to Manulife’s records, and that there is no evidence that she filed a change of beneficiary with Manulife prior to her death. He also argued that the separation agreement does not specifically refer to life insurance policies.
However, the SCBC ruled in favour of the sister, finding that Proudman was under an obligation to refrain from pursuing a claim to the insurance proceeds, under the separation agreement.
“He filed a claim to the insurance proceeds in breach of his contractual obligations under the separation agreement. He took active steps to pursue property despite having agreed that he had no further interest in that property,” wrote Madame Justice Wendy Baker.
“In my view, it does not matter that the separation agreement does not refer specifically to policies of insurance. It is clear that it was intended to be a full and final settlement of entitlement to any and all property, including policies of insurance.”
As a result, the SCBC ordered that the proceeds be paid out to Schiller-Arsenault.