Madore-Ogilvie vs. Ogilvie Estate – Hull on Estates #103
Listen to Madore-Ogilvie vs. Ogilvie Estate.
This week on Hull on Estates, Rick and Sean discuss the case of Madore-Ogilvie vs. Ogilvie Estate which was recently featured in the CCH periodical Will Power.
Madore-Ogilvie vs. Ogilvie – Hull on Estates Podcast #103
Rick Bickhram: Hi and welcome to Hull on Estates. You are listening to Episode #103 of our podcast on March 25th, 2008.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and Wills. Now, here are today’s hosts.
Rick Bickhram: Hi it’s Rick Bickhram here today. And I’m podcasting with Sean Graham.
Sean Graham: Hi Rick, how’s it going?
Rick Bickhram: I’m doing well, how are you doing today Sean?
Sean Graham: Pretty good thanks, pretty good. We figured we’d refer to a great resource we get that people out there probably know fairly well if they’re in the area. But in case they don’t, it’s certainly worth a read every once in awhile. It’s the CCH Will Power Periodical Resource and we get it obviously through the firm and it’s really a great resource for us. It provides pretty helpful summaries, I find, of recent cases, tax rulings. And the thing I like the most about it, I think, is that it often refers to Quebec cases which we don’t come across that often, but it’s kind of a novelty, for me anyway, to read the cases and to see the analysis and the references to the Civil Code of Quebec and just to sort of see how the reasoning seems to go in these Civil Code cases. It’s a nice sort of distraction almost from the cases we’re used to seeing.
And there’s one case referred to in the most recent edition which is the March 2008 edition, it’s #159. It’s about the Madore-Ogilvie vs. Ogilvie Estate case which is an Ontario Court of Appeal case. Maybe, Rick, if you want to chat about the facts a bit?
Rick Bickhram: Absolutely. This is an Ontario Court of Appeal decision that the CCH edition discusses and it takes us back, a little bit back towards the Superior Court decision, and I’m just going to run through the facts here very briefly. The deceased here had six children, three of which were minors. Now the three minors, of the three minors, two of the minors were from a different mother and one minor was with Mary, who was the deceased’s wife. The deceased died and his estate was consumed with debts except for two life insurance policies. One of the life insurance policies was owned by the deceased solely and another life insurance policy was owned jointly between the deceased and his wife Mary. Now it was pretty much agreed between the parties that the first life insurance policy that was owned by Lloyd – or the deceased – was deemed to be part of his estate. Whereas the other life insurance policy that was owned jointly between the deceased and his wife Mary, there was some debate in regards to whether or not that a life insurance policy constituted or could be deemed part of his estate.
Sean Graham: And I think it’s that old Section 72 analysis where the estate can be, sort of, broadened by including Section 72 from the Succession Law Reform Act. It’s a list of assets which fall outside the estate, as regular listeners will probably be aware of, but what happens is in these dependant’s relief claims, the Section 72 assets can be clawed back into the estate by the Court for the purpose of satisfying the dependant’s relief claims. And so the issue in this decision was should this particular asset be clawed back? It’s kind of an interesting one because it sets a joint policy which arguably falls under the definition but the Court noted that the intent of the whole policy was to pay down the mortgage on the matrimonial home. And the Court also noted that Mary, the surviving spouse, had made the majority and maybe even all of the policy payments. So you have to think that those facts figure in to the eventual decision.
I don’t know about you, Rick, but I’m finding these days that it seems like a lot of estate planning is taking into account these dependant’s relief claims or other claims against the estate. And so a lot of times, I’m finding that the estate has been well planned to avoid claims because a lot of assets have passed outside the estate. So clawing them back with Section 72 seems to be an increasingly necessary option.
Rick Bickhram: Absolutely. And what makes this decision a little bit more interesting is that in the applications in the initial decision to claw the insurance policy back, the Divisional Court took the reverse position. They said that the insurance policy should not be clawed back such that it would be constituted part of the estate for valuing the estate in lieu of a dependant relief’s claim.
Sean Graham: Yeah, it’s kind of neat. At the trial level, the trial judge felt that the policy clearly fell under the language of Section 72 of the Act and basically, literally applied the Act and found that the policy should be clawed back. But then at the Appellate levels, both Divisional and Appeal Court, reversed that. And it’s sort of an interesting reasoning and I think it’s going to lead to some more cases in this area. And I suspect that the cases are going to be fairly fact-based in terms of who contributed to the asset, because in this case, it was Mary, the surviving spouse, and other facts, I think, are going to come into it. So we may be… maybe, anyway, according to this case, moving from a rigid enforcement of the Section 72 language, and maybe branching out to some more areas for consideration as to whether these assets should fall into the estate, even if they’re clearly under the language of the Act. So I think that’s an interesting one to watch.
Rick Bickhram: Well, this was an interesting decision in the Court of Appeal decision. And I think it’s interesting in the sense that the Court of Appeal held that this insurance policy that was jointly owned between the deceased and his wife Mary didn’t fall within the language of the Succession Law Reform Act, Section 72, which is used normally to claw back assets into the estate and deems it part of the estate for the purpose of the valuation.
Sean Graham: Yeah and that’s a little – I mean I was, sort of, reading it from the point of view of thinking that it did fall under the… that the asset in this case did appear to fall under the language. But the Court of Appeal has an interesting twist on that. It basically said that the deceased in this case did not own the policy because there was an ownership interest of the surviving spouse as well, which became an absolute entitlement to the proceeds when the deceased died. Now that’s always the case with a joint asset, in theory and a lot of those are clawed back. But the Court of Appeal really looked at the language of Section 72 a little closer. And in particular, juxtaposed the language of Section 72, sub (1), sub (e) and sub (c) and (d), which talk about jointly owned bank accounts and property. And then the insurance policy sub-section though, 72, sub (1), sub (f) talks about insurance policies owned by the deceased. So those other two sections would capture joint assets but they don’t really talk about insurance policies, and I think there’s the distinction. So that this asset, in this case, was an insurance policy and so 72, sub (1), sub (f) has a different mechanism. And it looks as though that was really the deciding factor, which meant that this particular asset fell outside of the estate, went to the surviving spouse and that was the end of that case.
I’d also note that the Court of Appeal has some specific discussions saying that this policy was not some sort of arrangement to avoid the dependants and I think that’s pretty important. I think that’s a factual determiner in some of these cases. I think the Court will really look at intent as much as possible and try to make sure that the intent did not try to get around the statute, and in this case it didn’t. The language of the Act was Section 72, sub (1), sub (f) of the Succession Law Reform Act and so it wasn’t the pure joint assets section. And on that basis, the asset went straight to the surviving spouse. I think it’s an interesting case and I do think that some of the underlying rationale is going to come back. It seems to me, at least in my practice, that the Section 72 assets are becoming a real driving force in these dependant’s relief claims.
Rick Bickhram: Well that was definitely a really good review and insight from Sean about that case. And also from CCH, which provided the summary of this case, which is really well put together.
Sean Graham: Yeah, I think Will Power is a great resource. Again, I really do like the sort of broad scope a bit. You get a bit of tax, a bit of Quebec cases, cases from B.C. and so forth and it’s all very, sort of, readable. The summaries are very well written and I’d certainly recommend to anyone that they look into it again. That’s CCH and that’s the Will Power Resource. Certainly worth the read.
Okay, well thanks, Rick. I think that brings us to the end of today’s talk. Thanks to everyone for listening and obviously we love hearing from listeners. You can send us an e-mail at firstname.lastname@example.org or just give us a shout at our telephone number. We have a comment line at 206-350-6636 and, of course, we’d love for you to visit our blog at estatelaw.hullandhull.com. And you’ll find lots of information, discussions on the growing and developing practice of estate law.
Rick Bickhram: It was a pleasure podcasting with you, Sean. I look forward to podcasting with you in the future.
Sean Graham: Hope you enjoyed the show. I’m Sean Graham.
Rick Bickhram: And I’m Rick Bickhram. Until next week, so long.
This has been Hull on Estates with the lawyers of Hull & Hull. The podcast you have been listening to has been provided as an information service. It is a summary of current legal issues in estates and estate planning. It is not legal advice and you are reminded to always talk with a legal professional regarding your specific circumstances.
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