A recent decision by the Ontario Superior Court of Justice addresses the issue of whether the owner of a life insurance policy, who is mentally competent but physically disabled, can validly instruct another to change a beneficiary designation on a life insurance policy.
In Hanson Estate, the owner of a life insurance policy, after being diagnosed with multiple sclerosis, sought to change the beneficiary designation of the policy. Although the owner was mentally competent, as a result of the debilitating disease, the owner was physically incapable of altering the beneficiary designation. As such, the owner’s attorney for property was directed to make the amendment (by the owner).
In reaching her decision, the Honourable Madam Justice H.M. Pierce first considered s 7(2) of the Substitute Decisions Act, which states that an attorney may “…do on the grantor’s behalf anything in respect of property that the grantor could do if capable, except make a will”. The Judge dismissed the applicability of the SDA on the basis that the attorney was “…not acting as a substitute decision-maker pursuant to the power of attorney”.
Instead, the Judge turned her analysis to s 171(1) of the Insurance Act (which deals with beneficiary designation under a contract of life insurance) and considered in what circumstances a declaration is “signed by the insured”.
Consideration turned to Lord Denning’s decision in London City Council v Agricultural Food Products,  2 Q.B. 218 (UK C.A.), which states that “…there are some cases where a man is allowed to sign by the hand of another who writes his name for him. Such a signature is called a signature by procuration, by proxy, ‘per pro’, or more shortly ‘p.p.’ All of these expressions are derived from the Latin per procurationem…he can get someone else to write his name for him; but the one who does the writing should add the letters ‘p.p.’ to show that it is done by proxy, followed by the initials so as to indicate who he is”.
Consideration also turned to Justice Cullitty’s decision in Banton v Banton which states that “…[a]n attorney for a donor who has mental capacity to deal with property is merely an agent notwithstanding the fact that that the power may be conferred in general terms…[a]s an agent, such an attorney owes fiduciary duties to the donor but these are pale in comparison with those of an attorney holding a continuing power of attorney when the donor has lost capacity to manage property”.
Justice Pierce held that given the attorney advised the insurer that he changed the policy designation as agent for the owner by procuration, the amended beneficiary designation was deemed valid.