



COURT OF APPEAL FOR ONTARIO

CITATION: McTavish v. Reed, 2021 ONCA 885

DATE: 20211214

DOCKET: C68992

Fairburn A.C.J.O, Roberts J.A. and
    Van Melle J. (
ad hoc
)

BETWEEN

Crystal McTavish, Tracy Ardis
    and Janice Ardis,
as Trustees for the Estate of Walter Ardis

Applicants (Respondents)

and

Susan Reed, as Trustee for the Estate of Margaret
    Ardis

Respondent (Appellant)

David M. Sundin, for the appellant

Douglas A. Sulman, for the respondent

Heard: November 9, 2021 by
    video conference

On appeal
    from the order of Justice Maria V. Carroccia of the Superior Court of Justice
    dated December 15, 2020, with reasons at 2020 ONSC 7795.

REASONS FOR DECISION

Overview

[1]

The appellant appeals the order that insurance
    proceeds in the amount of $314,237.50 be paid out of court to the respondents
    as Estate Trustees for Walter Ardis. She submits that the application judge
    erred in two ways: (1) in failing to adjourn the respondents application to be
    heard at the same time as the appellants application contesting the validity
    of a subsequent will of Walter Ardis, and (2) in her determination of insurable
    interest under an insurance contract.

Factual Background

[2]

Walter and Margaret Ardis were married for 27
    years. They owned a house together as joint tenants. They were close to his
    son, Trevor Ardis, and her daughter, Susan Reed, who were beneficiaries under Mrs.
    Ardiss will and purportedly under Mr. Ardiss mirror will made in 2012. Toward
    the end of his life, Mr. Ardis suffered from severe dementia, paranoia, and
    hallucinations, which resulted in him killing his wife and setting fire to their
    house on March 24, 2016. On July 31, 2017, Mr. Ardis was found not criminally
    responsible on account of mental disorder (NCRMD) in the death of his wife.
    Pursuant to s. 672.54(c) of the
Criminal Code
, R.S.C., 1985, c. C-46,
    the Ontario Review Board (ORB) ordered Mr. Ardis to be detained in custody in
    a psychiatric hospital. He remained there until his death on March 19, 2018.

[3]

While detained in the psychiatric hospital, Mr.
    Ardis purportedly made a new will in which it is said that he removed the
    appellant in her personal capacity as a beneficiary and named as Estate
    Trustees three of Mr. Ardiss children from whom he had been estranged for many
    years until after his NCRMD designation. We say purportedly because that will
    does not form part of the record in this case. While the appellant has made
    repeated requests to see the will purportedly made while Mr. Ardis was detained
    in the psychiatric hospital, the respondents have not provided a copy to her.

[4]

On March 1, 2018, one of the respondents,
    Crystal McTavish, as power of attorney for Mr. Ardis, submitted to the insurer a
    proof of loss claim arising out of the fire damage to the house and its contents.
    While there exists a public policy rule that a person who kills another should
    not profit from that crime, there are some exceptions to the rule, including
    where the killing arises out of a mental disorder:
Dhingra v. Dhingra
,
    2012 ONCA 261, 109 O.R. (3d) 641,

at para. 22. Therefore, the appellant
    does not dispute that a person found NCRMD is not prevented from taking under
    an insurance policy or by right of survivorship. The question on appeal is
    whether the Estate of Mrs. Ardis was also entitled to take under the policy.

The Litigation

[5]

On March 9, 2018, an action was commenced in Mr.
    Ardiss name, without a litigation guardian, against the insurer for payment of
    the insurance proceeds for the fire damage caused to the house and its
    contents. Following Mr. Ardiss death, an order to continue the action in the
    names of the respondents was obtained. On June 7, 2019, in settlement of the
    action, the insurer agreed to pay the amount of $314,237.50 into court. The
    settlement funds were broken down as follows: $186,400 for the building;
    $114,900 for contents; and $12,937.50 for demolition costs. The appellant was
    named as a respondent on Verbeem J.s order, dated August 13, 2019, that the
    funds be paid into court. On February 3, 2020, the respondents commenced an
    application to have the funds paid to them out of court.

[6]

On March 16, 2020, just as the province of
    Ontario was locking down because of the pandemic, the appellant commenced an
    application in Windsor, Ontario as Estate Trustee of Margaret Ardis for directions
    on whether Mr. Ardis was without the requisite capacity to make his subsequent
    will (the will application). If the appellant succeeds on the will application,
    the 2012 will shall remain the last will and testament of Mr. Ardis, which
    would leave the appellant in her personal capacity as a beneficiary under both
    Mrs. and Mr. Ardiss wills.

[7]

Due to complications caused by the physical
    closing of the court offices during the pandemic, the appellant asserts she was
    not able to serve the application or transfer it to Chatham, Ontario in time to
    be heard with the respondents application, which was heard on August 18, 2020.
    Therefore, the appellant requested an adjournment of the respondents
    application requesting the release of the insurance funds to the Estate of
    Walter Ardis. Included in the appellants responding application record was a
    copy of the will application that had not yet been successfully transferred to
    Chatham. The appellant argued that both applications should be heard together.

[8]

The application judge dismissed the
    appellants request that the respondents application be adjourned to be heard
    with the will application on the basis that the will application had not yet been
    served. The application judge also noted that there was no formal application
    filed to join the applications, nor had the appellant taken any other steps to
    bring such an application before the court. Therefore, the application judge
    dismissed the appellants adjournment request and went on to decide the
    application brought by the respondents for the release of the insurance funds
    held in court to them.

[9]

The application judge rejected the appellants
    submission that the Estate of Mrs. Ardis was entitled to a 50 percent share of
    the insurance proceeds held in court because any interest that Mrs. Ardis may
    have had in the parties home passed on her death to the joint tenant, Mr.
    Ardis. She allowed the respondents application and ordered that the funds held
    in court be paid to the Estate of Mr. Ardis.

Analysis

[10]

We agree that the application judge erred in refusing the
    requested adjournment and in ordering that the insurance proceeds be paid out
    of court to the respondents.

[11]

First, by refusing the adjournment and determining the
    respondents application for the release of the insurance funds to them as the
    Estate Trustees, the application judge decided the respondents application
    under a will that remained in dispute. In our view, the application judge erred
    in doing so.

[12]

The appellants request for an adjournment of the
    respondents application so that it could be heard together with the
    appellants will application was not only reasonable, but to proceed otherwise
    was unreasonable in these circumstances. Normally, decisions regarding
    adjournment requests attract a high degree of deference. In this case, though,
    the application judges approach to resolving the adjournment request was
    overly technical and not in keeping with the general principles set out in r.
    1.04 of the
Rules of Civil Procedure
,
R.R.O. 1990, Reg. 194. Those principles call for the just, most expeditious
    and least expensive determination of applications, proportionate to the
    importance and complexity of the issues, and to the amount involved in the
    proceedings: see also
Finlay v. Paassen
, 2010 ONCA 204, 101 O.R. (3d)
    390, at para. 14;
Wood v. Farr Ford Ltd.
, 2008 CanLII 53848 (Ont.
    S.C.), at para. 23.

[13]

The will application raises very serious issues regarding Mr.
    Ardiss capacity to make a new will in light of the fact that, at that time, he
    had been found NCRMD and was the subject of an ORB detention order. If the appellants
    will application were to be successful, it would render the respondents
    application to receive the insurance proceeds entirely moot because the
    appellant in her personal capacity and Trevor Ardis, who are the beneficiaries
    under Mrs. Ardiss will, would be the beneficiaries under Mr. Ardiss first
    will. In these circumstances, the application judge should have granted the
    adjournment request so that the applications could be heard together.

[14]

Second, even if the will application fails one day and the
    respondents in their personal capacities are the rightful beneficiaries of the
    Estate of Mr. Ardis, the application judge erred in how she approached the
    issue involving who should receive the insurance proceeds currently held in
    court. Specifically, the application judge erred when arriving at the
    conclusion that, following Mrs. Ardiss death, only Mr. Ardis had an interest in
    the insurance proceeds because he had sole legal ownership of the house insured
    under the policy by right of survivorship.

[15]

The right of survivorship applies only to interests in
    property held in a joint tenancy:
Hansen Estate v. Hansen
, 2012 ONCA
    112, 109 O.R. (3d) 241, at paras. 30-31. Section 2(1) of the
Estate
    Administration Act
, R.S.O. 1990, c. E. 22, provides that real or personal
    property, vested in a person without a right in any other person to take by
    survivorship, devolves to the persons personal representative on his/her death
    to be administered as part of the estate.

[16]

Here, the application judge failed to consider whether Mrs.
    Ardis (and following her death, her Estate), had an interest in the insurance
    proceeds in issue, as opposed to an interest in the house itself that was held
    in a joint tenancy and subject to a right of survivorship on Mrs. Ardiss
    death. As a result, she failed to determine two material issues that had to be
    resolved before the insurance proceeds held in court could be disbursed. First,
    she failed to resolve the timing of Mrs. Ardiss death relative to the fire,
    which may give rise to an interest in the insurance proceeds. Second, she
    failed to appreciate that, even if the Estate of Mrs. Ardis did not have an
    interest in the insurance proceeds related to the home, the Estate may nevertheless
    have an interest in the insurance proceeds related to its contents.

[17]

First, regarding the timing issue, the application judge
    erred in failing to determine when Mrs. Ardis died. The determination of this
    issue may affect whether Mrs. Ardis or her Estate has an interest in the
    insurance proceeds related to the house that was destroyed in the fire. If Mrs.
    Ardis is found to have died after the partial or complete destruction of the
    home, there is a triable issue as to whether she had an interest in the
    insurance proceeds that arose before her death.

[18]

Second, the application judge erred by focusing solely on
    the competing interests in the parties house and related insurance proceeds.
    As a result, she failed to consider the houses contents to which the right of
    survivorship may not have attached. There is a triable issue, which the
    application judge did not address, as to whether the Estate of Mrs. Ardis has an
    interest in the houses contents and therefore an interest in the $114,900 of insurance
    proceeds that were designated and paid in the settlement for the contents.

[19]

It was incumbent on the application judge to address the
    triable issues that we have just reviewed before releasing the insurance funds
    from court. She erred in failing to do so. The respondents application is
    remitted for hearing with the will application.

Disposition

[20]

The appeal is allowed, and the order is set aside.

[21]

While nothing precludes the parties from settling this
    matter, should it proceed to litigation, the will application and the respondents
    application shall be heard together. Before releasing the insurance proceeds to
    anyone, the court must first resolve which will is operative, the answer to
    which shall inform who are the rightful beneficiaries.

[22]

The insurance proceeds shall remain in court pending the
    disposition of the applications or further order.

[23]

As agreed, the appellant is entitled to costs of the appeal
    in the amount of $7,500, inclusive of disbursements and applicable taxes. The
    disposition of the costs below is reserved to the judge disposing of the
    applications.

Fairburn
    A.C.J.O.

L.B.
    Roberts J.A.

Van
    Melle, J. (ad hoc)


