Bassi v. Bassi

To change the beneficiary of a life insurance policy in British Columbia, how clearly do you need to identify the insurance policy? This was considered recently by the British Columbia Court of Appeal in Bassi v. Bassi, 2013 BCCA 422.

Buta Singh Bassi had named his wife and his brother Lakhwinder Singh Bassi as the beneficiaries of a life insurance policy, with each to receive one-half of the insurance proceeds.

Later, when he made his last will on April 16, 2007, Buta Bassi included the following:

d) I DISINHERIT my brother Lakhwinder Singh Bassi from any and all of my beneficiaries list (if any) That I might not be aware of. There were financial loans made to Lakhwinder Bassi over $50,000, (also includes 2 years of Mortgage Payments which he has not paid while still living in the same house). He promised to pay back upon sale of our Joint house in Vancouver, BC (Sep 2005) Lakhwinder has caused me much grief and unhappiness. My Brother would not take my phone calls because he knows I will ask him for my money. He’s not to be involved whatsoever with my family.

After Buta Bassi’s death, the insurer paid half of the proceeds to his brother in accordance with the earlier designation. Buta Bassi successfully sued in the Supreme Court of British Columbia for an order that Lakhwinder Bassi pay her the proceeds he received.

Mr. Justice Hinkson in the Court of Appeal set out the provisions of the Insurance Act:

[37]         The relevant sections of the Insurance Act were set out by the chambers judge at paras. 107–109 of his reasons:

[107]    Subsection 48(1) of the Insurance Act, R.S.B.C. 1996, c. 226 [Act] in force at the time provided:

(1) An insured may in a contract or by a declaration designate the insured, the insured’s personal representative or a beneficiary to receive insurance money.

[108]    Section 48(2) of the Act provided:

(2) Subject to section 49, the insured may alter or revoke the designation by a declaration.

[109]    The definition of “declaration” in the Act read:
            29 In this Part:

...
“declaration” means an instrument signed by the insured
(a) with respect to which an endorsement is made on the policy,
(b) that identifies the contract, or
(c) that describes the insurance or insurance fund or a part of it,
in which the insured designates, or alters or revokes the designation of, the insured, the insured’s personal representative or a beneficiary as one to whom or for whose benefit insurance money is to be payable.

(These provisions are still in the Act with some modifications but section 29 is now section 37, and sections 48(1) and (2) and 49 are now in sections 59 and 60.)

Mr. Justice Hinkson considered a number of precedents in British Columbia and in other Provinces. In Hurzin v. Great West Life Assurance Co. (1988), 23 B.C.L.R. (2d) 252, a general revocation clause in a will under which the will-maker said:

I HEREBY REVOKE all former Wills and testamentary dispositions at any time heretofore made by me, and declare this to be my Last Will and Testament

was not a declaration revoking previous life insurance policy beneficiary designation.

On the other hand, in a Manitoba case,  Canada Life Assurance Co. v. Couture Estate, [1975] 1 W.W.R. 191 (M.B.Q.B.), the following clause was found to be sufficient to revoke an insurance designation and make the proceeds payable to the estate of the deceased owner of the policy:

ALL THE REST AND RESIDUE of my property, both real and personal, of whatsoever kind and wheresoever situate, including any property over which I may have any power of appointment, and including all policies of insurance on my life, I GIVE, DEVISE AND BEQUEATH to the HOLY REDEEMER CATHOLIC CHURCH of North Kildonan, in Manitoba [emphasis in C.A. reasons]. 

Mr. Justice Hinkson held that without any reference to insurance policies the clause in Bassi did not sufficiently identify the insurance policy to revoke the designation of Lakhwinder Bassi. He wrote:

[55]         I conclude that Hurzin correctly decided that if there is to be a revocation of an insurance designation, it “must be in the clearest possible terms or it will be of no effect” and “must be precise enough to leave no doubt that a revocation of the insurance designation is intended.” 

 [56]         In British Columbia, s. 29 of the Insurance Act defines the term “declaration” as set out above. To effectively alter the designation of a beneficiary to whom or for whose benefit insurance money is to be payable, the insured must sign an instrument:

(a) with respect to which an endorsement is made on the policy,
(b) that identifies the contract, or
(c) that describes the insurance or insurance fund or a part of it … 

[57]         The deceased’s last will and testament identifies neither an endorsement on his insurance policy with the Clarica Life Insurance Company, his insurance contract with that insurer, nor any insurance fund or part thereof. It therefore fails to comply with the requirements of s. 48(2) of the Insurance Act. The chambers judge thus erred in finding that the deceased’s last will and testament was an effective revocation of the designation of the appellant as a beneficiary of one half of the insurance coverage.