October 2012

No indemnity for the innocent beneficiaries

By Frédéric Savard-Scott, Marie-Ève Henrichon

Sadly, family tragedies have made headlines in recent years. But how are life insurance policies handled in such cases? This is the issue that Judge Gatien Fournier of the Court of Québec had to decide on March 2, 2012, in Chamouri v. Financière Manuvie (2012 QCCQ 4638).

On May 23, 2006, a mother of three was killed by her husband, who then took his own life. The coroner's report confirmed the circumstances surrounding their deaths. In January 2007, the couple's children sought indemnities from Financière Manuvie for their parents' life insurance plans. The insurance company accepted the claim for the father's policy but cancelled the mother's under section 2443 of the Civil Code of Québec (CCQ), which stipulates: "An attempt on the life of the insured by the policyholder entails, by operation of law, cancellation of the insurance and payment of the surrender value."

As beneficiaries, the children were seeking $50 000 from Financière Manuvie under their mother's policy. Financière Manuvie denied owing the amount since the father, who was also the policyholder and beneficiary of the policy, was responsible for the woman's death, giving the corporation the right to cancel the policy.

At trial, the plaintiffs first argued that it was impossible to establish the order in which the parents died and that it should therefore be presumed that the mother had survived longer than her husband under CCQ section 2448. The court rejected the argument in light of the clear conclusions of the coroner's report, adding that the provision did not exclude the application of CCQ section 2443. Also, Judge Fournier did not uphold the plaintiffs' claim that the beneficiaries were innocent and should be protected against the consequences of a criminal act for which they were not responsible. The judge was rather of the opinion that if such were the legislator's intent, provisions would have been outlined. CCQ section 2443 is clear and by no means open to interpretation.

In sum, in light of the circumstances and unequivocal terms of CCQ section 2443, the insurance policy was cancelled and no indemnity was paid out to the beneficiaries.