Estate of Frank Nourse Youngman v. Minister of Finance of British Columbia, [1970] CTC 295

VERCHERE, J.:—On this application the executors of the estate of Frank Nourse Youngman, deceased, appeal summarily, pursuant to Section 44 of the Succession Duty Act, from the decision of the Honourable the Minister of Finance affirming his prior determination of the gross value of the deceased’s British Columbia estate and the succession duties accordingly payable. They challenge the legality of the Minister’s inclusion in that gross value of the proceeds of seven policies of insurance on the life of the deceased and assert that he erred in concluding that those proceeds properly constituted ‘‘property situate within the Province” within the meaning of the words as used in Sections 6 and 9 of the Succession Duty Act.

In respect of one policy, namely, Northwestern Mutual Life Insurance Company policy number 1036452, counsel agreed that its proceeds had wrongly been treated as property within British Columbia. But as regards the others, namely, New York Life Insurance Company policy number 8064616 dated October 21, 1921 and Travelers Insurance Company policies numbered 1076929 dated December 21, 1924, 1298753, 1298754 and 1298755 dated February 1, 1927 and 1656651 dated September 10, 1931, counsel for the Minister contended that because those companies had at all relevant times been licensed and authorized to transact insurance in the Province, their proceeds had been properly treated. Counsel for the executors, on the other hand, argued that because the moneys payable under the policies were recoverable only outside the Province, those moneys were not properly classifiable as property within British Columbia.

The evidence, including Mrs. Youngman’s affidavit, established that the deceased resided in British Columbia from March 1927 until 1932 and from 1954 until his death here in 1968; and that not long after his death his will was duly admitted to probate in this Court and administration of his estate in it granted to his executors who had, in their affidavit of value and relationship as filed, properly included the above- mentioned policies in the assets of the estate. It was also established that although both of the last-mentioned insurance companies have since 1913 been licensed and therefore authorized to transact insurance in the Province {Insurance Act, Section 38), their policies were executed by them at and provide for payment of the insurance moneys at their respective home offices, both of which are clearly and admittedly outside the Province.

It seems clear and I take it to be the law that debts and other choses in action are generally to be looked upon as situate in the country where they are properly recoverable or can be enforced’’ and that because payment of a debt (other than a judgment or specialty debt or one incorporated in a security transferable by delivery) can normally only be enforced in the country where the debtor resides its notional situs in that country. See Dicey & Morris on the Conflict of Laws (8th ed.) at pp. 509-510. And further, that where the debtor resides or carries on business in more than one place and is in both places subject to the jurisdiction of the court, then the contract may be looked at to determine what is to be the place in which and at which the debt would be recoverable. See New York Life Insurance Co. v. Public Trustee, [1924] 2 Ch. 101, and in particular the words of Pollock, M.R. at page 111. And still further, that a provincial legislature may; by requiring in legislation not directed to the end of taxation that a debt be paid within the Province, make such a debt liable to taxation as property within the Province. See Re Lawton, [1945] 4 D.L.R. 8, where, on the application of Sections 121 and 163(2) of the Manitoba Insurance Act, specifying where a contract of life insurance is deemed to be made and requiring the insurance moneys to be paid in Manitoba when the insured dies domiciled therein, the situs of such a debt was fixed in the Province and thus became liable for taxation.

By Section 149 of the Insurance Act it is provided as follows:

149. Regardless of the place where a contract was made, an action on it may be brought in a Court by a resident of the Province if the insurer was authorized to transact insurance in the Province at the time the contract was made or at the time the action is brought.

Accordingly, in my opinion, the real issue here is whether that section is applicable to the insurance policies already mentioned. If it applies, an action on them for the recovery of the moneys payable thereunder could be brought here because clearly both insurers were authorized to transact insurance in the Province at the time the contracts were made; if it does not apply then the insurer’s residence and the terms of the policies would govern and since by those terms and the nature of that residence and insurance moneys are recoverable only outside the Province, their situs would be outside the Province.

The issue is governed by the circumstances and the effect of Section 115(1) and Section 9 of the Insurance Act. They read as follows :

115. (1) Notwithstanding any agreement, condition, or stipulation to the contrary, this Part applies to a contract made in the Province on or after the day on which this section comes into force, and, subject to subsections (2) and (3), applies to a contract made in the Province before that day. (Subsections (2) and (3) are not relevant here.)

9, Every contract insuring a person domiciled or resident in the Province on or after the day on which this section comes into force, property or any interest in property situate within the Province, shall be demed to be made in the Province and shall be construed accordingly.

On the evidence of the deceased’s residence and domicile and of the evidence afforded by the policies themselves, I find that none of them were made within the Province and further, that none of them can, on the application of Section 9, supra, properly be deemed to have been made in the Province, excepting Travelers Insurance Company policy number 1656651. When that last-mentioned policy was made on September 10, 1931, the deceased was residing in British Columbia and it therefore would not seem to be of any moment that he may not also have been domiciled here.

In the result, the policy last above-mentioned is one, in my opinion, which by Section 9 must be deemed to be made in the Province and accordingly a contract to which Part IV of the insurance Act, which includes Section 149, is applicable. That being the case, and as at least one of the executors is a resident of the Province and all of them were appointed by this Court, and as the insurer was authorized to transact insurance in the Province when the contract was made, an action on it might be brought here to recover the proceeds. They were therefore properly considered as property situate within the Province.

By the same token, however, the remaining five policies cannot be considered as policies to which Section 9 applies. The deceased was neither domiciled nor resident in the Province at the date when any of them was made and therefore, by the provisions of Section 115(1), Part IV of the Insurance Act, and hence Section 149, is not applicable to them. In the result, the moneys that became payable under them on the death of the deceased were recoverable only in the country where the insurers have their respective home offices and, that being so, they are not, as I understand the law, capable of properly being considered to constitute property situate within the Province.

Accordingly, I hold as follows:

1. The proceeds of Travelers Insurance Company policy number 1656651 were properly classified as property situate within the Province.

2. The proceeds of the other five Travelers Insurance policies and of the Northwestern Mutual Life Insurance policy above-mentioned are not property situate within the Province nor properly to be classified as such.

There will be an order that the assessment herein be modified accordingly.

Costs are within my discretion and may be given in favour of or against the Crown; see Succession Duty Act, Section 44(7). Here I think they should follow the events and as each policy of insurance, regardless of its amount, had to be examined, the applicants will be entitled to 6/7ths of their costs as taxed and the Crown will be entitled to 1/7th of its costs as taxed, to be set off, with judgment for the balance then remaining.