A party that is not advancing a claim for insurance money cannot be an adverse party for the purposes of litigation under section 176 of the Insurance Act, RSNB 1973, c.I-12

Insurance law – Accident and sickness insurance – Group insurance – Interpretation of policy – Accidental death benefits – Beneficiaries – Entitlements to benefits – Policies and insurance contracts – Statutory provisions – Practice and procedure – Parties to an action

Blue Cross Life Insurance Company of Canada v. Crawford, [2015] N.B.J. No. 147, 2015 NBQB 105, New Brunswick Court of Queen’s Bench, May 27, 2015, R.T. French J.

The New Brunswick Court of Queen’s Bench was asked to determine issues relating to entitlement to an accidental death benefit. The fiancée of the deceased insured was the named beneficiary under the group insurance policy under which the funds were payable. The mother of the insured disputed the fiancée’s entitlement to the Accidental Death Benefit. The mother was the administrator of the deceased’s Estate and as the administrator she initially took the position that the Estate was entitled to the funds, claiming they were “vested” in the Estate.

The mother had previously disputed the validity of a holograph will that had named the fiancée as the executrix and had granted the fiancée 50% of the estate. Subsequently, the parties had come to what appeared to be a global resolution of all issues, and a Consent Order was signed by a judge of the Queen’s Bench which provided that the mother would be the administrator of the Estate and the fiancée would have a right to establish her claim for the Accidental Death Benefit. The mother subsequently claimed that the estate was not a party to the Consent Order and notified the insurer that the Estate was disputing the fiancée’s entitlement to the Accidental Death Benefit. The insurer commenced the proceedings by filing an application.

At the hearing of the application, the mother acknowledged that neither she personally nor the Estate were claiming entitlement to the Accidental Death Benefit. She admitted that the Estate was seeking a trial to dispute the fiancée’s entitlement to the funds with the expectation that the result could be that the benefits lapse.

As a result, the Court held that the Estate did not have an adverse claim to the funds in the possession of the insurer within the meaning or contemplation of either section 176 of the Insurance Act or Rule 43 of the Rules of Court. Furthermore, the mother failed to substantiate her position that the fiancée was not entitled to the Accidental Death Benefit. Accordingly, the Court held that there was no basis upon which a “trial of the issues in dispute” should be ordered. The insurer was directed to pay the proceeds of the Accidental Death Benefits to the fiancée following a further hearing to determine the outstanding issues of the fiancée’s claim for interest and costs.

This case was digested by JoAnne Barnum and edited by David W. Pilley of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact them directly at jbarnum@harpergrey.com or dpilley@harpergrey.com or review their biographies at http://www.harpergrey.com.

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