A mother and father were working through a separation which resulted in a court order requiring the father to name the mother as a the irrevocable beneficiary of his life insurance policy. The order specifically said,

“The Respondent will arrange for an insurance policy on his life with a face value of Two Hundred and Eighty Thousand Dollars ($280,000). Within thirty (30) days of the date of this Order, the Respondent will contact his insurer and make arrangements to change the existing beneficiary designations to “irrevocable” beneficiary designations in favour of the Applicant ‘in trust for the children’ (if allowed by the insurer). He will pay the insurance premiums required to maintain any life insurance policies and he will maintain the Applicant as the irrevocable beneficiary of each while he has an obligation to contribute to any of the children’s support. When all of the Respondent’s support obligations to the children end, he may name any person or his estate as the beneficiary of each life insurance policy. If required by his insurance company, the Applicant will consent in writing to the Respondent changing the beneficiary designations on his policy or policies at the applicable time.”

The order also imposed the same obligation on the mother.

The father, who has his life insurance with a Canadian bank, attempted to designate the mother as an irrevocable trustee but was told by the bank that they do not allow such a designation on their insurance policies.

Motion to hold the father in contempt

The mother filed a motion to find the husband in contempt of court after failing to follow the order. Her position was that the father “is in breach of the Order because he has not irrevocably designated her as the trustee for the children under his policy.” She pointed to the section of the separation order imposing the obligation on the father, and said the father had not acted in good faith to take reasonable steps to comply with it. She argued he should have shopped for insurance from other companies in order to find one that would allow him to follow the order.

The husband’s position is that he complied with the order by requesting for the mother to be designated the irrevocable trustee, and that it would have been done had his bank allowed it.

What does the law say?

The courts stated that in order for someone to be found in contempt, it must be established that:

  1. The order alleged to have been breached states clearly and unequivocally what should or should not be done;
  2. the alleged contemnor had actual knowledge of the order’s terms; and
  3. the alleged contemnor intentionally did the act the order prohibited or intentionally failed to do the act the order required.

The moving party, in this case the mother, needs to satisfy all three parts of the test. Even if all parts of the test are satisfied, judges retain an overriding discretion to decline to make a contempt finding “where it would be unjust to do so, such as where the alleged contemnor has acted in good faith to take reasonable steps to comply with the relevant court order.”

Analysis

The court found the father to not be in breach of the order. The order did not require the father to clearly and unequivocally make the mother an irrevocable trustee. Rather, it expressly states that the obligation only exists if it is allowed by the insurer. In this case, the insurer did not allow it. While the mother argued this was contrary to the intention of the parties. However, the court pointed out that if it was the intention of the parties, it should have been stated as such in the order. The court also disagreed with the mother’s position that the father be made to shop for insurance that does allow the designation to be made, again, because the order did not impose such a requirement. The order imposes no obligations for further actions to be taken by the father if his insurer denies his request – whether by asking them to do so as per the terms of the order, or by finding a new insurer.

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