Almost a Sweet Deal: The Supreme Court of Canada’s Decision in Moore v Sweet

When Mr. Lawrence Moore died, he left behind a messy legal issue for his surviving spouse and ex-wife to deal with: Who gets the life insurance proceeds? This legal dispute made its way to the Supreme Court of Canada, which took this opportunity to review the law regarding unjust enrichment in its decision in Moore v Sweet, 2018 SCC 52.

When Ms. Michelle Moore and Mr. Moore were married, they purchased a life insurance policy on Mr. Moore’s life, which was paid through their joint bank account. After they separated, they reached an oral agreement whereby Ms. Moore would continue to pay the policy premiums and her ex-husband would keep her as the sole beneficiary under the policy. Although Ms. Moore upheld her end of the bargain, Mr. Moore later changed the beneficiary under the policy irrevocably to his new common law spouse, Ms. Lisa Sweet. It was only after Mr. Moore died that Ms. Moore discovered that she was no longer the beneficiary under the policy.

The majority of the Court sided with Ms. Moore in finding that she was entitled to the $250,000 pay-out under the policy. In arriving at this conclusion, the Court confirmed the following principles underlying unjust enrichment and the remedy of constructive trust:

  1. A proper equitable basis must exist before the Court will deem property to be held in a constructive trust.
  2. The Plaintiff must establish that a monetary award is insufficient and that there is a link between his/her contributions and the property.
  3. The Plaintiff must show that the Defendant was enriched, that the Plaintiff suffered a corresponding deprivation, and that the Defendant’s enrichment and the Plaintiff’s deprivation occurred in the absence of a juristic reason.
  4. The Plaintiff must demonstrate that the loss corresponds to the Defendant’s gain, such that there is a causal connection between the two.

The Court also clarified that the concept of loss suffered by the Plaintiff may include a benefit that was never in the Plaintiff’s possession. As a result, the Court held that Ms. Moore’s deprivation was not limited to her out of pocket expenditures for the premiums paid; it also included her right to claim the $250,000 in insurance proceeds.

The Court held that Ms. Sweet’s status as an irrevocable beneficiary under Ontario’s Insurance Act was not a juristic reason justifying Ms. Moore’s deprivation of the insurance proceeds. The Court reviewed the two stages of this analysis:

  1. To prove a lack of a juristic reason, the Plaintiff must demonstrate that the Defendant’s retention of the benefit cannot be justified on the basis of any established categories of juristic reasons. Recognized categories include contract, disposition of law, or any other common law or equitable statutory obligations.
  2. If the Plaintiff can demonstrate that none of the established categories applies, the burden of proof shifts to the Defendant to show why the enrichment should be retained. The parties’ reasonable expectations and public policy interests must be considered at this stage.

The Court rejected Ms. Sweet’s argument that her status as an irrevocable beneficiary under the Insurance Act constituted a juristic reason to deny relief to Ms. Moore. Although the Insurance Act required the insurance company to pay Ms. Sweet, it did not give her the right to keep the proceeds as against Ms. Moore or anyone else with contractual or equitable rights in the proceeds.

The Court further held that Ms. Sweet was unable to rebut Ms. Moore’s prima facie case by establishing that there was some residual reason to deny recovery. The Court determined that it would be bad policy to ignore the fact that Ms. Moore was effectively tricked by her ex-husband into paying premiums for a policy for the benefit of someone else, and that her premium payments essentially kept the policy alive. The majority of the Court therefore imposed a constructive trust to the full extent of the insurance proceeds in Ms. Moore’s favour.

About the Author:

Katherine is an associate practicing in the Regina office.

About McKercher LLP:

McKercher LLP is one of Saskatchewan’s oldest and largest law firms, with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have led to our firm ranking in the top 5 in Saskatchewan by Canadian Lawyer magazine (2017). Integrity, experience and capacity provide innovative solutions for our clients’ diverse legal issues and complex business transactions.

This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances.  Counsel should be consulted concerning your own situation and any specific legal questions you may have.