This month, the Ontario Court of Appeal released its decision in Moore v. Sweet, 2017 ONCA 182. The case discusses several issues, but its discussion of unjust enrichment carries the day. In particular, the decision hinges on whether an irrevocable beneficiary designation executed subsequent to an agreement to designate a different beneficiary of the policy constitutes a juristic reason for the enrichment of the irrevocably designated beneficiary.
The essential facts of the case are as follows. Mr. Moore suffered from substance abuse problems. This led to the financial ruin of his family and to him and his wife at the time, Mrs. Moore, declaring bankruptcy. In an effort to piece back together the family’s financial affairs, he and his wife agreed that Mr. Moore would purchase a life insurance policy on his life for $250,000 and designate Mrs. Moore as beneficiary. The purpose of the policy was to provide some security for Mrs. Moore and his children should he pass away. Sometime later, the Moore’s separated and later divorced. During their 20-year marriage premiums on the policy were paid from a joint account. Following separation from 1999 to Mr. Moore’s death in 2013, Mrs. Moore paid the premiums. The application judge found that the premiums were paid by Mrs. Moore pursuant to an oral agreement made in 2000 between Mr. Moore and Mrs. Moore, whereby Mr. Moore agreed that he would designate Mrs. Moore as the beneficiary of the policy and she would be entitled to the proceeds of the policy. This finding was not contested on appeal.
Although Mrs. Moore was the original beneficiary of the policy, sometime following separation Mr. Moore designated his common-law wife, Ms. Sweet, as the irrevocable beneficiary of the policy. Ms. Sweet testified that the purpose of the switch was to ensure that her basic needs would be provided for following Mr. Moore’s death, including securing her ability to continue to live in the rental apartment where she had resided for the past 40 years. On his death, the proceeds went to Ms. Sweet and Mrs. Moore began an application arguing that a constructive trust in her favour applied to the proceeds on the basis of unjust enrichment, or failing that, on the basis of good conscience. Mrs. Moore succeeded in the lower court, where the application judge found that she had a successful claim in unjust enrichment and also in equitable assignment, which had not been pleaded. Ms. Sweet appealed and was successful.
The majority decision for the Court of Appeal notes that this is not a case where the equities are weighted heavily in favour of one party over another. Although Mrs. Moore paid the premiums on the policy, they note, the Court was provided with little information on her current financial situation apart from the fact that she currently still resides in the former matrimonial home (and, I would add, was driven into bankruptcy in the past by her ex-husband). Ms. Sweet, on the other hand, demonstrated clear financial need and cared for the deceased in the last 13 years of his life. Respectfully, I believe that this analysis conflates need with fairness, the value that should drive an equity analysis.
Ultimately, the majority of the Court of Appeal overturns equitable assignment as a ground for awarding the proceeds to Mrs. Moore because it was not a ground argued in the initial application. The claim in unjust enrichment fails because the irrevocable beneficiary designation is considered by them to be a juristic reason for the enrichment of Mrs. Sweet. They go on to award Mrs. Moore $7,000, the amount she paid in premiums, but it’s not clear what their basis is for doing so. If the unjust enrichment claim fails because there exists a juristic reason for the enrichment, then it is difficult to see how it could partially succeed.
The dissenting opinion by Justice Lauwers acknowledges, following Richardson Estate, that an insurance beneficiary designation may constitute a juristic reason for enrichment. However, it notes that, due to the oral agreement between Mr. Moore and Mrs. Moore, the beneficiary designation was no longer Mr. Moore’s to make. Because the designation was invalidly made, it cannot constitute a juristic reason for enrichment. Several cases following this line of reasoning are discussed in detail.
There is a lot to this decision! Even at over 100 pages, it is well worth taking the time to read. Other issues discussed in some detail include the doctrine of equitable assignment, whether a “good conscience” constructive trust exists following the Supreme Court’s decision in Soulos and whether the restitutionary nature of an unjust enrichment remedy should limit recovery to the policy premiums paid by Mrs. Moore personally. Given the monetary values involved, this may be the final word on this case, but I hope not. In my opinion, it would be an excellent candidate for further appeal. The decision can be accessed here.