The Supreme Court of Canada rendered the Moore v Sweet decision on November 23, 2018.1 The Hon. Madam Justice Côté delivered the judgement, with Wagner C.J., Abella, Moldaver, Karakatsanis, Brown, and Martin JJ. concurring.
Facts
The circumstances that gave rise to the Moore decision are unfortunate. In 1985, Lawrence Moore purchased a life insurance policy, making his wife, Michelle Moore, his designated beneficiary. The couple entered into an oral agreement with respect to the policy upon their separation in 1999. Michelle would continue to pay the premiums to maintain the policy, and would be entitled to the proceeds of the same upon Lawrence’s death.
After Lawrence began cohabiting with Risa Sweet, he designated Risa as the beneficiary under the terms of the policy. Of note was that Risa was designated as the irrevocable beneficiary of the policy, whereas Michelle had been a revocable beneficiary prior to the change in designation.
Michelle continued to pay the premiums on the policy, pursuant to the agreement she had made with Lawrence. In 2013, Lawrence died. Two weeks later, Michelle was informed that she was not, in fact, the designated beneficiary of the policy. The proceeds of the policy were paid into court pursuant to court order.
Procedural history
Wilton-Siegel J. of the Ontario Superior Court of Justice ruled that if Risa were to receive the proceeds of the policy, she would be unjustly enriched at the expense of Michelle.2 For this reason, Wilton-Siegel J. held that the proceeds of the policy were held in constructive trust in favour of Michelle. Risa appealed this decision.
At the Ontario Court of Appeal, Risa’s appeal was allowed and Wilton-Siegel J.’s decision was set aside.3 The court ordered that Michelle be paid the amount she had contributed towards the policy between the date of her agreement with Lawrence and his death (approximately $7,000). Risa was to receive the balance of the policy.
The majority’s decision
At the Supreme Court of Canada, Côté J. enumerates the issues in this case as follows:
- Has Michelle made out a claim in unjust enrichment by establishing:
- Risa’s enrichment and her own corresponding deprivation; and
- the absence of any juristic reason for Risa’s enrichment at her expense?
- If so, is a constructive trust the appropriate remedy?4
The analysis of the majority in the Moore decision begins with a discussion of the general principles surrounding unjust enrichment. Côté J. states that, “[b]roadly speaking, the doctrine of unjust enrichment applies when a defendant receives a benefit from a plaintiff in circumstances where it would be ‘against all conscience’ for him or her to retain that benefit.”5 Unjust enrichment can be considered in the context of a “principled framework.”6 If a plaintiff demonstrates that (a) the defendant was enriched; (b) that the plaintiff suffered a deprivation as a result; and (c) there is an absence of a juristic reason for the enrichment and subsequent deprivation, the plaintiff’s claim will succeed.7 Côté J. notes that, “[t]his principled approach to unjust enrichment is a flexible one that allows courts to identify circumstances where justice and fairness require one party to restore a benefit to another.”8
With respect to issue “A(1)”, Côté J. concludes that, [t]aking a straightforward economic approach to the enrichment and corresponding deprivation elements of the unjust enrichment framework, I am of the view that Michelle stands deprived of the right to receive the entirety of the policy proceeds (for a value of $250,000) and that the necessary correspondence exists between this deprivation and Risa’s gain.”9
After concluding that Michelle made out her claim for unjust enrichment, Côté J. turns to whether there was a “juristic reason” that would justify Risa’s retention of the benefit. Côté J. provides examples of “established” categories of juristic reasons: contracts, donative intent, disposition by law, and obligations arising out of statute, common law, or equity.10 If a plaintiff shows that no established category of juristic reason applies, the onus then falls upon the defendant to demonstrate why the plaintiff ought to be denied recovery.11 Côté J. notes that in examining whether a plaintiff ought to be denied recovery, the court should consider the reasonable expectations of the parties as well as public policy.12 According to Côté J., “[t]his two-stage approach to juristic reason was designed to strike a balance between the need for predictability and stability on the one hand, and the importance of applying the doctrine of unjust enrichment flexibly, and in a manner that reflects our evolving perception of justice, on the other.”13
In this case, there is much consideration as to whether Ontario’s Insurance Act14 gave rise to a juristic reason. Côté J. suggests that, “the authorities indicate that the court’s inquiry should focus not only on why the defendant received the benefit, but also on whether the statute gives the defendant the right to retain the benefit against a correspondingly deprived plaintiff – in this case, whether the Insurance Act extinguishes an unjust enrichment claim brought by a plaintiff at whose expense the named beneficiary was enriched” [footnotes omitted].15
Côté J. concludes that Michelle’s entitlement to the proceeds of the policy is not affected by the Insurance Act, and subsequently suggests that there is no established category of juristic reason that would bar Michelle from recovering the proceeds of the policy.16 Côté J.’s analysis then proceeds to the second stage, wherein the reasonable expectations of both Michelle and Risa are considered, as well as public policy concerns. In her analysis, Côté J. suggests that had Michelle neglected to uphold the terms of the agreement between herself and Lawrence (ie. paying the premiums), Risa’s entitlement to the proceeds of the policy would not have been possible. It can of course then be presumed that Michelle, by contributing to the policy, had a reasonable expectation that she would be entitled to receive the proceeds of the same. Côté J. notes further that it would be “bad policy” to “ignore the fact that Michelle was effectively tricked by Lawrence into paying the premiums of a policy for the benefit of some other person of his choosing.”17
With respect to issue “B”, Côté J. opines that it was not necessary to disturb the findings of the application judge with respect to his conclusion that Risa held the proceeds of the policy in constructive trust for Michelle. Côté J. concludes her decision by holding that the proceeds of the policy, with accrued interest, be paid out of court to Michelle.18
Conclusion
The Moore decision exemplifies how the doctrine of unjust enrichment can be flexibly applied so that an equitable result is achieved in circumstances where a just result might not otherwise occur. The Moore decision also suggests the importance of prudent estate planning, especially in circumstances where there has been a relationship breakdown. The commentary on the doctrine of unjust enrichment provided by Côté J. and the rest of the majority in this case will illuminate how this complex doctrine will operate in practice, and should also alert the public to exercise caution when organizing their affairs.
Prepared by Allison A. Curley, an associate with McLellan Herbert in Vancouver
End Notes
1. 2018 SCC 52 [Moore].
2. 2015 ONSC 3914.
3. 2017 ONCA 182.
4. Moore, supra note 1 at para 30.
5. Ibid at para 35.
6. Ibid at para 37.
7. Ibid, citing Pettkus v Becker, [1980] 2 SCR 834 at 848, Garland v Consumers’ Gas Company Ltd. (2001) 57 OR (3d) 127 (CA), and Kerr v Baranow, 2011 SCC 10).
8. Ibid at para 38.
9. Ibid at para 46.
10. Ibid at para 57.
11. Ibid at para 58.
12. Ibid.
13. Ibid at para 59.
14. RSO 1990, c I 8.
15. Moore v Sweet, supra note 1 at para 77.
16. Ibid at para 81.
17. Ibid at para 87.
18. Ibid at para 96.