Former Spouse Wins Right to Life Insurance Policy Proceeds Due to Unjust Enrichment


By Written on behalf of Campbell Bader LLP


The Supreme Court of Canada recently decided a case in which a legally married spouse disputed the right of a common law spouse to receive the proceeds of their husband’s life insurance policy.

The Facts

Mr. and Mrs. Moore were married in 1979 and had three children together. During their marriage, in 1985, Mr. Moore had purchased a term life insurance policy and designated Mrs. Moore as revocable beneficiary. After their separation in 1999, they entered into an oral agreement by which Mr. Moore would maintain the policy and Mrs. Moore would continue to be sole beneficiary. In exchange, she agreed to pay all of the policy’s premiums. This would have entitled her to receive the proceeds of the policy upon his death.

Mrs. Moore paid the premiums in accordance with the agreement, totalling $7,000. However, unbeknownst to her, Mr. Moore soon designated his new common law spouse, Ms. Sweet, as the irrevocable beneficiary of the policy. He changed this designation in 2000, when the common law couple began living together. When he passed away in 2013, according to his designation, the proceeds, which equalled $250,000, were payable to Ms. Sweet.

Mrs. Moore brought an application claiming entitlement to the policy proceeds. The application judge held that Ms. Sweet had been unjustly enriched at Mrs. Moore’s expense and impressed the proceeds with a constructive trust in Mrs. Moore’s favour. The Court of Appeal set aside the judgment.


The Supreme Court of Canada set out the issues as follows:

  1. Has Mrs. Moore made out a claim in unjust enrichment by establishing:

(a)   Ms. Sweet’s enrichment and her own corresponding deprivation; and

(b)   the absence of any juristic reason for Ms. Sweet’s enrichment at her expense?

  1.   If so, is a constructive trust the appropriate remedy?

The Law

 The court first explained that a “constructive trust is a vehicle of equity through which one person is required by operation of law – regardless of any intention – to hold certain property for the benefit of another […] it is understood primarily as a remedy, which may be imposed at a court’s discretion where good conscience so requires.” A proper equitable basis, such as a successful claim in unjust enrichment, must first be found to exist for a court to order the remedy.

The court turned to the issue of unjust enrichment. It explained that the doctrine applies when a defendant receives a benefit from a plaintiff in circumstances where it would be “against all conscience” for that person to retain the benefit. A plaintiff will succeed on the cause of action in unjust enrichment if they can show three elements:

(1) that the defendant was enriched;

(2) that the plaintiff suffered a corresponding deprivation; and

(3) that the defendant’s enrichment and the plaintiff’s corresponding deprivation occurred in the absence of a juristic reason.

The Decision 

The court began its analysis by considering whether all the elements were present to find unjust enrichment.

Regarding the first element, the court stated that there was no dispute as to the fact that Ms. Sweet was enriched to the full extent of the insurance proceeds in the amount of $250,000, because she had been designated irrevocable beneficiary.

For the second element, the court found that there was a corresponding loss; Mrs. Moore was not only deprived of the $7,000 she paid in premiums, she was also deprived of the right to receive the entirety of the $250,000 of the insurance proceeds. Therefore, because Ms. Sweet received the benefit that otherwise would have accrued to Mrs. Moore, the court determined that Ms. Sweet was enriched at the expense of Mrs. Moore.

The final element requires a finding that the enrichment and the corresponding deprivation occurred in the absence of a juristic reason. First, a court must look at whether the retention of the benefit can be justified on the basis of any of the established categories of juristic reasons, such as disposition of law or statutory obligations. After analysis, the court found that no established category of juristic reason applied. At the second stage of analysis, a defendant must establish some residual reason why the enrichment should be retained. Considerations such as the parties’ reasonable expectations and moral and policy‑based arguments come into play. In this case, the court did not find any residual reasons why Ms. Sweet should retain the benefit; in fact, the court found that any residual reason would favour the retention of the benefit by Mrs. Moore.

Therefore, the court found that unjust enrichment had been established. Regarding the proper remedy, the court found that a constructive trust would be the most appropriate remedy in this case.

Therefore, the appeal was allowed and the court ordered that the proceeds of the policy be impressed with a constructive trust in favour of Mrs. Moore and accordingly be paid out of court for her benefit.

Get Advice

Despite proactive estate planning that outlines a person’s express wishes in writing, various disputes involving wills, estates, and powers of attorney still arise. Responding to such disputes requires guidance, advice, and representation from a knowledgeable estates lawyer.

At Campbell Bader LLP, our team of exceptional Mississauga estate lawyers offers skillful and trusted advice on effective estate planning. Where estates disputes arise and require litigation, we represent clients accordingly. To learn more about how we can help you, contact us online or at 905-828-2247. We look forward to speaking with you and going through this process by your side.


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