{"id":15978,"date":"2023-09-07T16:43:36","date_gmt":"2023-09-07T16:43:36","guid":{"rendered":"https:\/\/resources.estateably.com\/us\/unjust-enrichment-and-constructive-trusts-in-canada\/"},"modified":"2024-04-24T14:48:46","modified_gmt":"2024-04-24T14:48:46","slug":"unjust-enrichment-and-constructive-trusts-in-canada","status":"publish","type":"post","link":"https:\/\/resources.estateably.com\/us\/unjust-enrichment-and-constructive-trusts-in-canada\/","title":{"rendered":"Unjust Enrichment and Constructive Trusts in Canada"},"content":{"rendered":"<h2 id=\"\"><strong id=\"\">Unjust enrichment in estate administration<\/strong><\/h2>\n<p id=\"\">Unjust enrichment is a form of restitutionary relief that allows for the recovery of money or other property that has been wrongfully obtained or retained by another party. In <a id=\"\" href=\"https:\/\/www.canlii.org\/en\/ca\/scc\/doc\/1976\/1976canlii4\/1976canlii4.html?autocompleteStr=Vige&amp;autocompletePos=2\" target=\"_blank\" rel=\"noopener\"><em id=\"\">Laure\u0301at Gigue\u0300re Inc. v. Cie Immobilie\u0300re Viger Lte\u0301e.<\/em>, [1977] 2 S.C.R. 67<\/a>, the Supreme Court identified six requirements for the presence of unjust enrichment: there must be an enrichment; an impoverishment; a correlation between the enrichment and impoverishment; an absence of justification for the enrichment; an absence of evasion of the law; and no other available remedy. Unjust enrichment occupies a third residual category of civil obligations after contract and delict. As such, it is typically the most complex for courts to grapple with.<\/p>\n<p id=\"\">In Canadian wills and estates law, unjust enrichment can arise in a number of different situations. For example, if an executor of a will has mismanaged or misappropriated funds from the estate, the beneficiaries of the will may be able to recover any unjustly obtained money or property. Similarly, if a beneficiary has received an undue benefit from the estate, such as a loan or a gift, the executor may be able to recover the funds or property. In addition, if a beneficiary has wrongfully taken or retained any funds or property from the estate, the executor or estate administrator may be able to recover the funds or property. Unjust enrichment often arises in the estates context among spousal and parent-child relationships, as these are the most common relationships for inheritance. In these cases, courts may impose constructive trusts on parties to remedy unjust results.<\/p>\n<p id=\"\">\u200d<\/p>\n<h2 id=\"\"><strong id=\"\">Imposing Constructive Trusts\u00a0<\/strong><\/h2>\n<p id=\"\">In the 2018 Supreme Court decision <a id=\"\" href=\"https:\/\/www.canlii.org\/en\/ca\/scc\/doc\/2018\/2018scc52\/2018scc52.html?autocompleteStr=moore%20v%20sweet&amp;autocompletePos=1#document\" target=\"_blank\" rel=\"noopener\"><em id=\"\">Moore v. Sweet<\/em>, 2018 SCC 52 (CanLII), [2018] 3 SCR 303<\/a>, the Court applied a streamlined tripartite framework unjust enrichment, with three elements to the principle: an enrichment; a corresponding impoverishment; and no juristic reason for the enrichment or corresponding deprivation. Lawrence Moore and Michelle Michelle Constance Moore were former spouses. While they were married, they formed a contractual agreement whereby Michelle would pay the premiums on Lawrence\u2019s life insurance policy while he was living, and in exchange, he would maintain her as the sole beneficiary of the policy upon his death. While Michelle held up her end of the deal for 13 years after their divorce, Lawrence designated Risa Sweet, his subsequent common law partner, as the irrevocable beneficiary of the policy, unbeknownst to Michelle. The <em id=\"\">\u200b\u200bInsurance Act<\/em>, RSO 1990 statutorily allows policy owners to create irrevocable beneficiaries.<\/p>\n<p id=\"\">Michelle and Risa both claimed the proceeds of the insurance policy. The court of first instance awarded Michelle the proceeds of the life insurance policy. The court argued that there was a constructive trust between Michelle and Lawrence, and she would be unjustifiably deprived of property owed to her if the life insurance policy proceeds went to Risa. The Court of Appeal reversed the trial court\u2019s decision, awarding the proceeds to Risa, while also refunding Michelle the amount she had paid after her divorce to Lawrence until his death. The majority argued that Risa, who was disabled and financially impecunious, was a fitting beneficiary for the policy. As she had nursed Lawrence through ill health and alcoholism, the Court found that the proceeds of the policy were appropriate compensation for her support of her partner of over a decade. The majority found that this outcome was antithetical to the spirit of unjust enrichment. In this sense, the Court held that Risa\u2019s enrichment did not correspond to Michelle\u2019s impoverishment.<\/p>\n<p id=\"\">The Supreme Court reversed the Court of Appeal\u2019s decision, finding that Michelle was entitled to expectation interests through her contractual relationship with Lawrence. Justice C\u00f4t\u00e9, writing for the majority, highlighted the difference in outcome between <em id=\"\">Moore v. Sweet <\/em>and other potential cases with similar facts. In <em id=\"\">Moore<\/em>, Michelle and Lawrence had an explicit oral agreement where Michelle would receive the full amount of the proceeds of the life insurance policy. Justice C\u00f4t\u00e9 argued that in cases without such an oral agreement, where a former spouse argues they are owed a moral obligation, the Court would not be able to provide an equitable remedy where the plaintiff has no legal claim to the insurance policy.<\/p>\n<p id=\"\">\u200d<\/p>\n<h2 id=\"\"><strong id=\"\">Equity: Fairness versus Contract<\/strong><\/h2>\n<p id=\"\">The Supreme Court\u2019s decision juxtaposes strongly with the Court of Appeal\u2019s interpretation of equity. The Court of Appeal looked more to the general principle of equity in ensuring that vulnerable parties are protected, whereas the Supreme Court considered equity within the law of contractual obligations. Under the latter interpretation, the Court considered the element of unjust enrichment, showing an absence of juristic reason for the enrichment. This is to say, the Court did not find that there was a valid legal basis for Risa to supplant Michelle as beneficiary.<\/p>\n<p id=\"\">The majority held that Lawrence, as the owner of the insurance policy, was entitled to name Risa as his irrevocable beneficiary pursuant to the <em id=\"\">Insurance Act<\/em>. However, Lawrence relinquished this right by creating a contractual relationship between himself and Michelle. Because no part of the <em id=\"\">Act <\/em>ousts court-ordered and common law equitable remedies, the Court found that it was within its jurisdiction to impose a constructive trust.<\/p>\n<p id=\"\">The Court\u2019s decision in <em id=\"\">Moore <\/em>questions the true \u201cirrevocability\u201d of an irrevocable beneficiary provided for by the Legislature. The dissenting opinion, delivered by Gascon and Rowe JJ, claimed that the majority was bypassing legislative intent by imposing a constructive trust, thereby undermining the meaning of an irrevocable beneficiary. <em id=\"\">Moore <\/em>similarly highlights the Court\u2019s barometer for unjust enrichment in the estates context, wherein the focus is not on the third party\u2019s behaviour resulting in own enrichment. Rather, the Court looks to the original party who has unjustly impoverished another through their actions, resulting in a third party\u2019s enrichment.<\/p>\n<p id=\"\">\u200d<\/p>\n<h2 id=\"\"><strong id=\"\">Takeaways<\/strong><\/h2>\n<p id=\"\">In Canada, constructive trusts are one of several equitable remedies that may be available in estate law where the courts believe that it is not appropriate or just to provide a traditional legal remedy, such as damages or specific performance. Equitable remedies are intended to provide a fair and just resolution to disputes, and are generally used when the parties involved have a special relationship, such as a fiduciary, spousal, or familial relationship. Constructive trusts are often used in estate law as an equitable remedy to remedy situations where one party has wrongfully taken control of property that was promised to someone else.<\/p>\n<p id=\"\"><em id=\"\">Moore v. Sweet <\/em>shows that the Court will consider the presence of contractual agreements when interpreting the operability of estate-related statutes, such as those regulating life insurance policies. <em id=\"\">Moore <\/em>underlines the Court\u2019s current openness to providing equitable remedies, placing into question the role of parliamentary sovereignty. In the future, we may see more explicit legislation from Parliament affecting the rights of testators and beneficiaries. One such development may be the possibility of \u201c\u2018irresistible clearness\u2019 to preclude the existence of\u00a0 contractual or equitable rights in those insurance proceeds once they have been paid to the named beneficiary.\u201d Testators and beneficiaries must continue to navigate the push-and-pull of legislative rules of estate administration and the roles of courts to ensure just outcomes within the law of succession.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unjust enrichment is a legal concept that refers to a situation where one party has received a benefit at the expense of another party without any legal justification or right to do so. In the context of estates, unjust enrichment can occur when one party improperly receives a benefit from an estate, such as by receiving property or funds they are not entitled to, such as the proceeds of a life insurance policy. Courts may intervene in these cases by imposing constructive trusts to remedy unjustly impoverished parties. The recent Supreme Court decision Moore v. Sweet provides an updated approach to this issue.<\/p>\n","protected":false},"author":1,"featured_media":15979,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[142],"tags":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Unjust Enrichment and Constructive Trusts in Canada - Support Center US | Estateably<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/resources.estateably.com\/unjust-enrichment-and-constructive-trusts-in-canada\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Unjust Enrichment and Constructive Trusts in Canada - Support Center US | Estateably\" \/>\n<meta property=\"og:description\" content=\"Unjust enrichment is a legal concept that refers to a situation where one party has received a benefit at the expense of another party without any legal justification or right to do so. In the context of estates, unjust enrichment can occur when one party improperly receives a benefit from an estate, such as by receiving property or funds they are not entitled to, such as the proceeds of a life insurance policy. Courts may intervene in these cases by imposing constructive trusts to remedy unjustly impoverished parties. The recent Supreme Court decision Moore v. 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