Dispute involves entitlement to proceeds of deceased's life insurance policy
The British Columbia Court of Appeal has remitted a matter to the Supreme Court of British Columbia and directed it to determine whether an irrevocable designation under a life insurance policy provided a juristic reason for the beneficiary’s enrichment.
In Heritage Trust Company Inc. v. Garrett, 2025 BCCA 326, a couple had one daughter in 2005. The husband designated the child as the irrevocable beneficiary of a $450,000 life insurance policy with Ivari. The policy required a court order to revoke her designation because she was a minor.
The couple separated. Under their separation agreement, the husband agreed:
- to keep a $450,000 life insurance policy with the wife as the irrevocable beneficiary for as long as he had support obligations
- that his estate would pay the wife if he died and she did not get the insurance proceeds
The husband tried to change the Ivari policy’s irrevocable beneficiary to the wife. Ivari confirmed this change even though he had not secured a court order.
After the husband’s death, Ivari refused to pay the wife because he had not properly revoked his daughter’s irrevocable beneficiary designation.
The wife petitioned for Ivari to pay her the policy proceeds in trust for the daughter. The wife alleged that her daughter was entitled to the proceeds.
As estate administrator, Heritage Trust Company opposed this petition and applied for a constructive trust to hold the proceeds for the wife. Heritage alleged that allowing the daughter to keep the proceeds would unjustly enrich her.
In February 2024, a chambers judge of the BC Supreme Court granted the wife’s petition and dismissed Heritage’s application for an unjust enrichment claim. Heritage appealed.
Case remitted
The Court of Appeal for British Columbia allowed the appeal, set aside the dismissal of Heritage’s unjust enrichment claim, and remitted the matter for the BC Supreme Court to determine the evidentiary, factual, and legal issues.
First, the appeal court found a legal error in the chambers judge’s dismissal of Heritage’s unjust enrichment claim.
The appeal court noted that the tripartite test for unjust enrichment required a plaintiff to establish the following elements: the defendant’s enrichment, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment.
The appeal court found no basis for determining that the separation agreement provided a juristic reason for the daughter’s enrichment.
The appeal court explained that the argument that the daughter could not be subject to enrichment because she remained entitled to the proceeds as the irrevocable beneficiary conflated the enrichment element with the juristic reason considerations.
The appeal court noted that the test’s first two elements involved the question of whether there was some causal, not legal, economic connection between the daughter’s enrichment and the estate’s deprivation.
The appeal court saw a clear economic causal connection between the daughter’s enrichment and the estate’s loss. The appeal court said the daughter’s retention of $450,000 in policy proceeds would deprive the estate of a benefit or require it to pay the wife that amount.
Next, the appeal court considered whether the daughter’s designation as the irrevocable beneficiary offered a juristic reason for her enrichment, given the allegations concerning the deceased’s intentions, including the assertion that he had made a mistake.
The appeal court noted that numerous “disappointed beneficiary” unjust enrichment cases included allegations of a mistake or the lack of the deceased’s intention for the designated beneficiary to receive insurance proceeds.
Without relevant submissions, the appeal court found it inappropriate to determine evidentiary and factual issues such as:
- whether the hearsay evidence in this case was admissible
- if admitted, whether the court should give weight to such evidence
- the allegations regarding the deceased’s intentions and possible mistake
