Widow’s claim for constructive trust on life insurance benefits paid to deceased’s mother rejected

In a summary trial application, the wife of a deceased insured was unable to establish unjust enrichment against the deceased’s mother, who was the name beneficiary under three insurance policies. The wife was also unable to establish the insurance proceeds paid to the deceased mother were provided based on a constructive trust in favour of her.

Insurance law – Life insurance – Beneficiaries – Unjust enrichment – Constructive trusts; Practice – Summary judgments.

Ross v. American Income Life Insurance Co., [2024] B.C.J. No. 231, British Columbia Supreme Court, February 12, 2024, M. Morellato J.

The insured died in an ATV accident in 2020. He had purchased three insurance policies, two in 1992 and one in 2006. The insurer paid the insurance proceeds of $113,314.86, relating to the three policies, to the insured’s mother as she was the designated beneficiary. The insured’s widow commenced an action seeking a declaration that the mother received the insurance proceeds on a constructive trust in her favour. The widow claimed the mother was unjustly enriched on the basis that the widow was the intended beneficiary and could show deprivation. The mother claimed she held the legal and beneficial title to the insurance proceeds as she was the designated beneficiary under all three policies.

The Court found the case was appropriate for summary trial and it was in the interest of justice to proceed in this manner given the cost and time of further litigation, and relative simplicity of the factual matrix.

The widow’s claim was dimissed.  The Court was unable to conclude the insured intended his widow to be the beneficiary rather than his mother.  The jurisprudence recognizes there is difficulty in obtaining relief in such cases where there is ambiguity about the deceased’s intentions. In such cases, the specific context and circumstances before the Court are especially important. For the 1992 policies, both parents were named beneficiaries. In 2004, the insured took initiative to change the named beneficiaries in both policies to his mother exclusively. Thus, he was clearly aware of how to change named beneficiaries, but he did not change the policies to name his wife. Further, the Court accepted the insured was very close to his mother and usually visited her at least twice a week and called frequently. Also, the insured’s commitment to provide for his mother was evident because he named his mother as beneficiary in the 2006 policy, one year after he began living with his wife. Lastly, the insured took several measures to provide insurance coverage for his wife and children, including purchasing a fourth policy that named the wife as beneficiary. The wife had received over $300,000 in monetary benefits after the death of the insured from other policies, RRSPs, and businesses. The Court was mindful the funds received by the wife after the insured’s death were not enough to cover the outstanding mortgage on their family home, but this was a decision made by the couple at the time of purchase. The Court carefully considered the wife’s evidence that it was her understanding that she was the beneficiary of all the insurance policies and her belief that the insured thought the same. However, the evidence before the court did not support this conclusion.

The Court was not satisfied this was a case of unjust enrichment. The widow’s argument was premised on the assumption that she was the intended beneficiary of the three policies, which was not supported by the evidence. The Court considered and applied the three-part legal test for establishing unjust enrichment. The Court held the first part of the test was met as the mother was enriched, but the widow failed to meet the last two parts. She did not establish she suffered a detriment corresponding to the benefit received by the mother, and even if this was established, the widow could not show there was no justification in law or equity for the mother’s enrichment. The Court noted the doctrine of a constructive trust is a remedy and not a cause of action, and it is a remedy that can be imposed where the deceased intended the disappointed beneficiary to be a beneficiary under the policy rather than the named beneficiary. However, the evidence before the Court did not establish such an intention in this case.

This case was digested by Aman Taggar and edited by Steven W. Abramson of Harper Grey LLP and first published in the LexisNexis® Harper Grey Insurance Law Netletter and the Harper Grey Insurance Law Newsletter.  If you would like to discuss this case further, please feel free to contact them directly at [email protected] or [email protected].