Originally published in our April 2017 Newsletter
Moore v. Sweet, 2017 ONCA 182
The recent Court of Appeal decision Moore v. Sweet is interesting in its consideration of the availability of remedial constructive trusts since the Supreme Court of Canada’s decision in Soulos v. Korkontzilas. The case discusses several issues which may be of interest to the reader, but it’s analysis with respect to constructive trust is important as the case may limit the availability of this remedy going forward.
The issue on the appeal was whether the appellant, Risa Sweet, or the respondent, Michelle Moore, were entitled to the proceeds of a life insurance policy on the life of Lawrence Anthony Moore (the “Policy”).
Ms. Moore and Mr. Moore were previously married for more than 20 years. They had three children together, who were all adults at the time of Mr. Moore’s death. During the marriage, Ms. Moore was the named (but not irrevocable) beneficiary of the Policy. Following their separation and ultimate divorce, Ms. Moore continued to pay the premiums for the policy pursuant to an oral agreement with Mr. Moore that she would remain the named beneficiary. The purpose of the arrangement was to mitigate for Mr. Moore’s financial irresponsibility and to enable Ms. Moore to support their children in the event of his death. Mr. Moore had a history of medical issues including substance abuse problems and mental health issues.
Following his separation from Ms. Moore, Mr. Moore entered into a relationship with Ms. Sweet. They lived together in Ms. Sweet’s apartment until Mr. Moore’s death 13 years later. Shortly after they began living together, Mr. Moore, contrary to his oral agreement with Ms. Moore, revoked the designation of Ms. Moore as beneficiary and designated Ms. Sweet as the irrevocable beneficiary under the Policy.
In the period of 1999-2000, Mr. Moore lost his driver’s license and job for medical reasons. For the remainder of his life he lived on a long-term disability pension from his former employer. Ms. Sweet is disabled as well. She indicated that Mr. Moore contributed to the rent and assisted with chores. He wanted her to benefit from the Policy to enable her to stay in the apartment in which she had lived for 40 years, and to live worry and debt free.
The Court Below
The application judge ruled in favor of Ms. Moore. He held that the Policy proceeds of $250,000 plus interest were held in trust and that Ms. Moore was entitled to recover them on the basis of unjust enrichment.
In a split decision, Justice Blair, writing for the majority of the Court of Appeal, held that the appeal should be allowed and that Ms. Sweet was entitled to the proceeds of the Policy.
The two key issues on appeal related to equitable assignment and unjust enrichment and the availability of remedial constructive trusts.
This article focuses on the issues relating to remedial constructive trusts given their overarching importance to estates law, and the ongoing debate as to their availability.
Good Conscience Trusts
The court considered the question of whether a constructive trust is only available as a remedy for unjust enrichment or where wrongful acts have taken place, or whether there is a broader category – “where good conscience requires it”.
The Position of the Parties
The appellant argued that the application judge erred in finding that the doctrine of unjust enrichment applied to the facts of the case. Ms. Moore’s end position was that a constructive trust in her favour was justified on the basis of good conscience. She relied on a group of cases in which the court imposed a remedial constructive trust. The appellant argued that Soulos abolished the doctrine of good conscience constructive trusts and that therefore this line of cases were wrongly decided.
The debate as to whether Soulos has restricted the use of remedial constructive trusts has waged in both academia and the case law. There is academic and jurisprudential support for both sides.
The Majority Decision
In the circumstances of this case, the majority did not find it necessary to resolve the debate of whether Soulos has indeed abolished the doctrine of good conscience constructive trust on this appeal. They held:
 Absent those considerations, I do not see anything in the circumstances of this case that would place it in some other “good conscience” category not caught with the rubric of either wrongful act (not asserted here) or unjust enrichment. For that reason, I do not see the need to resolve the foregoing debate about whether Soulos has restricted the categories for imposing a remedial constructive trust to unjust enrichment or wrong act or whether there remains some additional “good conscience” basis.
 Simply because wrongful act is not asserted, and unjust enrichment is unsuccessful, does not mean that some other “good conscience” basis must exist on the facts. To engage in such an exercise, on this record at least, it seems to me, would undermine the rationale for creation of the juristic reason element in the first place.
The reasoning of the majority does, however, appear to support limiting the circumstances in which a remedial constructive trust may be imposed. It will be interesting to see how this language is interpreted going forward. In what factual circumstance, for example, may the other “good conscience” basis exist, if at all?
In contrast to the majority, Justice Lauwers in his dissenting opinion considered that this appeal “raises squarely, for the first time in this court, whether the Supreme Court intended in Soulos to confine the availability of remedial constructive trusts to instances of unjust enrichment and wrongful gains only.”
Justice Lauwers rejected the appellant’s argument that Soulos limits the remedy to the two defined situations above and otherwise abolished the doctrine of good conscience constructive trusts. He reviewed the cases relied on by the appellant for the proposition that Soulos does limit the constructive trust remedy, and found that none of them squarely addressed the issue of whether there is another basis for imposing a constructive trust and that its determination was not necessary to the decisions.
Justice Lauwers reviewed Soulos at length. He noted various passages where Justice McLachlin made observations of a more general application for the imposition of a constructive trust. He found that her statements “decisively refute the appellant’s argument that a court can impose a constructive trust now in only two categories of cases: to remedy an unjust enrichment or a wrongful act.” Specifically, he found that the Supreme Court left open four routes by which a court could impose a constructive trust: (i) unjust enrichment; (ii) wrongful acts or wrongful gain; (iii) circumstances where its availability has long been recognized; and (iv) otherwise, where good conscience requires it.
The Disappointed Beneficiary Cases
Justice Lauwers also extensively reviewed the “disappointed beneficiary” cases. These cases commonly concern the right to life insurance proceeds. Often, the plaintiff pursues life insurance proceeds on the death of a deceased former spouse in circumstances where the deceased had named a new beneficiary, often a new spouse. Justice Lauwers opined that these cases should be treated differently to ordinary breach of contract cases, in part because of the family context within which the disputes arise.
Justice Lauwers summarized his review of these cases as follows:
 I recapitulate the findings that must be made for a court to impose a constructive trust on life insurance proceeds, which have emerged so far in the cases involving disappointed beneficiaries. These serve as limits to discipline judicial discretion. First, the defendant has been enriched and the plaintiff deprived in a family context, not in the market world. Second, the deceased’s ruling intent, before resiling, was to benefit the plaintiff. That intent can be found in an oral agreement, a separation agreement or in a court order, but it must comprise an obligation. Third, there is a proprietary link between the plaintiff and the life insurance proceeds. It is this life insurance policy that is in issue, not some other. Finally, providing the plaintiff with the remedy of a constructive trust Page: 98 does not breach any law. Experience with constructive trusts in the disappointed beneficiary context would undoubtedly add other refinements.
 The disappointed beneficiary cases represent a distinct type of case in which the constructive trust remedy is disciplined by the common structure and elements of the dispute, which ought to serve to assuage the concern that equity is off on a frolic of its own, paying no attention to the law. Equity follows the law; the imposition of a constructive trust does not block the law’s operation, which in this case is the operation of the Insurance Act; it imposes an obligation in conscience on the appellant the moment her entitlement to the proceeds attaches, one that requires her to hold the proceeds in trust for the respondent.
 To my mind, the disappointed beneficiary cases constitute a genus in which a constructive trust can be imposed on life insurance proceeds consistently with the reasoning of McLachlin J in Soulos. They are situations in which courts have found a constructive trust.
While he ultimately found that Ms. Moore was entitled to a remedial constructive trust over the proceeds of the Policy as a result of unjust enrichment he went further, holding:
 But I would go further and add that, to the extent that they fit awkwardly under the rubric of unjust enrichment, the disappointed beneficiary cases are perhaps better understood as a genus of cases in which a constructive trust can be imposed via the third route in Soulos – circumstances where the availability of a trust has previously been recognized – and the fourth route – where good conscience otherwise demands it, quite independent of unjust enrichment.
Given that the majority did not squarely address the issue, Justice Lauwers comments may have some influence on the case law, particularly as it relates to the use of remedial constructive trusts in the family and estates context.
This decision is lengthy and is certainly worth reviewing in depth, although it ultimately leaves the ongoing debate with respect to remedial constructive trusts open. The language in both the majority and dissenting decisions fairly explains the jurisprudential and academic divide on this issue since Soulos and it will no doubt be considered in academic writings going forward. We understand that leave has been sought to the Supreme Court of Canada in this case. It will be interesting to see whether the Supreme Court will grant leave and provide further guidance on this interesting issue.
 2017 ONCA 182 [“Moore”].
  2 SCR 217 [“Soulos”].
 Moore at para 2.
 Ibid at para 7.
 Ibid at para 10.
 Ibid at para 2.
 Ibid at para 19.
 Ibid at para 21.
 Ibid at para 14.
 Ibid at para 3.
 Ibid at para 100 and footnote 7.
 Ibid at para 139.
 Ibid at paras 175-181.
 Ibid at para 182.
 Ibid at para 186.
 Ibid at paras 241-
 Ibid at para 243.
 Ibid at para 203.