Heritage Trust Company Inc. v. Garrett, 2025 BCCA 326

This appeal concerns a claim of unjust enrichment which was dismissed at trial. The unjust enrichment claim targets the proceeds of a life insurance policy. The claim arises due to a conflict between terms stipulated in a separation agreement and the insurance policy’s terms designating irrevocable beneficiary.

Background:

In 2014 Richard Garrett (“Richard” or the “Deceased”), entered into a contract for life insurance with Ivari in the amount of $450,000 (the “Ivari Policy”).[1]

In June 2020, Richard designated his daughter, Jacqueline Garret (“Jacqueline”), as the irrevocable beneficiary of the Ivari policy.[2] At the time of this designation, Jacqueline was still a minor; as such, the Ivari Policy required a court order to revoke Jacqueline’s designation.[3]

The relevant excerpts from the Ivari Policy read as follows:

“Irrevocable/Revocable Beneficiaries”

By naming an Irrevocable Beneficiary, you are giving up substantial control over your policy. Once an Irrevocable Beneficiary has been designated, his/her consent will be required for future dealings e.g.: surrender, loan with the policy.

“Minor Beneficiaries”

If naming a minor as Irrevocable Beneficiary, you should be aware that a minor cannot give consent. Irrevocable beneficiary consent to any changes will only be permitted if Ivari is provided with a court order, satisfactory to it, authorizing the specific change being requested.[4]

In September of that same year, Richard and Jacqueline’s mother, Sonia Garrett (“Sonia”), executed a separation agreement, pursuant to which Richard agreed to support obligations which were secured by a life insurance policy in the same amount as the Ivari Policy, with Sonia as the irrevocable beneficiary.[5] The agreement further stipulated that if Richard were to die during that time, and Sonia did not receive the proceeds from the insurer, Richard’s estate would be obligated to pay her.[6]

In October 2020, Richard attempted to change the irrevocable beneficiary designation of the Ivari Policy to Sonia.[7] Although he had not obtained a court order, Ivari told him the change had been made.[8] After his death, however, Ivari refused to pay Sonia as Jacqueline’s irrevocable beneficiary designation had not been properly updated.

In a strange turn of events, Sonia took the position that Jacqueline was entitled to the Ivari Policy proceeds and brought a petition seeking an order that they be paid to her in trust for Jacqueline.[9] This application was opposed by Heritage Trust Company (“Heritage”), an institutional Estate Trustee for the Estate of Richard. Heritage moved for a number of orders directed at Sonia obtaining the proceeds, including an order they be held on a constructive trust for Sonia, based on the claim that Jacqueline would be unjustly enriched if permitted to retain the proceeds.[10]

The chambers judge granted Sonia’s petition and dismissed Heritage’s application for unjust enrichment. Heritage appeals.

Reasons of the Chamber Judge

At first instance, Heritage pled Garland v Consumers’ Gas Co.[11] as the authority setting out the necessary elements for proving an unjust enrichment claim:

• an enrichment of Jacqueline;
• a corresponding deprivation of Richard’s estate; and
• an absence of juristic reason for the enrichment.[12]

The chambers judge found that the first two elements were satisfied but identified the third element as being the issue in contention. The chambers judge considered Moore v Sweet[13] and concluded that the Insurance Act[14] did not provide a juristic reason for “Sonia’s enrichment”, but the Separation Agreement did.

Unjust Enrichment Analysis

The court begins by reviewing the emergence of unjust enrichment as a cause of action, finding that it grew out of traditional categories of recovery in restitution that include: a plaintiff conferring a benefit through a mistake of fact or law; under compulsion; out of necessity; or from a failed or ineffective transaction.[15] The Court then referred to the approach set out in Garland which prescribes a two-stage analysis for the juristic reason element.[16]

At the first stage, the plaintiff must prove the defendant’s retention of the benefit cannot be justified based on the “established” categories of juristic reason that include, inter alia contract, disposition of law, donative intent and “other valid common law, equitable or statutory obligations”.[17] If the retained benefit does not fall into one of the established categories, there is reason to believe a prima facie case exists. At the second stage, the defendant has an opportunity to show a residual reason why the enrichment should be retained. All the circumstances of the “transaction” can be examined to determine if there is another reason, but two factors are to be considered: the reasonable expectations of the parties and public policy considerations or moral and policy-based arguments.[18]

The Appellate Court goes on to hold that Moore confirmed the principled framework for unjust enrichment and Garland’s two-step juristic reason analysis.[19] The court found that,

Justice Côté, writing for the majority, discussed the juristic reason element as requiring the enrichment and the corresponding deprivation to occur without a juristic reason: at paras. 37 and 55, citing Pettkus v. Becker, [1980] 2 S.C.R. 834 at 848, 1980 CanLII 22; Garland at para. 30; and Kerr at paras. 30–45.[20] 

When Moore was applied by the B.C. Supreme Court in Knowles, it was concluded the Insurance Act did not provide a juristic reason for the deceased’s ex-wife, as the designated beneficiary of his life insurance policy, to receive the proceeds.[21]

The Appellate Court’s Disposition

The Court was satisfied that there was no basis for finding the Separation Agreement provided a juristic reason for Jacqueline’s enrichment.[22] The court of appeal next considered Heritage’s allegations that Richard’s conduct amount to ‘mistake’.[23]  The Court found that, given the submissions of the parties framing the issue as a matter of mistake, which is also a traditional category of recovery in restitution, it would be more appropriate to remit the matter back to the lower court so they may determine the evidentiary and factual issues.

Final Remarks

The British Columbia Court of Appeal’s decision underscores the complexity of unjust enrichment claims in the context of life insurance and family law obligations. By remitting the matter for further consideration of mistake within the restitutionary framework, the court reaffirmed the centrality of the juristic reason analysis while highlighting the tension between contractual arrangements and statutory beneficiary designations.

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[1] Heritage Trust Company Inc. v. Garrett, 2025 BCCA 326 (CanLII), at para 7. (“Heritage Trust”)

[2] Ibid., at para 9.

[3] Ibid., at para 3.

[4] Ibid., at paras 9-10.

[5] Ibid., at para 12.

[6] Ibid., at para 3.

[7] Ibid., at para 16.

[8] Ibid., at para 17.

[9] Ibid., at para 20.

[10] Ibid., at para 21.

[11] Garland v. Consumers’ Gas Co., 2004 SCC 25 (CanLII), [2004] 1 SCR 629 at para 30. (“Garland”)

[12] See Kerr v. Baranow, 2011 SCC 10 (CanLII), [2011] 1 SCR 269 at paras 40-45 for a more fulsome discussion as to what qualifies as a juristic reason. (“Kerr”)

[13] Moore v. Sweet, 2018 SCC 52 (CanLII), [2018] 3 SCR 303. (“Moore”)

[14] R.S.B.C. 2012, c. 1. (the “Insurance Act“)

[15] Heritage Trust, at para 30; Moore at para 36; Kerr v. Baranow, 2011 SCC 10 at para 31.

[16] Heritage Trust, at para 33; Garland, at paras 44-47.

[17] Heritage Trust, at para 34; Garland, at para 44.

[18] Heritage Trust, at para 34; Kerr, at para 44.

[19] Heritage Trust, at para 35.

[20] Ibid., at para 35.

[21] Ibid., at para 45.

[22] Ibid., at para 65.

[23] Ibid., at para 71.