Moore v. Sweet: When Someone Else Cashes Your Cheque

Here is a scenario that sounds almost too harsh to be real. A woman agrees to pay her ex-husband’s life insurance premiums in exchange for his promise to keep her as the sole beneficiary. She pays every year, faithfully, for over a decade. He takes the money and, without telling her, quietly redesignates the policy in favour of his new girlfriend. He dies. The girlfriend collects $250,000. The woman who paid for it all gets nothing.

That is the story behind Moore v. Sweet, and the Supreme Court of Canada’s 2018 decision in that case has become one of the most important rulings in Canadian unjust enrichment law — not just for what it decided on the facts, but for what it said about when a person can claim restitution from someone they never dealt with directly.

What Happened

During their marriage, Lawrence Moore took out a life insurance policy and named his wife Michelle as the beneficiary. When the marriage ended, they made an oral agreement: Michelle would pay the annual $500 premium, and Lawrence would keep her as the beneficiary. She held up her end. He did not.

Shortly after making that promise, Lawrence secretly redesignated the policy in favour of his new common law partner, Risa Sweet. Critically, he designated Risa not as a revocable beneficiary — as Michelle had been — but as an irrevocable beneficiary. That status, under the Ontario Insurance Act, gives the beneficiary a veto over any further changes and removes the policy from the insured’s estate.

Lawrence died. His estate had no meaningful assets. The insurer paid the $250,000 into court. Michelle, who had paid roughly $7,000 in premiums over the years, commenced proceedings. The question was whether Risa — who had done nothing wrong and received the proceeds lawfully under the statute — had nonetheless been unjustly enriched at Michelle’s expense.

The Unjust Enrichment Framework

Canadian law requires a plaintiff to prove three things to make out a claim in unjust enrichment:

1. The defendant was enriched;
2. The plaintiff suffered a corresponding deprivation; and
3. The enrichment and deprivation occurred without a juristic reason.

Each of these three elements was genuinely contested in Moore v. Sweet, and the Supreme Court’s treatment of each is worth examining.

Enrichment — Easy

The first element was not seriously disputed. Risa received $250,000. She was enriched. That much was clear.

Corresponding Deprivation — The Hard Part

The second element is where the case got complicated, and where the Supreme Court made its most significant contribution to the law.

The obvious problem is this: Michelle paid $7,000 in premiums. Risa received $250,000 from the insurance company. The money did not flow from Michelle to Risa — it flowed from the insurer to Risa. And Michelle had no proprietary interest in the policy; she held only personal contractual rights against Lawrence. So in what sense did Risa’s enrichment come “at Michelle’s expense?”

Writing for the majority, Justice Côté articulated a broader conception of what it means to suffer a “corresponding deprivation.” The plaintiff’s loss, she held, is not limited to money paid out of pocket. It also includes:

“a benefit that was never in the plaintiff’s possession but … would have accrued for his or her benefit had it not been received by the defendant instead.” — para. 44

On that analysis, Michelle’s deprivation was not $7,000 — it was $250,000. She had been stripped of the precise thing she bargained and paid for: the right to receive the policy proceeds on Lawrence’s death. And Risa had received exactly that right.

The majority put it plainly:

“It is not simply that Risa gained a benefit with a value equal to the amount of Michelle’s deprivation. Rather, what Risa gained is the precise benefit that Michelle lost: the right to receive the proceeds of Lawrence’s life insurance policy.” — para. 51

That precise correspondence — the same right, transferred from one woman’s column to the other’s — was the key. The element does not require that the benefit flow directly from the plaintiff’s hands to the defendant’s. What it requires is a genuine correspondence between the gain and the loss.

Juristic Reason — Does the Insurance Act Protect Risa?

Risa’s strongest argument was her third-element defence. She had been validly designated as an irrevocable beneficiary under the Ontario Insurance Act. Didn’t that statutory designation constitute a “disposition of law” that justified her retaining the proceeds?

The Court said no, and the reasoning is important. The Insurance Act obligated the insurer to pay Risa. But the statute does not — by express provision or necessary implication — give a beneficiary the right to keep the proceeds as against a third party asserting prior contractual rights in those proceeds.

There is a meaningful distinction between the right to receive and the right to retain. The legislature is presumed not to override common law and equitable rights without expressing that intention with unmistakable clarity. The Court found no such clarity in the Insurance Act. The statute regulated the mechanism of payment; it did not immunize the recipient from a restitutionary claim by someone with a prior contractual entitlement to the same benefit.

With no established juristic reason, a prima facie case was made out. Risa then needed to show some residual reason why she should keep the money. She could not. The Court found that the equities strongly favoured Michelle, whose premium payments had literally kept the policy alive.

The Remedy: Constructive Trust

Once unjust enrichment is established, the default remedy is a personal monetary judgment. But in appropriate cases, a court can impose a proprietary remedy — a constructive trust over specific assets. To get there, the plaintiff must show that a personal remedy would be inadequate and that there is a link between her contributions and the disputed property.

Ordinarily, money claims do not attract constructive trusts. Here, however, the $250,000 had been paid into court and was immediately available. And Michelle’s premium payments were causally connected to the very policy that generated the proceeds. The Court imposed a constructive trust over the full $250,000 in Michelle’s favour.

The Dissent

Justices Gascon and Rowe dissented — and their analysis is worth understanding because it captures a genuine tension in the law that the majority did not fully resolve.

Their core objection was that Risa’s enrichment was not truly “at the expense of” Michelle, because it was not dependent on Michelle’s deprivation. Risa received the proceeds because she was the named irrevocable beneficiary and Lawrence died. Michelle lost her expected benefit because Lawrence broke his contract with her. These were two separate legal events, connected by Lawrence’s wrongdoing — not by a direct bilateral relationship between the two women.

The dissent posed a pointed hypothetical: what if Lawrence had not died with an empty estate? Michelle would have sued him for breach of contract and recovered $250,000 in expectation damages. Risa would simultaneously have received $250,000 from the insurer. Both women could, in theory, have been made whole at the same time. The dissent argued that this possibility showed that Risa’s enrichment was not “dependent on” Michelle’s deprivation in the required sense — meaning Michelle was not truly the relevant source of Risa’s gain.

The Bigger Picture: Indirect Enrichment and Interceptive Subtraction

Moore v. Sweet‘s lasting importance lies in what it says about a fundamental problem in unjust enrichment: what happens when the benefit reaches the defendant not directly from the plaintiff, but through a third party or an intervening legal arrangement?

In the simple case — a mistaken bank transfer, an overpayment, goods delivered under a failed contract — the analysis is bilateral. Value moves from A to B. Unjust enrichment undoes that transfer. But real life is rarely so clean. The courts regularly encounter situations where B’s enrichment traces back to A’s deprivation only through C. These are cases of indirect enrichment, and they are notoriously difficult.

Three Categories of Indirect Enrichment

The cases suggest three recurring patterns where courts have allowed recovery against an indirect recipient.

The first is where the plaintiff has discharged the defendant’s debt to a third party. If the plaintiff pays off a creditor to whom the defendant owed money, the defendant is enriched — not by receiving anything from the plaintiff, but by being released from a liability. Restitution can follow, particularly where the plaintiff paid under legal compulsion. This is well-established law: see Bannatyne v. D. & C. MacIver [1906] 1 KB 103.

The second is where the plaintiff’s funds are misappropriated and shared with a third party. If a fraudster steals money and hands part of it to an associate or a family member, both may be liable. Canadian courts have consistently allowed claims against these downstream recipients without treating the indirect nature of the transfer as a bar to recovery: see International Longshore & Warehouse Union Local 502 v. Ford, 2016 BCCA 226. The causal connection between the plaintiff’s deprivation and the recipient’s enrichment is sufficient.

The third — and most conceptually complex — is where the plaintiff’s title to an asset persists through a chain of transfers. If property is stolen and passed along to a third party, the owner’s title never vested in the thief and therefore never passed to anyone down the chain either. Each successive holder is, in effect, a direct recipient of the owner’s property. This principle underpinned the House of Lords’ reasoning in Lipkin Gorman v. Karpnale Ltd. [1991] 2 AC 548, where a rogue partner siphoned funds from his firm and lost them gambling at a London club. The firm retained title to the funds at each point, creating a direct restitutionary claim against the club.

Interceptive Subtraction

Moore v. Sweet does not fit neatly into any of these three categories. Michelle had no persisting title to the policy. Her money was not stolen and passed along. She had not discharged Risa’s debt. Her situation was different: she had paid, under contract, for the right to receive a specific benefit — and that benefit was intercepted by Risa’s designation before it could reach her.

This is the scenario that legal scholars call interceptive subtraction: a benefit that was heading toward the plaintiff is redirected to the defendant before arriving. The plaintiff suffers a deprivation not because the defendant took something from her, but because the defendant received something that was destined for her.

The doctrine requires more than a bare “but for” test. If mere disappointment were enough — if it were sufficient that a plaintiff would have received a benefit but for the defendant’s intervention — the floodgates would open. Courts regularly deal with disappointed spouses who claim that but for the deceased’s broken promises, they would have received pension or insurance proceeds. That alone has never been enough for restitution: see Love v. Love, 2013 SKCA 31; MacEachen v. Minnikin, 2015 NSCA 81.

What made Moore v. Sweet different was Michelle’s contractual right. She had not merely hoped to receive the proceeds. She had paid for the right to receive them, under a contract with the policy holder. Her right was legally protected, and it was precisely that right which Risa’s designation displaced. The enrichment was not incidentally related to the deprivation; they were, as the majority said, two sides of the same coin.

Why This Case Matters for Practitioners

Moore v. Sweet has direct application well beyond insurance disputes. Its principles engage any time a plaintiff paid for or earned a specific benefit that was redirected to someone else through a third-party mechanism. If you are dealing with a dispute of this kind, our unjust enrichment practice may be able to help.

Life insurance and pension disputes in separation contexts are the most obvious application. Where a separated spouse has an agreement to be maintained as beneficiary, and the policy holder subsequently redesignates, the new beneficiary may be exposed to a constructive trust claim regardless of whether they knew about the prior agreement.

The case also reinforces a practical point about the Insurance Act: designation as an irrevocable beneficiary does not provide absolute protection from restitutionary claims by third parties with contractual rights in the proceeds. Irrevocable designation governs the relationship between insurer and beneficiary; it does not determine who has the better equitable claim to the money once paid.

More broadly, the case illustrates that unjust enrichment can reach defendants who are entirely innocent. Risa did nothing wrong. She was named a beneficiary and collected what the statute said she was owed. But innocence is not a defence to a claim in unjust enrichment — it may, however, be relevant to the defence of change of position, which was not argued on these facts.

Conclusion

Moore v. Sweet is a case about a broken promise, a stolen benefit, and the limits of what the law of unjust enrichment can do when the wrongdoer dies broke. The Supreme Court’s majority held that the law could reach Risa Sweet, even though she received the proceeds lawfully, because what she received was the precise benefit that Michelle Moore had paid to secure for herself.

The decision expands — perhaps significantly — the concept of “corresponding deprivation.” It holds that a plaintiff need not have directly transferred value to the defendant; it is enough that the defendant received the very benefit to which the plaintiff held a legally protected entitlement. The Insurance Act could not stand in the way, because the legislature is presumed not to override private law rights without saying so clearly.

The dissent’s concern remains a live one: if both women could have theoretically received $250,000 concurrently, was the gain truly at Michelle’s expense? That question will keep academics and courts busy for years. But as the law stands today, Moore v. Sweet is the governing authority on indirect enrichment in Canada — and it is essential reading for anyone who litigates in this space.