The court said that the man’s ex-wife, who had paid the premiums on the policy, should receive the money
The Supreme Court of Canada has awarded the $250,000 benefit from a life insurance policy to a woman who had continued paying the premiums for her ex-husband’s policy for over a decade after their divorce — and even after he removed her as the beneficiary behind her back.
The woman, Michelle Moore, had entered into an unwritten agreement with her husband Larry when they separated. She would keep paying the annual premiums on his life insurance, and he would leave her as the beneficiary. With that understanding, Moore continued to pay over $500 a year in premiums and expected to receive $250,000 in the event of his death.
But things didn’t go to plan. According to the National Post, he married another woman, Risa Sweet, moved in with her, and named her as the new beneficiary of his life insurance without letting his ex-wife know.
When Larry died in 2013, Moore learned from the insurance company that the policy for which she had been paying premiums had, since her divorce, been officially in the name of her ex-husband’s new wife. What ensued was a legal battle between two “innocent” parties, as the Supreme Court said it, which went through all levels of court over five years.
“Risa was enriched, Michelle was correspondingly deprived, and both the enrichment and the deprivation occurred in the absence of a juristic reason,” said the Supreme Court ruling written by Justice Suzanne Côté. The ruling to give Michelle the money, which had been held in trust, came as a split decision with Justices Clément Gascon and Malcolm Rowe dissenting.
Larry purchased the policy and designated Michelle as the beneficiary in 1985; at that time, he and Michelle had been married six years and had three children together. When the two separated in 1999 — a marriage breakdown arising from his struggles with chronic pain and substance addiction issues at the time, which led to significant debt and bankruptcy — they made the informal agreement.
They also signed a separation agreement in 2002, though it does not mention the oral agreement. The initial application judge found that verbal deal was real, legally binding, and enforceable, and that it was meant to provide for Michelle and the Moore children in the event that Larry died.
But in September 2000, Larry changed his policy to replace Michelle with Sweet, who eventually became his common-law spouse for 13 years, as the beneficiary. The Supreme Court found that he did not make the switch “surreptitiously” —he did it through a broker who was married to Michelle’s sister — but he did not tell her about it.
Sweet argued that Michelle was trying to “circumvent” the rules of Ontario’s statutory scheme to regulate insurance, Insisting that the policy was hers by rights, she said that Larry did not want her to worry about how she would pay rent or buy medications, which she needs to manage multiple chronic illnesses that prevents her from taking public transit.
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