Skip to content

Pension plan recovers overpayments made to deceased

Level Chan and Dante Manna

On October 31, 2019, the Supreme Court of Canada issued its decision in Threlfall v Carleton University, 2019 SCC 50, dismissing an appeal from the Quebec Court of Appeal. Carleton University successfully recovered $497,332.64 of pension payments it had made in respect of a retiree, Mr. R, after his death.

While the decision is based on specific provisions of the Civil Code of Quebec (“C.C.Q.”) and the applicable pension plan, it provides some guidance for pension plan administrators on death of beneficiaries and the ability to recover overpayments:

  • Entitlement to a pension benefit ends on death, subject to the plan terms (e.g. survivor benefits).
  • The person responsible for the beneficiary’s estate (e.g. the executor) may be held personally liable for overpayments and be required to repay funds.
  • Plan administrators should act as soon as they become aware of a death and can get retroactive recovery even if time has passed, and payments have been made, since the death.

Facts of the case – presumption of life

Mr. R, who suffered from Alzheimer’s, disappeared one day while walking near his home in rural Quebec. He died shortly thereafter but his remains were not discovered for several years. In his absence, he was presumed alive under art. 85 of the C.C.Q. and Carleton continued making his pension payments. That presumption lasts for up to seven years or until the absentee is located.

Mr. R.’s remains were located just before the end of the seven year period but his death was declared to have occurred at the beginning of the period (i.e. when he went missing). The C.C.Q. did not explicitly address Mr. R’s rights where the presumption of life had been rebutted.

Court decision – payments end on death, which occurred on disappearance

The Supreme Court majority’s decision confirmed restitution to Carleton retroactive to the date of Mr. R.’s actual death, rather than when his remains were found. While he was presumptively entitled to receive payments during the seven year period, those rights ended when his death was declared to be the earlier date.

The majority rejected the alternative, saying the C.C.Q. should not be interpreted so as to create a windfall to Mr. R or his beneficiaries at Carleton’s expense. They found that pension plans cannot be expected to continue benefits indefinitely and said that “Life, at some point, must move on,” and at that point (seven years, in Quebec), the protection of the absentee’s interests “take[s] a back seat to long-term certainty and pragmatism”.

Plan allowed to recover even though it had continued payments

Carleton was not initially notified of Mr. R’s mysterious disappearance. It learned of the story nearly a year later from media reports about Mr. R.  At that time, Carleton nearly stopped making payments to Mr. R. When it was presented a demand letter by Ms. T, who had been appointed to serve as tutor (guardian) in his absence and liquidator of Mr. R’s succession (executor of his estate), it reluctantly continued payments “without admission”. The courts concluded, based in part on Carleton’s reluctance to continue the payments, that the payments were made in error and could be recovered and not, contrary to Ms. T’s argument, made with liberal intention (gratis).

Unambiguous language terminating benefit

Like the lower courts, the Supreme Court majority agreed that the plan “unambiguously” terminated Carleton’s obligations on the date of death based on:

  • the plan text providing that payments cease when “the Member’s death occurs” (rather than when the Member’s death is certified); and
  • a memorandum of election in which Mr. R chose to draw a “single life pension”, payable monthly for his “remaining life only”, with all payments to stop upon his “death”.

The majority held that the words “life”, “remaining lifetime” and “death” were sufficiently clear and did not require further definition.

Guardian/executor required to repay overpayment

Carleton named Ms. T as defendant, both personally and in her capacities as tutor and liquidator.  The trial judge held that Ms. T could be personally liable, and that aspect was not challenged in either appellate decision.

Guidance for plan administrators

While the Carleton University decision relates specifically to an ambiguity in the C.C.Q., it is helpful to pension plans in that:

  • There is recognition that pension benefits end on death, subject to the terms of the pension plan. The termination of a lifetime benefit upon death of the individual (and entitlement to any survivor benefits) should be stated in clear language, both in the plan text and any election forms signed by the individual;
  • Courts can take a pragmatic approach to interpreting absentee legislation, affording plans:
    • the certainty of relying on the date of death provided in official documents; and
    • the finality that such certainty will be reached within a prescribed period;
  • A plan can be aware of a beneficiary’s absence and continue making payments “without admission”, while still preserving the right to argue those payments were made in error and recover overpayments; and
  • A claim to recover overpayments can be made against an estate executor or absentee guardian personally as well as the estate or absentee.

This update is intended for general information only. Should you have questions on the above, please contact a member of our Pensions & Benefits group.

 

Click here to subscribe to Stewart McKelvey Thought Leadership.

SHARE

Archive

Search Archive


 
 

Prince Edward Island adopts new Municipal Government Act

December 22, 2016

Perlene Morrison Prince Edward Island’s municipal legislation is being modernized with the implementation of the Municipal Government Act (the “MGA”). The legislation has now received royal assent and will be proclaimed in force at a future date.…

Read More

Land Use Planning in Prince Edward Island: The Year in Review

December 20, 2016

Jonathan Coady and Chera-Lee Gomez It’s that time of year – the moment when we look back at the year that was and chart our course for the year ahead. For many councillors, administrators and planning professionals…

Read More

The Latest in Labour Law: A Stewart McKelvey Newsletter – Onsite OHS liability: Who is (and who is not) the true constructor?

December 15, 2016

Peter McLellan, QC and Michelle Black In a recent decision, R v McCarthy’s Roofing Limited, Judge Anne Derrick provided some much-needed clarity around what it means to be a “constructor” on a job site. This is critical as…

Read More

Federal Government’s Cannabis Report: What does it mean for employers?

December 15, 2016

Rick Dunlop On December 13, 2016, the Government of Canada released A Framework for the Legalization and Regulation of Cannabis in Canada: The Final Report of the Task Force on Cannabis Legalization and Regulation (“Report”). The Report’s…

Read More

Canadian employers facing marijuana challenges in the workplace

November 25, 2016

Brian Johnston, QC Canadian employers are already coping with approximately 75,000 Canadians authorized to use medical marijuana. Health Canada expects that this number will increase to about 450,000 by 2024. Employers know that medical marijuana…

Read More

You’ve got mail – Ontario Court of Appeal sends a constitutional message to municipalities about community mailboxes

October 28, 2016

Jonathan Coady With its decision in Canada Post Corporation v. City of Hamilton,1 the Ontario Court of Appeal has confirmed that the placement of community mailboxes by Canada Post is a matter beyond the reach of municipalities…

Read More

A window on interpreting insurance contracts: Top 10 points from Ledcor Construction

September 23, 2016

Jennifer Taylor Introduction Thanks to some dirty windows, insurance lawyers have a new go-to Supreme Court case on issues of policy interpretation: Ledcor Construction Ltd v Northbridge Indemnity Insurance Co, 2016 SCC 37. The insurers in Ledcor Construction had…

Read More

Charter-ing a Different Course? Two decisions on TWU’s proposed law school

August 11, 2016

Jennifer Taylor Introduction Appeal courts in Ontario1 and Nova Scotia2 have now issued decisions about Trinity Western University’s proposed law school (“TWU”) in British Columbia, and at first glance they couldn’t be more different. The Court of Appeal for…

Read More

Restart the Clock!: Confirmation and resetting limitation periods in Tuck v. Supreme Holdings, 2016 NLCA 40

August 11, 2016

Joe Thorne1 and Giles Ayers2 Limitation periods serve a critical function in the civil justice system. They promote the timely resolution of litigation on the basis of reliable evidence, and permit litigants to assess their legal exposure…

Read More

Client Update: SCC issues major decision affecting federal employers: Wilson v. Atomic Energy of Canada Limited

July 15, 2016

On July 14, 2016 the Supreme Court of Canada issued a significant decision affecting federally regulated employers across Canada. In Wilson v. Atomic Energy of Canada Limited the Court held that the purpose of the unjust dismissal…

Read More

Search Archive


Scroll To Top