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


 
 

Client Update: Requirement to register as a mortgage brokerage and mortgage administrator in New Brunswick

July 7, 2016

On April 1, 2016 New Brunswick’s Mortgage Brokers Act came into force, requiring businesses acting as mortgage brokerages or as mortgage administrators in New Brunswick to be licensed. A mortgage brokerage is a business that on behalf…

Read More

Copyright does not monopolize facts – documentary filmmakers’ claim against book author and publisher fails

June 29, 2016

In May 2016, the Federal Court of Canada confirmed that copyright does not protect facts, even where a book’s author is clearly inspired by the content of a film (Maltz v. Witterick, 2016 FC 524 (CanLII)).…

Read More

Solicitor-client privilege vs the Canada Revenue Agency: the SCC speaks

June 10, 2016

By Jennifer Taylor “…firms of notaries or lawyers…must not be turned into archives for the tax authorities”1 So says the Supreme Court of Canada in one of two highly anticipated decisions on solicitor-client privilege, offering lawyers…

Read More

Why can’t we be friends?: Lessons on corporate dissolution from Smith v. Hillier

May 30, 2016

Joe Thorne1 and Clara Linegar2 As joint owners of a business, what do you do when the business relationship falls apart? And what if one owner undermines the business in the process? In Smith v Hillier,3 Justice Paquette…

Read More

Client Update: Supreme Court of Canada dismisses appeals in punitive damages cases

May 26, 2016

The Supreme Court of Canada has dismissed the appeals in Bruce Brine v. Industrial Alliance Insurance and Financial Services Inc.1 (with costs) and Luciano Branco, et al. v. Zurich Life Insurance Company Limited, et al.(without costs). Both of…

Read More

Client Update: Pension update: Countdown to Nova Scotia Pooled Registered Pension Plans

May 17, 2016

On May 4, 2016, the Nova Scotia Pooled Registered Pension Plans Act (“PRPP Act”) was proclaimed in force, and finalized Pooled Registered Pension Plan Regulations were released. While there were no major changes from the previously released draft regulations, the proposed rules…

Read More

Pension Primer: Pooled Registered Pension Plans (“PRPPs”) in Nova Scotia

April 22, 2016

By Level Chan and Dante Manna Pooled Registered Pension Plans (“PRPPs”) are closer to becoming a reality for Nova Scotian employers. PRPPs were established by the Federal government in an effort to address the lack of retirement savings…

Read More

Client Update: Perrin v Blake reaffirms the law on contributory negligence and recovery of damages

April 14, 2016

In a case where there is a contributorily negligent plaintiff and two or more negligent defendants, can the plaintiff recover 100% of her damages from any of the defendants? The answer in Nova Scotia is…

Read More

Client Update: Interest arbitration changes for New Brunswick postponed for further study

April 11, 2016

On Friday, the Province of New Brunswick announced that it would not proceed at this time with the recently proposed changes to binding interest arbitration. The Province announced that a joint labour management committee will be struck to examine…

Read More

Client Update: Universal interest arbitration proposed for New Brunswick

April 5, 2016

On March 29, 2016, the Province of New Brunswick tabled proposed changes to the Industrial Relations Act and the Public Services Labour Relations Act. If passed, these changes would dramatically alter well-established principles of private sector collective bargaining.…

Read More

Search Archive


Scroll To Top