SCC rules pension benefits paid for deceased man must be returned

A person who received pension benefits for a man who was missing for several years must now repay that man’s former employer, the Supreme Court of Canada (SCC) has ruled.

In a decision handed down on Thursday, the top court ruled that Carleton University is entitled to the return of pension payments that it continued making after a retiree disappeared on a walk.

The retired man — referred to as R in the SCC judgment — was initially presumed to be alive, but once his remains were discovered after almost six years, he was deemed to have died the day after he disappeared.

Given that the pension payouts should have stopped immediately after R died, his former employer sought repayment of the pension benefits it paid while he was deemed missing.

A trial court ruled in favour of the employer, and its decision was upheld on appeal.

In a split decision, the SCC upheld the original ruling, dismissing an appeal from the retiree’s former spouse.

“The pension plan unambiguously contemplated the termination of benefits upon R’s actual death, not the date his death was officially recognized,” the SCC said in its majority opinion.

“Because the legal basis for the payments evaporated, R’s former employer’s claim for receipt of a payment not due […] must succeed: assessed retrospectively, the payments were made in error,” the court found.

The dissenting opinion said that the appeal should be allowed, arguing the discovery of R’s remains should only put an end to future pension payouts, and that restitution of past payouts shouldn’t be required.

“There was no mistaken belief that the payment was due when it was made. The tutor’s enrichment is justified: the pension benefits were paid in accordance with the presumption of life,” the dissenting opinion said. “The former employer did not meet its burden to prove that the tutor had the obligation to return the pension payments received.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.