Supreme Court of Canada orders repayment of pension benefits made in error
The Supreme Court of Canada has ruled in Threlfall v. Carleton University that a Quebec woman must repay nearly half a million dollars she had collected on behalf of a missing member of the Carleton University pension plan while the member was missing for a period of nearly six years.1 The plan administrator was able to recover payments it had made after it was discovered that the member had in fact died shortly after his disappearance.
On September 10, 2007, a retired former professor suffering from Alzheimer’s disease disappeared while on a walk near his home. As a member of the university’s pension plan, he had been in receipt of a pension benefit which, under the terms of the plan and the option he selected, was payable for the rest of his life, with no survivor benefits.
Upon his disappearance, the retiree became an “absentee” within the meaning of articles 84 and 85 of the Civil Code of Québec (CCQ), and was therefore presumed to be alive for seven years following his disappearance, unless proof of his death was made before then. As required under the CCQ’s absentee regime, the plan administrator continued to pay the pension to the member’s “tutor”—the person appointed by a court to administer the absentee’s property—who was also his former spouse and his sole heir.
The member’s remains were discovered almost six years following his initial disappearance. A coroner concluded he had died sometime in 2007 and the province’s Registrar of Civil Status recorded his death as having occurred on September 11, 2007, one day after he had gone missing. The administrator of the Carleton University pension plan then sought to recover the payments it had made during the period between the member’s disappearance and the discovery of his remains.
On October 31, 2019, the Supreme Court of Canada ruled in favour of the administrator, upholding the decisions of the Quebec Court of Appeal and the trial judge, who had ordered the deceased member’s spouse to repay approximately $500,000 in pension benefits that had been paid while the member was missing.
The court ruled that the presumption that the absentee is alive is extinguished retroactively to the time he actually died, rather than prospectively from when his death was discovered. In the court’s view, the presumption of life created under the CCQ did not create any permanent substantive rights, and could be rebutted by new facts. Since the member was in fact dead during the period in which he had been presumed to be alive, and since the plan’s obligation to pay his pension ended on upon his death, the continued pension payments the administrator had made were not required in order to satisfy a genuine debt and therefore represented a “payment not due” under the CCQ.
While the facts of this case are unusual, the court’s ruling highlights that, in general, pension payments made in error or to those without genuine entitlements will be recoverable by pension plan administrators when the true facts are discovered. It also highlights that family members are responsible for notifying the pension plan administrator of the death of a pension plan member and that payments mistakenly continued after the death of a member will generally be required to be returned to the pension plan.
1 2019 SCC 50.