A B.C. insurance broker is entitled to more than $26,000 he received as a result of an accounting error in a settlement with his former brokerage.
The B.C. Supreme Court found that the money did not constitute “unjust enrichment,” as characterized by his former brokerage, Capri Insurance Services Ltd.
Capri released Cameron Lineker, a partner in the brokerage, in August 2008. The brokerage and Lineker then negotiated a ‘Redemption Agreement,’ which was executed in February 2009.
The Redemption Agreement called for Lineker to receive $948,259 – the estimated value of 20,000 ‘Trust Units’ he received when he became a partner in 2004. It also called for this amount to be reduced by almost $353,000 for a loan Lineker received from the brokerage to pay for the Trust Units he received, as well as for outstanding commission payments he owed to the brokerage as a result of unpaid client premiums. The broker ultimately received $595,509 in the settlement.
The Redemption Agreement said $948,259 was an estimate based on a formula that has been used historically to determine the amount. It was subject to adjustment once the brokerage’s financial statements were finalized at year-end.
The brokerage later found that it has made an accounting error, effectively double-counting commissions in the calculation of the value of the Trust Units.
For example, it included $26,246 for Lineker’s estimated commissions earned for the months of September to December 2008. It also included $21,340 for the actual commissions earned by the broker during that same time period.
“In other words, the plaintiff was overpaid $26,246 in respect of commissions for the period of September-December 2008,” the court wrote in its decision.
The court found that Lineker was in fact enriched because of the mistake, and the brokerage was deprived, but the enrichment was not “unjust.” Money paid out in error can be recovered for four reasons in law; the central issue in this case was whether the recipient had no legal, moral or equitable right to keep the money.
“In my view, the plaintiff [Lineker] has a legal right to retain the money by virtue of the Redemption Agreement,” B.C. Supreme Court Justice Gordon Weatherill wrote for the court.
