Awards Measured by Benefit: Restitution
| Author | Jamie Cassels/Elizabeth Adjin-Tettey |
| Profession | Professor of Law, Vice President Academic, and Provost, University of Victoria/Professor of Law, University of Victoria |
| Pages | 249-280 |
CHAPTER 7
AWARDS MEASURED BY
BENEFIT: RESTITUTION
A. INTRODUCTION
The word “restitution” refers both to a particul ar type of remedy and also
to a body of substantive law regarding civil liability. As a type of remedy,
restitution i s avail able in specific common law and equitable causes of
action to strip unjust gain s from a wrongdoer. The basis of restitution is
corrective justice because it seeks to restore a disturbed equil ibrium be-
twee n the par ties bro ught about b y the unju st enric hment of t he defend-
ant at the plaintiff’s expense.1 As a body of substantive law, restitution
has e merged as a new basis of li ability or cau se of action , independe nt of
contract and tort, aimed at preventing unjust enrichment.
Both type s of restitution are grounded in the principle of unjust
enrichment. As a body of substantive law, the obligations encompassed
in the law of restitution are organized around the moral notion that the
law should prevent wrongful or unjust gains made at the ex pense of
others. And while restitutionar y rem edie s can be said to “compensate”
1 See Peel (Regional Municipalit y) v. Canada, [1992] 3 S.C.R. 762 at 804, McLach lin
J. [Peel]; Kingstreet Investments Ltd . v. New Bruns wick (Department of Finance),
2007 SCC 1 at para. 32; James Gord ley, Foundatio ns of Private Law: Property,
Torts, Unjust Enrichment (Oxford, New York: Oxford Uni versity Press, 2006) at
445–4 6; E.J. Weinrib (2000) “Re stitutionary Damage s As Corrective Justice”
Theoretical Inqui ries in Law: Vol. 1: No. 1, Article 1, online: ww w.bepress.com /
til/default/vol1/iss1/art1.
249
REMEDIES: THE L AW OF DAMAGES250
the plaintiff for wrongdoing, they are measured by the wrongful benefit
to the defendant regardless of the plaintiff ’s loss, if any.
Restitutionary remed ies are, therefore, not strictly compensator y.
While they do usually provide compensation for losses suffered by the
plaintiff, they are measured not by what the plaintiff has lost but by
what the defendant has gained. In the result, awards based on resti-
tution may be more or less than the pecuniar y harm suffered by the
plaintiff. They are, of course, attractive to a plaintiff when it is difficult
to establish a loss, but the defendant has made a wrongful profit.
The law of restitution has been developing rapidly over the past four
decades. Restitutionary remedies have long been available for a number
of specified common law and equitable wrongs. For example, in actions
of “quasi contract” courts would imply agreements between the parties
in order to justify an order for the return of money mistakenly paid by
one to the other, or payment for services rendered at the defendant’s re-
quest. On the equitable side, courts employed restitutionary remedie s
for breach of trust and rescis sion. Many of these historical categories of
liability are illustrated later in this chapter.
More recently these di sparate remedies have been aggregat ing
under the general heading of unjust enrichment. The concept of unjust
enrichment, in turn, has evolved from a mere description of these rem-
edies to an independent b ody of subst antive law (including principles
of liability) and an autonomous basis of civil liability. In particular,
the fiction that restitution turned on there being an i mplied contract
between the part ies ha s been abandoned. As the House of Lords stat-
ed, “The alleged contract by the blackmailer and the robber was never
made and never could be. The law, in order to do justice, imputed to
the wrongdoer a promise which alone as forms of act ion then existed
could give the injured person a reasonable remedy.”2 These “fantastic
resemblances of contracts invented in order to meet the requirement
of the law as to forms of action”3 are no longer necessar y. Freed from
the forms of action, court s now recognize t hat restitutionar y remedies
are imposed by law, not by the parties, and are grounded in unjust
enrichment, not consent. Somewhat arbitrarily, this more recent trend
in Canada may be traced to the 1954 case of Deglman v. Guaranty Trust
Co.4 in wh ich t he Supreme Court of Canada ordered a restitutionary
remedy to a plai ntiff who h ad conferred benefit s on his aunt under an
unenforceable contract. The Court acknowledged that the obligation to
3 Ibid. at 29.
4 Deglman v. Guaranty Trust Co. of Canada, [1954] S.C.R. 725 [Deglman].
Awards Measure d by Benefit: Restitution 251
pay was “based not on contract, but on an obligation imposed by law”5
in order to prevent unjust enrichment.
B. THE PRINCIPLE OF UNJUST ENRICHMENT
The writers of texts have long urged that the specific remedies noted
above are better understood as part of an autonomous body of law
known as restitution. This body of law is organi zed around the princi-
ple of unjust enrichment. This is the position in the United States, and
Canadian courts have moved substantially in this direct ion. Prominent
statements of the principle of unjust enr ichment include the ea rly and
famous dictum of Lord Mansfield in Moses v. Macferlan6 — “the gist of
this kind of action is that the defendant, upon the circumstances of
the ca se, is obliged by the ties of natural justice a nd equity to refund
the money.” More contemporary are those found in t he American Law
Institute’s Restatement (Third) of the Law of Restitution and Unjust En-
richme nt:7 “A person who is unjustly enriched at the expense of another
is li able in restitution to the other”; Lord Wright’s speech in Fibrosa ,8
that “any civilized system of law is bound to provide remedies for cases
of what has been called unjust enrichment or unjust benefit, that is to
prevent a man from retaining the money of or some benefit derived
from another which it is against conscience that he should keep.”
In Canada the development of the law of unjust enrichment has
been achieved primarily through the evolution of the constructive
trust. In a series of cases involving the property rights of cohabiting
couples (begi nning with Rathwell v. Rathwell9 a nd Pettkus v. Becker10),
the Supreme Court of Canada substantially consolidated the principles
of unjust enrichment.11 In these cases the Court affirmed th at, when
one cohabitee contributes in money or service s towards the acquisi-
tion of property by the other, the principle of unjust enrichment may
5 Ibid. at 734.
6 (1760), 2 Burr. 1005 at 1012, 97 E.R. 676 (K.B.).
7 American L aw Institute, Restatem ent (Third) of Restitution and Unjust Enrich-
ment (Tentative Drafts) (Philadelphi a, PA: America n Law Institute, 2000 –2006)
at § 1 [Restatement (Third)].
8 Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barb our Ltd., [1943] A.C. 32 at
61 (H.L.).
10 [1980] 2 S.C.R. 834 [Pettk us].
11 See al so Sorochan v. Sorochan, [1986] 2 S.C.R. 38 [Sorochan]; Peter v. Beblow,
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