Awards Measured by Benefit: Restitution
| Author | Jamie Cassels |
| Pages | 281-319 |
281
CHA PTER 7
AWARDS MEASURED BY
BENEFIT: RESTITUTION
A. INTRODUCTION
The word “restitution” refers both to a particular ty pe of remedy and also
to a body of substantive law regardi ng civil liability. As a type of remedy,
restitution is available in specific common law and equitable causes of
action to strip unjust gains from a w rongdoer. The basis of rest itution is
corrective justice because it seek s to restore a disturbed equil ibrium be-
tween the partie s brought about by the unjust enrichment of the defend-
ant at the plaintiff ’s expense.1 As a body of substantive law, restitution
has emerged as a new basis of liability or cause of action, independent of
contract and tort, aimed at preventing unjust enr ichment.
Both type s of restitution are grounded in the principle of unjust
enrichment. As a body of subst antive law, the obligations encompassed
in the law of restitution are organi zed around the moral notion that the
law should prevent wrongful or unjust gains made at the ex pense of
1 See Peel (Regional Municipality) v Canada, [1992] 3 SCR 762 at 804, McLachlin
J [Peel]; Kingstreet Invest ments Ltd v New Brunswick (De partment of Finance),
2007 SCC 1 at para 32; James Gord ley, Foundations of P rivate Law: Property,
Torts, Unjust Enrichment (Oxford, New York: Oxford Uni versity Press, 2006) at
445–4 6; EJ Weinrib, “Re stitutionary Dam ages as Corrective Justice” (2000) 1:1
Theoretical Inqui ries in Law Article 1, onl ine: www.bepress.com/ti l/default/
vol1/iss1/art1.
REMEDIES: THE L AW OF DAMAGES282
others. In Kerr v Baranow,2 the Supreme Court of Canada summar ized
the basis of unjust enrichment claims: “At the heart of the doctrine of
unjust enrichment lies the notion of restoring a benefit which justice
does not permit one to retain . . . For recovery, something must have
been given by the plainti ff and received and retained by the defendant
without juristic reason.” And while restitutionary reme dies can be said
to “compensate” the plaintiff for wrongdoing, they are measured by
the wrongful benefit to the defendant regardless of the plaintif f’s loss,
if any.
Restitutionary remedies are, therefore, not strictly compensatory.
While they do usually provide compensation for losses suffered by the
plaintiff, they are me asured not by what the plaintiff has lost but by
what the defendant has gain ed. In the result, award s based on resti-
tution may be more or less than t he pecuniary ha rm suffered by the
plaintiff. They are, of course, attractive to a plaintiff when it is difficult
to establish a loss, but the defendant ha s made a wrongful profit. Courts
have sometimes declined to award re stitutionary remedies where to do
so could possibly overcompensate the plaintiff.3
The law of restitution has been developing rapidly over the past four
decades. Restitutionar y remedies have long been available for a number
of specified common law and equitable wrongs. For example, in action s
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 remedies
for breach of trust and resci ssion. Many of these historical categories of
liability are illustrated later in this chapter.
More recently these disparate remedies have been aggregating
under the general heading of unjust enrichment. The concept of unjust
enrichment, in tur n, has evolved from a mere description of these rem-
[Kerr].
3 For a discussion of t he appropriateness of compensat ory or restitutionary r em-
Canpar Holdings Ltd v Petrobank Energ y and Resources Ltd, 2011 ABCA 62. In
Freyberg, t he defendant oil company had comm itted conversion by producing
oil from the plai ntiff’s land without p aying her royalties. The court aw arded a
compensator y remedy, not a restit utionary one. However, in Montreal Trust Co
v Williston Wild catters Corp, 2004 SKCA 116, leave to appea l to SCC refused,
[2004] SCCA No 474 [Montreal Trust], the defendant’s lease on the plai ntiff’s
land had ex pired, yet it continued to operate a well for min es and minerals. The
court held that t he conversion in that case war ranted restitutiona ry damages in
the form of accounti ng (royaltie s).
Awards Measure d by Benefit: Restitution 283
edies to an independent body of substant ive law (including principles
of liability) and an autonomous basis of civil liability. In particular,
the fiction that restitution tur ned on there being an implied contract
between the partie s has been abandoned. As the House of Lords stat-
ed, “The alleged contract by the blackmailer and t he 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 action then ex isted
could give the injured person a reasonable remedy.”4 These “fantastic
resemblances of contracts i nvented in order to meet the requirement
of the law as to forms of action”5 are no longer necessary. Freed from
the forms of action, courts now recogni ze that restitutionar y remedies
are imposed by law, not by the parties, and are g rounded in unjust
enrichment, not consent. Somewhat arbitrar ily, this more recent trend
in Canada may be traced to the 1954 case of Deglma n v Guaranty Trust
Co6 in which the Supreme Court of Canad a ordered a restitutionary
remedy to a plaintiff who had conferred benefits on his aunt under an
unenforceable contract. The Court acknowledged that the obligation to
pay was “based not on contract, but on an obligation imposed by law”7
in order to prevent unjust enrichment.
B. THE PRINCIPLE OF UNJUST ENRICHMENT
The writers of texts have long urged th at the specific remedies noted
above are better understood as part of an autonomous body of law
known as restitution.8 This body of law is organized around the pr in-
ciple of unjust enrichment. This is the posit ion in the United States,
and Canadian cour ts have moved substantially in this direction.
Prominent statements of the principle of unjust enrich ment include
the early and famous dictum of Lord Mansfield in Moses v Macfer-
lan9 — “the gist of this k ind of action is that the defendant, upon the
circumstances of the case, is obliged by the ties of natural justice and
equity to refund the money.” More contemporary are those found
in the American L aw Institute’s Restatement (Third) of the Law of
5 Ib id at 29.
6 Deglman v Guaran ty Trust Co of Canad a, [1954] SCR 725 [Deglman].
7 Ibid at 734.
8 See, for exa mple, R Goff & G Jones, The Law of Restitution, 6 th ed (London:
Sweet & Maxwell, 2 002); PD Maddaugh & JD McCamu s, The Law of Restitution,
loose-leaf (Aurora, ON: Can ada Law Book, 2004–).
9 (1760), 2 Burr 1005 at 1012, 97 ER 676 (KB).
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