Unjust Enrichment
| Author | Alan J. Lenczner, Q.C. |
| Pages | 99-121 |
Unjust
Enrichment
Alan
J.
Lenczner,
Q.CV
A.
INTRODUCTION
In
two
decisions released
by the
Supreme Court
of
Canada
in
2004,
the
Court
felt
that "some redefinition
and
reformulation"
of the
relatively
new
test
for
unjust enrichment
was
required.
It did so
because
it was
concerned trial
and
appellate courts
had
made awards based
on
purely
subjective
standards.
In
2004
the
Court hearkened back
to the
warning
that McLachlin
J.
signalled
in
1992'
when
she
wrote that there were jur-
isprudential tensions inherent
in
applying
the
concept
of
unjust enrich-
ment. There
was the
need
for
certainty
in the law and the
need
to do
justice
in the
individual case. There
was a
tension between
the
need
for
predictable rules upon which people
can
predicate their conduct
and the
desire
to
allow recovery where
the
retention
of the
benefit
in the
circum-
stances would
be
unjust.
McLachlin
J.
cited
'"frightful
images
...
of
judges
roaming willy-nilly over
the
restitutionary landscape with only their
in-
ner
voices
to
guide
them.'"2
She
wrote that
the
application
of the
test
for
unjust
enrichment should
not be
"case
by
case
'palm
tree'
justice."3
Thus
*
Alan
J.
Lenczner,
Q.C,
Partner
with
Lenczner Slaght Royce
Smith
Griffin
LLP in
Toronto.
1
See
Peel
v.
(Regional
Municipality)
v.
Canada,
[Peel].
2
Ibid,
at
785,
quoting
Mitchell
Mclnnes,
"Incontrovertible
Benefits
and the
Canadian
Law of
Restitution"
(1990)
12
Advocates'
Q. 323 at
352.
3
Ibid,
at
802.
99
loo
ALAN
J.
LENCZNER,
Q.C.
in
2004
the
Court took
up
McLachlin J.'s earlier challenge
and set
about
to
reformulate
the
tests
to
apply
to
underpin
the
cause
of
action
of
unjust
enrichment,
thereby hoping
to
provide more certain guidelines.
This paper will examine
the
leading "unjust enrichment" cases
from
Deglman
v.
Brunet
Estate4
of
1954
to
Pacific
National
Investments
Ltd.
v.
Victo-
ria
(City)5
of
November
2004.
ft
W1U
suggest that
the new
redefinition
and
reformulation
is a
good
first
step
by the
Court
but
that
it is not
explicit
enough,
is
backwards,
and not
user
friendly.
The
newly-defined test still
leaves
too
wide
a
discretion.
The
writer will suggest
a
statement
of the
tests which
is
easier
to
apply
and
consistent with
the
reported authori-
ties
to
date.
The
writer's
own
test
may be
more restrictive
of
application
than
the
Court intended.
It
is
certainly more restrictive than
the
expansive treatment that
a
great many scholars advocate.
B.
THE
SUPREME
COURT
OF
CANADA'S
REFORMULATION
Unjust
enrichment
is a
cause
of
action. Much confusion
has
reigned
in
the
past whether
it is a
cause
of
action
or a
remedy
or
both.
The
proper
view
at
present
is
that
it is a
cause
of
action.
The
remedy, when
it is
estab-
lished,
is
restitution
of the
benefit
by the
wrongdoer that corresponds
to
the
deprivation
suffered
by the
wronged party.
In
Garland
v.
Consumer's
Gas
Co.,
lacobucci
J. for a
unanimous Court acknowledged that:
As
a
general
matter
the
test
for
unjust
enrichment
is
well
established
in
Canada.
The
cause
of
action
has
three
elements:
(i)
an
enrichment
of
the
defendant;
(2) a
corresponding
deprivation
of the
plaintiff;
and
(3)
an
absence
of
juristic
reason
for the
enrichment
(Pettkus
v.
Becker,
834,
at p.
848;
Peel
(Regional Municipality)
v.
Canada,
762,
at p.
784.6
The
first
two
elements
are
easier
to
apply than
the
third, although
even,
as
will
be
later discussed,
the
concepts
of
enrichment
and
corre-
sponding deprivation have
led to
difficulties
and
misunderstanding.
It
is,
however,
the
third element,
an
absence
of
juristic
reason
for the en-
richment, that
has
bedevilled courts
and
scholars. lacobucci
J.
noted that
4
[1954] S.C.R.
725
[Deglman}.
5
[Pacific
National
Investments}.
6
Garland
v.
Consumers'
Gas
Co., [2004]
i
S.C.R.
629 at
para.
30
[Garland].
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