Unjust Enrichment

• Author: Stephen G.A. Pitel/Nicholas S. Rafferty
• Profession: Faculty of Law, University of Western Ontario/Faculty of Law, University of Calgary
• Pages: 288-306

288

CHAPTER 15

UNJUST ENRICHMENT

A. INTRODUCTION

The previous two chapters have considered the choice of law rules for

two well-known parts of the law of obligations, namely contract and

tort. Each of these area s of the law required litt le introductory explana-

tion. In contrast, unjust enrichment is less well understood, especially

by law students. One reason for this is that the law in this area de-

veloped much more recently in the common law than did contract and

tort. In addition, claims in this area arise less frequently. Accordingly,

a brief introduction to the core concepts is required.

In Canada, a claim to reverse an unjust enrichment requires the

plaintiff to show (i) that the defendant has been enriched; (ii) that the

enrichment is at the plainti ff’s expense; and (iii) that there is no “juris-

tic reason,” such as a contract or a gift, for the enrichment.1 A leading

example can be drawn from the area of mistaken payments. Consider

Anne, who think s she owes Bria n $100 and pays that amount to him. In

reality, Anne actually owed the $100 to Carrie. When Carrie demands

payment, Anne complies, and then asks Brian for the f‌irst $100 back. If

Brian refuses, we must determine the legal basis on which Anne could

recover the $100. She has no contract with Brian, and his retention of

the $100 paid to him is not a tort, so those areas of the law are of no

1Pettkus v. Becker, [1980] 2 S.C.R. 834 at 848, Dickson J.; Garland v. Consumers’

Gas Co., [2004] 1 S.C.R. 629 at para. 30, Iacobucci J.

Unjust Enrichment289

help. Anne’s claim is in unjust enrichment. There is no juristic reason

to which Brian can p oint as basis for his retaining the enr ichment. Anne

paid him by mistake, which vitiates the intent to transfer the money.

This is a very simple exa mple, but it could easily be modif‌ied to involve

a f‌inancial institution mistakenly transferring millions of dollars.

If all of the factual connections in an unjust enrichment case are

with the jurisdiction hearing the dispute, there is no choice of law

issue. However, it is easy to envisage situations where some of the con-

nections will be with other jurisdictions. Sticking with the mistaken

payments example, wire transfer payments can easily be made around

the world. In such cases, a choice of law rule for unjust enrichment

becomes essential.

However, we are immediately confronted with a signif‌icant diff‌i-

culty. Unlike for contract and tort, there is little authority for an unjust

enrichment choice of law rule. Several factors have combined to pro-

duce this situation. First, unjust enrichment was only recognized as a

distinct area of law in England in the 1990s, and in Canada there are

few cases prior to the 1980s. As a result, there was little opportunity to

develop a choice of law rule. Second, in light of the f‌irst factor, litigants

chose not to raise potential choice of law issues when they did arise.

They thought doing so would make the proceedings more complex and

less predictable. Third, in Canad a the substantive law of unjust enr ich-

ment is largely common law, and thus quite uniform across t he country,

reducing the number of possible case s. Fourth, in the few ca ses that did

arise, there was a tendency to accept the choice of law rule proposed by

leading academics rather than litigating the issue further.

Unjust enrichment therefore is quite different from other areas of

choice of law. It is diff‌icult to articulate the current rule with a high

degree of conf‌idence, which can be frustrating. Yet as more cases ar ise,

Canadian courts will be required to formulate a choice of law rule for

unjust enrichment. This will provide an excellent opportunity to debate,

using the core principles of choice of law, what the rule should be.

A f‌inal introductory point should be made about characterization.2

Because unjust enrich ment is a developing area of the law of obligations,

it is common to see disagreement s about whether a claim is one in unjust

enrichment or not. Part of this confusion f‌lows from the historic link

between unjust enrichment and restitution. Restitution is not a cause of

action, rather it is a remedy. It is a remedy measured not by the plaintiff ’s

2See Stephen G.A. Pitel, “Ch aracterisation of Unjust En richment in the Conf‌lict

of Laws” in Jason Neyer s, Mitchell McInnes, & Stephen G.A. Pite l, eds., Under-

standing Unjust Enrichme nt (Oxford: Hart, 2004).