Unjust enrichment is an equitable cause of action. It stems from an ancient principle that no person should be allowed to benefit (be enriched) at another’s expense (deprivation) without there being some valid reason in law for this to have occurred. The remedy is made in equity through a restoration (restitution). In effect, the benefit (enrichment) is transferred to the person who was wrongfully deprived.
It must be remembered that the parties to the action are most often both innocent in the sense of having done nothing to create the situation. This aspect is one of the most difficult obstacles to finding one party entitled and successful, and the other, also innocent, to be deprived of a benefit to which they were on the face of the common law, entitled to.
Not a Claim in Contract
Unjust enrichment is sometimes referred to as a contractual, or quasi-contractual, cause of action, but this is incorrect. The remedy does not depend on a contract. In almost all such cases no contract exists between the enriched and the deprived. If there was a contract the remedy would lie in a breach of that contract and damages. This mischaracterization is likely the result of the usual request made in an unjust enrichment action for the court to find a quasi or assumed contract in the circumstances.
Elements of Unjust Enrichment
A plaintiff will succeed on the cause of action in unjust enrichment if they can show:
(a) that the defendant was enriched;
(b) that the plaintiff suffered a corresponding deprivation; and
(c) that the defendant’s enrichment and the plaintiff’s corresponding deprivation occurred in the absence of a juristic reason.
These three elements are now known as the “principled unjust enrichment framework”.
No Longer Based on Fixed Categories
Historically, a “category” of recovery was necessary to succeed. These would be situations where a plaintiff conferred a benefit on a defendant by mistake, under compulsion, out of necessity, as a result of a failed or ineffective transaction, or at the defendant’s request. Although these discrete categories exist independently of one another, they are each premised on the existence of some injustice in permitting the defendant to retain the benefit that he or she received at the plaintiff’s expense.
The Modern Approach is Flexible
The principled approach to unjust enrichment is a flexible one that allows courts to identify circumstances where justice and fairness require one party to restore a benefit to another. Recovery is therefore not restricted to cases that fit within the categories under which the retention of a conferred benefit was traditionally considered unjust.
As was said by the Supreme Court of Canada (SCC) in Peel (Regional Municipality) v. Canada;
The tripartite principle of general application which this Court has recognized as the basis of the cause of action for unjust enrichment is thus seen to have grown out of the traditional categories of recovery. It is informed by them. It is capable, however, of going beyond them, allowing the law to develop in a flexible way as required to meet changing perceptions of justice.
Many of the recent cases have evolved from “family law” relationships where a partner was deprived of a benefit that they in many ways helped to create. The usual tool of remedy is the constructive trust. However, these cases are equally adaptable to other substantive areas of law making the concept of unjust enrichment an important tool in the arsenal of the civil litigator to resolve a wide variety of corporate and commercial disputes, insurance disputes, real estate disputes, and other disputes.
If you feel you have been wrongfully deprived of a benefit, please contact the Toronto litigators at Milosevic Fiske LLP. We believe we are among the best litigation teams in Toronto. We are in court or in mediations almost every day and are skilled at thinking on our feet and rolling with the punches. Over the years we have seen and responded to it all and our impressive track record speaks for itself. We represent clients in complex commercial litigation matters, from contract and partnership disputes, to complex multi-party commercial claims. Call us at 416-916-1387 or contact us online for a consultation.