Unjust enrichment law is important to lawyers in Vancouver, B.C. practicing creditor’s remedies and business disputes law. To succeed in an unjust enrichment claim, the plaintiff must prove three elements: (1) that the defendant was enriched; (2) that the plaintiff suffered a corresponding deprivation; and (3) the absence of a juristic reason for the enrichment (Rathwell v. Rathwell,  2 S.C.R. 436, at pg. 455).
The first element (requiring the defendant to be enriched) is typically a straight-forward economic analysis, and includes enrichment via both money and services. Similarly, the second element (requiring a corresponding deprivation to the plaintiff) is often non-contentious, and includes deprivation of tangible property as well as deprivation of intangibles by, for example, the infringement of the plaintiff’s interests.
It is the third element (requiring an absence of juristic reason for the enrichment) that is the most complex and contentious, and is broken down into a two stage test.
At the first stage of the test, the plaintiff must prove that the facts do not fall within an established category of juristic reason. These categories include contract, disposition of law, donative intent and “other valid common law, equitable or statutory obligations” (Garland v. Consumers’ Gas Co.,  1 S.C.R. 629, para 44) (“Garland”).
At the second stage of the test, the defendant bears a de facto burden of proof to show some reason why the enrichment should be retained. Here, public policy and the parties’ reasonable expectations are important considerations (Garland, paras 45-46). Upon consideration of these factors, three scenarios are possible. First, the court might find and establish a new category of juristic reason. Second, the court may determine that there is a juristic reason in the particular circumstances in question that does not comprise a new category of juristic reason to be applied in other factual circumstances. Third, the court may determine that there was no juristic reason for the enrichment (in which case recovery should be allowed) (Garland, para 46).
Even if all three of the above elements are satisfied, a plaintiff will receive a remedy only if no defences apply. The most important defence to a claim in unjust enrichment is the change of position defence.
The change of position defence, which was accepted in Canada in Storthoaks Rural Municipality v. Mobil Oil Canada Ltd, (1975) 55 DLR (3d) 1, operates to prevent recovery from a defendant whose position has so changed that it would be inequitable in all the circumstances to require him to make restitution (The Law of Restitution, 3rd Edition, 2011 by Andrew Burrows, pg 525) (“Burrows”). The justification for the defence is that, through a change of position, the defendant has no longer been enriched, and so the first element in an unjust enrichment claim can no longer be satisfied: “although the defendant was initially enriched… the change of position defence responds to the fact that that enrichment has subsequently… been countered by causally related loss or detriment so that overall the defendant has not been enriched” (Burrows, pg 526).
If all three elements are satisfied and no defences apply, the court will move on to consider remedies, the two most important of which are monetary compensation and the constructive trust.
With respect to monetary compensation, the past practice was to employ one of several quasi-contractual remedies, such as money had and received, money paid, quantum meruit and quantum valebat. However, the modern approach does not involve placing the facts within a specific category of recovery; instead, it “appears now to be an accepted principle of Canadian law that there exists a general right to recover… the value of benefits conferred in circumstances where their retention without payment would constitute an unjust enrichment” (The Law of Restitution, 2013, by Peter Maddaugh and John McCamus, pg 4-10) (“Maddaugh”).
It is also possible for a constructive trust to arise in remedy of an unjust enrichment.
A trust is a relationship whereby title is split into two, with the legal title belonging to one party and the beneficial title belonging to another. The legal title holder holds the title for the benefit of the beneficial title holder. A trust is constructive when it is imposed by a court without regard to the intention of the parties, whether express or implied (Maddaugh, pg 5-5). Generally speaking, a constructive trust will be imposed only where monetary compensation is inadequate and there is a sufficient link between the enrichment and the property that will comprise the subject matter of the constructive trust. This link between enrichment and property is emphasized in the recent Restatement of the Law Third, Restitution and Unjust Enrichment: “If a defendant is unjustly enriched by the acquisition of title to identifiable property at the expense of the claimant or in violation of the claimant’s rights, the defendant may be declared a constructive trustee, for the benefit of the claimant, of the property in question and its traceable product.”
Thus, a plaintiff in an unjust enrichment action will be entitled to a remedy, likely monetary compensation or a constructive trust, where three elements are established and no defences apply. The three elements require (1) the defendant to be enriched, (2) the plaintiff to suffer a corresponding deprivation; and (3) absence of juristic reason for the enrichment. The most common defence to an unjust enrichment claim is change of position, which operates to negate the first element of the unjust enrichment action.