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Equity - Remedies - Monetary. Chippewas of Nawash Unceded First Nation v. Canada (Attorney General)
In Chippewas of Nawash Unceded First Nation v. Canada (Attorney General) (Ont CA, 2023) the Court of Appeal considers an indigenous claim against municipalities where, historically, the Crown allowed 'settler squatting' on native land. The indigenous claim asserted an 'institutional constructive trust' over "municipal roads and unopened road allowances" insofar as they were later conveyed to the municipalities.
In these quotes the court considers principles of equitable compensation (ie. monetary compensation as opposed to a proprietary constructive trust), including the effect of laches (delay):(ii) Contrasting the constructive trust with equitable compensation
[271] The court more recently considered principles of equitable compensation in Southwind v. Canada, 2021 SCC 28, 459 D.L.R. (4th) 1. A project to flood reserve lands was advanced without the consent of the First Nation, as well as without compensation or lawful authorization. The court noted that the constructive trust is a gains-based remedy, measured by the fiduciary’s gain rather than the plaintiff’s loss: at para. 67. It indicated that, when the Crown breaches its fiduciary duty, the remedy will seek to restore the plaintiff to the position the plaintiff would have been in had the Crown not breached its duty. When it is possible to restore the plaintiff’s assets in specie, a constructive trust and accounting for profits are often appropriate, but when restoring the plaintiff’s assets in specie is not available, equitable compensation is the preferred remedy: at para. 68.
[272] The court went on to hold, at para. 73, that fiduciary remedies are shaped by the particular fiduciary duty at play in a given case:There must be a close relationship between the fiduciary duty and the fiduciary remedy, and the fiduciary duty must “forcefully shape the content of [the] fiduciary remed[y]”. Thus, while factual causation will always apply to equitable compensation in the sense that the fiduciary’s breach must cause in fact the plaintiff’s loss, common law limiting factors will not readily apply because of the nature of the fiduciary relationship and obligations. [Citation omitted.] (iii) Unjust enrichment
[273] SON also relies upon Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, for the proposition that a constructive trust can be imposed upon property in the hands of a person who is innocent of any wrongdoing. In that case, a husband and wife agreed that the wife would pay the premiums upon an insurance policy on his life and that he would continue to name her as beneficiary of the policy. Instead, the husband named his new common law spouse as beneficiary, while the former wife continued to pay the premiums. The court treated this as a case of unjust enrichment – the first wife was deprived of the insurance proceeds and the common law spouse was enriched. Absent a juristic reason for the enrichment of the common law spouse, a prima facie case of unjust enrichment was established and the common law wife then had the onus to establish some residual reason why the enrichment should be maintained. At this stage, the reasonable expectations of the parties, as well as moral and policy-based arguments, were relevant: at para. 83.
[274] The court noted, at para. 89 of Moore, that a personal remedy – essentially a debt or money obligation – is the default remedy for unjust enrichment. A court will impress the disputed property with a constructive trust only if the plaintiff can establish that a personal remedy would be inadequate: at para. 91. Further, the plaintiff must also establish that their contribution underlying the action is “linked or causally connected to the property over which a constructive trust is claimed”: at para. 91. In Moore, for instance, the first wife’s payment of the premiums meant that the proceeds of the policy were causally connected to the premiums she paid, a further factor justifying the imposition of a constructive trust.
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(iii) Adverse effects on third parties
[289] Thirdly, a long time has passed. The Crown’s failure to act with adequate diligence here transpired over a period of 18 years, from 1836 to 1854. The municipalities have relied on the treaty surrender, and the Crown title that followed, to build road infrastructure which covers the land in a network. Others have undoubtedly relied on the roads to construct lives for themselves over many years.
[290] Deterrence of wrongful conduct by the municipalities is not a factor here. As acknowledged by SON, the municipalities are utterly innocent of any wrongdoing. In Indalex, at paras. 239-40, Cromwell J. concluded that it would be unfair to creditors to impress the funds in issue with a constructive trust. Here, we are persuaded that it would be unfair to the municipalities to impress roads and road allowances with the constructive trust claimed.
[291] We are also not persuaded that Moore has any application here. Moore involved a claim for unjust enrichment in a binary dispute in a domestic context. The issue there, whether there was a juristic reason for the enrichment, is not engaged here.
(iv) Equitable compensation from the Crown would be an appropriate remedy for the failure to diligently perform the treaty promise
[292] Finally, we are persuaded that equitable compensation, payable by the Crown, would be an effective remedy in the circumstances, taking into consideration the importance SON attaches to its lands, surrendered for reasons it considered appropriate at the time. As the trial judge noted:Considering all of the evidence, and all of the issues raised by SON in relation to the process leading up to the treaty, I find that Oliphant did not lie or misrepresent the Crown’s ability, in October 1854, to stop squatting. I further find that SON’s decision to enter into Treaty 72 was not affected by Oliphant’s statements or process. SON had shown they were fully capable of saying no, but this time SON reached terms that they agreed on. [293] The trial judge did not accept SON’s arguments that Crown failures led to the surrender in Treaty 72.
[294] We are not satisfied that “good conscience” demands that the municipalities’ roads and road allowances be transferred to SON. As Cromwell J. noted in Indalex, at para. 229, “while the remedial constructive trust may be appropriate in a variety of situations, the wrongdoer’s conduct toward the plaintiff must generally have given rise to assets in the hands of the wrongdoer (or of a third party in some situations) which cannot in justice and good conscience be retained” (emphasis added). Further, as noted in Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] 2 S.C.R. 574, at p. 678, “a constructive trust should only be awarded if there is reason to grant to the plaintiff the additional rights that flow from recognition of a right of property.”
[295] These principles apply in the determination of this appeal. While such authorities must be applied with caution in contexts where the honour of the Crown is the dominant principle, the assessment of an appropriate remedy cannot be divorced entirely from its historical context and existing jurisprudence about remedies.
[296] In Indalex, the pension plan members sought a constructive trust over funds “which arose only because of the process to which they now object”: at para. 233. Cromwell J., at para. 240, concluded that “[t]o impose a constructive trust in response to a breach of fiduciary duty to ensure for the plan beneficiaries some procedural protections that they in fact took advantage of in any case is an unjust response in all of the circumstances.” Similarly, the surrender in Treaty 72 ultimately enabled the surveys, road construction, and laying out of road allowances. Despite its dissatisfaction with the level of squatting, SON ultimately benefited financially from the pressure by settlers to acquire land in the surrendered regions.
[297] Quite apart from the issue of whether the municipalities can be qualified as bona fide purchasers for value without notice, it would be unjust to impose the constructive trust claimed upon them, regardless of whether the Crown failings are characterized as breach of treaty, breach of the honour of the Crown, or breach of fiduciary duties. Equitable compensation is more appropriate.
[298] The claim against the municipalities is dismissed. . Kerr v. Baranow
In Kerr v. Baranow (SCC, 2011) the Supreme Court of Canada develops the restitution law regarding monetary remedies, steering away from calculation based solely on quantum meruit to those including those calculated on a 'retention of an inappropriately disproportionate amount of wealth by one party', using the 'joint family venture' as the classical model:(4) The Approach to the Monetary Remedy
[80] The next step in the legal development of this area should be to move away from the false remedial dichotomy between quantum meruit and constructive trust, and to return to the underlying principles governing the law of unjust enrichment. These underlying principles focus on properly characterizing the nature of the unjust enrichment giving rise to the claim. As I have mentioned above, not all unjust enrichments arising between domestic partners fit comfortably into either a “fee-for-services” or “a share of specific property” mold. Where the unjust enrichment is best characterized as an unjust retention of a disproportionate share of assets accumulated during the course of what McLachlin J. referred to in Peter (at p. 1001) as a “joint family venture” to which both partners have contributed, the monetary remedy should reflect that fact.
[81] In such cases, the basis of the unjust enrichment is the retention of an inappropriately disproportionate amount of wealth by one party when the parties have been engaged in a joint family venture and there is a clear link between the claimant’s contributions to the joint venture and the accumulation of wealth. Irrespective of the status of legal title to particular assets, the parties in those circumstances are realistically viewed as “creating wealth in a common enterprise that will assist in sustaining their relationship, their well-being and their family life” (McCamus, at p. 366). The wealth created during the period of cohabitation will be treated as the fruit of their domestic and financial relationship, though not necessarily by the parties in equal measure. Since the spouses are domestic and financial partners, there is no need for “duelling quantum meruits”. In such cases, the unjust enrichment is understood to arise because the party who leaves the relationship with a disproportionate share of the wealth is denying to the claimant a reasonable share of the wealth accumulated in the course of the relationship through their joint efforts. The monetary award for unjust enrichment should be assessed by determining the proportionate contribution of the claimant to the accumulation of the wealth.
[82] This flexible approach to the money remedy in unjust enrichment cases is fully consistent with Walsh. While that case was focused on constitutional issues that are not before us in this case, the majority judgment was clearly not intended to freeze the law of unjust enrichment in domestic cases; the judgment indicates that the law of unjust enrichment, including the remedial constructive trust, is the preferable method of responding to the inequities brought about by the breakdown of a common law relationship, since the remedies for unjust enrichment “are tailored to the parties’ specific situation and grievances” (para. 61). In short, while emphasizing respect for autonomy as an important value, the Court at the same time approved of the continued development of the law of unjust enrichment in order to respond to the plethora of forms and functions of common law relationships.
[83] A similar approach was taken in Peter. Mr. Beblow argued that the law of unjust enrichment should not provide a share of property to unmarried partners because the legislature had chosen to exclude them from the rights accorded to married spouses under matrimonial property legislation. This argument was succinctly — and flatly — rejected with the remark that it is “precisely where an injustice arises without a legal remedy that equity finds a role”: p. 994.
[84] It is not the purpose of the law of unjust enrichment to replicate for unmarried partners the legislative presumption that married partners are engaged in a joint family venture. However, there is no reason in principle why remedies for unjust enrichment should fail to reflect that reality in the lives and relationships of unmarried partners.
[85] I conclude, therefore, that the common law of unjust enrichment should recognize and respond to the reality that there are unmarried domestic arrangements that are partnerships; the remedy in such cases should address the disproportionate retention of assets acquired through joint efforts with another person. This sort of sharing, of course, should not be presumed, nor will it be presumed that wealth acquired by mutual effort will be shared equally. Cohabitation does not, in itself, under the common law of unjust enrichment, entitle one party to a share of the other’s property or any other relief. However, where wealth is accumulated as a result of joint effort, as evidenced by the nature of the parties’ relationship and their dealings with each other, the law of unjust enrichment should reflect that reality.
[86] Thus the rejection of the remedial dichotomy leads us to consider in what circumstances an unjust enrichment may be appropriately characterized as a failure to share equitably assets acquired through the parties’ joint efforts. While this approach will need further refinement in future cases, I offer the following as a broad outline of when this characterization of an unjust enrichment will be appropriate.
(5) Identifying Unjust Enrichment Arising From a Joint Family Venture
[87] My view is that when the parties have been engaged in a joint family venture, and the claimant’s contributions to it are linked to the generation of wealth, a monetary award for unjust enrichment should be calculated according to the share of the accumulated wealth proportionate to the claimant’s contributions. In order to apply this approach, it is first necessary to identify whether the parties have, in fact, been engaged in a joint family venture. In the preceding section, I reviewed the many occasions on which the existence of a joint family venture has been recognized. From this rich set of factual circumstances, what emerge as the hallmarks of such a relationship?
[88] It is critical to note that cohabiting couples are not a homogeneous group. It follows that the analysis must take into account the particular circumstances of each particular relationship. Furthermore, as previously stated, there can be no presumption of a joint family venture. The goal is for the law of unjust enrichment to attach just consequences to the way the parties have lived their lives, not to treat them as if they ought to have lived some other way or conducted their relationship on some different basis. A joint family venture can only be identified by the court when its existence, in fact, is well grounded in the evidence. The emphasis should be on how the parties actually lived their lives, not on their ex post facto assertions or the court’s view of how they ought to have done so.
[89] In undertaking this analysis, it may be helpful to consider the evidence under four main headings: mutual effort, economic integration, actual intent and priority of the family. There is, of course, overlap among factors that may be relevant under these headings and there is no closed list of relevant factors. What follows is not a checklist of conditions for finding (or not finding) that the parties were engaged in a joint family venture. These headings, and the factors grouped under them, simply provide a useful way to approach a global analysis of the evidence and some examples of the relevant factors that may be taken into account in deciding whether or not the parties were engaged in a joint family venture. The absence of the factors I have set out, and many other relevant considerations, may well negate that conclusion.
(a) Mutual Effort
[90] One set of factors concerns whether the parties worked collaboratively towards common goals. Indicators such as the pooling of effort and team work, the decision to have and raise children together, and the length of the relationship may all point towards the extent, if any, to which the parties have formed a true partnership and jointly worked towards important mutual goals.
[91] Joint contributions, or contributions to a common pool, may provide evidence of joint effort. For instance, in Murdoch, central to Laskin J.’s constructive trust analysis was that the parties had pooled their efforts to establish themselves in a ranch operation. Joint contributions were also an important aspect of the Court’s analyses in Peter, Sorochan, and Pettkus. Pooling of efforts and resources, whether capital or income, has also been noted in the appellate case law (see, e.g., Birmingham v. Ferguson, 2004 CanLII 4764 (Ont. C.A.); McDougall v. Gesell Estate, 2001 MBCA 3, 153 Man. R. (2d) 54, at para. 14). The use of parties’ funds entirely for family purposes may be indicative of the pooling of resources: McDougall. The parties may also be said to be pooling their resources where one spouse takes on all, or a greater proportion, of the domestic labour, freeing the other spouse from those responsibilities, and enabling him or her to pursue activities in the paid workforce (see Nasser v. Mayer-Nasser (2000), 2000 CanLII 5654 (ON CA), 5 R.F.L. (5th) 100 (Ont. C.A.); Panara v. Di Ascenzo, 2005 ABCA 47, 361 A.R. 382, at para. 27).
(b) Economic Integration
[92] Another group of factors, related to those in the first group, concerns the degree of economic interdependence and integration that characterized the parties’ relationship (Birmingham; Pettkus; Nasser). The more extensive the integration of the couple’s finances, economic interests and economic well-being, the more likely it is that they should be considered as having been engaged in a joint family venture. For example, the existence of a joint bank account that was used as a “common purse”, as well as the fact that the family farm was operated by the family unit, were key factors in Dickson J.’s analysis in Rathwell. The sharing of expenses and the amassing of a common pool of savings may also be relevant considerations (see Wilson; Panara).
[93] The parties’ conduct may further indicate a sense of collectivity, mutuality, and prioritization of the overall welfare of the family unit over the individual interests of the individual members (McCamus, at p. 366). These and other factors may indicate that the economic well-being and lives of the parties are largely integrated (see, e.g., Pettkus, at p. 850).
(c) Actual Intent
[94] Underpinning the law of unjust enrichment is an appropriate concern for the autonomy of the parties, and this is a particularly important consideration in relation to domestic partnerships. While domestic partners might not marry for a host of reasons, one of them may be the deliberate choice not to have their lives economically intertwined. Thus, in considering whether there is a joint family venture, the actual intentions of the parties must be given considerable weight. Those intentions may have been expressed by the parties or may be inferred from their conduct. The important point, however, is that the quest is for their actual intent as expressed or inferred, not for what in the court’s view “reasonable” parties ought to have intended in the same circumstances. Courts must be vigilant not to impose their own views, under the guise of inferred intent, in order to reach a certain result.
[95] Courts may infer from the parties’ conduct that they intended to share in the wealth they jointly created (P. Parkinson, “Beyond Pettkus v. Becker: Quantifying Relief for Unjust Enrichment” (1993), 43 U.T.L.J. 217, at p. 245). The conduct of the parties may show that they intended the domestic and professional spheres of their lives to be part of a larger, common venture (Pettkus; Peter; Sorochan). In some cases, courts have explicitly labelled the relationship as a “partnership” in the social and economic sense (Panara, at para. 71; McDougall, at para. 14). Similarly, the intention to engage in a joint family venture may be inferred where the parties accepted that their relationship was “equivalent to marriage” (Birmingham, at para. 1), or where the parties held themselves out to the public as married (Sorochan). The stability of the relationship may be a relevant factor as may the length of cohabitation (Nasser; Sorochan; Birmingham). When parties have lived together in a stable relationship for a lengthy period, it may be nearly impossible to engage in a precise weighing of the benefits conferred within the relationship (McDougall; Nasser).
[96] The title to property may also reflect an intent to share wealth, or some portion of it, equitably. This may be the case where the parties are joint tenants of property. Even where title is registered to one of the parties, acceptance of the view that wealth will be shared may be evident from other aspects of the parties’ conduct. For example, there may have been little concern with the details of title and accounting of monies spent for household expenses, renovations, taxes, insurance, and so on. Plans for property distribution on death, whether in a will or a verbal discussion, may also indicate that the parties saw one another as domestic and economic partners.
[97] The parties’ actual intent may also negate the existence of a joint family venture, or support the conclusion that particular assets were to be held independently. Once again, it is the parties’ actual intent, express or inferred from the evidence, that is the relevant consideration.
(d) Priority of the Family
[98] A final category of factors to consider in determining whether the parties were in fact engaged in a joint family venture is whether and to what extent they have given priority to the family in their decision making. A relevant question is whether there has been in some sense detrimental reliance on the relationship, by one or both of the parties, for the sake of the family. As Professor McCamus puts it, the question is whether the parties have been “[p]roceeding on the basis of understandings or assumptions about a shared future which may or may not be articulated” (p. 365). The focus is on contributions to the domestic and financial partnership, and particularly financial sacrifices made by the parties for the welfare of the collective or family unit. Whether the roles of the parties fall into the traditional wage earner/homemaker division, or whether both parties are employed and share domestic responsibilities, it is frequently the case that one party relies on the success and stability of the relationship for future economic security, to his or her own economic detriment (Parkinson, at p. 243). This may occur in a number of ways including: leaving the workforce for a period of time to raise children; relocating for the benefit of the other party’s career (and giving up employment and employment-related networks as a result); foregoing career or educational advancement for the benefit of the family or relationship; and accepting underemployment in order to balance the financial and domestic needs of the family unit.
[99] As I see it, giving priority to the family is not associated exclusively with the actions of the more financially dependent spouse. The spouse with the higher income may also make financial sacrifices (for example, foregoing a promotion for the benefit of family life), which may be indicative that the parties saw the relationship as a domestic and financial partnership. As Professor Parkinson puts it, the joint family venture may be identified where[o]ne party has encouraged the other to rely to her detriment by leaving the workforce or forgoing other career opportunities for the sake of the relationship, and the breakdown of the relationship leaves her in a worse position than she would otherwise have been had she not acted in this way to her economic detriment. [p. 256] (6) Summary of Quantum Meruit Versus Constructive Trust
[100] I conclude:1. The monetary remedy for unjust enrichment is not restricted to an award based on a fee-for-services approach.
2. Where the unjust enrichment is most realistically characterized as one party retaining a disproportionate share of assets resulting from a joint family venture, and a monetary award is appropriate, it should be calculated on the basis of the share of those assets proportionate to the claimant’s contributions.
3. To be entitled to a monetary remedy of this nature, the claimant must show both (a) that there was, in fact, a joint family venture, and (b) that there is a link between his or her contributions to it and the accumulation of assets and/or wealth.
4. Whether there was a joint family venture is a question of fact and may be assessed by having regard to all of the relevant circumstances, including factors relating to (a) mutual effort, (b) economic integration, (c) actual intent and (d) priority of the family.
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