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Restitution (Specific) - Insurance

. Intact Insurance Company v. Zurich Insurance Company Ltd.

In Intact Insurance Company v. Zurich Insurance Company Ltd. (Ont CA, 2022) the Court of Appeal considered an unjust enrichment argument in the context of an EPA spill case:
(2) The Unjust Enrichment Claim

[71] As the Supreme Court stated in Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, at para. 37, to succeed in a claim for unjust enrichment, a plaintiff must show that:
(a) the defendant was enriched;

(b) the plaintiff suffered a corresponding deprivation; and

(c) the defendant’s enrichment and the plaintiff’s corresponding deprivation occurred in the absence of a juristic reason.
[72] The motion judge correctly referred to these requirements. Her application of this test to the facts is a matter of mixed fact and law, subject to a standard of review of palpable and overriding error absent any extricable error of law: Open Sez-A-Me-Inc. v. Drewlo Holdings Inc., 2018 ONSC 7670 (Div. Ct.), at para. 21; Rogers Communications Partnership v. Society of Composers, Authors and Music Publishers of Canada, 2016 FCA 28, 393 D.L.R. (4th) 354, at para. 124, leave to appeal refused, [2016] S.C.C.A. No. 119.

[73] In the motion judge’s view, the enriched party – the true beneficiary of any excess payments – was Intact’s own insured, TDB. Had Zurich or its insureds made these payments, this would have only increased the value of their counterclaims against TDB. She held this to be a juristic reason for any enrichment. As well, following Garland v. Consumers’ Gas Co., 2004 SCC 25, 2004 1 S.C.R. 629, at para. 46, she considered the reasonable expectations of the parties to be a residual, or second stage, reason to deny the claim. She found that the parties’ reasonable expectations were that Zurich would not pay unless the Minister made an order against its insureds, and that Intact made the excess payments in the face of that.

[74] Intact argues that the benefit analysis is flawed because the motion judge should have found that if Intact did not make the excess payments, the respondents would have had no choice but to do so. In other words, Intact argues that its excess payments constituted a “negative” benefit; the respondents were spared an expense they would otherwise have been required to undertake: Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, 1992 CanLII 21 (SCC), [1992] 3 S.C.R. 762, at p. 790. Although had the respondents made those payments, this might have increased their ultimate claim against TDB, Intact says that the initial benefit was enjoyed by the respondents, regardless of their ability to recover them from Intact’s insured.

[75] Intact also argues that the motion judge’s juristic reason analysis is flawed because the EPA did not require a transfer of wealth by it for the benefit of the respondents, and because the motion judge should have found that Intact did not share Zurich’s expectation and that Zurich’s expectation was unreasonable.

[76] I would not interfere with the motion judge’s conclusion that an unjust enrichment remedy is not available to Intact in these circumstances.

[77] First, counsel for Intact framed the unjust enrichment argument as being “based on an understanding of the framework under the EPA” and as a common law claim “based on the circumstances of the statute”. As counsel for Intact fairly pointed out in argument, the claim is aimed at fixing liability on Zurich, who cannot be reached under a s. 99(2)(a) claim even though, on Intact’s theory, the other respondents – Zurich’s insureds – have liability to Intact under that section. But on the view I have taken of the s. 99(2)(a) claim, none of the respondents has any liability to Intact under this provision. Giving effect to the unjust enrichment claim would make it a remedy for Intact against all the respondents in circumstances where the legislative scheme has not created any.

[78] Second, I am not persuaded by Intact’s argument that the only salient question in the benefit analysis is whether, if Intact had not made the excess payments, the respondents would have, without regard to whether the benefit of the payments would flow to TDB in the end. The doctrine of unjust enrichment requires an unrequested service to be an “incontrovertible benefit”: Peel, at pp. 795-96; Grover v. Hodgins, 2011 ONCA 72, 103 O.R. (3d) 721, at para. 57, leave to appeal refused, [2011] S.C.C.A. No. 142. In some cases, a benefit that is merely temporary will not constitute an enrichment: Birkett v. Astris Energi Inc. (2004), 2004 CanLII 7855 (ON CA), 45 B.L.R. (3d) 293 (Ont. C.A.), at para. 90. In my view, this is an important consideration in the context here – whether an incontrovertible negative benefit should be considered as having been conferred on the respondents by a payment that the respondents say would have been recoverable from Intact’s insured under the legislative scheme if the respondents themselves had made it. This feature was not present in Accuworx Inc. v. Enroute Imports Inc., 2016 ONCA 161, 97 C.E.L.R. (3d) 198, relied on by Intact.[6]

[79] As described above, ss. 99(7) and (8) provide for sharing, contribution, and indemnity among persons who have a duty under s. 93 of the EPA in proportion to their relative degrees of fault. As the respondents concede, the total of Intact’s policy payments and excess payments will be a credit, for TDB, against any amounts the respondents say should have been paid by it to meet its proportionate responsibility. Although Intact argues that the result of the contest over proportionate shares has not been determined, it seems to me that on any determination, TDB has benefited. If more was paid than TDB’s proportionate share as determined under those sections, TDB will be able to defeat the respondents’ claims and may be entitled to recover the excess. If, taking into account the excess payments, exactly the amount of TDB’s proportionate share was paid, TDB will be entitled to defeat the respondents’ claims. If less has been paid than the amount that represents TDB’s proportionate share, Intact’s insured has still benefited from Intact’s payments, reducing the respondents’ claim against it.

[80] The fact that liability under s. 99(8) remains to be determined in the litigation does not assist Intact. Intact chose to bring its summary judgment motion in advance of that determination. In order to succeed in showing that it was the respondents who received an “incontrovertible benefit”, Intact would have to show that the resolution of the s. 99(8) process is not likely to result in the ultimate benefit of the payments being enjoyed by TDB, rather than the respondents. Intact did not establish that.

[81] Although the motion judge analyzed the benefit and juristic reason parts of the analysis together, her finding that it was TDB who benefited from Intact’s payments was sufficient to dispose of the unjust enrichment claim. Where a benefit to the defendant has not been established, an unjust enrichment claim fails without the need for a juristic reason analysis: Birkett, at para. 91.

[82] Finally, I am not satisfied that the motion judge made a reversible error in her determination of the reasonable expectations of the parties as a “second stage” basis to deny the claim. On the record, she was entitled to find that Zurich indicated it would not be paying unless the Minister made an order. As Intact dropped its misrepresentation claim, it was open to the motion judge to find that Intact was aware of Zurich’s intentions and made its excess payments with that knowledge, such that they would reasonably be taken to have shared the same expectations.

[83] The doctrine of unjust enrichment applies “when a defendant receives a benefit from a plaintiff in circumstances where it would be ‘against all conscience’ for him or her to retain that benefit”: Moore, at para. 35. Given the respondents’ lack of liability to Intact under the EPA, the benefit to Intact’s insured arising from Intact’s excess payments, the voluntary nature of Intact’s payments, and the reasonable expectations of Intact and Zurich, the doctrine does not assist Intact here.


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Last modified: 04-02-23
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