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Restitution - Enrichment/Deprivation (2). Palmer v. Teva Canada Limited
In Palmer v. Teva Canada Limited (Ont CA, 2024) the Ontario Court of Appeal dismissed an appeal against a lower court dismissal of a class action certification motion.
In a class action for contaminated drugs, the court considered the 'enrichment/deprivation' elements of a restitution claim:[98] Because the motion judge also dealt with a cause of action in “unjust enrichment” and the appellants argued unjust enrichment on appeal, I will briefly address it here. For a claim of unjust enrichment to succeed, the plaintiffs must establish three elements: (i) an enrichment of or benefit to the defendants; (ii) a corresponding deprivation of the plaintiffs, and (iii) the absence of a juristic reason for the enrichment: Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, at para. 37.
[99] The appellants’ claim for unjust enrichment of the defendants fails because any benefit the defendants received from class members was indirect. The law of unjust enrichment does not permit recovery for incidental collateral benefits: Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, 1992 CanLII 21 (SCC), [1992] 3 S.C.R. 762, at para. 47. This court has previously struck claims for unjust enrichment brought against a drug manufacturer for an allegedly defective drug where the reimbursement sought was paid to a retailer and not the drug manufacturer. Unjust enrichment simply does not extend to permit such recovery: Boulanger v. Johnson & Johnson Corp., 2003 CanLII 52154 (ON CA), 174 O.A.C. 44 (C.A.), at para. 20.
[100] Moreover, the appellants did not plead a deprivation on the part of class members and the motion judge did not err in so concluding. To the contrary, the material facts pleaded in support of the claim are that the class members paid for valsartan and received it. Purchasers of defective products do not suffer a “deprivation” for the purpose of the law of restitution when they in fact received the products in issue: Spring v. Goodyear Canada Inc., 2021 ABCA 182, 459 D.L.R. (4th) 315, at para. 49; Nissan Canada Inc. v. Mueller, 2022 BCCA 338, at para. 115, leave to appeal refused, [2022] S.C.C.A. No. 446. Liability for a claim arising from a defective product is better found in negligence.
[101] I therefore conclude that the appeal must be dismissed on this ground. The motion judge was correct to find that the pleading did not disclose a cause of action for unjust enrichment. . Mascia v. Tri-Star Disaster Recovery Inc.
In Mascia v. Tri-Star Disaster Recovery Inc. (Div Court, 2024) the Divisional Court largely dismissed an appeal against a quantum meruit home renovation case, with a high substantial indemnity costs award.
Here the plaintiff argued for the value of supplies purchased in furtherance of renovation work, but not used, as a matter of restitution 'enrichment':[53] As a matter of contract law, I would quickly conclude that goods purchased for another that are not delivered due to a breach by the proposed recipient are properly the subject of a claim for reimbursement. Damages are incurred by the purchase at the request of the other party and then the other party’s refusal to pay. There could then be a question of mitigation as to whether the person who holds the goods can return them or liquidate them for some value to avoid double recovery. But there was evidence at trial that the customized goods had no significant realizable value.
[54] Mr. Rumble submits that as a matter of quantum meruit, Tri-Star is not entitled to recovery because quantum meruit requires unjust enrichment. As Anthony Mascia never received the windows and other customized goods from Tri-Star, he received no benefit from them. It cannot be “unjust for the opposing party to retain the benefit” when there was no benefit received by him at all.
[55] The trial judge denied Tri-Star’s claim for profit on installation of the windows as they were never installed. But he allowed the claim for reimbursement of the cost of the windows and other customized goods both as a claim for breach of contract and quantum meruit. At para. 120, he held:... Even if Tri-Star was found to not have a claim for lien because the items were not delivered to the site, the plaintiff could seek compensation for those items on the basis that, since the lien claim is joined with the contractual claim for payment, Tri-Star would be entitled to compensation on the basis of "contractual "quantum meruit" for the reasonable remuneration for the supply of services and materials due being abruptly terminated by the defendants.[1] [56] In my view, Mr. Rumble treats the nature of the “benefit” received by his client too narrowly. In the absence of case law to the contrary, it seems to me that Anthony Mascia received a benefit when Tri-Star used its own funds to buy customized goods for his project and held them at its warehouse. If Tri-Star could have returned the goods or used them otherwise, perhaps there would have been less detriment suffered by it. But here, Anthony Mascia does not have the windows because he preferred to spend insurance money on new windows rather than to pay into trust the cost of the windows bought for him by Tri-Star. Tri-Star has been left with valueless windows it bought at the request of Anthony Mascia.
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