Simon's Megalomaniacal Legal Resources

Restitution - Juristic Reason - General

. Espartel Investments Limited v. Metropolitan Toronto Condominium Corporation No. 993

In Espartel Investments Limited v. Metropolitan Toronto Condominium Corporation No. 993 (Ont CA, 2023) the Court of Appeal considers 'juristic reason' as an element of restitution (aka unjust enrichment):

[37] Unjust enrichment occurs when one party is enriched, the other party suffers a corresponding deprivation, and there is an absence of a juristic reason for the enrichment: Moore v. Sweet, 2018 SCC 52, [2018] 3 S.C.R. 303, at para. 37. There is no dispute that the respondent’s overpayments for utilities enriched the appellant. The trial judge found that the respondent had met its burden to prove that there was no basis in contract, common law, or statutory obligation to justify the appellant’s enrichment. The appellant implies in its factum that there may have been a juristic reason for this enrichment somewhere else in the invoices, but points to nothing in particular. We see no basis to interfere with the trial judge’s determination on unjust enrichment.

. Carleton Condominium Corporation No. 519 v. Ottawa-Carleton Standard Condominium Corporation No. 656

In Carleton Condominium Corporation No. 519 v. Ottawa-Carleton Standard Condominium Corporation No. 656 (Ont CA, 2023) the Court of Appeal considered an appeal of an unjust enrichment finding, here where the issue was that of 'juristic element':

[6] The application judge appropriately applied the two step framework for determining the presence or absence of a juristic reason set out in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paras. 43-45. The first step is to determine whether there is a juristic reason from established categories of obligation to justify the enrichment. If there is no juristic reason, the plaintiff has made out a prima facie case of unjust enrichment. The second step is to determine whether the prima facie case is rebuttable for any other reason, such as reasonable expectations of the parties. The burden at the second stage is on the defendant.

. LaRochelle v. Elite Environments Inc.

In LaRochelle v. Elite Environments Inc. (Ont CA, 2023) the Court of Appeal briefly summarizes the outcome of a restitition appeal, here on 'juristic reason' for enrichment:

[12] A claim for unjust enrichment requires the plaintiff to establish three elements: (i) an enrichment of the defendant; (ii) a corresponding deprivation of the plaintiff; and (iii) an absence of juristic reason for the enrichment. (Garland v. Consumers’ Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, at para. 30). The contract required payments upon the completion of certain construction milestones. The milestones were reached. That 70% of the funds were due when the work was only partly, or half done represents a term of the contract. The contract provides a juristic reason for the respondents’ enrichment. Consequently, despite the trial judge’s failure to address the issue, we see no substantial wrong or miscarriage of justice requiring a new trial.

. Kerr v. Baranow

In Kerr v. Baranow (SCC, 2011) the Supreme Court of Canada sets out basics of the 'juristic reason' element in restitution, here in 2011:

(2) Absence of Juristic Reason

[40] The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without a juristic reason. To put it simply, this means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case: see Pettkus, at p. 848; Rathwell, at p. 456; Sorochan, at p. 44; Peter, at p. 987; Peel, at pp. 784 and 788; Garland, at para. 30.

[41] Juristic reasons to deny recovery may be the intention to make a gift (referred to as a “donative intent”), a contract, or a disposition of law (Peter, at pp. 990-91; Garland, at para. 44; Rathwell, at p. 455). The latter category generally includes circumstances where the enrichment of the defendant at the plaintiff’s expense is required by law, such as where a valid statute denies recovery (P. D. Maddaugh and J. D. McCamus, The Law of Restitution (1990), at p. 46; Reference re Goods and Services Tax, 1992 CanLII 69 (SCC), [1992] 2 S.C.R. 445; Mack v. Canada (Attorney General) (2002), 60 O.R. (3d) 737 (C.A.)). However, just as the Court has resisted a purely categorical approach to unjust enrichment claims, it has also refused to limit juristic reasons to a closed list. This third stage of the unjust enrichment analysis provides for due consideration of the autonomy of the parties, including factors such as “the legitimate expectation of the parties, the right of parties to order their affairs by contract” (Peel, at p. 803).

[42] A critical early question in domestic claims was whether the provision of domestic services could support a claim for unjust enrichment. After some doubts, the matter was conclusively resolved in Peter, where the Court held that they could. A spouse or domestic partner generally has no duty, at common law, equity, or by statute, to perform work or services for the other. It follows, on a straightforward economic approach, that there is no reason to distinguish domestic services from other contributions (Peter, at pp. 991 and 993; Sorochan, at p. 46). They constitute an enrichment because such services are of great value to the family and to the other spouse; any other conclusion devalues contributions, mostly by women, to the family economy (Peter, at p. 993). The unpaid provision of services (including domestic services) or labour may also constitute a deprivation because the full-time devotion of one’s labour and earnings without compensation may readily be viewed as such. The Court rejected the view that such services could not found an unjust enrichment claim because they are performed out of “natural love and affection” (Peter, at pp. 989-95, per McLachlin J., and pp. 1012-16, per Cory J.).

[43] In Garland, the Court set out a two-step analysis for the absence of juristic reason. It is important to remember that what prompted this development was to ensure that the juristic reason analysis was not “purely subjective”, thereby building into the unjust enrichment analysis an unacceptable “immeasurable judicial discretion” that would permit “case by case ‘palm tree’ justice”: Garland, at para. 40. The first step of the juristic reason analysis applies the established categories of juristic reasons; in their absence, the second step permits consideration of the reasonable expectations of the parties and public policy considerations to assess whether recovery should be denied:

First, the plaintiff must show that no juristic reason from an established category exists to deny recovery. . . . The established categories that can constitute juristic reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra), a donative intent (Peter, supra), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out a prima facie case under the juristic reason component of the analysis.

The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery. As a result, there is a de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for a category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery.

As part of the defendant’s attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. [paras. 44-46]

[44] Thus, at the juristic reason stage of the analysis, if the case falls outside the existing categories, the court may take into account the legitimate expectations of the parties (Pettkus, at p. 849) and moral and policy-based arguments about whether particular enrichments are unjust (Peter, at p. 990). For example, in Peter, it was at this stage that the Court considered and rejected the argument that the provision of domestic and childcare services should not give rise to equitable claims against the other spouse in a marital or quasi-marital relationship (pp. 993-95). Overall, the test for juristic reason is flexible, and the relevant factors to consider will depend on the situation before the court (Peter, at p. 990).

[45] Policy arguments concerning individual autonomy may arise under the second branch of the juristic reason analysis. In the context of claims for unjust enrichment, this has led to questions regarding how (and when) factors relating to the manner in which the parties organized their relationship should be taken into account. It has been argued, for example, that the legislative decision to exclude unmarried couples from property division legislation indicates the court should not use the equitable doctrine of unjust enrichment to address their property and asset disputes. However, the court in Peter rejected this argument, noting that it misapprehended the role of equity. As McLachlin J. put it at p. 994, “It is precisely where an injustice arises without a legal remedy that equity finds a role.” (See also Nova Scotia (Attorney General) v. Walsh, 2002 SCC 83, [2002] 4 S.C.R. 325, at para. 61.)

. Moore v. Sweet

In Moore v. Sweet (SCC, 2018) the Supreme Court of Canada considered the unjust enrichment (restitution) element of the 'absence of a juristic reason' (for the enrichment and deprivation) [see para 57 for established 'juristic reasons']:

(2) Absence of Any Juristic Reason

[54] Having established an enrichment and a corresponding deprivation, Michelle must still show that there is no justification in law or equity for the fact that Risa was enriched at her expense in order to succeed in her claim. As observed by Cromwell J. in Kerr (at para. 40):

The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without a juristic reason. To put it simply, this means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case . . . . [Emphasis added.]

[55] This understanding of juristic reason is crucial for the purposes of the present appeal. The third element of the cause of action in unjust enrichment is essentially concerned with the justification for the defendant’s retention of the benefit conferred on him or her at the plaintiff’s expense — or, to put it differently, with whether there is a juristic reason for the transaction that resulted in both the defendant’s enrichment and the plaintiff’s corresponding deprivation. If there is, then the defendant will be justified in keeping or retaining the benefit received at the plaintiff’s expense, and the plaintiff’s claim will fail accordingly. At its core, the doctrine of unjust enrichment is fundamentally concerned with reversing transfers of benefits that occur without any legal or equitable basis. As McLachlin J. stated in Peter (at p. 990), “It is at this stage that the court must consider whether the enrichment and detriment, morally neutral in themselves, are ‘unjust’.”

[56] In Garland, this Court shed light on exactly what must be shown under the juristic reason element of the unjust enrichment analysis — and in particular, on whether this third element requires that cases be decided by “finding a ‘juristic reason’ for a defendant’s enrichment” or instead by “asking whether the plaintiff has a positive reason for demanding restitution” (para. 41, citing Garland v. Consumers’ Gas Co. (2001), 2001 CanLII 8619 (ON CA), 57 O.R. (3d) 127 (C.A.), at para. 105). In an effort to eliminate the uncertainty between these competing approaches, Iacobucci J. formulated a juristic reason analysis that proceeds in two stages.

[57] The first stage requires the plaintiff to demonstrate that the defendant’s retention of the benefit at the plaintiff’s expense cannot be justified on the basis of any of the “established” categories of juristic reasons: a contract, a disposition of law, a donative intent, and other valid common law, equitable or statutory obligations (Garland, at para. 44; Kerr, at para. 41). If any of these categories applies, the analysis ends; the plaintiff’s claim must fail because the defendant will be justified in retaining the disputed benefit. For example, a plaintiff will be denied recovery in circumstances where he or she conferred a benefit on a defendant by way of gift, since there is nothing unjust about a defendant retaining a gift of money that was made to him or her by (and that resulted in the corresponding deprivation of) the plaintiff. In this way, these established categories limit the subjectivity and discretion inherent in the unjust enrichment analysis and help to delineate the boundaries of this cause of action (Garland, at para. 43).

[58] If the plaintiff successfully demonstrates that none of the established categories of juristic reasons applies, then he or she has established a prima facie case and the analysis proceeds to the second stage. At this stage, the defendant has an opportunity to rebut the plaintiff’s prima facie case by showing that there is some residual reason to deny recovery (Garland, at para. 45). The de facto burden of proof falls on the defendant to show why the enrichment should be retained. In determining whether this may be the case, the court should have regard to two considerations: the parties’ reasonable expectations and public policy (Garland, at para. 46; Kerr, at para. 43).

[59] This two-stage approach to juristic reason was designed to strike a balance between the need for predictability and stability on the one hand, and the importance of applying the doctrine of unjust enrichment flexibly, and in a manner that reflects our evolving perception of justice, on the other.