RESTITUTION OUTLINE by sarahjanebelonga

VIEWS: 78 PAGES: 21

									                                                                RESTITUTION OUTLINE
                                                                           SPRING 2004
                                                                         Marnelle Dragila


BASIC RESTITUTION PRINCIPLES (PETTKUS) ...................................................................................................2
DEFENCES TO UNJUST ENRICHMENT .................................................................................................................2
    SUBSTANTIVE GROUNDS FOR RESTITUTIONARY RELIEF:.....................................................................4
I. RESTITUTION OF BENEFITS CONFERRED BY (P’S) MISTAKE ..................................................................4
II. RESTITUTION OF BENEFITS CONFERRED UNDER INEFFECTIVE TRANSACTION ..........................6
   INFORMALITY .................................................................................................................................................................6
     Deglmen ....................................................................................................................................................................6
   ILLEGALITY ....................................................................................................................................................................7
   INCAPACITY ...................................................................................................................................................................6
   WANT OF AUTHORITY ....................................................................................................................................................8
   MISREPRESENTATION .....................................................................................................................................................8
   MISTAKE & UNCERTAINTY ............................................................................................................................................9
   DISCHARGE BY BREACH .................................................................................................................................................9
   FRUSTRATION ...............................................................................................................................................................10
   ANTICIPATED CONTRACTS & GIFTS .............................................................................................................................10
III. RECOVERY OF PROFIT FROM WRONGDOING .........................................................................................11
   CRIMINAL & QUASI-CRIMINAL ACTS ...........................................................................................................................11
   WAIVER OF TORT .........................................................................................................................................................13
   WAIVER OF CONTRACT ................................................................................................................................................13
   COMPULSION & UNDUE INFLUENCE .............................................................................................................................14
   BREACH OF FIDUCIARY DUTIES....................................................................................................................................17
   ABUSE OF CONFIDENCE ................................................................................................................................................17
   REFUSAL TO SHARE SPOUSAL ASSETS ON SEPARATION ...............................................................................................18
SUBSTANTIVE GROUNDS FOR RESTITUTIONARY RELIEF CONT’D: .......................................................20
   COMPULSORY DISCHARGE OF ANOTHER’S LIABILITY ..................................................................................................20
   UNREQUESTED BENEFITS .............................................................................................................................................20
   RESTITUTIONARY LIABILITY OF PUBLIC AUTHORITIES ................................................................................................20
   UNJUST ENRICHMENT AS A FREE-STANDING CAUSE OF ACTION ..................................................................................20
RESTITUTIONAL REMEDIES .................................................................................................................................20
   TRACING MONEY AT COMMON LAW ............................................................................................................................20
   CONSTRUCTIVE TRUST AS GENERAL REMEDY .............................................................................................................20
   TRACING IN EQUITY .....................................................................................................................................................20
   SUBROGATION ..............................................................................................................................................................21


***Note-highlighted sections not completed!! Unanswered questions highlighted in outline.




                                                                                                                                                                            1
Basic Restitution Principles (Pettkus)

Deglman-first to recognize unjust enrichment under Common Law
Pettkus-first to recognize unjust enrichment in Equity & recognizes Restitution as a cause of action by itself, i.e.,
restitutionary claims can arise without a contract or a tort.

Basic Principles & Elements of Cause of Action for Unjust Enrichment/Restitution (Pettkus)
   1. Enrichment of the D
   2. A Corresponding Deprivation of the P
   3. Absence of Juristic Reason for Enrichment

            Satisfying these 3 principles only sets up a presumptive case of unjust enrichment. Can be
             REBUTTED
                 i. with claim that D conferred benefits as an officious intermeddler or by using other defences.

Defences to Unjust Enrichment
    First, Argue against 3 prong elements, i.e., there was NO
   1. Enrichment to D
          o If D made NO profits, then NO enrichment, so NO recovery to spouse.
          o Discharge of debt is a benefit/enrichment (Dixdale)

   2. Corresponding deprivation to P
                 Despite no monetary loss, breach of duty is a wrong and an injury to P! (Reading v AG)
                 Corresponding deprivation means a causal connection between deprivation suffered and
                    benefit conferred. Doesn’t have to equal the enrichment, just has to be related
       In matrimonial cases, CL spouse must show that she:
                    a. Helped improve, maintain or purchase property in question
                    b. Either directly or
                    c. Indirectly (services) by freeing up Husband’s assets so H could do above himself (Peter)
    Recovery is based on D’s GAIN from P’s contribution
    Doesn’t necessarily lead to equal split
    If enrichment came from other source, e.g., H’s stocks, hard to show W’s services/contribution was
      corresponding

    3. OR There WAS a juristic reason for (D’s) enrichment because benefit conferred by:
                     Gift
                          If gift made to D by P, then P can’t get it back, UNLESS mistake was made
 Seems to be
 conflict between         For example:
 Mack & Dixdale                  o Old lady conferring benefit as a gift twice, once in life and once in will, WAS
                                    recoverable (Lady Hood)
 Dix-3rd prong
 allows relief                   o In Larner, council topping up army guy’s pay out of moral obligation at time
 despite statute if                 of war. Army guy did not tell them he wasn’t in army anymore. Almost a gift
 unjust to allow D                  & not a contract, but council was granted recovery anyway.
 to retain benefit.
 Court should        Contract
 balance leg              If benefit conferred by contract, then can’t get it back (unless unconscionable)
 purpose v policy
 of preventing
                     Statute
 unjust enrichment        Statute is juristic reason UNLESS it is ultra vires (Mack)
                          BUT Don’t look to statute alone for juristic reason. If Act doesn’t expressly prohibit
 Mack-must meet
 legal test. No              P from restitution, i.e., its silent on manner, then read Act purposively. ASK:
 recovery for                    o Are objectives/purposes of impugned statute weakened by granting
 injustice alone-                   restitution?
 without meeting
 legal test               Charter can’t be applied retroactively (Mack)
                          International law must be incorporated to domestic legislation to have effect

                                                                                                                        2
                                Where the legal test for recovery can’t be met, recovery CANNOT be based on justice &
                                 fairness alone (Mack) v. Relief granted if unjust to allow D to retain (Dixdale)
                     ONLY in matrimonial cases-P had no reasonable expectation of restitution
                         If married, presumption of sharing between spouses (Peter)
                         If not married, you are NOT presumed to have a reasonable expectation (Peter)
                               o P (claiming spouse) must show they had a reasonable expectation

    4. If 3 prongs of unjust enrichment are satisfied, i.e., there was enrichment, Ask whether any
        Officiousness?
                      D claiming P gave me unrequested benefits
                      D claims benefit was NOT a benefit to him in the subjective sense-subjective devaluation
Policy-
           a. Don’t want to force people to invest assets in a manner they wouldn’t normally invest
           b. If benefit conferred amounted to a subjective devaluation in your mind, then not a benefit to you

   5. IF D claims P was Officiousness, see if P can rebut D’s claim of Officiousness: (see notes pg. 17)
    If P claims that:
                    Benefits conferred by D’s request or contract
                        1. Requested= prima facie benefit, whether you used benefit or not (Colburn)
                               a. BUT ask if contract was frustrated
                    It was an emergency situation
                    Duress
                    Mistake
                    Benefit was an inevitable expense that P would have had to make anyway
                        1. Show that unrequested benefit can be turned into cash, it’s easier than if D made
                           improvements to P’s land. Court won’t make P sell home

   6. OTHER DEFENCES
        I.     Public Authorities (special defences)
    Passing On defence-If P passed on cost of benefit to D to 3rd parties, then P can’t recover UNLESS
                  It’s a tax case (per LaForest in Canadian Pacific Airlines)

Policy Concern-Shouldn’t matter whether P has passed on cost to 3rd party. Should operate like loss from
wrongdoing. D should NOT get to keep the windfall & P should get recovery (Maddaugh).

           II.    Changed position (for mistake cases)
           III.   Estoppel by Representation




                                                                                                                    3
SUBSTANTIVE GROUNDS for RESTITUTIONARY RELIEF:

              IV.       Restitution of Benefits Conferred by MISTAKE (Money Paid by P by Mistake)

         Generally, Mistake in Law & Fact are subject to the same analysis HOWEVER,
         NOT yet been clearly established that the Mistake of Law doctrine has been completely overruled in Canada
         Some issues arise ONLY in the contexts of payments made under a mistake of law

     Mistake treated differently in Restitution than Contract (Contract mistake was set out in Solle, but shaken by Great Peace).
    Unlike mistake in contract law:
           o Only one party has to be mistaken (not both as in contract)
           o No requirement that mistake is substantial (as in contract)
           o P’s Negligence is no bar to recovery (as it is in contract) although it may be a factor (Solari)

         Elements of “Operative” Mistake (starred items below were originally add’l elements set out in Royal Bank)
             o P’s Mistake was genuine
                     P’s Negligence/failing to use due diligence to inquire is no bar to recovery (Solari)
                     “Voluntary submission to honest claim” to avoid future hassle not incl (Solari/also Lord Goff)
             o “Operative”-Mistake caused the payment to be made/payment wouldn’t have been made but for mistake
             o D has no defence/reason to keep the money.
*No requirement that mistake be between the parties (i.e., can get $ from 3rd party not involved w/ mistake-Waring)
*No requirement that P paid money under an obligation to pay (Larner/Lady Hood)

Equitable Defences to Mistake
              o     Even though the origins of the claim lie in Common Law, the claim is equitable in its nature & thereby D can
                    raise equitable defences to show that P is not entitled to restitution (Moses, aff’d in Storthokes SCC)
    Equity says that D should get to keep the money because:

         Change of Position-(established in Storthokes SCC)
            o As a result of the mistaken payment, D has made expenditures that he normally would not have
               made, i.e., didn’t spend $ on normal things (Storthokes SCC/RBC). HOWEVER,
            o Change of position is pro tanto-D must pay back portion not spent at time of finding out P’s
               mistake (RBC)
            o NO representation by P is required for D to use this defence BUT
            o Mistake payment cannot be result of D’s carelessness or misconduct (opposite of Solari?)

    Estoppel by Representation-i.e., P estopped from recovery due to his “misrepresentation”
   *Essential Elements of Estoppel set out in (Greenwood-onus of D to show)
          o Express Representation or Representation Implied by Conduct made by one person to another,
          o With the intention of inducing the other to rely on the representation and
          o Other party DOES detrimentally rely on representation
          o If using this defence, mistake can’t be due to negligence of D (Larner)
Duty of Accuracy-some P/D relationships create duty on P to accurately represent facts to D (Clark?)
                        
                      I.E., If P doesn’t have duty, lack of accuracy= no breach = no estoppel? P can’t argue D was
                      negligent?
*P making payment to D does NOT mean by itself that P represented to D that he could keep the $ (Waring)

          Pattison Motors-Car dealer misrep’d old lady that insurance covered dead H’s old car debt, so she’d buy new one.
          Insurance didn’t cover. Dealer unsuccessful getting $ from lady, because she successfully claimed estoppel

Downfall of Estoppel Defence
   1. Total defence/doesn’t operate Pro Tanto-no court discretion to award only a portional recovery of $ paid under
      mistake
    Result-if estopped NO recovery OR if P not estopped, recovery amount may be very disproportionate to P’s loss
    Court must chose: Injure D by awarding full recovery to P or deny P any relief & give D unjust enrich windfall

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   2. Requires a representation. Often no representation is made but Ds detrimental reliance is such that granting full
       recovery to P is an obvious injustice, e.g.,
            a. $ paid in circumstances which gave D a false sense of security so that D altered relations with 3rd parties
                (Waring, D gave more credit to rouge as result of detrimental reliance, not credited for loss)
   3. All or nothing defence scares court from giving any relief
      Other possible equitable defences:
          o D was a bona fide purchaser for value-involves 3 parties (“Good Consideration” Defence)
                  P can argue that D got exactly what he bargained for, e.g., Krebs-money paid was good
                     consideration for discharging rouge’s mortgage, NOT for paying off car, i.e., $ irrecoverable
                         Lord Goff thinks $ should be recoverable bc Payor is paying off 3rd party rouge’s
                            debt. /Maddaugh doesn’t agree, no recovery?? Or is MD saying that payee can’t use
                            defence unless they can estb change of position?- see pg. 10-44 looseleaf
                  Innocent purchaser can recover the value of property improvements he has made
                     (Greenwood)
          o Laches (Pooley)-not specific limitation period. D can argue this if P has taken a long time to
             complain

      Common Law Defence-Statute of Limitations applies in Restitution

       Policy Argument-Finality in Dispute Resolution-(Solari) “Voluntary Submission to Honest Claim” (Lord Goff)
     P NOT able to recover if:
            o P forgoes further inquiry & assumes risk of error by intentionally making payment (confers benefit)
            o Regardless of any uncertainty there may be concerning the factual circumstances of the payment,
            o To avoid future hassle
            o UNLESS unconscionable conduct by D induced the payment from P.
*Finality comes up in situations where D has made a good faith demand on P, & P having full knowledge avoiable
to them, accedes to the demand regardless of remaining reservations they have about the obligation to pay
(analysis similar to risk of bad bargain in contract)
     P can argue that he paid under practical compulsion/duress (Eadie)
            o Due to P’s personal circumstances, his payment was required, i.e., not nec for gov’t to require
               payment




                                                                                                                             5
                            II.      Restitution of Benefits Conferred Under INEFFECTIVE TRANSACTION

Ineffective Transaction-a contract that was supposedly complete, but ineffective & incomplete

                                     General Steps for Ineffective Transactions:
   1. Use principled approach:
                     Enrichment to D, Corresponding Deprivation to P, No Juristic Reason for D to Retain
   2. Balance giving effect to UE principle v Policy underlying rule making the transaction ineffective
   3. Use Public Policy to find whether contract should be enforced & separately whether restitution should be granted
   4. Ask: Does Public Policy underlying the rule making the transaction ineffective also require Restitution NOT be
      granted to P who conferred benefits to D on assumption that contract was binding?

   *Public Policy Analysis is crucial

Informality
    Some statutes provide that certain agreements must be in writing
    To determine if restitution should be granted despite statutory requirements, consider:
          o Whether restitutionary relief can be granted without significantly undermining the underlying policy
            behind the statute’s requirement of writing
          o The Statute has frustrated the parties intentions by not enforcing their oral agreement
          o There is a conflict between the general policy against unjust enrichment & the policies underlying
            the statute’s particular formality requirements
          o Courts usually conclude that this conflict is best resolved by allowing restitutionary relief (Law of Rest)

Deglmen
Even though transaction was void for informality (agreement didn’t adhere to statute of frauds) and couldn’t be
enforced, quantum meriut (value of services-restitution) is available as a remedy.

Incapacity
    Restitution to recover benefits transferred under agreements, which are unenforceable for want of
      contractual capacity of one of the parties.
    The Issue is: What kind of contract will be enforced & which will not?

    A. Contracting with Minors & Mentally Incompetent/k is void if can’t appreciate nature/effect of k (Complex doctrine)
          a. Contract entered into as a minor aren’t void, but are voidable/can be ratified when minor is adult
          b. Exception-Supplier of necessities, e.g., food, housing, etc, is entitled to relief. I.e., minor will be
              held to pay for necessities.
          c. Collateral Issue-did other party know that person was a minor or mentally incompetent?
Policy- balancing conflicting interest of protecting inexperienced minors v good faith suppliers of goods

    B. Corporations who are acting ultra vires (Westduesche)-how is this diff from illegal contract/mistake?
          a. Old law said to protect shareholders/creditors, corporations should not get restitution if acting ultra
             vires of statutory contractual authority. But its purpose became frustrated, so it didn’t really provide
             protection to shareholders/creditors, so NOW:
          b. Don’t have to grant contractual expectancy interest, just restitution of benefits conferred.
          c. Use 3 prong principled approach in Pettkus-above steps (Westduesche)
          d. Exception-ultra vires loans are not recoverable (Sinclair, not overruled in Westduesche?)
Remedy-CL/In personam claim-No Equitable Proprietary claim giving rights against 3rd parties or creditor priority (Westduesche)

    C. Public Authorities (Crown) acting beyond scope of contractual authority: constitutional or stat mandate
          a. Purpose of old rule making ultra vires contracts unenforceable-to eliminate abuse of authority
          b. Now ultra vires borrowing is recoverable-use principled approach-above steps
Policy-Tax payers (Crown) can more easily bear burden of paying Restitution v individual denied relief


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Illegality
     P is claiming for D’s lack of payment under a contractual obligation. D uses illegality as defence OR
     P feels he has overpaid or should not have paid under contract & is suing to get money back
     Determining Whether a Contract is Enforced & Whether Restitution will be Granted are Independent Issues
     Determine if contract is enforceable or not. If enforceable, restitution paid. If unenforceable, ask should
        recovery be granted? Look at policy considerations to determine whether recovery will be granted.

STEPS:
   I. Is the Contract unenforceable?
                 ii. Old law set out in Holman v Johnson, says illegal contracts are NOT enforceable, but NOW:
                iii. Just because some aspect of the law hasn’t been complied with doesn’t mean the contract is
                     necessarily be unenforceable (See St John’s Shipping)

     A. Contract will be unenforceable if either: (St John’s Shipping)
                a. A Statute or Public Policy prohibits an certain Act & one or more of the parties has:
                          i. INTENTION of committing an illegal act by contract, THEN
                                 1. D must prove intent (i.e. P is trying to enforce k to get paid)
Is Contract Enforceable ?        2. If the intent is mutual, then contract is unenforceable, BUT
Enforceable = Restitution        3. ONLY ENFORCEABLE IF: intent was unilateral
                                         a. The contract IS enforceable for the innocent party & unenforceable for the
Unenforceable= Look to                       party with illegal intent OR if
policy considerations to
determine whether                        b. Party with illegal intent repented before contract was executed, recovery
Restitution paid                             possible (Harman case, etc-although case law is not well defined here)
                                         c. Mistake vitiates illegal intent (Burgess)
                             Policy-Wrongdoer should not profit form their wrongdoing

              b. Statute or Public Policy prohibits the express or implied Contract as made or performed
                      i. It doesn’t matter what the parties intention was
                     ii. If the statute prohibits the contract then it is unenforceable

Policy-Look at Statute’s objectives to determine if they are met by enforcing the contract or not (Still)

    B. IF ENFORCEABLE-Restitution is Paid, Contract is in force
           1. If there is only unilateral illegal intent, contract enforceable for innocent party OR
           2. If one or more parties was mistaken as to illegality, vitiates illegal intent = innocent/enforceable

      C. IF UNENFORCEABLE-Look at Policy Considerations to Determine Whether Restitution Will be Paid
              a. Restitution will be Paid if:
                            1. Parties are not equally at fault (In pari delicto)
                                    a. Should one have known law better than the other?
                                    b. Fraud, Oppression, Undue Influence or other wrong by one party? (Mohammad)
If the Contract is
                            2. Guilty party has repented prior to contract execution & illegal purpose not met
Unenforceable is
Award of                    3. P falls into Protected Class (Kiriri Cotton)
Restitution Fair & is                a. Interpret the Statute in question
it in the Public                               Identify the protected class-For whose protection was it passed?
Interest?                                      If P falls into this class, then defeats statute’s purpose to deny P restitution
                                    E.g., Kiriri case-Rental rates were controlled by law to protect tenants. P knew it was illegal, but
                                    compelled to pay illegally high rent due to tight real estate market
                            4.   Does the penalty fit the crime? (In St John’s Shipping it did not & recovery was denied)
                                    a. What is the gravity of the offence-is it a technical violation or does it go to
                                         the heart of policy concern?
                            5. Is it in the public’s interest to deny recovery?
                                    a. By denying P’s recovery, is the D’s windfall acceptable or is it too much?
                                    b. In more simple cases, like incapacity, recovery is likely

                                                                                                                                           7
Want of Authority
   Transaction carried out by agent acting without authority (Hazlewood)

   1. A 3rd party dealing with an Agent, who is acting without authority, may be led to believe that he has
      entered into a valid contract with the Agent’s Principal.
   2. The Agreement is void for want of authority UNLESS the Principal ratifies the agreement,
           a. I.e., accepts benefits knowing that the 3rd party expects payment
   3. If the Principal does not ratify the contract, i.e., by not knowing about 3rd party expectations, then 3rd party
      must use claim of restitution to recover benefits conferred on Agent for Principal.
   4. Ask: Has there been a benefit conferred to the Principal? Use 3-prong principled approach.
   5. Defences available to Principal (D)-
           a. Officiousness-P conferred benefits in officious manner
           b. Defence of Change of Position
           c. Bona Fide Purchaser for Value without Knowledge

Misrepresentation




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Mistake & Uncertainty
    Mistake renders contract ineffective. Can get back benefits conferred by restitution, using rescission.

STEPS:
           1. Determine if Contract is Void for Mistake
           2. If void, determine if Restitution should be granted

Equitable Test for Mistake in Contract (Solle v Butcher)
   1. Common Mistake-both parties made mistake
   2. Fundamental-i.e., mistake goes to heart of agreement
   3. Mistake is NOT P’s fault
           a. Equity Protects Innocent 3rd Parties

BUT Great Peace puts law of mistake in question. In GP, court didn’t consider equitable merits of case. Court
rejected Solle equitable test & created “stiffer than Bell” CL test. No concerns for 3rd parties addressed.

CL Test (Great Peace)
Mistake will Render Contract Void at Common Law if:
   1. The Subject matter of the contract has disappeared (Res Extincta)
          a. E.g., Tomatoes sold from farmer to market, but hail storm wipes out crop. No tomatoes= No contact

   2. The Subject Matter of the Sale Didn’t Exist (Res Suq)
         a. Party has accidentally contracted to buy something they already own

Argue:
    Great Peace would lead to inequitable results for 3rd parties & shouldn’t be followed in Canada OR
    If you don’t want to protect 3rd parties, argue it is latest case & UK CA overruled Solle/itself & equity test




                                                                                                                      9
Discharge by Breach

Frustration

Frustration = If after entering a contract, the very purpose of the contract is destroyed by an act or event, making
performance of the contract impossible or impracticable, an agreement may be rendered unenforceable by doctrine of
frustration (Davis)

Result-Contract/obligations treated as enforceable up to the moment of the frustrating event, at which point, the
parties are released from the duty to perform obligations, which have not yet accrued.

Problem-benefits may have been conferred or other losses sustained when the contract was enforceable. What to do?

In Provinces w/ NO Frustrated Contract Act Apply Common Law Doctrine:

Common Law Doctrine:
P can recover in a claim for money had & received using restitution IF:(Fibrosa)
     P suffered a total failure of consideration, BUT if P had already received partial performance THEN
     Recovery is only allowed if the agreement was severable & a total failure of consideration had been
        suffered wrt one of its severed parts.
CL doctrine in Fibrosa only applies to provinces that don’t have legislation in place (BC has Frustrated Contract Act)
     AND in Canada, court should ignore total failure of consideration on unjust enrichment grounds
     Just deduct the value of any benefit received from P’s recovery
     Also seems unlikely that a Cnaadian court would hold that accrued obligations that haven’t been performed
        by the time of the frustrating event are enforceable.

Problem with Common Law Doctrine (according to Maddaugh & McCamus):
     Limits P’s ability to recover if no total failure of consideration
     Didn’t deal whether an unperformed but accrued obligations remain enforceable after frustrating event
     Failed to Address the problem of wasted expenditures
          1. D should be able to use wasted expenditure as a partial defense to repaying P.

IN BC- Apply Frustrated Contract Act:

S. 5-If a benefit is bargained for & requested, then it constitutes a benefit
S. 5(1)-Can claim for Restitution
S. 5(3)-If both parties are innocent, i.e., neither at fault, then divide loss 50/50




Anticipated Contracts & Gifts




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                                       III.    Recovery of Profit from WRONGDOING

General Principle-a party who is guilty of wrongdoing is prohibited from profiting as a result of such conduct

Criminal & Quasi-Criminal Acts

Nowhere in the Criminal Code does it say a Criminal shouldn’t benefit from their crime HOWEVER irrelevant bc this is CL
position & treated as civil distribution of property cases, so no extra punishment being doled out, no violation of Code
    Also, CIVIL test wrt whether person committed crime governs

Denial of Benefits to Murderer

Basic Public Policy Principle: Criminal or person claiming through him shouldn’t benefit from criminal’s crime (Demeter)
                    i. Neither a murderer or his estate, can take a benefit from:
                   ii. Victim’s Will or Intestacy (RE Johnson)
                  iii. An insurance policy (Cleaver ) or pension plan (Re Ontario…)

               Policy-Criminal can’t benefit regardless of whether wrongdoer would have collected eventually
               anyway or what victim would have wanted
                         1. Wrongdoer has accelerated acquisition of benefit & made benefit a certainty
                         2. Precluded Victim from changing mind re named beneficiary
                         3. Removed possibility that wrongdoer may have predeceased victim

   A. Distribution of Benefits Upon the Death of a Victim as Result of Crime
                      Treat as if Criminal predeceased victim EXCEPT if Joint Tenancy

       a. Criminal as Beneficiary under Will or Intestacy
                      Under a will, Property does not vest in criminal beneficiary until death (doesn’t incl JT)
                      Criminal cannot benefit either through will or through resulting intestacy.
                      Treat situation as if Criminal predeceased victim to determine beneficiaries

       b. Insurance Policies
Basic premise: you can’t insure against your own criminal act (Brisette)
                      Remember to check insurance policy for terms, which may override law

   1. Insurance Policies in Criminal’s Name-Insurance proceeds are not payable & policy is rendered
      unenforceable if the policy owner (criminal) intentionally caused the loss insured against to occur (NOT
      same as criminal intentionally committing the crime) (Oldfield)
                             Bag of coke exploded in H’s stomach, H not intending to die, W can collect (Oldfield)

                      What counts as Intentional Harm?
           a. Manslaughter
           b. High end Recklessness if death of T/insured results = intentional (Grey) BUT
           c. Negligence NOT enough to prove intentional, that’s why we have insurance (Walkem SCC)
                  i. E.g., Negligent/drunk driving causing death; no intention to kill (Stats)
           d. Insane does Not count, i.e., you can claim benefit if you are nuts

   2. Insurance Policy in Victim’s Name-
          a. Treat Criminal as if he predeceased the victim; i.e., this means claimants cannot claim through the
             criminal bc the victim’s property never vested in the criminal
          b. Claimant CAN claim through innocent party, e.g., victim, as an independent right (Cleaver)

Another Alternative: Have insurance pay in all cases, & then have insurance subrogate victim’s position & sue wrongdoer.


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Public Policy-doesn’t exclude those w/ independent right to claim (Cleaver) Don’t deprive innocent parties who aren’t
responsible for criminal act from collecting; need intent for insurance companies to get out of paying (McDonald)

            c. Joint Tenancy
                    i. Murdering JT had vested right in property at time of murder
                   ii. Cannot forfeit murdering JT’s property right BUT
                   iii. If one JT kills the other, the property interests vests in the murdering JT, who must hold an
                       undivided half-interest in the property in constructive trust for victim’s Bs, as a means to prevent
                       murderer from profiting from his crime & preventing murderer’s unjust enrichment (Sholbelt)
                   iv. Murdering JT retains his ½ interest in the property & court avoids illegally forfeiting his property

Indirect Profit from Crime
    1. Criminals giving evidence to cops for pay
              o “Corresponding loss” means must be causal connection between loss and gain
              o Money coming from cops was for evidence from criminal and was not paid to compensate for
                   deaths of victims. If criminal didn’t collect it, it would not have been payable to victim’s
                   parents. So no corresponding loss to plaintiff (Olsen) /publisher is not loss to victim’s family.
Policy-Cops paying criminals for evidence, especially leading to more convictions, is useful. If criminals knew
they would lose pay off in restitution suit, they may not confess.
                        Can also argue that it is not wrongful conduct of criminal to help cops w/ case

    2. Criminal profiting from writing book about their crime (Blake)
                       If author has no fiduciary duty at time of publishing then no loss to claimant
                       But if author breached contract to not publish (in exceptional circs, e.g., combined w/ criminal
                          act) or violates criminal law stating he can’t publish, e.g., secret service agents, claim is good




                                                                                                                              12
Waiver of Tort

      Name of doctrine is misleading. P does not “waive” right to sue in tort. P can base claim concurrently in restitution
       (assumpsit) & tort but at some point elect which remedy he wants-United Australia

Policy-principle against double recovery-P should not get to recover twice for same wrong, so not tort + restitution

Maddaugh/McCamus, “once its true nature & scope is fully appreciated, w of t ranks as 1 of the most useful & innovative tools for achieving goals of the law of restitution”


STEPS & Advantage of Basing Claim in Restitution v Tort
     1. D committed a tort or other civil/equitable wrong leading to unjust enrichment/profit (e.g., not battery).
                 (Maddaugh/McCamus-wrong doesn’t necessarily need to be a tort)
                 Traditionally trespass to land not incl bc of implied k theory (Phillips), but can argue for it now post-Pettkus
     2. But for the wrongdoing, D would have had juristic reason for their enrichment
        a. I.e., D is unjustly enriched bc got $ from wrongdoing
     3. Restitution is Advantage to Basing Claim in Tort
                a. Has D’s gain/savings exceeded what P can collect in Tort damages? If yes, go by Restitution
                         E.g., D steal stocks. Suit in conversion only gets you original price of stocks. Restitution also gets you the profits .
                         Restitution (quantum valebut) is only better in conversion if increased in value. Tort = value at time of conversion
                b.    Some torts are subject to shorter limitation periods than action in restitution (e.g., Daly)
                c. If D is insolvent-Most tort claims are in personam, puts P in line w/ other general creditors. BUT in
                   restitution, P may be able to get in rem/proprietary remedy, putting him ahead of general creditors
                d. Assignment-can’t assign tort claims, but possible w/restitution claims
                e. Conflict of Law-choice of law may be better for your case
                f. Focuses on D’s benefit/strips D of profits gained through wrongful conduct = potentially higher award to P
                g. Don’t have to prove the actual loss in tort

                                                                SPECTRUM of RECOVERY

Minimum Awarded                                                                                                            Maximum Awarded
Cost that D saved by committing Tort, i.e.,                             Accounting of Profits     Pecuniary Damages
        Value of P’s lost opportunity to                                    If D was intentional     Over & Above Disgorgement of
       bargain w/ D (Daniel)                                                  wrongdoer                  Profits
                                                                                                      Restitution doesn’t preclude
      If P suffered no $ Losses or D was                                                                pecuniary damages
       innocent tortfeasor                                                                            Possible if D’s behavior was
                                                                                                         egregious, e.g.,:
Quantum Meruit:                                                                                               o blatant disregard for law
         o For fair value for use of P’s                                                                      o calculated gains v losses
            property                                                                                             by committing wrong =
         o Reasonable rent for use of P’s                                                                        profit
            chattels                                                                              Problem-must be really egregious,
                                                                                                  which isn’t required for restitution &
                                                                                                  damages are imprecise in nature (crap
                                                                                                  shoot)


*If you can show D has committed a wrong, its more likely that the court will grant recovery




                                                                                                                                                                         13
Waiver of Contract
Main Issue in Waiver of Breach of Contract = How much to award

     Normal measure of recovery for breach of contract is expectation interest: to compensate P & put him in
      the position he would have been in if D had fully performed his contractual obligations (Keneric Tractor)
          o Exceptionally, punitive damages may also be available (Vorvis)
     In situations of breach, P can also elect to treat the contract as discharged by the breach & bring a
      restitutionary claim for the value of what D saved by breach (normal recovery for waiver of breach of k)
     Problem arises: when P’s legitimate interests are not adequately protected by the expectancy interest, i.e.,
      when fulfilling the breached contract doesn’t yield P adequate relief/damages.
             o   E.g., but for his contractual breach w/ the Crown, Blake wouldn’t have made profits from his book, BUT if
                 he had fulfilled his contract & kept quiet, Crown wouldn’t have made any $ either, i.e., they were not out of
                 pocket & hadn’t suffered financial loss, so damages would be nil. Info Blake put in his book was now public
                 info, so no duty of confidence. Problem- allowing Blake to profit from treacherous breach led to injustice,
                 SO:
     Exceptionally, P may also bring a restitutionary claim for profits made by D as a result of breach (Blake)
             o   Accounting of Profits is an available remedy for breach of confidence where D breached a non-disclosure
                 agreement, so doesn’t seem to be unreasonable to award for profits made by D by breach of contract (Blake)

                                                  Spectrum of Recovery

Minimum (& normal award)                                                                   Maximum Award
Cost Saved by D by Breach (normal)             Accounting of Profits (rare) Blake         Pecuniary Damages (rare) Vorvis
    Compensatory =                            (Equitable Remedy-lien or injunction
difference in value btwn services promised &   may also be possible)
services provided

When is recovery of profits made by D appropriate? Exceptional circumstances (Blake)
   Court will use open-textured, not fixed approach involving significant discretion to award profits when
      expectancy interest isn’t adequate, having regard for all the circumstances, such as: (Blake)
          o Subject matter of the contract
          o Purpose of contractual provision that was breached
          o Circumstances under which the breach occurred
                 E.g., did D act in bad faith
                 Whether P had a legit interest in preventing D’s profiting making activity (e.g., spy info-Blake)
                 E.g., did D’s behavior amount to criminal offence (Blake)
                 Whether D’s breach of k engages same policy considerations as fiduciary duty, i.e., D nearly
                    had a fiduciary duty to P
                 *The breach of contract in question is in conflict with important social values
          o Consequences of the breach
                 E.g., a threat to the effectiveness of an important public institution, intelligence services (Blake)
          o Circumstances in which relief is being sought




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Compulsion & Undue Influence

Basic Idea-P confers benefit on D without P’s free and voluntary consent
“ a payment under such circumstances is no more voluntary than a donation to a beggar who presents a pistol”-C.J. Best in Carter

     Unlike mistake:
         o P usually has full knowledge of the facts
         o D usually guilty of some wrongdoing to induce P to confer benefit

    Unlike Compulsory Discharge of Another’s Liability, here there is wrongdoing
3 Categories:
       1. CL Duress
           a. General recognized categories of duress
           b. Focuses on the wrongfulness of the means used by the D to obtain the benefit from the P
           c. P either resists duress or succumbs grudgingly

        2. CL Practical Compulsion
           a. Other forms of unwarranted pressure, not usually included under recognized categories of duress
           b. D may be unaware the conduct is wrong, e.g., D may be operating under mistake of law
           c. Often the pressure on P is economic
           d. P either resists duress or succumbs grudgingly

        3. Equitable Doctrine-Undue Influence
           a. Recovery of benefits obtained through undue influence
           b. P confers benefit on D with apparent willingness (so diff from above 2 categories)

DURESS
   Remember-whatever D has asked for has to be illegitimate (absence of juristic reason for enrichment)

        1. Was There an Absence of Choice?
           a. Duress vitiates consent (Pau On)
           b. Duress must be such that it makes P’s consent to the transaction INVOLUNTARY
           c. Subjective Approach to Determine if P’s Consent Voluntary:
                   i. Look at circumstances & their actual effect upon this particular party (Maskell)
                  ii. P is NOT required to Protest, but an express protest may be an evidentiary factor (Andrew)
        2. Competing Policy-Must distinguish compulsion from Finality of Settlement of an Honest Claim
           a. If P waived all inquiry & paid to get rid of problem, P can’t come back later & claim compulsion

Traditional Categories of Wrongful Conduct that Amount to Duress:
    Actual or threatened violence
          o More than violence or threat, has incl: threatened injury to reputation (Underwood)
          o The threat must be aimed at some person for whose welfare the P would be concerned (Steinberg)
          o NOT required that P’s will was overborne-really P is choosing the lesser of 2 evils
    Duress of Goods
          o Interference w/ property rights (Astley)
          o A person who pays money, which he isn’t bound to pay, under the compulsion of urgent & pressing
             necessity of actual or threatened seizure of his goods can recover in money had & received (Maskell)
          o Immediacy of P’s situation is factor (Pople)
          o If threat is to land, may help push court to grant recovery (St John)
          o Duress of goods can’t be used to avoid a (verbal or written) contract; so if P promised benefit to
             avoid duress of goods, can’t avoid/breach it (Skeate-UK)
                  BUT Skete doesn’t seem to apply in Canada & Knutsen suggests Skete isn’t valid law



                                                                                                                                   15
    Improper Application of the Legal Process
        o Ok to threaten legal proceedings if based on bona fide belief that such proceedings re warranted
        o BUT where proceedings have been brought improperly or otherwise abused, a resulting transaction
           will be set aside (Stolze) & benefits conferred can be recovered from the recipient (Newdigate)
                E.g:
                       1. starting legal proceedings w/o reasonable & probable cause (Scott)
                       2. trying to stifle criminal prosecution is also an abuse of process, e..g, if I pay you money you
                           won’t turn me in, Exception: doesn’t count if person coerced to stifle (Stolze)
                      P worked at company & was under investigation. Others in company locked him in office &
                       threatened P w/criminal prosecution if he did not resign & turn over company shares (w/o giving
                       consideration) to them. P did so, & recovered, he was coerced to stifle crim prosecution (Stolze)

Recovery
Type of Benefit determines action:
    Money = Money had & Received (CL/in personam)
    Goods = Quantum Valebat (CL)
    Where legal title remains w/claimant = in rem (replevein)
    Services = Quantum Meruit (CL/in personam)

PRACTICAL COMPULSION

Causing party to miss contract deadline =practical compulsion
Can make a threat to do something that you have a legal right to do, e.g, refuse to ever contract w/ person again
    You can make legal threats, just can’t use them to extort money/benefit.
          o You don’t have to justify the legal threat, you have to justify the demand for benefit.

If threat & demand happen prior to contract, then must stop and sue (Peter Qulet)

Practical Compulsion by Public Authority or Officials
Colore Offici-if gov’t charges for something that ought to be provided for free or charges more than what can be
charged for it under statute, then recovery granted under this doctrine.

Policy-we hold public authorities to higher standard in providing services for citizens they are serving.




Economic Duress-use undue influence/equity for recovery. Benefits conferred through one person playing on
relationship to gain trust of another in order to con them out of benefit.

       Unconscionable transaction-one person with superior bargaining power makes a deal and gets an advantage
based on their superior bargaining power.




                                                                                                                           16
Breach of Fiduciary Duties
    E.g., director of corporation taking a person benefit using their director position

Abuse of Confidence
    Independent equitable wrong




                                                                                           17
Refusal to Share Spousal Assets on Separation
NOT A COMMON LAW ACTION-it’s equitable wrongdoing/unequitable w/holding of property-gives rise to UE
           1. An Enrichment to the D
                  Recovery is based on D’s GAIN from P’s contribution
                  Enrichment = Surplus Wealth, which has not subsequently been lost (value surviving)
                  Surplus Wealth = purchase/improvement/maintenance of asset(s) acquired during
                    relationship or prior (Sorochan)

           2. A Corresponding Detriment to the P
                  P either directly contributes to surplus wealth financially or by labour OR
                  Indirectly contributes to surplus wealth through domestic services, which free up D’s
                    assets/time, i.e., saving D expense &/or allows D to amass benefit (Peter)
                         If enrichment (e.g., specific asset) came form other source entirely, e.g., stock in H’s
                            name only, hard to show W’s services/contrib was corresponding

             3. An Absence of Juristic Reason for the Enrichment (H has no juridical reason to retain benefit)
                         Sorochan/Pettkus suggest that to have an absence of juristic reason for enrichment, P
                          must have reasonable expectation of having an interest in asset
 No Juristic             While arguably, having a surplus would lead to expectation of interest in asset, instead:
 Reason for D to              o Replace the “reasonable expectation test” in Peter with a “presumption of
 retain benefit IF:              sharing” between spouses in the absence of evidence to the contrary (Maddaugh)
 Spouses are                           Mere fact that H alone has title to asset is NOT by itself enough evidence
 “Marriage-like”                         to the contrary
 because of              Arguably easier to show “Sharing Intention” if married, but once relationship is proven
 Presumption of           to be “marriage-like”, sharing intention presumption should apply
 Sharing Intention,
                         Factors tending to show “sharing intention”:
 UNLESS D can                 o Lengthy relationship (Pettkus),
 meet heavy onus              o Pooled assets (Peter),
                              o Economically meshed (Pettkus),
                              o Primary caregiver (almost all marital cases in casebook)
                              o Gave up paid work
                    iv. NO JURISTIC REASON FOR D TO KEEP BENEFIT =
                          II.    If D proves there was NO sharing intention/reasonable expectation OR
                          III.   Cohabitation agreement OR
                          IV.    Statute OR
                          V.     Gift OR
                          VI.    Officiousness

Remedy:
    IF no Surplus Wealth after paying debts, then NO recovery
    Courts have discretion in determining amount/method of recovery- not necessarily an even split (Peter)
    In usual matrimonial cases, there has been NO undertaking wrt how the property is to be shared
    Usually all of couples assets are put into pie to determine surplus wealth (except those excluded, e.g., by k)

2 Remedies Available:
   1. Constructive Trust (proprietary remedy)
          o Constructive Trust granted:
                  For domestic services alone if they were provided after undertaking by D (Kiss)
                  Where claimant’s efforts (including domestic services alone) have given her a sufficient link
                     (“causal connection”) to asset, e.g., by freeing up H’s assets to acquire new ones (Peter) OR
                  Where it would be difficult to enforce a money award (Peter, per McLachlin)
                  If CT awarded, then W gets priority over creditors. Potential unfairness to 3rd party creditors.



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   2. Monetary Award (In Personam)-
        o Services provided w/ an undertaking that they will be compensated can get quantum meruit
               (Deglman)
           o Court says they should favor this remedy-but cases don’t suggest this (Peter)
                 Constructive Trust should not be awarded where money award is sufficient (Peter)
                 Money award is insufficient if spouse’s contribution is sufficiently linked to assets (Peter)
           o Money can be awarded for share of surplus wealth if insufficient link to assets (Everson Sask CA)
                 Although SCC may still have awarded CT if insufficient link to assets-CT or &/outcome is
                    unclear
                 BCCA cases have indicated that money award can also be based on value surviving/acct of
                    profits of surplus wealth (Pickelein)
           o TO assess actual quantum:
                 Take account of the value of services W provided v. value she received while in the
                    relationship (Everson)
                 If value of W’s benefits in relationship were worth more than services she provided, then W
                    already received remuneration for services she provided (Everson)

Value Received (Money Award)-actual value of goods, services or money the D has received from the P

Value Survived (Constructive Trust)-what is left of asset. I.e., if asset was lost, then P cannot claim. This would
apply to home, i.e., property, constructive trust claim. Would include any increase in the value of the asset.
   o BUT Cory suggested Constructive trust could be calculated on value received basis, i.e., quantum meriut
        could be calculated & enforced by equitable lien against target asset, e.g., home (Peter) (although
        McLachlin didn’t agree)

Effect of Matrimonial Property Legislation
*Only effects couples who qualify under legislation
     Issue 1-Should CT be imposed in addition to legislation division of property provisions? (Rawluk)
           o McLachlin said no because statute provides scheme for property division. No need to resort to
               equity. Statute has provision to take account of any spousal inequities that happen in the interim
           o Maddaugh-neither H or W is contributing to property value increase in interim, no UE
           o First court must determine whether UE has occurred, and whether CT is appropriate and THEN
               court may or may not apply it retroactively (LeClair Estate BCCA)
     Issue 2-what date should property be valuated?
     If CT, imposed court has discretion to decide whether CT applies at time of:
           o Court Proceedings (thereby likely granting W any increase in property value since separation)
           o Unjust Enrichment-problem is that UE usually occurs over time, not any specific time.
                   Result - valuation date = date of separation. Would not take account of interim property
                       value increases from teim of separation to time of court proceedings)




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           o SUBSTANTIVE GROUNDS for RESTITUTIONARY RELIEF cont’d:

Compulsory Discharge of Another’s Liability

Unrequested Benefits

Restitutionary Liability of Public Authorities

Unjust Enrichment as a Free-standing Cause of Action
Restitution is a freestanding cause of action even prior to Pettkus (Muir v Univ of Ottawa)


RESTITUTIONAL REMEDIES

Common Law Remedies: (use for breach of promise/contract)
    Quantum Meruit-value of services rendered (see Deglman)
    Quantum Valebat-value of goods
    Money Had & Received (by D)
    Money Paid
    Use and Occupation of Land
    Rescission at Law
Equitable Remedies:
     Constructive Trust (in rem)
     Equitable Accounting of Profits (in personam)
     Equitable Lien
     Equitable Rescission
     Equitable Compensation

Equitable & CL Remedies:
    Subrogation
    Contribution & Indemnity
    Tracing?

Tracing Money at Common Law


Equitable Compenstion
Equitable compensation is available for all fiduciary relationships (Nocton)
Outstanding issue: whether all the particularities of the doctrine are available to & appropriate for on-trustee
fiduciaries v. trustees see pg 5:53
Bene is entitled to collect losses calculated from time of trial, not time of breach. Bene benfits from certain
presumptions.


Constructive Trust as General Remedy

Tracing in Equity
Not a remedy or claim, it’s a process or means to get a remedy. Can be used where P seeks a proprietary or in
personam remedy. In personam, e.g., mistaken payments to overpaid beneficiary under a will. In Rem, e.g.,
property
     To establish a proprietary claim:
           o P must establish that he has legal ownership of the property
           o Identify the property in the hands of D
                   Not a problem for non-fungibles usually (e.g., land)

                                                                                                                   20
                     Fungible identification is problematic if:
                           P’s property becomes attached to that of another (e.g., windshield)
                           P’s property becomes inseparably/indistinguishably mixed with that of another (e.g.
                              wheat in grain elevator)
                           P’s property is transformed into a new product as result of another’s labour
      Tracing Money
          o Missing and identification becomes problematic
          o Usual principles wrt fungibles doesn’t apply
          o Appropriate action is money had and received (in personam claim)
                    Doesn’t work against a bona fide purchaser for value w/o notice?? But they would be UE!
                    BUT if P can estb proprietary interest at the time it comes into the D’s hands, via tracing,
                      can he get $ back from 3rd party? Doesn’t matter wht form it is in, if prop interest estb unless
                      agsint bona fide purchaser, in which case P is screwed. If D changes his position can claim
                      change of position as defence (Lipkn Gorman)
                    $ can be identified so long as it hasn’t be indistinguishably mingled with other money.
                      Whether 3rd party has notice (wrongdoer) or not, P’s proprietary interest in the $ is lost
                   
                   
          o P not awarded specific money, gets personal judgment for its equivalent value
          o Result: P is treated like any other general creditor
          o
      Benefit to proprietary claim:
          o When D is insolvent, moves P ahead of other creditors (bc P is seeking his specific property-CIBC)
                    To allow otherwise would mean general creditors would be UE to extent that debt was paid
                      w/P’s property, i.e., P’s property never belonged to D who owes creditors the debt.
          o If P only assets an in personam claim, P must share with general creditors

Tracing only possible if asset can be followed, whether mixed or unmixed, it can be located or identified.
2 things stopping Tracing: (McTaggart)
                           1. Bona fide purchaser for value without notice
                           2. Lack of existence of an identifiable trust fund

When Does the Right to Trace in Equity Arise?


When is the Right to Trace in Equity Lost? (how to identify P’s property in equity)




Subrogation




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