The Law of Restitution.
The last few years have been eventful ones for the law of restitution in Canada. In LAC Minerals Ltd. v. International Corona Resources Ltd., (1) the Supreme Court of Canada engaged in a lengthy analysis of the range of relationships that give rise to fiduciary duties--duties that frequently serve to ground claims for restitution. In LAC Minerals and in Rawluk v. Rawluk, (2) the Court explored one of the law of restitution's favorite remedies: the constructive trust. And in Air Canada v. British Columbia (3) it took a major step toward brushing aside the anachronistic distinction between payments made due to mistakes of fact and those made due to mistakes of law. While this remarkably energetic exercise in housecleaning has gone on, David Stevens has been busy rethinking the very foundations of the structure that shapes the law of restitution, suggesting that greater coherence and clarity can be attained if one defines the cause of action in unjust enrichment as "non-consensual receipt and retention of value." (4) As if this were not enough, Peter D. Maddaugh and John D. McCamus have now produced a treatise that is very much concerned to highlight distinctive features of the law of restitution in Canada. (5)
With so much going on, one can only welcome the advent of a detailed overview and analysis of the law of restitution that explores the implications of recent developments in Canadian jurisprudence. While courts in this country continue to effect important changes to the law of restitution, the judiciary can but tackle problems on a sector by sector basis, and then only with a rather limited say about the nature and sequence of the issues to be addressed. (6) A treatise, on the other hand, offers an opportunity to conduct a comprehensive review of all facets of the subject, one that can draw out organizing principles which may in turn provide coherence and conceptual unity across what previously appeared to be discrete and disparate corners of the law.
Of course, not all treatises set out to provide this kind of wide ranging exploration--and recharacterization--of a given area of law. They may, on the one hand, seek to provide a snapshot of the state of the law, concentrating on supplying a particularly detailed picture of the components that are commonly assumed to make up the relevant body of law. One would obviously be oversimplifying were one to suggest that Goff and Jones' The Law of Restitution (7) falls squarely into this category, particularly since it has played a crucial role in shaping the very structure of the law of restitution. Still, it is fair to suggest that portions of this treatise are often content to trace the evolution and contours of a particular strand of the law of restitution, with the result that one is not altogether sure whether that strand fits neatly into a web structured by a few simple organizing principles or whether it is instead something of a loose thread.
At the other end of the spectrum, there are treatises that are not concerned to produce a finely etched picture of the law as it has evolved. Rather, they seek to recharacterize the subject matter in light of a given set of organizing principles with a view to providing coherence which they suggest has previously gone missing. Peter Birks' An Introduction to the Law of Restitutions (8) is very much a member of this category. Indeed, responding to some of his critics, Birks observes:
Hedley would seem to think that carrying unjust enrichment back into nineteenth century decisions is a violation of their own particular truth. Which indeed it is. But, if it is right to say that in this field lawyers of that time were disabled by a demonstrable error, we are forced to choose between disturbing their vitiated truth or gravely delaying our own. (9)
Maddaugh & McCamus does not fit neatly into either of these categories and in this respect it represents something of a new generation of treatise in the law of restitution. Rather than having to look on the barren landscape that led Birks to observe of the law of restitution that "[t]he shape of its skeleton has not been established," (10) Maddaugh & McCamus is able to look back over some three decades of Canadian jurisprudence in which an attempt has been made to give some structure to the subject matter. Whereas Goff & Jones sought to fight off the debilitating effects of implied contract theory and to build on a series of unfocused and frequently contradictory judicial pronouncements about whether there is a principle prohibiting unjust enrichment, Maddaugh & McCamus is able to focus on Dickson C.J.C.'s efforts to integrate Goff & Jones' conclusions about the nature of that principle into our law of restitution. (11) The result is a treatise that clearly feels more secure than its predecessors about looking to case law for guidance with respect to appropriate organizing principles.
In many respects, however, Maddaugh & McCamus' roots are firmly embedded in the ground that Goff & Jones sowed: not simply because the case law to which it looks for inspiration with respect to organizing principles is itself profoundly marked by that first generation of treatise, but also because it retains a similar conception of the most appropriate way in which to approach a study of the law of restitution (at least at this juncture in its evolution). In other words, Maddaugh & McCamus sets out to provide a comprehensive picture of the current state of the law of restitution in Canada, how it came to look as it does, where sources of controversy lie and what the solutions to those disputes might be. Although it does devote space to the nature of the principle of unjust enrichment that the authors suggest underlies our law, and while this analysis gives shape to the treatise's overall structure, this is nonetheless a study that has quite deliberately chosen both to leave to one side the kind of critical analysis of the principle's constituent elements that one finds in Stevens' recent work, (12) and to forsake a radical restructuring of the subject matter.
The treatise is divided into three parts: first, an introduction to the history and nature of the principle of unjust enrichment; second, a study of the remedies that have traditionally been available to secure restitution; and, third, an analysis of the situations that may be thought to give rise to a right to restitution.
Part One provides a brief history of the origins of the law of restitution before turning to more recent Canadian developments. As noted, the focus is squarely on Dickson C.J.C.'s articulation of the circumstances in which unjust enrichment may give rise to a cause of action: that is, where the facts "display an enrichment, a corresponding deprivation, and the absence of any juristic reason--such as a contract or disposition of law--for the enrichment." (13) Maddaugh & McCamus goes on to observe:
If the principal rationale underlying the unjust enrichment doctrine is that it is unjust to receive a windfall benefit at the plaintiff's expense, it must be emphasized that there is a second rationale of equivalent importance underlying the granting of relief in many restitution cases. There are substantial areas of restitutionary doctrine in which the reasoning of the courts manifests a predominant concern with the wrongfulness of the conduct of the defendant which has resulted in the acquisition of the benefit in question. The fundamental notion underlying the granting of recovery in such cases appears to be that "a person shall not be permitted to profit from his wrongdoing." (14)
These, then, are the authors' organizing principles. Indeed, they emphasize that throughout the treatise they attempt to state the central principle of unjust enrichment in such a fashion as to embrace restitutionary doctrine resting on either one or both of the so called "unearned windfall" rationale and "profit from wrongdoing" rationale. (15) They explain that in their view the key to such an articulation is the latent ambiguity in the term "at the expense of," that cases of unearned windfall involve a transfer of a benefit "at the expense" of the plaintiff in the sense that the plaintiff's wealth is reduced, and that cases of profit from wrongdoing involve an acquisition "at the expense" of the plaintiff in the sense that it arises from the infliction of an injury upon or the infringement of an interest of the plaintiff. (16)
It is disappointing that the authors do not explain why they feel that this two-limbed approach to the law of restitution provides a powerful set of organizing principles. Given the variety of theories concerning the most appropriate way to structure this body of law, it would have been helpful to have some account of the reasons why the thesis that Maddaugh & McCamus favours might be thought to be a superior analytic instrument. (17) The disappointment is reinforced by the absence of any sustained attempt to show in what respects, if at all, the two limbs are conceptually united. Must we really be satisfied with a two track approach to the law of restitution, one that looks to a "latent ambiguity" as a unifying theme? Or is there not some more fundamental principle on which this body of law can be seen to rest? (18)
Commenting on their decision to deal with the question of remedies (in Part Two) before the nature of the cause of action (in Part Three), the authors observe that at a later stage in the development of the subject it might be appropriate to reverse the order of the second and third parts of their treatise. But it is obviously their view that that time has not yet arrived:
The history of this subject, however, has been very closely bound up with the history of its remedies. Accordingly, the discussion of remedies in the second Part is designed to carry the reader forward to a more complete understanding both of the history of the subject and of its evolution into the modern law of restitution. (19)
There can be no doubt that the law of restitution has, to a remarkable extent, been driven by remedial considerations and that if one is to grasp the nature of the right to restitution as understood in the case-law, then one must appreciate these remedial considerations. But the focus on remedies has also been the source of many of the subject's structural problems. Rather than moving from organizing principles to a definition of the cause of action and then to a consideration of the appropriate range of remedies, the history of the law of restitution has all too often been the saga of a remedy in search of a cause of action and only then some vague underlying principle. This, unfortunately, is a problem that Maddaugh & McCamus does not avoid altogether. As a result, although the treatise does succeed in going far beyond the mere itemization of available remedies, exploring some of the difficulties surrounding the way in which concepts like the constructive trust have traditionally been understood, Maddaugh & McCamus does not provide a general account of the nature of the remedies that ought to be available to secure restitution, given the principles that underlie the cause of action.
In placing a study of available remedies between their introduction to organizing principles and their analysis of the way in which these principles shape the right to restitution, Maddaugh and McCamus have also sacrificed the flow of their argument about the best way in which to structure the law of restitution and to understand the cause of action. This is a shame. Not only because the effect is to produce a slightly disjointed analysis, but also because the risk is that those who are unfamiliar with the subject will not find Part Two as accessible as the rest of the treatise. In an area renowned for its rather amorphous and ambiguous nature, the importance of accessibility should not be underestimated.
Part Three forms the bulk of the treatise and is built around the two track approach outlined in Part One. Chapters 10 through 21 deal with the law concerning benefits conferred by mistake or as a result of various kinds of ineffective transactions: situations that give rise to what the authors call "unjust enrichment by subtraction from the plaintiff." (20) Chapters 22 through 27 are devoted to the second limb, "unjust enrichment by way of doing wrong to the plaintiff." (21) Three final chapters are devoted to various forms of "Officiousness." (22)
The analysis is thorough and highlights nicely the respects in which the law of restitution in Canada has taken on a life of its own. Once again, however, it is unfortunate that the authors do not consider more consistently the relationship between organizing principles and particular corners of the law. For example, the analysis of the impact of Air Canada on the distinction between mistakes of fact and mistakes of law provides a carefully considered set of conclusions about the state of this distinction in Canada. Powerful arguments are advanced concerning the inadequacy of some of La Forest J.'s reasoning in Air Canada. (23) Yet there is no sustained attempt to explore whether the distinction cannot but collapse in light of the principle of unjust enrichment set out in the first part of the treatise. The reader is provided with a brief "restatement" of the doctrine of mistake, (24) but the restatement is little more than a summary of the state of the law in Canada after Air Canada. Much more is needed if the reader is to understand fully how this doctrine might best be structured in light of the author's views concerning the principle of unjust enrichment.
That much having been said, there are some chapters that are highly successful and that provide very good examples of the kind of thoroughgoing analysis from which law of restitution can only benefit. The discussion of non-monetary benefits conferred by mistake in chapter 12 (25) manages to bring together the authors' views on the principle of unjust enrichment with their conclusions about how little substance there is to distinctions between various kinds of mistake (at least for the purposes of restitutionary analysis). Moreover, a number of constructive observations are put forward regarding the kinds of remedies that should be available in this context. This is precisely the kind of integrated exploration that the law of restitution so desperately needs.
Another example of a successful plunge into murky waters may be found in the authors' discussion of the law relating to the recovery of benefits conferred under illegal contracts. (26) After examining the general rule prohibiting recovery and the exceptions to the rule that ultimately serve to illustrate its potential unfairness, a determined effort is made to provide a picture of the way in which realignment might be effected with a view to better reflecting the principle of unjust enrichment. But it is not every chapter that accomplishes as much. Indeed, among the chapters devoted to cases of enrichment by way of wrongdoing, (27) it is only in canvassing the law on the doctrine of waiver of tort (28) that the authors display hints of the analytic skills that they deploy so effectively in some of the preceding portions of the treatise.
In conclusion, Maddaugh & McCamus is a welcome addition to Canadian treatises on the law of restitution. Its value lies in its comprehensive overview and analysis of the current state of the law and in its emphasis on the distinctively Canadian features of that law. In this respect, the treatise is bound to play an important role in shaping future discussions in Canada both about the most appropriate way to address specific problems in the law of restitution and about how best to conceive of the nature of that body of law. But it is precisely because the treatise is significant that one must also express disappointment about its failure to provide more in the way of critical discussion of the reasons why the version of the principle of unjust enrichment that it favours is to be preferred to other conceptions of that principle and, in turn, why the overall structure of this treatise is to be preferred to that of other treatises. Similarly, it is unfortunate that the effort to explain in what respects particular aspects of the law of restitution could be better understood through a rigorous application of the principle of unjust enrichment is not made in a more consistent manner. In the end, it is the absence of this kind of sustained analysis that makes it difficult for the authors to engage in an ongoing dialogue about the best way to conceive of the cause of action and about the nature of the remedies that should be available to secure restitution. Having taken a valuable first step, the challenge in subsequent editions of Maddaugh & McCamus will be to address these broader questions systematically.
(1) LAC Minerals Ltd. v. International Corona Resources Ltd.,  2 S.C.R. 574, 61 D.L.R. (4th) 14 [hereinafter LAC Minerals[. In connection with this decision, see D.W.M. Waters, "LAC Minerals Ltd. v. International Corona Resources Ltd." (1990) 69 Can. Bar Rev. 455.
(2) Rawluk v. Rawluk,  1 S.C.R. 70, 65 D.L.R. (4th) 161.
(3) Air Canada v. British Columbia,  1 S.C.R. 1161, 59 D.L.R. (4th) 161 [hereinafter Air Canada[. Specifically, see La Forest J.'s obiter comments. Lamer J. (as he then was) and L'Heureux-Dube J. concurred with La Forest J. While Wilson J. dissented in the result, she was sympathetic to La Forest J.'s observations on this point. Beetz and McIntyre JJ. deliberately refrained from expressing an opinion on this issue. For a brief analysis of this decision, see S. Arrowsmith, "Restitution and Mistake of Law in Canada" (1990) 106 L.Q. Rev. 28.
(4) D. Stevens, "Restitution, Property, and the Cause of Action in Unjust Enrichment: Getting by with Fewer Things" Parts I and II (1989) 39 U.T.L.J. 258 and 325, respectively.
(5) P.D. Maddaugh & J.D. McCamus, The Law of Restitution (Aurora, Ont.: Canada Law Books, 1990) [hereinafter Maddaugh & McCamus].
(6) The difficulties involved in judicial attempts to reformulate aspects of the law of restitution are aptly illustrated in the Air Canada decision, supra, note 3. While La Forest J. sought to inject some order into one corner of the law of restitution, Beetz and McIntyre JJ. argued that it was inappropriate to do so in this instance as the question of mistake did not need to be addressed. Wilson J. displayed a similar hesitancy about dealing with the issue in view of the fact that it was not squarely before the Court. Thus, even though a majority of the Court clearly thought that the distinction between mistakes of fact and law was generally unsound, its pronouncements on this matter are nevertheless strictly speaking obiter.
(7) Lord Goff of Chieveley & G. Jones, The Law of Restitution, 3d ed. (London: Sweet & Maxwell, 1986) [hereinafter Goff & Jones].
(8) P. Birks, An Introduction to the Law of Restitution (Oxford: Clarendon Press, 1989) [hereinafter Birks].
(9) P. Birks, "Unjust Enrichment: A Reply to Mr. Hedley" (1985) 5 Legal Studies 67 at 76. See S. Hedley, "Unjust Enrichment as the Basis of Restitution--An Overworked Concept" (1985) 5 Legal Studies 56.
(10) Birks, supra, note 8 at 1.
(11) For example, in his decisions in Rathwell v. Rathwell,  2 S.C.R. 436, 83 D.L.R. (3d) 289 [hereinafter Rathwell cited to S.C.R.] and in Sorachan v. Sorachan,  2 S.C.R. 38, 29 D.L.R. (4th) 1.
(12) Stevens' work, supra, note 4, appeared after the bulk of Maddaugh & McCamus was written. There were, however, other theories already in place that could have been examined. See infra, note 17.
(13) Rathwell, supra, note 11 at 455, excerpted in Maddaugh & McCamus, supra, note 5 at 25.
(14) Maddaugh & McCamus, ibid. at 32-33.
(15) Ibid. at 35.
(16) The authors explain that they find inspiration for this approach in Birks. Thus, the structure that Maddaugh & McCamus favours is evidently the result of a marriage of Birks' two-limbed approach and the judiciary's application of Goff & Jones's views on the principle of unjust enrichment.
(17) Apart from Goff & Jones and Birks, each of which puts forward a distinct thesis about the best way to conceive of a doctrine of unjust enrichment, one need only look to G. Klippert's work or that of G. Fridman and J.G. McLeod for different approaches to the most appropriate way to structure the subject. See G. Klippert, "The Juridical Nature of Unjust Enrichment" (1980) 30 U.T.L.J. 356; G. Klippert, Unjust Enrichment (Toronto: Butterworths, 1983); and G. Fridman & J.G. McLeod, Restitution (Toronto: Carswell, 1982). In future, one will also have to look to Stevens' thoughtful analysis of the cause of action in unjust enrichment, supra, note 4.
(18) For example, Stevens' maxim "non consensual receipt and retention of value," ibid. at 325. An application of this maxim might well lead one to ask how much of the material covered by the profit from wrongdoing rationale properly belongs in the law of restitution.
(19) Maddaugh & McCamus, supra, note 5 at ix.
(20) Ibid. The authors attribute this label to Birks.
(21) Ibid. The authors also attribute this label to Birks.
(22) Ibid. c. 28 "Necessitous Intervention: The Altruistic Intermeddler," c. 29 "Compulsory Discharge of Another's Liability," and c. 30 "The Self-Serving Intermeddler."
(23) Ibid. at 274-75.
(24) Ibid. at 276.
(25) Ibid. c. 12 "Other Benefits Conferred by Mistake."
(26) Ibid. c. 15 "Illegality."
(27) Ibid. c. 22 "Criminal and Quasi-Criminal Acts," c. 23 "Waiver of Tort," c. 24 "Compulsion," c. 25 "Breach of Fiduciary Duty," c. 26 "Unconscionable Transactions," and c. 27 "Other Equitable Wrongdoing."
(28) Ibid. c. 23.
Robert Yalden, Sessional Lecturer, Faculty of Law, McGill University.
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|Publication:||McGill Law Journal|
|Article Type:||Book Review|
|Date:||Apr 1, 2001|
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