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Evan Barchuk, a lawyer at SHK Law

Evan Barchuk

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Tel:604.408.2024

Email:eab@shk.ca

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Authors: Evan Barchuk

Unjust Enrichment

Typically, a claim for unjust enrichment may be made when one person receives a benefit at the expense of a second person, in circumstances where it would be “against all conscience” for the first person to retain that benefit without compensating the second person.

In practice, unjust enrichment claims sometimes arise when one party performs services for, or benefiting, another in the absence of a contract.

The law of unjust enrichment was recently considered in Moore v. Sweet, [2018] SCJ No. 52, and the Supreme Court of Canada confirmed that a claim for unjust enrichment may be established where:

  • one party is enriched;
  • the other party suffered a corresponding deprivation; and
  • the enrichment and corresponding deprivation occurred in the absence of juristic (i.e., legally justifiable) reason.

The above elements are broadly applicable to all claims for unjust enrichment and Canadian courts have typically dealt with them as follows:

One Party is Enriched

Canadian courts have found that either the receipt of a benefit or relief from loss can constitute enrichment.  Typically, where one party receives services from another, its receipt of those services constitutes a benefit.  Moreover, if the receiving party refuses to pay for services received, its lack of payment may constitute relief from loss.

Corresponding Deprivation

The party claiming unjust enrichment must have suffered a quantifiable loss.  Most often, the claiming party’s failure to be appropriately paid for its services constitutes such a loss.

Absence of Juristic Reason

This final element asks whether there is any legal reason the claim should not succeed.  One such reason would be the existence of a valid contract under which payment is not due.  If a party provides services, and that party’s compensation (or lack thereof) is prescribed by contract, a court will likely conclude that the issue of compensation was previously settled between the parties and no intervention is warranted.

Consequently, the question as to whether a contract is, in fact, valid sometimes arises in claims for unjust enrichment.  In the case of an insufficiently detailed or ambiguous contract, a court may decide that the contract is so inadequate that it is void.  Under these circumstances, the existence of the contract may not be a bar to the claiming party’s unjust enrichment claim.

Even when there is a seemingly valid written contract between two parties, if either believes that it has not been adequately compensated for its work, it may consider revisiting the contract itself.  Further, if an oral agreement’s terms are lacking to the extent that a valid and subsisting contract cannot be found to exist, the claiming party may possibly succeed in a claim for unjust enrichment.

Overall, unjust enrichment provides a potentially useful alternative for recovery when a party feels that it has not been adequately compensated for its services.  Moreover, when there is no contract between parties or where their contract is inadequate, unjust enrichment may provide the only means for the claiming party’s recovery.

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