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Defences to a Claim of Unjust Enrichment

You may be an estate trustee defending an estate against a claim for unjust enrichment.1 You may be a common-law partner, who believes that the benefit(s) you received arising from your relationship are fair and deserved. You might be designated as a beneficiary on a policy of life insurance and someone argues that they should get the money instead. This blog will examine some of the defences that can be asserted to a claim for unjust enrichment.

What is Unjust Enrichment?

Firstly, what is unjust enrichment? Unjust enrichment is best described as a cause of action whereby person A seeks either a monetary or proprietary award against person B on the basis that B was enriched at A‘s expense without any good legal reason to allow B to retain that enrichment.

The test for unjust enrichment has been settled authoritatively. It is as follows:

  1. Has there been an enrichment;
  2. Has there been a corresponding deprivation; and
  3. Is there a juristic reason for the enrichment? This means a reason/explanation for the enrichment that makes it fair and “just”2

Defence 1: The “Established Categories”

The law states that if an unjust enrichment claim falls within one of the “established” categories of juristic reasons, the claim fails. If the claim does not, the claimant has a prima facie case.3 The “established” categories include the following:

  1. The intention to make a gift;4
  2. The existence of a contract;
  3. The disposition of law;5 and
  4. Other valid common law, equitable or statutory obligations.6

If the unjust enrichment claim does not fall within one of the “established” categories, a prima facie case for unjust enrichment has been made. What this means is that the onus then shifts to the person defending the claim to show that there is some other valid reason to deny recovery.

Defence 2 – Reasons to Deny Recovery

In Garland v. Consumers Gas Co.,7 the Supreme Court of Canada introduced two possible reasons to deny recovery; public policy and reasonable expectations. In Garland, the public policy consideration was that a criminal should not be permitted to keep the proceeds of their crime.8

The reasonable expectations of a person will be decided on a case-by-case basis. The court will consider the nature of the benefit received and whether it was imparted in circumstances resembling the existence of a gift or, on the other extreme, an implied contract. The court has stated that potential new categories of juristic reason may be established by considering moral or policy arguments and the expectations of the parties.9 As such, unjust enrichment claims are a developing area of the law.

Defence 3 – The Six “General Defences”

The court has held that there are six general defences to an unjust enrichment claim, including the following:

  1. Change of position;
  2. Estoppel;
  3. Statutory defences;
  4. Laches and acquiescence;
  5. Limitation periods; and
  6. The impossibility of counter-restitution.10

Change of position

Change of position provides a defence to a defendant where it would be inequitable to compel him or her to make restitution. It is best explained by way of example: Larry mistakenly receives a $4,000 dividend on shares. Delighted with his apparent good fortune, Larry treats his daughter to a car which he could never have afforded otherwise. If Larry was later required to provide restitution, he would legitimately feel aggrieved. The cost of the car would fall upon him, rather than upon the source of the apparent dividend. The law of unjust enrichment, therefore, provides Larry with a defence.11


The law of estoppel, generally, acts to stop person A from benefiting from actions taken by person B as a result of A’s promises. What if A promised B that he would get an interest in a house and B, subsequently, spends a lot of money improving the house. If A does not give B an interest in the house in his Will, should the law permit A’s estate to benefit? Estoppel acts to prevent A from retaining the benefit.

If the claimant was under a statutory obligation to provide the benefit, then this will act as a defence to the claim.

Laches and acquiescence

Laches arises when a claimant has unreasonably and inexcusably delayed in bringing an action and the delay has prejudiced the defendant.12   Acquiescence is akin to a waiver. It will act as a defence to an unjust enrichment claim where the claimant has delayed asserting their rights for so long that the claimant is adjudged to have acquiesced to the alleged unjust enrichment. In the circumstances, it is considered unfair to the defendant to provide restitution.

Limitation periods

Ontario’s Limitations Act, 2002, generally, places a two-year limitation on most types of actions. Equitable claims against something other than land (e.g., an RRSP or a pension), have a two year limitation period.13

For unjust enrichment claims relating to real property, however, the deadline for the claimant to bring their claim is 10 years.14

The impossibility of counter-restitution

Before a claimant can recover any benefit from the defendant, the claimant must return any benefit, which they have received from the defendant. Thus, in any case where there has been an exchange of benefits, if the claimant is unable to give counter-restitution, their claim will be barred.

Defence 4 – Other Defences

The “clean hands” doctrine

Unjust enrichment is an equitable remedy and those who seek to rely on equitable remedies must come to court with clean hands. Martek v. Martek15 is a good example.

Set off16

Take the example of Mavis v. Mavis17 where the Court found that the parties’ contributions offset each other with the wife’s contributions primarily financial and the husband’s primarily physical in terms of his labour to improve the property.

Paying their “fair share”

A claim for unjust enrichment may fail when the claimant’s contributions of money and labour are very small and could be considered as a fair contribution to some of the household expenses. See the court’s comments in Prelorentzos v. Havaris.18

Properly remunerated for services

In Derakhshan v. Narula,19 the plaintiff’s claim for unjust enrichment did not succeed where the court found that he was paid for all services rendered.

Failure to show corresponding loss

A claim for unjust enrichment will fail where there is a benefit to the defendant, but the claimant fails to show a corresponding loss.20


While the above defences may be asserted to a claim of unjust enrichment, it is important to bear in mind that this area of the law is far from settled. Each case must be carefully examined to determine whether an existing defence applies or whether the facts of the case support a potentially new category of defence.

unjust enrichment and estate law

Unjust Enrichment in the Estate Context

Unjust enrichment is an independent cause of action whereby the plaintiff seeks either a monetary or proprietary award against the defendant. The basis for the claim is that the defendant was enriched at the plaintiff’s expense without juristic reason.
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“Juristic Reason”

This blog is intended to look at the last part of the unjust enrichment test and what exactly the court means by “juristic reason” and what the courts have found such reasons to include.
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When Might Unjust Enrichment Apply in Estates Litigation?

When Might Unjust Enrichment Apply in Estates Litigation?

Lawyers and laypeople alike may be aware of the equitable principle that no one should be able to profit from committing a wrongful act. The doctrine of unjust enrichment is similar and deals with transfers of property from one person to another where there is no valid reason to allow the transferee to retain the property. The doctrine has specific application in estates litigation.
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  1.   See: What is an executor/estate trustee and what are his/her duties?
  2.   See Garland v Consumers Gas Co., 2004 S.C.C. 25 (S.C.C.). For a closer look at unjust enrichment in the estates context and what a “juristic reason” means, I direct you to blogs by Peter Neufeld and Bradley Phillips on those respective issues.
  3.   In Garland v. Consumers’ Gas Co. 2004 SCC 25, 2004 CSC 25, 2004 CarswellOnt 1558, the court set out a two-step analysis for the absence of juristic reason. 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
  4.   “… 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.” Moore v. Sweet 2018 SCC 52, 2018 CSC 52, 2018 CarswellOnt 19478 at para 57
  5.   For example, a transfer by right of survivorship to a joint tenant on death
  6.   For example, the obligation to support one’s child
  7.   Garland v. Consumers’ Gas Co. 2004 SCC 25, 2004 CSC 25, 2004 CarswellOnt 1558
  8.   Garland v. Consumers’ Gas Co. 2004 SCC 25, 2004 CSC 25, 2004 CarswellOnt 1558 at para 57. See also Oldfield v. Transamerica Life Insurance Co. of Canada, (2002) 1 S.C.R. 742, 2002 SCC 22 (S.C.C.), at para. 11. In the Garland case, a criminal rate of interest was charged on late utility payments.
  9.   Garland v. Consumers’ Gas Co. 2004 SCC 25, 2004 CSC 25, 2004 CarswellOnt 1558 at para 46, and Kerr v. Baranow 2011 SCC 10, 2011 CarswellBC 240 at para 44
  10.   Fuscaldo v. Stewart 2010 BCSC 1585, 2010 CarswellBC 3000
  11.   Morgan Guaranty Trust Co. of New York v. Outerbridge 1990 CarswellOnt 129
  12.   Re Hipel Estate, 2011 ONSC 5259 (Ont. S.C.J.). Appeal dismissed, Jacques v. Hipel Estate, 2012 ONCA 371 (Ont. C.A.); application for leave to appeal refused, 2012 CanLII 76984 (S.C.C.)
  13.   See also: Limitation Period Cheat Sheet
  14.   Section 4 of the Real Property Limitations Act, R.S.O. 1990, c. L.15
  15.   Martek v. Martek (2009), 66 R.F.L. (6th) 461, 2009 CarswellOnt 1244 (Ont. S.C.J.), Here, the wife was required to leave the home because of the husband’s violence. Although the husband continued to pay off the mortgage and all expenses, the court did not allow him to profit from his violence and gave the wife a 50% interest in the home.
  16.   The Supreme Court in Kerr v Baranow confirmed that “set-off” should be considered as a defence.
  17.   Mavis v. Mavis (2005), 15 R.F.L. (6th) 369, 2005 CarswellOnt 1649 (Ont. S.C.J.).
  18.   In Prelorentzos v. Havaris, 2015 ONSC 2844, 2015 CarswellOnt 6370 (Ont. S.C.J.) the court heard that Havaris made three municipal tax payments. The court’s response was “…. why shouldn’t she have contributed to some of the household expenses”.
  19.   Derakhshan v. Narula, 2018 CarswellOnt 902, 2018 ONSC 537 (Ont. S.C.J.).
  20.   See Best v. Hill, 2013 CarswellOnt 5191, 2013 ONSC 3034 (Ont. S.C.J.).

The author of this blog is James Dunphy. James is a partner at Wagner Sidlofsky LLP.

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This blog is not intended to serve as a comprehensive treatment of the topic. It is not meant to be legal advice. Every case turns on its specific facts and it would be a mistake for the reader of this blog to conclude how it might impact on the reader’s case. Nothing replaces retaining a qualified, competent lawyer, well versed in this niche area of practice and getting some good legal advice.
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