Unjust Enrichment in the Estate Context

The Cause of Action

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. Where the enrichment relates to specific property, the court may impose a “constructive trust” over the property to the plaintiff‘s benefit. Where the claim is for a monetary award, the court may make a monetary award instead of a constructive trust.¹

Three elements are required to satisfy a claim for unjust enrichment, including the following:

1. Enrichment of the defendant;
2. A corresponding deprivation of the plaintiff; and
3. The absence of a juristic reason for the enrichment.²

This principled approach is flexible. It permits the court to identify circumstances in which justice and fairness require a party to restore a benefit to another party, but through a developed legal model that does not rely on what any single Judge might consider “just”.³ This flexibility is important in estates litigation⁴where family members of a deceased are often competing with creditors to claim against the deceased’s estate for money or property owed to them by way of contract or for equitable reasons.

Enrichment & Corresponding Deprivation

The first and second steps of the unjust enrichment analysis concern the following:

1. Whether the defendant has been enriched by the plaintiff; and
2. Whether the plaintiff has suffered a corresponding deprivation.⁵

The court has taken a straightforward approach to these elements. It has left the moral and policy questions to the third element (i.e., absence of a juristic reason).⁶

Regarding the first requirement (i.e., enrichment), the plaintiff must show that he or she gave something to the defendant, which the defendant received and retained.⁷  The benefit may be temporary; however, the benefit must be able to be restored to the plaintiff in specie or by money.⁸

Regarding the second requirement, the defendant must have gained a benefit or be enriched in a manner corresponding to the plaintiff’s loss.⁹ The measure of the plaintiff’s deprivation is not limited to his or her out-of-pocket expenditures, but may also include a benefit that was never in his or her possession, but would have accrued had the defendant not received it.¹⁰

For example, in Moore v. Sweet,¹¹ the plaintiff and the deceased were married for 20 years. They separated, but entered into an oral agreement whereby the plaintiff would pay the life insurance’s premiums in exchange for the deceased maintaining the plaintiff as beneficiary under the policy of insurance.¹² The deceased, however, removed the plaintiff as the beneficiary without the plaintiff’s knowledge. The Supreme Court of Canada found that the plaintiff had established that the defendant, who was the deceased’s subsequent spouse, was enriched by the corresponding deprivation of the plaintiff. As such, a constructive trust was imposed for the plaintiff’s benefit based on the oral agreement

Absence of Juristic Reason

The third element of unjust enrichment effectively means that there is no reason in law for the defendant to retain the benefit conferred by the plaintiff.¹³ Examples where a “juristic reason” exists include the intention to make a gift, a contract or a disposition of law.¹⁴

The proper approach to this analysis has two parts, including the following:

1. The plaintiff must show that there is no juristic reason from an established category, such as a contract or a disposition of law, to deny recovery.
2. If there is no juristic reason, then the plaintiff has made out a prima facie case.¹⁵

The defendant may rebut the prima facie case where the defendant can show that there is another reason to deny the recovery.¹⁶ This means that the defendant has the burden of proof to show why the enrichment ought to be retained. At this juncture, the court may take into account the legitimate expectations of the parties as well as the moral and public policy-based arguments for why the enrichment is unjust.¹⁷

Remedies

Remedies for unjust enrichment are restitutionary, which require the defendant to repay or reverse the unjustified enrichment.¹⁸ The plaintiff may be entitled to money or a proprietary remedy. In most cases, money may be a sufficient remedy to unjust enrichment.¹⁹ However, the calculation of the monetary award may present challenges.²⁰ As such, where a monetary award is inappropriate, the court may order a proprietary award.²¹

Constructive trusts are commonly imposed where proprietary awards are appropriate. There, however, must be a nexus between the property and the plaintiff’s deprivation. The nexus need not necessarily involve the acquisition of the property. What is important is whether the services rendered have a “clear proprietary relationship”.²²

Unjust Enrichment in the Estates Context

Situations where unjust enrichment may be awarded in estates litigation include the following:

1. Where a beneficiary received a larger bequest than he or she was otherwise entitled to under the will.
2. Where the deceased was enriched at the deprivation of another individual, who now claims against the estate for that enrichment.

Specific examples of unjust enrichment in the context of estates litigation are as follows:

Compensating Common Law Spouses

Common law spouses of the deceased may claim for part of the deceased’s estate where the common law spouse could not otherwise seek compensation under the Family Law Act or the Succession Law Reform Act.

In Becker v. Pettkus,²³ the deceased developed and ran a successful bee-keeping business. The plaintiff, who was the common law spouse, contributed substantially to the deceased’s business, including 19-years of unpaid labour. The plaintiff sought a declaration of one-half interest and share in the lands and the business. The Supreme Court of Canada found that a constructive trust could be applied for the plaintiff’s benefit. The court noted that the evidence suggested that the plaintiff believed she had an interest in the business and property, that her expectation was reasonable and that the plaintiff prejudiced herself in her reasonable expectation of receiving an interest in the property.

Now,²⁴ we look for a “joint family venture” as the vehicle within the law of unjust enrichment to decide proprietary entitlements between separating common law spouses. We no longer have to rely on discretionary decision-making by courts and have a model of law that can develop rationally over time.

Compensating Children Providing for Deceased Parent²⁵

Similar to the common law spouse referred to above, a child of the deceased may have performed services for his or her deceased parent on the promise of receiving a bequest under the will, which the deceased fails to provide upon their death.

In Antrobus v. Antrobus,²⁶ the plaintiff, who was the daughter of the deceased, contributed money and labour to her parents and family at a young age, including cooking, cleaning and caring for her siblings.²⁷ The plaintiff sought a constructive trust over her parents’ real property, which she was promised in exchange for her services provided. The trial judge found that the plaintiff’s parents were unjustly enriched. The judge noted that the parents received a benefit from the plaintiff’s work in the home, that the plaintiff was correspondingly deprived of all her leisure time as a teenager and young adult, and that there was no juristic reason for this enrichment.²⁸ The trial decision was upheld on appeal, albeit damages were reduced.²⁹

Quantum Meruit/Part Performance

Similar to unjust enrichment, although not identical, are contractual situations where the deceased promised to provide real property to the plaintiff in exchange for services, but where that property is gifted to another individual in the deceased’s will and given to that beneficiary upon the deceased’s death.

In Deglman v. Guaranty Trust Co. of Canada,³⁰ the plaintiff’s deceased aunt promised the plaintiff that she would leave him certain real property in her will on the condition that the plaintiff would “be good to her” and perform certain services. The plaintiff was entitled to recover for the services rendered by him on a quantum meruit basis. Having received the benefits of the plaintiff’s completion of the contract, the deceased was obligated to pay fair value for the services.

The approach in Deglman, however, relied on a fiction – a “quasi-contract” that would make an otherwise unenforceable contract enforceable based on the discretion of the court. The newer approach under the autonomous action for unjust enrichment sheds the fiction and highlights the need for an established cause of action or a sufficient reliance on circumstances arising ad hoc in a given set of circumstances. Providing services without payment and where no gift was intended is precisely the type of circumstance that unjust enrichment may address in a rational and coherent manner.