DATE: 19990409
DOCKET: C27348
COURT OF APPEAL FOR ONTARIO
CATZMAN, CHARRON AND BORINS JJ.A.
BETWEEN: )
)
JOHN CAMPBELL, DONALD CAMPBELL ) Michael G. Emery
Executor and trustee under the last) for the appellant
will and testament of ROBERT )
CAMPBELL )
)
(Plaintiffs/ )
Respondents))
)
and )
)
LAURA CAMPBELL ) D. Kevin Davis
) for the respondents
(Defendant/ )
Appellant) )
) Heard: January 20, 1999
)
On Appeal from the Judgment of Kent J. without a jury dated
January 20, 1997
BORINS J.A.:
[1] The circumstances that give rise to this appeal are most
unfortunate. Two sons have brought a claim against their elderly
mother arising out of the operation of the family farm. At
trial, they were awarded damages of $180,810, which includes pre-
judgment interest, on the ground that their mother was unjustly
enriched by improvements which they made to the farm property.
Their mother has appealed. The sole issue raised by the appeal
is whether the trial judge, Kent J., correctly applied the legal
principles which entitle a person to obtain restitution on the
basis of unjust enrichment.
BACKGROUND
[2] The farm was operated by the Campbell family for three
generations as a dairy operation. Prior to his death in 1977, it
was operated by Gordon Campbell and his sons, John and Robert.
Robert died in 1991. These proceedings were brought by John and
Robert’s estate, represented by his son, Donald, against Gordon’s
widow, Laura Campbell.
[3] Shortly before Gordon died, he transferred the milk quota,
which is essential for the successful operation of a dairy farm,
to his sons John and Robert. Through his will, he left the farm
property, including all buildings located on it, the farm
equipment and the dairy herd, to his wife Laura.
[4] From 1977 until the end of 1991, John and Robert continued
to operate the farm, assisted during part of this period by
Donald, until he left farm work for other endeavours in 1989.
After Robert’s death in the summer of 1991, John’s declining
health made it impossible for him to continue the dairy farm as a
profitable operation. As well, Laura, who was about 88 years old
at the time, was in failing health and incapable of operating the
farm. Early in 1992 John decided to discontinue the dairy
operation. He and Donald, who had inherited his father’s share
of the milk quota, sold it. Through a lawyer, they informed
Laura of its sale, and advised her that “after March 31, 1992, it
will no longer be possible for you to sell your milk to the
Ontario Milk Marketing Board under [the] quota”.
[5] The day-to-day operation of the farm was carried on by John
and Robert, assisted for a number of years by Donald. John and
Robert continued to operate the same bank account for the farm
operation which had been established by their father. All of the
proceeds of the farm operation were deposited in the account, and
all expenses related to it were paid from the account. Laura was
responsible for keeping the books of the farm operation until her
health made this impossible in 1988. In addition, she had
housekeeping responsibilities in respect to the farm house in
which she and John, who was unmarried, lived. She prepared all
of the meals for herself and John, as well as for Robert, who was
divorced, and his son, Donald, who lived together in another
house on the farm property. John, Robert and Laura each drew
$500 per month from the farm account. At her own request, Laura
ceased her monthly draw in 1988 when her poor health forced her
to give up the bookkeeping for the farm operation. In addition,
John and Robert periodically withdrew significant equal amounts
from the farm account which they invested in guaranteed
investment certificates. In 1988, they redeemed a portion of the
guaranteed investment certificates to finance the improvements to
the farm which are the subject of the unjust enrichment claim.
[6] In 1988, John and Robert decided that it was necessary to
modernize the farm operation to enable it to remain economically
viable. These modifications involved the construction of a new
barn, renovations to the existing barn and the purchase and
installation of milking and manure removal equipment. The cost
of these improvements was about $220,000, the largest portion of
which was spent to construct the new barn. In assessing damages,
the trial judge noted that while he was prepared to assess
damages in an amount greater than $151,200, exclusive of pre-
judgment interest, he limited the award of damages to this
amount, plus pre-judgment interest, at the request of the
respondents.
[7] As I will discuss subsequently, central to the issue of
whether the trial judge was correct in his finding that Laura
Campbell was unjustly enriched by the improvements which her sons
made to her farm, is the fact that a new barn was constructed on
property which she owned and that the acquisition of new
equipment was to replace obsolete equipment which she also owned,
which were required to enable John and Robert to continue the
operation of the family dairy farming operation which she had
allowed them to carry on since 1977. Closely connected to the
resolution of this issue is whether Laura was aware that her sons
intended to proceed with the improvements, in particular the
construction of the new barn, and, if so, whether she gave her
consent to them to do so using money in the farm account to pay
for the cost of the improvements.
[8] In this regard, it is helpful to review the evidence
concerning Laura’s participation in the decision of John and
Robert to construct the new barn. At the time of the trial in
December, 1996, Laura was about 93 years old, residing in a
nursing home, in poor health, in a confused state of mind, and
unable to testify. By the time of the trial, her son, Harvey,
had been appointed her litigation guardian. As Robert was no
longer alive, it was John who was the respondents’ main witness
on this issue. Indeed, he agreed with appellant’s counsel that
he was “the best source of information about this whole
situation”.
[9] John’s testimony-in-chief in regard to the position his
mother took in respect to the construction of the barn was very
brief, consisting of only three questions and answers:
Q. And what if anything did she say about the barn
either before the construction started or during the
construction?
A. She really – she really didn’t say
– she’s pretty neutral really. She
really didn’t say anything.
Q. Do you recall her ever expressing a
view as to whether it should or
shouldn’t be done or what she thought of
it?
A. I don’t know. She just stayed out
of it as far as I am concerned.
Q. Did she say anything about the barn
after it was built?
A. No, not a great deal. No. Not
particular. No.
[10] It does not appear that John gave any evidence concerning
his mother’s attitude toward any of the other improvements that
constitute part of the respondents’ claim.
[11] When cross-examined, John admitted that when he was examined
for discovery his evidence was that he did “not really [consult]
too much” with his mother when he decided to build the barn as
“her mind wasn’t very well”. He said he could not “get much out
of her and her mind was so screwy”. Although he tried to discuss
the construction of the barn with her, he “couldn’t get nowhere
with her really”. John also admitted he was asked the following
questions and gave the following answers (on his examination for
discovery):
Q. What did you [meaning John and Robert] say to her?
A. Well, we would like to do something
to the barn, either do something or get out
of the dairy business. That’s what it
amounted to.
Q. All right. What did she say?
A. Well, she wasn’t that agreeable.
Well, she – yes. Not agreeable. No.
She probably would have been if her mind
was a little more normal. If we did it
five years before that, she might be
quite, I mean, more agreeable I think
because her mind was starting to – very
unpredictable, her mind.
Q. Did the fact that she wasn’t very
agreeable cause you any concern?
A. No. I don’t know.
[Emphasis added]
[12] After John admitted that he gave this evidence on
examination for discovery, he was asked this question and gave
this answer:
Q. I suggest to you your view was that she wasn’t in
her right mind at that time which seems to be what you have said
on various occasions in your evidence-in-chief, and you just
ignored her and went ahead?
A. Yes.
[Emphasis added]
[13] These extracts from John’s testimony constitute the only
direct evidence about his mother’s state of mind regarding the
construction of the new barn, which was the largest of the
expenditures incurred by the respondents for which they sought
restitution from their mother.
[14] It is in light of this general background that in the summer
of 1993 John, and the executor of his brother Robert’s estate,
sued their mother for a declaration that from June, 1977, to
August 31, 1991, John, Robert and his mother operated a dairy
farm as partners on the family farm, that the family farm, the
milk quota, the cattle, the farm equipment, and the funds in the
farm’s bank account constituted partnership property. In the
final two paragraphs of the statement of claim, the respondents
added an alternative claim for unjust enrichment based on the
improvements which they made to the farm property in 1988. Thus,
it was the approach of the respondents that if they failed to
acquire two thirds of the farm property through a declaration
that it had become the property of a partnership comprised of
John, Robert and Laura, they wished to be compensated for the
cost of the improvements John and Robert had made to the farm
property. From a review of the transcript of the proceedings, it
appears that the focus of the trial was the claim for the
declaration that a partnership had been created, with little
evidence being presented relevant to the unjust enrichment claim.
REASONS OF THE TRIAL JUDGE
[15] In dismissing the claim for the declaration, Kent J. made
the following finding:
I am of the view that the more appropriate finding is that
John and Robert operated the farm in partnership, using their
mother’s farm and herd with their mother’s consent, even
encouragement. They paid their mother for housekeeping and
bookkeeping services.
[16] Earlier he found that “Laura was quite content that John and
Robert have complete use of the farm property and herd to use in
an effort to accumulate income in the farm account”. No appeal
was taken from the dismissal of the respondents’ claim for the
declaration.
[17] In finding that Laura was unjustly enriched by the
improvements to the farm made by John and Robert in 1988, the
trial judge delivered the following reasons which, unfortunately,
are somewhat lacking in their analysis, being reflective, no
doubt, of the prominence which this issue occupied in the
respondents’ presentation of their claim:
The evidence was clear that Laura knew the barn was going to
be constructed. In fact at points in time before 1988 she had
complained to her sons that they should invest some of the farm
profits in improvements to the barn. While she took no active
part in the decision to proceed with the modernization, she made
no objection to it. It must be remembered that she was a very
strong willed and outspoken person who in these circumstances
chose not to speak out or speak against this modernization. She
even suggested what she thought would be a better manure-removal
system. Perhaps, she chose to remain neutral concerning the
modernization because she sensed a developing antagonism and/or
personality conflict developing among some of the members of her
family. Nevertheless, she did have every opportunity to object
to, or at least decline, the improvement being made to the farm.
Counsel on her behalf suggests that the modernization may have
not been any benefit to Laura, but that is clearly contradicted
by the expert evidence presented. She has a farm that is a more
valuable asset. It gained that value when the modernization was
completed and according to the expert evidence it continues to
have that value. Because her farm and herd did not become
partnership property during the 1977 to 1988 period she has
retained them and has benefited in that the farm became more
valuable. In addition she has retained the proceeds from the
sale of her herd.
ANALYSIS
[18] As I have indicated, the sole issue presented by this appeal
is whether the trial judge erred in finding that Laura was
unjustly enriched at the expense of her sons John and Robert. In
my view, he did.
[19] As I read the reasons of the trial judge in support of his
finding that Laura had been unjustly enriched, he was of the
opinion that Laura knew the barn was to be constructed, and that
while she did not participate in the decision to construct it,
she did not object to its construction. Further, he was of the
view that “she chose to remain neutral” even though “she did have
every opportunity to object to, or at least decline, the
improvement being made to the farm”.
[20] Earlier, I quoted John’s evidence on this subject. It was
not contradicted by Laura as she was too infirm to testify. As I
pointed out, this was the only direct evidence about Laura’s
involvement in the construction of the new barn, although Donald
had testified about his grandmother’s general disposition. Kent
J. likely based his finding that “she was a very strong willed
and outspoken person” on Donald’s evidence. However, Donald was
speaking about when she was in good health. In reaching the
conclusion that Laura chose to remain neutral and did not object
to the construction of the barn, it is apparent that the trial
judge either ignored, or misunderstood, John’s evidence, about
his mother’s state of mind. As well, it appears that the trial
judge equated the absence of any objection on the part of Laura
to the construction of the barn with her consent to its
construction. Considering the evidence about her state of mind
at the relevant time, together with John’s evidence that he and
his brother ignored her and went ahead and built the new barn, it
is my view that it was not open to the trial judge to make the
findings which he did, which were the foundation for his
conclusion that Laura had been unjustly enriched.
[21] I appreciate the deference that must be accorded to findings
of fact made by a trial judge. However, where a finding of fact
fails to take into account relevant evidence, is based on a
misunderstanding of the evidence, or is contrary to
uncontradicted evidence which has been expressly, or implicitly,
accepted by the trial judge, an appellate court is entitled to
interfere with the finding, and to substitute its own finding of
fact: Stein v. “Kathy K” (The Ship), [1976] 2 S.C.R. 802; Re:
Equity Waste Management of Canada & Corporation of the Town of
Halton Hills (1997), 35 O.R. (3d) 321 (C.A.).
[22] In my view, on the basis of John’s evidence, the only
reasonable finding open to the trial judge was that John knew
that his mother had not consented to the construction of the
barn, that she appeared to disagree, that she was “not in her
right mind” at the time, that he ignored her and proceeded to
construct the barn. As I will explain, the absence of Laura’s
consent to the construction of the barn and the making of the
other improvements to the farm – indeed, the absence of any
evidence that she expressly requested her sons to undertake this
work – is the essential reason why the respondents’ claim based
on unjust enrichment should fail.
[23] It is unnecessary for the purpose of this appeal to enter
upon an extensive discussion of the venerable equitable principle
of unjust enrichment which, as Dickson J. has observed, “has
played a role in Anglo-American legal writing for centuries”:
Pettkus v. Becker (1980), 117 D.L.R. (3d) 257 at 273 (S.C.C.).
In Pettkus, Dickson J., at 273-274, stated the requirements which
must be satisfied to establish an unjust enrichment and explained
what, in my view, is the overriding feature of all claims based
on unjust enrichment:
How then does one approach the question of unjust enrichment
in matrimonial causes? In Rathwell I ventured to suggest there
are three requirements to be satisfied before an unjust
enrichment can be said to exist: an enrichment, a corresponding
deprivation and absence of any juristic reason for the
enrichment. This approach, it seems to me, is supported by
general principles of equity that have been fashioned by the
Courts for centuries, though, admittedly, not in the context of
matrimonial property controversies.
The common law has never been willing to
compensate a plaintiff on the sole basis that
his actions have benefited another. Lord
Halsbury L.C. scotched this heresy in the
case of Ruabon S.S. Co. Ltd. v. London
Assurance, [1900] A.C. 6 with these words (p.
10): “…I cannot understand how it can be
asserted that it is part of the common law
that where one person gets some advantage
from the act of another a right of
contribution towards the expense from that
act arises on behalf of the person who has
done it”. Lord Macnaughten, in the same
case, put it this way (p. 15): “…there is no
principle of law which requires that a person
should contribute to an outlay merely because
he has derived a benefit from it”. It is not
enough for the Court simply to determine that
one spouse has benefited at the hands of
another and then to require restitution. It
must, in addition, be evident that the
retention of the benefit would be “unjust” in
the circumstances of the case. [Emphasis
added]
[24] Although the criteria which must be present in cases of
unjust enrichment as articulated by Dickson J. in Pettkus arose
in a matrimonial case, it is clear that they apply in all cases
of unjust enrichment: Peel (Regional Municipality) v. Canada;
Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762.
[25] Perhaps the most difficult requirement to apply is the
absence of a juristic reason for the enrichment. It has been
left to the judiciary to give shape and content to the concept of
juristic justification, and to develop its limits. Ultimately,
it is up to the courts to determine when there is justification
for an enriched defendant to retain the benefit based on the
circumstances of each case. In this regard, the following
observation by Prof. Litman in his article The Emergence of
Unjust Enrichment as a Cause of Action and the Remedy of
Constructive Trust (1988), 26 Alta. L. Rev. 407 at 436 is
helpful:
In the process of fleshing out the concept of juristic
justification the existing law of restitution should not be
forgotten. Goff and Jones summarize and develop the various
justifications for the retention of benefits by an enriched
defendant recognized by this traditional law. Without exploring
fully the content of each of these justifications they are as
follows:
(i) the plaintiff conferred the benefit
as a valid gift or in pursuance of a valid
common law, equitable or statutory obligation
which he owed to the defendant;
(ii) the plaintiff submitted to, or
compromised, the defendant’s honest
claim;
(iii) the plaintiff conferred the
benefit while performing an obligation
which he owed to a third party or
otherwise while acting voluntarily in
his own self interest;
(iv) the plaintiff acted officiously in
conferring the benefit;
(v) the defendant cannot be restored to
his original position or is a bona fide
purchaser;
(vi) public policy precludes
restitution.
[26] Subsequently, at p.451, Prof. Litman stated the following,
with which I agree:
In formulating juristic justification, the primary focus of
the courts should be the narrow question of fairness as between
the parties. Courts should consider whether, having regard to
the particular circumstances giving rise to an enrichment and to
subsequent events, it is fair for the defendant to retain the
benefit.…
[27] In Peter v. Beblow (1993), 101 D.L.R. (4th) 621 (S.C.C.), a
case of unjust enrichment arising out of a common law
relationship, McLachlin J., writing on behalf of a majority of
the Supreme Court, explained the third branch of the test stated
in Pettkus. At 645 she stated:
The main arguments on this appeal centred on whether the law
should recognize the services which the appellant provided as
being capable of founding an action for unjust enrichment. It
was argued, for example, that the services cannot give rise to a
remedy based on unjust enrichment because the appellant had
voluntarily assumed the role of wife and stepmother. It was also
said that the law of unjust enrichment should not recognize such
services because they arise from natural love and affection.
These arguments raise moral and policy questions and require the
court to make value judgments.
The first question is: where do these
arguments belong? Are they part of the
benefit – detriment analysis, or should they
be considered under the third head – the
absence of juristic reason for the unjust
enrichment? The Court of Appeal, for
example, held that there was no “detriment”
on these grounds. I hold the view that these
factors may most conveniently be considered
under the third head of absence of juristic
reason. This court has consistently taken a
straightforward economic approach to the
first two elements of the test for unjust
enrichment: Pettkus v. Becker, supra,
Sorochan v. Sorochan (1986), 29 D.L.R. (4th)
1, [1986] 2 S.C.R. 38, 23 E.T.R. 143; Peel
(Regional Municipality) v. Canada (1992), 98
D.L.R. (4th) 140, [1992] 3 S.C.R. 762, 12
M.P.L.R. (2d) 229 (hereinafter “Peel”). It
is in connection with the third element –
absence of juristic reason for the enrichment
– that such considerations may more properly
find their place. It is at this stage that
the court must consider whether the
enrichment and detriment, morally neutral in
themselves, are “unjust”.
What matters should be considered in
determining whether there is an absence of
juristic reason for the enrichment? The test
is flexible, and the factors to be considered
may vary with the situation before the court.
For example, different factors may be more
relevant in a case like Peel, supra, at pp.
164-5, a claim for unjust enrichment between
different levels of government, than in a
family case.
In every case, the fundamental concern
is the legitimate expectation of the parties:
Pettkus v. Becker. [Emphasis added]
[28] In considering the requirement of juristic justification in
Pettkus, Dickson J. also emphasized the importance of the
legitimate expectation of the parties at 274:
As for the third requirement, I hold that where one person
in a relationship tantamount to spousal prejudices herself in the
reasonable expectation of receiving an interest in property and
the other person in the relationship freely accepts benefits
conferred by the first person in circumstances where he knows or
ought to have known of that reasonable expectation, it would be
unjust to allow the recipient of the benefit to retain it.
[29] In Peel, McLachlin J. provided a thorough overview of the
general principles of unjust enrichment at 786 et seq. In
considering the requirement of juristic justification, assuming
that the other requirements have been established, McLachlin J.
made a number of helpful observations. At 803-804 she stated:
This is not to say that the concepts of justice and equity
play no role in determining whether recovery lies. It is rather
to say that the law defines what is so unjust as to require
disgorgement in terms of benefit, corresponding detriment and
absence of juristic reason for retention. Such definition is
required to preserve a measure of certainty in the law, as well
as to ensure due consideration of factors such as the legitimate
expectation of the parties, the right of parties to order their
affairs by contract, and the right of legislators in a federal
system to act in accordance with their best judgment without fear
of unforeseen future liabilities.
Additionally, conscience and fairness
may play a role in the development of the
relevant legal principles. When questions
arise as to the scope of the principles, the
balance of equities between the parties may
determine the outcome. Thus Maddaugh and
McCamus (The Law of Restitution (1990),
“Compulsory Discharge of Another’s
Liability”), considering a series of cases
where the defendant shared a legal liability
for the payment made with the plaintiff,
opine at p.740 that “[s]o long as that
benefit is bestowed by a plaintiff in
circumstances such that the defendant cannot,
in all good conscience, retain it,
restitutionary relief ought to be awarded.”
But this is quite different from the
assertion that “good conscience” is the only
requirement for recovery.
E.
The concept of “injustice” in the
context of the law of restitution harkens
back to the Aristotelian notion of correcting
a balance or equilibrium that had been
disrupted. The restitutive form of justice
is distinct from the analysis particular to
tort and contract law, in the sense that
questions of duty, standards, and culpability
are not a central focus in restitution.
Speaking in highly general terms, Stevens
suggests that contract and tort claims deal
with punitive or distributive measures,
whereas restitution claims deal with an
“unusual receipt and a retention of value”
(“Restitution, Property, and the Cause of
Action in Unjust Enrichment: Getting By With
Fewer Things (Part I)” (1989), 39 U.T.L.J.
258, at p. 271; see also Wingfield, “The
Prevention of Unjust Enrichment: or How
Shylock Gets His Comeuppance” (1988), 13
Queen’s L.J. 126, at p.134). Thus,
restitution, more narrowly than tort or
contract, focuses on re-establishing equality
as between two parties, as a response to a
disruption of equilibrium through a
subtraction or taking. This observation has
dual ramifications for the concept of
“injustice” in the context of restitution.
First, the injustice lies in one person’s
retaining something which he or she ought not
to retain, requiring that the scales be
righted. Second, the required injustice must
take into account not only what is fair to
the plaintiff; it must also consider what is
fair to the defendant. It is not enough that
the plaintiff has made a payment or rendered
services which it was not obliged to make or
render; it must also be shown that the
defendant as a consequence is in possession
of a benefit, and it is fair and just for the
defendant to disgorge that benefit.
[Emphasis added]
[30] Based on the foregoing authorities, I have come to this
conclusion: assuming that Laura was enriched by the acquisition
of the new barn and the other improvements and that her sons had
sustained a corresponding deprivation, for them to establish that
their mother was unjustly enriched they were required to prove
that:
(1) In providing the improvements to their mother’s
farm, they prejudiced themselves with the reasonable expectation
of receiving something in return from her and that she freely
accepted the benefits conferred by her sons in circumstances
where she knew, or ought to have known, of that reasonable
expectation.
(2) Considering all of the relevant
circumstances, it would be neither just,
nor fair, to permit their mother to
retain the benefit which they conferred
on her without requiring that she
compensate them for the cost of the
improvements.
[31] Thus, what is at the heart of the third requirement is the
reasonable expectation of the parties, and whether it would be
just and fair to the parties considering all of the relevant
circumstances, to permit the recipient of the benefit to retain
it without compensation to those who provided it.
[32] This analysis receives support in a recent article: A.
Drassinower, Unrequested Benefits in the Law of Unjust Enrichment
(1998), 48 U. of T. Law. J. 459. It is the thesis of this
article, which its author demonstrates by an extensive review of
the caselaw, that the law of unjust enrichment refuses recovery
for unrequested benefits. The question dealt with by the author
is why a body of law that routinely grants recovery for benefits
conferred in the absence of donative intent nonetheless refuses
recovery in cases where the benefits conferred are unrequested.
Drassinower provides the answer to this question at p.460:
The law of unjust enrichment thus construes the absence of
donative intent not unilaterally, as a subjective matter taking
place in the plaintiff’s head, but rather bilaterally, as an
inter-subjective matter taking place between plaintiff and
defendant. Forcing the defendant to disgorge the benefit
received in the absence of this bilaterality would amount to
granting the plaintiff the privilege of unilaterally constituting
another’s obligation. Unrequested benefits fall outside the law
of unjust enrichment in that, having failed to display the
required bilaterality, their disgorgement would itself be unjust.
[33] In his analysis of Pettkus at p.466, the author elaborates
this view:
The third observation, which I will now elaborate, is that
Pettkus reveals the bilaterality of unjust enrichment in that it
explicitly holds that, though necessary, the plaintiff’s merely
subjective lack of donative intent is not in and of itself
sufficient to ground the defendant’s liability in unjust
enrichment. Becker’s expectation of remuneration, even if
eminently reasonable, is not in and of itself sufficient to
generate a restitutionary remedy. Pettkus’s free acceptance of
the benefit in circumstances in which he knew or ought to have
known of Becker’s reasonable expectation is an additional
necessary element. In the absence of such acceptance on
Pettkus’s part, Becker’s claim would not have succeeded. The non-
gratuitous character of the benefit, that is, must show on both
sides. It must appear not unilaterally but bilaterally.
[34] And further at p.470 he states:
Whether in Moses or in Pettkus, granting the plaintiff’s
wish for a restitutionary remedy in the absence of such evidence
of bilaterality would have violated the equality of the parties.
The equality that normatively structures the relation between
plaintiff and defendant informs the requirement that, factually,
the plaintiff must provide evidence that the non-gratuitousness
of the benefit shows on both sides. This normatively ordained
evidentiary journey from wish to reality, from desire to right,
is that which he who confers unrequested and/or unaccepted
benefits cannot negotiate. This failure to establish
bilaterality accounts for the law of unjust enrichment’s refusal
to grant him restitution.
CONCLUSION
[35] Although the trial judge did not refer to the test for
unjust enrichment, it is clear that he had it in mind. He found
that Laura had been enriched. However, he made no finding that
her sons had sustained a corresponding deprivation. Furthermore,
he failed to consider the third branch of the test – the absence
of any juristic reason for the enrichment. In my view, his
failure to consider this requirement must lead to the success of
Laura’s appeal. As well, I question whether, in the
circumstances of this appeal, John and Robert had suffered a
deprivation. However, it is unnecessary to decide this question.
[36] In my view, this is not a case of unjust enrichment because
the plaintiffs did not establish the absence of any juristic
reason for their mother’s enrichment. In arriving at this
conclusion, I have considered the legitimate expectations of the
parties and the absence of bilaterality, together with what is
just and fair to the parties. I have concluded that to order
recovery would effect the result of enabling the plaintiffs to
unilaterally constitute their mother’s obligations. In my view,
liabilities are not to be forced upon people without their
consent, and without their knowledge.
[37] Simply stated, this is a case where the evidence shows that
John and Robert constructed the barn, and otherwise improved the
farm property, without the consent of their mother who was the
owner of the farm property, and subsequently expected that she
would reimburse them for having done so. However, there was no
evidence that when they incurred these expenses, John and Robert
expected to be reimbursed by their mother. Moreover, even if the
sons had such an expectation, there is no evidence that their
mother accepted the improvements in circumstances in which she
knew, or reasonably ought to have known, of her sons’
expectations. Indeed, there was evidence that she did not agree
to the construction of a new barn. Thus, the evidence failed to
show an absence of donative intent on the sons’ part which was as
real from their mother’s perspective as it was from their
perspective. Applying the concept of bilaterality, the
plaintiffs failed to show that their mother was aware they were
not making her a gift of the barn and the other improvements. It
is also significant that at the relevant time Laura’s state of
mind was so impaired that she was not fully cognizant of what was
taking place. Although there was no medical evidence of her
state of mind, I believe this is a reasonable inference that can
be drawn from John’s evidence, which I quoted earlier.
[38] In this regard, counsel for the respondents submitted that
this was a proper case of unjust enrichment as Laura had
acquiesced to the making of the improvements. I find no merit to
this submission. As I have indicated, it is doubtful that her
impaired state of mind was adequate to enable her to properly
acquiesce in what was taking place. Moreover, on the basis of
the evidence I do not find that there had been an acquiescence in
the meaning given to that word by Callaghan J. in Geldhof v.
Bakai (1982), 139 D.L.R. (3d) 527 (Ont. High Ct.). See, also,
Montreuil v. Ontario Asphalt Co. (1922), 69 D.L.R. 313 (S.C.C.).
[39] As I have observed, there was no evidence that John and
Robert had any expectation that they would receive compensation
from their mother for the cost of the improvements. To the
contrary, the reasonable inference I draw from the evidence is
that they intended to use the improvements in continuing the
dairy farming operation on their mother’s farm, just as they had
done from 1977, without seeking compensation from their mother.
They would, therefore, benefit in their farming operation from
the new barn, the renovations to the old barn, and the new
equipment. As the sons had no expectation that their mother
would reimburse them for their expenses, it follows that their
mother cannot be said to have accepted any benefits with the
knowledge of such expectation. They were unrequested benefits.
[40] It is to be recalled that the trial judge had found as a
fact, in dismissing the sons’ claim for a declaratory judgment,
that they had operated the farm in partnership since 1977 on
their mother’s farm with her consent and encouragement, providing
her with modest compensation of $500 a month from 1977 to 1988.
As the accumulated earnings of the farming operation were used to
pay for the improvements, it is obvious that it was a profitable
operation.
[41] At most, the only reasonable expectation the respondents
could have had of receiving some benefit in return for financing
the improvements to the farm was the continued use of the farm,
together with its buildings, equipment and herd, in running the
dairy operation. The appellant never deprived the respondents of
this use and did not intend to do so in the future. This
reasonable expectation was defeated only as a result of the
respondents’ own actions in deciding to sell the milk quota,
which effectively brought the dairy operation to an end. In my
view, the respondents did not arrive at this decision with the
expectation that they would obtain some share in the farm in
return for the improvements.
[42] Not only is the analysis in the previous paragraphs directed
to a consideration of what is just and fair in the circumstances,
it also forms the basis for the concern which I have expressed
about whether the evidence would support a finding that the sons
had sustained a detriment which corresponded to their mother’s
benefit.
[43] In my view, it can be said that there was, in a sense, a
juristic reason for Laura’s enrichment. She was under no
obligation, contractual or otherwise, to permit her sons to use
her farm and her dairy herd to earn their living. She derived
very modest compensation from them for the bookkeeping and
housekeeping services she provided for the farm operation. Her
sons, who paid no rent for the farm, in using the farm buildings
and equipment for their benefit, had a moral obligation to
replace buildings and equipment that they had “worn out”, or
which had become obsolete. In my view, what occurred in this
case can be said to come within the first and third
justifications for the retention of benefits by an enriched
defendant identified by Goff and Jones and referred to in the
extract from Prof. Litman’s article found in paragraph 25 of my
reasons.
[44] For all of the above reasons, it is my opinion that it was
not the legitimate expectation of the parties that Laura would
compensate John and Robert for the improvements they made to her
farm. Furthermore, it is not evident that Laura’s retention of
the benefit she received from her sons would be unjust or unfair
in the circumstances of this appeal.
[45] I wish to make a final observation.
[46] At the outset of my reasons, I referred to the unfortunate
circumstances which gave rise to this litigation. It is not a
pleasant experience for a trial judge to preside at a trial in
which children have brought a claim against an elderly, infirm
parent. It is evident that Kent J. found the circumstances of
this case very disturbing and unpleasant. It is also evident
that he tried his best to encourage the parties to settle their
differences on more than one occasion during the trial. For
doing so, he is to be commended. Unfortunately, he was
unsuccessful.
RESULT
[47] I would allow the appeal, set aside the judgment of Kent J.
awarding damages of $180,810 to the respondents, and dismiss
their claim based on unjust enrichment. The appellant is to have
her costs of the trial and the appeal.
“Borins J.A.
“I agree. Marvin Catzman J.A.”
“I agree. Louise Charron J.A.”
Released: April 9, 1999 |