Article Volume 26:3

Restitutionary Claims for the Appropriation of Property

Table of Contents

Restitutionary Claims for the Appropriation of Property

George B. Klippert*

I. Introduction

In certain cases, when civil liability is imposed on the basis
of unjust enrichment, the court will have decided, directly or in-
directly either what things are property or in what way property
may be acquired. At the highest level of abstraction, the law of
property describes the dynamic existing between things and actions
in time. At a lower level of abstraction, we can discern the outlines
of two types of cases: where actions create acquisition rights and
obligations in things which have the characteristics of property,
and where the actions create things which themselves have the
characteristics of property. Reducing that level of abstraction once
again, we can distinguish two types of “property” cases which
arise in the law of restitution: the Pettkus v. Becker’ type, where
the claimant who has conferred a benefit acquires (as an exchange)
an interest in the defendant’s property, and the International News
Service v. Associated Press2 type, where the plaintiff asserts that
the defendant has appropriated a “thing” which has the charac-
teristics of property, that the “thing” belongs to the plaintiff, and
that the defendant must pay compensation for any benefit derived
from his appropriation. It is at this level of abstraction that this
article will analyze the relationship of property law principles and
the restitutionary principle of unjust enrichment.

A. Dispensing justice as a means of distributing property

As a general rule, if two parties contributed to the purchase
price of property and the legal title was taken in the name of one
contributor then a chancery court would hold that both contributors
had a beneficial interest in the property proportionate to their

* Of the Faculty of Law, University of British Columbia.
‘At

the date of printing, the judgments pronounced by the Supreme
Court of Canada on December 18, 1980 had not been reported. Page references
to Pettkus v. Becker are to the Reasons for Judgment issued by the Court.
[The judgment is now reported at (1980) 19 R.F.L. (2d) 165.]
2 248 U.S. 215 (1918). The International News Service case was distinguished
by Laskin CJ.C. in MacDonald v. Vapor Canada Ltd [1977] 2 S.C.R. 134, 149.

1981]

RESTITUTION AND THE APPROPRIATION OF PROPERTY

507

respective contributions.3 It was presumed that a person did not
make a gift to a stranger.4 That presumption was reflected in the
resulting trust which was imposed against the legal title-holder of
the property in these circumstances. That presumption, however,
was rebuttable by the legal title-holder who could prove that the
claimant’s contribution had been intended as a gift.5 Thus a
resulting trust was a burden-of-proof device which favoured the
contributor who did not share legal title.

This traditional analysis has caused problems in matrimonial
property cases.” The spouse’s contribution has generally been an
indirect financial one or in the nature of services performed7
In my view, the indirectness of the contribution created a causation
problem which had not often appeared in the early resulting trust
cases. Causation had not been a problem because it could be
established that the claimant had paid money directly to the
vendor who transferred the property to the defendant. The de-
fendant did not deny the contribution of money but argued that
it was intended as a gift. In the matrimonial property cases the
legal title-holder of the property opposes that no contribution has
been proved. The House of Lords, in Gissing v. Gissing8 and Pettitt
v. Pettitt,9 found a solution in the “common intention” test. The
test functioned primarily as a means to block the causation problem
inherent in the defendant’s argument. If both parties had intended
that each should have a beneficial interest in the property acquired
in the name of one, then the defendant could not be heard to say

3 See Pettitt v. Pettitt [1970] A.C. 777, 794 (H.L.) per Lord Reid. For a
discussion of the traditional authorities, beginning with Dyer v. Dyer (1788)
2 Cox 92, 30 E.R. 42 (Ex.), see Lord Upjohn’s judgment in Pettitt v. Pettitt,
supra, 814-5.

4 See Waters, Law of Trusts in Canada (1974), 277.
5 Such presumptions were “readily rebutted by comparatively slight evi-

dence” (Pettitt v. Pettitt, supra, note 3, 814 per Lord Upjohn).

6E.g., the doctrine of advancement, which established a rebuttable pre-
sumption that a gift was intended when the husband transferred property to
his wife, has since been questioned by the House of Lords in Gissing V.
Gissing [1971] A.C. 886, 907 (H.L.) per Lord Diplock.

7 For example, in Pettitt v. Pettitt, supra, note 3, 807, Lord Hodson said
that “the husband does not become entitled to a share in the wife’s property
by occupying his leisure hours in the house or garden even though he
enhances the value of the property.” And in Murdoch v. Murdoch [1975] 1
S.C.R. 423, 436, Martland J., speaking for a majority of the Supreme Court of
Canada, held that a wife who has done the work of “any ranch wife’
had not acquired an interest in her husband’s ranching operation.

8 Supra, note 6.
9 Supra, note 3.

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that the claimant’s “indirect” contribution had not given him or
her a beneficial interest in the acquired property.10

Before Pettkus v. Becker,”

the substantial weight of Anglo-
Canadian law12 would have supported the rule that acquisition
rights and obligations in matrimonial property required evidence
of a common intention between the parties, and in the absence
of common intention the claimant was unable to establish a bene-
ficial interest in the defendant’s property. 3 In Pettkus v. Becker
the six-member majority 14 held that the principle of constructive
trust is to be treated as an independent acquisition device.

Miss Becker claimed a beneficial interest in real property held
in the name of Mr Pettkus, the man with whom she had lived for
nineteen years. During a fourteen-year period of their relationship,
the real property had been acquired in Mr Pettkus’s name and
together the parties established a successful beekeeping operation.
Dickson J. observed that during this time Mr Pettkus “freely accepted
the benefits conferred upon him through [Miss Becker’s] financial
support and her labour.”‘I5 The first issue was whether Mr Pettkus,
as the recipient of these benefits, had intended to exchange an
interest in his land for them. In light of Murdoch v. Murdoch”,
and Rathwell v. Rathwell,’7 the law had become “equivocal”‘ 8 as

‘IoGissing v. Gissing, supra, note 6, 908 per Lord -Diplock.
“1 Supra, note 1.
‘ 2 Murdoch v. Murdoch, supra, note 7; Rathwell v. Rathwell [1978] 2
S.C.R. 436; Pettitt v. Pettitt, supra, note 3; Gissing v. Gissing, supra, note 6.
Historically, there is every indication that Chancery did not adopt an intention
test in constructive trust cases: see Waters, The Constructive Trust (1964),
38-9.

13 In Gissing v. Gissing, supra, note 6, 909, Lord Diplock said:

Where the wife has made no initial contribution to the cash deposit and
legal charges and no direct contribution
to the mortgage instalments
nor any adjustment to her contribution to other expenses of the house-
hold which it can be inferred was referable to the acquisition of the
house, there is in the absence of evidence of an express agreement between
the parties no material to justify the court in inferring that it was the
common intention of the parties that she should have any beneficial
interest in a matrimonial home conveyed into the sole name of the
husband, merely because she continued to contribute out of her own
earnings or private income to other expenses of the household.
14The reasons for judgment given by Dickson J. were concurred in by
Laskin CJ.C., Estey, McIntyre, Chouinard, Lamer JJ. The majority decided
to abandon the English constructive trust which has been dominated by
“the analogy-with.trust technique”: see Waters, supra, note 12, 42.

16 Supra, note 1, 13 per’Dickson J.
16 Supra, note 7.
17Supra, note 12.
8 Pettkus v. Becker, supra, note 1, 5 per Dickson J.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

509

(Martland and Beetz JJ. concurring)

to whether common intention was the exclusive test in matrimonial
property cases.
Ritchie J.

avoided
the problem by finding evidence of common intention and holding
that Miss Becker had succeeded in establishing a resulting trust.
But Dickson J. expressed the majority’s dissatisfaction with the
common intention test in unusually strong terms. “Fugitive”,’9
“phantom” 20 and “artificiality” 21 are words used to describe common
intention. Dickson J. stops short of abandoning the common in-
tention test altogether and holds that on the evidence it was not
established in this case. As a result, he concludes that “[i]f she is to
succeed at all, constructive trust emerges as the sole juridical
foundation for her claim.12 2

In Gissing v. Gissing2 3 four Law Lords failed to distinguish
between “implied, constructive or resulting trust”. By contrast,
the majority in Pettkus v. Becker have decided that a constructive
trust may be imposed in circumstances where a resulting trust
could not arise. What is the nature of this device which departs
from the traditional definition of constructive trust as a sub-
stantive trust?24 Dickson J.’s discussion of constructive trust is
divided between the general nature of the device and the specific re-
quirement for imposing one in a matrimonial property case.

A disturbing feature of the majority judgment is the high level
of abstraction used to discuss the nature of constructive trust.
The use of metaphors to define constructive trust may convey
a visual impression but it does little to advance our understanding
of the underlying legal principles. For example, Dickson J. opens
his judgment on constructive trust with an anatomical metaphor:
“[t]he principle of unjust enrichment lies at the heart of the
constructive trust.”25 Next we are told that: “[t]he constructive
trust has proven to be a useful tool in the judicial armoury.”2 6

19 Ibid., 6 per Dickson J.
20 Ibid.
21 Ibid., 7.
22 Ibid., 11.
23 Supra, note 6, 905 per Lord Diplock. Such a statement does not explain
Chancery’s remedies imposed in the form of a trust in cases where the
defendant had acquired the plaintiff’s property through fraud: see Waters,.
supra, note 12, 40.

24 Waters, supra, note 4, 335-9.
25 Supra, note 1, 11 per Dickson J.
26Ibid. Nonetheless, there was no Chancery decision equivalent to Moses
v. Macferlan, and “there was never a theme behind the use of constructive
trust by Chancery” (Waters, supra, note 12, 39).

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We are reminded that “[t]he great advantage of ancient principles
of equity is their flexibility: the judiciary is thus able to shape
these malleable principles so as to accommodate the changing needs
and mores of society, in order to achieve justice.”” In Martland
J.’s opinion this view of constructive trust “would clothe judges
with a very wide power to apply what has been described as
‘palm tree justice’ without the benefit of any guidelines. 28

In my view, Dickson J.’s objection to the common intention
test is not really that it is fugitive or phantom-like, but that it
poses the wrong question. The intention of the parties is simply
not the only concern in a matrimonial property dispute.2 The
central question is whether, in the circumstances, justice is served
by a distribution of property acquired in a relationship “tantamount
to spousal”.3 0
the courts to suspend
traditional notions of intention and causation which underlie many
common law and equitable principles. Every property owner who
“freely accepts benefits” is at risk of a court deciding that fairness

In effect, this empowers

27Ibid. The gist of this view finds some support in Lord Wilberforce’s
judgment in In re Baden’s Deed Trust [1971] A.C. 424, 451-2 (H.L.). In the
nineteenth century the Chancery, like the common law courts, limited re-
medies to narrow and defined categories. But this “change of attitude, or
practice”, as Lord Wilberforce termed the decision in the time of Lord
Eldon (ibid., 452), did not affect the discretionary jurisdiction enjoyed by
Chancery in the eighteenth century. In the twentieth century, judges should
exercise equitable jurisdiction with less concern for technical categories
established in the nineteenth century but like the “great masters of equity”
who adapted “their creation [the trust]
to its practical and commercial
character” (ibid.). It might be noted that Lord Wilberforce did not sit in
Gissing v. Gissing (supra, note 6), which was decided the same year as
In re Baden’s Deed Trust.

28 Supra, note 1, 6 per Martland J.
2 9 By contrast, in Gissing v. Gissing, supra, note 6, 906, Lord Diplock did
not choose to distinguish the matrimonial property cases from the “many
branches of English law in which legal rights and obligations depend upon
the intentions of the parties to a transaction”.

so Supra, note 1, 13 per Dickson J. Putting the issue in this fashion allows
the court, in the words of Prof. Waters, “to think in terms of the act or event
or occurrence lying behind the imposition of the constructive trust, and to
cease to think (as traditionally is done in English law) of the abusing of
relationships” (supra, note 12, 42).

In the view of the majority, the absence of a marital bond is not a proper
basis to withhold the imposition of a constructive trust (supra, 14-5). The
California Supreme Court’s decision in Marvin v. Marvin 557 P. 2d 106 (Sup.
Ct in banco 1976) was cited with approval. As for the legal rights and obliga-
tions arising out of cohabitation, Watson v. Lucas [1980] 3 All E.R. 647 (CA.),
Oliver LJ., dissenting, indicates a possible trend towards attaching enforce,-
able rights, in limited cases, to the status of unmarried cohabitant.

1981J RESTITUTION AND THE APPROPRIATION OF PROPERTY

511

demands a transfer of interest in that property to the person who
conferred the benefit. Once introduced into the Canadian law of
restitution, it. is unlikely that constructive trust will be confined
to matrimonial property cases.3′ For that reason, the Pettkus case
was a “bad” case to make such an introduction. The parties were
not married;” Quebec law,
though possibly relevant, was not
pleaded; 33 a reconciliation agreement between the parties was
ignored;3 4 the nature and scope of the claimant’s contribution was
in question;35 and there was no promise or representation to, or
suggestion by, the claimant during the fourteen-year period that
she had an interest in the land .3
Imposing a constructive trust in
the face of these obstacles has major implications for a new
conceptual relationship between personal and proprietary claims
in restitution. For example, on the basis of Pettkus, it is open to
argument that the nephew in DegIman v. Guaranty Trust Co. of
Canada & Constantineau3 7 ought to have been awarded an interest
in his aunt’s house rather than a personal judgment against her
estate.

The specific requirement for imposing a constructive trust in

Pettkus is explained by Dickson J.:

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 con-
ferred 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 3 8

31 The lower Canadian courts have already imposed constructive trusts in
non-matrimonial cases. See, e.g., Goodbody v. Bank of Montreal & Lestet
(1974) 4 O.R. (2d) 174 (H.C.); B.C. Teachers’ Credit Union v. Batterley (1975)
61 D.L.R. (3d) 755 (B.C.S.C.). In a priority dispute over holdback payments the
trial court judge’s decision to impose a constructive trust to prevent fraud
and unjust enrichment was reversed in a unanimous judgment by the Nova
Scotia Supreme Court, Appeal Division: see Re Union Construction Ltd
and Nova Scotia Power Corp. Ltd (1980) 111 D.L.R. (3d) 728, 747 (N.S.S.C.,
App. Div.) per Cooper JA., who said: “[this is not a situation in which the
concept of constructive trust applies.” After Pettkus v. Becker it is not
clear whether this traditional view of constructive trust may be doubted in
the commercial priority cases.

(C.A.) per Wilson J.A., aff’d

Pettkus v. Becker, supra, note 1.

32 Becker v. Pettkus (1978) 20 OR. (2d) 105
33 Supra, note 1, 17-8 per Dickson J.
34Ibid.
35Ibid.
36 Ibid., 10.
37 [1954] S.C.R. 725.
38 Supra, note 1, 13 per Dickson J. In England a similar test has been
employed by Lord Denning M.R. in Greasley v. Cooke [1980] 1 W.L.R. 1306

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But the requirement presents a paradox for the Court. The terms
“prejudice” and “reasonable expectation” indicate that the claimant
must produce evidence of her “intentions” respecting the land.
Yet earlier in Dickson J.’s judgment we find the majority’s approval
of the trial judge’s finding that “there was no common intention,
either express or implied.” 39 Mr Pettkus’s uncontradicted evidence
was that neither he nor Miss Becker had ever suggested that she
had an interest in the land. In these circumstances, the evidence
suggests- that Miss Becker could not have reasonably held an ex-
pectation in the property and, consequently, could not have been
prejudiced by Mr Pettkus’s retention of it.

Why did the majority hold that Mr Pettkus was unjustly re-
taining property in which Miss Becker was entitled to an interest?
Three factors emerge as underlying the decision: the length of the
relationship; the circumstances surrounding the acquisition of the
property; the circumstances surrounding the use of the property.
These factors provide some indication for the majority’s finding
that it was “fair” for Miss Becker to have a beneficial interest
in the property owned by Mr Pettkus. With Pettkus v. Becker,
the traditional guidelines provided by trust law are suspect, and
the Canadian law of restitution assumes a new remedy of unknown
dimensions. Instead of a principle we find an experiment:
the
distribution of property rights and obligations sanctioned by judges
in the name of justice and fairness.

B. The relevance of English law

In Orakpo v. Manson Investments Ltd, Lord Diplock observed
that “no general doctrine of unjust enrichment [is] recognised in
English law.”40 But that doctrine is an important part of the Canadian
law of restitution.41 Acceptance of constructive trust as an equitable

(CA.). In that case a “proprietary estoppel” (in contrast to a constructive
trust) was raised -in favour of the person claiming a right to remain in
possession of a house as against the legal title-owner. But, unlike Pettkus
v. Becker, the English Court of Appeal did not grant her a beneficial interest
in the property but allowed “her to stay on in the house as long as she
wishes” (ibid., 1312).

89 Supra, note 1, 11 per Dickson I.
40 [1978] A.C. 95, 104 (H.L.). In Pettitt v. Pettitt, supra, note 3, 795, Lord
Reid did not think that the doctrine of unjust enrichment was much help in
cases where one party improves the property of another.

41 In Canadian law Degiman v. Guaranty Trust Co. of Canada & Constanti-

neau, supra, note 37, is the milestone decision establishing unjust enrichment
as part of the law of restitution.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

513

remedy42 and change of position 3 as an equitable defence are con-
sistent with the view that the Supreme Court of Canada has
recognized unjust enrichment as a basis of liability. 44 In view
of this doctrinal difference between Canadian and English law
the question arises whether the English cases provide an accurate
guide for Canadian restitution cases.

In my view, the English cases serve three major functions in
the Canadian law of restitution. First, an English case may serve
a symbolic function. For example, cases such as Moses v. Macferlan4 5
and Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour
Ltd46 are rarely cited by a Canadian court for what they held.
Instead, selected passages from Lord Mansfield’s or Lord Wright’s
judgments are quoted to support a third head of civil liability
based on the principle of unjust enrichment.47 The Canadian courts48
have generally capitalized on these large generalizations to impose
civil liability on the grounds of enrichment.

Second, a number of nineteenth-century English cases 49 provide
an escape from the principle of unjust enrichment. The Canadian

42 Pettkus v. Becker, supra, note 1.
43 Rural Municipality of Storthoaks v. Mobil Oil Canada Ltd [1976] 2 S.C.R.

147.

44 An elaboration of this view has been made elsewhere: see Klippert, The

Juridical Nature of Unjust Enrichment (1980) 31 U.T.L.J. 356.

45 (1760) 2 Burr. 1005, 97 E.R. 676 (K.B.).
46 [1943] A.C. 32 (H.L.).
47 The symbolic use of these two English judgments may be found in a
number of Supreme Court of Canada decisions: see Deglman v. Guaranty
Trust Co. of Canada & Constantineau, supra, note 37, 794 per Cartwright J.;
Rural Municipality of Storthoaks v. Mobil Oil Canada Ltd, supra, note 43,
12-3 per Martland J.; County of Carleton v. City of Ottawa [1965] S.C.R.
663, 669 per Hall J.; Pettkus v. Becker, supra, note 1, 11 per Dickson J.

4 8 Following the lead established by the Supreme Court of Canada, a
number of lower Canadian courts have taken refuge in the broad statements
of Lord Mansfield and Lord Wright to support the imposition of civil
liability: see, e.g., Estok v. Heguy (1963) 40 D.L.R. (2d) 88, 93 (B.C.S.C.) per
Brown J.; Arnett & Wensley Ltd v. Good (1967) 64 D.LR. (2d) 181, 182
(B.C.S.C.) per Gould J.; Re Spears & Levy
(1974) 52 D.L.R. (3d) 146, 150
(N.S.S.C., App. Div.) per MacKeigan C.J.N.S.: Hink v. Lhenen
(1974) 52
D.L.R. (3d) 301, 314-5 (Alta S.C., App. Div.) per Allen J.A.

40 See, e.g., Aiken v. Short (1856) 1 H. & N. 210; 35 L.J. Exch. 321 (though
a recent judgment by Goff J. in Barclay’s Bank Ltd v. W.J. Simms Son &
Cooke (Southern) Ltd [1979] 3 All E.R. 522 (Q.B.) casts doubt on Bramwell
B.’s influential dictum in Aiken); Falcke v. Scottish Imperial Ins. Co. (1886)
34 Ch. 234 (C.A.); Leigh v. Dickeson (1884) 15 Q.B.D. 60 (C.A.). The escape-
hatch cases, however, are not limited to the nineteenth century: see, e.g.,
Morgan v. Ashcroft [1938] 1 K.B. 49 (C.A.).

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courts often employ such cases to justify a decision denying civil
liability.50 Such cases are cited as authority even though the English
courts that decided them did not accept unjust enrichment as the
basis of liability in a restitution action. The use of these English
in this fashion indicates that Canadian courts have not
cases
always accepted that liability may be denied, as well as supported,
on the basis of unjust enrichment theory.51 That problem is avoided
by reverting to the escape-hatch technique in which Canadian courts
capitalize on the narrow common law approach to liability.

Finally, the English cases may ground an alternative basis of
liability.52 The court may avoid the question of whether the claimant
is entitled to recover on the basis of unjust enrichment by upholding
his claim on the narrow common law or equitable principles applied
in the English cases. While the claimant succeeds, he does so
on a basis which would be difficult to reconcile with the large
generalizations contained in the leading cases.

In Pettkus v. Becker5 ‘ all three functions may be found. Moses
v. Macferlan54 is a touchstone in the majority’s effort to expand
unjust enrichment remedies so as to include the constructive trust.
Of course, the money-had-and-received action considered by Lord
Mansfield in the King’s Bench could be distinguished on a number
of grounds 5 But to distinguish Moses v. Macferlan is to ignore

G0See, e.g., City of Moncton v. Stephen [1956] 5 D.L.R. (2d) 722, 723
(N.B.S.C., App. Div.), where Bridges J. distinguishes both Deglman and
Fibrosa on their facts, and applies principles from the nineteenth-century
English cases. While the cases are not cited in Bridges J.’s judgment, those
decisions are reflected in the English textbooks which are cited (ibid., 723-4).
See also Arding v. Buckton (1957) 6 D.L.R. (2d) 586 (B.C.C.A.) per Sheppard
J.A.; Ings v. Industrial Accept. Corp. [1962] O.R. 454 (C.A.) per McGillivray
JA.; Krebs v. World Finance Co. Ltd (1958) 14 D.L.R. (2d) 405, 408-9 (B.C.C.A.)
per O’Halloran J.A.; Chimo Structures Ltd v. Canadian Pacific Ltd [1977] 78
D.L.R. (3d) 210, 213-4 (B.C.S.C.) per Legg J.; Pettkus v. Becker, supra, note 1,.
4 per Martland J.

51 Compare the use of English authority by Martland J. in Pettkus v.
Becker, supra, note 1, with his use of the same authorities in Rural Muni-
cipality of Storthoaks v. Mobil Oil Ltd, supra, note 43.
52 See, e.g., Hydro Electric Commission of Nepean v. Ontario Hydro (1979)
22 O.R. (2d) 137, 159 (H.C.) per Craig J.; Parklane Private Hospital Ltd v.
City of Vancouver (1972) 33 D.L.R. (3d) 169, aff’d .[1975] 2 S.C.R. 47 (sub
nom. A.-G. B.C. v. Parklane Private Hospital Ltd).

M3Supra, note 1.
54Supra, note 45.
55 This is a favourite technique, adopted along with the English cases,
which functions as an escape-hatch from unjust enrichment-based liability:
see note 50, supra.

1981J RESTITUTION AND THE APPROPRIATION OF PROPERTY

515

the special function of such a case. For the minority in Pettkus,
the decisions of the House of Lords in Gissing56 and Pettitt5 7 gave
alternative grounds for imposing liability against Mr Pettkus and
allowed them not to decide whether unjust enrichment was the
basis of liability. The majority held that because of evidential
problems with intention, the claimant could only succeed on the
basis of a constructive trust imposed to prevent unjust enrichment.
Martland J. replied that the majority’s approach is inconsistent
with the English cases that permit an escape from liability for unjust
enrichment.

The debate in Pettkus v. Becker does little to clarify the nature
of unjust enrichment or constructive trust as an equitable remedy.
This is the legacy of the three functions accorded to English cases
in the Canadian law of restitution. The lower courts are left to
decide whether to follow the large generalization or the narrow
common law category approach to liability. In this climate there
is a risk that unjust enrichment will be seen as a legal slogan
or conclusion.

C. The English concept of benefit

The concept of benefit is essential to any notion of unjust
enrichment. In Pettkus v. Becker, Dickson J. turns to the judgments
of Lord Halsbury and Lord Macnaghten in Ruabon S.S. Co. Ltd v.
London Assurance 8 to support his observation that “[t]he common
law has never been willing to compensate a plaintiff on the sole
basis that his actions have benefited another.” 9 In this there is
a danger that other courts might view this approval of an English
benefit case as opening the door to other English benefit cases which
function as an escape-hatch.

As a control device,60 benefit, along with voluntariness and
volition, establishes the scope of civil liability available in a restitu-
tionary action. The basic premise of all theories of benefit is that
the defendant has received a benefit which he cannot justly retain,
but the interpretation of this premise has raised controversy. The
English courts divided over the meaning of benefit in much the

G6Supra, note 6.
67 Supra, note 3.
58 [19001 A.C. 6 (H.L.).
69 Supra, note 1, 12 per Dickson J.
80The term “control device” was used by Prof. Fleming in analyzing the
liability in negligence (Remoteness and Duty:
mechanisms which
The Control Devices in Liability for Negligence (1953) 31 Can. Bar Rev. 471,
474).

limit

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same way as they had done in the law of quasi-contract. In several
respects, the definitional struggle over benefit opposes the advocates
of Lord Mansfield’s view of money had and received0’ and proponents
of a restricted approach to quasi-contract.62 Since this debate is often
repeated in Canadian restitution cases, there is some interest in
examining two influences which have shaped the English concept
of benefit: the application of the maxim actio personalis moritur
cum persona and the historical jurisdictional rivalry between the
common law and chancery. To understand these influences is to
gain a perspective on the limitations inherent in applying English
cases in a Canadian restitution action where the issue is whether
a benefit has been conferred on the defendant.

1. Actio personalis moritur cum persona

The origins of the maxim actio personalis moritur cum persona
are unclear. Apparently, it did not come into English law from
Roman or Canon law. 3 According to Winfield, “[t]he textbooks
and decisions limit it to trespass or tors, and usually to trespasses
of a personal character. 0 64 The maxim is said to reflect an early
attitude that did not distinguish between civil and criminal pro-
ceedings; 65 a right to personal retribution belonged to the person
who suffered the wrong and that right would have been satisfied
with the wrongdoer’s death. “Death pays all when the criminal
has gone.”‘ But a personal representative was not held personally
culpable for the deceased’s crime. The effect of the maxim was to
restrict rights akin to vendetta to the lifetimes of the wrongdoer
and his victim, and not to allow them to continue among their

[1938] Camb. L..

01 See Wright, Comment

305; Wright, Book Review
[Restatement of the Law of Restitution] (1937) 51 Harv. L. Rev. 369; Brooks
Wharf & Bull Wharf Ltd v. Goodman Brothers [1937] 1 K.B. 534 (CA.);
Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd, supra, note
46, 61 per Lord Wright. Lord Denning has continued in the same tradition:
see Denning, The Recovery of Money (1949) 65 L.Q.R. 37; Hussey v. Palmer
[1972] 3 All E.R. 744 (CA.); and Greenwood v. Bennett [1973] Q.B. 915 (C.A.)
per Lord Denning. Sir Robert Goff, like Lords Wright and Denning, has made
a significant contribution fo rehabilitate Lord Mansfield’s approach in Eng.
land: see Goff & Jones, The Law of Restitution, 2d ed. (1978), and B.P.
Exploration Co. v. Hunt (No. 2) [1979] 1 W.L.R. 783, 839 (Q.B.).

62 See, e.g., Holdsworth, Unjustifiable Enrichment (1939) 55 L.Q.R. 37.
63Holdsworth, History of English Law, 5th ed.

(1942), Vol. III, 576;
Winfield, Death as Affecting Liability in Tort (1929) 29 Colum. L. Rev. 239, 244.

64 Winfield, supra, note 4, 248.
05Ibid., 240. See also Brickey, The Jurisprudence of Larceny: An Historical

Inquiry and Interest Analysis (1980) 33 Vanderbilt L. Rev. 1101, 1114-5.

0 Ibid., 249.

1981]

RESTITUTION AND THE APPROPRIATION OF PROPERTY

517

relatives. One plausible explanation for the origin of the maxim
lies in the Anglo-Saxon use of blood-feud and lynching to resolve
disputes. 7 Perhaps the maxim was introduced by the Normans to
contain and limit the customs of the people they had conquered.
But once the judiciary had become entrenched, then it was not
surprising to find pressure for limiting the types of cases covered
by the maxim. Beginning in 1267 with the Statute of Marlborough,
Parliament enacted legislation which would ultimately confine the
maxim to narrow categories of cases. 8 The legislative changes
reflected a distinction between tort and criminal liability and, per-
haps more importantly, the institutionalization of personal retribu-
tion in damage awards which compensated the victim for his loss.

The maxim, however, did not apply to the common law action
of assumpsit.69 Holdsworth’s view was that common law barristers
excluded the maxim from their assumpsit action because they feared
“the chancellor’s growing jurisdiction”.70 But the common law
barrister had to show the wrongdoer’s estate had been enriched.71
What was historically a jurisdictional dispute between common law
and chancery barristers may offer one explanation for the definition
of benefit and the difficulty in basing civil liability on a generalized
right of action. The concept of benefit in English law was partially
developed in actions begun in tort where the defendant invoked
the maxim actio personalis moritur cum persona. The application
of that maxim has had an impact on the orientation of quasi-contract
law.

2. Jurisdictional rivalry

Lord Mansfield’s view of benefit allowed that a restitutionary
action could be established apart from actions in contract or tort.
In Hambly v. Trott72 the plaintiff brought an action in trover
against a tortfeasor’s estate to recover damage for the conversion
of the plaintiff’s property. The defendant pleaded the old maxim
of law actio personalis. Thus, because trover was an action in tort,
the plaintiff’s claim could not succeed against the administrator.
Lord Mansfield viewed trover as only in the form of a tort action.
The substance of trover was, in his Lordship’s view, an action

67 Rembar, The Law of The Land (1980), 92.
08 Holdsworth, supra, note 63, 578-9.
69 Winfield, supra, note 63, 249.
7o Holdsworth, supra, note 63, 579.
71 Sherrington’s Case (1583) Savile 40, 123 E.R. 1000 (C.P.).
72 (1776) 1 Cowp. 371, 98 E.R. 1136 (K.B.) [hereinafter cited to E.R.].

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to try property and akin to money had and receivedY3 Lord Mans-
field defined the distinction between an action in tort and one
in quasi-contract:

Here therefore is a fundamental distinction. If it is a sort of injury
by which the offender acquires no gain to himself at the expense of
the sufferer, as beating or imprisoning a man, etc. there, the person
injured has only a reparation for the delictum in damages to be assessed
by a jury. But where, besides the crime, property is acquired which
benefits
the testator, there an action for the value of the property
shall survive the executor. As for instance, the executor shall not be
chargeable for the injury done by his testator in cutting down another
man’s trees, but for the benefit arising to his testator for the value
or sale of the trees he shall.74
Hambly v. Trott was an attempt to rationalize the conceptual
boundaries between tort and quasi-contract. But during the nine-
teenth century Lord Mansfield’s views were not to prevail in English
courts.75 In Phillips v. Homfray,0 the Court of Appeal applied
technical restraints to the definition of benefit, and by the end
of the nineteenth century a general theme emerged from the English
cases that quasi-contract was an appendage to the law of contract
and tort.7
Indeed, this philosophical disposition to cannibalize
unjust enrichment for contract or tort has profoundly influenced
the development of English law. Lord Mansfield’s vision of unjust
enrichment as an independent basis of liability requires a theory
of benefit consistent with that ideal. There is, however, a practical
consideration raised by Lord Mansfield’s approach which is not
expressed in the cases: does the solicitor brief a chancery or
common law barrister? Such a theory does not address the potential
jurisdictional dispute between the chancery and the common law
courts after Slade’s Case.7 By contrast, as the wayleave cases

73 Ibid., 1137.
74 Ibid., 1139.
75 See Utterson v. Vernon (1792) 4 T.R. 570, 100 E.R. 721 (K.B.); Walker
v. Constable (1798) 1 Bos. & Pul. 306, 126 E.R. 919 (C.P.); Sanders v. Vanzellar
(1843) 4 QB. 260, 114 E.R. 897. Yet other early decisions questioned the
authority of Moses v. Macferlan, supra, note 45; see Cooth v. Jackson (1801) 6
Ves. Jun. 12, 39, 31 E.R. 913 (Ch.); Johnson v. Johnson (1802) 3 Bos. & Pul. 162,
169, 127 E.R. 89 (C.P.); Miller v. Atles (1849) 3 Ex. 799, 154 E.R. 1068.
Moreover, in the nineteenth century there was a considerable decline in the
Chancery’s willingness
jurisdiction
asserted in the eighteenth century: compare Warburton v. Warburton (1.702)
4 Bro. P.C. 1, 2 E.R. 1 (H.L.) with Kemp v. Kemp (1801) 5 Ves. Jun. 849, 31 E.R.
891 (Ch.).

the broad discretionary

to exercise

76 (1883) 24 Ch.D. 439 (CA.).
17 See, e.g., Sinclair v. Brougham [1914] A.C. 398 (H.L.).
78 (1602) 4 Co. Rep. 912, 76 E.R. 1072 (K.B.). See also Baker, An Introduc-

tion to English Legal History, 2d ed. (1979), 98; Waters, supra, note 12, 9.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

519

illustrate,79
the English courts willingly absorbed the principle
of unjust enrichment into a theory of damage in trespass actions.
Ironically, in. so far as the concept of benefit operated within the
confines of a tort action, the English courts encompassed a broader
definition than would have been the case if the action had sounded
in quasi-contract. Thus, a claimant was likely to use reasoning
similar to unjust enrichment (although he would not necessarily
employ those words) as a means of defining and measuring damages.
But damages were compensation for a tort, not a quasi-contractual
remedy. Because the courts were divided into chancery and common
law, the litigant might face a double bind. For example, the claimant
who elected to pursue a quasi-contractual remedy in the common
law courts would face the rule that a contract would not be implied
against a trespasser.8 0 If he tried to bring a bill in equity on the
basis of money had and received or quantum meruit, he would
have been non-suited.’ For the claimant who wanted an accounting
of profits for the thing appropriated, he was required to invoke
the jurisdiction of chancery. Thus, the claimant would have avoided
the common law assumpsit and brought. his action in conversion,
detinue or trespass in the chancery.

Like American courts,82 it appears likely that Canadian courts
will develop a concept of benefit which recognizes the status of
unjust enrichment as a basis of liability independent of contract
and tort. There have been few Canadian cases which have addressed
the issue of benefit. But after Degiman we can expect the Canadian

6 L.R. 742

79 Confusion in the state of land titles produced a number of the so-called
wayleave or mesne profit decisions. See, e.g., Whitwham v. Westminster
Brymbo Coal & Coke Company [1896] 2 Ch. 538 (C.A.); and Jegon v. Vivian,
(1871)
(L.C.). In Strand Electric & Engineering Co. Ltd v.
Brisford Entertainments Ltd [1952] 2 Q.B. 246, 254, Lord Denning extended
the principle from the wayleave cases to cases involving the detention of
goods.

80 Phillips v. Homfray, supra, note 76, 461-2 per Bowen L.J.
81 See Lamb v. Cranfield (1874) 43 L.J.N.S. 408 (Ch.) per Jessel M.R.
8 The classic American case is Raven Red Ash Coal Co. v. Ball 39 S.E. 2d
231 (Va 1946), which Prof. Palmer characterizes as “one of the most im-
-portant modem cases which has allowed quasi-contractual recovery” (Law
of Restitution (1978), Vol. I, 77-8). See text at note 109, infra, for a discussion
of Raven Red. There are, however, American decisions which have adopted
the restrictive interpretation found in Phillips v. Homfray: see Schillinger
v. United States 155 U.S. 163 (1894).

83See Estok v. Heguy, supra, note 48; McCarthy Milling Co. Ltd v. Elder
Packing Co. Ltd [1973] 2 O.R. 96 (H.C.); Hazlewood v. West Coast Securities
Ltd (1975) 49 D.L.R. (3d) 46 (B.C.S.C.), aff’d (1976) 68 DL.R. (3d) 172 (B.C.C.A.),
which are cases where the scope of benefit has been considered.

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courts to establish the scope of liability, in part, by identifying what
is meant by benefit. While there are many possible meanings for
the term benefit,4 three major theories provide a range of the
potential meanings: strict liability, volitional liability and incon-
trovertible liability. 5 This article will analyze the first of these
theories. The focus will be on benefits acquired by the wrongful
appropriation of the plaintiff’s property, and in these circumstances
the principle of unjust enrichment takes on the nature of strict
liability. Since strict liability is generally the exception rather than
the rule, this type of restitutionary action demands careful attention
in an area that touches upon fundamental ideas in the notion of
civil liability.

Under the general heading of strict liability, we will consider
the types of restitution cases which share a theoretical and historical
heritage with the law of torts. The notion of strict liability allows
the plaintiff to dispense with the burden of showing that the
defendant had a particular motive or knowledge in obtaining a
benefit.80 An expansive application of strict liability would make
restitution substantially more coercive for defendants than either
contract or tort liability. Therefore, in defining the scope of benefit,
the challenge in the law of restitution has been to develop a distinct
basis of liability which will not subvert the principles of civil
liability in contract and tort. Whether a defendant is strictly liable
for a benefit raises a crucial question: what role ought the de-
fendant’s conduct play in determining civil liability in restitution?

II. The concept of benefit in tort damages

As a general rule, where a defendant, regardless of motive or
knowledge appropriates the property of the plaintiff, the principle
of unjust enrichment will make the defendant strictly liable on
the basis that he has received a benefit.n While the property-
interest theory represents the orthodox explanation for imposing
unjust enrichment, the scope of the theory has been unsettled in

84 See Sullivan, The Concept of Benefit in the Law of Quasi-Contract (1975)
64 Geo. LJ. 1, 25; Palmer, supra, note 82, 44; Goff & Jones, supra, note 61,
14-6.

85 See Jones, Restitutionary Claims for Services Rendered (1978) 93 L.Q.R.

273.

86 Fleming, The Law of Torts, 5th ed. (1977), 38; and Winfield and Jolowicz
on Tort, 11th ed. (1979), 335; Fridman, Introduction to the Law of Torts
(1978), 91-4.
8 t Yet it will be open for the defendant in certain cases to contend that the
*thing” appropriated was not property: see International News Service v.
Associated Press, supra, note 2.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

521

English law. The terms “appropriation” and “property” have invited
debates about the relationship between modern liability in torts
and restitution. 8 Historically, the property-interest theory has been
used to accommodate a widely divergent approach to the issue
of benefit.

Phillips v. Homfray80 is a classic case of the hindered develop-
ment of restitution as a distinct area of English law.90 The case
itself spans a generation of lawyers and judges over the twenty-
five year period it was before the English courts. In 1866 the
plaintiffs, owners of a farm, brought suit against three defendants,
Homfray, Fothergill and Forman. The form of the action was in
trespass. The defendants, who were in the coal-mining business,
had removed coal and ironstone from under the plaintiffs’ land
and had used roads and passages under that land to transport
minerals. By 1871 the plaintiffs had obtained a decree which declared
inter alia that Homfray and Fothergill (Forman having died in
1869) were liable to compensate the plaintiffs for the use of all
the roads and passages under the farm. The decree ordered in-
quiries to determine the amount for wayleave and royalty. The
inquiry had apparently not been completed ten years later when
Fothergill died. The plaintiffs sought to continue action against
Fothergill’s executrix in 1881. Clearly, if there had been final
judgment for an ascertained amount against Fothergill, it would
have been enforceable against his estate. Because the inquiries
were outstanding under the decree of 1871, at the date of Fothergill’s
death, the judgment was only interlocutory. Since the plaintiffs
sought to continue their original action against the estate rather
than enforce a final judgment, the executrix relied on the maxim
actio personalis moritur cum persona; that is, the trespass action
for wayleave and royalty compensation lapsed at the time of Fother-
gill’s death. In 1883, the executrix brought a motion to have all pro-
ceedings under the inquiries stayed. In resisting that motion, the
plaintiffs asserted that the maxim relied upon by the defendant’s
estate applied only to simple tort. Moreover, citing Hambly v. Trott
for support, the plaintiffs stated: “The law is well settled that where

88 The nineteenth-century view of “appropriation” and “property” has been
criticized by a number of academic writers. See, e.g., Beatson, The Nature of
Waiver of Tort (1979) U.W.O. L. Rev. 1, 19; Sullivan, supra, note 84, 8; Goff &
Jones, supra, note 61, 474-8; Palmer, supra, note 82, 78-80.

89 Supra, note 76. Phillips v. Homfray is generally regarded as the leading

case on “waiver of tort”.

90 See Sinclair v. Brougham, supra, note 77, which is consistent in principle
with the restrictive view of quasi-contract taken by the Court of Appeal in
Phillips v. Homfray.

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the estate of the deceased wrongdoer had derived a profit from
the wrong done, the rule does not apply. The right to recover
the profit made as damages survives as against the executor of
the wrongdoer.” 91

Pearson J. refused the motion and ordered that inquiries re-
specting the deceased tortfeasor’s use of the roads and passages
under the farm continue against his estate. Like Lord Mansfield
before him, Pearson J. was not prepared to allow the plaintiffs’
substantive right to be determined by the form of action,92 The
inconsistency in the defendant’s case was considered in the following
passage:

… admits that she is properly brought here, and is
[the executrix]
properly liable … for the value of the coal dug out of the property, and
if she is liable for that I cannot understand how she can escape liability
for compensation for the use of wayleave across the Plaintiff’s property.
It seems to me to stand on exactly the same footing, and to be governed
by the same principle: it is not damages in the ordinary sense for
personal injuries inflicted, but simply compensation which has to be
paid out of the estate of the testator, because that estate, in one way
or another derived profit from the use of the wayleave … 93
Several points raised in Pearson J.’s judgment deserve emphasis.
First, by using the land of another the tortfeasor acquires a benefit,
and compensation of such a benefit rests on a principle independent
of tort. Second, it must not be overlooked that the plaintiffs had
obtained a decree making the tortfeasor liable to compensate for
wayleave and royalty. Third, if the use of the underground passages
had been a benefit during the tortfeasor’s lifetime, how can it be
said the tortfeasor’s estate derived no benefit? In effect, to put
Pearson J.’s judgment in modern perspective, Fothergill’s estate
had been unjustly enriched by the receipt of a benefit. The Vice-
Chancellor’s decree of 1871 in favour of the plaintiffs is compatible
with liability for unjust enrichment. Therefore, seventeen years
into the lawsuit, why make the plaintiffs bring a new form of action
(i.e., money had and received) ? Two of the three original defendants
had died during this period, and certainly requiring a new action
would have caused evidential problems for the plaintiffs.

The Court of Appeal allowed the executrix’s appeal from Pearson
J.’s judgment. The following two passages from Bowen L.J.’s judg-
ment indicate a considerably different view of what is a benefit in a
quasi-contractual action:

91 Supra, note 76, 443.
92Ibid., 448.
931Ibid., 446-7.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

523

The only cases in which, apart from questions of breach of contract, ex-
press or implied, a remedy for a wrongful act can be pursued against
the estate of a deceased person who has done the act, appear to us to
be those in which property, or the proceeds or value of property,
belonging to another, have been appropriated by the deceased person
and added to his own estate or moneys.94

In applying that principle to the case, Bowen L.J. observed:

The deceased, … by carrying his coal and ironstone in secret over the
Plaintiffs’ roads took nothing from the Plaintiffs. The circumstances
under which he used the road appear to us to negative the idea that he
meant to pay for it. Nor have the assets of the deceased Defendant been
necessarily swollen by what he has done. He saved his estate expense,
but he did not bring into it any additional property or value belonging to
another person.95
In dissent, Baggallay L.J. stated that “nothing in the language
used by Lord Mansfield [in Hambly v. Trott] … can support this
view.” 96 In his view the gain or acquisition by the defendant does
not depend upon a showing that the plaintiffs’ property has been
diminished in order to be classified as a benefit . 7 For example,
if the wrongdoer, before his death, had stolen a sheep from the
plaintiff and resold it, the wrongdoer’s estate, according to Bowen
L.J.’s analysis of benefit, would be liable to pay compensation
because the estate was swollen by the wrongful act. On the other
hand, if the wrongdoer had eaten the sheep, his estate would not
be liable even though savings on the butcher’s bill could be proved.
Such a distinction requires some explanation.

The majority judgment in Phillips v. Homfray raises an important
problem: clearly, in the original action for trespass, the Vice-
Chancellor, by ordering an account and injunction, held that the
defendants, including Fothergill, had acquired a benefit by using
passages under the plaintiffs’ farm; the only remaining issue to be
resolved on inquiry was the quantification of compensation for the
wayleave and privilege. 8 As Pearson J. later observed, and nothing
in Bowen LJ.’s judgment contradicts that observation, liability
for wayleave under the decree of 1871 was not based on quantifying
the injuries suffered by the wrongful act but an accounting of the
benefit acquired by the defendants. How, then, can the death
of the tortfeasor suddenly provide the estate with a defence based
on benefit which had been implicitly rejected by the Vice-Chancellor
during the tortfeasor’s lifetime?

94 Ibid., 454.
95Ibid., 462-3.
96 Ibid., 471.
97 Ibid, 471-2.
98 (1871) 6 L.R. 770 (L.C.).

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Goff and Jones have suggested that the answer lies in a con-
fusion of personal and proprietary claims in restitution.” There
is, however, another criticism to Bowen L.J’s approach in Phillips
v. Homfray. In my view, the nature of quasi-contractual liability
was the central, though unstated issue in the Court of Appeal.
In modern terms the plaintiffs had asked the Court to treat the
original action in trespass as a restitutionary claim, a step that
Bowen L.J. was unwilling to take. In effect the plaintiffs were
seeking to impose strict liability against a tortfeasor’s estate on
a quasi-contractual basis. At this period, quasi-contract was linked
to implied contract, and that connection was bound to view such
liability as arising only in circumstances where the defendant
“meant to pay for it”.

Bowen L.J. was undoubtedly aware of the inconsistency raised
in Baggallay L.J.’s dissenting judgment. Therefore, his Lordship
must have had some important reasons to sacrifice consistency
which were not expressly stated in his judgment. The first ex-
planation already discussed relies upon a particular nineteenth-
century judicial attitude towards civil liability. But there is another
possible view of the majority position. We will look beyond the
controversy over the application of the abatement maxim to the
trespass action. That requires us to address a difficult question:
what is the basis of an action continuing in chancery? It would
have been expected that a chancery barrister would have argued
the right survives because of some proprietary right enforceable
against the wrongdoer’s estate. But the Court of Appeal rejected
this argument.

The remaining possibility was a right in quasi-contract in the
broad sense urged by Lord Mansfield, a generalized right of action.
Bowen L.J., who was formerly a common law barrister,100 might
have viewed such an argument as an attempt to expand the chancery
barristers’ jurisdiction at the expense of the common law bar.
Historically, the common law barristers had a monopoly over
quasi-contractual actions which evolved out of assumpsit. Perhaps
Phillips v. Homray, then, is another example of English cases,
such as Slade’s Case, which disguise the practical reality of one
group of barristers seeking to seize jurisdiction from their tradi-
tional rivals. Certainly the consequences of allowing the action
in Phillips v. Homfnray to continue on the basis of quasi-contract
would have expanded the chancery barristers’ jurisdiction at the

99 Goff & Jones, supra,- note 61, 475.
“Oo Graham, Fifty Years of Famous Judges (1930), 108-25.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

525

expense of the common law bar. In this respect the result of
Bowen L.J.’s reasoning was to preserve the professional status
quo between two competing groups of barristers.

Support for this interpretation is found in the following passage

of Bowen L.J.’s judgment:

We do not believe that the principle of waiving a tort and suing in con-
tract can be carried further than this –
that a plaintiff is entitled, if
he chooses it, to abstain from treating as a wrong the acts of the
defendant in cases where, independently of the question of wrong, the
plaintiff could make a case for relief.10 ‘
The notion of waiver of tort’02 is perfectly consistent with the
nineteenth-century English view of quasi-contract. It reinforces
the principle of implied contract. Unjust enrichment could not
operate as an independent basis of civil liability if Bowen L.J.’s
views were accepted. Quasi-contract was an appendage to the law
of contract, and unless tangible property 0 3 could be shown to be
in the hands of the defendant, the defendant had received nothing
for which a contract in fact might be implied. Moreover, he said
that a contract could not be implied against a trespasser. 04

III. Restitution against tortfeasors

A. Benefit as an element of unjust enrichment

In my opinion, the Canadian courts would no more follow
Phillips v. Homfray than Sinclair v. Brougham,10 5 and for the same
the theoretical underpinnings of unjust enrichment are
reason:
incompatible with the Canadian notion of independent liability.
While Lord Mansfield was not infallible in all of his early judg-

3o0 Supra, note 76, 461.
102 The term “waiver of tort” has been criticized by most academic writers
as a misnomer: see Fridman, Waiver of Tort (1955) 18 M.L.R. 1, 2 et seq.;
Beatson, supra, note 88, 22; Goff & Jones, supra, -note 61, 469; Palmer, supra,
note 82, 51-3.

103 The requirement of some concrete gain which adds to the defendant’s
wealth excludes the type of benefit which, while not tangible in nature, has
clearly saved the defendant from an expense he would have otherwise
incurred: see Friedmann, Restitution of Benefits Obtained Through the
Appropriation of Property or the Commission of a Wrong (1980) 80 Colum.
L. Rev. 504, 506-10.

‘O’Supra, note 80, 461: “actions for use and occupation, according to the
better opinion, have been confined to the class of cases where the defendant
is not a trespasser setting up an adverse title, and where there are no
circumstances that negative the implication of a contract.”

1o5 Supra, note 77.

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ments, 10 6 it seems unlikely that after Pettkus the Canadian courts
would embrace Moses v. MacFerlan’0 7 without adopting the views
of Hambly v. Trott’08 expressed by Pearson J. and Baggallay L.J.

American courts, which share a similar view of unjust enrich-
ment, have rejected the majority judgment in Phillips v. Homfray.
The facts in the leading American case are remarkably similar to
Phillips v. Homfray. In Raven Red Ash Coal Co. v. Ball’0 9 the plaintiff
landowner brought an action of trespass on the case in assumpsit
against the defendant coal company. The defendant had transported
coal across the plaintiff’s land. The plaintiff was unable to prove
specific damages, but claimed entitlement
to compensation for
the defendant’s use and occupation of an easement over the plaintiff’s
land. As to the narrow view of property expressed in the majority
judgments in Phillips v. Homrnray, Hudgins J., on behalf of the
Supreme Court of Appeals of Virginia, observed:

The logic of the dissenting opinion in Phillips v. Homfray, supra, is
irresistible. To hold that a trespasser who benefits himself by cutting
and removing trees from another’s land is liable on an implied contract,
and that another trespasser who benefits himself by the illegal use of
another’s land is not liable on an implied contract i~s illogical. The only
distinction is that in one case the benefit he received is the diminution
of another’s property. In the other case, he still receives the benefit but
does not thereby diminish the value of the owner’s property. In both
cases, he has received substantial benefit by his own wrong. As the gist
of the action is to prevent the unjust enrichment of a wrongdoer from
the illegal use of another’s property, such wrongdoer should be held
on an implied promise in both cases.” 0
Raven Red Ash Coal has significance for the Canadian courts.
The case illustrates an instance where liability for unjust enrichment
resembles tort liability. It has been generally accepted that this
third distinct area of the common law resembles contract,”” but
Raven Red Ash Coal indicates that may not always be the case.
This possibly expands the scope of unjust enrichment in the
direction of strict liability where wrongful use of another’s property

10 E.g., it is doubtful that a modern court would agree that a master has
a property interest in his apprentice: see Lightly v. Clouston (1808) 1 Taunt,
112, 127 E.R. 774 (C.P.).

1O Supra, note 45.
108 Supra, note 72.
109 Supra, note 82.
110 Ibid., 237.
M In Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd,
supra, note 46, 62, Lord Wright observed that “[t]he obligation [derived
from unjust enrichment] belongs to a third class, distinct from either con-
tract or tort, though it resembles contract rather than tort.”

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

527

has been established. As a result, the courts might be expected to
focus increasing attention on the meaning of property. In the
following discussion we will consider a number of the problems
that arise for the restitution lawyer who seeks a property definition.

B. Distinguishing the basis of civil liability

Unjust enrichment liability, like certain tort actions,-” operates
to reinforce the traditional notion that a property owner’s right
takes its value from the power to exclude others from using or
interfering with that right. Historically, the action of trespass evolved
as a means of protecting the property owner’s right to exclude
others. 113 In an article published in 1938, Seavey and Scott wrote
that:

The law of torts is based upon the premise that a person has a right
not to be harmed by another, either with respect to his personality or
with respect to his interests in things and in other persons. The law
protects this right by requiring a wrongdoer to give such compensation
to the person harmed as will be substantially equivalent to the harm
done. The accent is upon wrong and harm.114
Conversely, in an unjust enrichment case, the accent is upon
wrong and benefit. As Phillips v. Homfray indicates, in a system
‘based on quasi-contractual categories of liability, the emphasis is
on promise and benefit. But with liability based on unjust enrich-
ment the defendant’s wrongful conduct becomes an element
in
establishing a prima facie case in either tort or restitution. 115 Con-
sequently, the “property owner” has the advantage of an expanded
system of compensation. He has the choice of using the wrong
to establish either loss based on harm or enrichment based on
benefit. 16

C. The definition of property

The scope of unjust enrichment (or tort)

liability depends
upon the definition of “property” adopted by the court, 17 and

112 E.g., actions of trespass, ejectment, trover, ‘conversion, and detinue: see

Brickey, supra, note 65, 1129-40.
I’s Fleming, supra, note 86, 37.
114 Seavey & Scott, Restitution (1938) 54 L.Q.R. 29, 32. See also Green, The

Study and Teaching of Tort Law (1955) 33 Texas L. Rev. 1, 4.

116 Palmer, supra, note 82, 51.
116 Prof. Palmer includes the following as potential advantages in using
quasi-contract: procedural advantages, e.g., counter-claim, joinder, attach-
ment, and bankruptcy; survival of actions; statutes of limitations; and suits
against the government (ibid., 60-7).
117 Friedmann, supra, note 103, 510.

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the acts of the defendant in relation to that property provide
for further controversy in interpretation. While it is beyond the
ambit of this article to analyze the complexities of property law,
we can illustrate the importance of establishing a property interest
for the restitutionary claimant. For example, in Kelsen v. Imperial
Tobacco Co.-“8 a commercial tenant obtained a mandatory injunction
ordering the defendant to remove a sign which protruded eight
inches into the airspace above the tenant’s shop. The action in
trespass required the plaintiff to establish a “property” interest
in the airspace. On analogy with Raven Red Ash Coal Co., in Canada
it would presumably be open to argue that the tenant in Kelsen
was entitled to recover the benefit (i.e., the fair rental value) from
the defendant as well.

On the other hand, an owner of land may not have a property
interest in the airspace for purposes of imposing liability against
an airline company even though the airplanes operated by the
company pass through the airspace of the owner. 19 An action for
unjust enrichment, like an action in trepass, would fail because
the claimant could not establish that the defendant had used some-
thing which belonged to the plaintiff. While the airline company
might benefit by using the airspace, they did not benefit at the
landowner’s expense. On the other hand, equitable relief may be
withheld even though the property owner can demonstrate an
actionable trespass which benefits the wrongdoer.

In Woolerton & Wilson v. Costain Ltd120 the defendant building
contractors had brought a tower crane onto the construction site
for a post office in Leicester. It was conceded that the jib of the
crane passed through the airspace fifty feet above the claimant’s
shop.’ 2′ Moreover, the uncontradicted evidence showed that the’
defendants’ tower crane could not have been relocated without
halting the project and redesigning the building. Significantly, the
defendants had offered 250 for the right to use the airspace
above the plaintiffs’ shop but that offer was refused. Stamp J.
thought that the defendants had put themselves in a position
where they could be held up for ransom.m The invasion of the

118 [1957] 2 Q.B. 334.
19 See Bernstein of Leigh (Baron) v. Skyviews & General Ltd [1978]
Q.B. 479; Lacroix v. The Queen [1954] Ex. C.R. 69; Re Air Canada and The
Queen In Right of Manitoba (1977) 77 D.L.R. (3d) 68 (Man. Q.B.), af’d
(1978) 86 D.L.R. (3d) 631 (Man. CA.), af-I’d on other grounds (1980) 111 D.L.R.
(3d) 513 (S.C.C.).

120 [1970] 1 W.L.R. 411 (Ch.) per Stamp J.
121 Ibid., 413.
12 Ibid., 416.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

529

plaintiffs’ proprietary rights was the result of “inadvertence” and
not carried out in “flagrant disregard” of those rights.123 Such a
distinction would make no difference in the plaintiffs’ right to
injunctive relief but Stamp J. decided that the timing of such
injunction was a different matter. The judge granted the injunction
but delayed its effect until a day after which the plaintiffs
would have finished construction. He observed that “I am conscious
that by so doing I am giving with one hand and taking away with
the other.’ 24

As we have seen, an unjust enrichment has been considered
equitable in nature.125 Does Woolerton & Wilson v. Costain Ltd
sanction a discretionary jurisdiction in quantifying the benefit
which the defendant has “inadvertently” appropriated? Unlike
an injunction, in most restitution cases the flexibility is not in the
timing of the remedy but in deciding whether the defendant ought to
account for his profit derived from using the plaintiff’s property
or merely account to the plaintiff for a reasonable value which
the marketplace would have attached to the use. In my view,
Stamp J.’s approach is compatible with a system of benefit assess-
ment designed to discourage the flagrant transgressor of proprietary
rights. 126 Restitutionary relief, in these circumstances, follows a
theory of deterrence, as is reflected, for example, in the jurisdiction
to award punitive or exemplary damages based on general equitable
principles; 27 to substitute damages for an account or injunctive
relief against an innocent converter;’ 28 or to reduce damages
in
equity “due to such factors as delay or acquiescence”.’2 9 Similarly, the
innocent fiduciary who profits from confidential information will
be allowed payment “on a liberal scale in respect of the work
and skill employed in obtaining the.., profits therefrom.”‘130

123 Ibid.
124 Ibid. The decision of Stamp J. was doubted by the Court of Appeal in
Charrington v. Simons & Co. [1971] 1 W.L.R. 598, 603 (C.A.). But there has
been academic support for the exercise of the discretion suggested by Stamp
J.: see Winfield & Jolowicz on Tort, supra, note 86, 341.

’25 E.g., Dominion Bank v. Union Bank of Canada (1908) 40 S.C.R. 366, 381
per Duff J. and Rural Municipality of Storthoaks v. Mobil Oil Ltd, supra,
note 43, per Martland J.; Pettkus v. Becker, supra, note 1, 11 per Dickson J.

126 Friedmann, supra, note 103, 509 argues that the plaintiffs in Woolerton
ought to have been limited to value of the use and not to the profit. To have
held otherwise would have allowed the claimants to obtain the same result
as an injunction.

127 See Spry, Equitable Remedies, 2d ed. (1980), 554-5.
128 Seager v. Copydex Ltd [1967] 1 W.L.R. 923, 932 (C.A.) per Lord Denning

M.R.

129 Elsley v. J.G. Collins Insurance Agencies Ltd [1978] 2 S.C.R. 916, 935.
130 Boardman v. Phipps [1967] 2 A.C. 46, 112 (H.L.) per Lord Hodson.

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To characterize

the claimant’s interest as “property” makes
the transgression of that interest actionable per se. Thus, a claimant
may obtain injunctive relief against another without proving actual
harm. 3′ But the law of tort would require a showing of actual
harm before imposing civil liability by way of damages against
the defendant. “The purpose of the law of torts is to adjust these
losses and afford compensation for injuries sustained by one
person as the result of the conduct of another.’ 1 32 Restitutionary
recovery would have a distinct advantage if liability could be
established solely on the basis of the defendant’s benefit. Unjust
enrichment would thus sanction civil liability in personam against
a defendant in circumstances resembling tort liability but without
requiring that the claimant demonstrate any loss. 133 To impose
the tort concept of actual harm as a preliminary condition for
restitutionary recovery is to repeat errors of “implying contracts”
and presumes that the law of restitution is the converse of tort law.
Problems emerge in defining private property in a realistic and
meaningful manner and in defining liability based on principles
of restitution as protecting an interest other than harm. As to
the first problem, it has been said that “[p]roperty essentially
involves relations between people.”‘134 The property owner is entitled
to employ the force of the state to exclude others and to make
others compensate him for any benefit received through an unau-
thorized use.”3
‘ Thus we must be mindful as to the things which
courts have held to be property, including, for example, confidential
information,138 airspace,”” identity, 38 profession,”” and news. 40

11 See Kelsen v. Imperial Tobacco Co., supra, note 118.
=32Wright, Introduction to the Law of Torts [1942] Camb. L.J. 238, quoted

by Fleming, supra, note 86, 4.

3It

has been suggested that restitution is limited by a plus-minus re-
quirement: see Irvine, “The Appropriation of Personality” in Gibson, Aspects
of Privacy Law (1980), 201-9.

“14 Cohen, Dialogue on Private Property (1954) 9 Rutgers L. Rev. 357, 380-1.
135 See Kennedy & Michelman, Are Property and Contract Efficient? (1980)

8 Hofstra L. Rev. 711.

36 Boardman v. Phipps, supra, note 130, 107 per Lord Hodson, 115 per
Lord Guest: but see Lord Cohen, who observed that “[i]nformation is, of
course, not property in the strict sense of the word” (ibid., 102). Lord Upjohn
was more blunt in his dissenting judgment: “In general, information is not
property at all” (ibid., 127).

“137Kelsen v. Imperial Tobacco Co., supra, note 118.
138See Krouse v. Chrysler Canada Ltd (1973) 1 Q.R. (2d) 225 (C.A.); Athans”

v. Canadian Adventure Camps Ltd (1977) 17 O.R. (2d) 425 (H.C.).

” Nagle v. Feilden [1966] 2 Q.B. 633 (C.A.); Lightly v. Clouston, supra,

note 106, per Lord Mansfield.

140 International News Service v. Associated Press, supra, note 2.

1981]

RESTITUTION AND THE APPROPRIATION OF PROPERTY

531

Having established an appropriation of the claimant’s property,
we then turn to the next problem: is there a balance of convenience
requirement to be considered in a restitution case?

American14 1 and Canadian’ 42 writers have argued that a claimant
in a restitution action must show that the defendant’s appropriation
resulted in an actual harm to the claimant as well as a benefit
to the defendant. In most restitution cases such a requirement
would not make any difference. 43 That is, the defendant’s enrich-
ment will be at the plaintiff’s expense.’4 4 On the other hand, it
does not follow that the plaintiff’s failure to demonstrate an
economic loss corresponding to the defendant’s gain will defeat
his claim based on unjust enrichment. This is the position adopted
by the Restatement’ 45 and has the support of courts in England 14
and Australia, 47 as well as the United States. 4s Nonetheless, the
issue of remoteness arises in restitution as -well as in contract and
tort. Professor Palmer has observed:

Perhaps the most useful generalization
is simply that restitution of
benefits obtained through tort usually will be limited to benefits that
can fairly be regarded as the product of the legally protected interest
of the plaintiff which was invaded. 49
Essentially, the “plus-minus” requirement ought :to be recognized
for what it is: an evasive technique. By putting the plaintiff in a
restitution case under the onus of-proving economic loss, difficult
problems of remoteness as well as the. quantification of benefit 50
are avoided rather than addressed -directly.

141 Woodward, The Law of Quasi-Contract (1913), 274; Keener, The Law of

Quasi-Contract (1893), 163.

142 Irvine, supra, note 133, 209.
143 Palmer, supra, note 82, 133; Goff & Jones, supra, note 61, 18-19.
’44Restatement

of Restitution (1937), 1 provides: “A person who has
been unjustly enriched at the expense of another is required to make resti-
tution” (emphasis added).

145Ibid., Comment e.
146See Goff & Jones, supra, note 61, 18-9. Strand Electric & Engineering
Co. Ltd v. Brisford Entertainments Co., supra, note 79; Wrotham Park
Estate Co. v. Parkside Homes Ltd [1974] 2 All E.R. 321 (Ch.); Swordheath
Properties Ltd v. Tabet [1979] 1 W.L.R. 285 (C.A.).

147See Bilambil-Terranora Pty Ltd v. Tweed Shire Council [1980] N.S.W.

L.R. 465, 477 (C.A.) per Reynolds J.A.

148 Palmer, supra, note 82, 133; Olwell v. Nye & Nissen Co. 173 P. 2d 652
(Wash. 1946); Edwards v. Lee’s Administrator 96 S.W. 2d 1028 (Ky Ct App.
1936).

149 Palmer, supra, note 82, 135.
1 0 Sullivan, supra, note 84, 24-5 has defended the plus-minus requirement:
Once a plaintiff’s recovery can exceed the amount of his loss, courts
become free to apply a variety of tests in the calculation of recovery ….
The field appears open to wide-ranging judicial subjectivity in measuring

McGILL LAW JOURNAL

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the defendant;

the defendant obtained

It ought to be re-emphasized that the plus-minus requirement
the plaintiff has
is often raised in the following circumstances:
established a property interest; that property interest has been
a
transgressed by
benefit by reason of that transgression; but there is no evidence
that the transgression caused the plaintiff any economic loss.
A leading American case, Olwell v. Nye & Nissen Co.,151 may be
used to illustrate the solution generally accepted in the United
States.52 In that case, the plaintiff sold his interest in an egg-
packing business but retained ownership of an egg-washing machine.
The machine was placed in storage at the plaintiff’s instruction
on premises adjacent to those occupied by the defendant. Facing
a shortage of labour, the defendant removed the egg-washing
machine from storage without the plaintiff’s consent or know-
ledge and used it over a three-year period.15 3 The plaintiff elected
to waive the tort of conversion and sue in quasi-contract for the
profits made by the defendant in using the machine. By way of
defence, it was argued that the plaintiff had no present use for
the machine and the operation by the defendant had not injured the
plaintiff.’M This restrictive concept of benefit was rejected as in-
consistent with the nature of property rights: “However plausible,
the appellant cannot be heard to say that his wrongful invasion
of the respondent’s property right to exclusive use is not a loss
compensable in law. To hold otherwise would be subversive of all
property rights since his use was admittedly wrongful and without
claim of right.”‘5 5 The wilful conversion of an unused chattel does
not, by inference from Qiwell, create a remoteness problem in a
restitutionary action commenced against the wrongdoer.

In Olwell the plaintiff had it within his power to exploit the
egg-washing machine in order to realize some economic gain. None-
theless, the plaintiff chose to do nothing. Taking the next step of
analysis, had the plaintiff’s property interest been of such a nature

a plaintiff’s proper recovery. Since no firmly fixed standards guide either
the definition of benefit or application of the plus-minus formula, the
risks of injustice and unpredictability are great.

This argument confuses the concept of benefit with the valuation of a benefit:
see Palmer, supra, note 82, 161.

-11 Supra, note 148.
162 Palmer, supra, note 82, 133.
IMSupra, note 148, 653.
164 Ibid., 654.
165Ibid. The case has been persuasively criticized by Prof. Palmer (supra,
note 82, 161) in his comparison of the concept of benefit with the appro-
priate method of quantifying the benefit.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

533

that any economic exploitation would have been intrinsically im-
possible, does this alter the argument concerning benefit in favour
of the-defendant? The American case of Edwards v. Lee’s Admini-
strator15
illustrates the problem. The defendants successfully ex-
ploited a cave which was accessible only by using an entrance on
land they owned. However, the “Great Onyx Cave”, as it became
known, extended below the surface of the plaintiff’s land. In the
quasi-contractual action, the defendants contended that the cave
was of no practical use to the plaintiff since he had no access to it,
and the plaintiff had not suffered any injury by reason of the
trespass. 157 Nevertheless, the Court of Appeals of Kentucky con-
cluded that the plaintiff was entitled to “one-third of the net profits
received alone from the exhibition of the cave [as] a fair deter-
mination of the direct benefit accruing to the appellants from the
use of the appellees’ property.” 5 8 The fact that the plaintiff’s
property interest was economically useless did not prevent him
from successfully invoking the equitable maxim “that a wrongdoer
shall not be permitted to make a profit from his own wrong.”‘159
While there have not been Canadian restitution cases similar to
Qiwell and Edwards, the concept of benefit applied in those cases
presupposes a notion of property rights which has long been accepted
in Canadian and English law. In McKie v. The K.V.P. Co.6 0 McRuer
CJ.H.C. recognized the distinction between invasion of a property
right and economic loss arising from such an invasion. He quoted
with approval the following passage by Fry J. contained in Pen-
nington v. Brinsop Hall Coal Co.:

I may observe in passing that the case of a stream affords a very clear
illustration of the difference between injury and damage: for the pollu-
tion of a clear stream is to a riparian proprietor below both injury and
damage, whilst the pollution of a stream already made foul and useless
by other pollutions is an injury without damage, which would, however,
at once become both injury and damage on the cessation of the other
pollutions.161
The invasion of the plaintiff’s property right was itself a suf-
ficient ground for granting a request for injunctive relief. However,
caution must be exercised in assuming that the English courts
would carry this distinction into a restitution case where the

156 Supra, note 148.
157 Ibid., 1030.
158 Ibid., 1033.
159 Ibid., 1032.
160 [1948] 3 D.L.R. 201, 212-3 (Ont. H.C.).
.61 (1877) 5 Ch.D. 769, 772.

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claimant seeks a money judgment.0 2 For example, Pennington
might be distinguished on the ground that injunctive relief serves
the purpose of preventing the transgressor from gaining prescriptive
rights of use, but the transgressor is not liable to disgorge any
gain where the property right invaded is valueless., 3 The American
law of restitution does not recognize such a distinction for purposes
of defining benefit. As we have already seen in the discussion of
Phillips v. Horn/ray,14 in a quasi-contractual case the concept of
benefit was divorced from the generally accepted notion of property
rights. The great irony of English law has been the development
of a restitutionary concept of benefit in the guise of damages in
tort. In these cases the English courts have rejected a plus-minus
requirement. Strand Electric & Engineering Co. Ltd v. Brisford
Entertainments Co.’ 65 illustrates an approach to damages in tort
which closely resembles the approach used in Olwell. In Strand
Electric, the plaintiff, who owned certain portable switchboards,0 ”
brought an action in detinue against the defendant. Damages were
sought for the period of forty-three weeks during which the de-
fendant had retained possession of the switchboards. But the
plaintiffs in Strand Electric were not able to establish a direct
link between their own economic loss and the defendant’s gain.
The issue was not whether the defendant had received a benefit
but the method of quantification employed.

Lord Denning observed that “[iln assessing damages, whether
for a breach of contract or for a tort, the general rule is that the
plaintiff recovers the loss he has suffered, no more and no less.’ 0 7
This general rule was applied at trial with the result that the
benefit gained by the defendant was assessed by, among other
things, the economic loss to the plaintiff. The Court of Appeal held
that the economic loss was not a relevant consideration in as-
sessing the value of the benefit gained by the defendant. Lord
Denning found an analogy with the detention of land cases which

162 Phillips v. Homfray, supra, note 76, illustrates the danger that a general
notion of property is acceptable without reference to the type of action
launched by the property owner.

‘IMThe law of property has been associated with economic value by English
scholars. See Nicholas, An Introduction to Roman Law (1962), 98: cf. Cohen,
supra, note 134, 378, who contends that the legal concept of property ought
not to be confused with the “economic or ethical concept of value.”

16 See text at note 146, supra.
165 Supra, note 79.
16 6In the words of Somervell U.J. (ibid., 249), “a profit-earning chattel”

and the egg-washing machine in Olwell are in the same category.

17 Ibid., 253.

1981) RESTITUTION AND THE APPROPRIATION OF PROPERTY

535

established that “a wrongdoer, who keeps the owner out of his
land, must pay a fair rental value for it, even though the owner
would not have been able to use it himself or to let it to anyone
else.”’01 8 Lord Denning then concludes by observing:

It may be that the owner would not have used the goods himself, or
that he had a substitute readily available, which he used without extra
cost to himself. Nevertheless the owner is entitled to a reasonable hire. 69
The quantification of benefit draws upon a restitutionary principle
even though t e action is brought in detinue for damages. 70 But
three years later Lord Keith of Avonhol-
in Government of India
v. Taylor observed that “[n]o case has been brought to our notice
of the application of the rule where there has been no enrichment
of one party with corresponding loss to the other.’ 7′ The problem
in English law is finding the principle buried in rules of damages
created in the law of torts. As a result, counsel apparently did not
cite a decision by the House of Lords in 1914 which clearly
established that corresponding loss to the plaintiff was not a
requirement. 7 2 The plus-minus requirement was most recently
rejected by Brightman J. in Wrotham Park Estate v. Parkside
Homes 173 in a judgment which relies upon the earlier decision of
the Law Lords:

A like principle was applied by the House of Lords in a Scottish case,
Watson, Laidlaw & Co. Ltd v. Pott, Cassels and Williamson [(1914) 31
R.P.C. 104 (H.L.)]. A patentee elected to sue an infringer for damages
rather than for an account of profits. Part of the infringement had taken
place in Java. There was evidence that the patentee could not have
competed successfully in that island. It was submitted that no damages
ought to be awarded in respect of the Java infringement. Lord Shaw said:
‘It is at this stage of the case … that a second principle comes into
play. It is not exactly the principle of restoration, either directly

108 Ibid.: see also Penarth Dock Engineering Co. v. Pounds [1963] 1 Lloyd’s

Rep. 359 (Q.B.) per Lord Denning.

16 Ibid., 254. This is also the usual basis of quasi-contractual recovery in

the United States (Palmer, supra, note 82, 136).

170 Lord Denning acknowledged the connection with restitution: “It is an
action against him because he has the benefit of the goods. It resembles,
therefore, an action for restitution rather than an action of tort. But it is
unnecessary to place it into any formal category. The plaintiffs are entitled
to a hiring charge for the period of detention, and that is all that matters”
(ibid., 255).

17′ [1955] A.C. 491, 513 (P.C.): see also In Re Wyvern Developments Ltd

[1974] 1 W.L.R. 1097, 1105-6 (Ch.) per Templeman J.

172Watson, Laidlaw & Co. Ltd v. Pott, Cassels & Williamson (1914) 31
R.P.C. 104 (H.L.). Perhaps the obscure report of this decision contributed to
this omission.

173 Supra, note 146.

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or expressed through compensation, but it is the principle underlying
price or hire. It plainly extends –
and I am inclined to think not in-
frequently extends –
to Patent cases. But, indeed, it is not confined
to them. For wherever an abstraction or invasion of property has
occurred, then, unless such abstraction or invasion were to be sanc-
tioned by law, the law ought to yield a recompense under the
category or principle, as I say, either of price or of hire. If A, being
a liveryman, keeps his horse standing idle in the stable, and B,
against his wish or without his knowledge, rides or drives it out, it
is no answer to A for B to say: “Against what loss do you want to be
restored? I restore the horse. There is no loss. The horse is none the
worse; it is the better for the exercise.” I confess to your Lordships
that this seems to me to be precisely in principle
the kind of
question and retort which underlay the argument of the learned
Counsel for the Appellants about the Java trade.’

He continued:

‘… in such cases it appears to me that the correct and full measure
is only reached by adding that a patentee is also entitled, on the
principle of price or hire, to a royalty for the unauthorised sale or
use of every one of the infringing machines in a market which the
infringer, if left to himself, might not have reached. Otherwise, that
property which consists in the monopoly of the patented articles
granted to the patentee has been invaded, and indeed abstracted,
and the law, when appealed to, would be standing by and allowing
the invader or abstractor to go free.”74

Restitution in Canada is in the early stages of developing a
concept of benefit, and as it takes shape there are three major
points to be drawn from the decisions in Qiwell, Edwards, Strand
Electric and Watson, Laidlaw & Co. Ltd: the concept of benefit
is inextricably connected with the legal nature of property rights;
the concept of benefit may be a separate issue from the quantifi-
cation of the benefit; and the concept of benefit, and especially
the plus-minus requirement, disguises questions of remoteness and
quantification, which should be addressed directly.175

The principle of unjust enrichment has aroused some controversy.
in certain recent Canadian cases 176 which have found a proprietary
interest in the plaintiff’s exclusive right to market his personality,
image and name. Intellectual property has become a new setting
for old controversies, but the basic issue remains familiar: whether

174 Ibid., 339-40.
175 There are encouraging signs that Canadian courts recognize the concept
of benefit that may arise in either a tort or restitution case, and that the
nature of the action ought not to result in a different approach to the
question of quantification: see Borden Chemical Co. (Canada) Ltd v. J.G.
Beukers Ltd (1973) 29 .D.L.R. (3d) 337, 344 (B.C.S.C.).

1T See Krouse v. Chrysler Canada Ltd, supra, note 138; Athans v. Canadian

Adventure Camps Ltd, supra, note 138; Irvine, supra, note 133, 201.9.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

537

the courts adequately consider the policy implications of expanded
civil liability. 77 To describe something as property may be an
attractive, even facile, substitute for that consideration. It has been
suggested that courts have used this technique to disguise a usurpa-
tion of legislative authority. 78 Historically, the term “property”
has been used as a legal conclusion which puts an end to the debate
over liability. For the law of restitution, the finding that property
has been appropriated allows the plaintiff to invoke the principle
of unjust enrichment.7’9

IV. Equitable remedies to prevent unjust enrichment

The property label assists the claimant in achieving three im-
portant goals: relieving him from the burden of demonstrating
actual loss or damage, 80 allowing him a tracing order at equity
or obtaining an order for an accounting for profits.”

A. Tracing orders

Entitlement to a tracing order at equity’

– required that the
claimant demonstrate a proprietary interest in money,’8 3 land,&
or shares.’8 – In the English law of constructive trust’ 6 the equitable
proprietary interest is retained in breach of a fiduciary relation-
ship,8 7 but is not a remedy in unjust enrichment.’88 The proprietary

1

177 Irvine, supra, note 133, 209.
178 See Cohen, supra, note 134, 380-1.
170 See text accompanying note 110, supra.
80 The traditional description of damages was set forth by Lord Holt, C.J.,
in Savile v. Roberts (1698) 1 Ld Raym. 374, 9 E.R. 1151; 1 Salk. 13, 91 E.R.
14; 3 Salk. 16, 91 E.R. 664 (K.B.): see also the report in [1558-1774] All E.R.
Rep. 456.

181 See York, Extension of Restitutional Remedies (1957) 4 U.C.L.A. L. Rev.

499.

182See Maudsley, Hanbury’s Modern Equity, 9th ed. (1969), 418-31; Goff
& Jones, supra, note 61, 53-60; Pettit, Equity and the Law of Trusts, 4th ed.
(1979), 486-93; see also Waters, supra, note 12, 15: “the constructive trust, as a
term, contains two elements -relationship
and tracing. The two are surely
inseparable; relationship without tracing points nowhere, and tracing without
relationship is a random remedy.”

‘ 83 Sinclair v. Brougham, supra,, note 77.
184 See Pettkus v. Becker, supra, note 1; Re Tilley’s Will Trust [1967] 1

Ch. 1179.

185 Goodbody v. Bank of Montreal & Lester, supra, note 31.
186 See Maudsley, supra, note 182, 218-36; Pettit, supra, note 182, 44-6.
187 In many instances the “fiduciary relationship” resembles the “implied
contract” with the courts imposing an obligation which was not based upon
actual consent or promise. In Chase Manhattan Bank N.A. v. Israel-British

McGILL LAW JOURNAL

[Vol. 26

interest at equity flowed directly from the fiduciary relationship,
and failure to establish such a relationship”‘ might have prejudiced
the plaintiff in several ways in that an in personam claim might
not lie;190 the defendant might be insolvent” or the value of property
might have appreciated in the hands of the defendant. 92 Thus, we
find a number of Canadian and English cases where the claimant’s
equitable proprietary interest exists because the court has willingly
invented a fiduciary relationship. For example, a fiduciary relation-
ship has been found to exist between the Crown and a British
Army sergeant, who had amassed a small fortune in bribes, 9 ‘
between depositor and directors of an ultra vires banking opera-
tion,’194 between the owner of share warrants and the apparent
thief of the warrants, 95 and between a bank that mistakenly paid
a large sum of money to another bank. 96 In these cases, equity
concerned itself with protecting the claimant’s continuing proprietary
interest 97 by granting a tracing order. By denying any link with
the principle of unjust enrichment, the English courts’ decision,
which has found some favour with lower courts in Canada, to find
a “proprietary interest” and a “fiduciary relationship” begs a funda-
mental question as to the juridical basis of that decision. 08

Bank (London) Ltd [1980] 2 W.L.R. 202, 210 (Ch.), Goulding J., referring to
Re Diplock [1948] 1 Ch. 465, 520, observed that the Court was looking for
either “a fiduciary or quasi-fiduciary relationship”. Moreover, his Lordship
continued: “At the same time they recognised that exactly what relationships
were sufficient for the purpose had not yet been precisely laid down.”

188 Goff & Jones, supra, note 61, 60-3 argue that unjust enrichment ought
to be based on restitutionary principles. This has
long been the legal
position in the United States: see Pound, The Progress of the Law 1918-1919
[,] Equity (1920) 33 Harv. L. Rev. 420, 421; Scott, The Law of Trusts, 3d ed.
(1967), Vol. 5, 462.2, pp. 3412-3.
189 The categories of fiduciaries recognized in English law may be found

in Goff & Jones, supra, note 61, 55, n. 68.

190 Sinclair v. Brougham, supra, note 77, 413-21 per Lord Haldane.
191 Waters, supra, note 4, 337.
192 Maudsley, supra, note 182, 414.
193 Reading v. Attorney-General [1951] A.C. 507, 516 (H.L.) per Lord Porter;

Goff & Jones, supra, note 61, 508-10.

194 Sinclair v. Brougham, supra, note 77.
195 Goodbody v. Bank of Montreal & Lester, supra, note 31.
196 Chase Manhattan Bank N.A. v. Israel-British Bank (London) Ltd, supra,

note 187, 209.

197 Ibid., 210.
‘0 8 The “quasi-fiduciary

the English courts
to circumvent the controversial issue of whether restitution includes a civil
obligation independent of tort and contract and enforces that obligation by em-
ploying both in personam and in rem remedies.

relationship” device allows

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

539

In Pettkus v. Becker0 90 a majority of the Supreme Court of
Canada held that a claimant is entitled to a constructive trust in
order to prevent unjust enrichment of the defendant. By holding
the defendant a constructive trustee, the claimant is enabled to
trace his or her beneficial interest into the hands of the legal title-
holder. It
is no longer possible to confine a tracing order to
circumstances where common intention has been established or
the defendant has retained property acquired in breach of a fidu-
ciary relationship. As an in rem order, tracing is the legal conse-
quence of imposing a constructive trust. As an equitable remedy,
tracing now forms part of a fused system of common law and
equitable principles.

B. Quantification of benefit

Once a court determines that the defendant has usurped the
plaintiff’s proprietary interest, the next issue is one of valuation
or quantification of the benefit acquired by the defendant. As a
general rule, the court will assess damages in tort or benefit in
restitution according to the reasonable fair-market value of the
property appropriated by the defendant. This rule has been applied
in Canada and England where the defendant appropriated copy-
righted architectural drawings and plans, 20 0 a customer list,20 1 the
image of a sports celebrity,20 2 residential premises, 20 3 and portable
switchboards.0 4 In the United States the rule has been considered
“the normal measure of recovery in quasi-contract. 2 5 Canadian
law is still developing on this point. Nevertheless, as a matter of
principle, it seems likely that Canadian courts will recognize that
the crux of quantification in such cases is unjust enrichment; 20 6
that is, once the plaintiff elects to recover the gain acquired through

109 Supra, note 1.
20oStovin-Bradford v. Volpoint Properties Ltd [1971] Ch. 1007 (C.A.).
201 Borden Chemical Co. (Canada) Ltd v. J.G. Beukers Ltd, supra, note 175.
202 Athans v. Canadian Adventure Camps Ltd, supra, note 138, 438.
203 Swordheath Properties Ltd v. Tabet, supra, note 146, 288.
204 Strand Electric & Engineering Co. Ltd v. Brisford Entertainments Co.,

supra, note 79.

205 Palmer, supra, note 82, 122.
200 Ibid., 51. See also Restatement of Restitution, supra, note 82, 128.
Even in jurisdictions where there is doubt whether unjust enrichment forms
part of the law, that principle is recognized as having an effect on the
quantification issues arising in a case concerning misappropriation of pro-
perty: see Bilambil-Terranora Pty Ltd v. Tweed Shire Council, supra, note
147, 495 per Mahoney JA.

McGILL LAW JOURNAL

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the wrongful appropriation, the basis of assessment remains the
same whether the action is brought in tort or restitution. 20 7

In Canadian and English law the right to an accounting of profits
on the basis of unjust enrichment is far less certain than in the
United States, where “restitution of profits always will be granted
against an intentional wrongdoer, provided the profits are the pro-
duct of a wrongful taking or other interference with the injured
party’s legally protected interest. ’20 8 In English law an action for
account would be considered a “tool in equity”.20 9 There is little
support in English law for the use of an accounting of profits as
an equitable remedy invoked to prevent unjust enrichment. 10 In
most cases, the English litigant has been satisfied with an award
for damages arising from the defendant’s tortious acts.

the most

As I have observed elsewhere,2 12 the Canadian courts have in-
dicated a willingness to adopt equitable remedies along the lines
proposed by the Restatement of Restitution.21 3 It is likely, therefore,
that a Canadian court would reject the argument that accounting
for profits is narrowly confined to the established categories worked
out by chancery. 14 While an account for profits might be described
as
fruitful manifestation of unjust enrichment,2
it must be remembered that English decisions recognize no gener-
alized right based on unjust enrichment. The notion of implied
contract appeared in one English case 21 6 as justification for refusing
to order an accounting for profits in a quasi-contract case. That
approach is no longer acceptable in Canada.21 A claimant seeking
an accounting should not be required to establish that a bill for an
accounting would lie. On the other hand, the remedy for accounting

207 See, e.g., Borden Chemical Co. (Canada) Ltd v. J.G. Beukers Ltd, supra,

note 175, 344.

208 Palmer, supra, note 82, 164-5.
209 McGregor on Damages, 14th ed. (1980), 5.
210 Goff & Jones, supra, note 61, 479-80.
211t Ibid., 481.
212 See Klippert, The Juridical Nature of Unjust Enrichment, supra, note 44,

407-14.

213 See Rathwell v. Rathwell, supra, note 12, 454 per Dickson J.
2 14 See Megarry, Snell’s Principles of Equity, 27th ed. (1973), 620-2.
215 This was the view of Profs Ames (The History of Assumpsit (1889) 2
Haiv. L. Rev. 53, 66) and Belsheim (The Old Action of Account (1931) 45
Harv. L. Rev. 466).
216 See Re Simms [1934] 1 Ch. 1 (C.A.). This line of argument was advanced
in some of the early American writings: see Keener, supra, note 141, 166 and
Woodward, supra, note 141, 274. Prof. Palmer states: (supra, note 82, 159)
that the implied contract reason “doe not bear examination.”
217 See, e.g., Deglman v. Guaranty Trust Co., supra, note 37.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

541

for profits will probably occur more frequently in the abuse of
fiduciary relation cases.218

As a method of quantification, recovery of profits will not
always increase the amount calculated on the basis of the reasonable
fair market value.219 For example, in Athans v. Canadian Adventure
Camps Ltd2 2 0 the plaintiff recovered for the appropriation of his
“trademark” image on the basis of “a percentage of the gross
receipts of the camp.”22 ‘ In effect, the quantification was based on
an accounting for profits because of the difficulty in determining
a reasonable fair-market value. In
that case there were no net
profits. The boys’ camp incurred a substantial loss for the defendant.
Assessing the benefit of using the plaintiff’s image on the basis of
ten cents per copy of the brochure distributed or ten per cent
of the gross receipts produced the same figure:
five hundred
dollars. But the wrongdoer whose act of appropriation can be
characterized as wilful,-022 deliberate, 22 3 or conscious2 24 may make
millions from his wrong and would quite happily pay what is
effectively a licence fee to the plaintiff according to the reasonable
fair-market value notion of quantification. 22 The innocent converter
is not held accountable for profits under the Restatement22 but in
practice the American courts have made the innocent account as
well as the wilful. 27 In most cases, however, the nature of the
wrong will be just one factor for the court to consider on the
issue of method of quantification. From the American experience,
it seems probable that the Canadian courts will find “no easy
formulas” to resolve the quantification problems..2 28 The major
obstacle in establishing the value of benefit according to the profit
obtained is simply one of causation. On what basis does the court

218 See, e.g., Canadian Aero Service Ltd v. O’Malley [1974] S.C.R. 592, and

Chevron v. Home Oil Co. (1980) 22 A.R. 451 (Q.B.).

210 Palmer, supra, note 82, 160.
220 Supra, note 138.
221 Ibid., 438.
222 See Palmer, supra, note 82, 158.
223 See Douthwaite, The Tortfeasor’s Profits – A Brief Survey (196&) 19

Hastings L.J. 1071.

224 See Restatement of Restitution, supra, note 144, 151.
225 Prof. Palmer has argued (supra, note 82, 161)

that even in the case of
a wilful wrongdoer the courts should not ignore the value of the thing
appropriated, and that any recovery which has a “wide discrepancy” *from
reasonable value is suspect. Oiwell v. Nye & Nissen Co., supra, note 148, is
given as an example of a “suspect” case.
220 Supra, note 144, 154, Comment (a).
227 Palmer, supra, note 82, 158.
228 Ibid., 161.

McGILL LAW JOURNAL

[Vol. 26

separate the defendant’s contribution from the thing appropriated
from the plaintiff? The American response is to suggest that “the
court must resort to general considerations of fairness”,22 9 but this
approach simply attempts to avoid the problem of causation by
leaving the matter to the judge’s discretion. Nevertheless, after
Pettkus v. Becker 230 such an approach may be open to the Canadian
courts.

Once the plaintiff establishes that the defendant has obtained
a gain from an appropriation of the plaintiff’s property, relief should
not be denied because assessment of the benefit is difficult. This
has happened in some American cases.231 In Canada, the problem
of quantification may be drawn from principles governing the law
of damages in contract: “[t]he law is clear that a party should not
be deprived of a damage award on the ground that the exact quantum
of the loss is difficult or mathematically impossible to ascertain. 232
The policy behind the contract rule has been set forth by the
Supreme Court of Canada in Wood v. Grand Valley Railway Com-
pany:

It was clearly impossible under the facts of that case to estimate with
anything approaching to mathematical accuracy the damages sustained
by the plaintiffs, but it seems to me to be clearly laid down there by the
learned judges that such an impossibility cannot ‘relieve the wrong-
doer of the necessity of paying damages for his breach of contract’ and
that on the other hand the tribunal to estimate them whether jury or
judge must under such circumstances do ‘the best it can’ and its con-
clusion will not be set aside even if the amount of the verdict is a
matter of guess work.Y33
Surely a similar principle should apply mutatis mutandis to
quantification of benefit, and for the same policy reason, that is,
the wrongdoer should not be relieved of the burden to pay for the
gain acquired through his wrongful appropriation because the benefit
is not arithmetically certain. But this policy does not tell us
whether the court ought to be making its “best guess” on the
basis of the benefit’s market value or its profit value. In my view,
the contract rule would apply in cases such as Athans where the

229Ibid.
2 3 0 Supra, note 1.
.231 Cason v. Baskin 20 So. 2d 243 (Fla in banco 1944); and Hart v. E.P.
Dutton & Co. 93 N.Y.S. 2d 871 (Sup. Ct 1949), afj’d 98 N.Y.S. 2d 773 (App.
Div. 1949).
2 32 McCain Produce Co. v. Can. Pac. Ltd (1980) 30 N.B.R. (2d) 476, 529
(N.B.C.A.) per Richard JA.

233 (1915) 51 S.C.R. 283, 289 per Davies I., cited with approval by Spence J.
in Penvidic Contracting Co. Ltd v. International Nickel Co. of Canada Ltd
[1976] 1 S.C.R. 267, 279-80.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

543

reasonable market value of the benefit is difficult to assess, but
where the plaintiff seeks the profit value of the gain he must
establish a causal connection between the benefit and the defendant’s
profit. To destroy that causation requirement and award the plaintiff
an amount based on “profits” would be a disguised award of
punitive or exemplary damages, which would be outside the scope
of unjust enrichment liability.

In summary, where the defendant has appropriated the property
of another without consent, the gain will generally be assessed
on the basis of the reasonable fair-market value of the thing ap-
propriated. In exceptional cases, to deter particular types of wrong-
ful acts, an accounting for profits will be an appropriate alternative
method of quantification. The factors which may influence the
court in selecting the appropriate method of quantification include:
the nature of the property appropriated, the motive of the defendant,
the relationship between the parties, the contribution of the de-
fendant to the profit, and the value of the thing appropriated.

V. Problems of remoteness in restitution

A. The third factor

Little specific attention has been focused on causation problems
in restitution.234 As an aspect of remoteness, the analysis of causa-
tion has been limited traditionally to a discussion of damage rules
in contract and tort. 35 The requirement that the defendant must
be enriched at the plaintiff’s expense is the expression which might
be seen as incorporating the principle of causation in restitution.
As we have seen, some scholars236 have interpreted the expense
requirement to mean that a plus-minus test exists. The better
view is that the plus-minus test misconceives
the meaning of
benefit. But the rejection of that test is not a repudiation of causa-

234 In Pettkus v. Becker, supra, note 1, 16, Dickson J. observed that “flor
the unjust enrichment principle to apply it is obvious that some connection
must be shown between the acquisition of property and corresponding de-
privation.” The question remains as to whether the broad discretionary
jurisdiction inherited from “ancient principles of equity” justifies finding a
causal connection because the final result is fair. That is, if a constructive
trust is imposed on the basis of good conscience notions why not adapt the
same approach to causation?

235See McGregor on Damages, supra, note 209, 176-179. See also Shavell,
An Analysis of Causation and the Scope of Liability in the Law of Torts
(1980) 13 J. of Leg. Studies 43.

236 See supra, note 150.

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tion. On the contrary, enrichment at the plaintiff’s expense 2 7 em-
bodies an idea similar to McGregor’s definition of causation in
tort and contract:

The total formulation, therefore, of what falls to be decided in these
questions of causation is whether given a third factor, the plaintiff’s
damage results from the defendant’s act, a formulation which has the
great merit of a common-sense approach.P 8

The notion of a third factor cuts across all three areas of civil
liability.2 39 But neither restitution scholars nor the courts have
expressly asked themselves whether the bulk of the case law in
tort and contract ought to be applicable mutatis mutandis to causa-
tion problems in restitution. In my view, whether the plaintiff
seeks to recover a benefit or compensation for a loss, the existence
of a third factor may preclude imposition of civil liability. Several
examples will serve to illustrate the so-called third factor where
unjust enrichment is the basis of civil liability.

James Moore & Sons Ltd v. University of Ottawa240 is an excellent
example of a causation problem. The plaintiff, a building contractor,
executed a written construction contract with the University of
Ottawa for the construction of a building. Under the terms of the
contract, a reduction in taxes imposed on building materials was
to be passed on for the University’s benefit. But the contract was
,silent as to the allocation of tax increases. This omission worked
against the contractor because the provincial sales tax was re-
moved but at the same time an additional federal tax was levied
on building materials. By contract the contractor was required
to pass on the three per cent reduction in provincial tax. The
additional federal tax was claimed on the basis of unjust enrichment.
The federal government compelled the contractor to pay the addi-
tional tax. Under the Excise Tax Act24′ the University applied for and
received from the federal government a tax refund based on the
added tax paid by the contractor. Clearly, the contractor suffered
an economic loss and the University received a corresponding
benefit. But was the benefit the result of the plaintiff’s loss or a
third factor? Morden J. held that the contractor was entitled to
recover the benefit on two grounds. The first suggested that resti-
tutionary recovery may be allowed where benefit is the result of
the third factor. The emphasis is on stripping a defendant of windfall

231 See supra, note 144.
238 McGregor on Damages, supra, note 209, 101.
2 39The Supreme Court of Canada has recognized restitution as a third
distinct category of civil liability (e.g., Degiman v. Guaranty Trust Co., supra,
note 37 and Pettkus v. Becker, supra, note 1).

240 (1974) 5 O.R. (2d) 162 H.C.).
2 4 1 Now R.S.C. 1970, c. E-13, s. 46.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

545

profits.2 42 It is submitted, however, that to negate the principle
of causation in restitution is alien to long-established concerns
over the extent of civil liability. But the alternative ground assumes
a causal connection between loss and benefit: “[t]he plaintiff paid
this tax. But for this payment the defendant would not have re-
ceived the moneys from the Government.”24 3 That is, there was
no third factor breaking the causal chain. Of course, Morden J.’s
view would open up liability for unjust enrichment to all taxpayers
seeking to recover against recipients of governmental largesse. With
respect, the federal government, or the omission from the contract
regarding increases of taxes, was the third factor. The compulsion
to pay the federal tax could not be attributed to the University.
The plaintiff paid a tax. But it was not paid to the defendant. The
benefit in the form of a refund also came from the government.
Certainly there might be a windfall for the University but to say
that a benefit is unearned is not the same as saying it was conferred
by the plaintiff. The defendant’s benefit was the result of using
refund provisions enacted by the federal government for educa-
tional institutions. But for those provisions the University would
have not received a refund, yet the contractor would still have
had to pay the tax.

Another example is afforded in the New Zealand case of Carly
v. Farrelly,2 44 where a plaintiff, purchaser of land, sought relief
based on unjust enrichment against the defendant vendor. The con-
tract of sale provided that risk for the property would lie with the
plaintiff pending completion. The plaintiff failed
to purchase
insurance to cover his risks and before completion the house on
the land burned down. It was assumed that the vendor retained
an insurable interest which would have entitled him to recover
on his own policy for the damage. The purchaser suffered a loss
and the vendor stood to recover a gain. Once again it was open
to argue that a third factor was the cause of the benefit and not
the plaintiff’s loss. As in James Moore & Sons Ltd, it appears that
the defendant has obtained a windfall, that is he collects the
insurance proceeds for the destroyed house and the full purchase
price from the purchaser on completion. The plaintiff’s loss was
the result of his failure to follow accepted conveyancing practice. 245
The defendant’s benefit was the result of payments under an in-
surance contract with another party. In the absence of a causal

242 Supra, note 174, 172-3.
243 Ibid.
244 [1975] 1 N.Z.L.R. 356 (S.C.).
245 See also Avondale Printers & Stationers v. Haggie [1979] 2 N.Z.L.R. 124

(S.C.).

McGILL LAW JOURNAL

(Vol. 26

connection between the loss and benefit, the New Zealand Supreme
Court refused the claimant’s restitutionary action.

American restitution cases must be carefully examined for causa-
tion problems. The decision of the New York Court of Appeals in
Simonds v. Simonds2 46 indicates a willingness to free civil liability
in unjust enrichment from the problems of causation if the result
would prevent injustice. In that case the plaintiff, the first wife
of the deceased, sought a constructive trust 247 against certain in-
surance-policy proceeds received by the deceased’s second wife and
daughter. The first wife and her husband at the time signed a
separation agreement which required the husband to maintain an
existing life insurance policy naming the first wife as beneficiary
or, in the event that policy was cancelled or lapsed, he would
purchase another policy in his first wife’s favour. The husband
defaulted on that agreement by allowing the insurance policy covered
by the separation agreement to lapse. The husband purchased
new life insurance policies, naming hfis -second wife and their
daughter as beneficiaries.

As in the previous two decisions from Ontario and New Zealand,
the plaintiff has suffered an economic loss and the defendant has
received a benefit. But the benefit received by the second wife
and daughter was paid by an insurance company, thus introducing
the third factor, which intervenes to destroy the causal link between
loss and benefit. The cause of the first wife’s loss was the failure
of her former husband to fulfil his contractual obligation to main-
tain an insurance policy naming her as beneficiary. But the second
wife’s benefit does not come from that failure. The first wife did
not pay the insurance proceeds to the second wife. Moreover, it is
doubtful that the policies were purchased with the first wife’s
property. When the insurance company paid the proceeds under the
policies purchased by the deceased they did not cause the plaintiff’s
loss. Her loss occurred during her former husband’s lifetime and
was caused by his inter vivos act. Nevertheless, on these facts
the New York Court of Appeals held that the first wife was entitled
to impress a constructive trust on the insurance proceeds received
by the second wife.248

246 408 N.Y.S. (2d) 359 (N.Y. 1978). See Gegan, Constructive Trusts: A New
Way for Tracing Equities (1979) 55 St. John’s L. Rev. 593, 599 where the
author characterizes the Simonds “notion of a floating equity … [as] an
unprecedented and dubious doctrine.”

247 Since the deceased’s estate was insolvent a suit based on the husband’s
breach of the separation agreement would not have yielded any practical
benefit.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

547

In restitution, the third factor arises where the defendant has
received a money payment from a person who is legally a stranger
to the plaintiff. While in contract and tort the third factor raises
a causation question concerning the plaintiff’s loss, the causation
question in claims for restitution is directed to the defendant’s
benefit. Canadian courts, among others, have not adequately dis-
cussed the implications of applying, or indeed not applying, prin-
ciples of causation in restitution. 249 The result of this silence is to
leave an inference that restitution, unlike tort and contract, may
ignore the third factor. Thus, a plaintiff may, in effect, recover
windfall profits because rough justice is served by taking away
the unearned profit and giving it (as opposed to restoring it)
to a person who has suffered a loss. Such an approach has more
in common with simple compassion than a workable judicial prin-
ciple of civil liability. In my view, it is more likely that Canadian
courts would adopt reasons similar to those in Carly v. Farrelly
to justify the retention of causation in restitution:

I must say that on the facts of this case I think I am being asked to
apply a supposed rule of equity which is not only vague in its outline
but which must disqualify itself from acceptance as a valid principle of
jurisprudence by its total uncertainty of application and result. It cannot
be sufficient to say that wide and varying notions of fairness and con-
science shall be the legal determinant. No stable system of jurisprudence
could permit a litigant’s claim to justice to be consigned to the formless
void of individual moral opinion.2 50
Yet, for purposes of determining civil liability, problems of causa-
tion will arise less frequently, in cases such as Strand Electric
or Qiwell. In these cases the defendant’s benefit was caused by
his transgression of the plaintiff’s proprietary interest. But causation
may function in some cases to restrict the scope of that interest. 25 1

B. Generating new grounds of civil liability

There is another aspect of remoteness, which has been defined
by McGregor in terms of scope of protection. 2 Assuming that the
plaintiff can satisfy the causation requirement by showing that he

2481n Chase Manhattan Bank of N.A. v. Israel-British Bank (London) Ltd,
supra, note 187, 216, Goulding J. said of Simonds that “the opinion proceeds
on
this
plaintiff….

the classical foundation of a persistent equitable

interest

in

2 49 See supra, note 234.
250 Supra, note 244, 367.
251 E.g., compare Cleland v. Berberick (1915) 34 O.L.R. 636

(H.C.), aff’d
(1916) 36 O.L.R. 357 (C.A.) with Bremner v. Bleakley (1923) 54 O.L.R. 233
(C.A.).

252 McGregor on Damages, supra, note 209, 144.

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conferred a benefit on the defendant, he must demonstrate that
his interest in the return of the benefit is recognized under the
principle of unjust enrichment. The issue of remoteness becomes
one of policy.2 53 The court asks whether the scope of unjust en-
richment ought to be expanded to impose liability for this class
of benefits. The courts are required to determine what enrichments
are unjust from a large and expanding number of enrichments.2
For example, where Jones spends $3,000 to renovate his house,
it may be possible to prove that the neighbouring house owned
by Smith increased in value by $1,000. While the defendant derived
a benefit from the plaintiff’s expenditure, as a general rule, Jones’s
interest would not be recognized in Smith’s benefit.2 55

In County of Carleton v. City of Ottawa2 56 the Supreme Court
of Canada used the principle of unjust enrichment to expand
civil liability beyond previously recognized boundaries. But there
was no discussion of policy reasons supporting the expansion of
liability to recover a benefit, which the Ontario Court of Appeal257
considered too remote. Without such reasons, it becomes difficult
to predict future expansions of liability for unjust enrichment be-
cause we do not know the criteria relied upon by the Court to
justify the creation of “irrebuttable benefit” as a new category
of liability.2 .8

The most recent illustration is the majority judgment in Pettkus
v. Becker.2″ As already explained76 the Supreme Court of Canada
held that Miss Becker was entitled to a proportionate interest in
the real property acquired in the name of the man with whom
she had lived for nineteen years. While liability is based on unjust
enrichment, Pektkus v. Becker expands the range of equitable
remedies available to prevent unjust enrichment. This view of
constructive trust was not accepted by a majority of the Supreme
Court of Canada in the earlier cases of Murdoch261 and Rathwell.202 ”

23

5 A.s is the case in tort: ibid.
2 5 4 It would be impossible from a practical point of view to impose liability
for every case of enrichment: see Dawson, The Self-Serving Intermeddler
(1974) 87 Harv. L. Rev. 1409, 1418.

note 50.

25 Such a limitation was recognized in City of Moncton v. Stephen, supra,
2 6 Supra, note 47.
257 [1965] 1 O.R. 7 (CA.).
258 I have discussed the concept of “irrebuttable benefit” elsewhere: The

Judicial Nature of Unjust Enrichment supra, note 44, 384-93.

259 Supra, note 1.
2 60 See text accompanying note 11, supra.
26 1 Supra, note 7.
26 2Supra, note 12.

19813

RESTITUTION AND THE APPROPRIATION OF PROPERTY

549

But we do not know in what circumstances a Canadian court
will impose a constructive trust as an alternative to a personal
judgment based on the value of the benefit conferred. Not all
benefits are unjustly retained.0 3 But this observation must be
read with Dickson J.’s view that the courts are to invoke the
“ancient principles of equity [in order] to accommodate the changing
needs and mores of society ….

264

The question of public policy may have wider implications. There
is no clearer example than recent Canadian cases which have con-
sidered the right of a plaintiff to prevent the commercial exploitation
of his “personality by use of his image, voice or otherwise”. 265
These decisions are consistent with the American view, expressed
by Professor Palmer,2 06 “that there is an economic interest that is
entitled to protection against unauthorized commercial exploitation
by another”. The notion of personality in Canadian and American
cases generally
involves some degree of celebrity status. The
American courts have taken judicial notice of the celebrity status
7 and Cary Grant 268 in actions commenced to
of Muhammad Ali2
seek relief for intended or actual commercial exploitation of their
personality. Whether we call this right one of property 69 or publi-
city,27 0 the plaintiff’s right of “exclusive marketing” 271 may entitle
him to a restitutionary claim based on the principle of unjust
enrichment. 72

6

2063Pettkus v. Becker, supra, note 1, 12 per Dickson J.
264 Ibid., 11.
205 Krouse v. Chrysler Canada Ltd, supra, note 138, 241. See also Athans

v. Canadian Adventure Camps Ltd, supra, note 138.

270 Prof. Palmer (supra, note 82, 125) does not put much emphasis on the
label used, equating right of publicity as an alternative label to a right of
property.

27 1Athans v. Canadian Adventure Camps Ltd, supra, note 138, 434.
272 Civil liability based on unjust enrichment for the commercial appropria-
tion of personality was established in the United States in the so-called
“human cannonball” case: see Zacchini v. Scripps-Howard Broadcasting Co.
433 U.S. 562 (1977).

200 Palmer, supra, note 82, 125.
207 Ali v. Playgirl, Inc. 447 F. Supp. 723 (S.D.N.Y. 1978). In that case,
Muhammad Ali obtained an injunction against Playgirl magazine precluding
them from printing and distributing an objectionable portrait of the former
champion.

268 Grant v. Esquire, Inc. 367 F. Supp. 876 (S.D.N.Y. 1973).
209 Irvine, supra, note 133, 205-7

liability for commercial
exploitation of personality requires a showing of economic
loss by the
claimant. A number of American cases have held that the claimant is en-
forcing a property right: see Cepeda v. Swift & Co. 415 F. 2d 1205 (8th cir.
1969); Price v. Hal Roach Studios, Inc. 400 F. Supp. 836 (S.D.N.Y. 1975);
Uhlaender v. Henricksen, 316 F. Supp. 1277 (D. Minn. 1970).

insists that

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In Athans v. Canadian Adventure Camps Ltd273 the plaintiff
was a champion water-skier of national and international fame.
The defendant, as part of a promotional campaign to launch a
boys’ camp, prepared and published a camp brochure with a drawing
which depicted the plaintiff skiing. This drawing of a water-skier
in action bore a “striking similarity” to the plaintiff’s ” ‘trademark’
photograph”. 274 It should also be noted that the boys’ camp planned
to feature water-skiing as a major programme, and the efforts by
the defendant to gain the plaintiff’s agreement to lend his name,
image and endorsement to the project failed . 2 7 5 A passing-off action
did not succeed,2 76 but a new category of protected interest emerges,
and that expansion has important implications for both the law
of tort and restitution. Henry J. explains the basis of civil liability
as follows:

I turn now to the second head of claim, namely, wrongful appropriation
of the plaintiff’s personality. I say at once that, on the basis of recent
-authority, it is clear that Mr. Athans has a proprietary right in the
exclusive marketing for gain of his personality, image and name, and that
the law entitles him to protect that right, if it is invaded: see Krouse
v. Chrysler Canada Ltd. et aL. (1973), 1 O.R. (2d) 225, 40 D.L.R. (3d) 15,
13 C.P.R. (2d) 28. If a case for wrongful invasion of this right is made
out, then the plaintiff is entitled, in appropriate circumstances, to an
injunction and to damages, if proved. It is only in recent years that the
concept of appropriation of personality has moved from its place in the
tort of defamation, as exemplified by Tolley v. J.S. Fry and Sons, Ltd.,
[1931] A.C. 333, to a more broadly based common law tort.2 77
The Athans case does not explain the criteria applied to a
thing before the court attaches a proprietary right to it. But when
proprietary rights are attached to personality in this way, we know
the probable legal consequence of such an invasion. While it has
been argued that Krouse v. Chrysler Canada Ltd278 requires the
plaintiff to show actual economic loss corresponding to the de-
fendant’s gain from the invasion,7 9 such an analysis ignores English
cases 280 which have employed the principle of unjust enrichment
to make an award of damages in tort based exclusively on the
defendant’s benefit. Further, such an argument relies upon a plus-
minus requirement which has found little judicial support in the

273 Supra, note 138, 431.
2 74Ibid., 430.
275 Ibid., 429.
276 Ibid., 433.
277 Ibid., 434.
278Supra, note 138.
279 Irvine, supra, note 133, 209.
280See supra, note 146.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

551

cases. s28 Therefore, Henry J.’s conclusion that the defendant had
invaded “Mr. Athans’ exclusive right to market his personality” 2 2
is akin to a finding of trespass in the land cases, 8 or conversion
in the case of a chattel.2
8 The tort is actionable per se.2 s5 And the
measure of damages in these so-called tort cases is based on a
notion of benefit obtained.2 6

The Ontario Court of Appeal in Krouse has shown a willingness
to consider the public-policy implications in developing guidelines
for what is “an appropriation” of the plaintiff’s exclusive right
to exploit his personality. The following passages from the judgment
by Estey J.A. illustrate the Court’s sensitivity to the broader policy
concerns.

It is clear from the evidence and by the slightest exercise of judicial
notice that our community to date .recognizes by contract the right of
the professional athlete and persons otherwise in the public eye to
commercialize on their notoriety. The law of contract is regularly in-
voked to make the personal attributes which are attached to such people
by the community, the subject of commerce. On the other handX, it is
equally clear that professional sport, either at the entrepreneurial or

281 Irvine, supra, note 133, 209.
2 82 Supra, note 138, 437.
283Swordheath Properties Ltd v. Tabet, supra, note 146. See also Bilambil-
Terranora Pty Ltd v. Tweed Shire Council, supra, note 147, for an excellent
analysis of the English cases.

284 Strand Electric & Engineering Co. Ltd v. Brisford Entertainments Co.,

supra, note 146.

285 Prof. Irving (supra, note 133, 207) takes the point of view that such a
conclusion is not supported by the Ontario Court of Appeal in Krouse,
and goes so far as to say it is “indeed flatly denied by that case.” However,
the Krouse case -acknowledges that “the Courts would be justified in holding
a defendant liable in damages for appropriation of a plaintiff’s personality,
amounting to an invasion of his rights to exploit his personality by use
of this image, voice or otherwise with damage to the plaintiff” (supra,
note 138, 241). English and American authorities clearly establish that these
“so-called damages” are based solely on the defendant’s gain without any
corresponding burden to establish the plaintiff’s “loss” in an economic sense
from such an invasion of right. Nothing in the Krouse case suggests that this
orthodox view of damages would not apply in the appropriation of per-
sonality case. See generally Meikle v. Maule [1941] 3 All E.R. 144, 153 (Ch.)
per Uthwatt J.; Chabot v. Davies [1936] 3 All E.R. 221 (Ch.) per Crossman, J.;
Stovin-Bradford v. Volpoint Ltd, supra, note 200, 266 per Lord Denning;
Netupsky v. Dominion Bridge Co. Ltd (1969) 5 D.L.R. (3d) 195, 226 (B.C.C.A.)
per Taggart J.A., rev’d on other grounds [1972] S.C.R. 368.

2 8 6 In Bilambil-Terranora Pty Ltd v. Tweed Shire Council, supra, note 147,
477, Reynolds J.A. observed that “[i]f A deprives B of his chattel, and it has
a value on the open market, it is impossible to contend that the damages
should be less than that sum, whoever converted it, and to whatever use B was
putting it or intending to put it.”

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participant’s level, invites
from the communications media 287

the widest possible coverage and publicity

Clearly, the availability of restitutionary relief in these cases will
turn on what amounts to an appropriation of the plaintiff’s rights.
This amounts to an indirect way of defining the nature of the
property right which the court will protect.

The danger of extending the law of torts to cover every such exposure
in public not expressly authorized is obvious. Progress in the law is not
served by the recognition of a right which, while helpful to some persons
or classes of persons, turns out to be unreasonable disruption to the
community at large and to the conduct of its commerce. Much of this
publicity will in reality be a mixed blessing involving the promotion
of the game itself, but at the same time resulting in some minor or
theoretical invasion of a player’s individual potential for gainful ex-
ploitation. By way of illustration, a sports report on television might
expose a motion or still picture of one or more well-known playert
immediately before or after the telecasting of a commercial message
by an enterprise not associated with the telecasting of football games.
The public in our community would not consider any players so re-
presented on the screen as thereby endorsing the products advertised on
the same programme, nor would a viewer reasonably associate in any
other way the players so depicted and the product mentioned in the
programme’s commercial messages. Thus, it would be a gross exaggera-
tion to say that the usefulness of the player’s name or image in some
form of commercial exploitation in the advertising world was thereby
diminished. The use by the appellants of the respondent’s image in this
case is in no way parallel to the use of a hockey player’s signature on a
hockey stick, or of a photograph of a professional athlete driving an
automobile of the advertisers. Aside from the laws of defamation, the
Courts have not heretofore found it appropriate to bring acts of the
kind complained of in the particular facts of this proceeding within
the purview of the law of torts.288
In order for a claimant to recover on the basis of unjust
enrichment in cases like Athans or Krouse, an analysis of complex
issues of policy, property law, and tort law is required. As these
cases illustrate, restitution is not a self-contained body of law.’
Instead, when a thing is vested with a proprietary nature, this
designation cuts across the law of tort, contract and restitution.
In particular, restitutionary liability should force those who would
appropriate property rights to make contractual arrangements
with the owner of those rights. While the “property”, “restitution”,
and “tort”, among others, are frequently employed terms in such
cases, the principal issue for a court is still whether it should
force one person to pay for a thing to which another claims some

2 87Supra, note 138, 28.
288 Ibid., 30.

1981] RESTITUTION AND THE APPROPRIATION OF PROPERTY

553

exclusive right of control.8 9 Neither Phillips v. Homfray nor Sinclair
v. Brougham have found favour in Canadian cases. It
is hoped
that Dickson J.’s approval of certain passages in Ruabon S. S. Co.2 90
will not be construed as a general approval of the English concept
of benefit.

VI. Conclusion

The English view of benefit reflects, in my view, certain institu-
tional biases and the custom and training of the English judges.
Before becoming decision-makers the English judges would generally
have practised at the Bar. The English cases indicate that the judges
have been sensitive to the professional interests of barristers. This
is not to suggest a single explanation for the English cases. But
landmark cases such as Sinclair v. Brougham and Phillips v. Horn-
fray reveal certain traits which suggest a jurisdictional dispute
of sorts is simmering quietly through the actual judgments. For
example, in Sinclair v. Brougham Lord Sumner’s judgment is divided
into two major sections. In the first Lord Sumner addresses the
common law barristers by co’nsidering a quasi-contractual argument
which would have resulted in expanding their jurisdiction.2 9′ Lord
Sumner, with the majority of the House of Lords, was unwilling
to allow a common law remedy. That is to say, the English common
law barrister failed to expand jurisdiction in the traditional manner,
which was based upon promise or contract-related fictions. In the
second part of Lord Sumner’s judgment, he appears to turn his
attention to the chancery Bar.29 2 In Phillips v. Homfray the English
Court of Appeal had protected the common law barristers from
possible chancery expansions, but the House of Lords in Sinclair
v. Brougham, faced with the question of expanding jurisdiction,
elected to allow that expansion on the chancery side. Consequently,
taking into account historical jurisdictional conflicts,
there was
nothing inconsistent in denying quasi-contractual recovery while
at the same time inventing a fiduciary relationship as a basis on
which to justify a proprietary remedy. This is not to suggest that
Phillips v. Homfray was eclipsed by Sinclair v. Brougham. In
both cases, jurisdictional battles between common law and chancery
barristers -were fought on both quasi-contractual and property
theories. The House of Lords in Sinclair v. Brougham did not

289 Cf. International News Services v. Associated Press, supra, note 2.
290 Supra, note 58.
29l Supra, note 77, 451-6.
292 Ibid., 456-60.

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sanction chancery jurisdiction over quasi-contractual actions. But,
nevertheless, the House of Lords in that case did expand chancery
jurisdiction in a predictable fashion. The Law Lords simply found
that a fiduciary relationship existed between the claimants and
the defendant and allowed the claimants to trace their proprietary
interests, subject, of course, to the competing claims of the outside
creditors.

The Canadian law of restitution has developed along different
lines from the English law.293 But the temptation remains to fall
back on certain English principles without considering their origin.” 4
The tendency to use English cases for their symbolic value,296 or
as an escape-hatch from unjust enrichment liability,296 or simply
as an alternative basis of liability to unjust enrichment,01 causes
uncertainty in the Canadian law of restitution. There is much
in the English law which lends itself to acceptance in other juris-
dictions. At the same time there is a realization that engrafting
some English principles, such as those governing constructive trust,29 8
onto the Canadian law of restitution has been a mistake. Similarly,
with the concept of benefit, we have seen that blood-feuds and
jurisdictional battles have left their scars, and it is appropriate
for Canadian courts to ask whether our system of restitution calls
for a different notion of benefit.

293 Since 1954, when the Supreme Court of Canada decided DegIman v.

Guaranty Trust Co., supra, note 37.

294 See text at note 40, supra.
25 See text at note 45, supra.
26 See text at note 49, supra.
297 See text at note 52, supra.
298 See text at note 22, supra.