Unjust enrichment

How BC law treats it

The Supreme Court of Canada set the test in Garland v Consumers' Gas Co: the defendant was enriched, the plaintiff suffered a corresponding deprivation, and there is no juristic reason for the enrichment. The court first asks whether an established juristic reason applies, such as a contract, a disposition of law, a gift or another valid legal obligation. If none applies, the defendant can still show a reason based on the parties' reasonable expectations and public policy. Unjust enrichment is not based on wrongdoing: an honest defendant can be liable. Because a valid contract is a juristic reason, unjust enrichment is generally unavailable where a contract governs the benefit. It is useful where a contract is void, unenforceable or ended, where work was done without an agreed price, or where money was paid by mistake. Quantum meruit, payment of a reasonable value for services, is often claimed alongside it. Older cases called these claims quasi-contract. The usual remedy is a monetary award equal to the value received. A constructive trust over specific property may be ordered where money is not enough and the contribution is linked to that property (Kerr v Baranow). In Moore v Sweet, the Supreme Court held that an enrichment through a change of life insurance beneficiary could be unjust. Claims are subject to the two year limitation period in section 6 of the Limitation Act.

What it means for your business

Unjust enrichment often comes up when a deal falls apart: a contractor completes extra work with no signed change order, a buyer pays a deposit on a failed deal, or a business pays an invoice twice. It gives a route to recovery where contract claims do not fit, but the claimant must prove each element and act within two years. Clear written contracts reduce the need to rely on it. Example: A Victoria design firm starts work on a client's rebrand while the contract is still being negotiated, and the client uses the designs but refuses to sign or pay. The firm sues for unjust enrichment and quantum meruit for the reasonable value of the work.

Risks and common mistakes

Claiming unjust enrichment when a valid contract already governs the payment or work. Treating it as a fault based claim and pleading wrongdoing instead of the three elements. Assuming fines or penalties are available, when the remedy is restitution of value received. Seeking a constructive trust without showing why money is not enough and how the contribution relates to the property. Missing the two year limitation period while negotiating.