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Improvements to Land, Equity,
Proprietary Estoppel, and Unjust
Enrichment
Mitchell McInnes*
Due to the high value that it placed upon the ownership of land, the common law
traditionally was wary of intervening if the plaintiff non-contractually improved the
defendant’s land. For the most part, liability was imposed only if the landowner acted
unconscionably according to the doctrine of proprietary estoppel. Recently, however,
Canadian courts have expanded the scope of relief in two respects. First, the test for
proprietary estoppel has been revised and relaxed. Second, the cause of action in unjust
enrichment is now widely employed as an alternative source of liability. While neither
development is necessarily wrong, the implications of those changes have received too
little attention. A sensitive balance must be struck between the interests of worthy
claimants and the interests of innocent landowners.

*

Faculty of Law, University of Alberta.

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McInnes, Improvements to Land

I.

Introduction

II.

The Risk of Restitution

III.

Enrichment and Autonomy

IV.

A.

Request and Free Acceptance

B.

Incontrovertible Benefit

C.

Change of Position: Autonomy Front and Back

Injustice and Autonomy
A.

V.

The Rise of Special Relationships
1.
The Misinterpretation of Nicholson v St Denis

Restitution for Improvements
A.

Readily Realizable Financial Gains
1.
A Step Too Far?

B.

The Decline of Special Relationships
1.

VI.

I.

Claims Between Strangers

Conclusion

Introduction

I

f the plaintiff improves the defendant’s land, will the owner be held
liable? From a historical perspective, that question was unlikely to
receive a robust response. The defendant obviously was obliged to pay
if the plaintiff acted pursuant to a contract between the parties. Absent
an agreement, however, the improver’s prospects were slim. That was
particularly true in law. Active claims were refused recognition and the
passive right of set-off was severely restricted. Montreuil v Ontario Asphalt
Co.1 provides a dramatic illustration. Believing that it had acquired a lease
and an option to purchase from a landowner, a company spent a small
fortune building a dock and a factory on the property. Unfortunately,
the purported holder of the fee simple then discovered that he held a
mere life estate, and, worse yet, died a few years later. The company was
anxious to reach some agreement, but the gentleman’s children, as the
remaindermen, were uncooperative. Proceeding in law, they recovered
possession through an action in ejectment and they were awarded mesne
1.

(1922), 63 SCR 401 [Montreuil].

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profits, representing reasonable rental value, with respect to the trespass
that the company committed following the expiration of the lease. The
company was not so fortunate. As both of the original parties had been
mistaken as to the nature of the lessor’s interest, the equitable doctrine of
proprietary estoppel was inapplicable. Further, because the children had
proceeded entirely in law, the company could not, by pleading that “[h]e
who seeks equity must do equity”, invoke the equitable doctrine of setoff, which would have encompassed the full value of the improvements.2
The company, instead, was limited to its legal remedies, which consisted
exclusively of law’s miserly right of set-off. Having made permanent
improvements to the property in the bona fide belief that it was in lawful
occupation, it was entitled to compensation, but only “to the extent of
the rents and profits claimed” by the children.3 Since the trespass was
worth a small fraction of the $100,000 that the company had spent on
the improvements, the children came away with a substantial windfall.4
The situation in equity was better, but far from generous. While
proprietary estoppel (or the doctrine of acquiescence) has long provided
relief, it historically was formulated narrowly. The claimant was required
to satisfy the “five probanda” articulated in Wilmott v Barber5 (“Wilmott”):
[i]n the first place the plaintiff must have made a mistake as to his legal rights.
Secondly, the plaintiff must have expended some money or must have done some
act (not necessarily upon the defendant’s land) on the faith of his mistaken
belief. Thirdly, the defendant, the possessor of the legal right, must know
of the existence of his own right which is inconsistent with the right claimed
by the plaintiff. … Fourthly, the defendant … must know of the plaintiff’s
mistaken belief of his rights. … Lastly, the defendant … must have encouraged
the plaintiff in his expenditure of money or in the other acts which he has done,
either directly or by abstaining from asserting his legal right.6

Proof of the five probanda demonstrated a form of fraud that led equity
2.
3.
4.
5.
6.

Neesom v Clarkson (1845), 67 ER 576 (Ch); Richards v Collins, 9 DLR
249 (Ont Div Ct).
Montreuil, supra note 1 at 439. See also Geldhof v Bakai (1982), 139 DLR
(3d) 527 (Ont HC); Farquhar v Sherk, (1979), 14 RPR 18 (Ont Dist Ct).
The case was remitted to trial for a determination of precise values.
(1880), 15 Ch D 96 at (Eng) 105-106 [Wilmott].
Ibid. See also Ramsden v Dyson and Thornton (1866), LR 1 HL 129
[emphasis added].

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to “restrain the possessor of the legal right from exercising it”.7 The precise
means by which it did so was a function of an unusually broad discretion
aimed at identifying “the minimum equity [required] to do justice
between the parties”.8 The possibilities, which were virtually unlimited,
included the transfer of title.9 By definition, however, proprietary estoppel
traditionally was confined to a narrow band of cases. If the defendant
did not, actively or passively, improperly induce the plaintiff to act, then
there was no basis for judicial intervention and the landowner’s windfall
was left to lie where it fell.10
The explanation for the historical reluctance to award relief for
improvements to land is reasonably clear. Rights in real property were all
but sacrosanct. Land, a scarce resource in a relatively small country, was
the main repository of wealth and source of power prior to the industrial
revolution. That fact, coupled with a fierce conception of personal
autonomy, understandably resulted in an unwillingness to impose
liability upon landowners. The danger was twofold. By its very nature,
land is susceptible to services to an extent that other forms of property
are not. It was easy to imagine a house mistakenly built on the wrong side
of a boundary line, but impossible to conceive of a similarly substantial
undertaking affecting a chattel. And even if liability was in personam, it
might well entail a debt so large as to be satisfied only with the proceeds
7.
8.
9.

10.

Wilmott, supra note 5 at 106.
Crabb v Arun District Council, [1976] Ch 179 at 189 (CA (Eng)) [Crabb].
Dillwyn v Llewelyn (1862), 45 ER 1285 (QB); Pascoe v Turner, [1979]
1 WLR 431 (CA (Civ)(Eng)); Brogden v Brogden, (1920), 53 DLR 362
(ABCA); Cowderoy v Sorkos Estate, 2012 ONSC 1921 [Cowderoy].
It is occasionally said that proprietary estoppel may apply regardless of
context: Amalgamated Investment and Property Co Ltd v Texas Commerce
International Bank Ltd, [1982] QB 84 (CA (Civ)(Eng))(enforcement of
loan guarantee); Moorgate Mercantile Co Ltd v Twitchings, [1977] AC
890 (HL)(existence of competing interest in vehicle). Canadian courts,
however, have generally confined the equitable doctrine to interests in
land, as Justice Crawford held in Silverstone Trucking Ltd v Pacific Dispatch
Ltd, 2015 BCSC 533 (“[a]s this case does not relate to real property, any
claim of proprietary estoppel fails” at para 68). See also Maritime Telegraph
and Telephone Co v Château Lafleur Development Corp, 2001 NSCA 167
at paras 37, 50; Sabey v Beardsley, 2014 BCCA 360 at para 32 [Sabey].

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from the sale of land.
Circumstances, of course, have changed. Land is not so scarce in a
country the size of Canada. Moreover, while a home frequently remains
a person’s most valuable asset, wealth increasingly is held in other forms.
Real property may be a single part of a diversified portfolio. Wealthy
individuals in the twenty-first century are just as likely to trace their
privileged positions to copyrights and patents as to land. Highly valuable
services may be rendered with respect to chattels and intangible assets as
easily as they may be conferred upon real property.
To some extent, the legal system has evolved in step with modern
perspectives on land. The Supreme Court of Canada, for instance, has
broken with the past by rejecting the presumption that every parcel is
unique and hence capable of supporting an order for specific performance
of a contract. “Residential, business, and industrial properties”, it
explained, are “mass produced much in the same way as other consumer
products” and therefore do not warrant special protection.11 The court
has also recognized that traditional attitudes regarding title to land are
no longer appropriate within the context of “joint family ventures”.12
The redistribution of property rights upon the dissolution of marriage
historically was unthinkable not only because courts tended to denigrate
the nature of female domestic labour,13 but also because they believed

11.

12.
13.

Semelhago v Paramadevan, [1996] 2 SCR 415 (“[t]his approach may
appear to be overly generous to the respondent in this case and other like
cases and may be seen as a windfall. In my opinion, this criticism is valid
if the property agreed to be purchased is not unique. While at one time
the common law regarded every piece of real estate to be unique, with
the progress of modern real estate development this is no longer the case.
Residential, business, and industrial properties are all mass produced
much in the same way as other consumer products. If a deal falls through
for one property, another is frequently, though not always, readily
available” at para 20) [Semelhago].
Kerr v Baranow, 2011 SCC 10 [Kerr].
Murdoch v Murdoch, [1975] 1 SCR 423 (dismissing the claim of a woman
who had laboured on the family property for twenty years because she
merely had performed “the work done by any ranch wife” at 436).

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that title to Blackacre was too important to be varied by judicial fiat.14
While English courts continue to resist the remedial constructive trust,15
Canadian judges no longer recoil at the prospect of awarding proprietary
relief.16
Similarly, some provinces have adopted non-traditional attitudes
towards land.17 If a structure or fence encroaches upon a neighbouring
property in British Columbia18 or Manitoba,19 a judge is entitled to order
its removal, grant an easement, or, most dramatically, vest title in the
encroaching party upon payment of an appropriate price. Likewise, if,
as a result of a mistaken belief that the land was the plaintiff’s own, a
“lasting improvement” is made to the defendant’s property, betterment

14.

15.
16.

17.
18.
19.

Pettkus v Becker, [1980] 2 SCR 834, Justice Martland (“[i]n my opinion,
the adoption of this concept involves an extension of the law as so far
determined in this Court. Such an extension is, in my view, undesirable.
It would clothe judges with a very wide power to apply what has been
described as ‘palm tree justice’ without the benefit of any guidelines. By
what test is a judge to determine what constitutes unjust enrichment? The
only test would be his individual perception of what he considered to be
unjust” at 859) [Pettkus].
Chapman v Chapman, [1954] AC 429 (HL) at 444; Re Polly Peck
International (No 2), [1998] 3 All ER 812 (CA (Civ)) at 830.
Pettkus, supra note 14. Matrimonial property legislation similarly rejects
the traditional view. For constructive trusts outside of family law, see
Soulos v Korkontzilas, [1997] 2 SCR 217.
Mitchell McInnes, The Canadian Law of Unjust Enrichment and
Restitution (Toronto: LexisNexis, 2014) at 327-31 [McInnes].
Property Law Act, RSBC 1996, c 377, s 36.
The Law of Property Act, CCSM 1997, c L90, s 28 [Law of Property Act].

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statutes in Alberta,20 Saskatchewan,21 Manitoba,22 and Ontario23 allow a
court to either award the claimant a lien for the value of the improvement
or require the claimant to retain the affected portion of the property and
compensate the defendant’s resulting loss.
In deciding to override the protection traditionally enjoyed by
landowners, the Supreme Court of Canada and the provincial legislatures
act upon policies formulated following careful consideration of competing
interests. These decisions typically receive considerable attention among
their target audience. As a result, there are normally opportunities, before
or after the fact, for experts and affected parties to assess the situation and
to comment on the wisdom of moving in one direction or another.
In other instances, however, the legal system’s attitude regarding noncontractual improvements to land has evolved piecemeal and without
broad oversight. In a sense, that is the genius of the common law. The
“heap of good learning”24 is forever changing, incrementally, one case at
a time. That approach nevertheless provides pause for thought insofar as
significant developments may occur largely unnoticed. That is true, to a
lesser or greater degree, in the current context.
The reformulation of the proprietary estoppel doctrine has been

20.
21.

22.
23.
24.

Law of Property Act, RSA 2000, c L-7, s 69.
Improvements Under Mistake of Title Act, RSS 1978, c I-1, s 2. See St Pierre
v St Pierre, 2010 SKCA 20 (“[t]he claims he was entitled to statutory relief
under The Improvements Under Mistake of Title Act and The Frustrated
Contracts Act are without merit. The purpose of the former Act is to
overcome the common law proposition that the true owner of land is
entitled to everything attached to the land. It is intended to compensate
someone who has an honest but mistaken belief that he or she was
making lasting improvements to their own land. As the appellant was a
wrongdoer, having induced someone to sell her home, he cannot expect to
be compensated for his own wrongdoing” at para 18).
Law of Property Act, supra note 19, s 27.
Conveyancing and Law of Property Act, RSO 1990, c C-34, s 37(1).
Thomas Wood, An Institute of the Laws of England in Their Natural Order
According to Their Common Use (1722), cited in Peter Birks, ed, English
Private Law, 2d ed (Oxford: Oxford University Press, 2000) at xliv.

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comparatively high profile.25 For too long, the “five probanda” that
Justice Fry articulated in Wilmott26 had been treated like “a Procrustean
bed constructed from some unalterable criteria”,27 rather than simply
a “valuable guide”.28 The doctrine’s usefulness had been unnecessarily
cramped by a test that supported redress only if the defendant had
knowingly duped the plaintiff into action. As a result, while traditions die
hard, a number of Canadian courts have expressly redesigned proprietary
estoppel.29
Idle-O Apartments Inc v Charlyn Investments Ltd 30 (“Idle-O”) is a
prime example. Idle-O purportedly leased part of a parcel to Charlyn for
a term of 998 years. That lease, in fact, was void because it constituted
an informal subdivision lasting more than three years.31 Nevertheless,
because neither party appreciated the problem, Charlyn greatly improved
the property over the next two decades. When the defect finally came
25.

26.
27.
28.
29.

30.
31.

A great deal of commentary has arisen in response to recent English
cases that have revisited the scope of proprietary estoppel: Yeoman’s Row
Management Ltd v Cobbe, [2008] UKHL 55; Thorner v Major, [2009]
UKHL 18; cf. Blue Haven Enterprises v Tully and another, [2006] UKPC
17 (Jam); David Neuberger, “The Stuffing of Minerva’s Owl? Taxonomy
and Taxidermy in Equity” (2009) 68:3 Cambridge Law Journal 537;
Martin Dixon, “Confining and Defining Proprietary Estoppel: The Role
of Unconscionability” (2010) 30:3 Legal Studies 408; Ben McFarlane
& Andrew Robertson, “Apocalypse Averted: Proprietary Estoppel in the
House of Lords” (2009) 125:3 Law Quarterly Review 535.
Wilmott, supra note 5.
Taylor Fashions Ltd v Liverpool Victoria Trustees Co Ltd, [1981] 1 All ER
897 (Ch) at 918.
Crabb, supra note 8 at 194.
Murphy v MacDonald, 2009 PESC 30 (applying traditional criteria and
denying relief because the defendant was not aware of the plaintiff’s
mistake) [Murphy]; Dutertre Manufacturing Inc v Palliser Regional Park
Authority, 2012 SKQB 335 [Dutertre].
2013 BCSC 2158 [Idle-0].
Land Title Act, RSBC 1996, c 250, s 73 (1)(b) provides: “[e]xcept on
compliance with this Part, a person must not subdivide land into smaller
parcels than those of which the person is the owner for the purpose of
[...] (b) leasing it, or agreeing to lease it, for life or for a term exceeding 3
years".

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to light and Idle-O asserted exclusive possession under a declaration
of invalidity, Charlyn sought protection in the doctrine of proprietary
estoppel. The traditional test, of course, could not be satisfied. While
Charlyn had acted in the mistaken belief that it held a long-term interest
in the land, Idle-O was oblivious to that error, as well as its own rights.
The title-holder certainly had not engaged in the sort of cynical fraud
contemplated in Wilmott. Charlyn’s plea was nevertheless successful. As
Justice Newbury explained in an excellent judgment, the “five probanda”
have been “overtaken by a broader and less literal approach to proprietary
estoppel”.32 An “equity” will arise in the improver’s favour if:
i.

“There was an assurance or representation, attributable to the owner, that the
claimant has or will have some right to the property”, and

ii.

“The claimant relied on this assurance to his or her detriment so that it would
be unconscionable for the owner to go back on that assurance”.33

If both hurdles are cleared, “the court must [then] determine the extent
of the equity and the remedy appropriate to satisfy the equity”.34 All
of that was true on the facts of Idle-O even though both parties had
laboured under the same mistake. While the invalid lease itself could
not constitute an actionable representation, Idle-O’s conduct certainly
encouraged Charlyn in the belief that it would enjoy the fruit of its own
labour. Moreover, once Charlyn detrimentally relied on that inducement
by spending a great deal of time and money on the property, it became
unconscionable for Idle-O to strictly enforce its legal rights. Accordingly,
Charlyn’s existing directors, as well as their children, were entitled to use
the premises for recreational purposes for the remainder of their lives.
Once the last member of that class has died, the cloud on Idle-O’s title
will disappear.
The specific manner in which the court reformulated proprietary
32.

33.
34.

Idle-0, supra note 30 at para 134, quoting Trethewey-Edge Diking District
v Coniagas Ranches Ltd, 2003 BCCA 197 at para 64. See also Erickson v
Jones, 2008 BCCA 379; Sabey, supra note 10; The Owners, Strata Plan VR
10 v EE Management Corp, 2015 BCSC 473; Hawes v Dave Weinrauch
and Sons Trucking Ltd, 2015 BCSC 540.
Sabey v Rommel, 2014 BCCA 360 at para 30.
Ibid.

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estoppel obviously is important, but the fundamental reorientation of the
doctrine is even more significant. Liability does not necessarily require
proof that the defendant was culpably complicit in the plaintiff’s decision
to act.35 The doctrine now responds, much more broadly, to the fact that
it would simply be inequitable for the defendant to assert its legal rights
to the plaintiff’s detriment. The essential element of unconscientiousness,
which justifies equity in overriding the landowner’s legal rights, may be
entirely ex post.
In that sense, the modern Canadian conception of proprietary
estoppel strongly resembles the action in unjust enrichment. The
defendant may be held liable with respect to unrequested services even
though it neither knew, nor ought to have known, that the plaintiff
35.

Whereas British Columbia’s Court of Appeal has adopted a two-stage test,
its counterpart in Ontario has adopted a three-fold inquiry. See Clarke
v Johnson, 2014 ONCA 237 (Peppal JA warned against rigid criteria,
but said that proprietary estoppel occurs when “(i) the owner of the
land induces, encourages or allows the claimant to believe that he has or
will enjoy some right or benefit over the property; (ii) in reliance upon
his belief, the claimant acts to his detriment to the knowledge of the
owner; and (iii) the owner then seeks to take unconscionable advantage
of the claimant by denying him the right or benefit which he expected
to receive” at para 52) [Clarke]. See also Eberts v Carleton Condominium
Corporation No 396 (2000), 136 OAC 317 (Ont CA) at para 23; Love
v Schumacher Estate, 2014 ONSC 4080 at para 36 [Schumacher Estate];
Gold v Chronas, 2014 ONSC 6763; Brownlee v Kashin, 2015 ONSC
1035 at para 69 [Brownlee]; Alexander James Wright v Candice Holmstrom,
2015 ONSC 1906 at para 50; Servello v Servello, 2014 ONSC 5035 at
para 103, per Justice Koke [Servello]. The same approach now prevails
in Alberta: Parkdale Nifty Fifties Seniors Association v Calgary (City),
2012 ABCA 301 at para 12; Rocky Mountain House (Town of ) v Alberta
Municipal Insurance Exchange, 2007 ABQB 548 at para 22; Nelson v
1153696 Alberta Ltd, 2009 ABQB 732 at para 235, appealed on other
grounds in Nelson v 1153696 Alberta Ltd, 2011 ABCA 203. Some
judges proceed more cautiously. In Cowderoy, supra note 9 at para 84,
Justice Tausendfreund observed that proprietary estoppel traditionally
encompassed two categories of cases – depending upon whether the
defendant encouraged or merely acquiesced in the plaintiff’s acts – and held
that the “five probanda” are not necessarily apposite in the former.

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did not truly intend to confer a benefit. As a result, unjust enrichment,
like the re-formulated model of proprietary estoppel, has the capacity
to substantially undermine the courts’ traditional reluctance to impose
liability for non-contractual improvements to land.

II.

The Risk of Restitution

Although the label is used ambiguously too often, “unjust enrichment”
properly refers to the cause of action that governs unwarranted transfers
between parties.36 As authoritatively framed by the Supreme Court of
Canada, it requires proof that (i) the defendant received an enrichment;
(ii) the plaintiff suffered a corresponding deprivation; and (iii) there was an
absence of juristic reason for the transfer. Reference sometimes is made to
a final stage of inquiry, consisting of four bars and defences.37 If the cause

36.

37.

Canadian courts sometimes use “unjust enrichment” to refer to a situation
in which the plaintiff proves that the defendant committed some form
of civil wrong (e.g. breach of confidence, trespass to land, “exceptional”
breach of contract), but instead of seeking compensation for losses
suffered, demands “restitution” (or, more precisely, disgorgement) of the
defendant’s ill-gotten gain. Critically, whereas true unjust enrichment
and restitution require no breach and are confined to benefits that the
defendant received from the plaintiff, the alternative model of liability
typically is invoked to capture benefits that the defendant obtained from
a third party as a result of violating the plaintiff’s rights. That is true, for
instance, if a Crown prosecutor abuses the fiduciary position by accepting
bribes from criminals. The government does not recover money that it
previously possessed. As the victim of the operative breach, it strips away
the enrichment that its dishonest agent obtained from the third parties:
Attorney General of Hong Kong v Reid, [1994] 1 AC 324 (PC (NZ)); cf.
Can Aero v O’Malley, [1974] SCR 592.
Pettkus, supra note 14; Garland v Consumers’ Gas Co, 2004 SCC 25
[Garland]. The underlying principle was first recognized in Deglman
v Guaranty Trust Co of Canada and Constantineau, [1954] SCR 725
[Deglman].

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McInnes, Improvements to Land

of action is made out, restitution is the only possible response.38 The
transfer between the parties is reversed and the status quo ante is restored.
The plaintiff cannot get back more than was lost; the defendant cannot
give back more than was gained.
The roots of the modern action in unjust enrichment date back
hundreds of years, but it was only during the second half of the twentieth
century that the subject came into its own.39 It was even longer before
the simple three-part claim was allowed to unfold naturally in the current
context. Writing in 1992, Professor Fridman objected to the application
of unjust enrichment as a “broad general principle” and insisted, in the
event of non-contractual improvements to land, that “no claim will
succeed where the defendant was given no opportunity to object to what
was being done, i.e. did not actively acquiesce”.40 To impose liability
against an “entirely innocent” landowner “on a restitutionary basis”,
he said, “would result in an injustice”.41 Similarly, in 2004, Professors
Maddaugh and McCamus wrote that “the full implications of the
unjust enrichment principle have not been adopted” and said that relief
for improvements to land has been “narrowly restricted to mistakes of
ownership in the traditional sense”.42
Significantly, as Fridman reported, while case-law was sparse, there
was “no congruence between the law relating to improvements to land

38.

39.
40.
41.
42.

McInnes, supra note 17 at chs 32, 34, 35 (While the measure of relief is
always the same, the form of restitution depends upon the circumstances.
It is usually personal, but it exceptionally is proprietary. There is growing
recognition that many traditional proprietary doctrines are best
understood as restitution for unjust enrichment. That is true, for instance,
of resulting trusts, rescission, and subrogation).
By 1760, Lord Mansfield was able to draw a generalized principle from a
rich body of case law: Moses v Macferlan (1760), 97 ER 676 (KB).
GHL Fridman, Restitution, 2d ed (Scarborough: Carswell, 1992) at 334,
336 [Fridman].
Ibid.
Peter D Maddaugh & John D McCamus, The Law of Restitution,
2d (Aurora, Ontario: Canada Law Book Inc, 2004)(Loose-leaf ) at §
12:400.20 [Maddaugh & McCamus].

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and that pertaining to improvements to chattels”.43 The action in unjust
enrichment was available to one who, for instance, repaired a vehicle
following an apparently valid purchase.44 Goff & Jones, the pioneering
English text, explained the essential difference:
It may seem odd to allow a bona fide improver of a chattel a claim for
improvements and to deny a bona fide improver of land a comparable claim.
But no English lawyer should be surprised that our law should treat chattels
differently than land. Most chattels are not unique; they are fungible and
replaceable. It may be unreasonable to require the owner of land to sell or
mortgage in order to recompense the improver for unsolicited improvements.
But it will not generally be unreasonable to require the owner of a chattel,
who has obtained an unsolicited but incontrovertible benefit from another’s
improvements, to sell his chattel to make restitution for the benefit, if that is
the only way he can do so.45

As the preceding quotation suggests, restitution carries a substantial risk
insofar as it may impose an unfair burden upon an innocent recipient.
The explanation lies in unjust enrichment’s unique nature.46 Most
causes of action turn on the breach of an obligation. Once it has been
determined that the defendant is a wrongdoer, a court will be justified
in disrupting the status quo ante. It may strip away ill-gotten gains (i.e.
43.

44.
45.
46.

Fridman, supra note 40 at 345. See also Gidney v Shank, [1995] 5 WWR
385 (Man QB), reversed in Gxqidney v Shank, [1996] 2 WWR 383 (Man
CA) [Gidney]; Thomas v Robinson, [1977] 1 NZLR 385 (SC) [Robinson].
Greenwood v Bennett, [1973] QB 195 (CA (Civ)(Eng)) [Greenwood];
Webb v Ireland, [1988] IR 353 (HC) [Webb].
Robert Goff & Gareth Jones, The Law of Restitution, 3d (London: Sweet
& Maxwell, 1986) at 147-48 [Goff & Jones].
McInnes, supra note 17 at 24-31 (“Strict liability” is an ambiguous
phrase. It typically means that the defendant may be held liable for
having breached an obligation even though the breach was neither
deliberate nor negligent. That is true, for instance, under the actions
for breach of fiduciary duty, breach of confidence, and trespass. In such
circumstances, the defendant’s breach of that primary obligation triggers
the imposition of a secondary (remedial) obligation. Unjust enrichment,
in contrast, entails true strict liability. The defendant incurs liability,
without any breach at all, simply by receiving a benefit from the plaintiff
in the absence of any legal explanation. And since there is no breach,
there is never any question of a secondary obligation. The duty to make
restitution is a primary obligation that arises from the transfer itself ).

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McInnes, Improvements to Land

disgorgement), extract reparation of losses (i.e. compensation), or even
impose deliberate pain (i.e. punitive damages).47 The breach warrants
the mistreatment. In other instances, the court’s justification lies in a
prior agreement. While it is human nature to grumble, the defendant
has no real complaint if a court demands performance of a contractual
undertaking. Judicial intervention merely reflects a choice that the
defendant previously exercised.
Unjust enrichment, however, requires neither a wrong nor an
agreement. The plaintiff may seek restitution for improvements to land
even though the defendant was entirely innocent and unaware of those
services at the time of conferral. If that claim is upheld, then there is a
very real risk that the landowner will bear the burden of a benefit that was
unnecessary, unwanted, and unaffordable. In the worst case scenario, as
Goff & Jones contemplated, the defendant may be able to satisfy judgment
only by liquidating the land. As a result of the plaintiff’s mistaken decision
to act, the defendant may be compelled to sacrifice a long-cherished
family home. That is not an attractive prospect.48

III.

Enrichment and Autonomy

Broadly speaking, the risk that restitution may create injustice may be
managed at either the first stage or the third stage of the action in unjust
enrichment.
Enrichment is a deceptively simple concept. It serves at least three
functions.49 To begin, it obviously demonstrates that the defendant
47.

48.
49.

Disgorgement almost always disrupts the status quo ante insofar as it
leaves the plaintiff with a benefit that it never possessed and never would
have obtained in the normal course of events. Punitive damages have the
opposite effect insofar as they require the defendant to deplete untainted
resources in order to satisfy judgment. Though the point occasionally
is overlooked, the same is true of compensation. Unless the defendant
coincidentally received a wrongful gain corresponding to the plaintiff’s
wrongful loss, the payment of reparations necessarily will draw upon
pre-existing funds. Compensatory damages hurt, albeit not as much as
punitive damages.
Goff & Jones, supra note 45.
McInnes, supra note 17 at ch 2.

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received an objective benefit, which, when coupled with other elements,
may support liability.50 Moreover, assuming that liability has been
established, the measure of relief is governed by the value of the transfer
between the parties; this is a function of the defendant’s gain and the
plaintiff’s corresponding loss.51 And, most importantly for present
purposes, the concept of enrichment provides the primary means by
which the courts protect innocent recipients from hardship. It does so
by ensuring that the risk of liability is consistent with the defendant’s
autonomy.
It is not enough for the plaintiff to prove the transfer of an objective
benefit. The common law “was founded on a philosophy of robust
individualism which expected every person to look out after his or her
own interests and which place[d] a premium on the right to choose
how to spend one’s money”.52 The recipient of an objective benefit
consequently enjoys the right of subjective devaluation.53 That label is a bit
misleading. The defendant may be personally delighted to have a benefit,
but still escape liability. The explanation lies in the fact that subjective
50.

51.

52.
53.

Peel (Regional Municipality) v Canada, [1992] 3 SCR 762 (“[t]he word
‘enrichment’ ... connotes a tangible benefit” at para 45) [Peel]; Peter
v Beblow, [1993] 1 SCR 980 (“[t]his court has consistently taken a
straightforward economic approach to the first two elements of the test
for unjust enrichment” at 990) [Beblow].
Air Canada v British Columbia, [1989] 1 SCR 1161 (restitution “is not
intended to provide windfalls to plaintiffs who have suffered no loss. Its
function is to ensure that where a plaintiff has been deprived of wealth
… it is restored to him” at 1202); Kerr, supra note 12 (unjust enrichment
means “not simply that the defendant has been enriched, but also that the
enrichment corresponds to a deprivation which the plaintiff has suffered”
at para 39); Quebec (Attorney General) v A, 2013 SCC 5 (liability in unjust
enrichment “will be allowed in the lesser of the following two amounts:
that of the enrichment of [the defendant] and that of [the plaintiff’s]
own impoverishment” at para 119); cf. Kingstreet Investments Ltd v New
Brunswick (Finance), 2007 SCC 1.
Peel, supra note 50 at 785-86.
Stevested Machinery & Engineering Ltd v Metso Paper Ltd, 2014 BCCA 91
at para 60; Valley v McLeod Valley Casing Services Ltd, 2004 ABQB 302
at para 145 [McLeod]; Sherbeth v Sherbeth, 2007 MBQB 50 at para 22
[Sherbeth].

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devaluation is a test of autonomy. It allows the defendant to turn to the
plaintiff and say, “it is not your job to make my choices”.54 Suppose,
for example, that a landscaping company, erroneously arriving at the
wrong address, artistically sculpts the landowners’ hedges into fantastical
shapes. That service has market value. Some people pay good money
for it. Nevertheless, whether they are amused or horrified to discover
the topiary on their front yard, the owners presumptively never chose to
expend resources on such whimsy.

A.

Request and Free Acceptance

Given the doctrine of subjective devaluation, recognition of a legal
enrichment is premised upon proof that restitution would not intolerably
override the recipient’s autonomy. There are two possibilities. First, the
plaintiff may prove that the defendant actually chose to accept the risk
of liability, either actively through a request55 or passively through free

54.

55.

Magical Waters Fountain Ltd v Sarnia (1990), 74 OR (2d) 682 (Ont Ct
J (Gen Div)) at 691, per Justice Gautreau, appealed on other grounds
in Magical Waters Fountains Ltd v Sarnia (1992), 8 OR (3d) 689 (CA).
See also JRM Gautreau, “When Are Enrichments Unjust?” (1989) 10:3
Advocates’ Quarterly 258 (“[t]he choice of how to invest one’s time,
effort and money should not be forced on one. Freedom of choice is the
dominant consideration in these cases” at at 261).
Of course, a request that elicits performance may support recognition of a
contract: St John Tug Boat Co Ltd v Irving Refinery Ltd, [1964] SCR 614.
If so, unjust enrichment generally is a non-issue.

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acceptance.56 A request normally57 demonstrates both a desire to receive
and a willingness to pay.58 Accordingly, if the plaintiff duly performs,
the defendant cannot complain if the court compels payment. Much
the same is true, under the doctrine of free acceptance, if the defendant
chooses to accept a proffered benefit despite knowing that the plaintiff
expects payment and despite a reasonable opportunity to reject.59 In
effect, silent acquiescence is deemed to constitute a decision to assume

56.

57.

58.

59.

As of 2004, a transfer is reversible not because of the presence of an unjust
factor, but rather because of the absence of juristic reason: Garland, supra
note 37 discussed below at Part V.B. As a result, free acceptance has “now
been overtaken” as a test of injustice: Kerr, supra note 12 at para 121. It
nevertheless continues to serve, more narrowly, as a test of enrichment.
Exceptions do arise. Within a family unit, in which benefits are routinely
conferred gratuitously, one may genuinely request a service without any
expectation of subsequently being provided with a demand for payment.
Much the same may be true even in a commercial context. For instance,
an injured worker may seek out a psychologist’s services in the mistaken
belief that the psychologist would look to the employer for payment: Tang
v Jarrett, [2009] OJ No 1282 (Sup Ct J)(QL). So too, a homeowner may
ask for a realtor’s help in selling a property in the mistaken belief that
the agent expected payment only in the event of a sale: Seale & Associates
Inc v Vector Aerospace Corp, [2009] OJ No 1456 (Sup Ct J)(QL); Sugar v
Kim Orr Barristers Professional Corp, 2012 ONSC 6668 (firm requested
lawyer’s assistance in drafting pleadings in belief that services were offered
on a contingency basis).
The request doctrine is extended slightly if, for example, a benefit is either
demanded at gunpoint or taken without permission. The courts will
not allow a person to improperly frustrate the normal operation of the
marketplace. One who demands or takes is treated as the same as one who
requests: 720654 Alberta Ltd v El Hajj, 2011 ABPC 64.
Pettkus, supra note 14; Binichakis v Smitherman, 2009 BCPC 131; Park
Georgia Realty Ltd v Mayfair Lanes Canada Ltd, 2009 BCSC 1322 at para
73.

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the risk of liability.60

B.

Incontrovertible Benefit

The second category of enrichment is more controversial. Instead of
turning upon the nature of the defendant’s conduct, it turns upon the
nature of the enrichment itself. As Justice McLachlin explained, normally,
it “would be wrong to make the defendant pay” for an unsolicited benefit
“since he or she might well have preferred to decline the benefit if given a
choice”.61 An incontrovertible benefit, however, is “demonstrably apparent
and not subject to debate or conjecture”. It is “not the antithesis of
freedom of choice” — it “exists when freedom of choice as a problem is
absent”.62
Money is an incontrovertible benefit.63 As the very means by which
value is recognized and expressed, it cannot be subjectively devalued. It
is always valuable and it is equally valuable regardless of who holds it. If
the recipient does not wish to be held liable, money can always be given
back. Even if the specific notes and coins received from the plaintiff no
longer are on hand, others can be returned in their place. Money, after
all, is fungible. One $20 bill is as good as the next.
Services, in contrast, can never be restored in specie. As Baron Pollock
famously said, “[o]ne cleans another’s shoes; what can that other do

60.

61.
62.
63.

That proposition is somewhat controversial. A person who requests a
benefit outside of a social setting is indeed normally prepared to pay. In
contrast, a non-solicited benefit may be freely accepted not because one
intends to pay, but rather because one cares too little to even voice an
opinion. In that sense, the doctrine constitutes a rare positive obligation
in private law.
Peel, supra note 50 at 795.
Ibid.
BP Exploration Co (Libya) Ltd v Hunt (No 2), [1979] 1 WLR 783 (QB
(Eng)), per Justice Goff (“[m]oney has the peculiar character of a universal
medium of exchange. By its receipt the recipient inevitably is benefitted”
at 799). See also Sharwood & Co v Municipal Financial Corp (2001), 197
DLR (4th) 477 (Ont CA) at 485; Halifax (City) v Nova Scotia (Attorney
General)(1997), 163 NSR (2d) 360 (SC) at 370.

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but put them on”?64 The courts consequently must exercise great care
in recognizing non-monetary incontrovertible benefits. In effect, the
court must be satisfied that, given the impugned transfer, it is as if the
defendant received money. This will be true in two circumstances.
A benefit may arise positively through an accretion to pre-existing
resources or negatively through the discharge of an obligation.65 And if an
obligation represents a necessary expense, either legally or factually, then its
satisfaction creates an incontrovertible benefit.66 Suppose, for instance,
that each landowner bears a statutory obligation to upgrade a sewer
line on its property. As a result of an error, the plaintiff upgrades the
defendants’ line rather than its own, at a cost of $25,000. Assuming that
the expense would have been the same in either event, the defendants
necessarily are enriched.67 It is as if they received money. The pre-existing
resources that they necessarily would have used to discharge their
statutory duty can be directed to the claimant instead. And while they
have no choice about reversing the unjust enrichment, they similarly had
64.
65.
66.

67.

Taylor v Laird (1856), 25 LJ Ex 329 (Eng) at 332. The same observations
apply, mutatis mutandis, with respect to goods that have been consumed.
Peel, supra note 50 at 790; Carleton (County) v Ottawa (City), [1965] SCR
663.
A legally necessary expense is relatively simple because the operative
obligation usually admits little, if any, scope for dissent. A tax demand,
for instance, normally dictates the amount and the timing of the required
payment. In contrast, because a factually necessary expense may be a
function of personal circumstance, a court must take care to ensure that
the defendant had no real choice in the matter. For instance, does the
installation of an air conditioning unit represent a factually necessary
expense? What if the defendant lives in Arizona or the Yukon? What if the
defendant is fabulously wealthy or desperately poor? As the category of
factually necessary expense expands, the defendant’s autonomy contracts.
The incontrovertible benefit exists insofar as a necessary expense has been
anticipated. Consequently, if the defendants could have satisfied their
statutory obligation at a cost of $20,000, then that is the value of their
enrichment even if it cost the plaintiff $25,000 to upgrade the sewer line.
By the same token, restitution will be limited to the lesser amount, under
the second element of the action in unjust enrichment, if the plaintiff
spends only $20,000 in order to discharge an obligation that would have
cost the defendants $25,000.

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no choice about upgrading their sewer line. Restitution leaves them none
the worse for wear.
The same is true if the defendants receive a benefit from which they
realize a financial gain. Suppose, for instance, that the defendants own
an empty parcel that they intend to sell for $50,000. Before they do so,
the plaintiff acts in error and builds a house on the property at a cost
of $150,000. The defendants then sell the improved lot for a price of
$200,000. They are in the same position they would have enjoyed if they
had sold the land in its original state for $50,000 and received $150,000
cash from the claimant. By the same token, liability will restore the status
quo ante on both sides. Restitution, again, will leave the defendants none
the worse for wear.
The analysis, however, may be more contentious. Assume that while
the plaintiff mistakenly built a house on the defendants’ property and
thereby raised its value from $50,000 to $200,000, the landowners never
intended to sell and, indeed, still hold title. Should an incontrovertible
benefit be recognized on the basis of a realizable financial gain? The
defendants could sell the improved parcel for $200,000, pay $150,000
as restitution to the plaintiff, and use the remaining $50,000 to buy
a replacement for their original asset. And, if they wish to retain the
improved property, they could satisfy judgment from other resources.
While rearranged, the totality of their wealth would be unchanged
relative to the status quo ante. Instead of holding land worth $50,000
and other assets worth $150,000, they would hold land worth $200,000.
For many years, case-law was sparse, the law was unsettled, and
academic analysis provided the primary point of discussion. As might
be expected, scholarly opinions vary. At one extreme, the interest in
autonomy is said to permit recognition of an enrichment only if and when
a profit has been realized from a non-monetary benefit.68 That approach,
of course, puts the plaintiff at the defendant’s mercy. A landowner may
escape liability simply by holding onto the improved property until
the limitation period has passed or perhaps until the improvement has
68.

Peter Birks, Unjust Enrichment, 2d (Oxford: Oxford University Press,
2005) at 61-62; Peter Birks, An Introduction to the Law of Restitution
revised ed (Oxford: Clarendon Press, 1985) at 121-24.

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sufficiently depreciated. At the other extreme, the defendant may be
considered enriched as long as a financial gain can be realized from the
claimant’s efforts. Most commentators, however, prefer to soften that
position through the addition of qualifiers. A beneficial service is said to be
incontrovertible if a financial gain is readily realizable69 or readily realizable
without undue hardship.70 Depending upon its precise formulation, that
test may allow a landowner to escape liability if, for instance, the affected
property is not marketable or genuinely treasured. Accordingly, while the
underlying premise no longer holds in Canada,71 landowners previously
were thought to be protected from the risk of restitution by the belief
that every parcel of land is unique and irreplaceable.72
Courts elsewhere in the Commonwealth continue to proceed
cautiously in this area. As will be seen, however, Canadian judges have
adopted a surprisingly broad test of incontrovertible benefit. While the
issue has never received the attention that it deserves, an enrichment is
commonly recognized as long as the plaintiff’s services have increased the
market value of the defendant’s property. A realizable financial gain, it
seems, may be sufficient.

69.
70.

71.

72.

Andrew Burrows, The Law of Restitution, 3d (Oxford: Oxford University
Press, 2011) at 47-49.
A variation on the same theme holds that if recognition of an
incontrovertible benefit would expose a landowner to intolerable
hardship, liability may take the form of an equitable lien that is exercisable
only if and when the defendant sells the relevant asset for an enhanced
price: Maddaugh & McCamus, supra note 42 at § 3:200.10, § 5:300;
Gareau Estate (Re)(1995), 9 ETR (2d) 25 (Ont Ct J (Gen Div)).
While each parcel of land historically was considered unique and
irreplaceable, the Supreme Court of Canada has adopted a more flexible
test: Semelhago, supra note 11; Southcott Estates Inc v Toronto Catholic
District School Board, 2012 SCC 51.
Goff & Jones traditionally endorsed that view: Goff & Jones, supra note
45 at 147. The most recent edition of that text, under new authorship,
now supports a very different approach: C Mitchell, P Mitchell & S
Watterson, eds, Goff & Jones: The Law of Unjust Enrichment, 8d (London:
Sweet & Maxwell, 2011) c 5.

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C.

Change of Position: Autonomy Front and Back

The test of enrichment protects a recipient’s autonomy at the time of
transfer. In order to satisfy the first element of the action in unjust
enrichment, the plaintiff must prove that the defendant either chose
to accept the risk of financial responsibility (request, free acceptance)
or received a benefit for which responsibility cannot be denied
(incontrovertible benefit). Without more, however, the risk of restitution
remains. Having been unjustly enriched, entirely innocent recipients may,
in good faith, become disenriched prior to trial. Suppose, for instance,
that the defendants, finding their property improved and honestly
believing that the windfall is theirs to keep, sell the land and distribute
the additional proceeds to charities that no longer can be identified. If
the plaintiff then steps forward and the court awards full recovery, the
defendants will be justifiably aggrieved. Liability will be contrary to their
freedom of choice. If they had known that they would have to restore the
value of the claimant’s services, they never would have given to charity.
Additionally, they will have to deplete other resources (e.g. children’s
education fund) in order to satisfy a judgment. Restitution will hurt.
It will leave the defendants with less than they had before the unjust
enrichment occurred. This cannot be right.
That problem is solved by protecting the defendants’ autonomy
front and back. Just as the tests of enrichment respect freedom of choice
at the moment of receipt, the change of position defence performs the
same function at the time of trial.73 Liability, ultimately, is reduced to
the extent that dis-enrichment occurs in good faith before judgment.74
Consequently, if the defendants donated the full value of their
enrichment to charity, the plaintiff would recover nothing. Alternatively,
if the defendants gave away forty per cent of their apparent windfall,
the plaintiff’s claim would be reduced accordingly. In contrast, the
defendants would have no defence at all if they spent their enrichment
73.
74.

McInnes, supra note 17 at ch 36.
Mobil Oil Canada Ltd v Storthoaks (Rural Minicipality), [1976] 2 SCR
147; RBC Dominion Securities Inc v Dawson (1994), 111 DLR (4th) 230
(NFCA).

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on rent and groceries; those expenditures would have occurred regardless
of the unjust enrichment and they do not implicate the defendants’
autonomy. The funds that the defendants would have otherwise spent
on their home can be directed toward the plaintiff instead. The defence
similarly would be denied if the defendants knew of the plaintiff’s claim
when they experienced their dis-enrichment. That would be true if they
gave to charity after being served with a statement of claim. Having made
an informed decision, they cannot reasonably expect the plaintiff to bear
the cost of their charitable donation.

IV.

Injustice and Autonomy

For the purposes of unjust enrichment, it would be difficult to overstate
the significance of the preceding analysis. The tests of enrichment,
supported by the change of position defence, ensure that restitution never
hurts relative to the status quo ante. They do so by allowing liability only
insofar as it is consistent with the defendant’s freedom of choice. That
proposition also carries an important corollary. Because the recipient’s
autonomy is protected at the first and fourth stages of inquiry, it need
not dominate the third. The issue of injustice can — and indeed, must
— be resolved primarily be reference to considerations other than the
recipient’s freedom of choice.
Granted, freedom of choice could be protected in terms of injustice
rather than enrichment. Liability could be premised upon proof that,
within a pre-existing relationship, the defendant requested or acquiesced
in the receipt of a benefit despite knowing that the plaintiff expected
payment in return. Significantly, however, whereas the nuanced test of
enrichment sensitively provides protection only to the extent that it is
required, an injustice-based approach broadly operates on an all-ornothing basis.
Consider a simple situation in which the parties have no relationship
at the time of transfer. The plaintiff mistakenly improves the defendant’s
property and thereby raises its value from $10,000 to $15,000. Oblivious
to the claimant’s mistaken services, the defendant incurs transaction costs
of $1,000 while selling the improved asset for $15,000, purchases a nonimproved replacement for $10,000, and pockets the remaining $4,000.

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The plaintiff then discovers the error and sues for restitution.
The defendant’s autonomy will receive all the protection it requires
under the enrichment-based approach. Regardless of the fact that the
parties remained strangers throughout the episode, the defendant
incontrovertibly is enriched as a result of realizing a $4,000 profit from
the plaintiff’s services. Liability will very nearly restore the status quo ante.
The defendant once again will have property worth $10,000; the plaintiff
will recoup $4,000. Of course, the claimant would prefer to recover
$5,000, but the additional $1,000 would run contrary to freedom of
choice. Judgment could be satisfied only if, for instance, the defendant
used funds that had been earmarked for a brief holiday in the mountains.
Despite doing nothing wrong, the defendant would be adversely affected.
Restitution would hurt.
Now consider the outcome under an injustice-based approach. Since
the defendant was unaware of the plaintiff throughout, and therefore
neither requested nor freely accepted the services, liability must be denied
altogether. The plaintiff will have no means of reversing any part of the
$5,000 transfer; the defendant will retain both an asset worth $10,000
and $4,000 in cash. It is difficult to imagine a clearer case of unjust
enrichment. And yet, for many years, that is precisely the analysis that
Canadian courts employed.

A.

The Rise in Special Relationships

The modern Canadian law of unjust enrichment began in 1954 when
Deglman v Guaranty Trust Co75 recognized an independent restitutionary
claim.76 Understandably, early judgments were somewhat unsophisticated
and results were decidedly mixed. In cases involving improvements to
land, it seems that the issues of enrichment and injustice were often
resolved through unreasoned intuition.
Estok v Heguy77 is a notorious example. Having apparently purchased
75.
76.
77.

Deglman, supra note 37.
Ibid.
(1963), 40 DLR (2d) 88 (BCSC). See also T & E Development Ltd v
Hoornaert (1978), 78 DLR (3d) 606 (BCSC); Reeve v Abraham (1957),
22 WWR 429 (ABSC); Phipps v Pickering (1978), 8 BCLR 101 (BCSC).

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a rural property, the plaintiff spread a great deal of manure in preparation
for planting crops. The purported agreement was then determined to be
void for lack of a consensus and the land was returned to the defendant.
Against the ensuing claim for restitution, the defendant insisted that
since he intended to resume using the parcel for pasture, he had no need
for the fertilizer. The court nevertheless imposed liability for the value
of the service. The error in that decision is now easy to see. There was
no enrichment. Although the manure deposit was an objective benefit
with market value, the plaintiff could not overcome the plea of subjective
devaluation. The defendant never chose to bear responsibility. He had
not requested the service and, because he never had an opportunity to
reject the manure, there was no question of free acceptance. Nor did
the fertilizer constitute an incontrovertible benefit. Given the defendant’s
intended use of the property, he had not been saved a necessary expense,
and there was no evidence that he was in a position to realize a financial
gain.
Republic Resources Ltd v Ballem78 (“Republic Resources”) stands on
firmer ground. The plaintiff entered onto the defendant’s land under a
natural gas lease but, as a result of an error, successfully drilled a well
only after the term had expired. Since it was no longer able to exploit the
well, the plaintiff sued the defendant in unjust enrichment. It claimed
that it had conferred an incontrovertible benefit because the defendant
was either saved the expense of drilling a well or able to realize a financial
gain whenever the well was put into production. Justice Holmes
disagreed. In the circumstances, he said, there was no need to drill a
well and it was impossible to know if or when the capped well might be
put into profitable production. Thirteen other wells in the area had been
shut down and the market for natural gas was in precipitous decline.
Consequently, since the plaintiff had created, at most, an “unascertained
benefit”,79 restitution was unavailable because it would unfairly override
the defendant’s autonomy.
78.

79.

[1982] 1 WWR 692 (ABQB) [Republic Resources]. See also Ross Cromarty
Developments Inc v Arthur Bell Holdings Ltd, [1994] 3 WWR 142
(BCCA).
Republic Resources, supra note 78 at 708.

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1.

The Misinterpretation of Nicholson v St Denis

Despite denying liability on the facts, the court in Republic Resources
observed that restitution may be awarded, on the basis of an incontrovertible
benefit, even if the defendant was unaware of the plaintiff’s services at the
time of performance.80 In that sense, Republic Resources closely resembles
Nicholson v St Denis81 (“Nicholson”). Unfortunately, the latter case came
to be misinterpreted with occasionally disastrous results.
Nicholson itself is an innocuous decision. It began when the defendant
agreed to sell a property, which contained a building, to Labelle. Though
the purchaser would not receive title until the price was paid in full, he
took possession immediately and hired the plaintiff to place siding on the
building. The job was completed, but as Labelle had become insolvent,
he could not pay. The plaintiff therefore demanded restitution from the
defendant who had resumed possession of the parcel. Justice MacKinnon
rightly dismissed that claim; there was no enrichment. The defendant
had neither requested nor freely accepted the plaintiff’s services despite
knowing that he expected payment. Nor did the siding constitute an
incontrovertible benefit. It did not anticipate a necessary expense and
there was no evidence to suggest that it raised the property’s market value
so as to create a realizable financial gain. Moreover, as a Canadian court
would say today, there was a juristic reason for any enrichment that might
exist. By entering into a contract and extending credit, the plaintiff took
the chance that Labelle might not be able to pay.82 Unjust enrichment
cannot be used to circumvent a contractual allocation of risk.83
All of this is entirely orthodox. Nicholson’s enduring legacy is found
instead in Justice MacKinnon’s dicta.84 After surveying cases in which
restitution had been awarded, he offered a general observation.
[I]n almost all of the cases the facts established that there was a special relationship
80.
81.
82.

83.
84.

Ibid.
(1975), 57 DLR (3d) 699 (Ont CA) [Nicholson].
The plaintiff similarly became the author of his own misfortune when he
neglected to secure his rights under the Mechanics’ Lien Act, RSO 1970, c
267.
McInnes, supra note 17 at ch 12.
Nicholson, supra note 81.

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between the parties, frequently contractual at the outset, which relationship
would have made it unjust for the defendant to retain the benefit conferred
on him by the plaintiff ... This relationship in turn is usually, but not always,
marked by two characteristics, firstly, knowledge of the benefit on the part of
the defendant, and secondly, either an express or an implied request by the
defendant for the benefit, or acquiescence in its performance.85

As long as it is confined to situations involving services, rather than
money or property, that statement is absolutely true. The explanation
pertains to the element of enrichment. As previously discussed, services
are problematic because they can never be restored and because they
are not equally valued by everyone. There consequently is a danger that
liability will hurt. The court may effectively dictate an innocent party’s
allocation of resources. The defendant may have to pay money for a
service that, while objectively beneficial, was not a spending priority.
To combat that danger, the law normally requires the plaintiff to prove
the defendant either requested or freely accepted services with knowledge
that payment was expected. Significantly, however, MacKinnon J qualified
his statement. He referred to “almost all of the cases” and said that a
special relationship “is usually, but not always”, required.86 Exceptions
do exist. Even if the defendant did not actually choose (actively or
passively) to bear responsibility for a benefit, the autonomy interest may
be overcome by the nature of the services themselves. That is true if the
plaintiff provided the defendant with an incontrovertible benefit.
MacKinnon J supported his position by citing Greenwood v Bennett.87
The plaintiff purchased a badly damaged Jaguar and spent considerable
time and money on repairs. In fact, although the claimant had acted
in good faith, the car previously had been stolen from the defendant
and run into the ground. After the police intervened and returned
the vehicle to its rightful owner, the plaintiff sued for the value of the
mistaken improvements. Although the other members of the Court of
85.
86.
87.

Ibid at 701-702 [emphasis added].
Nicholson, supra note 81 at para 8.
Greenwood, supra note 44. See now Benedetti v Sawiris, [2013] UKSC
50 (“there are circumstances in which the receipt of a service may call for
restitution of its monetary value even if the receipt was involuntary” at
para 113).

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Appeal recognized a passive claim of equitable set-off, Lord Denning
held that the mistaken improver was entitled to restitution of an unjust
enrichment. Stated in more modern language, the defendant obtained
an enrichment when he sold the Jaguar, in its improved state, for an
increased price. By realizing a financial gain from the plaintiff’s efforts,
the defendant incontrovertibly was benefitted.88
A careful reading of the dicta in Nicholson reveals a sound proposition:
in the absence of a “special relationship” that involves either request or free
acceptance, the defendant is not enriched, and consequently cannot be
held liable, unless the plaintiff conferred a benefit that, by its very nature,
is incontrovertible. Soon enough, however, the case was misinterpreted
as support for a very different proposition: a mistaken improver of
property must demonstrate a pre-existing “special relationship” with the
defendant in order to prove that the impugned transfer was unjust, and
hence, reversible. A misplaced desire to protect innocent recipients from
unwanted obligations elevated the concept of a “special relationship” to
the status of an “essential nexus”, the “sine qua non of success”,89 without
which a restitutionary claim for services rendered must fail.
Because it effectively insists that the autonomy interest can be
satisfied only through an actual exercise of choice, the purported “special
relationship” rule precludes recovery any time the plaintiff must prove
an incontrovertible benefit in order to overcome the defendant’s plea
of subjective devaluation. An entire category of legitimate claims is
placed beyond the reach of the action in unjust enrichment. The result,
predictably, is injustice. Undeserved windfalls are left where they fall.
Olchowy v McKay90 (“Olchowy”) perfectly illustrates that possibility.
Mistakenly believing that he had purchased a parcel of land, the plaintiff
spent $3,889 clearing it of rocks and planting canola seed. The defendants,
88.

89.
90.

Canadian courts have applied the same reasoning in cases dealing with
land: Salna v Awad, 2011 ABCA 20; Sanderson v Campsall, 2000 BCSC
583; Maggio Flooring Ltd v Gipson, [2011] OJ No 1751 (Sup Ct J)(QL);
Park Lane Ranch Ltd v Fleetwood Village Holdings (Phase II) Ltd (1980),
17 RPR 35 (BCSC).
McLaren v The Queen, [1984] 2 FC 899 at 905 (FCTD).
[1996] 1 WWR 36 (SKQB) [Olchowy].

(2016) 2(2) CJCCL

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who were aware of the claimant’s error from the outset, cynically sat
silent until the work was done. They then purchased the property for
a price that did not account for the crop and harvested 600 bushels of
canola worth $4,386. The court agreed that the plaintiff had conferred
an incontrovertible benefit to the extent that the defendants realized
a financial gain from the plaintiff’s services. Restitution nevertheless
was denied on the grounds that the defendants had not requested the
enrichment, and, because they did not own the property when the
services were provided, they were not subject to the obligations inherent
in the doctrines of free acceptance or proprietary estoppel.91 In the end,
they were literally allowed to reap what the plaintiff had sown.92
Olchowy was a remarkable case, but the court’s analysis was anything
but. Beginning in 1975, restitution claimants routinely were required to

91.

92.

Ibid. Though harsh, Olchowy might be defended on the basis that, by
virtue of their purchase, the defendants acquired an absolute right to
both the land and the crop growing on it. The judgment, in fact, contains
reasons along those lines. Significantly, however, the plaintiff did not
dispute ownership of the canola. His claim pertained to its value. And,
in any event, Justice McLellan’s reasoning is mirrored in countless other
decisions that are not complicated by questions of title. For a discussion
of the intersection of unjust enrichment and Torrens indefeasibility, see
McInnes, supra note 17 at ch 26.
The plaintiff’s only relief, for $428, stemmed from the fact that
the clearing of rocks constituted a “lasting improvement” under
Saskatchewan’s betterment legislation. See Improvements Under Mistake of
Title Act, RSS 1978, c I-1, s 2.

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McInnes, Improvements to Land

establish “special relationships”.93 And as long as that practice continued,
the action in unjust enrichment very often would deny relief to those
who improved land.

V.

Restitution for Improvements

Late into the twentieth century, liability was unlikely if one improved
another’s land. Leaving aside betterment statutes and passive rights of setoff, proprietary estoppel and unjust enrichment provided the best hope
of relief, but both were subject to very similar limitations. Even though
Canadian courts have distanced themselves from the “five probanda” in
favour of more relaxed criteria, proprietary estoppel continues to require
proof that services were rendered in reliance upon the landowner’s active
or passive representation that the claimant enjoyed, or would acquire,
some interest in the affected property. The action in unjust enrichment
was doubly restricted. As courts refused to recognize incontrovertible
benefits in connection with land, an enrichment could be established only
by means of a request or free acceptance. And on the issue of injustice,
liability was said to depend upon the existence of a “special relationship”.
The situation today is dramatically different. Proprietary estoppel has

93.

Jones v Craig, [2009] OJ No 2365 (Sup Ct J)(QL); Grant Design Group
Inc v Neustaedter 2008 MBQB 336; Litemor Distributors (Edmonton) Ltd
v Midwest Furnishings and Supplies Ltd, 2007 ABQB 23; Agrium Inc v
Chubb Insurance Co of Canada, 2002 ABQB 495; Nu-Way Kitchens Ltd
v Smallwood (2000), 187 Nfld & PEIR 251 (SC); Elmford Construction
Co v South Winston Properties Inc (1999), 45 OR (3d) 588 (Sup Ct J); JE
Weaver Enterprises Ltd v Hardy (1998), 44 CLR (2d) 243 (NSSC); Turf
Masters Landscaping Ltd v TAG Developments Ltd (1995), 143 NSR (2d)
275 (CA); Robert D Sutherland Architects Ltd v Montykola Investments Inc
(1995), 142 NSR (2d) 137 (SC); Alyea v South Waterloo Edgar Insurance
Brokers Ltd, (1993) 50 CCEL 266 (Ont Ct J (Gen Div)); cf. MacLellan v
Morash, 2006 NSSC 101 (lack of “special relationship” fatal to legal claim
for quantum meruit, but irrelevant to equitable claim in unjust enrichment
for “compensation”) [Morash].

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lost its traditional status as the primary source of liability.94 Of course, that
claim remains relevant if the plaintiff seeks to do something other than
reverse a transfer, or if the facts do not fall within the restitutionary action.
In the majority of cases, however, the focus falls upon unjust enrichment.
Even those situations that historically would have triggered a plea of
proprietary estoppel are now commonly addressed exclusively in terms
of unwarranted transfers.95 That change is a function of two fundamental
developments within the Canadian law of unjust enrichment. Together,
they facilitate liability, even if, prior to performance, the plaintiff had no
contact with the defendant.

A. Readily Realizable Gains
The first development is the remarkable expansion of incontrovertible
benefits. If the landowner did not actually choose to accept the risk of
financial responsibility, the plaintiff must prove that the benefit itself was
undeniable. And unless the services anticipated a necessary expense, that
benefit must pertain to the realization of a financial gain.
There should be little scope for debate if the defendant actually did
turn the plaintiff’s contributions into cash.96 That was true in Sanderson

94.

95.

96.

In practice, the detrimental act that lies at the heart of proprietary
estoppel often entails an enrichment to the landowner, such that the
claimant can satisfy both heads of liability as they are now formulated.
See Idle-0, supra note 30; Clarke, supra note 35; Schumacher Estate, supra
note 35. Nevertheless, because it does not require a beneficial transfer,
proprietary estoppel may provide help to those whom unjust enrichment
turns away: Schwark Estate v Cutting (2008) 46 ETR (3d) 120 (Ont Sup
Ct J) reversed in 2010 ONCA 61; Brownlee, supra note 35; cf. Cowderoy,
supra note 9.
No 151 Cathedral Ventures Ltd v Gartrell, 2003 BCSC 1801; Sherbeth,
supra note 53; Stewart v Stewart, 2014 BCSC 766; cf. Sabey, supra note 10
(disputing lower court’s proprietary estoppel analysis and returning parties
to trial level for consideration of restitutionary claim).
Port Abino Association v Lee 73 ACWS (3d) 44 (Ont Ct J (Gen Div)); cf.
Olchowy, supra note 90. See also Spicer v Middleton (Town), 2014 NSSC
66; Pekurar v Hummingbird Farms Ltd, [2015] OJ No 378 (Sup Ct J)
(QL).

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v Campsall.97 While sharing possession of a parcel that belonged to her
husband’s parents, a woman affixed a mobile home to the land and made
other improvements. When her marriage ended and she was removed
from the property, she sued in unjust enrichment. Although the parents
argued that they “just wanted the home — which they do not consider
an improvement — off the land”,98 they rented out the unit, which was
worth $34,000, for $600 per month. The court recognized an enrichment
accordingly. Conrad v Feldbar Construction Co Ltd99 came to a similar
conclusion on the enrichment issue. The defendant owned an isolated
property in an undeveloped area of Toronto. The plaintiff constructed an
arterial roadway that serviced all of the properties in the area, including
the defendant’s. The defendant then sold his parcel for a price that was
substantially inflated by reason of the improvement. He was held liable
for those additional profits.
Far more remarkably, Canadian courts now frequently allow the first
element of the action in unjust enrichment to be satisfied by proof that
the plaintiff’s services created a realizable financial gain by increasing
the market value of the defendant’s property.100 In Love v Schumacher
Estate101 (“Schumacher Estate”), the defendant owned an unused cottage
that he allowed the plaintiff and her daughters to occupy beginning in
1985. Over the next twenty-five years, the claimant spent approximately
$100,000 on repairs and improvements, thereby raising the property’s
97.
98.
99.

2000 BCSC 583.
Ibid at para 8.
(2004), 70 OR (3d) 298 (Ont Sup Ct J). The court’s attempt to explain
its decision in terms of free acceptance is fatally undermined by the fact
that the defendant expressly informed the plaintiff, even before the work
commenced, that he did not wish to contribute to the cost of the roadway.
The defendant’s enrichment must be explained instead by reference to the
profit that he realized from the sale of the improved parcel.
100. Idle-0, supra note 30; Clarke, supra note 35; Dutertre, supra note 29;
Murphy, supra note 29; Simonin Estate v Simonin, 2010 ONCA 900
[Simonin Estate]; cf. Birch Paving & Excavating Co v Clark, [2014] OJ
No 1637 (Sup Ct J)(QL)(enrichment not proven because “there is no
evidence supporting any increase in the value of the property” as a result
of the plaintiff’s services at para 64) [Birch Paving].
101. Schumacher Estate, supra note 35.

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value from $35,000 to $174,000. She did so in part because the defendant
promised, in 1993, that she would receive legal title on his death. In
2010, however, he executed a new will that gave his entire estate to his
son. In the ensuing litigation, Justice Tausenfreund upheld claims in both
proprietary estoppel and unjust enrichment. The issue of enrichment
was resolved on the simple basis that the “value of the cottage property
increased over the years based on the plaintiff’s time, her labour, and her
financial resources”.102
Servello v Servello103 (“Servello”) involved a large immigrant family
that successfully developed a business that operated out of a property
that also contained their home. The youngest son, working alongside
his father, substantially enlarged the onsite workshop, but subsequently
became estranged from his family. In the litigation that followed, he sued
for both proprietary estoppel and unjust enrichment. Despite ultimately
rejecting both “equitable” claims because the son’s behaviour during the
squabble left him with “unclean hands”, Justice Koke did agree that the
parents had been enriched. Having valued the son’s “contribution to the
workshop … to be approximately $68,133.66”, he observed that while
“the overall value of the property” had not necessarily “increased by this
much, it still represents an enrichment”.104
MacLellan v Morash105 (“Morash”) similarly arose from a familial
dispute. Having long allowed her seven children recreational use of an
island that she owned, an elderly woman also permitted one son, named
Ronald, to operate a lobster business from the property. He accordingly
devoted more than $20,000 and 3500 man-hours to the construction
102. Ibid at para 40.
103. Servello, supra note 35.
104. Ibid at para 105. See Servello v Servello, 2015 ONCA 434 at para 7,
where, while affirming the decision below, the Ontario Court of Appeal
said that there was “no evidence that the property increased in value as a
result of the [son’s contributions]”. In fact, Koke J said that there was “no
evidence … to indicate how much the value of the property has increased”
in Servello, supra note 35 at 116 [emphasis added]. Despite the difference,
both statements are consistent with the recognition of an enrichment on
the basis of increased value.
105. Morash, supra note 93.

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of a “fish shed”, as well as a causeway and a bridge that linked the island
to the mainland. That connection both furthered his economic interests
and made it much easier for family members to access the property.
Against that backdrop, the mother’s decision to devise title to two other
children understandably enraged Ronald, who tore down the bridge and
blocked up the causeway with machinery. Even after that fit of pique,
however, the remaining improvements enhanced the island’s value by
some $300,000. Ronald consequently was entitled to relief. Although
his claim for proprietary estoppel failed, because his acts were a product
of his own initiative rather than any promise of title from his mother, his
plea of unjust enrichment was successful. Justice MacLellan considered
it “clear that the owner of the island” was enriched. Just as the “family
started making considerably more use” of the island once the causeway
was in place, the property became “much more valuable” once it could
“be reached without using a boat”.106
Sherbeth v Sherbeth107 (“Sherbeth”), the final case for consideration,
provides the most robust illustration of the incontrovertible benefit
doctrine. After the plaintiff announced his desire to start a construction
business, his father offered the use of a section of land for that purpose.
The plaintiff then spent almost $100,000 building business premises. The
situation predictably turned ugly when the father transferred title to the
plaintiff’s brother. And when the brother demanded vacant possession,
the plaintiff countered with a claim in unjust enrichment. Against
that restitutionary claim, the brother explained that he had no use for
the improvements, which he intended to remove. Justice Menzies was
prepared to accept that seemingly irrational threat, “not because there is
no value in the building and yard site but rather because [the brother]
would wish to remove any reminder of [the plaintiff]”.108 He nevertheless
found that the plaintiff’s services “represent an incontrovertible benefit
to the [d]efendants even if they do not wish to take advantage of it”.109
It might be different, he said, if the claimant left “behind some type of
106.
107.
108.
109.

Ibid at para 74.
Sherbeth, supra note 53.
Ibid at para 24.
Ibid.

(2016) 2(2) CJCCL

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structure that could serve no useful purpose to the [d]efendants on their
farming operation”.110 On the facts, however, the plaintiff constructed
“a yardsite which could be productively used in a farming operation or
at very least could be sold or rented to realize on its value, whether the
[d]efendants elect to take advantage of it or not”.111 In the absence of any
juristic reason, that enrichment entitled the plaintiff to recover the value
of the improvement.

1.

A Step Too Far?

On reading the preceding cases, those who champion the cause of unjust
enrichment are apt to echo Lord Mansfield’s admonition: “I am a great
friend to the [restitutionary] action … and therefore I am not for stretching,
lest I should endanger it”.112 The crucial question, it will be recalled, is
whether the plaintiff can overcome the right of subjective devaluation by
demonstrating that liability is consistent with the defendant’s freedom of
choice.113 The mere receipt of an objective benefit must not be enough.
To hold otherwise is to potentially impose an intolerable burden upon
an innocent party. Irreplaceable property, having been improved without
request or acquiescence, may have to be sacrificed for the purpose of
satisfying judgment. That is why scholarly opinion, even at its broadest,
formulates the relevant branch of incontrovertible benefit in terms of
readily realizable financial gains. The restitutionary interest is reconcilable
with the landowner’s autonomy only to the extent that the claimant’s
contribution can be treated as if it consisted of a transfer of money.
At a glance, however, it is clear that Canadian courts have gone
somewhat further. Granted, Schumacher Estate arguably fell within the
spirit of the doctrine.114 The plaintiff had greatly improved the property
while enjoying exclusive possession for a quarter century; the defendant
had no connection to the cottage before inheriting it from his father at
the end of that period. In the circumstances, the court’s decision to allow
110.
111.
112.
113.
114.

Ibid at para 27.
Ibid.
Weston v Downes (1778), 1 Doug KB 23 (Eng) at 24.
Discussed above at Part III.B.
Schumacher Estate, supra note 35.

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the claimant to remain in possession for another fifteen years does not
seem an intolerable infringement of the titleholder’s rights. Servello was
more problematic. Restitution would have created genuine hardship.115
Given the degree of acrimony within the family, as well as the defendant’s
residence on the property, shared use was not feasible; given the value
of the improvements, in personam relief would have constituted a
substantial debt. As a result, the court, presumably, was much relieved to
be able to (speciously)116 invoke the clean hands doctrine and make the
case go away. That option was not available in Morash, which similarly
involved an ugly family dispute.117 Since the squabbling siblings “simply
[could not] live together as joint owners”, restitution took the form of a
personal judgment for $65,000.118 While the titleholders’ financial status
was not reported, most people do not have that kind of money close at
hand and it is easy to imagine that the defendants were compelled to sell
or mortgage the affected property in order to satisfy the judgment. The
island, which several generations of the family had enjoyed for decades,
undoubtedly held much more than monetary value. Is the law of unjust
enrichment ever justified in effectively requiring innocent parties to
sacrifice prized possessions?
Even those who agree with the decision in Morash119 may question
Sherbeth.120 Acting entirely for his own benefit, the plaintiff dug down to
bedrock, laid foundations, and built his business premises on an otherwise
undeveloped piece of land. His father, who owned the parcel at the outset,
permitted that work to be done, but had no use for the improvements.
More dramatically, his brother, as successor in title, intended to exercise
his right of exclusive occupation in order to remove the structures and
allow nature to resume its course. The court nevertheless recognized an
enrichment and imposed liability on the ground that — regardless of
what a landowner wishes to do, or is likely to do, or can afford to do
115.
116.
117.
118.
119.
120.

Servello, supra note 35.
Discussed in Part VI, below.
Morash, supra note 93 at para 87.
Ibid at para 87.
Morash, supra note 93.
Sherbeth, supra note 53.

(2016) 2(2) CJCCL

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— the ability to realize a financial gain constitutes an incontrovertible
benefit.121
The branch of incontrovertible benefit governing the realization of
financial gains is inherently controversial. There is no singularly correct
way to formulate the doctrine and, until the Supreme Court of Canada
settles the issue, opinions will vary as widely as individual judicial
philosophies. Sherbeth falls well to one side of that continuum. Without
any discussion of the debate, Justice Menzies overwhelmingly privileged
the plaintiff’s restitution interest above the defendant’s autonomy interest.
Unless he had a substantial sum of money that he was willing to allocate
to the judgment, the titleholder was at serious risk of losing control over
his own property. And, while Canadian law may eventually regard such
risks as an acceptable cost of reversing unjust enrichments, it is worth
observing that Sherbeth raises precisely those concerns that traditionally
inhibited courts from entertaining such claims.

B.

The Decline of Special Relationships

While Canadian courts continue to struggle with incontrovertible
benefits, they largely have overcome the troublesome doctrine of “special
121. Several aspects of the decision may appear to hedge that proposition.
First, the defendants surprisingly “admit[ted] liability … but dispute[d]
the Plaintiff’s entitlement to any relief ”, ibid at para 1. The existence
of an enrichment, however, was not treated as a foregone conclusion.
Justice Menzies proceeded as though the elements of the action in
unjust enrichment were contested. Second, the father initially had given
the plaintiff some assurance that he eventually would receive title if he
developed the land. Nevertheless, while that fact undoubtedly coloured
the judge’s perception of the dispute, it was logically irrelevant to the
recognition of a realizable financial gain. Interestingly, notwithstanding
the father’s “promise”, the plaintiff did not sue for proprietary estoppel.
He relied exclusively on unjust enrichment. Third, the court referred to
the defendants’ “wrongful actions” and said that the “object of unjust
enrichment is to compensate the Plaintiff for the losses he has suffered”,
ibid at para 52. Of course, if the facts did truly call for the reparation
of wrongful losses, then any comments regarding restitutionary benefits
would be dicta. Notwithstanding occasional terminological errors,
however, the court properly focused on the issue of unjust enrichment.

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relationship” that needlessly restricted the scope of restitutionary relief
for a quarter century. Granted, old habits occasionally die hard. The
purported rule of “bilaterality”122 — a misinterpretation of Nicholson123
— continues to be expressed from time to time.124 Beginning in the
late 1990s, however, judges increasingly employed a model of unjust
enrichment that is capable of imposing liability for unsolicited services
between strangers.125 In Wacky’s Carpet & Floor Centre v Joseph,126
for instance, Justice Edwards revisited Nicholson’s dicta and correctly
observed that while the concept of “special relationship” is a “thread that
runs through the jurisprudence”, it is not “an additional burden that
must be met by a claimant”.127 “The absence of a special relationship”,
he explained, “will not necessarily defeat a claim”.128 Likewise, in Bond
Development Corp v Esquimalt (Township),129 Justice Huddart focused
on the actual message of Nicholson before stressing that, given the
evolution of the action in unjust enrichment, it is no longer appropriate
to determine rights of recovery on the basis of some vague principle of
“special relationship”.130
Huddart J undoubtedly was right in regarding the decline of “special
relationships” as a mark of maturity. When MacKinnon J first formulated
that doctrine in Nicholson, the Canadian law of unjust enrichment was
under-developed and poorly understood.131 There was no Canadian text
on point and the three-part cause of action had yet to be authoritatively
122. Campbell v Campbell (1999), 173 DLR (4th) 270 (Ont CA) at paras 3234 [Campbell].
123. Nicholson, supra note 81.
124. J Lepera Contracting Inc v Royal Timbers Inc, 2012 ONSC 271 at para 83;
Skibinski v Community Living British Columbia, 2010 BCSC 1500 at para
192; Murphy, supra note 29 at para 86; cf. Birch Paving, supra note 100.
125. Clearwater Well Drilling Ltd v Wile (1996), 148 NSR (2d) 306 (SC)
(restitution “may be granted in an exceptional case where no special
relationship exists between the parties” at 309); Gidney, supra note 43.
126. 2006 NSSC 353.
127. Ibid at para 12.
128. Ibid at para 15.
129. 2006 BCCA 248.
130. Ibid at at para 47.
131. Nicholson, supra note 81.

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articulated. Mistakes were inevitable and, given the traditional fear that
restitution may threaten individual autonomy, courts understandably
erred on the side of caution. However, by the turn of the twenty-first
century, the situation had changed dramatically. Courts at the highest level
routinely resolved restitutionary disputes, a substantial body of literature
served the subject, and the profession had grown comfortable with the
governing principles. As unjust enrichment evolved and expanded to its
natural dimensions, it no longer had any need for “special relationships”.
Relief rightly became available between strangers.
That development gained additional impetus in 2004, when the test
of restitutionary injustice was fundamentally reformulated. Garland v
Consumers’ Gas Co132 (“Garland”) provided an opportunity to resolve a
long-standing debate regarding the precise basis upon which transfers
are reversed.133 Within common law systems, the reason for restitution
consists of an unjust factor that positively justifies recovery (e.g. mistake,
compulsion). Civilian systems, in contrast, generally award restitution
in the absence of any juristic reason for a transfer (e.g. contract, donative
intent). Though they usually come to similar conclusions, those two tests
proceed in opposite directions. Whereas the former looks at the plaintiff
and says, “[n]o restitution unless … ”, the latter looks at the defendant
and says, “[r]estitution unless … ”. For complicated reasons that lie
beyond this paper,134 the Supreme Court of Canada decided to embrace
the juristic reason approach.135 Anomalously within the common law
world, the Canadian action in unjust enrichment now operates on a
civilian model.
Though the concept could be accommodated within either approach,
a “special relationship” provides a positive reason for the claimant’s
132.
133.
134.
135.

Garland, supra note 37.
Ibid.
McInnes, supra note 17 at ch 4 II-III.
The language, though not substance, of juristic reasons was introduced in
Rathwell v Rathwell, [1978] 2 SCR 436 at 455, and adopted in Pettkus,
supra note 14 at 848. See also Lauréat Giguère Inc v Cie Immobilière Viger
Ltée, [1977] 2 SCR 67 at 77 which addressed, on appeal from Quebec,
the civilian action de in rem verso. See now art 1493 CCQ.

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recovery and therefore fits more naturally within a test of unjust factors.136
In contrast, a “special relationship” has no real role to play within a test
of juristic reasons. If the parties shared a “special relationship” insofar as
the impugned transfer was undertaken pursuant to, say, a contractual
obligation, then there will be a legal explanation for the defendant’s
enrichment and restitution will be denied. And if the parties shared a
“special relationship” that fell outside the categories of juristic reason,
then it is irrelevant.

1.

Claims Between Strangers

By its very nature, the decline of “special relationships” is difficult to
prove positively. A few judges have expressly disavowed the purported
rule, but recent decisions dealing with unsolicited improvements to land
are notable for what they do not say. While the late twentieth century
cases were dominated by talk of “special relationships”, Canadian courts
now routinely proceed simply by reference to the three-part cause of
action.
That development can be illustrated by re-visiting Campbell v
Campbell 137 (“Campbell”), the decision that provided the most thorough
attempt to justify the supposed need for “special relationships”. Gordon
Campbell operated a dairy farm for many years. Shortly before his
death in 1977, he transferred his milk quota, which was essential to
136. The point is complicated by the fact that Garland did not adopt a classic
civilian test of juristic reasons. The Supreme Court of Canada instead
formulated a two-stage analysis. The first stage requires the plaintiff to
disprove the “established categories” of juristic reason — i.e. contract,
donative intent, disposition of law, and “other valid common law,
equitable or statutory obligations”. Satisfaction of that burden raises a
prima facie right to restitution, but the defendant is entitled to rebut
that presumption by proving the existence of a “residual” juristic reason.
That second stage of inquiry is guided by “all of the circumstances of the
transaction”, but focuses on “two factors: the reasonable expectations of
the parties, and public policy considerations”. See Garland, supra note 37
at para 44. Rules regarding “special relationships” could be accommodated
within either of those factors.
137. Campbell, supra note 122.

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the business, to his sons, John and Robert. His land and equipment,
in contrast, passed to his widow, Laura, under his will. The survivors
continued the business. The two sons assumed responsibility for dayto-day operations while the widow permitted use of her property and
contributed her bookkeeping and household services. By 1988, the farm
required modernization in order to remain economically viable. John
and Robert accordingly replaced several pieces of equipment, renovated
an existing barn, and constructed a new barn. The farm functioned in
its improved state for three more years until Robert’s death in 1991. At
that point, John sold the milk quota to a third party and informed his
mother that she no longer would be able to sell milk to the marketing
board. Shortly thereafter, he and Robert’s executor sued Laura for the
restitutionary value of the improvements.138 Having accepted an expert
opinion that the farm’s value continued to be enhanced as a result of the
brothers’ contributions, Justice Kent imposed liability for $151,200.
That decision was overturned by the Ontario Court of Appeal.
Justice Borins stressed that “the absence of Laura’s consent to the …
improvements to the farm — indeed, the absence of any evidence that
she expressly requested her sons to undertake this work — is the essential
reason why the … claim … should fail”.139 Rephrasing his reasons as a
general proposition, he baldly stated that “the law of unjust enrichment

138. The plaintiffs also sought, in the alternative, a declaration that the farm
assets were partnership property held equally between themselves and the
widow. That claim was dismissed at trial and not pursued on appeal.
139. Campbell, supra note 122 at para 26.

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McInnes, Improvements to Land

refuses recovery for unrequested benefits”.140 Of course, that simply
is not true. The absence of a “bilateral” relationship, marked by the
recipient’s request or free acceptance, merely means that the plaintiff
must show that the benefit, by its very nature, is incontrovertible and
consequently consistent with the defendant’s autonomy. On the facts of

140. Ibid at para 34. Though typically traced to Nicholson, supra note 81 and
presented in terms of “special relationships”, Justice Borins JA drew his
demand for “bilaterality” from an academic source: Abraham Drassinower,
“Unrequested Benefits in the Law of Restitution” (1998) 48:4 University
of Toronto Law Journal 459 at 460. See ibid at para 36. Regardless
of the details, however, the purported requirement was irreconcilable
with the rules of restitutionary liability as a matter of policy, principle,
and historical precedent. The court similarly was led astray on another
fundamental point, Campbell, supra note 122 at para 26. Borins JA stated
the issue of juristic reasons should be treated as a “narrow question of
fairness as between the parties. Courts should consider whether, having
regard to the particular circumstances giving rise to an enrichment and
to subsequent events, it is fair for the defendant to retain the benefit”,
quoting MM Litman, “The Emergence of Unjust Enrichment as a Cause
of Action and the Remedy of Constructive Trust” (1988) 26:3 Alberta
Law Review 407 at 451. That conception of injustice invites precisely the
sort of “palm tree justice” that nearly proved fatal to unjust enrichment
during the early part of the twentieth century. See Holt v Markham,
[1923] 1 KB 505 (Eng) at 513 (rejecting “well-meaning sloppiness of
thought” as a basis of liability); See Beblow, supra note 50 (Of course, the
restitutionary action is not actually “a device for doing whatever may seem
fair between the parties” at 987).

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Campbell, liability might have been refused on other grounds,141 but the
improvements undertaken by the defendant’s sons increased the value of
her farm and provided her with a realizable financial gain.142 And once
an enrichment and a corresponding deprivation have been established, a
transfer is reversible as long as it occurred without juristic reason.
Significantly, all of that would hold true even if the parties did
not share a pre-existing relationship. Cases of that sort understandably
are rare. It is easy enough to imagine a person acquiring possession

141. Campbell, supra note 122 at para 11. When the issue first arose, Laura
was “[n]ot agreeable” with her sons’ plans to upgrade the farm. Because
they “just ignored her and went ahead”, their ensuing claim might have
been barred on the grounds of officiousness. The law of unjust enrichment
does not protect those who knowingly foist themselves on others. The
plaintiffs resisted that conclusion by arguing that Laura’s objections were
a function of the fact that “her mind was so screwy”. And indeed, given
“her impaired state of mind”, the court was “doubtful” that she was able
“to properly acquiesce in what was taking place”; see Campbell, supra
note 122 at para 38. Even if that was true, however, relief might have
been refused on the basis that the defendant had received an incidental
benefit from the claimants’ self-interested acts. As Borins JA interpreted
the situation, the brothers undertook the improvements because dairy
production was their business. While their mother had stopped drawing
an income several years earlier, their livelihood depended upon the
efficient operation of the farm. They knowingly had acted without any
expectation of compensation other than the profits generated by the
business. See also Simonin Estate, supra note 100; cf. Morash, supra note
93 (relief available if plaintiff motivated only partially by self-interest).
The concepts of officiousness and incidental benefit may be incorporated
within Garland’s test of juristic reasons, but they are better addressed at
a fourth stage of analysis, dealing with bars and defences: Mcinnes, supra
note 17 at chs 41-42.
142. Campbell, supra note 122. So too, by replacing old equipment and
building a new barn, the claimants arguably discharged a factually
necessary expense. Without those improvements, the family business was
not viable.

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of a chattel and improving it without any knowledge of the owner.143
Because it stays in one place, land does not readily lend itself to similar
treatment. Restitutionary claims nevertheless may arise, outside of
“special relationships”, if, for instance, the plaintiff improved a parcel
under a mistake of title.144 Fortunately, the Canadian principle of unjust
enrichment is now sufficiently mature to resolve such claims without the
need for extraneous requirements.

VI.

Conclusion

This paper is misleading in one respect. Its title suggests that improvements
to land are remedied primarily, if not exclusively, in equity. As explained
in the introduction, that largely was true in the past. Leaving aside the
law’s ability to reduce a landowner’s right to mesne profits by the value
of improvements provided by a bona fide trespasser, the only hope
for relief was found in equity’s passive right of set-off or its doctrine
of proprietary estoppel. Since the turn of the century, however, the
situation has changed dramatically. The criteria for proprietary estoppel
have been relaxed, but much more importantly, the action in unjust
enrichment has been allowed to operate according to its own logic.
The concept of “special relationships”, initially adopted in a misguided
attempt to protect the autonomy of innocent recipients, increasingly
has been abandoned. Canadian courts have recognized that, regardless
of any request or acquiescence, beneficial services may incontrovertibly
enrich the defendant, and, in the absence of any juristic reason, trigger a
restitutionary obligation. The principle of unjust enrichment sufficiently
143. Gidney, supra note 43; Mayne v Kidd, [1951] 2 DLR 652 (Sask CA);
Ings v Industrial Acceptance Corp Ltd, [1962] OR 454 (CA); Greenwood,
supra note 44; Robinson, supra note 43; cf. Webb, supra note 44; Munro v
Willmott, [1949] 1 KB 295 (Eng); Mutungih v Bokun (2006), 40 CCLT
(3d) 313 (Ont Sup Ct J).
144. Even when the parties are aware of each other, they are not joined by
a “special relationship” or “bilaterality” unless the defendant requests
or receives beneficial services with knowledge that the plaintiff expects
something in return. As a result, the parties effectively are strangers if, for
instance, a purchaser makes improvements after taking early occupation
under a contract that is later struck down: see Nicholson, supra note 81.

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protects freedom of choice and the addition of extraneous requirements
like “bilaterality” merely serves to defeat legitimate claims.
All of that would seem to reinforce the title of this paper:
improvements to land are remedied in equity through the action in
unjust enrichment. In truth, however, there is nothing inherently
equitable about restitutionary relief. Indeed, the vast bulk of the subject
now known as “unjust enrichment” derives from the ancient courts of
law, rather than chancery.145 Canadian judges come close to recognizing
that fact when they address improvements to land in terms of quantum
meruit, which, as one of the common counts under the writ of indebitatus
assumpsit, operated in the courts of law.146 Nevertheless, although the
same error seldom is seen in other common law jurisdictions,147 most
Canadian lawyers believe that the whole of unjust enrichment is equitable
in origin and nature.148 The explanation for that belief is unclear, but there
is simply no debate on the central point.149 As with tort and contract,
unjust enrichment is an essentially legal concept. Equity typically enters
into the picture, as needed, at the margins. For instance, just as a tortious
nuisance may attract injunctive relief and a contract to sell land may
trigger specific performance, an unjust enrichment may be remedied by
145. McInnes, supra note 17 at 31-54.
146. Idle-0, supra note 30 at para 79; McLeod, supra note 53.
147. Sinclair v Brougham, [1914] AC 398 (HL)(“the notion that [the
restitutionary action] was an equitable action” has been “exploded” — it
“was not devised by the Court of Chancery, nor was it applied there either
in form or in substance” at 454-456); Roxborough v Rothmans of Pall Mall
Australia Ltd (2001), 208 CLR 516 (HCA)(“a perfectly legal action” at
562); American Law Institute, Restatement of the Law Third: Restitution
and Unjust Enrichment (St. Paul: American Law Institute, 2011),
Comment A (warning against “the common misperception that liabilities
or remedies described in terms of ‘unjust enrichment’ are necessarily
equitable in origin” at § 4).
148. Cf. Communities Economic Development Fund v Canadian Pickles Corp,
[1991] 3 SCR 388 (the restitutionary action “does not lie in equity” at
415); Federated Co-Operatives Ltd v Canada, 2001 FCA 23 at para 5;
Michelin Tires (Canada) Ltd v Canada, 2001 FCA 145.
149. Mitchell McInnes, “The Equitable Action in Unjust Enrichment” (2007)
45:2 Canadian Business Law Journal 253.

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a proprietary form of restitution (e.g. a trust or a lien) if a simple money
judgment would be inadequate. While the response may be equitable,
the underlying cause of action generally operates in law.150
Nearly 150 years after the Judicature Acts fused the administration
of law and equity, pedigree should be largely irrelevant.151 Within the
context of this paper, however, it bears mention for one reason. Canadian
lawyers tend to believe that unjust enrichment is “equitable” in two
respects. Having attributed the cause of action to the courts of chancery,
they further insist that the availability of restitution “necessarily” turns,
to an unusual degree, on “discretion and questions of fairness”.152 That
would suggest that one who improves another’s land must both satisfy
the three-part cause of action and bring the episode within the judge’s
concept of “good conscience”. In Servello, for instance, the improver’s
claim was dismissed because he had not come to court with “clean
hands”.153 In truth, that additional requirement is both unprecedented
and unprincipled. As Lord Goff once explained, “restitution is not … a
matter of discretion … A claim to recover money at common law is made
as a matter of right; and even though the underlying principle of recovery
is the principle of unjust enrichment, nevertheless, where recovery is

150. Exceptions do exist. That is true of the action for knowing receipt, which
provides restitution if a stranger obtains property that beneficially belongs
to the plaintiff under a trust. See e.g. Citadel General Assurance Co v Lloyds
Bank Canada, [1997] 3 SCR 805. Because the misdirection of trust assets
cannot be remedied by law, the Chancellor developed a species of the
claim in unjust enrichment.
151. Andrew Burrows, “We Do This at Common Law But That in Equity”
(2002) 22:1 Oxford Journal of Legal Studies 1.
152. Garland, supra note 37 at para 44.
153. Servello, supra note 35.

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denied, it is denied on the basis of legal principle”. 154 Just as it has no
need for a “special relationship” doctrine, so too, the modern Canadian
principle of unjust enrichment can consistently resolve restitutionary
claims without recourse to ill-defined notions of “equitable” fairness.

154. Lipkin Gorman v Karpnale Ltd, [1991] 2 AC 548 at 578 (HL). See also
Beblow, supra note 50 (cautioning against the “tendency … to view the
action for unjust enrichment as a device for doing whatever may seem fair
between the parties” at 987); Peel, supra note 50 (rejecting the suggestion
that “recovery can be awarded on the basis of justice or fairness alone”
at 767); Pavey & Matthews Pty Ltd v Paul (1987), 162 CLR 221 (HCA)
(denying that unjust enrichment entails a “judicial discretion to do
whatever idiosyncratic notions of what is fair and just might dictate” at
256).