Unjust Enrichment – Hull on Estates #174
Listen to: Unjust Enrichment – Hull on Estates #174
This week on Hull on Estates, Diane Vieira and Rick Bickhram discuss a recent decision from Judge Daley regarding unjust enrichment, using the case of Simonin vs. Simonin as a background to explain the issues surrounding unjust enrichment.
Simonin v. Simonin, 2008 CanLII 58155 (ON S.C.)
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Unjust Enrichment – Hull on Estates- Episode #174
Diane Vieira: Hello and welcome to Hull on Estates. You’re listening to episode 174 on Tuesday, August 4, 2009.
Welcome to Hull on Estates, a series of podcasts for the Canadian legal community dealing with issues and insights surrounding estate planning in Canada. Hosted by the lawyers of Hull & Hull, the podcast will touch on some key considerations when planning estates and wills. Now, here are today’s hosts.
Rick Bickhram: Hi and welcome to another episode of Hull on Estates. I’m Rick Bickhram.
Diane Vieira: And I’m Diane Vieira.
Rick Bickhram: And if you want to be heard on Hull on Estates, you can participate by leaving us a comment. Please e-mail us at firstname.lastname@example.org or you could visit our daily blog at estatelaw.hullandhull.com. How are you doing today, Diane?
Diane Vieira: I’m good. How are you?
Rick Bickhram: Not bad. It’s a Tuesday after a long weekend. I had a relaxing weekend this weekend. Yourself?
Diane Vieira: So did I. It was very nice.
Rick Bickhram: Great. Well today, I was thinking that maybe we could discuss a case law that I happened to come across. It’s a recent decision by Justice Daley. And in his decision, he analyzes the concept of unjust enrichment. The name of the case is Simonin v. Simonin. Just by way of a very brief background, I’m going to go into some of the basic facts. In this case, we have a plaintiff and defendant, as in most cases. The plaintiff in this case was the surviving spouse of the deceased. And the defendant was the mother of the deceased.
Diane Vieira: And the plaintiff brought this claim personally on her own behalf and also on behalf of her late husband as estate trustee. And basically what the plaintiff was seeking was a declaration that she was entitled, or that she and the estate of her late husband were entitled to a portion of the net proceeds of the sale of a farm property as a result of an unjust enrichment flowing to the defendant, which was her mother-in-law.
Rick Bickhram: Okay, well the property was owned by the mother-in-law.
Diane Vieira: Yes.
Rick Bickhram: It devolved from the deceased’s father to his mother. So it was owned by the mother-in-law but the deceased was the individual, the deceased and the plaintiff, during their lifetime and with their children, lived on the property, took care of the farm property, had the benefit of I guess enjoying the benefits of cash crops and the cattle. I believed the cattle were being raised there for beef, etc., right?
Diane Vieira: Yes, so they resided…they married I believe in 1996 and they resided there until 2004 which would be the year of her husband’s death. There was a farm house that was in question and that’s actually the property that was sold but they also did operate a farm on that land.
Rick Bickhram: Now while they were living on the farm, I understand that the deceased made certain renovations to the property. So one of the questions in issue in this trial was, what was the value of those renovations that were made by the deceased?
Diane Vieira: Yes, during his lifetime, the deceased…and there’s quite a bit of detail in the actual case, judgment…he made a substantial amount of renovations to the home itself. And that was the reason why the plaintiff had brought her claim.
Rick Bickhram: One of the key facts…and sorry to cut you off, I didn’t intend on doing that…but just one of the key facts that kind of, it’s glaring at me here was the renovations that were made on the property…they were being made or under the name of one of the deceased’s construction companies. I think that’s important because as we go through the analysis of unjust enrichment, Justice Daley points out, uses the construction company as a reason in his holding here so…
Diane Vieira: That’s actually a really important point because he later goes on to state that when you ask for the equitable remedy of unjust enrichment, you have to come to Court with clean hands. And in this case, the improvements to the home were done by a construction company that belonged to the deceased that probably got a tax benefit and in terms of deciding what deprivation the deceased suffered, the fact that the construction work was done towards the company that probably got a benefit, was a very important fact that he makes throughout the judgment.
Rick Bickhram: Absolutely. So there’s the general background of the facts. Plaintiff, defendant. Plaintiff and her husband, while he was alive, lived at the farm. Defendant was the owner of the property named on title. Subsequent to the death of the deceased, the defendant, the mother, sold the property and this was…let me take it a step back…the plaintiff moved out of the property with her children and the defendant subsequently sold the property. So with respect to the proceeds of sale, the plaintiff had requested certain funds from the defendant prior to commencing this action. The defendant rejected the plaintiff’s request for those funds and the plaintiff subsequently commenced this action seeking some of the net proceeds from the sale of that property on the grounds of unjust enrichment.
Diane Vieira: Yes. And I just wanted to add a little bit more background to maybe clarify a few things. So the house was sold in 2004. One fact that Justice Daley mentioned was the plaintiff chose to leave the house. It was the defendant’s testimony that she intended to allow the plaintiff and the children to continue to reside in the home. And it’s only after they left that she sold it. And we should also point out that the defendant maintained…we’ll discuss this later on but the defendant paid the property taxes until it was sold in 2004 and the defendant had paid the utilities for the property for the period up until 1996 and from 1996 on, probably the plaintiff had paid the utilities. But there’s a lot of detail with that later on in the judgment. And one other thing I wanted to mention was that the plaintiff had sold farm equipment that had been given to her and her husband by the defendant, and had sold that and that was a benefit to her of around $400,000.
Rick Bickhram: Okay, going into the analysis of the unjust enrichment, or maybe before we do that we should look at why did she bring the unjust enrichment claim. Being in the plaintiff’s shoes, her view was during my husband’s lifetime, he made improvements on this property. We took care of it and we greatly appreciated the value of this property while we were living on it. We are certainly entitled to some of the proceeds from sale as compensation or just compensation for the work we put into this property. That was the essence of her claim.
Diane Vieira: Yes.
Rick Bickhram: And in his review, Justice Daley looks back at the test for unjust enrichment. And what do we look for? Justice Daley states: (1) there has to be an enrichment conferred upon the defendant; (2) there has to be a corresponding deprivation to the plaintiff; and (3) there has to be an absence of a juristic reason for the enrichment.
Diane Vieira: Yes. He refers to the Supreme Court of Canada decision Peter v. Balboa and sets out that exact test.
Rick Bickhram: Okay, so Diane, what do you think was the benefit or the enrichment that was conferred upon the defendant? What was the plaintiff saying here?
Diane Vieira: So basically the position of the plaintiff was my husband did this work on this property, it greatly valued the property. Therefore, I should be entitled to a remedy. However, Justice Daley found that while the property was improved and he even gives it a figure up and to a value of $545,000, the plaintiff’s claim both personally and on behalf of the estate, fails because no benefit was conferred to the defendant by the plaintiff or her late husband because the work was done by the construction company. So it’s the construction company’s claim, not the claim by the plaintiff or her husband, sorry.
Rick Bickhram: So if I understand correctly, what Justice Daley is saying here is, yeah there was some sort of benefit conferred to the defendant but it was not a benefit conferred by the deceased, it was not a benefit conferred by you, the plaintiff. It was a benefit conferred by the deceased’s construction company.
Diane Vieira: Yes. Despite that finding, he does go on to consider the second branch of the test, corresponding deprivation. So in that regard, he looks at what the plaintiff and her late husband lost as a result of this unjust enrichment. And he basically found that the plaintiff and her late husband were able to live on a rent-free basis on this farm property for 8 years, they benefited from the money they generated from farming the property. The evidence is that they kept all the proceeds of farming. The deceased used the property as a basis for his business, so he had that benefit. And in great detail, Justice Daley goes on to list all the benefits that the plaintiff and her late husband were able to enjoy and he gives that a number figure of over $700,000. He then adjusts that number to somewhere in the $600,000 range and he then contrasts what that number was compared to the value they added to the property. And the value they added to the property he finds to be in the amount of $230,000. So he compares the benefit they received, which is the range of $600,000, to what they contributed to the property, in the range of $200,000.
Rick Bickhram: In essence here, the plaintiff failed to establish that there is some sort of corresponding deprivation caused as a result of the benefit conferred. And I think at this juncture of the litigation, it really hurt her case here. Justice Daley, as Diane had mentioned, went through a very detailed analysis speaking about all of the benefits that were received by the plaintiff and the deceased. They were living rent-free on the property, they had the enjoyment of the farm equipment for free, it allowed the deceased to enjoy building his own building on the property for the purpose of his business, again which was rent-free. And at the end of the day, Justice Daley kind of compared the two and he said well, it seems to me that you had a bigger benefit than any benefit you conferred on to the defendant here.
Diane Vieira: Yes.
Rick Bickhram: The final test, even though it was in Justice Daley’s eyes that neither of the two branches of unjust enrichment were established, he still went on to consider the third prong of this test which is the absence of a juristic reason for the enrichment of the defendant. And what does this mean? Justice Daley, in his analysis, quotes part of a case law that clears up what that third prong means. And it says “what is at the heart of the third requirement is the reasonable expectation of the parties. And whether it would be just and fair for the parties considering all of the relevant circumstances to permit the recipient of the benefit to retain it without compensation to those who provided it”. So what does that mean? What was the reasonable expectations of the parties here?
Diane Vieira: Yes, so this is a most tricky branch and the one that there’s been a lot of writing on. He does reference the Supreme Court of Canada decision Garland v. Consumer Gas, a 2004 decision, which attempts to clarify that third branch. And basically he found that the plaintiff didn’t improve her case because there was no expectation on behalf of the defendant to compensate the plaintiff or her late son for the work they did on the property. They were never billed for this work. There was no discussions that they would be compensated. There was no evidence before the Court that the defendant was expected to compensate.
Rick Bickhram: And I think he concluded this third prong of the branch by stating that any renovations that were made on the property, or any benefit that was conferred onto the defendant was pretty much done voluntarily by the plaintiff and the deceased and it was done in their own self-interest. Like Diane said, there was no invoice from the construction company to the defendant. There was no expectation here that the deceased, nor would the plaintiff at some point be compensated for their services.
Diane Vieira: Yes. So just to summarize, Justice Daley did not find evidence of unjust enrichment. He did not provide the plaintiff with a remedy. He found that it failed on all three grounds. But it’s an interesting case to use as a reference tool because the up-to-date law concerning unjust enrichment is laid out in the judgment.
Rick Bickhram: And I think that brings us to an end of this week’s discussion. Thanks for listening. And thanks for joining me today, Diane.
Diane Vieira: Thank you Rick.
Rick Bickhram: And we look forward to hearing from you, our listeners. You can send us an e-mail at email@example.com. Be sure to visit our blog at estatelaw.hullandhull.com where you’ll find even more information and discussion on today’s practice of estate law. We hope that you enjoyed the show. I’m Rick Bickhram.
Diane Vieira: And I’m Diane Vieira. Until next week…
Rick Bickhram: So long.
Diane Vieira: Bye.
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