The Fundamentals Of A Civil Asset Recovery Action - Part 2

Article by Martin Kenney

& Elizabeth

O'Brien

Restitution and Unjust Enrichment.

Restitution has been defined as a body of law in which (a)

substantive liability is based on unjust enrichment, (b) the

measure of recovery is based on the defendant's gain

instead of the plaintiff's loss, or (c) the court restores

to the plaintiff, in kind, his lost property or its

proceeds.

The divergence between the American and English perspectives

on restitution is marked. The American Restatement on the law

of restitution suggests that a plaintiff will be entitled to

restitution in any circumstances where the defendant has been

unjustly enriched at the expense of another. In contrast, under

the English legal position, there is not necessarily any right

to recover money in personam merely because it would

be the right and fair thing that it should be refunded to the

payer. Entitlement to recovery on the basis of restitution in

the English legal system seems to be very much based upon the

implied existence of a promise to repay - or, in essence,

a contractual obligation of sorts.21

Restitution, more narrowly than tort or contract, focuses on

re-establishing equality as between two parties, as a response

to a disruption of equilibrium. Its raison

d'être is founded in the injustice that lies in

one person's retaining something which he or she ought not

to retain, requiring that the scales be righted. It also must

take into account not only what is fair to the plaintiff, but

also what is fair to the defendant.

The overriding impression is that restitution is a remedy

for wrongs defined by other theories of liability as opposed to

an independent source of liability having characteristic

remedies of its own. Yet the Supreme Court of Canada case of

Lac Minerals Limited v. International Corona Resources

Limited 22 refers to the constructive trust as

being one of the remedies in the law of restitution, suggesting

that it has both a remedial and a substantive role to play. The

distinction is of no immediate practical significance. Where a

defendant has committed a wrong from which he benefits, the

essential thing is to recognise that the law of restitution

offers the plaintiff a choice of remedies, among them a

monetary recovery measured either by harm to the plaintiff or

benefit to the defendant. If the latter alternative is more

advantageous, as in the case of a profitable trespass causing

no injury to the plaintiff, there is a sense in which it does

not matter whether we describe the result by saying that the

law provides an alternative remedy in restitution for a tort

liability, or that the basis of liability is the

defendant's unjust enrichment at the expense of the

plaintiff. The distinction, however, may be important where

proof of liability may be provided by reference to the

defendant's unjust gain.

The distinction between restitution as a substantive area of

law and restitution as a remedial area also has implications in

respect of determining what legal system might apply in a

multi-jurisdictional dispute - under the relevant

principles governing choice of law or the conflict of laws.

Depending upon how it is classified, where a conflict of laws

arises, the law of restitution that is deemed to govern the

resolution of the dispute could be that of where the wrong

occurred (if seen as substantive), or that of the forum (where

seen as remedial).

Focusing on restitution as a remedy, in contrast to a

separate head of liability, a question arises - what

basis of liability activates an obligation to provide

restitution? The answer is that there are many, and restitution

can be considered a catch-all type remedy which leads itself to

providing redress for a wide selection of wrongs. These wrongs

can be roughly brought together as a class of case where the

defendant's independently actionable wrongdoing is what

makes an enrichment unjust as opposed to the situation where

the defendant's only wrongdoing is the failure to account

for a benefit received. In either case, there is violation of a

legal duty and unjust enrichment - but the distinction

may be said to be between an action and an omission. That duty

is the duty to restore or pay for benefit that the recipient

cannot conscientiously retain.

The related equitable theories of restitution, unjust

enrichment, quasi-contract, contract implied-at-law and quantum

meruit - all actions brought under common law doctrines

- are essentially the same, and the names are used

interchangeably in much case law. (See, Pascals

v. Dozier23). In the past, such

actions were also known as actions in assumpsit, for

money had and received, or an "equitable action to recover

money which the defendant in justice ought not to retain...

where a defendant has monies of the plaintiff which, ex

equo et bono, he ought to

refund."24 In essence, the action lies in money

received by one party that, in justice and equity, belongs to

another. A contract is therefore implied because natural

justice requires either the return of the money or some other

benefit to be conferred upon the plaintiff.

Unjust enrichment and the law of restitution have been used

in the United States as a basis for providing recompense to

plaintiffs. In contrast, in England, courts have sought to

classify the cause of action as one resting in quasi-contract.

In other words, English judges have preferred to find the

existence of an implied promise to repay or an implied

contractual obligation as a basis for ordering the return or

repayment of money, goods or benefit to the rightful

owner.25

Tracing - or 'Tracking and Attributing'

Ownership to Concealed Wealth.

To an English lawyer, tracing refers to the process whereby

assets which in equity belong to another, or may be said to be

impressed by a constructive trust in another's favour, may

be 'traced' by their beneficial owner from their point

of departure through to their current location. It provides an

answer to the question of who the true owner of wealth may be

- if it has been misappropriated or lost due to some form

of wrongdoing. It is an equitable remedy (although it is also

available at law in more narrow factual settings). Accordingly,

it requires adherence to the maxims of equity. These maxims

ensure that those who seek the assistance of the courts of

equity are themselves deserving of such assistance and include

rules such as the...