Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, [1992] 3 SCR 762

Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762

 

The Regional Municipality of Peel                                             Appellant

 

v.

 

Her Majesty The Queen in Right of Canada                             Respondent

 

and between

 

The Regional Municipality of Peel                                             Appellant

 

v.

 

Her Majesty The Queen in Right of Ontario                             Respondent

 

Indexed as:  Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario

 

File Nos.:  21342, 22301.

 

1992:  June 2; 1992:  November 19.

 

Present:  Lamer C.J. and La Forest, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.

 

on appeal from the federal court of appeal

 

on appeal from the court of appeal for ontario

 

                   Restitution ‑‑ Municipality ordered by Provincial Court to financially support young offenders placed by the court in group homes ‑‑ Authority for ordering this support later found unconstitutional ‑‑ Municipality paying support but only reluctantly ‑‑ Municipality seeking restitution from federal government

in Federal Court and from provincial government in Supreme Court of Ontario ‑‑ Whether or not municipality entitled to restitution ‑‑ Juvenile Delinquents Act, R.S.C. 1970, c. J‑3, ss. 20(1), (2) ‑‑ Canadian Charter of Rights and Freedoms, s. 24(1)  ‑‑ Constitution Act, 1982, s. 52(1) .

 

                   Between 1974 and 1982, the Family Court judges in the Peel District directed a number of juveniles be placed in group homes, pursuant to s. 20(1) of the Juvenile Delinquents Act (which provided for placement with an individual or an institution), rather than rely on placement by the Children's Aid Society.  The judges ordered the municipality, pursuant to s. 20(2) (which authorizes a family court judge to order a municipality to contribute to the support of a juvenile) to pay the per diem rate that each group home charged for the care of the child.  The municipality claimed the amount paid under these orders after deducting the ex gratia amounts paid to the municipality by the province for the years 1976‑1982.

 

                   The municipality successfully challenged the jurisdiction of the Family Court judges to direct that the juveniles be placed in a group home on the ground that a "group home" is not an individual or institution to which a child may be committed under s. 20(1).  The trial judge in that action found in obiter, that s. 20(2) was intra vires Parliament.  The Court of Appeal affirmed the judgment in its entirety, and declared the orders invalid.  The Supreme Court confirmed the appeal judgment but refrained from pronouncing upon the constitutional validity of s. 20(2).

 

                   After judgment was given at trial and before the appeals were

heard, the municipality at the province's request agreed to continue paying the children's maintenance costs and to refrain from seeking immediate recovery from the group home pending negotiations as to an equitable cost sharing arrangement.  The province agreed to contribute to 50% of the municipality's costs which would result from such orders in the future.  The federal government was not included in any of the municipality's protests or the negotiations which followed soon after the judgment at trial.

 

                   The authority of the Family Court judges to place a juvenile in the custody of a named person at the group home, as opposed to the group home itself, was later confirmed in a parallel proceeding.  On appeal, however, this Court struck down s. 20(2) so far as it purported to authorize the imposition of the financial cost of the disposition on a municipality.

 

                   The municipality commenced these proceedings for restitution from the provincial and federal governments.  The Federal Court (Trial Division) (File No. 21342) ordered the federal government to reimburse the municipality.  The Federal Court of Appeal, however, found that the appellant had not established that Parliament was legally obligated to pay for the juveniles subject to these orders and thus had not made out its claim in restitution.  The proceedings against the province (File No. 22301) played out in a similar fashion.  The Ontario Supreme Court ordered the province to reimburse the municipality but the Court of Appeal reversed that judgment because the municipality had failed to meet the elements of a claim in restitution.

 

                   The municipality appeals to this Court from both judgments.  It seeks reimbursement of what it paid out pursuant to the invalid orders plus interest.

 

                   Held:  The appeals should be dismissed.

 

                   Per La Forest, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.:  No recovery lies for unjust enrichment without a benefit which has "enriched" the defendant and which can be restored to the donor in specie or by money.  It is immaterial, therefore, that the plaintiff suffered a loss if the defendant gained no benefit.  The difficulty in this case, therefore, lies in establishing that the payments conferred a "benefit" on the federal and provincial governments which represent an unjust retention or enrichment.

 

                   Two types of benefit exist:  a positive benefit upon the defendant (e.g., the payment of money) and a `negative' benefit (in the sense that the defendant was spared an otherwise inevitable expense such as a legal expense).  To be established in the class of payment made under compulsion of law, a benefit must be shown to have discharged the defendant's liability. 

The municipality cannot meet this test for this category, or indeed, for any of the traditional categories.  Neither the federal nor provincial government was under a constitutional, statutory or legal obligation to care and provide for the care of these children.

 

                   An "incontrovertible benefit" is one that is demonstrably apparent and not subject to debate and conjecture.  Where the benefit is not clear and manifest, it would be wrong to make the defendant pay, since he or she might well have preferred to decline the benefit if given the choice.  Any relaxation

on the traditional requirement of discharge of legal obligation which may be effected through the concept of "incontrovertible benefit" is limited to situations where it is clear on the facts (on a balance of probabilities) that had the plaintiff not paid, the defendant would have done so.  Otherwise, the benefit is not incontrovertible.

 

                   The benefit must be more than a secondary collateral benefit.  A plaintiff, were it otherwise, could recover twice ‑‑ once from the person who is the immediate beneficiary of the payment or benefit (the parents of the juveniles placed in group homes here), and again from the person who reaped an incidental benefit.  It would also open the doors to claims against an undefined class of persons who, while not the recipients of the payment or work conferred by the plaintiff, indirectly benefit from it.

 

                   The municipality falls short of the law's mark.  The benefit conferred is not incontrovertible because neither level of government was shown to have gained a demonstrable financial benefit or to have been saved an inevitable expense.  Nor is it "unquestionable"; the federal and provincial governments were under no legal obligation and their contention that they were not benefited at all, or in any event to the value of the payments made, had sufficient merit to require, at the least, serious consideration.  It was neither inevitable nor likely that, in the absence of a scheme which required payment by the municipality, the federal or provincial government would have made such payments.  An entirely different scheme could have been adopted.

 

                   Admitting recovery here would extend the concept of benefit in the law of unjust enrichment far beyond the restoration of property, money, or services unfairly retained.  Recovery could occur wherever a payment had been made under compulsion of law which has an incidental beneficial effect of a non‑pecuniary nature.

 

                   Parliament was clearly aware of and relied upon the obligation of parents to support their children, expressly acknowledged in s. 16(1) of the (then) Family Law Reform Act, because s. 20(2) of the Juvenile Delinquents Act provided that the municipality could recover any expenditures ordered under s. 20(2) from the parent or parents responsible.  The fact that the municipality's payments furthered Canada's general interest in the welfare of its citizens or its more particular interest in the effective administration of its scheme for the regulation of criminal conduct by minors is an insufficient "correlative link" upon which to found recovery even on the application of the broader `incontrovertible benefit' doctrine.  It falls short of proof of a "demonstrable financial benefit" or proof that the federal government was saved an "inevitable expense".  The principle of freedom of choice is not a "spent force" in this instance ‑‑ the municipality has not established that its

payments covered an expense that the federal government "would have been put to in any event" nor did it proffer any evidence that the Canadian government "capitalized" in any direct fashion upon these payments.  Federal government (financial) support of the juveniles' stay in the group homes in Peel was not "inevitable".  Neither was this expense "necessary",  given the host of dispositions available to judges under s. 20, and given the municipality's statutory authority to seek reimbursement from the children's parents.  Parliament did not believe it had any obligation to provide financial support for the juveniles assigned to group homes; any obligation it had to the provinces in this regard was created by a voluntary federal‑provincial agreement to which the appellant was not privy.  Any benefit received by the Government of Canada from the municipality's payments was therefore incidental or indirect.

 

                   The same inability to establish an incontrovertible benefit bedevils the municipality's claim against the province.  The fact that the appellant's payments necessarily furthered the province's general interest in the welfare of its citizens or its more specific interest in the protection and supervision of children residing within its boundaries is, for the reasons already outlined, not a sufficient basis upon which to found recovery even if the Court were to apply the `incontrovertible benefit' doctrine.  The appellant did not establish

on a balance of probabilities that the province either received "a demonstrable financial benefit" or was spared an inevitable expense.  The appellant has, at most, shown that its payments may have relieved the province of some obligation or debt that might have arisen.

 

                   The municipality is reduced in the final analysis to the contention that it should recover the payments which it made from the federal and provincial governments because this is what the dictates of justice and fairness require.  Where the legal tests for recovery are clearly not met, however, recovery cannot be awarded on the basis of justice or fairness alone.  A general adherence with accepted principle must be demonstrated as well.  These principles must be sufficiently flexible to permit recovery where justice so requires having regard to the reasonable expectations of the parties in all the circumstances of the case as well as to public policy.  Such flexibility is found in the three‑part test for recovery enunciated by this Court in cases such as Pettkus v. Becker.

 

                   Justice, even if it, without more, were admitted as the basis of recovery, would not require recovery.  Restitution, more narrowly than tort or contract, focuses on re‑establishing equality as between two parties, as a response to a disruption of equilibrium.  Injustice 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.  It is not enough that the plaintiff has made a payment or rendered services which it was not obliged to make or render; it must also be shown that the defendant as a consequence is in possession of a benefit, and it is fair and just for the defendant to disgorge that benefit.  Of equal importance, fairness must embrace not only the situation of the claimant, but the position of those from whom payment is claimed.  It is far from clear that ordering payment to the municipality would be fair to the federal and provincial governments and the taxpayers who would ultimately foot the account.

 

                   Per Lamer C.J.:  The municipality did not meet the test for benefit of both the federal and provincial governments under compulsion of law because  it failed to demonstrate any obligation on the part of either the federal or the provincial governments to care for juvenile delinquents which was sufficient to satisfy the requirements of the applicable test.

 

                   Appellant was seeking to establish a type of Charter  s. 24(1)  remedy in a restitution claim made without reference to s. 52(1)  of the Constitution Act, 1982 , and after the fact of the declaration that the impugned provision was ultra vires Parliament.  The two forms of relief, restitution and a remedy under s. 24(1)  of the Charter , must not be confused.  Section 24(1) only provides a remedy for individuals (whether real persons or artificial) whose rights under the Charter  have been infringed.  Even if Peel had brought a successful division of powers constitutional challenge to the legislation under s. 52(1), an individual remedy under s. 24(1)  of the Charter  will rarely be available in conjunction with an action under s. 52  of the Constitution Act, 1982 .  Ordinarily, where a provision is declared unconstitutional and immediately struck down pursuant to s. 52, that will be the end of the matter.  No retroactive s. 24 remedy will be available.  Peel's relief would have been limited to the declaration that the provision was unconstitutional and of no force or effect.

 

Cases Cited

 

By McLachlin J.

 

                   Distinguished:  Carleton (County of) v. Ottawa (City of), [1965] S.C.R. 663; referred to:  Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957; Attorney General for Ontario v. Regional Municipality of Peel, [1979] 2 S.C.R. 1134; Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9; Pettkus v. Becker [1980] 2 S.C.R. 834; Taylor v. Laird (1856), 25 L.J. Ex. 329; Slade's Case (1602), 4 Co. Rep. 92b, 76 E.R. 1074; Brook's Wharf and Bull Wharf, Ltd. v. Goodman Brothers, [1937] 1 K.B. 534; Air Canada v. British Columbia, [1989] 1 S.C.R. 1161.

 

By Lamer C.J.

 

                   Referred to:  Brook's Wharf and Bull Wharf, Ltd. v. Goodman Brothers, [1937] 1 K.B. 534; Carleton (County of) v. Ottawa (City of), [1965] S.C.R. 663; Reference re Adoption Act, [1938] S.C.R. 398; Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9; R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295; Schachter v. Canada, [1992] 2 S.C.R. 679.

 

Statutes and Regulations Cited

 

Canadian Charter of Rights and Freedoms , s. 24(1) .

 

Constitution Act, 1982 , s. 52(1) .

 

Family Law Reform Act, R.S.O. 1980, c. 152, s. 16(1), (2) (now Family Law Act, 1986, S.O. 1986, c. 4, s. 31(1), (2)).

 

Juvenile Delinquents Act, R.S.C. 1970, c. J‑3, s. 20(1), (2).

 

Regional Municipality of Peel Act, S.O. 1973, c. 60, s. 66 (now R.S.O. 1980, c. 440, s. 70).

 

Young Offenders Act , R.S.C., 1985, c. Y‑1 .

 

Authors Cited

 

Fridman, G. H. L., and James G. McLeod.  Restitution.  Toronto:  Carswell, 1982.

 

Gautreau, J. R. Maurice.  "When Are Enrichments Unjust?" (1989), 10 Advocates' Q. 258.

 

Goff, Robert, Lord Goff of Chieveley, and Gareth Jones.  The Law of Restitution, 3rd ed.  London:  Sweet & Maxwell, 1986.

 

Maddaugh, Peter D. and John D. McCamus.  The Law of Restitution.  Aurora:  Canada Law Book, 1990.

 

McInnes, Mitchell.  "Incontrovertible Benefits and the Canadian Law of Restitution" (1990), 12 Advocates' Q. 323.

 

Restatement of the Law of Restitution:  Quasi‑Contracts and Constructive Trusts.  As

adopted and promulgated by the American Law Institute, at Washington, D.C., 1937.  St. Paul:  American Law Institute Publishers, 1937.

 

Stevens, David.  "Restitution, Property, and the Cause of Action in Unjust Enrichment:  Getting By With Fewer Things (Part I)" (1989), 39 U.T.L.J. 258.

 

Wingfield, David R.  "The Prevention of Unjust Enrichment:  or How Shylock Gets His Comeuppance" (1988), 13 Queen's L.J. 126.

 

Zwiegert, Konrad, and Hein Kötz.  An Introduction to Comparative Law, 2nd ed., vol II.  Translated by Tony Weir.  Oxford:  Clarendon Press, 1987.  U.T.L.J. 258.

 

                   APPEAL (File No. 21342) from a judgment of the Federal Court of Appeal, [1989] 2 F.C. 562, 55 D.L.R. (4th) 618, 89 N.R. 308, 41 M.P.L.R. 113,  allowing an appeal from a judgment of Strayer J., [1987] 3 F.C. 103, 7 F.T.R. 213.  Appeal dismissed.

 

                   APPEAL (File No. 22301) from a judgment of the Ontario Court of Appeal (1990), 1 O.R. (3d) 97, 75 D.L.R. (4th) 523, 42 O.A.C. 356, 2 M.P.L.R. (2d) 121, allowing an appeal from a judgment of Montgomery J. (1988), 64 O.R. (2d) 298, 49 D.L.R. (4th) 759, 37 M.P.L.R. 314.  Appeal dismissed.

 

                   J. Edgar Sexton, Q.C., and David Stratas, for the appellant.

 

                   J. E. Thompson, Q.C., and Alan S. Davis, for the respondent Her Majesty The Queen in Right of Canada.

 

                   T. H. Wickett and Elaine Atkinson, for the respondent Her Majesty The Queen in Right of Ontario.

 

//Lamer C.J.//

 

                   The following are the reasons delivered by

 

                   Lamer C.J. ‑‑ I agree with the reasons and disposition proposed by Justice McLachlin, but wish to address two of the arguments advanced by

Peel in more detail.  These arguments are:

 

                   (1)  Peel's reliance on the restitution available for the recovery of compelled payments which discharge another's liability, following Brook's Wharf and Bull Wharf, Ltd. v. Goodman Brothers, [1937] 1 K.B. 534, and Carleton (County of) v. Ottawa (City of), [1965] S.C.R. 663; and

 

                   (2)   Peel's reliance on the relationship of this appeal to this Court's decision in Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9.

 

1.                Restitution for Compelled Payments Discharging Another's Liability

 

                   In her reasons, McLachlin J. states at p. 791 that:

 

                   The municipality acknowledges that it cannot meet the test for benefit in the category of payment under compulsion of law, nor indeed, in any of the traditional categories of recovery.

 

These remarks might suggest that counsel for Peel had abandoned this ground of appeal.  However, Peel vigorously advanced the argument before this Court, as it did in the courts below.  In its facta, Peel submitted that it had discharged a liability of Ontario and Canada for the maintenance of juvenile delinquents.  With respect to its claim against Ontario, Peel submitted that the primary responsibility for juvenile delinquents rested on the provinces, relying on the remarks of Duff C.J. in Reference re Adoption Act, [1938] S.C.R. 398, at pp. 402‑403.  In its claim against Canada, Peel submitted:

 

This Honourable Court's holding in Peel v. MacKenzie is a recognition of the fact that Canada cannot impose its responsibility or liability to maintain juvenile delinquents upon municipalities. [Emphasis added.]

 

Furthermore, in oral argument counsel for Peel asserted that the federal government, having set up a scheme, was responsible for finishing it, and that this amounted to a legal obligation.  Counsel for Peel added, of course, that in his submission it was not necessary in this case to establish a legal obligation.  Finally, counsel for Peel, under this same head of restitution, engaged in a detailed analysis of Carleton (County of) v. Ottawa (City of), supra, intended specifically to argue in the alternative that a social, moral or

political responsibility could satisfy the liability requirement of the  compulsion test.

 

                   For the reasons indicated by McLachlin J., these arguments fail to demonstrate that there was any obligation on either the federal or the provincial governments to care for juvenile delinquents which is sufficient to satisfy the requirements of the applicable test.  However, it should be made clear that this Court has rejected these arguments after submissions by counsel on the point.

 

2.                The Relationship of this Appeal to Peel v. MacKenzie

 

                   McLachlin J. does not address the arguments of Peel based on this Court's decision in Peel v. MacKenzie.  Peel submitted in its factum that:

 

Restitutionary relief is essential in order to give practical effect to the requirement in s. 52(1)  of the Constitution Act, 1982  that legislation which is inconsistent with the Constitution of Canada is of no force or effect.

 

This was the basis on which Strayer J. in the Trial Division of the Federal Court, [1987] 3 F.C. 103, and Mahoney J. in the Federal Court of Appeal, [1989] 2 F.C. 562, held that restitution should be made by the respondent Federal government.

 

                   While this argument has the prima facie attraction of undoing the effects of unconstitutional legislation, it confuses the restitution claim in the present case with other, constitutionally‑based, forms of relief.

 

                   "Practical effect" was given to this Court's holding in Peel v. MacKenzie:  once this Court struck down s. 20(2) of the Juvenile Delinquents Act, R.S.C. 1970, c. J‑3, Peel stopped making payments.  What Peel is in fact seeking to establish with this argument is a type of Charter  s. 24(1)  remedy in a restitution claim made without reference to s. 52(1)  of the Constitution Act, 1982 , and after the fact of the declaration that the impugned provision was ultra vires Parliament.

 

                   The two forms of relief, restitution and a remedy under s. 24(1)  of the Canadian Charter of Rights and Freedoms , must not be confused.  As Dickson J. (as he then was) noted in R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295, at p. 313:

 

                   Section 24(1) sets out a remedy for individuals (whether real persons or artificial ones such as corporations) whose rights under the Charter  have been infringed.

 

The analogy between its restitution claim and a remedy under s. 24(1)  of the Charter  which seems to animate Peel's argument, even if it were valid, would not therefore entitle Peel to the remedy it seeks, since there was no violation of Charter  rights at issue in Peel v. MacKenzie.

 

                   Even if Peel had brought a successful division of powers constitutional challenge to the legislation under s. 52(1)  of the Constitution Act, 1982 , I held in Schachter v. Canada, [1992] 2 S.C.R. 679, at p. 720:

 

                   An individual remedy under s. 24(1)  of the Charter  will rarely be available in conjunction with an action under s. 52  of the Constitution Act, 1982 .  Ordinarily, where a provision is declared unconstitutional and immediately struck down pursuant to s. 52, that will be the end of the matter.  No retroactive s. 24 remedy will be available.

 

                   Peel's relief would have been limited to the declaration that the provision was unconstitutional and of no force or effect.

 

                   Therefore, Peel cannot avoid fulfilling the requirements of a restitution claim with this analogy to constitutional forms of relief.

 

                   Finally, Peel supported its claim for restitution as a constitutional remedy with the submission that:

 

Restitutionary recovery may be the only practical relief available to litigants faced with an invalid provision requiring payments to be made; denying that practical relief will discourage future litigants from testing the constitutionality of such provisions and will in effect immunize certain provisions from the possibility of constitutional challenge.

 

The answer may be made that the prospect of terminating the compelled payments should be sufficient incentive for future litigants in Peel's position.  It certainly was for Peel when it brought the series of challenges culminating in Peel v. MacKenzie.

 

                   For the reasons given by McLachlin J., and for these additional reasons, I would dismiss the appeals.

 

//McLachlin J.//

 

                   The judgment of La Forest, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ. was delivered by

 

                   McLachlin J. ‑‑ This appeal arises from a financial dispute involving three different levels of government ‑‑ federal, provincial and municipal.  The federal government passed a law requiring the municipality to meet certain expenses should a court so order.  The courts so ordered.  The municipality, protesting inter alia that the federal law was unconstitutional, paid.  The courts eventually ruled that the federal law was unconstitutional.  The municipality now sues both the federal and provincial governments to get its money back. It is established that the municipality cannot sue in tort: it has long been recognized that the enactment of legislation ultra vires a legislature's competence does not give rise to damages for breach of a "duty of care" ‑‑ Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957, at p. 969.  The municipality, however, claims that it has an action under the doctrine of unjust enrichment.  That is the question which we must now consider.

 

The Facts

 

                   As with most restitutionary claims, the particular facts of the case are of great importance to the ultimate decision of whether or not the Court will extend to the plaintiff the relief it seeks.  A detailed summary of the relevant facts is thus warranted.

 

                   First enacted in 1908, the Juvenile Delinquents Act, R.S.C. 1970, c. J‑3 (replaced in 1984 by the Young Offenders Act , R.S.C., 1985, c. Y‑1 ) conferred upon "juvenile court judges" the jurisdiction to issue a variety of orders upon finding that a particular child had committed a "delinquent act"; these alternative orders were set out in s. 20(1) of the Act.  Section 20(2) of the Act empowered these judges to order that the parent(s) of the child or the municipality in which the child is situate "contribute to the child's support such sum as the court may determine"; where the municipality is so ordered, it was authorized by s. 20(2) to recover from the parent(s) any sum paid by it pursuant thereto.

 

                   The appellant municipality came into being on January 1, 1974, under the authority of the Regional Municipality of Peel Act, S.O. 1973, c. 60.  Section 66 of that Act, (R.S.O. 1980, c. 440, s. 70) clarified the orders made under s. 20(2) of the Juvenile Delinquents Act:

 

                   66.  Where an order is made under subsection 2 of section 20 of the Juvenile Delinquents Act (Canada) upon an area municipality, such order shall be considered to be an order upon the Regional Corporation, and the sums of money required to be paid under such order shall be paid by the Regional Corporation and not by the area municipality.

 

                   Between 1974 and 1982, the Family Court judges in the Peel District purported to direct, pursuant to s. 20(1)(d)‑(f) of the Juvenile Delinquents Act, that a number of juveniles be placed in various "group homes"; these homes were for the most part "Viking House" institutions.  The Family Court judges appear to have believed that the `group home' setting was the most appropriate disposition and wished to ensure the direct placement of the juveniles in such facility rather than placement of these children with the Children's Aid Society ("CAS"), which could determine whether placement in a group home was warranted.  The evidence indicates because the CAS insisted on the authority to determine whether the child should in fact be placed in a group home, and once such decision was made to decide the particular home and the date which the child should be removed, the Family Court judges in the District decided to `by‑pass' the CAS and directly place the juvenile.  The judges relied upon s. 20(2) of the Act to order the appellant municipality to pay the per diem rate that each group home charged for the care of the child.  Between 1974 and 1982, the municipality paid out a total of $2,036,131.37 under such orders.  The municipality's payments under these orders, after deduction of the ex gratia amounts paid the municipality by the province (1976‑1982), totalled $1,166,814.22; this is the amount claimed here.

 

                   The municipality protested these orders; it instituted an action in the Ontario courts which challenged the jurisdiction of the Family Court judges to direct that the juveniles be placed in a group home on two grounds.  First, the municipality claimed that the court lacked the statutory authority to make such orders on the basis that a "group home" is not an individual or institution to which a child may be committed under s. 20(1).  Second, the municipality challenged Parliament's jurisdiction under s. 20(2) to order a municipality to contribute to the support of a juvenile.  J. Holland J. found that the Family Court judges lacked the statutory jurisdiction to order the juveniles to group homes; in obiter, he found s. 20(2) intra vires Parliament.

 

                   In the wake of this ruling, a meeting took place at the Ministry of Community and Social Services at which provincial and municipal officials, Chief Judge Andrews of the Family Court and certain representatives of "Viking Houses" were in attendance.  At the request of the province, the municipality agreed to continue paying the children's maintenance costs and to refrain from seeking immediate recovery from Viking Houses pending negotiations between all parties at the meeting as to an equitable cost sharing arrangement.  The province agreed to contribute to 50% of the municipality's costs which would result from such orders in the future; it met this obligation. The respondent federal government was not included in any of the appellant's protests or in these negotiations.

 

                   On April 21, 1977, the Court of Appeal affirmed the judgment of J. Holland J. in its entirety, and declared the orders invalid.  The Supreme Court confirmed the appeal judgment but refrained, however, from pronouncing upon the constitutional validity of s. 20(2): Attorney General for Ontario v. Regional Municipality of Peel, [1979] 2 S.C.R. 1134.

 

                   In a parallel proceeding commenced shortly after the judgment of J. Holland J., referred to above, the appellant challenged an order which ‑‑to comply with J. Holland J.'s decision ‑‑ placed the juvenile in the custody of a named staff member of a Viking House facility (a "suitable person" under s. 20(1)(d)) in which the judge wished the child to be cared for.  The validity of this order was upheld at trial and on appeal.  On further appeal, this Court struck down s. 20(2) of the Act, so far as it purported to authorize the imposition of the financial cost of the disposition on a municipality, as ultra vires Parliament: Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9.

 

                   Having been vindicated in its contention that the direction to support juveniles under authority of the Juvenile Delinquents Act was ultra vires, the municipality commenced proceedings for restitution from the provincial and federal governments.  In the Federal Court, the trial judge found in the appellant municipality's favour, ordering that the federal government reimburse the municipality in the amount of $1,166,814.22.  The Federal Court of Appeal, however, found that the appellant had failed to establish that Parliament was legally obligated to pay for the juveniles subject to these orders and thus had not made out its claim in restitution.  As a result, the municipality had no right of recoupment from the federal government.  The proceedings against the province played out in a similar fashion.  At trial, the Ontario Supreme Court ordered that the province reimburse the municipality in the above amount but the Court of Appeal reversed the trial judgment because the municipality had failed to meet the elements of a claim in restitution.

 

                   The municipality appeals to this Court from both judgments.  It seeks reimbursement of what it paid out pursuant to the invalid orders plus interest thereupon.

 

Legislation

 

                   The orders for which payment was demanded of the municipality were made under s. 20 of the (then) Juvenile Delinquents Act which read as follows:

 

                   20. (1) In the case of a child adjudged to be a juvenile delinquent the court may, in its discretion, take either one or more of the several courses of action hereinafter in this section set out, as it may in its judgment deem proper in the circumstances of the case:

 

                   (a) suspend final disposition;

 

(b) adjourn the hearing or disposition of the case from time to time for any definite or indefinite period;

 

(c) impose a fine not exceeding twenty‑five dollars, which may be paid in periodical amounts or otherwise;

 

(d) commit the child to the care or custody of a probation officer or of any other suitable person;

 

(e) allow the child to remain in its home, subject to visitation of a probation officer, such child to report to the court or to the probation officer as often as may be required;

 

(f) cause the child to be placed in a suitable family home as a foster home, subject to the friendly supervision of a probation officer and the further order of the court;

 

(g) impose upon the delinquent such further or other conditions as may be deemed advisable;

 

(h) commit the child to the charge of any children's aid society, duly organized under an Act of the legislature of the province and approved by the lieutenant governor in council, or, in any municipality in which there is no children's aid society, to the charge of the superintendent, if there is one; or

 

(i) commit the child to an industrial school duly approved by the lieutenant governor in council.

 

                   (2)   In every such case it is within the power of the court to make an order upon the parent or parents of the child, or upon the municipality to which the child belongs, to contribute to the child's support such sum as the court may determine, and where such order is made upon the municipality, the municipality may from time to time recover from the parent or parents any sum or sums paid by it pursuant to such order.

 

Section 16(1) of the Family Law Reform Act, 1978, R.S.O. 1980, c. 152, (now s. 31(1) of the Family Law Act, S.O. 1986, c. 4) imposed the following obligation on the parent(s) to support his/her child:

 

                          16. ‑‑ (1) Every parent has an obligation, to the extent the parent is capable of doing so, to provide support, in accordance with need, for his or her child who is unmarried and is under the age of eighteen years.

 

                   (2) The obligation under subsection (1) does not extend to a child who, being of the age of sixteen years or over, has withdrawn from parental control.

 

The Judgments Below

 

                   A.   In the Federal Court

 

                   At the Trial Division, [1987] 3 F.C. 103, Strayer J. considered both the principles of restitution and of the Constitution.  On the facts at bar, he concluded at p. 121 and at p. 122:

 

                   It is at this point where the principles of the federal system of government and the principle of redress for unjust enrichment join together in requiring that the defendant reimburse the plaintiff for the costs incurred by the plaintiff through compliance with the invalid law.  It might well have been impossible for anyone to have sued the defendant directly to force the payment of such monies in the first place.  But where the plaintiff has paid them in compliance with a federal law that has turned out to be invalid, and in furtherance of the objectives of that law duly adopted by Parliament, as between the plaintiff and the defendant, it would be unjust that the plaintiff ultimately bear those costs rather than the defendant.

 

. . .

 

                   In finding that the Crown is liable to pay such amount in the present circumstances, it is important to make clear what is not being decided.  As noted above, I am not prepared to adopt the view that the federal executive is automatically and legally obliged to pay all costs of the administration of federal laws.  Further, recovery here is not being allowed on some theory of constitutional tort based on liability for "legislating without due care and attention".  I recognize that the function of enacting legislation involves a political and social responsibility which does not give rise to a private duty of care: see Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957, at pages 969 and 970.  Instead, liability to reimburse the plaintiff arises out of the requirements of justice as between the two parties.  [Emphasis in original.]

 

                   The majority of the Federal Court of Appeal, [1989] 2 F.C. 562, per MacGuigan J.A., reviewing the applicable principles of restitution, noted at p. 573 that both parties agreed that a plaintiff in this type of case must satisfy four conditions to establish a "right of recoupment for moneys expended".  The third and fourth of these conditions require that a plaintiff establish that the payments claimed discharged a legal liability of the defendant for which, as between the parties, the defendant was primarily liable.  MacGuigan J.A. found, at p. 575, that the trial judge although recognizing these conditions and finding that Parliament had a "political, not a juridical" obligation to pay for the proper administration of federal law nonetheless created a new comparative liability rule which in his view better accords with our federal, as opposed to a unitary, state structure.  MacGuigan J.A. disagreed with Strayer J.'s analysis at p. 577 and at p. 580:

 

                   With great respect, this seems to me to be tantamount to reducing the fourth condition for unjust enrichment to which party, as between the two, should more fairly bear the cost, and at the same time ignoring the third condition, as to whether the defendant/appellant had any legal liability at all.  One obvious result of such analysis is that the plaintiff/respondent may well become legally entitled to recovery against both senior governments.  As the appellant pointed out in oral argument, the respondent's statement of claims [sic] against both governments made identical claims that the payments discharged "a liability or responsibility of the defendant" (Appeal Book, vol. 1 at page 3 and vol. 5 at page 741).

 

                   In fact, I believe that the analysis of the Trial Judge leads to the conclusion that, even in a federal context, the constitutional principles establish no federal liability to pay the costs of the administration of federal laws, and still less so where the constitutional authority to make the law in question was lacking.

 

. . .

 

                   What is decisive, I believe, in the present case is that the government of Canada had no legal obligation of any kind to pay for the maintenance of juvenile delinquents.  The obligation it had as a result of its legislation, though serious, was of a political nature, and led to its cost‑sharing agreement with the province of Ontario ‑‑ as the word "cost‑sharing" implies, not an assumption of 100 percent responsibility ‑‑ and the Province in turn paid some of the costs of the municipality.  In a relationship involving three parties, one cannot impose liability on one of only two on the theory that of these two it has the lesser equity.  This is not to say that the Province is necessarily liable to the respondent [municipality].  That issue is for another court to decide.  But it is to assert that, however much the federal Government was the initiating cause of the respondent's expenditures, it cannot be said to have had legal liability for those expenditures.  Its responsibility is political, for which the resolution, if any, is of an ex gratia nature.

 

                   Mahoney J.A., dissenting, saw the matter not as a case about restitution but about the integrity of legislative enactments and the Constitution.  Stated metaphorically, Mahoney J.A. found that Parliament cannot ‑‑ absent an applicable rule of public policy ‑‑ achieve by the back door what it could not by the front.  Thus, a payment ordered under the guise of legislative authority must be reimbursed where such authority is subsequently found to be absent.

 

B.  In the Ontario Courts

 

                   Acknowledging the fourfold conditions spoken of above, Montgomery J. (1988), 64 O.R. (2d) 298, awarded recovery against the province on the basis of the following conclusions, at p. 304:

 

                   Here, the payments were not foolishly made.  They were made under protest in response to court orders.  These payments discharged a responsibility of the Province.  Since, s. 20(2) of the Juvenile Delinquents Act was ultra vires the Federal Government, responsibility lay upon the Province to pay.

 

                   The Municipality has satisfied me that as between the parties the Province is primarily liable.  Further, in my view, the equities all lie with the Municipality.  Under numerous Ontario statutes payment concerning the welfare of children is, in large measure, made by the Province.

 

                   In a thorough judgment, a unanimous Court of Appeal (1990), 1 O.R. (3d) 97, (per Griffiths J.A.) reversed the trial judge in a manner similar to that employed by the majority of the Federal Court of Appeal.  Reviewing the restitutionary principles applicable to the discharge of another's debt or liability, Griffiths J.A. concluded at p. 117:

 

. . . the municipality has not established a right of restitution on the basis of the established principles of unjust enrichment.  As I pointed out earlier, the authorities are uniform in holding that even where the plaintiff has made the payment under a legal compulsion, he must establish that his payment to the third party served to discharge an existing liability of the defendant.  Clearly it is not sufficient that the defendant received some indirect benefit or that it was relieved of some obligation that might have arisen but for the plaintiff's payments.  In this case, when the payments were made by the municipality pursuant to the impugned s. 20(2) of the Act, there was no liability therefor, direct or otherwise, on the part of the province.  [Emphasis in original.]

 

                   With regard to the argument that recoupment is available where one discharges a potential obligation of another, Griffiths J.A. reviewed the provincial legislation said to indicate provincial responsibility in this area, and concluded at pp. 120‑21:

 

                   On the theory that the municipality is entitled to restitution where it has discharged a potential liability of the province, the burden would rest on the municipality to establish on a balance of probabilities that when the municipality paid for the maintenance of children placed in group homes pursuant to the invalid s. 20(2) orders it did so in discharge of a liability likely to have been placed on the province.  In other words, the burden rests upon the municipality to establish that in making these payments, the province was "unjustly enriched".

 

                   I am not able to arrive at such a conclusion on the evidence.  My conclusion is that it is highly likely or at least probable that judges would have chosen to place these children either in foster homes or in group homes as wards of the Children's Aid Society in which case the financial responsibility would have been shared.  To the extent that the province did, in fact, benefit as a result of the gross payments made by the municipality pursuant to the orders under s. 20(2) of the Act, it may well be, as counsel for the province has submitted, that the province has paid to the municipality on an ex gratia basis more than its fair and equitable share of the liability.

 

. . .

 

                   In general, I conclude that the municipality has failed to prove that the payments it made under compulsion of law served to discharge either an existing or potential legal liability or debt of the province.

 

Analysis

 

Overview

 

                   The concept of restitution for unjust enrichment in the common law world has evolved over the past century from a collection of fact‑specific categories in which recovery was permitted, toward a body of law unified by a single set of coherent rules applicable to all cases.  The evolving state of the law of restitution manifests itself in a series of tensions, all reflected in the present appeal.

 

                   The first set of tensions is theoretical.  There are two distinct doctrinal approaches to restitution at common law.  The first is the traditional "category" approach.  It involves looking to see if the case fits into any of the categories of cases in which previous recovery has been allowed, and then applying the criteria applicable to a given category to see whether the claim is established.  The second approach, which might be called the "principled" approach,  developed only in recent years.  It relies on criteria which are said to be present in all cases of unjust enrichment: (1) benefit to the defendant; (2) corresponding detriment to the plaintiff; and (3) the absence of any juridical reason for the defendant's retention of the benefit: Pettkus v. Becker, [1980] 2 S.C.R. 834.

 

                   The arguments before us reflect these distinct doctrinal approaches.  The municipality, finding it difficult to bring its case within the traditional categories, emphasizes the general "principled" approach to unjust enrichment, asking that the court apply those general principles in an expansive fashion.  The federal and provincial governments, on the other hand, argue that the municipality must fail because it is unable to bring itself within a recognized category of recovery.

 

                   The second set of tensions is jurisprudential in nature.  I refer to the tension between the need for certainty in the law and the need to do justice in the individual case; the tension between the need for predictable rules upon which people can predicate their conduct and the desire to allow recovery where, and only where, retention of the benefit would in all the circumstances be unjust.  This jurisprudential tension corresponds to the doctrinal tension discussed above.  An approach based on traditional categories has the advantage of being predictable.  Its supporters conjure up "frightful images . . . of judges roaming willy‑nilly over the restitutionary landscape with only their inner voices to guide them." (McInnes, "Incontrovertible Benefits and the Canadian Law of Restitution" (1990) 12 Advocates' Q. 323, at p. 352).   Those advocating the approach of general principle, on the other hand, are more ready to concede that in some cases, the court may have to make decisions based on the equities of the particular case before them.  The term "unjust", as well as the term "absence of juristic reason" in the third requirement of the general test, lend themselves to this approach.

 

                   Once again, the arguments before us reflect these tensions.  The municipality emphasizes the "injustice" of being unable to recover payments which the federal legislation required it to make, where the legislation was later held to be ultra vires.  The federal and provincial governments, on the other hand, emphasize the absence of any legal precedent for requiring them to reimburse expenses incurred as a result of ultra vires legislation.

 

                   The third set of tensions lies on the philosophical ‑‑ policy level.  The traditional reluctance of the law to permit recovery to a plaintiff who had provided non‑contractual benefits to another was founded on a philosophy of robust individualism which expected every person to look out after his or her own interests and which placed premium on the right to choose how to spend one's money.   As one nineteenth century judge (Pollock, C.B. in Taylor v. Laird (1856), 25 L.J. Ex. 329, at p. 332) put it: "One cleans another's shoes; what can the other do but put them on?"  The new approach of general principle, on the other hand, questions the merits of this view and the quality of justice which it entails.  It shrinks from the harsh consequences of individualism and seeks to effect justice where fairness requires restoration of the benefit conferred.

 

                   The arguments before us reflect this tension too.  The municipality emphasizes the injustice of its situation; the federal and provincial governments argue that they never voted to spend their money on supporting these children in group homes and assert that the municipality's situation is the unfortunate but occasionally inevitable by‑product of a federal system where legislatures from time to time are found to have exceeded their powers.

 

                   This case presents the Court with the difficult task of mediating between, if not resolving, the conflicting views of the proper scope of the doctrine of unjust enrichment.  It is my conclusion that we must choose a middle path; one which acknowledges the importance of proceeding on general principles but seeks to reconcile the principles with the established categories of recovery; one which charts a predictable course without falling into the trap of excessive formalism; one which recognizes the importance of the right to choose where to spend one's money while taking account of legitimate expectations and what, in the light of those expectations, is fair.

 

The Arguments on Classes of Traditional Recovery and the General Principle

of Restitution

 

                   The modern law of restitution finds its roots in the 16th century writ of indebitatus assumpsit which, as a form of trespass on the case, was returnable in the Court of King's Bench, as opposed to the Court of Common Pleas where all regular debt actions had to be instituted.  Maddaugh and McCamus, The Law of Restitution (1990), note at p. 5 that from the Writ's birth in Slade's Case (1602), 4 Co. Rep. 92b, 76 E.R. 1074, a number of "standard forms of general assumpsit were developed depending upon the type of circumstance giving rise to the original `indebtedness'"; the standard forms were called the `common counts':

 

Of these common counts, four have come to form the basis of the vast majority of common law actions in quasi‑contract:  (i) money had and received to the plaintiff's use, where money is paid directly to the defendant; (ii) money paid to the defendant's use, where money is paid, not to the defendant but to a third party for the defendant's benefit; (iii) quantum meruit; and (iv) quantum valebat, where services or goods, respectively, are bestowed by the plaintiff upon the defendant.

 

The Court of Chancery, or Equity, also played an important role in the development of the modern law of restitution.  Maddaugh and McCamus consider equity's most fundamental contribution to be the development of the remedial constructive trust as a means by which the unjust enrichment of a defendant may be avoided.  Late 19th and 20th century courts faced the arduous task of making sense of the diverse branches of restitution and of creating some general principle upon which to ground restitutionary relief.

 

                   The courts found the required unifying principle in the concept of unjust enrichment.  The American Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts, 1937, states the principle simply at p. 12:  "A person who has been unjustly enriched at the expense of another is required to make restitution to the other." A leading commonwealth text offers the following elaboration:

 

[Unjust enrichment] presupposes three things: first, that the defendant has been enriched by the receipt of a benefit; secondly, that he has been so enriched at the plaintiff's expense; and thirdly, that it would seem unjust to allow him to retain the benefit.

 

                   (Goff and Jones, The Law of Restitution (3rd ed. 1986), at p. 16.)

 

 

These three requirements, somewhat differently articulated, have been recognized as the basis of the action for unjust enrichment by this Court: e.g., Pettkus v. Becker, supra.

 

                   At the heart of the doctrine of unjust enrichment, whether expressed in terms of the traditional categories of recovery or general principle, lies the notion of restoration of a benefit which justice does not permit one to retain.  As Goff and Jones, supra, put it at p. 12:  "Most mature systems of law have found it necessary to provide, outside the fields of contract and civil wrongs, for the restoration of benefits on grounds of unjust enrichment".  Thus for recovery to lie, something must have been given, whether goods, services or money.  The thing which is given must have been received and retained by the defendant.  And the retention must be without juristic justification, to quote Dickson J. in Pettkus v. Becker.

 

                   The tri‑partite principle of general application which this Court has recognized as the basis of the cause of action for unjust enrichment is thus seen to have grown out of the traditional categories of recovery.  It is informed by them.  It is capable, however, of going beyond them, allowing the law to develop in a flexible way as required to meet changing perceptions of justice.

 

                   It follows from this that the traditional categories of recovery, while instructive, are not the final determinants of whether a claim lies.  In most cases, the traditional categories of recovery can be reconciled with the general principles enunciated in Pettkus v. Becker, supra.  But new situations can arise which do not fit into an established category of recovery but nevertheless merit recognition on the basis of the general rule.

 

                   It is suggested that the case at bar falls into, or is analogous to, the following classes of cases where recovery has been allowed:  (1) a benefit conferred under compulsion; (2) a benefit conferred out of necessity; (3) a benefit conferred as a result of an ineffective transaction; and (4) a benefit conferred at the request of the defendant.  The distinctions between these categories turn mainly on the circumstances giving rise to the conferral of the benefit, which in turn affect the absence of a juristic reason for permitting the defendant to retain the benefit.  It seems clear that the municipality in this case made the payments under statutory compulsion.  It may also be argued that it did so out of necessity, since someone had to care for the children in question.  In some ways payment under an invalid statute may be likened to payment under an ineffective transaction.  And if one rejects the compulsion argument, one might argue that the federal and provincial governments requested the payments.

 

                   The difficulty lies not in establishing that the plaintiff made payments which might potentially attract the doctrine of unjust enrichment.  The difficulty lies rather in establishing that the payments conferred a "benefit" on the federal and provincial governments which represents an unjust retention or enrichment.  As Professors Goff and Jones note:  "In restitution it is not material that the plaintiff has suffered a loss if the defendant has gained no benefit." (See Goff and Jones, The Law of Restitution, supra, at p. 16.)  As already noted, the concept of restoration of a benefit retained without juristic reason lies at the heart of the doctrine of unjust enrichment.  The word "restitution" implies that something has been given to someone which must be returned or the value of which must be restored by the recipient.  The word "enrichment" similarly connotes a tangible benefit.  It follows that without a benefit which has "enriched" the defendant and which can be restored to the donor in specie or by money, no recovery lies for unjust enrichment.

 

                   Since the establishment of such a benefit is essential for recovery under any of the traditional categories, as well as under the general test for recovery which this Court has adopted, the remainder of these reasons focus on that concept.  To date, the cases have recognized two types of benefit.  The most common case involves the positive conferral of a benefit upon the defendant, for example the payment of money.  But a benefit may also be `negative' in the sense that the benefit conferred upon the defendant is that he or she was spared an expense which he or she would have been required to undertake, i.e., the discharge of a legal liability.

 

                   It is useful to begin by looking at the sort of benefit required for recovery under the category which fits most closely with the facts in this case, that of payment made under compulsion of law.  The courts have consistently held that for a benefit to be established in this class of case, it must be shown that the plaintiff's payments discharged the defendant's liability.  (See, for example, Fridman and McLeod, Restitution (1982), at p. 347, and Brook's Wharf and Bull Wharf, Ltd. v. Goodman Brothers, [1937] 1 K.B. 534.)

 

                   As regards the traditional requirement that the plaintiff have discharged the defendant's liability, Goff and Jones, supra, state at pp. 320 and 324:

 

Compulsion is not enough in itself to enable a plaintiff to recover.  He must also, by reason of the compulsion, have paid money which the defendant is primarily liable to pay, so that the latter obtained the benefit of the payment by the discharge of his liability.

 

                   At first sight it is puzzling that the plaintiff's payment should be capable of discharging the defendant's liability in these cases, for a stranger cannot discharge the debt of another without that other's authority.  The present cases can only be explained on the ground that the law compels the plaintiff to make the payment and therefore enables him, although a stranger, to discharge the liability of the defendant.  It is for this reason, we suggest, that the doctrine is limited to those cases where the plaintiff has been compelled by law to make the payment; if he were not, for example, if his goods had been wrongfully taken in distress for rent, it appears that his payment would not of itself discharge the liability of the person primarily liable to pay.

 

. . .

 

                   If no liability has been discharged, it is irrelevant that the plaintiff, in the performance of a duty or otherwise, has incidentally conferred some benefit on the defendant by his payment.  For it is a limiting principle of restitution that the mere conferring of some incidental benefit, while discharging an obligation to another, does not in itself give rise to any right to be recouped. [Emphasis in original.]

 

                   The municipality acknowledges that it cannot meet the test for benefit in the category of payment under compulsion of law, nor indeed, in any of the traditional categories of recovery.  The  requirement that the plaintiff have discharged the defendant's legal liability is simply not met in the sense required by the traditional tests.  There was no constitutional obligation on either the federal or provincial government to provide for the care of these children; as the courts below noted, the power to legislate does not give rise to an obligation to legislate.  Nor were the federal or provincial governments under a statutory or legal liability to provide for the care of the children.  The provincial statutes relied on by the municipality as evidence of the province's obligation generally create a discretion in the province to finance the acquisition or construction of institutions for the care of children and in some cases to finance the operation of these institutions in cooperation with others.  The benefit which the federal government is said to have received is the care of `prisoners' which it might otherwise have had to provide itself (even though they are not obliged to, provincial prisons house many persons convicted of federal offences), and a more general "political" benefit of having the goals of its legislation furthered.  The benefit which the province is said to have received is the discharge of responsibilities which it might have undertaken because conscience required that someone do so.   So there was no legal liability on either government as required by the traditional tests.

 

                   Unable to meet the traditional tests, the municipality turns to the general principles governing recovery for unjust enrichment enunciated by this Court in cases such as Pettkus v. Becker, supra.  It argues that the third

condition of the traditional rule has been revised by the Canadian jurisprudence so as to require only that the plaintiff's payments have discharged a political, social or moral responsibility of the defendant, for which the defendant was primarily liable; the plaintiff need not have discharged a liability enforceable at law.  Stated otherwise, a defendant may be found to have benefitted from the payment of a certain sum even though the defendant had the option of whether or not it wished to incur this expenditure.  It is in the failure to accept this proposition that the appellate courts below are said to have erred.

 

                   The question thus reduces to this: how should "benefit" in the general test for recovery for unjust enrichment be defined?  More particularly, can it encompass payments which fall short of discharging the defendant's legal liability?

 

                   We have been referred to no cases in Canada or the commonwealth where a "negative" benefit has been found in the absence of an underlying legal liability on the defendant.  The municipality relies on this Court's decision in Carleton (County of) v. Ottawa (City of), [1965] S.C.R. 663.  But in that case the defendant had assumed legal responsibility for the care of the indigent woman in question.  The county was responsible under statute and by contract (with another county) for the maintenance of an indigent woman resident in the Township of Gloucester.  By agreement, Gloucester annexed a portion of its territory (on which the indigent woman resided) to Ottawa.  The city undertook inter alia to take over Gloucester's responsibility for welfare cases in this area but, by inadvertence, the woman's name was left off the list of such persons and Carleton continued to pay her expenses.  On discovery of its mistake, the county sought to recoup these payments from Ottawa.  In awarding recovery, Hall J. relied on the decision of Lord Wright in Brook's Wharf & Bull Wharf, Ltd. v. Goodman Brothers, supra, in which he stated that the plaintiff must have discharged the defendant's "liability", or a "liability" or "debt" which as between the parties the defendant was primarily responsible.  Applying this dicta, Hall J. found at p. 669:

 

                   Norah Baker was an indigent for whose care the appellant [Carleton] was responsible prior to January 1, 1950, when the area in question was annexed by the respondent [Ottawa].  The respondent by the act and fact of annexation and by the terms of said Exhibit 11, para. 10 [the Agreement] assumed responsibility for the social service obligations [statutory and contractual] of the appellant to the residents of the area annexed, and the fact that one welfare case was inadvertently omitted from the list cannot permit the respondent to escape the responsibility for that case.  To paraphrase Lord Wright, it is against conscience that it should do so.  [Emphasis added.]

 

While the municipality places great emphasis on the last sentence of this passage, the case, read as a whole, supports the traditional rule that discharge of another's liability gives rise to a claim only where it is a legal liability.

 

                   Notwithstanding the absence of authority, some scholars (Goff and Jones, Maddaugh and McCamus) perceive a `whittling away' of the hard and fast rule barring recovery absent proof of a defendant's legal obligation to undertake the expense or perform the act which the plaintiff claims to have accomplished on the defendant's behalf.  They suggest that where the plaintiff has conferred on the defendant an "incontrovertible benefit" recovery should be available even in the absence of a defendant's legal liability.  An "incontrovertible benefit" is found in the gain of "a demonstrable financial benefit" or the saving of an "inevitable expense".  At pages 21‑22 of The Law of Restitution, supra, Goff and Jones state:

 

                   To allow recovery because a defendant has been incontrovertibly benefited is to accept that he must make restitution even though he did not request or freely accept the benefit.  In the past, the principle embodied in Bowen L.J.'s well known dictum in Falcke's case, that "liabilities are not to be forced on people behind their backs any more than you can confer a benefit upon a man against his will," has been regarded as paramount.  Free choice must be preserved inviolate.  To accept the principle of incontrovertible benefit is to admit a limited and, in our view, desirable exception.  The burden will always be on the plaintiff to show that he did not act officiously, that the particular defendant has gained a demonstrable financial benefit or has been saved an inevitable expense and that it will not be a hardship to the defendant, in the circumstances of the case, to make restitution. [Emphasis added.]

 

                   An "incontrovertible benefit" is an unquestionable benefit, a benefit which is demonstrably apparent and not subject to debate and conjecture.  Where the benefit is not clear and manifest, it would be wrong to make the defendant pay, since he or she might well have preferred to decline the benefit if given the choice.  According to Justice Gautreau of the District Court of Ontario, where an unjust benefit is found "one discharges another's debt that is owed to a third party or discharges another's contractual or statutory duty":  Gautreau, "When Are Enrichments Unjust?" (1989), 10 Advocates' Q. 258, at p. 269.  The late Justice Gautreau cites this Court's decision in Carleton (County of) v. Ottawa (City of), supra, as an example of such a case but adds the following pertinent remarks at pp. 270‑71:

 

                   While the principle of freedom of choice is ordinarily important, it loses its force if the benefit is an incontrovertible benefit, because it only makes sense that the defendant would not have realistically declined the enrichment.  For example, choice is not a real issue if the benefit consists of money paid to the defendant or paid to a third party to satisfy the debt of the defendant that was owing to the third party.  In either case there has been an unquestionable benefit to the defendant.  In the first case, he can return it or repay it if he chooses; in the second, he had no choice but to pay it, the only difference is that the payee has changed.  Likewise, the principle of freedom of choice is a spent force if the benefit covers an expense that the defendant would have been put to in any event, and, as an issue, it is weak if the defendant subsequently adopts and capitalizes on the enrichment by turning it to account through sale or profitable commercial use.

 

                   The principle of incontrovertible benefit is not the antithesis of freedom of choice.  It is not in competition with the latter; rather, it exists when freedom of choice as a problem is absent.  [Emphasis added.]

 

                   Gautreau's comment takes us back to the terms of the traditional test; the discharge of a legal liability creates an "unquestionable" benefit because the law allowed the defendant no choice.  Payment of an amount which the defendant was under no legal obligation to discharge is quite another matter.

 

                   The same requirement of inevitable expense is reflected in McInnes' discussion of the notion of incontrovertible benefit:  McInnes, supra.  He asserts, at p. 346, that "restitutionary relief should be available to one who has saved another an inevitable or necessary expense (whether factually or legally based)."  Arguendo, he suggests that recovery may lie where one "has discharged an obligation which the obligee would likely have paid another to discharge."  He goes on, at p. 347, to caution that "although otherwise warranted, restitutionary relief should be denied if the benefit was conferred officiously, or if liability would amount to a hardship for the recipient of the benefit."  McInnes concludes at p. 362 that the caselaw provides only theoretical and not express support for the incontrovertible benefit doctrine and suggests that, as such relief is "somewhat extraordinary", it "should not be imposed unless the equities of the circumstances demand it."

 

                   It is thus apparent that any relaxation on the traditional requirement of discharge of legal obligation which may be effected through the concept of "incontrovertible benefit" is limited to situations where it is clear on the facts (on a balance of probabilities) that had the plaintiff not paid, the defendant would have done so.  Otherwise, the benefit is not incontrovertible.

 

                   While not much discussed by common law authorities to date, it appears that a further feature which the benefit must possess if it is to  support a claim for unjust enrichment, is that it be more than an incidental  blow‑by.  A secondary collateral benefit will not suffice.  To permit recovery for incidental collateral benefits would be to admit of the possibility that a plaintiff could recover twice ‑‑ once from the person who is the immediate beneficiary of the payment or benefit (the parents of the juveniles placed in group homes in this case), and again from the person who reaped an incidental benefit.  See, for example, Fridman and McLeod, supra, at p. 361; Maddaugh and McCamus, supra, at p. 717; and, Gautreau, supra, at pp. 265 et seq.  It would also open the doors to claims against an undefined class of persons who, while not the recipients of the payment or work conferred by the plaintiff, indirectly benefit from it.  This the courts have declined to do.  The cases in which claims for unjust enrichment have been made out generally deal with benefits conferred directly and specifically on the defendant, such as the services rendered for the defendant or money paid to the defendant.  This limit is also recognized in other jurisdictions.  For example, German restitutionary law confines recovery to cases of direct benefits: Zwiegert and Kötz, Introduction to Comparative Law, vol. II (2nd ed. 1987), at pp. 234‑35.

 

                   Where does this discussion of "benefit" in the doctrine of unjust enrichment bring us?  Accepting for the purposes of argument that the law of restitution should be extended to incontrovertible benefits, the municipality still falls short of the law's mark.  The benefit conferred is not incontrovertible in the sense in which Goff and Jones define that concept; the municipality has not shown that either level of government being sued "gained a demonstrable financial benefit or has been saved an inevitable expense."  Nor is it "unquestionable", to use Gautreau's test; the federal and provincial governments were under no legal obligation and their contention that they were not benefited at all, or in any event to the value of the payments made, has sufficient merit to require, at the least, serious consideration.  It was neither inevitable nor likely, in McInnes' phrase, that in the absence of a scheme which required payment by the municipality the federal or provincial government would have made such payments; an entirely different scheme could have been adopted, for example.

 

                   To admit recovery in this case would be to extend the concept of benefit in the law of unjust enrichment much further than contemplated by any of the authorities to date.  It would open the door to recovery wherever a payment has been made under compulsion of law which arguably has an incidental beneficial effect of a non‑pecuniary nature.  In short, it would take the law of unjust enrichment far beyond the concept of restoration of property, money, or services unfairly retained, which lies at its core.

 

                   To elaborate, Parliament was clearly aware of and relied upon the obligation of parents to support their children, expressly acknowledged in s. 16(1) of the (then) Family Law Reform Act, because s. 20(2) of the Juvenile Delinquents Act provided that the municipality could recover any expenditures  ordered under s. 20(2) from the parent or parents responsible.  The fact that the municipality's payments can be said to have furthered Canada's general interest in the welfare of its citizens or its more particular interest in the effective administration of its scheme for the regulation of criminal conduct by minors is an insufficient "correlative link" upon which to found recovery even on the application of the broader `incontrovertible benefit' doctrine;  it

falls short of proof of a "demonstrable financial benefit" or proof that the federal government was saved an "inevitable expense".  The principle of freedom of choice, referred to by Gautreau, supra, and Maddaugh and McCamus, supra, is not a "spent force" in this instance ‑‑ the municipality has failed to establish that its payments covered an expense that the federal government "would have been put to in any event" nor did it proffer any evidence that the Canadian government "capitalized" in any direct fashion upon these payments.  On close examination, even McInnes' proposition, at p. 346, that "restitutionary relief should be available to one who has saved another an inevitable or necessary expense (whether factually or legally based) or, arguably, has discharged an obligation which the obligee would likely have paid another to discharge", does not assist the municipality in this instance.  Federal government (financial) support of the juveniles' stay in the group homes in Peel was not "inevitable".  Neither was this expense "necessary", first and foremost, given the host of dispositions available to judges under s. 20, and second, given the municipality's statutory authority to seek reimbursement from the children's parents.  The legislative scheme set up by Parliament is proof positive that Parliament did not believe it had any obligation to provide financial support for the juveniles assigned to group homes; any obligation it had to the provinces in this regard was created by a voluntary federal‑provincial agreement to which the appellant was not privy.  These facts confirm that any benefit received by the Government of Canada from the municipality's payments was incidental or indirect; the federal government had no greater responsibility for the welfare of these children than did the municipality from whence they came and cannot be found liable in restitution.

 

                   The same inability to establish an incontrovertible benefit bedevils the municipality's claim against the province.  The fact that the appellant's payments necessarily furthered the province's general interest in the welfare of its citizens or its more specific interest in the protection and supervision of children residing within its boundaries is, for the reasons already outlined, not a sufficient basis upon which to found recovery even if the Court were to apply the `incontrovertible benefit' doctrine.

 

                   The appellant is unable to establish on a balance of probabilities that the provincial government has received "a demonstrable financial benefit" nor has it established that the province was spared an inevitable expense.  The paucity of evidence as to both the types of institutions sought to be created under the provincial legislation said to evidence the province's obligation and as to the functional equivalence of these institutions to "Viking House" facilities, combined with the absence of proof that such institutions were actually in existence at the material times, makes it difficult for this Court to give credence to the appellant's claim that in lieu of the invalid orders, the juveniles would have been placed in the care of such provincial institutions, and thus the province was enriched by foregoing this expense.  I am in agreement with the Ontario Court of Appeal that a more probable alternative order would have placed the juvenile delinquents at issue directly in the custody of a foster home, an order which would not necessarily involve any cost to the Government of Ontario, or into the custody of the CAS.  Such an eventuality is, however, still too speculative for proof on the balance of probabilities ‑‑ the standard which the appellant must meet.

 

                   Even if the Court could say with sufficient certainty, for example, that the children would have necessarily been handed over to the charge of the CAS, the financial responsibility for these children would have been shared between the municipality, the province and the federal government on application of the Canada Assistance Plan.  The practical effect of the Canada Assistance Plan, as all parties seem to be agreed, was that the appellant would have been responsible for 20% of the cost of the support of juveniles committed to the charge of the CAS; the province would have been responsible, ultimately, for 30% of that cost, while the other 50% would have been borne by the federal government by way of transfer payments.  Assuming this scenario sufficiently proven, it may be useful to ask whether the province therefore benefitted in a practical sense by the municipality's expenditures.

 

                   It is important to recall the facts at this juncture.  Once it was determined by J. Holland J., in 1977, that the Family Court judges had been invalidly placing the juveniles in group homes, the respondent province met with the appellant and certain other parties to discuss cost‑sharing arrangements.  The municipality agreed to meet the expenses directed by current and subsequent s. 20(2) orders.  The province agreed to reimburse the municipality for 50% of the costs imposed upon it by all s. 20(2) orders made subsequent to J. Holland J.'s decision.  The evidence is that the province met this undertaking (1977‑82), paying to the municipality a total of $843,986.65.  Of the total amount paid by the appellant pursuant to s. 20(2) orders between  1974 and 1982, the province's reimbursement of the appellant, totalling $869,317.15, constituted 42.6% of that amount.  Such reimbursement was available to all municipalities in Ontario subject to s. 20(2) orders under the Juvenile Delinquents Act.  In light of these facts, it would be difficult for the Court ‑‑ even if the appellant could establish on a balance of probabilities what alternative course Family Court judges in Peel would have elected ‑‑ to find that the province benefited, in the end, in a practical sense.

 

                   As with its claim against the respondent federal government, the appellant has failed to establish that its payments to the specified group homes covered an expense that the province "would have been put to in any event", nor did it lead sufficient evidence by which to establish on a balance of probabilities that the province was saved an "inevitable or necessary expense", whether factually or legally based.  As found by the Court of Appeal, the appellant has, at most, shown that its payments may have relieved the province of some obligation or debt that might have arisen.

 

The Argument on Injustice

 

                   The municipality is reduced in the final analysis to the contention that it should recover the payments which it made from the federal and provincial governments because this is what the dictates of justice and fairness require; stated otherwise, it would be unjust for the federal and provincial governments to escape these payments.  This argument raises two questions.  First, where the legal tests for recovery are clearly not met, can recovery be awarded on the basis of justice or fairness alone?  Second, if courts can grant judgment on the basis on justice alone, does justice so require in this case?

 

                   On my review of the authorities, the first question must be answered in the negative.  The courts' concern to strike an appropriate balance between predictability in the law and justice in the individual case has led them in this area, as in others, to choose a middle course between the extremes of inflexible rules and case by case "palm tree" justice.  The middle course consists in adhering to legal principles, but recognizing that those principles must be sufficiently flexible to permit recovery where justice so requires having regard to the reasonable expectations of the parties in all the circumstances of the case as well as to public policy.  Such flexibility is found in the three‑part test for recovery enunciated by this Court in cases such as Pettkus v. Becker, supra.  Thus recovery cannot be predicated on the bare assertion that fairness so requires.  A general congruence with accepted principle must be demonstrated as well.

 

                   This is not to say that the concepts of justice and equity play no role in determining whether recovery lies.  It is rather to say that the law defines what is so unjust as to require disgorgement in terms of benefit, corresponding detriment and absence of juristic reason for retention.  Such definition is required to preserve a measure of certainty in the law, as well as to ensure due consideration of factors such as the legitimate expectation of the parties, the right of parties to order their affairs by contract, and the right of legislators in a federal system to act in accordance with their best judgment without fear of unforeseen future liabilities.

 

                   Additionally, conscience and fairness may play a role in the development of the relevant legal principles.  When questions arise as to the scope of the principles, the balance of equities between the parties may determine the outcome.  Thus Maddaugh and McCamus (The Law of Restitution (1990), "Compulsory Discharge of Another's Liability"), considering a series of cases where the defendant shared a legal liability for the payment made with the plaintiff, opine at p. 740 that "[s]o long as that benefit is bestowed by a plaintiff in circumstances such that the defendant cannot, in all good conscience, retain it, restitutionary relief ought to be awarded."  But this is quite different from the assertion that "good conscience" is the only requirement for recovery.

 

                   But even if justice without more were admitted as the basis of recovery, the municipality in this case would fail on the second question.  The facts fall short of establishing that justice requires that the federal and provincial governments reimburse the municipality for payments under the ineffective law.

 

                   The concept of "injustice" in the context of the law of restitution harkens back to the Aristotelian notion of correcting a balance or equilibrium that had been disrupted.  The restitutive form of justice is distinct from the analysis particular to tort and contract law, in the sense that questions of duty, standards, and culpability are not a central focus in restitution.  Speaking in highly general terms, Stevens suggests that contract and tort claims deal with punitive or distributive measures, whereas restitution claims deal with an "unusual receipt and a retention of value" ("Restitution, Property, and the Cause of Action in Unjust Enrichment:  Getting By With Fewer Things (Part I)" (1989), 39 U.T.L.J. 258, at p. 271; see also Wingfield, "The Prevention of Unjust Enrichment: or How Shylock Gets His Comeuppance" (1988), 13 Queen's L.J. 126, at p. 134).  Thus, restitution, more narrowly than tort or contract, focuses on re‑establishing equality as between two parties, as a response to a disruption of equilibrium through a subtraction or taking.  This observation has dual ramifications for the concept of "injustice" in the context of restitution.  First, the injustice lies in one person's retaining something which he or she ought not to retain, requiring that the scales be righted.  Second, the required injustice must take into account not only what is fair to the plaintiff; it must also consider what is fair to the defendant.  It is not enough that the plaintiff has made a payment or rendered services which it was not obliged to make or render; it must also be shown that the defendant as a consequence is in possession of a benefit, and it is fair and just for the defendant to disgorge that benefit.

 

                   The municipality has shown that it expended monies under a statute which was ultra vires.  This may seem unfair, considered in the abstract.  But in the context of the law of restitution, no injustice is established.  The payments did not confer on the federal and provincial governments benefits which must be returned to right the balance between the parties; the benefits were conferred on the children of the Regional Municipality of Peel and their parents.

 

                   Of equal importance, fairness must embrace not only the situation of the claimant, but the position of those from whom payment is claimed.  It is far from clear that ordering payment to the municipality would be fair to the federal and provincial governments and the taxpayers who would ultimately foot the account.

 

                   The ordering of one level of government to pay large sums of money to another level of government because one level has suffered by obeying the invalid legislation of the other is a complex question, involving political as well as legal issues.  It is further complicated by the fact that all the governments act as the representatives of the electorate in the name of the Crown.  This complex matrix of considerations renders problematic any assertion that justice and fairness demand that the federal and provincial governments reimburse the Regional Municipality of Peel for expenditures made under the invalid legislation.

 

                   Given these conclusions, I need not address the question of whether the reasons of La Forest J. in Air Canada v. British Columbia, [1989] 1 S.C.R. 1161, created a rule of public policy barring recovery against the government for charges made under invalid legislation, nor is it necessary for the Court to consider whether it wishes to give majority support to such a rule, presuming it to be applicable.  That important question may be left to another day.  Similarly, the Court need not address the collateral issue concerning this Court's jurisdiction to award interest on a judgment against the federal Crown.

 

Conclusion

 

                   I would dismiss the appellant's appeal both as against the respondent Her Majesty The Queen in Right of Canada and as against the respondent Her Majesty The Queen in Right of Ontario.  Due to the peculiar circumstances in which these appeals have arisen, I would however exercise this Court's discretion and refrain from ordering costs in the cause.

 

                   Appeals dismissed.

 

                   Solicitors for the appellant:  Osler, Hoskin and Harcourt, Toronto.

 

                   Solicitor for the respondent Her Majesty The Queen in Right of

Canada:  The Deputy Attorney General of Canada, Ottawa.

 

                   Solicitor for the respondent Her Majesty The Queen in Right of

Ontario:  The Deputy Attorney General for Ontario, Toronto.