QUEEN’S BENCH FOR SASKATCHEWAN 2017 SKQB 144 Date: 2017 05 18 Docket: QBG 254 of 2016 Judicial Centre: Battleford BETWEEN: NICOLE PORTERFIELD and RONI MARIE PIROT and RONALD MICHAEL PIROT and MICHAEL PIROT Counsel: Justin M. Luddington for the applicants Paula Bittman for the respondents DECISION MESCHISHNICK J. May 18, 2017 [1] Nicole Porterfield [Nicole] and Roni Marie Pirot [Roni] [Applicants] are sisters. They apply for partition and sale of lake front recreational property [Property] owned by them together with their Father Ronald Michael Pirot [Ronald] and their brother, Michael Pirot [Michael] [Respondents] at Cochin Saskatchewan. [2] Each of the parties owns an undivided one quarter interest as tenants in common in the Property. [3] The parties inherited the Property from Ronald’s mother after her passing in 1996. The lot was wedding gift to her and her husband in 1931 from her father-in-law who had acquired the land in 1928. [4] Nicole now resides in Edmonton. Roni resides in Winnipeg. It is not obvious from the material where Michael resides. His title shows his address as General Delivery, Cochin, Saskatchewan. [5] The Property is located next door to another that until recently was the permanent residence of the Applicants’ parents. They are now separated. Ronald no longer resides at the next door property and says that as result of the separation it may have to be sold. Ronald does not reside on the Property the evidence suggesting he has other properties in Cochin and Arizona. [6] Ronald says that the Property is “family” property and the only meaningful property left from his mother. He says that it has considerable tangible and intangible value because of its history which includes being the meeting place for the extended family since 1948. Ronald says that it was his mother’s wish that the Property remain in the family for its use and enjoyment. He is of the same view. He says that it was not his mother’s intention that the parties sell the Property to realize on its capital value. [7] Ronald says that currently neither he nor Michael are in position to purchase the Applicants interest in the Property. [8] Ronald also says that he has contributed approximately $40,000 in materials and $40,000 in time to maintain and improve the Property and that these contributions are over and above the contributions of the others. Ronald is of the opinion that these improvements have added to the value of the Property. He says he was under no obligation to provide these materials or work and did so only on the expectation that the Property would remain in the family for the use of his children and grandchildren. [9] The Applicants disagree with Ronald’s estimates of the value of the materials and the time he has spent on maintenance and improvements. They also point out that the Property has been rented when not being used and that until 2012 Ronald and the Applicants mother, Lynn, were responsible for renting the Property. They used the rental income for taxes, utilities and maintenance and did not provide any accounting. In 2012 Nicole took over managing the rental of the Property and 2016 was the first time that surplus has been generated from the rentals although final accounting of the expenses relating to the Property has not yet been finalized. The Applicants do clarify though that at no time have they ever received for their personal use any of the proceeds from the rental of the Property. [10] The Applicants also point out that they have never been provided with an accounting of the costs of the maintenance and improvements that Ronald is now claiming nor until the Applicants pursed their desire to realize on their interest did he ever make claim for reimbursement of his contributions. [11] In addition, the Applicants attest that they too have had hand in maintaining and improving the Property having taken on or assisting with various maintenance and improvement projects. [12] Finally, the Applicants contest that the improvements made to the Property have been responsible for increasing its value. The cabin on the Property was built in the 1930’s. In their opinion the current value of the Property is founded on the demand for lake front lots. [13] It is clear that there is factual dispute about the value of Ronald’s contributions and whether they have increased the market value of the Property. What will be called upon to decide at this point is whether the legal issues raised by Ronald if decided in his favor would block the Applicants request for partition and sale of the Property. The Partition Act [14] The Partition Act, 1868, 31 32 Vict, 40 [UK] [Act] continues to apply in Saskatchewan. Grunert Grunert (1960), 1960 CanLII 230 (SK QB), 32 WWR (NS) 509 (Sask QB), Wiebe 101105260 Saskatchewan Ltd., 2013 SKQB 440 (CanLII), 435 Sask 79 [Wiebe]. It contains three sections which the Respondents say are germane to the issues they raise: 3. In Suit for Partition, where, if this Act had not been passed, Decree for Partition might have been made, then if it appears to the Court that, by reason of the Nature of the Property to which the Suit relates, or of the Number of the Parties interested or presumptively interested therein, or of the Absence or Disability of some of those Parties, or of any other Circumstance, Sale of the Property and Distribution of the Proceeds would be more beneficial for the Parties interested than Division of the Property between or among them, the Court may, if it thinks fit, on the Request of any of the Parties interested, and notwithstanding the Dissent or Disability of any others of them, direct Sale of the Property accordingly, and may give all necessary or proper consequential Directions. 4. In Suit for Partition, where, if this Act had not been passed, Decree for Partition might have been made, then if the Party or Parties interested, individually or collectively, to the Extent of One Moiety or upwards in the Property to which the Suit relates, request the Court to direct Sale of the Property and Distribution of the Proceeds instead of Division of the Property between or among the Parties interested, the Court shall, unless it sees good Reason to the contrary, direct Sale of the Property accordingly, and give all necessary or proper consequential Directions. 5. In Suit for Partition, where, if this Act had not been passed, Decree for Partition might have been made, then if any Party interested in the Property to which the Suit relates requests the Court to direct Sale of the Property and Distribution of the Proceeds instead of Division of the property between or among the Parties interested, the Court may, if it thinks fit, unless the other Parties interested in the Property, or some of them, undertake to purchase the Share of the Party requesting Sale, direct Sale of the Property, and give all necessary or proper consequential Directions, and in case of such Undertaking being given the Court may order Valuation of the Share of the Party requesting Sale in such Manner as the Court thinks fit, and may give all necessary or proper consequential Directions. [15] If owners holding “One Moiety (a half interest) or more” request partition and sale s. directs that the court “shall, unless it seems good reason to the contrary, direct Sale of the Property” whereas if the owners requesting the relief hold less than half interest it is s. that operates. It directs that “if it appears that Sale of the Property and Distribution of the Proceeds would be more beneficial to the Parties then division of the Property between them the Court may, if it thinks fit direct Sale of the Property”. In either case if sale is directed the court may or shall “give all necessary or proper consequential directions” which may include, where one of the owners gives an undertaking to purchase the interest of the party requesting sale, valuation of the property. The Court’s Discretion Under the Act [16] The court’s discretion to refuse partition under s. is limited whereas under s. broader discretion exists. This necessitates determining whether it is s. or s. which operates in these circumstances. [17] The Respondents acknowledge that the Applicants hold “one moiety” of the legal title to the Property but argue that the contributions made by Ronald, through the operation of the principle of unjust enrichment and resulting or constructive trusts, entitle him to an equitable interest in the Property. If so, then his total legal and equitable interest will reduce the Applicants interest to less than one half which in turn will put the case into s. 3. [18] As mentioned earlier, the discretion to deny the Applicants the relief requested is limited if the application is to be determined under s. of the Act. Recently, this court has denied partition under this section where it would override the terms of an agreement for sale Matovich Matovich, 2013 SKQB 205 (CanLII), 421 Sask 266 [Matovich] or where, as in Wiebe, there existed an agreement that decisions regarding disposition of the property would have to be approved by two thirds majority. [19] Other reasons to deny request for partition and sale under s. are found in earlier case law. They are summarized in Matovich in paras. 24 The law respecting partition is set out succinctly in Coburn v. Coburn (1984), 1984 CanLII 2235 (SK QB), 36 Sask.R. 41, [1984] S.J. No. 550 (QL) (Q.B.), wherein Geatros J. states in para. ... joint tenant has prima facie right to partition or sale and the court will compel such partition or sale unless justice requires that such an order should not be made. ... 25 Geatros J. also deals with this matter in Reed v. Reed(1985), 1985 CanLII 2388 (SK QB), 40 Sask.R. 289, 40 R.P.R. 90 (Q.B.), wherein he states at para. [18] The judgment of Craig, J., in Reitsma v. Reitsma, 1974 CanLII 1786 (BC SC), [1975] W.W.R. 281 is most helpful in determining whether the plaintiff is precluded from determining the joint tenancy by an action for partition. Craig, J., stated at p. 283: “There are numerous authorities for the proposition that joint tenant has prima facie right to partition or sale at any time. The court has discretion to refuse partition, but this discretion is ‘severely limited’: see Bergen v. Bergen (1969), 1969 CanLII 1071 (BC SC), 68 W.W.R. 196 (B.C.), and the cases therein referred to. The plaintiff must come into court ‘with clean hands’: McGeer v. Green (1960), 1960 CanLII 345 (BC SC), 22 D.L.R. (2d) 775, at 779 (B.C.). In seeking partition, the plaintiff must not be motivated by malice, or by desire to be vexatious or oppressive. In partition cases, the word ‘oppressive’ means ‘oppressive economically’: Korolew v. Korolew (1972), R.F.L. 162, at 165 (B.C.)." He quotes at p. 284 what Seaton, J., said in Bergen v. Bergen,supra, at p. 199: “That the order would cause inconvenience and hardship to the defendant would not be sufficient reason to refuse the relief sought”. And, later Craig, J., said: “Hardship’ is relative term. It seems to me that before hardship can be basis for refusing partition order (to which the plaintiff is otherwise entitled) the hardship must amount to economic oppression.” [20] If this case is governed by s. the application will be allowed as cannot see anything in the evidence that suggests that the Applicants are motived by malice or are being vexatious as those terms have been interpreted in Reed Reed (1985), 1985 CanLII 2388 (SK QB), 40 Sask 289 (QB) at para 25 or that the result would be economically oppressive as that term has been interpreted and applied in such cases as Reitsma Reitsma, 1974 CanLII 1786 (BC SC), [1975] WWR 281 (BCSC). Unjust Enrichment and Trust Remedies [21] Turning then to the question of whether expenditures for upkeep and improvements by one joint owner can result in that owner establishing an equitable proprietary interest in property, first note that cases which dealt with claims for unequal contributions under the Act have made adjustments for these “equities” when distributing the sales proceeds. [22] For example, Justice Gabrielson in Wionzek Magyar, 2013 SKQB 194 (CanLII) at para 48, 421 Sask 102 relied on academic authority: 48 In the text by Anne Warner La Forest, Anger Honsberger Law of Real Property, 3rd ed., looseleaf (Aurora, Ont.: Canada Law Book Inc., 2012) vol. at 14-28.1, it is stated: s.14:20.140 Joint Tenancy Partition or Sale by Court Order ... The general rule in accounting is that joint tenant, unless ousted by his co-tenant, cannot sue him for use and occupation but, if the joint tenancy is terminated by court order for partition or sale, the court may make all allowances and should give such directions as will give complete equity to the parties. What is equitable depends on the circumstances of each case. If the occupying tenant claims for upkeep and repairs, the court, as term of allowing the claim, usually requires him to submit to an allowance for use and occupation. If one tenant has made improvements which increased the selling value, the other tenant cannot take advantage of the increase without submitting to an allowance for the improvements and, if one tenant paid more than his share of encumbrances, he is entitled to an allowance of the excess. ... Although the reference was to valuation in circumstances of joint tenancy, at page 14-37 (s.14:30.140), the author confirms that the same principles apply in respect to partition or sale by court order in respect to tenancies in common such as was found here. [23] similar approach was followed in McNabb Fortin (1999), 1999 CanLII 12750 (SK QB), 183 Sask 150 (QB) at para 14 [McNabb] where Justice McLellan wrote: 14 The Court, when ordering the sale of the property, may also determine the equity of each joint tenant in the property by taking into account capital payments, improvements, surplus payments towards encumbrances on the property and use and occupation of the property. The Ontario Court of Appeal in Mastron v. Cotton, 1925 CanLII 464 (ON CA), [1926] D.L.R. 767 indicated that the court may make all just allowances and should give such directions as will do complete equity between the parties [24] The Mastron case (Mastron Cotton, 1925 CanLII 464 (ON CA), [1926] DLR 767 (Ont CA)[Mastron]) relied on by Justice McLellan in McNabb also summarized the circumstances when equity would make adjustments and when it would not: What is just and equitable depends on the circumstances of each case. For instance, if the tenant in occupation claims for upkeep and repairs, the Court, as term of such allowance, usually requires that the claimant shall submit to an allowance for use and occupation: Rice v. George (1873), 20 Gr. 221; Pascoe v. Swan (1859), 27 Beav. 508, 54 E.R. 201. Again, if one tenant has made improvements which have increased the selling value of the property, the other tenant cannot take the advantage of increased price without submitting to an allowance for the improvements: Leigh v. Dickeson, 15 Q.B.D. 60, per Cotton, L.J., at p. 67; 21 Hals., p. 851, para. 1595. And, once again, when, as here, one tenant has paid more than his share of encumbrances, he is entitled to an allowance for such surplus: Re Curry, Curry v. Curry (1898), 25 A.R. (Ont.) 267; 33 Corp. Jur., p. 909. These allowances being made as equitable allowances, there may as matter of course be circumstances under which they should not be made. For instance, the circumstances may indicate that the improvements were made or the surplus payments were made or intended to be made as gifts by one tenant to the other as by the husband for the benefit of the wife; and it may be that had the surplus payments in this case been made by the husband rather than by the wife the Court would, in the absence of something to show contrary intention, presume that they were gifts to the wife: Dunbar v. Dunbar, [1909] Ch. 639. [25] The point to be noted from these cases is that when applying the Act the equities that might result in an unequal division of the sale proceeds are taken into account after the sale and are not used to determine the ownership interest of title holder opposing partition and sale. [26] The question posed by the Respondents is whether this remains proper analysis in light of the developments in the law of unjust enrichment and resulting and constructive trusts starting with Pettkus Becker, 1980 CanLII 22 (SCC), [1980] SCR 834. The Respondents argue that if their evidence is accepted all requirements for finding of unjust enrichment will have been established and that the remedy of constructive or resulting trust will give the Respondents collectively an interest in the Property greater than 50%. If so the application will have to be considered under s. of the Act and not s. 4. [27] The question is good one and raises number of issues. will address two of them which in my view determine the issue. No Juristic Reason [28] One of the most recent clarifications in this area of the law from the Supreme Court of Canada is found in Kerr Baranow, 2011 SCC 10 (CanLII), [2011] SCR 269 [Kerr]. [29] In Kerr the court was clear that the law of unjust enrichment and the remedies flowing from it would not be applied differently in different areas of law saying: 33 The application of unjust enrichment principles to claims by domestic partners was resisted until the Court’s 1980 decision in Pettkus. In applying unjust enrichment principles to domestic claims, however, the Court has been clear that there is and should be no separate line of authority for “family” cases developed within the law of unjust enrichment. Rather, concern for clarity and doctrinal integrity mandate that “the basic principles governing the rights and remedies for unjust enrichment remain the same for all cases” (Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] S.C.R. 980, at p. 997). [30] Justice Cromwell also addressed the availability of “common intention resulting trust” in these circumstances rejecting its application: 25 First, as the abundant scholarly criticism demonstrates, the common intention resulting trust is doctrinally unsound. It is inconsistent with the underlying principles of resulting trust law. Where the issue of intention is relevant to the finding of resulting trust, it is the intention of the grantor or contributor alone that counts. As Professor Waters puts it, “In imposing resulting trust upon the recipient, Equity is never concerned with [common] intention” (Waters’, at p. 431). The underlying principles of resulting trust law also make it hard to accommodate situations in which the contribution made by the claimant was not in the form of property or closely linked to its acquisition. The point of the resulting trust is that the claimant is asking for his or her own property back, or for the recognition of his or her proportionate interest in the asset which the other has acquired with [page290] that property. This thinking extends artificially to claims that are based on contributions that are not clearly associated with the acquisition of an interest in property; in such cases there is not, in any meaningful sense, “resulting” back of the transferred property: Waters’, at p. 432. It follows that resulting trust based solely on intention without transfer of property is, as Oosterhoff puts it, doctrinal impossibility: “... resulting trust can arise only when one person has transferred assets to, or purchased assets for, another person and did not intend to make gift of the property”: p. 642. The final doctrinal problem is that the relevant time for ascertaining intention is the time of acquisition of the property. As result, it is hard to see how resulting trust can arise from contributions made over time to the improvement of an existing asset, or contributions in kind over time for its maintenance. As Oosterhoff succinctly puts it at p. 652, resulting trust is inappropriate in these circumstances because its imposition, in effect, forces one party to give up beneficial ownership which he or she enjoyed before the improvement or maintenance occurred. [31] Justice Cromwell then went on to consider unjust enrichment and, if it is found to exist, when the remedy of constructive trust should be granted. [32] Without determining whether the first two elements of unjust enrichment could be established in this case will focus on the third element as it seems to me it is an area that will upend the Respondents argument. [33] In Kerr the court in reviewing and applying previous authority from that court said this about the third element: (2) Absence of Juristic Reason 40 The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without juristic reason. To put it simply, this means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case: see Pettkus, at p. 848; Rathwell, at p. 456; Sorochan, at p. 44; Peter, at p. 987; Peel, at pp. 784 and 788; Garland, at para. 30. 41 Juristic reasons to deny recovery may be the intention to make gift (referred to as “donative intent”), contract, or disposition of law (Peter, at pp.990-91; Garland, at para. 44; Rathwell, at p. 455). The latter category generally includes circumstances where the enrichment of the defendant at the plaintiff's expense is required by law, such as where valid statute denies recovery (P.D. Maddaugh, and J. D. McCamus, The Law of Restitution (1990), at p. 46; Reference re Excise Tax Act (Canada), 1992 CanLII 69 (SCC), [1992] S.C.R. 445 (S.C.C.); Mack v. Canada (Attorney General) (2002), 60 O.R. (3d) 737 (Ont. C.A.)). However, just as the Court has resisted purely categorical approach to unjust enrichment claims, it has also refused to limit juristic reasons to closed list. This third stage of the unjust enrichment analysis provides for due consideration of the autonomy of the parties, including factors such as “the legitimate expectation of the parties, the right of parties to order their affairs by contract (Peel, at p. 803). 43 In Garland, the Court set out two-step analysis for the absence of juristic reason. It is important to remember that what prompted this development was to ensure that the juristic reason analysis was not “purely subjective”, thereby building into the unjust enrichment analysis an unacceptable “immeasureable judicial discretion” that would permit “case by case ‘palm tree’ justice”: Garland, at para. 40. The first step of the juristic reason analysis applies the established categories of juristic reasons; in their absence, the second step permits consideration of the reasonable expectations of the parties and public policy considerations to assess whether recovery should be denied: First, the plaintiff must show that no juristic reason from an established category exists to deny recovery [...] The established categories that can constitute juristic reasons include contract (Pettkus, supra), disposition of law (Pettkus, supra), donative intent (Peter, supra), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out prima facie case under the juristic reason component of the analysis The prima facie case is rebuttable, however, where the defendant can show that there is another reason to deny recovery. As result, there is de facto burden of proof placed on the defendant to show the reason why the enrichment should be retained. This stage of the analysis thus provides for category of residual defence in which courts can look to all of the circumstances of the transaction in order to determine whether there is another reason to deny recovery. As part of the defendant’s attempt to rebut, courts should have regard to two factors: the reasonable expectations of the parties, and public policy considerations. [paras. 44-46] 45 Policy arguments concerning individual autonomy may arise under the second branch of the juristic reason analysis. In the context of claims for unjust enrichment, this has led to questions regarding how (and when) factors relating to the manner in which the parties organized their relationship should be taken into account. It has been argued, for example, that the legislative decision to exclude unmarried couples from property division legislation indicates the court should not use the equitable doctrine of unjust enrichment to address their property and asset disputes. However, the court in [page298] Peter rejected this argument, noting that it misapprehended the role of equity. As McLachlin J. put it at p. 994, “It is precisely where an injustice arises without legal remedy that equity finds role.” (See also Nova Scotia (Attorney General) v. Walsh, 2002 SCC 83 (CanLII), [2002] S.C.R. 325, at para. [34] In the first step then if the party defending an unjust enrichment claim can show “disposition at law” which permits what might otherwise be an inequitable result there will be juristic reason to deny claim. In the second step it is available to the party defending the claim, when reasonable expectations and public policy are considered, to establish that juristic reason exists to deny the claim. This opens the door to consider the manner in which the parties organized their relationship and whether an injustice has arisen that without equity cannot be remedied. [35] An example of “disposition at law” that amounts to juristic reason for enrichment is found in the case dealing with the harsh consequences that follow even the inadvertent loss of registration of security agreement under Personal Property Security Act regimes. In KBA Canada, Inc. 3S Printers Inc., 2014 BCCA 117 (CanLII) [KBA] (leave to appeal to the SCC denied) the British Columbia Court of Appeal noted: 34 There are three elements that must be satisfied in order for claim in unjust enrichment to succeed: there must be an enrichment of the defendant, corresponding deprivation of the plaintiff, and an absence of juristic reason for the enrichment: Garland v. Consumers' Gas Co., 2004 SCC 25 (CanLII) at para. 30, citing Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980] S.C.R. 834 at 848 and Peel (Regional Municipality) v. Canada, 1992 CanLII 21 (SCC), [1992] S.C.R. 762 at 784. 35 In the case before us, it is apparent that the inadvertent cancellation of KBA’s financing statement, through no fault of its own, resulted in it losing the priority of its security, and in Supreme Graphics and CIT gaining corresponding priority for theirs. accept, therefore, that the first two elements of the test for unjust enrichment are satisfied. The question is whether the statutory priorities scheme represents “juristic reason for the enrichment”. [36] Then, after summarizing the case of Central Guaranty Trust Co. Dixdale Mortgage Investment Corp. (1994), 1994 CanLII 1429 (ON CA), 24 OR (3d) 506 (Ont CA), decided by the Ontario Court of Appeal, the court in KBA went on to discuss when “disposition at law” provides juristic reason: 37 Supreme Graphics notes that Central Guaranty Trust was decided twenty years ago, and says that it has been overtaken by developments in the law of restitution. In particular, it says that the Supreme Court of Canada’s analysis of “juristic reason” in Garland must be considered. In Garland, Iacobucci J., for the Court, said this about “juristic reason”: [44]... [In] the proper approach to the juristic reason analysis..., the plaintiff must show that no juristic reason from an established category exists to deny recovery. By closing the list of categories that the plaintiff must canvass in order to show an absence of juristic reason, Smith’s objection [L. Smith, “The Mystery of ‘Juristic Reason”, (2000), 12 S.C.L.R. (2d) 211] to the Canadian formulation of the test that it required proof of negative is answered. The established categories that can constitute juristic reasons include contract (Pettkus, supra), disposition of law (Pettkus, supra), donative intent (Peter [Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] S.C.R. 980], supra), and other valid common law, equitable or statutory obligations (Peter, supra). If there is no juristic reason from an established category, then the plaintiff has made out prima facie case under the juristic reason component of the analysis. 38 Justice Iacobucci elaborated on "disposition of law" as juristic reason for an enrichment: [49] Disposition of law is well established as category of juristic reason. In Rathwell [Rathwell v. Rathwell, 1978 CanLII (SCC), [1978] S.C.R. 436], supra, Dickson J. gave as examples of juristic reasons “a contract or disposition of law” (p. 455). In Reference re Goods and Services Tax, 1992 CanLII 69 (SCC), [1992] S.C.R. 445 (“GST Reference”), Lamer C.J. held that valid statute is juristic reason barring recovery in unjust enrichment. This was affirmed in Peter, supra, at p. 1018. Most recently, in Mack v. Canada (Attorney General) (2002), 60 O.R. (3d) 737, the Ontario Court of Appeal held that the legislation which created the Chinese head tax provided juristic reason which prevented recovery of the head tax in unjust enrichment. In the leading Canadian text, The Law of Restitution [Peter D. Maddaugh and John D. McCamus, The Law of Restitution (Aurora, Ontario: Canada Law Book, 1990)], supra, McCamus and Maddaugh discuss the phrase "disposition of law" from Rathwell, supra, stating, at p. 46: ... it is perhaps self-evident that an unjust enrichment will not be established in any case where enrichment of the defendant at the plaintiff's expense is required by law. It seems clear, then, that valid legislation can provide juristic reason which bars recovery in restitution. 39 Garland did not, itself, concern statutory provision. In Gladstone v. Canada (Attorney General), 2005 SCC 21 (S.C.C.) (CanLII), however, the Supreme Court dealt with the question of whether an allegedly unjust enrichment was justified by statutory disposition. In that case, the Crown had seized herring spawn on kelp allegedly harvested in violation of the Fisheries Act, R.S.C. 1985, c. F-14. When charges were eventually stayed, it paid the proceeds of sale of the herring spawn to the respondents. The respondents claimed entitlement to interest, as well, and relied on the doctrine of unjust enrichment. The Supreme Court denied recovery, on the basis that the matter was governed by statute: [19] In the case at bar, the seizure, sale, and return of the proceeds were all done pursuant to the Fisheries Act. The statute provides for the return of any fish, thing, or proceeds realized from its disposition. This is what happened. Any residual gain or loss is ancillary. Relying upon such statutory basis fall within the "disposition of law" category of juristic reason.... 42 In my view, the PPSA’s priorities provisions constitute clear juristic reasons for the enrichment in this case. The PPSA comprehensively governs priority among creditors, and the judge erred in finding that the doctrine of unjust enrichment could be used to navigate around the clear statutory provisions. [37] At the core of the rule set out in these authorities is the notion that if the result in case is governed by valid statute unjust enrichment cannot be employed to change the result. As noted earlier, the Act is in force in Saskatchewan. The cases like Mastron which have interpreted it and, in particular, the phrase “give all necessary and proper consequential directions” as found in s. have concluded that the Act already provides an “unjust enrichment” like remedy but explicitly provides that the remedy shall only be invoked in the disposition of the proceeds of sale. In other words, the Act does not allow the equitable principles of unjust enrichment and constructive trust to operate to create proprietary interest. [38] In my view the same result flows when looking for juristic reason under the second step. In this case the parties became equal owners of the Property by inheritance. They became owners of undivided interests at tenants in common. They did not have choice in formulating their legal relationship. It was decided for them by Ronald’s mother. [39] In addition, by Ronald’s own admission, he says at para. 25 of his affidavit that he undertook to maintain and upgrade the Property not with the expectation of being compensated or acquiring greater interest but with “… the reasonable expectation that the cabin would remain in the family for my use and benefit, and the use and benefit of my children and grandchildren”. [40] Since the parties did not participate in formulating their relationship it could only have been the expectations Ronald’s mother at the time of making her will that influenced her decision. If indeed Ronald’s mother had desire to have the Property stay in the family she should have considered using an express trust which in turn would have been subject to the law limiting its application and duration. [41] Furthermore, at the heart of this second step analysis is the principle that there must be an injustice without remedy before equity will intervene. This is case for partition and sale under the Act. The Act, as noted above, provides a remedy but it is a monetary remedy and not a proprietary one. [42] Since the Act has directed how and when the equities between the parties will be determined there is juristic reason why Ronald cannot succeed outside the Act in claim for unjust enrichment. And, without that finding he cannot get to remedy in constructive trust, and without that remedy he cannot establish an ownership interest in the Property greater than his legal interest of an undivided one quarter. Monetary Remedy Sufficient [43] Even if Ronald could succeed in establishing claim for unjust enrichment there is another reason why he cannot succeed. Just because claim is made out for unjust enrichment proprietary remedy does not always follow. The first remedy to consider is always monetary award, Kerr in para 47, relying on Peter Beblow, 1993 CanLII 126 (SCC), [1993] SCR 980 (WL) [Peter]. Kerr also directed that: 52 The plaintiff must also establish that monetary award would be insufficient in the circumstances (Peter, at p. 999). In this regard, the court may take into account the probability of recovery, as well as whether there is reason to grant the plaintiff the additional rights that flow from recognition of property rights (Lac Minerals, at p. 678, per La Forest J.). [44] In Peter, Madame Justice McLachlin (as she was then) (La Forest, Sopinka and lacobucci JJ. concurring) stated: 28 Nor does the distinction between commercial cases and family cases on the remedy of constructive trust appear to be necessary. Where monetary award is sufficient, there is no need for constructive trust. Where monetary award is insufficient in family situation, this is usually related to the fact the claimant’s efforts have given her special link to the property, in which case constructive trust arises. 34 To summarize, it seems to me that the first step in determining the proper remedy for unjust enrichment is to determine whether monetary award is insufficient and whether the nexus between the contribution and the property described in Pettkus v. Becker has been made out. If these questions are answered in the affirmative the plaintiff is entitled to the proprietary remedy of constructive trust. In looking at whether monetary award is insufficient the court may take into account the probability of the award’s being paid as well as the special interest in the property acquired by the contributions: per La Forest J. in Lac Minerals. The value of that trust is to be determined on the basis of the actual value of the matrimonial property the “value survived” approach. It reflects the court’s best estimate of what is fair having regard to the contribution which the claimant’s services have made to the value surviving, bearing in mind the practical difficulty of calculating with mathematical precision the value of particular contributions to the family property. [45] The very nature of this application protects Ronald. It is an application for sale and the distribution of the sale proceeds. If Ronald can establish that he is entitled to some amount for his maintenance and improvement costs he will be protected for that amount when the proceeds of sale are distributed. The recovery of successful claim is certain and there is no need for propriety award to protect him. This then becomes another reason why Ronald would not succeed in establishing constructive trust. Conclusion [46] As a result of this analysis I have concluded that this application is governed by s. 4 of the Act and that the Respondents have not established a circumstance which would allow me to deny the application. [47] I therefore order that the Property be sold. If the parties are unable to agree as to the process to be utilized to sell the Property they shall apply back to me for further directions. [48] I further order that the proceeds from the sale of the Property after the payment of all reasonable selling costs and the deduction of an amount necessary to protect Ronald’s claim can be paid to the parties equally. Any balance not paid to the parties shall be paid into court and not disbursed without further court order or the agreement of the parties. If the parties are unable to agree on the amount of the deduction necessary to protect Ronald’s claim the full amount of the proceeds of sale after the payment of all reasonable selling costs shall be paid into court and any party may apply back to me for further directions to settle the amount to be disbursed. [49] Finally, direct Ronald’s claim for the payment of his maintenance and improvement costs to trial. Ronald shall be the plaintiff in the action and the action shall be brought and proceed in accordance with The Queen’s Bench Rules. [50] The Applicants shall have one set of costs to be taxed against the Respondents. J. G.A. MESCHISHNICK
HELD: The application was granted. The court ordered that the property be sold and the proceeds of sale take into account the amount necessary to protect the respondent father’s claim. The Partition Act, 1868 applies in the province. It did not allow the equitable principles of unjust enrichment and constructive trust to operate to create a proprietary interest. The court found that s. 4 of the Act applied, which provides a monetary remedy so that if the respondent father could establish entitlement to some amount for his maintenance and improvement costs, he would be protected for that amount for his costs.