Restitution (Legal) | The Canadian Encyclopedia

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Restitution (Legal)

Restitution is a legal response calculated to take away a gain or enrichment that is considered to be inappropriate. It developed to address situations of unjust enrichment that were not adequately addressed by the laws of tort or contract.

Restitution (Legal)

Restitution is a legal response calculated to take away a gain or enrichment that is considered to be inappropriate. It developed to address situations of unjust enrichment that were not adequately addressed by the laws of tort or contract. Most legal claims brought by citizens seek compensation; that is, the recovery by a plaintiff or loss suffered. A claim to restitution is a claim measured not by the plaintiff's loss, but rather by the defendent's gain. Restitution is a rapidly developing area of the law, touching on areas as diverse as COMMERCIAL LAW, TORTS, domestic property disputes, claims against government and intellectual property.

The starting point for the development of Canadian jurisprudence on restitution was the 1954 Supreme Court of Canada decision Deglman, in which the court concluded that the law should provide a remedy in situations where one person has derived a benefit from another person that is against conscience.

How Is Restitution Established?

Restitution arises in 2 different ways. The first is where a defendant acquires a gain through commmitting an unlawful act; for example, making profits through a breach of copyright. Some unlawful acts allow the plaintiff to seek removal of the defendant's gain, instead of compensation for the plaintiff's loss. One developing area of the law is the question of which legal wrongs allow a plaintiff to elect to take away the defendant's gain; for example, there is currently debate about whether a breach of CONTRACT allows the plaintiff to do this, or only allows for compensation for loss.

The second route to restitution does not depend on any unlawful act by the defendant. Instead, it requires the plaintiff to show 1) that the defendant received an enrichment which 2) came from the plaintiff, and 3) that there is no good reason in law for the defendant to keep that enrichment. When these 3 elements are proved, the right to restitution arises from "unjust enrichment." The simplest example is a payment of money by mistake; the payment is recoverable. Confusingly, the first type of restitution (based on an unlawful act) is often also called "unjust enrichment," even though such claims do not require proof of the 3 elements of unjust enrichment. In both types of claim, the defendant may be able to establish a defence that will defeat the plaintiff's claim.

Defences to a claim in restitution arise where the plaintiff lacked any intention to recover payment or acted completely voluntarily, meaning that the actions of the plaintiff were done neither at the request of the defendant nor with the compliance of the defendant. A claim in restitution will be denied if there is a valid and enforceable contract between the parties. Restitution will not be granted if to do so would give approval to illegality or be in violation of public policy. Failure to establish one of the elements of unjust enrichment will also defeat a restitutionary claim.

Bringing It About

Once the right to restitution is established, there are 2 ways to bring it about. The defendant may be declared to owe to the plaintiff a sum equal to the defendant's gain. Alternatively, if the defendant still has the gain, the plaintiff may be granted an ownership interest in it. This is done by a declaration of a constructive TRUST, which makes the defendant into a trustee of the property for the plaintiff's benefit. This may be a more attractive remedy if the defendant is at risk of BANKRUPTCY, or if the property in question has risen in value.

Restitution to a victim can also be ordered as a part of the sentence following a criminal conviction. This will often be appropriate if the crime involves a misappropriation of property. In the criminal context, restitution also has a somewhat wider meaning: an order for the compensation of a victim's loss is often called a "restitution order," even though it does not involve the giving up of any gain by the criminal. Voluntary restitution by a criminal defendant will often be considered as a factor mitigating any other sentence the court might impose.

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