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Digest of the Week — Requirements for Unjust Enrichment

Stevested Machinery and Engineering Ltd. v. Metso Paper Ltd. |  (WestlawNext Canada)
2014 CarswellBC 595 |
British Columbia Court of Appeal

Restitution and unjust enrichment | General principles | Requirements for unjust enrichment | Conferral of benefit

Plaintiff fabricated machine parts — Defendant was affiliated with international supplier of products and services to pulp and paper industry — One of defendant's clients was CT, owner and operator of pulp and paper mill — From 2007 to 2010, plaintiff's machine finished segment holders, components of mechanical pulp grinders of pulp mill manufactured by defendant for CT — Ten segment holders were cast in 2006 — Defendant planned to finish holders and supply them to CT over number of years — Non-party CT went into receivership after only four of segment holders were delivered, did not take delivery of balance of finished or partly finished machine parts and did not pay defendant for them, having commenced application for creditor protection pursuant to Companies' Creditors Arrangment Act (CCAA) — Plaintiff alleged that defendant had orally contracted to have plaintiff complete machining of ten segment holders over five years and that defendant breached contract by refusing to pay for work on last six segment holders — Plaintiff brought action for damages in breach of contract or for restitution for unjust enrichment — Action was dismissed and plaintiff appealed — Appeal allowed — Trial judge implicitly and erroneously held that plaintiff's work and work product was of no value to defendant — In fact defendant obtained title to remaining five machine parts and benefit of certain account receivable from CT, quanitifiable gains amounting to benefit — No juristic reason existed to deprive plaintiff of benefits which had accrued to defendant, particularly as common business practices and reasonable inferences derived therefrom strongly indicated that plaintiff had reasonable expectation of recovery from defendant out of that benefit — Accordingly appeal was properly allowed and declaration issued that plaintiff had title by way of constructive trust over benefits defendant received from CT, including any residual CCAA dispositions to defendant.

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