#6872 - Rbc Dominion Securities V. Dawson - Restitution of Unjust Enrichment BCL

RBC Dominion Securities v. Dawson

Facts

In 1984 the respondent, Rosemary Dawson, purchased, through RBC (securities brokers), 3,000 common shares of Hawthorne Gold Corporation for approximately $2,700.00. RBC held the shares for Ms. Dawson. Thereafter, Ms. Dawson received from RBC regular monthly statements showing the value of her shares. Shortly after they were purchased, the value of the shares began to drop and Ms. Dawson lost interest in her investment.

In 1989, under a mandatory plan of amalgamation with Eureka Resources Inc., five common shares of Hawthorne were to be exchanged for one common share of Eureka.

When Ms. Dawson received her monthly statement for the period ending May 31, 1990, it showed an adjustment based on receipt of five common shares of Eureka for each share of Hawthorne. Ms. Dawson was told she held 15,000 shares of Eureka. The statement should have said 600. The value of Ms. Dawson's holdings was given as $6,750.00. It should have been $270.00. Ms. Dawson sought, from a broker employed by RBC, verification of the facts contained in the statement. The broker, apparently on the basis of incorrect data in RBC's computer, confirmed the information. Ms. Dawson then instructed RBC to sell her shares in Eureka. After payment of commission, she received $5,069.74 for the sale of her shares, $4.919.74 more than their value.

The error was subsequently discovered. On July 26, 1990, Ms. Dawson was written and advised of the error. RBC requested a refund. Ms. Dawson refused.

Holding

Recognition of Change of Position

The development of the defence of change of circumstances was, in part, a reaction to the deficiencies of the defence of estoppel including the necessity of establishing a representation of fact or breach of duty and the fact that estoppel could deny the payor a remedy though it was inequitable that the payee be permitted to retain all of the money. (Law of Restitution by Goff and Jones, 3rd ed., p. 113.)

In addition to stating the foundation of actions for recovery of money paid under mistake of fact, Storthoaks also recognized the existence of the defence of change of circumstances. It is available "... if it can be established that [the defendant] had materially changed its circumstances as a result of the receipt of the money." Justice Martland adopted the American view as expressed in the Restatement of the Law of Restitution.

Estoppel defence no longer applies

The estoppel defence, while protecting the innocent payee, may unnecessarily maintain the inequity for the payor. To make the estoppel defence one which operates pro tanto would be inconsistent with the most commonly accepted view of estoppel: that it is a rule of evidence which prevents evidence of the event which resulted in the change of circumstances from being considered. We conclude that estoppel is no longer an appropriate method of dealing with the problem. The change of circumstance defence is the one which most fairly balances the equities. It is, as Klippert stated in Unjust Enrichment, "tailored to the general principles of unjust enrichment" (p. 252). The defence of estoppel to actions for recovery of money paid under mistake of fact is rejected.

Retention of assets does not defeat change of position

What are the equities of the situation where the defendant may have an asset which has some value though perhaps not equivalent to the money spent? If it is an asset, like the chesterfield, which the defendant would have purchased whether the mistake had been made or not, then clearly the defence of change of circumstances is not established to the extent of the money paid for that item. However, the more difficult questions arise with the refurbishing of the furniture and the purchase of items which would not have been bought except for the mistake but which continue to enrich the defendant.

The appellant submits that Ms. Dawson has been enriched by the increase in value of her personal assets and should pay to the appellant an amount representing this enrichment. Of course, she has been enriched. These assets replace the money. That is not...