Gains-Based Remedies in the Supreme Court of Canada

Abstract

Loss-based remedies compensate the plaintiff for harm caused by the defendant's wrongdoing and the most common example is damages. Gains-based remedies deprive the defendant of profits earned by wrongdoing. The most common examples are the constructive trust, which is a proprietary remedy, and the account of profits, which is a money claim. In Pettkus v. Becker, the Supreme Court of Canada held that a constructive trust may be awarded to prevent unjust enrichment and in LAC Minerals Ltd v. International Corona Resources Ltd, the court apparently assumed that in the wake of Pettkus v. Becker, the prevention of unjust enrichment was now the only basis for constructive trust relief. However, in Soulos v. Korkontzilas the court held that a constructive trust may be imposed either to reverse unjust enrichment or to deter wrongful conduct and that where the purpose is deterrence, it makes no difference whether the plaintiff has suffered any loss. 3469420 Canada Inc. v. Strother is a parallel decision holding that an account of profits may be awarded for either unjust enrichment or deterrence reasons and that, where the purpose is deterrence, the plaintiff's loss does not matter. In summary, Soulos and Strother seem to support the use of gains-based remedies for deterrence purposes and without reference to unjust enrichment. On the other hand, the majority judgment in Soulos is not unequivocal, while both Soulos and Strother were subject to strong dissents. The upshot is that the question remains at least to some extent unsettled. Part 2, below discusses Pettkus v. Becker and its place in the Canadian law of unjust enrichment. Part 3 analyzes the LAC Minerals case and Soulos, with particular reference to the ambiguity in the Soulos majority judgment. Part 4 examines Strother with emphasis on observations in the minority judgment about the nature and function of the account of profits remedy. Part 5 concludes with an overall assessment of the cases from both a doctrinal and a policy perspective.