Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario

Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario
Collection
Supreme Court Judgments
Date
1992-11-19
Report
[1992] 3 SCR 762
Case number
21342, 22301
Judges
Lamer, Antonio; La Forest, Gérard V.; Sopinka, John; Gonthier, Charles Doherty; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank
On appeal from
Federal Court of Appeal
Subjects
Action
Notes
SCC Case Information: 21342, 22301
Decision Content
Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762
The Regional Municipality of Peel Appellant
v.
Her Majesty The Queen in Right of Canada Respondent
and between
The Regional Municipality of Peel Appellant
v.
Her Majesty The Queen in Right of Ontario Respondent
Indexed as: Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario
File Nos.: 21342, 22301.
1992: June 2; 1992: November 19.
Present: Lamer C.J. and La Forest, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.
on appeal from the federal court of appeal
on appeal from the court of appeal for ontario
Restitution ‑‑ Municipality ordered by Provincial Court to financially support young offenders placed by the court in group homes ‑‑ Authority for ordering this support later found unconstitutional ‑‑ Municipality paying support but only reluctantly ‑‑ Municipality seeking restitution from federal government
in Federal Court and from provincial government in Supreme Court of Ontario ‑‑ Whether or not municipality entitled to restitution ‑‑ Juvenile Delinquents Act, R.S.C. 1970, c. J‑3, ss. 20(1), (2) ‑‑ Canadian Charter of Rights and Freedoms, s. 24(1) ‑‑ Constitution Act, 1982, s. 52(1) .
Between 1974 and 1982, the Family Court judges in the Peel District directed a number of juveniles be placed in group homes, pursuant to s. 20(1) of the Juvenile Delinquents Act (which provided for placement with an individual or an institution), rather than rely on placement by the Children's Aid Society. The judges ordered the municipality, pursuant to s. 20(2) (which authorizes a family court judge to order a municipality to contribute to the support of a juvenile) to pay the per diem rate that each group home charged for the care of the child. The municipality claimed the amount paid under these orders after deducting the ex gratia amounts paid to the municipality by the province for the years 1976‑1982.
The municipality successfully challenged the jurisdiction of the Family Court judges to direct that the juveniles be placed in a group home on the ground that a "group home" is not an individual or institution to which a child may be committed under s. 20(1). The trial judge in that action found in obiter, that s. 20(2) was intra vires Parliament. The Court of Appeal affirmed the judgment in its entirety, and declared the orders invalid. The Supreme Court confirmed the appeal judgment but refrained from pronouncing upon the constitutional validity of s. 20(2).
After judgment was given at trial and before the appeals were
heard, the municipality at the province's request agreed to continue paying the children's maintenance costs and to refrain from seeking immediate recovery from the group home pending negotiations as to an equitable cost sharing arrangement. The province agreed to contribute to 50% of the municipality's costs which would result from such orders in the future. The federal government was not included in any of the municipality's protests or the negotiations which followed soon after the judgment at trial.
The authority of the Family Court judges to place a juvenile in the custody of a named person at the group home, as opposed to the group home itself, was later confirmed in a parallel proceeding. On appeal, however, this Court struck down s. 20(2) so far as it purported to authorize the imposition of the financial cost of the disposition on a municipality.
The municipality commenced these proceedings for restitution from the provincial and federal governments. The Federal Court (Trial Division) (File No. 21342) ordered the federal government to reimburse the municipality. The Federal Court of Appeal, however, found that the appellant had not established that Parliament was legally obligated to pay for the juveniles subject to these orders and thus had not made out its claim in restitution. The proceedings against the province (File No. 22301) played out in a similar fashion. The Ontario Supreme Court ordered the province to reimburse the municipality but the Court of Appeal reversed that judgment because the municipality had failed to meet the elements of a claim in restitution.
The municipality appeals to this Court from both judgments. It seeks reimbursement of what it paid out pursuant to the invalid orders plus interest.
Held: The appeals should be dismissed.
Per La Forest, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ.: No recovery lies for unjust enrichment without a benefit which has "enriched" the defendant and which can be restored to the donor in specie or by money. It is immaterial, therefore, that the plaintiff suffered a loss if the defendant gained no benefit. The difficulty in this case, therefore, lies in establishing that the payments conferred a "benefit" on the federal and provincial governments which represent an unjust retention or enrichment.
Two types of benefit exist: a positive benefit upon the defendant (e.g., the payment of money) and a `negative' benefit (in the sense that the defendant was spared an otherwise inevitable expense such as a legal expense). To be established in the class of payment made under compulsion of law, a benefit must be shown to have discharged the defendant's liability.
The municipality cannot meet this test for this category, or indeed, for any of the traditional categories. Neither the federal nor provincial government was under a constitutional, statutory or legal obligation to care and provide for the care of these children.
An "incontrovertible benefit" is one that is demonstrably apparent and not subject to debate and conjecture. Where the benefit is not clear and manifest, it would be wrong to make the defendant pay, since he or she might well have preferred to decline the benefit if given the choice. Any relaxation
on the traditional requirement of discharge of legal obligation which may be effected through the concept of "incontrovertible benefit" is limited to situations where it is clear on the facts (on a balance of probabilities) that had the plaintiff not paid, the defendant would have done so. Otherwise, the benefit is not incontrovertible.
The benefit must be more than a secondary collateral benefit. A plaintiff, were it otherwise, could recover twice ‑‑ once from the person who is the immediate beneficiary of the payment or benefit (the parents of the juveniles placed in group homes here), and again from the person who reaped an incidental benefit. It would also open the doors to claims against an undefined class of persons who, while not the recipients of the payment or work conferred by the plaintiff, indirectly benefit from it.
The municipality falls short of the law's mark. The benefit conferred is not incontrovertible because neither level of government was shown to have gained a demonstrable financial benefit or to have been saved an inevitable expense. Nor is it "unquestionable"; the federal and provincial governments were under no legal obligation and their contention that they were not benefited at all, or in any event to the value of the payments made, had sufficient merit to require, at the least, serious consideration. It was neither inevitable nor likely that, in the absence of a scheme which required payment by the municipality, the federal or provincial government would have made such payments. An entirely different scheme could have been adopted.
Admitting recovery here would extend the concept of benefit in the law of unjust enrichment far beyond the restoration of property, money, or services unfairly retained. Recovery could occur wherever a payment had been made under compulsion of law which has an incidental beneficial effect of a non‑pecuniary nature.
Parliament was clearly aware of and relied upon the obligation of parents to support their children, expressly acknowledged in s. 16(1) of the (then) Family Law Reform Act, because s. 20(2) of the Juvenile Delinquents Act provided that the municipality could recover any expenditures ordered under s. 20(2) from the parent or parents responsible. The fact that the municipality's payments furthered Canada's general interest in the welfare of its citizens or its more particular interest in the effective administration of its scheme for the regulation of criminal conduct by minors is an insufficient "correlative link" upon which to found recovery even on the application of the broader `incontrovertible benefit' doctrine. It falls short of proof of a "demonstrable financial benefit" or proof that the federal government was saved an "inevitable expense". The principle of freedom of choice is not a "spent force" in this instance ‑‑ the municipality has not established that its
payments covered an expense that the federal government "would have been put to in any event" nor did it proffer any evidence that the Canadian government "capitalized" in any direct fashion upon these payments. Federal government (financial) support of the juveniles' stay in the group homes in Peel was not "inevitable". Neither was this expense "necessary", given the host of dispositions available to judges under s. 20, and given the municipality's statutory authority to seek reimbursement from the children's parents. Parliament did not believe it had any obligation to provide financial support for the juveniles assigned to group homes; any obligation it had to the provinces in this regard was created by a voluntary federal‑provincial agreement to which the appellant was not privy. Any benefit received by the Government of Canada from the municipality's payments was therefore incidental or indirect.
The same inability to establish an incontrovertible benefit bedevils the municipality's claim against the province. The fact that the appellant's payments necessarily furthered the province's general interest in the welfare of its citizens or its more specific interest in the protection and supervision of children residing within its boundaries is, for the reasons already outlined, not a sufficient basis upon which to found recovery even if the Court were to apply the `incontrovertible benefit' doctrine. The appellant did not establish
on a balance of probabilities that the province either received "a demonstrable financial benefit" or was spared an inevitable expense. The appellant has, at most, shown that its payments may have relieved the province of some obligation or debt that might have arisen.
The municipality is reduced in the final analysis to the contention that it should recover the payments which it made from the federal and provincial governments because this is what the dictates of justice and fairness require. Where the legal tests for recovery are clearly not met, however, recovery cannot be awarded on the basis of justice or fairness alone. A general adherence with accepted principle must be demonstrated as well. These principles must be sufficiently flexible to permit recovery where justice so requires having regard to the reasonable expectations of the parties in all the circumstances of the case as well as to public policy. Such flexibility is found in the three‑part test for recovery enunciated by this Court in cases such as Pettkus v. Becker.
Justice, even if it, without more, were admitted as the basis of recovery, would not require recovery. Restitution, more narrowly than tort or contract, focuses on re‑establishing equality as between two parties, as a response to a disruption of equilibrium. Injustice lies in one person's retaining something which he or she ought not to retain, requiring that the scales be righted. It also must take into account not only what is fair to the
plaintiff but also what is fair to the defendant. It is not enough that the plaintiff has made a payment or rendered services which it was not obliged to make or render; it must also be shown that the defendant as a consequence is in possession of a benefit, and it is fair and just for the defendant to disgorge that benefit. Of equal importance, fairness must embrace not only the situation of the claimant, but the position of those from whom payment is claimed. It is far from clear that ordering payment to the municipality would be fair to the federal and provincial governments and the taxpayers who would ultimately foot the account.
Per Lamer C.J.: The municipality did not meet the test for benefit of both the federal and provincial governments under compulsion of law because it failed to demonstrate any obligation on the part of either the federal or the provincial governments to care for juvenile delinquents which was sufficient to satisfy the requirements of the applicable test.
Appellant was seeking to establish a type of Charter s. 24(1) remedy in a restitution claim made without reference to s. 52(1) of the Constitution Act, 1982 , and after the fact of the declaration that the impugned provision was ultra vires Parliament. The two forms of relief, restitution and a remedy under s. 24(1) of the Charter , must not be confused. Section 24(1) only provides a remedy for individuals (whether real persons or artificial) whose rights under the Charter have been infringed. Even if Peel had brought a successful division of powers constitutional challenge to the legislation under s. 52(1) , an individual remedy under s. 24(1) of the Charter will rarely be available in conjunction with an action under s. 52 of the Constitution Act, 1982 . Ordinarily, where a provision is declared unconstitutional and immediately struck down pursuant to s. 52 , that will be the end of the matter. No retroactive s. 24 remedy will be available. Peel's relief would have been limited to the declaration that the provision was unconstitutional and of no force or effect.
Cases Cited
By McLachlin J.
Distinguished: Carleton (County of) v. Ottawa (City of), [1965] S.C.R. 663; referred to: Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957; Attorney General for Ontario v. Regional Municipality of Peel, [1979] 2 S.C.R. 1134; Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9; Pettkus v. Becker [1980] 2 S.C.R. 834; Taylor v. Laird (1856), 25 L.J. Ex. 329; Slade's Case (1602), 4 Co. Rep. 92b, 76 E.R. 1074; Brook's Wharf and Bull Wharf, Ltd. v. Goodman Brothers, [1937] 1 K.B. 534; Air Canada v. British Columbia, [1989] 1 S.C.R. 1161.
By Lamer C.J.
Referred to: Brook's Wharf and Bull Wharf, Ltd. v. Goodman Brothers, [1937] 1 K.B. 534; Carleton (County of) v. Ottawa (City of), [1965] S.C.R. 663; Reference re Adoption Act, [1938] S.C.R. 398; Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9; R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295; Schachter v. Canada, [1992] 2 S.C.R. 679.
Statutes and Regulations Cited
Canadian Charter of Rights and Freedoms, s. 24(1) .
Constitution Act, 1982, s. 52(1) .
Family Law Reform Act, R.S.O. 1980, c. 152, s. 16(1), (2) (now Family Law Act, 1986, S.O. 1986, c. 4, s. 31(1), (2)).
Juvenile Delinquents Act, R.S.C. 1970, c. J‑3, s. 20(1), (2).
Regional Municipality of Peel Act, S.O. 1973, c. 60, s. 66 (now R.S.O. 1980, c. 440, s. 70).
Young Offenders Act, R.S.C., 1985, c. Y‑1 .
Authors Cited
Fridman, G. H. L., and James G. McLeod. Restitution. Toronto: Carswell, 1982.
Gautreau, J. R. Maurice. "When Are Enrichments Unjust?" (1989), 10 Advocates' Q. 258.
Goff, Robert, Lord Goff of Chieveley, and Gareth Jones. The Law of Restitution, 3rd ed. London: Sweet & Maxwell, 1986.
Maddaugh, Peter D. and John D. McCamus. The Law of Restitution. Aurora: Canada Law Book, 1990.
McInnes, Mitchell. "Incontrovertible Benefits and the Canadian Law of Restitution" (1990), 12 Advocates' Q. 323.
Restatement of the Law of Restitution: Quasi‑Contracts and Constructive Trusts. As
adopted and promulgated by the American Law Institute, at Washington, D.C., 1937. St. Paul: American Law Institute Publishers, 1937.
Stevens, David. "Restitution, Property, and the Cause of Action in Unjust Enrichment: Getting By With Fewer Things (Part I)" (1989), 39 U.T.L.J. 258.
Wingfield, David R. "The Prevention of Unjust Enrichment: or How Shylock Gets His Comeuppance" (1988), 13 Queen's L.J. 126.
Zwiegert, Konrad, and Hein Kötz. An Introduction to Comparative Law, 2nd ed., vol II. Translated by Tony Weir. Oxford: Clarendon Press, 1987. U.T.L.J. 258.
APPEAL (File No. 21342) from a judgment of the Federal Court of Appeal, [1989] 2 F.C. 562, 55 D.L.R. (4th) 618, 89 N.R. 308, 41 M.P.L.R. 113, allowing an appeal from a judgment of Strayer J., [1987] 3 F.C. 103, 7 F.T.R. 213. Appeal dismissed.
APPEAL (File No. 22301) from a judgment of the Ontario Court of Appeal (1990), 1 O.R. (3d) 97, 75 D.L.R. (4th) 523, 42 O.A.C. 356, 2 M.P.L.R. (2d) 121, allowing an appeal from a judgment of Montgomery J. (1988), 64 O.R. (2d) 298, 49 D.L.R. (4th) 759, 37 M.P.L.R. 314. Appeal dismissed.
J. Edgar Sexton, Q.C., and David Stratas, for the appellant.
J. E. Thompson, Q.C., and Alan S. Davis, for the respondent Her Majesty The Queen in Right of Canada.
T. H. Wickett and Elaine Atkinson, for the respondent Her Majesty The Queen in Right of Ontario.
//Lamer C.J.//
The following are the reasons delivered by
Lamer C.J. ‑‑ I agree with the reasons and disposition proposed by Justice McLachlin, but wish to address two of the arguments advanced by
Peel in more detail. These arguments are:
(1) Peel's reliance on the restitution available for the recovery of compelled payments which discharge another's liability, following Brook's Wharf and Bull Wharf, Ltd. v. Goodman Brothers, [1937] 1 K.B. 534, and Carleton (County of) v. Ottawa (City of), [1965] S.C.R. 663; and
(2) Peel's reliance on the relationship of this appeal to this Court's decision in Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9.
1. Restitution for Compelled Payments Discharging Another's Liability
In her reasons, McLachlin J. states at p. 791 that:
The municipality acknowledges that it cannot meet the test for benefit in the category of payment under compulsion of law, nor indeed, in any of the traditional categories of recovery.
These remarks might suggest that counsel for Peel had abandoned this ground of appeal. However, Peel vigorously advanced the argument before this Court, as it did in the courts below. In its facta, Peel submitted that it had discharged a liability of Ontario and Canada for the maintenance of juvenile delinquents. With respect to its claim against Ontario, Peel submitted that the primary responsibility for juvenile delinquents rested on the provinces, relying on the remarks of Duff C.J. in Reference re Adoption Act, [1938] S.C.R. 398, at pp. 402‑403. In its claim against Canada, Peel submitted:
This Honourable Court's holding in Peel v. MacKenzie is a recognition of the fact that Canada cannot impose its responsibility or liability to maintain juvenile delinquents upon municipalities. [Emphasis added.]
Furthermore, in oral argument counsel for Peel asserted that the federal government, having set up a scheme, was responsible for finishing it, and that this amounted to a legal obligation. Counsel for Peel added, of course, that in his submission it was not necessary in this case to establish a legal obligation. Finally, counsel for Peel, under this same head of restitution, engaged in a detailed analysis of Carleton (County of) v. Ottawa (City of), supra, intended specifically to argue in the alternative that a social, moral or
political responsibility could satisfy the liability requirement of the compulsion test.
For the reasons indicated by McLachlin J., these arguments fail to demonstrate that there was any obligation on either the federal or the provincial governments to care for juvenile delinquents which is sufficient to satisfy the requirements of the applicable test. However, it should be made clear that this Court has rejected these arguments after submissions by counsel on the point.
2. The Relationship of this Appeal to Peel v. MacKenzie
McLachlin J. does not address the arguments of Peel based on this Court's decision in Peel v. MacKenzie. Peel submitted in its factum that:
Restitutionary relief is essential in order to give practical effect to the requirement in s. 52(1) of the Constitution Act, 1982 that legislation which is inconsistent with the Constitution of Canada is of no force or effect.
This was the basis on which Strayer J. in the Trial Division of the Federal Court, [1987] 3 F.C. 103, and Mahoney J. in the Federal Court of Appeal, [1989] 2 F.C. 562, held that restitution should be made by the respondent Federal government.
While this argument has the prima facie attraction of undoing the effects of unconstitutional legislation, it confuses the restitution claim in the present case with other, constitutionally‑based, forms of relief.
"Practical effect" was given to this Court's holding in Peel v. MacKenzie: once this Court struck down s. 20(2) of the Juvenile Delinquents Act, R.S.C. 1970, c. J‑3, Peel stopped making payments. What Peel is in fact seeking to establish with this argument is a type of Charter s. 24(1) remedy in a restitution claim made without reference to s. 52(1) of the Constitution Act, 1982 , and after the fact of the declaration that the impugned provision was ultra vires Parliament.
The two forms of relief, restitution and a remedy under s. 24(1) of the Canadian Charter of Rights and Freedoms , must not be confused. As Dickson J. (as he then was) noted in R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R. 295, at p. 313:
Section 24(1) sets out a remedy for individuals (whether real persons or artificial ones such as corporations) whose rights under the Charter have been infringed.
The analogy between its restitution claim and a remedy under s. 24(1) of the Charter which seems to animate Peel's argument, even if it were valid, would not therefore entitle Peel to the remedy it seeks, since there was no violation of Charter rights at issue in Peel v. MacKenzie.
Even if Peel had brought a successful division of powers constitutional challenge to the legislation under s. 52(1) of the Constitution Act, 1982 , I held in Schachter v. Canada, [1992] 2 S.C.R. 679, at p. 720:
An individual remedy under s. 24(1) of the Charter will rarely be available in conjunction with an action under s. 52 of the Constitution Act, 1982 . Ordinarily, where a provision is declared unconstitutional and immediately struck down pursuant to s. 52 , that will be the end of the matter. No retroactive s. 24 remedy will be available.
Peel's relief would have been limited to the declaration that the provision was unconstitutional and of no force or effect.
Therefore, Peel cannot avoid fulfilling the requirements of a restitution claim with this analogy to constitutional forms of relief.
Finally, Peel supported its claim for restitution as a constitutional remedy with the submission that:
Restitutionary recovery may be the only practical relief available to litigants faced with an invalid provision requiring payments to be made; denying that practical relief will discourage future litigants from testing the constitutionality of such provisions and will in effect immunize certain provisions from the possibility of constitutional challenge.
The answer may be made that the prospect of terminating the compelled payments should be sufficient incentive for future litigants in Peel's position. It certainly was for Peel when it brought the series of challenges culminating in Peel v. MacKenzie.
For the reasons given by McLachlin J., and for these additional reasons, I would dismiss the appeals.
//McLachlin J.//
The judgment of La Forest, Sopinka, Gonthier, Cory, McLachlin and Iacobucci JJ. was delivered by
McLachlin J. ‑‑ This appeal arises from a financial dispute involving three different levels of government ‑‑ federal, provincial and municipal. The federal government passed a law requiring the municipality to meet certain expenses should a court so order. The courts so ordered. The municipality, protesting inter alia that the federal law was unconstitutional, paid. The courts eventually ruled that the federal law was unconstitutional. The municipality now sues both the federal and provincial governments to get its money back. It is established that the municipality cannot sue in tort: it has long been recognized that the enactment of legislation ultra vires a legislature's competence does not give rise to damages for breach of a "duty of care" ‑‑ Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957, at p. 969. The municipality, however, claims that it has an action under the doctrine of unjust enrichment. That is the question which we must now consider.
The Facts
As with most restitutionary claims, the particular facts of the case are of great importance to the ultimate decision of whether or not the Court will extend to the plaintiff the relief it seeks. A detailed summary of the relevant facts is thus warranted.
First enacted in 1908, the Juvenile Delinquents Act, R.S.C. 1970, c. J‑3 (replaced in 1984 by the Young Offenders Act, R.S.C., 1985, c. Y‑1 ) conferred upon "juvenile court judges" the jurisdiction to issue a variety of orders upon finding that a particular child had committed a "delinquent act"; these alternative orders were set out in s. 20(1) of the Act. Section 20(2) of the Act empowered these judges to order that the parent(s) of the child or the municipality in which the child is situate "contribute to the child's support such sum as the court may determine"; where the municipality is so ordered, it was authorized by s. 20(2) to recover from the parent(s) any sum paid by it pursuant thereto.
The appellant municipality came into being on January 1, 1974, under the authority of the Regional Municipality of Peel Act, S.O. 1973, c. 60. Section 66 of that Act, (R.S.O. 1980, c. 440, s. 70) clarified the orders made under s. 20(2) of the Juvenile Delinquents Act:
66. Where an order is made under subsection 2 of section 20 of the Juvenile Delinquents Act (Canada) upon an area municipality, such order shall be considered to be an order upon the Regional Corporation, and the sums of money required to be paid under such order shall be paid by the Regional Corporation and not by the area municipality.
Between 1974 and 1982, the Family Court judges in the Peel District purported to direct, pursuant to s. 20(1)(d)‑(f) of the Juvenile Delinquents Act, that a number of juveniles be placed in various "group homes"; these homes were for the most part "Viking House" institutions. The Family Court judges appear to have believed that the `group home' setting was the most appropriate disposition and wished to ensure the direct placement of the juveniles in such facility rather than placement of these children with the Children's Aid Society ("CAS"), which could determine whether placement in a group home was warranted. The evidence indicates because the CAS insisted on the authority to determine whether the child should in fact be placed in a group home, and once such decision was made to decide the particular home and the date which the child should be removed, the Family Court judges in the District decided to `by‑pass' the CAS and directly place the juvenile. The judges relied upon s. 20(2) of the Act to order the appellant municipality to pay the per diem rate that each group home charged for the care of the child. Between 1974 and 1982, the municipality paid out a total of $2,036,131.37 under such orders. The municipality's payments under these orders, after deduction of the ex gratia amounts paid the municipality by the province (1976‑1982), totalled $1,166,814.22; this is the amount claimed here.
The municipality protested these orders; it instituted an action in the Ontario courts which challenged the jurisdiction of the Family Court judges to direct that the juveniles be placed in a group home on two grounds. First, the municipality claimed that the court lacked the statutory authority to make such orders on the basis that a "group home" is not an individual or institution to which a child may be committed under s. 20(1). Second, the municipality challenged Parliament's jurisdiction under s. 20(2) to order a municipality to contribute to the support of a juvenile. J. Holland J. found that the Family Court judges lacked the statutory jurisdiction to order the juveniles to group homes; in obiter, he found s. 20(2) intra vires Parliament.
In the wake of this ruling, a meeting took place at the Ministry of Community and Social Services at which provincial and municipal officials, Chief Judge Andrews of the Family Court and certain representatives of "Viking Houses" were in attendance. At the request of the province, the municipality agreed to continue paying the children's maintenance costs and to refrain from seeking immediate recovery from Viking Houses pending negotiations between all parties at the meeting as to an equitable cost sharing arrangement. The province agreed to contribute to 50% of the municipality's costs which would result from such orders in the future; it met this obligation. The respondent federal government was not included in any of the appellant's protests or in these negotiations.
On April 21, 1977, the Court of Appeal affirmed the judgment of J. Holland J. in its entirety, and declared the orders invalid. The Supreme Court confirmed the appeal judgment but refrained, however, from pronouncing upon the constitutional validity of s. 20(2): Attorney General for Ontario v. Regional Municipality of Peel, [1979] 2 S.C.R. 1134.
In a parallel proceeding commenced shortly after the judgment of J. Holland J., referred to above, the appellant challenged an order which ‑‑to comply with J. Holland J.'s decision ‑‑ placed the juvenile in the custody of a named staff member of a Viking House facility (a "suitable person" under s. 20(1)(d)) in which the judge wished the child to be cared for. The validity of this order was upheld at trial and on appeal. On further appeal, this Court struck down s. 20(2) of the Act, so far as it purported to authorize the imposition of the financial cost of the disposition on a municipality, as ultra vires Parliament: Regional Municipality of Peel v. MacKenzie, [1982] 2 S.C.R. 9.
Having been vindicated in its contention that the direction to support juveniles under authority of the Juvenile Delinquents Act was ultra vires, the municipality commenced proceedings for restitution from the provincial and federal governments. In the Federal Court, the trial judge found in the appellant municipality's favour, ordering that the federal government reimburse the municipality in the amount of $1,166,814.22. The Federal Court of Appeal, however, found that the appellant had failed to establish that Parliament was legally obligated to pay for the juveniles subject to these orders and thus had not made out its claim in restitution. As a result, the municipality had no right of recoupment from the federal government. The proceedings against the province played out in a similar fashion. At trial, the Ontario Supreme Court ordered that the province reimburse the municipality in the above amount but the Court of Appeal reversed the trial judgment because the municipality had failed to meet the elements of a claim in restitution.
The municipality appeals to this Court from both judgments. It seeks reimbursement of what it paid out pursuant to the invalid orders plus interest thereupon.
Legislation
The orders for which payment was demanded of the municipality were made under s. 20 of the (then) Juvenile Delinquents Act which read as follows:
20. (1) In the case of a child adjudged to be a juvenile delinquent the court may, in its discretion, take either one or more of the several courses of action hereinafter in this section set out, as it may in its judgment deem proper in the circumstances of the case:
(a) suspend final disposition;
(b) adjourn the hearing or disposition of the case from time to time for any definite or indefinite period;
(c) impose a fine not exceeding twenty‑five dollars, which may be paid in periodical amounts or otherwise;
(d) commit the child to the care or custody of a probation officer or of any other suitable person;
(e) allow the child to remain in its home, subject to visitation of a probation officer, such child to report to the court or to the probation officer as often as may be required;
(f) cause the child to be placed in a suitable family home as a foster home, subject to the friendly supervision of a probation officer and the further order of the court;
(g) impose upon the delinquent such further or other conditions as may be deemed advisable;
(h) commit the child to the charge of any children's aid society, duly organized under an Act of the legislature of the province and approved by the lieutenant governor in council, or, in any municipality in which there is no children's aid society, to the charge of the superintendent, if there is one; or
(i) commit the child to an industrial school duly approved by the lieutenant governor in council.
(2) In every such case it is within the power of the court to make an order upon the parent or parents of the child, or upon the municipality to which the child belongs, to contribute to the child's support such sum as the court may determine, and where such order is made upon the municipality, the municipality may from time to time recover from the parent or parents any sum or sums paid by it pursuant to such order.
Section 16(1) of the Family Law Reform Act, 1978, R.S.O. 1980, c. 152, (now s. 31(1) of the Family Law Act, S.O. 1986, c. 4) imposed the following obligation on the parent(s) to support his/her child:
16. ‑‑ (1) Every parent has an obligation, to the extent the parent is capable of doing so, to provide support, in accordance with need, for his or her child who is unmarried and is under the age of eighteen years.
(2) The obligation under subsection (1) does not extend to a child who, being of the age of sixteen years or over, has withdrawn from parental control.
The Judgments Below
A. In the Federal Court
At the Trial Division, [1987] 3 F.C. 103, Strayer J. considered both the principles of restitution and of the Constitution. On the facts at bar, he concluded at p. 121 and at p. 122:
It is at this point where the principles of the federal system of government and the principle of redress for unjust enrichment join together in requiring that the defendant reimburse the plaintiff for the costs incurred by the plaintiff through compliance with the invalid law. It might well have been impossible for anyone to have sued the defendant directly to force the payment of such monies in the first place. But where the plaintiff has paid them in compliance with a federal law that has turned out to be invalid, and in furtherance of the objectives of that law duly adopted by Parliament, as between the plaintiff and the defendant, it would be unjust that the plaintiff ultimately bear those costs rather than the defendant.
. . .
In finding that the Crown is liable to pay such amount in the present circumstances, it is important to make clear what is not being decided. As noted above, I am not prepared to adopt the view that the federal executive is automatically and legally obliged to pay all costs of the administration of federal laws. Further, recovery here is not being allowed on some theory of constitutional tort based on liability for "legislating without due care and attention". I recognize that the function of enacting legislation involves a political and social responsibility which does not give rise to a private duty of care: see Welbridge Holdings Ltd. v. Metropolitan Corporation of Greater Winnipeg, [1971] S.C.R. 957, at pages 969 and 970. Instead, liability to reimburse the plaintiff arises out of the requirements of justice as between the two parties. [Emphasis in original.]
The majority of the Federal Court of Appeal, [1989] 2 F.C. 562, per MacGuigan J.A., reviewing the applicable principles of restitution, noted at p. 573 that both parties agreed that a plaintiff in this type of case must satisfy four conditions to establish a "right of recoupment for moneys expended". The third and fourth of these conditions require that a plaintiff establish that the payments claimed discharged a legal liability of the defendant for which, as between the parties, the defendant was primarily liable. MacGuigan J.A. found, at p. 575, that the trial judge although recognizing these conditions and finding that Parliament had a "political, not a juridical" obligation to pay for the proper administration of federal law nonetheless created a new comparative liability rule which in his view better accords with our federal, as opposed to a unitary, state structure. MacGuigan J.A. disagreed with Strayer J.'s analysis at p. 577 and at p. 580:
With great respect, this seems to me to be tantamount to reducing the fourth condition for unjust enrichment to which party, as between the two, should more fairly bear the cost, and at the same time ignoring the third condition, as to whether the defendant/appellant had any legal liability at all. One obvious result of such analysis is that the plaintiff/respondent may well become legally entitled to recovery against both senior governments. As the appellant pointed out in oral argument, the respondent's statement of claims [sic] against both governments made identical claims that the payments discharged "a liability or responsibility of the defendant" (Appeal Book, vol. 1 at page 3 and vol. 5 at page 741).
In fact, I believe that the analysis of the Trial Judge leads to the conclusion that, even in a federal context, the constitutional principles establish no federal liability to pay the costs of the administration of federal laws, and still less so where the constitutional authority to make the law in question was lacking.
. . .
What is decisive, I believe, in the present case is that the government of Canada had no legal obligation of any kind to pay for the maintenance of juvenile delinquents. The obligation it had as a result of its legislation, though serious, was of a political nature, and led to its cost‑sharing agreement with the province of Ontario ‑‑ as the word "cost‑sharing" implies, not an assumption of 100 percent responsibility ‑‑ and the Province in turn paid some of the costs of the municipality. In a relationship involving three parties, one cannot impose liability on one of only two on the theory that of these two it has the lesser equity. This is not to say that the Province is necessarily liable to the respondent [municipality]. That issue is for another court to decide. But it is to assert that, however much the federal Government was the initiating cause of the respondent's expenditures, it cannot be said to have had legal liability for those expenditures. Its responsibility is political, for which the resolution, if any, is of an ex gratia nature.
Mahoney J.A., dissenting, saw the matter not as a case about restitution but about the integrity of legislative enactments and the Constitution. Stated metaphorically, Mahoney J.A. found that Parliament cannot ‑‑ absent an applicable rule of public policy ‑‑ achieve by the back door what it could not by the front. Thus, a payment ordered under the guise of legislative authority must be reimbursed where such authority is subsequently found to be absent.
B. In the Ontario Courts
Acknowledging the fourfold conditions spoken of above, Montgomery J. (1988), 64 O.R. (