Lloyd's Maritime and Commercial Law Quarterly
Unjust enrichment in Canada
Mitchell McInnes *
CASES
51. 4 Star Ventures (2012) Ltd v Eizicovics 2023 SKKB 121 (Sask KB: Keene J)
Fraud—unjust enrichment—tracing—bona fide purchaser for value
Denzel Blackett fraudulently caused $110,672 to be transferred from the plaintiff’s bank account with Innovation Credit Union (ICU) to a bank account held by company called R&B Mechanical. Blackett then withdrew $103,932.50 from R&B’s account to purchase Bitcoin from the defendant. Before agreeing to the transaction, the defendant performed various investigations to satisfy itself of Blackett’s identity. Because of regulations governing the purchase and sale of digital currencies, Blackett paid the price to a law firm acting on the defendant’s behalf. The firm then placed the funds into its trust account. Once payment was received, the defendant fulfilled its bargain with Blackett. The Bitcoin promptly “vanished into the vast uncharted world of the internet” (at [3]). Proceedings were then commenced to determine which party was entitled to the funds, which had been paid into court. As against the defendant, the plaintiff argued unjust enrichment and constructive trust. (Blackett, beset by criminal law problems, was not sued.)
Decision: Defendant entitled to funds.
Held: (1) The defendant “did not have notice of the theft until well after the horse had left the barn … and there is no evidence that [the defendant] in any fashion colluded with Mr Blackett to perpetrate a fraud on [the plaintiff]” (at [27]). (2) A constructive trust may be available on two grounds. First, such relief may be imposed on a wrongful gain if four criteria are satisfied: Soulos v Korkontzilas [1997] 2 SCR 217, [45]; [1997] RLR §49. None of those elements is present in this case. The defendant did not owe an equitable obligation to the plaintiff; the defendant did not acquire the funds as a result of “deemed or actual agency activities … in breach of [its] equitable obligation to the plaintiff”; the plaintiff has not shown a “legitimate reason” for seeking proprietary relief; and the imposition of a constructive trust in favour of the plaintiff would be unjust to the defendant. (3) A constructive trust may also be imposed in response to unjust enrichment, but the facts in this case do not support that possibility either. “[A]lthough [the plaintiff] was deprived of the funds because of the unauthorised withdrawal, that does not mean this constitutes an enrichment for [the defendant]. The defendant paid out to Mr Blackett an equivalent market value of Bitcoin in exchange for the Funds. Therefore … there is no evidence of an enrichment” (at [43]). In addition, “there was a juristic reason for the
UNJUST ENRICHMENT IN CANADA
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