Election of rights

Charter Building Company v. 1540957 Ontario Inc. (Mademoiselle Women's Fitness & Day Spa), 2011 ONCA 487 deals with a party that, following an unfulfilled settlement, sought a default judgment. As seeking default judgment is inconsistent the party was barred from later relying on the settlement. The Court holds:

[15]        The essence of the doctrine of election is that a person is precluded from exercising a right that is inconsistent with another right if he has consciously and unequivocally exercised the latter.

[16]        The doctrine is set out in the oft-quoted decision of Lord Atkin, in United Australia Ltd. v Barclays Bank Ltd. , [1941] A.C. 1 (H.L), in which the appellant had started an action against a company on a cheque, framing the action as money had and received to the use of the appellant. The cheque had been unlawfully issued. The action was discontinued and no judgment obtained. The appellants then brought an action against the bank for conversion of the cheque. It was held that the commencement of the first action did not amount to an election to waive the tort so as to preclude the bringing of the second action. In the course of his decision, Lord Atkin said at pp. 29-30:

It seems to me that in this respect it is essential to bear in mind the distinction between choosing one of two alternative remedies, and choosing one of two inconsistent rights. As far as remedies were concerned, from the oldest time the only restriction was on the choice between real and personal actions. If you chose the one you could not claim on the other

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On the other hand, if a man is entitled to one of two inconsistent rights it is fitting that when with full knowledge he has done an unequivocal act showing that he has chosen the one he cannot afterwards pursue the other, which after the first choice is by reason of the inconsistency no longer his to choose. Instances are the right of a principal dealing with an agent for an undisclosed principal to choose the liability of the agent or the principal: the right of a landlord where forfeiture of a lease has been committed to exact the forfeiture or to treat the former tenant as still tenant and the like. To those cases the statement of Lord Blackburn in Scarf v. Jardine [(1882) 7 App. Cas. 345, 360] applies "where a man has an option to choose one or other of two inconsistent things when once he has made his election it cannot be retracted." In a later passage [(1882) 7 App. Cas. 345, 361] Lord Blackburn speaks of a man choosing between two remedies: but it is plain that he is speaking of remedies in respect of the inconsistent things as stated above. The case was one where the plaintiff had a right of recourse against two former partners, or against two new partners: but obviously not against both. Lord Blackburn quotes Dumpor's case [(1601) 4 Co. Rep. 119(b)] which was a plain case of inconsistent rights, the question of waiver of a forfeiture. I therefore think that on a question of alternative remedies no question of election arises until one or other claim has been brought to judgment.

[17]        The doctrine has been endorsed by Canadian courts. See, for example: Findlay v. Findlay, [1952] 1 S.C.R. 96, at pp. 103-104 and 110.

[18]        The doctrine of election has been broken down into two categories – the common law doctrine of election and the equitable doctrine of election.

[19]        Election at common law takes place where a party is faced with a choice between two inconsistent courses of action that affect another party's rights or obligations, and knowing that the two courses of action are inconsistent and that he or she has the right to choose between them, makes an unequivocal choice and communicates that choice to the other party.  The doctrine provides that the party making the election is afterwards precluded from resorting to the course of action that he has rejected.  The election is effective at the point of communication on the basis that the parties to an ongoing relationship are entitled to know where they stand: The Commonwealth of Australia v. Verwayen (1990), 170 C.L.R. 394 (H.C.A), at pp. 421-422.