A vehicle includes an engine that generates drive torque and a power transfer device that selectively transfers the drive torque to a driveline. The power transfer device includes an input shaft, an output shaft and a torque biasing system. The torque biasing system has a clutch pack and an actuator that regulates engagement of the clutch pack. An on-demand lubrication system supplies a lubricating fluid flow through the clutch pack based on a control signal generated by a control system. A passively actuated positive displacement pump supplies the lubricating fluid flow through the clutch pack based on a speed differential between the input shaft and the output shaft.