BCL Law Notes Restitution of Unjust Enrichment Notes
A comprehensive guide to some of the key topics in the Restitution of Unjust Enrichment module taught on the BCL (but would also be useful for other similar courses).
It includes case summaries, various academic positions and a thorough analysis of some of the key debates within the topic in an easy digestible manner.
It focuses on contributions to this area of law from Andrew Burrows, Graham Virgo and Peter Birks, amongst others. ...
The following is a more accessible plain text extract of the PDF sample above, taken from our Restitution of Unjust Enrichment Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
ABSENCE OF BASIS ESSAY
OPENING
Where D has received an enrichment at the expense of C, this alone is not enough to trigger a restitutionary response. There must also be a triggering event, (and for D to have no defences per Lord Steyn in Battersea). This essay will argue that in England and Wales, that triggering event is that there is an unjust factor (eg. it is unjust for D to retain the benefit as it was transferred as a result of mistake, or under duress or undue influence). However, in civil law systems they operate on an absence of basis approach, whereby, restitution will be effected where there was no grounds for D to retain the benefit. This essay will consider, has English law moved to absence of basis, as Birks says (answer = no) and if not, should it (answer = no)?
WHAT IS THE CURRENT LAW?
LAW CURRENTLY IS ABSENCE OF BASIS
Westdeutsche v Islington – Hobhouse J at first instance and majority of HL (obiter dicta) saw rest as being triggered by voidness of swap contract meaning there was an absence, or automatic failure, of consideration
Guinness Mahon v Kensington – same view as above
Peter Birks said in 2005 that as a result of these swaps cases English law had already ‘in the most unequivocal manner’ moved from unjust factors to absence of basis ALSO
LAW IS NOT ABSENCE OF BASIS
Burrows – in cases above, judges did not mention that they were switching to absence of basis. Rather, they saw ‘absence of consideration’ as an unjust factor
Test Claimants – Lord Sumption said Westdeutsche hasn’t subsequently been understood as providing authority for absence of basis approach and if so the decisions would look rather different
Kleinwort Benson v Lincoln CC – Lord Hope explicitly contrasted common law and civilian approaches
DMG v IRC – Lord Walker said that absence of basis represented a ‘distinct departure from established doctrine’
LAW IS BECOMING MORE ENTRENCHED AS UNJUST FACTORS
Sanders - In 2006, Lord Walker in DMG seemed open to English law developing in accordance with Birks’ scheme. However, by 2012 with Test Claimants, when Mr Rabinowitz QC brought up the point he did not even comment on it
Burrows – lower courts are applying unjust factor scheme ie. Rowe v Vale and Greater Manchester v Wigan Athletic
PROFESSOR STEVENS’ ARGUMENT
Professor Stevens – restitution is not allowed where there is an existing contract that is not avoided or terminated, which can only be explained by absence of basis approach being at the heart of the English system. So whenever D has a legal entitlement to the enrichment (ie. there is a presence of basis) C can’t have restitution BUT
Whilst this is in line with general rule (per Lord Hope in Kleinwort Benson v Lincoln CC), there are exceptions to this rule, as highlighted by Burrows (ie. DMG v IRC) where the Revenue did have a legal entitlement to the tax in one sense, which suggest Professor Stevens is WRONG
WESTDEUTSCHE v ISLINGTON FACTS (brief)
This dealt with payments made under interest-rate swap contracts between banks and local authorities that were held to be void as ultra vires the local authorities
Burrows – correct approach should have been:
money paid under open swaps (swaps that were not fully executed) = failure of consideration or mistake of law
money paid under closed swaps (fully executed) = mistake of law
INSTEAD Hobhouse J at first instance and majority of HoL (as obiter dicta) saw restitution being triggered because the contract was void so that there was an absence, or automatic failure, of consideration
Same reasoning applied by CA in Guiness Mahon v Kensington
WHAT IS BIRKSIAN SCHEME
HOW DOES IT WORK?
Unjust question is answered by reference to one question alone: was there an absence of basis?
Birks – ‘An enrichment which turns out to have no such explanation was inexplicable and could not be retained’
Sanders – has highlighted how the meaning of a legal basis has caused difficulty amongst German academics, especially outside the realm of enforceable obligations.
THERE ISN’T JUST ONE ABSENCE OF BASIS APPROACH
Each civil law country which embraces this approach has their own idiosyncrasies HOWEVER
Birks’ scheme is closest to German approach
Burrows - Birks’ scheme is a good ‘general guide’ for whether English law should embrace this civilian approach as it will already be adapted to ‘fit’ English law and previous decisions
WOULD ABSENCE OF BASIS PRODUCE DIFFERENT RESULTS?
Burrows – he looks at the Birksian scheme and shows that where it’s applied to English unjust enrichment cases it generally gets the same results, although sometimes by different reasoning HOWEVER
CTN Cash and Carry –
Money had been demanded that wasn’t due as the person demanding thought it was. C paid the money, knowing it wasn’t due and then claimed it back on the grounds of duress. Restitution did not lie, because there was no duress. But under Birksian scheme, there was no absence of basis so different result would have been achieved according to Burrows
Sanders – she says she’s not sure what the result would have been with this case under German law
ME: Birks never actually addressed this and had he, I suspect he would say that it was a gift, as C knew the payment wasn’t due. So they took the risk. This highlights the problem with Birks’ scheme, the gift idea is too broad
PROBLEMS WITH BIRKSIAN SCHEME
GIFTS
Burrows – Birksian scheme relies on a problematically wide use of the notion of gift, extreme example of Birks’ treatment of by-benefits
Peter Watts – ‘Surely there is a gift here only because the law has already determined that there should be no claim’
Sanders – critical of Birks’ definition of gifts which included...
Buy the full version of these notes or essay plans and more in our Restitution of Unjust Enrichment Notes.
A comprehensive guide to some of the key topics in the Restitution of Unjust Enrichment module taught on the BCL (but would also be useful for other similar courses).
It includes case summaries, various academic positions and a thorough analysis of some of the key debates within the topic in an easy digestible manner.
It focuses on contributions to this area of law from Andrew Burrows, Graham Virgo and Peter Birks, amongst others. ...
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