1. Unjust Enrichment Notes

Unjust Enrichment

1. Enrichment

• Step 1: Has the defendant received an enrichment?

  • Money –

    • Always an enrichment

    • Authority: “Money has the peculiar character of a universal medium of exchange. By its receipt, the recipient is inevitably benefited.” Goff J in BP Exploration (Libya) v Hunt (No.2)

  • Use of Money –

    • The fact that you have the use of money is enrichment in itself

    • Authority: Sempra Metals v IRC 2007

  • Property –

    • Is a benefit but susceptible to subjective devaluation (see (Step 4))

  • Services with an end product –

    • General principle: that the service will be the enrichment unless the service by the claimant actually caused the enrichment.

    • Authority: Lord Scott in Yeoman’s Row Management v Cobbe 2008

      • Note his analogy with a locksmith unlocking a jewel in a safe.

    • Authority: Goff J in BP Exploration (Libya) v Hunt (No.2)

      • Note Goff J thought in this particular case the enrichment should have been the service not the end product but felt bound by the Law Reform (Frustrated Contracts) Act 1943

  • Pure services –

    • If people are willing to pay for the service, should be an enrichment.

      • Note Beatson believes it cannot be an enrichment but Burrows thinks this is wrong.

  • Release of obligations –

    • Paying for a discharge of an obligation is an enrichment

    • Authority: Lord Kenyon & Gross J in Exall v Partridge 1799 – discharge of rent liability

    • Authority: Floyd LJ in Menalaou v Bank of Cyprus 2013 – signature on charge was defective therefore charge over property was void – bank claimed that the defendant was unjustly enriched.

  • Foregoing a claim –

    • Authority: “If everything else is equal I can see no principled distinction between a benefit consisting in money paid and a benefit consisting in a claim foregone”. Laws LK in Gibb v Maidstone and Tunbridge Wells NHS Trust 2010

• Step 2: Value of the enrichment –

  • Step 2.0: Judged at the time of receipt not at time of judgment

    • Authority: Goff J in BP Exploration (Libya) v Hunt (No.2) 1979

      • Note this problem would not have arisen in Hunt had the services rather than the end product been identified as the ‘enrichment’.

  • Step 2.1: Ordinary market value – what a normal person would pay on the market

  • Step 2.2: Objective value – what is the objective value given the defendant’s subjective position and status

    • Relative factors: not generosity etc. but poor credit rating, gender, occupation, state of health, age, status.

    • Lord Reid’s example of Vanity fair and film star.

    • Caused reconsideration of Sempra Metals Ltd v IRC 2007 – tax payment - benefit was the use not the receipt of money – issue for the House of Lords was how much the government could have borrowed the money for – called it subjective devaluation but SC in Benedetti said that this was merely objective value.

  • Authority: Lord Clarke in Benedetti v Sawiris 2013

  • Step 2.3: Role of contract –

    • (a) As a ceiling on recovery? Two lines of authority:

      • (i) Contract price as ceiling: one line of case law treats the contract valuation as a ceiling on the enrichment

      • Authority: “There can be no justification, even if a restitutionary claim is available, for recovery in excess of the contract limit. Such recovery in itself would be unjust since it would put the innocent party in a better position than he would have been if the contract had been fulfilled”. Cooke J in Taylor v Motability Finance 2004

      • Authority: Lord Aktin in Way v Latilla 1937 – would be wrong to completely depart from the figures agreed in the contractual discussion and fix the remuneration on an entirely different basis on which the services may never have been rendered at all.

      • (ii) Contract price not a ceiling:

      • Authority: Kerr LJ and Nicholls LJ in Rover International v Cannon Film Sales Ltd (No.3) – the suggested ceiling was considered unjust, since its operation would be one-sided limiting the quantum meruit in favour of the claimant whereas the benefits of the restitutionary position favoured the defendant. Considered the implications of accepting a ‘ceiling’ to be far-reaching and undesirable.

        • But note the very unusual facts of this case on which this decision was correct, the contract was made before the company had been incorporated and therefore null and void, thus there could be no attention paid to it for valuing the enrichment.

    • Current law: probably just strong evidence of how the parties valued the benefit but may act as a ceiling.

      • Authority: Lord Neuberger in Benedetti said it was only evidence.

    • (b) Inadequate performance?

      • Price of the benefit received under a void contract can be reduced if performance was inadequate

      • Authority: British Steel Corporation v Cleveland Bridge and Engineering Co 1984

• Step 3: Benefit must have been received –

  • Note red herring for Planche v Colburn – quantum meruit awarded in contract case where no breach of contract and no benefit received at all.

• Step 4: Subjective devaluation of the enrichment?

  • Chance to show that you personally did not value it to the full extent of the objective value.

  • Authority: Lord Clarke in Benedetti v Sawiris 2013

    • Note Lord Reid dissented, thought enrichment was a subjective test generally and that this was required to protect the autonomy of the defendant. ‘Palm tree justice’ approach.

  • Authority: “Liabilities are not to be forced upon people behind their backs any more than you can confer a benefit upon a man against his will” (Bowen LJ in Falcke v Scottish Imperial Insurance 1886)

    • Note the Supreme Court in Benedetti rejected the notion of subjective over-valuation save in ‘exceptional’ circumstances, despite Burrows, Goff & Jones arguing that it should be possible.

• Step 5: Does either means of defeating subjective devaluation apply?

  • 5.1. Incontrovertible benefit –

    • Question of fact that depends on the circumstances.

    • Authority: “an unquestionable benefit, a benefit which is demonstrably apparent and not subject to debate and conjecture”. Rural Municipality of Peel v Her Majesty the...

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