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Unjust Enrichment Notes

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UNJUST ENRICHMENT
THE LAW ON UNJUST ENRICHMENT
I) HAS THE DEFENDANT RECEIVED AN ENRICHMENT?

(i) Money: (its exchange value) always an enrichment (BP Exploration v Hunt)
(ii) Use value? What you save by not having borrow

• Sempra Metals v IRC 07 suggested yes = enrichment

• Providential Assurance v HMRC SC 18: no! Depended on HMRC v ITC reasoning the use value is not 'at expense of C' thus not enrichment
(iii) Property a benefit, but susceptible to subjective devaluation
(iv) Services with an end product:

• value of the service (not end product) will be the enrichment unless the service by C caused the end product (the enrichment)

• Yeoman's Row v Cobbe 08: Lord Scott locksmith unlocking jewel in safe analogy - enrichment is service

• here about planning permission - said didn't cause the enrichment, just unlocked inherent value

• I'd disagree - point of application is because you don't know if you can get it
(v) Pure services:

• e.g lecturer - doesn't leave a market residuum

• Beatson believes cannot be an enrichment

• Burrows: if people wiling pay for service must be an enrichment
(vi) Discharge of obligations

• Exall v Partridge 1799 yes enrichment - here discharge of rent liability

• Menalaou v Bank of Cyprus 13 also said yes - here sig on charge defective so charge over property void - bank claimed D unjustly enriched
(vii) Forgoing claim/waiving - enrichment Gibbs v Maidstone 10
II) VALUE OF THE ENRICHMENT

• Judged at time of receipt not judgement (Hunt)

• Starting point: objective test (but can be subjectively devalued)
i) Objective test: 2 ways of establishing (L Clarke Benedetti)

• start with ordinary market value - what normal person would pay on market then consider 'objective value' (things market would take into account about D
e.g red carpet actress)

• Relevant factors: not generosity etc but poor credit rating, gender, occupation,
health, age, status (Lord Reid e.g Vanity fair/film star)

• note some authorities suggest contract price as ceiling on value - Way v Latilla but current law is that is merely evidential (shows how parties valued benefit)
- L Neuberger Benedetti

• also note that if inadequate performance, price of benefit received under void contract can be reduced (Brit Steel Corp v Cleveland Bridge)
ii) Subjective devaluation:

• Chance to show you personally didn't value it to full extent of the objective value! (L Clarke Benedetti)

• recognised in Falcke v Scottish Imperial Insurance 1886: 'liabilities shouldn't be forced upon people behind backs any more than you can confer a benefit upon a man against his will' • but note Lord Reed in Benedetti rejected subjective devaluation - said only way avoid D incurring liabilities against will is within grounds of restitution
(disagree)

• note SC in Benedetti rejected notion of subjective over-valuation save in
'exceptional' circs

• Burrows, Goff & Jones think should be possible

iii) Ways of overriding subjective devaluation a) Incontrovertible Benefit

• Describes a benefit demonstrably apparent/not subject to debate (JS Bloor v
Pavillion Developments)

• Types:
(i) Money (cash) - BP v Hunt
(ii) Anticipation of necessary expenditure

• Legal necessity e.g discharging obligation - Exall v Partridge 1799 - to get carriage back from L, C paid D's rent

• Factual necessity - Re Berkley Applegate 89 - C a liquidator who provided services for D in respect of trust prop - if C hadn't D would've had pay s.o else thus incontrovertible
(iii)
Failure to return property i.e you actually don't value it you'd give back - McDonald v Coys of Kensington 04 - numberplate
(iv)
Benefit realised in money i.e receive something & sell for £ incontrovertible Rover v Canon Fil)
(v) Benefit realisable in money i.e would have value if sold - debatable

• McDonald v Coys of Kensington Mance endorsed idea that resisability sufficient

• Goff/Jones agree

• Burrows midway position - test is is it reasonably certain D will realise the positive benefit in future, acknowledging risk of 'realisability'. Take into account circs of D - I agree

• Birks/Virgo say no - realisability insufficient - not good enough reason interfere with autonomy b) Request: you must have valued it here, thus can't subjectively devalue it c) Free acceptance: will override subjective devaluation (L Clarke Benedetti)

• 3 elements:
(i) Opportunity to reject - 'Hobson's choice' - as in CC Greater Manc Police v Wigan
Athletic - no opportunity reject additional unneeded police force w.o rejecting all of them
(vi)
D knew/should've that not gratuitous - Rowe v Vale of White Horse
(vii)
D failed reject the benefit
III)

AT THE EXPENSE OF

C

(i) Direct enrichment: D must be directly enriched at C's expense

• HMRC v ITC 17 SC: 'at expense of' shows C is right person sue (suffered loss) but only where suffered directly • here ITC paid too much VAT, customers charge too much VAT - but VAT paid in advance thus not exactly C -> HMRC - indirect thus claim failed

• e.g Costello v MacDonald 11: C paid £ to D (company), D bust, C tried sue directors - no - not direct!

• but HMRC SC did recognise circs where indirect may suffice (Lord Reid)
(viii) Indirect enrichment:
a) Agency: agent drops out of the picture & C can sue D directly b) Assignment: 3P may have assigned rights to C
c) Sham transaction: if transaction with 3P a sham then ignored thus direct e.g
Relfo Ltd v Varsani 14:
d) Co-ordinated transaction: if 3P & D coordinated from start then can treat as 1 transaction e) Trace property: but this is just equity really f) Discharge of debt g) Interceptive subtraction (Virgo) C tries get property from T but D takes it D enriched at C's expense (Official Custodian for Charities v Mackey)
(iii) Incidental benefits:

• Where C acts selfishly, but D benefits

• TFL Management v LLoyds TSB 13: argued acting selfishly should bar claim rejected

• but HMRC overruled TFL - benefits received by D must be result of intentional transfer

• but conflicts with Exall v Partridge - core UE case thus question this aspect of
ITC

• note in TFL - C sued T for sum of £ but court held T owed £ to D - C had incurred legal expenses in ultimately fighting D's case thus wanted restitution

(iv) Correspondence of gain & loss

• Birks thought that so long as C suffered some loss, could also get D's gain

• Rush agrees

• points to 'user damages' as in Humbly v Trott

• Burrows: says no correspondence principle - like tracing

• but Virgo: corrective justice requires respect for the correspondence principle

• HMRC v ITC 17 SC: Lord Reed said essence of UE = correcting defective transfer from C-D - suggests we compensate loss, not additional gain!

• Any windfall should lie with the D because claim capped to extent of gain of D
& loss of C - corresponds!

• So even if C loses £1m & D gains £2m, only required make restitution of £1m

• note there is no defence of passing on (Kleinwort Benson)

• affirmed in MnS v Commissioners of Customs & Excise 05 HoL: (teacakes rise) practically sensible - difficult to prove! C may still have lost - may have had fewer customers et
IV) THE UNJUST FACTORS: GROUNDS OF RESTITUTION

a) Mistake:

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