English unjust enrichment

The English law of unjust enrichment is part of the English law of obligations, along with the law of contract, tort, and trusts. The law of unjust enrichment deals with circumstances in which one person is required to make restitution of a benefit acquired at the expense of another in circumstances which are unjust.

The modern law of unjust enrichment encompasses what was once known as the law of quasi-contract. Its precise scope remains a matter of controversy. Beyond quasi-contract, it is sometimes said to encompass the law relating to subrogation, contribution, recoupment, and claims to the traceable substitutes of misapplied property.

English courts have recognised that there are four steps required to establish a claim in unjust enrichment. If the following elements are satisfied, a claimant has a prima facie right to restitution:
# the defendant has been ''enriched'';
# this enrichment is ''at the claimant's expense'';
# this enrichment at the claimant's expense is ''unjust''; and
# there is no applicable bar or defence.
The law of unjust enrichment is among the most unsettled areas of English law. Its existence as a separate body of law was only explicitly recognised in 1991 in ''Lipkin Gorman v Karpnale Ltd''.. While the law has rapidly developed over the last three decades, controversy continues over the precise structure, scope and nature of the law of unjust enrichment.

Background

History

The notion of an obligation to make restitution of benefits received at another's expense can be traced back to Roman law. Its history in English law can be traced to the form of action known as ''indebitatus assumpsit''. From this action came the 'common money counts'. Of present relevance are the following:
* an action for money had and received to the plaintiff's use;
* an action for money paid to the defendant's use;
* ''quantum meruit'' (that is, a claim for reasonable remuneration for services provided by the plaintiff to the defendant); and
* ''quantum valebat'' (that is, a claim for the reasonable value of goods provided by the plaintiff to the defendant).
During the course of the 18th and 19th centuries the law of contract, the law of tort and the law of trusts emerged as discrete bodies of law within English private law. As many thought they covered the field, restitutionary claims as embodied in the common money counts were appended to the law of contract. The various claims were termed 'quasi-contractual'. This was because it was often necessary to plead that the defendant had promised to repay a debt, even though the promise was fictitious and the debt was imposed by the law. As recently as 1951 the House of Lords held that: "My Lords, the exact status of the law of unjust enrichment is not yet assured. It holds a predominant place in the law of Scotland and, I think, the United States, but I am content for the purposes of this case to accept the view that it forms no part of the law of England..."

While restitutionary obligations were not enforced solely through these quasi-contractual claims, the law of quasi-contract constitutes the core of the modern law of unjust enrichment. A seminal case is ''Moses v Macferlan'' (1760) 2 Burr 1005.

Perhaps more than any other area of the common law, the law of unjust enrichment has been shaped by academic writing, particularly by that of jurists from Oxford and Cambridge. Of course, the law did not develop in a vacuum: the American Law Institute drafted a ''Restatement of the Law of Restitution'' in 1937. The first major practitioner text in England appeared in 1966, written by Robert Goff and Gareth Jones. It was Robert Goff (by this time Lord Goff) who gave the leading judgment in ''Lipkin Gorman v Karpnale Ltd'' over two decades later. Professor Peter Birks was instrumental in promoting the autonomy of unjust enrichment within the law of obligations in his seminal work ''Introduction to the Law of Restitution.'' Academic writing continues to be heavily cited by the highest courts, particularly the more recent work of Professor Andrew Burrows and Professor Graham Virgo, as well as modern editions of ''Goff & Jones: The Law of Unjust Enrichment'', now edited by Professor Charles Mitchell, Professor Paul Mitchell, and Dr Stephen Watterson. A good example of the close relationship between the academy and the profession in the development of this area of law is seen in the recent publication of the ''Restatement of the English Law of Unjust Enrichment''''.''

Restitution or unjust enrichment?

As it has developed, the law of unjust enrichment has frequently been referred to as the 'law of restitution'. The difficulty with this is that it emphasises a legal ''response'' (restitution) rather than the ''event'' which gives rise to it (unjust enrichment). In doing so, it is akin to treating contract (an event which gives rise to an obligation to perform) as coterminous with compensation (the law's response to non-performance or defective performance). That approach is problematic: the law of compensation is wider than contract, encompassing compensation claims arising out of tortious conduct. This is equally true of restitution: a claimant can obtain restitution not only for an unjust enrichment, but also for a tort. It is in this sense that one can say that restitution is multi-causal: it is a legal response to a number of different events.

Continuing controversies

Controversy continues to surround many aspects of the modern law of unjust enrichment. This controversy extends to its existence as an independent body of law, some arguing that the concept of unjust enrichment lacks the explanatory power it is so frequently asserted to have.

It would be misleading to exaggerate the level of controversy, however. At least in English law, there is high authority accepting the principle of unjust enrichment as having fundamental explanatory force in this area of law.. Recent decisions have continue to clarify key aspects of actions in unjust enrichment. Nevertheless, uncertainty pervades key areas of the law:
* ''Enrichment.'' The principles of enrichment and expense are more stable in cases of transfers of goods or money, but contested in cases where labour and benefits in kind are passed. This distinction owes its origin to the fact that, historically speaking, these were different kinds of claim.
* ''At the claimant's expense''. Cases in which a benefit is received by way of a third party can cause difficult issues for courts, given the traditional assumption that a benefit must be acquired directly from the claimant.
* Unjust' factors.'' English law has typically adopted an 'unjust factor' approach, whereby the claimant must positively identify a reason why the defendant's enrichment is 'unjust'. 'Unjust' is a generalisation of all the circumstances in which the law calls for restitution. Recognised grounds of restitution include mistake, duress, undue influence and failure of consideration. The unjust factor approach contrasts with certain civilian systems which may adopt an 'absence of basis' approach, whereby the claimant need only show that there is no good reason ('basis') for the defendant's enrichment.
* ''Defences.'' The categories of defences are also controversial: "change of position" is a general defence, although the law recognises estoppel, the ''bona fide'' purchaser defence, and others as alternatives.
* ''Remedy: personal or proprietary?'' The law's remedial response to unjust enrichment is particularly controversial. The historical core of unjust enrichment lies in quasi-contract. The quasi-contractual actions were common law claims which awarded a claimant the ''money value'' of the benefit received by the defendant. As the law has extended beyond such claims, unjust enrichment scholars have debated the scope of proprietary relief: that is, whether the court should recognise that (or declare that) the claimant has a beneficial or security interest in property held by the defendant (or a third party, as in the case of subrogation to extinguished rights).
Despite this controversy, the statement by Justice Deane appears to remain an accurate statement of the place of unjust enrichment in the Anglo-Australian law of obligations: " he concept of unjust enrichmentconstitutes a unifying legal concept which explains why the law recognises, in a variety of distinct categories of case, an obligation on the part of a defendant to make fair and just restitution for a benefit derived at the expense of a plaintiff and which assists in the determination, by the ordinary processes of legal reasoning, of the question whether the law should, in justice, recognise such an obligation in a new or developing category of case.

Analytic framework

English courts have recognised that there are four steps involved in establishing a claim to restitution for unjust enrichment. This analytic framework was developed by academics such as Professor Peter Birks. The four steps were expressly endorsed by the House of Lords in '' Banque Financière de la Cité v Parc (Battersea) Ltd'' in the form of four questions:
* (1) is a defendant ''enriched'' or ''benefited''?
* (2) is the enrichment ''at the claimant's expense''?
* (3) is the enrichment ''unjust''?
* (4) are there any ''defences''?
Subsequent case law and academic writing has given greater content to this commonly accepted framework. The application of the formula can be illustrated by '' Kelly v Solari.'' In that case, a company paid out a life insurance policy to a widow by mistake. The company brought an action for money had and received against the widow, seeking restitution of the mistaken payment. Analysed in modern language, the widow had been enriched at the company's direct expense. The 'unjust factor' was mistake: the company had conferred the benefit whilst labouring under the incorrect tacit assumption that the payment was due.

Controversy over the status of the analytical framework

The precise status of this analytic framework and its underpinning concept of unjust enrichment is controversial.
* On the one hand, scholars have sought to provide a coherent, rational and principled structure to an area of law once riddled with legal fiction. They have also sought to avoid the perception that courts are dispensing palm tree justice by engaging in an open-ended consideration of the injustice of the circumstances. To this end, 'unjust enrichment' has been treated as a descriptive, taxonomical term with precise legal content: it does not invite some broad, discretionary examination of what is just or equitable on the facts of the case. The framework is treated as conclusive of liability, producing a clear answer to whether a defendant is obliged to give restitution of a benefit acquired at another's expense.
* On the other hand, some have suggested that the framework has too much of a 'broad-brush or legislative flavour'. The UK Supreme Court recently referred to the framework as 'broad headings for ease of exposition' and emphasised that they do not have 'statutory force'. This debate about the precise content of 'unjust enrichment' and the utility of a strict theoretical framework is closely tied to jurisprudential debates about the role of conscience and Equity in a modern system of law. Unjust enrichment has been a key battleground for the so-called 'fusion wars'.
As a matter of day-to-day practice, it is this framework which is routinely applied as the organising structure for the law. Nevertheless, practitioners frequently plead claims by reference to the old common counts. It is not yet possible to articulate the law without reference to these old categories. Whether it is desirable to do so remains a controversial question.

Enrichment

The first element of a claim is that a defendant is ''enriched''. This requirement distinguishes a claim in unjust enrichment from a claim in tort: the law of unjust enrichment is not concerned with compensation for loss, but rather with the restitution of gains.

Historically, the nature of one's claim differed depending upon the nature of the enrichment. For example, if the defendant had received money, the plaintiff would bring an action for money had and received. If the plaintiff had discharged a liability of the defendant by paying money to a third party, the plaintiff would bring an action for money paid to the defendant's use. If instead the defendant had received services or goods, the plaintiff would recover bring a quantum meruit or a quantum valebat, respectively. These were claims for the reasonable value of the services or goods. It is no longer necessary to plead one's form of action. Whilst lawyers often draft their claims by reference to this language, academic commentators tend to analyse the law without regard to such historical distinctions. In short, an 'enrichment' for the purposes of the modern law may include, amongst other things: (i) money; (ii) services; (iii) chattels; and (iv) the discharge of a liability to a third party.

Whether a defendant has been enriched (and the proper valuation thereof) is determined objectively. Nevertheless, the law does take account of the defendant's autonomy. This is through the notion of 'subjective devaluation'. In effect, a defendant is entitled to say '''I do not value the benefit as much as you claim I do''' or even '''I did not want that benefit at all; to me it is worthless'''. The law respects this argument because it protects individual autonomy. The law nevertheless 'looks for its limitations and curbs its excesses'. A plaintiff can overcome subjective devaluation by demonstrating:
* (i) that the defendant ''requested'' the benefit; or
* (ii) that the enrichment is an ''incontrovertible benefit''; or
* (iii) that the defendant has ''freely accepted'' the benefit.
The principles relating to enrichment can be illustrated by the following cases.
* In ''McDonald v Coys of Kensington (Sales) Ltd

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