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(B) ALTERNATIVE THEORIES

Even though the unjust enrichment principle has clearly been recognized in English law, its validity and usefulness continue to be a source of controversy. Some commentators and jurisdictions have rejected unjust enrichment and suggest that restitutionary liability should be based on a different theoretical foundation.

(i) Proprietary Theory

A significant critique of the unjust enrichment principle was made by Stoljar, who advocated a proprietary theory of the law of restitution.[1] The essence of this theory is that restitution is justified where the defendant received property which belonged to the claimant. Stoljar’s recognition of a proprietary theory of restitution is consistent with the principle of vindicating proprietary rights, where the claimant is able to obtain restitution if he or she can establish a continuing proprietary interest in property which was received and retained by the defendant.[2] But Stoljar took his proprietary theory much further, since he considered that it even encompassed unjust enrichment claims. But this is unacceptable for the following reasons.

  • (1) In most cases where the claimant transfers property to the defendant, the claimant cannot be said to have a proprietary interest in the property once it is received by the defendant, since the claimant’s title to the property will usually have passed to the defendant at the time of receipt.[3] It follows that the restitutionary claim cannot be based on the fact that the defendant has received property which belongs to the claimant, because, at the point of receipt, the property no longer belongs to the claimant. It is for this reason that there is a role for the unjust enrichment principle, since this does not depend on proof that the claimant has retained a proprietary interest in the property which was received by the defendant.
  • (2) The fact that the defendant received property which belonged to the claimant before it was transferred is hardly a convincing justification for the award of restitutionary remedies where the consequence of the receipt is that the property then belongs to the defendant. Something else needs to be shown to justify the award of such remedies, such as the application of one of the grounds of restitution for the purposes of a claim founded on the defendant’s unjust enrichment.
  • (3) Stoljar’s proprietary theory also does not explain how restitutionary remedies can be awarded where the defendant is enriched by the receipt of services, since the claimant has no proprietary interest in the provision of a service. Although Stoljar accepted that his theory did not cover such claims, he adopted an alternative explanation, namely that a remedy is awarded to the claimant in respect of the services which he or she had provided to the defendant on the basis of the claimant’s loss rather than the defendant’s gain, this being called the principle of ‘unjust sacrifice’.[4] But this is highly artificial, particularly when the principle of reversing the defendant’s unjust enrichment explains why restitutionary remedies can be available where the defendant has benefited from the claimant’s services.

  • [1] SJ Stoljar, The Law of Quasi-Contract (2nd edn, Sydney: The Law Book Co, 1989), 9-10 and 250. See alsoP Jaffey, The Nature and Scope of Restitution (Oxford: Hart Publishing, 2000), ch 9.
  • [2] See Part IV. 3 See Chapter 21.
  • [3] 51 SJ Stoljar, ‘Unjust Enrichment and Unjust Sacrifice’ (1987) 50 MLR 603. See Chapter 4 for further
  • [4] discussion of this principle.
 
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