THE ROLE OF THE UNJUST ENRICHMENT PRINCIPLE IN PRACTICE
It is one thing to recognize the unjust enrichment principle as a means ofanalysing certain types of restitutionary claim, but how does this principle operate in practice? Most importantly, how does the claimant plead a restitutionary claim founded on unjust enrichment? This raises a further question, namely what is the cause of action when the claim is founded on unjust enrichment?
(A) CURRENT PRACTICE
In practice, where the claimant wishes to bring a restitutionary claim founded on the defendant’s unjust enrichment that claim will still be pleaded with reference to the old forms of action, known as the common counts, even though they were abolished in the nineteenth century.[1] [2] There are four types of action:
- (1) the action for money had and received by the defendant to the use of the claimant;
- (2) the action for money paid to the defendant;
- (3) quantum valebat to recover the reasonable value of goods which had been transferred to the defendant; and
- (4) quantum meruit to recover the reasonable value of services which the defendant had received from the claimant.
Which action is pleaded depends on the type of enrichment which the claimant alleges the defendant has received and the circumstances in which it has been received. Even though the restitutionary claim is formulated in terms of the old form of action, it does not follow that it is unrelated to the unjust enrichment principle. In fact, the forms of action are explicable today only by reference to that principle. This was recognized by Clarke J in South Tyneside MBC v Svenska International plc, who accepted that the recognition of unjust enrichment does not constitute the recognition of a new cause of action different from that of money had and received and the other forms of action. Rather, unjust enrichment ‘is simply another way of describing the same thing’.
The continued inclusion of the old forms of action in pleadings is liable to confuse, especially because this indicates that the underlying cause of action is, for example, the action for money had and received. If the language of the old forms of action is to be retained, they should be treated as describing the remedy which is awarded rather than the underlying claim.[3] In fact, because of the liability to confuse, the language of the old forms of action should be rejected completely. The need for this is clearly illustrated by the decision of the House of Lords in Yeoman’s Row Management Ltd v Cobbe.89 Although the case was primarily concerned with an unsuccessful claim founded on proprietary estoppel, a claim for restitution succeeded. What makes the case so controversial is that three distinct causes of action were recognized, when in fact each cause of action was a different way of describing the same thing. The claimant had entered into an oral agreement in principle with the defendant to buy the defendant’s land. No written contract was made. The claimant successfully made an application for planning permission to develop the land, at significant expense in preparing plans and submitting the application. Negotiations for purchase of the land broke down. The claimant was unable to sue for breach of contract, because contracts for the sale of land must be in writing,[4] so the claimant sought a restitutionary remedy from the defendant. This claim succeeded on the basis that the defendant had obtained the benefit of the planning permission.[5] Lord Scott recognized that there were three causes of action available to the claimant:
- (1) unjust enrichment—on the basis that the defendant had obtained a benefit at the expense of the claimant;
- (2) quantum meruit—on the basis that the defendant’s benefit consisted of the provision of the claimant’s services in obtaining planning permission;
- (3) failure of consideration92—on the basis that the claimant had expected to obtain the land in respect of which the planning permission had been obtained and this was not forthcoming.
That the claimant could obtain a personal restitutionary remedy in these circumstances is not controversial; that the claimant had three distinct ways to obtain this remedy is. The only claim available was one in unjust enrichment, for which the only appropriate remedy would have been quantum meruit (the reasonable value of the services provided) and for which the unjust element would be satisfied by showing that there had been a total failure of basis, in that the claimant had received nothing from the defendant. In identifying three distinct claims Lord Scott was simply describing one claim but from three different perspectives: the underlying principle, the remedy, and the ground of restitution.
The most worrying aspect of Lord Scott’s analysis was the proposition that quantum meruit was a cause of action in its own right. But that cause of action was abolished in 1852. Even if the cause of action could still be considered to exist in its own right, what are the elements of the claim which need to be established? Lord Scott gave no indication of this and it is difficult to see what would be required, other than that the defendant had benefited from the receipt of the services provided by the claimant and that there was a reason why the defendant should be required to pay for this service. But that is what unjust enrichment establishes. There is a growing body of law on the identification and valuation of enrichment, which has been contributed to by the decision in Yeoman’s Row, and reliance on a recognized ground of restitution shows why a remedy should be awarded. Nothing can be gained by simply asserting a claim in quantum meruit.
