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(i) Services Resulting in an End Product

Where the service results in the receipt of a valuable end product by the defendant, should the enrichment be identified as the service or the end product? For example, if the claimant provides a service which results in an increase in the value of the defendant’s property, this increase in value could be considered to be the relevant enrichment, since this is the benefit which was actually received by the defendant. Alternatively, the true enrichment might be considered to be the service itself,[1] [2] because it is the service rather than the end product which was received from the claimant. This difficulty can be resolved by asking what enrichment was received by the defendant as a result of the transfer from the claimant. In other words, what benefit was caused by the claimant’s intervention? If the effect of the service provided by the claimant is to improve the defendant’s property and so increase its value, the total value of the property cannot be considered to be the benefit, because the original value of the property is not causatively linked to the unjust enrichment.[3]

This was recognized by the House of Lords in Cobbe v Yeoman’s Row Management Ltd.[4] The claimant had entered into an oral agreement in principle with the defendant to purchase some flats for redevelopment. No written contract was made. The claimant, believing that the property would be sold to him, spent time and money preparing to make an application for planning permission to develop the land. This application was successful. The defendant withdrew from the agreement and, since the agreement was not in writing, it was not possible to sue for breach of contract.[5] The claimant sought instead a restitutionary remedy from the defendant for the value of his services, since the value of the defendant’s land had substantially increased following the grant of planning permission. This increase in value was considered by the trial judge to be the measure of the enrichment, but this was rejected by the House of Lords which concluded that the relevant enrichment was the service and not the end product. Lord Scott drew an analogy with a locked cabinet which is believed to contain valuables, but the key is missing. If the claimant locksmith makes a key which enables the defendant to unlock the cabinet and obtain the valuables inside, the defendant can only be considered to be enriched by the cost of the key and not by the value of the valuables, because everything which is inside the cabinet is already owned by the defendant. So, in Yeoman’s Row Lord Scott concluded that the planning permission did not ‘create the developmental potential of the property; it unlocked it’.[6] In other words, the increase in value was inherent in the property and could not be attributed to the claimant’s services. Rather, the true benefit was simply what the defendant had saved in not having to apply for planning permission.

This is a significant decision on the law of enrichment since it shows that the defendant can only be considered to be enriched to the extent that the claimant has caused the defendant to be benefited. It follows that, where for example, a claimant has explored for and discovered oil on the defendant’s land, the oil itself cannot be considered to be the enrichment, since the defendant already owned it and did not obtain it at the claimant’s expense. Rather, the enrichment was the ability of the defendant to exploit the oil after it had been found, which would be assessed by reference to the value of the claimant’s services in finding the oil. Where, however, the claimant has improved the defendant’s property, the relevant enrichment should be the increase in the value of the property, since this was the benefit which can be attributed to the claimant, such that it was obtained at the claimant’s expense. So, if the claimant restored and improved the defendant’s car, which was worth ?1,000 before the work was done and afterwards was worth ?3,000, the defendant should be considered to have been enriched by ?2,000, but only if this increase in value can be attributed to the claimant’s work rather than to the intrinsic potential value of the car.

  • [1] Taylor v Laird (1856) 25 LJ Ex 329, 332 (Pollock CB).
  • [2] See BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, 801 (Robert Goff J).
  • [3] See R Stevens, ‘Three Enrichment Issues’ in AS Burrows and Lord Rodger of Earlsferry (eds), Mappingthe Law (Oxford: Oxford University Press, 2006), 54.
  • [4] [2008] UKHL 55, [2008] 1 WLR 1752.
  • [5] Law of Property (Miscellaneous Provisions) Act 1989, s 2.
  • [6] Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55, [2008] 1 WLR 1752, [41].
 
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