(iii) The Application of the Estoppel Principle
Although the estoppel principle has not been clearly recognized as a way of satisfying the claimant’s need to establish that the defendant was enriched,[1] the operation of this principle can be discerned in a few cases. Its most important role will be in those cases where the claimant has spent time and money in doing work which has not yet been received by the defendant, or where the claimant has done work on behalf of the defendant which has been received by a third party. In both situations the defendant has not received any benefit, so a restitutionary claim founded on the reversal of the defendant’s unjust enrichment can only succeed if he or she is estopped from denying that he or she has been enriched.
The most important context where this estoppel principle can be used to justify the award of restitutionary remedies is where the claimant has acted in anticipation of a contract which is not forthcoming.[2] In some of these cases the defendant received an objective benefit which he or she would have been unable subjectively to devalue because it was incontrovertibly beneficial or had been freely accepted.[3] In other cases, however, the claimant was awarded a restitutionary remedy even though there was no evidence that the defendant had received an objective benefit. This is particularly well illustrated by Brewer
Street Investments Ltd v Barclays Woollen Co Ltd,188 where the defendant had been negotiating with the claimant for a lease of the claimant’s property. Before a contract had been signed, the defendant requested the claimant to do some work on the property, which the claimant did. No contract was ever signed, and so the claimant brought a restitutionary claim against the defendant to recover the value of the work which it had done. The claim succeeded. The problem with this case is that the defendant had not received any benefit from the claimant’s work, because the work had occurred on the claimant’s own property and the defendant had never entered into possession of it, but the defendant was still held liable to pay the claimant for the reasonable value of its services. A majority of the Court of Appeal explained this restitutionary liability by virtue of the fact that no contract had been made because of the defendant’s conduct,189 namely the defendant’s insistence on the granting of an option when it knew at the outset that the claimant would never do so. Although none of the judges stated that the defendant was estopped from denying enrichment, the language they used is consistent with that principle. The defendant had requested the claimant to do the work, the claimant had done so in reliance on this request and the failure to make the contract was due to the fault of the defendant. It followed that the defendant could not deny that he had been enriched.
Similarly, in the Australian case of Sabemo Pty Ltd v North Sydney Municipal Council,190 the defendant had requested the claimant to do some work for it in anticipation of a contract being made. This contract was not forthcoming due to the fault of the defendant, in that it unilaterally decided to drop the proposal.191 So, even though the trial judge held that the defendant had not been unjustly enriched since it had not received a benefit,192 the restitutionary remedy which was awarded could still be justified by reference to the principle of unjust enrichment, with the enrichment being assumed, since the defendant’s conduct, on which the claimant had relied, estopped it from denying that it had been enriched.
In Jennings and Chapman Ltd v Woodman Matthews and Co,1 3 on the other hand, although the facts were similar to those of Brewer Street, restitution was denied. The preferable explanation for this is simply that in Jennings the reason why no contract was forthcoming was because of a mutual breakdown in negotiations; there was no evidence that the defendant was at fault in any way and so there was no basis for preventing the defendant from denying that it had been enriched.194
This estoppel principle might also be relevant to explain the difficult case of Planche v Colburn.195 In that case the claimant had contracted with the defendant to research and write a book, but the defendant terminated the contract after the claimant had done much of the research and writing but before anything had been received by the defendant. The claimant successfully brought an action to recover the reasonable value of his services. Although the claimant’s action would today be founded on breach of contract, it is still possible to justify the award of a restitutionary remedy by reference to the estoppel principle. This is because the defendant had requested the claimant’s performance on the understanding that the claimant would be paid for it, the claimant had acted in reliance on this request and the defendant by his own act falsified the representation that the performance would be paid for under the contract by terminating it.1 6 Consequently, even though the defendant had not received an enrichment, it might still have been possible to assume that the defendant had been enriched because he would have been estopped by his conduct from denying that this was the case.
- [1] Although Lord Clarke in Benedetti v Sawiris [2013] UKSC 50, [2014] AC 938, [29], did acknowledge thepossible role of estoppel in establishing enrichment by the provision of a service even though the defendant hadnot obtained any benefit. See also Lord Neuberger, ibid, [199], who contemplated that the defendant might beliable for the additional value above the objective market value, where the defendant led the claimant to believethat he was willing to pay more for the benefit and the claimant reasonably and foreseeably relied on thisrepresentation, by virtue of estoppel. See further p 98, below.
- [2] See Chapter 13.
- [3] See, for example, William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932.
