THE VALUATION OF THE ENRICHMENT

Once it has been shown that the defendant has received an enrichment, it is necessary to value it. This value forms the basis for assessing the restitutionary remedy which is awarded to reverse the defendant’s unjust enrichment. A number of questions need to be examined when valuing the defendant’s enrichment.

(A) TIMING OF THE VALUATION

In order to value the defendant’s enrichment it is first necessary to consider when this valuation should take place. In particular, should the enrichment be valued at the time of receipt or the time of the trial? This is an important question, since the test of timing which is adopted could have a profound effect upon the value which is actually restored to the claimant. The importance of the timing question is illustrated by Appleby v Myers,^[1] where the claimant partly performed a contract to build machinery for the defendant, but before he was able to complete the work the machinery was destroyed by fire, so frustrating the contract. If the enrichment was valued at the time it was received it would have been a substantial amount, but if the enrichment was valued at the time of the trial it would have been worth nothing, since the enrichment no longer existed.

English law recognizes that the enrichment should be valued at the time when it was received by the defendant.^[2] It would be more accurate, however, to say that the enrichment should be valued when all the elements of the unjust enrichment claim have been satisfied, for only then will the claim be crystallized.^[3] Normally, the claim will crystallize when the enrichment is received because the ground of restitution will also be established at that point. So, for example, if money has been paid by mistake, all the elements of the claim will be satisfied at the time of payment, so long as it can be shown that the money would not have been paid at that time had the claimant known the true state of the facts or the law.^[4] Where, however, the claimant transfers a benefit to the defendant on the basis, for example, that a benefit will be transferred by the defendant in return on some future occasion, and no benefit is transferred, the ground of restitution will only arise when the basis fails, so that the enrichment should be valued at that point at which the claim crystallizes.

Once the unjust enrichment claim has crystallized, subsequent events which affect the enrichment should not be taken into account, save to the extent that the defendant can satisfy the conditions for the defence of change of position,^[5] which will operate to reduce or extinguish the restitutionary liability, or if the claimant seeks to defeat the defendant’s reliance on the defence of subjective devaluation.^[6]

This timing question was considered by Rattee J in Regalian Properties pic v London Docklands Development Corp,²¹⁶ who assumed that the defendant had not been enriched by the claimant’s preparatory work, relating to the redevelopment of the defendant’s land, because property values had fallen after negotiations for a contract had collapsed so that no-one would wish to develop the defendant’s land. Consequently, the claimant’s preparatory work was ultimately worthless.²¹⁷ This decision might be criticized on the ground that events subsequent to receipt of the enrichment should only be taken into account by virtue of the defence of change of position and, since it was not possible to establish a link between the receipt of the enrichment and the later failure to redevelop the land, this defence could not have been established. In fact the judge’s conclusion about the timing of valuation can be defended by focusing on when the claim crystallized. For the reason why the unjust enrichment claim actually failed was because the agreement between the parties was subject to contract, which meant that the claimant bore the risk of no concluded contract materializing. Had the agreement not been subject to contract the unjust enrichment claim would have crystallized at the point when negotiations for the contract collapsed, at which point there was a total failure of basis. Since, however, the claimant bore the risk of the negotiations failing, there was no failure of basis for the services and so the claim in unjust enrichment had not crystallized. Consequently, it was appropriate to take into account the subsequent fall in property values which meant that the claimant’s work was ultimately worthless, so that the defendant was no longer enriched.

• [1] (1867) LR 2 CP 651. The case would today be governed by the Law Reform (Frustrated Contracts) Act1943. See Chapter 13.
• [2] BP Exploration Co (Libya) Ltd v Hunt [1979] 1 WLR 783,802 (Robert Goff J); Benedetti v Sawiris [2013]UKSC 50, [2014] AC 938, [14] (Lord Clarke).
• [3] See Stevens, ‘Three Enrichment Issues’, 58.
• [4] Deutsche Morgan Grenfell Group plcv IRC [2006] UKHL 49, [2007] 1 AC 558, [59] (Lord Hope).
• [5] See Chapter 25. 215 See further p 78, above. 216 [1995] 1 WLR 212.
• [6] 217 Ibid, 225.