(B) THE TEST OF VALUATION

The question of valuing the enrichment usually does not cause any difficulty. So, for example, where the benefit conferred on the defendant consists of the receipt of money, the defendant is benefited by the amount received and it is this amount which must be repaid to the claimant.[1] This does not mean that there can never be valuation problems when the enrichment is money received, since there may be particular problems relating to inflation, the valuation of foreign currency[2] and the payment of interest.[3]

These problems are nothing, however, when compared with those which can arise in connection with the valuation of non-money benefits. The general test of valuation which should be adopted is an objective test,[4] namely the reasonable value of the benefit received, since this is the basic test which is relied on when identifying whether or not the defendant has actually been enriched.[5] This reasonable value is ascertained by reference to the market value, which is the price which a reasonable person in the position of the defendant would have had to pay for the services.[6]

Although the objective test of valuation will initially be used to value the enrichment, that test may be qualified by the subjective devaluation principle, whereby the defendant can prove that he or she valued the benefit at less than the market value.[7] This principle is recognized by virtue of the need to protect the defendant’s autonomy.[8] So, for example, the defendant may have received a benefit and acknowledges that it is valuable, but is free to argue that he or she valued it less than the objective value. But, in the same way that the principle of subjective devaluation may be defeated by the principles of incontrovertible benefit, request, and free acceptance for the purpose of identifying an enrichment, the defendant’s reliance on subjective devaluation should be circumscribed for the purposes of valuing the enrichment. This means that, if it can be shown that the defendant had been incontrovertibly benefited or had requested or freely accepted the benefit, the objective value of the benefit should be adopted and the defendant’s own valuation of it should be considered to be irrelevant.

In the context of identifying the appropriate test for valuing benefits there are three issues which require particular consideration.

  • [1] Subject to the operation of the general defences.
  • [2] BP Exploration Co (Libya) Ltd v Hunt [1979] 1 WLR 783, 839-41 (Robert Goff J).
  • [3] See Chapter 1.
  • [4] Benedetti v Sawiris [2013] UKSC 50, [2014] AC 938, [16] (Lord Clarke).
  • [5] See p 65, above.
  • [6] Benedetti v Sawiris [2013] UKSC 50, [2014] AC 938, [17] (Lord Clarke).
  • [7] Ibid, [18] (Lord Clarke). So subjective devaluation applies both to the identification and the valuation ofthe enrichment. See also Scarisbrick v Parkinson (1869) 20 LT 175, 177 (Kelly CB); Sempra Metals Ltd v IRC[2007] UKHL 34, [2008] AC 561, [48] (Lord Hope), [116] (Lord Nicholls), and [180] (Lord Walker).
  • [8] Benedetti v Sawiris [2013] UKSC 50, [2014] AC 938, [18] (Lord Clarke). See p 37, above.
 
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