(C) INCIDENTAL BENEFITS

Even where the defendant can be considered to have been enriched as a direct result of something done by the claimant, this enrichment might not be considered to be at the claimant’s expense where it is characterized as an incidental benefit. A benefit will be characterized as incidental where the claimant was acting primarily out of self-interest to benefit him or herself, but, in doing so, the defendant is also benefited, even though this was not intended by the claimant. It has been a matter of some controversy as to whether a restitutionary claim should be defeated where the defendant’s benefit is incidental. Birks argued that such a bar should be recognized to deal with the following hypothetical problem.^[1] A spends money heating his ground floor flat and the heat rises, incidentally benefiting B in the flat above, so that B does not need to turn on her own heating. Birks correctly concluded that A will not be able to claim restitution from B in such circumstances, but the reason is that there is no obvious ground of restitution on which A can rely,^[2] rather than artificially concluding, as Birks did, that B’s incidental benefit was a gift from A.

Although there are dicta in some cases which might be consistent with the recognition of the incidental benefit bar in English law,^[3] it was expressly rejected by the Court of Appeal in TFL Management Ltd v Lloyds Bank plc.^[4] In that case a company had spent ?550,000 on legal fees in a claim to recover a debt. The claim failed, but the Court of

Appeal held that the debt was actually owed to the defendant. Subsequently, the defendant entered into a settlement with the debtor, relying on this judgment. The company’s rights having been assigned to the claimant, it sued the defendant in unjust enrichment on the ground that the company had incurred legal costs which conferred a valuable benefit on the defendant as a result of the company’s mistaken belief that the money was owed to it rather than to the defendant. Although the issue for the Court of Appeal in the TFL Management case was whether the claim for restitution had any prospect of success on the assumption that the facts as pleaded could be proved, the Court held that the fact the benefit to the defendant was incidental did not necessarily defeat the claim. The court held that it was not compelled to recognize the incidental benefit bar as a matter of authority, and, because there was no clear conceptual basis for denying restitution where the claimant had acted selfishly, the court refused to recognize the bar. But the court did emphasize that, where the benefit obtained by the defendant was incidental, there is likely to be difficulty in establishing the components of the unjust enrichment formula. So, for example, on the facts of the TFL Management case, it would be difficult to establish that the defendant had been enriched. Whilst the defendant had been able to enter into a settlement with the debtor, all the judgment obtained by the company had done was to procure a declaration that the defendant had a right to be paid the debt. That right was not created by the declaration; it existed already. The only possible enrichment was what the defendant had saved in legal expenses in not having to bring the claim in the first place. But, even if the defendant had commenced proceedings, it would presumably have been able to recover its costs from the debtor. The majority concluded that the defendant might have been saved other costs following the company’s proceedings, but these would be significantly less than the money it received following the settlement. Although this money would not have been obtained directly at the expense of the company, it was considered to be arguable that there was a sufficient causal connection between the company’s legal proceedings and anything which the defendant had saved. Finally, the only possible ground of restitution would be that of mistake, but this would also be difficult to establish because the company might be characterized as having taken a risk in commencing litigation.⁵⁴ Although it would be difficult for the claimant in such a case to establish a claim in unjust enrichment, the effect of the Court of Appeal’s refusal to recognize a limiting principle of incidental benefit means that it is possible, in principle at least, that the claimant will obtain restitution even though he or she had been acting selfishly. That is surely right. If the elements of the unjust enrichment formula can be established, there is then no reason to defeat the claim on the ground that the claimant was acting in his or her own interests rather than specifically to benefit the defendant. But, where the claimant is motivated by self-interest, it will be very difficult to establish the elements of the claim. So, for example, if the claimant has spent money removing a tree from his land which has the incidental benefit of dramatically improving the view from the defendant’s land, with a consequent increase in the value of the defendant’s property, it should be possible to say that the defendant has been enriched and this was at the claimant’s expense, but there is no obvious ground of restitution to make the enrichment unjust.

• [1] 51 The hypothetical problem caused Birks particular problems because he had rejected the need to identify
• [2] particular grounds of restitution to establish unjust enrichment, it being sufficient that there was no basis forthe transfer. See further p 127, below.
• [3] See, for example, Ruabon Steamship Company Ltd v London Assurance Company Ltd [1900] AC 6, 12(Lord Halsbury LC).
• [4] [2013] EWCA 1415, [2014] 1 WLR 2006.