PRINCIPLES UNDERLYING THE RECOGNITION OF THE GROUNDS OF RESTITUTION
The orthodox analysis of the law of unjust enrichment is that, once it has been established that the defendant has been enriched at the expense of the claimant, the defendant is only liable to make restitution if the receipt of the enrichment can be considered to be unjust. This is not simply an opportunity for judges to exercise their discretion to determine what justice requires. Rather, specific grounds of restitution have been recognized within which the claim must fall.[1] The recognition of these so-called ‘unjust factors’[2] provides what has been described as ‘a principled ground for granting a restitutionary remedy’.[3] It is vital to be aware of what the grounds of restitution are and also why they have been recognized. Although the particular grounds of restitution are now generally well established, the reason for their recognition remains controversial, especially following Birks’ radical reconsideration of the unjust enrichment claim.[4]
The nature of the grounds of restitution was usefully identified by Lord Toulson in Barnes v Eastenders Cash and Carry plc.[5] He recognized that they are a ‘generalisation of all the factors which the law recognizes as calling for restitution’[6] and emphasized that the reasons why the defendant’s enrichment will be characterized as unjust varies between different sets of cases. It follows, he said, that the law of unjust enrichment is more like the law of torts, where a variety of reasons are recognized why the defendant is liable to compensate the claimant for harm suffered, rather than the law of contract, which is embodied by a single principle, namely that ‘expectations engendered by binding promises must be fulfilled’.
The main grounds of restitution were recognized by Lord Mansfield in Moses v Macferlan:7
[This action of money had and received] lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition, (express or implied) or extortion; or oppression; or an undue advantage taken of the plaintiff’s situation, contrary to laws made for the protection of persons under those circumstances.
This list proved highly significant to the subsequent rationalization of the law by jurists, notably William Evans in 1801.[7] These are still the main grounds of restitution for purposes of establishing liability for unjust enrichment. But why have these grounds of restitution been recognized? The answer is that the receipt of a benefit by the defendant in the circumstances recognized by Lord Mansfield can be considered to be unjust. According to the orthodox view of the law of unjust enrichment, originally advocated by Birks,[8] this notion of injustice derives from three different principles, which can usefully be summarized as claimant-oriented, defendant-oriented, and policy-oriented. Every ground of restitution can be explained by reference to at least one of these principles.
- [1] Rowe v Vale of White Horse DC [2003] EWHC 388 (Admin), [2003] 1 Lloyd’s Rep 418, 422 (Lightman J).
- [2] Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221, 227 (Lord Steyn); Kleinwort BensonLtd v Lincoln CC [1999] 2 AC 349, 363 (Lord Browne-Wilkinson), 386 (Lord Goff), 395 (Lord Lloyd), 409(Lord Hope); Test Claimants in the FII Group Litigation v HMRC [2012] UKSC 19, [2012] 2 AC 337, [81](Lord Walker).
- [3] Banque Financiere de la Cite v Parc (Battersea) Ltd [1999] 1 AC 221, 227 (Lord Steyn).
- [4] See p 127, below. 5 [2014] UKSC 26, [2015] AC 1, [102].
- [5] 6 Referring to the judgment of Campbell J in Wasada Pty Ltd v State Rail Authority of New South Wales
- [6] (No 2) [2003] NSWSC 987, [16]. 7 (1760) 2 Burr 1005, 1012; 97 ER 676, 681.
- [7] W Evans, ‘An Essay on the Action for Money Had and Received’ [1998] RLR 1.
- [8] See PBH Birks, ‘No Consideration: Restitution after Void Contracts’ (1993) 23 Univ WALR 195, 206.
