ABSENCE OF BASIS

Although Birks was the main proponent of the principled analysis of particular grounds of restitution, with reference to their being either claimant-, defendant, or policy-oriented, he subsequently advocated a radical reinterpretation of the unjust element of unjust enrichment.^[1] He argued that the identification of a specific ground of restitution from a list of recognized grounds was unreliable, cumbersome, and could produce the wrong results.^[2] He concluded that it should be rejected in favour of a civilian approach,^[3] whereby there should be one single ground of restitution, namely that there was no explanatory basis for the defendant’s receipt of an enrichment.^[4] If there was no such basis, the receipt should be considered to be unjust. There would be a basis for receipt if, for example, the enrichment was transferred to discharge a contractual or other obligation or was a valid gift.^[5]

Whether this absence of basis approach should be adopted in English law remains a matter of controversy. That it does not yet reflect the state of English law is clear, even though Birks considered it to have been accepted implicitly by cases which had recognized that money paid pursuant to void contracts could be recovered simply because the transaction was void.^[6] In Deutsche Morgan Grenfell v IRC^[7] all the judges in the House of Lords analysed the unjust enrichment principle with reference to the need to establish specific grounds of restitution, and none adopted the absence of basis analysis in respect of a claim relating to mistaken payment of tax. Lord Walker did, however, acknowledge the persuasiveness of Birks’s approach and recognized that it might be appropriate to consider its reception into English law at a future date:^[8]

The recognition of ‘no basis’ as a single unifying principle would preserve... the purity of the principle on which unjust enrichment is founded, without in any way removing (as this case illustrates) the need for careful analysis of the content of particular ‘unjust factors’ such as mistake.

But no decision subsequently has recognized absence of basis instead of the orthodox grounds of restitution. Indeed, in Test Claimants in the FII Group Litigation v HMRC^[9] Lord Walker, when deciding that a claimant could recover overpaid tax from the Revenue even when this had not been demanded, considered that this would not be a decisive step towards the recognition of the absence of basis principle instead of the traditional grounds of restitution. Lord Sumption^[10] in the same case emphasized that English law had still not recognized the principle that liability would be imposed simply because money had been paid which was not due to the defendant.

Even so, it is important to consider whether analysis with reference to absence ofbasis is preferable to the traditional analysis of specific grounds of restitution.

• [1] Birks, Unjust Enrichment (2nd edn). See especially Chapters 5 and 6. See also T Baloch, ‘The UnjustEnrichment Pyramid’ (2007) LQR 636.
• [2] Birks, Unjust Enrichment (2nd edn), 160.
• [3] Building on the work of Meier: S Meier, ‘Restitution after Executed Void Contracts’ in P Birks and F Rose(eds), Lessons from the Swaps Litigation (London: Informa Law, 2000), 168; S Meier, ‘Unjust Factors and LegalGrounds’ in D Johnston and R Zimmermann (eds), Unjustified Enrichment: Key Issues in ComparativePerspective (Cambridge: Cambridge University Press, 2002), 37. See also F Zimmermann, ‘Unjustified Enrichment: The Modern Civilian Approach’ (1995) 15 OJLS 403; S Meier and F Zimmermann, ‘Judicial Development of the Law, Error Iuris and the Law of Unjust Enrichment’ (1999) 115 LQR 556; J du Plessis, ‘Toward aRational Structure of Liability for Unjustified Enrichment: Thoughts From Two Mixed Jurisdictions’ (2005)122 South African LJ 142; F Giglio, ‘A Systematic Approach to “Unjust” and “Unjustified” Enrichment’ (2003)23 OJLS 455; HLE Verhagen, ‘Absence of Basis and Unjustified Enrichment in Dutch Law’ [2004] RLR 132.
• [4] Birks, Unjust Enrichment (2nd edn), chs 5 and 6. This approach had been specifically rejected by LordGoff in Woolwich Equitable Building Society v IRC [1993] AC 70, 172. Cf Canada where ‘no juristic basis’ hasbeen recognized by the Supreme Court: Pettkus v Becker [1980] 2 SCR 834; Peel v Canada (1993) 98 DLR (4th)140; Garland v Consumers’ Gas Distributors Inc [2004] 1 SCR 629; Pacific National Investments v Victoria[2004] SCC 75. Note, however, BMP Global Distribution Inc v Bank of Nova Scotia [2009] SCC 15 where theSupreme Court of Canada explicitly relied on the ground of mistake to justify the restitutionary claim.
• [5] Birks, Unjust Enrichment (2nd edn), 104.
• [6] See especially Guinness, Mahon and Co Ltd v Kensington and Chelsea Royal LBC [1999] QB 215.
• [7] [2006] UKHL 49, [2007] 1 AC 558.
• [8] Ibid, [158] (Lord Walker). Lord Hoffmann also made reference to this absence of basis analysis: [28]. Seealso Lord Hope in Sempra Metals Ltd v IRC [2007] UKHL 34, [2008] 1 AC 561, [25], who did refer to ‘no legalground’ as the ground of restitution, although he had earlier accepted that the ground was mistake oflaw. LordMance left the point open: ibid, [192].
• [9] [2012] UKSC 19, [2012] 2 AC 337, [81]. 3 Ibid, [162].
• [10] 63 Birks, Unjust Enrichment (2nd edn), 129.