(ii) Different Results

There are circumstances where a basis, as defined by Birks, can be identified but restitution is still appropriate. This is illustrated by cases where the claimant has been legally compelled to discharge a debt owed by the defendant and the defendant is liable to make restitution.⁷⁹ In such cases the defendant’s liability cannot be analysed in terms of absence of basis, because the claimant has discharged a real legal liability owed to the defendant’s creditor, so that there was a basis for the transfer, as against the creditor, but restitution is still awarded, as against the defendant debtor.

The emphasis on absence of basis creates other dissonances with the common law by identifying cases where restitution should have been awarded even though it was rejected on the facts. For example, in CTN Cash and Carry Ltd v Gallaher Ltd⁸⁰ the claimant was unable to obtain restitution from the defendant, which had mistakenly demanded payment and had threatened to withdraw credit facilities in the future if the money was not forthcoming. In such a case the money which the claimant had paid to the defendant was not due to it, but the Court of Appeal held that the claim for restitution failed because the requirements for economic duress could not be established, since it was lawful for the defendant to withdraw credit facilities in respect of future dealings.⁸¹ If absence of basis was recognized, however, restitution should be awarded, simply because there was no basis for the payment to be made. But this raises serious concerns about the extension of the law of unjust enrichment which would undermine the security of transactions, especially in a commercial context.