(iii) Analytical Complexity
A significant problem with Birks’s ‘absence of basis’ thesis is that it suggests something elegant when in fact it is unwieldy.82 The analogy with a pyramid is misplaced. The better
See p 372, below.
- 75 R Stevens, ‘The New Birksian Approach to Unjust Enrichment’ [2004] 12 RLR 260, 271.
- 76 See Kleinwort Benson Ltd v Lincoln CC [1999] 2 AC 349,408-9 (Lord Hope); Rowe v Vale of White Horse DC [2003] EWHC 388 (Admin), [2003] 1 Lloyd’s Rep 418, 422 (Lightman J); Cressman v Coys of Kensington (Sales) Ltd [2004] EWCA Civ 47, [2004] 1 WLR 2775; Uren v First National Home Finance Ltd [2005] EWHC 2529 (Ch), [17] (Mann J); Sempra Metals Ltd v IRC [2007] UKHL 34, [2008] 1 AC 561; Test Claimants in the FII Group Litigation v HMRC [2012] UKSC 19, [2012] 2 AC 337.
- 77 [2006] UKHL 49, [2007] 1 AC 558. 78 See further p 403, below.
- 79 See p 239, below. 80 [1994] 4 All ER 714. 81 Ibid, 717 (Steyn LJ). See p 216, below.
- 82 See also Burrows, ‘Absence of Basis: The New Birksian Scheme’, 45.
analogy is with an iceberg, where nine-tenths of the object is hidden below the surface. This is because focusing on absence of basis alone cannot be sufficient to justify restitution. Where there is a potential basis for a transfer, the grounds of restitution still need to be examined to determine whether the basis was valid. Even as regards the void swaps cases, Birks acknowledged[1] that it would still be necessary to consider whether the claimant was mistaken when paying the money to the local authorities, since this would indicate that the claimant had not willingly taken the risk that the money was not due. But this emphasis on risk-taking, which appears to incorporate aspects of the law concerning the established grounds of restitution, undermines the elegant structure of Birks’ approach to absence of basis. For, as regards his analysis of the swaps cases, he asserted that the unjust enrichment claim could be grounded simply on the invalidity of the underlying transaction. Absence of basis is then established at the top of the pyramid, but we need to return to the base of the pyramid to determine risk-taking with express reference to mistake. Now it may be easy to show in such a case that the claimant was not a risk-taker, but it is still a factor which needs to be taken into account. The role of risk within the law of unjust enrichment is significant and difficult, but the absence of basis approach does not make it any easier. For Birks, risk-taking is an implicit part of the absence of basis question,[2] but it can be easily missed. Risk-taking needs to be brought out explicitly as a bar in its own right to unjust enrichment claims.[3]
