LAWFUL BASES
It was concluded in the last chapter that Birks’s absence of basis analysis of the unjust element of the unjust enrichment claim should be rejected in favour of the orthodox identification of particular grounds of restitution. Nevertheless, there is much in Birks’s theory which makes sense in that, if there is a lawful basis for the defendant’s receipt of an enrichment, restitution should be denied because there is no reason why the law of restitution should undermine a lawful transfer. It is consequently preferable to recognize that if there is a legally effective basis for the transfer of a benefit to the defendant a claim in unjust enrichment should be denied. Indeed, this was specifically recognized by Lord Hope in Kleinwort Benson v Lincoln CC:[1]
the payee cannot be said to have been unjustly enriched if he was entitled to receive the sum paid to him. The payer may have been mistaken as to the grounds on which the sum was due to the payee, but his mistake will not provide a ground for its recovery if the payee can show that he was entitled to it on some other ground.
So, for example, where the claimant has transferred a benefit to the defendant pursuant to a valid statutory obligation, such as a valid tax demand, restitution will not lie because there is a legal basis for the defendant’s receipt.[2] Where there is a legally effective basis for the receipt of an enrichment by the defendant, this can usefully be called the ‘presence of basis’ bar. The bar should be treated as functioning as a denial of the unjust enrichment claim rather than a defence, so that the burden is placed on the claimant to prove that there was no lawful basis for the transfer once the bar has been pleaded by the defendant.[3] This is consistent with the analysis of Millett LJ in Tribe v Tribe[4] that the claimant bears the burden of proving that the enrichment has not been transferred by way of gift or an enforceable contract. This bar should apply where the defendant’s receipt of the enrichment can be considered to be legally effective in some way, in the sense that it has a legal consequence, as will occur, for example, where the transfer has discharged an existing obligation or creates a liability other than the liability to make restitution.
A legally effective basis for a transfer of an enrichment can be identified in a variety of different ways.
- [1] [1999] 2 AC 349, 408. See also Fairfield Sentry Ltd v Migani [2014] UKPC 9, [18] (Lord Sumption).
- [2] Deutsche Morgan Grenfell v IRC [2006] UKHL 49, [2007] 1 AC 558, [89] (Lord Scott).
- [3] See p 60, above, for the distinction between denials and defences. 4 [1996] Ch 107, 125.
- [4] 5 See RB Grantham and CEF Rickett, ‘On the Subsidiarity of Unjust Enrichment’ (2001) 117 LQR 273.
