(iii) Discharge of a Debt
Where the claimant discharges the defendant’s debt in circumstances of necessity, the claimant can obtain restitution from the defendant, with the ground of restitution being founded on the principle of necessity. This was recognized in Owen v Tate,[1] where Scarman LJ suggested that where there was some necessity for the claimant to assume an obligation, such as a guarantee of the defendant’s liability, and the claimant was required to pay money under the guarantee to discharge the defendant’s liability, the defendant would be required to make restitution to the claimant ‘if it is just and reasonable to do so’.[2] This dictum was applied in The Zuhal K and Selin,[3] where the claimant had entered into a guarantee of the defendant’s liability to a third party, since this was the only practicable way that it could secure the release of the defendant’s ship, which had been arrested by the owners of cargo. If the ship had not been released the consequent delay would have been very costly for the claimant. After the claimant had been compelled to pay on the guarantee it was able to recover the amount paid from the defendant. Even though the restitutionary claim succeeded, no ground of restitution was identified. Although it could have been concluded that the ground of restitution was founded on necessity, the case is better analysed as an example of legal compulsion, since the claimant had been compelled to pay money to the defendant’s creditor by virtue of the guarantee.[4] Even if legal compulsion had been relied on to secure restitution, there would still have been a role for the necessity principle in that the need for the claimant to release the ship would have defeated any argument that the claimant had entered into the guarantee voluntarily.[5]
There are other cases where the claimant’s conduct in discharging the defendant’s liability can be regarded as arising in circumstances of necessity, so that this could constitute a ground of restitution. For example, in Gebhardt v Saunders55 the claimant’s restitutionary claim succeeded where it had repaired a sewer, even though the obligation to repair was placed on the defendant. Again, the ground of restitution was not identified but the result is clearly consistent with the application of the principle of necessity.
- [1] [1976] QB 402, 409.
- [2] There is no reason why the court should have a discretion to award restitutionary relief where it isconsidered to be just and reasonable to do so. Such a discretion is not recognized in respect of any other claimsfounded on the reversal of the defendant’s unjust enrichment.
- [3] [1987] 1 Lloyd’s Rep 151. 5 See p 241, above.
- [4] 54 Which would have defeated the claim following the decision in Owen v Tate [1976] QB 402. See p 244,
- [5] above. 55 [1892] 2 QB 452.
