(iv) Will the Courts Recognize Partial Failure of Basis?

There was some indication in the decision of the House of Lords in Westdeutsche Land- esbank Girozentrale v Islington LBC¹¹² of a greater willingness to accept partial failure of basis as a ground of restitution. As Lord Goff said:^[1]

There has long been a desire among restitution lawyers to escape from the unfortunate effects of the so-called rule that money is only recoverable at common law on the ground of failure of consideration where the failure is total, by reformulating the rule upon a more principled basis; and signs that this will in due course be done are appearing in judgments throughout the common law world.

Although it is likely that the Supreme Court^[2] will at some point recognize that partial failure of basis is a ground of restitution in its own right, we have not yet reached that position. Indeed, soon after delivering the opinion of the Privy Council in Goss v Chilcott Lord Goff sounded a note of caution in Stocznia when he said of the ground of total failure of basis:^[3]

This rule has been subject to considerable criticism in the past; but it has to be said that in a comparatively recent Report (Law Com. No. 121(1983) concerned with Pecuniary

Restitution on Breach of Contract) the Law Commission has declined to recommend a change in the rule, though it was there considering recovery by the innocent party rather than by the party in breach.

The House of Lords had the opportunity in that case to reject the requirement that the basis must fail totally, but it declined to do so. Consequently, although a very strong case can be made for the recognition of partial failure of basis as a general ground of restitution, that recognition is still some way off.^[4]

• [1] acknowledged ‘the lively academic debate’ as to whether the failure of basis had to be total, but the issue
• [2] was not fully argued and did not need to be determined in that case.
• [3] Stocznia Gdanska SAv Latvian Shipping Co [1998] 1 WLR 574, 590. See also Taylor v Motability FinanceLtd [2004] EWHC (Comm), [25] (Cooke J).
• [4] Total failure of basis was recognized in Marks and Spencer Plc v BNP Paribas Securities Services Trust Co(Jersey) Ltd [2013] EWHC 1279 (Ch), [42] (Morgan J) and Barnes v Eastenders Cash and Carry plc [2014]UKSC 26, [2015] AC 1, [114] (Lord Toulson).