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Home arrow Law arrow The principles of the law of restitution
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(i) Establishing Unjust Enrichment

One of the difficulties in establishing a restitutionary claim where the claimant has acted in respect of a contract which is anticipated or incomplete, relates to proving that the defendant had obtained an enrichment, as has previously been examined.[1] Typically, it will be possible to show that the defendant had been enriched, either because the defendant had received an objective benefit and was prevented from relying on the subjective devaluation principle because of request or free acceptance,[2] or, in those cases where an objective benefit has not been received, where the defendant was estopped from denying this.[3] In some cases the restitutionary claim will fail simply because it cannot be shown that the claimant had been enriched.[4] [5]

Once the question of the defendant’s enrichment has been established, it is then necessary to identify the relevant ground of restitution, this will typically be total failure of basis as recognized by the Supreme Court in Benedetti v Sawiris,217 but crucially, and somewhat confusingly, also in Yeoman’s Row Management Ltd v Cobbe.218 In that case the claimant had entered into an oral agreement in principle with the defendant to buy the defendant’s land. No written contract was made. The claimant successfully made an application for planning permission to develop the land. Negotiations broke down and the claimant sought restitution from the defendant in respect of his services in obtaining planning permission. Lord Scott, with whom the other Lordships agreed, recognized three claims, namely unjust enrichment, quantum meruit and total failure of basis. In fact, the claim was founded on unjust enrichment with the remedy being the reasonable value of the claimant’s services, but, crucially, the ground of restitution was total failure of basis, because the claimant’s work in obtaining the planning permission was conditional on the land being conveyed to the claimant. Since this condition failed it followed that there was a total failure of basis.

This ground ofrestitution can be used to explain the result in earlier cases, even though it was not specifically identified. For example, in William Lacey (Hounslow) Ltd v Davis219 the claimant submitted to the defendant an estimate for the work in rebuilding the defendant’s property and, although the parties did not enter into a binding contract, the defendant led the claimant to believe that a contract would be made. The defendant asked the claimant to incur expenditure for a purpose which did not relate to the performance of the anticipated contract, and the claimant agreed to do this in the belief that it would be recompensed from the profit which it would make under the contract once it was made. When no contract was made the claimant successfully brought a quantum meruit claim to recover the reasonable value of the services which had clearly benefited the defendant.[6] Although the ground of restitution was not clearly identified in the case, the trial judge appeared to suggest that it was mistake. But that is an unsatisfactory explanation. The claimant had not made any mistake as to any existing facts, rather it had made a misprediction as to what would happen in the future, and this is not a ground of restitution.[7] [8] Surely the preferable explanation for the success of the restitutionary claim was that the basis for the provision of the claimant’s services had failed totally, since the condition by reference to which the claimant’s expenditure was subject was that the claimant would be reimbursed under the contract and, when no contract was made, the basis for the work failed totally.

Similarly, in British Steel Corporation v Cleveland Bridge and Engineering Co Ltd222 the defendant wanted the claimant to supply steel nodes and, after obtaining an estimated price from the claimant, sent it a letter to the effect that the defendant intended to enter into a contract with the claimant on the defendant’s standard terms and requested that the claimant commence work on the nodes pending the issue of the contract. No such contract was ever made because the parties failed to agree terms. The claimant delivered to the defendant all but one of the steel nodes which the defendant wanted. The defendant refused to pay for them on the ground that they had been delivered late and out of sequence. The claimant then sued for the reasonable value of the nodes and succeeded. It was clear that the defendant had received a valuable benefit.[9] Even though the trial judge, Robert Goff J, did not identify a specific ground of restitution in this case, surely it was total failure of basis since the claimant had not received anything for the nodes it had supplied.

  • [1] See p 92, above.
  • [2] See, for example, William Lacey (Hounslow) Ltd v Davis [1957] 1 WLR 932; British Steel Corporation vCleveland Bridge and Engineering Co [1984] 1 All ER 504; and Tahar Benourad v Compass Group pic [2010]EWHC 1882 (QB), [106] (Beatson J).
  • [3] See, for example, Brewer Street Investments Ltd v Barclays Woollen Co Ltd [1954] 1 QB 428.
  • [4] See, for example, Jennings and Chapman Ltd v Woodman Matthews and Co [1952] 2 TLR 409. See alsoRegalian Properties plc v London Dockland Development Corporation [1995] 1 WLR 212, discussed at p 346,below.
  • [5] [2013] UKSC 50, [2014] AC 938, [86] (Lord Reed), [175] (Lord Neuberger). See also ValencinavLlupar
  • [6] As was recognized by Rattee J in Regalian Properties plc v London Dockland Development Corporation[1995] 1 WLR 212, 225.
  • [7] See p 162, above. 222 [1984] 1 All ER 504.
  • [8] 223 The fact that the nodes had been delivered out of sequence related to the question of valuation rather
  • [9] than whether or not the delivery of the nodes constituted a valuable benefit. See p 102, above.
 
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