(ii) The Obstacle of Phillips v Homfray

Care must be taken when analysing old cases which are consistent with restitutionary remedies being awarded for torts, both because a number of these cases are ambiguous as to whether the remedy awarded was intended to be compensatory or restitutionary, and also because it is sometimes unclear whether the underlying cause of action is tort or the reversal of the defendant’s unjust enrichment. In addition, there are some cases which appear to suggest that gain-based remedies cannot be available where the defendant has committed a tort. The most influential of these have been the cases which arose from the litigation in Phillips v Homfray. ⁰ The complex litigation in Phillips v Homfray, which lasted for over 20 years in the late nineteenth century, has been one of the major obstacles to the recognition of gain-based remedies for torts. In fact, careful analysis of the various decisions which made up this litigation shows that they do not prevent gain-based remedies being awarded for torts.

(1) The Course of the Litigation

In Phillips v Homfray the deceased had committed the tort of trespass by drawing coal from the claimant’s land and using passages under that land to transport this coal and also coal which had been mined from his own land. The Court of Appeal⁴¹ held that the claimant was entitled to recover the value of the coal which the deceased had mined from the claimant’s land and was also entitled to a remedy in respect of the use of the passages under the land for the transfer of the coal. The Court ordered that an inquiry should be held to ascertain the amount and value of coal which had been mined from the claimant’s land and what the cost for the use of the passages should be. The deceased died before this inquiry was held. As the law stood at the time, the deceased’s personal representatives could not be liable for any tort committed by the deceased,⁴² so the case returned to the Court of Appeal to determine whether the deceased’s personal representatives were entitled to have the inquiry discharged.⁴³ The Court of Appeal was only required to consider whether the deceased’s estate remained liable to the claimant in respect of the deceased’s use of the passages under the claimant’s land. This effectively turned on a

• 38 [1988] 1 WLR 1406. ³⁹ Ibid, 1419 (Nicholls LJ).
• 40 See WMC Gummow, ‘Unjust Enrichment, Restitution and Proprietary Remedies’ in P Finn (ed), Essays on Restitution (Sydney: The Law Book Co, 1990), 60-7. See also PBH Birks, ‘Civil Wrongs: A New World’ in PBH Birks, Butterworth Lectures 1990-1991 (London: Butterworths, 1992), 65-7; WJ Swadling, ‘The Myth of Phillips v. Homfray in GH Jones and WH Swadling (eds), The SearchforPrinciple (Oxford: Oxford University Press, 1999), 277.
• 41 Phillips v Homfray (1871) LR 6 Ch App R 770.
• 42 This bar is called actio personalis moritur cum persona. It was abolished by the Law Reform (Miscellaneous Provisions) Act 1934. ⁴³ Phillips v Homfray (1883) 24 Ch D 439.

question of alternative analysis, namely whether the claim was dependent on the tort of trespass, which would not have survived the deceased’s death, or whether it could be founded on the defendant’s unjust enrichment, an action which would have survived the death of the deceased. The court held that the action was founded on the tort of trespass and so it did not survive the death of the deceased. The court relied on two additional reasons for its decision that the claimant did not have a restitutionary claim which survived the deceased’s death.^[1]

• (a) The court first concluded that the deceased had not received a benefit by using the passages under the claimant’s land. The court assumed that the deceased would have benefited from the trespass only if he had acquired property or the proceeds of property from the claimant as a result of the trespass. It did not consider that the negative benefit, which arose from the fact that the deceased had saved money by not paying the claimant for the use of the passages, was a real benefit for these purposes.^[2] It followed that a restitutionary claim was unavailable because there was nothing for the deceased’s estate to disgorge to the claimant.
• (b) The court also held that the claimant could not waive the trespass, primarily because it was not possible to imply a contract that the deceased would pay for the use of the passages where the deceased had never intended to pay for such use.
• (2) Analysis of the Case

If this decision is taken at face value it appears to constitute a major restriction on the ability to award gain-based remedies for torts, both because of the restrictive interpretation of what constitutes an enrichment and because of the suggestion that restitutionary relief is only available where it is possible to imply a contract to pay the claimant for the use of his or her property. The conclusion that such a contract cannot be implied if the defendant never intended to pay for the use of the claimant’s property constitutes a fundamental obstacle to the success of restitutionary claims arising from the commission of a tort, simply because in most cases the defendant does not intend to pay for the unauthorized use of the claimant’s property, and hence the defendant’s conduct is characterized as wrongful. Careful analysis of the Court of Appeal’s decision, however, shows that it was wrongly decided for two reasons, such that it should not be interpreted as barring restitutionary claims founded on torts.

• (1) It is clear that if the claim was founded on tort it should have been barred by the actio personalis bar, since this bar related to the underlying cause of action. It is for this reason impossible to defend the assertion of the Court of Appeal that, if the deceased had obtained property or proceeds from the claimant as a result of the trespass, a restitutionary claim would lie against the estate. This assertion is indefensible because, even where the deceased had obtained a positive benefit from the tort, the underlying cause of action is still the tort and any claim on the tort must be barred by the actio personalis bar. Whether the benefit which the defendant obtained was positive or negative is totally irrelevant. The question is simply whether a tort could be established and, on the facts of the case, it was not possible to establish this. But it does not follow that all restitutionary claims founded on tort are barred, at least where the defendant has obtained a negative benefit. Phillips v Homfray turned on the application of a bar which was peculiar to certain tort claims and, anyway, that bar has since been abolished.
• (2) Even though the claimant could not rely on the commission of a tort to establish a restitutionary claim, it does not follow that the claimant could not bring any restitutionary claim, because he may have brought a claim founded on the defendant’s unjust enrichment. Although the Court of Appeal held that such a claim could not be established because it was not possible to imply a contract, such reasoning has since been rejected.^[3] Could the claimant have established that the deceased had been unjustly enriched at his expense? As regards the identification of an enrichment, the suggestion of the Court of Appeal that the saving of expenditure cannot constitute an enrichment is inconsistent with the modern approach to the definition of enrichment.^[4] If the court’s suggestion was correct it would mean that restitution would never lie for pure services or where the claimant had discharged the defendant’s debt by paying a third party. Surely the deceased had been incontrovertibly benefited by the saving of a factually necessary expense, since the only way of getting the coal out of the mine was by paying the claimant for the use of the passages under his land.^[5] Clearly this benefit had been obtained at the claimant’s expense and the relevant ground of restitution could have been that of ignorance, because the claimant was unaware that the defendant was trespassing under his land.⁴⁹ It therefore seems that the defendant had been unjustly enriched at the claimant’s expense.

But it is also necessary to consider whether the policy of the actio personalis bar should have been applicable to such a restitutionary action. It seems that this bar only applied to claims which were founded on tort and had no application to a claim founded on reversing the defendant’s unjust enrichment. This is supported by the final case in the Phillips v Homfray saga, which concerned whether the claimant could recover the value of the coal which the deceased had extracted from the claimant’s land.⁵⁰ The Court of Appeal accepted that, if this claim had been founded on the tort of trespass, it would have been barred by the actio personalis bar, but, since the action was characterized by the judges as an equitable action to recover the benefits which the defendant had received by wrongfully taking the claimant’s coal, the underlying cause of action was not tort. In fact, this aspect of the claim could be analysed as founded on the claimant’s continuing proprietary interest in the coal which had been taken without his knowledge,⁵¹ so the restitutionary claim was founded on the vindication of property rights rather than tort and so would not have been affected by the actio personalis bar.

(3) Conclusion: Phillips v Homfray is a Red Herring

The implication of this analysis is that the controversial decision in the Phillips v Homfray saga, namely the case which was decided in 1882, is wrongly decided, both because it was wrong to suggest that the claimant had not been enriched and because the claim was not necessarily founded on the commission of a tort by the deceased. Careful analysis of the series of cases which formed the Phillips v Homfray litigation suggest that there is nothing in any of the decisions which prevents the award of gain-based remedies for tort.

• [1] Ibid, 466 (Bowen and Cotton LJJ).
• [2] Cf Baggallay LJ, ibid, 471-2. This is consistent with the approach of the House of Lords in Attorney-General v Blake [2001] 1 AC 268. See p 427, above.
• [3] United Australia Ltd v Barclays Bank Ltd [1941] AC 1. 2 See Chapter 4.
• [4] 48 This was recognized by Baggallay LJ in (1883) 24 Ch D 439, 471. 49 See Chapter 8.
• [5] 50 Phillips v Homfray [1892] 1 Ch 465. 51 See p 572, below.