Unjust enrichment & restitution

CON.14 — Unjust Enrichment & Restitution

Restitution reverses a defendant's gain at the claimant's expense. It is not based on breach or a promise; it fills the gap where there is no enforceable contract.

The four-stage test (Banque Financière de la Cité v Parc (Battersea) [1999]; Benedetti v Sawiris [2013] UKSC 50)

1. Was the defendant enriched? (received money, services, goods).
2. Was it at the claimant's expense? (a direct transfer of value from C to D).
3. Was the enrichment unjust? — you must point to a recognised "unjust factor", not a general sense of unfairness.
4. Are there defences?

Unjust factors (must identify one)

• Mistake — payment under mistake of fact or law (Kleinwort Benson v Lincoln CC [1999] confirmed mistake of law counts).
• Failure of basis / consideration — the basis for the transfer failed. The orthodox rule still requires the failure to be total: if C got any part of what was bargained for, the claim normally fails. A developing exception allows a claim on a partial failure where the benefit is severable and apportionment is possible (e.g. money paid for distinct, separable items). Treat this as an emerging qualification, not a settled replacement of the total-failure rule.
• Duress, undue influence, free acceptance, necessity.

Key remedies / measures

• Quantum meruit — reasonable value of services where work done but no agreed price (Benedetti: the objective market value is the starting point, capped by what D actually valued/subjectively accepted).
• Quantum valebat — reasonable value of goods supplied.
• Where money paid, claim is for the sum received.

Defences

• Change of position (Lipkin Gorman (a firm) v Karpnale Ltd [1991]) — D in good faith changed position relying on the receipt, so it is inequitable to repay in full. Bad faith / wrongdoing defeats it.
• Estoppel, bona fide purchase, ministerial receipt, passing on (limited).

Common SQE1 traps

• It is a separate cause of action from contract and tort — don't analyse it as breach.
• A valid contract bars restitution: you cannot use unjust enrichment to get a better deal than (or to bypass) a subsisting contract.
• You must name a specific unjust factor — "it would be unfair" is not enough.
• Enrichment must be at C's expense — a benefit conferred via a third party usually fails this (no "leapfrogging").
• Benedetti point: D's subjective devaluation can reduce quantum below market rate.
• Mistake of law now counts (post-Kleinwort Benson) — old learning said otherwise.
• Failure of basis is still presumptively total — don't assume a partial failure grounds a claim unless the benefit is severable and apportionable.