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Published online by Cambridge University Press: 10 October 2019
This article seeks to defend the law of unjust enrichment against the recent influential attacks of Robert Stevens (“The Unjust Enrichment Disaster” (2018) 134 LQR 574) and Lionel Smith (“Restitution: A New Start?” in Devonshire and Havelock, The Impact of Equity and Restitution in Commerce (2018), ch. 5). A central argument here put forward is that there is a law of unjust enrichment, embodying a cause of action in unjust enrichment, which unites what Stevens and Smith see as disparate categories. A linked but separate argument is that, within the central area of unjust enrichment, Stevens is incorrect to regard the defendant's acceptance of performance as being necessary to trigger restitution albeit that acceptance may be relevant in establishing that the defendant has been enriched. A further, and more specific, argument is that, with great respect, the overruling, as a matter of principle, of Sempra Metals Ltd. v IRC  UKHL 34,  1 A.C. 561, by the Supreme Court in Prudential Assurance Ltd. v HMRC  UKSC 39,  3 WLR 652, seems unfortunate and appears to have been influenced by Stevens's excessively narrow approach to the meaning of “at the expense of”.
Q.C., F.B.A., D.C.L., Professor of the Law of England in the University of Oxford and Fellow of All Souls College.
I would like to thank Charles Mitchell, Helen Scott, Stephen Smith, Lionel Smith and two anonymous reviewers for their helpful comments on earlier versions of this article.
1 The first edition of Goff, R. and Jones, G., The Law of Restitution, 1st ed. (London) was published in 1966Google Scholar. Under C. Mitchell, P. Mitchell and S. Watterson, the title of the eighth edition in 2011 was changed to The Law of Unjust Enrichment and the material on restitution for wrongs was excluded. The latest (ninth) edition was published in London in 2016.
2 Birks, P., An Introduction to the Law of Restitution, revised ed. (Oxford 1989)Google Scholar; The Law of Unjust Enrichment, 2nd ed. (Oxford 2005).
3 Lipkin Gorman v Karpnale Ltd.  2 A.C. 548.
4 See e.g. Hedley, S., “Unjust Enrichment as the Basis of Restitution – an Overworked Concept” (1985) 5 LS 56Google Scholar; “Unjust Enrichment”  C.L.J. 578; “Restitution: Contract's Twin?” in F. Rose (ed.), Failure of Contact (Oxford 1997), 247–74; Restitution: Its Division and Ordering (London 2001); A Critical Introduction to Restitution (London 2001); “Unjust Enrichment – a Middle Course?” (2002) 2 O.U.C.L.J. 181; “Implied Contract and Restitution”  C.L.J. 435; “Farewell to Unjustified Enrichment: A Common Law Response” (2016) 20 Edin.L.R. 326. For some of my replies, see e.g. Burrows, A., Understanding the Law of Obligations (Oxford 1998) 99–108Google Scholar; The Law of Restitution, 3rd ed. (Oxford 2011), 34.
5 Jaffey, P., The Nature and Scope of Restitution (Oxford 2000)Google Scholar; Private Law and Property Claims (Oxford 2007). For criticism, see Burrows, Law of Restitution, p. 33.
6 Watts, P., “Restitution – a Property Principle and a Services Principle”  R.L.R. 49Google Scholar; “‘Unjust Enrichment’– the Potion that Induces Well-meaning Sloppiness of Thought” (2016) 69 C.L.P. 289. The latter words are those of Scrutton L.J. in Holt v Markham  1 K.B. 504, 513, who was referring to the history of the action for money had and received and, in particular, Lord Mansfield's approach which may be seen as the basis for the modern law of unjust enrichment.
7 Formerly of the High Court of Australia. See e.g. his judgment in Roxborough v Rothmans of Pall Mall Australia Ltd. (2001) 208 C.L.R. 516. For my response, see , Burrows, “The Australian Law of Restitution: Has the High Court Lost Its Way?” in Bant, E. and Harding, M. (eds.), Exploring Private Law (Cambridge 2010), ch. 3Google Scholar.
9 Smith, L., “Restitution: A New Start?” in Devonshire, P. and Havelock, R. (eds.), The Impact of Equity and Restitution in Commerce (Oxford 2018), ch. 5Google Scholar.
10 There has also been an interesting attack on the unity of unjustified enrichment in civil law by Jansen, N., “Farewell to Unjustified Enrichment” (2016) 20 Edin.L.R. 123CrossRefGoogle Scholar. For a reply to that article, see MacQueen, H., “The Sophistication of Unjustified Enrichment: A Response to Nils Jansen” (2016) 20 Edin.L.R. 312CrossRefGoogle Scholar.
11 Burrows, Law of Restitution, ch. 17.
12 Woolwich Equitable Building Society v IRC  A.C. 70.
13 Lipkin Gorman  2 A.C. 548.
14 Stevens, “Disaster”, pp. 577–78, 581–82; Smith, “A New Start?”, p. 98: “I now think that when explaining why the defendant is liable, we must always consider, and can never ignore, the defendant's role in the events that generate liability.”
15 Sempra Metals Ltd. v IRC  UKHL 34,  1 A.C. 561.
16 Prudential Assurance Ltd. v HMRC  UKSC 39,  3 W.L.R. 652.
17 There was a revised paperback edition published in 1989.
18 In co-teaching with Stevens on the Oxford BCL, he has often used this terminology.
19 For an in-depth examination of this, see Burrows, “‘At the Expense of the Claimant’: A Fresh Look”  R.L.R. 167. For similar reasons I think it was also a mistake for Birks to include the idea of “interceptive subtraction”: see Birks, An Introduction, pp. 133–39.
20 It may be that what we are seeing in relation to unjust enrichment is the almost inevitable cycle that occurs with general theories. A general theory, which seeks to explain large areas, initially makes huge strides forward before it comes under attack as being too wide-ranging. So if one looks, e.g., at the German law of unjustified enrichment, one sees in the early twentieth century the development of a general theory of unjustified enrichment. Subsequently in the 1950s the very influential work of Wilburg and von Caemmerer cut back on that general theory by arguing that the law was better understood as confined to four specific categories which were seen as loosely linked together by the idea of unjustified enrichment: performance, infringement of rights, discharge of another's liability, improvement of another's property. But in Germany, almost inevitably, the pressure is on to expand those four categories. They are a good solid base but reasoning outwards from them is almost inevitable. In particular, one can helpfully think of three not four categories: performance, infringement of rights, and enrichment by neither performance nor infringement of rights. That last category would sweep up e.g. compulsory discharge of another's debt and mistaken improvements of land but would extend to other cases as well.
21 Smith, “A New Start?”, p. 112.
24 “[A cause of action is] every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court”: Read v Brown (1888) 22 Q.B.D. 128, 131, per Lord Esher. See also Letang v Cooper  1 Q.B. 232, 242–43. While a cause of action isolates particular facts, it is the legal consequence of those facts that matters.
25 E.g. contributory negligence is not a defence to the tort of deceit (Standard Chartered Bank v Pakistan National Shipping Corp. (No 2)  UKHL 43,  1 A.C. 959) or the tort of trespass to the person (Pritchard v Co-operative Group Ltd.  EWCA Civ 329,  Q.B. 320). Smith himself refers to “justification” being a defence to a few torts, such as the tort of inducing breach of contract, but not most torts.
26 Henderson J. accepted that change of position does not apply to a “Woolwich claim” for restitution from a public authority: Test Claimants in the FII Group Litigation v HMRC (No 2)  EWHC 4302 (Ch),  S.T.C. 1471, at –. For another example, see Skandinaviska Enskilda Banken AB (Publ) v Conway  UKPC 36 (in the context of a liquidator's claim for restitution from a preferred creditor, it was held that the preferred creditor could not invoke a change of position defence because this would undermine the statutory regime dealing with voidable preferences).
27 Smith, “A New Start?”, p. 93.
28 Investment Trust Companies v HMRC  UKSC 29,  2 W.L.R 1200, at –. See also Lord Reed's similar formulation in relation to the duty of care in tort in Robinson v Chief Constable of West Yorkshire  UKSC 11,  A.C. 736, at –: it is noteworthy that, of course, no-one would suggest that this clarification casts doubt on the existence of the tort of negligence as a cause of action.
29 Burrows, Law of Restitution, pp. 26–27.
30 The classic example of the dangers of rejecting incremental development is in relation to the tort of negligence where Anns v Merton LBC  A.C. 728 – with its approach of setting out a principled prima facie liability which could then be cut-back for policy reasons – was subsequently rejected for having pushed the law too far forward and away from existing precedent.
31 TFL Management Services Ltd. v Lloyds Bank plc.  EWCA Civ 1415,  1 W.L.R. 2006. In this case, A had gone to court to try to establish that X owed A money. In fact the legal proceedings established that X owed the money to B. The question was whether A had a claim for restitution in the law of unjust enrichment against B for enriching B by the expense of those legal proceedings. The Court of Appeal refused to strike out the claim. But, as made clear by the Supreme Court in Investment Trust Companies  UKSC 29,  2 W.L.R. 1200, at –, the claim should have been struck out because the benefit was an incidental benefit.
32 Investment Trust Companies  UKSC 29,  2 W.L.R. 1200.
33 Smith, “A New Start?”, p. 91. See also Stevens, “Disaster”, pp. 576–77.
34 Birks, Unjust Enrichment.
35 Yet another way of expressing my argument is as follows. Unjust enrichment is concerned with all gain-based claims (claims to restitution) other than those which are excluded because they rest on other well-established causes of action (e.g. restitution for wrongs).
36 It is an interesting question whether the exclusion of restitution for wrongs (including breach of a contract to make restitution) is principled or pragmatic. Say e.g. in Attorney-General v Blake  1 A.C. 268 the royalties were received by Blake more than six years after the breach of contract. Could the Crown have successfully argued that the limitation period should run from when the ill-gotten gains were first received by Blake, rather than from the date of the breach of contract – on the basis that Blake's enrichment was essential to an unjust enrichment cause of action?
37 This can also explain why delivery up of a chattel which one owns is not regarded as restitution of an unjust enrichment, i.e. it is a remedy for the tort of conversion. But, in any event, the vindication of pre-existing proprietary rights differs from unjust enrichment because, in contrast to unjust enrichment, it does not create a new right to restitution.
38 That there is an underlying normative principle against unjust enrichment may be traced back to Roman law times (the second century AD): see e.g. Pomponius, Digest 12.6.14, “According to the law of nature, it is equitable that no person be enriched to the detriment of another”; and Digest 50.17.206, “According to the law of nature, it is equitable that no person shall be wrongly enriched to the detriment of another”. In the seventeenth century, Grotius in his Introduction to Roman-Dutch Law, at 3.30.3, wrote: “equity does not permit that one person should be enriched at another's expense.”
39 Contrast J. Edelman and E. Bant, Unjust Enrichment, 2nd ed. (Oxford), ch. 13 who argue that Birks's policy-based restitution should not be viewed as part of the law of unjust enrichment because the policy reason for restitution is independent of considerations between the parties.
40 Mitchell et al., The Law of Unjust Enrichment, 9th ed. See further Mitchell, C., “Other Reasons for Restitution” in Bant, E., Barker, K. and Degeling, S. (eds.), Unjust Enrichment and Restitution Handbook, (Cheltenham 2020), ch. 20Google Scholar. See also Smith, S., “Unjust Enrichment: Nearer to Tort than Contract” in Chambers, R., Mitchell, C. and Penner, J. (eds.), Philosophical Foundations of the Law of Unjust Enrichment (Oxford 2009), pp. 181–208CrossRefGoogle Scholar.
41 See above text to notes 11–13 above.
42 In particular he has a separate criticism of Deutsche Morgan Grenfell v IRC  UKHL 49,  1 A.C. 558 and International Energy Group v Zurich Insurance  UKSC 33,  A.C. 509 for infringing the rule – which he sees as a rigid rule without exceptions – that one cannot have restitution of a benefit that was legally owed (under a valid contractual or statutory obligation) by the claimant to the defendant. My view is that there can be exceptions to that rule and that Deutsche Morgan is a justified exception because the very unlawfulness in question was the non-provision of an option for group relief which the claimant would have exercised had it been available.
43 Stevens, “Disaster”, p. 581.
45 E.g. Weinrib, E., “The Normative Structure of Unjust Enrichment” in Rickett, C. and Grantham, R. (eds.), Structure and Justification in Private Law (Oxford 2008), 21Google Scholar; “Correctively Unjust Enrichment” in Chambers et al., Philosophical Foundations, pp. 81, 86–93.
46 Burrows, “At the Expense of the Claimant”. One may similarly talk of a “direct transfer of value from C to D”.
47 Kelly v Solari (1841) 11 L.J. Ex. 10.
48 Stevens, “Disaster”, pp. 579–80. See above text to note 44.
49 There was some criticism of the language of “subjective devaluation” in Benedetti v Sawiris  UKSC 50,  A.C. 938 but that did not cast doubt on the essential point, underlying Birks's terminology, that one needs to respect the freedom of choice of the defendant or, put another way, one needs to ensure that the objective benefit is a benefit to this particular defendant.
50 This is insisted on by Stevens as essential in understanding what is meant by “performance”: see Stevens, “Disaster”, p. 581. In order for the performance here to be “for D”, Stevens would presumably have to say that the payor's performance is for the person with those bank account details. But that would seem to undermine the reason for saying that the performance must be “for” D. In reality the mistake means that the performance is “for” X not D.
51 Hence the idea, accepted in the recent case law, that “free acceptance” is a test of benefit (see note 53 below). That a defendant can easily “subjectively devalue” services is best captured in the well-known statement by Pollock C.B. in Taylor v Laird (1856) 25 L.J. Ex. 329, 332: “One cleans another's shoes; what can the other do but put them on?”
52 Goff and Jones, The Law of Restitution, 1st ed., pp. 30–31; Birks, An Introduction, p. 104; Birks, P., “In Defence of Free Acceptance” in Burrows, A. (ed.), Essays on the Law of Restitution (Oxford 1991), 105, 144–45Google Scholar. Birks also initially saw “free acceptance” as constituting a separate unjust factor.
53 Cressman v Coys of Kensington (Sales) Ltd.  EWCA Civ 47,  1 W.L.R. 2775; Chief Constable of the Greater Manchester Police v Wigan Athletic A.F.C. Ltd.  EWCA Civ 1449,  1 W.L.R. 1580, and Benedetti v Sawiris  EWCA Civ 1427 (reversed without dealing with this point by the Supreme Court in Benedetti  UKSC 50,  A.C. 938). See also C. Mitchell, P. Mitchell and S. Watterson, Goff and Jones on the Law of Unjust Enrichment, 9th ed. (2016), paras. 4-45 to 4-50.
54 See similarly e.g. Weinrib, E., “The Structure of Unjustness” (2012) 92 B.U.L. Rev. 1067Google Scholar. As Weinrib makes clear, at p. 1072, his acceptance condition “has nothing to do with establishing the enrichment; [instead, acceptance] makes the unjustness of the [payee's] retention of the benefit correlative to the unjustness of the [payor's] gratuitous but non-donative transfer”. For criticism of Weinrib's emphasis on acceptance, including his “deeming” of an acceptance’ to deal with incontrovertible benefits, see e.g. D. Klimchuk, “The Normative Foundations of Unjust Enrichment” in Chambers et al., Philosophical Foundations, pp. 81, 86–93.
55 If one takes Stephen Smith's view – see e.g. Rights, Wrongs, and Injustices: The Structure of Remedial Law (forthcoming, OUP) – that conduct by the defendant is necessary to establish a substantive duty owed by the defendant, one might say that the defendant has no (substantive) duty to the claimant to make restitution but is merely subject to a liability, and the claimant has the power to obtain, a court order against the defendant. In other words, it would appear that, normatively, Smith would regard there as being no requirement for conduct of the defendant because one is not trying to explain a (substantive) duty owed by the defendant to the claimant but merely a liability.
56 Greenwood v Bennett  Q.B. 195. For discussion see Burrows, Law of Restitution, pp. 237–39.
57 See now s. 6(1) of the Torts (Interference with Goods) Act 1977.
59 Stevens, “Disaster”, pp. 583–84.
62 See note 26 above.
63 The judicial formulations of the defence stress that it is not open to a defendant who has changed its position in bad faith: see e.g. Lipkin Gorman  2 A.C. 548, 580.
65 Investment Trust Companies  UKSC 29,  2 W.L.R. 1200.
66 Prudential Assurance Ltd.  UKSC 39,  3 W.L.R. 652.
67 Where there is a contract between X and C, under which C is required to carry out services for the benefit of D in return for payment by X, it is X, not C, who is directly conferring the benefit on D: see MacDonald Dickens & Macklin v Costello  EWCA Civ 930,  3 W.L.R. 1341; Lumbers v W Cook Builders Pty Ltd.  HCA 27, (2008) 232 C.L.R. 635. An important policy behind this is that the law on unjust enrichment ought not to undermine the risks, including the risk of insolvency, which have been undertaken in the contract between C and X. See Burrows, Law of Restitution, pp. 74–75; Burrows, A., A Restatement of the English Law of Unjust Enrichment (Oxford 2012), 52–54Google Scholar.
68 An incidental benefit is one that is a secondary consequence from the claimant's actions. E.g., A heats A's flat and the rising heat, heats B's flat; A drains her land and also drains B's land; A destroys his stamp which enhances the value of B's stamp; A goes to court to try to establish that X owes A money but in fact it is established that X owes B money. It is incorrect to think that the key to understanding an incidental benefit is whether A is acting in self-interest because in almost all cases of restitution of unjust enrichment the claimant was acting in self-interest. It is true that in three of the above hypothetical examples A was acting in self-interest but the reason for denying restitution is that the benefit conferred was a secondary consequence of A's (self-interested) actions. In the stamp example, A was not acting in self-interest but contrary to his own interests.
69 Burrows, “At the Expense of the Claimant”. See also A. Burrows, “Unjust Enrichment and Restitution” in The Oxford Handbook of New Private Law (forthcoming, OUP). For reference to a concept of “directness”, see e.g. Tettenborn, A., Law of Restitution in England and Ireland, 3rd ed. (London 2002), 30–31Google Scholar; Dawson, J.P., Unjust Enrichment: A Comparative Analysis (Boston 1951), 120–27Google Scholar.
70 Sempra Metals Ltd.  UKHL 34,  1 A.C. 561. The question as to whether Prudential was correct to overrule Sempra Metals was left open for Australian law (while pointing out some of the issues that would need to be considered) by Justice Edelman in Northern Territory v Griffiths  HCA 7, at .
71 Stevens, “Disaster”, p. 597. Stevens asks what the use value transferred is on day one. But what is transferred is the continuing use value (the continuing opportunity to use) which increases according to the period of use in question. One day's use is likely to be minimal. One year's use is likely to be significant.
72 A few days after the judgment was handed down, the electronic version of para. 71 of the judgment on the Supreme Court website was amended to read: “This analysis has a number of questionable features (discussed in Stevens, R., “The Unjust Enrichment Disaster” (2018) 134 L.Q.R.Google Scholar (October issue, forthcoming)), which can be illustrated by an example” (emphasis added). But that amendment does not appear in the electronic version of the judgment now on the Supreme Court website, nor has it made it through to the official reports.
73 Prudential Assurance Ltd.  UKSC 39,  3 W.L.R. 652, at –. As was made clear, at , nothing said in the Supreme Court casts doubt on the obiter dicta in Sempra Metals supporting the availability of compensatory damages (as opposed to restitution) for (compound) interest. For an excellent case-note on Prudential, see Wilmot-Smith, F., “A Prudent Decision” (2019) 135 L.Q.R. 195Google Scholar.
74 Kleinwort Benson Ltd. v Lincoln City Council  2 A.C. 349.
75 It should also be noted that: (1) there was no express reference by the Supreme Court to the 1966 Practice Statement  1 W.L.R. 1234 (albeit that the Supreme Court's judgment refers to reasons that would meet the vague threshold for the highest court overruling itself laid down in that Practice Statement); (2) the panel of five was not enlarged as is the usual convention if the highest court is being asked to overrule itself. As regards (1), see also Wilmot-Smith, “A Prudent Decision”, pp. 199–200.
76 I should make clear that I was one of the counsel acting on behalf of HMRC.
77 It is important to appreciate that in Sempra Metals itself, there was no possibility of a claim for (simple) interest under s. 35A of the Senior Courts Act 1981 because that section requires there to have been a claim for “a debt or damages” to which the interest can be added. The restitutionary award of compound interest sought was for the tax payment being premature so that the interest sought was itself the principal sum/debt. In that sense, there was no clash between the award of compound interest and s. 35A. For discussion, see Burrows, Law of Restitution, pp. 24–25.
78 Sempra Metals Ltd.  UKHL 34,  1 A.C. 561, at .
79 For similar criticism, see C. Mitchell, “End of the Road for the Overpaid Tax Litigation?” (2019) Supreme Court Year Book 1, 16–17. Moreover, one has to recognise that there is now a significant lacuna in our law on interest. This is because if a mistaken payment is returned before any proceedings have been commenced for restitution there is no right even to simple interest under the Senior Courts Act 1981, s. 35A. So if C mistakenly pays D £50,000 and this is discovered after a year and D, without C commencing any legal action, pays back £50,000 to C, C has no legal entitlement to one year's interest, simple or compound, whether at common law or under statute. Cf. the judgment of the Supreme Court in Prudential Assurance Ltd.  UKSC 39,  3 W.L.R. 652, at .
80 Note that if title had not passed and C is given specific restitution (or compensatory damages for the value of the car) in the tort of conversion, C would presumably also be entitled to compensatory damages for the loss of use of the car for that year.
81 This is not to deny that there may have been other good reasons as set out by the Supreme Court (see the text to note 73 above) – such as the policy behind statutes or the desire not to undermine public finances – that did justify overruling Sempra Metals.
82 This was referred to in the case as the category (c) interest; and it was the argument of principle set out in this paragraph, and directed to the category (c) interest, that was put forward to the Supreme Court by HMRC in the Prudential case. This argument of principle has no bearing on the award of interest in Sempra Metals.
83 Let us assume, to continue with the above example of the £1,000 tax payment, that up to the time of the repayment, or offsetting against lawful tax, of the £1,000 tax payment, the value of the opportunity to use that tax payment – the interest (including compound interest) – amounts to £200. Applying Sempra Metals, C would be entitled as restitution of an unjust enrichment to £200. But C would not be entitled to further interest on the £200 because that further interest does not constitute the conferral (or transfer) of an opportunity to use the £1,000 tax payment. It is simply a gain from not paying back the £200.
84 It is precisely because the “at the expense of” requirement is not satisfied that no-one would seriously suggest that there is a claim by a creditor for restitution of unjust enrichment to remove a gain that a debtor has made by not paying its contractual debt on time (even if there were an unjust factor such as that the creditor has mistakenly failed to enforce the debt on time).
85 For a full treatment, see, e.g., Burrows, Law of Restitution, Parts 1–3.
86 Cf. Stevens, “Disaster”, pp. 577–78; Wilmot-Smith, F., “Should the Payee Pay?” (2017) 37 O.J.L.S. 844Google Scholar (denying that there is any convincing reason for requiring restitution of a mistaken payment but one might say that his arguments fail to give due weight to the combination of the payor's impaired consent and the payee's enrichment at the payor's expense).
87 Birks, An Introduction, ch. IX.
88 See note 26 above.
89 See e.g. Burrows, Law of Restitution, ch. 17.
90 See above text to note 68.
91 See Burrows, Law of Restitution, ch. 16 (but note that that chapter arguably confused matters by starting with two-party hypothetical conferral cases and two-party cases where D was a tortfeasor).
92 Lipkin Gorman  2 A.C. 548. That was a decision at common law. The equivalent in equity may be said to be Ministry of Health v Simpson (Re Diplock)  A.C. 521.
93 See Burrows, Law of Restitution, ch. 8.
94 In Investment Trust Companies v HMRC  UKSC 29,  A.C. 275, Lord Reed set out various three-party situations which might be classed as exceptions to the “direct conferral” general rule. These included agency and tracing but also, and most difficult of all, “co-ordinated transactions” which he relied on to explain the subrogation cases of Banque Financiere de la Cite v Parc (Battersea) Ltd.  A.C. 221 and Meneloau v Bank of Cyprus UK Ltd.  UKSC 66,  A.C. 176.
95 Or by a “bright-line” rule that there can never be restitution where the benefit was legally owed (under a valid contractual or statutory obligation) by the claimant to the defendant. See note 42 above.
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