Unjustified Enrichment Flashcards
(39 cards)
What is unjustified enrichment?
he has obtained a benefit from his actings or expenditure, without there being a legal ground which would justify him in retaining that benefit, and it is in accordance with equity that he should account for that enrichment.
(Dollar Land Ltd v CIN Properties Ltd 1996)
What are the key requirements for UE?
● enrichment: ‘obtained a benefit’
● at another’s expense: ‘from [another’s] actings or expenditure’ ● unjustified: ‘without there being a legal ground which would justify him in retaining that benefit’ (as constituted by a particular ‘cause of action’ giving a claim) - list of recognised claims. ● equitable between the parties to reverse the enrichment: ‘in accordance with equity that he should account for that enrichment’
What makes enrichment unjustified?
KEY PRINCIPLE: Absence of Legal Ground for Retention
Lord Hope in Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd 1998 SC (HL) 90 at 98-99: ‘the remedy is available where the enrichment lacks a legal ground to justify the retention of the benefit. In such circumstances it is held to be unjust.’
What would constitute legal grounds for lawful retention of an ‘enrichment’?
● contract - contractual performances theoretically do not give legal ground for a claim in unjustified enrichment.
● gift or donation ● inheritance under a valid will ● satisfaction of court decree ● satisfaction of statutory payment demand
When does unjustified enrichment apply due to “absence of legal ground for retention”?
‘Failed’ contract situations where UE applies:
● no contract because no consensus in idem (Mathieson v Gee) ● contract void (e.g. invalid from lack of capacity) ● contract ‘frustrated’ ● illegality in contract or its performance means contract unenforceable
what is the Structure of Liability in Unjustified Enrichment according to Shilliday v Smith?
(1) Enrichment: “a benefit from the other’s actings or expenditure”
(2) At Another’s Expense: enrichment deprives another of a benefit (3) Unjustified: ● “unjustified” means “without there being a legal ground which would justify him in retaining that benefit” ● test depends on classification into ‘recognisable groups or categories’ to identify specific cause of action i.e. the requirements of an individual legal ‘claim’ explaining why “unjustified” in relevant fact situation (4) Remedies: choose “remedy or combination of remedies which will achieve … purpose of having that enrichment reversed”
What are the three different categories of ‘unjustified’
The individual categories of situation fall into three broader groups
- Lord Brodie in Pert v McCaffrey [2020] CSIH 5 distinguishes categories of “transfer” and “imposition”; “taking/interference” is the other in this scheme.
What are the ‘groups’ of categorised UE?
Transfer - conferral of property or money, or performance of services
Imposition - improvement of another’s property and payment of their debt
Taking/interference - use of another’s property, money or rights
Transfer: what are the main causes of action?
● condictio indebiti: recovery of benefit because it was undue
● condictio causa data causa non secuta: recovery of benefit because conferred for future purpose which failed to materialise
● condictio ob causam finitam: recovery of benefit because conferred on valid basis which has subsequently ceased to exist
● condictio ob turpem vel iniustam causam: recovery of benefit conferred for illegal or immoral purpose
● condictio sine causa: residual claim for benefits retained without legal basis, closely analogous to, but not fully matching, other nominate transfer claims: allows the court to recognize a cause of action for a new situation
What is the conduction indebiti?
Definition: recovery of payments (and other transfers):
● which were undue (explains why no legal basis for retention) and ● made in error (explains why undue transfer is not a gift)
Established by Morgan Guaranty Trust Co of New York v Lothian Regional Council,
What is the general test for the conduction indebiti and the relevant authority?
General Test for the Condictio Indebiti:
(1) deliberate conferral and receipt of a benefit (i.e. a transfer)
(2) the purpose of the conferral was to discharge a legally recognised duty (e.g. performance under a contract)
(example - paying someone back when you have forgotten you have already paid them back)
(3) the purpose of the conferral failed, because the benefit transferred was undue
(4) the reason why the conferral was made was an error by the transferor as to legal liability (a “liability error”)
Morgan Guaranty Trust Co of New York v Lothian Regional Council
What is condictio causa data causa non secuta?
Definition: recovery of payments (and other transfers):
● which were made for a future purpose (explains the basis for making the transfer) and ● the future purpose failed to materialise (explains why no legal basis for retention)
How does condictio causa data compare with condictio indebiti with the scope of claims?
● condictio indebiti:
scope relates to present purpose of purporting to discharge an obligation
● condictio causa data:
scope relates to some future purpose not involving discharge of any present obligation
What is the general test for the condictio causa data and the authority?
(1) deliberate conferral and receipt of benefit
(2) the reason for the conferral related to
(i) a future purpose outside contract or
(ii) the future purpose of completing performance of a contract which is subsequently frustrated before any counter-performance
(3) the future purpose failed to materialise, meaning the retention of the benefit is without a legal ground
(4) no valid defence exists
(5) the whole circumstances of the case must make it equitable (as between the parties) to redress the unjustified enrichment
Established by Shilliday v Smith
How does cause and motive intertwine in the CCDCNS?
● “causa” (i.e. the basis which fails) does not require express agreement but ‘the purpose which the person who makes the conferral seeks to achieve by the performance must be known and accepted as the basis of the performance by both parties’ (Evans-Jones, vol 1, para 4.10)
● defined in Grieve v Morrison as ‘mutually agreed understanding’ (per Lord Morison)
● ‘performances are recoverable if their cause fails [i.e. known and accepted purpose], but not if the motive of the person who performs is frustrated’ (Evans-Jones, vol 1, para 4.11)
- the other party needs to know the motive
Can CCDNCS be used in cohabitation cases?
Yes
Pert v McCaffrey [2020] CSIH 5
tatutory remedy not an ‘alternative’ but ‘additional to any common law remedy otherwise available’ (para 24, per LP Carloway)
- Therefore CCDCNS available in principle in cohabitation situations, alongside orders under Family Law (Scotland) Act 2006, s. 28
CCDCNS and ‘Advances’: What is the rule and authority for such examples?
Watson & Co v Shankland (1871)
● if money is advanced by one party to a mutual contract
[i.e. transfer by payment of an “advance”, distinct from contract price]
● on the condition and stipulation that something shall afterwards be paid or performed by the other party
[i.e. future purpose of subsequent performance/payment due under the contract]
I am giving you this money because you are going to deliver my products.
● and the latter party fails in performing his part of the contract
[i.e. failure of future purpose of making the “advance”]
● the former is entitled to repayment of his advance, on the ground of failure of consideration [i.e. causa, failure of the basis of the transfer]
What are the requirements for the frustration of contract preventing completion of performance?
(1) deliberate conferral and receipt of benefit
(2) the reason for the conferral related to
(i) a future purpose outside contract or
(ii) the future purpose of completing performance of a contract which is subsequently frustrated before any counter-performance
(3) the future purpose failed to materialise, meaning the retention of the benefit is without a legal ground
(4) no valid defence exists
(5) the whole circumstances of the case must make it equitable (as between the parties) to redress the unjustified enrichment
what is the exception for the application of the CCDCNS to performance under valid contracts?
payments made under a contract which is frustrated before any counter-performance
It has the effect of discharging any future obligations, it is not triggered by the two parties, it is when something out of their control makes it impossible to complete.
Authority:
Cantiere San Rocco v Clyde Shipbuilding Co 1923 SC (HL) 105
What is the frustration of a contract?
When unforeseen circumstances make performance:
● impossible
or
● illegal
or
● radically different from what was agreed
→ the contract’s future obligations are discharged
‘the termination of the contract by operation of law on the emergence of a fundamentally different situation’ (Lord Reid, Davis Contractors Ltd. v. Fareham UDC [1956] AC 696 at 723)
What can you use Cantiere San Rocco v Clyde Shipbuilding in terms of frustrating a contract?
● a contract is frustrated by any change of circumstances which makes a previously lawful contract become illegal
● outbreak of war makes contracts to trade with enemy illegal
● Cantiere San Rocco, S.A.
● a shipbuilding company based in Trieste, Italy, which in 1914 belonged to the Austro-Hungarian Empire.
● trade by UK with Austrian companies became illegal on the outbreak of First World War in August 1914
What happens when payment made under a contract in anticipation of a counterpart performance which never occurs because of material breach of contract?
QUESTION: whether a remedy of restitution is available under the law of unjustified enrichment.
ANSWER: restitution not available under principles of unjustified enrichment and the CCDCNS
Connelly v Simpson 1993 SC 391
Don’t have unjustified enrichment remedy where there has been a breach of contract.
But separate contractual restitutionary remedy might still be available:
Stork Technical Services (RBG) Ltd v Ross’s Executor 2015 S.L.T. 160
What is the authority for Rescinded contracts and CCDNCS?
Stork Technical Services (RBG) Ltd v Ross’s Executor (2015) discusses the availability of restitution under the law of contract versus unjustified enrichment, confirming that restitution in the case of rescinded contracts should be pursued under contract law rather than under unjustified enrichment principles.
What happens when there is a breach of contract and acceptance of benefit
If a party accepts a benefit after a material breach and before rescission, they may still claim restitution under unjustified enrichment, as shown in Graham v United Turkey Red (1922) for services contracts.
