enrichment Flashcards
Money
Is always regarded as an enrichment: BP v Hunt
recognised by maj of HL in Sempra Metals that a D in receipt of money may be enriched by opportunity to use it - negative enrichment relating to the savings from not having to borrow money elsewhere (Mance and Scott dissented - money is a wholly conceptual benefit)
Where money is transferred, the defendant will be enriched by the value of the money and by the defendant’s presumed use of the money, save where the defendant can rebut the presumption. The use value is calculated by asking how much interest the defendant would have been charged if he had borrowed £X for Y time.
services resulting in an end product
It is the value of the services themselves, not the end-product or subsequent profit made by the defendant, per Lord Clarke in Benedetti v Sawiris, following Cobbe v Yeoman’s Row Management Ltd. This is also supported by Lord Reed’s discussion of subjective over-valuation in Benedetti (redecoration of house which has not added any value - value is the services).
value of the services is the necessary costs incurred in doing the work + reasonable profit margin assessed by reference to relevant industry rates and practice
Cobbe v Yeoman’s Row Management Ltd
” Oral agreement to purchase some flats for development.
“ Claimant, believing property would be sold to them, successfully sought planning permission.
“ defendant withdrew from the agreement.
“ Claimant sought restitution for the value of his services.
“ HL rejected lower court’s view that the increase in land value was the measure of the enrichment. The enrichment was the service.
“ Analogy with locked cabinet believed to contain valuables. Claimant locksmith makes a key. Enrichment is value of services.
“ Virgo: the defendant can only be considered to be enriched to the extent that the claimant has caused the defendant to be benefitted.
pure services
BEATSON argues that pure services can’t be enirchments unless the defendant has been saved a necessary expense, this is because he interprets an enrichment as wealth, so that a D is only enriched when has received something which has exchange value. BURROWS and VIRGO both consider that this is an overly economic analysis. For BURROWS it is an “underinclusive notion of benefit”.
Services recognised as an enrichment in Wigan Athletic (CA)
release of obligation
is an enrichment, non money benefit
example is Exall v Patridge - C left cart on D’s land to be restored, landlord used common law powers to seize cart to secure payment, C discharged liability. C could sue D.
Menelaou - D received property without a charge on it when it was meant to have a charge. liability to repay, attaching to the property, had gone. this was an enrichment of D
forgoing a claim
e.g. Gibb v Maidstrone and Turnbrdige Wells - D enriched by fact that C had decided not to pursue claim they would otherwise have done
Chambers “Two Kinds of Enrrichment”
Argues there are two kinds of enrichments: value and rights.
restitution for property rights is restitution for a right. doesn’t require proof of value, value is irrelevant.
cf Birks, Smith and Weinrib who all argue that value is essential (otherwise things creep into law of UE that aren’t meant to be there like recovery of body parts)
Lodder “Enrichment in the Law of Unjust Enrichment and Restitution”
2 types of enrichment: factual (receipt of value) and legal (acquisition of rights or release of obligation)
Accepts Chambers, but argues that rights should include release of an obligation, UE is concerned with immediate enrichment rather than surviving enrichment, and rejects subjective devaluation.
enrichment encompasses both value and rights
Test for whether D has received an enrichment
Benedetti v Sawiris
1st. Identify the benefit
2. Consider subjective devaluation
3. Consider arguments to defeat subjective devaluation
Identifying the benefit
Clarke, Kerr and Wilson (Benedetti): starting point is the objective market value, which is the price which a reasonable person in the defendant’s place would have had to pay
Reed: ordinary market value is the price which would have been agreed in the market in the absence of some unusual characteristics of the purchaser (e.g. Sempra Metals - cost of borrowing an equivalent amount of money, assessed by reference to compound interest). This may be different from the objective value of the benefit, which is the value of the benefit to the reasonable person in the position of the defendant which would have been taken into account by the market (e.g. Sempra Metals - need to regard position of govt as borrower, able to borrow on public sector borrowing rate)
Neuberger: prima facie sum to be awarded is the market value of the benefit. this requires taking into account the charactersitics of one or both parties which would be known to and taken into account by the market when assessing the market value
negative enrichment
Craven-Ellis v Canons Ltd
Has the benefit been received
If not, then the D has not been objectively enriched. Planche v Colborn is not an obstacle to the principle that the D should only be considered to be enriched where the benefit has been received, because today it would be decided according to the law of contract.
cf BIRKS - services should be regarded as beneficial from the time that service commences, irrespective of receipt, on ground that D has had benefit of C’s time and labour
subjective devaluation
Clarke (Kerr and Wilson agreeing) in Benedetti recognised principle of subjective devaluation in order to protect the D’s autonomy. Burden on D to prove that he did not value the enrichment or that he valued it at less than the market price. Need some objective manifestation of D’s subjective views.
Neuberger gives no concluded view - in the great majority of cases Reed and Clarke approach will lead to the same result.
Lord Reed Benedetti approach to subjective devaluation
Rejects it - aim of achieving a just result by restoring to the claimant the monetary value of the services will be compromised if the services are valued on a basis which depends on idiosyncracies of one party, rather than one which is even handed between both. Valuation is necessarily an objective process.
It may be that subjective deval is not an apt description because reason to decline making award based on ordinary marketvalue is the importance of respecting D’s choice. might be more simple to deal with freedom to choose at stage of whether retention unjust but do not need to decide.
Goff and Jones: Reed’s argument that the law of UE is only concerned with economic value assumes its conclusion
Academics on subjective devalu
Lodder argues against it
Virgo says Reed’s approach of focusing on choice at retention being unjust stage “Changes the accepted understandinfg of most grounds of retsitution being claimant focused.” D’s circs usually only taken into account at defence stage so preferable to treat D as not enriched.
ways to defeat subjective devaluation
incontrovertible benefit, request, free acceptance
definition of incontrovertible benefit
Rural Municipality of Peel v Queen (SCC)
an unquestionable benefit which is demonstrably apparent an not subject to debate
Categories of incontrovertible benefit
money anticipation of necessary expenditure failure to return property benefit realised in money benefit realisable in money
IB: anticipation of necessary expenditure
expenditure necessary by operation of law e.g. Exall v Patridge
Factually necessary expenditure:
Virgo - in the ordinary course of events the defendant would have incurred the expenditure
Goff and Jones - the expense was one that the D would have borne if C had not relieved him of need to do so e.g. Craven-Ellis (D would have paid for services of another MD)
examples of IB: anticipation of necessary expenditure
Craven-Ellis (MD services)
Re Berkeley Applegate Investment Consultants (liquidation services)
Rowe v Vale of White Horse DC (supply of services to remove sewage)
Dissenting judgment in Wigan
IB: failure to return property
McDonald v Coys of Kensington (CA)
” Sale of car with personalised registration plate which wasn’t meant to be sold
“ McDonald refused to transfer the number plate when requested to do so
“ Coys settled with owner and then sought restitution from McDonald
“ McDonald sought to rely on subjective devaluation as the mark had no value to him, he had given the car to a third party.
“ Because he could have returned it without substantial difficulty or detriment, he must have considered retention to be valuable.
“ The law must recognise as a category of enrichment cases of readily returnable benefit
IB: benefit realised in money
D cannot subjectively devalue because the value of the benefit has been realised in money which is always an IB
o Greenwood v Bennett (CA) provides some support (car crashed, repaired, sold) and also shows that the market value of services can be realised by selling the end product of the services.
o Rover International Ltd v Cannon Film Sales Ltd (No 3) (CA) - as explained by Virgo, defendant had incontrovertibly benefitted since the value of the services provided by the claimant had been realised in money.
IB: benefit realisable in money
BIRKS: no, only realised benefits are IB.
BURROWS: yes, but only if reasonable certain that the D would realise the benefit (nb Mance LJ in McDonald v Coys of Kensington said this was too restrictive)
Goff and Jones: yes
Virgo: no, unnecessarily subverts the autonomy principle. Reject apart from when it is inevitable that the D will realise the benefit.
o Suggestion in McDonald that it might be enough if the benefit is realisable. Preferable for the court to order or assume a sale of readily realisable benefits at market value, whatever the defendant’s actual intentions (to avoid tactical stances).
free acceptance
where the D had an opportunity to reject services and failed to do so, knowing C expected to be paid, D can be said to have FA, which defeats subjective devalu because D is seen as exercising a voluntary choice.
BUT it has only been accepted in obiter - in Rowe v Vale of White Horse DC it was common ground that FA could establish enrichment but it wasnt made out on the facts, in Cressman v Coys of Kensington Mance LJ held that D’s enrichment could be established using FA but did not need to decide case on that basis
G&J latest ed states “there are signs that the Eng courts are now moving in the same direction” as the Aus, Canadian and NZ courts which do embrace free acceptance
elements of Free Acceptance
(1) opportunity to reject the benefit, e.g. Rowe v Vale of White Horse DC, Wigan Athletic
(2) D knew the benefit was not provided gratuitously e.g. Cressman v Coys of Kensington
(3) D failed to reject the benefit
Against Free Acceptance
BURROWS Free Acceptance and the Law of Restitution: no reason to regard a freely accepting D as being benefitted, could have freely accepted something neutral, so FA indicates nothing more than indifference and more is needed to establish enrichment (request)
GARNER The Role of Subjective Benefit in the Law of UE - said FA and Burrows’ request argument can’t deal with cases of a D who is willing to pay, but less than C wants, and priority of arranging payment. Says that it is only when a D has truly acknowledged receipt of a benefit and manifested a willingness to pay for that benefit as a present priority that he should be treated as enriched. this is about autonomy.
BEATSON rejects free acceptance as part of his more fundamental objection to regarding pure services as beneficial
Birks’ defence of FA
” Free acceptance is not intended to show that the defendant values the benefit, but is unconscientious conduct which debars the defendant from exercising his usual right to appeal to the subjective devaluation argument.
VIRGO is similar, sees FA as similar to estoppel
subjective revaluation
in Benedetti v Sawiris where Benedetti only entitled to 36m Euro even though Sawaris had purportedly valued his services at 75m, subjective revaluation not applicable.
Lord Clarke (Wilson and Kerr agreeing) thought the law should not recognise subjective reval because it is not necessary to protect the D's freedom of choice, although left open that it may be recognised in exceptional circs Lord Reed said that the amount Sawiris offered to pay was only relevant so far as it provided evidence of objective value Lord Neuberger said that even if subjective reval is available, it shouldnt be in a case like this. One reason is because it would be surprising if a C could obtain more by pursuing an UE claim than would likely receive under a contract
when to value benefit
BP v Hunt, followed by Benedetti v Sawiris - at the time it has been received, any subsequent change in value can be accounted for by the COP defence
but VIRGO suggests a more sophisticated approach where value the enrichment at the time the cause of action has crystallised, normally this will be the same, but for a FOC claim it will not be until the basis has failed
Relevance of contractual valuations
o Price agreed by the parties is likely to constitute significant evidence of both the market value of the benefit and also its objective value.
o Contract price is a ceiling to the valuation of the benefit: Taylor v Motability Finance Ltd (obiter): allowing the claimant to recover more than the contractual ceiling would be unjust since it would put the innocent party in a better position than he would have been in if the contract had been fulfilled.
o However sometimes recognised that the contract price should not be used to restrict the valuation, e.g. Rover International Ltd v Cannon Film Sales Ltd (No 3): contract was void ab initio (null and void, so how can it be relevant?)
o Benedeitti Lord Neuberger - in the absence of general market for a benefit (so no other evidence for valuation), the contractual price is at least good evidence of the market value.
inadequate performance
o will be taken into account and the value will decrease accordingly
o suggestion in Crown House Engineering Ltd v Amec Projects Ltd that the claimant’s acts or omissions in provision of services depreciating or eliminating the value of the services should be taken into account.
o unless there was free acceptance or IB.
o Lachhani v Destination Canada (UK) Ltd, EDRC Group Ltd v Brunel University - award should be reduced because the claimant’s work is worth less than it would be if adequate performance.
is part performance of a contract a benefit
part performance has some objective value and then D can subjectively devalue. Subjective deval defeated if D completed the work (adoption of benefit) or D prevented claimaint performing.
BURROWS suggests that incomplete performance should be rebuttably presumed to be an enrichment
THREE ENRICHMENT ISSUES rejects this flip of BOP - contract price is a ceiling to recovery. the contract is evidence of reduced market cost for D in completing and evidence of the market value of the work done
Sempra Metals
D in receipt of money may be enriched by opportunity to use it. negative enrichment relating to the savings from not having to borrow money elsewhere.
SCOTT and MANCE dissented = ability to use money is a wholly conceptual benefit.
calculate use value
ask how much interest the D would have been charged if he had borrowed X for Y time
J S Bloor
the building of a road by the claimant in circ where D contractually required to build it not IB because D had not been able to design to its own specs and negotiate costs
Edelman’s suggested approach to valuation
identify the benefit with reference to what the defendant subjectively desired, and then value the benefit objectively.
VIRGO - taking objective identification first is practical in terms of burden of proof, and for subjective deval to work the D must first have been shown to receive an objective benefit.
factually necessary expenditure IB
Goff and Jones: it is enough that the expense was one that the defendant would have borne if the claiamnt has not relieved him of the need to do so e.g. Craven Ellis
free acceptance examples
Leigh v Dickeson (had no choice but to accept the benefit so not liable to D for repair expenditure)
Falcke v Scottish Imperial - D unaware of the claimant’s payments, so could not be regarded as having chosen to accept benefit.
