This restitutionary claim was rejected by the House of

This segment will
discuss the development of the principle of unjust enrichment within the UK
legal system, the challenges faced by the courts in its application, the corrective measures taken to address the challenges and
the current position of the Law.

The principle of
unjust enrichment first appeared in English law under an action for indebitatus assumpsit (to have undertaken a
debt). However, it took over two centuries before it was formally
recognised by the House of Lords in Lipkin
Gorman (a firm) v Karpnale Ltd. Though legally recognised, the principles
as its concept was not instantly acceptable because it relates to only four forms actions, namely money had
and received for the defendant’s use ,money paid to the defendant, quantum
valebat – to recover the reasonable value of goods and quantum meruit – to recover
reasonable value of services ; and it contradicts the established old
common law principle of express contract (Oxford
University Press (2016) Equity, Trusts & Land Law (compiled for The Open
University), Oxford, Oxford University Press).  

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The principle’s
reliance on implied contract as means of assessing restitutionary claim constitute
a major impediment to its acceptance and application in the UK. It follows that
a claim will not suffice where there was an express contract and one of the
parties does not have the capacity to contract or would prevent the contract from being implied. The implied contract
approach by the principle of unjust enrichment in assessing restitutionary claim
was rejected by the House of Lords in Westdeutsche
Landesbank Girocentrale v Islington LBC. However, the Court of Appeal in Haugesund Kommune v Depfa ACS Bank, it
was held that though it was not possible to imply a contract due to lack of
contractual capacity, the claimant could sue the defendant on an implied
contract (see also Taylor v Bhail).

 It
was this rejection of the implied approach to restitutionary claim that helps
cement the position of the principle in English law. Lord Wright in Fibrosa Spolka Akcyjna v Fairbairn Lawson
Combe Barbour Ltd noted that ” it is
clear that any civilised system of law is bound to provide remedies for cases
of what has been called unjust enrichment or unjust benefits, that is to
prevent a man from retaining the money of or some benefit derived from another
which it is against conscience that he should keep. Such remedies in English
law are generically different from remedies in contract or tort, and are now
recognised to fall within a third category of the common law which has been
called quasi-contract of restitution”.

 

The
application of the principle has also been a major subject of controversy over
the years, The House of Lords
in Sempra Metals Ltd v Inland Revenue
Commission, while relying on the principle of unjust enrichment, allowed a
claim for compound interest on money
paid to an innocent defender under a mistake. The unanimous decision relies on
the principle of unjust enrichment, but the analysis varies. The majority
decision viewed the claim as commensurate to the value of the benefit received
while the minorities are of the view that the claim of compound interest should
only be successful where the claimant could establish that there are certain
gains accrued to the defendant.

Critics faults
this line of argument in the application of the principle because it makes the
law unclear, unpredictable and ambiguous. Also, there are situations where the
courts disagree or failed to apply the principles in cases where it should be
or have not categorically distinguished the difference between unjust
enrichment and equity (Blue Haven
Enterprise v Tully 2006 UKPC 17).

To make the
application of principle more clearer and less ambiguous, the courts established two functions of the principle of
unjust enrichment, namely the formulaic and the normative functions. Under the
formulaic function, a restitutionary relief may granted to the claimant if the
defendant has unjustly enriched himself/herself and such relief have been
granted in previous circumstances. The formative function is based on the
discretion of the court. The judge determines whether the enrichment claim was
unjust, based on the facts of the case without reference to previous similar
cases. 

This progressive
approach has now been developed by the courts to deal with the predictability
and ambiguity of the application of the principles.

In
modern application, establishing a claim in unjust enrichment requires the
claimant, who alleges that the defendant has enriched himself or herself at the
expense of the claimant, to proof the elements of unjust enrichment and thus
one of the grounds on restitutionary relief applies. The burden of proof no
move to the defendant who must rebuff the allegation in defence, either to state
that there is a legal basis for the receipt of the enrichment as there is no
legal basis for the enrichment or the defendant’s position has changed after
the receipt of the enrichment

It
is now easy to identify claims of unjust enrichment in court. The claimants are
required to plead reference to unjust enrichment principle for a successful
application. The category related to the claim must be identified as the
principle have different causes of action that should be identified with the
respective claim. The claim must also be consistent with the grounds that could
activate the restitutionary remedies. The claim must also identify the type of
wrongdoing that is alleged against the defendant, for example, where the claim
is founded on the vindication of property rights, ”it is necessary to identify the rights claimant seeks to vindicate and
sometimes to formulate the claim with some precision…” (Oxford
University Press (2016) Equity, Trusts & Land Law (compiled for The Open
University), Oxford, Oxford University Press).

The creation
of the law of unjust enrichment is one of the most noble legal principles
developed around the private law in the UK legal system. Though its development
and application were ambiguous, and it encounters strong criticisms over the years,
it now operates as a body of law with its own rules that are generally accepted
and no more a rejected concept. The application of the principle is consistent;
clearer and distinct from the law of obligation.

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