Oxford University Comparative Law Forum
Unjust Factors or Restitution of Transfers Sine
(2008) Oxford U Comparative L Forum 1 at ouclf.iuscomp.org | How to cite this article
Table of contents
Kleinwort Benson v Lincoln City Council1 is sometimes said to
support the proposition that English law does, or should, allow
restitution in every case where there is no valid legally recognised
reason for the transfer.2
Such legally recognised reasons are called legal grounds. That
particular method of structuring the law of unjust, or unjustified,
enrichment is typical of civilian systems, in particular the German
system. There is an apparent alternative in the mixed systems -
Scotland and South Africa - here recovery is arranged to a much greater
degree around the traditional Roman condictiones - but in fact absence
of legal ground plays a role here also.3 The aim of this paper is to examine
whether English law should, or is following a Civilian route in
developing its law of unjust enrichment. This is not in fact a new
question, but there are still good reasons for examining it.
The first is the need to be clear on the effect of mistake.
Kleinwort Benson had entered into a number of interest rate swap
agreements. These were fully completed. They were then declared to be
void because the swaps were ultra vires the local authorities.4 The bank
claimed that they had been mistaken as to the law relating to the
validity of the contracts, under which they had paid the local
authority, despite the fact that the payments had come earlier than the
House of Lords decision as to the contracts' nullity. If the bank had
not been mistaken, the case would be authority for restitution for
nullity alone. If it had been, relief was properly based on mistake.
The bank was actually mistaken,5 although some commentators have denied
Secondly, we accept the existence of natural obligations.7 Natural
obligations arise in cases of agreements where the reason for nullity
does not protect the defendant, nor indicates a disapproval of the
subject matter of the agreement. They bar relief for mistake of law.
However, their recognition might be thought to support a legal grounds
analysis, especially when combined with a belief that the result in Kleinwort
Benson v Lincoln City Council was correct.8 If that case cannot be
explained in terms of mistake, and we recognise a type of valid but
unenforceable obligation as barring relief, the conclusion may be that
the presence of a natural obligation bars relief and the absence of
one, along with other legal grounds, allows it.
Thirdly, the question arose in the recent decision of Deutsche
Morgan Grenfell v IRC,9
although the House of Lords refused to make any definitive ruling on
the issue whether English law accepts an absence of basis approach
generally. That decision involved a decision by the bank to pay Advance
Corporation Tax, believing that they could not make a group income
election, which would have delayed the point at which tax was due. In
fact the rule that they could not was contrary to EU law, and
overturned in Metallgesellschaft v IRC.10 The House of Lords
decided that the bank had made a mistake and could recover interim
interest in a claim for restitution. They also decided that the Court
of Appeal was wrong to suggest that mistake and relief for nullity of a
tax demand could not co-exist. Birks, recently under pressure from
comparative arguments, came over to believe that a legal grounds
analysis, such as is found in Germany, is required.11 Not all have done so;
Krebs has not, nor has Edelman.12 Lord Goff rejected the view in Woolwich
BS v IRC.13
Goymour and Baloch are more supportive.14 The question whether English law
does, or should, adopt the more Civilian approach is still live
therefore, and indeed Lord Walker expressed a desire to see further
This paper is a response to that call, which has already been
answered by a number of commentators. It is divided into three main
sections. The first provides arguments against those comparatists who
argue that the English law on mistake is too broad, and only mistakes
as to purpose should count. The second reviews the introduction into
English law of the idea of absence of consideration. Questions arise as
to what will count as a legal ground. We see that uncertainty as to
what will count as a basis will defeat the shift, as it may yet do in
Canada. We need a complete and comprehensive list of valid bases for
payment. We also need to be able to distinguish when one basis for
payment operates, and when another operates, and related to that
question what will count as invalidity. The third section draws on
comparative material from Scotland and South Africa to demonstrate that
the Birksian scheme fails in that Birks misapplied the concepts of
transfer and causa.
(1) Distinguishing Mistakes
Meier and Zimmermann argue that English law fails to distinguish
adequately between mistakes which should and should not ground relief.
We set out their argument that legal grounds analysis is the only way
to do so. Secondly we establish that recent English authority holds to
the requirement of a mistake, and thirdly we argue that Meier and
Zimmermann's argument is flawed and there are good reasons to support
the current causal mistake model. We saw that one reason to look at the
applicability of legal grounds analysis is the need to be clear on the
effect of mistake; this section aims to fulfil that discrete purpose.
(A) The Argument to Distinguish Mistakes
There can of course be a need for restitution for non-liability
However, Meier and Zimmermann argue that English law now fails to
distinguish between relevant and irrelevant mistakes.17 The reliance on the
idea of mistake may strike some as surprising. A legal grounds analysis
formally depends on the absence of a reason supporting the payment or
transfer. However, the legal ground behind the property transfer can be
identified either subjectively or objectively. Properly understood the
legal grounds analysis depends on intention as much as the "unjust
factors" approach - which legal ground did the claimant intend to
create, or discharge?18
That is the subjective view of legal grounds, and is the standard
German method of identifying them.19 Where the claimant's purpose,
discharge of the debt, fails, recovery is available. There are,
however, a limited number of purposes. These are causa solvendi,
obligandi, donandi and ob rem. These are
respectively - to discharge an obligation, create an obligation, give,
or induce action in another.20 The objective view suggests that
there either is or is not a ground, irrespective of the parties'
intention. Scots institutional writers seem to have taken that view.21 Their
view was that the knowledge of the lack of obligation to make the
transfer makes it a gift. There are hints that the House of Lords in Deutsche
Morgan Grenfell v IRC thought the issue was objective. Lord
Hoffmann remarked that whether there was a valid causa was a matter of
Yet this has severe problems. Absence of intention to donate is
consistent with full knowledge of the facts; it does not follow for
instance from knowledge that there is no obligation that there is an
intention to make a gift.
English law has developed to allow all mistakes to ground a prima
facie cause of action, provided they caused the payment to be made.23 Meier
and Zimmermann suggest that this is too broad.24 A causal mistake test
could lead to a flood of claims.25 Meier and Zimmermann suggest for
instance that it would be unreasonable to allow the claimant relief
where he has merely mistaken his tax liability, or discovered that the
recipient of the money is an enemy of a relative of his.26 However, where he
meant to give £100 but actually gave £1000 relief would be
reasonable. They therefore suggest a distinction between mistakes in
forming the intention and executing it. Only mistakes as to the purpose
of the claimant in making the payment affect the legal ground. The
mistake must be purpose oriented;27 it must affect the purpose that the
party had in mind before making the gift or payment; that purpose must
fail. Meier and Zimmermann suggest that this is in keeping with the old
requirement of a liability mistake, because liability mistakes too were
Meier and Zimmermann point to Bell v Lever Bros29 as
demonstrating that English law does not take its unjust factors
It is clear that courts do not give relief for a merely causative
mistake where there is a contract; a fundamental mistake is required.
This needs to be explained as an exception to the general rule,
according to Birks, and represents a big concession to the legal
No legal system, however, allows relief where the claimant was obliged
It proves little to recognise this, and the English position is
explicable in terms of the consciously chosen allocation of risk by the
There is a final argument that the comparatists have deployed. Meier
argues that the rejection of Birks' spent mistake doctrine is hard to
reconcile with a concentration on mistake. Krebs appears to agree.33 The
spent mistake doctrine is that if a party makes a mistake as to the
validity of a contract, but the transaction is completed, the harm that
might have occurred as a result of the mistake is avoided. Each party
has received what he bargained for. Relief ought not to be available.34 The
importance of this is that in Kleinwort Benson v Lincoln City
Council itself the swap was closed - that is all the payments had
been made. If Birks is right, no relief should have been available in
mistake. The argument appears to come to the following proposition. The
payor would have paid the money anyway had he realised that he would
get everything that he bargained for despite his mistake. The mistake
was therefore not a causal factor.35 In fact this argument fails. The
claimant may have lost on the deal; had he realised this he may not
have paid. The true counterfactual is whether the payor would have paid
had he realised the transaction's invalidity, not had he realised the
transaction would be fully executed anyway, which would have been a
misprediction not a mistake.36 The spent mistake doctrine should
not be accepted; it runs counter to the nature of the cause of action.
(B) Recent English Authority on Mistake
Meier and Zimmermann argue that Kleinwort Benson v Lincoln City
Council supports their analysis that English law revolves around
absence of legal ground. Because the decision cannot be explained in
terms of the bank's being mistaken, the result focuses attention on the
fact that the payment was not due, which compels recovery. The purpose
of the payment failed. It was paid to discharge a liability, but did
not do so. Their argument that the bank was not mistaken focuses on the
question whether we should accept a declaratory theory of law. They
argue we should not; at the time the payments were made the law really
The payor bank could not therefore have been mistaken. Birks agreed,
arguing that mistakes cannot be retrospective. There was according to
him no impairment of the decision to pay.38 In fact more recently he suggested
that the House of Lords in Kleinwort Benson could not be
understood as eliminating absence of basis. "They had no intention of
saying that the explanation must be mistake of law."39 It is hard to agree
with this sentiment. The majority had to conclude there was a mistake,
essential to the cause of action, in order to invoke section 32(1)(c)
Limitation Act 1980. The House of Lords in Deutsche Morgan Grenfell
v IRC reaffirmed that traditional position on limitation,40
although Lord Hoffmann dissented on this point, arguing that the
mistake need not be an essential of the cause of action.41 Furthermore, Lord
Hope in Kleinwort Benson v Lincoln City Council explicitly
required a mistake to be a counterfactual cause of the disputed
payment, as a sine qua non of liability to return the money.42
I have argued in the past that Kleinwort Benson was mistaken. They
had all the information available to them, and interpreted it
incorrectly. It was possible to show at the time of the payment that
they were so mistaken.43
The possibility of retrospective mistakes has now been reaffirmed by
the House in Deutsche Morgan Grenfell v IRC.44 Lord Walker expressly
rejected the settled understanding of the law defence,45 and characterised the
mistake there as retrospective. The judgment which contradicted the
belief under which the payments were made was only handed down later.
There are, however, problems with the decision in Deutsche
Morgan Grenfell v IRC. Lord Hope said it was a mistake "that group
relief could not be claimed which led inevitably to the liability to
Stevens has correctly pointed out that the money was due,47
something about which Lord Hope seemed unconcerned. Williams has
rejected this; she argues that a second mistake as to the lawfulness of
the ACT was generated.48
The fact of the unlawfulness of the bar on election meant the
particular demand for the ACT was in fact unlawful, a position Lord
Hoffmann at least seems to have taken as well. The Court of Appeal even
seems to have thought the whole regime illegal. Stevens' views are
preferable. Firstly Williams' views sit uneasily with the fact that
only interest, not the principal, was repayable. Secondly, the
overturning of the rule that no election could be made makes it
possible to say there was a mistake. It does not make it possible to
re-characterise history by retrospectively creating an election that
never was. Lord Hoffmann did precisely that. He said "The mistake was
about whether DMG was liable for ACT. The election provisions were
purely machinery, which DMG would undoubtedly have used, by which it
could enforce its right to exemption from liability."49 As Lord Scott
accepted, only if the EU law decision rendered the ACT unlawful would
it be recoverable.50
The tax was not invalid. The only possible action was one for
compensation for breach of Community law.51
That action for compensation for breach of EC law was time barred.
Only by finding the mistake, and declaring it operative, was the
majority able to justify relief. This meant that the question whether
English law recognises a legal grounds system did not come up for
decision, and Lord Walker clearly did not want to be tied down to
moving English law in that direction.52 Lord Hoffmann also said, "At any
rate for the moment ... unlike civilian systems, English law has no
general principle that to retain money paid without any legal basis
(such as debt, gift, compromise, etc) is unjust enrichment."53 English
law therefore formally retains its unjust factors approach, although
the House's decision cannot be taken as wholly authoritative, given its
error as to the effectiveness of the mistake.
(C) The Rejection of the Distinction between
This section aims to undermine Meier and Zimmermann's argument,
which they have sometimes expressed individually,54 by showing that there
are good reasons to treat all mistakes the same. There is no
metaphysical distinction between mistakes that affect the formation of
the intention to transfer the wealth and those that do not. Their
suggestion to the contrary is one of the major flaws in their argument
that we must look to the purpose to be achieved, and to the formation
of the intention.55
Take the example of a gift. Is the distinction drawn here stable? It is
impossible to tell whether or not the donor's mistake is only in
forming the intention to give. It is uncertain what 'intention to give'
means. Is it his intention to give at all, his intention to give this
present, or to this person, or in this place, or some other intention?
Even if such intentions could be distinguished, any mistake which
counts as a sine qua non condition of the gift affects the donor's
decision in some way; usually we say restitutionary liability in this
area protects personal autonomy.56 This explains the causal mistake
test in restitution. Virgo and others have talked of the justification
being the vitiation of the parties' intention.57 By this we mean that
the data used to arrive at the claimant's belief were wrong, or that
the heuristic processes that he used to process the data were flawed.
The party's intention is vitiated irrespective of the particular
subject matter of the mistake. Despite some confusing subsequent dicta,
Neuberger J accepted this in Nurdin & Peacock Ltd v DB Ramsden
& Co. He said, "It is hard to see a good reason, either in
principle or in practice, for holding that a person should be entitled
to recover a payment made under a mistake if that mistake relates to
the question of his liability, but that he should not be entitled to
recover the payment if the mistake was of some other nature."58 This is
quite right; the logic of the claim extends to all mistakes; the effect
on the mind or decision making process is the same. The process of
looking for mistakes that affect the formation of the intention begins
to look like the old English law question of what a fundamental mistake
was, a requirement attacked as incurably vague.59 The ideas of a
mistake as to the legal nature of the transaction and motive are
(2) Absence of Consideration
Deutsche Morgan Grenfell v IRC provides no clear authority
for the Civilian approach, and there are good reasons why all causal
mistakes should ground restitution. We might well leave it here;
however, Professor Birks was converted to the legal grounds analysis,
which he argued provided the best explanation for English law. English
law in this area is complicated by the idea of "absence of
consideration", which became entangled with failure of consideration.
The first part of this section examines the infancy of absence of
consideration, and how it equates to legal grounds analysis. The legal
grounds approach is said to have greater explanatory power, and while
that may occasionally be right, we show in the second part that it is
not always so. Nonetheless, the Civilian system has been described as
clearer and more elegant.60
In reply, the English approach has been described as more intuitive.61 Neither
is a sufficient argument in itself to adopt or reject the Civilian
approach, and it should be born in mind that only rarely will there be
a different result under the new approach.
(A) The Genesis of Absence of Consideration
Absence of consideration has caused much confusion. It is derived
from Westdeutsche Landesbank Girozentrale v Islington LBC.62 Given
the lack of comparative input in that case, it seems likely that it was
intended to be an additional unjust factor. Westdeutsche was a
swaps case. Some of the swaps were open swaps, where there were
payments still to be made; however, one was closed, where there were no
more payments to be made. The bank was the losing party in the closed
swap and sought to recover. Hobhouse J said
In my judgment, the correct analysis is that any
payments made under a contract which is void ab initio, in the way that
an ultra vires contract is void, are not contractual payments at all.
They are payments in which the legal property in the money passes to
the recipient, but in equity the property in the money remains with the
payer... Neither mistake nor the contractual principle of failure of
consideration are the basis for the right of recovery... I consider the
correct analysis is absence of consideration...63
Absence of consideration grounds relief, whatever the reason for the
avoidance of the contract, be it that the parties were mistaken, or
that the contract was ultra vires. Hobhouse J held that in both the
closed and open swaps the cause of action was absence of consideration,
not failure of consideration.64 Guinness Mahon v Kensington v
another swaps case, also necessitates relief for invalidity. The bank
was the losing party and claimed relief on the grounds of failure of
consideration. It succeeded. Morritt LJ said that the consideration had
failed totally because the bank had bargained for a legally enforceable
right to the money.66
The Court believed to be bound by the Court of Appeal in Westdeutsche
Landesbank Girozentrale v Islington LBC, which had likewise held
that restitution was justified by the lack of a binding contract and of
an enforceable right to the money.67 This is a different way of saying
that money was paid to discharge an obligation which did not exist - a
failed payment causa solvendi. The Court of Appeal in Westdeutsche
did this on the basis of the authority of a number of cases under the
Grant of Life Annuities Act 1777, which Swadling argues they
The open swap in Westdeutsche could be explained on the basis of
failure of the counter-performance, and that was an alternative the
Court of Appeal relied on.69 Absence of consideration was never
affirmed in the House of Lords in Westdeutsche Landesbank
Girozentrale v Islington LBC,70 as the council involved in the
closed swap did not appeal.71 Guinness Mahon remains,
though, authority for relief in closed swaps cases under failure of
In his last book, Birks argued that there are now three
possibilities, absence and failure of basis and mistake, which all cut
across each other.72
The cases have left them as alternative causes of action. Absence of
consideration places importance on the sufficiency of nullity, whereas
it is merely a necessary condition for the other two bases for relief,
which also require either failure of reciprocation or mistake. All
other things being equal, absence of basis renders proof of mistake
superfluous. Even on a subjective view, mistake is assumed. On that
view, the decision in Deutsche Morgan Grenfell v IRC73 that
mistake of law claims can co-exist with the Woolwich BS v IRC
claim should be wrong. There is no reason to claim mistake. In fact at
the time there was. Were the claim a mistake claim it would be possible
to take advantage of section 32(1)(c) Limitation Act 1980. This is now
no longer possible.74
In future therefore there is no advantage in positing the additional
mistake. Absence of consideration also renders failure of
counter-performance superfluous. Absence of consideration for Birks was
not a policy based factor, nor was it based on deficiency of consent.75 It
could not be a third type of factor because it was a necessary part of
the group based on deficiencies of consent.
Birks' original argument was that the absence of consideration view
fell foul of the Chandler v Webster76 fallacy.77 It
should consequently be rejected. The true position he argued was that
wherever there was a failure of performance, restitution follows. Chandler
v Webster was one of the coronation cases. The contract was
frustrated when the king's illness forced the cancellation of the
coronation ceremony; the claimant was unable to obtain the return of
any of his prepayment because frustration did not invalidate the
contract. It was initially valid. To bar all relief in such
circumstances and allow loss to lie where it falls seems unacceptable.
What matters is performance, not liability, nor validity. That is the
classic formulation of failure of consideration in Fibrosa Spolka
Ackcjyna v Fairbairn Lawson.78 That case involved the frustration
of a contract to supply machinery to a Polish buyer in Gdansk, which
was frustrated by the supervening illegality of trading with the enemy
after the German occupation of Poland. Viscount Simon said79
In English law, an enforceable contract may be formed
by the exchange of a promise for a promise, or by the exchange of a
promise for an act... and thus, in the law relating to formation of
contract, the promise to do a thing may often be the consideration, but
when one is considering the law of failure of consideration... it is,
generally speaking, not the promise which is referred to as the
consideration, but the performance of the promise.
In other words, if performance is not forthcoming, restitution
should follow. However, if performance is forthcoming, restitution
ought not to be forthcoming on the basis of failure of consideration,
invalidity notwithstanding.80 The closed swaps should therefore
not attract relief, at least not for failure of consideration. In Guinness
Mahon, however, Morritt LJ distinguished Fibrosa as a case
where the contract was originally valid.81 There are at this point two distinct
issues. Firstly, is failure of consideration to be understood as
failure of actual performance? Secondly, if we see failure of
consideration as failure of the validity of the obligation, how do we
avoid a return to Chandler v Webster? In the particular context
of frustration the answer is that the Law Reform (Frustrated Contracts)
Act 1943 fills the field. However, the model lives on in termination
for breach cases.
On the first question, Meier claims that there is no authority that
the defendant must be unwilling to perform for the claimant in order to
obtain relief from his performance in failure of consideration where
the contract is void.82
The classic case on readiness and willingness to perform is Thomas
The contract was valid. Mellor J said that the buyer could not
repudiate and recover his payment where the seller stood ready and
willing to perform.84
This rule is not so much a matter of unjust enrichment law as of
contract law. The buyer was claiming that the contract was
unenforceable; the court thought otherwise, and because the seller had
not chosen to terminate the contract, it remained on foot. Had the
vendor terminated, accepting what amounted to a repudiatory breach,
relief would have been available. Meier argues that if recovery is
denied where the defendant is ready and willing to perform a void
contract, the contract is immune to being unwound just as if it were an
The party who performs an unenforceable contract cannot recover his
performance, yet the party who has not yet performed escapes liability;
the result depends on which party performs and when.86 This strikes Meier as
This argument only works, however, if the equivalence between
failure of consideration and mistake is accepted. We saw in the
previous section that Meier's arguments for distinguishing mistakes
were unsatisfactory; a qualified rule that all causal mistakes ground
relief is better. Unenforceable and natural obligations have the same
effect in that executed agreements cannot be unwound for mistake as to
liability to pay, but executory agreements are not enforced. That
overlap, which also exists in Scotland,88 has caused little difficulty.
Natural and unenforceable obligations bar mistake claims, but not
failure of consideration. Void obligations are susceptible to both.
Even if a readiness and willingness exception is allowed in void
obligations cases, there is a difference. The claimant under a void
obligation can resort to mistake, but not under an unenforceable
obligation. Illegal obligations may be susceptible to mistake,89 but not
in the normal course of events failure of consideration.90 While locus
poenitentiae, which allows withdrawal from unexecuted illegal
transactions and the recovery of assets transferred, can be seen as a
type of failure of consideration, there is no "ready and willing"
To allow it would give legal weight to illegality. Meier is therefore
wrong to say that unenforceable and void contracts have the same effect.
Birks dealt with the second question in his last book, while
acknowledging that Chandler v Webster remains incorrect. Fibrosa
Spolka Ackcjyna fell into error, he now argued, in saying that only
void or voidable contracts invalidated the obligation sufficiently to
allow restitution; terminable contracts should do so, too.92 In
saying this, he criticised Hobhouse J in Westdeutsche Landesbank
Girozentrale for insisting that failure of consideration was only
available within contract.93 These terminability cases were for
Birks examples of cases where there is no basis for the payment. Below
[section (3)(C)(ii)] we will see that comparative analysis points up
serious issues with Birks' reformulation.
(B) The (Dis)Advantages of Legal Grounds Analysis
One argument that comparatists raise in order to show that a shift
to an absence of basis approach is required is that it has greater
explanatory power, and is more economical. This may seem
counter-intuitive. The layman would hardly understand that he could get
money back because there was no legal basis; he would, though,
understand getting money back because he didn't owe it. The unjust
factors frequently replicate the factors that render the basis a
nullity. They are therefore superfluous. Birks' example was Mason v
New South Wales.94
An invalid NSW statute allowed the state to levy dues on trade across
the border into Victoria. In raising the taxes, the NSW Government
threatened to detain the claimant's property. He paid, and recovered
the money for duress. This, Birks argued, was unnecessary. The
statute's unconstitutionality sufficed, as it subsequently did in Woolwich
However, McKendrick has argued that a liability mistake is needed to
justify restitution after the nullity of a contract for mistake.96 This
might seem redundant; first a fundamental mistake is raised to avoid
the contract, and secondly a liability mistake is raised to justify
restitution - nullity suffices to explain recovery.
Birks acknowledged that there could be different rules for gifts and
for contracts. Gifts remained on his view invalidated by causative
mistake. However, he was then forced to say that the legal ground was
invalidated ab initio by the mistake. That invalidity led to relief.97 In
other words, the mistake invalidates the gift. The invalidity justifies
restitution. In contract cases, the mistake invalidates the legal
ground much less frequently than in gifts. However, in the gift case,
at least where there is no pre-existing promise to make the gift, the
utility of a two stage test is at best questionable. There, the unjust
factors approach is more economical. Similarly, in cases of rescission
of contracts for misrepresentation it seems less than economical to say
as Millett LJ did in Portman BS v Hamlyn Taylor Neck that the
obligation to make restitution stems from invalidity and not from the
Birks attempted a list of possible bases justifying retention, but
the experience of Canadian law sounds a very important cautionary note;
it is in fact on the verge of chaos. It calls legal grounds juristic
Whether it took the idea seriously at first is doubtful. It now does. Garland
v Consumer Gas100
and Pacific National Investments v Victoria (no 2)101
clearly purport to shift Canadian law to a more civilian approach. In Pacific
National Investments v Victoria (no 2) the company was trying to
recover the costs of its improvements to land on the basis of an ultra
vires commitment by the City to rezone it, although in fact it seems no
such commitment was ever made - the company took a risk. Binnie J
argued that the claimant must show there is no juristic reason. He
allowed recovery, and commented that this new approach required the
claimant to prove a negative, although bizarrely positive proof of
mistake seems to remain relevant; he also said had there been no
mistake the position might have been different.102 This implies an
objective approach, but the main problem is that a negative proposition
is almost impossible to prove. Furthermore, the list of juristic
reasons which the Supreme Court of Canada provides in these two cases
is somewhat eclectic and haphazard, and clearly does not cover the
field completely. Iaccobucci J said in Garland, a case
concerned with restitution of interest on late payments demanded
illegally, that reasonable expectations and public policy may lead to
the recognition of new juristic reasons.103 Defining reasonableness will be
difficult, and fails to provide the certainty required. Birks also
acknowledged his scheme was incomplete. Given one of his original
concerns was that English law would not draw up a list quickly enough,
this is a matter of concern.104 The failure to draw up a list of
valid bases is as essential for Birks' subjective approach as an
objective approach. The subjective approach cannot focus entirely on
party intention; if it did, it would become an unjust factors approach.
Helen Scott has identified another problem with the legal grounds
approach. In Kelly v Solari,105 there is no putative contract
under which the parties perform. She argues that while there are some
cases where the legal grounds approach has greater explanatory power it
breaks down in other cases.106 The claimant's payment in Kelly
v Solari was extra-contractual, and it is here that the problems
The failure of the claimant's purpose cannot be directly inferred from
the invalidity of a contract. This seems doubtful. The failure of the
purpose can be inferred from the fact that the only conceivable
relationship between the insurance company and Mrs Solari, was a
contractual one. The contract, having lapsed, did not compel the
payment. It is hardly plausible that the insurance company intended a
gift to Mrs Solari. Scott's point about the absence of a ready
inference of the claimant's purpose rendering the legal grounds
analysis no better than the alternative is valid, but it is unclear
that there is no ready inference in the range of cases she suggests.
The real, and related, problem lies in the case where the claimant
pays money, knowing it is not owed in order to prevent the cut off of
some supplies by the defendant. Scott suggests the only sensible
explanation for recovery is compulsion,108 and proof of compulsion within the
condictio indebiti is required for relief in South African law.109
Compulsion is also important for another reason. There is a defence in
German law that the payor knew that the payment was not due.110 This
is typical of Civilian systems. The defence cannot logically apply
where the legal ground is void because of mistake. It can only apply
where the ground is void for some other reason, but not as a defence in
cases of physical duress.111 The subjective view of legal
grounds has difficulty here - your purpose in closing the dispute was
after all fulfilled. In the end a fiction is needed. The purpose of the
payment is not to prevent the threatened outcome, but to discharge the
debt that does not exist.
The defence of knowledge also provides a difference of approach
between the systems in cases of doubt. English law denies relief;
German law allows it. There is therefore a minute broadening of
liability. Lord Hope insisted on a sine qua non mistake and said, "A
state of doubt is different from that of mistake. A person who pays
when in doubt takes the risk that he may be wrong... whether the issue
is one of fact or of law."112 The defence of knowledge brings in
many of the same questions as the unjust factor of mistake under a
There are clear examples therefore of the unjust factors approach
intruding into a legal grounds analysis. It is not obviously
significantly more elegant than unjust factors.
(3) Drawbacks of the Birksian Scheme
English law has a ready comparator nearby; Scots law is based on a
Civilian tradition, although it has had considerable infusions of
English influence. Lord Walker made an interesting comment in Deutsche
Morgan Grenfell v IRC. He said, referring to the Birksian scheme,
"The recognition of "no basis" as a single unifying principle would
preserve... the purity of the principle on which unjust enrichment is
founded, without in any way removing... the need for careful analysis
of the content of particular "unjust factors""114 This was in the
context of a plea for English law to align itself more closely with
Lord Hope has commented that the basis of unjust enrichment in both
English and Scots law is to prevent the defendant's retention of assets
without a basis,116
a principle Lord Walker referred to approvingly.
This section takes up the challenge Lord Walker implicitly laid
down, of examining the Birksian scheme from the perspective of Scots
and South African law, to which the scheme has similarities. We see
that there are in turn three major difficulties, relating to Birks'
treatment of indirect or non-participatory enrichment, mistake claims
and terminability of contracts for breach. The mixed systems'
unjustified enrichment law has traditionally been arranged around the
condictiones. These actions include the condictio indebiti and the
condictio causa data causa non secuta, or condictio cd for short. Each
represents a different mode by which there could be no basis for the
payment to be retained. They are mutually exclusive grounds of recovery,117
something Lord Walker seems not have fully appreciated in talking of
unjust factors, which are not.
Birks' legal grounds approach relies on a subjective determination
of what the ground was. What purpose did the claimant intend? The
importance of nullity of a contract is that the claimant's purpose was
to discharge a debt that never was. Birks commented, "If the purpose is
discharge of an obligation and there is indeed a valid obligation which
is discharged the enrichment has an explanatory basis. If there turns
out to be no valid obligation discharged, the enrichment is
This cannot be understood as an objective approach; it is a subjective
approach based on the failure of a purpose to discharge an obligation,
the causa solvendi. Birks' subsequent comment, "voluntary
enrichments are those transferred without obligation but in order to
achieve some outcome" refers to a different possibility and a different
purpose, the causa ob rem. Baloch suggests that Birks retains
unjust factors as a means of deciding whether the basis had failed.119 He
argues that both absence of basis and reasons for invalidity are
essential to a system of unjust enrichment.120 He goes on that on
the new Birksian view, "the justification, and therefore controlling
factor, for the restitutionary award is the particular invalidity
If so, the scheme in fact approximates the mixed systems' condictio
structure, including, given the reference to "the particular invalidity
involved", their mutual exclusivity. Birks' own preference, despite his
separation of obligatory and voluntary enrichments, seemed to be for a
single action, and the removal of reasons for invalidity to other
areas, and other books.122
That may be impossible. Elements of the unjust factors, as we have
seen, force their way to the surface even on an absence of basis
approach. The Scots and South African approach may prevent this. They
are said to be multi-actional; the different condictiones are different
types of claim, rooted in the absence of basis approach.123 We have seen that
despite coming under the condictio indebiti in South African law,
positive proof of compulsion is needed. A multi-actional system,
allowing for easier disuniformity may therefore be preferable.
Ironically, perhaps, the major structural question in both mixed
jurisdictions is, however, whether a general unjust enrichment action
should be recognised,124
and at the same time whether the explicit error requirements, which
exist under the condictio indebiti in both Scots and South African law125
ought to be removed.
(A) Non-Participatory Enrichment
Non-participatory enrichment comes in several different varieties.
The defendant may be enriched incidentally, and possibly unavoidably,
as a result of actions aimed either to benefit the claimant or a third
party. The defendant may receive the property via an intermediary, or
the claim may be that the benefit was interceptively subtracted. Baloch
has suggested that the greater unity of the new Birksian scheme over
the German system is an advantage.126 This section demonstrates that the
Birksian scheme fails - precisely because of its greater unity. It
treats unlike cases alike. This criticism can indeed also be directed
at the Canadian formulation, which again has a much greater unity than
(i) Incidental Benefits
Hedley has been startled by Birks' treatment of an example used by
the Lord President in Edinburgh Tramway v Courtenay.127 That
was of the scenario where a man lit a fire and claimed his upstairs
neighbour was unjustly enriched by having his flat heated also. It is
not a gift, which is Birks' explanation for the lack of liability.128 For
there to be a gift, which would count as a valid transfer of
enrichment, there would have to be a transfer. But there is no
transfer. A transfer is a transfer of assets with a purpose. Even
taking the view that the reduction in the upstairs neighbour's heating
bills is enrichment at the expense of the claimant, there is no
putative purpose to fail. It is not a conscious transfer. Edelman's
example is different, involving the claimant's work on his land raising
the value of the neighbour's. He also suggests there is no juristic
reason for the enrichment,129 so prima facie relief should be
available. Yet again it is not a conscious purposive transfer. For that
reason the case could not be brought into a condictio claim. Those
cases sometimes called "ignorance" cases in English law cannot
therefore be condictio claims.130 There is a possible apparent
exception. South African law, unlike Scots, accepted the condictio
furtiva, available against a thief.131 This may be a delictual action,
and in its Roman inception may well have been seen as such. However,
despite this slightly anomalous condictio action a significant
difference lies between enrichments by transfer, and enrichments by act
of the party enriched.
Scots law takes the position that incidental benefits such as this
are not enrichments "at the expense" of the claimant. There is nothing
anyone can do to prevent them and the claimant downstairs flat owner
has just as nice and warm a flat whether some warmth rises to his
neighbour or goes straight out the roof. The Court of Session dismissed
the claim in the example on the ground that the party claiming
recompense must have lost something. This appears the most sensible
conclusion, and it is notable that it was not reached in the context of
a condictio claim. Baloch concedes in his paper that the new Birksian
view deals only with difficulty with these cases,132 but they represent
a much greater problem than he admits.
(ii) Indirect Enrichment
There are several different ways in which enrichment might be
indirect. Hedley observes that Birks argued the law should be the same
whether the enrichment was direct or more circuitous.133 Birks argued "at
the expense of" asks "what variations upon knowing transfer are
possible without losing touch with the logic which explains the right
to restitution of a mistaken payment."134 These indirect enrichment cases
may be proprietary claims, which we treat first. They may involve a
personal claim leapfrogging an intermediary, or interceptive
Birks quite properly said that on his view many proprietary claims
were condictio indebiti type cases. Birks also argued that all
proprietary claims contingent on tracing were unjust enrichment claims.135 That
is where A (usually a trustee) passes property to B, who passes it to
C, A's beneficiary's claim against C is an unjust enrichment claim.
This, however, is a step too far. It cannot be the same type of claim
as a condictio indebiti. In order for a condictio claim to operate
there must be a putative basis for a transfer. Yet as between the trust
beneficiary and C there is no such transfer, or putative basis. Indeed
in German law "at the expense of" is almost entirely redundant under
the Leistungskondiktion as it is inherent within the concept of
That need not mean that proprietary claims contingent on tracing are
not unjust enrichment. In fact they are, but it requires an acceptance
that these are quite different types of claim.
Much the same argument can be put to suggest that neither Lipkin
Gorman v Karpnale137
nor knowing receipt can be personal unjust enrichment cases as Birks
claimed. These are the leapfrogging cases, alluded to earlier, where a
causal link from the claimant to the defendant via an intermediary
suffices to demonstrate enrichment. Birks acknowledged the problem in a
footnote, when he said this type of claim was a type of actio de in rem
verso. Giglio has also suggested that Lipkin Gorman is an
anglicised version of the action.138 In that case Cass withdrew money
from the claimant firm's client account and paid it to the defendant
club in payment of gambling debts. The firm successfully recovered.
From a comparative standpoint the actio de in rem verso, while it
undoubtedly has a long history back to classical Roman law, has its
modern Civilian detractors. German law has rejected the action although
Giglio suggests it cannot do so completely. South African law has also
largely rejected the actio de in rem verso.139 De Vos suggested
that in principle no claim should be available in cases where an
intermediary is involved in the transfer of assets from claimant to
defendant. In support of his argument that these leapfrogging, or
indirect enrichment, cases are personal unjust enrichment cases Birks
pointed to a number of agency cases,140 and argued relief could not be
limited to those agency cases. However, South African law limits
liability to a number of agency situations.141 In South African
law this seems to take place under the heading of the actio de in rem
verso. ABSA Bank v CB Stander142 provides a further, but related,
exception. That decision involved Kent's loan of a car subject to a
retention of title clause in favour of ABSA to Bezuidenhout. He crashed
the car and delivered it to Stander to be repaired before disappearing.
ABSA took the car back and Stander counter-claimed for the value of the
repairs. He succeeded in an extended actio negotiorum gestorum, which
the court saw as related to the actio de in rem verso. The extended
action applied as an enrichment action where the contractual action
against Bezuidenhout was useless, and another party, ABSA, was enriched.143
In Scots law as well, the general rule is that indirect enrichment
cannot be recovered. The two main exceptions Whitty identifies are
and more uncertainly some cases involving fraud. These are cases where
recompense, partly derived from the actio de in rem verso, applies.
From a comparative standpoint it makes sense therefore to restrict such
personal claims in English law to agency cases.
Interceptive subtraction takes place in those cases where the
defendant makes money from another's asset. This allowed Birks'
re-conception of Edwards v Lee's Administrator145 as an unjust
enrichment case. There the defendant had taken tours into a cave which
started on his land, but extended under his neighbour's. That was a
trespass, but Birks was able to reconceptualise it as unjust enrichment.146 Yet
even if this can be seen as enrichment at the expense of the claimant,147 it
cannot be seen as a transfer. The difficulty is quite deep in unjust
enrichment theory, and is related to the incidental benefits point made
earlier. Edelman refers to restitutionary damages as retransferring
value from defendant to claimant.148 He uses the example of a
trespasser squatting on land. Value in the form of the use of the
premises is transferred to the trespasser, and subtracted from the
owner's dominium. Later he describes this measure as an almost perfect
parallel to unjust enrichment. Further he describes enrichment as the
when in fact it is the wider, because it does not need a putative
purpose. Birks described Edelman's work as irrefutable,150 yet it causes
terminological confusion. The sense in which Birks and Edelman use the
word transfer is incompatible with the meaning of the word in the
condictio-type claim, and leads to the quite false conclusion that
these use claims can be treated as if they were condictio claims. In
German law this would be a case of the Eingriffskondktion, if
anything. In Scots and South African law there are two sets of rules,
concerning reasonable sums for the use of another's asset, and profits
from possession of another's asset.151 The relationship between the
latter claim and enrichment law is unclear,152 but what is clear
is that in none of these jurisdictions are they covered by performance
claims. Birks stated that the law of unjust enrichment was the "law of
all events materially identical to the mistaken payment of a
These cases are not.
(B) Mistake Claims
This might strike some as odd. Surely all mistake claims now fall
under a condictio system. They do not. Birks does not in fact deal with
this in detail. The Scots decision of Shilliday v Smith154
demonstrates the problem. In that case the pursuer claimed money back
spent improving a house on the basis that she and the defender would
marry. They did not. She recovered under the condictio cd. One case
that Lord Rodger relied on is Newton v Newton.155 That though is a
different type of case. There the pursuer believed he owned the
property. The mistake was explicitly relied upon. A mistake that you
own the property negatives the possibility of a purposive transfer,
which is why it cannot be a condictio claim. While there are clearly
some improvement cases in Scots law that can be fitted into a
condictio, many cannot be.156 In German law this might not in
fact be unjust enrichment at all. Where the claimant is in possession
§ 964ff BGB will apply. Otherwise the Verwendungskondiktion
German law has a problem here. The fact that my act improved your
property is insufficient to ground relief. What is sufficient is
controversial, although it is obvious that some substantive reason is
This is more apparent in the Rückgriffskondiktion. That
applies where a party mistakenly pays a debt believing it his own, and
succeeds in discharging it. An example is a shareholder paying a
company's tax bill believing himself also liable. The tax was due, so
he cannot recover from the Government. He intended to discharge his own
liability, so there is no purposive transfer to make the company
liable. Some other route must be found. Markesinis, Lorenz and
Dannemann expressly talk of the mistake, although this is not typical
of German lawyers.159
Dannemann suggested later that the separation of the Rückgriffskondiktion
from performance claims artificially divides up similar claims that
would be better treated together.160 Scots law, however, took the
obvious route - rely on the mistake.
English law currently does so too. Greenwood v Bennett161 is
the same sort of case. The claimant undertook repairs to a car before
realising it in fact belonged to the defendant rather than himself. He
sought to recover for the repairs. While the Court of Appeal did not
deal in detail with the question of improvements, they did comment that
the car had to be worth more repaired. With no possibility of being
fitted into the new structure the easy answer is to stick with mistake.162
Indeed this is linked to the point we saw earlier about enrichment in
English law being wider than transfer. There is no transfer, but the
defendant is unquestionably enriched. Indeed this is quite clearly also
true in Scots law in those cases where recompense is available outside
Indeed Morgan Guaranty v Lothian RC164 makes it clear
that there is currently a mistake requirement in the condictio indebiti
in Scots law, although many commentators wish to remove it.165 If
we have a mixed unjust factors/absence of legal ground approach as
found in Scotland, and advocated by Scott as the best solution for
South African law, where the law has also developed specific unjust
factors outside the condictio structure,166 the question still arises what
mistakes should ground relief. The obvious answer is causal mistakes.
Why then reject that test in transfer scenarios, when we saw earlier it
(C) Termination for Breach
We have seen that one lesson from comparative law is that Birks'
concept of transfer is too broad. However, as well as over-extending
the concept of transfer and absence of basis, Birks misapplied the idea
in one of the main areas where a transfer does take place. This section
is divided into two. The first part looks at the situation in the main
jurisdictions targeted for comparison here; the second shows that the
internal logic of the system is not reflected in Birks' reformulation
of the law. Contrary to Baloch's view, to make Birks' scheme work will
require considerable upheaval in English law.167
(i) Termination for Breach in the Civilian Systems
There is, according to McQueen, a clearly articulated rule in Scots
law that outside frustration the condictio causa data causa non secuta
cannot apply where there is a valid contract.168 He generalises
this to all enrichment remedies. In Scots law it is clear that
termination for breach only effects prospective obligations;169 in
South Africa only obligations, accrued and due and enforceable
independent of any element of the executory contract, remain so.170
There seems little difference with Scots law.171 The position seems
to be that where there are continuing obligations cancellation is
prospective, and where not, it will be retrospective. This is pretty
much identical to the English position.172 Indeed since the South African law
of cancellation for breach is largely an import from English law, and
English cases have been influential in its development, this ought not
to be surprising.
The prospective effect of termination creates problems for the use
of the condictio causa data causa non secuta. Indeed the problems are
common to frustration cases as well. Cantiere San Rocco v Clyde
is the classic case in Scots law. It involved a sale of engines to an
Austrian company, frustrated by the outbreak of the First World War and
the illegality of trading with the enemy. It is clear authority for the
use of the condictio in that context, and this seems to be too firmly
embedded now to be easily removed. Evans-Jones has criticised the
extension into termination for breach cases.174 His argument is
essentially twofold. Firstly, the House of Lords in Cantiere
did not properly appreciate the history of Scots private law when they
applied the Corpus Iuris Civilis, and in any case applied an incorrect
reading of Justinianic Roman law. Secondly, in cases of termination for
breach or frustration the reason why the party pays is to discharge his
obligation. He did so.175
That is why the condictio is traditionally said to apply "outwith
contract". This means that Morritt LJ's comments distinguishing Guinness
Mahon v Kensington & Chelsea RLBC from Fibrosa on the
grounds that Fibrosa was a valid contract make sense, as do
Hobhouse J's comments on contractual failure of consideration. They are
no more than recognition that the condictio indebiti cannot apply
within a valid contract.
Connelly v Simpson176 where the pursuers were claiming
under the condictio cd in a termination for breach case seems to have
followed this line of reasoning. It was a case of a sale of shares. The
shares were paid for but never transferred before the voluntary
liquidation of the company. Lord McCluskey said that there was no right
to elect between contractual and unjustified enrichment remedies,177 and
Lord Sutherland expressly said that the payment was in consideration
for a personal right to demand the shares, which they had received.178 Connelly
v Simpson has its difficulties, however, and they are instructive
as to the English law. It suggested that not only was the condictio cd
not available, but restitution was not available at all; the remedy was
damages. Restitution refers to reversal of transfers. That reversal
need not be in pursuance of unjustified enrichment.
Despite the lack of a principle of consideration in Scottish
contract law, there is a principle of mutuality. In effect bilateral
contractual obligations are conditional on the other side's
performance. There was a justifiable rescission of the contract in Connelly
v Simpson, which meant that had the purchaser not paid for the
shares, he could not have been sued. The question is whether the
principle can require repayment. Hogg suggests it does.179
Connelly v Simpson is a money case; other cases suggest an
enrichment remedy is possible where benefits unreturnable in specie are
In PEC Printers v Forth Printers181 a type setting firm completed part
of the work for a printers' firm, but then said they could not finish
it on time. The printers rescinded the contract and hired a typesetter
to work in-house. The subcontractors sued for the work they had done. A
quantum meruit was granted on the basis of an implied contract; this
was a true implied contract, not a disguised enrichment claim. The
sheriff said obiter, however, that there might be a recompense claim
for work done. After Shilliday v Smith recompense is to be seen
as a remedy for any of the condictiones.182 If so, and as Connelly v
Simpson bars repetition (payment of money) under the condictio cd
in termination cases, it should bar recompense, too. Attitudes to
recompense and repetition have not always been consistent, though. Lord
Clyde said in Morgan Guaranty, "In recompense the emphasis is
on the enrichment, the loss and the absence of intention of donation.
In repetition the emphasis is on the payment of money in the mistaken
belief it was due."183
There is no real justification for the difference, and this tends to
support those suggesting a general action in Scots law.
Hutton focuses on South African law.184 In South African law, the return
of money or returnable benefits after termination is a contractual
remedy, but restitution of unreturnable benefits such as services is
frequently said to be unjustified enrichment.185 The asymmetry is
the question is merely whether liability in both cases is unjustified
enrichment or contract. Hutton's argument is that it is unjustified
enrichment. Termination of the contract removes the future obligations
to perform. The assumption that the contract will be completed fails at
the moment of termination; she then argues that the condictio cd is an
She reaches this conclusion by drawing on English jurisprudence on
failure of consideration. This and her other argument that the
obligation to perform is removed by termination retrospectively and
that therefore despite the original validity of the contract, the causa
falls away and the condictio ob causam finitam is appropriate, sits
uneasily with the availability of damages for breach of contract.188 It
is trite that there is no rule in South African law that damages based
on the "positive interesse" are not available in cancellation cases.
Crudely, they are the equivalent of expectation damages. It implies
enrichment remedies are available in South African law alongside
precisely the position correctly rejected in Scotland by Connelly v
Simpson. The logic behind a condictio system seems to bar such
concurrency of remedies.
In the context of money transfers, South African scholars have
developed the transformation theory.190 It is not clear why the
transformation theory does not, or cannot apply to non-money cases, but
it is clear that some South African commentators believe that where
enrichment is measured with reference to the contract price, as it
should be, contract law is doing the work.191 The theory
distinguishes between two sorts of contractual rights, the primary
obligations and the secondary obligations to pay damages or make
restitution. By cancelling, the claimant transforms the contract into
an obligation to pay damages and perform restitution. As Lubbe puts it,
cancellation or rescission of a contract for misrepresentation protects
the autonomy of the parties, cancellation for breach should fulfil it,
providing enforcement of the contract where other means are impossible
Consequently positive interesse damages are available, and damages for
"out of pocket expenses", or negative interesse damages, ought not to
be, as they shift the risk of a bad bargain from one party to another.193
This transformation theory appears in a modified form in German
law. § 346ff BGB provides the law on restitution after termination
of a contract for breach. This is a contractual remedy, not an unjust
Prior to 2002, unlike in South African law, however, expectation
damages were not available.195 This is no longer the case.
Termination and all damages claims are compatible, with one exception -
a claim for the difference between defective and correct performance.196 The
defective performance is returned - the correct claim is for the full
expectation value of perfect performance. It is seen as unsatisfactory
to have two methods of unwinding mutual performances, yet the
availability of expectation damages forces the conclusion that this is
a contractual regime. Nonetheless there has been an appreciation of the
need for further harmonisation.197
Krebs suggests that if unjust enrichment does not disturb the risk
allocation in the contract the two can act concurrently.198 In an unjust
factors approach, Krebs is right. Without the conceptual need to divide
contractual restitution from unjust enrichment, we need to be careful
not to disturb the contractual risk allocation in restitution. That
need not always preclude restitution within a valid contract.199 The
Civilian system, however, is insufficiently nuanced to be able to say
despite your purpose being fulfilled unjust enrichment is available.
What it can, and does do, most obviously in Germany, is look at the
policy behind the invalidating provision to decide if the obligation is
void, or not.200
It would do so in all cases - sometimes in common law countries we say
an obligation is unenforceable, yet allow restitution, because of the
effect of the policy behind unenforceability. Under an absence of basis
approach we would have to say it was void, and so we would have to be
much more careful about classifying obligations and contracts than
(ii) Birks' Reformulation of English Law - Causa Misapplied
As we have seen, Birks argued that terminability was merely a means
of showing invalidity triggering restitution. Terminability bit
immediately, so it operated retrospectively. McMeel correctly points
out that the power to terminate is premised on wrongdoing, and Birks
underplayed the distinctiveness of termination for breach.201
McMeel argues that rescission ab initio, which might be triggered by
misrepresentation, duress or undue influence, may not be appropriate in
Birks needed though to give terminability retrospective effect to get
round Chandler v Webster and allow recovery in unjustified
enrichment, when otherwise there would be none. The rule seems also
designed to justify the decision in Neste Oy v Lloyds Bank.203 That
decision involved six payments to a company, PSL. PSL were to use the
money to make payments on behalf of the claimants for services
rendered. The first five gave rise to personal claims; the company
resolved only after the payments had been made to the company but
before any payments had been made on behalf of the claimant. The
failure of basis, or consideration, only arose after the payments had
been made. The sixth payment was made when it was already clear that
contractual reciprocation would not be coming; it was credited when the
company had already resolved to cease trading and Lloyds Bank had
appointed a receiver. It is questionable whether it is appropriate to
grant a proprietary remedy, where the payor has taken the risk of his
contracting party's insolvency.204
It seems that the need to give terminability retrospective effect,
but only for the innocent party, is felt because English law never
needed to distinguish clearly as Scots law does between lack of causa
and lack of contractual mutuality.205 South African contract law, by
jettisoning causa as a requirement for a valid contract, does not have
the same problem, although the reciprocity idea does surface in this
context and in the separate context of the remedy of withholding
English law now does need to distinguish these two ideas. Birks'
suggestion fails to do so. His attempts to justify restitution after
termination within the confines of his new law of unjust enrichment run
against the internal logic of the law. There is, contrary to Burrows'
a causa present; at the time the payment was made the payment was due.
Termination in English law is prospective only. The parties are no
longer liable for executory obligations, but accrued and due
obligations are enforceable. Obligations performed for which payment
has been made cannot be reversed; recovery in unjust enrichment is only
possible where the counter-obligation is not rendered nor due.208
Unearned enrichments are recoverable. Where the contract is void or
voidable the payment either was not due, or the causa is
retrospectively removed. Damages, except in tort or delict, are
unavailable, in contrast to termination cases where damages are
available in contract. For terminability to suffice there must
therefore be degrees of invalidity.209 Terminability would be a peculiar
half way house between validity and invalidity, invalid enough for
restitution, but not so invalid as to evade liability for damages. The
conceptually easier solution is that restitution must take place within
the confines of contract.
Three consequences follow. Firstly, it is the failure of
reciprocation that matters not the failure of validity of the
obligation. Secondly, Neste Oy v Lloyds Bank cannot stand.
Proprietary claims cannot stand within contract. Thirdly, Chandler
v Webster could still be condemned as wrong, but this time for
failure to distinguish between two contractual concepts. It is
noticeable that this would not disturb the new structure of unjust
enrichment. We saw earlier Meier's criticism of the Thomas v Brown
requirement applying to void contracts. If Thomas v Brown is
seen as an aspect of a mutuality principle in contract it will not
apply in extra-contractual contexts.210 Indeed it is notable that its
applicability was rejected in the non-contractual context in Chillingworth
In that case, £240 was paid prior to the completion of a contract
to purchase land. The claimant refused to sign the contract and asked
for the money back. This was a payment on a non-contractual condition,
that a contract would be signed. It was recoverable.
To say that liability to return is contractual, and to develop a
contractual mutuality principle, separate from unjust enrichment, is,
however, an exceptionally difficult route given that such a doctrine
would have to be carefully distinguished from consideration as a
requirement for the validity and enforceability of the contract. It is
notable that neither Scots nor South African law have a consideration
requirement for the validity of contracts. The doctrine of
consideration in English law requires reciprocity - something of
economic value to be given in return for a promise to be enforceable.
It rests on the idea of benefit to the promisee or detriment to the
promisor, either of which suffices.212
English law has not yet properly developed such principles. It is
true, of course, that there are rules as to, for example, conditions
precedent, relating to the order of performance.213 These rules,
however, have a different function. Similarly, we can say that English
law allows termination where the term breached is a condition, or where
there is substantial failure of performance.214 However, there is
at best only a loose connection between that idea and the extent to
which restitution might be ordered, if at all. We might also look at
entire and severable obligations. Entire obligations are those which
need to be completely performed before the other party is required to
pay. Severable obligations arise where payment is due from time to time
as performance of specified parts of the contract is rendered.215
However, although these contractual concepts clearly have an impact,
they do not cover the field. Hobhouse J talked of the contractual idea
of failure of consideration, and did not examine these other ideas at
the same time.
Confusing this new contractual idea of failure of mutuality with
contractual validity, or unjust enrichment ideas is already well afoot.
It is notable that in their otherwise excellent article on Sumpter
Stevens and McFarlane talk of failure of consideration as the common
law counterpart to causa data causa non secuta.217 This is not
unprecedented. It is dangerous, though. In Cantiere san Rocco v
Clyde Shipbuilding Lord Shaw said, "It is an admitted fact in the
case that that consideration has entirely failed. Therefore, this, as I
say, would be a typical case of restitution under the Roman law and one
for the application of the maxim causa data causa non secuta."218
Assimilating causa data causa non secuta to the English idea of total
failure of consideration meant Lord Shaw had to demonstrate total
failure through an argument that the engines were not in fact supplied,
despite the validity of the contract. The House of Lords evaded what
they saw as the problem posed by Chandler v Webster by saying
each side performs in consideration for full performance. Any failure
of performance on one side entailed a total failure of consideration.219 Yet
if so, payments under valid contracts need not be made in order to
discharge the debt, they can also be made in order to obtain
counter-performance. The flipside of this is that payments under void
contracts have additional purposes than discharge of a debt, and it has
been suggested that the condictio cd applies alongside the condictio
That destroys the mutual exclusivity of the condictiones. Ultimately,
this drives us towards an unjust factors approach, and Stewart, who
made the suggestion, included, amongst others, an account of an unjust
factor of mistake in his book.221
In any case McFarlane and Stevens' examples of the operation of the
causa data principle are not properly such examples. They point to the
non-recoverability of a deposit. That principle is entrenched in Scots
but it is properly a contractual principle. Their next example is Re
Phoenix Life Assurance.223 That case involved an ultra vires
insurance contract. The policy holders recovered on the basis that they
received nothing for their premiums. It would be a case of the
condictio indebiti in Scots law, not the condictio cd.
Moving from unjust enrichment to undoing the transaction within
contract law may nevertheless have beneficial effects. If the claim is
in unjust enrichment, change of position is available as a defence.
Miller has, however, suggested that change of position might subvert
contractual risk allocation.224 Were relief contractual, change of
position would not be available. In German law, provisions on
restitution after termination of contract (§ 346ff BGB) do not
include the general notion of cession of enrichment which can be found
in § 818 BGB for unjust enrichment (with § 346 para. 3
covering some situations where the claimant is somehow responsible for
the fact that the enrichment cannot be returned) . Hedley has
repeatedly argued, most recently in 2004, that since the contract
survives for some purposes, treating the rules, perhaps especially of
valuation, as extra-contractual is unreal.225 Treating the
valuation question within contract obviates the problem of deciding
whether bad bargains can be overturned within unjust enrichment.226 This
is an old argument. However, the two German regimes for unwinding
mutual performances do not always produce consistent outcomes. Contract
and unjust enrichment may still rub uncomfortably together.
We set out to show that English law should not move to a Civilian
system. There are good reasons for supporting a causal mistake test for
liability, and the advantages said to adhere to a Civilian style system
are marginal at best once it is realised that specialist rules for
different scenarios will still be needed. Birks put forward in his last
book a comprehensive model of how absence of basis should work in
English law, a model suffering some serious flaws. The paper has set
out to expose some of those flaws. There are three main difficulties.
Birks failed to provide an exhaustive list of potential bases for
transfers. Some help may now be garnered from Canadian law. That said,
while the shift is further advanced in Canada, the law is in greater
confusion about what counts as a basis. Secondly, Birks' scheme, and
the nascent Canadian law, fail to appreciate the bipartite nature of
transfer, and the linked need for a putative basis. This led Birks to
problems with proprietary claims and incidental benefits. Linked to
this, the mixed systems demonstrate that mistake claims will be needed
where there is no condictio claim. Thirdly, terminability of a contract
for breach is a type of invalidity sufficing for unjust enrichment. In
Civilian systems payments are made to discharge an obligation, which
was discharged. Restitution occurs through contract. The question
arises whether English (and for that matter Canadian) law can separate
out the new concepts that will be required. It is unlikely that they
can, which is neither to their credit nor discredit. The price in terms
of the reorganisation of contract law is too high, given the minimal
benefits in terms of improvements to the results of cases.
Senior Lecturer in Law, University of East Anglia, MA, BCL DPhil
(Oxon). I should like to thank all those who attended an internal UEA
research seminar on this topic, and also Lu Xu for reading the
penultimate draft. All errors remain my own.
 2 AC 349 (HL).
Krebs 'A German Contribution to English Enrichment Law'  RLR 271,
278, discussing S Meier's doctoral thesis in German, S Meier Irrtum
und Zweckfehlung; Das System der Unjust-Gründe bei rechtgrundlosen
Leistungen im englischen Recht (JCB Mohr Tübingen 1999); S
Meier and R Zimmermann 'Judicial Development of the Law, Error Juris,
and The Law of Unjustified Enrichment- A View from Germany' (1999) 115
LQR 556, 563-565; PBH Birks 'Mistakes of Law'  CLP 205, 233 and
PBH Birks and WJ Swadling 'Restitution'  All England Law Reports
Annual Rev 390, 397.
Hogg 'Unjustified Enrichment in Scots Law Twenty Year on: Where Now?'
 RLR 1.
v Hammersmith & Fulham LBC  2 AC 1.
Sheehan 'What is a Mistake?' (2000) 20 LS 538.
Birks (n 2) 223-230; C Mitchell 'Retrospective Mistakes of Law' 
King's College LJ 121, 125-126.
Sheehan 'Natural Obligations in English Law'  LMCLQ 172; contrast
TH Wu 'Natural Obligations and the Common Law of Unjust Enrichment'
 OUCLJ 133.
Krebs (n 2) 277; T
Krebs 'In Defence of Unjust Factors' (2000) Oxford U Comparative Law
Forum 4 at http://www.ouclf.iuscomp.org text at n 37.
 UKHL 49;  3 WLR 781.
 Ch 620.
PBH Birks Unjust Enrichment (2nd edn Clarendon Press Oxford
2005) ch 5.
T Krebs Restitution at the Crossroads (Cavendish London 2001);
J Edelman 'The Meaning of "Unjust" in the English Law of Unjust
Enrichment' (2006) 3 ERPL 309.
 AC 70 (HL) 172.
T Baloch 'The Unjust Enrichment Pyramid' (2007) 123 LQR 636; A Goymour
'Premature Tax Payments and Unjust Enrichment'  CLJ 24.
 UKHL 49, ;  3 WLR 781.
Krebs (n 2) 274.
Meier and Zimmermann (n 2) 561. See also N Whitty and D Visser
'Unjustified Enrichment' in R Zimmermann, K Reid and D Visser Mixed
Legal Systems in Comparative Perspective (OUP Oxford 2004) 398,
Birks (n 11) 104.
H Scott 'Restitution of Extra-Contractual Transfers: Limits on the
Absence of Legal Ground Analysis'  RLR 93, 100; Münchener
Kommentar zum Bürgerlichen Gesetzbuch, 4th ed., Vol. 5 (CH Beck
München 2004) § 812, no 170 (Lieb); D Reuter and M Martinek Ungerechtfertigte
Bereicherung (JCB Mohr Tübingen 1983) 81; Baloch appears to
identify this as the objective approach; Baloch (n 14) 640.
Krebs (n 2) 219-222; R Zimmermann The Law of Obligations (Juta
Cape Town 1996) 889.
Mackenzie I 3.1; R Evans-Jones 'Some Reflections on the Nature of the
Condictio Indebiti in a Mixed Legal System' (1994) 111 SALJ 759.
 UKHL 49, .
Meier and Zimmermann (n 2) 562.
S Meier 'Restitution after Executed Void Contracts' in PBH Birks and FD
Rose (eds) Lessons of the Swaps Litigation (Mansfield Press
London 2000) 168, 212.
Meier and Zimmermann (n 2) 562-563; see D Visser 'Unjustified
Enrichment'  Annual Survey of South African Law 303.
§ 812-I (2) BGB; MünchKomm (n 19) § 812, no 170; B
Dickson 'The Law of Restitution in the Federal Republic of Germany: A
Comparison with English Law' (1987) 36 ICLQ 751, 775. For South African
law see P O'Brien 'A Generally Applicable Condictio Sine Causa
for South African Law'  TSAR 752, 755-756.
Meier and Zimmermann (n 2) 561-562; Krebs (n 2) 274.
 AC 161 (HL).
Meier and Zimmermann (n 2) 563 .
Birks (n 11) 139.
P Gallo 'Unjust Enrichment: A Comparative Analysis' (1992) 40 AJCL 431,
Krebs (n 8) text to nn 26-27.
PBH Birks 'No Consideration: Restitution after Void Contracts' (1993)
23 U Western Australia L Rev 195, 230 n 137; Birks (n 2) 220-222.
Krebs (n 2) 278; AS Burrows 'Swaps and the Friction between Common Law
and Equity'  RLR 15, 19.
See Sheehan (n 5) 551-552.
Meier and Zimmermann (n 2) 557-560; R Zimmerman and N Jansen 'Quieta
Movere: Interpretative Theory in a Codified System' in P Cane and J
Stapleton (eds) The Law of Obligations: Essays in Celebration of
John Fleming (OUP Oxford 1998) 285, 302-307. The idea that a legal
ground can become retrospectively void is not unchallenged, however. T
Weir (tr) K Zweigert and H Kötz An Introduction to Comparative
Law (3rd edn Clarendon Press Oxford 1997) 571-572.
Birks (n 2) 225-226.
Birks (n 11) 112.
Phillips-Higgins v Parker  1 QB 411.
 UKHL 49, .
 2 AC 349 (HL) 408.
Sheehan (n 5) 558-560; this view is based on Dworkin's theory of law,
which amounts to a sophisticated declaratory theory.
 UKHL 49, .
R Stevens 'Justified Enrichment'  OUCLJ 141; M Chowdry and C
Mitchell 'Tax Legislation as a Justifying Factor'  RLR 1, 16-18;
Birks (n 11) 138-139.
R Williams 'The Beginnings of a Public Law of Unjust Enrichment' (2005)
15 KCLJ 194, 199
 UKHL 49, .
As a consequence of Metallgesellschaft & others 
EUECJ C-397/98 .
 UKHL 49, ; B Häcker 'Still at the Crossroads' (2007)
123 LQR 177.
Ibid ; see also Uren v First National Home Finance 
EWHC 2529,  (Mann J).
See R Zimmermann 'Unjustified Enrichment: The Modern Civilian Approach'
(1995) 15 OJLS 403, and Meier (n 25).
Krebs (n 2) 275.
K Barker 'Theorising Unjust Enrichment' (2006) 26 OJLS 603.
G Virgo The Principles of the Law of Restitution (2nd edn OUP
Oxford 2006) 159-160; Midland Bank v Brown Shipley & Co
 2 All ER 690, 700-701; Barclays Bank v Simms  QB
680; David Securities v Commonwealth Bank of Australia (1992)
175 CLR 353; Air Canada v British Columbia  1 SCR 1161,
1200 (1989) 59 DLR (4th) 161, 191-192.
 1 WLR 1249, 1272; G Jones 'Lord Goff's Contribution to the Law
of Restitution' in G Jones and WJ Swadling (eds) The Search for
Principle: Essays in Honour of Lord Goff of Chieveley (OUP Oxford
1999) 207, 224-225.
PBH Birks An Introduction to the Law of Restitution (Revised
edn Clarendon Press Oxford 1989) 155-156; for a related critique of
Meier's argument see Krebs (n 12) 78-80.
Zimmermann (n 54) 415-416.
Birks (n 2) 231; see generally Krebs (n 12) ch 12.
 4 All ER 890.
 QB 215 (CA).
Ibid 227; Meier (n 25) 209-210.
 1 WLR 938 (CA) 946 (Dillon LJ); 953 (Leggatt LJ).
WJ Swadling 'Restitution for no Consideration'  RLR 73; the cases
include Hicks v Hicks (1802) 3 East 16, 102 ER 502 and Holbrook
v Sharpey (1792) 19 Ves Jun 131, 34 ER 467. Swadling argues they
omitted to consider Davis v Bryan (1827) 6 B&C 651, 105 ER
591, which clearly supports the Fibrosa approach. But see Krebs
(n 12) 240, Guinness Mahon v Kensington & Chelsea RLBC
 QB 215 (CA) 228-229 (Morritt LJ).
 1 WLR 938 (CA) 945.
But see  AC 669 (HL) 710-711 (Lord Browne-Wilkinson).
Birks (n 2) 232.
 UKHL 49,  (Lord Hoffmann),  (Lord Hope), , (Lord
Finance Act 2004, s 320.
Birks (n 11) 114-116.
 1 KB 493.
Birks and Swadling (n 2) 394.
 AC 32 (HL).
Linz v Electric Wire Co. of Palestine  AC 371 (PC).
 QB 215 (CA) 226.
Meier (n 25) 209.
(1876) LR 1 QB 714.
Meier (n 25) 209-210.
Scottish Law Commission Recovery of Benefits Conferred under Error
of Law (Scot Law Comm DP no 95 1993) Vol 2 para 2.73.
Oom v Bruce (1816) 12 East 225, 104 ER 87.
Parkinson v College of Ambulance  2 KB 1; Berg v
Sadler & Moore  2 KB 158 (CA).
Virgo (n 57) 728-729.
Birks (n 11) 141-142.
(1959) 102 CLR 108; see also Meier (n 25) 211.
 AC 70.
E McKendrick 'The Reason for Restitution' in PBH Birks and FD Rose
(eds) Lessons of the Swaps Litigation (Mansfield Press Oxford
2000) 95; David Securities v Commonwealth Bank of Australia
(1992) 175 CLR 353.
Birks (n 11) 148-149; Lord Scott suggests causation is insufficient at Deutsche
Morgan Grenfell v IRC  UKHL 49, .
 4 All ER 202 (CA) 208.
Rathwell v Rathwell  2 SCR 436, 455 (1978) 83 DLR (3d)
289, 306 (Dickson J); Pettkus v Becker  SCR 834 (1981)
117 DLR (3d) 257 and Sorochan v Sorochan  2 SCR 38 (1986)
29 DLR (4th) 1.
(2004) 295 DLR (4th) 385.
 3 SCR 575, critiqued by M McInnes 'Making Sense of Juristic
Reasons: Unjust Enrichment after Garland v Consumer Gas' (2004)
42 Alberta L Rev 399, M McInnes 'Juristic Reasons and Unjust Factors in
the Supreme Court of Canada' (2004) 120 LQR 554; M McInnes 'The Test of
Unjust Enrichment in Canada (2007) 123 LQR 34.
 3 SCR 575, [23-24]; in Kingstreet Investments v New
Brunswick (Dept of Finance)  SCC 1,  Bastarache J
appears, albeit obiter, to reintroduce compulsion into the common law
of unjust enrichment. M McInnes 'Restitution for Ultra Vires Taxes'
(2007) 123 LQR 365.
(2004) 295 DLR (4th) 385, .
Birks (n 34) 231-232.
(1841) 9 M&W 54, 152 ER 51.
Scott (n 19) 97-98.
Union Government v Gowar 1915 AD 426.
§ 814 BGB.
B Markesinis, W Lorenz and G Dannemann An Introduction to the
German Law of Obligations: Contract and Unjustified Enrichment
(Clarendon Press Oxford 1997) 736; MünchKomm (n 19) § 814,
no. 12; Reuter and Martinek (n 19) 182-185; AS Burrows 'Absence of
Basis: The New Birksian Scheme' in AS Burrows and A Rodger (eds) Mapping
the Law (OUP Oxford 2006) 33, 39 has another example where the
defence may not run - the open swap where the bank paid knowing the
contract was void.
Kleinwort Benson v Lincoln City Council  2 AC 389 (HL)
S Hedley 'The Empire Strikes Back: A Restatement of the Law of Unjust
Enrichment' (2004) 28 Melbourne U L Rev 754, 773.
 UKHL 49, .
Kleinwort Benson v Lincoln City Council  2 AC 349 (HL)
Hogg (n 3) 4.
Birks (n 11) 129.
Baloch (n 14) 641.
Birks (n 11) 112.
Hogg (n 3) 5; Shilliday v Smith 1998 SLT 976.
Hogg (n 3) 19; Kommisaris van Binnelandse Inkomste v Willers
1994 (3) SA 283 (A); Shortdistance Carriers v McCarthy Retail
2001 (3) SA 482 (A).
For Scots law see Morgan Guaranty v Lothian RC 1995 SC 151
(IH); for South African law see Willis Faber Enthoven v Receiver of
Revenue 1992 (4) SA 202 (A).
Baloch (n 14) 643-644.
1909 SC 99; Shilliday v Smith 1998 SLT 976; Hedley (n 113) 780.
Birks (n 11) 158.
Edelman (n 12) 319-320; Smith raises the idea of a "juristic reason" of
risk-taking, but this also seems to be a fudge. LD Smith 'Demystifying
Juristic Reasons' (2007) 45 Canadian Business LJ 281, 291.
Contrary to Birks (n 11) 104.
J Blackie and I Farlam 'Enrichment by Act of the Party Enriched' in D
Visser, K Reid and R Zimmermann Mixed Legal Systems in Comparative
Perspective (OUP Oxford 2004) 469, 488-489.
Baloch (n 14) 653.
Hedley (n 113) 777-778.
Birks (n 11) 72.
G Dannemann 'Unjust Enrichment by Transfer: Some Comparative Remarks'
(2001) 79 Texas L Rev 1837.
 2 AC 549.
F Giglio 'A Systematic Approach to Unjust and Unjustified Enrichment'
(2003) 23 OJLS 455, 468; Zimmermann (n 20) 879.
Ibid 464; Zimmermann (n 20) 887.
Bannatyne v D&C MacIver  1 KB 103; B Liggett
(Liverpool) Ltd v Barclays Bank  1 KB 48; Reid v Rigby
& Co  2 QB 40; Re Cleadon  Ch 286; Butler
v Rice  2 Ch 277.
A Honoré 'Third Party Enrichment'  AJ 238, 246-251.
1998 (1) SA 939 (C); Zimmermann (n 20) 880 points out a close
relationship between the actio de in rem verso and the actio negotiorum
gestorum contraria in the Digest D.22.214.171.124.
1998 (1) SA 939 (C) 953.
N Whitty 'Indirect Enrichment in Scots Law'  JR 200, 207; Commercial
Bank of Scotland v Biggar 1958 SLT (Notes) 46; ABSA Bank v CB
Stander 1998 (1) SA 939 (C) 947.
96 SW (2d) 1028 (1932); see also Martin v Porter (1839) 5
M&W 351, 151 ER 149; Livingstone v Rawyards Coal Co (1880)
5 App Cas 25 (HL).
Birks (n 11) 89-90.
Against this, see D Sheehan 'Subtractive and Wrongful Enrichment:
Identifying Gain in the Law of Restitution' in C Rickett (ed) Justifying
Private Law Remedies (Hart Oxford 2008) 331 and C Rotherham 'The
Conceptual Structure of Restitution for Wrongs'  CLJ 172,
J Edelman Gain-Based Damages (Hart Oxford 2002) 66-68.
Birks (n 11) 282.
Blackie and Farlam (n 131) 473-485 - on the different nature of use
claims in English law see P Jaffey Private Law and Property Claims
(Hart Oxford 2007) 99-103; Jaffey's position encapsulates Birks'
problem - the logic of a condictio claim supports Jaffey's critique,
although both commentators' assumption that in English law these need
not be wrongs claims is dubious - Sheehan (n 147).
Blackie and Farlam (n 131) 479-480, MJ Schermaier '"Performance Based"
and "Non-Performance Based" Enrichment Claims: The German Pattern'
(2006) 3 ERPL 363, 374.
Birks (n 11) 3.
1998 SLT 976.
1925 SC(HL) 925.
J Wolffe 'Enrichment by Improvement in Scots Law' in R Zimmermann and D
Visser (eds) Unjustified Enrichment: Key Issues in Comparative
Perspective (CUP Cambridge 2001) 384, 402-407.
T Krebs 'Unrequested Benefits in German Law' in J Neyers et al (eds) Understanding
Unjust Enrichment (Hart Oxford 2004) 247.
Markesinis, Dannemann and Lorenz (n 111) 754.
Ibid 769-770; Dannemann (n 136) 1850-1851.
 QB 195.
Contrast R Evans-Jones 'The distorting images of Newton v Newton
and its lessons for the law of property and unjustified enrichment in
Scotland' (2005) 9 Edinburgh Law Rev 449 arguing that it was a
Rankin v Wither (1886) 13 R 903; Buchanan v Stewart
(1874) 2 R 78.
1995 SC 151 (IH) 165.
Hogg (n 3) 7; Glover suggests that the only way to make sense of the
South African condictio indebiti is in terms of encrusted unjust
factors. G Glover 'The Condictio Indebiti and Unjust Factors' (2006) 69
THRHR 419, 435; he too wishes to remove those elements from the
corresponding South African law.
Scott (n 19) 94.
Baloch (n 14) 643.
H McQueen 'Contract, Unjustified Enrichment and Concurrent Liability: A
Scots Perspective'  Acta Juridica 176, 185; Connelly v Simpson
1994 SLT 1096.
Lloyds Bank v Bamberger 1993 SC 570.
Crest Enterprises v Ryckloff Beleggings 1972 (2) SA 863.
E Clive and D Hutchison 'Breach of Contract' in K Reid, D Visser &
R Zimmermann (eds) Mixed Legal Systems in Comparative Perspective
(OUP Oxford 2004) 176, 204-205.
Hurst v Bryk  1 AC 185.
1923 SC(HL) 105.
R Evans-Jones 'Unjust Enrichment, Contract and the Third Reception of
Roman Law in Scotland' (1993) 109 LQR 663.
1994 SLT 1096..
M Hogg Obligations (Avizandum Edinburgh 2003) 200; R
Evans-Jones and J Dieckmann 'The Dark Side of Connelly v Simpson'
 JR 95.
Ramsay v Brand (1898) 25 R 1212, Kerr v Dundee Gas Light
(1861) 23 D 343, PEC Printers v Forth Print 1980 SLT (Sh Ct)
118, Watson v Shankland (1871) 10 M 142.
1980 SLT (Sh Ct) 118.
1998 SLT 976.
1995 SC 151 (IH) 169.
S Hutton 'Restitution after Breach of Contract: Rethinking the
Conventional Jurisprudence'  Acta Juridica 201, 212-217; S Miller
'Unjustified Enrichment and Failed Contracts' in K Reid, D Visser and R
Zimmermann (eds) Mixed Legal Systems in Comparative Perspective
(OUP Oxford 2004) 437, 445.
Miller (n 184 above) 441; Probert v Baker 1985 (3) SA 429 (A).
It has become almost axiomatic that different types of enrichment be
treated the same in English law; Virgo (n 57) 308; this now seems to be
the case in Scots and South African law. See Shilliday v Smith
1998 SLT 976; Hutton (n 184) 205-207.
Hutton (n 184) 215.
Clive and Hutchison (n 171) 204-205; G Lubbe 'Assessment of Loss upon
Cancellation for Breach of Contract' (1984) 101 SALJ 616, 636-637; in
Scots law see Bell Commentaries I, 478.
D Visser 'Rethinking Unjustified Enrichment: A Perspective on the
Competition between Contractual and Enrichment Remedies'  AJ 203,
227; complete concurrency is advocated for English law by SA Smith
'Concurrent Liability in Contract and Unjust Enrichment: The
Fundamental Breach Requirement' (1999) 115 LQR 245, but a subsidiarity
rule is usually applied in all (common law and Civilian) systems.
Miller (n 184) 446-447.
Lubbe (n 188) 636.
Krebs (n 12) 106; R Zimmermann 'Restitution after Termination for
Breach of Contract: German Law after the Reform of 2002' in AS Burrows
and A Rodger (eds) Mapping the Law (OUP Oxford 2006) 323,
326-327; Meier (n 25) 344; BGB § 346 ff - unjustified enrichment
is regulated by § 812ff.
NJW 1979, 762, NJW 1982, 1279.
§ 325 BGB; D Coester-Waltjen 'The New Approach to Breach of
Contract in German Law' in N Cohen and E McKendrick (eds) Comparative
Remedies for Breach of Contract (Hart Oxford 2005) 135, 154.
Zimmermann (n 194) 338.
Krebs (12) 108-109; there is a small but growing list of cases where
restitution is permitted despite a contract eg Roxborough v Rothman
Pall Mall of Australia (2001) 208 CLR 516; R Chambers 'Deutsche
Morgan Grenfell Group Plc v IRC'  OUCLJ 227, 234.
A Tettenborn 'Subsisting Contracts and Failure of Consideration: A Note
of Caution'  RLR 1
BGHZ 111, 308; this is an illegality case, but the technique is the
only one open to the Civilian system.
G McMeel 'Unjust Enrichment, Discharge for Breach and the Primacy of
Contract' in AS Burrows and A Rodger (eds) Mapping the Law (OUP
Oxford 2006) 223, 225.
Ibid 232-235; Smith also believes that under a juristic reasons
approach these are unjust enrichment cases, but it is less clear how he
believes this to work Smith (n 132) 292.
 2 Lloyds Rep 683.
Meier (n 25) 347; F Maher 'A New Conception of Failure of Basis' 
RLR 96, 100-101.
See J du Plessis 'Common Law Influences on the Law of Contract and
Unjustified Enrichment in Some Mixed Legal Systems' (2003) 78 Tulane L
Rev 219, 223.
Clive and Hutchison (n 171) 196; this developed from the exceptio
non adimpleti contractus of the ius commune. See § 320
BGB for the remedy in German law, and in South African law BK
Tooling BPk v Scope Precision Engineering BPk 1979 (1) SA 391 (A).
AS Burrows 'Absence of Basis' in AS Burrows and A Rodger (eds) Mapping
the Law (OUP Oxford 2006) 33, 39-40; see also Smith (n 132) 292 who
describes as a wild fiction the idea that the claim is contractual.
Stocznia Gdanska v Latvian Shipping  1 WLR 574.
Birks (n 11) 125-126.
PEC Printers v Forth Printers 1980 SLT (Sh Ct) 118.
 1 Ch 97.
E Peel (ed) Treitel's Law of Contract (12th edn Sweet and
Maxwell London 2007) 75; Thomas v Thomas (1842) 2 QB 851.
Treitel (n 212) 813-814..
Ibid 821-827; for the relevance of these ideas see B McFarlane and R
Stevens 'In Defence of Sumpter v Hedges' (2002) 118 LQR 569.
 1 QB 678.
Stevens and McFarlane (n 215) 575.
 AC 226 (HL) 251.
R Evans-Jones 'Receptions of Law, Mixed Legal Systems and the Myth of
the Genius of Scots Private Law' (1998) 114 LQR 228, 238; R Evans-Jones
'Roman Law in Scotland and England and the Development of One Law for
Britain' (1999) 115 LQR 605, 607-614; Evans-Jones appears to prefer a
statutory loss adjustment regime, although that is not essential to the
WJ Stewart 'Restitution: First Thoughts on Swaps in Scotland' 1992 SLT
WJ Stewart The Law of Restitution in Scotland (W Green &
Sons Edinburgh 1992) 67-73.
Zemhunt v Control Securities Ltd 1992 SLT 151.
(1862) 2 J&H 441, 70 ER 1131.
Miller (n 184) 448; it may in any case only very rarely be applicable R
Stevens 'The New Birksian Approach to Unjust Enrichment'  RLR
S Hedley 'Implied Contract and Restitution'  CLJ 235.
Miller (n 184) 447-448.
© 2008 Duncan Sheehan. This HTML edition ©
University of Oxford.
The contents of this page may be downloaded and printed out in single
copies for individual use only. Making multiple copies without
permission is prohibited.
Your must accept our disclaimer before you continue.
The Oxford University Comparative Law Forum is sponsored by CMS Hasche Sigle.