Oxford University Comparative Law Forum
Property, Subsidiarity, and Unjust Enrichment.
by Lionel Smith1
(2000) Oxford U Comparative L Forum 6 at ouclf.iuscomp.org | How to cite this article
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someone were asked, as I was, to write a paper dealing with "proprietary
issues" in the law of unjust enrichment, he or she would most naturally
think of proprietary consequences: that is, the extent to which unjust
enrichments can be reversed by proprietary as opposed to obligationary
responses. This of course would be an interesting study, although it might
lack a certain promise as a comparative work, due to the well-known refusal
of civilian systems to have any truck with such odd and uncontrollable
devices as the constructive trust.2 Instead
I have chosen to consider the interaction between the law of property and
the law of unjustified enrichment from the other end: that is, the extent
to which the existence of a proprietary claim affects the availability
of a claim in unjustified enrichment. Or at least, I chose so to begin;
for the study grew, as such things will, and in the end it has become a
wider look at how and why the availability of unjustified enrichment is
conditioned by the existence of other kinds of claims. The focus is on
the common law, German law and the law of Quebec.
It can be described, then,
as a comparative study of devices for controlling the scope of liability
in unjust enrichment; but it must be emphasized that it is a study of only
some such devices. The grounds on which claims can be made, the meaning
of enrichment, the available defences: all of these could be described
as devices for controlling the scope of liability, and so a comprehensive
study of such devices would amount to a book on the subject. This attempt
is obviously more limited in its amibitions, but it bears remembering that
a restrictive approach taken by a system in one context can be offset by
a more liberal approach in another.
The threshold question is
whether a plaintiff is allowed to make a claim in unjustified enrichment
in respect of the transfer of some asset, in the case where the plaintiff
remains the owner of the asset in question. A simple case will illustrate
the point: if a thief steals my horse, can I sue the thief in unjustified
1. Common Law
The position in the common
law is not definitively settled. One reason may be that the question seems
to have little practical implication. The common law protects property
in movables through the law of wrongs, and in particular through the tort
of conversion which is a tort of strict liability. It is also a tort which
does not admit of the defence of change of position. The tort claim being
wider than the unjustified enrichment claim, there is no incentive to bring
the latter. Even a defendant who came into possession of my horse in good
faith is liable in conversion. There may, however, be some relevance where
the plaintiff's proprietary right is an Equitable rather than a legal one.4
The reason is that claims for interference with a plaintiff's Equitable
proprietary rights are not strict but fault-based.5
If the plaintiff were allowed to deploy an unjustified enrichment claim
instead, the scope of liability might be wider.6
It is also true that such things as limitation periods and the outcome
of choice of law rules might differ depending upon what type of claim the
plaintiff is able to deploy.7
It has been suggested that
in such a case, there is no room for an unjustified enrichment claim. One
argument is that the defendant is not enriched in the requisite sense if
the plaintiff retains his proprietary rights in the transferred asset.8
Under this view, the non-availability of a claim in unjustified enrichment
arises as a matter of logical necessity. The argument is that the elements
of unjustified enrichment are simply not satisfied.
In order to evaluate this
argument, a word must first be said about the measure of recovery. Assume
that the thief stole my horse one year before the time of trial. If my
claim were calculated so as to represent the recovery of the value of one
year's use of the horse, it would be hard to deny it. That value has clearly
been transferred from me to the defendant; and presumably, such a claim
would leave untouched my ownership of the horse. The more difficult question
is whether I can have an enrichment claim measured by the value of my ownership.
Here the objection makes sense, and indeed has a certain logical attraction:
if my ownership has not been transferred, how can I say that the defendant
was enriched by the value of my ownership? On the other hand, the objection
ignores the common law's tendency to multiply remedies, preventing excess
recovery by requiring the plaintiff to elect between them.9
For example, if I were to sue the horse thief in conversion, the normal
measure of damages would reflect the full ownership of the horse, even
though I remained the owner. Upon recovery of the full judgment, the ownership
would be transferred by operation of law to the defendant.10
There is no reason that this system, which was necessitated by the lack
of any ability to revendicate a movable thing, could not operate in unjustified
enrichment claims. That is, the enrichment claim could also be measured
by the value of full ownership of the horse, and upon payment of the judgment,
title would pass. So, it is strongly arguable that the enrichment claim
is available at common law. We now turn to other systems.
2. Roman Law
Roman law provided for the
reversal of unjustified enrichment through a set of actions called condictions.
These were personal claims for the transfer of a specific thing, or of
a fixed amount of money or some other fungible asset. The form of words
used in these claims asked for relief should it appear to the judge that
the defendant "ought to give" to the plaintiff that which was the object
of the claim. In this context, at least in classical Roman law if not earlier,
these words were understood to imply that the object of the claim belonged
to the defendant. So on the face of it, no condiction could logically be
used in the case of the stolen horse with which we are concerned.
But the position was not
governed entirely by logic. One of the condictions was the condictio
ex causa furtiva, and Gaius observed that it could be used against
a defendant guilty of furtum even though he did not become owner
of the stolen thing:
This distinction between
real and personal actions means that we definitely cannot seek something
of our own from another by a pleading: 'if it appears that he has a duty
to give'. For what we own cannot be given to us, because 'give' is to be
understood as meaning giving so that it may become ours. What is already
ours cannot be made more so. No doubt it was from hatred of thieves, to
multiply their liabilities, that the law came to allow against them not
only the claims for twofold or fourfold penal damages [actio furti]
but also the pleading: 'if it appears that they have a duty to give', even
though the real action [rei vindicatio], by which we claim what
is ours, is also competent against them.11
Clearly Gaius viewed the
claim as anomalous. The reason he gives, the hatred of thieves, is not
the only one which has been suggested.12
If we take it as correct, it means that hatred of thieves leads to the
allowance of an anomalous claim in order to make it easier for the plaintiff
to recover, or to recover more. If, regarding the recovery of what was
stolen or its value,13 the plaintiff were
confined to his rei vindicatio, then he would need to prove that
the defendant still had the stolen thing. He would also need to prove his
"quiritary ownership" of the thing. Moreover, the value would be assessed
at the time of the commencement of proceedings, whereas under the condictio
ex causa furtiva, it was taken to be the highest value since the commission
of the theft.14 Finally, the condiction
could be brought against an heir of the thief, unlike a delictual action.15
It may be noted that the condiction, measured by the value of ownership
of the thing, was alternative and not cumulative to the rei vindicatio;
similarly to the common law position, the enrichment claim effectively
transferred a kind of title to the defendant.16
But if allowing this claim
was anomalous, it must be that the "normal" position was that no condiction
was available where the plaintiff remained the owner; only the rei vindicatio
could be brought. Although the concept of furtum was much wider
than our modern idea of theft,17 nonetheless
it was possible for the defendant to acquire the plaintiff's horse in circumstances
which did not amount to furtum; he might find it, or purchase it
in good faith. In such a case, it seems, the Roman law position was that
there was no enrichment remedy, but only the rei vindicatio.18
If we ask why this was, we might be tempted to say that the concepts used
by the Roman lawyers were not sufficiently fine-grained to distinguish
enrichment by use from enrichment by a transfer of ownership. In general
terms, such an idea would clearly be incorrect. The possibility of theft
of possession was recognized; if an owner pledged a thing with a creditor
and then took it away without the latter's consent, this was furtum.19
Moreover, there are cases in which it seems the condictio ex causa furtiva
was available to a plaintiff who was a non-owner in possession, and whose
possession was taken by the defendant.20
So at least against a thief, a transfer of possession could support a condiction,
whether or not the plaintiff was the owner. And it has been argued that
even in the absence of furtum, a plaintiff who was and remained
the owner could use a condiction against a good faith finder of property.21
This brings us back to the
anomaly of furtum. The discussion in Gaius suggests that it was
anomalous in the sense that the claim was allowed even though the facts
did not really fit the words of the formula, the defendant not being the
owner. If it was possible for the owner to use a condiction even in the
absence of furtum, then it was not so anomalous. But it may be that
the anomaly lay in the measure of recovery. Clearly, the condictio ex
causa furtiva allowed recovery measured by the full value of ownership,
and was a non-cumulative alternative to the rei vindicatio. It is
less clear what might be the measure of recovery in the case of a condiction
brought by an owner in the absence of furtum, but one possibility
would be that recovery would be measured only by the value the defendant
had derived by use. This would leave the plaintiff's ownership, and his
3. German Law
Most of the condictions
of Roman law were codified in the BGB, but that code also added a general
enrichment action.22 The doctrine which
has grown up around this part of the BGB is complicated indeed.23
But the law governing the point with which we are concerned seems fairly
clear. Where the plaintiff remains owner of a thing which is in the possession
of the defendant, the defendant not having a right to retain possession,
the provisions on unjustified enrichment in §§ 812-822 do not
govern. Rather, the situation is governed by an "owner-possessor relationship"
and certain provisions of the book on property govern (§§ 987
ff). These provide for the restitution to the owner of any benefits derived
from the thing by the possessor, including fruits but also use value. They
also provide for the recovery from the owner of any necessary expenditures.
The extent of recovery turns in large part on whether the possessor was
in good faith.24
Generally, then, unjustified
enrichment claims do not lie for use value. Or at least, claims which are
sourced in the unjustified enrichment provisions of the BGB do not lie.
If one were to ask why it is that a plaintiff can claim for the use value
under §§ 987 ff, it would seem that the answer is that otherwise
the defendant would be unjustly enriched.25
The use value, which belonged to the plaintiff, was enjoyed by the defendant,
and so there was a transfer of wealth without a legal basis. But the measure
of recovery does not include the value of ownership, and the rei vindicatio
is preserved. This was the position suggested for Roman law, in the absence
of furtum. The parallel is heightened by the fact that in those
cases where title does not pass but nonetheless the "owner-possessor relationship"
does not govern, an unjustified enrichment claim under § 812 is allowed
for the value of possession, and indeed modern German lawyers still refer
to it as the condictio possessionis.26
4. Quebec Law
In the Civil Code of Lower
Canada, as in the French Civil Code, there was no general action for unjustified
enrichment. There was a regime governing the management of the business
of another (negotiorum gestio), and there was a claim for reception
of a thing not due (réception de l'indu), reflecting one
of the Roman condictions, the condictio indebiti.27
However, in Quebec as in France, a general action was recognized by the
courts under the rubric of the actio de in rem verso.28
The general action is now codified in the Civil Code of Quebec, artt. 1493-6.
There are provisions in
the Civil Code which perform a similar function to those in the BGB on
the "owner-possessor relationship." Artt. 928 ff deal with the effects
of possession, and generally regulate the position of a possessor who is
not the owner. On the other hand, artt. 1699-1707 govern "restitution of
prestations."29 Their applicability is set
out in art. 1699 and via certain other provisions;30
the effect is that someone like a finder or a thief of property would be
subject to artt. 931-2, but one to whom the property had been transferred
by the plaintiff would be subject to artt. 1699-1707. Either way, the possessor
must of course return the property if possible;31
and both regimes require a bad faith possessor to render account of the
fruits and revenues of the property.32 Fruits
and revenues do not, however, include use value.33
Under art. 1704, the defendant must account for use value if he was in
bad faith, or if use was the primary object of the prestation, or if the
property was subject to rapid depreciation. Artt. 931-2 are silent on the
matter. Hence there appears to be a gap where the defendant has derived
some significant use value, but the thing was not transferred as a prestation;
for example, if someone has stolen my horse and used it for a year. It
would be natural for this gap to be filled by a general enrichment action.
Challies, relying on French decisions and commentators, thought that an
enrichment by use value could support the actio de in rem verso.34
So it appears that the Quebec position is quite similar to the Roman and
German positions, allowing an enrichment claim for use value only, while
preserving the ability to revendicate.
In these systems, outside
in Roman law, it seems you cannot measure an enrichment claim by the value
of ownership where ownership has not passed. The enrichment claim is not
permitted to supplant the rei vindicatio. But furtum shows
the possibility of another solution, one which is arguably adopted by the
common law. That is, through the use of appropriate doctrinal tools to
avoid over-compensation, it is possible to create a relationship of elective
concurrence between the enrichment claim and the rei vindicatio.
So the question becomes, why has this possibility been resisted? Why is
the relationship instead one of subsidiarity?
This section will be concerned
to lay out a brief comparative overview of some different kinds of subsidiarity
applicable to unjustified enrichment claims in different systems. In the
next section, an attempt will be made to understand the phenomenon of subsidiarity.
It is, however, necessary to begin with definition and differentiation,
because subsidiarity is a concept with different meanings. One understanding
of it is as a kind of opposite to concurrent liability. On this approach,
subsidiarity is a relationship between different types of claims such that
one type of claim is disallowed by the presence of another claim.35
If unjustified enrichment were subsidiary in this way to the rei vindicatio,
then if the rei vindicatio were available, a claim in unjustified
enrichment would not lie even if all of its elements were established.
If, on the other hand, the rei vindicatio could not be made out,
the claim in unjustified enrichment would be permitted. As we have seen,
this appears to be the law of Quebec and of Germany.
Then there is a much stronger
idea of subsidiarity, which denies the availability of a claim in unjustified
enrichment due to the applicability of some other set of legal principles,
even if, according to those principles, no claim will lie. An example will
serve. Assume that an occupier of land, who is not the owner, has made
improvements to the land. If a codified system has a set of provisions
which deal specifically with such improvements, and if, according to those
provisions, the occupier has no claim, then a court would probably also
deny a claim based on a general principle against unjustified enrichment.36
The important point to notice is that here, the plaintiff has no claim
at all. Weak subsidiarity, as discussed in the previous paragraph, only
directs a plaintiff to the correct claim; strong subsidiarity can deny
the plaintiff any claim. It can also be said that while weak subsidiarity
is a relationship between claims, strong subsidiarity is better understood
as a relationship between legal dispositions or sets of rules.
It will be argued below
that each of the systems under consideration makes unjustified enrichment
strongly subsidiary in some circumstances. It would be possible for a system
to make unjustified enrichment claims weakly subsidiary to all other claims,
and indeed it appears that this is the law of Quebec. It would not, however,
make sense for a system to make unjust enrichment strongly subsidiary to
all other rules of law. The effect would be that there could never be a
claim in unjustified enrichment.37 This
can be illustrated by a recent French case, in which the plaintiff sought
recourse by an action of guarantee as well as an action de in rem verso.38
The action of guarantee was rejected since no fault was shown on the part
of the defendant, but the claim in unjustified enrichment was allowed.
The defendant appealed on the ground that this ignored its subsidiary character,
but the Cour de cassation rejected the appeal. One might view the
decision as an occasion for dispensing entirely with subsidiarity;39
but it can be understood more narrowly, as holding that there was no strong
subsidiarity between the action of guarantee and the action in unjustified
enrichment. In that light, it does not touch the possibility of a general
weak subsidiarity, nor the need for strong subsidiarity in some cases.40
1. Strong Subsidiarity
The first step will be to
examine strong subsidiarity. That is, in what circumstances do other legal
regimes exclude the possibility of a claim in unjustified enrichment, even
where the elements of the claim are present, and even where the plaintiff
has no other claim against the enriched defendant?
(a) Excluding Claims due to the Relationship Between Plaintiff and Defendant
Strong subsidiarity often
operates based on the legal relationship between the plaintiff and the
defendant. There are a number of examples.
(i) Illegal, Void or Unenforceable Transactions
Consider the case where
some statutory provision comes into play to deny the plaintiff a right
which it would otherwise have. Take the case of an illegal contract under
which the plaintiff has conferred a benefit upon the defendant. A rule
of law operates to take away the plaintiff's ability to sue for contractual
performance; can the plaintiff nonetheless sue in unjustified enrichment
to recover the benefit it has conferred? All legal systems have struggled
with this question.41 It can also arise
where the contract is made merely unenforceable or void, rather than illegal.
It is a question of trying to determine the intention of the legislator;
would allowing the enrichment claim subvert the goals of the rule which
made the contract illegal or unenforceable?42
It is clear that in any system, an unjust enrichment claim must be excluded
by any legislative provision which implicitly denies it.
(ii) Different Types of Unjustified Enrichment Claims
The same reasoning can apply
to the case in which a system provides more than one type of claim for
unjustified enrichment. It might be that a plaintiff will not be allowed
a free choice among them, even where the facts of the case satisfy more
than one claim. Such a doctrinal rule could be justified where a general
unjustified enrichment claim is provided along with other unjustified enrichment
claims which apply only to particular fact patterns. For example, in Quebec
there is a general enrichment action and also the action for réception
de l'indu. It was held, under the Civil Code of Lower Canada, that
the general claim is not appropriate where the facts fit the claim for
de l'indu, even though the latter claim could not succeed.43
Another example is provided by artt. 955 ff, which govern the position
relating to a landowner's obligation to pay for improvements to land; there
is no room for the general enrichment action where these provisions are
apt to decide the case, even if no claim lies under them.44
Similarly, in German law the provisions governing the "owner-possessor
relationship" expressly exclude any other enrichment remedy on facts within
that relationship.45 In both of these systems,
where a plaintiff can claim his expenses for managing the business of another,
unjustified enrichment is excluded.46 This
kind of subsidiarity does not seem to be relevant in the common law system,
which does not have a general enrichment claim alongside more specific
(iii) Unjustified Enrichment and Contracts
Unjustified enrichment claims
are not allowed where the matter in issue is dealt with by a subsisting
contract between the parties. In that case, it is said, the contract governs,
and only if it can be disposed of in some way is a claim in unjustified
enrichment available.48 We might initially
think of this as an example of weak subsidiarity, on the view that rights
in unjust enrichment are subsidiary to the parties' contractual rights.
On a closer examination, however, it appears that the governing principle
is strong subsidiarity.
We cannot say that claims
in unjustified enrichment are subsidiary to claims in breach of contract,
because, in all of the systems under consideration, such claims are alternatives.
If a contract is cancelled for breach (and conceptualisations of "cancelled"
vary in different systems), the non-breaching party is allowed to choose
to recover the benefits it conferred, as an alternative to seeking damages
valued by performance. A system may view this claim to recover benefits
as a contractual one, or as founded on unjustified enrichment.49
The claim is not one which can be understood as enforcing any contractual
promise, and it is arguable that wherever the claim may appear in a civil
code, its function is to prevent unjustified enrichment.50
We might try to formulate
the relevant principle by saying that enrichment claims are weakly subsidiary
to primary contractual rights. This would reflect the general position
that there can be no enrichment claim so long as there is a subsisting
contract between the parties. Of course, this covers the case where there
has been no breach of the contract; but it also deals with the position
where there has been a breach, so long as the breach does not lead to cancellation
of the contract. Even this, however, does not appear to be quite wide enough.
Sometimes, umjustified enrichment is excluded even where there are no primary
rights. This can be illustrated by Rillford Investments Ltd. v. Gravure
International Capital Corp.51 The plaintiff's
business was to broker mergers and acquisitions. The defendant wanted to
be acquired and it entered into a contract with the plaintiff providing
for the payment of a healthy commission to the plaintiff, should the plaintiff
arrange for the acquisition of the defendant by another corporation. The
terms of the contract provided that the arrangement would end after 60
days, but that the fee would be payable if the defendant were acquired
within 365 days by a company introduced by the plaintiff. The plaintiff
introduced a potential buyer, Graphic Corp., but no sale was agreed. Two
and a half years after the agreement was executed, Graphic Corp. acquired
the defendant. The plaintiff sued, relying on implied contract and unjust
enrichment, but the claim was rejected. Although the contract said nothing
about liability in unjustified enrichment, the court held that it "contemplated
the possibility that the plaintiff would receive no compensation if the
defendant was enriched by virtue of the sale of his business beyond the
time of the expiry of the agreement." By the time all of the facts had
occurred which allegedly generated an unjustified enrichment, there was
no contract; there were no primary or secondary obligations. And yet somehow
the contract excluded the enrichment claim. The decision was made under
the common law, but one could expect a similar holding in each of the systems
under consideration. If this be right, it follows that the unavailability
of unjust enrichment in the contractual context cannot be understood through
weak subsidiarity. Rather, the existence of a relevant distribution of
risks and rewards between plaintiff and defendant excludes unjustified
enrichment, even though the plaintiff has no other claim. This is strong
At this point it must be
observed that Stephen Smith has now argued that for the common law, there
should be concurrent liability in contract and unjustified enrichment just
as there is between contract and tort.52
The gist of the argument is the same as that which eventually prevailed
in the debates about contract and tort: that is, the only question is whether
the elements of the different causes of action can be established, and
if they can, then both types of claim are available. Clearly, this argument
depends on the absence of any governing principle of subsidiarity, and
it must be assessed in the light of the justifications for this principle
which are discussed below.
(b) Excluding Claims due to Relationships Involving Third Parties
In the previous section,
it was found that where there is a relevant distribution of risks and rewards
between plaintiff and defendant, then in general enrichment claims are
excluded. Here we need to consider some slightly more complex situations,
namely where there is no contract between plaintiff and defendant, but
there is a contract between one or the other of them and some third party.
(i) Plaintiff's Contract with a Third Party
Consider first the case
in which the plaintiff has a contract with some third party. This can be
illustrated by the facts of the arrêt Boudier,53
the case in which the Cour de cassation recognized the actio
de in rem verso as a general enrichment remedy. The plaintiff contracted
with a lessee of land to fertilize the land, and did so. The plaintiff
was unable to recover the price because the lessee was insolvent. The plaintiff
sued the lessor, who by that time had taken possession of the land. Recovery
in that situation on the basis of unjustified enrichment raises certain
difficulties. The plaintiff entered into a legal relationship with the
lessee which provided for the payment for the fertilizer, and, with his
right to payment still intact (albeit impaired by the lessee's insolvency),
he was allowed to recover from another defendant. The policies will be
discussed further below,54 but it may be
observed here that Challies noted that in two cases in 1939, the Cour
de cassation disallowed claims in similar fact patterns.55
The Civil Code of Quebec seems clearly to deny recovery such a case, as
art. 1494 provides, "Enrichment or impoverishment is justified where it
results from the performance of an obligation." There is no stipulation
that it has to be an obligation owed to the person who was enriched.56
If the plaintiff was performing an obligation, his impoverishment was justified,
and under Quebec law (as in France) the claim lies only if both the enrichment
and the impoverisment were unjustified.57
The common law does not
seem to have found its way to any firm doctrinal rule, but most cases deny
recovery in this type of situation. Canadian cases sometimes cite the plaintiff's
contract with a third party as the "juristic reason" for the defendant's
enrichment.58 Lord Goff has suggested that
"the existence of a remedy in restitution in such circumstances must still
be regarded as a matter of debate," but that "serious difficulties arise
if the law seeks to expand the law of restitution to redistribute risks
for which provision has been made under an applicable contract."59
Dawson said that the denial of recovery was "almost unchallenged" in U.S.
law.60 He said "almost" because he noted
a line of cases in which lawyers were allowed to recover from those whom
their work had benefited when they were unable to enforce their contractual
claims. He was not overly impressed by the "success of American lawyers
in escaping their self-imposed limitations";61
but Canadian lawyers seem to have taken up the torch. In Giffen, Lee
& Wagner v. Zellers Ltd.,62 Zellers
was sued in negligence by another party. The action was taken over by its
liability insurers, who retained the plaintiff law firm. The plaintiffs
arranged a tentative settlement and sent an account for $3,220 to the insurer,
which by then had become insolvent. The law firm successfully sued Zellers
for this amount in unjust enrichment. To be fair, there is at least one
recent case allowing recovery where the plaintiff was not, so far as can
be discovered, a lawyer.63
In Peter Birks' contribution
to this volume, he takes the view that the reason the plaintiff cannot
recover in a case like this is that the defendant's enrichment is not at
the expense of the plaintiff. On our assumptions, though, the plaintiff
can prove all of the elements of his enrichment claim against the defendant,
and it is only the presence of the plaintiff's contract with another party
which bars the claim. In other words, saying that the enrichment was not
at the plaintiff's expense is just a conclusion of law which is reached
by applying a principle additional to the basic one which requires only
that the plaintiff conferred the enrichment on the defendant.64
The present paper is attempting to analyse this additional principle.
If we consider the position
on this point in Germany, the law is absolutely clear; there can be no
claim in unjustified enrichment where the enrichment was conferred pursuant
to a contract between the plaintiff and some other party. As a matter of
doctrinal development of the words of § 812 of the BGB, German law
distinguishes between cases where the enrichment can be described as a
"performance" (Leistung), and cases of enrichment in any other way.
In this context, a performance means an enlargement of another's estate
which is brought about intentionally and with a specific purpose in mind.65
"The concept ofLeistung serves as a compass in this territory; once
one has found who has performed to whom, one will normally know the right
plaintiff and the right defendant for an action in unjustified enrichment."66
The German rule of subsidiarity is that whenever there has been a performance,
there can be no claim based on enrichment in any other way.67
If the plaintiff enriched the defendant pursuant to the plaintiff's obligations
under a contract with a third party, then there has been a performance
between the plaintiff and the third party. Any enrichment claim by the
plaintiff against the defendant is excluded.68
(ii) Defendant's Contract with a Third Party
Briefly we can consider
another type of case. What if it is the defendant who is in a contractual
relationship with some third party, which relationship contemplates the
provision of the enrichment by the plaintiff? One feature of this type
of case is that even in the absence of any rule of subsidiarity, the claim
may fail as the plaintiff may be unable to prove that the defendant was
enriched. The defendant will be liable to pay, or will already have paid,
the third party under the contract.69 On
the other hand, in the common law at least, a defendant's attempt to deny
its enrichment on the basis of dealings with a third party is usually understood
as a matter of defence.70 This is parallel
to the discussion above, in the case of the plaintiff's contract with a
third party;71 the denial of recovery in
such cases can be explained on the basis that the defendant's enrichment
was not "at the expense of" the plaintiff, but the reasoning behind that
conclusion must be unearthed.
Even though we are assuming
here that the plaintiff was not bound contractually to anyone, this does
not mean that the claim against the defendant is the plaintiff's only possible
recourse. Why might the plaintiff have enriched the defendant? Although
there are other possibilities, it is most likely that the plaintiff was
attempting to fulfil its obligations under a contract with some other party
which turns out to be void or unenforceable.72
This might be the same third party with whom the defendant contracted,
or a fourth party. Under German law, since in this case the plaintiff was
making a performance toward his contractual counterparty, his only claim
will be an enrichment claim against that counterparty. Quebec law appears
to generate the same conclusion. Liability for unjustified enrichment under
art. 1493 is defeated if either the defendant's enrichment or the plaintiff's
impoverishment is justified; under art. 1494, "Enrichment or impoverishment
is justified where it results from the performance of an obligation." So
in this case of defendant's contract with a third party, it could be argued
that the defendant's enrichment is justified, since it resulted from the
performance of the obligation of the third party.73
There is no stipulation that the obligation must be owed by the plaintiff.
In the common law, there does not appear to have emerged any trend toward
denying the plaintiff an enrichment claim against the defendant, but there
are very few cases which are not also "combination" cases as discussed
Many cases involve a combination
of the plaintiff's contract with a third party and the defendant's contract
with a third party. It might be that the plaintiff and the defendant each
have a contract, but each has contracted with a different party. More likely,
the plaintiff and the defendant have each contracted with the same third
party. That is the case which arises where a building project involves
a general contractor and subcontractors. The owner of the site contracts
with the general contractor, and the general contractor contracts with
subcontractors. If the general contractor becomes insolvent, can the subcontractors
sue the owner in unjustified enrichment? There will often be legislative
solutions to assist the subcontractors, such as the possibility of registering
a real security interest in the land, or a statutory trust fund of payments
made by the owner to the general contractor which is for the benefit of
subcontractors. Such solutions are motivated of course by policies aimed
at protecting the subcontractors, and cannot be seen as reflecting the
general law.75 Moreover, such remedies cannot
affect the enrichment claim except in a system with a wide-ranging subsidiarity
Since this combination involves
both a plaintiff's contract with a third party and a defendant's contract
with a third party, it follows that if either of those configurations denies
the plaintiff its enrichment claim, there can be no claim here. Some recent
common law cases seem to support this view.77
Unfortunately, the simple denial of recovery in such a case does not make
clear which of the two contracts is keeping the plaintiff from recovering.78
2. Weak Subsidiarity
The widest possible principle
of weak subsidiarity would provide that a claim in unjustified enrichment
was unavailable where the plaintiff had any other claim against some defendant.
For example, if the plaintiff could establish all of the elements of an
enrichment claim against the defendant, but it transpired nonetheless that
the plaintiff held a tort claim against some third party, the enrichment
claim would be disallowed. No system seems to have a principle as wide
as this. An argument along these lines was made and rejected for Quebec
law under the Civil Code of Lower Canada.79
The widest possible version
of weak subsidiarity operating inter partes would say that if the
plaintiff has any other claim against the defendant, unjustified enrichment
cannot be used. This appears to be the law of Quebec, in respect of the
general enrichment action, because art. 1494 of the Civil Code of Quebec
provides that enrichment or impoverishment is justified where it results
"from the failure of the person impoverished to exercise a right of which
he may avail himself or could have availed himself against the person enriched."80
A general doctrine of weak subsidiarity of unjustified enrichment would
explain the non-availability of an enrichment claim where the rei vindicatio
subsists, the phenomenon observed for Germany and Quebec in Section II
of the paper. An argument has been made that the common law takes a similar
It would appear, however,
that the German version of subsidiarity is not as wide as that prevailing
in Quebec. The reason is that a generalized weak subsidiarity must make
unjustified enrichment claims unavailable where there is a claim based
on a wrong. If, as is suggested by the language of art. 1494, this is the
law of Quebec, then it would be another reason for disallowing an enrichment
claim in the case of the stolen horse under Quebec law.82
But in German law, unjustified enrichment is not subsidiary to the law
of wrongs.83 Nor has it been suggested,
to my knowledge, that there is any such subsidiarity in the common law.
So in these systems, a narrower principle applies.
A final point can usefully
be addressed before attempting to understand the reasons for subsidiarity.
It relates to prescription. Assume that an unjustified enrichment claim
is subsidiary to another claim; make it a claim for breach of contract,
where the contract has not been terminated by the breach. Now assume that
the contractual claim is prescribed by the passage of time. Does it still
preclude the enrichment claim? The principle in all systems appears to
be that it does.84 This might be thought
to indicate a relationship of strong subsidiarity, since the claim in unjustified
enrichment is denied even though the other is unavailable. Conversely it
might be thought to be inconsistent with a relationship of weak subsidiarity;
that only operates when there is another viable claim. It does, however,
seem possible to reach this result even if the relationship is one of weak
subsidiarity. This involves treating the case of a prescribed claim in
the same way as a viable claim, rather than treating it like the situation
where the substantive elements of the claim cannot be established.85
It appears therefore that conclusions about the nature of the subsidiarity
relationship cannot be drawn from the treatment of prescribed claims.
IV. Understanding Subsidiarity
1. A Model of Subsidiarity
The preceding comparative
study suggests that subsidiarity is a general feature of the law of unjust
enrichment, although the strength of the subsidiarity principle varies
widely from system to system and even within each system. This section
is an attempt to understand what might justify this subsidiarity. I am
not primarily concerned here with the way in which subsidiarity is worked
out in doctrinal terms. In those terms, a claim may be denied in one system
due to a recognised principle of subsidiarity; in another system, it may
be denied because the defendant's enrichment is said not to be at the plaintiff's
expense. The concern here is with making sense of the results, in terms
It does not appear that
strong subsidiarity can be justified by a desire for orderliness in our
legal categories. If claims exist, it is presumably to meet the demands
of justice, and therefore any principle which will deny an otherwise existing
claim must be one with more normative weight than this.86
It might be possible to understand weak subsidiarity in this way, since
weak subsidiarity only orders claims and cannot exclude them. Even here,
however, substantive rights are affected and one would hope for a better
Another possible justification
might be the general principle that the specific overrides the general.
certainly comes to mind when we consider how codified systems make the
general unjustified enrichment claim strongly subsidiary to a more specific
regime. This result can be seen to derive directly from the implied intention
of the legislature; but the same principle could be deployed in a wider
way, if unjustified enrichment claims could somehow be understood as more
general in their application than such things as the terms of a specific
contract. A well-known feature of the French legal tradition is its refusal
to allow concurrent liability in contract and in delict, which may be understood
as based on a philosophy that the specific terms of a particular contract
should govern in preference to a general law of fault, especially one so
general as is usual in the French tradition. But this understanding would
explain too much and too little at the same time. It would explain too
little, because there are elements of strong subsidiarity for unjustified
enrichment claims even in systems, like German law and the common law,
which have no general aversion to concurrent liability. It would explain
too little, because in the French legal tradition unjustified enrichment
claims are subsidiary (albeit weakly so) even to delictual claims, and
it is difficult to see how this could be explained on the basis that the
delictual claim is somehow more specific than the claim in unjustified
What seems to be needed
is a conviction that unjustified enrichment claims serve a corrective role.88
In the common law, some parts of unjust enrichment come from Equity, such
as the resulting trust. But even those parts of the law which are rooted
solely in the common law can be said to be derived not from Equity, but
from equity. So said the great common law judge, Lord Mansfield;89
and civilian lawyers, who have nothing to do with Equity, also view unjustified
enrichment as based on equity. In both France and Quebec, the need for
this corrective was so strongly felt that a whole head of liability was
created by the courts outside of the civil code, and the basis for this
step was équité.90
The impetus for the inclusion of a general enrichment action in the BGB
came from von Gierke, who viewed it as equitable in nature.91
This only means that it is a corrective.
The idea of one part of
the law operating so as to correct other parts of the law is a slightly
curious one. It makes sense in relation to laws which are of different
orders, as where a statute is declared void due to its inconsistency with
some constitutional principle. This may be why some German jurists have,
in the past, viewed unjustified enrichment as a kind of higher law.92
But paradoxically, to the extent that it is subsidiary, it is a kind of
lower law. In fact, "correction" by a disposition of a higher legal order
is just the natural outcome of that hierarchical structure; the higher
order governs the lower. It is when the parts of the law in question are
of the same order that correction is more difficult to conceptualise.
What follows from the conceptualization
of unjustified enrichment as corrective of other parts of the law, while
yet being of the same order as those other parts? We can find a parallel
in that other great corrective system, Equity. One of the "maxims of Equity"
was (or is, depending on one's view of such things) that "Equity supplements
but does not contradict the common law." This is, at the same time, fundamentally
important and completely false. It is false inasmuch as any supplementation
amounts to a kind of contradiction. There is no point in having a second,
supplementary set of rules unless it changes the outcome which the first
set would give. On the other hand, the maxim is fundamentally important
in the sense that it was the whole basis for the creation of Equity. When
the first Chancellors enforced the first uses against legal title holders,
the suggestion that they were contradicting the common law would have appalled
them. They were merely requiring those people to behave according to good
conscience (and telling them what good conscience required). Of course
Equity developed into a set of legal rules, but the same reasoning holds:
having a second set of rules only makes sense if the second set "supplements
but does not contradict" the first set. If you wanted to contradict the
first set, you would just change it. How can the circle be squared? For
one legal regime to correct another, without possessing the authority of
belonging to a higher legal order, it must in a sense go to a lower level;
it must defer, at least nominally, to that which it corrects. Equity corrects
the common law, but it cannot correct too much, or too obviously; the correction
cannot lay itself open to the charge of being a contradiction.93
So, down the centuries to the present day, there are those who want Equity
to do more, and those who want it to do less. Among the latter, there are
concerns about containing it. Another consequence of the corrective nature
of Equity is that it is very difficult to define it in any positive way:
you cannot understand what it is without understanding that it is a corrective,
and without having at least some grasp of that which it corrects.94
The parallels with unjustified
enrichment are striking. It is a corrective, and just as in the case of
Equity, this makes it difficult to define positively.95
It can only be understood in the light of that which it corrects. Furthermore,
since this corrective regime does not stand higher in the legal order than
which it corrects, it must not correct so much as to contradict. Moreover,
the concerns with containing unjust enrichment liability are always to
the fore.96 So the question becomes, what
are the limits? When will correction amount to contradiction? The main
difficulty here (and this is a problem in the relationship between the
common law and Equity as well) is what might be called "negative implication."
This name is borrowed from a doctrine (its status now uncertain) of Canadian
constitutional law.97 Sometimes it is possible
for a provincial legislature and the federal Parliament to both pass legislation
which overlaps in its effects, each level of government being able to point
to one of its jurisdictional powers to justify the act which it has passed.
If the two pieces of legislation conflict, the federal legislation prevails
under another doctrine called "paramountcy."98
But do they conflict? This is where negative implication might have a role
to play. Here is a simple example.99 The
federal Parliament, under its power over banking, passed legislation which
provided rules for taking and enforcing a kind of security interest. The
provincial legislation, under its power over property and civil rights
in the province, passed legislation which required formal notice to the
debtor before property subject to a security interest could be seized.
The two regimes did not conflict in the sense suggested by many other cases,
because it was perfectly possible for a bank to comply with both the federal
and the provincial rules. But the doctrine of paramountcy was held to apply.
In passing its legislation, the federal Parliament implied certain things,
including that seizure could not be made more difficult by a notice requirement.
The provincial legislature must avoid conflict not only with what the federal
act says, but with what it implies is not to have anything said about it.
It is as though the federal act casts a shadow beyond its express provisions,
which the province must not enter. One expression sometimes used is that
the federal Parliament has "occupied the field."
If this framework can be
used to understand subsidiarity, then we can say that to different extents,
corresponding to different conceptions of subsidiarity, the law of unjustified
enrichment is not supposed to contradict the effects of other legal institutions.
Weak subsidiarity sees a contradiction only where another recourse actually
exists. Strong subsidiarity incorporates the idea of "negative implication,"
so that in assessing whether or not there is a contradiction, we must determine
the extent to which other legal institutions cast shadows which unjustified
enrichment cannot enter. Unjustified enrichment must yield to the positive
dispositions and also to the negative implications of those other legal
2. Implications of the Model
Let us first apply this
concept to the phenomenon, discussed earlier, of the exclusion of unjustified
enrichment claims by statutory implication. A statute makes a contract
unenforceable; can the plaintiff claim in unjust enrichment for benefits
transferred? We have to ask whether the policy which made the contract
illegal or unenforceable excludes the enrichment claim. In other words,
do the provisions which nullify the contract cast a shadow over the law
of unjustified enrichment as well? Have they occupied the field? Here the
relationship between the statute and the enrichment claim is clear, because
these dispositions are of different legal orders. In other areas the matter
may be less clear.
(a) Unjust Enrichment and Contract Law
We can start by looking
at the relationship between contract and unjustified enrichment. The comparative
study above suggested that all legal systems make unjustified enrichment
strongly subsidiary to the law of contract: the existence of a contractual
regime can exclude an enrichment claim, even where there is no contractual
claim. On the present analysis, this means that unjustified enrichment
is viewed as in some sense corrective of contract. Or, perhaps more precisely,
unjustified enrichment is corrective of something with which contract tends
to deal; so that if contract does deal with it, there is no room
for correction. Can this case be made? There are many ways of understanding
what contract is about. Maybe it is about keeping promises, maybe it is
about wealth maximization, maybe it is about reasonable reliance. But on
any view, it seems, contract is about the transfer of benefits, in the
sense that what people do, or promise to do, under contracts is thought
by the other party to the contract to be of some benefit. Unjustified enrichment,
at least over much of its range, is about the reversal of non-consensual
transfers of benefits.100 If contract law
deals with the consensual transfer of benefits, it makes sense that unjustified
enrichment, dealing with defective or non-consensual transfers, should
stand in a corrective and subsidiary role to contract.101
Clearly, then, between the
parties to the contract, the contract casts a long shadow. It occupies
the field relating to the transfer of benefits within the contractual framework.
The length of the shadow which is cast is a matter of interpreting the
contract to decide whether or not it dealt with the benefit in issue, even
if only in a negative way. In Hoffman v. Sportsman Yachts Inc.,102
the plaintiff was buying a boat from the defendant for $174,345. There
was a term which provided for the price to rise, and on delivery the defendant
relied on this and demanded $202,500. The plaintiff paid but then sued
to recover the difference of $28,155, arguing that the term was not enforceable.
For reasons which are immaterial here, the judge agreed that the contract
had to be read without this term. So amended, the contract had nothing
to say about the extra $28,155. One of the things which the contract was
very much about was the price of the boat, but without the disputed term,
the $28,155 was not referable to the price, even though it was paid as
part of the price. It was therefore recoverable. If that result seems obvious,
recall Rillford Investments Ltd. v. Gravure International Capital Corp.,103
which was discussed earlier. The plaintiff conferred a benefit long after
the contract between the parties had ended, but the court held that the
contract "contemplated the possibility that the plaintiff would receive
no compensation if the defendant was enriched by virtue of the sale of
his business beyond the time of the expiry of the agreement." This is clearly
an example of negative implication.
So sometimes a claim in
unjustified enrichment may be denied even where there is no continuing
contractual tie between the parties. The consensual distribution of risks
and benefits can continue to govern, excluding unjustified enrichment,
even when the contract has ceased to operate. Conversely, there might be
cases where a claim would be allowed even though the matter was governed
by a contract. If the plaintiff owed the defendant £50 for work done,
and the plaintiff paid when the defendant threatened him with personal
violence, it might well be that the money would be recoverable. The matter
is governed by a contract, but the consensual distribution of risks and
benefits did not contemplate personal violence, and so the unjustified
enrichment claim is not excluded.
It begins to appear that
unjustified enrichment is not actually subsidiary to contract law as such.
Rather it is excluded by an operative distribution of risks and benefits.
When we say that there can be no claim in unjustified enrichment so long
as there is a subsisting contract, we are making a slightly inaccurate
generalisation by aiming at a false target. A subsisting contract usually
corresponds to an operative distribution of risks and benefits, but the
examples above show that it does not always do so. What implications does
this understanding have for the situations discussed above, where the contract
is not between plaintiff and defendant but between one (or both) of them
and some other party? Can the bargain cast a shadow on third parties? The
case of the plaintiff's contract with a third party seems to be within
the principles being discussed here. The plaintiff is party to a regime
governing the conferral and receipt of benefits, and that regime remains
in force. An enrichment claim against a third party would contradict that
regime if the contract is understood in this way: in providing for some
counterperformance for what the plaintiff had done, the contract negatively
implies that there is to be no other right of payment. The common law,
which does not appear to have committed itself yet, may therefore be on
the right track in moving, as it seems to be, toward a rule excluding enrichment
claims in this situation.104 The common
law has a strong commitment to privity of contract, and it might be thought
to contradict that to say that the contract between the plaintiff and the
third party has this effect on the legal position between the plaintiff
and the defendant, who is not a party to the contract. In fact, the privity
argument cuts both ways: nobody should have to pay for benefits conferred
under a contract to which he was not a party.105
But in the end privity as such seems to be irrelevant, since it is about
controlling contractual liability.
This question has been examined
most carefully by German jurists, and it is clear that in that system,
contracts cast shadows over third parties. The doctrinal reason is that
where the plaintiff has rendered a performance (Leistung), no enrichment
claim can be brought except against the person who received the performance.
Thus, where the plaintiff enriched the defendant pursuant to the plaintiff's
contract with a third party, the plaintiff has no enrichment claim. Moreover,
in German law this effect applies even if the plaintiff's contract is void.
His actions still count as a performance and have the same effect. The
applicable policies have been elucidated by German jurists, in particular
Canaris. He formulated three principles governing the availability of third
party enrichment claims in a contractual context.106
These are said to apply where two parties have tried to contract, successfully
or not. One principle is that the parties should bear the risk of insolvency
of their chosen counterparty. Moreover, the parties should be able to rely
upon, and to be bound by, the defences they have against one another. These
are the reasons why plaintiffs are not allowed to make claims against third
parties. Such claims would be a way of avoiding the effects of the insolvency
of their chosen counterparty, or of avoiding his defences. While this learning
is very instructive, it is inconsistent with the view which appears to
be emerging in the common law, to the effect that void contracts can have
no influence on the law of unjust enrichment.107
The difference between the two systems can be understood in this way. German
law gives effect to the parties' transaction as creating and distributing
certain risks in relation to the transfer of a benefit, even if the transaction
fails to create a contract; and these effects are sufficient to exclude
the corrective law of unjust enrichment. The common law takes the voidness
of the contract to exclude any legal effects whatsoever.
The German approach might
well be considered more sophisticated in this regard. We have already seen
that even within the common law, it is inaccurate to say that unjust enrichment
claims are excluded by contract. That statement is, in extreme cases, both
too wide and too narrow. The point can be further tested by recalling the
example of the building project. The owner contracts with the general contractor,
and the general contractor contracts with the subcontractor. Can the subcontractor
sue the owner in unjustified enrichment? Surely not, if both contracts
are valid; and the same result must follow if both were valid, but are
now terminated by complete performance on both sides. By imagining that
one or both of the contracts is void we can test what really bars the action.
German law will tell us that the subcontractor can never sue the owner
in unjustified enrichment even if both contracts are void; and the theoretical
underpinnings for that position seem formidable.
The position in Quebec makes
an interesting contrast. Under the Civil Code of Lower Canada, following
French law, it would appear that the plaintiff who had a contract with
a third party could not prima facie sue the defendant in unjustified
enrichment. This result was superseded, however, in the case in which it
mattered most: when the third party was insolvent. This was the situation
in the root case of the whole body of jurisprudence.108
It was sometimes explained doctrinally by saying that the action de
in rem verso was not subsidiary to another claim if there was a factual
obstacle to that other claim.109 To the
extent that the insolvency policies discussed above are accepted, however,
this result seems difficult to justify. The wording of art. 1494 of the
Civil Code of Quebec appears apt to alter this result for the future; it
provides that "Enrichment or impoverishment is justified where it results
from the performance of an obligation."110
The analysis based on a
consensual distribution of risks can also be used to deal with another
point. In Kleinwort Benson Ltd. v. Lincoln City Council,111
the House of Lords allowed a claim based upon mistake of law, even though
the swap transaction under which the payments had been made was fully executed.
One of the arguments by which the defendants tried to resist payment was
based upon the logic of mistake. It was said that in such a case, the force
of the mistake was spent.112 The argument
in those terms was rejected, as it had been in earlier litigation where
the claim was based on failure of consideration.113
In other words, the "executed transaction" defence does not seem to work
when it is tied into the logic of unjust factors. A mistake is a mistake,
and a failure of consideration remains one, even where the transaction
is fully executed. But if we recognise that unjust enrichment is excluded
by the existence of an operative distribution of risks and rewards, that
could be used to build an independent principle which excluded claims in
such cases. The distribution of risks was fully realised, leaving no room
for unjust enrichment. This of course would also depend on following the
German lead in recognising that such an effect can occur even where the
contract embodying the distribution is void.
This argument is not intended
to imply that the case itself was wrongly decided, but the result may turn
on the fact that the defendant was a public body which lacked capacity
to enter into the transaction. Allowing restitution can be seen as necessary
to give full legal effect to that lack of capacity, which is imposed as
a protection for the defendant's constitutuents.114
This permits a final point to be made. The argument in this section has
been that subsidiarity in the context of contracts turns on the idea that
a relevant consensual distribution of risks and rewards ousts unjustified
enrichment, to the extent that the latter is based on non-consensual transfers
of benefits. The discussion of Kleinwort Benson Ltd. v. Lincoln City
Council emphasises that in some cases, liability in unjustified enrichment
is not based on the defective consent of the plaintiff to the transfer
of wealth in question.115 If the argument
herein is correct, then in exactly those cases we should expect to find
that the existence of any consensual distribution of risks and rewards
cannot exclude liability in unjustified enrichment.
(b) Unjust Enrichment and Property Law
We now turn to the interaction
between the law of unjustified enrichment and actions which vindicate property
rights. The earlier analysis suggested that enrichment claims are subsidiary
to the rei vindicatio in German and Quebec law. As was mentioned
above, unjustified enrichment, in the widest sense, is about the reversal
of defective transfers of value. Some such transfers are by way of services,
but many are by way of transfers of property. So it seems justifiable to
say that one function of unjustified enrichment is as a corrective of property
transfers, which would suggest that unjustified enrichment would be subsidiary
to actions which vindicate property rights. As was mentioned above, this
has been suggested as the common law position, but the matter is far from
clear.116 It is complicated by the absence
of any rei vindicatio for movables in the common law system. Property
in movables is protected by the law of wrongs, and it is not suggested
that unjust enrichment is subsidiary to the law of wrongs. On the other
hand, there is a rei vindicatio for immovables, and it may well
be that a claim in unjust enrichment, measured by the value of ownership
of an immovable, would not lie where the plaintiff still held ownership
of the immovable.117 Similarly, Equity
can provide the equivalent of a rei vindicatio in the form of a
declaration of trust and consequential orders, and it has been held that
no claim in unjust enrichment lies where the plaintiff retains its Equitable
ownership of the transferred asset.118
In other words, wherever a rei vindicatio is potentially available,
its actual availability seems to preclude unjust enrichment.
We may ask whether the subsidiarity
is strong or weak. Even though unjustified enrichment can be understood
as corrective of property dispositions, their interaction does not seem
to generate the same concerns about "negative implication" as does the
interaction of unjustified enrichment and contracts. The presence of a
vindicatio may exclude an enrichment claim--this is weak subsidiarity--but
the absence of any claim which vindicates property will not generally
do the same. In other words, the fact that property has passed to the defendant
does not, by itself, generally exclude an enrichment claim. While a contract
creates a regime for the consensual transfer of benefits, a property transfer
is not so much a regime as it is an event, albeit one which may occur within
a contractual regime. As a result, a transfer of property does not in itself
cast a shadow which excludes unjustified enrichment; any such shadow is
cast by the context in which the transfer is made. A transfer of property
made outside of any contractual context is indeed commonly the very occasion
for an unjustified enrichment claim, aimed at the recovery of the property
or its value.
If unjustified enrichment
is generally only weakly subsidiary to property transfers, there is one
apparent exception. Assume that the plaintiff transfers possession of a
thing to another party, X, while retaining ownership. X then transfers
possession to the defendant, in circumstances which give the defendant
ownership of the thing, without the plaintiff's consent. Here we find that
the plaintiff has lost ownership, and the defendant has acquired it; but
any claim in unjustified enrichment will be excluded.119
The rule by which the defendant acquired ownership here casts a shadow
which negatively implies that there may be no enrichment claim. But this
exception is more apparent than real. The acquisition of ownership by the
defendant in such a case is not merely an event; it is also part of a transaction
between the defendant and X. This activates the considerations discussed
in the previous section. The rule which gives ownership to the defendant
is designed to protect the transaction between the defendant and X, and
this protection ousts the plaintiff's enrichment claim.
The position in the common
law (understood broadly so as to include Equity) is also complicated by
the existence of trusts raised to reverse unjustified enrichment. On its
face, this phenomenon seems clearly inconsistent with any relationship
of subsidiarity between unjust enrichment and claims protecting property.
But on further examination, this does not appear to be the case. If an
asset is transferred at common law in circumstances which amount to an
unjustified enrichment of the defendant, the common law will allow a personal
claim to recover the value. The common law, viewed on its own, is like
a civilian system in this regard; the law of unjust enrichment may step
in to correct (but not to contradict) the property transfer, by creating
an obligation. There is no difficulty about subsidiarity, because there
is no rei vindicatio. Equity, however, adds another layer of correction
to the analysis. It has long been established that the principle of non-contradiction
which operates between common law and Equity does not prohibit interfering
with common law ownership; that is the basis of all uses and trusts. Nor
does it prohibit the addition of Equitable proprietary rights to common
law personal rights. Unjust enrichment as it operates through Equity has
different tools at its disposal than unjust enrichment operating through
(c) Unjust Enrichment and Wrongs
Finally, we may turn to
the law of wrongs. In the German system and the common law, there is no
general subsidiarity principle between wrongs and unjustified enrichment.
It would appear that we can infer that for these systems, there is no sense
in which unjustified enrichment stands in a corrective relationship to
the law of wrongs; they do not deal with the same kind of matter.120
Wrongs are not, in general, concerned with transfers of benefits. But this
brings us to the widest subsidiarity principle, that which applies to the
general enrichment action in Quebec. If the plaintiff has a claim based
on extracontractual fault, or even used to have one which is now prescribed,
it appears that there can be no general enrichment action. The generally
subsidiary character of the general unjustified enrichment claim in Quebec
law suggests that its relationship to all other parts of the legal system
is conceived as a corrective one.
It is difficult to understand
how it can be thought to have this relationship to the law of wrongs, but
a historical explanation seems best. The general enrichment action in the
form of the actio de in rem verso was an extra-codal development.
This perhaps inevitably lent it a generally subsidiary air; in a system
with a general civil code, an extra-codal liability, created judicially,
exists almost in a different legal order from the provisions of the code.121
This historical explanation fits with the observation that the action for
the reception of a thing not due, which was always in the Code, is not
subsidiary to the law of wrongs.122 It
also fits with the observation of other jurisdictions.123
This difference between the general action and the action for the reception
of a thing not due is otherwise quite puzzling, since on any view the latter
is a special case of the former.124 If
this is right, then one might question the choice made for the new Civil
Code of Quebec, to codify the general subsidiarity of the general unjustified
The relationship between
unjustified enrichment and other claims is complex. Understanding it depends
not only upon an understanding of the overall function of the law of unjustified
enrichment, but also upon the history and philosophy underlying the structure
of private law in a particular system. The common law does not know "subsidiarity"
by that name, but elements of that relationship appear to be embedded in
the law. As the common law of unjust enrichment develops, it can be expected
that the policies which have been discussed herein will need to be addressed,
and their impact on unjust enrichment liability analysed.
1 St. Hugh's
College, Oxford. I would like to thank Dr. Simon Whittaker for his thoughtful
comments, although any remaining errors are my own. I acknowledge with
gratitude the financial assistance of the Arts and Humanities Research
Board, and also the kind hospitality of the Faculty of Law, McGill University
where much of the research for this paper was done and a working version
presented. I am grateful for the helpful suggestions I received at that
2 "In the
very short space of seventy-five years we have created a monster": J.P.
Dawson, Unjust Enrichment [:] A Comparative Analysis (1951), 30.
the paper, I expressly exclude the case where the first transferee has
gone on to transfer the thing to some other person, gratuitously or for
some exchange value. Such a possibility complicates the analysis considerably.
The papers in this collection on 'Indirect Enrichment' address the matter.
later in the paper I will have occasion to refer to "equity" in the civilian
sense, I have used "Equity" and "Equitable" where the reference is to that
system of law. Although many consider this inelegant, I make no apologies
for following the example of such as Professor F.W. Maitland and Sir George
General Assurance Co. v. Lloyds Bank Canada  3 S.C.R. 805, 152
D.L.R. (4th) 411, required a showing of carelessness. See now Twinsectra
Ltd. v. Yardley, unreported, 28 April 1999, English C.A., paras. 101-111,
apparently assuming that liability depends upon a showing of dishonesty.
6 It would
be wider if the unjust enrichment claim did not require the proof of any
level of knowledge on the part of the defendant. This position is advocated
in P.B.H. Birks, 'Misdirected Funds: Restitution from the Recipient', 
Maritime and Commercial Law Quarterly 296 ff; Lord Nicholls of Birkenhead,
'Knowing Receipt: The Need for a New Landmark', in: W. Cornish
(eds.), Restitution: Past, Present and Future (1998), 231 ff and
J. Martin, 'Recipient Liability after Westdeutsche',  Conveyancer
and Property Lawyer 13 ff. It has not yet been adopted judicially.
It is arguable that even if a claim in unjust enrichment may arise upon
the defendant's interference with the plaintiff's Equitable proprietary
rights, a level of knowledge on the part of the defendant must be established:
L.D. Smith, 'Property, Unjust Enrichment and the Structure of Trusts' forthcoming
in (2000) 116 Law Quarterly Review.
of law rules were in issue in Macmillan Inc. v. Bishopsgate Investment
Trust plc,  1 W.L.R. 387 (C.A.), a case which generated some
of the academic discussion relating to the issue now under consideration.
8 W. Swadling,
'A Claim in Restitution?'  Lloyds Maritime and Commercial Law
Quarterly 63 ff, 65.
Benson Ltd. v. Lincoln City Council  4 All E.R. 513, 542h, 
3 W.L.R. 1095 (H.L.), per Lord Goff.
v. Scott  1 D.L.R. 712 (B.C.C.A.); L.D. Smith, The Law of
Tracing (1997), 291-292.
trans. W.M. Gordon and O.F. Robertson (1988), IV, 4. This text appears
in Justinian's Institutes 4, 6,14.
Zimmermann, The Law of Obligations[:] Roman Foundations of the Civilian
Tradition (1990), 941n152, suggests that the condiction was extended
to furtum at a time when the words "dare oportere" ("ought to give")
had not acquired a technical meaning confined to a duty to transfer ownership.
Similarly, Institutes of Gaius, Part II, comm. F. de Zulueta (1953),
229: "[Gaius'] explanation is acceptable, though some prefer the doubtful
explanation that in primitive times possession even by a thief gave ownership."
furti for damages was available in any case, and could be cumulated
with one of (i) the rei vindicatio (ii) the condictio ex causa
furtiva or (iii) a contractual action which might lie if, for example,
the stolen thing had been deposited with the thief. See Zimmermann
(n. 12), 942-943.
(n. 12), 942; J.A.C. Thomas, The Institutes of Justinian[:] Text, Translation
and Commentary (1975), 295.
of Roman Law by Gaius, trans. & comm. E. Poste, 4 ed. by E.A. Whittuck
(1904), 450; this was true whether or not the heir could be shown to have
been enriched: P. Pauw, 'Historical Notes on the Nature of the Condictio
Furtiva', (1976) 93 South African Law Journal 395 ff, 397. The only
disadvantage of the condiction was that it could not be brought against
a thief who was not free: Pauw, 396.
(n. 12), 943. Election occurred earlier in Roman law than in the common
law, and the mere bringing of the condiction would eliminate any prospect
(n. 12), 922-930.
(n. 12), 836n20: "The condictio ex causa furtiva survived as the only application
of a condictio which could be brought by the owner." Zimmermann notes that
the contrary position is taken in D. Liebs, 'The History of the Roman Condictio
Up to Justinian', in: N. MacCormick and P. Birks (eds.), The Legal Mind[:]
Essays for Tony Honoré (1986), 163 ff, 165 ff.
(n. 12), 840 notes that a condiction could be used by a possessor of land
who was evicted. See also Liebs (n. 18), 170. The designation of this type
of claim based on loss of possession as condictio possessionis clearly
shows the focus on possession, although it is not clear whether it sheds
light on the question of whether the condictio ex causa furtiva
was the only condiction available where title did not pass. The reason
is that the condictio possessionis was arguably a sub-category of
the condictio ex causa furtiva: Zimmermann (n. 12), 840n40.
particular, Liebs (n. 18), 171 suggests that an owner could bring a condiction
against a finder of property. Note also the final words of Gaius II, 79,
indicating that a condiction is available against "thieves and certain
other types of possessor" (scil., defendants who are not owners
but who have not committed furtum). Again, Zimmermann (n. 12), 840
appears to take the view that such claims were subcategories of the condictio
ex causa furtiva.
the history, see R. Zimmermann and J. du Plessis, 'Basic Features of the
German Law of Unjustified Enrichment,'  Restitution Law Review
14 ff, 14-20.
and du Plessis,  Restitution Law Review 15 quote König: "The
terminology is confusing, almost each statement is disputed, the solution
of trivial questions is becoming ever more complicated, and there is a
grave danger of a loss of perspective."
generally B.S. Markesinis, W. Lorenz and G. Dannemann, The German Law
of Obligations, vol. 1 (1997), 741-743.
988, 993 cross-refer to the provisions on unjustified enrichment.
al. (n. 24), 769.
(n. 2), 96, laid the blame for this over-simplification on Pothier. The
same view is expressed in K. Zweigert and H. Kötz, Introduction
to Comparative Law, trans. T. Weir (3rd ed., 1998), 545-546.
France, in 1892 in the arrêt Boudier, Req. 15.vi.1892, S.
1893.1.281 note Labbé, D. 1892.1.596; in Quebec, not definitively
until Cie Immobilière Viger Ltée v. Laureat Giguère
Inc.,  2 S.C.R. 67. The actio de in rem verso was not
one of the condictions; it was originally applicable only to a narrow range
of cases. For the history of how it came to be used as a general enrichment
claim, see Zimmermann (n. 12), 878-884.
29 A prestation
is the object of an obligation (art. 1373); it is that which the debtor
is bound to render to the creditor.
1422, 1491 (réception de l'indu), 1606, 1694, 1838. The regime
in artt. 1699-1707 does not appear to govern where the general unjustified
enrichment claim of artt. 1493-96 applies because (i) there is no cross-reference
to artt. 1699-1707 from artt. 1493-96, as there is from other provisions;
(ii) the regime in artt. 1699-1707 is inconsistent with artt. 1493-96.
For example, art. 1495 in general excuses restitution to the extent that
the enrichment has fallen away, but art. 1702 in general does not; and
(iii) on facts which give rise to a claim under artt. 1493-96 the benefit
received by the defendant cannot generally be seen as a prestation.
the definitions in art. 910. This is in contrast to the position in German
law, where the provisions on the "owner-possessor relationship" refer to
translated as "emoluments" by Markesinis et al. (n. 24). The
term is defined in '
100 so as to include fruits (itself defined in '
99 to include revenues) and also (as translated by Markesinis et al.)
"the advantages which the use of the thing or right affords."
Challies, The Doctrine of Unjustified Enrichment in the Law of the Province
of Quebec (2nd ed., 1952), 63.
(n. 2), 106, on subsidiarity: "In terms this limitation is an adequacy
test, reserving the action for cases where no adequate alternative remedy
is authorized by the Code."
v. Tremblay  R.J.Q. 1619 (Que. Ct.).
observed in H. Mazaud et al., Leçons de Droit Civil, tome
II, vol. 1, F. Chabas, Les Obligations (8th ed., 1991), '709.
(1) 3.vi.1997, J.C.P. 1998.II.10102, note Viney. I am grateful to Jean-Pascal
Chazal, Université Jean Monnet (Saint Etienne), for drawing this
case to my attention.
does G. Viney in his note, ibid.
French writers have recognised the difference between strong and weak subsidiarity:
for example Chabas (n. ), 706-709.
Quebec, see for example Nadeau v. Doyon  R.J.Q. 2267 (Que.
Ct.), citing Quebec and French doctrine. For Germany, Zimmermann and du
Plessis,  Restitution Law Review 22-24. For the common law, G. Virgo,
'The Effect of Illegality on Claims for Restitution in English Law', in:
W. Swadling (ed.), The Limits of Restitutionary Claims: A Comparative
Analysis (1997) 141 ff; Law Commission Consultation Paper No. 154,
Transactions: The Effect of Illegality on Contracts and Trusts (1999),
took the view that this is not subsidiarity as such: Dawson (n. 2), 106;
but that is understandable since he was using the term in the sense which
in this paper is denoted by "weak subsidiarity"; see n. . See also B. Nicholas,
'Unjust Enrichment and Subsidiarity', in: F. Santoro Passarelli and M.
Lupoi (eds.), Scintillae iuris: studi in memoria di Gino Gorla (1994)
2037 ff, 2044. Still, courts in France (Civ. 12.v.1914, S. 1918.1.41 note
Naquet; Civ. (3) 29.iv.1971, G.P. 1971.2.554) and Quebec (Bédard
v. Bédard Transport Co.,  C.S. 472) have described this
Discount Corp. v. Vaudreuil (City)  2 S.C.R. 210, 227. This conclusion
can be expected to remain true under the Civil Code of Quebec. Because
the action for reception of a thing not due was prescribed, however, the
conclusion could rest on weak subsidiarity: see Section III.2.
v. Tremblay  R.J.Q. 1619 (Que. Ct.).
993(1), last half-sentence. It is also true in German law that if the plaintiff
has an enrichment claim based on a "performance," then he may not bring
any other kind of enrichment claim against that defendant. Because this
principle has much wider effects, controlling which defendant the plaintiff
may sue, it is explained and discussed below, Section III.1.b.i, text around
Quebec, the general enrichment action is subsidiary to all claims, as discussed
in the next section. For Germany, see Markesinis et al. (n. 24),
768 (noting that claims against the manager may attract concurrent
liability under both regimes).
however the suggestion in A.S. Burrows, 'Free Acceptance and the Law of
Restitution,' (1988) 104 Law Quarterly Review 576 ff, 599, that
if the common law allows claims based on "free acceptance," these should
not be available except where no other basis for a claim exists. The suggestion
is adopted in P.B.H. Birks, 'In Defence of Free Acceptance', in: A. Burrows
(ed.), Essays on the Law of Restitution (1991) 105 ff, 144-145.
This however would probably be weak subsidiarity.
is, the plaintiff must show that the contract was void or unenforceable
initio, or has been avoided or terminated. German law: Markesinis
al. (n. 24), 45. Quebec law: Challies (n. 34), 95-96; J. Pineau, D.
Burman, S. Gaudet, Théorie des Obligations (3rd ed., 1996),
305-306, 601-602. Common law: Pan Ocean Shipping Co. v. Creditcorp
Ltd.  1 W.L.R. 161 164F (H.L.), per Lord Goff; Singh
v. Singh (1992), 71 B.C.L.R. (2d) 336,  2 W.W.R. 59 (C.A.); 337965
B.C. Ltd. v. Tackama Forest Products Ltd. (1992), 67 B.C.L.R. (2d)
1, 91 D.L.R. (4th) 129 (C.A.), leave to appeal refused  1 S.C.R.
v; Building Design 2 Ltd. v. Wascana Rehabilitation Centre, 
6 W.W.R. 343 (Sask. Q.B.); Hesjedal v. Granville Estate (1993),
117 Sask. R. (2d) 111, 109 D.L.R. (4th) 353 (Q.B.); Scott v. Noble
(1994), 99 B.C.L.R. (2d) 137 (C.A.); Luscar Ltd. v. Pembina Resources
Ltd. (1994), 24 Alta. L.R. (3d) 305,  2 W.W.R. 153 (C.A.), at
paras. 111-122, leave to appeal refused  3 S.C.R. vii; Windisman
v. Toronto College Park Ltd. (1996) 28 O.R. (3d) 29, 132 D.L.R. (4th)
512 (Gen. Div.).
Zimmermann, 'Restitution After Termination for Breach of Contract in German
Law',  Restitution Law Review 13 ff, 17-18 notes that the
idea that the relevant provisions in the BGB are a special kind of enrichment
claim is no longer accepted by most German jurists. Recovery in French
law is usually understood as based on the claim for reception of a thing
not due: J. Flour and J.-L. Aubert, Droit Civil[:] Les Obligations,
vol. II (6th ed.by J.-L. Aubert, 1994), 26; J. Bell, S. Boyron, and S.
Whittaker, Principles of French Law (1998), 421; even if the basis
is said to be theoretically different, it is conceded that this is the
practical outcome: M. Malaurie, Les Restitutions en Droit Civil
(1991), 35. In Quebec, the provisions on "restitution of prestations" in
artt. 1699-1707 were added in the new Civil Code for just this type of
situation. In the plan of the Code, they belong neither to unjust enrichment
nor to contract.
 Restitution Law Review 18, apparently disagreeing with the majority
view; D.P. Visser, 'Rethinking Unjustified Enrichment: A Perspective of
the Competition between Contractual and Enrichment Remedies',  Acta
Juridica 203 ff, 209-210.
118 Man. R. (2d) 11,  7 W.W.R. 534 (C.A.).
Smith, 'Concurrent Liability in Contract and Unjust Enrichment', (1999)
115 Law Quarterly Review 245 ff. See also Visser, 
Acta Juridica 231-236.
15.vi.1892, S. 1893.1.281 note Labbé, D. 1892.1.596.
(n. 34), 30.
may be contrasted with the words in art. 1494 which establish a relationship
of weak subsidiarity between claims in unjustified enrichment and other
claims: see Section III.2.
1493. Surprisingly, however, it is suggested in Pineau et al. (n.
48), 406-407, that a claim in unjustified enrichment would be available
in this situation. The same suggestion is made in Pavage Rolland Fortier
Inc. v. Caisse Populaire Desjardins de la Plaine  R.J.Q. 1221,
1227 (S.C.), although citing French doctrine.
v. Nugent (1996) 193 A.R. 113, 141 D.L.R. (4th) 410 (C.A.); J.E.
Weaver Enterprises Ltd. v. Hardy (1998) 171 N.S.R. (2d) 30, 519 A.P.R.
30 (S.C.). See also Nicholson v. St. Denis (1975) 8 O.R. (2d) 315,
57 D.L.R. (3d) 699 (Ont. C.A.), leave to appeal to S.C.C. refused loc.
cit. This case refused recovery on the unhelpful ground that there
was no "special relationship" between plaintiff and defendant; but it is
still often cited, and the facts are functionally those of Boudier.
Other cases denying recovery, but with a slight factual twist on this basic
pattern, will be mentioned below in the section on "Combinations": Section
III.1.b.iii, at note .
Ocean Shipping Co. v. Creditcorp Ltd.  1 W.L.R. 161, 166EF
Dawson, 'Indirect Enrichment', in: E. von Caemmerer, S. Mentschikoff and
K. Zweigert (eds.), Ius Privatum Gentium (1969) 789 ff, 805, with
citations to U.S. authority; see also J.P. Dawson, 'The Self-Serving Intermeddler',
(1974) 87 Harvard Law Review 1409 ff, 1444-1450.
(n. 60), 805. The special treatment of lawyers was the jumping-off point
of Dawson's important article 'The Self-Serving Intermeddler', (1974) 87
Law Review 1409 ff; and Dawson returned to the theme in 'Lawyers and
Involuntary Clients: Attorney Fees from Funds', (1974) 87
Review 1597 ff and 'Lawyers and Involuntary Clients in Public Interest
Litigation', (1975) 88 Harvard Law Review 849 ff.
15 O.R. (3d) 387 (Gen. Div.).
(S.A.) Building Ltd. v. Von Meunchhausen (1995) 165 N.B.R. (2d) 219,
424 A.P.R. 219 (C.A.).
is supported by the contributions to this volume of Danie Visser and Niall
Whitty, both of whom note that the "at the expense of" requirement permits
the imposition of additional policy-driven constraints upon the claim.
and du Plessis,  Restitution Law Review 25; Markesinis et al.
(n. 24), 720. The translation "performance" is that of Markesinis et
al.; Zimmermann and du Plessis translate Leistung as "transfer."
al. (n. 24), 719.
and du Plessis,  Restitution Law Review 37, discussing possible exceptions
at 37-38; Markesinis et al. (n. 24), 723.
German rule operates to exclude the claim even if the plaintiff's contract
with the third party was void, because the concept of performance does
not depend on the existence of an underlying contract.
point is taken in Dawson (n. 60), 1446-1447.
however Turf Masters Landscaping Ltd. v. TAG Developments Ltd. (1995)
143 N.S.R. (2d) 275, 411 A.P.R. 275 (C.A.), leave to appeal refused (1996)
151 N.S.R. (2d) 240, 440 A.P.R. 240 (S.C.C.). This was actually a "combination"
case as discussed in the next section, in which the plaintiff and the defendant
both had contracts with the same third party (but not with each other);
but the court's denial of the claim was based on the non-enrichment of
note and text.
seems just possible that a plaintiff might, by mistake, perform the prestation
owing to the defendant under the defendant's contract with the third party.
Assume that the third party was contractually bound to shovel the snow
from the defendant's driveway, and the plaintiff, meaning to shovel his
own driveway, cleared the defendant's. If the defendant is still liable
to pay the third party, then presumably there can be no claim against the
defendant, but rather the plaintiff could succeed against the third party
whose contract the plaintiff performed. Alternatively the plaintiff's actions
might have frustrated the contract between the defendant and the third
party, leaving the way clear (so to speak) for an action against the defendant.
Cf. Markesinis et al. (n. 24), 731-732.
noted in Simon
Whittaker's contribution, however, in the French legal tradition obligations
are viewed as personal to the parties; while the plaintiff can perform
the prestation owing under another's obligation, it is not clear that the
plaintiff can perform another's obligation as such. Nonetheless, we may
note that in discussing the position under the Civil Code of Lower Canada
(and in French law), Challies (n. 34), 104-112, was of the view that no
claim could be made in such a case.
(P.H.) Ltd. v. Cypress Colony Farms Ltd. (1993) 87 Man. R. (2d) 250
(Q.B.) suggests that the defendant's contract with a third party is not
(n. 2), 125. See also Dawson (n. 60), 802-803; Dawson (n. 60), 1450-1457.
order to deny a claim in unjustified enrichment where the statutory protection
was unavailable, it would also have to be a strong subsidiarity principle.
Ocean Shipping Co. v. Creditcorp Ltd.  1 W.L.R. 161 (H.L.);
Masters Landscaping Ltd. v. TAG Developments Ltd. (1995) 143 N.S.R.
(2d) 275, 411 A.P.R. 275 (C.A.), leave to appeal refused (1996) 151 N.S.R.
(2d) 240, 440 A.P.R. 240 (S.C.C.); Hussey Seating Co. (Canada) Ltd.
v. Ottawa (City) (1997) 145 D.L.R. (4th) 493 (Gen. Div.) aff'd (1998)
41 OR (3d) 254 (C.A.); Toronto-Dominion Bank v. Carotenuto (1997)
154 D.L.R. (4th) 627 (B.C.C.A); Elmford Construction Co. v. South Winston
Properties Inc. (1999) 45 O.R. (3d) 588 (S.C.J.). Writing particularly
of the three-party building contract cases in U.S. law, Dawson (n. 60),
1447 said that "The decisions, old and new, are lined up in an unbroken
phalanx against restitution recovery."
Pan Ocean Shipping Co. v. Creditcorp Ltd.  1 W.L.R. 161
(H.L.), Lord Goff was of the view that it was the fact that the plaintiff
had conferred the benefit under a contractual obligation to do so; interestingly,
in his comment on the case, Professor Burrows seems to prefer the view
that it was the defendant's contract which was decisive:  Restitution
Law Review 52 ff, 55.
Immobilière Viger Ltée v. Laureat Giguère Inc.
 2 S.C.R. 67, 84. The words of art. 1494, Civil Code of Quebec which
enshrine the weak subsidiarity principle seem designed to codify this ruling:
enrichment or impoverishment is justified where it results "from the failure
of the person impoverished to exercise a right of which he may avail himself
or could have availed himself against the person enriched" [emphasis
added]. This interpretation finds favour in J.-L. Baudouin, Les Obligations
(5th ed., 1998), 442.
however that it was held in Willmor Discount Corp. v. Vaudreuil (City)
 2 S.C.R. 210 that a claim for reception of a thing not due is not
subsidiary to a claim based on fault, and there is no reason to think this
is not still true under the Civil Code of Quebec, where reception of a
thing not due is codified separately from the general unjustified enrichment
claim, and without any language giving rise to subsidiarity.
Grantham and C.E.F. Rickett, 'Restitution, Property and Ignorance C A
Reply to Mr. Swadling,'  Lloyds Maritime and Commercial Law Quarterly
463 ff, 465; see also J.H. Baker, 'The History of Quasi-Contract in English
Law', in: W.R. Cornish et al. (eds.), Restitution [:] Past, Present
and Future (1998), 37 ff, 52.
Pineau et al. (n. 48), 404 (my translation): "... the action de
in rem verso is not available where the plaintiff has an action arising
from a contract, from extracontractual fault, from management of the business
of another, or from payment of a thing not due."
al. (n. 24), 768.
words of art. 1494 of the Civil Code of Quebec seem clear on this point;
the claim in unjustified enrichment is denied if the situation arises from
the failure of the plaintiff to exercise a right "of which he may avail
himself or could have availed himself"; this is in line with what the law
was understood to be under the Civil Code of Lower Canada;Cie Immobilière
Viger Ltée v. Laureat Giguère Inc.  2 S.C.R. 67;
v. Centre Hospitalier des Laurentides  R.J.Q. 2498, per
Chamberland J. Common law authority on the point goes the same way: Luscar
Ltd. v. Pembina Resources Ltd. (1994) 24 Alta. L.R. (3d) 305, 
2 W.W.R. 153 (C.A.), at paras. 117, 120, leave to appeal refused 
3 S.C.R. vii. See also E. Schrage, "Restitution in the New Dutch Civil
Code"  R.L.R. 208 at 220-221.
1494, cited in the previous note, arguably does exactly this.
(n. 42), 2039-40.
are affected in some sense when a claim in unjustified enrichment is barred
even if another claim is available. Moreover, even weak subsdiarity can
prevent a claim in unjustified enrichment when the other claim is prescribed
(above, text at n. 84), which obviously has a substantial effect on the
plaintiff's legal position.
(n. 42), 2041-43.
v. Macferlan (1760) 2 Burr. 1005, 97 E.R. 676 (K.B.). See also Baker
(n. 81), 48-49; M. Macnair, 'The Conceptual Basis of Trusts in the Later
17th and Early 18th Centuries', in: R. Helmholz and R. Zimmermann (eds.),
Fiduciae (1998) 207 ff, 218.
Brierley and R.A. Macdonald (eds.), Quebec Civil Law (1993), 464,
suggest that this was the most important extra-codal development under
the Civil Code of Lower Canada. See also Baudouin (n. 79), 441 (my translation):
"The action de in rem verso exists to remedy unforeseen situations
and not to replace existing dispositions or agreements."
Dickson, 'The Law of Restitution in the Federal Republic of Germany', (1987)
36 International and Comparative Law Quarterly 751 ff, 770-771.
See also Zweigert and Kötz (n. 27), 561-562.
Zimmermann and du Plessis,  Restitution Law Review 24; Dawson (n.
the institution of the Judicature Act system, consolidating the two legal
regimes into a single court, it was enacted that in the case of any conflict
between law and Equity, Equity should prevail; and this disposition remains
operative in every jurisdiction which possesses the Judicature Act system.
To the modern lawyer this might seem to indicate that Equity belongs to
a higher legal order. Viewing the matter in a historical light, as captured
by the maxim about supplementing without contradicting, Maitland took the
view that this provision is "practically without effect"; apparent conflicts
resolve themselves into cases of supplementation. See F.H. Maitland, Equity[:]
A Course of Lectures, rev. J. Brunyate (1936), 16-19. By contrast,
if one takes the other perspective, that any alteration of the final result
amounts to contradiction, then Equity is constantly contradicting the law:
see W.N. Hohfeld, 'The Relations Between Equity and Law', (1913) 11 Michigan
Law Review 537 ff, 543-544.
famously gave up on any positive definition: Maitland (n. 93), 1: "...
we are driven to say that Equity now is that body of rules administered
by our English courts of justice which, were it not for the operation of
the Judicature Acts, would be administered only by those courts which would
be known as Courts of Equity. This, you may well say, is but a poor thing
to call a definition."
and Kötz (n. 27), 538: "The layman can make nothing of the expressions
['unjustified enrichment,' "enrichissement injustifié,' 'ungerechtfertigte
Bereicherung'], and can hardly be blamed for it."
and du Plessis,  Restitution Law Review 24, on the years after the
adoption of the BGB: "But it was no easy task to interpret these expressions
in a way which did not bring about an uncontrollable extension of liability."
Dawson (n. 2), 104, on French law: "In the constant struggle to contain
the actio de in rem verso, various techniques have been employed."
At 106, on subsidiarity: "In terms this limitation is an adequacy test,
reserving the action for cases where no adequate alternative remedy is
authorized by the Code. In certain applications this is precisely its effect.
Though this limitation has been rejected by some of the writers and is
not systematically applied, it has proved quite useful in keeping the modern
remedy within manageable limits." The reference to subsidiarity as an adequacy
test provides another parallel to Equity. Of course, every legal liability
needs its boundaries, but anyone who has studied unjustified enrichment
will I think agree that containment is a constant concern, more so than
in other fields. Baudouin (n. 79), 441, on subsidiarity (my translation):
"If the law provides another recourse, the impoverished party must pursue
it, for otherwise the action de in rem verso would take on a kind
of universality which it must not have." See also K. Barker, 'Unjust Enrichment:
Controlling the Beast', (1995) 11 Oxford Journal of Legal Studies
P.W. Hogg, Constitutional Law of Canada (3rd ed., 1992), 423-429.
provincial legislation is still valid, because by assumption it was competent
to the provincial legislature; but its effects are suspended.
on Bank of Montreal v. Hall  1 S.C.R. 121, 65 D.L.R. (4th)
the framework developed by P.B.H. Birks, An Introduction to the Law
of Restitution (rev. ed., 1989), reasons why enrichments are unjustified
fall into three categories. In most cases it is because the plaintiff's
consent to the transfer was impaired in some way. In some cases it is because
the defendant's receipt was unconscientious, and in some others it is because
of a reason of policy which does not depend on the position of either party
to the transfer. In the other systems there is no doctrinal framework of
"unjust factors," but it is true (although it may be a matter of defence)
that there can be no recovery if the plaintiff had an unimpaired desire
to make the transfer: BGB '
814; Civil Code of Quebec, art. 1494, closing words.
Ocean Shipping Co. v. Creditcorp Ltd.  1 W.L.R. 161, 164F
(H.L.), Lord Goff used language which strongly suggested that the law of
unjustified enrichment and the parties' contract are on different legal
orders (emphasis added): "as between shipowner and charterer, there is
a contractual regime whichlegislates for the recovery of overpaid
89 D.L.R. (4th) 600 (C.A.).
118 Man. R. (2d) 11,  7 W.W.R. 534 (C.A.).
(Regional Municipality) v. Canada  3 S.C.R. 762, 98 D.L.R. (4th)
140, 160 where McLachlin J. (as she then was) seemed attracted by the German
(n. 2), 104-105.
Markesinis et al. (n. 24), 732-733.
for example Rover International Ltd. v. Cannon Film Sales Ltd. (No.
3)  1 W.L.R. 912 (C.A.).
Boudier, Req. 15.vi.1892, S. 1893.1.281 note Labbé, D. 1892.1.596.
was opposed to a legal obstacle, such as prescription or inability to make
out the elements of the other claim. See P. Drakidis, 'La 'subsidiarité',
caractère spécifique et international de l'action d'enrichissement
sans cause', (1961) 59 Revue trimestrielle de droit civil 577 ff,
586-7, 613. For recovery in Quebec in the same situation, see Challies
(n. 34), 139. Italian law followed the French law in this regard: Zweigert
and Kötz (n. 27), 550; Nicholas (n. 42), at 2038-39. Nicholas notes
that Italian writers distinguish between an "abstract" and a "concrete"
understanding of subsidiarity; the "concrete" understanding allows the
claim in unjustified enrichment where the other claim is useless due to
insolvency or prescription.
commentators and judges, however, appear to take the view that the distinction
between factual and legal obstacles remains relevant: Pineau et al.
(n. 48), 406-407; Pavage Rolland Fortier Inc. v. Caisse Populaire Desjardins
de la Plaine  R.J.Q. 1221, 1227 (S.C.), citing French doctrine.
4 All E.R. 513,  3 W.L.R. 1095 (H.L.).
argument was built on points made in P.B.H. Birks, 'No Consideration: Restitution
After Void Contracts', (1993) 23 University of Western Australia Law
Review 195 ff, 230 n. 137.
Mahon & Co Ltd. v. Kensington and Chelsea Royal L.B.C.  Q.B.
Lord Goff at  3 W.L.R. 1126-27; Lord Hope at 1153H. Birks himself
has now made this point: P.B.H. Birks, 'Restitution at the End of an Epoch',
(1999) 28 University of Western Australia Law Review 13 ff, 37-39;
see also L.D. Smith, 'Restitution for Mistake of Law'  Restitution
Law Review 148 ff, 157.
and Rickett,  Lloyds Maritime and Commercial Law Quarterly 465.
(n. 81), 52.
Building Society v. Hamlyn Taylor Neck  4 All E.R. 202 (C.A.).
the common law, see Smith (n. 6); for German law, K. Zülch, 'Lipkin
Gorman in German Law', in: W. Swadling (ed.), The Limits of Restitutionary
Claims: A Comparative Analysis (1997) 106 ff, 116-119. In Quebec the
same result must follow from the requirement (art. 1493) that a claim will
not lie if either the plaintiff's impoverishment or the defendant's enrichment
is justified; here the defendant's enrichment would be justified by the
rule of law giving him ownership.
(n. 42), 2043-4.
(n. 42), 2040-1. Challies (n. 34), 125 was not enthusiastic about this
argument as a justification for general subsidiarity, but it may
still function as an explanation for the current law.
Discount Corp. v. Vaudreuil (City)  2 S.C.R. 210.
French law, the actio de in rem verso developed extra-codally (and
still is so), and is generally subsidiary. On the other hand, the action
for reception of a thing not due was always in the Code, and it is not
subsidiary: Chabas (n. 37), '653;
J. Bell, S. Boyron, and S. Whittaker (n. 49), 410, 416-417. In Italy, the
de in rem verso appeared first as an extra-codal development, and when
it was codified, it kept its subsidiary character, just as in Quebec. By
contrast, German law never knew unjustified enrichment as an extra-codal
development; there has been a general action from the time of codification.
Similarly, in the Netherlands, there was no general extra-codal enrichment
claim under the old code, and the new code, in adding one, did not make
it subisidiary: E. Schrage, 'Restitution in the New Dutch Civil Code',
 Restitution Law Review 208 ff, 216, 220. See also D.H. van
Zyl, 'The General Enrichment Action is Alive and Well', 
Juridica 115 ff, 128-130.
Discount Corp. v. Vaudreuil (City)  2 S.C.R. 210, 227, Gonthier
J. referred to the the action for the reception of a thing not due as "the
only action for unjust enrichment" available in that case.
préparatoires for the new Code show an attempt to codify the
law of unjustified enrichment as it was understood; they do not reveal
any critical examination of the general subsidiarity of the general enrichment
claim. See Québec (Ministère de la Justice),
du ministre de la Justice: le Code civil du Québec (1993), 917
(my translation): "This article [scil. art. 1493] will therefore
give legislative effect to these doctrinal and jurisprudential developments
in unjustified enrichment." Challies (n. 34) was of the view that the actio
de in rem verso was not generally subsidiary: he states this explicitly
at 143, and the section of his book which addresses the matter is entitled
not "Subsidiarity" but "No Indirect Contravention of Imperative Rules of
Law." The Nahum Gelber Law Library at the Faculty of Law, McGill University
holds the unpublished manuscript of Challies' third edition, dated 1970;
this shows that he planned to change this title to "Absence of Other Possible
Action - or - No Indirect Contravention of Imperative Rules of Law." No
doubt this was due to the accumulation of cases accepting subsidiarity
in the intervening years.
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