English unjust enrichment law

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Restitution for unjust enrichment affects commercial, banking, tax, or any other transaction which is not valid. It triggers an obligation for the recovery of property or money, when the gains should not lie where they have fallen.

English unjust enrichment law is part of the English law of obligations, alongside contract and tort, and property. A claim in unjust enrichment requires benefits that have been obtained by someone to be given up if it would be "unjust" to retain them. The enrichment must be "unjust" if no valid legal transaction is present, such as a contract, trust, gift or estoppel. "Restitution", or restoration of the unjust gain, to the party to whom the enrichment came from is the main right that follows from an unjust enrichment. English courts have recognised that to found a claim there are four steps: (1) someone has to be enriched, (2) at the expense of someone else, (3) the enrichment must be unjust, and (4) there must be no defence, such as the defendant changing its position on the strength of the enrichment. Around 10 major "unjust factors" are typically recognised in English law, many of which are typically understood in contract as "vitiating factors". If someone receives an enrichment at another's expense, and this is a mistake, it happens with the claimant's ignorance of the transfer, after a failure of consideration, under duress, under undue influence or exploitation, through legal compulsion, out of necessity, when the transaction is illegal, or the claimant lacks capacity or acts ultra vires, then this will found a claim, so long as no defence operates. Unjust enrichment is an action based on strict liability to return the enrichment, and may frequently work concurrently with a claim in tort. For example, if someone is forced to make a contract to transfer property, the "unjust factor" of duress will vitiate the contract. The claimant will be entitled to have their property returned, and will also have a claim in tort against the one who made the threat.

The law of unjust enrichment is among the most recent and unsettled areas of English law, because only in 1991, in Lipkin Gorman v Karpnale Ltd,[1] did the senior judiciary endorse unjust enrichment's existence. The principles of enrichment and expense are more stable in cases of transfers of goods or money, but contested in cases where labour and benefits in kind are passed. The scope of unjust factors raises controversy, as does the very approach of English law to require an "unjust factor" be identified, rather than presume there is a claim if facts of transfer are made out (as in a "resulting trust") but no positive act of consent or other legal ground is found. The law's remedial response to unjust enrichment is also contested, particularly regarding the availability of proprietary claims. It is established that proprietary restitution is available for tracing, and some mistakes, although it has not been acknowledged for other unjust factors. One view is that a proprietary response should always be available. A second view is that claims should only generate personal remedies, while an and unrelated to property law. A third view is that proprietary restitution ought generally to be available, unless the law would regard the claimant as having taken on the risk of the defendant's insolvency.[2] The categories of defences are also controversial: "change of position" is a general defence, although the law recognises estoppel, the bona fide purchaser defence, and others as alternatives.


Main articles: Obligations and Private law

The modern law of unjust enrichment, at least in English law, was only expressly recognised by a majority of the House of Lords in 1991 in Lipkin Gorman v Karpnale Ltd.[1] Nevertheless, many judges had previously acknowledged the basis of private law actions as founded up the principle of unjust enrichment before.[3] Where they had not, cases that reflected the same idea had been described as being based on concepts such as "quasi-contract", resulting trusts, multiple statutes, specific actions like money had and received, or claims for rescission of consent based obligations. Through the 20th century, common lawyers followed reformers in the civil law, particularly the German Civil Code of 1900, to fashion a law of unjust enrichment. The American Law Institute drafted a Restatement of the Law of Restitution in 1937, and the first major text by Robert Goff and Gareth Jones appeared in 1966.[4] Lord Goff gave the leading judgment in Lipkin Gorman v Karpnale Ltd 22 years later. Peter Birks was also instrumental in promoting the autonomy of unjust enrichment within the law of obligations, in his Introduction to the Law of Restitution and through his teaching.


The foundational unjust enrichment case, Lipkin Gorman v Karpnale Ltd, held a casino on Park Lane, Mayfair, was liable to repay money that a law firm partner had stolen and gambled away.[5]

Since the formal acknowledgement of unjust enrichment in English law by the House of Lords in Lipkin Gorman v Karpnale Ltd[5] four main steps have been accepted in a claim. These steps were promoted by Peter Birks on the view that, if unjust enrichment were to be regarded as an equal pillar of the law of obligations, it needed a mnemonic like those found for contractual formation (offer, acceptance, consideration, creation of legal relations) or for a claim in negligence (duty of care, breach, causation, not too remote). The House of Lords in Banque Financière de la Cité v Parc (Battersea) Ltd,[6] approved four questions that were basic to a claim: (1) is a defendant enriched or benefited? (2) is the enrichment at the claimant's expense? (3) is the enrichment unjust? (4) are there any defences? This meant that when Banque Financière lent DM 30 million to Parc Ltd to discharge a security interest held by another bank, mistakenly thinking that it would have priority, upon Parc Ltd's insolvency, Banque Financière was entitled to get the position of having that other bank's charge (to be "subrogated"). Otherwise, Parc Ltd would have been (1) enriched by having received the benefit of a loan, (2) at Banque Financière's expense, (3) on the basis of a mistake in the transaction terms, and (4) there was no other defence Parc Ltd could point to. Many cases work on more simpler facts. For instance in Kelly v Solari[7] Mrs Solari received money from her husband's life insurance policy. It then transpired that Mr Solari had not in fact paid the final premium installment. The Court of Exchequer held that the money could be recovered. Mrs Solari had (1) been enriched, (2) at the insurance company's expense, (3) because the money was not due this was unjust, and (4) Mrs Solari had not, for example, changed her position by spending money. In principle it is thought that the same framework can be used in any unjust enrichment claim.


Unlike a claimant in tort who alleges that their rights or interests have been harmed or wronged,[8] a claimant in unjust enrichment alleges that the defendant has been "enriched" at the claimant's expense. The idea of "enrichment" is thought to separate unjust enrichment from compensatory actions such as the tort of negligence, or strict liability claims like conversion or trespass, where there is no necessity to show the defendant was "enriched" by harming another's rights (except in the sense that the defendant has exercised freedom of conduct). The concept of "enrichment" is deliberately open to capture multiple rights and interests that could hold value. The central complication is that sometimes, when people have received something, they may seek to argue that it was not valuable to them (it is "subjectively devalued"). In cases of assets or money, it is simpler to show that there has been an objective or "incontrovertible" benefit, and it is freely accepted. However this becomes more complex for services or work. First, and most simply, a valuable good will usually count as an enrichment. For example, in McDonald v Coys of Kensington (Sales) Ltd, Mr McDonald was sold a Mercedes for £20,290 but was mistakenly also given a personalised number plate worth £15,000. By the time anyone realised, it had been registered in his name, and thus he was entitled to it under statute. The auctioneers, who bought the original owners' claim, sought recovery of the number plate's value. Mance LJ held the value could be recovered, because in principle "justice requires that a person, who... has a benefit or the right to a benefit for which he knows that he has not bargained or paid, should reimburse the value... if it is readily returnable without substantial difficulty or detriment and he chooses to retain it".[9] Even though Mr McDonald acquired the registration plate as a necessary part of the statutory scheme for registering vehicles, he still had the choice to give it up, and therefore was enriched. Second, a transfer of money will be enrichment. In Sempra Metals Ltd v IRC it transpired that Sempra Metals Ltd had paid too much in advance corporation tax (a mistake of law), and it sought recovery of the money with compound interest.[10] The House of Lords held (reversing this point in Westdeutsche Landesbank v Islington LBC[11] the compound interest was indeed available upon the claim: the full time-value of money, in addition to the initial sum of the enrichment. Third, if a claimant discharges a defendant's liability, this will count as an enrichment. In the old case of Exall v Partridge,[12] Exall paid the rent to Partridge's landlord, because the landlord had seized Partridge's coachbuilding shop, and Exall's carriage with it while it was there for repair, for unpaid rent. Exall then sued Partridge to recover the money for the liability he had discharged. The Court of King's Bench held the money could be recovered. Grose J said "the law implies a promise by the three defendants to repay", although now the law recognises that the implication of a "promise" is fictitious, and liability exists simply because the defendant would otherwise be unjustly enriched.

Rowe v Vale of White Horse DC,[13] held that receiving sewerage services was an "incontrovertible benefit".

Cases involving the rendering of services, and especially the personal performance of work, have presented greater difficulty historically. Some of the more extreme opinions of nineteenth century judges appeared to view labour as being inherently worthless unless an employer had expressly promised a certain amount of pay for doing work.[14] However, more recent cases have adopted a distinction between commercial service providers, and those with very unequal bargaining power. A fourth category of cases cover the rendering of a service in general.[15] In Rowe v Vale of White Horse DC,[13] Mr Rowe received sewerage services free of charge from 1985 to 2001 because of an administrative error. Lightman J held this was an incontrovertible benefit, and Mr Rowe had to pay. Similarly, in Manchester Police v Wigan Athletic AFC Ltd, a football club received extra policing services at its football games. Because it freely accepted these service, it had to pay.[16] A fifth category of cases involve personal performance of work, particularly by people rather than corporations. In Cobbe v Yeoman's Row Management Ltd[17] the House of Lords held that Mr Cobbe's efforts to obtain planning permission for a development on land owned by Yeoman's Row Ltd should be compensated at a market rate, albeit that this was far lower than the gain received by Yeoman's Row Ltd. Stress was laid on the fact that Mr Cobbe acted without a fully detailed contract, but was a commercial party who could protect himself. Similarly, the Supreme Court held in Benedetti v Sawiris that when Mr Benedetti worked to arrange a takeover for Mr Sawiris without agreeing on a contractual payment for his services, Benedetti's commission would reflect the market value of his work, rather than a percentage of the profits that Sawiris took for investing his capital.[18] The emphasis on the commercial context of these cases suggests that a market assessment of quantum meruit for work is inapplicable to labour markets characterised by unequal bargaining power: here the more appropriate guide is a fair valuation of the gain provided by the work.[19]

Expense of another[edit]

The second general requirement of an unjust enrichment action is that an "enrichment" (something of objective value) comes at the "expense" of the claimant. The reason for this is partly thought to delineate the autonomy of unjust enrichment as an action from claims founded on wrongs that also trigger restitution. A claim for restitution for wrongs, such as for breach of duty to avoid conflicts of interest, does allege the defendant had been enriched (e.g. by a bribe or taking an opportunity that belonged to a corporation[20] or a trust[21]) but it is said that this does not come at the "expense" of the claimant in the same way as other claims (except in the sense that the fiduciary's intangible duty of loyalty is "expended"). There is no necessary "subtraction" from the defendant's wealth, if the concept of subtraction is confined to meaning a pre-existing asset. Two main difficulties have then been debated in the cases: namely whether the "expense" of the claimant has to match the enrichment in value, and whether the enrichment received by the defendant needs to be directly from the claimant or can go via a third party. Generally, the courts have adopted the view that there needs to be neither complete "equivalence", nor "directness", so long as a causal connection between enrichment and expense may be shown.

Cases where the enrichment being claimed is more than the expense to the defendant usually arise where work is combined with an asset or something is done or happens so that it increases in value. In BP Exploration Co (Libya) Ltd v Hunt (No 2)[22] Robert Goff J held that BP was entitled to recover a just sum of money for its capital investment in a Libyan oil field owned by Hunt, although their contract had been frustrated by the 1969 Libyan coup d'état, under the Law Reform (Frustrated Contracts) Act 1943. The recovery was more than its investment, but said Robert Goff J, ‘where the benefit does not consist of money, then the defendant’s enrichment will rarely be equal to the plaintiff’s expense.’ In Trustee of FC Jones and Son v Jones, the Trustee in Bankruptcy of an insolvent farming firm claimed back money that had been misappropriated from the firm and invested by Mrs Jones in potato futures (derivative contracts speculating on the price of potatoes).[23] Only £11,700 was taken before the firm went insolvent, but the potato futures had risen in value to £50,760. Millett LJ held that the Trustee was entitled to claim the full sum of money, despite the value rise, as it came directly from the misappropriated funds.[24] It had been debated whether the defendant can resist a claimant, by arguing it had "passed on" the expense through its other market transactions. In Kleinwort Benson Ltd v Birmingham CC[25] the Court of Appeal denied there was any such defence,[26] although this position is inconsistent with a number of statutes, such as the Value Added Tax Act 1994 section 80.

Factors and basis[edit]

Although English law states that one of a number of unjust factors must be shown for a claim in unjust enrichment,[27] this is not the approach in most other systems of law. In most civil law jurisdictions, if there has been an "absence of basis" for a transfer of value, or enrichment, there is a claim in unjust enrichment unless some positive justification can be found. For example, a consent based obligation, like a contract, gift, express trust, may be present, which defeats the claim in unjust enrichment. When fully informed and true consent is not given, this is the equivalent of finding an "unjust factor" in English law. A contract or gift will be cancelled if there is duress, misrepresentation, and so on. Then it is a separate and further question as to whether the enrichment can be returned. With an absence of basis, the enrichment will be viewed as unjustified. It follows that in the vast majority of cases the distinction between an "unjust factors" approach and an "absence of basis" approach is an issue of semantic emphasis, and holds no practical consequence.


  • ‘It is evident that in these situations the strict liability from which we recoil is actually the only acceptable regime. The reason is that the [demand for a repayment of windfall gain] does not aim to make you bear a loss or to inflict a deterrent punishment on you. Strong facts are needed to justify unpleasant outcomes of that kind which will leave you worse off. The [enrichor] is not trying to make you worse off. He seeks only that you should give up the gain obtained at the shop’s expense.’ (Birks, 7)
  • Kleinwort Benson Ltd v Birmingham CC [1996] 4 All ER 733
  • Kingstreet Investments Ltd v New Brunswick (Finance) 2007 SCC 1
  • Value Added Tax Act 1994 s 80(7)

Unjust factors[edit]

Other than mistakes, a variety of categories of "unjust factors" are said to generate unjust enrichment situations. Undue influence, duress, incapacity and illegality are examples of vitiating factors in contract. Contract law's analysis has been used to explain why courts do not uphold contracts in these situations. These are cases of unjust enrichment. The following ten categories are examples of "unjust factor" (or what Peter Birks argued could be unified under one principle of a basis of a right being absent) which may ground a claim of restitution for unjust enrichment.[28]

Failure of consideration[edit]

  • Meaning of consideration
  • Contracts discharged for breach
    • Claim by the innocent party for the recovery of money paid
    • Claim by the innocent party for the value of work done
    • Claim by the party in breach for the recovery of money paid
    • Claim by the party in breach for the value of the work done
  • Contracts which are unenforceable for want of formality




  • Re Diplock, strict liability subject to defences as an exception


Main article: Duress in English law

Undue influence and exploitation[edit]

  • The role of unconscionable conduct
  • Exploitation of the mental inadequacy of the claimant
  • Exploitation of the economic weakness of the claimant
  • Exploitation of the difficult circumstances of the claimant
  • Illegality to protect vulnerable persons from exploitation

Legal compulsion[edit]

Compulsory discharge of another's liability can happen (1) to recover one's goods, or (2) if someone falls under a common liability for another.




  • Hazell v Hammersmith and Fulham LBC [1992] 2 AC 1. Banks paid councils a lump sum (for Islington, £2.5m). The councils then paid the banks back at the prevailing interest rate. Banks paid councils back a fixed interest rate (this is the swap part). The point was that councils were gambling on what interest rates would do. So if interest rates fell, the councils would win. As it happened, interest rates were going up and the banks were winning. Islington was due to pay £1,354,474, but after Hazell, it refused, and waited to see what the courts said. At first instance Hobhouse J said that because the contract for the swap scheme was void, the council had been unjustly enriched with the lump sum (£2.5m) and it should have to pay compound interest (lots) rather than simple interest (lots, but not so much). But luckily for local government, three law Lords held that Islington only needed to repay with simple interest. There was no jurisdiction for compound interest. They said this was because there was no ‘resulting trust’.
  • Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, the council had no authority to enter into a complex swap transaction with the German bank. So the House of Lords held that the council should repay the money they had been lent and a hitherto unknown ‘unjust’ factor was added to the list. Birks argued that the better explanation in all cases is an ‘absence of basis’ for the transfer of property. Searching through or adding to a list of open ended unjust factors simply concludes on grounds of what one wishes to prove, grounds that ‘would have to be constantly massaged to ensure that they dictated an answer as stable as is reached by the shorter ‘non basis’ route.’ (Birks (2005) 113)
  • Deutsche Morgan Grenfell plc v IRC [2006] UKHL 49 at [26] Money was paid as tax under a statutory regime, which the ECJ later held to have infringed the EC Treaty. The House of Lords held that a claim could be made on grounds of a ‘mistake as to the law’. Professor Charles Mitchell prefers the reasoning of Park J at first instance, which recognised that there is not really a ‘mistake’ in terms of an ‘impairment of a claimant’s actual thought processes’. Lord Hoffmann recognised it only implicitly at [32].

Tracing and proprietary restitution[edit]

Tracing at common law
Tracing in equity
Proprietary restitution



Mixing two claimants' money or money mixed with an innocent claimant

Backwards tracing

M Conaglen ‘Difficulties with Tracing Backwards’ (2011) 127 LQR 432

Swollen assets theory


Change of position[edit]

Main article: Change of position


Bona Fide Purchaser[edit]

It means that good value is given for receipt of assets without notice of breach of trust. It is a complete defence to any knowing receipt claim.


Another available defence is ministerial receipt, i.e. the recipient defendant receives the assets as agent for another.

Counter restitution impossible[edit]

Passing On[edit]



Comparative law[edit]

Unjust enrichment is a developed and coherent field in continental civil law systems. Continental lawyers say someone is unjustly enriched when there is no basis for their possession or title to some right or property. A more correct way of saying it is that someone has been "unjustifiedly enriched". In German, the term is Ungerechtfertigte Bereicherung (§812 BGB) and in France the term is Enrichissement sans cause. English lawyers, however, have been accustomed to identify an "unjust factor". The difference between "unjust factors" and "absence of basis" as a unifying principle has generated a lot of debate, particularly since Peter Birks changed his mind in his second edition of Unjust Enrichment (2005) in the Clarendon Law Series, and argued that the continentals had got it right.

The two leading theorists that have revived unjust enrichment were Lord Goff, who produced Goff and Jones on Restitution and Professor Peter Birks.

See also[edit]


  1. ^ a b [1988] UKHL 12, [1991] 2 AC 548
  2. ^ Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669, per Lord Goff
  3. ^ eg Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, 61-4, per Lord Wright
  4. ^ R Goff and G Jones, The Law of Restitution (1966)
  5. ^ a b [1991] 2 AC 548
  6. ^ [1999] AC 221, per Lord Steyn and Lord Hoffmann, cf Gibb v Maidstone and Tunbridge Wells NHS Trust [2010] EWCA Civ 678 [26]-[27], Laws LJ critiquing the open-endedness of Lord Hoffmann's elaboration of the "unjust" step of a claim. This held an NHS trust had not acted ultra vires so that a £250k payment to a former chief executive could not be recovered as being irrationally overpaid.
  7. ^ (1841) 9 M&W 54
  8. ^ See X v Bedfordshire CC [1995] 3 All ER 353
  9. ^ [2004] EWCA Civ 47, [37]
  10. ^ [2007] UKHL 34
  11. ^ [1996] UKHL 12
  12. ^ (1799) 8 TR 308, 101 ER 1405
  13. ^ a b [2003] EWHC (Admin) 388
  14. ^ Taylor v Laird (1856) 25 LJ Ex 329, 332, Pollock CB, ‘One cleans another’s shoes; what can the other do but put them on?’ Falcke v Scottish Imperial Insurance (1886) 34 Ch 234, Bowen LJ, "The general principle is, beyond all question, that work and labour done or money expended by one man to preserve or benefit the property of another do not according to English law create any lien upon the property saved or benefited, nor, even if standing alone, create any obligation to repay the expenditure. Liabilities are not to be forced upon people behind their backs..."
  15. ^ See also BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783 and Regional Municipality of Peel v Canada [1992] 3 SCR 762
  16. ^ [2008] EWCA Civ 1449
  17. ^ [2008] UKHL 55, [68], [76] and [91]
  18. ^ [2013] UKSC 50
  19. ^ cf Boardman v Phipps [1966] UKHL 2, [1967] 2 AC 46 and Autoclenz Ltd v Belcher [2011] UKSC 41
  20. ^ Bhullar v Bhullar
  21. ^ Keech v Sandford
  22. ^ [1979] 1 WLR 783
  23. ^ [1997] EWCA Civ 1324
  24. ^ cf Foskett v McKeown, taking the view that the claim is one based in property law.
  25. ^ [1996] 4 All ER 733
  26. ^ Also in Canada, Kingstreet Investments Ltd v New Brunswick [2007] 1 SCR 3 and Australia, Roxborough v Rothmans of Pall Mall Australia Ltd [2001] HCA 68, but contrast Kirby J.
  27. ^ See Deutsche Morgan Grenfell Group plc v IRC [2006] UKHL 49
  28. ^ Burrows et al., 133


  • P Birks, Unjust Enrichment (2nd Ed, Clarendon, Oxford, 2005)
  • A Burrows, J Edelman and E McKendrick, Cases and Materials on the Law of Restitution (2nd Ed, OUP, Oxford, 2007)