Introduction to English Law of Obligations (2014/2015) Law of Restitution dr Jan Halberda Introduction to English Law of Obligations© Jan Halberda(UJ)

Law of Restitution May 2015 Introduction to English Law of Obligations© Jan Halberda(UJ)

Unjust enrichment in civil law systems 1. General clauses in German, Swiss, Dutch, Polish civil codes. Development in French judicature. 2. Premises/conditions of the unjust enrichment claim: enrichment, impoverishment, connection, absence of basis. Introduction to English Law of Obligations© Jan Halberda(UJ)

Unjust enrichment in civil law systems General clause in German civil code (par.812 I): A person who obtains something as a result of the performance of another person or otherwise at his expense without legal grounds for doing so is under a duty to make restitution to him. Introduction to English Law of Obligations© Jan Halberda(UJ)

Law of restitution (law of unjust enrichment) in England 1. Different approach due to historical reasons. 2. Westminster courts and common law in the Middle Ages. The English legal history is the history of writs (the forms of action). Introduction to English Law of Obligations© Jan Halberda(UJ)

Law of restitution (law of unjust enrichment) in England 3. Today’s consequences of the historical development: defragmentation of law, tunneled vision, no general rule on liability in tort, no general rule in unjust enrichment, law of contract tied up with action of assumpsit. Introduction to English Law of Obligations© Jan Halberda(UJ)

Law of restitution (law of unjust enrichment) in England 4. The division of “obligation” writs into those regarding torts and contracts [until the 1991]. Restitution cases were treated as the contract cases. Law of quasi-contracts = cases developed by courts during the 16 th -18 th centuries. Introduction to English Law of Obligations© Jan Halberda(UJ)

Lord Mansfield in Moses v. MacFerlan (1760) Examples of the heads of liability/unjust factors: “it lies for money paid by mistake; or upon a consideration which happens to fail; or for money got through imposition (express or implied); or extortion; or oppression; or an undue advantage taken of the plaintiff’s situation, contrary to laws made for the protection of persons under those circumstances.” Introduction to English Law of Obligations© Jan Halberda(UJ)

Lord Mansfield in Moses v. MacFerlan (1760) Source & justification: “If the defendant be under an obligation, from the ties of natural justice to refund; the law implies a debt, and gives this action, founded in equity of the plaintiff’s case, as it were upon a contract (‘quasi ex contractu’ as the Roman law expresses it). This kind of equitable action to recover back money which ought not in justice to be kept, is very beneficial, and therefore much encouraged. It lies only for money which, ex aequo et bono, the defendant ought to refund. (…) In one word, the gist of this kind of action is, that, the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money.” Introduction to English Law of Obligations© Jan Halberda(UJ)

Implied contract theory in the 19th c. Lord Mansfield’s concept was rejected. Law of quasi-contracts prevails. Quasi-contracts = implied contracts = cases wherein form of action “indebitatus assumpsit for money had and received” is used. Introduction to English Law of Obligations© Jan Halberda(UJ)

The attack on implied contracts in the 20th c. Judges: lord Wright, lord Denning. Books: Goff and Jones, Law of Restitution (sixties), Peter Birks (eighties) [2005: („The unjust enrichment is the enrichment which has no basis”)]. Sinclair v. Brougham (1914) Re Diplock, Diplock v. Wintle (1948) Reading v. Attorney-General (1951) Introduction to English Law of Obligations© Jan Halberda(UJ)

The emergence of the law of restitution in other countries United States - (restatement of the law, 1937) Canada - (cases since 1956) Australia - (cases since 1986) Introduction to English Law of Obligations© Jan Halberda(UJ)

The emergence of the law of restitution in England A gambler’s case: Lipkin Gorman v. Karpnale Ltd (1991). Lord Goff: „the present case is founded upon the unjust enrichment”, „the underlying principle of recovery is the principle of unjust enrichment”. Change of position defence. Introduction to English Law of Obligations© Jan Halberda(UJ)

Premises of the action lord Steyn in Banque Financière De La Cité v. Parc (Battersea) Ltd and Others (1999): „Four questions arise: (1) Has OOL benefited or been enriched? (2) Was the enrichment at the expense of BFC? (3) Was the enrichment unjust? (4) Are there any defences?” Introduction to English Law of Obligations© Jan Halberda(UJ)

Questions restitution or unjust enrichment? the meaning of the unjust enrichment – is it a principle or a rule of law ? unjust factors vs absence of basis dillema Introduction to English Law of Obligations© Jan Halberda(UJ)

Unjust factors vs absence of basis dillema in other countries Australia - unjust factors (cases) Canada - absence of basis (cases) United States - absence of basis (restatement) Introduction to English Law of Obligations© Jan Halberda(UJ)

Unjust factors vs absence of basis dillema in England New unjust factor in illegal tax case: Woolwich Society v. Inland Revenue Commissioners (1993) ultra vires demand by a public authority a distinct head of restitutionary recovery Introduction to English Law of Obligations© Jan Halberda(UJ)

Absence of basis approach in swap cases Kleinwort Benson Ltd. v. Sandwell BC (1994), Westdeutsche Landesbank Girozentrale v. Islington LBC (1994). „The basis of the plaintiff's claim, whether at common law or in equity, is that the defendant has been unjustly enriched at the expense of the plaintiff and that in conscience the defendant must repay to the plaintiff”. Absence of consideration =? absence of basis. Introduction to English Law of Obligations© Jan Halberda(UJ)

Unjust factors’ approach lord Steyn in Banque Financière De La Cité v. Parc (Battersea) Ltd and Others (1999): „Restitutionary liability is triggered by a range of unjust factors or grounds of restitution”. Introduction to English Law of Obligations© Jan Halberda(UJ)

Unjust factors’ approach Lord Hoffman in Deutsche Morgan Grenfell (2007): „The answer, at any rate for the moment, is that unlike civilian systems, English law has no general principle that to retain money paid without any legal basis (…) is unjust enrichment. (…) In England, the claimant has to prove that the circumstances in which the payment was made come within one of the categories which the law recognizes as sufficient to make retention by the recipient unjust”. Introduction to English Law of Obligations© Jan Halberda(UJ)

Tax cases Deutsche Morgan Grenfell Group plc v. Inland Revenue Commissioners (2007), Sempra Metals Limited v. Her Majesty’s Commissioners of Inland Revenue (2007), Test Claimants in the Franked Investment Income Group Litigation v. Revenue and Customs Commissioners (2012). Breach of EU law by UK government (principle of legal certainty, principle of protection of legitimate expectation, principle of effectiveness). Introduction to English Law of Obligations© Jan Halberda(UJ)

Distinctive features of English law of unjust enrichment restitution or unjust enrichment? the meaning of the unjust enrichment – is it a principle or a rule of law ? impoverishment not the premise of the action restitution in money Introduction to English Law of Obligations© Jan Halberda(UJ)

Specific issues - mistake of law - change of position defence - locus poenitentiae Introduction to English Law of Obligations© Jan Halberda(UJ)